Over the past several years, the financial world has seen a remarkable convergence of traditional finance (TradFi) and decentralized finance (DeFi). Franklin Templeton, one of the world’s largest asset managers, has been consistently working on exploring digital assets and blockchain technologies to improve its offerings and embrace innovation.

Previously, we’ve discussed the possibility for traditional markets to work with DeFi, and in today’s article, we’ll have a look at an example of how this collaboration looks like in practice.

A Legacy in Finance Meets Cutting-Edge Technology

Franklin Templeton, with over seven decades of experience in asset management (it was founded way back in 1947), has long been a stalwart of traditional financial markets. According to research, the company was in the top-5 fastest growing firms by the compound annual growth rate in 2017-2023.

Its extensive portfolio, including mutual funds, ETFs, and other investment products, has been a staple for investors globally. However, blockchain technologies and cryptocurrencies have challenged traditional norms, creating opportunities for institutions like Franklin Templeton to innovate.

The Franklin Templeton crypto activity has increased in recent years. The company’s initiatives indicate a broader strategy to adapt to evolving market dynamics and cater to a new generation of tech-savvy investors.

Key Initiatives in the Digital Asset Space

Franklin Templeton’s exploration of digital assets is comprehensive. It includes blockchain-based investment products, tokenized assets, and partnerships with startups. Let’s have a look at a few examples:

Tokenized treasury fund. Franklin Templeton's OnChain U.S. Government Money Market Fund (FOBXX) launched in 2021 as the first money-market fund to use a public blockchain for recording transactions. It is now available on Polygon, Avalanche, Arbitrum, and some other blockchains.
First spot Bitcoin and Ethereum combo ETF. In December 2024, the SEC approved filings from Nasdaq and Cboe BZX Exchange to list the first crypto index ETFs in the U.S., managed by Hashdex and Franklin Templeton. These ETFs, set to launch in January, will hold spot Bitcoin and Ethereum with an approximate 80/20 split.
Partnerships with crypto projects. The asset manager shows a lot of willingness to work with crypto projects to keep innovating in the sphere of DeFi. For example, in November 2024, they announced the ecosystem partnership with Sui. The company plans to support Sui ecosystem builders and develop new technologies. While the details are unclear, we can expect the developments soon.

Franklin Templeton crypto ventures highlight the connection between traditional and decentralized finance. By tokenizing traditional assets like money market funds, the firm makes these products more accessible to a broader audience, including those who prefer digital-first solutions. Moreover, blockchain’s inherent qualities, such as transparency, immutability, and decentralization, enhance trust and efficiency.

This integration also represents a shift in the mindset of traditional finance. Historically, TradFi institutions have been cautious about embracing blockchain and cryptocurrencies due to regulatory uncertainty and volatility. However, as frameworks become clearer and the technology matures, firms like Franklin Templeton are demonstrating how these innovations can complement rather than disrupt their business models.

Challenges of Crypto Adoption

While the initiatives are promising, there issues associated with crypto adoption still affect firms like Franklin Templeton.

Regulatory uncertainty. Navigating the complex regulatory landscape surrounding digital assets remains a significant challenge, especially on the global level.
Market volatility. The inherent volatility of cryptocurrencies and nascent DeFi protocols poses risks for traditional investors. Balancing innovation with stability is crucial for widespread adoption.
Technology integration. Integrating blockchain technology into legacy systems requires substantial investment and expertise.

Despite these challenges, the opportunities are definitely worth it. Blockchain technology can reduce operational costs, improve settlement times, and democratize access to financial products. By embracing these benefits, Franklin Templeton and similar firms can redefine the future of finance.

The Road Ahead

The asset manager has a lot of ambitious plans for the future, as seen in their Outlook for 2025. The company believes that going forward, there will be more regulatory clarity, and that the SEC should be the trend setter in this regard. They also see tokenized products and stablecoins as the main driver for future growth in the financial sector. What is more, they envision the shift from speculation to utility with continuing Bitcoin dominance and more AI involvement.

By the way, they are also building a personalized financial AI platform. In April 2024, Franklin Templeton collaborated with Microsoft to develop a platform that will focus on increasing productivity for sales and marketing teams, delivering personalized client support, etc. This is another undoubtedly high-potential sphere for innovations.

Franklin Templeton’s engagement with digital assets is an example of the transformative potential of combining TradFi and DeFi. As blockchain technology keeps evolving, the lines between traditional and decentralized finance will likely blur even further, creating a hybrid ecosystem that takes advantage of the strengths of both worlds.

For investors, this development means greater accessibility, transparency, and innovation. For the industry, it shows a shift in mindset where collaboration and adaptability will determine success. Franklin Templeton’s journey in this space serves as a blueprint for how legacy institutions can navigate and thrive in the digital age.

SimpleSwap reminds you that this article is provided for informational purposes only and does not provide investment advice. All purchases and cryptocurrency investments are your own responsibility.

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