Franklin Templeton brings its tokenized collateral service to Bybit

Digital asset-friendly financial institution Franklin Templeton is expanding its “off-exchange collateral program” to Bybit, allowing the exchange’s users to use shares in Franklin Templeton’s tokenized money market funds for crypto trading.

The partnership allows investors and wallet holders on the exchange to pledge shares, which represent about $686 million in net assets, as collateral to borrow stablecoins USDT or USDC while earning yield on the underlying assets, according to a press release on Monday.

The key point is that users will not have to move the underlying assets to Bybit. Instead, regulated custody platform ByCustody will hold the underlying assets off-exchange, with the value mirrored in Bybit’s trading environment to enable yield generation while unlocking trading liquidity, the release said.

This is not Franklin Templeton’s first off-exchange collateral partnership; the firm also offers its tokenized money market funds to customers of Binance and OKX. The work continues the buildout of collateral mirroring in the crypto space and the opportunities that brings, said Sandy Kaul, Head of Digital Assets and Innovation at Franklin Templeton.