The Securities and Exchange Commission issued a no-action letter allowing Franklin Templeton fund managers to invest cash in the Franklin OnChain U.S. Government Money Fund, a tokenized, interest-bearing vehicle that holds U.S. government securities and targets a $1 stable share price. Under the SEC’s response, the agency will not take enforcement action provided Franklin Templeton meets a set of specified conditions and guardrails.
The letter also permits Franklin Templeton Investor Services (FTIS), the affiliated transfer agent, to serve as custodian for the tokenized funds and to hold the funds’ private keys without being subject to the SEC’s existing physical-custody rules. That relief was granted in response to a formal no-action request from Franklin Templeton.
The SEC’s approval is conditional. The letter sets out a dozen requirements, including controls to prevent unauthorized instructions and administrative capabilities for FTIS to correct, freeze, migrate or restore records. The firm must maintain systems and processes designed to protect assets and ensure operational integrity of the on-chain fund.
Franklin Templeton manages roughly $2.5 billion in tokenized or on-chain assets, making it one of the larger tokenized asset managers by that metric. The firm expanded its crypto efforts this year by creating a dedicated crypto division and acquiring asset manager 250 Digital in June as part of its broader push into tokenization and digital asset services.
