As Asia continues to solidify its position as a hub for innovative digital assets, Franklin Templeton has introduced a ground-breaking tokenized USD money market fund created for institutional investors in Hong Kong. The move marks a notable shift towards the integration of traditional finance and blockchain technology, and highlights Hong Kong’s evolving regulatory landscape and commitment to promoting asset tokenization within the crypto market.
- Franklin Templeton launches the first end-to-end tokenized USD fund targeting professional investors on-chain in Hong Kong.
- The fund uses a proprietary blockchain system to provide short-term exposure to the U.S. government treasury with the goal of generating income while preserving capital.
- Initially access will be limited to institutional investors, with plans to expand to retail following regulatory approval.
- Hong Kong’s clear digital asset regulations are facilitating the growth of DeFi and real-world asset (RWA) tokenization projects.
- Major financial institutions are actively considering blockchain pilots, marking the increasing mainstream adoption of crypto-related infrastructure.
Franklin Templeton expands digital asset offering in Asia
Franklin Templeton, one of the world’s largest asset managers, has launched the Franklin On-Chain US Government Money Fund, a tokenized US dollar money market fund designed for professional investors in Hong Kong. The fund represents the first end-to-end digital structure by an asset manager, with issuance, distribution and servicing handled entirely on-chain, leveraging blockchain technology to increase efficiency and transparency.
Registered in Luxembourg under a regulated framework that allows cross-border sales within the EU, the fund utilizes Franklin’s proprietary blockchain record-keeping system. The purpose is to provide a stable source of income and capital preservation through investments in short-term U.S. government securities. Initially limited to institutional investors, Tariq Ahmad, head of Asia Pacific at Franklin Templeton, said the company plans to develop a retail-approved version, subject to regulatory approval from the Securities and Futures Commission (SFC).
Brian Chen, who heads major distribution partner OSL Wealth Management, highlighted Hong Kong’s growing reputation as a regional digital asset hub, saying, “Hong Kong is becoming an institutionally trusted center for digital assets.” This move into tokenized funds follows a similar effort by China Asset Management’s recent launch of a tokenized money market fund, and is indicative of a broader regional trend.
Hong Kong’s growing role in asset tokenization
Unlike mainland China’s restrictive stance, Hong Kong benefits from a comprehensive regulatory framework for digital assets, fostering a vibrant environment for cryptocurrency innovation and RWA tokenization. The Hong Kong Monetary Authority (HKMA) has launched Project Ensemble Sandbox to explore ways to tokenize real-world assets and settle them through wholesale central bank digital currencies (wCBDCs).
This initiative builds on previous projects, such as the launch of wCBDC in March 2024, designed to facilitate the tokenization of assets. Additionally, pilot-like collaborations between UBS, Chainlink, and DigiFT in Hong Kong are testing automated fund tokenization and lifecycle management using blockchain infrastructure.
In November, the HKMA announced plans to deepen its RWA tokenization efforts under its FinTech 2030 strategy. This includes the issuance of tokenized government bonds and consideration of tokenized exchange fund documentation along with the upcoming e-HKD stablecoin, which will put Hong Kong at the forefront of cryptocurrency regulation and blockchain-based financial innovation.