“We are committed to continuing to explore these opportunities as part of our broader digital assets strategy,” said Sandy Kaul, head of digital assets and industry advisory services at Franklin Templeton, in a press statement on Monday 28 October, commenting on the regulatory approval in Luxembourg to operate its first tokenised Ucits fund. Photo: Franklin Templeton

“We are committed to continuing to explore these opportunities as part of our broader digital assets strategy,” said Sandy Kaul, head of digital assets and industry advisory services at Franklin Templeton, in a press statement on Monday 28 October, commenting on the regulatory approval in Luxembourg to operate its first tokenised Ucits fund. Photo: Franklin Templeton

Following approval from Luxembourg’s financial regulator, the CSSF, Franklin Templeton’s tokenised Ucits fund is set to become the first public blockchain-based investment product in Luxembourg, the firm claimed. The fund aims to leverage proprietary technology for secure and cost-effective fund management.

Franklin Templeton announced on Monday 28 October 2024 that it had received regulatory approval from the Luxembourg Financial Sector Supervisory Commission (CSSF) to launch Luxembourg’s first fully tokenised undertakings for collective investment in transferable securities (Ucits) fund. Shares in the new fund will be issued via Franklin Templeton’s blockchain-enabled transfer agency platform, utilising blockchain technology for transparency, security and operational efficiency.

Scheduled for launch in the coming months, the fund is expected to be widely distributed throughout Europe pending further regulatory approvals. This product represents the first Ucits fund in Luxembourg to utilise public blockchain technology developed entirely in-house. Franklin Templeton’s internal blockchain infrastructure supports this initiative, bringing digital assets into the realm of regulated investment products in Europe.

Sandy Kaul, Franklin Templeton’s head of digital assets and industry advisory services, emphasized the firm’s commitment to integrating new technologies to enhance its services. Kaul highlighted that blockchain technology has the potential to transform client engagement and noted that future projects may involve additional tokenised financial products leveraging blockchain-native capabilities.

Over the past four years, Franklin Templeton has developed the necessary infrastructure to support these initiatives, including capabilities in regulatory compliance, custody, digital wallet creation and legal risk management, stated the firm in its press release. Since entering the digital asset ecosystem in 2018, Franklin Templeton has introduced several digital solutions, such as the Franklin OnChain US Government Money Fund, launched in April 2021. This fund was notable for being the first US-registered mutual fund to utilise a public blockchain for transaction processing and ownership recording. In this context, Roger Bayston, executive vice president and head of digital assets, emphasised the firm’s close collaborations with global regulators in the development of these new products. He further noted that Franklin Templeton’s extensive blockchain expertise and proprietary technologies bolster its position in advancing the use of blockchain within the investment community.

Blockchain technology functions as a decentralised ledger, securely recording transactions in a transparent and immutable manner. Unlike traditional databases, blockchain’s decentralisation ensures that data is permanently recorded and visible, which reduces security risks and administrative burdens. Asset tokenisation, facilitated by blockchain, enhances liquidity, accessibility and transparency, said Franklin Templeton.

Matt Harrison, head of Americas (ex-US), Europe and UK, stated that this fund marks a significant step in Franklin Templeton’s commitment to leveraging blockchain for client services outside the US. He affirmed that the company’s solutions improve security, transparency and efficiency, reinforcing Franklin Templeton’s position in the digital asset landscape.

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