It is reported that the digital asset-friendly financial institution Franklin Templeton is expanding its "over-the-counter collateral program" to Bybit, allowing users of that exchange to use shares of Franklin Templeton tokenized money market funds as collateral for crypto transactions.

The key point is that users do not need to transfer the underlying assets to Bybit. On the contrary, the regulated custodian platform ByCustody will hold these underlying assets off-exchange, while their value will be mirrored and displayed in the trading environment of Bybit. The company states that this approach allows for the generation of revenue while releasing trading liquidity.

Franklin Templeton is not undertaking over-the-counter collateral cooperation for the first time; the company has previously also provided its tokenized money market funds to customers of Binance and OKX. Franklin Templeton, the head of digital assets and innovation at Sandy Kaul, stated that this initiative continues the development of collateral mirroring mechanisms in the crypto sector, as well as the opportunities that come with them.

Kaul said in an interview, "So now I can truly take a holistic view of the major exchanges, use my collateral more efficiently as an investor, and at the same time earn profits from it. For me, this is a key factor in truly driving the growth of the ecosystem. It's also a great opportunity for us as asset managers to design products specifically for this type of wallet-based investment channel."

The report indicates that this expansion reflects a broader industry trend. Multiple crypto platforms are accepting tokenized funds as trading collateral. For example, Crypto.com and Deribit allow eligible institutions and professional users to use the BUIDL funds from BlackRock to support their trades, including derivative positions.