Franklin Templeton Investments has submitted to the US Securities and Exchange Commission (SEC) a precursive brochure for a money market fund whose shares would be stored on the Stellar Network.
The scheme needs permission from the SEC. Franklin Templeton Investments, a US-based asset management firm, intends to use the stellar blockchain for the intended fund.
The company submitted a precursory brochure for the Franklin Blockchain Enabled US Government Money Fund. The shares of the fund would be registered on the Stellar network as per the information.
However, this is subject to endorsement of the Securities and Exchange Commission (SEC). It is essential to remember that the company is not going to invest in cryptocurrencies.
In comparison to the conventional book-entry process, only possession of the fund’s shares will be registered on the Stellar network.
The prospectus reads
“In the future, the ownership of the Fund’s shares may be maintained and recorded solely on the Stellar network, although there is no guarantee that this will occur. The Fund will not invest in any cryptocurrencies (referred to as, among other things, virtual currencies).”
The company would attempt to keep $1 as share price and invest “at least 99.5% of its total assets in Government securities, cash and repurchase agreements collateralized fully by Government securities or cash.”
Investors can presently only buy or redeem shares of the fund straight through the application of the asset manager, but not through the secondary market.
Franklin Templeton trusts that shares based on blockchain will offer “increased transparency to Fund shareholders and may, in the future, permit reduced settlement times and provide other benefits to Fund shareholders.”
The firm also said that while it has expertise in handling mutual funds and supervision of risks, it has restricted expertise in blockchain technology, adding:
“On account of these risks, the Fund may never achieve market acceptance and may not be able to attract sizable assets or achieve scale. Under these circumstances, the investment manager and the Fund’s board of trustees may take actions including, potentially, restructuring or liquidating the Fund.”