SEC Gives Franklin Relief to Use Tokenized Cash in Traditional Funds

Franklin Templeton has secured relief from the SEC that will allow its traditional investment funds to use a blockchain-based money market fund for cash management and collateral. The relief, which Bloomberg reported on, gives Franklin's conventional funds a way to invest in the Franklin OnChain U.S. Government Money Fund, known as BENJI.

The SEC stressed that this relief is not formal approval, but rather applies only to the specific arrangement and conditions outlined in the request. Tokenized cash has been gaining ground, with Franklin expecting individual fund boards to approve the arrangements before the funds can begin using it in the fourth quarter.

BENJI records transactions on a blockchain, with Stellar as its primary blockchain. The fund calculates its net asset value hourly and allows trading during the day, giving funds faster access to cash and speeding up transactions, Franklin says.

Franklin launched BENJI in 2021, using tokens to represent shares. As of April 29, the broader BENJI suite had about $1.98 billion in assets. The SEC relief could bring tokenized funds closer to broader use in traditional portfolios.