DeFi • August 12, 2026, 5:04PM EDT

SEC clears Franklin Templeton funds to use onchain BENJI system for cash management

Quick Take

Franklin Templeton received a no-action letter from the SEC enabling its traditional registered funds to invest in its blockchain-based BENJI fund for cash management.
The SEC said it would allow the traditional funds to hold those shares without having to meet certain physical-vault requirements.

The U.S. Securities and Exchange Commission’s Division of Investment Management has issued a no-action letter to Franklin Templeton, clearing the way for the firm’s traditional registered funds to invest in its blockchain-based OnChain U.S. Government Money Fund.

In the letter, posted Wednesday, the SEC cites Section 17(f) and Rule 17f-2 of the Investment Company Act of 1940, enabling registered funds to hold shares of the onchain money market fund for cash management without meeting certain physical-vault requirements.

"Essentially, it opens the door for Franklin’s registered funds (mutual funds, ETFs, etc) to hold its OnChain fund despite not technically satisfying 1940 Act custody rules," Bloomberg analyst James Seyffart said on X.

The decision effectively lets conventional Franklin funds access some of the operational advantages of its OnChain U.S. Government Money Fund (FOBXX), often called BENJI, including faster transaction processing and more frequent pricing updates.

Franklin’s onchain fund relies on an integrated record-keeping system that combines internal book-entry data with transaction records on the Stellar blockchain, the agency noted, while the firm’s affiliated transfer agent maintains full control over private keys, administrative functions and the official shareholder file, allowing it to correct errors or restore records if needed.

Under the arrangement, Franklin Templeton Investor Services will create and control blockchain wallets on Stellar for the investing funds and keep the private keys.

That, combined with BENJI’s blended onchain and off-chain transfer agent setup, was similar enough to prior book-entry arrangements that the funds need not satisfy certain Rule 17f-2 provisions written for physical certificates and vaults.

In the letter, the SEC cited a 1992 no-action letter also involving Franklin to justify its decision.

BENJI launched on Steller in 2021 and has since expanded to several blockchains, including Ethereum and Solana. The fund invests primarily in U.S. government securities and aims to maintain a stable $1 share price.

The fund has about $726 million in assets under management, with the majority on Stellar, according to RWA.xyz.

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