Franklin Templeton, Binance roll out program letting institutions use tokenized money funds as trading collateral

Franklin Templeton and Binance have launched a program aimed at solving a persistent problem for large crypto traders: how to deploy capital on exchanges without leaving assets parked on trading platforms.

Under the new setup, institutional clients can use tokenized shares of money market funds issued through Franklin Templeton’s Benji platform as collateral when trading on Binance, while the assets themselves remain held off-exchange in regulated custody.

Instead of transferring cash or crypto onto the exchange, clients pledge tokenized fund shares held with a custodian. Binance then mirrors the collateral value within its trading environment, allowing clients to trade while the underlying assets stay outside the exchange.

The structure is designed to reduce counterparty risk following years of exchange failures and custody concerns that have made some institutions wary of leaving large balances on centralized platforms.

At the same time, the pledged assets continue to earn yield, potentially improving capital efficiency compared with idle exchange balances.

Custody and settlement for the program are handled by Ceffu, Binance’s institutional custody partner, which holds the tokenized fund shares in regulated custody while allowing them to be used as trading collateral.

The move also fits into a broader push by asset managers and banks to adapt existing cash and liquidity products for tokenized markets rather than launching entirely crypto-native funds.

Franklin Templeton has already been updating money market funds to work with blockchain-based settlement systems, including structures aimed at meeting U.S. stablecoin reserve requirements.

Regulatory tone in the U.S. has also shifted toward accommodating these models. SEC Commissioner Mark Uyeda said on Tuesday that the agency should avoid creating “unnecessary roadblocks” as tokenization moves from theory into practical market use.