SEC grants Franklin Templeton nod for tokenized money fund investment

The Franklin OnChain U.S. Government Money Fund, which invests in U.S. government securities and aims to maintain a stable $1 share price, will now be accessible for investment by affiliated Franklin Templeton funds. Crucially, the SEC's letter also permits Franklin Templeton Investor Services (FTIS), an affiliated transfer agent, to act as the custodian for these tokenized funds and manage their private keys without being subject to existing physical-custody rules.

This regulatory nod comes in response to a formal no-action request letter submitted by Franklin Templeton. The SEC's approval is contingent upon adherence to 12 specific conditions. These include requirements for Franklin Templeton to implement robust systems that prevent unauthorized instructions and for FTIS to maintain stringent administrative controls, such as the capability to correct, freeze, migrate, or restore records.

Franklin Templeton is a notable player in the tokenized asset space, managing approximately $2.5 billion in onchain assets through its tokenized funds, positioning it as the fifth-largest manager of such assets according to RWA.xyz. The firm has been actively expanding its presence in the crypto and tokenization sector, notably by launching a dedicated crypto division and acquiring crypto asset manager 250 Digital in June.