Why Investment Giant Franklin Templeton Thinks Crypto Could 10x This Cycle

Crypto winters have a way of shrinking expectations.

Prices fall. Deal flow slows. And lofty predictions of uptake invariably fall back down to Earth.

But this time, Franklin Templeton’s Sandy Kaul sees something very different happening beneath the surface.

“I think that we got up to about $4 trillion in this last bull market,” Kaul, Franklin Templeton’s Head of Digital Assets and Innovation told Coinage at The Tie's Out East Summit. “I think we’re going to see multiples of that move into crypto. We could get $20 trillion, $30 trillion, maybe even north of that.”

That would represent a fivefold to nearly eightfold expansion from the industry’s previous peak, and potentially something closer to 10x if the two trends Kaul is watching unfold as quickly as she expects.

The first is already familiar: Wall Street is rebuilding financial markets on blockchain rails. The second is only beginning to emerge: Artificial intelligence agents that can independently negotiate, execute and pay for transactions.

Kaul believes those two shifts are now colliding. And that the collision could make the next crypto cycle much larger than the last one.

“We have not rebuilt the financial market infrastructure since the early 1970s,” Kaul said. “We’re really at this point working on a 50-year-old process.”

Indeed, perhaps Franklin Templeton is solid proof of just that. The global asset manager was the first firm to tokenize one of its funds (BENJI) to settle and record ownership on a public blockchain. But when it comes to connecting products to other parts of the financial stack, America's underlying system still largely relies on a collection of intermediaries, databases and processes that were designed decades before blockchains existed.

That is now beginning to change. Kaul said nearly every traditional financial counterparty Franklin Templeton works with is asking how it can introduce wallets and offer tokenized investment products.

The opportunity, however, extends far beyond simply creating tokenized versions of stocks and bonds. With the GENIUS Act passing last year to trigger the rise of stablecoins, Kaul notes that both payments and the broader set of investment products are moving onchain.

“In this new trend, they’re going to come together,” Kaul said. “So you’re talking about double the opportunity being re-platformed on these new rails.”

But part of the reason Kaul is even more confident this next cycle will deliver much more upside than those of the past is due to the unlock of AI. As she predicts, it's not just the tokenization of payments and investment products to consider — it's the introduction of the potential to see a second agent-to-agent economy start to take off.

Each of those transactions could require the agent to verify its identity, agree to contractual terms, execute a payment and produce a permanent record. Kaul argues that blockchain is uniquely suited to coordinate that machine-to-machine economy.

“You can only have that kind of ecosystem operate if you are actually running it on blockchain,” she said, noting that should, in theory, increase demand for underlying tokens of the blockchains that win this activity. “Demand for the native cryptocurrencies by people who are actually operating businesses in the space, I think, is going to surge."

That is a very different investment thesis from the one that drove previous crypto cycles.

“It used to be I needed to own the equity of a company to capture growth,” she said. “And now I really believe you need to own the tokens of a network to capture growth.”

Rather than relying primarily on speculation or retail traders chasing higher prices, native tokens may inch closer to becoming the necessary assets that businesses must own to operate across blockchain networks.

Franklin Templeton has been positioning itself for that boom by expanding while much of the industry is pulling back. The company recently acquired a team from CoinFund and rebranded it as Franklin Crypto. Kaul said the firm is using the crypto downturn to recruit talent, add investment capabilities and build a multi-strategy hedge fund that can shift between strategies depending on where the market sits in the cycle.

“We really believe that we can be the number one investing firm in crypto,” she said, pointing to the opportunity to bring Franklin Templeton’s existing expertise in equities, bonds, private credit, private equity and real estate into wallet-based portfolios.

Crypto investors, she argued, should eventually be able to access diversified, multi-asset strategies directly from their wallets. And as crypto enters the world of traditional investments, Kaul predicts volatility should be reduced.

“Maybe that drawdown gets shallower,” Kaul said. “And maybe you actually don’t lose money in the next crypto winter.”

As bad as this bear cycle has been, historically it has yet to compare with the more than 80% drawdowns Bitcoin has previously suffered. Since last year's high, Bitcoin has only re-traced by about 50%. And with many traders expecting the market’s four-year cycle to turn around October, she believes investors may begin positioning themselves before that consensus date arrives.

“The markets will probably start to turn prior to October,” she said. “People are going to want to be positioned before that.”

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