SEC Grants No-Action Letter to FTDA_US for On-Chain Money

The SEC’s Division of Investment Management has issued a no-action letter to FTDA_US, allowing Franklin Templeton to utilize its on-chain money market fund, $FOBXX, for managing cash and collateral for securities lending. This regulatory relief enables the firm to custody and record ownership of fund shares through a blockchain-integrated system, enhancing operational efficiency. The implications for asset management could be substantial as traditional practices evolve to accommodate new technologies, as detailed in Eleanor Terrett’s tweet.

The Key Development

The SEC’s recent no-action letter represents a significant step for FTDA_US, as it allows the firm to use its blockchain-based money market fund, $FOBXX, for managing cash and securities lending collateral. This approval indicates a shift in regulatory stance towards embracing blockchain technology in asset management. With this new capability, Franklin Templeton can facilitate intraday trading, conduct hourly NAV calculations, and process transactions more swiftly, potentially reshaping the landscape for money market funds. This ruling is particularly relevant in a crypto market currently showing mixed signals, as firms seek to innovate within the regulatory framework.

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