Nikolas Sargeant
TL;DR
-
Bybit users can pledge shares in Franklin Templeton’s tokenized money market funds to borrow USDT or USDC for trading.
-
The shares will remain with ByCustody while their collateral value is reflected on Bybit, allowing holders to continue earning yield.
-
Franklin Templeton already offers similar off-exchange collateral arrangements to Binance and OKX customers.
Franklin Templeton is extending its off-exchange collateral program to Bybit, giving eligible users a way to use tokenized money market fund shares for crypto trading without transferring the underlying assets onto the exchange.
Under the arrangement, investors can pledge shares as collateral to borrow USDT or USDC while continuing to earn yield on the funds. The shares represent about $686 million in net assets, according to the partnership announcement.
How the Bybit Arrangement Works
ByCustody, a regulated custody platform, will hold the fund shares off-exchange. Their value will be mirrored in Bybit’s trading environment, where users can access trading liquidity backed by the pledged assets.
Keeping the shares with a custodian means investors can put their holdings to work as collateral without moving them directly to Bybit. The shares are issued through Franklin Templeton’s Benji Technology Platform, which provides blockchain-integrated recordkeeping and transfer agency services.
Franklin Templeton Extends Its Exchange Reach
The Bybit partnership adds to Franklin Templeton’s existing off-exchange collateral arrangements with Binance and OKX.
Sandy Kaul, the firm’s head of digital assets and innovation, said the expansion gives investors more ways to use the same type of collateral across major exchanges while earning yield. She also described wallet-based investing as an opportunity for asset managers to develop products tailored to that channel.
The agreement reflects a wider move toward using tokenized funds as trading collateral. Crypto.com and Deribit, for example, allow eligible institutional and professional users to back trades, including derivatives positions, with shares in BlackRock’s BUIDL fund.
