Asset management mogul Franklin Templeton has collaborated with Arbitrum Foundation to launch its Franklin OnChain US Government Money Fund (FOBXX).
The collaboration signifies growing institutional interest in further integrating traditional finance (TradFi) into decentralized finance (DeFi).
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. Retail investors can access the instrument through the Benji Investments mobile app, while institutional investors have to use the Benji Institutional web portal for their transactions.
FOBXX initially debuted on the Stellar in April 2021, making it the first US-registered fund to be issued via a public blockchain. The fund later expanded to Polygon in April and now to Arbitrum.
The fund’s managers aim to build 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 report on the Arbitrum Foundation’s forum, Franklin Templeton first made the application in May. It sought a place in the Arbitrum Stable Treasury Endowment Program (STEP). The assets manager’s goal is to increase TradFi integration into DeFi, so it plans to add more networks in the future.
Read more: What is Tokenization on Blockchain?
Based on the announcement, blockchain technology benefits the fund’s shareholders. It enables operational efficiencies, like increased security, transaction speed, and reduced costs.
“Expanding into the Arbitrum ecosystem is an important step on our journey to empower our asset management capabilities with blockchain technology. We are enthusiastic about the opportunities this will unlock for our firm and our clients,” Franklin Templeton Head of Digital Assets Roger Bayston said.
FOBXX already has relationships with some of the largest DAOs in the digital asset ecosystem. Franklin Templeton also revealed that it owns several governance tokens in its digital asset investment portfolios.
This development reflects the increasing interest in tokenized government securities. With growing mainstream adoption, the sector now records $1.8 billion in assets under management (AUM), according to data from 21.co on Dune Analytics. Key players in this space include BlackRock’s BUIDL, Franklin Templeton’s BENJI, and Ondo Finance’s USDY and UOSG.
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