Franklin Templeton Retrofits $LUIXX for GENIUS Act Compliance; Targets $2T Stablecoin Market

Franklin Templeton has successfully retrofitted two institutional money market funds to serve as compliant infrastructure for the regulated stablecoin economy, effectively positioning traditional treasury vehicles as the backend rails for on-chain finance. The asset manager announced Tuesday that its Western Asset Institutional Treasury Obligations Fund ($LUIXX) now invests exclusively in U.S. Treasuries with maturities of 93 days or less.

The strategic pivot aligns the fund directly with the stringent reserve requirements of the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), signed into law in July 2025. By restricting the portfolio to short-dated government paper, $LUIXX becomes a plug-and-play reserve asset for stablecoin issuers mandated to hold high-quality liquid assets (HQLA) against their circulating supply.

Digital Rails for Institutional Cash

Beyond reserve management, the firm introduced a new “Digital Institutional Share Class” ($DIGXX) for the Western Asset Institutional Treasury Reserves Fund. This share class is engineered for distribution across blockchain-enabled platforms, allowing intermediaries to record and transfer ownership on-chain 24/7. This moves settlement from T+1 to near-instant execution.

Traditional funds are already beginning to move on-chain, so rather than question their ability, our focus is to make them more accessible and useful by many.

. Roger Bayston, Head of Digital Assets at Franklin Templeton

The Institutional Context

This is not a retail product launch; it is an infrastructure play. With the total stablecoin market cap currently surpassing $310 billion and projected to hit $2 trillion by 2030, traditional asset managers are racing to capture the reserve float. BlackRock previously modified treasury mandates to service USDC, but Franklin Templeton’s explicit alignment with the GENIUS Act standards signals a move toward standardized, regulatory-first reserve management.

By splitting the utility, $LUIXX for compliance-grade backing and $DIGXX for on-chain mobility, Franklin Templeton is effectively separating the collateral from the rail, a necessary step for integrating tokenized cash into institutional clearing workflows.