Traditional asset management giants are entering the tokenization space: Franklin Templeton upgrades two funds to support stablecoins

Fidelity Dummpton announces a significant move—upgrading the blockchain compatibility of two of its asset management subsidiaries’ money market funds. This is not only a technological iteration for a traditional asset management company but also a concrete signal of traditional finance moving towards the tokenization asset sector.

Upgrade Directions of the Two Funds

The upgrade involves two funds managed by its subsidiary Western Asset Management, each with a different focus:

LUIXX: Reserve Tool for Stablecoins

The LUIXX fund has been modified to meet the reserve standards of the GENIUS Act. The act sets clear reserve requirements for regulated stablecoins, and the LUIXX fund currently holds only short-term US Treasuries with maturities under 93 days, making it an ideal reserve tool for stablecoins. In other words, stablecoin issuers can use this fund as the backing asset for their token issuance.

DIGXX: A New Attempt at On-Chain Distribution

The DIGXX fund takes a different approach, launching a digital institutional share class designed specifically for distribution on blockchain platforms. This means approved intermediaries can directly record and transfer fund ownership on-chain, enabling faster settlement and 24/7 trading, while still maintaining the status of an SEC-registered fund.

Why This Matters

Formal Entry of Traditional Finance

Fidelity Dummpton is one of the world’s largest asset management firms. This move represents traditional financial institutions’ recognition of the tokenization asset market. As Roger Bayston, head of digital assets at Fidelity Dummpton, said, “Traditional funds have started to go on-chain, so the focus is on making them more accessible.” This is not a test but a formal strategic adjustment.

A Signal of Maturity in the Stablecoin Market

The transformation of the LUIXX fund into a stablecoin reserve tool reflects that stablecoins have evolved from fringe products to financial instruments requiring formal backing. When traditional asset management giants start providing reserves for stablecoins, it indicates that the compliance and acceptance of stablecoins have reached a new level.

Improving Infrastructure for Tokenized Finance

The on-chain distribution model of the DIGXX fund demonstrates the feasibility of tokenizing traditional financial products. It opens up an imaginative space: in the future, more traditional financial products could be tokenized, providing investors with more convenient and transparent trading experiences.

Market Impact Outlook

This move could have multi-layered effects. In the short term, stablecoin issuers will gain endorsement and asset backing from traditional financial giants, boosting market confidence in stablecoins. In the medium term, other large asset management firms may follow suit, creating a demonstration effect. In the long term, this marks the transition from concept to practice in the integration of traditional finance and crypto finance.

Summary

Fidelity Dummpton’s move reflects three key signals: first, the formal recognition of the tokenization asset market by traditional financial institutions; second, the increasing consolidation of stablecoins as a financial infrastructure; third, the gradual improvement of the infrastructure for tokenized finance. This is not an isolated act by a single company but a step in the broader trend of the entire financial system migrating onto the chain. Future attention should be paid to similar actions by other traditional asset management firms and the practical application of the GENIUS Act.