SEC Clears Franklin Templeton Funds to Invest in Tokenized BENJI Fund

The U.S. Securities and Exchange Commission has cleared Franklin Templeton's registered mutual funds and exchange-traded funds to invest directly in the firm's blockchain-based money market fund, a move that removes key custody barriers and could deepen the integration of tokenized assets within traditional finance. The SEC's Division of Investment Management issued a no-action letter on August 12, 2026, permitting Franklin's funds to hold shares of the Franklin OnChain U.S. Government Money Fund, known by its ticker FOBXX and often referred to by its BENJI token.

The decision addresses a long-standing regulatory hurdle. Under the Investment Company Act of 1940, registered funds face strict custody requirements originally designed for physical securities and vault storage. The SEC's letter states it will not recommend enforcement action if Franklin's funds hold FOBXX shares under the proposed arrangement, exempting them from certain provisions of Rule 17f2 that mandate physical certificate notation and vault controls. This relief allows Franklin to use its tokenized fund for cash management purposes across its broader lineup of conventional investment products.