Ondo Finance and Franklin Templeton Bring ETFs Onchain
In a significant step toward merging traditional finance with digital asset infrastructure, Ondo Finance announced on March 25 a landmark partnership with global investment firm Franklin Templeton. The collaboration introduces tokenized exchange-traded funds (ETFs) to the blockchain, making five Franklin Templeton funds available as onchain assets through Ondo’s Global Markets platform. This move addresses a persistent friction in finance: the limited accessibility of established investment vehicles due to geographic restrictions, market hours, and intermediary requirements.
How Tokenization Bridges Traditional and Digital Markets
The partnership operates on a clear division of responsibilities. Franklin Templeton, a firm with over 75 years of experience managing more than $1.5 trillion in assets, continues as the investment manager, overseeing the underlying funds’ strategies. Ondo Finance provides the tokenization layer—acquiring the ETF shares in traditional markets, holding them in a regulated custodian vehicle, and minting blockchain-based tokens that represent direct ownership. These tokens can be held in self-custodied crypto wallets, traded on digital asset platforms, and integrated into decentralized finance (DeFi) protocols.
“Together, we’re tokenizing 5 Franklin Templeton ETFs across growth, large cap, fixed income, equity income, and gold available through Ondo Global Markets, the largest tokenized securities platform globally,” Ondo stated, noting this marks the first time Franklin Templeton-managed ETFs are available in tokenized form onchain.
The Five Tokenized ETFs and Their Strategies
The initial lineup spans diverse asset classes and investment objectives:
- Franklin Focused Growth ETF (FFOG): Targets innovation-driven growth companies.
- Franklin U.S. Large Cap Multifactor Index ETF (FLQL): Employs a multifactor strategy emphasizing quality, value, and momentum within large-cap U.S. equities.
- Franklin Responsibly Sourced Gold ETF (FGDL): Tracks gold and gold-mining equities aligned with responsible sourcing standards.
- Franklin High Yield Corporate ETF (FLHY): Invests in higher-yielding, lower-rated corporate bonds.
- Franklin Income Equity Focus ETF (INCE): Seeks current income from dividend-paying equity securities.
Investors in these tokenized products receive the same economic exposure and regulatory protections as holders of the original ETFs, with the added utility of blockchain-based settlement and custody.
Key Benefits: Liquidity, Access, and DeFi Integration
Tokenization fundamentally alters the ownership and transfer dynamics of these assets. By representing ETF shares as digital tokens, the structure enables:
- 24/7 Trading: Transactions can occur outside traditional exchange hours, including weekends, on compatible digital asset venues.
- Self-Custody: Investors hold tokens directly in their wallets, removing the need for a brokerage account as an intermediary.
- Global Reach: Access is no longer tied to U.S. brokerage infrastructure. Investors in regions like Latin America or Asia can use stablecoins and digital wallets to gain exposure, though current offerings are primarily targeted at non-U.S. jurisdictions due to varying regulatory frameworks.
- DeFi Utility: Tokenized ETFs can be used as collateral within decentralized finance protocols without the risk of forced liquidation by a central counterparty, opening new avenues for yield generation and leverage.
Tokenization Signals Shift in Global Asset Distribution
The partnership reflects a broader industry trend: the use of blockchain rails to distribute traditional financial products more efficiently. By preserving Franklin Templeton’s active management and investment processes while leveraging Ondo’s digital infrastructure, the model aims to maintain institutional standards while expanding distribution.
Ondo Global Markets has already demonstrated traction in the tokenized securities space, reporting more than $700 million in total value locked (TVL) and over $12 billion in transaction volume since its launch in September 2024, serving a community of over 70,000 token holders. This scale suggests growing institutional and retail appetite for onchain exposure to real-world assets (RWAs).
For investors, the implications are clear: a future where premier financial products are not confined by legacy market infrastructure. As Ondo concluded, “The partnership establishes a new model for distributing premier financial products globally via blockchain rails while preserving institutional standards.”
FAQ 🧭
- Why does tokenizing ETFs matter for investors?
It expands access and liquidity while enabling blockchain-based ownership and transfers. - How does Ondo Global Markets impact ETF distribution?
It introduces blockchain rails that allow global, digital access to traditional financial products. - What assets are included in the tokenized ETF offering?
The lineup spans growth equities, large-cap stocks, bonds, income equities, and gold exposure. - Does tokenization change how these ETFs are managed?
No, Franklin Templeton continues managing the funds with unchanged investment strategies.
