Franklin Templeton is seeking a U.S. SEC exemption, and plans to enable tokenized funds to trade via blockchain liquidity pools.
46 minutes ago
Franklin Templeton held discussions with staff from the U.S. Securities and Exchange Commission (SEC)’s Cryptocurrency Task Force yesterday on regulatory issues for tokenized fund transactions, exploring whether regulatory exemptions can be secured to allow tokenized money market funds and ETFs to trade on blockchain trading platforms and liquidity pools. Discussion topics include: whether investors can exchange tokenized money market fund shares for tokenized stocks or ETFs via trading pairs; whether liquidity providers may charge service fees; and whether relevant liquidity pools need exemptions from provisions of the Investment Company Act, Securities Act, and Securities Exchange Act. Existing rules set clear requirements for the trading price, pricing timing, and trading venues of fund shares, which may limit such on-chain transaction models. The SEC rolled out its Innovation Exemption Mechanism on September 17, permitting eligible blockchain platforms to conduct limited tokenized stock transactions provided they meet conditions including trading volume limits, shareholder rights protection, and smart contract audits. Franklin Templeton’s latest exploration extends regulatory discussions to tokenized fund shares and on-chain liquidity pools, though the relevant exemptions have not yet been approved.
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