In 2019, Franklin Templeton became one of the first asset managers to begin actively exploring digital assets. They experimented in using distributed blockchain ledgers to increase operational efficiencies and save money. This move highlights the growing importance of blockchain and the "protocol economy," characterized by open participation, decentralized ownership, and community-driven governance. The company has fully designed and launched a patented Gemio wallet solution. It developed the Benji infrastructure stack and a blockchain-based transfer agent, putting it at the head of this fast-moving technological shift.
The crypto-driven protocol economy, powered by cryptocurrencies and tokens, represents a paradigm shift in the fundamentals of how networks and economies function. Blockchain technology inherently combines the features of one app into another. This encourages even greater consumer participation and builds powerful positive network effects. This open-source, decentralized approach makes direct, peer-to-peer transactions easier and more accessible, eliminating or at least lowering the barrier that traditional intermediaries create.
Tokenizing financial assets is one of the building blocks of this evolution, including the development of digitally native, token-based securities. Franklin Templeton recognized this potential early on, filing with the Securities and Exchange Commission in 2019 to launch a tokenized version of a U.S. government money market fund. Their digital asset infrastructure was developed natively within the blockchain ecosystem to capitalize on these advancements as a foundation.
Blockchain and its related protocols represent one of the more historic advances in the Computer Age. This change is in keeping with past revolutions of computation, networking, encryption and communications. The firm's transfer agent uses blockchain to calculate yield and update shareholder records daily, demonstrating practical applications of this technology. The evolution of network-based economies, marked by advancements in the 1960s, 1990s, and 2000s-2010s, culminates in the blockchain-enabled, open-source functional protocols driving today's networked economies.
Tokenization and on-chain capital markets are set to fundamentally democratize global finance in unprecedented ways. The new programmability of tokenized financial assets introduces a host of complicated questions, especially around the notion of “Code as Law.” As financial assets are more fully digitized, the necessity of contemplating the implications of smart contracts and automated enforcement mechanisms comes to the fore.
