Bloomberg Audio Studios, podcasts, radio news. All right, let's head back now to Wyoming to the Wyoming Blockchain Symposium, where I'm pleased to say we're joined now by Franklin Templeton CEO Jenny Johnson.
Jenny, such a.
Pleasure to speak with you. Thank you for joining us today from beautiful Wyoming. This is Saul and Kraken's second annual Wyoming Blockchain Symposium, and I imagine that this must be such a contrast this year to twenty twenty four, when the federal government under President Joe Biden was skeptical of all things crypto, with policy and regulation really reflecting
that level of caution. What does the Trump administrations embrace of crypto mean Franklin Templeton and your broader financial services industries efforts to offer more services and digital assets.
Yeah, no, I mean for Franklin Templeton, I mean one of the challenges obviously was not having regulatory clarity. And so as a highly regulated firm who started doing things in blockchain in twenty seventeen, twenty eighteen and had our money market fund, we're to this day still I believe the only forty c money market fund that runs on
the public blockchain. Is that we were limited in what we could do because you didn't have regulatory clarity, and if you're a regulated entity, you had to be really careful about how far you moved into the digital asset space. And I think what President Trump has done with kind of his support is to recognize, Look, this technology is going to be hugely powerful and beneficial to the financial services industry because it'll drive down costs, it has more
transparency in many ways, it's arguably more secure. And so what's going to happen is you're going to start to see much more of a convergence of traditional finance with the digital asset space.
And I think that's a really good thing.
Right, And it'll be events like the one you're attending right now that kind of.
Catalyze a lot of that.
What message does it send that Michelle Bowman, a FED Vice Chair of Banking Supervision, is attending the conference. What does that signal to the crypto industry, What does that signal to the financial services industry?
Well, I think it signals that this is becoming mainstream, right, digital assets are going to become mainstream. Now, that doesn't mean all of them, I think there's going to be some that you know, you'd like. In anything, you have to be sort of careful and really understand the space.
But again, this underlying technology is so powerful, U that bringing it together, and I think a recognition that it is important for regulators, it's important for you know, for traditional financial people to understand the space and to figure out how to converge these things together. And so I think that's really the message.
Got it. Thank you for answering that.
You mentioned, of course that Franklin Templeton has been doing a lot. You've got a money market fund that's on the chain. Let's talk about tokenized assets a little bit here. What does that mean in terms of this on the chain fund in terms of its accessibility and availability to clients and potential clients.
Well, so, I mean one of the things that we see as a big trend in asset management is obviously this movement of alternatives into the wealth channel, right, And so you know why is that that a difficult thing?
Because alternative assets tend to be very.
Liquid and often people who don't have a huge amount of savings may have an emergency and dip into it. So they need a certain amount of liquidity, Well, we think tokenization is going to actually help that situation.
So why is that.
Well, one a transaction that's been tokenized, so it does three things. It has you know, the source of truth, right, so whoever owns a token has all the rights to it. It has a smart contract so you can execute the smart contract.
That reduces the costs on.
A bunch of people having to calculate to make sure that the terms of the contract are enforced. And then finally, it has a payment mechanism. So if that can drive down and we saw it because the SEC had us run parallel processing between our old transfer agency shareholder record keeping system and the blockchain system, and even we were astonished at how much more cost effective it was to
run these transactions on the blockchain blockchain system. And so if you think about the ability as we start to tokenize and create market makers and liquidity around these assets, you're going to actually democratize access to things that have only historically been available to really large institutions.
What other funds are you considering tokenizing.
Well, we have we have you know, several ETFs, Bitcoin, et ap ethereum, others that have been so those are actually accessing the investment in the in the market.
We are in conversations.
I mean, one of the things we did with our private chain money market fund is we have a partnership with Standard Charter Bank and Okax where you're actually going to be able to exchange kind of stay coins and park them into a yield bearing account and then you can move them back and that'll be twenty four by seven. I mean, that's a goal, twenty four by seven, three hundred and sixty five days a week. I mean, why is it that you can't trade stocks on the New
York stocket chain after four o'clock in the afternoon. It's because in the old days the system that was a batch processing system and you had to reconcile at the end of the day.
Blockchain is going to completely make that irrelevant.
You're going to be able to settle atomic settlement immediately, and that's going to just change the types of products that people are going to be able to bring to market. And so Franklin Templeton, we've already built this whole ecosystem around a Sheralder record keeping system for that kind of atomic settlement, and so and building working out with partners who carry further along the chain is really important. But we think it's going to open up a lot of opportunities.
We look forward to hearing what those opportunities might be. You have Benji tokens, which represents shares in Franklin's on chain government money fund, and they can be traded peer are now they can also be used as collateral. I'm curious what other utilities you're planning to add to Benji.
Well, part of that is you have to kind of move in lockstep with the regulation because again this is a forty act mutual fund that is on chain, and so there are some limits to that. But as the Trump administration is opening up sort of you know, opportunities in the digital asset space, I think.
There'll be more capabilities.
And again, you know, working in this partnership where you can take a stable coin and essentially exchange it into the money market fund the stable coin, you can make payments with those, and so it's going to allow you to sort of earn yield for a period of time and then when you need to do a transaction to switch it into a stable coin.
That would be an example.
What types of investors are investing in Benji and other token ised funds are these mainly crypto investors that are branching out.
It's a lot of people who play in the space who are using it as they like the idea that they get on their collateral, and so you have a lot of institutions, some of the stable coins that Benji is actually the collateral behind that stable coin, so you have it. You know, today it's mostly people who are operating in the ecosystem who want to be able to ensure that their money is safe. And the beauty of as we all know money market fund is US Treasuries
is backing it and it's again regulated. But you're also starting to see so there's some hedge funds that are also doing some business in the digital asset space and so they like it as collateral. And then of course you can download the app from the app store, so we do get individuals.
You know, my kids have Benji apps.
I can move money between It used to be in the old money market fund you'd have to go to the Franklin redeem and then send the money. Now you can move it directly to another holder of Benji.
Yeah, I was multi stepped and now it's a lot simpler than that. Benji was launched much earlier than many other tokenized money market funds, like say black Rocks. Yet Benji is now lagging behind black Rocks in terms of assets under management.
What do you attribute that to?
You know, I think that again, as a highly regulated entity and we use partners. Franklin Templeton is not a big direct business. We use partners who are a lot of financial advisors and others, and so as they're looking into this space, and they definitely are whereas in the past they would have said, now we don't want to deal with those clients' assets over in the digital asset space.
Because we're regulated, you're starting to say, they're starting to understand that they need to manage their clients' assets with the full picture.
We think that that's going to be a big opportunity for Benji.
Are you seeing money from traditional investors move into tokenized funds. I'm curious when you expect to see a meaningful amount flow in.
Oh, I think you already, especially hedge funds. There's a lot of what we're traditional kind of hedge funds that have moved into the ecosystem of digital assets, and so I don't think that there's such a definitive line as there used to be as far as who's playing in the digital assets space and who's traditional I think you've already started to see people crossing over.
And before I let you go, of course, you're in Wyoming right now. There's another big gathering that's taking place there later on this week in Jackson Hole, and I'm curious how much of what's going to happen there, the speeches that will come, do you see influencing and impacting the world of digital assets and specifically the immediate outlook for digital assets.
You know, I think that that one may be a little bit more focused on sort of the macroeconomic environment, but I think all of these things play into again digital assets. Over time, you're going to stop talking about them as a separate thing. Way back when when I ran at Franklin, we were launching our Internet group. Everything to do with the Internet was under me. Now you can't imagine thinking of that as a separate group. I think the same thing's gonna happen in digital assets today.
It's kind of been a separate thing. It's going to naturally converge, all right.
That makes a lot of sense.
Jenny really appreciate your joining us as always Franklin Templeton CEO Jenny Johnson joining us from Wyoming