On August 12, 2026, the SEC’s Division of Investment Management issued a No-Action Letter (the Letter) granting no-action relief to Franklin Templeton under Section 17(f) of the Investment Company Act of 1940 (the 1940 Act) and Rule 17f-2. The Letter provides that the SEC staff would not recommend enforcement action where Franklin Templeton’s affiliated transfer agent acts as custodian for certain Franklin Templeton funds’ investments in shares of a blockchain-recorded money market fund, notwithstanding noncompliance with Rule 17f-2(b), (e), and (f), which addresses the physical custody of certificated securities.
The relief was conditioned on 12 representations centered on the transfer agent’s control of the master securityholder file and the authoritative ownership record as a whole, with control of the private key being one of the many factors cited. The Letter provides useful insight into a transfer agent’s design of its control framework around blockchain-recorded money market fund shares and was issued against the backdrop of broader SEC attention to how existing transfer agency and custody frameworks should apply to digital asset and tokenized fund infrastructure.