Overview
- The SEC’s Division of Investment Management issued a no-action letter on August 12, 2026, saying it would not recommend enforcement under Section 17(f) and Rule 17f-2 if Franklin’s registered funds hold shares of the OnChain U.S. Government Money Fund (FOBXX) under the proposed custody model.
- Under the approved setup, Franklin Templeton Investor Services will create and control blockchain wallets and private keys while an affiliated transfer agent will maintain the official shareholder file and have the ability to correct or restore records.
- The letter removes custody constraints that had prevented Franklin’s mutual funds and ETFs from investing directly in BENJI and allows the firm to route cash from its broader fund lineup into the tokenized money market product for cash management and liquidity uses.
- FOBXX operates as a Rule 2a-7 government money market fund that tokenizes shares as BENJI across public blockchains and primarily holds U.S. government securities, cash, and fully collateralized repurchase agreements.
- The SEC relied on prior book-entry custody precedent, including a 1992 Franklin letter, and made clear the no-action relief is fact-specific so the same approach is not automatically available to other firms or different custody arrangements.