Franklin Templeton Secures SEC Approval for BENJI Tokenized Fund Investments
U.S. Treasuries
The U.S. Securities and Exchange Commission has granted regulatory approval allowing Franklin Templeton’s registered mutual funds and ETFs to hold the BENJI tokenized money market fund directly. This decision resolves long-standing custody challenges related to Section 17(f) and Rule 17f-2 of the Investment Company Act, which previously required physical certificate safeguards incompatible with blockchain-based assets. By utilizing the Stellar blockchain alongside traditional transfer-agent oversight, Franklin Templeton can now integrate tokenized government debt instruments into its broader investment portfolios. This development marks a significant shift in how institutional investment vehicles manage digital assets, moving away from legacy physical custody requirements toward electronic, blockchain-enabled record-keeping. The SEC’s no-action correspondence validates the firm's hybrid architecture, which combines on-chain transaction data with authoritative off-chain shareholder documentation. This approval enables more efficient cash management and capital allocation strategies across Franklin’s registered investment products. Ultimately, this milestone reinforces the institutional viability of tokenized funds by aligning modern blockchain infrastructure with established regulatory frameworks.
Key points
- ▸SEC approval permits registered funds to hold BENJI tokenized money market shares directly.
- ▸Regulatory relief bypasses legacy physical custody requirements for blockchain-based fund assets.
- ▸Franklin Templeton utilizes Stellar blockchain infrastructure paired with traditional transfer-agent oversight.
- ▸Authorization enables broader institutional use of tokenized government debt for cash management.
Background
Franklin Templeton’s BENJI fund, or the Franklin OnChain U.S. Government Money Fund (FOBXX), is a tokenized money market fund that invests primarily in U.S. government securities, cash, and repurchase agreements. It functions by issuing digital tokens on public blockchains to represent ownership shares, allowing investors to track their holdings via a digital wallet while maintaining the regulatory compliance of a traditional mutual fund.
Relevance
9/10