Grafa logo

Franklin Templeton updates MMFs for stablecoin reserves

Written by Brie CarterPublished jan. 13 2026Last Updated jan. 13 2026

Share

Franklin Templeton has updated two long-standing institutional money market funds to support stablecoin reserves and onchain cash activity without creating new crypto-native products.

The changes focus on integrating existing Western Asset funds into the emerging US regulatory framework for stablecoins and tokenised cash.

The firm confirmed that the amendments allow the funds to connect with blockchain-enabled distribution while retaining their Securities and Exchange Commission-registered 2a-7 status.

Franklin Templeton said the move is aimed at serving payment stablecoins and other tokenised cash structures that require regulated, government-backed collateral.

The updated structure allows the funds to function as reserve assets without altering their underlying investment mandates.

Western Asset Institutional Treasury Obligations Fund, trading under the ticker LUIXX, invests solely in short-term US government obligations.

The fund has been positioned to align with GENIUS Act reserve requirements, making it suitable for stablecoin treasuries and bank-style issuers.

Franklin Templeton described LUIXX as plug-and-play infrastructure for issuers that need SEC-registered and government-only collateral.

The Western Asset Institutional Treasury Reserves Fund, known as DIGXX, has introduced a new blockchain-enabled Digital Institutional share class.

This new share class sits on top of the existing 2a-7 framework rather than replacing it with a separate digital product.

DIGXX is designed for continuous, onchain collateral use and digital cash management across tokenisation platforms and financial intermediaries.

The structure targets custodians, broker-dealers and tokenisation firms seeking digital settlement rails without moving into unregistered vehicles.

Franklin Templeton said the approach allows institutional clients to access onchain liquidity using familiar regulatory wrappers.

We expect stablecoin reserves to be managed in both tokenised and more traditional form.

Roger Bayston said.

Bayston added that the firm sees demand for both exclusive and multi-manager reserve mandates as institutions issue their own tokens.

He pointed to stablecoins backed by traditional short-term instruments rather than fully crypto-native structures as a growing market segment.

Franklin Templeton cited recent state-level initiatives as evidence of increasing demand for regulated reserve management expertise.

The company said its role is to manage reserves using the product structures preferred by clients rather than forcing new fund adoption.

Bayston described the changes as incremental adjustments rather than experimental product launches.

He said the existing Treasury fund required only minor modifications to align with GENIUS requirements.

Franklin Templeton plans to support multiple access partners rather than tying the digital share class to a single blockchain platform.

The firm expects banks and broker-dealers to deploy their own blockchain-enabled front ends over time.

Other asset managers are pursuing similar strategies to reposition money market funds for stablecoin reserve use.

BlackRock previously signalled plans to tighten a Treasury money market fund mandate to meet federal stablecoin requirements.

Large asset managers increasingly view regulated cash funds as backend infrastructure for tokenised dollars rather than retail-only products.