The regulatory action
SEC Division of Investment Management staff issued a no-action letter on August 11 confirming that Franklin Templeton's registered funds may hold shares of the OnChain U.S. Government Money Fund (FOBXX) through the firm's blockchain-integrated recordkeeping system for purposes of Rule 2a-7 cash and collateral requirements. The letter addresses FOBXX shares recorded on the Stellar and Polygon networks through Franklin Distributors, LLC, the fund's transfer agent.
What the ruling actually says
The relief permits registered funds to treat blockchain-recorded FOBXX positions as cash equivalents and qualifying collateral under Rule 2a-7 and Rule 18f-4, provided 12 conditions are met. Those conditions require the blockchain system to maintain books and records meeting Rule 31a-1 standards, ensure shares are freely redeemable at net asset value within one business day, and prevent transfer restrictions beyond those applicable to traditional share classes. The transfer agent must retain full control over share issuance, redemption, and corporate actions onchain.
Affected firms and tokens
Franklin Templeton is the sole fund complex covered. FOBXX, launched in 2021 as the first SEC-registered money fund with blockchain-based share classes, holds roughly $450 million across its traditional and onchain share classes combined. The fund invests exclusively in U.S. government securities and repurchase agreements collateralized by government securities. No other tokenized funds, stablecoins, or digital assets receive similar treatment under this letter.
| FOBXX total assets | ~$450M |
|---|---|
| Onchain share class launch | 2021 |
| Blockchain networks used | Stellar, Polygon |
|---|---|
| SEC no-action letter date | August 11, 2026 |
The procedural path ahead
The no-action position is conditioned on Franklin Templeton submitting semi-annual compliance certifications to the Division. The broader tokenization framework for registered funds remains subject to the Commission's proposed rule amendments released in December 2025, with a comment period closing October 15, 2026. A Commission vote on final rules could occur as early as December 2026. Staff emphasized the letter does not prejudge the outcome of that rulemaking.
Market reaction and the long-term read
Total crypto market cap held at $2.26 trillion with 24-hour volume of $51.8 billion, showing minimal immediate reaction. BTC dominance stands at 56.2% and ETH at 10.0%. The decision is narrowly scoped but signals staff comfort with transfer-agent-operated blockchain recordkeeping for regulated fund assets. Market observers note the 12 conditions create a template other fund complexes may seek to replicate through their own no-action requests.
Key dates in the next 90 days
Franklin Templeton's first semi-annual certification is due February 2027. The tokenization rulemaking comment deadline is October 15, 2026. The Division has indicated it will publish a staff compliance guide for blockchain-based shareholder records by November 2026.