Franklin Templeton Expands Money Market Fund to Aptos Blockchain; Seeks Approval for Crypto Index ETF

Asset manager Franklin Templeton's On-Chain U.S. Government Money Fund (Nasdaq: FOBXX) has become the first money market fund on the Aptos blockchain, the Layer 1 blockchain announced Wednesday.

"This integration represents a key milestone in merging TradFi with decentralized technology, further positioning Aptos as the leading network for secure, performant, and interoperable financial solutions. TradFi is coming to Aptos," Aptos said on Twitter/X.

The fund, which boasts a market capitalization of $435 million, is currently the second-largest tokenized fund available. It is already accessible on the Ethereum network through Arbitrum, as well as on Stellar, Polygon, and Avalanche.

The fund is a notable innovation in the money market fund space, and aims to leverage blockchain technology to enhance transparency and efficiency in managing cash equivalents. Investors can access and manage their investments in FOBXX directly from Franklin Templeton's Benji digital wallet.

While the firm's venture into on-chain money market funds is certainly a forward-thinking move, launching it on a relatively new and less-tested blockchain like Aptos, which was launched in 2022, brings up some valid concerns regarding the platform's maturity, market trust, the complexities of decentralization, user experience, potential liquidity risks, and interoperability issues.

However, Franklin Templeton said that the move was a "massive step in the right direction" to "innovate in the name of a truly decentralized and accessible financial future" and that Aptos meets its "rigorous suitability standards for the Benji platform."

Aptos' APT token rallied on the news, and is currently up by 8% overnight to $8.20, according to Coinmarketcap data.

SEC Reviewing Crypto Index ETF Proposal

As Franklin Templeton explores new frontiers, the US Securities and Exchange Commission (SEC) is deliberating the asset manager's proposal to list and trade a Crypto Index ETF, which aims to provide investors with exposure to the two largest cryptocurrencies—Bitcoin and Ethereum—through a single index fund.

To ensure the integrity and security of its assets, the ETF will be managed by BNY Mellon, which will act as both the custodian and transfer agent. Coinbase Custody, will oversee the management of the fund's digital assets.

The Franklin Crypto Index ETF would be the first of its kind to hold both Bitcoin and Ether, marking a significant milestone in the evolving digital currency ETF landscape. Shares will be issued in blocks of 50,000, with the value reflecting the net asset value (NAV) of the Bitcoin and Ether held by the fund. The fund will not engage in activities such as staking or generating income from its digital assets, focusing instead on the direct performance of the underlying cryptocurrencies.