Key Highlights
- Franklin Templeton and Ondo will offer tokenized ETFs accessible through crypto wallets.
- The products launch globally outside the U.S. due to ongoing regulatory uncertainty.
- The EFTs’ structure enables 24/7 trading and new DeFi use cases for traditional fund exposure.
Franklin Templeton is moving its ETF offerings onto blockchain rails through a partnership with Ondo Finance, marking a shift in how traditional funds are distributed and accessed.
The initiative, announced on Wednesday, will allow investors to gain exposure to ETFs through tokenized instruments that can be held in crypto wallets and traded beyond standard market hours.
Tokenized ETFs without brokerage accounts
Under the structure, Ondo will acquire shares of Franklin Templeton’s ETFs and issue blockchain-based tokens representing their economic exposure.
These tokens do not grant direct ownership of the underlying ETF shares. Instead, they pass through returns to holders, enabling the assets to be used in ways not typically possible with traditional fund shares, such as serving as collateral or interacting with decentralized finance applications. The model removes the need for brokerage accounts, targeting investors who operate primarily within crypto ecosystems.
Global rollout begins outside the U.S.
The tokenized products will initially be offered across regions, including Asia-Pacific, Europe, the Middle East, and Latin America.
Availability in the United States remains uncertain, with both firms pointing to unresolved regulatory questions around distributing registered investment products on-chain through third parties.
Expanding access to crypto-native investors
The partnership is aimed at a segment of investors who use crypto wallets and stablecoins but have limited access to traditional financial infrastructure, particularly cross-border brokerage services.
By offering tokenized exposure, the firms are effectively creating an alternative distribution channel for ETFs that operates alongside, rather than within, conventional systems. Liquidity for the tokens will be supported by Ondo’s market makers, including during periods when traditional markets are closed.
A growing push toward tokenized real-world assets
The move reflects broader momentum behind tokenization, where traditional assets such as equities, bonds, and commodities are represented on blockchain networks.
While still small compared to global fund markets, tokenized real-world assets have expanded rapidly in recent years, attracting interest from both crypto-native firms and established financial institutions. Other players, including BlackRock and WisdomTree, have also explored similar initiatives.
Structural and regulatory hurdles remain
Despite growing interest, integrating tokenized assets with the existing ETF ecosystem remains complex. Traditional funds rely on intermediaries such as broker-dealers and authorized participants, creating challenges when adapting to blockchain-based ownership models.
Questions around compliance, investor identification, and regulatory oversight, particularly in the U.S., continue to shape how quickly such products can scale.
Faster settlement and new use cases
Tokenized ETFs could change how fund transactions are processed by enabling near-instant settlement, compared to the typical one- or two-day clearing cycles in traditional markets. They may also improve capital efficiency by allowing assets to be reused more easily within financial systems, particularly in collateralized or programmable environments.
For now, the Franklin Templeton–Ondo partnership serves as a test case for whether tokenized fund structures can attract a meaningful base of users beyond traditional investment channels.
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