Singapore bet on tokenized finance grows with Franklin Templeton fund approval

Asset manager Franklin Templeton has secured approval from the Monetary Authority of Singapore to launch its tokenized Franklin OnChain US Dollar Short-Term Money Market Fund. With the move, it became the first tokenized fund open to all investors in Singapore.

According to reports, the fund is similar to the Luxembourg-registered Franklin Templeton money market fund, which exposes investors to short-term securities and government money market instruments. That fund currently has $1.76 billion in total net assets, with the net asset value (NAV) being $9.81.

A breakdown of its portfolio also shows that most of its investments (52%) are allocated to assets with more than 30 days of maturity. The rest have maturity dates varying between one day and 30 days.

Interestingly, 92.38% of the Luxembourg fund allocation is in cash or cash equivalents. The remaining is divided among securities of several commercial banks and other companies. Thus, the Singapore fund is also expected to have a similar strategy and structure.

Meanwhile, media reports claim that the Singapore fund is structured under Franklin Templeton Investments Variable Capital Company (VCC), and a blockchain-integrated transfer agency platform from the firm will handle the issuance of shares.

Speaking on the development, Franklin Templeton’s head of APAC, Tariq Ahmed, described it as a milestone moment that shows how the company is leveraging blockchain technology to make investment opportunities available.

Ahmed said:

“The new fund marks a significant milestone in our commitment to harnessing the power of blockchain technology to lower the barriers to investing and deliver transformative products for investors in Asia-Pacific.”

This is evident in the minimum investment amount for investors being $20, a very low barrier of entry compared to other money market funds. The low investment threshold signifies the firm launching the product for retail investors.

Tokenization market continues to expand with new products and players

While there is no date yet for when the fund will launch in Singapore, the move by Franklin Templeton highlights the growth of real-world assets (RWA) tokenization. The firm is already one of the biggest players in the emerging market, with its tokenized US treasury product BENJI having almost $750 million in market cap.

Interestingly, VanEck recently ventured into tokenization with its own tokenized US Treasury fund, VBILL. Other firms such as BlackRock, WisdomTree, and Apollo also have tokenized funds. Overall, the total value of on-chain RWA now stands at $22.57 billion, with an 8.33% growth in the last 30 days.

Meanwhile, the sector’s potential has become increasingly evident to policymakers, likely influencing the MAS decision to approve the Franklin Templeton fund. Singapore is one of the leading countries in terms of regulatory clarity on financial innovations, which has allowed it to become a major hub for crypto activity.

Interestingly, even US regulators are recognizing the potential impact of tokenization. The new chair of the Securities and Exchange Commission (SEC), Paul Atkins, compared the tokenization of securities in the financial sector to the transition from analog to digital audio in the music industry.

In a recent report, the Federal Reserve of New York also identified tokenization as the future of finance. The Project Pine report, which was conducted in collaboration with the Bank of International Settlements (BIS), found that central banks can implement monetary policies in a tokenized world.

Ethereum is pushing to maintain dominance in the RWA sector

Meanwhile, Ethereum is at the center of the on-chain RWA ecosystem, with the network holding 58.37% of the market share for RWA value. Its layer-2 networks, such as ZkSync era, Arbitrum, and Polygon, account for another 25% of the value.

The network is now pushing to maintain that dominance by unveiling a “One Trillion Security” initiative that will further strengthen its resilience as more RWA value flows to the network. Security is crucial to why many major asset issuers choose Ethereum over any other blockchain to launch their tokenized products.

However, the competition for blockchain networks dominating the RWA market will likely increase in the coming years as other networks continue to scale towards meeting institutional standards.

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