SEC Clears Franklin Templeton Funds to Hold Tokenized Assets

The regulatory decision, issued by the SEC’s Division of Investment Management, removes a significant barrier for Franklin’s conventional investment products to utilize the tokenized fund, which manages approximately $726 million in assets. By bypassing technical compliance with Section 17(f) and Rule 17f-2 of the Investment Company Act of 1940, the firm can now integrate its blockchain-based BENJI shares into broader cash-management strategies without adhering to outdated vault-storage requirements.

Under the approved structure, Franklin Templeton Investor Services will manage blockchain wallets for the investing funds while retaining control of the associated private keys. The system relies on an integrated model where official shareholder records are maintained by an affiliated transfer agent, which also holds administrative authority to correct blockchain transaction errors. This hybrid approach mirrors established book-entry custody systems, drawing on regulatory precedents set as far back as 1992. Bloomberg analyst James Seyffart noted that the move effectively bridges the gap between traditional investment vehicles and tokenized infrastructure, providing a legal pathway for funds to gain direct exposure to the Stellar-based product.