Franklin Templeton Rolls Out Tokenized ETFs
Franklin Templeton teams up with Ondo Finance to bring tokenized ETFs onchain, targeting crypto-native investors.
Global asset manager Franklin Templeton is deepening its commitment to blockchain-based finance through a new partnership with Ondo Finance, aiming to tokenize a suite of exchange-traded funds (ETFs) tied to equities, bonds, and gold.
The move reflects a broader shift across traditional finance toward tokenized real-world assets (RWAs)—a sector gaining traction as firms look to modernize infrastructure and appeal to digitally native investors.
Bringing Traditional Assets Onchain
According to Bloomberg, five Franklin Templeton ETFs will be converted into blockchain-based tokens, enabling investors to access them through digital wallets instead of conventional brokerage accounts.
Unlike traditional ETFs, which trade during market hours, these tokenized versions will operate 24/7, allowing continuous trading and integration into decentralized finance (DeFi) applications. Liquidity will be supported by Ondo’s market makers, ensuring activity even when underlying markets are closed.
Sandy Kaul, head of innovation at Franklin Templeton, framed the initiative as part of a larger transformation in financial services:
“The next phase of digital assets isn’t just about trading crypto, but building your optimized financial life onchain.”
She added that the firm aims to combine its longstanding expertise in traditional finance with new digital-native investment strategies delivered via blockchain infrastructure.
The Five Tokenized Funds
The initial rollout will include a diverse range of strategies spanning equities, fixed income, and commodities:
- FFOG – Growth-oriented U.S. equity strategy
- FLQL – Systematic large-cap equity fund
- FGDL – Gold-focused fund
- FLHY – High-yield corporate bond strategy
- INCE – Income-focused U.S. equity strategy
To structure the products, Ondo Finance will acquire and hold shares of the underlying ETFs, issuing tokenized representations through a special-purpose vehicle. This approach mirrors existing tokenization models designed to maintain regulatory compliance while offering blockchain-based access.
The products will initially launch outside the United States, targeting Europe, Asia-Pacific, the Middle East, and Latin America.
Building on Early Tokenization Efforts
Franklin Templeton has been active in the tokenization space for several years. In 2021, it launched the OnChain U.S. Government Money Fund (BENJI)—widely regarded as the first U.S.-registered mutual fund operating on a public blockchain.
Today, BENJI manages over $1 billion in assets, making it the fourth-largest tokenized Treasury fund, according to rwa.xyz. Across all strategies, Franklin Templeton oversees approximately $1.7 trillion in assets under management, while Ondo Finance reports around $620 million in total value locked (TVL).
The new initiative represents a broader expansion beyond single-product experimentation toward mainstream financial offerings delivered onchain.
Tokenization Gains Momentum
Tokenization—the process of converting traditional financial instruments into blockchain-based tokens—has rapidly become a focal point for Wall Street innovation.
According to rwa.xyz, the market for tokenized RWAs has surged roughly 360% since 2025, reaching $26.5 billion. Despite this growth, the sector remains relatively small compared to the multi-trillion-dollar ETF and mutual fund industry.
Still, the potential advantages are drawing attention:
- Near-instant settlement, reducing reliance on multi-day clearing cycles
- Lower counterparty risk through blockchain-based ownership records
- Improved capital efficiency, as assets can be reused more easily as collateral in DeFi
These benefits are particularly appealing in a financial system that still relies heavily on legacy infrastructure and intermediaries.
Regulatory and Structural Challenges
Despite growing interest, tokenized ETFs face significant hurdles—especially in the United States.
Recent guidance from the U.S. Securities and Exchange Commission (SEC) reaffirmed that onchain securities fall under existing regulatory frameworks, but clear rules for tokenized ETFs remain limited.
Ian De Bode, president of Ondo Finance, warned that regulatory uncertainty could slow domestic adoption:
“This is an area where the US risks falling behind other jurisdictions.”
He noted that the potential market for such products could be substantial, with millions of users globally interested in accessing traditional assets through blockchain-based platforms.
Beyond regulation, technical challenges persist. Integrating tokenized ownership into the ETF ecosystem—traditionally reliant on broker-dealers and authorized participants—requires complex structural adaptations. Additionally, balancing compliance requirements with non-KYC wallet access remains an unresolved issue.
Wall Street Moves Toward Tokenized Finance
Franklin Templeton’s latest move comes amid a wave of activity across traditional finance.
Major institutions are increasingly exploring tokenized securities:
- BlackRock and WisdomTree have signaled plans to tokenize ETF products
- The New York Stock Exchange (NYSE) recently partnered with Securitize to support tokenized assets
- Nasdaq has teamed up with digital asset firm Talos to integrate crypto trading and risk tools
- WisdomTree has already tokenized shares of a money-market fund, enabling instant settlement at a stable $1 value
These developments point to a growing consensus that tokenization could reshape how financial assets are issued, traded, and managed.
A Step Toward Onchain Finance
Franklin Templeton’s collaboration with Ondo Finance underscores a broader industry transition: the gradual merging of traditional financial products with blockchain infrastructure.
While challenges remain—particularly around regulation and market structure—the push toward tokenized ETFs highlights a future where investors may interact with stocks, bonds, and commodities as seamlessly as cryptocurrencies.
As adoption grows globally, the success of these early initiatives could determine whether tokenization evolves from a niche innovation into a core pillar of modern financial markets.
