Franklin Templeton: SEC Clears Onchain Fund Custody
U.S. Treasuries
Franklin Templeton has secured a significant no-action letter from the SEC Division of Investment Management regarding its OnChain U.S. Government Money Fund, known as FOBXX. This regulatory relief permits the fund to be utilized for cash management and as collateral for securities lending, moving beyond traditional physical-securities settlement requirements. By enabling ownership to be recorded directly on its blockchain-integrated system, the firm can now facilitate intraday trading and more efficient collateral management. This development marks a pivotal shift in how institutional-grade money market funds interact with distributed ledger technology. It effectively bridges the gap between legacy financial infrastructure and blockchain-based settlement, enhancing the utility of tokenized assets. For the broader RWA market, this approval signals a growing regulatory comfort with using on-chain assets for complex financial operations. The move underscores the increasing integration of tokenized government securities into mainstream institutional workflows.
Key points
- ▸SEC granted no-action relief for Franklin Templeton's $FOBXX onchain money market fund.
- ▸FOBXX can now serve as collateral for securities lending and cash management.
- ▸Blockchain-integrated system replaces legacy physical-securities rules for ownership recording.
- ▸Regulatory approval enables intraday trading capabilities for the tokenized fund.
Background
Franklin Templeton is a global investment firm that launched the first U.S.-registered mutual fund to use a public blockchain for transaction recording and share ownership. The FOBXX fund invests primarily in U.S. government securities, cash, and repurchase agreements, providing investors with a digital representation of their holdings via the Benji Investments platform.
Relevance
9/10