SEC Issues No-Action Letter for Franklin Templeton On-Chain Government MMF
Summary
- The US Securities and Exchange Commission has issued a no-action letter for Franklin Templeton’s on-chain government money market fund (MMF).
- The on-chain fund is a government MMF that invests at least 99.5% of its total assets in US government securities, cash, and repurchase agreements (RP).
- James Seyffart said the letter opens a path for Franklin Templeton’s registered funds, including mutual funds and exchange-traded funds (ETFs), to hold the on-chain fund even if they do not technically satisfy existing custody rules.
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The US Securities and Exchange Commission has issued a no-action letter for Franklin Templeton’s on-chain government money market fund.
James Seyffart, a Bloomberg ETF analyst, said on August 12 that the letter states SEC staff would not recommend enforcement action if certain conditions are met, even when US-registered open-end and closed-end funds affiliated with Franklin Templeton fail to satisfy some requirements of Rule 17f-2 under the Investment Company Act of 1940 while holding the Franklin OnChain U.S. Government Money Fund.
The on-chain fund is a government MMF that invests at least 99.5% of its total assets in US government securities, cash, and repurchase agreements fully collateralized by government securities or cash. It does not invest in digital assets such as cryptocurrencies. Instead, it uses blockchain technology to record ownership of fund shares.
Seyffart added that the letter opens a path for Franklin Templeton’s registered funds, including mutual funds and exchange-traded funds, to hold the on-chain fund even if they do not technically comply with existing custody rules.
JH Kim
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