The U.S. Securities and Exchange Commission has issued a no-action letter allowing Franklin Templeton’s traditional registered funds, including mutual funds and ETFs, to invest in its blockchain-based OnChain U.S. Government Money Fund for cash management.
The SEC said the funds can hold shares of the onchain fund without complying with certain physical-custody and vault requirements under the Investment Company Act of 1940.
The decision effectively allows Franklin’s conventional investment funds to access the operational benefits of the OnChain U.S. Government Money Fund, known as FOBXX or BENJI, including faster transaction processing and more frequent pricing updates.
BENJI uses a hybrid record-keeping system that combines Franklin’s internal records with blockchain transactions. Franklin Templeton Investor Services controls the Stellar wallets and private keys, while the firm’s transfer agent maintains the official shareholder records and can correct or restore records when necessary.
The SEC determined that this structure is sufficiently similar to traditional book-entry custody arrangements, meaning certain rules originally designed for physical securities certificates and vault storage do not need to apply.
BENJI launched on Stellar in 2021 and has since expanded to networks including Ethereum and Solana. The fund primarily invests in U.S. government securities, targets a stable $1 share price and currently manages about $726 million in assets.
The SEC said the funds can hold shares of the onchain fund without complying with certain physical-custody and vault requirements under the Investment Company Act of 1940.
The decision effectively allows Franklin’s conventional investment funds to access the operational benefits of the OnChain U.S. Government Money Fund, known as FOBXX or BENJI, including faster transaction processing and more frequent pricing updates.
BENJI uses a hybrid record-keeping system that combines Franklin’s internal records with blockchain transactions. Franklin Templeton Investor Services controls the Stellar wallets and private keys, while the firm’s transfer agent maintains the official shareholder records and can correct or restore records when necessary.
The SEC determined that this structure is sufficiently similar to traditional book-entry custody arrangements, meaning certain rules originally designed for physical securities certificates and vault storage do not need to apply.
BENJI launched on Stellar in 2021 and has since expanded to networks including Ethereum and Solana. The fund primarily invests in U.S. government securities, targets a stable $1 share price and currently manages about $726 million in assets.