Binance and Franklin Templeton have rolled out a new institutional off-exchange collateral program that allows eligible clients to use tokenized money market fund (MMF) shares as collateral when trading on Binance. The initiative marks a further step in bridging traditional finance and digital asset markets through regulated, yield-bearing instruments.
The program enables institutional traders to pledge tokenized MMF shares issued via Franklin Templeton’s Benji technology platform, while the underlying assets remain held off-exchange in regulated custody. Their value is mirrored within Binance’s trading environment, allowing participants to access liquidity without transferring assets onto the exchange itself.
The structure addresses one of the most persistent institutional concerns in crypto markets: counterparty risk tied to on-exchange collateral. By keeping assets in segregated custody, institutions can maintain regulatory protections and capital efficiency while participating in digital markets.
What problem does off-exchange collateral actually solve?
Institutional crypto trading has long required participants to pre-fund exchange accounts with cash or stablecoins, exposing them to exchange credit risk. Even after improvements in exchange transparency, large asset managers remain cautious about concentrating assets on centralized venues.
The new program allows institutions to hold tokenized MMF shares in regulated custody while using those shares as pledged collateral for trading. Instead of transferring assets directly to Binance, their value is represented within the exchange’s margin system, separating execution from asset safekeeping.
This mirrors traditional prime brokerage and cleared derivatives models, where collateral can remain in custody while being recognized for trading exposure. In crypto, such frameworks are only beginning to gain traction as exchanges compete for institutional order flow.
Takeaway
Why tokenized money market funds are gaining traction
Money market funds have become one of the most attractive collateral assets in a higher interest rate environment, offering yield with relatively low volatility. Tokenizing MMF shares extends their utility into 24/7 digital markets, enabling them to function as programmable, blockchain-based collateral.
Franklin Templeton’s Benji platform has been at the forefront of tokenized real-world assets, focusing on bringing regulated investment products onto blockchain infrastructure. By integrating these tokenized MMF shares into Binance’s collateral framework, the firms are effectively merging traditional yield products with crypto-native trading rails.
For institutions, the appeal is clear: earn yield on underlying assets while using them to support margin requirements. In volatile crypto markets, idle collateral carries opportunity cost. Yield-bearing tokenized instruments could reduce that drag.
Takeaway
How custody partners fit into the structure
The custody and settlement infrastructure supporting the program is facilitated by Ceffu, Binance’s institutional custody partner. Assets remain off-exchange in regulated environments, with tokenized shares pledged rather than transferred.
This separation is critical from a governance perspective. Institutions increasingly require custody arrangements that meet global compliance standards, including multi-party approval schemes and audited security frameworks. The use of regulated custody providers strengthens the program’s institutional credibility.
The structure also reflects a modular evolution of digital market infrastructure. Instead of exchanges acting as both trading venue and custodian, roles are increasingly distributed across specialized providers—mirroring long-standing financial market architecture.
Takeaway
What this means for institutional crypto adoption
Institutional demand for crypto exposure has steadily increased, but operational and risk-management concerns have slowed deeper integration. Programs like this aim to lower those barriers by aligning digital trading infrastructure with established asset management standards.
Binance and Franklin Templeton’s collaboration builds on their earlier strategic alignment and expands the range of tokenized real-world assets available within crypto trading frameworks. The model could serve as a template for additional asset classes, including tokenized treasuries, corporate bonds, or structured products.
If adoption scales, off-exchange collateral models could reshape institutional crypto participation. Rather than funding exchanges directly, large allocators may increasingly rely on mirrored collateral frameworks that combine blockchain efficiency with regulated custody safeguards.