Franklin Templeton’s on-chain money market fund (Franklin OnChain U.S. Government Money Fund, symbol: FOBXX) has been used in an industry-first derivatives transaction between two institutional dealers: Nonco and SwapGlobal.

Crypto OTC derivatives, like swaps and options, are widely used by institutional investors for hedging or directional trades. These transactions often require large amounts of collateral, which can be tied up for extended periods. Using yield-bearing solutions like the BENJI token, which represents shares of FOBXX, helps reduce the cost of capital by generating returns on collateral, allowing investors to meet their hurdle rates more efficiently while the trade is in place.

“Fiat wire transfers and non-yield bearing stablecoins have been a drag on crypto OTC derivatives for the past several years due to rising interest rates,” according to SwapGlobal co-founder Yev Feldman. “Most counterparties expect to receive a risk-free yield on their dollar collateral, but operationally converting cash into money market funds, potentially on a daily basis, has been operationally burdensome.”

“Using the BENJI token as collateral, we were able to seamlessly continue to maximize our treasury operations without lowering our collateral efficiency or introducing additional accounting processes to enter into this transaction,” said Jeffrey Howard, Partner and Head of North America at Nonco.

Both parties to the transaction are hopeful that the ease of peer-to-peer transfers of the BENJI token will simplify operational burdens while simultaneously thawing counterparty concerns and collateral efficiency in the crypto OTC derivatives space.

Derivatives collateral is a large industry, dominated by custodians such as JPMorgan and BNY. New use cases of technologies enabled by blockchain rails, such as this transaction between Nonco and SwapGlobal, may one day find themselves adopted by broader industry.

About Nonco

Nonco is an institutional crypto trading firm renowned for our distinctive approach. With 10 years of experience in digital assets and trading, their team employs a risk-mitigating, noncustodial strategy that leverages clearing, bilateral, and smart contract settlement capabilities. Their expertise spans across stablecoins, legacy and altcoin execution, specializing in high-frequency, systematic trading strategies.

About SwapGlobal

SwapGlobal Inc., is a venture-backed company building a CFTC-compliant swap dealer using modern infrastructure. SwapGlobal specializes in providing electronic OTC options capabilities for crypto participants.

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