Franklin Templeton's $1.8T CEO: Why I Was Wrong About Bitcoin

My name is Megan Nielsen, coming to you from Proof of Talk Live in the Louvre here for Tim Draper's DraperTV, my podcast there. And we're so excited to welcome Jenny Johnson, the CEO of Franklin Templeton. It's been an incredible day. You're keeping the energy really high out there. You just came off a panel. People loved it. There's just something that resonates so well with the audience and the message that you deliver. So I'll say that first off, but what is your sensation coming off that panel and sort of like some of the key takeaways?

Yeah, well, so So it was fun because it was a panel with Carolyn Pham, who was the former commissioner of the CFTC but is now with MoonPay. And we just announced literally minutes before we walked on stage the partnership that Franklin Templeton has with MoonPay, where they've integrated our Benji, which is our tokenized money market fund, into MoonPay. So you can move from stablecoin into the money market fund, earn the yield, And then you want to go make a payment, you can swap back into your stablecoin and make a payment. And so, you know, MoonPay has clients in 180 countries. Franklin Templeton has clients in 160 countries. For us, it's a whole new distribution channel and just really amazing to have that kind of reach. They've got 30 million, 30 million users and wallets. So it was, it was fun. It was fun to be able to stage and be able to like have breaking news right then.

Oh yeah. It's a big milestone in the industry. I definitely sat down with you 2 years ago here for a very quick interview. But how has the landscape, like everything, how has it changed in those 2 years?

So the interesting thing is, 2 years ago, you had within the US a fear about regulatory retaliation if you got into the crypto world. So you had most of the traditional, you know, tradfi, the banks, the wirehouses, the, you know, just staying away from it. And they just didn't want to touch it because they were worried about the backlash. Fast forward now a Well, I think a couple of things have happened. One, the regulatory environment's changed in the US. You did have progress and it was actually one of the things that was making me sad at the time is because there was dysfunction on the regulatory environment in the US, you ended up ceding it to other markets like Singapore was very aggressive. The UAE, Hong Kong, even Europe was being very constructive. And so it was happening kind of everywhere. And we finally said, we can't focus on the US, we got to focus outside the US.

Right.

But now that's changed. The other thing that's changed is the clients of those traditional banks, those traditional wirehouses who have investment accounts. The clients are saying, I want to hold my crypto assets here. And so they're now talking to us and others about, okay, we've got to understand this space. We've got to be able to have a wallet infrastructure so that our clients can hold their assets here because they want to have a consolidated picture. You didn't have any of that a conversation 2 years ago.

I mean, it feels like we've made so much progress in such a short amount of time.

Yeah, absolutely. And I feel like, like you're starting to finally see TradFi and DeFi kind of starting to come together.

Absolutely. And the other thing I'll say then is we see now how the industry sort of shifted. But you did say on a panel earlier that you once saw Bitcoin as the greatest distraction to blockchain, right? It was a quote that like shook the whole place.

I mean, it was really, truly interesting, especially because I was on stage with Adam Back.

Exactly. So it was, it was an impactful moment. How has your sort of like mentality shifted about everything?

So, I mean, and it was funny because when I used to say that, people took it as I was dismissive of Bitcoin. My point was every— at the time, every time you wanted to have a conversation about blockchain, you went down a rabbit hole about whether you believed in Bitcoin or not. And I always said, people, it's kind of like a religion. You believe it or not. What got me to believe it was talking to people like I talked to this guy whose parents— he lives in Israel and he says, my parents and grandparents had their money taken away by government. They will always keep a percentage of their savings in Bitcoin. And by the way, they're not going to do it in a Bitcoin ETF because the government could take a Bitcoin ETF. They will do it in Bitcoin keys. They will self-custody those assets. Right. And then I was talking to somebody in the Middle East who said, you know, if I say the wrong thing, I could fear that, that my bank accounts could be frozen. So I always keep a percentage in, in, in Bitcoin. And so the light bulb kind of went off. For me, it's like growing up in the US, we don't fear that same kind of government's going to come in and take it. And so we don't really understand that mentality.

Right.

But that gave me a view of, oh, there's always going to be a market here for Bitcoin. And then, you know, you saw a lot of ownership of Bitcoin in places like Turkey, Venezuela, El Salvador, where, where you were having high inflation in the currencies and they were looking for another way to be able to deal with inflation.

Out of necessity.

Out of necessity. Exactly. And so, so that made me much more of a believer on the Bitcoin side, and then I've been passionate about blockchain because I just think that it's really exciting as far as the innovation that it's going to enable, and it's going to and the financial inclusion it's going to enable because it drives costs out of the system. And if you can drive costs out of the system, you can offer products at a much cheaper price as well as a much smaller entry level. So, for example, today our tokenized money market fund—you can open a Benji account with $20. Wow! To open a traditional money market fund, you have to have $500 because below $500. We lose money, and that means the other shareholders are subsidizing you, and we can't have that. So that— and that's simply down to the technology efficiency of blockchain.

The barrier to entry is lowered dramatically. I mean, dramatically. Yeah. $500 to $20. I mean, that's much more accessible to the average user. Yeah. Which is incredible. Um, it's just crazy to see all of these sort of revolutions. And so the big banks and asset managers— you talked about the moment for you, which I thought was really interesting actually, that got you sort of to understand really truly why this shift was necessary. What do you think was the light bulb moment for somebody maybe like Jamie Dimon, who once referred to Bitcoin as a pet rock? You know what I mean? Like, what, what was the turning point for a lot of these asset managers to say, wow, there's something here we need to get involved?

So I'm not sure Jamie Dimon is yet a Bitcoin fan. Okay. Because that is a different— again, and he's got a legitimate concern. Right. Right. Any day a government can say it's illegal to use that currency in this country.

Right.

China did it. So, so I think Jamie has a kind of a legitimate, you know, sort of Oh, I'm skeptical on that. But where I think JPMorgan and Jamie Dimon have come along is that they very much believe the technology, right? Yes. And from the same reason that I looked at it, I ran our operations in technology. I know how much money we spend reconciling data between systems. And oh, by the way, we then have to go reconcile it with our counterparty. And if they don't reconcile, one of us has a failed trade and then there's probably an error cost to that. So When you looked at this and said, wait a second, as soon as a transaction happens, there's only one source of truth. It happened. It's updated immediately. And both parties use that as a source of truth. I was like, that's going to drive out a lot of costs and take risk out of the system. I, I think Jamie Dimon and JPMorgan all view that as well, that this infrastructure is really terrific and will ultimately replace a lot of the infrastructure of traditional finance. The challenge is It does impact the business models of some of these traditional— how they make money in some of this traditional finance as you take the toll takers out of the system. And so if that's going to happen, you're probably going to see a certain slow adoption by those whose business model is impacted by it.

That's interesting to sort of separate the two, the two sort of pros but also cons and where we're trying to find ourselves now in the industry as we sort of navigate through this period of reflection, right? An inflection point in the technology.

Oh, and you did ask the question, why now? And so I think people have understood the technology benefits. I think the why now is clients are now asking, hey, and you cannot ignore your clients. My dad told me when I, when I took over, when I took over CEO of the company, he said, my advice to you is take care of the client and the business takes care of itself. So when clients start asking, you have to be responding to that.

I mean, that says it all, right? It just says it all. We're at today that clients are actually demanding these sort of products. It's really cool to see your partner with your partnership with MoonPay. And what else can we sort of like be expecting?

Well, a couple of things. We actually— Benji is available with— we have a partnership with Kraken, Ondo, Binance. And in the case of Kraken, we have tokenized ETFs. We've taken our traditional ETFs because what's now happening is the crypto world is saying, hey, Actually, I need a diversified portfolio. I'd like to have some traditional assets in there, but I want to hold them in my wallet. So we have tokenized some of our traditional ETFs and they're now available on crypto exchanges. And there's a lot of interest in that. So we're, we're talking to Coinbase and others about that kind of partnership to expand. For us, it's a whole new distribution channel, which is really fun. So I think that's important. The other thing is Benji is now being accepted collateral by hedge funds who trade on some of these crypto exchanges. And so they can post it and earn yield. And it's funny because in the traditional finance world, you know, if one money market fund pays 1 basis point more than another money market fund, the person who's using it as collateral will use the money market fund that makes 1 basis point. They'll move for 1 basis point. Right. Wow. So, you know, today a lot of these hedge funds are using stablecoins as collateral, which means they are nothing. You can earn, say, 3.45%, say, on a money market fund. Well, that's just money that you're giving away if you're posting a stablecoin instead of a Benji money market fund as collateral. So a lot more interest in that.

That's really interesting. So that's— I mean, this is big. Yeah. And I remember talking to people who are really deep in the industry, colleagues of mine who are crypto natives, who are talking about diversifying their allegations to things and they should have a conversation.

They absolutely should. Why would you not? I mean, look at where, you know, what's the other big boom that's going on, right? As far as technological advances, blockchain, it's AI, right? So wouldn't you like to invest in an ETF that gives you exposure to AI? I mean, that would be really important for your portfolio. So you're, you're definitely getting people saying, hey, I don't want to miss out on that just because I can't hold it in a tokenized form. So that's where we come in. We take these traditional products that have exposure to thematics like AI and be able to offer them on the crypto exchanges.

That's fantastic. And as we're wrapping this up now, where do you see us headed? What do you think the future will be? Or something that people may not be focusing on yet where you think that we could be headed with the industry, something you're excited about?

Well, I kind of mentioned it on stage. I think that the future portfolio, say a financial advisor is going to say to their client, look, here's how you've done on your investments. Here's how the impact those investments have, because it's part of the smart contract. You're going to have things that are important to that individual client. Maybe it's a It's, you know, they want to see the carbon footprint of the companies that they invest in. They want those who are marching towards zero carbon footprint or diversity. You know, they may want gender diversity, whatever it is that those are important. You'll be able to track that data as part of the token and be able to report to the client on that. And then the third piece of it is the, the loyalty programs that are now being built. So, you know, you can own, say, Nike stock. And if you have this certain type of equity, only you get these special Nike Nike shoes, right? So they'll say, here are the loyalty programs that you now get because of the equity holdings that you have. And then I think a final component of it, your risk management is actually going to be embedded in the token. You're going to understand it better. You might say, let's say my thematic is I love, you know, certain brands and I want my token, my investment token to Watch social media, track the brands that are trending upward on social media. And if you see that trend, I want it to trigger and buy, you know, buy, buy that brand, right? That equity in that brand. So that's the type of personalization and financial innovation that I think ultimately comes because of this really cool technology. And when you combine AI with the smart contracts, it's really powerful.

Yeah, it's almost as if it were built for that is what the conversation's been. Blockchain is built for the agentic economy. That's upon us. You know, Cathie Wood recently said, you know, that we're in a sort of a lull or a transitionary period in the market now, but that it's going to be one of the most productive— will be one of the most productive races in human history. Yeah. I mean, and so with the convergence of all these powerful technologies.

Absolutely.

And I think that's going to be a very exciting time indeed. And we're very fortunate to have somebody like you at the forefront sort of representing how this should be done. Well, thank you. So, Jenny, thank you so much for being with us today.

And I look forward to catching up with you someday soon. All right.

Thank you.