Franklin Templeton Expands DeFi Push with Arbitrum Tokenized Fund

The launch, announced on August 8, allows investors to utilize Franklin Templeton's blockchain-integrated recordkeeping system, Benji, for the FOBXX fund.

Asset management giant Franklin Templeton has partnered with Arbitrum Foundation to launch its Franklin OnChain US Government Money Fund (FOBXX).

The collaboration marks a deeper institutional push into further integrating traditional finance (TradFi) with decentralized finance (DeFi).

Franklin Templeton Expands DeFi Push with Arbitrum Tokenized Fund

The launch, announced on August 8, will allow investors to use Franklin Templeton’s blockchain-based recordkeeping system, Benji, for the FOBXX fund. Retail investors can access the instrument through the Benji Investments mobile app, while institutional investors will use the Benji Institutional web portal to conduct their transactions.

FOBXX initially launched on the Stellar blockchain in April 2021, making it the first US-registered fund to be deployed on a public blockchain. The fund then expanded to Polygon in April and now Arbitrum.

The fund’s managers aim to maintain a diversified portfolio of government securities. Like all mutual funds, investments in FOBXX are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

According to a post on the Arbitrum Foundation’s forum, Franklin Templeton first applied in May for a spot in the Arbitrum Stable Treasury Endowment Program (STEP). The asset manager’s goal is to increase TradFi integration into DeFi, and it plans to add more networks in the future.

The announcement states that blockchain technology benefits the fund’s shareholders by enabling operational efficiencies, including increased security, faster transaction speeds, and lower costs.

“Expanding into the Arbitrum ecosystem is a critical next step on our journey to augment our asset management capabilities with blockchain technology. We are excited about the possibilities this will unlock for our firm and our clients,” said Roger Bayston, Head of Digital Assets at Franklin Templeton.

FOBXX has already established relationships with some of the largest DAOs in the digital asset ecosystem. Franklin Templeton also disclosed that it holds various governance tokens in its digital asset investment portfolios.

This development showcases the growing interest in tokenized government securities. With mainstream adoption increasing, the sector now has about $1.8 billion in assets under management (AUM), according to data from 21.co on Dune Analytics. Major players in this space include BlackRock’s BUIDL, Franklin Templeton’s BENJI, and Ondo Finance’s USDY and UOSG.