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Franklin Templeton gets SEC no-action relief for on-chain money fund use in cash and collateral

Photorealistic header: modern vault with a glowing blockchain ledger, FOBXX tokens, and SEC-inspired on-chain cash management

Franklin Templeton said the U.S. Securities and Exchange Commission’s Division of Investment Management has granted no-action relief tied to its on-chain money fund FOBXX, allowing registered funds to use the product for cash management and securities-lending collateral.

The development was reported in connection with Franklin Templeton’s institutional collateral program, and the SEC staff position is described as covering a custody arrangement in which ownership is tracked through a blockchain-integrated system rather than legacy paper-based securities procedures. The relief appears to be limited to Franklin’s structure and the facts it presented to the regulator.

How the arrangement is described

According to reporting on the letter, the SEC staff did not issue a broad rule change. Instead, it gave Franklin Templeton a no-action position for its proposed setup, which would let participating registered funds hold shares of FOBXX and use them as part of cash management and securities lending collateral.

The structure is also described as supporting operational features such as intraday trading, hourly net asset value calculations and faster transaction processing. The reported arrangement relies on a blockchain-linked recordkeeping system, with the affiliated transfer agent retaining control of the private keys and the official shareholder record.

One public Franklin Templeton press release also describes an institutional off-exchange collateral program involving tokenized money market shares, although it does not itself state the SEC approval directly.

What the relief changes for registered funds

The reported effect is practical rather than symbolic: registered funds would be able to use FOBXX within their own cash and collateral workflows without forcing the digital ownership record into custody rules built for certificated securities.

Coverage of the letter says the arrangement comes with safeguards, including separate wallets for participating funds, daily reconciliation and oversight requirements. The staff position is described as tied to Franklin’s facts and controls, rather than a general endorsement of tokenized fund custody.

For now, the most concrete change is that Franklin Templeton has regulatory breathing room to use an on-chain money fund in a way that links tokenized ownership records with traditional fund operations.