Franklin Templeton has taken further steps to bridge traditional asset management with the rapidly evolving world of tokenized finance by updating two of its institutional money market funds. The revisions are designed to ensure that these established cash-management vehicles can function effectively within blockchain-enabled environments and emerging regulated stablecoin frameworks. The changes apply to funds overseen by Franklin Templeton’s affiliate, Western Asset Management, and are primarily aimed at institutional investors seeking compliant and familiar tools as they explore on-chain infrastructure.
The firm has positioned these updates as part of a broader strategy to support the adoption of digital financial rails without requiring clients to shift into entirely new or crypto-native investment products. Instead, the approach emphasizes adapting existing funds to meet new regulatory and technological standards, thereby reducing friction for institutions entering tokenized markets.
Treasury Fund Updated for Stablecoin Reserve Use
One of the revised products is the Western Asset Institutional Treasury Obligations Fund. This fund was modified to comply with reserve standards introduced under the U.S. GENIUS Act, which was signed into law last July. The legislation outlines clear criteria regarding the types of assets that may be used to back regulated stablecoins, with a strong focus on safety, liquidity, and transparency.
To meet these requirements, the fund adjusted its portfolio composition so that it now invests exclusively in U.S. Treasury securities with maturities of 93 days or less. By limiting duration and focusing on highly liquid government instruments, the fund has become eligible for use as a reserve asset within regulated stablecoin structures. This change allows stablecoin issuers and institutional partners to rely on a well-established money market fund while remaining within the bounds of U.S. regulatory expectations.
Blockchain-Enabled Share Class for Faster Settlement
The second product affected by the update is the Western Asset Institutional Treasury Reserves Fund. While the underlying fund structure continues to operate as a conventional money market fund, it has introduced a new digital institutional share class. This share class enables approved intermediaries to record and transfer ownership using blockchain-based infrastructure rather than relying solely on traditional transfer and settlement mechanisms.
By incorporating blockchain distribution rails, the fund aims to support faster settlement cycles, seamless integration with digital collateral systems, and improved connectivity with modern cash-management platforms. The updated structure is also intended to enable continuous, around-the-clock transfers and settlement, a feature that aligns more closely with the always-on nature of digital asset markets.
Supporting Institutional Onchain Adoption
Franklin Templeton has indicated that these enhancements are focused on helping institutional investors become comfortable with on-chain systems through products they already recognize and trust. Rather than creating entirely new digital funds, the firm has chosen to modernize existing offerings, allowing clients to extend familiar cash strategies into tokenized and blockchain-based environments.
This approach reflects a growing trend among large asset managers who are seeking practical ways to integrate blockchain technology without disrupting established investment processes. By maintaining traditional fund structures while upgrading operational and compliance features, firms can address regulatory requirements and technological demands simultaneously.
Part of a Broader Industry Shift
The updates by Franklin Templeton come amid increased activity from other major financial institutions exploring tokenized money market products. Large banks and asset managers have recently announced initiatives involving blockchain-based funds and settlement systems, highlighting a broader industry shift toward digital financial infrastructure.
As tokenization and regulated stablecoins gain traction, adaptations like these are likely to become more common. Franklin Templeton’s latest moves underscore how traditional finance players are positioning themselves to participate in digital markets while preserving the risk profiles, compliance standards, and operational familiarity that institutional investors require.
