Franklin Templeton turns money market fund into stablecoin reserve vehicle

Cryptocurrency-friendly investment firm Franklin Templeton has made two of its institutional money market funds compatible with blockchain-based finance, in a move aimed at positioning itself for the growing market around tokenized assets and regulated stablecoins.

The updates apply to the Western Asset Institutional Treasury Obligations Fund (LUIXX) and the Western Asset Institutional Treasury Reserves Fund (DIGXX). Both are managed by Franklin Templeton affiliate Western Asset Management.

LUIXX has been modified to comply with the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, a law passed in 2025 that sets reserve standards for regulated stablecoins.

The fund now holds only short-term U.S. Treasuries with maturities under 93 days, allowing it to be used as a stablecoin reserve vehicle, according to a press release shared with CoinDesk.

As stablecoins become more common in payments and settlement, regulated reserve products like LUIXX could serve as a key financial back-end.

DIGXX, meanwhile, has introduced a Digital Institutional Share Class designed for distribution over blockchain-based platforms. That means approved intermediaries can record and transfer ownership of fund shares onchain, enabling faster settlement, round-the-clock transactions, and easier integration with digital asset systems.

The fund itself remains SEC-registered and operates under traditional money market rules.

“Traditional funds are already beginning to move on-chain, so rather than question their ability, our focus is to make them more accessible and useful by many,” Roger Bayston, Head of Digital Assets at Franklin Templeton, said.

Franklin Templeton has been moving deeper onto blockchain rails over the last few months. The firm debuted a tokenized money market fund in Hong Kong back in November, the same month it expanded the Benji Technology Platform to the Canton Network.