Why Franklin Templeton is betting big on tokenised funds

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Traditional finance is shifting its focus in crypto beyond bitcoin (BTC-USD), according to Roger Bayston, head of digital assets at Franklin Templeton, a leading asset manager and early mover in tokenised funds and spot bitcoin ETFs.

Speaking at the Digital Assets Forum in London, Bayston said the strongest interest from incumbent financial institutions isn’t focused on price speculation, but on infrastructure.

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Bitcoin (BTC-USD) has lost roughly half its value from its all-time high of over $126,000 in October. While Franklin Templeton offers a spot bitcoin ETF, Bayston said short-term controversies or shifts in investor sentiment, whether toward gold or other assets, are largely “noise” compared with the broader structural opportunity in blockchain and digital assets.

“The integration of blockchain into legacy financial markets, banking, capital markets, asset management, that’s the bigger story,” he told Yahoo Finance UK.

At its peak, the total crypto market has hovered around $3tn. By comparison, global public markets are worth more than $100tn.

“Are we in the early days? Absolutely,” Bayston said.

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For Franklin Templeton, the journey into digital assets began around eight years ago, not with speculation, but with internal experimentation.

“We looked at distributed ledger technology as a record-keeping solution,” he said. “Asset management is fundamentally a record-keeping business. We asked: where can we substitute legacy centralised databases with blockchain infrastructure?”

That exploration led to the creation of “Benji,” the firm’s tokenizsed US government money market fund.

Benji runs on multiple blockchains, including ethereum (ETH-USD) and its layer-2 networks, as well as Stellar, Avalanche, Polygon and Arbitrum.

Rather than betting on a single network, Bayston described these blockchains as “digital nation states” with their own economic ecosystems.

Benji allows investors to hold shares of a money market fund in tokenized form and transfer them on blockchain rails, potentially in fractions of a second.

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“What we’ve unpacked is new utility on something that already existed,” Bayston said. “You can send it like cash, but it offers yield.”

That means users can earn interest for however many minutes, hours, or seconds they hold the tokenized fund, a feature that traditional settlement systems don’t easily support.

The opportunity, Bayston argues, is enormous. Roughly $7tn is invested in money market funds globally. Tokenisation could modernize how those assets move and settle.

Blockchain’s appeal to traditional finance isn’t just about speed, it’s also about eliminating friction.

Financial markets today resemble “a big bowl of spaghetti,” Bayston said, with multiple institutions reconciling separate databases and records. Entire business models are built around reconciling those differences.

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He said that distributed ledger technology, or the development of blockchain networks, changes that.

“These records are identical across nodes,” he said. “If you’re in the business of reconciling two databases and suddenly that’s not needed anymore, you’d better find something else to do.”

In other words, some intermediaries may face disruption, but the end investors could benefit from lower costs and faster settlement.

Bayston does not see the future of tokenisation resting on one chain. He believes multiple networks, and especially scaling solutions, will compete for market share.

Speed, he said, is critical. “If you’re going to move to atomic settlement, you have to do it with speed,” he said. “If I’m at Starbucks and I want to pay with Benji, I can’t wait 10 minutes for the transaction.”

That’s where layer-2 networks and high-throughput chains come in, offering near-instant settlement that could support real-world payments and capital markets activity.

The broader trend has also been championed by leaders like Larry Fink of BlackRock (BLK), who has said that most assets will eventually be tokenised.

Bayston agreed, noting that blockchain infrastructure can cut costs, boost transparency, and deliver better returns to investors by reducing fees and operational friction. He added that asset managers, long under pressure to lower costs, see blockchain as the next technological leap in a decades-long drive for efficiency.

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