Franklin Templeton Transforms Money Market Funds into Stablecoin Infrastructure

Asset management giant Franklin Templeton is reshaping its money market fund offerings to support the emerging tokenized finance ecosystem. The firm has upgraded two institutional treasury funds managed by affiliate Western Asset Management, positioning them as critical infrastructure for the growing stablecoin sector. These moves reflect a broader shift as traditional finance begins integrating with blockchain-native payment and settlement systems.

LUIXX Fund Meets GENIUS Act Reserve Standards

The Western Asset Institutional Treasury Obligations Fund (LUIXX) has been restructured to comply with the GENIUS Act, legislation passed in 2025 that establishes reserve requirements for regulated stablecoins. The money market fund now holds exclusively short-term U.S. Treasuries with maturities under 93 days, making it eligible to serve as a stablecoin reserve vehicle. This strategic shift enables LUIXX to become a standardized backing asset for digital currency issuers seeking regulatory compliance.

As stablecoins gain prominence in cross-border payments and settlement infrastructure, reserve-backed products like LUIXX provide the institutional-grade collateral that regulators and market participants demand. The fund’s focus on sub-93-day Treasury instruments ensures liquidity and stability—key requirements for any asset backing digital currencies.

DIGXX Brings Digital Shares and Blockchain Settlement

The Western Asset Institutional Treasury Reserves Fund (DIGXX) has introduced a Digital Institutional Share Class, allowing fund ownership to be recorded and transferred directly on blockchain networks. This structure enables approved intermediaries to manage fund shares through distributed ledger technology, facilitating faster settlement cycles, 24/7 trading capabilities, and seamless integration with digital asset platforms.

The money market fund itself remains SEC-registered and operates within traditional regulatory frameworks. However, the new share class creates a bridge between conventional fund architecture and blockchain-native infrastructure, eliminating settlement delays and enabling round-the-clock capital flows.

Expanding the Tokenized Asset Ecosystem

Franklin Templeton’s dual strategy reflects its accelerated push into blockchain infrastructure. The firm debuted a tokenized money market fund in Hong Kong at the end of 2025 and expanded its Benji Technology Platform to the Canton Network around the same period. “Traditional funds are already beginning to move on-chain,” noted Roger Bayston, Head of Digital Assets at Franklin Templeton. “Rather than question their ability, our focus is to make them more accessible and useful.”

These initiatives position the money market fund category as a foundational building block for institutional tokenized finance, signaling that asset managers view blockchain-based settlement as an essential future capability rather than an experimental alternative.