Franklin Templeton Adapts Money Market Funds For Us Stablecoin Rules - 2025 Update

Franklin Templeton is amending institutional money market funds to support stablecoin reserves and onchain cash use without launching new crypto-native products.

Franklin Templeton has amended two Western Asset institutional money market funds (MMFs) to plug directly into the emerging US stablecoin regime and tokenized cash infrastructure rather than launching new crypto native products.

According to a release shared with Cointelegraph, Franklin Templeton is adapting the two long‑running Western Asset institutional funds so they can be used more directly in US GENIUS‑aligned stablecoin reserve structures and blockchain‑enabled distribution channels, without changing their status as Securities and Exchange Commission‑registered 2a‑7 MMFs.

The changes are designed to allow the funds to serve as regulated, government-backed collateral for payment stablecoins and other tokenized cash uses without altering their core regulatory status.

​Franklin Templeton’s Western Asset Institutional Treasury Obligations Fund (LUIXX) invests exclusively in short‑term US government obligations and is structured to be compatible with GENIUS Act reserve requirements, positioning it as plug‑and‑play infrastructure for payment stablecoin treasuries and bank‑style issuers that need SEC‑registered, government‑only collateral.

Its Western Asset Institutional Treasury Reserves Fund (DIGXX), on the other hand, has added a blockchain‑enabled “Digital Institutional” share class on top of its existing 2a‑7 structure, intended to make it usable as 24/7, onchain collateral and cash management for tokenization platforms, custodians and broker‑dealers that want digital rails without moving into an unregistered vehicle.

Related: XRP jumps 8% as Franklin Templeton, Grayscale ETFs begin trading

Roger Bayston, head of digital assets at Franklin Templeton, told Cointelegraph that the company expects stablecoin reserves to be managed “in both tokenized and more traditional form,” and sees room for both exclusive and multi‑manager mandates as more financial institutions launch their own tokens.

He said that several “significant products in the stablecoin market” are “backed by traditional high-quality short-term issuance through non-digitally native product structures,” including the recently launched FRNT stablecoin in the State of Wyoming, and the company sees opportunities to help such partners through its investment management expertise.

Franklin Templeton’s role, he said, is to manage r

Source: CoinTelegraph