Franklin Templeton to put tokenized BENJI into ETFs, mutual funds

Franklin Templeton will place its tokenized Franklin Onchain U.S. Government Money Fund, known as BENJI, inside exchange-traded funds and mutual funds after the Securities and Exchange Commission issued a no-action clearance. Individual fund boards must approve onboarding before any funds hold the tokenized product, and placements could begin as early as the fourth quarter.

The tokenized money-market assets total about $2.6 billion. The SEC’s no-action position allows Franklin funds to use BENJI for cash management and as collateral for trading, settlements and redemptions, rather than requiring investors to buy tokenized products directly.

Franklin oversees more than 130 ETFs with roughly $82 billion in assets and mutual funds holding about $790 billion. Combined, the firm manages about $872 billion in fund assets; any use of BENJI will proceed fund by fund after board approvals and operational onboarding.

Franklin intends to hold BENJI tokens either as a cash management instrument within portfolios or as collateral to support trading, settlements and redemptions. The firm has previously distributed tokenized funds through digital wallets and plans to issue additional tokenized products that could serve similar roles across its fund lineup.

Market figures show tokenized assets have reached more than $38 billion in total value. Tokenized holdings can enable continuous transfers and may allow more efficient use of collateral compared with using only traditional cash instruments.

Sandy Kaul, head of digital assets and innovation at Franklin, described the SEC response as a first for the firm, saying: “This is the first time the SEC has said a digitally native product can be used in traditional financial products.”

Franklin’s next steps include completing operational readiness, onboarding individual funds and obtaining approvals from the boards that govern each fund before adding any tokenized holdings to fund portfolios.