SEC staff clears Franklin Templeton's traditional funds to park cash in its own onchain money fund

The SEC's Division of Investment Management issued a no-action letter to Franklin Templeton on Wednesday allowing the firm's registered funds — mutual funds and ETFs — to hold shares of its Franklin OnChain U.S. Government Money Fund, ticker FOBXX and marketed as BENJI, for cash management purposes, The Block reported, citing the letter itself.

The mechanics are narrower than the headline suggests. The letter turns on Section 17(f) of the Investment Company Act of 1940 and Rule 17f-2, the custody provisions written decades ago around physical share certificates and vaults. Staff concluded that investing funds need not satisfy certain of those provisions, because BENJI's record-keeping is not really a bearer-asset arrangement: it combines internal book-entry data with transaction records written to the Stellar blockchain, while Franklin Templeton Investor Services — an affiliated transfer agent — creates and controls the Stellar wallets, holds the private keys, runs administrative functions and maintains the official shareholder file, with the ability to correct errors and restore records. Staff found that close enough to prior book-entry setups to grant relief, and cited a 1992 no-action letter that also involved Franklin.

FOBXX launched on Stellar in 2021 and has since been issued on other chains including Ethereum and Solana. It invests primarily in U.S. government securities and targets a stable $1 share price. Assets stand at roughly $726 million, the majority on Stellar, according to RWA.xyz data cited by The Block.

Key facts

• No-action letter issued by the SEC's Division of Investment Management and posted Wednesday, Aug. 12, 2026 (The Block, citing the letter).
• Relief covers Section 17(f) and certain Rule 17f-2 requirements of the 1940 Act (the letter, via The Block).
• Franklin Templeton Investor Services controls the Stellar wallets and private keys and maintains the official shareholder file (the letter, via The Block).
• Staff cited a 1992 Franklin no-action letter as precedent (the letter, via The Block).
• FOBXX/BENJI: launched on Stellar 2021; also on Ethereum and Solana; ~$726M AUM, majority on Stellar (RWA.xyz, via The Block).

The real-world read

Read the conditions and the "onchain" framing thins out fast. The reason staff could grant relief is precisely that a single affiliated entity holds every private key, controls the shareholder record and can reverse mistakes — a permissioned ledger mirroring a conventional book-entry system, which is why a 1992 letter was usable as precedent at all. This is a custody accommodation for a centralized product, not a blessing of self-custodied onchain assets.

Two things go unsaid. First, a no-action letter is staff-level, applies to the requester, and creates no rule other issuers can lean on. Second, this is Franklin funds buying a Franklin fund; the reporting details the custody analysis but not the affiliated-transaction or fee-layering arrangements a shareholder would want disclosed, or any cap on how much cash can be routed this way.

Note also that the $726 million figure comes from RWA.xyz, a third-party tokenization dashboard, not audited fund reporting. And The Block discloses that Foresight Ventures is its majority investor and that Bitget is an anchor LP of Foresight.

Opinion, and whose

Bloomberg Intelligence analyst James Seyffart, on X: the letter "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." That "not technically satisfying" is Seyffart's characterization of the gap, not the SEC's language.

Sources

• The Block (Daniel Kuhn), Aug. 12, 2026 — the account of the no-action letter, the 17(f)/17f-2 analysis, the wallet and transfer-agent conditions, the 1992 precedent, and the Seyffart quote. Not sponsored; The Block discloses Foresight Ventures as majority investor and Bitget as a Foresight anchor LP.
• SEC Division of Investment Management no-action letter — the primary document, as described in The Block's report.
• RWA.xyz — the ~$726M AUM and chain breakdown, via The Block.

Nothing here is investment advice.