$700B Asset Manager Wants to Use Stellar Blockchain for a U.S. Government Money Fund

Siamak Masnavi

On Tuesday (September 3), Franklin Templeton, one of the world's largest asset managers with total assets under management (AUM) of almost $700 billion, filed a preliminary prospectus with the U.S. Securities and Exchange Commission (SEC) for a new U.S. Government money market fund that will record the ownership of the fund's shares on the Stellar blockchain.

Here are some details about this proposed new fund:

  • The fund aims to "maintain a stable $1.00 share price" and to " provide investors with as high a level of current income as is consistent with the preservation of shareholders’ capital and liquidity."
  • The fund will invest "at least 99.5% of its total assets in Government securities, cash and repurchase agreements collateralized fully by Government securities or cash."
  • Although the fund will not invest in any cryptocurrencies, it will have blockchain-based shares. What this means is that although the fund's transfer agent will "maintain the official record of share ownership in book-entry form," share ownership "will also be recorded on the Stellar network."

The prospectus points out that "in the event of a conflict between the blockchain record and the record held by the transfer agent, the transfer agent’s record will be determinative." Such a discrepancy could "result in a delay of the processing of a purchase and redemption order."

And finally, Franklin Templeton warns that using distributed ledger technology (DLT) is "untested for mutual funds."

It is possible to purchase/redeem the funds's shares via a mobile app (available for both iOS and Android). The minimum initial purchase is $20 (for most accounts), but there is minimum investment requirement for further purchases of shares.

On August 21, Coindesk reported that Securitize, a "platform for the issuance and management of digital securities", had announced that it had registered as a transfer agent with the SEC, which means that it can now "act as the official keeper of records about changes of ownership in securities."

Carlos Domingo, Co-Founder and CEO of Securitize, told Coindesk:

We can increase the amount of securities issued on the blockchain and give comfort to people that this is a regulated space. The SEC has also started approving other types of exempted securities like Reg A+ and down the road those people will need transfer agents.

 

Featured Image Courtesy of Franklin Templeton Investments