Franklin Templeton has updated two of its institutional money market funds to directly support the stablecoin and tokenized finance ecosystem, aligning them with the U.S. federal stablecoin framework.
The changes, announced on January 13, 2026, position the funds to act as regulated reserve vehicles for stablecoins while remaining fully compliant with existing U.S. financial regulations.
Funds Aligned With the GENIUS Act
The Western Asset Institutional Treasury Obligations Fund (LUIXX) has tightened its mandate to invest exclusively in U.S. Treasuries with maturities of 93 days or less. This adjustment brings the fund in line with the reserve standards outlined in the GENIUS Act, which was signed into law in July 2025.
By meeting these requirements, LUIXX can now serve as a compliant reserve asset backing regulated stablecoin issuance, using short-duration Treasuries to minimize risk and enhance liquidity.
Blockchain-Enabled Share Class Introduced
Franklin Templeton also launched a Digital Institutional Share Class for the Western Asset Institutional Treasury Reserves Fund (DIGXX). This new structure allows approved intermediaries to record, transfer, and manage fund ownership on blockchain networks, enabling near-instant settlement and 24/7 transaction capabilities.
Despite the technological upgrade, the fund remains registered with the U.S. Securities and Exchange Commission and continues to operate under traditional money market fund rules.
Part of a Broader Industry Shift
Franklin Templeton’s move mirrors similar steps taken by BlackRock, which updated one of its Treasury money market funds in October 2025 to support tokenized finance and digital asset settlement.
Together, these changes signal a broader trend among major asset managers: adapting existing, trusted cash products to serve as regulated infrastructure for stablecoins and on-chain finance, rather than creating entirely new vehicles from scratch.
Why It Matters
By combining government-backed assets, SEC oversight, and blockchain compatibility, Franklin Templeton is offering institutional investors a familiar and compliant bridge into tokenized markets. The updates allow stablecoin issuers and digital asset platforms to plug directly into established liquidity products, reducing regulatory friction while accelerating adoption of on-chain financial systems.
