What happened
- Specific facts/numbers: On August 12, 2026, the SEC Division of Investment Management said it would not recommend enforcement action if Franklin Templeton’s U.S. registered open-end and closed-end funds invest in shares of the Franklin OnChain U.S. Government Money Fund without complying with paragraphs (b), (e) and (f) of Rule 17f-2.
- Institutions involved: The key parties are the U.S. Securities and Exchange Commission, Franklin Templeton, Franklin Templeton Investor Services LLC as transfer agent, Franklin Resources, Inc., and the Franklin OnChain U.S. Government Money Fund (BENJI/FOBXX).
- Regulatory/technical context: The SEC response covers Section 17(f) of the Investment Company Act of 1940 and Rule 17f-2, while describing FTIS’s integrated recordkeeping system that combines an internal book-entry system with one or more blockchains to maintain the official ownership record.
- What to watch next: Watch whether Franklin Templeton expands use of BENJI across more affiliated registered funds under this structure; no broader SEC rulemaking or next milestone was identified in the materials reviewed.
Why it matters
The letter gives a regulated path for a large asset manager to use a tokenized money market fund as an internal cash-management tool, which could lower operational friction for similar onchain fund structures.
HKMA Relevance
Indirect: The decision is a U.S. regulatory development, but it may influence how global asset managers and regulators, including in Hong Kong, assess tokenized fund operations and custody models.
Story details
Sources
- Primary source: https://www.sec.gov/rules-regulations/no-action-interpretive-exemptive-letters/division-investment-management-staff-no-action-interpretive-letters/franklin-templeton-081226
- Secondary source: https://www.ledgerinsights.com/sec-greenlights-franklin-templeton-funds-to-park-cash-in-tokenized-benji-fund