Global financial giants Franklin Templeton and Citigroup are eyeing Solana to create new, emerging financial products and use blockchain for cross-border payments. The developments were announced at the Solana Breakpoint 2024, demonstrating continued institutional interest in tokenization.
Franklin Templeton, the renowned asset manager with $1.4 trillion in assets under management (AuM), has revealed plans to launch a native investment fund on the Solana blockchain. Citibank, on the other hand, is interested in the chain's low transaction fees, speed and scalability, which would be beneficial for cross-border payments. This marks a growing interest from the traditional finance (TradFi) sector in the decentralized finance (DeFi) opportunities of the blockchain.
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Franklin Templeton's on-chain mutual fund
Templeton plans to add Solana to its current digital asset offerings of the Franklin Bitcoin ETF (EZBC) and the Franklin Ethereum ETF (EZET). However, the SEC has not yet approved the Solana ETFs in the US. In fact, initial applicants VanEck and 21Shares have been completely blocked. Nevertheless, there is interest in Solana globally, with Brazil approving its second Solana ETF in the summer. In fact, Solana is more popular with european ETP investors than Ethereum or even bitcoin. Templeton seems to have recognised the needs of retail investors and is ready to be a first mover.
This goes with the credo that digital assets are "Investible opportunities that capture the return streams of novel business models and can generate long-term growth". Mike Reed, the firm's head of partnership development, highlighted the appeal of blockchain technology for improving efficiency and reducing costs in financial services. Blockchain technology is particularly attractive for the proposed money market fund because of the blockchain's ability to efficiently support high transaction volumes. This is indicative of the transactional nature of the proposed fund. Templeton's commitment to blockchain goes beyond this initiative. The firm has already developed its own digital wallet infrastructure and on-chain transfer agent, laying the groundwork for the mutual fund to operate natively on the Solana blockchain, rather than outsourcing the tokenisation process.
"Franklin Templeton is expanding to the Solana blockchain due to its speed, cost efficiency, and modern architecture. The company uses a tech suitability framework to evaluate blockchains, and Solana met their criteria. Additionally, they were impressed by Solana's development tools and the support provided by the Solana team." - Mike Reed, Partnership Development Lead
Citibank's exploration of Solana
Citibank, the fourth largest bank in the United States, is also exploring Solana's potential for seamless money transfers and advanced smart contracts. The move demonstrates Citibank's recognition of blockchain's role in the future of finance, and its potential to enhance financial services. Citi already has existing blockchain expertise, having used the Avalanche blockchain to tokenise private equity funds. Solana's scalability and speed make it a strong alternative.
🚨BREAKING BIG: @Citibank is exploring @Solana's potential, looking to utilize blockchain technology for seamless money transfers and advanced smart contracts in the future.
(Citi Bank is the 4th largest bank in the US🇺🇸). pic.twitter.com/zLivuQlJ3m
— SolanaFloor (@SolanaFloor) September 20, 2024
Some concerns have been raised about the implementation of these plans, citing the hacks, outages and impact on network stability of Solana. Despite remaining regulatory challenges, public statements signal a growing trend of institutional adoption.
