Franklin Templeton Launches Institutional Collateral Program with Binance

Remy: Welcome back to Market Movers: The Opening Bell. The promise of blockchain and finance has always been efficiency. Institutions have long struggle with the tradeoff between earning yield as well as managing exchange risk. While earlier today, Franklin Templeton announced a partnership with Binance to launch a new institutional collateral program, this move is designed to bridge the gap between traditional yield and crypto trading efficiency. Well, joining me to weigh in is Sandy Kaul, the head of Franklin Innovation Research Strategies and Technologies at Franklin Templeton. Sandy, great to have you on. Thank you so much for joining us this morning. So first and foremost, you've called for a more secure financial architecture and also emphasized the importance of managing risks. walk us through off exchange collateral and in terms of timing tell us why now.

Sandy: Yeah. So off exchange collateral in the crypto space is really bringing together the traditional financial market ecosystem with the crypto ecosystem in a smart way, right? We are locking up tokenized treasury market funds, which are one of the most secure and well-understood financial vehicles that produce regular yield. by locking them up with a custodian, we are able to mirror that credit on the Binance exchange and give those hedge funds and those market makers and others looking to trade derivatives on Binance, the credit to be able to trade on the exchange and manage their collateral without needing to sacrifice the yield that they would need to do if they were using a stablecoin. So this is a way of really creating more efficiency for those looking to trade in these derivative markets, which should help to bring more capital into those markets.

Remy: Yeah. AndSandy, as you mentioned, big announcement today. So for the layperson who is watching right now, the viewers, why did Franklin Templeton decide to actually launch this program with Binance and walk us through the Benji Technology Platform.

Sandy: Yeah, so we have been engaged at Franklin Templeton in working in the crypto space since 2019. actually launched the world's first tokenized money market fund back in April of 2021. We have been running that fund 24 hours a day, seven days a week ever since. We are the only asset manager that is really trading a digitally native product that exists solely on chain. So this is an ecosystem that we are quite comfortable in. We have built our own technology in this space and we really understand the key players. And Binance is the largest exchange in the world. They do the most derivatives volume. And we are really committed to seeing the growth in the crypto space. And this collateral mirroring program should really help those volumes start to expand as more institutional players can now get comfortable coming into the space.

Remy: Yeah. And Sandy, speaking of which, as we kick off 2026, institutional adoption as well as tokenization have been key themes here in the digital asset space. But how does this program actually fit into Franklin Templeton's broader digital asset strategy?

Sandy: Yeah, so we are big participants in these markets. We have our own crypto investing teams that are actively managing funds. They do derivatives to help hedge and to help position those contracts. We have a commitment to building out the tokenized money market fund franchise and creating this universal liquidity layer on top of blockchain, so that more and more volume can move in for real world assets. it kind of satisfies both our aims. It helps to build the ecosystem, to increase the amount of hedging and the amount of basis trading that we can do on our collateral, on our crypto investing, and better use the collateral we post there and it allows us in our traditional business to really bring more of our expertise around cash management and liquidity management into the crypto ecosystem and create that bridge and pathway for our large institutional clients.

Remy: Yeah. So I do want to expand on the Sandy. So does this partnership actually prove that regulated yield bearing tokens are ready to replace stablecoins as the primary fuel for the entire digital asset ecosystem, or not?

Sandy: I think that there are significant advantages to tokenized money market funds over stablecoins in certain aspects, right? They are regulated. There is a lot of established case law around bankruptcy protections with tokenized money market funds. And this is a vehicle that is used to manage the world's cash every day all over the world. So I think there's tremendous benefits to having tokenized money market funds in this space. That said, there is still a role for stablecoins, right? Stablecoins are permissionless. Stablecoins can circulate freely. They really play the role of cash. Online cash, on-chain cash. So there's always a need for cash. then you always want to be able to optimize the use of that cash. And that is where I think the role of tokenized money market funds will come to represent a greater share of the volume in the crypto space.

Remy: Yeah, and Sandy 2026 has been off to quite the start volatility across all asset classes. And even this morning we continue to see some of that volatility play out. But I do want to ask you about the future of institutional investing. What does this actually look like not just this year but also beyond.

Sandy: Yeah. This is where I think the most exciting story is really playing out. Remy. Right. We are looking at, for the first time in 50 years, putting into place better rails to run the financial markets on. There is no reason at this point in time that we should not have 24/7 global marketplaces. There is no reason that we should only trade five days a week between certain market hours. There's no reason that I need to have 15 or 20 or 30 different accounts as an institutional participant.

To really be able to operate globally, I should be able to trade in one wallet. I should be able to trade anywhere I want globally, any time, day or night. And that is the set of rails we are building and bringing together the traditional financial expertise and creating these bridges with programs like our collateral mirroring program, is what's going to allow the traditional financial ecosystem to begin to migrate onto these blockchain rails, which is going to add just tremendous inefficiencies and velocity into our system globally.

Remy: And Sandy. Finally, before I let you go, it's the time of year for conferences, not just in the US, but also overseas as well. And I know that you've been attending plenty of events here stateside as well as overseas. So what are some of the conversations taking place on the ground? Because I know it's not just DeFi, it's also TradFi policymakers and institutions of all sizes getting in on the conversation. tell me what you're hearing.

Sandy: Yeah, I think that the two big topics that we're really hearing about consistently is excitement about this idea of now being able to tokenize U.S. equities and U.S. bonds and U.S. funds and U.S. ETFs and put them on chain. That is really a major step forward, because now we are introducing wallets throughout the traditional financial ecosystem, and you have huge players like the DTC, Nasdaq, New York Stock Exchange really taking significant strides in this area. then the other big story that people are talking about is this rotation into yield products within the crypto space. And those yield products are being fed now, not just by crypto and crypto type looping products, but by a combination of bringing in traditional credit and private credit, corporate credit and private credit into this space, and creating yield vehicles that are really giving opportunities for people who may have had a lot of profits in their crypto trading and are looking to diversify, who may have been looking for ways to protect the stablecoin cash that they have sitting in their wallets. These are the two themes that we're hearing about consistently, and this is really all about bringing real world assets on-chain.

Remy: Yeah. And finally, our viewers are mostly here in the U.S. and stateside. So for viewers who are wondering what it means in terms of vehicle and actually products, what would you say to them in terms of what's to be expected and also timeline?

Sandy: Yeah. So I think that some of these real products are going to be coming out by mid-year from some of the largest US players. There's already great participants in the market like Kraken and Ondo and Robinhood that are offering these products today in wallet based ecosystems, and it's a way of really bringing together your portfolio. bringing together your traditional portfolio with your crypto portfolio and creating that benefit of being able to look at your assets as a holistic pool. And we at Franklin Templeton are super excited about the steps that we are taking and about the products that we will be launching in coming months. I think that by mid-year this year, you're going to start to see these pipelines really open up, and by the end of 2026, I think trading in tokenized real world assets is going to become more and more a standard part of how the industry does business.

Remy: Well, Sandy, we will have to leave it there for today. But thank you so much for joining us, and thank you so much for sharing all of your insights.

Sandy: Thank you so much.