According to a preliminary prospectus filed on September 3rd, 2019 with the U.S. Securities and Exchange Commission (SEC), Franklin Templeton plans to tokenize a new fund. The fund will leverage the Stellar blockchain to track its own shares but will not involve any cryptocurrencies.
Franklin Templeton to Tokenize a Fund on Stellar Explained
Franklin Templeton Investments is a global investment firm which manages almost $700 billion worth of assets.
Now, the firm is trying to receive regulatory approval to tokenize a new fund on the Stellar blockchain.
The fund will be primarily comprised of government securities, cash, and repurchase agreements which are fully collateralized by either government securities or cash. Investments will entail shares that are issued, transferred, and managed on a blockchain, but no cryptocurrencies will be involved.
To help users manage their investments, Franklin Templeton also plans to create a mobile app to allow investors to purchase, monitor, and redeem their tokenized shares. The app will be available in both the Apple Store and Google Play.
Franklin Templeton recently told The Block,
“[We believe] that blockchain technologies have the possibility to knit traditional asset management products and services closer to transactional payments… A registered money market fund that is backed by hard assets and registered with the SEC under the Investment Company Act of 1940, with its shares existing as native digital assets on a blockchain and held in a digital wallet, can be an ideal stable digital asset to be used in the new economy. “
An increasing number of traditional financial securities firms are entering the digital asset realm.
Out of a concern for regulatory compliance, most are entering through security tokens. In differing from ICOs, the Security Token Offering (STO) explicitly declares itself a securities offering, and therefore must abide by its jurisdiction appropriate securities laws.
So far, the nascent security token industry has raised nearly $1 billion through assets to include equity, real estate, investment funds, and fine art.
What do you think of Franklin Templeton trying to receive SEC-approval to tokenize a new fund? We’d like to know what you think in the comments section below.
Image courtesy of Franklin Templeton.