Speaker 1: Bloomberg Audio Studios, podcasts, radio news. All right, let's head
Speaker 1: back now to Wyoming to the Wyoming Blockchain Symposium, where
Speaker 1: I'm pleased to say we're joined now by Franklin Templeton
Speaker 1: CEO Jenny Johnson.
Speaker 2: Jenny, such a.
Speaker 1: Pleasure to speak with you. Thank you for joining us
Speaker 1: today from beautiful Wyoming. This is Saul and Kraken's second
Speaker 1: annual Wyoming Blockchain Symposium, and I imagine that this must
Speaker 1: be such a contrast this year to twenty twenty four,
Speaker 1: when the federal government under President Joe Biden was skeptical
Speaker 1: of all things crypto, with policy and regulation really reflecting
Speaker 1: that level of caution. What does the Trump administrations embrace
Speaker 1: of crypto mean Franklin Templeton and your broader financial services
Speaker 1: industries efforts to offer more services and digital assets.
Speaker 3: Yeah, no, I mean for Franklin Templeton, I mean one
Speaker 3: of the challenges obviously was not having regulatory clarity. And
Speaker 3: so as a highly regulated firm who started doing things
Speaker 3: in blockchain in twenty seventeen, twenty eighteen and had our
Speaker 3: money market fund, we're to this day still I believe
Speaker 3: the only forty c money market fund that runs on
Speaker 3: the public blockchain. Is that we were limited in what
Speaker 3: we could do because you didn't have regulatory clarity, and
Speaker 3: if you're a regulated entity, you had to be really
Speaker 3: careful about how far you moved into the digital asset space.
Speaker 3: And I think what President Trump has done with kind
Speaker 3: of his support is to recognize, Look, this technology is
Speaker 3: going to be hugely powerful and beneficial to the financial
Speaker 3: services industry because it'll drive down costs, it has more
Speaker 3: transparency in many ways, it's arguably more secure. And so
Speaker 3: what's going to happen is you're going to start to
Speaker 3: see much more of a convergence of traditional finance with
Speaker 3: the digital asset space.
Speaker 2: And I think that's a really good thing.
Speaker 1: Right, And it'll be events like the one you're attending
Speaker 1: right now that kind of.
Speaker 2: Catalyze a lot of that.
Speaker 1: What message does it send that Michelle Bowman, a FED
Speaker 1: Vice Chair of Banking Supervision, is attending the conference. What
Speaker 1: does that signal to the crypto industry, What does that
Speaker 1: signal to the financial services industry?
Speaker 3: Well, I think it signals that this is becoming mainstream, right,
Speaker 3: digital assets are going to become mainstream. Now, that doesn't
Speaker 3: mean all of them, I think there's going to be
Speaker 3: some that you know, you'd like. In anything, you have
Speaker 3: to be sort of careful and really understand the space.
Speaker 3: But again, this underlying technology is so powerful, U that
Speaker 3: bringing it together, and I think a recognition that it
Speaker 3: is important for regulators, it's important for you know, for
Speaker 3: traditional financial people to understand the space and to figure
Speaker 3: out how to converge these things together. And so I
Speaker 3: think that's really the message.
Speaker 2: Got it. Thank you for answering that.
Speaker 1: You mentioned, of course that Franklin Templeton has been doing
Speaker 1: a lot. You've got a money market fund that's on
Speaker 1: the chain. Let's talk about tokenized assets a little bit here.
Speaker 1: What does that mean in terms of this on the
Speaker 1: chain fund in terms of its accessibility and availability to
Speaker 1: clients and potential clients.
Speaker 3: Well, so, I mean one of the things that we
Speaker 3: see as a big trend in asset management is obviously
Speaker 3: this movement of alternatives into the wealth channel, right, And
Speaker 3: so you know why is that that a difficult thing?
Speaker 2: Because alternative assets tend to be very.
Speaker 3: Liquid and often people who don't have a huge amount
Speaker 3: of savings may have an emergency and dip into it.
Speaker 3: So they need a certain amount of liquidity, Well, we
Speaker 3: think tokenization is going to actually help that situation.
Speaker 2: So why is that.
Speaker 3: Well, one a transaction that's been tokenized, so it does
Speaker 3: three things. It has you know, the source of truth, right,
Speaker 3: so whoever owns a token has all the rights to it.
Speaker 3: It has a smart contract so you can execute the
Speaker 3: smart contract.
Speaker 2: That reduces the costs on.
Speaker 3: A bunch of people having to calculate to make sure
Speaker 3: that the terms of the contract are enforced. And then finally,
Speaker 3: it has a payment mechanism. So if that can drive
Speaker 3: down and we saw it because the SEC had us
Speaker 3: run parallel processing between our old transfer agency shareholder record
Speaker 3: keeping system and the blockchain system, and even we were
Speaker 3: astonished at how much more cost effective it was to
Speaker 3: run these transactions on the blockchain blockchain system. And so
Speaker 3: if you think about the ability as we start to
Speaker 3: tokenize and create market makers and liquidity around these assets,
Speaker 3: you're going to actually democratize access to things that have
Speaker 3: only historically been available to really large institutions.
Speaker 1: What other funds are you considering tokenizing.
Speaker 3: Well, we have we have you know, several ETFs, Bitcoin,
Speaker 3: et ap ethereum, others that have been so those are
Speaker 3: actually accessing the investment in the in the market.
Speaker 2: We are in conversations.
Speaker 3: I mean, one of the things we did with our
Speaker 3: private chain money market fund is we have a partnership
Speaker 3: with Standard Charter Bank and Okax where you're actually going
Speaker 3: to be able to exchange kind of stay coins and
Speaker 3: park them into a yield bearing account and then you
Speaker 3: can move them back and that'll be twenty four by seven.
Speaker 3: I mean, that's a goal, twenty four by seven, three
Speaker 3: hundred and sixty five days a week. I mean, why
Speaker 3: is it that you can't trade stocks on the New
Speaker 3: York stocket chain after four o'clock in the afternoon. It's
Speaker 3: because in the old days the system that was a
Speaker 3: batch processing system and you had to reconcile at the
Speaker 3: end of the day.
Speaker 2: Blockchain is going to completely make that irrelevant.
Speaker 3: You're going to be able to settle atomic settlement immediately,
Speaker 3: and that's going to just change the types of products
Speaker 3: that people are going to be able to bring to market.
Speaker 3: And so Franklin Templeton, we've already built this whole ecosystem
Speaker 3: around a Sheralder record keeping system for that kind of
Speaker 3: atomic settlement, and so and building working out with partners
Speaker 3: who carry further along the chain is really important. But
Speaker 3: we think it's going to open up a lot of opportunities.
Speaker 1: We look forward to hearing what those opportunities might be.
Speaker 1: You have Benji tokens, which represents shares in Franklin's on
Speaker 1: chain government money fund, and they can be traded peer
Speaker 1: are now they can also be used as collateral. I'm
Speaker 1: curious what other utilities you're planning to add to Benji.
Speaker 3: Well, part of that is you have to kind of
Speaker 3: move in lockstep with the regulation because again this is
Speaker 3: a forty act mutual fund that is on chain, and
Speaker 3: so there are some limits to that. But as the
Speaker 3: Trump administration is opening up sort of you know, opportunities
Speaker 3: in the digital asset space, I think.
Speaker 2: There'll be more capabilities.
Speaker 3: And again, you know, working in this partnership where you
Speaker 3: can take a stable coin and essentially exchange it into
Speaker 3: the money market fund the stable coin, you can make
Speaker 3: payments with those, and so it's going to allow you
Speaker 3: to sort of earn yield for a period of time
Speaker 3: and then when you need to do a transaction to
Speaker 3: switch it into a stable coin.
Speaker 2: That would be an example.
Speaker 1: What types of investors are investing in Benji and other
Speaker 1: token ised funds are these mainly crypto investors that are
Speaker 1: branching out.
Speaker 3: It's a lot of people who play in the space
Speaker 3: who are using it as they like the idea that
Speaker 3: they get on their collateral, and so you have a
Speaker 3: lot of institutions, some of the stable coins that Benji
Speaker 3: is actually the collateral behind that stable coin, so you
Speaker 3: have it. You know, today it's mostly people who are
Speaker 3: operating in the ecosystem who want to be able to
Speaker 3: ensure that their money is safe. And the beauty of
Speaker 3: as we all know money market fund is US Treasuries
Speaker 3: is backing it and it's again regulated. But you're also
Speaker 3: starting to see so there's some hedge funds that are
Speaker 3: also doing some business in the digital asset space and
Speaker 3: so they like it as collateral. And then of course
Speaker 3: you can download the app from the app store, so
Speaker 3: we do get individuals.
Speaker 2: You know, my kids have Benji apps.
Speaker 3: I can move money between It used to be in
Speaker 3: the old money market fund you'd have to go to
Speaker 3: the Franklin redeem and then send the money. Now you
Speaker 3: can move it directly to another holder of Benji.
Speaker 1: Yeah, I was multi stepped and now it's a lot
Speaker 1: simpler than that. Benji was launched much earlier than many
Speaker 1: other tokenized money market funds, like say black Rocks. Yet
Speaker 1: Benji is now lagging behind black Rocks in terms of
Speaker 1: assets under management.
Speaker 2: What do you attribute that to?
Speaker 3: You know, I think that again, as a highly regulated
Speaker 3: entity and we use partners. Franklin Templeton is not a
Speaker 3: big direct business. We use partners who are a lot
Speaker 3: of financial advisors and others, and so as they're looking
Speaker 3: into this space, and they definitely are whereas in the
Speaker 3: past they would have said, now we don't want to
Speaker 3: deal with those clients' assets over in the digital asset space.
Speaker 3: Because we're regulated, you're starting to say, they're starting to
Speaker 3: understand that they need to manage their clients' assets with
Speaker 3: the full picture.
Speaker 2: We think that that's going to be a big opportunity
Speaker 2: for Benji.
Speaker 1: Are you seeing money from traditional investors move into tokenized funds.
Speaker 1: I'm curious when you expect to see a meaningful amount
Speaker 1: flow in.
Speaker 3: Oh, I think you already, especially hedge funds. There's a
Speaker 3: lot of what we're traditional kind of hedge funds that
Speaker 3: have moved into the ecosystem of digital assets, and so
Speaker 3: I don't think that there's such a definitive line as
Speaker 3: there used to be as far as who's playing in
Speaker 3: the digital assets space and who's traditional I think you've
Speaker 3: already started to see people crossing over.
Speaker 1: And before I let you go, of course, you're in
Speaker 1: Wyoming right now. There's another big gathering that's taking place
Speaker 1: there later on this week in Jackson Hole, and I'm
Speaker 1: curious how much of what's going to happen there, the
Speaker 1: speeches that will come, do you see influencing and impacting
Speaker 1: the world of digital assets and specifically the immediate outlook
Speaker 1: for digital assets.
Speaker 3: You know, I think that that one may be a
Speaker 3: little bit more focused on sort of the macroeconomic environment,
Speaker 3: but I think all of these things play into again
Speaker 3: digital assets. Over time, you're going to stop talking about
Speaker 3: them as a separate thing. Way back when when I
Speaker 3: ran at Franklin, we were launching our Internet group. Everything
Speaker 3: to do with the Internet was under me. Now you
Speaker 3: can't imagine thinking of that as a separate group. I
Speaker 3: think the same thing's gonna happen in digital assets today.
Speaker 3: It's kind of been a separate thing. It's going to
Speaker 3: naturally converge, all right.
Speaker 2: That makes a lot of sense.
Speaker 1: Jenny really appreciate your joining us as always Franklin Templeton
Speaker 1: CEO Jenny Johnson joining us from Wyoming