Partnership launches off-exchange collateral program
The world’s largest cryptocurrency exchange, Binance, has partnered with pro-crypto Tradifi firm Franklin Templeton to provide an ‘institutional off-exchange collateral program’ to build a secure and capital-efficient digital market.
“This is the first initiative under Binance and Franklin Templeton’s collaboration announced last year,” Binance stated in an X post.
How the off-exchange collateral program works
They aim to provide eligible clients to use tokenized Money Market Fund (MMF) shares issued via Franklin Templeton’s Benji Technology Platform as off-exchange collateral. These assets can be used to trade on Binance through Ceffu, the exchange’s institutional custody partner. Here, institutions get the ability to trade on an exchange without fully handing over custody of their assets, but with a trusted custodian.
According to the press release, the program works on one of the pain points dealt with by the institutional traders. They allow them to use traditional and regulated but yield-bearing money market fund assets in digital markets without depositing them on the exchange.
“Partnering with Franklin Templeton to offer tokenized real-world assets for off-exchange collateral settlement is a natural next step in our mission to bring digital assets and traditional finance closer together,” stated Catherine Chen, Head of VIP & Institutional at Binance.
Reducing custody risk while unlocking yield
Binance shows the value of the Benji fund shares for trading, but the assets themselves are not kept on the exchange but held off-exchange, within regulated custody. According to the firm, this lowers risk and lets large investors earn returns and trade at the same time, without worrying about asset safety or rules.
Tokenized MMFs are viewed as one of the adaptable ways how TradiFi products are adapted into modern market structures. This way institutions can manage risk and deploy capital more efficiently.
Our off-exchange collateral program is just that: letting clients easily put their assets to work in third-party custody while safely earning yield in new ways.
Head of Digital Assets at Franklin Templeton, Roger Bayston
