Podcast: The Rollup
Compiled by: Yuliya, PANews
In this episode of The Rollup podcast, host Robbie had an in-depth conversation with Anthony Pecore, Senior Vice President and Director of Digital Asset Management at Franklin Templeton, and Seth Ginns, Chief Investment Officer, discussing institutional capital entry, the tokenization supercycle, Franklin's tokenized money market fund Benji which has been running smoothly since 2021, financial product innovation, and the convergence of AI and digital assets.
In Anthony's view, the tokenization supercycle is driving industry growth and has gradually evolved from early experimentation into important infrastructure for institutions exploring on-chain finance. As it becomes an important tool for on-chain trading and collateral, the application value of tokenized assets will be further unlocked. Moreover, the significance of tokenization goes far beyond moving traditional assets on-chain. By building a liquidity layer that supports round-the-clock trading, as well as composability, financial institutions are expected to develop more innovative products on this foundation. In addition, the combination of AI and digital assets is expected to push asset management into a new stage and reshape the way financial services operate.
The following is the detailed transcript of this podcast:
Institutions Are Not Keen on Meme Coins, Turning to Fundamental Investing
Robbie: Welcome to The Rollup. I'm very glad to connect with Anthony and Seth from the Franklin Crypto team to talk about core market themes, industry trends, and your extensive experience in crypto. If you look around, institutions have actually already entered, and you have been pioneers in this field since the beginning. Seth, could you first share what you are currently focused on? In digital assets, what excites you the most and what do you spend the most time on?
Seth: For us, what's most exciting right now is seeing a broadening set of institutional allocators showing interest in this space. On the liquidity market side, we're seeing real revenue growth, tokens can genuinely capture value, and valuation multiples are reasonable. It sounds just like the traditional stock market, which feels very reassuring.
What people want are fundamental investment opportunities. Institutions have little interest in investing in meme coins. What excites them is being able to invest in emerging companies that are just getting started but are genuinely doing business in a new industry with long-term growth. This has coalesced into a legitimate investable theme, and that resonance is very exciting.
Anthony: We often say that we are in this "tokenization supercycle," which is driving a great deal of growth. If I had to say what I'm most excited about recently, it's that we are "returning to basics." Franklin is known for Benji (a tokenized money market fund). It's a very simple concept, but it has earned our nearly 80-year-old company a reputation in crypto. It started as just an experiment in tokenizing a money market fund, but the fund has been running flawlessly since 2021. Now, institutions are starting to view it as high-quality collateral for various interesting transactions. All of this will be settled and traded on blockchains and various different protocols. It is precisely this behavior that drives usage, drives KPIs, and then translates into revenue, and ultimately into investable assets that are reinvested into the liquidity token space.
Stocks and Treasuries May Be the Biggest Beneficiaries; Tokenization's Killer Feature Is Composability
Robbie: At last week's Cyos conference, some large institutions' digital asset teams mentioned in discussions that "tokenization is heading toward a dead end." But now, they are starting to realize that it will ultimately make the entire financial world more capital-efficient, more productive, more programmable, and unlock massive amounts of idle capital. So, who will be the biggest winners of the tokenization supercycle?
Anthony: The evergreen keyword is always: who captures the value? This technology clearly creates value, but who can capture it?
Seth: That's interesting. Right now the market is full of enthusiasm for tokenized private market investment vehicles, such as pre-IPO equity tokenization. But I have a different view. When we look at the addressable market, I think assets that already benefit from deep liquidity, such as stocks and Treasuries, will gain the most from 24/7 round-the-clock liquidity. This somewhat overturns everyone's conventional wisdom.
People often rebut me: "But no one trades on weekends anyway, even crypto has little liquidity on weekends." My answer is: "Right, that's usually the case, but what if something very important suddenly happens on a weekend?" Look at the oil market during the Iran war. As long as something major happens on a weekend, capital will always find a channel to flood into the market, and everyone can urgently adjust the assets in their hands. So if stocks could achieve 24/7 trading, that would be very valuable.
Beyond longer trading hours, tokenization has another even more important feature: composability. Simply put, it means financial products can be more easily combined, split, and redesigned. In traditional financial infrastructure, many things are hard to do because systems are complex, processes are long, and restrictions are numerous. But if assets become tokens and trade on blockchains, many creative things can be done with simpler infrastructure, such as the various innovative operations Pendle has performed on yields in the tokenized world.
I think many new approaches will also emerge for stocks in the future. For example, splitting off and dividing a company's profit stream and earnings portion, then recombining them to form new financial products.
Tokenized Money Market Funds Are Becoming Standard for Asset Management
Robbie: From inside institutions and more broadly, are they starting to conceive of the financial products they can create? Liquid markets are one aspect. How are they thinking about using tokenization features to build new products?
Anthony: We are still on a journey of exploration. As tokenization and protocol rails upgrade finance, we sometimes use the term "liquidity layer." This will help support 24/7 trading and the collateral behind all these transactions, allowing leverage to unfold and unwind in an orderly manner on weekends. Once you have this liquidity layer, you can start building more consumer-facing applications on top of it. Structured finance has existed for a long time. Spreadsheets were once the greatest revolution in finance, and this is another revolution, but we are only at the beginning of this journey.
Robbie: Anthony, share some behind-the-scenes stories with us. Benji has been around for a long time since it launched in 2021. What was the atmosphere in the room like when it launched? Did you get a lot of strange looks? What did people think it was for? How have those looks changed now?
Anthony: There were certainly a lot of strange looks. Franklin has existed for more than 75 years. You can't survive that long without reinventing yourself several times. Franklin is a tightly controlled public company with what is essentially a family business's long-term vision. So we can conduct these experiments. Driven by the support and curiosity of management, including CEO Jenny Johnson, we initially treated it as an experiment: digital ledger technology (DLT) could disrupt asset management, and our job was to stay ahead. We communicated fully with the SEC, because money market funds are strictly regulated. We ultimately built a rock-solid project and product, with asset ownership purely on-chain, with no second ledger.
Robbie: Is it still an experiment now?
Anthony: I don't think so. It has proven itself. Many of our competitors now want to have similar projects or are launching similar projects. Tokenized money market funds have already become standard for many asset management companies.
Crypto Investing Is Entering the Fundamental Era; Investors Need to Understand Both Crypto and the Industry
Robbie: As institutional FOMO spreads, everyone is competing for a piece of this market. Seth, from an institutional perspective, how will they enter? Which areas are still untapped blue oceans?
Seth: We can start with the two words you just said: mimetic and non-mimetic. To put it simply:
Mimetic means taking what already exists in traditional finance and redoing it on-chain.
Non-mimetic means entirely new things brought by on-chain technology, products and models that did not exist before.
Let's start with what already exists. As we just said, many projects have strong revenue growth and their fundamentals look very good. Moreover, these businesses are very profitable and very capital-efficient. The money earned can go into profits and can also be used for buybacks. So many institutions are now very interested in projects with fundamentals. This falls under the more typical "mimetic" category.I used to be a stock investor myself. Before launching a liquid crypto fund in 2020, I had been a stock investor for 18 years. I think that in the future, crypto investing will increasingly resemble stock investing. In the stock market, there are analysts who specifically cover certain industries, such as healthcare, consumer, AI, and so on. I believe that maybe a year from now, or two years from now, similar analysts will emerge in the crypto space.
For example, a healthcare analyst must understand the healthcare industry very well. It could be biotech, or it could be healthcare services. He not only needs to understand the industry itself, but also needs to understand crypto technology. Combining these two capabilities will become an important advantage.
In the future, there may be people focused on healthcare, people focused on consumer discretionary, and people focused on AI. In other words, crypto investing will develop stronger industry specialization.
In the past, many liquid crypto funds assumed by default that it was enough to understand what was happening within the crypto industry itself. But things will be different going forward.
If what we care about is revenue growth, then we must know what is happening in the end markets. For example, which companies are using crypto rails to improve business efficiency? Which companies are not? How are the competitive dynamics between them changing?
In other words, investors cannot only understand crypto; they also need to understand specific industries. I think this is already starting to happen now, and it is very important.
Looking further ahead, I think there will be equity splits. Simply put, different sources of profit within a company may in the future be split apart and traded separately.
From an investor's perspective, this is very interesting. For example, you could say, "I want to go long H100 chips and short Vera Rubins or Blackwells architecture."
From management's perspective, management will discover that the market is assigning a higher valuation multiple to one business they own than to another. They may therefore direct capital expenditure into the business that receives the higher multiple.
By the way, what you are doing is laying the foundation for beginning to drive the "self-management" of these enterprises, that is, market signals driving capital allocation.
Anthony: Don't forget that there is also the debt side in a company's capital structure. What Seth just said can also be applied to a company's debt structure. In theory, a company can issue bonds that are backed by the cash flows of a specific project. For example, if a large company wants to make a bet on a specific project, it can finance it in a more customized way.
The financial singularity is coming, and AI and crypto are reshaping asset management.
Robbie: Can you talk about what autonomous capital management will look like, and the opportunities embedded in it?
Seth: In the example I just gave, I was talking about some roles of a company's management team being taken over by market signals. But of course this can also happen in fund management, though I think that will take longer. Especially in the institutional business, many things depend on personal relationships, trust, and the transfer of knowledge over time.
But there is a very important dynamic here, which is the use of AI. Our advantage lies in "simulated data," that is, the proprietary human data we obtain from attending conferences, talking with people, talking with project leaders and their competitors, and synthesizing it into a worldview. This is extremely valuable. But the power of using AI as a tool to synthesize this information is astonishing. It can bring enormous productivity gains, allowing an analyst or investor researching a specific target to now complete the work in only 20% or 10% of the time, achieving 10x productivity. All of this is happening now, and these tools are amazing.
Anthony: Franklin is a fiduciary institution, and portfolio managers must bear ultimate responsibility. If an AI agent goes astray, the responsibility still lies with the investment manager.
Robbie: What are the fastest-growing products and verticals within Franklin? How do you think about innovation to stay ahead?
Anthony: We have a lot of ideas, some for three years from now, some for seven years from now. We are envisioning a world of asset management that is no longer account-based. We will not open different accounts in different places, but instead put all assets in one wallet.
What does that mean? What assets can go into that wallet? The answer is obvious: they need to be tokenized. Then, how can AI agents or AI assist in managing these assets? How do we still provide advice? Coming back to what was said earlier, ultimate responsibility still rests with the portfolio manager. But how these pieces fit together, I think, will determine what the financial world looks like in the next seven years.
Seth: All of this requires connectivity, wallets, and everything we are building in crypto to become infrastructure. We are seeing all of this happening rapidly. Whether it is AI agents or humans, the reduction in friction brought by on-chain interconnection allows us to see that AI and digital assets are highly complementary technologies. Wallets, interconnectivity, and cross-chain connectivity will become the key enablers that ignite all innovation.
Robbie: I think the core phrase here is "financial singularity." This is indeed the true integration of Tradfi (traditional finance) with the on-chain economy we have been discussing for a long time. Thank you very much to Seth and Tony for joining today's interview!