SEC allows Franklin Templeton funds to invest in onchain money fund
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The U.S. Securities and Exchange Commission (SEC) issued a no-action letter permitting Franklin Templeton fund managers to invest cash in its blockchain-based Franklin OnChain U.S. Government Money Fund without complying with physical custody rules. The SEC also allowed Franklin Templeton Investor Services (FTIS), the affiliated transfer agent, to act as custodian and hold private keys under specific conditions. This decision follows Franklin Templeton’s formal request and applies guardrails to ensure security and control over the tokenized fund assets.
Why it matters
This regulatory approval enables a major asset manager to invest in tokenized money-market funds while bypassing traditional physical custody regulations, potentially streamlining operations and expanding institutional participation in tokenized securities. The SEC’s decision outlines conditions to maintain investor protections, reflecting cautious facilitation of crypto fund innovation under regulatory oversight.
Key context
Franklin Templeton is currently the fifth-largest tokenized asset manager with $2.5 billion in onchain assets. It has recently expanded its focus on crypto and tokenization by launching a crypto division and acquiring 250 Digital, a crypto asset manager. The Franklin OnChain U.S. Government Money Fund invests in U.S. government securities, seeks to maintain a stable $1 share price, and issues interest-bearing tokens.
Key numbers and entities
The SEC issued the no-action letter on Franklin Templeton’s request. Franklin Templeton manages $2.5 billion in onchain assets and is noted by RWA.xyz as the fifth-largest tokenized asset manager. The fund involved is the Franklin OnChain U.S. Government Money Fund. The affiliated transfer agent is Franklin Templeton Investor Services (FTIS).
What remains unclear
The source does not flag open questions or limitations but details 12 specific conditions imposed by the SEC, including controls to prevent unauthorized actions and administrative capabilities for the transfer agent.