DBS Bank, Franklin Templeton, and Ripple have announced a strategic collaboration aimed at revolutionizing tokenized trading and lending for institutional investors. This new initiative, built on the XRP Ledger, introduces services leveraging tokenized money market funds and stablecoins to enhance asset management amid market fluctuations.
The companies have formalized their partnership through a memorandum of understanding (MOU), which is intended to provide investors with dynamic solutions for navigating the volatile landscape of digital assets. The alliance was confirmed in a press release issued on Thursday.
Lim Wee Kian, CEO of DBS Digital Exchange, emphasized the need for innovative solutions that cater to the demands of a 24/7 global asset class. He stated, “This partnership illustrates how tokenized securities can enhance efficiency and liquidity in financial markets worldwide.”
As part of this initiative, the DBS Digital Exchange plans to debut sgBENJI, a tokenized variant of Franklin Templeton’s US Dollar Short-Term Money Market Fund. Additionally, they will introduce Ripple USD (RLUSD) into the trading environment. This framework will allow investors to swiftly move between RLUSD and sgBENJI, facilitating portfolio rebalancing and yield generation even in unpredictable market conditions.
In a subsequent phase, DBS aims to allow users to leverage sgBENJI as collateral for obtaining credit through either repurchase agreements or collaborations with third-party lending platforms, with DBS taking on the role of collateral agent. This development signifies a significant step toward integrating traditional financial operations with blockchain technology.
Franklin Templeton will oversee the issuance of sgBENJI on the XRP Ledger, chosen specifically for its cost-effective transaction fees and rapid settlement capabilities. Nigel Khakoo of Ripple described the initiative as a transformative development, highlighting the convenience of managing trading between stablecoins and tokenized funds within a secure and reliable ecosystem. This advancement promises to unlock greater capital efficiency and liquidity, crucial for institutional investors.
This strategic collaboration is timely, as there is increasing interest from institutions for regulated on-chain products. A recent survey by Coinbase in partnership with EY-Parthenon revealed that a staggering 87% of institutional investors anticipate allocating resources to digital assets by 2025.
DBS Bank and Franklin Templeton are not alone in exploring the potential of tokenized assets. Their initiative resonates with broader trends in global financial markets, where tokenization is gaining traction. For instance, SBI Shinsei Bank’s recent partnership with Singapore’s Partior and Japan’s DeCurret DCP focuses on developing a blockchain framework to facilitate cross-border settlements using multicurrency tokenized deposits.
This collaborative approach aims to establish a continuous global settlement system, thereby decreasing dependence on conventional correspondent banking mechanisms. As the tokenization landscape continues to evolve, collaborations like those between DBS, Franklin Templeton, and Ripple are likely to shape the future of digital asset management.
Cointelegraph reached out to both DBS and Franklin Templeton for further insights on this partnership but had not received a response at the time of publication.
