Bybit and Franklin Templeton said Monday they'll let eligible institutional clients pledge shares of a tokenized money-market fund as collateral against trading credit lines on the exchange. The arrangement, announced September 28, runs through Bybit's custody arm, ByCustody, and uses shares issued on Franklin Templeton's Benji platform. Clients get USDT or USDC credit to trade with; the fund shares stay where they are.
That last part is the point. The shares aren't sold, aren't converted into stablecoins, and don't move onto Bybit's books. They sit in custody, keep earning yield, and back the credit facility at the same time.
What institutions can actually post
The collateral is the Franklin OnChain U.S. Government Money Fund, represented by the BENJI token. Franklin Templeton says it launched that fund in 2021 as the first U.S.-registered mutual fund to use a public blockchain as its official system of record. The Benji Technology Platform handles the blockchain-based recordkeeping and transfer-agent work behind it.
Only eligible institutional clients can use the service. Bybit hasn't said what makes a client eligible, how much credit is on offer, or how the fund shares get valued when they're posted.
Off-exchange is doing a lot of work here
The structure keeps the asset off the exchange. That matters to institutions that want trading exposure without parking the underlying collateral in an exchange's wallet, and it keeps the position productive instead of idle. Cointelegraph reported that institutions can use the tokenized shares as collateral without transferring them onto Bybit, which extends their use past simply holding them as an investment.
It's a narrow product. Not retail, not a general stablecoin mint, not a way to borrow against any tokenized fund. It's one fund, one custodian, one exchange, and an eligibility screen that hasn't been published.
The open terms
Bybit's announcement is short on the numbers that usually define a credit facility. No stated credit limits. No stated valuation methodology. No margin-call mechanics. No haircut on the pledged shares. No fee schedule or interest rate.
Those gaps aren't unusual for a launch announcement, but they're the terms that decide whether the facility is actually usable at size. A money-market fund share is a low-volatility collateral asset, which should make the risk math simpler than posting a token that can move double digits in a day. That's presumably why a government money fund is the first asset in the door.
Where this fits
Tokenized treasuries and money-market funds have been pitched as collateral for a while, mostly in theory. Getting a live credit line against them at a major exchange is a different step. If institutions take it up, the model could spread to other tokenized funds and other venues.
Bybit hasn't given a launch date beyond the announcement, and it hasn't said when the eligibility criteria or credit terms will be published. Those are the two things to watch: who qualifies, and on what terms.
