Every mutual fund and exchange-traded fund keeps a small amount of cash. That cash pays investors when they sell, covers ordinary expenses, and lets the manager move quickly when an opportunity appears. Since ordinary cash earns almost nothing, the standard move is to park those dollars in a money market fund - a low-risk place to hold money for a short period.
Franklin Templeton's version is different. Its Franklin OnChain U.S. Government Money Market Fund, known as BENJI, is tokenized. Its shares exist on a blockchain, a shared digital ledger that a network of computers updates and keeps secure.
A letter from the SEC and a company executive says BENJI can serve as a cash position or as collateral inside ETFs and mutual funds. This lets a blockchain-native product handle a job normally done by traditional cash.
Franklin says this marks the first U.S. regulatory approval for a digital-native asset to be used inside a traditional fund.
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The firm is not new to blockchain. It has already placed a standard ETF onchain, so clients can hold it through a crypto wallet. Now the innovation is moving the other direction: a tokenized product is entering the funds themselves.
There is a catch: the boards that oversee each mutual fund and ETF must still vote before their own fund can add BENJI. Franklin says the change could be ready as early as the fourth quarter.
Tokenized asset values have grown to about $38 billion over the past year, according to industry data, while BlackRock and BNY Mellon continue expanding similar efforts. Wall Street has moved beyond early experiments.
Franklin Templeton is a large manager, with more than 130 ETFs and $82 billion in assets, and its mutual funds hold an even bigger base. Keep tokenized money fund is still small at about $2.6 billion, but the new approval gives it a path into much larger pools of cash.
No one needs to buy a crypto coin or manage wallet balances directly. If a fund adds BENJI, the tokenized cash works behind the scenes and replaces some of the low-yield cash position.
"We want our funds to experience the efficiency of having a better money market fund option: manage more precisely, capture more of the yield, and more tightly manage how much cash liquidity they have to hold," said Sandy Keul, who leads digital assets and innovation at Franklin.
Money market funds have concrete standard home for fund cash because they offer stability plus a small return. BENJI can deliver the same while operating faster and more transparently. Based on these advantages, traditional funds can now use blockchain-based cash instruments without forcing shareholders to deal with crypto details.
If your fund's cash buffer is upgraded, you benefit without taking any action.
As tokenized cash enters traditional funds, let the Always Be Buying E-Book guide your investing journey.