Franklin Templeton Launches Tokenized Dollar Fund in Hong Kong
Asset Manager Expands Digital Offerings in Asia
Franklin Templeton has launched a tokenized US dollar money market fund for professional investors in Hong Kong, marking a step forward in its digital asset strategy in Asia. The product, known as the Franklin OnChain U.S. Government Money Fund, is the first end-to-end tokenized structure by a global asset manager to integrate issuance, distribution and servicing directly on blockchain in the city.
The fund is open initially to institutional and professional investors. It is registered in Luxembourg under a regulated framework that allows investment funds to be distributed across the European Union. The structure uses Franklin Templeton’s proprietary blockchain recordkeeping system and invests primarily in short-term U.S. Treasury securities, targeting income generation and capital preservation.
“We plan to offer a retail-approved tokenized fund, subject to SFC approval,” said Tariq Ahmad, Franklin Templeton’s head of Asia-Pacific. The firm said the move extends its tokenization footprint beyond the United States, where it launched the world’s first in 2021.
Investor Takeaway
Hong Kong’s Tokenization Push
The launch comes as Hong Kong accelerates its asset tokenization agenda under a regulatory framework that separates it from mainland China’s ban on cryptocurrency trading. In August, the Hong Kong Monetary Authority (HKMA) introduced the Project Ensemble sandbox to test how banks can tokenize and settle real-world assets using a wholesale central bank digital currency (CBDC).
Earlier this year, the HKMA expanded its Fintech 2030 strategy, setting out plans to issue tokenized government bonds and explore the use of tokenized platform Fund papers alongside the rollout of its e-HKD stablecoin. The regulator has positioned tokenization as a bridge between , with a focus on regulated pilots involving banks, fund managers and infrastructure providers.
In September, UBS, Chainlink and DigiFT ran a pilot in Hong Kong to automate fund tokenization and settlement using blockchain infrastructure. The following month, the HKMA began consultations with financial institutions on how tokenized funds could integrate into existing custody and payment systems.
Growing Institutional Participation
Franklin Templeton’s move follows China Asset Management (Hong Kong), which launched the ChinaAMC HKD Digital Money Market Fund in February. The product became Hong Kong’s first tokenized retail money market fund under local regulatory oversight. Together, these launches suggest a growing institutional appetite for tokenized fixed-income products that can operate within Hong Kong’s compliance standards.
Brian Chen, head of OSL Wealth Management, which is supporting Franklin Templeton’s rollout as a regulated distributor, said the initiative reinforces the city’s role as “an institutionally trusted hub for digital assets.” OSL, one of Hong Kong’s licensed virtual asset trading platforms, has been building partnerships with fund houses to bridge regulated crypto custody with tokenized asset management.
Market participants say Hong Kong’s clear licensing rules have made it a natural testing ground for tokenized investment products at a time when many Western jurisdictions are still formulating policy. Tokenized funds are viewn as a practical use case for blockchain in traditional finance, offering greater transparency, quicker settlement and lower administrative costs without exposing investors to volatile cryptocurrencies.
Investor Takeaway
What Comes Next
Franklin Templeton said it would work with Hong Kong regulators to open its tokenized products to retail investors once approvals are granted. The company joins a growing list of global asset managers testing blockchain in fund management, including BlackRock and Fidelity, which have explored tokenized ETFs and digital custody answers.
For Hong Kong, the fund’s arrival bolsters its reputation as a controlled environment for digital asset experimentation, even as the city remains cautious about retail crypto trading. With multiple pilots underway, local authorities view tokenized funds as a stepping stone toward a broader onchain financial ecosystem that blends traditional asset management with blockchain efficiency.
