The U.S. Securities and Exchange Commission has said it will not take enforcement action over Franklin Templeton’s investment by its fund manager in its own tokenised money market fund.

Cointelegraph reported on Aug. 13 local time that the SEC said on Aug. 12 it would not sanction Franklin Templeton if it invests cash in the Franklin OnChain U.S. Government Money Fund under certain conditions.

The Franklin OnChain U.S. Government Money Fund is an interest-paying tokenised fund that invests in government securities such as U.S. Treasuries. It aims to maintain a price of $1 per share. The decision allows Franklin Templeton to invest in its blockchain-based money market fund without following existing physical custody rules.

The SEC also recognised the custody structure. Franklin Templeton Investor Services, an affiliated transfer agent, can directly hold private keys as custodian of the tokenised fund.

The approval is conditional. The SEC presented 12 conditions. Franklin Templeton must maintain a system to prevent unauthorised instructions. Franklin Templeton Investor Services must also have administrative controls that can correct, freeze, transfer and restore records.