The financial world stands at the edge of a transformation—one where traditional finance (TradFi) and decentralized finance (DeFi) converge to redefine how assets are managed, transferred, and invested. At the forefront of this shift is Franklin Templeton, one of the world’s largest asset management firms, with over $1.6 trillion in assets under management. Through its pioneering work in blockchain-based financial products, Franklin Templeton is not just adapting to change—it’s driving it.
In a recent conversation with Sandy Kaul, Head of Innovation at Franklin Templeton, we gain deep insight into how legacy financial institutions can embrace crypto-native infrastructure to unlock unprecedented efficiency, transparency, and innovation.
Bridging Traditional Finance and Blockchain Innovation
Sandy Kaul’s journey into blockchain began long before it became mainstream. With a background in research, commodities, and fintech consulting, she witnessed firsthand how emerging technologies reshape financial systems. From internet banking in the 1990s to blockchain today, her career has been defined by identifying transformative shifts early.
“When Ethereum launched in 2016, I realized smart contracts could automate reconciliation and paperwork—core inefficiencies in traditional finance.”
This realization led her to join Franklin Templeton in 2022, where she now leads efforts to integrate digital assets across the firm’s operations. Unlike many traditional firms constrained by short-term thinking, Franklin Templeton operates more like a family office, allowing leadership to focus on long-term strategic bets—like blockchain adoption.
👉 Discover how institutional investors are reshaping finance through blockchain innovation.
The First Step: Tokenized Money Market Funds
Franklin Templeton didn’t jump into DeFi with flashy NFTs or yield farms. Instead, they started with one of the most foundational financial instruments: money market funds.
Launched as an experiment in 2019, their tokenized money market fund was built from the ground up because no compliant infrastructure existed. At the time:
- There were no KYC-compliant wallets.
- No institutional-grade trading systems.
- No blockchain-native accounting tools.
They had to build everything themselves—partnering with crypto-native developers along the way.
But the payoff was clear: blockchain isn’t just about cost reduction—it enables entirely new capabilities.
Three Revolutionary Features Enabled by Blockchain
- Precision Yield Calculation
In traditional finance, money market funds calculate daily returns after market close. If you deposit funds mid-day and withdraw hours later, you earn nothing. On-chain, yield accrues per second, enabling fair, real-time earnings—even for holdings lasting minutes. - Daily Payouts, Every Day
Traditional funds pay monthly. With tokenized shares, new tokens representing interest are minted daily—even on weekends—delivering consistent cash flow without relying on legacy settlement cycles. - Peer-to-Peer Transferability
Selling mutual fund shares traditionally takes days and involves intermediaries. Tokenized shares can be sent directly from wallet to wallet instantly—unlocking liquidity and enabling use as collateral in DeFi protocols.
“These aren’t small improvements—they’re revolutionary. We’re doing things that were structurally impossible before.”
Infrastructure Evolution: From 2019 to Today
Back in 2019, launching a compliant on-chain product required building nearly every component from scratch. Today, the landscape has matured dramatically.
Franklin Templeton now operates across nine public blockchains and one private chain, treating each ecosystem as a “digital nation” with its own native currency (gas token), developers (“entrepreneurs”), and governance models.
This multi-chain strategy allows them to:
- Optimize for speed and cost on high-throughput chains.
- Prioritize security and finality for large institutional transfers.
- Leverage cross-chain interoperability tools as they evolve.
Their proprietary framework intelligently routes transactions based on size, urgency, compliance needs, and counterparty type—ensuring optimal execution across ecosystems.
Institutional Priorities When Going On-Chain
For institutions entering the blockchain space, several key factors determine success:
1. Security & Decentralization
Not all blockchains are equally secure. Franklin Templeton evaluates:
- Validator count and distribution.
- History of outages or exploits.
- Community-driven upgrades vs. centralized control.
A highly centralized chain may offer speed but lacks the trust-minimized environment essential for regulated assets.
2. Transparency & Auditability
Every transaction must be verifiable. Public ledgers allow auditors and regulators to trace flows in real time—something impossible with siloed databases.
3. Compliance Integration
KYC/AML isn’t optional. Franklin Templeton uses whitelisted wallets and identity layers to ensure only verified participants interact with regulated funds.
“We don’t want freedom at the expense of compliance. We want both—through technology.”
Beyond Payments: DeFi Applications in Supply Chain & ERP
Tokenized funds aren’t just for investment—they’re becoming tools for enterprise efficiency.
Smart Contracts in Supply Chain Finance
Imagine shipping goods from Asia to Europe:
- Goods arrive at port → recorded in digital booking system.
- Oracle feeds data to a smart contract.
- Payment triggers instantly via tokenized money market fund transfer.
Result? Payment time drops from 30–60 days to seconds, improving cash flow and reducing counterparty risk.
Enterprise Resource Planning (ERP) Transformation
Multinational corporations juggle payments across hundreds of jurisdictions using outdated banking rails. By using tokenized funds for intercompany settlements:
- Cross-border payments settle instantly.
- FX costs drop significantly.
- Treasury teams gain real-time visibility across entities.
“We’re rethinking financing not just for DeFi—but for all corporate finance.”
Tokenized Funds vs. Stablecoins: Key Advantages
Why choose a regulated tokenized fund over USDC or DAI?
| Feature | Tokenized Fund | Stablecoin |
|---|---|---|
| Yield Distribution | Full yield passed to users | Limited due to regulatory constraints |
| Underlying Assets | Transparent, audited, high-quality (e.g., U.S. Treasuries) | May lack full reserve transparency |
| Regulatory Status | Registered investment product (e.g., under 1940 Act) | Regulatory uncertainty persists |
| Collateral Efficiency | Higher loan-to-value ratios due to quality | Lower LTVs required due to volatility concerns |
While stablecoins offer greater transfer freedom, tokenized funds deliver higher yields, stronger collateral value, and full regulatory clarity—making them ideal for institutional use cases.
However, transfers require KYC checks—so they’re not anonymous or unrestricted.
Expanding the Product Line: Real-World Assets & Cultural Assets
Franklin Templeton isn’t stopping at money market funds.
They’re actively exploring tokenization of:
- Equities & Fixed Income Portfolios
- Private Equity Secondary Markets
- Real Estate Investment Trusts (REITs)
- Private Debt Instruments
But more exciting? The rise of cultural assets—a new asset class enabled by blockchain:
- Digital art and collectibles
- Music royalties
- Intellectual property (IP) rights
“These were once illiquid and hard to access. Now, they can be fractionalized, traded, and integrated into diversified portfolios.”
They’ve already launched versions of their money market fund in:
- The U.S. (under 1940 Act)
- Luxembourg (for EU distribution)
- Singapore (via BCC structure)
- Private placements
And access is simple: download the Benji app, complete KYC quickly, and start investing—no broker needed.
Barriers to Broader Adoption: Regulation & Liquidity Pools
Despite progress, major hurdles remain—especially around liquidity pools and lending protocols.
Franklin Templeton wants to integrate its tokenized funds into DeFi lending markets as a superior alternative to stablecoins. But questions remain:
- Can regulated funds participate in permissionless pools?
- Must every user undergo KYC?
- How do we handle bankruptcy remoteness if a protocol fails?
Sandy co-chairs the CFTC’s Digital Assets Subcommittee and has testified before the SEC—actively shaping policy from within.
“We need clarity on stablecoin rules, digital identity standards, smart contract enforceability, and insolvency frameworks.”
👉 See how global institutions are navigating crypto regulation today.
The Regulatory Horizon: Clarity Within 18 Months
Sandy believes the U.S. will establish a clear regulatory framework within 12–18 months.
Once that happens:
- More asset classes can move on-chain.
- Institutions can confidently deploy capital.
- New financial models will emerge at scale.
And while crypto’s total market cap (~$3.5T) pales next to managed assets (~$100T+), even a small shift could unlock trillions in value.
The Future: All New Funds Will Be On-Chain
Looking ahead:
“In three to four years, every new fund will launch on-chain.”
Existing funds will migrate gradually—starting with low-liquidity or high-cost structures like ETFs where automation delivers immediate savings.
Back-office systems? They’ll evolve slowly due to legacy tech debt—but eventually, even shareholder registries and reconciliation engines will run on blockchain.
Wallets Over Accounts: The New Financial Interface
Today, 99% of investing happens through account-based systems—disconnected silos at different brokers and banks.
Tomorrow’s model? Wallet-based ownership:
- All assets—stocks, bonds, ETFs, real estate tokens—live in one wallet.
- Full interoperability enables seamless transfers and DeFi integration.
- Users gain true control over their financial lives.
Platforms like PayPal, Robinhood, and the EU’s digital wallet initiative are accelerating this shift.
“People keep stablecoins not because they hate fiat—but because they want to stay inside the wallet ecosystem.”
A World Beyond Fiat Payments
Will we ever stop using dollars?
Unlikely—but their role will change.
Instead of central bank digital currencies (CBDCs) replacing cash, expect:
- Bank-issued digital dollars (regulated stablecoins).
- Interoperable payment rails where gold, bonds, or funds act as mediums of exchange.
- Wider merchant acceptance of crypto-backed payments via credit cards.
“We’re moving toward a world where fiat is just one option among many.”
Defining Success: When Crypto Is Invisible
For Franklin Templeton, success isn’t measured by AUM in crypto ETFs alone.
It’s when:
“Crypto becomes so embedded in our operations that having a ‘digital assets team’ seems quaint—like having an ‘internet department’ in 2005.”
Their goal? Make blockchain the default infrastructure for all financial activity—not an add-on, but the foundation.
👉 Learn how top firms are embedding blockchain into core operations.
Frequently Asked Questions (FAQ)
Q: Can retail investors access Franklin Templeton’s tokenized funds?
A: Yes! Anyone can download the Benji app, complete KYC, and invest directly—no broker or minimum net worth required.
Q: How does yield compare to stablecoins like USDC?
A: Tokenized money market funds typically offer higher yields since they pass through nearly all income generated by underlying assets (like U.S. Treasuries), unlike stablecoins restricted by regulatory limits.
Q: Are these funds available globally?
A: Not yet universally—but versions exist for U.S., EU (via Luxembourg), and Singapore markets, with expansion ongoing through jurisdiction-specific structures.
Q: What prevents hacking or theft of on-chain assets?
A: Multi-layer security including institutional-grade custody solutions, whitelisted wallets, transaction monitoring, and smart contract audits by third parties.
Q: Can tokenized funds be used as collateral in DeFi?
A: Potentially yes—and it’s a key roadmap item. Regulatory clarity is needed first to allow participation in lending protocols while maintaining compliance.
Q: Is Franklin Templeton planning crypto-only funds?
A: They already offer crypto ETFs and include up to 6% allocation in model portfolios. Their view is that crypto should be part of a diversified strategy—not a speculative bet.
Core Keywords
blockchain finance, tokenized assets, decentralized finance (DeFi), money market fund, institutional crypto adoption, real-world assets (RWA), digital asset regulation, wallet-based investing