Franklin Templeton Launches First Tokenized Money Market Fund in Hong Kong

TLDR

• Franklin Templeton launched the Franklin OnChain U.S. Government Money Fund in Hong Kong for professional and institutional investors
• The fund is the first end-to-end tokenized structure in Hong Kong that integrates issuance, distribution and servicing directly onchain
• The fund is registered in Luxembourg under UCITS framework and invests in short-term U.S. government Treasurys
• The launch is part of Hong Kong’s Fintech 2030 strategy and Project Ensemble sandbox testing tokenized deposits
• Franklin Templeton plans to offer a retail-approved tokenized fund pending Securities and Futures Commission approval

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Franklin Templeton has launched Hong Kong’s first tokenized U.S. dollar money market fund for professional investors. The Franklin OnChain U.S. Government Money Fund represents the asset manager’s latest expansion into digital assets in Asia.

The fund is registered in Luxembourg under the UCITS framework. This regulatory structure allows investment funds to be sold across the European Union. The tokenized fund will initially be available only to institutional and professional investors.

Franklin Templeton uses its proprietary blockchain recordkeeping system for the fund. The fund aims to provide income and preserve capital through investments in short-term U.S. government Treasury securities. This marks the first end-to-end tokenized structure by an asset manager to integrate issuance, distribution and servicing directly onchain in Hong Kong.

Tariq Ahmad, Franklin Templeton’s head of Asia-Pacific, said the company plans to offer a retail-approved tokenized fund. This expansion would require approval from the Securities and Futures Commission. Brian Chen, head of OSL Wealth Management, is supporting the launch as a regulated distribution partner.

The launch follows China Asset Management’s first tokenized product. ChinaAMC announced its HKD Digital Money Market Fund in February. Franklin Templeton is one of the world’s largest asset managers.

Hong Kong’s Regulatory Framework

Hong Kong operates under a defined regulatory framework for digital assets. This differs from mainland China’s approach. The city has emerged as a regional center for crypto innovation and real-world asset tokenization.

The Hong Kong Monetary Authority unveiled Project Ensemble in August. The sandbox explores how real-world assets can be tokenized and settled between banks. The project uses a wholesale central bank digital currency for settlement.

The initiative builds on earlier work. Hong Kong launched a wholesale central bank digital currency in March 2024 to support asset tokenization. UBS, Chainlink and DigiFT tested automated fund tokenization in September using blockchain infrastructure.

Fintech 2030 Strategy

The HKMA outlined its real-world asset tokenization plans in November. These plans are part of the five-year Fintech 2030 strategy. The strategy includes plans to issue tokenized government bonds and explore tokenized Exchange Fund papers.

Chief Executive Eddie Yue Wai-man unveiled the Fintech 2030 plan this week. The plan outlines more than 40 measures to integrate AI tools and develop a tokenization ecosystem. The HKMA is building a tokenized-deposit settlement framework that could later incorporate a central bank digital currency for interbank payments.

Franklin Templeton is working with HSBC and OSL Group through Project Ensemble. OSL Group is one of Hong Kong’s 11 licensed virtual-asset platforms. HSBC executives said the setup could support near-instant settlement between traditional and blockchain-based systems.

Asset managers worldwide are accelerating tokenization efforts. A Ripple and Boston Consulting Group report from April projects tokenized real-world assets will expand from roughly $36 billion today to $19 trillion by 2033.

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