Franklin Templeton Unveils Tokenized ETFs with Ondo Finance Partnership

Franklin Templeton and Ondo Finance have joined forces to introduce tokenized exchange-traded funds (ETFs) that can be traded around the clock through crypto wallets. These products will initially be available in international markets, including Europe, Asia-Pacific, the Middle East, and Latin America.

The tokenized ETFs are designed to remove the need for traditional brokerage accounts, allowing investors to access a range of exposures to equities, fixed income, and commodities on a continuous basis. According to Franklin Templeton's head of innovation, Sandy Kaul, the initiative represents 'a new distribution channel' that can be used in conjunction with existing products.

The tokenization process involves Ondo Finance purchasing shares of the Franklin Templeton ETFs directly and then issuing tokens through a special-purpose vehicle that transfers financial exposure to holders. Investors will own rights to the return stream, not the underlying fund shares, allowing the tokens to serve as collateral or within decentralized finance applications.

The partnership between Franklin Templeton and Ondo Finance is part of a broader trend towards integrating blockchain ownership with traditional ETF systems. Other major firms, such as BlackRock and WisdomTree, have announced plans for tokenizing ETFs in the US, while the New York Stock Exchange has partnered with Securitize to support tokenized securities.