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FollowingSEC staff approves Franklin Funds to use chain-linked money funds for cash management and collateral
The U.S. Securities and Exchange Commission (SEC) staff has approved Franklin Funds to use chain-linked money funds for cash management and collateral. This is a limited approval that allows regulated money market funds to operate through blockchain-based structures rather than purely traditional models.
SEC staff approves the authority granted to Franklin Funds
The approval comes from the SEC's Investment Management Department, which issued a no-objection letter and explanation letter against Franklin Templeton staff. The letter is a staff-level position and is not a formal rule change or full committee approval. It applies to Franklin Funds using chain money funds for two specific purposes specified in the approval: holding cash and providing collateral.
According to the company's press release regarding the development, Franklin Templeton has said it is preparing a tokenized finance plan for its institutional money market fund.
Why on-chain money funds are crucial to the cash and collateral process
Cash and collateral have different functions in fund operations. Cash is used for day-to-day liquidity and settlement, while collateral is used to support positions or obligations. The approval connects money funds on the same chain to both.
The core fund involved this time is Franklin's on-chain U.S. Government Monetary Fund, a regulated money market product available on its official product page. Operating a money fund on the chain means that shares and records are maintained on the blockchain, so the approval is seen as a progress at the market structure level rather than a regular fund filing.
For readers of tokenized finance, the significance lies in the combination itself: a regulated fund approved by SEC staff for institutional cash and collateral processes, rather than a broad blockchain concept.
What does this mean for the broader tokenized fund narrative
This development allows Franklin Funds with an on-chain structure to be integrated into institutional workflows. Related reports linked the plan to institutions trading tokenized money funds and using them as collateral. Staff involvement is why this incident has attracted much attention at the regulatory news level-it is a specific fund use case rather than a broad policy shift, and the approval should be interpreted only in light of the specific facts about the Franklin Fund it involves.
This move adds impetus to the migration of regulated financial products up the chain, a trend that has attracted attention and is also accompanied by changes at the level of other institutions. For now, the approval is based on a realistic adoption signal from a fund management company's specific use case.
