SEC clears Franklin Templeton to invest in onchain money fund

The U.S. Securities and Exchange Commission (SEC) has indicated it will not pursue enforcement action if Franklin Templeton’s funds allocate cash to the asset manager’s in-house tokenized money market fund, according to a company filing.

The move represents a milestone for traditional asset managers integrating blockchain technology into cash management, allowing for 24/7 settlement and programmable liquidity. Franklin Templeton’s onchain fund, which operates on the Stellar blockchain, holds U.S. Treasury bills and repurchase agreements, providing a yield-generating alternative to conventional cash instruments.

The SEC’s no-action letter, disclosed in an 8-K filing on Tuesday, follows a broader trend of regulators scrutinizing tokenized assets while acknowledging their potential efficiency gains. The regulator’s stance suggests a cautious but evolving approach to blockchain-based financial products, provided they comply with existing securities laws.

Franklin Templeton, one of the largest asset managers globally, has been at the forefront of exploring blockchain applications for fund administration. Its tokenized money market fund, launched in 2023, was among the first SEC-registered funds to issue shares on a public blockchain, offering transparency and near-instant settlement.

Industry analysts view the SEC’s decision as a signal that tokenized cash products could gain broader acceptance in institutional portfolios, though adoption remains constrained by regulatory clarity and market infrastructure. The move may encourage other asset managers to explore similar offerings, particularly as demand for yield and liquidity solutions grows amid higher interest rates.

Franklin Templeton declined to comment beyond the filing. The SEC did not immediately respond to a request for further details.