Franklin Templeton Positions Two Money Market Funds for Tokenized Finance Under GENIUS Act.
On Tuesday, Franklin Templeton said the updates apply to two existing Rule 2a-7 government money market funds, expanding their usability in regulated digital finance without altering their status as traditional, Securities and Exchange Commission (SEC)-registered products. The move targets two fast-developing use cases: stablecoin reserve management and blockchain-based fund distribution.
The first update involves the Western Asset Institutional Treasury Obligations Fund, which has been restructured to align with reserve requirements under the Guiding and Establishing National Innovation for U.S. Stablecoins Act. The fund now invests exclusively in U.S. Treasuries with maturities of 93 days or less, positioning it for use by stablecoin issuers operating under the federal framework enacted in July 2025.
Franklin Templeton pointed to the expanding stablecoin market as a driver of demand for regulated, high-quality liquidity products. With stablecoins increasingly used for payments, settlement, and collateral, institutional issuers are seeking compliant reserve assets that behave more like infrastructure than speculation.
The second update centers on the Western Asset Institutional Treasury Reserves Fund, which introduced a Digital Institutional Share Class designed for distribution through blockchain-enabled intermediary platforms. Approved intermediaries can use blockchain technology to record and transfer fund share ownership, enabling faster settlement and around-the-clock transaction capabilities.
Importantly, Franklin Templeton emphasized that the fund itself remains a traditional money market vehicle. The firm explained that the blockchain component affects how shares are distributed and recorded, not the underlying investment strategy or regulatory framework. In short, the plumbing changes, not the product on the shelf.
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