Franklin Templeton Wins SEC Staff Relief for Its $721M Onchain Fund
Franklin Templeton has received SEC staff clearance to integrate its $721 million blockchain-based money market fund, the Franklin OnChain U.S. Government Money Fund (FOBXX), into its conventional mutual funds and ETFs. This development marks a significant milestone as the first U.S. regulatory relief allowing digitally native products to be held within traditional investment portfolios. The SEC staff provided this relief by setting aside specific custody provisions of the Investment Company Act of 1940, provided that Franklin Templeton adheres to twelve strict operational conditions. These conditions include annual board reviews, independent public accountant verification of holdings, and the retention of administrative control over smart contracts by Franklin Templeton Investor Services. By utilizing the Stellar blockchain, the firm aims to use these tokenized shares for cash balances and securities lending collateral. This move bridges the gap between legacy financial structures and blockchain-based assets, potentially increasing the utility of tokenized funds. The decision sets a precedent for other investment managers, as the SEC's letter explicitly names 23 additional firms that could benefit from similar arrangements.
- ▸SEC staff cleared Franklin Templeton to hold FOBXX tokens within conventional mutual funds and ETFs.
- ▸FOBXX reported $720.9 million in net assets and a 3.50% seven-day yield as of July 31.
- ▸Twelve conditions include mandatory annual board reviews and three independent audits per fiscal year.
- ▸The relief allows tokenized shares to be utilized for cash balances and securities lending collateral.
Franklin Templeton is a global investment firm managing over $1.6 trillion in assets. The Franklin OnChain U.S. Government Money Fund (FOBXX) is a tokenized money market fund that operates on the Stellar blockchain, providing investors with a digital representation of their holdings while maintaining traditional fund characteristics.