SEC Clears Franklin Templeton to Add Tokenized Assets to Traditional Funds

Franklin Templeton has received U.S. regulatory clearance that could place its tokenized money market fund inside conventional mutual funds and exchange-traded funds as early as the fourth quarter of 2026. The move marks a significant step in integrating blockchain-based assets into the traditional investment system.

The U.S. Securities and Exchange Commission's Division of Investment Management issued a no-action letter on August 12, stating it would not recommend enforcement action if Franklin Templeton's registered funds hold shares of the Franklin OnChain U.S. Government Money Fund under a proposed custody arrangement. The fund, known by the ticker FOBXX, uses the BENJI token to represent each share on public blockchains. The SEC relief specifically applies to custody rules under the Investment Company Act of 1940, waiving certain requirements originally designed for physical securities, such as vault storage and regular physical inspections.

Under the approved structure, Franklin Templeton Investor Services will create wallets for participating funds and retain control of the associated private keys. The affiliated transfer agent will continue to maintain the official...