Franklin Templeton Partners with Ondo Finance to Bring ETFs On-Chain

Asset management giant Franklin Templeton has entered a partnership with Ondo Finance to create tokenized versions of its exchange-traded funds. The on-chain products will give crypto-native investors direct access to traditional investment vehicles through their wallets.

«We're excited to announce that Ondo has partnered with Franklin Templeton (@FTDA_US), one of the world's largest asset managers with $1.7T AUM. Together, we're bringing exposure to Franklin Templeton-managed investment products onchain through Ondo Global Markets.» — Ondo Finance (@OndoFinance), original post

How the Deal Works

Under the agreement, Ondo Finance will purchase Franklin Templeton's funds and issue tokens backed by them through a separate entity. Token holders will receive income rights but will not directly own the underlying shares.

This structure unlocks several use cases: tokenized products can serve as collateral or plug into DeFi applications. Ondo's market makers will also provide liquidity, including during hours when traditional exchanges are closed.

Five Funds at Launch

The initial rollout will tokenize five funds: FFOG, FLQL, FGDL, FLHY, and INCE. These products focus on high-yield corporate equities, primarily from U.S. issuers.

Sandy Kaul, head of innovation at Franklin Templeton, said the selected ETFs offer a strong mix of different investment types. She noted that this provides an opportunity to test what genuinely resonates with a new audience.

The initiative targets a growing segment of investors who operate exclusively through wallets and stablecoins, without interacting with the stock market directly.

Why This Matters

As of February, Franklin Templeton managed approximately $1.7 trillion in assets, while Ondo Finance oversees tokenized products worth around $2.7 billion. A partnership between players of this caliber sends a powerful signal for the broader real-world asset (RWA) tokenization sector.

According to RWA.xyz, the market cap of tokenized real-world assets has grown roughly 360% since 2025, reaching $26.5 billion. Major asset managers moving into this space could further accelerate adoption.

Regulatory Hurdles Remain

Ondo Finance president Ian De Bode noted that regulatory uncertainty in the United States has slowed broader adoption, as officials have yet to establish clear rules for tokenized ETFs.

Market participants also point to the complexity of integrating blockchain with traditional financial infrastructure, which relies on broker-dealers and authorized participants for share creation and redemption. Structuring products that accommodate crypto wallets while complying with securities law remains a significant challenge.

In March, the SEC approved Nasdaq's proposal to begin trading tokenized stocks — a development that could gradually clear the regulatory path for initiatives like this one.