From Stellar to Canton: How Franklin Templeton Rebuilt Its Tokenization Strategy
Franklin Templeton, one of the world’s largest asset managers, has spent the past several years quietly turning tokenization from a buzzword into a working part of its business. Under the guidance of Roger Bayston, Head of Digital Assets, the firm has experimented with public blockchains, tested the limits of on‑chain finance, and ultimately migrated key tokenized products to a new home on the Canton Network.
That journey, from Stellar to Canton, illustrates how a traditional financial giant thinks about blockchain infrastructure, regulation, and scalability—and why choosing the right network is as much a risk‑management decision as a technology call.
Why a Global Asset Manager Cares About Tokenization
For Franklin Templeton, tokenization isn’t about chasing hype. It is about re‑engineering the plumbing of asset management to achieve three main goals:
1. Operational efficiency
Traditional fund administration depends on multiple intermediaries, batch processes, and end‑of‑day reconciliations. Tokenizing fund shares on a blockchain enables near‑instant settlement, continuous recordkeeping, and automated workflows via smart contracts.
2. New distribution channels
Digital wallets and blockchain rails make it possible to reach new categories of investors, integrate with emerging fintech platforms, and offer fractionalized access to products that historically required higher minimums.
3. Programmability and composability
Once a fund share becomes a token, it can interact with other on‑chain services—collateral management, automated compliance checks, and eventually more complex on‑chain capital markets tools—without reinventing back‑office processes each time.
Instead of treating these as abstract benefits, Franklin Templeton tried to operationalize them early, putting real assets on chain and learning from live deployments.
The First Chapter: Experimenting on Stellar
Franklin Templeton’s initial tokenization work leveraged the Stellar blockchain, a public network originally designed for fast, low‑cost transfers of value. Stellar’s architecture made it an appealing starting point:
– Fast, inexpensive transactions suited to high‑volume, low‑denomination movements.
– Native support for asset issuance, which made it relatively straightforward to create tokens that represented fund shares.
– Active tooling and ecosystem around payments and tokenized assets.
On Stellar, Franklin Templeton experimented with tokenized fund shares that mirrored traditional offerings while being recorded and transacted on chain. This phase allowed the firm to test several critical pieces:
– How to maintain a synchronized view between traditional transfer agent records and on‑chain ledgers.
– How to implement investor onboarding, redemptions, and corporate actions in a tokenized environment.
– How regulators and institutional partners would respond once blockchain became part of the operational stack.
The Stellar phase was less about marketing and more about learning where public, permissionless infrastructure aligns—and where it clashes—with the requirements of a heavily regulated asset manager.
Where Public Chains Meet Institutional Constraints
Working on a public blockchain offered transparency and open access, but it also surfaced multiple challenges for a firm of Franklin Templeton’s scale and profile:
1. Regulatory and compliance requirements
Asset managers must know their investors, enforce jurisdictional restrictions, and maintain strict control over who can hold and transfer regulated fund interests. On a permissionless chain, these constraints need to be layered on top of an open system, which is non‑trivial.
2. Data privacy and confidentiality
While token balances and transactions can be pseudonymous, public blockchains are by design transparent. Institutional workflows often involve sensitive information that cannot be exposed—even indirectly—on a public ledger.
3. Determinism and governance
Institutions need confidence about how upgrades occur, how network changes are governed, and how to handle disputes or unforeseen technical issues. Public chain governance, driven by widely distributed stakeholders, can be unpredictable from a regulated perspective.
4. Interoperability with legacy systems
Integrating a public network with regulated fund accounting and transfer agency systems demands robust, auditable bridges. Every integration point becomes a potential operational and regulatory risk that must be carefully controlled.
None of these issues are unique to Stellar; they are structural questions about using open networks for regulated financial products. Franklin Templeton’s experience on Stellar made clear that while public chains are powerful, they are not always the best fit for the full lifecycle of institutional‑grade tokenized assets.
Enter Canton: A Different Kind of Blockchain Network
The next phase in Franklin Templeton’s tokenization strategy involved the Canton Network, an infrastructure designed for institutional use cases. Rather than being a single monolithic public chain, Canton is structured as an interoperable network of applications that can maintain privacy, enforce permissions, and still enjoy synchronized, shared state where necessary.
Key characteristics that align with an asset manager’s needs include:
– Permissioned access with granular control
Participants in Canton can restrict who is allowed to view, interact with, or custody specific assets. This is critical when dealing with regulated funds, KYC/AML obligations, and jurisdiction‑based investor eligibility.
– Data confidentiality by design
Transactions are not globally broadcast to all network participants. Instead, only involved parties see the details, which better mirrors traditional financial privacy norms while still allowing for verifiable, consistent state across the network.
– Composable, regulated‑grade workflows
Applications on Canton can interoperate while keeping their own compliance logic, allowing transfer agents, custodians, and trading venues to connect without surrendering control over their regulatory responsibilities.
– Institutional governance expectations
The network’s architecture and governance model are built with institutional counterparties in mind: predictability, upgradability, auditability, and alignment with existing regulatory frameworks.
For Franklin Templeton, Canton offered a way to retain the benefits of tokenization—programmable assets, shared ledgers, streamlined settlement—while addressing many of the frictions of operating on a public chain.
Why Move from Stellar to Canton Instead of Staying Multichain?
The shift from Stellar to Canton was not a rejection of public blockchains but a reflection of how Franklin Templeton prioritizes stability, compliance, and long‑term integration with core business functions.
Several strategic considerations underpinned the move:
1. Regulated asset lifecycle
A fund’s lifecycle involves onboarding, subscriptions, redemptions, distributions, corporate actions, and reporting. Doing this at scale under strict regulation favors an environment where access, data, and workflows are tightly controlled.
2. Consistency with partner expectations
Banks, custodians, auditors, and regulators are more comfortable collaborating in networks that mirror traditional, permissioned financial infrastructures, especially where data privacy and deterministic behavior are critical.
3. Reduced legal and operational uncertainty
Public chains can introduce questions about jurisdiction, liability for protocol changes, and exposure to unforeseen network events. A more permissioned architecture reduces those uncertainties.
4. Future interoperability with other institutional apps
Canton is designed to connect multiple regulated applications—custody, trading, collateral management, and settlement—in a way that supports shared workflows without globally exposing data. This aligns with how institutions already operate across interconnected but permissioned systems.
The decision was less about short‑term performance metrics and more about aligning blockchain infrastructure with the realities of institutional asset management.
Roger Bayston’s Role in Shaping the Strategy
As Head of Digital Assets, Roger Bayston has been central in translating blockchain’s theoretical advantages into institutional practice. His mandate involves more than experimenting with technology; it is about aligning digital strategies with Franklin Templeton’s fiduciary obligations and risk framework.
Under Bayston’s leadership, the firm’s approach can be summarized as:
– Use tokenization to upgrade existing businesses, not to abandon them.
– Engage deeply with regulators and partners rather than move fast and break things.
– Test in production carefully, starting with contained products and scaling as confidence grows.
– Be prepared to change infrastructure choices as requirements and technology mature.
The migration from Stellar to Canton is a visible product of that philosophy: an iterative, evidence‑based shift from open experimentation toward a network that better fits institutional constraints without abandoning the core value proposition of on‑chain assets.
What Tokenization Actually Changes in Day‑to‑Day Operations
From the outside, “tokenized assets” can sound abstract. Internally, tokenization touches multiple layers of Franklin Templeton’s operations:
1. Recordkeeping and transfer agency
Instead of maintaining and reconciling multiple off‑chain ledgers, a single authoritative on‑chain record can act as the shared source of truth among relevant parties, reducing errors and reconciliation costs.
2. Settlement and cash movements
On‑chain tokens can settle faster and more predictably than traditional processes that rely on batch files and end‑of‑day netting, potentially shrinking settlement risk and operational overhead.
3. Compliance automation
Eligibility rules—such as jurisdiction, investor type, or holding limits—can be embedded directly in smart contracts, reducing manual checks and the risk of human error.
4. Reporting and transparency
While sensitive data remains private, the underlying infrastructure can support more timely, consistent, and machine‑readable reporting to regulators and institutional clients.
5. Product design
Fractional ownership and global digital access open the door to new product structures and investor segments that were previously uneconomical or operationally complex to serve.
Lessons for Other Institutions Considering Tokenization
Franklin Templeton’s path offers a series of practical lessons for other asset managers and financial institutions:
– Start with contained use cases
Begin with a single product line or a clearly defined pilot that can be ring‑fenced for risk and learnings, rather than attempting to tokenize everything at once.
– Expect your infrastructure preferences to evolve
The network that works for early experimentation may not be the one you use for scaled, regulated operations. Building with that flexibility in mind reduces future migration pain.
– Treat compliance as a design parameter, not an afterthought
Tokenization only becomes sustainable when regulatory, legal, and operational teams are co‑designers, not late‑stage reviewers.
– Look beyond marketing headlines
Successful tokenization is less about being “on blockchain” and more about concrete improvements in cost, speed, risk management, and client experience.
– Focus on interoperability and standards
The long‑term value lies in how tokenized assets can interact with other institutional platforms and services. Networks like Canton emphasize this multi‑party, cross‑application future.
Why Choice of Blockchain Matters More at Institutional Scale
For a retail‑focused crypto project, switching blockchains can be a community or performance debate. For a global asset manager, the choice of blockchain shapes:
– Governance and control over core infrastructure.
– Legal risk and how regulators interpret responsibilities.
– Data protection strategies and privacy guarantees.
– The types of partners that are willing and able to connect.
Franklin Templeton’s move from Stellar to Canton highlights an emerging pattern: public networks may remain central for open financial innovation, while permissioned, institution‑grade networks become the backbone for regulated products with complex compliance requirements.
Both models can coexist, and in many cases, they will need to interoperate. Institutions like Franklin Templeton are laying the groundwork for that hybrid future by choosing infrastructure that can speak the language of both blockchain and traditional finance.
The Broader Implication: Tokenization as Financial Infrastructure, Not a Feature
Looking ahead, the significance of Franklin Templeton’s journey is less about a single firm or network and more about the direction of travel for the industry:
– Tokenization is shifting from pilot projects to core infrastructure decisions.
– The conversation is moving from “whether” to tokenize to “how” and “on what terms.”
– Network choice is increasingly being evaluated through the lens of regulation, interoperability, and privacy—not just speed and fees.
By progressing from a public chain like Stellar to an institution‑focused network such as Canton, Franklin Templeton has effectively signaled that tokenization, done at institutional scale, demands infrastructure tailored to the realities of regulated finance.
For other asset managers, the message is clear: tokenization is no longer a speculative side project. It is becoming a strategic capability—one that requires careful network selection, clear governance, and leaders like Roger Bayston who can bridge the worlds of traditional finance and digital assets.