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Franklin Templeton Wins SEC Relief for Tokenized Fund in ETFs
SEC no-action letter lets Franklin Templeton's OnChain U.S. Government Money Fund serve as cash management tool for ETFs and mutual funds. Board approvals needed before Q4 use.
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Franklin Templeton can now let its ETFs and mutual funds invest in shares of the Franklin OnChain U.S. Government Money Fund. The SEC staff issued a no-action letter on August 12, opening a regulated path for blockchain-based fund shares inside standard portfolios.
The Division of Investment Management said it would not recommend enforcement action if Franklin Templeton Investor Services acts as custodian for eligible fund investments. Each fund board must approve the arrangement before use. Franklin said some portfolios could begin using the OnChain Fund in the fourth quarter, depending on those approvals and each fund’s needs.
The OnChain Fund uses blockchain networks to record transactions and anonymous shareholder data. Franklin Templeton Investor Services keeps the official ownership record, while Stellar serves as the fund’s main public blockchain. Franklin said the setup supports hourly net asset value calculations, intraday trading and faster transaction processing. The firm also expects the structure to help funds manage liquidity more closely while reducing operational costs over time.