- The SEC gave Franklin Templeton a no-action letter allowing its traditional funds to invest in its blockchain-based BENJI fund.
- This lets mutual funds and ETFs use BENJI for cash management without meeting certain older custody requirements.
- BENJI invests primarily in US government securities and aims to maintain a $1 share price.
- The fund has around $726 million in assets.
- BENJI originally launched on Stellar in 2021 and has since expanded to Ethereum and Solana.
The SEC has cleared the way for Franklin Templeton's traditional investment funds to use its blockchain-based BENJI fund for cash management.
The SEC's Division of Investment Management issued a no-action letter that allows Franklin's registered funds, including mutual funds and ETFs, to hold shares of its OnChain U.S. Government Money Fund without having to meet certain physical custody requirements designed for traditional assets.
In simple terms, Franklin's conventional investment products can now use the blockchain-based fund in a way that would previously have created regulatory issues.
What is BENJI?
BENJI is Franklin Templeton's tokenized money market fund.
The fund invests primarily in US government securities and aims to maintain a stable $1 share price.
It uses blockchain technology alongside Franklin's existing record-keeping system. Transactions are recorded on the blockchain, while Franklin's affiliated transfer agent maintains control of the private keys and official shareholder records.
This setup allows the fund to benefit from some of the advantages of blockchain, including faster transactions and more frequent pricing updates, while maintaining traditional controls over the assets.
BENJI originally launched on Stellar in 2021 and has since expanded to other blockchains, including Ethereum and Solana.
According to RWA.xyz, the fund currently has around $726 million in assets, with most of the assets still held on Stellar.
The SEC's decision is another step toward traditional financial products using onchain infrastructure for real-world financial assets, without requiring the entire investment product itself to be built around crypto.
