Franklin Templeton announced two institutional government money market funds managed by its Western Asset Management affiliate have been updated to support emerging use cases in tokenized finance, positioning the products for potential use by regulated stablecoin issuers and for distribution through blockchain-enabled platforms.
The firm said the changes make the two funds eligible for use in two “major segments” of the evolving market for tokenized money market funds: one tied to stablecoin reserve management under the federal stablecoin framework known as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, and another focused on distributing traditional fund shares across blockchain-based intermediary networks. Franklin Templeton framed the move as part of a broader push to use blockchain rails to expand access to regulated investment products while keeping the underlying funds within existing SEC-registered structures.
The updates apply to two traditional Rule 2a-7 government money market funds and are intended to give institutional clients and distribution partners more flexibility as digital settlement and collateral workflows develop. Franklin Templeton said the revisions are designed to help investors deploy cash-like instruments across two core applications: stablecoin reserves and blockchain-enabled distribution.
One of the two funds, the Western Asset Institutional Treasury Obligations Fund (ticker: $LUIXX), was modified to align with reserve requirements under the GENIUS Act, which the company said was signed into law in July 2025. Franklin Templeton said the fund now invests exclusively in U.S. Treasuries with maturities of 93 days or less, a change intended to make it suitable for stablecoin reserve management as institutions look for regulated, high-quality liquidity options that can plug into digital payment, settlement, and collateral platforms.
The second fund, the Western Asset Institutional Treasury Reserves Fund, introduced a new Digital Institutional Share Class (ticker: $DIGXX) built for distribution through blockchain-enabled intermediary platforms. Franklin Templeton said the structure allows approved intermediaries to use blockchain technology to record and transfer fund share ownership, enabling faster settlement, continuous (24/7) transaction processing, and easier integration with digital collateral and cash-management systems, while the fund itself remains a traditional, SEC-registered money market fund.
The company said the updates reflect a broader trend of traditional funds moving “on-chain,” with asset managers experimenting not only with tokenized representations of assets but also with blockchain-based distribution and recordkeeping. Franklin Templeton also highlighted its longer-running digital-asset efforts, describing its work since 2018 across tokenomics research, data science, and technical development.
KEY QUOTES:
“Traditional funds are already beginning to move on-chain, so rather than question their ability, our focus is to make them more accessible and useful by many. By prioritizing interoperability and flexibility, we’re opening more ways for clients to access and deploy regulated funds across the platforms they rely on, giving investors greater choice in how they put their capital to work.”
Roger Bayston, Head of Digital Assets, Franklin Templeton
“The Western Asset Liquidity business has long focused on helping clients move forward without choosing between innovation and managing risk. Being early only matters if you do it responsibly, and these updates prove how we can help institutions adopt tokenized infrastructure with products they already know.”
Matt Jones, Head of Institutional Liquidity, Franklin Templeton
