Fund Giant Franklin Templeton Looking at Stellar for Blockchain Share Records
Franklin Templeton views the potential of the Stellar protocol for the issuance of blockchain-backed securities, but is not interested in cryptocurrencies.
Franklin Templeton, the US-based asset management firm, is looking at the potential of the Stellar protocol for issuing and transacting in various blockchain-based investment vehicles. However, the firm warned it is not interested in cryptocurrencies.
Thus, Franklin Templeton enters a still difficult area of the crypto space, the issuance of fully legalized, transparent security tokens. The firm is interested in tokenized government bonds, repurchase agreements, and blockchain-based shares.
In a prospectus filed this September 3, Franklin Templeton explains the policy of the so-called “Franklin Blockchain Enabled U.S. Government Money Fund”.
The firm intends to use traditional accounting methods, but also record the fund’s shares on the Stellar blockchain:
“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”)...The Fund will not invest in any cryptocurrencies (referred to as, among other things, virtual currencies).”
However, the fund will be based on other assets, and not depend on the price of XLM, the native Stellar asset. Franklin Templeton also preserved the right to delay or cancel the listing on the Stellar network as needed, and rely only on traditional accounting.
However, the intention to use a public blockchain to help with the building of an investment fund is a novelty. Businesses have the options of building permissioned or private blockchains, to avoid depending on older networks.
The Stellar network is similar to the Ripple ecosystem, using a system of verifying servers. The network has been accused of concentrating votes on a handful of servers with a high level of trust, thus limiting the pool of participants to a form of digital oligarchy.
XLM currently trades at $0.062, down by about 50% since the start of 2019. The asset is among the leading altcoins that continuously lost positions. This is despite the success of the Stellar protocol, which is used for testing by IBM, as well as becoming the platform for the new KIN tokens on the Kik chat app.