Franklin Templeton and Kraken's parent company to explore new onchain investments

In another sign that the ties between Wall Street and the digital assets industry are growing closer, global asset manager Franklin Templeton and Payward, the parent company of crypto exchange Kraken, said Tuesday they have entered into a partnership designed to find new ways to tokenize traditional investment products.

The partnership will span tokenized equities, qualified custody, actively managed yield products, and access to institutional crypto liquidity through Kraken's OTC and Prime services, according to the release. The companies described the collaboration as "one of the clearest demonstrations yet of how traditional finance and digital asset markets are converging in practice."

The two firms will specifically explore launching new tokenized versions of Franklin Templeton financial instruments, such as yield products suited for institutional clients. Where applicable, the companies also said they would consider introducing products for Kraken's "broader" user base.

Kraken already offers tokenized versions of equities through its xStocks feature, which the firm says has "processed over $30 billion" in trading volume since launching last year.

"Payward and Franklin Templeton are building toward a model of finance where the distinction between traditional assets and digital infrastructure no longer holds," Payward and Kraken co-CEO Arjun Sethi said. "The convergence between these two worlds is only going to deepen, and what collaborations like this one unlock is a new class of products that wouldn't have been possible even three years ago."

While Payward strengthens its ties to TradFi, the firm has also recently applied for a national trust company charter with the Office of the Comptroller of the Currency, a move that would give it expanded access to the U.S. financial framework.

For its part, Franklin Templeton is an issuer of crypto-based ETFs that track the price of digital assets like bitcoin and XRP. The firm also offers BENJI, a tokenized version of its money market fund. Additionally, it is working with Ondo Finance on tokenized products.

"The focus should be on making onchain assets more functional for the full range of market participants once they are there," said Sandy Kaul, head of digital assets & innovation at Franklin Templeton.