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Franklin Templeton, the US-based asset manager, just launched the first fully tokenized investment fund in Luxembourg. The asset manager claims that this is the first fully tokenized fund in the industry and that it represents a major step forward in the application of blockchain technology for the investment funds industry.
The fund is officially known as the Franklin OnChain US Government Money Fund, and it is available for investors in a number of European nations, including Germany, Italy, France, Spain, the Netherlands, Switzerland, and Liechtenstein.
According to reports, it will operate under the new brand — Franklin Templeton OnChain Funds. The asset manager decided to create it on the Stellar public blockchain, but it will use Franklin Templeton’s own blockchain-enabled transfer agency platform.
The firm further noted that the fund offers great security and accuracy, coupled with high levels of transparency, as well as immediacy.Â
Blockchain technology saw a lot of excitement once it managed to enter the funds industry, but behind all the hype, it was actually struggling to identify suitable applications. There have been many Proof-of-Concepts that were never deployed at scale, which brought its usefulness into question.
Things started to change with fund tokenization, which finally allowed funds to be represented on a blockchain. Thanks to this, fund tokenization is now one of the sector’s most compelling use cases.
Tokenization can offer a number of security and operational benefits, and in theory, it can even make illiquid asset classes more accessible to a wider range of investors. This is possible thanks to fractional shares which are fairly simple to achieve thanks to tokenization.
Franklin Templeton recognized the potential of the tokenization market years ago, all the way back in April 2021. Back then, it rolled out the Franklin OnChain US Government Money Fund, which was described as the first mutual fund to use a public blockchain that was registered in the US. It enabled faster transaction processing and share ownership recording, both of which are major benefits important to this day.
