Franklin Templeton has received SEC clearance to incorporate tokenized assets into conventional investment funds, marking the first time a major asset manager has been authorized to bridge blockchain-native instruments into traditional fund structures.
The SEC Division of Investment Management issued a no-action letter on August 12 stating it would not recommend enforcement action against Franklin funds investing in the Franklin OnChain U.S. Government Money Market Fund, a tokenized vehicle whose shares exist as digital assets on the Stellar blockchain. The letter was reported by Bloomberg on August 20.
What the Clearance Allows
The decision enables Franklin Templeton’s conventional mutual funds and ETFs to hold shares of its own tokenized money market fund as a cash management and collateral tool. Sandy Kaul, the firm’s head of digital assets and innovation, told Bloomberg that the structure would allow the company to manage cash more efficiently across its $1.74 trillion in assets under management.
Previously, the tokenized fund operated as a standalone product with a minimum investment threshold. The SEC ruling opens the door for its integration into broader portfolio construction, where it could serve as a yield-bearing alternative to traditional cash equivalents.
A Bridge Between Two Worlds
Franklin Templeton’s tokenized money market fund, known by its ticker BENJI, already holds roughly $900 million in assets and runs on the Stellar blockchain. It invests primarily in short-term U.S. government securities, with the blockchain layer providing real-time settlement and transparency into holdings.
By allowing conventional fund shares to reference BENJI, the SEC is effectively endorsing a model where tokenized instruments become plumbing for the existing financial system rather than a parallel ecosystem. The ruling does not require any changes to fund prospectuses or investor disclosures, according to the no-action letter.
Paul Atkins, the SEC chairman appointed earlier this year, has previously compared the tokenization of securities to the transition from analog to digital audio, signaling the agency’s comfort with the technology’s maturation.
Implications for the $10 Trillion RWA Market
The clearance arrives as tokenized real-world assets have surpassed $10 billion in total value locked, led by BlackRock’s BUIDL fund at approximately $2.17 billion. Franklin Templeton’s FOBXX fund follows at roughly $900 million. The ability to route traditional fund capital into these vehicles could significantly accelerate the sector’s growth.
Franklin Templeton has also partnered with MoonPay to expand institutional access to its tokenized money market fund, and recently filed with the SEC for a dividend-to-Bitcoin ETF structure that could launch as early as September 2026 if regulatory approval is granted.
The SEC’s decision reflects a broader shift in Washington’s approach to digital assets under the current administration, moving away from enforcement-first tactics toward a framework-based posture that accommodates tokenization within existing regulatory boundaries.
Sources: Bloomberg; Crypto Briefing; SEC no-action letter (August 12, 2026); Franklin Templeton press release
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