Franklin Templeton is partnering with Ondo Finance to offer tokenized versions of its ETFs that trade around the clock through crypto wallets, bypassing the brokerage accounts and limited trading hours that have defined fund investing for decades.
The products — spanning US equities, fixed income and gold — will initially be available in Europe, Asia-Pacific, the Middle East and Latin America. Franklin said US availability depends on further regulatory clarity around how third parties can distribute registered funds on-chain.
Under the arrangement, Ondo will purchase shares of the Franklin ETFs and issue tokens through a special-purpose vehicle that passes through the financial exposure to holders. Investors own rights to the return stream rather than the underlying shares — a structure that frees the tokens to be used as collateral or plugged into decentralized finance applications in ways that registered fund shares cannot.
The initiative is aimed at a growing class of investors who operate entirely through crypto wallets and stablecoins and have no interaction with traditional brokerages — an investor base the two companies believe is large enough to justify building dedicated products for, rather than trying to pull into existing infrastructure. Ondo’s market makers will provide liquidity for the tokens, including during hours when stock and bond markets are closed.
The five funds slated for tokenization include a growth-oriented US equity strategy (FFOG), a systematic large-cap equity fund (FLQL), a gold fund (FGDL), a high-yield corporate bond fund (FLHY) and an income-focused US equity strategy (INCE). Franklin Templeton oversees approximately $1.7 trillion in assets as of February. Ondo Finance, which has roughly $2.7 billion in tokenized assets outstanding, will serve as partner.
“You can think of this as a new distribution channel,” said Sandy Kaul, Franklin’s head of innovation. “These ETFs represent a good mix of different exposures. And it gives a good test case for us to see what is really striking the appetite to this a new audience.”
Franklin already offers international versions of its US strategies through conventional channels. But those still require brokerage accounts. The tokenized versions strip that requirement out, reaching investors who may have access to a crypto wallet but not to the cross-border brokerage infrastructure needed to buy a US-listed ETF.
Tokenization refers to the process of converting traditional financial assets — such as stocks, bonds or private credit — into blockchain-based tokens that represent ownership. The approach has quickly emerged as a focal point for Wall Street firms seeking to modernize infrastructure and attract crypto-native investors.
The market value for tokenized real-world assets has grown roughly 360% since 2025 to $26.5 billion, according to rwa.xyz, still a small fraction of the trillions held in mutual funds and ETFs.
But regulatory uncertainty in the US has slowed adoption, as officials have yet to establish clear guardrails for tokenized ETFs, according to Ian De Bode, president of Ondo Finance.
“This is an area where the US risks falling behind other jurisdictions,” said De Bode, who added that the new products would have a “meaningful” addressable market of millions of potential users.
Several market participants point to the complexity of integrating blockchain-based ownership with the traditional ETF ecosystem, which relies on broker-dealers and authorized participants to create and redeem shares. Structuring such products in a way that accommodates non-KYC wallets while complying with securities laws also remains a significant hurdle.
The broader implications could be significant. Tokenized ETFs may reduce settlement risk and counterparty exposure by enabling near-instant settlement, rather than the one- or two-day clearing cycles typical in traditional markets. They could also improve capital efficiency by allowing assets to be reused more seamlessly as collateral.
Meanwhile, BlackRock Inc. and WisdomTree Inc. have revealed plans for tokenizing ETFs in the US.
Wall Street has been tapping into this new structure. This week, the New York Stock Exchange announced a collaboration with tokenization platform Securitize to support tokenized securities. Nasdaq Inc. also teamed up with digital-asset technology firm Talos to connect crypto trading and risk-management tools. Last month, WisdomTree was able to tokenize shares of a money-market mutual fund, which allows investors to buy and sell shares at a constant $1 throughout the day, with instant settlement on blockchain rails.
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Isabelle Lee, Sidhartha Shukla
