Franklin Templeton Files for Bitcoin and Ethereum Index ETF with SEC

Highlights:

• The leading asset manager proposes a Bitcoin and Ethereum ETF index to the SEC.
• The fund offers exposure to Bitcoin and Ethereum without holding these volatile assets.

• The company will sell shares in blocks, ensuring easier access for institutional and retail investors.

Franklin Templeton, a leading global asset manager overseeing trillions in assets, has submitted a proposal to the United States Securities and Exchange Commission (SEC) to launch a Bitcoin and Ethereum index exchange-traded fund (ETF). 

JUST IN: 🇺🇸 $1.6 trillion Franklin Templeton files for #Bitcoin and Eth Index ETF with SEC. pic.twitter.com/ZE6MCMx0J3

— Bitcoin Magazine (@BitcoinMagazine) October 3, 2024

The fund, called Franklin Templeton Bitcoin & Ethereum Crypto Index ETF, aims to give investors exposure to Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, without directly holding these volatile assets. This move comes as interest in cryptocurrency investments is rising among both institutional and retail investors seeking diversified access to digital assets.

The trust’s assets will include BTC, ETH, cash, and short-term instruments with a maturity of fewer than three months. BNY Mellon, a firm offering worldwide financial services, will oversee the fund as both the custodian and transfer agent. For cryptocurrency custody, Coinbase Custody, a subsidiary of the prominent crypto exchange Coinbase, has been chosen to securely hold the underlying assets.

The proposed ETF will be linked to the CF Institutional Digital Asset Index, which monitors the performance of Bitcoin and Ethereum according to current market conditions.

New ETF Offers Bitcoin and Ethereum Shares in Blocks

According to the filing, this ETF will be the first of its kind to hold both Bitcoin and Ether, making it a distinctive asset in the digital currency ETF market. The asset manager aims to simplify access for institutional and retail investors to top cryptocurrencies. It offers both assets in one product, eliminating the need to navigate the volatility and complexities of crypto exchanges.

Franklin Templeton will offer the Bitcoin & Ethereum Crypto Index ETF in blocks of 50,000 shares. The price per block will correspond to the net asset value (NAV) of the Bitcoin and Ethereum held by the fund. However, the ETF will not engage in staking or other income-generating activities with the digital assets.

The ETF filing is part of the asset manager’s expansion into blockchain technology. Recently, the firm introduced the OnChain U.S. Government Money Market Fund on the Aptos blockchain. This move increases the fund’s flexibility, as using tokens allows for buying and selling on the blockchain.

Franklin Templeton, a global asset management giant, announced that it will expand its OnChain U.S. Government Money Fund (FOBXX) to the Aptos blockchain, having previously launched on Avalanche. The asset management scale has reached $420 million, and it can choose to hold its…

— Wu Blockchain (@WuBlockchain) October 2, 2024

SEC Review May Lead to Approval of First Dual Crypto ETF

The ETF launch requires approval from the US SEC and aims to protect investors from fraud and market manipulation related to the underlying assets. The proposal highlights oversight agreements with regulated futures markets, such as CME Bitcoin and Ether Futures, as part of its framework.

Crypto ETFs face challenges in the US due to strict regulations, with the Securities and Exchange Commission showing skepticism. This situation arises as several applications for crypto-related ETFs, including Bitwise’s XRP ETF, have been submitted. The regulator has often emphasized the need for strong anti-fraud measures. Franklin Templeton’s plan aims to address this by utilizing regulated futures markets and a secure custody system.