Franklin Templeton Launches Tokenized Money Fund on Base, Coinbase’s Layer-2 Network

The Franklin OnChain US Government Money Fund (FOBXX) is the first tokenized fund to launch on Base, Franklin Templeton said in a post on the X platform.

Asset management giant Franklin Templeton has launched its tokenized money fund on Base, Coinbase’s layer-2 network, the firm announced on Oct. 31.

The Franklin OnChain US Government Money Fund (FOBXX) is now available on Base, making it the first tokenized fund to launch on the network, according to a post on the X platform.

Created in 2021, FOBXX has previously launched on several blockchain networks, including Stellar, Polygon, and Arbitrum.

The fund is said to be valued at around $435 million, with an annualized return of roughly 4.7% as of October 2024.

According to Franklin Templeton, the fund's goal is to provide a high level of liquidity and a low level of risk by investing in short-term U.S. government securities. The fund is accessible through Franklin Templeton’s Benji Investments platform.

The launch of FOBXX on Base marks a significant development for the regulatory landscape of digital assets in the United States.

Base is a layer-2 scaling solution for Ethereum that was launched by Coinbase in February 2023. The network's public ledger is designed to be used by applications and protocols that require high throughput and low transaction costs.

Money funds, also known as cash equivalents or money market funds, generate low-risk yields for investors by holding highly liquid assets like short-dated Treasury bills and commercial paper. These funds typically offer quick access to funds and low volatility, making them a popular choice for short-term investments or cash management strategies.

Franklin Templeton's FOBXX is a government money fund that tracks the performance of the ICE BofA US Treasury Money Fund 0-3 Month Index. The fund, which began trading in 2021, has seen its net assets and management fees gradually decline over time.

Related: Franklin Templeton’s tokenized money fund now live on Arbitrum

The asset management firm is known for its unique approach to tokenized funds, outsourcing a substantial portion of reporting requirements to blockchain networks' public ledgers.

“We are currently the only product with the ability to use public distributed ledger technologies for official transaction record-keeping,” Roger Bayston, Franklin Templeton’s head of digital assets, told Cointelegraph in July.

The firm's strategy involves using on-chain capabilities to reduce the need for intermediaries and enhance the efficiency of fund administration processes. This approach aligns with the broader goal of leveraging blockchain technology to optimize and automate financial workflows.

The launch of FOBXX on Base, which is governed by regulatory frameworks in the United States, suggests that regulators may recognize the validity of public ledgers for maintaining official financial records. This development could pave the way for further integration between traditional finance and decentralized technologies.