Franklin Templeton, a global investment management firm, and leading cryptocurrency exchange Binance announced a new institutional off-exchange collateral program on Wednesday (February 11).
A new partnership between the two will enable eligible institutional clients to use tokenized shares of Franklin Templeton’s money market funds as collateral when trading on Binance, with custody support from Ceffu, Binance’s institutional crypto-native custody partner.
Under the terms of the partnership, Binance will expand its offerings by allowing tokenized money market fund shares issued through Franklin Templeton’s Benji Technology Platform to meet the growing institutional demand for stable, yield-bearing collateral that can settle 24/7.
The program enables institutional traders to use these traditional, regulated yield-bearing assets in digital markets without having to park the assets directly on the exchange.
While the value of the tokenized fund shares is mirrored within Binance’s trading environment, the actual assets remain securely held off-exchange in Ceffu’s regulated custody.
The program is designed to make digital markets more secure and capital-efficient for institutions by reducing counterparty risk and allowing participants to safely earn yield while using their assets to support trading activity on Binance.
“Our off-exchange collateral program is just that: letting clients easily put their assets to work in regulated custody while safely earning yield in new ways. That’s the future Benji was designed for, and working with partners like Binance allows us to deliver it at scale.”
“Partnering with Franklin Templeton to offer tokenized real-world assets for off-exchange collateral settlement is a natural next step in our mission to bring digital assets and traditional finance closer together,” said Catherine Chen, Head of VIP & Institutional at Binance. “Innovating ways to use traditional financial instruments on-chain opens up new opportunities for investors and shows just how blockchain technology can make markets more efficient.”
Key benefits of off-exchange collateral
When collateral stays on an exchange, traders are exposed to risks like hacking, insolvency or fraud. With off‑exchange collateral, the assets sit with a regulated custodian, keeping the trader in control and protected, even if the trading venue runs into trouble.
Many institutions are required by regulators or internal policies to limit how much collateral they can leave on any single exchange. Off‑exchange programs let them trade with the same amount of capital while keeping most of the collateral off the exchange, so they stay within those limits.
On many platforms, collateral remains idle and generates no returns while securing trades. In contrast, off-exchange collateral can often be invested in short-term, low-risk instruments, such as government bonds or tokenized money-market funds. This allows the collateral to continue generating returns while still securing the positions.
Institutions also value being able to manage and move collateral themselves, rather than having it locked into a single exchange’s system. Off‑exchange structures let them keep custody and operational control, and in some cases help hide large trades from public order books, protecting their strategies.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.