Franklin Templeton has received SEC staff relief that could allow its traditional investment funds to use a blockchain-based money market fund for routine cash management and as collateral in securities lending. The arrangement centers on the Franklin OnChain U.S. Government Money Fund, known as BENJI.
The SEC emphasized that its letter is not a formal approval and applies only to the specific structure and conditions described in Franklin’s request. Franklin said individual fund boards would still need to review and approve the setup before any eligible funds begin using it, a step the firm expects could lead to implementation in the fourth quarter.
What the relief would permit
The staff relief gives Franklin’s conventional funds a path to invest in BENJI, a tokenized government money fund that the firm wants to use as a cash-management tool. It would also allow the fund to be used as collateral for securities-lending activity, extending its role beyond a standalone digital-asset product.
That matters because it would connect a tokenized money fund directly with traditional registered funds rather than limiting the product to separate digital-asset use cases. Even so, the SEC’s response was narrowly framed, making clear that the position is limited to this particular proposal.
How BENJI is structured
Franklin launched BENJI in 2021, using tokens to represent fund shares. Transactions are recorded on a blockchain, while Franklin continues to maintain the official ownership records.
Stellar serves as the fund’s primary blockchain. Franklin says the product calculates its net asset value every hour and supports trading during the day, features the firm argues can improve access to cash and make transaction processing faster for funds using it.
A step in Franklin’s digital-assets push
The relief fits into Franklin Templeton’s broader effort to expand its digital-assets business. The company has continued to add to that strategy, including through its acquisition of 250 Digital.
Franklin has argued that tokenized funds can make cash management more efficient and reduce the amount of liquidity managers need to keep idle. Sandy Kaul, the firm’s head of digital assets and innovation, has previously said those tools could help asset managers put cash to work more effectively.
Scale and what comes next
According to Franklin, the broader BENJI suite held about $1.98 billion in assets as of April 29. That gives the firm an existing base from which to test wider operational use inside conventional funds if the planned approvals are completed.
The next confirmed step is board review at the individual fund level. Franklin expects those approvals to be considered before any use begins in the fourth quarter, and the SEC’s letter does not extend beyond the arrangement and conditions described in the request.
Source: Coin Edition