TLDR
- Franklin Templeton updates two Western Asset institutional money market funds to support regulated stablecoin reserves.
- The funds now comply with the federal GENIUS Act, which mandates strict reserve requirements for stablecoin issuers.
- A new Digital Institutional Share Class allows blockchain-enabled share transfers and near-instant settlement for institutional investors.
- The updates enable 24/7 blockchain-driven transfer and settlement on digital platforms for institutional distributors.
- Franklin Templeton expects stablecoin market growth to drive demand for short-duration, high-quality collateral by 2030.
Franklin Templeton has updated two of its Western Asset institutional money market funds to support tokenized financial products. These changes are aimed at integrating more seamlessly with the rapidly growing market for stablecoins and blockchain-enabled finance. The updates enable the funds to operate across blockchain-based distribution platforms and support regulated stablecoin reserves under U.S. law.
Franklin Templeton Aligns Funds with GENIUS Act
Franklin Templeton’s Western Asset Institutional Treasury Obligations Fund and the Western Asset Institutional Treasury Reserves Fund are now aligned with the federal GENIUS Act. The GENIUS Act, signed into law in 2025, establishes strict reserve requirements for stablecoin issuers. The funds have been retrofitted to meet these regulations, ensuring that they exclusively hold U.S. Treasuries with maturities of 93 days or less.
Matt Jones, Franklin Templeton‘s Head of Institutional Liquidity, emphasized the firm’s commitment to both innovation and risk management. “Being early only matters if you do it responsibly,” he said, highlighting the firm’s focus on helping institutions adopt tokenized infrastructure with products they are already familiar with. The firm expects demand for short-duration, high-quality collateral to surge as regulated stablecoin adoption accelerates.
Introduction of Blockchain-Enabled Share Class for Institutional Investors
The Western Asset Institutional Treasury Reserves Fund now features a new Digital Institutional Share Class (DIGXX). This share class allows approved intermediaries to record and transfer ownership using blockchain rails, enabling near-instant settlement. These enhancements will allow institutional investors to transfer and settle transactions around the clock, while still complying with traditional SEC rules for money market funds.
Roger Bayston, Franklin Templeton’s Head of Digital Assets, explained the firm’s goal is to modernize how institutions access mutual funds.
He stated, “Rather than question their ability, our focus is to make them more accessible and useful.”
The integration of blockchain technology aims to improve interoperability and flexibility, offering institutions more options for managing their investments on digital platforms.
Franklin Templeton’s move comes at a time when the stablecoin market is expanding rapidly, with total supply already exceeding $310 billion. The firm anticipates the market will surpass $2 trillion by 2030, driven by digital payments and real-time settlement networks.
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