The Securities and Exchange Commission has issued a no-action letter permitting Franklin Templeton fund managers to invest cash balances into the firm’s proprietary tokenized fund, the Franklin OnChain US Government Money Fund. Under the regulatory relief, the agency confirmed it will not pursue enforcement action regarding specific physical custody rules for the blockchain-based money market product, which invests in US government securities to maintain a stable $1 share price.
The decision allows affiliated transfer agent Franklin Templeton Investor Services to serve as custodian for the tokenized assets and manage the corresponding private keys. To qualify for the exemption, the SEC outlined 12 operational conditions. These requirements mandate that Franklin Templeton maintain security systems designed to prevent unauthorized transfer instructions while ensuring its transfer agent retains administrative capabilities to correct, freeze, migrate, or restore onchain ledger records when necessary.
The regulatory approval supports Franklin Templeton’s broader expansion into digital asset management and tokenized real-world assets. The firm currently oversees $2.5 billion in onchain assets across its funds, positioning it as the fifth-largest tokenized asset manager globally. This milestone follows the launch of a dedicated cryptocurrency division and the acquisition of digital asset manager 250 Digital, reinforcing the asset manager’s strategic push into blockchain-based financial infrastructure and modernized cash management solutions.
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