Blockchain and Digital Assets Enter the Mainstream
Franklin Templeton and ARK Invest are each pioneers in the crossover between traditional finance and disruptive technologies. Over the last year Dechert has assisted both of these investment managers in innovations that promise to be catalysts for new industry standards.
For Franklin Templeton, Los Angeles- and Silicon Valley-based partner Timothy Spangler helped create a first-of-its-kind SEC registered mutual fund, the Franklin OnChain Government Money Fund, using blockchain to distribute and trade traditional financial assets rather than as the basis for cryptocurrencies such as Bitcoin. “There was no template,” explains Spangler, “so we worked with the client to structure and launch an entirely new type of mutual fund that has the potential to be a game-changer for the industry.” SEC approval was received in April 2021.
“Taking traditional asset management products – such as equity, debt and derivatives – into the digital realm is an evolutionary step-change in how our financial markets operate,” says Spangler. “Dechert’s familiarity in dealing with regulators was invaluable, as the clearance, settlement and trading of digitalized securities had never been considered before by SEC in the context of a retail mutual fund.”
Spangler has also advised ARK Invest on launching their private Bitcoin fund. Increasingly, institutional investors are demanding access to cryptocurrencies in their portfolios and investment management firms, both traditional and alternative, will need to have products available for them. “This a great example of the way in which cryptocurrencies are creating a new paradigm for the way in which funds are stored and transferred for investors,” says Spangler.
“Our team is able to draw on 40-year track record innovating in funds,” adds Spangler, “and when this is combined with our deep expertise in blockchain and digital assets, this gives our clients a powerful advantage.”