Franklin Templeton has moved to expand its presence in tokenized finance by launching a strategic collaboration with Ondo Finance to offer tokenized versions of selected Franklin exchange-traded funds (ETFs). These funds will be accessible 24/7 through crypto wallets, bypassing the need for conventional brokerage accounts or adherence to standard market hours. The initiative aims to bridge the gap between traditional financial products and decentralized finance (DeFi) infrastructure.
Partnership Targets Broader Global Reach
This new offering will initially target regions such as Europe, Asia-Pacific, the Middle East, and Latin America. Franklin Templeton noted that launching these tokenized ETFs in the US remains contingent upon further regulatory clarification, specifically concerning distribution methods for on-chain registered funds. The initial rollout is set to involve five funds that cover a mix of US equities, fixed income, and gold.
Tokenization Mechanics And Market Implications
Ondo Finance plans to purchase shares of Franklin ETFs, then issue equivalent tokens representing the economic value of those shares. These tokens are passed to investors via a special-purpose vehicle, allowing holders to gain return exposure without direct fund share ownership. Franklin Templeton, founded in 1947, is a global investment management organization managing over $1 trillion in assets; Ondo Finance specializes in tokenizing traditional assets for blockchain-based applications.
This structure enables the tokens to be used as collateral in DeFi environments, an option unavailable to traditional registered fund shares. Ondo’s market makers will actively support liquidity for these tokens, even outside regular trading hours, aiming to serve crypto-native users who operate through digital wallets and stablecoins rather than brokerages.
Franklin Templeton’s innovation leadership positioned the project as a new route to reach digital asset investors. Sandy Kaul, the company’s head of innovation, characterized the planned suite of ETFs as an initial test case to gauge interest from this audience, emphasizing that traditional distribution channels generally require brokerage access.
Regulatory Uncertainty Shapes U.S. Trajectory
The tokenization process effectively converts instruments such as stocks and bonds into blockchain-based tokens, granting users economic exposure without standard ownership structures. This model removes the need for cross-border brokerage infrastructure, which can be a hurdle for many global investors interested in US-listed funds.
Wall Street’s focus on tokenized assets reflects a broader push to modernize asset access and appeal to crypto-oriented participants. Despite this momentum, the scale of tokenized ETFs and similar products remains small compared to the traditional ETF and mutual fund universe.
Data from rwa.xyz indicate that the market for tokenized real-world assets expanded by 360% since 2025 to reach $26.5 billion. However, uptake in the United States remains well behind, attributed to ongoing regulatory ambiguity related to on-chain funds.
Ondo Finance president Ian De Bode raised concerns that the US could cede market leadership unless greater regulatory certainty emerges. He views the target market as significant, emphasizing potential for millions of users. At the same time, industry participants cite structural challenges in adapting ETF operations to tokenized environments, including the need to comply with securities regulations while accommodating anonymous wallet use.
Proponents suggest that tokenized ETFs could bring efficiency improvements, such as faster settlement times and reduced counterparty risk. Recent moves by other financial institutions—including ongoing pilots by BlackRock, WisdomTree, the New York Stock Exchange, and Nasdaq—underscore growing competition to shape this developing sector.
