Franklin Templeton and Binance Launch Off-Exchange Collateral Model for Institutions

Franklin Templeton and Binance have introduced what they describe as the first institutional program allowing tokenized money market fund shares to serve as trading collateral without being transferred onto the exchange.

The structure enables eligible clients to deploy regulated financial assets in digital markets while keeping the underlying holdings in third-party custody.

The initiative marks the first product rollout from a strategic collaboration announced in September 2025 and reflects the accelerating integration of traditional financial instruments into blockchain-based trading infrastructure.

Mirroring Structure Connects TradFi Assets to Digital Markets

The program operates through a “mirroring” mechanism designed to bridge traditional finance assets with exchange-based trading activity. Tokenized collateral is issued through Franklin Templeton’s Benji Technology Platform, which facilitates the digital representation of money market fund shares.

Custody of the underlying assets remains off-exchange through Ceffu, Binance’s institutional custody partner. Rather than transferring funds onto the exchange, the value of the tokenized shares is reflected inside the Binance trading environment. This allows institutions to maintain trading exposure while the base assets remain in regulated third-party custody.

The structure separates asset storage from trading execution, addressing one of the core institutional constraints around centralized exchange participation.

Yield-Bearing Collateral Enhances Capital Efficiency

Unlike cash or stablecoin collateral, tokenized money market fund shares continue generating regulated yield while simultaneously serving as margin collateral. These funds are typically backed by U.S. government instruments, allowing institutions to preserve capital productivity while maintaining liquidity access.

This dual-function model increases capital efficiency by enabling professional traders to avoid idle balances. Institutions can deploy yield-bearing assets as collateral while preserving round-the-clock access to digital asset markets.

Reduced Counterparty Risk Through Off-Exchange Custody

By keeping assets in regulated third-party custody instead of on the exchange itself, the structure reduces exposure to exchange-specific insolvency or operational risks. This separation is designed to address persistent institutional concerns around custody security and counterparty concentration.

The model reflects a broader shift toward segregated collateral frameworks, where asset control and trading functionality operate independently.

Strategic Positioning in the 2026 Tokenization Trend

Franklin Templeton, which manages approximately $1.6 trillion in assets under management, has expanded its footprint in digital assets as part of a wider 2026 real-world asset tokenization trend. Asset managers are increasingly integrating regulated financial products directly into blockchain infrastructure to meet institutional demand for capital-efficient exposure.

The collaboration with Binance illustrates how traditional asset managers and major exchanges are converging on hybrid models that preserve regulatory safeguards while enabling digital market participation.

Eligible institutional participants can access program details through Binance’s VIP and Institutional portal or via Franklin Templeton Digital Assets channels.

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