Franklin Templeton Tokenized Assets Gain SEC Staff Relief for Traditional Fund Use

• Franklin Templeton tokenized assets gain SEC staff relief for use inside traditional investment funds.
• The approval covers the $721 million Franklin OnChain U.S. Government Money Fund.
• Twelve conditions require oversight, audits, and control measures for tokenized fund shares.

Franklin Templeton tokenized assets are moving closer to broader adoption after SEC staff granted regulatory relief for the firm’s blockchain-based money market fund. According to Bloomberg, the clearance allows the Franklin OnChain U.S. Government Money Fund to be held as collateral inside conventional ETFs and mutual funds. The move could introduce blockchain-based assets into traditional investment structures.

The latest development marks a regulatory step for Franklin Templeton tokenized assets as the firm prepares to integrate digitally native products into existing fund structures. The SEC Division of Investment Management issued a no-action position allowing Franklin Templeton Investor Services to manage blockchain-recorded fund shares.

The relief applies to the Franklin OnChain U.S. Government Money Fund, which reported around $720.9 million in net assets on July 31. The fund operates on the Stellar blockchain and recorded a 3.50% seven-day net yield.

The SEC clarified that the decision does not represent a formal rule or approval from the commission. The staff letter stated that the position has no legal force but provides regulatory clarity for the structure.

Franklin Templeton will create separate Stellar wallets for each investment fund. The firm will maintain official ownership records and control over wallet administration.

The expansion of Franklin Templeton tokenized assets comes with twelve conditions designed to protect investors and maintain operational controls. Fund boards must approve the arrangement and review it annually.

Franklin Templeton Investor Services must retain the ability to correct errors, freeze records, migrate wallet information, and restore ownership data when necessary. Independent public accountants must also verify fund holdings multiple times each fiscal year.

The development reflects growing interest in tokenized assets within traditional finance. Blockchain-based securities allow financial products to use digital records while maintaining existing investment structures.

Franklin Templeton’s move follows broader institutional efforts to connect blockchain infrastructure with regulated markets. The company has positioned its OnChain U.S. Government Money Fund as an example of how traditional funds can operate with blockchain technology.

The SEC staff relief also allows fund shares to be used for cash balances and securities lending collateral, expanding potential applications for tokenized investment products.

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