The U.S. Securities and Exchange Commission (SEC) has just issued a no-action letter to Franklin Templeton. Through its Division of Investment Management, the SEC allows the asset manager’s lineup of registered mutual funds and ETFs to invest funds directly into the OnChain U.S. Government Money Fund (FOBXX), its own real-world asset (RWA) tokenization product also known by the ticker BENJI.
This approval includes exemptions from Section 17(f) and Rule 17f-2 of the Investment Company Act of 1940 - legacy regulations originally designed purely to secure physical securities. Citing Bloomberg ETF analyst James Seyffart, this permission opens the door for Franklin’s registered funds to hold on-chain investments despite technically not meeting traditional custody rules. As the basis for the decision, the SEC referenced a 1992 no-action letter that also involved Franklin as a legal precedent.
Merging Conventional Records and Blockchain
As a compliance compromise, Franklin has implemented a hybrid structure. They combine the conventional transfer agent record book with live transaction data from the blockchain network. All crypto wallets for these registered fund products are managed directly by Franklin Templeton Investor Services. To date, FOBXX has around $726 million in assets under management, with more than 99.5% of the total portfolio allocated to U.S. government debt securities.
This investment fund has relied on Stellar as its native blockchain since its initial launch in 2021, positioning it as one of the pioneer US mutual funds on a public network. FOBXX’s expansion footprint is now much broader. This tokenized asset is also accessible on Solana, Aptos, Ethereum, Avalanche, Arbitrum, Base, and Polygon, though the majority of its asset value still resides on the Stellar ledger.
Cross-Entity Collateral and Portfolio Rebalancing
The SEC’s new approval expands the utility of the BENJI token beyond passive investment. Franklin’s ETFs and mutual funds can now use it as an instrument for daily cash management, portfolio rebalancing, and even as collateral and liquidity provider between registered funds. This step extends the growing list of integrations achieved by BENJI throughout 2026. Earlier this year, Franklin and Binance released an off-exchange collateral program, followed by BENJI’s listing on the Kraken exchange in May, and the product’s entry into MoonPay Trade in June.
The blockchain-based real-world asset landscape now holds a massive market share. RWA.xyz statistics show that this tokenized market already has more than 1.7 million asset holders with a total distributed value exceeding $38 billion. As custody regulations from the 1940s era finally soften to make room for digital wallets, the line between traditional financial systems and crypto infrastructure is slowly merging into one.
As reported by crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
