Institutional investors can now use a new method that does not require them to deposit assets directly with exchanges for cryptocurrency trading. This was made possible by the unveiling of an off-exchange collateral program centered around tokenized money market funds (MMF) by Binance and Franklin Templeton.
This plan is part of a broader change aimed at the tokenization of real-world assets (RWA) and the expansion of infrastructure to meet the needs of large financial institutions. However, risks still remain.
Binance and Franklin Templeton Launch Off-Chain Cryptocurrency Collateral for Institutions
Binance co-CEO Richard Teng confirmed this launch, stating that institutional clients can now use tokenized MMF shares issued through Franklin Templeton's Benji Technology Platform as collateral on Binance.
"We are increasing efficiency and bringing traditional finance (TradFi) and the cryptocurrency market closer together," said co-CEO Teng.
Through this program, qualified institutions can use tokenized shares of Franklin Templeton's regulated MMF as collateral. In this case, the assets are held in third-party custody.
Instead of transferring funds to an exchange, the value of the collateral is reflected within the Binance trading environment through the infrastructure provided by custody partner Ceffu.
This structure resolves the counterparty risk issues that institutional traders have raised for a long time. This is similar to how Bitcoin ETFs have alleviated concerns over cryptocurrency risk exposure for institutional investors.
By storing assets outside the exchange, companies can secure liquidity and trading opportunities while reducing exposure to risks such as exchange bankruptcy.
This design also improves capital efficiency. Traditional exchange collateral typically does not generate revenue, but MMF does generate income, allowing institutions to support trading while maintaining capital productively.
"This off-exchange collateral program aims to support institutional clients in easily entrusting assets to third-party custody and safely generating returns in new ways," said Roger Bason, head of digital assets at Franklin Templeton, in a statement.
Meanwhile, Catherine Chen, head of VIP and institutional clients at Binance, evaluated this move as part of a larger trend to integrate traditional financial products into the blockchain-based market.
Binance-Franklin Templeton Partnership Milestone
This launch has resulted in the first tangible product from the strategic collaboration announced in September 2025. It shows that tokenized RWA is playing an increasingly important role in the cryptocurrency market, particularly in low-volatility products such as government bond-based funds and money market funds.
The industry assesses that demand for income-generating collateral that supports 24-hour trading continues to grow.
"Institutions are increasingly demanding trading models that prioritize risk management without compromising capital efficiency," said Ian Law, CEO of Ceffu.
Meanwhile, Binance community representatives emphasized that custody, yield, and operational safety are the top priorities for institutional investors.
This point is even more critical in a context where memories of exchange failures and liquidity shocks from past cycles still dominate the market.
Importance of Timing in 2026
This launch occurred at a time when the cryptocurrency market is experiencing volatility and a more cautious institutional sentiment.
Bitcoin and major assets have experienced a deleveraging phase, and the inflow of institutional funds has also slowed compared to the 2025 peak. BeInCrypto recently reported that Bitcoin ETF investors have seen $3 billion exit the market over two weeks, resulting in an 8% loss.
In this context, infrastructure that can provide returns while reducing custody risk can enhance market entry attractiveness for participants such as these.
Hedge Funds
Asset Management Companies
Corporate Finance Team
However, this approach is only effective when they maintain interest in digital assets while being cautious about operational risks.
Moreover, this plan aligns with the spreading trend of tokenization. Analysts believe that RWA will play a key role in the next leap of the cryptocurrency market, highlighting the importance of providing stable collateral and acting as a bridge between traditional finance and blockchain networks.
Centralization concerns... hidden trading conditions
Despite high interest, the new structure does not eliminate risks entirely but rather disperses them, making caution essential. Assets are not held on the exchange, but execution of trades, value reflection, and liquidity still heavily depend on Binance's ecosystem and operational stability.
Such hybrid models may strengthen the dominance of large centralized platforms rather than advancing the decentralized ideology that underpins the cryptocurrency market.
Additionally, there are aspects to consider in terms of operations and regulation.
Tokenized assets carry inherent risks unique to blockchain.
Cross-border custody and tokenization regulations are continuously evolving.
Therefore, institutions participating in the program must meet complex regulatory requirements that vary by jurisdiction.
Despite the cautionary notes, the Binance-Franklin Templeton initiative illustrates an important reality that cryptocurrency is currently experiencing. Institutional investment is no longer driven by speculative expectations but is centered around infrastructure.
Programs responding to custody, capital efficiency, and risk management are the foundation for institutional participation. Retail investors may not immediately feel the changes, but these tools have long-term significance in reshaping market structure.
In this respect, the new collateral program is closer to gradual change than a sudden revolution. As debates over centralization and control continue to shape the future of the industry, it is bringing digital assets closer to traditional financial (TradFi) standards.
