Franklin Templeton gets SEC clearance to bring tokenized assets into traditional funds

Franklin Templeton is preparing to use tokenized assets inside conventional investment funds after receiving SEC staff relief allowing its funds to invest in shares of its blockchain based money market fund. The SEC Division of Investment Management said in an August 12 no action letter that it would not recommend enforcement action against Franklin funds using Franklin Templeton Investor Services as custodian for investments in the Franklin OnChain U.S. Government Money Fund, subject to a series of conditions. The SEC stressed that the letter reflects a staff position on enforcement and does not constitute Commission approval or a legal conclusion. The decision gives Franklin funds flexibility to use the OnChain Fund for cash management, including cash balances and securities lending collateral. Franklin said the structure could eventually allow its tokenized money market fund to be used inside ETFs and mutual funds, bringing tokenized assets directly into conventional portfolios. The OnChain Fund uses an integrated recordkeeping system in which blockchain networks record transaction and anonymous shareholder information while Franklin Templeton Investor Services maintains the off...