Bybit now accepts tokenized shares of Franklin Templeton's money market funds as institutional trading collateral, the exchange and the asset manager announced Monday. Eligible institutions can pledge fund shares issued on Franklin Templeton's Benji platform and receive credit lines denominated in USDT or USDC, without selling the shares or moving them onto the exchange.

The structure keeps the pledged assets in off-exchange custody throughout. Institutions retain yield on their money market fund holdings while using those positions to finance crypto trading on Bybit — a working-capital arrangement that treats tokenized fund shares as margin rather than as a liquid investment.

What does the program change operationally?

The deal expands the utility of tokenized fund shares beyond buy-and-hold exposure. Under the arrangement:

• Institutions pledge Benji-issued fund shares as collateral.
• Assets stay in off-exchange custody; nothing transfers to Bybit's platform.
• Credit lines are denominated in USDT or USDC.
• Clients can trade on Bybit without liquidating fund positions or interrupting yield accrual.

For Franklin Templeton, the partnership opens a distribution channel into crypto-native institutional flows. For Bybit, it deepens the pool of collateralized institutional liquidity available on the exchange and aligns it with a practice already established at larger venues.

How large is the tokenized money market segment?

The Bank for International Settlements values the tokenized money market fund market at more than $9 billion as of September 2025. Franklin Templeton's Benji platform held $1.98 billion in assets under management as of April, a figure that has since fallen to roughly $669 million, according to RWA.xyz data.

BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) remains the segment's largest vehicle at $2.2 billion. Crypto.com and Deribit already accept BUIDL as collateral, and Binance lets institutional clients use BUIDL as off-exchange collateral. Bybit's move with Franklin Templeton brings it to parity with rivals that have integrated tokenized fund collateral into their institutional offering.

The decline in Benji's AUM underscores the competitive pressure in the segment, where BlackRock's institutional distribution has pulled assets away from first movers. Collateral acceptance programs address that pressure by adding utility that plain custody does not provide.

What comes next?

Franklin Templeton and Bybit also plan a tokenized investment product for wallet users on Bybit and the Mantle network, though the companies have not disclosed details on structure, timing or eligibility. That product would extend the partnership from institutional collateral into retail-facing distribution.

With tokenized money market assets above $9 billion and exchanges competing to accept them as margin, off-exchange collateral programs look set to become a standard feature of institutional crypto market structure over the coming quarters.