Franklin Templeton CEO sees blockchain as massive disruption – Ledger Insights

Yesterday at the Consensus event, Franklin Templeton CEO Jenny Johnson discussed how the asset manager is already benefiting from blockchain, the benefits of blockchain for the fund management sector and the potential she sees in NFTs.

With some banks backing down and others failing to pass on higher interest rates to depositors, Franklin Templeton and other asset managers have benefited as bank deposits have migrated to money market funds.

But Franklin Templeton, with $1.4 trillion in assets under management (AUM), has also benefited from last year’s decision to launch a tokenized money market fund on the public blockchain Stellar, which has passed $270 million in AUM. Now crypto firms struggling to find US bank accounts have an alternative place to park their money. Yesterday it announced that the fund is also available on Polygon, the Ethereum sidechain. It is talking to MakerDAO about investing some of its stablecoin reserves in the fund.

While the current offering is a US fund, Franklin Templeton is also exploring a tokenized global fund.

More blockchain than crypto

As much as Johnson is a fan of crypto, she is a bigger fan of blockchain.

“Bitcoin is the biggest distraction from the biggest disruption coming to financial services, which is blockchain,” she said.

That’s partly because of her belief that if Bitcoin gets too big, the government will restrict its use because of the importance of currencies as an economic lever.

She talked about the blockchain’s ability to enable instant settlement and remove the need for reconciliations.

“If you think about blockchain, it does three things. It allows for a payment mechanism. It allows for a smart contract, and it allows for a ledger. So it’s going to take the friction costs out of a transaction,” Johnson says.

And lower costs enable new types of transactions. She gave an example of Rihanna selling NFTs that include a fraction of royalties from a popular track. Johnson sees it as an example of not just fandom, but democratizing investment. Additionally, Rihanna’s royalties are not correlated with the rest of the financial markets.

Zooming out, Franklin Templeton sees its core value as making active investment decisions on behalf of clients. Potentially, AI could be a threat to that. But not so much DLT. “Blockchain just helps us make it (the investment) much more efficient and actually opens up a lot more instruments that we can invest in,” she said.