Franklin Templeton turns money market fund into stablecoin reserve vehicle. The LUIXX fund has been modified to hold short-term US Treasuries and meet stablecoin reserve standards. The DIGXX fund now offers an onchain share class.

Franklin Templeton has retooled two Western Asset institutional money market funds so they can serve emerging onchain and stablecoin use cases under the new U.S. stablecoin law. According to a January 2026 Franklin Templeton announcement, the Western Asset Institutional Treasury Obligations Fund (ticker LUIXX) has been updated to comply with reserve requirements set out in the GENIUS Act, the U.S. federal stablecoin framework enacted in July 2025. The fund now invests exclusively in U.S. Treasuries with maturities of 93 days or less, positioning it to be used by regulated stablecoin issuers as a compliant reserve vehicle while remaining a traditional Rule 2a‑7 government money market fund. This aligns a legacy institutional product with the specific asset quality and duration constraints expected for stablecoin reserves, aiming to support large issuers that need short‑duration, government‑only backing. The Western Asset Institutional Treasury Reserves Fund (ticker DIGXX) has been modified in a different direction, adding a new Digital Institutional Share Class designed for blockchain-enabled distribution. This share class allows approved intermediaries to record and transfer fund share ownership on blockchain infrastructure, providing 24/7 transferability, faster settlement, and easier integration with digital collateral and cash-management workflows, while the underlying fund remains an SEC‑registered money market fund holding traditional assets. The move fits into Franklin Templeton’s broader strategy around tokenized money market funds, including its Benji platform and partnerships intended to connect onchain users and infrastructure with regulated fund exposure. The changes matter because they show a large, traditional asset manager adapting institutional money market products specifically for stablecoin reserve management and onchain distribution, further blurring the line between regulated cash-like instruments and digital asset rails. "entities":["Franklin Templeton","Western Asset Management","Western Asset Institutional Treasury Obligations Fund (LUIXX)","Western Asset Institutional Treasury Reserves Fund (DIGXX)","GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act)","stablecoin issuers","MoonPay","Benji Technology Platform","tokenized money market funds"]}`'},

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