Franklin Templeton and Payward (Kraken) partner to bring tokenized traditional assets on-chain. It tests regulatory and liquidity frameworks for tokenized funds.
Franklin Templeton and Payward, the parent company of crypto exchange Kraken, have formalized a partnership to tokenize traditional Wall Street products. The collaboration, first reported earlier this year (see Franklin Templeton, Kraken Parent to Launch Onchain Managed Funds), moves beyond experimentation and into the operational phase, with the two firms aiming to issue on-chain versions of managed funds and other regulated assets.
The announcement confirms that a $1.5 trillion asset manager is now building directly on crypto-native infrastructure. Franklin Templeton already operates a blockchain-based money market fund, the Franklin OnChain U.S. Government Money Fund, which uses the Stellar and Polygon networks for transaction processing and share recordkeeping. The new partnership with Payward extends that model to a broader set of products, leveraging Kraken’s custody, trading, and tokenization technology.
The tie-up pairs Franklin Templeton’s product structuring and distribution capabilities with Payward’s institutional-grade crypto infrastructure. Payward’s subsidiary, Kraken, provides custody through Kraken Institutional and operates a regulated exchange in multiple jurisdictions. The partnership aims to tokenize assets such as money market funds, fixed-income products, and potentially equity-linked instruments, making them accessible to investors via blockchain rails.
This is not a standalone experiment. Franklin Templeton has been actively building its digital assets division, and Payward has been expanding its institutional services. The combination creates a vertically integrated pipeline from asset creation to secondary trading. For Franklin Templeton, the partnership reduces reliance on legacy transfer agents and opens a path to 24/7 liquidity and programmability. For Payward, it anchors a new revenue stream beyond exchange fees and validates its infrastructure for traditional finance clients.
Tokenization of traditional financial products has moved from proof-of-concept to early production. BlackRock’s BUIDL fund, launched on Ethereum, and Franklin Templeton’s own on-chain money market fund have demonstrated that regulated funds can operate on public blockchains. The Franklin Templeton-Payward partnership signals an acceleration: instead of building in-house blockchain capabilities, a major asset manager is outsourcing the technical layer to a crypto-native firm.
The market for tokenized real-world assets (RWAs) has grown to over $10 billion in total value locked, according to industry trackers (see crypto market analysis). Money market funds dominate, however the pipeline now includes private credit, bonds, and equities. The partnership positions Franklin Templeton to capture a share of this growth while offering investors a familiar brand with the efficiency of blockchain settlement.
Key components of the partnership include:
Kraken’s role as the infrastructure provider places it in direct competition with other crypto-native firms like Coinbase, which also offers institutional custody and tokenization services. Coinbase has partnered with BlackRock and other asset managers for tokenized fund initiatives. The Franklin Templeton-Payward deal shows that asset managers are diversifying their crypto infrastructure providers, reducing single-vendor risk.
For Kraken, the partnership is a strategic move to diversify revenue beyond volatile trading fees. Tokenization-as-a-service could generate recurring revenue from custody, minting, and transaction fees. The exchange’s regulatory standing–it holds licenses in the U.S., Europe, and other regions–provides a compliance foundation that traditional finance firms require.
The competitive landscape is intensifying. Traditional exchanges like the London Stock Exchange Group and Deutsche Börse are also exploring tokenized asset platforms. The Franklin Templeton-Payward partnership, however, combines a top-tier asset manager with a crypto exchange that already has retail and institutional liquidity. That integrated model could accelerate adoption if the first products gain traction.
The partnership’s success depends on navigating a fragmented regulatory environment. Tokenized funds that represent traditional securities must comply with the same registration, custody, and anti-money laundering rules as their off-chain counterparts. The U.S. Securities and Exchange Commission has not yet provided comprehensive guidance on tokenized securities, leaving firms to operate under existing frameworks with legal uncertainty.
The first product launch will be the critical test. Franklin Templeton and Payward have not disclosed a timeline, however the earlier announcement of on-chain managed funds suggests a launch within 2024. The initial product is likely a tokenized money market fund or a fixed-income fund, given the existing precedent and lower regulatory complexity. Demand from institutional investors for on-chain yield products has been growing, driven by the search for efficient collateral management and real-time settlement.
The next concrete catalyst is the filing or approval of a tokenized fund with the SEC. Any delay or rejection would signal that the regulatory path is still blocked. A successful launch, on the other hand, would validate the model and likely trigger a wave of similar partnerships. For traders and investors, the Franklin Templeton-Payward partnership is a leading indicator of how quickly Wall Street’s back office will migrate to blockchain rails.
Drafted by the AlphaScala research model and grounded in primary market data – live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.