Ondo Finance and Franklin Templeton have announced a partnership to bring a new set of tokenized exchange-traded funds onchain. The initiative significantly expands the range of traditional financial products available through blockchain infrastructure and signals a major shift in how legacy asset managers view decentralized ledgers.
The partnership will make five Franklin Templeton-managed ETFs available via the Global Markets platform of Ondo to cover growth equities, large-cap stocks, fixed income, equity income and gold. The legacy asset manager will continue to oversee the respective funds while Ondo Finance provides the underlying tokenization and distribution layer. Institutional investors are increasingly looking for transparent ways to bypass legacy clearing houses and this collaboration provides a direct avenue for that capital flight into the digital realm.
The move builds on growing demand for access to US capital markets through blockchain rails, Ondo president Ian De Bode said during an announcement at the Digital Assets Summit on 25 Mar.
The tokenized stocks and ETFs platform has already surpassed $700mn in total value locked (TVL) alongside more than $2bn in tokenized Treasury products, he added.
The partnership extends earlier work in tokenization but also signals the next phase for the asset manager, which involves expanding beyond yield-focused products into a broader set of investment strategies, Sandy Kaul, head of innovation at Franklin Templeton, said. These types of diversified portfolios are what will really create a powerful engine to drive growth for those who have financial needs all over the world, Kaul said.
A tokenized strategy for traditional assets
Franklin Templeton was the first asset manager to successfully tokenize a traditional money market fund. The flagship product known as the Franklin OnChain U.S. Government Money Fund launched in 2021 and holds about $864mn in assets as of February.
The financial company is one of the largest asset managers in the world with roughly $1.7tn in assets under management according to recent company disclosures. Further moves into tokenizing equities, bonds, real estate and private credit could bring exposure to a significant portion of that asset base directly onto blockchain rails.
The longer-term vision enables a highly diversified portfolio that can incorporate traditional equities, traditional bonds, private equity, private credit, real estate, infrastructure and cryptocurrency together in a single digital wallet, Kaul said.
Tokenization scales across the industry
Tokenized real-world assets currently account for more than $26.5bn in value according to data from RWA.xyz. Tokenized digital securities could reach $4tn by 2030 according to forecasts from Citi.
Traditional finance executives are clearly terrified of being left behind as decentralized plumbing slowly replaces the archaic Swift network. Retail traders should prepare for a future where traditional equities trade 24/7 on decentralized ledgers to completely bypass the traditional gatekeepers of Wall Street.
