Overview
- The SEC Division of Investment Management said in a no‑action letter dated Aug. 12 that it would not recommend enforcement if eligible Franklin funds used Franklin Templeton Investor Services as custodian for the Franklin OnChain U.S. Government Money Fund under the firm’s proposed hybrid model.
- Franklin’s hybrid custody and transfer‑agent structure keeps an official shareholder file with an affiliated transfer agent while recording transactions on public blockchains and having Franklin Templeton Investor Services create and control wallets and private keys.
- The firm says individual fund boards and onboarding checks must approve any use of BENJI/FOBXX, and Franklin expects some products could begin using the tokenized fund as a holding, cash position, or collateral as early as the fourth quarter if approvals and operational steps are completed.
- Franklin and executives have argued the tokenized structure can enable hourly NAVs, intraday trading, faster settlement and lower operating costs, which would let fund managers manage cash more precisely and potentially capture more yield on idle balances.
- The SEC letter is a staff enforcement position limited to the facts presented rather than formal Commission approval, so adoption will be phased, fact‑specific, and not automatically transferable to other firms or different custody arrangements.