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Franklin Templeton Launches Money Market Fund, Blockchain Style
Here’s something interesting, American asset management giant Franklin Templeton is launching a government money market fund – and it wants it on the blockchain.
The fund will be called the Franklin Blockchain Enabled U.S. Government Money Fund, and per its prospectus, it will invest “at least 99.5% of its total assets in Government securities, cash and repurchase agreements collateralized fully by Government securities or cash.”
Under no circumstances will it invest in cryptocurrency, but it will have “blockchain-based shares.” What does that mean?
Although the Fund’s transfer agent will maintain the official record of share ownership in book-entry form, the ownership of the Fund’s shares will also be recorded on the Stellar network, an electronic distributed ledger that is secured using cryptography (referred to as a “blockchain”).
That’s right, in addition to old-school book-entry, the whole thing will be tracked and maintained on the blockchain.
Amusingly however, the blockchain record seems to have no real purpose other than – as Matt Levine points out – to allow the fund to have the word “blockchain” on it. Here’s what the prospectus also said:
“…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.”
At any rate, Franklin Templeton does seem to have an eye on handing the whole thing to the blockchain eventually, writing that “in the future, the ownership of the Fund’s shares may be maintained and recorded solely on the Stellar network.” Shares of the fund are purchasable through an app, in which a blockchain wallet and a corresponding public and private key pair will be created for each investor. Secondary market trading however is still not available. The company also believes that these blockchain-based shares increase transparency to shareholders and may even “permit reduced settlement times and provide other benefits” going forward.