Franklin Templeton has secured a first-of-its-kind green light from the SEC to let its own registered mutual funds and ETFs hold its blockchain-based money market token, BENJI, directly on their books. The relief is one of the clearest signals yet that tokenized real-world assets are moving from standalone products into the plumbing of traditional finance itself.
Coin Bureau reported that the $872 billion asset manager's blockchain-based money market fund can now be held as collateral inside ETFs and mutual funds, bringing tokenized assets directly into vehicles that ordinary investors already hold. The SEC's own no-action letter, dated August 12, confirms the Division of Investment Management will not recommend enforcement action if Franklin's registered funds invest in the Franklin OnChain U.S. Government Money Fund, whose shares are represented onchain by the BENJI token.
What BENJI Actually Is
BENJI represents shares of the Franklin OnChain U.S. Government Money Fund (ticker FOBXX), a registered mutual fund that invests in U.S. Treasury securities, repurchase agreements and cash. Each token corresponds to one fund share, and the fund itself now spans multiple public blockchains including Stellar, its original home, alongside Polygon, Arbitrum, Avalanche, Base, Solana and Ethereum. The fund held roughly $717-828 million in assets as of early August, a modest figure next to Franklin's overall book but significant as a proof of concept for tokenized cash management at an $872 billion firm.
The Custody Workaround
The relief specifically exempts Franklin from three provisions of Rule 17f-2 under the Investment Company Act of 1940, a decades-old rule written for physical stock certificates that doesn't cleanly map onto blockchain-based recordkeeping. The SEC's reasoning hinges on Franklin's hybrid custody structure: its affiliated transfer agent retains control of the private keys and the official shareholder register, while the blockchain networks themselves simply record transactions. That structure lets Franklin argue the tokenized shares are still, functionally, custodied the way a traditional fund would custody any other security.
Related: Tokenized Stocks Could Repeat Wall Street's 1960s Paper Crisis
Why This Matters Beyond Franklin
Franklin Templeton has said it plans to bring more tokenized products to market for use as cash or collateral now that the custody question has a regulatory answer, and other large asset managers have been watching similar structures closely. Letting a fund manager's own traditional vehicles hold its tokenized product as collateral is a meaningfully different milestone than simply offering a tokenized fund to outside investors: it treats the onchain asset as fungible with any other qualifying security inside the existing fund ecosystem, rather than as a separate, novel category that needs its own market structure built around it.
