SEC issues no-action letter allowing Franklin Templeton to invest registered funds into its on-chain U.S. Government Money Fund, signaling regulatory approval for tokenized fund structures.
Regulation & Gov ·
The SEC's Division of Investment Management granted Franklin Templeton a no-action letter permitting the firm's conventional registered investment funds to hold stakes in its OnChain U.S. Government Money Fund, a blockchain-based structure. The letter signals regulatory comfort with tokenized fund vehicles operating under existing compliance frameworks.
This clearance establishes a pathway for established asset managers to layer blockchain-native instruments into their traditional fund ecosystems without requiring novel regulatory classifications. The no-action letter format allows the SEC to take no enforcement action against the specified activity, effectively endorsing the arrangement within the firm's current regulatory perimeter.
The approval may accelerate institutional adoption of tokenized treasury and real-world asset structures by demonstrating that SEC oversight can accommodate digital fund mechanics alongside conventional fund registration. Open questions remain around whether this letter's reasoning will apply to other asset classes or fund sponsors, and whether broader regulatory codification will follow.