Upcoming Crypto: Layer-2's Franklin Templeton Fund

Franklin Templeton, a worldwide asset manager with over $1.6 trillion AUM, continues to make strides in the cryptocurrency space through 2025. They recently began making strides into Layer-2 networks, which are secondary structures developed on top of base blockchains like Ethereum to help users in scalability and cost of transactions. The firm's tokenized money market fund known as FOBXX (or BENJI) is at the forefront of this effort, and has recently expanded to new terms such as Base, Polygon, and Arbitrum. This means everyday investors will now be able to access high-yielding opportunities backed by U.S. Treasuries using blockchain technology, without brokerage accounts. As Layer-2's popularity increases due to their efficient operations, Franklin Templeton's fund represents a continuation between traditional finance and decentralized systems, and could attract billions in inflows.

The upcoming aspects of the funds include future integrations with new Layer-2 protocols in Q4 of 2025 and early 2026. These new integrations will help by giving participants more liquidity and yield options, making it simpler to hold tokenized shares that will earn as a money market account would. For those watching future crypto aspects, this fund's use of compliance and tokenization of real-world assets can be a safe entry point in a volatile market. With Bitcoin holding above $120,000 and Ethereum's ecosystem expansion, the timing optimistically aligns with the increased institutional interest in scalable blockchain solutions.

To get ahead in this space, here are some actionable steps to take:

• Watch announcements from
• Enable alerts on platforms like CoinMarketCap for token movement.
• Determine if your wallet can support a particular Layer-2 network before committing funds.

These activities will allow you to prepare to move quickly when new features become available.

Examining Franklin Templeton's Tokenized Fund Mechanics

The Franklin Templeton fund is a tokenized fund, and their operating statement describes the process of where they convert shares of their institutional OnChain U.S. Government Money Fund into digital tokens that trade on blockchain networks. A BENJI token, for example, represents one share of the fund, which is backed by short-term U.S. Treasuries and cash equivalents. This expression of the fund on Layer-2 networks use either optimistic rollups or zero-knowledge proofs to facilitate lower fees and a faster transaction process than is currently available on Ethereum's mainnet. As an investor, you can buy, sell or transfer tokens peer to peer and, as the investor maintains the ability to earn yield that accells quickly—no 30-day waiting period as with a conventional fund—the investor need only to hold the tokens.

The body of these mechanics involves smart contracts that not only handle the minting of a token representing the share but also holds the collateral (less any fees, reserves), all while ensuring every BENJI is 100% over-collateralized! These processes are audited by a third-party firm to offer ongoing compliance verification that Franklin Templeton has collateral in place for every token on a 1:1 basis, which are typically requisite for institutional caliber products. The cost of gas on a network like Polygon will be significantly cheaper per transaction - fractions of a cent - which makes investing small amounts possible, as layer-1 transactions are not reasonable due to cost. Because of this context, a small incoming retail investor will be able to dip their toes in the water with modest amounts while still earning competitive yield passing the current rate of 5% APY based on treasury rates. The Layer-2 aspect consists of the infrastructure surrounding these operational pieces, so there are no headaches to deal with. Arbitrum, for example's batching technology allows you to batch multiple transactions into one single transaction, thereby enabling up to 90 percent reduction in this not only benefits individual token holders but also opens up possibilities for integrations with DeFi protocols to lend or borrow against the tokenized shares.

Some takeaways to help you engage in the fund's mechanics:

• Be sure to verify the token's smart contract address on an explorer, such as Etherscan, to avoid scams.
• Use tools in the fund's app to assess the potential yields, keeping the Treasury rates in mind.
• Experiment with small transfers on Layer-2 to understand confirmation speeds.

Developing these practices can make your experience much smoother and much more secure.

How Layer-2 Helps Accessibility of Fund

Layer-2 networks help with the accessibility of the Franklin Templeton fund by addressing Ethereum's transaction fees and speeds. For example, on Base, transactions confirm in seconds, so you don't have to wait for hours during peak hours to redeem or transfer a share. This is helpful for global investors in regions where banking access is limited to hold U.S. Treasury-backed assets digitally.

The expansion of the fund onto multiplication of Layer-2 means users may take advantage of their preferred aggregator—like Polygon, for lower spend, to Optimism for benefits of shared sequencing. By using a multi-chain approach, users are less dependent on a single network, and funds are less likely to experience problems with outages or upgrades. To would-be crypto users, this means more opportunities for yield farming from tokenized shares as collateral in lending pools.

Not only is it accessible on other networks, but it is accessible via mobile apps where users can see real-time NAV and open trades from their phones. This ease of use will expand the fund's scope and appeal to non-technical investors.

Here are a few practical ways to utilize this accessibility.

• Download the Benji Investments app to access funding to share.
• Utilize Layer-2 wallets (like MetaMask) for cross-chain transferring.
• Monitor community forums for yield optimization recommendations across networks.

These would further extend the reach of the fund.

Regulatory Settings for Tokenized Treasury Products

A key feature of Franklin Templeton's Tokenized fund demonstrating consistency with those from like SEC regulators. The FOBXX fund operates within the compliance set forth by the 1940 Investment Company Act resulting in similar protections offered by recurring, traditional money-market funds. This compliance allows the tokenized version of the fund to accrue daily and be maintainable at stable NAV for risk-averse investors who may be hesitant based on crypto-asset volatility.

The fund on Layer-2 will follow chain-specific regulation, e.g., KYC integrations, for their customers to conduct certain transactions. Compliance across layers will provide lower legal risk to fund issuer(s) and assets who would require a regulatory exception. The tokenized fund would be suitable for institutional portfolio managers. Beginning in 2025 with regulations from CFTC on digital assets, fund products like this will be more popular at scale without fear of scrutiny that can come from un-registered security.

The fund will act as an example in regulating consumer involvement in new crypto project development which will elevate the idea of tokenization to an idea within current laws. They can be assured their holdings are backed by audited assets and can redemption cash through official channels designated for them.

To ensure you remain compliant to keep in mind for their activities:

• Confirm the fund is registered in the SEC EDGAR database.
• Utilize a compliant wallet, with KYC for the restricted aspects of the decentralized finance landscape.
• Confirm with your tax advisers on your engagement when reporting yield, tokenized activity.

These should keep you on the right side of laws when trading.

Understanding Global Differences in Regulation

The difference in regulators globally will matter regarding the fund operating on Layer-2 networks. In Europe, the MiCA regulation mandates that tokenized funds be classified as either e-money or securities, which has implications for their availability in Europe. To that end, the company has developed specific variations for EU users that allow simple integrations of stablecoin solutions.

In Asia, progressive markets such as Singapore provide topical sandboxes for experimentation, enabling the company to conduct pilots on layer-2 solutions and use layer-2 networks like Arbitrum, where yield can be adjusted for local rates in real time. For U.S. investors, a 40 Act fund may be preferable to promote familiarity but will still require examining regulatory oversight - especially with layer-2 networks and state-specific laws.

This presents a balancing act that requires awareness of country and jurisdictional specific laws, particularly for cross-border transfers. Layer-2 + Layer-3 also creates the benefit of exposure to multiple chains: users can select layer-2 networks that comply with the regulations within that country combinations.

Tips for navigating global sales:

• Study country-level laws by utilizing nuggets of knowledge/research in the applicable Financial Stability Board reports.
• Wear VPNs if local laws will allow you access to otherwise restricted features from where VPN.
• Allow stablecoin redemptions to mitigate currency conversion issues.
• Hopefully, such tips help maintain access around the world.

Yield Generation of Layer-2 Tokenized Funds

Yield generation of Franklin Templeton's Layer-2 fund is derived from the underlying investments in Treasury, and yield levels are consistent with government bonds that find returns of 5% APY, without some of the traditional risks with crypto return profiles. The fund secures daily accruement of tokens for token holders that is compounded for you automatically, establishing a steady source of income for your portfolio. Layer-2 environments, deliver low fees, thus enabling larger yields for underlying returns, unlike Layer-1 gas expenses.

The tokenized format also provides an opportunity for staking in DeFi modeling for the hope of yields of approximal stablecoin returns, creating an opportunity to earn and blend traditional yield practices with blockchain incentives, which may be an attractive model for a trader who is trying to establish some stability around aggressive trades.

Generation mechanics derive from NAV adjustments based on the fund performance related to Treasury rates. The token includes an option to redeem at par, which enables some level of comfort for investors and to drive conservatism. To optimize yields:

• Participate in bonus APY staking through platforms while holding BENJI.
• Compound growth by reinvesting accruals weekly.
• Use the app to track changes in the rate and adjust accordingly.

All of these methods to yield rewards will grow your earnings.

Writing Moments Sometimes Yields vs Money Markets

Compared to money markets, our yields are similar, but there is liquidity. For instance, Vanguard’s VMFXX yields around 5.2%, but it could take days to redeem while it would take seconds if it is on chain. The tokenized investment fund is also always open (24/7) versus only some money markets, which are rarely open for global traders. 

Another stark contrast is while your traditional fund does not offer staking programs, the tokenized investment fund has DeFi protocols which offer multiple layers of yield and returns. Tokenized funds can also present risks, like risk of Smart Contract bugs etc., but these risks are further offset by providing blockchain audits.   

The key comparison points are:

• Liquidity- instant liquidity vs T+1 settlement
• Yields- rate of return is generally comparable, but the tokenized funds will produce annualized payouts for crypto, thus earning layers of return
• Access- wallet based draws vs bank account expenses

Tokenized funds tend to provide better overall flexibility than compared to traditional FDIC funds.

Institutional Interest in Layer-2 Funds

Institutional Interest in Layer-2 crypto funds like Franklin Templeton increased to over $500 million in 2025- evidenced by positive and record inflows. Companies see enormous value in funds for a complainant way to hold Treasuries, with each fund trading on the Blockchain. The recent expansion of the fund into additional ecosystems like BNB Chain and Solana also speaks to their aspiration to be able to reach traders across the globe.

Much of the interest towards yield production is simply a product of today's high yield environment during a time of low interest. When they tokenize formats, they basically reduce the complexity of custody and create simplicity in trading for institutions as well.

Lastly, institutions lend credibility to the tokenized investment funds overall from a retail trading perspective. Institutions managing similar funds in treasuries provides all retail participants with a sense of stability and that these are "real" products.

Factors of Interest:

• A regulatory stamp of approval will help to alleviate some scrutiny.
• The ability to integrate into the total existing portfolio.
• Opportunities for tokenized real estate extensions.

These are the main contributors to growth.

Whale Pets and Responsibilities of Fund Liquidity

Whalesce are a crucial piece of fund liquidity, providing capital into large pools that allow for a price binding. Franklin Templeton worked on the fund structure which allows institutional whales on Layer-2 to utilize their capital into deep pools, with the benefit of reducing slippage for smaller trades. Additionally, if whales are invested in a fund, it creates trust and any volume, or more volume, will flow to the fund.

Whales have governance responsibilities in the protocols that the fund is connected to or invested in, and they are likely to seek calls for products with higher yields, either through protocol creations or product creation, given the merit of a fund connected to cryptocurrency itself.

Insight into roles:

• Significant deposits embody the NAV and provide stability around that NAV.
• Whale trades dictate what the market will price for future trades.
• Whale wallets should be monitored to gauge the flow of liquidity.

Whales create extra liquidity into markets.

Technological Advances in Fund Tokenization

Some technological innovations around fund tokenization include the use of Layer-2, which will allow for faster settlements and the ability for Franklin Templeton to deploy fund tokenization on multiple chains. The utilization of the ERC-20 standards also allows for conventional wallets and DEXs to have access to the fund and add to their flow, which is a connection to the private markets.

Another technological innovation is the auto-compounding aspect through smart contracts; the fund would work to add elements of artificial intelligence to assess risk in future updates.

Insights:

• The utilization of multiple chain deployments for resiliency.
• Smart contracts allow for automation.
• Integration of oracles.

All these aspects will continue to make the actual fund itself appeal to different institutional investors.

Blockchain Upgradation Supporting Tokenized Assets

The recent blockchain upgrade, such as Dencun on Ethereum, will allow for less expensive availability of data and other benefits to support tokenized assets on Layer-2. Upgrades on Solana include TPS of more than 50,000, which allows for immediate and fast execution and transfers of the tokens. Upgrades to the BNB Chain provide significantly lower fees to attract a user that is sensitive to cost.

Upgrades provide added security to updated proofs and protect tokenized funds and assets.

Supporting insights:

• Rollup technology with batching.
• The technology of ZK proofs for added privacy of transactions.
• Cross-chain bridges allowing for fluidity.

These aspects of upgrades will provide support to tokenized affiliated assets.

Summary and Closing

Franklin Templeton's move to expand with Layer-2 funds in 2025 is an exciting milestone bridging traditional yields in the event with blockchain technology and usability. The start of the fund will likely build off networks like Base and Polygon and further development of their products will provide high-yield options for users. Additionally, it is important to note the focus they place on regulations and credibility is critical when addressing the challenges of real-time execution technology in the overall scheme. As mentioned early, it seems as if this particular fund has a range of products incorporating some sort of highlighted knowable stable return yield through investment into tokenized Treasuries.

While the use of cryptocurrencies and transfers of investment into these assets begin to grow, it is possible for investment tokens and funds tied to yield may eventually become standard portfolio components for continued returns in otherwise volatility markets. The aspects of multi-chain environments create a unique aspect of resiliency, and additional products will likely provide means of more pooling or higher yield. Overall, this signals more alignment of finance and technology while providing reliable, trusted tools for modern investors.

The long-term viability and sustainability will for the fund will same conditions like any investment for continued regulatory events and acceptance for the market to utilize the asset likely in some sort of tradition. However, signs of inertia are likely and will be worth keeping an eye on with additional infrastructure or either utilizing other layer-Twos in the future.