Key Highlights
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SEC grants approval for Franklin Templeton’s registered funds to access tokenized BENJI directly.
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Mutual funds and ETFs managed by Franklin can now include BENJI holdings following custody authorization.
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BENJI operates through Stellar blockchain infrastructure paired with conventional transfer-agent oversight.
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Regulatory relief addresses custody challenges that previously blocked registered fund participation.
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Franklin broadens BENJI’s application in institutional finance and cash management operations.
Franklin Templeton has obtained regulatory approval from SEC staff permitting its registered investment vehicles to allocate capital directly into its BENJI blockchain-enabled money market fund. This authorization eliminates significant custody obstacles that had previously prevented mutual funds and exchange-traded funds from holding these digital assets. The development enables Franklin to embed tokenized government money market products more comprehensively throughout its conventional investment offerings.
Regulatory Authorization Enables Direct BENJI Holdings
The SEC Division of Investment Management provided the no-action correspondence under provisions of the Investment Company Act. The exemption addresses Section 17(f) and Rule 17f-2 standards that govern how registered investment companies manage custody relationships. Franklin’s investment products can now maintain FOBXX positions without adhering to multiple regulations originally created for tangible securities.
These legacy provisions emphasize physical certificates, vault security protocols, and similar safeguards for physical asset custody. FOBXX operates through electronic records and blockchain-based transactions instead of issuing paper certificates to document ownership. The regulatory body approved Franklin’s proposed framework because conventional shareholder oversight mechanisms continue to function within the architecture.
Franklin Templeton Investor Services will establish Stellar network wallets for registered portfolios allocating to FOBXX. The firm will maintain custody of the private keys associated with these digital wallets. Concurrently, the affiliated transfer agent will preserve official shareholder documentation and manage related administrative responsibilities.
BENJI Merges Distributed Ledger Technology With Conventional Oversight
FOBXX integrates blockchain infrastructure with traditional book-entry mechanisms rather than depending exclusively on decentralized ledgers. Transaction data gets recorded on Stellar’s network, while the transfer agent maintains authoritative ownership documentation. This architecture provides Franklin with multiple protective measures for addressing transaction discrepancies or recovering shareholder data.
The regulatory agency drew comparisons to previous book-entry custody frameworks that functioned without tangible securities. Additionally, the commission referenced a 1992 no-action determination involving Franklin during its evaluation of this current application. That earlier precedent established support for regulatory recognition of securities documented through digital records.
Franklin introduced FOBXX on the Stellar network in 2021 as one of the earliest blockchain-enabled registered investment vehicles. BENJI tokenizes shares of the money market fund using blockchain technology. The fund’s holdings primarily consist of United States government debt instruments, cash positions, and repurchase agreements.
Franklin Scales Institutional Applications for Tokenized Product
Franklin has deployed BENJI across multiple blockchain platforms following its initial Stellar network introduction. The fund subsequently expanded to Ethereum, Polygon, Avalanche, Arbitrum, Base, Aptos, and Solana networks. These multi-chain deployments enhanced blockchain accessibility while preserving established fund administration and ownership verification processes.
The investment firm has also built institutional use cases for BENJI extending beyond simple portfolio allocation. Recent collaborations incorporated stablecoin exchange capabilities, collateral posting functions, corporate treasury solutions, and over-the-counter settlement infrastructure. Franklin additionally authorized qualified participants to execute peer-to-peer BENJI share transfers between whitelisted blockchain addresses.
Previous strategic alliances integrated BENJI with Binance, MoonPay, and Payward platforms for institutional financial workflows. Nevertheless, the SEC authorization concerns a distinct application within Franklin’s proprietary registered investment vehicles. The approval now permits these portfolios to utilize FOBXX directly for compliant cash management operations under the prevailing custody framework.
