Franklin Templeton Gets SEC Clearance for Funds to Hold Tokenized Assets

Franklin Templeton is preparing to bring tokenized assets into traditional investment funds after SEC staff granted relief allowing eligible funds to invest in its blockchain-based U.S. government money market fund.

SEC Staff Grants Franklin Templeton No-Action Relief

The SEC’s Division of Investment Management issued a no-action letter on August 12 covering investments in the Franklin OnChain U.S. Government Money Fund. The relief allows Franklin funds to use Franklin Templeton Investor Services as custodian for those investments, subject to several conditions.

However, the SEC staff made clear that the letter is not formal Commission approval or a legal ruling. Rather, it states that staff would not recommend enforcement action under the arrangements described by Franklin.

The regulatory relief gives Franklin funds greater flexibility to use the OnChain Fund for cash management and securities lending collateral. The asset manager said the structure could eventually place tokenized money market fund shares directly inside conventional products such as mutual funds and exchange-traded funds.

Tokenized Fund Could Enter Traditional Portfolios

Bloomberg reported that Franklin could begin using the tokenized fund within conventional portfolios as early as the fourth quarter. Bloomberg Individual fund boards would still need to approve the arrangements before implementation.

Sandy Kaul, Franklin Templeton’s head of digital assets and innovation, said the firm wants to manage fund cash more precisely while earning additional yield and reducing excess liquidity requirements. The company also plans to develop more tokenized products that could serve as cash or collateral across its investment funds.

The OnChain U.S. Government Money Fund launched in 2021 and uses BENJI tokens to represent fund shares. Its recordkeeping structure uses blockchain networks to record transactions and anonymous shareholder information, while Franklin Templeton Investor Services maintains the official ownership record.

Franklin Expands Tokenized Asset Strategy

Stellar currently serves as the fund’s primary public blockchain. The structure supports features such as hourly net asset value calculations, intraday trading and faster transaction processing, which Franklin identified as potential benefits for cash management.

The wider BENJI platform managed $1.98 billion in assets as of April 29. Franklin has continued expanding its digital asset operations as it develops blockchain-based investment products for institutional and traditional financial markets.

The firm also plans to acquire crypto investment company 250 Digital. The transaction is expected to close during the second quarter of 2026, subject to required approvals and closing conditions.

For more options, traders can explore the best platforms to trade tokenized stocks and compare access to blockchain-based versions of traditional equities.