Franklin Templeton Launches First End-to-End Tokenized Dollar Fund in Hong Kong

Franklin Templeton has launched the Franklin OnChain U.S. Government Money Fund, a tokenized US dollar money market fund exclusively for professional and institutional investors in Hong Kong, marking a significant step in its digital asset strategy in Asia. The fund, registered in Luxembourg under a regulated UCITS framework, 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. It invests primarily in short-term U.S. Treasury securities, targeting income generation and capital preservation, and is initially available to investors with at least $1 million in assets.

Tariq Ahmad, Franklin Templeton’s head of Asia-Pacific, stated, "We plan to offer a retail-approved tokenized fund, subject to SFC approval," highlighting plans to expand accessibility. The launch extends the firm’s tokenization footprint beyond the U.S., where it pioneered the world’s first onchain government money fund in 2021. Collaborations with HSBC and OSL Group support the initiative, with HSBC testing tokenized deposits for near-instant, 24/7 settlements as part of the Hong Kong Monetary Authority’s (HKMA) Project Ensemble sandbox.

The move aligns with Hong Kong’s accelerated asset tokenization agenda under its Fintech 2030 strategy, which includes over 40 initiatives to promote AI and tokenization. Eddie Yue Wai-man, HKMA Chief Executive, emphasized creating an integrated financial ecosystem using tokenized deposits and central bank digital currencies (CBDCs) for interbank settlements. This follows earlier pilots, such as one involving UBS, Chainlink, and DigiFT, and the launch of China Asset Management’s tokenized retail fund in February, underscoring growing institutional appetite for compliant, blockchain-based fixed-income products.

Brian Chen, head of OSL Wealth Management, noted the initiative reinforces Hong Kong’s role as "an institutionally trusted hub for digital assets," with clear licensing rules making it a testing ground for tokenized investment products. Market participants see tokenized funds as a practical blockchain use case, offering transparency, faster settlement, and lower costs without exposure to volatile cryptocurrencies. Franklin Templeton aims to work with regulators to open products to retail investors, joining global asset managers like BlackRock and Fidelity in exploring blockchain-based fund management.