This is Why Franklin Templeton Bets on Blockchain Technology

Jenny Johnson, President and CEO of Franklin Templeton oversees a financial titan with $1.6 trillion in assets. Recently, she underscored the significant benefits of blockchain technology in asset management.

Speaking at the 27th Annual Milken Institute Global Conference in California, Johnson expressed her enthusiasm for blockchain’s potential, especially in tokenizing real-world assets.

Jenny Johnson Believes Mutual Funds and ETFs Will Soon Come On-Chain

During her conversation with Bloomberg, Johnson emphasized Franklin Templeton’s innovative approach to utilizing blockchain technology. She detailed an experiment where the company processed account records using traditional and blockchain methods over six to eight months.

“We were astonished by how much less cost it was to run it on the blockchain. It’s a very effective technology, and we think it is going to open up a lot of new investment opportunities. Eventually, I think exchange-traded funds (ETFs) and mutual funds are all going to be on blockchain,” Johnson stated.

The CEO also discussed the challenges in financial services related to data reconciliation across systems. This process is often costly and time-consuming.

Blockchain provides a single source of truth for transactions, dramatically reducing costs and improving efficiency. This reduction in friction indeed paves the way for new investment opportunities.

Johnson also illustrated blockchain’s broader potential with a reference to pop superstar Rihanna, who issued non-fungible tokens (NFTs) for royalties from her songs.

“So when Spotify plays a Rihanna song, and you own that token, the smart contract can kick off. And the payment mechanism built into the blockchain can give you your fractions,” Johnson said.

Read more: Where To Buy Tokenized or Fractionalized Real Estate and Art

Franklin Templeton launched the Franklin OnChain US Government Money Fund (FOBXX) in 2021, a trailblazer as the first US-registered fund that uses public blockchain for processing transactions and documenting share ownership.

“I am a huge fan of blockchain and the technology. We had the first SEC approved money market fund, the SEC had us run the shareholders’ servicing system,” Johnson said.

At the heart of this innovation lies the BENJI token. Operating on the Stellar (XLM) and Polygon (MATIC) blockchains, these tokens uniquely represent shares of the FOBXX fund.

They include assets like government securities, cash, and repurchase agreements. They also offer a stable yield, which is highly attractive to investors seeking dependable returns.

Recent data from rwa.xyz shows that the BENJI token has a market capitalization of $367 million. This impressive figure ranks it second only to BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL).

On April 25, Franklin Templeton expanded the functionality of BENJI tokens. They are now available for peer-to-peer transfer on the public blockchain.

Read more: What is Tokenization on Blockchain?

Continuing its commitment to the blockchain, the company launched a Bitcoin ETF in January, achieving modest net flows of $351 million to date. Moreover, on February 13, Franklin Templeton sought SEC approval for a spot Ethereum ETF, further integrating blockchain into its offerings.