Franklin Templeton and Ondo Finance Launch Tokenized ETFs for Crypto Wallets

TLDR:

• Franklin Templeton and Ondo Finance are tokenizing five ETFs spanning equities, bonds, and gold. 
• Tokens trade 24/7 through crypto wallets, removing the need for traditional brokerage accounts. 
• The tokenized real-world asset market has surged 360% since 2025, now valued at $26.5 billion. 
• US availability remains on hold pending regulatory clarity on on-chain fund distribution rules.

Tokenized ETFs are entering a new phase as Franklin Templeton teams up with Ondo Finance on a new product line. The partnership will bring blockchain-based versions of Franklin’s exchange-traded funds to international markets.

These products will trade around the clock through crypto wallets, removing the need for traditional brokerage accounts.

Initial availability covers Europe, Asia-Pacific, the Middle East, and Latin America. US access depends on further regulatory guidance from authorities.

How the Tokenized ETF Structure Works

Under the arrangement, Ondo Finance will purchase shares of the Franklin Templeton ETFs directly. It will then issue tokens through a special-purpose vehicle that transfers financial exposure to holders.

Investors will own rights to the return stream, not the underlying fund shares. This structure allows the tokens to serve as collateral or within decentralized finance applications.

Five funds are lined up for tokenization as part of this rollout. They include a growth-oriented US equity strategy, a systematic large-cap equity fund, and a gold fund.

A high-yield corporate bond fund and an income-focused US equity strategy also make the list. These products span equities, fixed income, and commodities.

Ondo’s market makers will provide liquidity for the tokens at all hours. This includes periods when traditional stock and bond markets remain closed.

As a result, investors gain continuous access without the trading restrictions tied to standard ETFs. The setup also removes the need for cross-border brokerage accounts entirely.

Franklin Templeton already offers international versions of its US strategies through conventional brokerage channels. However, those products still require investors to hold brokerage accounts.

The tokenized versions remove that barrier entirely. Sandy Kaul, Franklin’s head of innovation, described the initiative plainly: “You can think of this as a new distribution channel. These ETFs represent a good mix of different exposures.”

Market Growth and Regulatory Challenges

The tokenized real-world asset market has grown roughly 360% since 2025, reaching $26.5 billion according to rwa.xyz. Despite this growth, the US has not established formal rules for distributing registered funds on-chain.

This regulatory gap remains the primary obstacle for products targeting US investors. Both firms are watching how regulators respond before expanding further.

Ian De Bode, president of Ondo Finance, addressed the regulatory gap directly. “This is an area where the US risks falling behind other jurisdictions,” he said.

He also described the potential user base as “meaningful,” with millions of investors relying on crypto wallets. Franklin Templeton manages approximately $1.7 trillion in assets, while Ondo holds around $2.7 billion in tokenized assets.

Other major firms are also pursuing tokenized fund strategies. BlackRock and WisdomTree have announced plans for tokenizing ETFs in the US.

The New York Stock Exchange recently partnered with Securitize to support tokenized securities. Nasdaq also teamed up with digital-asset firm Talos to connect crypto trading tools.

Integrating blockchain ownership with traditional ETF systems remains a technical challenge. Broker-dealers and authorized participants handle share creation under current market rules.

Accommodating non-KYC wallets while complying with securities laws adds further complexity to product design. Still, firms continue advancing these structures as demand from crypto-native investors grows.