On August 12, 2026, the SEC’s Division of Investment Management issued a no-action letter to Franklin Templeton. The letter covers the Franklin OnChain U.S. Government Money Fund, which trades under the ticker FOBXX. Investors know the product better by its platform name, BENJI. Staff said they would not recommend enforcement action if Franklin’s registered funds hold BENJI shares. That clears Franklin’s own mutual funds and ETFs to use the tokenized fund for cash management. Additionally, those funds can post BENJI shares as collateral in securities lending programs. No traditional fund complex had received that permission before.
Rules Written for Paper Certificates
The relief targets Section 17(f) of the Investment Company Act of 1940 and three paragraphs of Rule 17f-2. Paragraph (b) requires funds to keep securities in a vault, physically segregated. Paragraph (e) demands written notation of every deposit and withdrawal. Paragraph (f) orders independent accountants to examine the physical securities. None of that works when ownership lives in blockchain records. Franklin argued the requirements simply do not map onto uncertificated shares. Notably, the staff agreed and pointed to its own 1992 precedent. That earlier letter went to Franklin Investors Securities Trust on September 24, 1992. It waived the same three paragraphs for non-certificated shares held by an affiliated transfer agent. In effect, the SEC treated blockchain records as the modern version of book-entry.
Who Holds the Keys
Franklin Templeton Investor Services acts as the fund’s affiliated transfer agent. FTIS runs what the filing calls an Integrated System. Private shareholder data stays in off-chain book-entry records. Meanwhile, the blockchain carries anonymized transaction data and serves as the master securityholder file. The two reconcile in real time. Critically, FTIS keeps unilateral administrative control using multiparty computation and multisignature techniques. It can correct errors, freeze records, migrate them, and restore the official ownership record. That control is exactly why the staff granted relief. This is not decentralized custody. Instead, traditional custodial authority survives intact behind a blockchain front end.
The relief also carries twelve operating conditions. Boards must approve the arrangement annually. Each fund needs its own account and its own blockchain wallet. Independent accountants must verify holdings three times a year, twice without warning.
Inside BENJI
Franklin launched the fund on Stellar in 2021. It became the first tokenized money market fund from a major incumbent asset manager. BENJI now spans nine public blockchains. That list includes Stellar, Ethereum, Solana, Polygon, Avalanche, Arbitrum, Aptos, Base, and BNB Chain. The fund holds roughly $726 million and charges a 0.15% management fee. It invests in U.S. government securities and targets a stable $1 share price. Across jurisdictions, Franklin’s tokenized money market funds total about $2.6 billion. The onchain structure supports hourly NAV calculations and intraday trading. As a result, funds can time cash movements far more precisely than legacy settlement allows.
What Changes Across $872 Billion in Funds
Franklin runs 130 ETFs globally holding about $82 billion. Its mutual funds hold roughly $790 billion more. Together, that is $872 billion in vehicles now eligible to use BENJI. Eligible does not mean automatic, however. Each fund board must approve the arrangement, and each fund mandate still governs. Franklin expects implementation in the fourth quarter of 2026, though it could move sooner. For scale, Franklin Resources reported $1.80 trillion in total assets under management on July 31, 2026.
Sandy Kaul, Franklin’s head of digital assets and innovation, framed the appeal in operational terms. She said funds want to manage cash more precisely and capture more of the yield. Kaul added that the SEC has now confirmed “a digitally native product can be used in traditional financial products.”
The Limits of a No-Action Letter
A no-action letter is not a rule, and it is not Commission approval. It reflects staff enforcement views on one specific set of facts. Franklin presented a particular structure with an affiliated transfer agent holding the keys. Other managers cannot assume the same treatment without a substantially similar setup. The staff itself noted that the broader framework for blockchain in regulated funds remains undeveloped. Bloomberg ETF analyst James Seyffart summarized the practical effect plainly. He said it “opens the door for Franklin’s registered funds to hold its OnChain fund.” Still, the relief only covers Franklin holding Franklin.
Why the Rest of the Industry Is Watching
Tokenized Treasury and money market products now hold roughly $10 billion in total. BlackRock’s BUIDL leads that group with close to $2.9 billion. Most of that capital has come from crypto-native firms parking idle cash for yield. This letter points somewhere very different. It puts a tokenized fund inside ordinary retail vehicles that millions of investors already own. Tokenization stops being a parallel product line, and starts becoming plumbing. Other fund sponsors will likely study those twelve conditions closely. Meanwhile, DTCC plans to launch tokenized Treasury settlement in October. Together, those moves suggest the settlement layer is shifting, not just the wrapper around it.
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