TLDR
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SEC clears Franklin funds to invest directly in the tokenized BENJI money fund.
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Franklin mutual funds and ETFs can now hold BENJI under SEC custody relief.
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BENJI combines Stellar blockchain records with traditional transfer-agent controls.
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The SEC relief removes physical custody hurdles for Franklin’s registered funds.
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Franklin expands BENJI’s role across cash management and institutional finance.
Franklin Templeton secured SEC staff relief allowing its registered funds to invest directly in its blockchain-based BENJI money market fund. The decision removes key custody barriers that previously complicated direct holdings by mutual funds and ETFs. As a result, Franklin can integrate tokenized government money funds more deeply across its traditional investment products.
SEC Clears Franklin Funds for Direct BENJI Exposure
The SEC Division of Investment Management issued the no-action letter under the Investment Company Act. The relief covers Section 17(f) and Rule 17f-2 requirements governing custody arrangements for registered investment companies. Franklin funds can hold FOBXX shares without following several rules designed for physical securities.
Those older requirements focus on certificates, vault controls, and other physical custody protections. FOBXX uses digital records and blockchain transactions rather than physical certificates for ownership processing. The SEC accepted Franklin’s proposed structure because traditional shareholder controls remain part of the system.
Franklin Templeton Investor Services will create Stellar wallets for registered funds investing in FOBXX. It will also control the private keys connected to those wallets. Meanwhile, the affiliated transfer agent will maintain the official shareholder records and oversee administrative functions.
BENJI Combines Blockchain Records With Traditional Controls
FOBXX uses blockchain technology alongside conventional book-entry systems rather than relying entirely on distributed ledgers. Transaction information appears on Stellar, while the transfer agent maintains the official ownership records. This structure gives Franklin several safeguards for correcting transaction errors or restoring shareholder information.
The SEC compared the arrangement with earlier book-entry custody structures that operated without physical securities. Furthermore, the agency referenced a 1992 no-action position involving Franklin when reviewing the latest request. That precedent helped support regulatory treatment of securities represented through electronic records.
Franklin launched FOBXX on Stellar in 2021 as an early blockchain-based registered investment fund. BENJI represents shares of the money market fund through blockchain infrastructure. Its portfolio mainly holds United States government securities, cash, and repurchase agreements.
Franklin Expands Institutional Uses for Tokenized Fund
Franklin has expanded BENJI across several blockchain networks since its original Stellar launch. The fund later reached Ethereum, Polygon, Avalanche, Arbitrum, Base, Aptos, and Solana. These integrations widened blockchain access while retaining established fund administration and ownership controls.
The asset manager has also developed institutional applications for BENJI beyond direct investment. Recent partnerships added stablecoin conversion, collateral functions, treasury management, and off-exchange trading support. Franklin also enabled eligible holders to transfer BENJI shares directly between approved blockchain wallets.
Earlier partnerships connected BENJI with Binance, MoonPay, and Payward for institutional financial operations. However, the SEC decision addresses a separate use within Franklin’s own registered investment products. The clearance now allows those funds to use FOBXX directly for regulated cash management under the existing custody framework.
