The Shift to Onchain Finance Is Coming Sooner Than You Think
Sandy Kaul, who leads innovation at Franklin Templeton, thinks the financial world is on the brink of a massive change—and it might happen faster than most expect. “At some point, everything we offer will probably be onchain,” she said in a recent interview. The real question, she added, isn’t *if* but *how* the industry gets there.
Right now, banks and corporations rely on old-school account-based systems. But Kaul believes they’ll soon switch to blockchain-powered wallets—not just for efficiency, but because they’ll have to keep up. Stablecoins, which she compares to digital checking accounts, are just the start. The $240 billion stablecoin market could grow tenfold in a few years, and she thinks that estimate might even be low.
But here’s the twist: the big players driving this shift won’t be crypto startups. “Banks will realize their future is wallet-based,” Kaul said. To stay relevant, they’ll start issuing their own stablecoins or tokenized cash. And with trillions in deposits at stake, the shift could happen almost overnight.
Tokenized Funds and the End of the ETF Wrapper?
Once stablecoins become a core part of finance, Kaul expects tokenized money market funds—basically digital savings accounts—to take off alongside them. Franklin Templeton already dipped its toes in with its OnChain US Government Money Fund, which now manages $740 million.
But it’s not just about stablecoins. Illiquid assets like private credit and CLOs are prime candidates for blockchain, she said, since the tech simplifies messy, paper-heavy processes. Even public equities and ETFs could move onchain, cutting out the middlemen. “If you put an ETF onchain, you might not even need the ETF structure eventually,” Kaul noted. “The smart contract does the same job.”
Why This Won’t Take Decades
Some might brush this off as distant futurism, but Kaul insists the timeline is shorter than people think. “I’d say within a decade, maybe less,” she said. “Look how fast Ethereum grew in just 10 years. Things move quicker now.”
Her CEO has gone even further, predicting more financial upheaval in the next five years than in the past fifty. Skeptics might scoff, but Kaul thinks they’ll be caught off guard. “A lot of folks don’t believe this will happen at all. They’re in for a surprise.”
The Hurdles Ahead
Of course, it’s not all smooth sailing. Regulations, especially around identity checks (KYC) and anti-money laundering rules, don’t mesh well with blockchain’s open nature. Kaul doesn’t see a fully permissionless system winning out—but the current rigidity isn’t sustainable either. “We need a middle ground,” she said. “Nobody’s really solving that yet.”
She’s more optimistic about regulators lately, though. After speaking at an SEC roundtable in May, Kaul noticed a shift. “There’s more openness now,” she said. But real progress hinges on clearer rules for mixing traditional securities with tokens. Until then, widespread adoption will stay stuck in neutral.
For now, Franklin Templeton is taking it step by step—testing tokenized funds, working with regulators, and quietly building the infrastructure they think will define finance’s next chapter. Whether it takes five years or ten, one thing’s clear: the old system’s days are numbered.
