Bitcoin

Why Franklin Templeton is Banking on Blockchain: An Inside Look at Their Crypto Strategy

Jenny Johnson, the President and CEO of Franklin Templeton, manages a financial powerhouse with $1.6 trillion in assets. She recently highlighted the significant advantages of blockchain technology in asset management.

Addressing the audience at the 27th Annual Milken Institute Global Conference in California, Johnson shared her excitement about blockchain’s potential, particularly in tokenizing real-world assets.

In a conversation with Bloomberg, Johnson emphasized Franklin Templeton’s innovative approach to leveraging blockchain technology. She described an experiment where the company compared account records processed using traditional and blockchain methods over a period of six to eight months.

“We were amazed by the cost savings associated with running it on the blockchain. It’s a highly efficient technology that we believe will bring forth numerous new investment opportunities. In the future, I anticipate that exchange-traded funds (ETFs) and mutual funds will all transition to blockchain,” Johnson explained.

She also discussed the obstacles faced by financial services in terms of data reconciliation across various systems, a process that is often expensive and time-consuming.

Blockchain offers a single source of truth for transactions, leading to substantial cost reductions and efficiency improvements. This decreased friction sets the stage for new investment possibilities.

Johnson further illustrated the broader potential of blockchain by referencing pop superstar Rihanna, who issued non-fungible tokens (NFTs) for royalties from her songs.

“When Spotify plays a Rihanna song and you own that token, the smart contract can initiate. With the payment mechanism built into the blockchain, you can receive your fractions,” Johnson elaborated.

Franklin Templeton introduced the Franklin OnChain US Government Money Fund (FOBXX) in 2021, marking a significant milestone as the first US-registered fund utilizing public blockchain for processing transactions and documenting share ownership.

“I’m a strong advocate of blockchain and the technology. We managed the first SEC-approved money market fund, and the SEC tasked us with overseeing the shareholders’ servicing system,” Johnson stated.

At the core of this innovation lies the BENJI token, operating on the Stellar (XLM) and Polygon (MATIC) blockchains. These tokens uniquely represent shares of the FOBXX fund, including assets like government securities, cash, and repurchase agreements, offering a stable yield attractive to investors seeking reliable returns.

Recent data from rwa.xyz indicates that the BENJI token has a market capitalization of $367 million, making it the second-largest after BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL).

On April 25, Franklin Templeton expanded the functionality of BENJI tokens to enable peer-to-peer transfers on the public blockchain.

As part of its commitment to blockchain technology, the company launched a Bitcoin ETF in January, generating modest net flows of $351 million to date. Additionally, on February 13, Franklin Templeton applied for SEC approval for a spot Ethereum ETF to further integrate blockchain into its offerings.

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