Franklin Templeton Discusses SEC Exemptions for On-Chain Trading of Tokenized Funds

Franklin Templeton is seeking potential regulatory exemptions that would allow tokenized money market funds and exchange-traded funds (ETFs) to trade on blockchain-based venues, according to Odaily Planet Daily. On Oct. 9, the global asset manager met with staff from the U.S. Securities and Exchange Commission’s cryptocurrency task force to review legal and operational questions tied to tokenized fund trading, including pricing, fees, and the structure of asset pools. Topics included whether investors could exchange blockchain-based fund shares for tokenized National Market System stocks through blockchain trading venues, and whether liquidity providers would be permitted to charge service fees. The discussion also touched on how the Investment Company Act’s pricing rules apply and whether exemptions would be needed. For tokenized ETFs, Franklin Templeton raised questions about whether trading pairs involving tokenized stocks, approved payment stablecoins, or tokenized money market funds—as well as related liquidity pools—would require an investment company regulatory exemption. As of Sept. 30, the firm’s preliminary disclosure showed $1.79 trillion in assets under management. Franklin Templeton’s blockchain-based fund efforts date back to 2021 with the launch of the Franklin OnChain U.S. Government Money Fund. Shares in the fund are represented by the BENJI token; transferring the token transfers the corresponding shares, with transactions recorded and tracked via the Benji Technology Platform to maintain shareholder records. (Bitcoin.com News)