Franklin Templeton Launches Tokenized USD Fund in Hong Kong: A New Era for Digital Assets

Introduction

Franklin Templeton has launched the Franklin OnChain U.S. Government Money Fund for professional investors in Hong Kong, marking one of the first end-to-end tokenized USD money market funds in the region. Built on the firm’s proprietary blockchain recordkeeping system, the UCITS-registered fund integrates issuance, distribution, and servicing directly onchain, while aiming to provide income and capital preservation through short-term U.S. Treasury instruments. Initially limited to institutional and professional investors, Franklin Templeton indicated it may pursue a retail-approved tokenized fund in Hong Kong subject to SFC approval. This expansion underscores the asset manager’s growing commitment to digital assets and real-world asset (RWA) tokenization.

The launch aligns with Hong Kong’s accelerating push into asset tokenization under a clearer digital asset regulatory framework than mainland China. Recent initiatives include the Hong Kong Monetary Authority’s Project Ensemble sandbox for tokenized asset settlement via a wholesale CBDC (wCBDC), pilots by UBS, Chainlink, and DigiFT for automated on-chain fund tokenization, and the HKMA’s Fintech 2030 strategy outlining tokenized government bonds, tokenized Exchange Fund papers, and e-HKD exploration. Market participants such as OSL Wealth Management emphasize Hong Kong’s emergence as an institutionally trusted hub for digital assets and tokenized funds.

Franklin Templeton’s move follows ChinaAMC (Hong Kong)’s tokenized money market product, highlighting growing competition and institutional adoption of blockchain-based funds across Asia. By combining UCITS oversight with blockchain infrastructure, tokenized money market funds aim to deliver operational efficiencies, improved transparency, and faster settlement while maintaining traditional liquidity and risk characteristics. As Hong Kong advances RWA tokenization and wholesale CBDC infrastructure, institutional demand for tokenized treasuries, tokenized bonds, and onchain fund servicing is poised to grow, potentially paving the way for broader retail access pending regulatory approvals.

Background

Franklin Templeton has unveiled the Franklin OnChain U.S. Government Money Fund for professional investors in Hong Kong, a first-of-its-kind “end-to-end” tokenized money market fund that issues, distributes, and services its shares entirely on a blockchain ledger — while still operating under the European UCITS regulatory umbrella (Cointelegraph). The fund invests in short-term U.S. Treasury bills, aiming to deliver the same low-volatility yield profile as a traditional USD money-market vehicle but with 24/7 transferability, instant settlement, and transparent on-chain record-keeping. Although access is initially limited to institutional and professional clients, Franklin Templeton says it will seek Securities and Futures Commission (SFC) approval to open a retail share class, underscoring the firm’s growing commitment to “tokenized treasuries” and other real-world asset (RWA) initiatives across Asia.

Why Hong Kong Became the Launchpad

Unlike mainland China, Hong Kong offers a clear licensing path for virtual-asset activities and has explicitly made RWA tokenization a pillar of its five-year Fintech 2030 strategy. The Hong Kong Monetary Authority (HKMA) plans to “regularise tokenised government bond issuance” and will soon pilot Project Ensemble, a sandbox that settles tokenized assets using wholesale central-bank digital currency (wCBDC) and e-HKD stablecoins (HKMA). Recent pilots by UBS, Chainlink, DigiFT, and ChinaAMC’s HKD Digital Money Market Fund show that the city is becoming an institutional hub for blockchain-based funds and tokenized deposits, giving global managers like Franklin Templeton a friendly jurisdiction to test new structures before exporting them elsewhere.

Tokenization, UCITS, and wCBDC—Key Terms Demystified

Tokenization simply means issuing a blockchain token that represents legal ownership of an off-chain asset such as a bond, fund share, or piece of property. Because transfer rules are coded into “smart contracts,” tokenized assets can trade peer-to-peer with near-instant settlement and full auditability, potentially lowering operating costs and eliminating reconciliation errors.

UCITS (Undertakings for Collective Investment in Transferable Securities) is the gold-standard European fund framework that allows cross-border distribution across the EU. Franklin’s Luxembourg registration reassures risk-conscious allocators that the tokenized share class enjoys the same investor-protection regime as its traditional sister fund.

Wholesale CBDC (wCBDC) is a central-bank-issued digital currency restricted to banks and licensed payment providers. HKMA’s wCBDC prototype under Project Ensemble aims to act as a settlement asset for large-value tokenized transactions, reducing counterparty risk and aligning on-chain transfers with existing real-time-gross-settlement (RTGS) processes.

A Global Trend Backed by Data

Boston Consulting Group and ADDX estimate that RWA tokenization could reach a US $16 trillion market—about 10 percent of global GDP—by 2030, driven by the efficiency gains of putting illiquid assets on public or permissioned chains (Ledger Insights). The Bank for International Settlements echoed the opportunity in an October 2024 report to the G20, noting that tokenization can “improve the safety and efficiency of the financial system” but must be paired with sound regulation (BIS). Against that backdrop, Hong Kong’s regulatory clarity and Franklin Templeton’s brand legitimacy give the new fund outsize signaling power: it demonstrates that tokenized funds can comply with legacy rules while delivering blockchain-native benefits that resonate with both crypto-savvy institutions and traditional treasurer portfolios.

What Comes Next

If the SFC green-lights a retail tranche, everyday Hong Kong savers could soon buy “on-chain” shares backed by Treasury bills, mirroring the user experience of a stablecoin but within a regulated fund wrapper. Meanwhile, global asset managers are watching closely: the tokenization playbook unlocked here—UCITS registration, local distribution partnerships, and blockchain servicing—may become a template for Europe, the Gulf, and eventually the United States once policy clarity emerges. For now, Franklin Templeton’s Hong Kong debut cements three realities: tokenized money market funds are no longer a concept, Hong Kong is positioning itself as Asia’s digital-asset gateway, and RWA tokenization has officially graduated from pilot projects to production-grade products.