Franklin Templeton announced on Tuesday that it has repositioned two institutional money market funds managed by Western Asset Management to support stablecoin reserves under the GENIUS Act and operate across blockchain-enabled distribution platforms. The move signals another step toward merging traditional liquidity products with tokenized finance.
Two Funds, Two Use Cases
The first fund, the Western Asset Institutional Treasury Obligations Fund, has been restructured to invest exclusively in U.S. Treasuries with maturities of 93 days or less, aligning with reserve requirements under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act enacted in July 2025. Franklin Templeton cited the expanding stablecoin market as a driver of demand for regulated, high-quality liquidity products. Stablecoins are increasingly used for payments, settlement, and collateral, prompting institutional issuers to seek compliant reserve assets that function like infrastructure rather than speculative instruments.
The second fund, the Western Asset Institutional Treasury Reserves Fund, introduced a Digital Institutional Share Class designed for distribution through blockchain-enabled intermediary platforms. Approved intermediaries can use blockchain technology to record and transfer fund share ownership, enabling faster settlement and 24/7 transaction capabilities. Franklin Templeton emphasized that the fund itself remains a traditional SEC-registered money market vehicle; the blockchain component affects only share distribution and recordkeeping, not the underlying investment strategy or regulatory framework. In short, the plumbing changes, not the product on the shelf.
Executive Insights: Balancing Innovation and Risk
Matt Jones, head of institutional liquidity at Franklin Templeton, noted that the updates reflect a push to balance innovation with risk management, arguing that early adoption only matters when paired with operational discipline. Roger Bayston, the firm’s head of digital assets, framed the move as a response to growing institutional demand for regulated funds that function within digital market infrastructure, rather than an attempt to reinvent money market products themselves.
The announcement adds to Franklin Templeton’s broader digital asset strategy, which has focused on integrating blockchain technology into existing financial products since 2018. The firm has invested in tokenization research, data science, and blockchain-based fund infrastructure. As tokenized funds gain traction, Franklin Templeton’s approach highlights a broader industry theme: institutions appear more interested in making familiar products interoperable with blockchain systems than replacing them outright.