SEC staff clear Franklin's mutual funds and ETFs to hold its onchain money fund despite custody rules

Franklin Templeton/Franklin OnChain US Government Money Fund (BENJI)

The SEC's Division of Investment Management issued a no-action letter letting Franklin Templeton's registered funds invest their cash in the onchain FOBXX fund, even though its shares do not meet some 1940 Act custody rules. Staff treated the blockchain-plus-transfer-agent record as equivalent to existing book-entry systems, citing a 1992 Franklin letter.

• Relief from parts of Rule 17f-2 under the Investment Company Act.
• Franklin's transfer agent creates and controls the funds' wallets and keeps the private keys.
• Fund assets were about $726M at the time.
• Each fund's board must approve before it starts; Franklin expects that in Q4 2026.