Franklin Templeton Launches Tokenized Fund on Arbitrum

Franklin Templeton has joined forces with the Arbitrum Foundation to extend its Franklin OnChain US Government Money Fund (FOBXX) onto the Arbitrum blockchain. This partnership is part of a broader strategy to integrate traditional finance (TradFi) with decentralized finance (DeFi), highlighting increasing institutional interest in these innovations.

The US Government Money Fund (FOBXX) aims to provide stable returns with a $1 share price by investing in government securities. Investors can access the fund through the Benji Investments app and website, allowing retail users to use the Benji mobile app, while institutional investors use the Benji Institutional web portal. This setup benefits from Franklin Templeton’s blockchain-based recordkeeping system, improving transaction speed and security.

FOBXX was initially launched on the Stellar network in April 2021, making it the first US-registered fund issued on a public blockchain. After expanding to Polygon in April, the fund is now on Arbitrum, demonstrating Franklin Templeton's commitment to blockchain technology. Fund managers focus on diversifying government securities, but, like all mutual funds, FOBXX investments are not insured by the Federal Deposit Insurance Corporation or other government agencies.

Franklin Templeton applied to join the Arbitrum Stable Treasury Endowment Program (STEP) in May, aiming to deepen TradFi and DeFi integration. The partnership with Arbitrum is a significant step for Franklin Templeton, leveraging blockchain to enhance asset management.

Blockchain technology provides several benefits, including increased security, faster transactions, and lower costs. Roger Bayston, Franklin Templeton’s Head of Digital Assets, stated, "Expanding into the Arbitrum ecosystem is important for empowering our asset management capabilities with blockchain technology."

FOBXX has established connections with major decentralized autonomous organizations (DAOs) in the digital asset ecosystem. Franklin Templeton has revealed ownership of several governance tokens in its digital asset portfolios, showing the rising interest in tokenized government securities.

The market for tokenized government securities is growing, with $1.8 billion in assets under management (AUM), according to data from 21.co on Dune Analytics. Key players in this space include BlackRock’s BUIDL, Franklin Templeton’s BENJI, and Ondo Finance’s USDY and UOSG.

Franklin Templeton's collaboration with Arbitrum to launch FOBXX on the blockchain marks a major milestone in merging traditional and decentralized finance. By embracing blockchain technology, Franklin Templeton aims to offer investors more efficient and secure investment options. This move highlights the growing interest in tokenized assets and sets the stage for further innovation in the financial sector. As the market for tokenized government securities expands, Franklin Templeton is poised to be a leader in shaping the future of finance.