Global asset manager Franklin Templeton has launched an institutional off-exchange collateral program with Binance, allowing clients to use tokenized money market fund (MMF) shares to support trading activity while the underlying assets remain in regulated custody.
According to a Wednesday news release shared with Cointelegraph, the framework is designed to reduce counterparty risk by reflecting collateral balances within Binance’s trading system rather than requiring clients to transfer assets directly onto the exchange.
Under the program, eligible institutions can pledge tokenized MMF shares issued through Franklin Templeton’s Benji Technology Platform as collateral for trades on Binance. The tokenized fund shares are held off-exchange by Ceffu Custody, a Dubai-licensed and regulated digital asset custodian, while their collateral value is mirrored on Binance to back trading positions.
Franklin Templeton said the structure enables institutions to earn yield on regulated money market fund holdings while simultaneously using those assets for digital asset trading — without relinquishing custody or regulatory safeguards.
“Our off-exchange collateral program is just that: letting clients easily put their assets to work in regulated custody while safely earning yield in new ways,” said Roger Bayston, head of digital assets at Franklin Templeton.
The program expands on a strategic partnership between Binance and Franklin Templeton announced in 2025, aimed at developing tokenization products that merge regulated fund structures with global trading infrastructure.
Off-Exchange Collateral Model Aims to Reduce Counterparty Risk
The structure resembles other tokenized real-world asset collateral models already in use across crypto markets. BlackRock’s BUIDL tokenized US Treasury fund, issued via Securitize, is also accepted as trading collateral on Binance and other platforms such as Crypto.com and Deribit.
Such models allow institutional participants to post low-volatility, yield-bearing assets as collateral instead of holding idle stablecoins or more price-sensitive tokens.
Other issuers and trading venues are pursuing similar approaches. WisdomTree’s WTGXX and Ondo’s OUSG, for example, are exploring tokenized bond and short-term credit funds positioned as onchain collateral in both centralized and decentralized markets.
Regulators Warn of Cross-Border Risks
While tokenized MMFs are gaining traction as collateral instruments, regulators have cautioned that cross-border tokenization frameworks may introduce new risks.
The International Organization of Securities Commissions (IOSCO) has warned that tokenized instruments operating across multiple jurisdictions could take advantage of differences in national regulatory regimes, potentially enabling regulatory arbitrage if oversight and supervisory coordination fail to keep pace.
