Franklin Templeton Secures SEC Approval for Tokenized Assets in Investment Funds
Franklin Templeton is set to integrate tokenized assets into its conventional investment funds following a no-action letter from the SEC. This letter, issued by the SEC Division of Investment Management on August 12, allows Franklin funds to invest in shares of its blockchain-based money market fund without facing enforcement action.
The SEC's decision provides Franklin funds with the flexibility to utilize the Franklin OnChain U.S. Government Money Fund for cash management, including managing cash balances and securities lending collateral. Although the letter reflects a staff position and does not constitute formal approval, it opens the door for Franklin to potentially incorporate its tokenized money market fund into ETFs and mutual funds.
The OnChain Fund operates on the Stellar blockchain and utilizes an integrated recordkeeping system where blockchain networks document transactions and shareholder information, while Franklin Templeton Investor Services maintains the official ownership records. This innovative structure aims to enhance liquidity management by offering hourly net asset value calculations, intraday trading, and faster transaction processing, which could lead to reduced costs.
Sandy Kaul, head of digital assets and innovation at Franklin Templeton, emphasized the firm’s goal to manage cash more effectively, increase yield, and minimize liquidity requirements. The firm anticipates that it could begin utilizing the tokenized fund in conventional portfolios as early as the fourth quarter, pending approval from individual fund boards.
Franklin Templeton launched the OnChain U.S. Government Money Fund in 2021, marking it as the first U.S. registered money market fund to adopt a public blockchain for its official record-keeping system. As of April 29, the broader BENJI suite associated with this fund holds $1.98 billion in assets under management.
Updated 17:04 UTC
New Developments in Tokenized Assets
- Solana's tokenized fund market cap increased by $12.5 million in just one week.
- Over the past 30 days, Solana led all tracked chains with a total increase of $201.2 million in tokenized fund market capitalization.
- Solana currently holds an estimated $1.9 billion in tokenized fund market cap within a total addressable market of approximately $34.7 billion.
- The non-stablecoin real-world asset ecosystem value on Solana has surged to between $3.4 billion and $3.9 billion as of mid-2026.
- Solana achieved the highest year-to-date growth in the tokenized credit fund sector, contributing to a cumulative market cap of $664.3 million in that category.
- 97% of on-chain tokenized equities spot volume is settled on Solana, with daily trading volumes exceeding $680 million.
- Solana's architecture allows for sub-second settlement finality, significantly faster than traditional settlement cycles.
- Transaction costs on Solana are typically measured in fractions of a cent, making it economically viable for fund managers to conduct micro-transactions and frequent rebalancing.
- The concentration of tokenized equity volume on Solana at 97% presents both opportunities and risks for the ecosystem.
- BlackRock and Securitize are notable institutional players actively launching products on Solana's network, indicating confidence in its reliability.
- Concerns remain regarding Solana's historical outages and the regulatory environment for tokenized securities, which is still evolving.
FAQ
What is the significance of the SEC's no-action letter for Franklin Templeton?
The SEC's no-action letter allows Franklin Templeton to integrate tokenized assets into its investment funds without facing enforcement action, providing flexibility to utilize its blockchain-based money market fund for cash management.
How does the OnChain U.S. Government Money Fund operate?
The OnChain Fund operates on the Stellar blockchain, using an integrated recordkeeping system where blockchain networks document transactions and shareholder information, while Franklin Templeton Investor Services maintains the official ownership records.
What benefits does the tokenized fund offer to investors?
The tokenized fund aims to enhance liquidity management by providing hourly net asset value calculations, intraday trading, and faster transaction processing, which could lead to reduced costs for investors.
When does Franklin Templeton expect to start utilizing the tokenized fund in conventional portfolios?
Franklin Templeton anticipates that it could begin utilizing the tokenized fund in conventional portfolios as early as the fourth quarter, pending approval from individual fund boards.
What is the current asset under management for the BENJI suite associated with the OnChain Fund?
As of April 29, the broader BENJI suite associated with the OnChain U.S. Government Money Fund holds $1.98 billion in assets under management.
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