Franklin Templeton’s registered mutual funds and exchange-traded funds have received SEC staff clearance to invest in the firm’s blockchain-based OnChain U.S. Government Money Fund, known as FOBXX and marketed as BENJI. The relief comes through a no-action letter from the SEC’s Division of Investment Management focused on how those shares are held and recorded.
The staff said it would not recommend enforcement under Section 17(f) of the Investment Company Act and Rule 17f-2 if Franklin’s registered funds hold FOBXX shares through the structure described by the firm. That structure pairs traditional transfer-agent records with blockchain transaction data while keeping control of private keys inside Franklin Templeton’s own systems.
How the custody structure works
The arrangement approved in the no-action letter does not replace the conventional shareholder record with blockchain alone. Instead, Franklin Templeton uses an integrated record-keeping model in which on-chain records sit alongside a traditional book-entry framework.
Under that setup, the affiliated transfer agent remains responsible for the official shareholder file. It also retains the ability to correct or restore records if necessary, a point that appears central to the SEC staff’s position on custody and recordkeeping.
Private keys tied to the holdings remain under the control of Franklin Templeton Investor Services. The no-action position means SEC staff would not pursue enforcement on the facts presented, rather than creating a broader rule change for all market participants.
What the decision means for BENJI
The letter gives Franklin Templeton’s registered funds a path to use BENJI as a cash-management instrument without having to satisfy certain physical custody requirements that would otherwise apply. In practice, that expands the range of Franklin products that can access the tokenized money market fund.
FOBXX invests primarily in U.S. government securities. In the latest filing cited in the report, the fund had roughly $726 million in assets under management.
The decision is also notable because it preserves the transfer agent’s central role even as the fund uses blockchain-based records. Franklin’s structure keeps the official ownership ledger with the transfer agent rather than shifting that function entirely to a public or permissioned chain.
A broader push for institutional use
Franklin Templeton has been widening the institutional uses of BENJI beyond its original launch. The source report said the firm has integrated the product with MoonPay Trade and with Payward, the company behind Kraken, for on-chain trading and collateral use.
FOBXX has developed significantly since its 2021 launch on Stellar. Its assets are now spread across additional networks, including Solana and other blockchains, although Stellar remains a major base layer for the product.
Those steps fit with Franklin Templeton’s broader effort to make a tokenized money fund usable within both traditional fund infrastructure and blockchain-based financial workflows.
What comes next
The immediate confirmed outcome is narrow but important: Franklin Templeton’s registered mutual funds and ETFs can invest in FOBXX under the custody and recordkeeping approach described to SEC staff. The no-action letter addresses enforcement posture under the cited provisions, not a change to the underlying law.
The next practical test will be how widely Franklin deploys that permission across its fund lineup and whether BENJI’s role as a treasury and collateral tool continues to grow through existing integrations. For now, the clearest takeaway is that the SEC staff accepted a hybrid model in which blockchain records are used, but the affiliated transfer agent remains the authoritative keeper of shareholder ownership records.
Source: crypto.news