Franklin Templeton's on-chain money market fund launches on Arbitrum

Global asset management giant Franklin Templeton has launched its OnChain U.S. Government Money Fund (FOBXX) on Arbitrum in collaboration with the Arbitrum Foundation.

Investors can gain exposure to the underlying FOBXX asset in digital wallets via Franklin Templeton’s blockchain-integrated Benji Investments platform and BENJI token. Investors “may use the Arbitrum network upon request and subject to eligibility,” the firm said in a statement shared with The Block. The launch follows an application to the Arbitrum Stable Treasury Endowment Program (STEP) in May. 

The collaboration is designed to accelerate the integration of traditional finance into the DeFi world further. The fund was initially launched on the Stellar blockchain, expanding to Polygon in April. It is designed to offer a competitive return by primarily investing in government securities and related instruments, seeking to maintain a stable $1 share price. More networks could be supported in the future.

“Expanding into the Arbitrum ecosystem is an important step on our journey to empower our asset management capabilities with blockchain technology,” Franklin Templeton Head of Digital Assets Roger Bayston said. “We are enthusiastic about the opportunities this will unlock for our firm and our clients.”

Arbitrum is the largest Ethereum Layer 2 network by total value locked, accounting for $2.6 billion in deposits — a 34% market share, according to DeFiLlama data. It has also persistently led its optimistic and zk rollup rivals in terms of active daily addresses. However, it was eclipsed by the Coinbase-incubated Base network last month on the seven-day moving average of the metric, according to The Block’s data dashboard.

“Franklin Templeton's commitment to innovation aligns with our mission to provide scalable and efficient solutions for the financial sector,” Steven Goldfeder, CEO and co-founder of Arbitrum core contributor Offchain Labs, said. “We are excited to see Franklin Templeton join the Arbitrum ecosystem and look forward to the transformative impact their participation will bring to our community."

Tokenized government securities landscape

FOBXX was the first U.S.-registered fund to use a public blockchain to process transactions and record share ownership, introduced in 2021. Total assets under management in tokenized government securities subsequently rose to a $1.8 billion market, according to data compiled by asset management firm 21.co, the parent company of bitcoin exchange-traded fund provider 21Shares.

Franklin Templeton, founded in 1947 and with more than $1.5 trillion in total assets under management, initially led the tokenized U.S. Treasurys niche. However, it has come under stiff competition from BlackRock’s new BUIDL fund, tokenized in collaboration with Securitize on Ethereum, among others, in recent months.

BlackRock’s BUIDL product currently leads the niche with its $519 million in assets under management, equivalent to a 28.4% market share. In April, BUIDL overtook Franklin Templeton’s fund, though the BENJI product remains the second-largest, with its $402 million in assets under management representing a 22% market share per 21.co’s data. That same month, Franklin Templeton enabled peer-to-peer transfers for the fund’s BENJI tokens.

Market Landscape of Tokenized Government Securities by Product. Image: 21.co/Dune Analytics.

Franklin Templeton is no stranger to blockchain technology, having run node validators and various investment strategies in the crypto space since 2018. The asset manager launched a spot Bitcoin ETF, EZBC, in January and a spot Ethereum ETF, EZET, last month, attracting $363.6 million and $22.7 million in assets under management, respectively, according to The Block’s ETFs Tracker Page. In June, the firm announced it was exploring additional crypto funds beyond these initial products.