Bullish

SEC Grants Franklin Templeton No-Action Relief for On-Chain Tokenized Fund Custody

09:04

SEC allows Franklin Templeton to use Stellar-based system for tokenized fund shares, bypassing physical custody rules under strict oversight conditions.

Woofun AI reports that the U.S. Securities and Exchange Commission issued a no-action letter to Franklin Templeton, permitting the on-chain custody of its tokenized fund shares. The regulator approved the use of an affiliated transfer agent and a Stellar-based integration system to hold investments in the OnChain Fund, a tokenized U.S. government money market fund. This arrangement allows the firm to bypass certain physical custody requirements under the Investment Company Act of 1940.

The SEC stipulated that enforcement action will not be recommended provided specific conditions are met. These requirements include board oversight, separation of wallets and records, daily reconciliations, independent accountant audits, and proper handover procedures.

WOOFUN AI

Impact Assessment · Quick Read

This no-action letter represents a significant regulatory precedent for Real World Asset (RWA) tokenization, validating blockchain-based custody for traditional financial instruments. By explicitly permitting the bypass of physical custody rules under strict controls, the SEC signals a potential pathway for broader institutional adoption of tokenized funds. This development may reduce friction for other asset managers seeking to tokenize treasury or money market products, potentially increasing liquidity and accessibility in the RWA sector.

Generated by WOOFUN AI · For reference only, not investment advice