Franklin Templeton has submitted a proposal for a Bitcoin and Ethereum index ETF (exchange-traded fund) to the U.S. Securities and Exchange Commission (SEC).
If the securities regulator approves the application, the global asset management giant could offer a single fund that combines Bitcoin (BTC) and Ethereum (ETH).
Franklin Templeton files for Bitcoin and Ethereum index ETF
Franklin Templeton’s Bitcoin and Ethereum Index ETF application is awaiting SEC approval. According to the application, the ETF is positioned as a unique asset class in the digital currency ETF market as the first ETF to hold both BTC and Ether.
If approved, Franklin Crypto Index ETF shares will be issued in blocks of 50,000, and their value will be tied to the net asset value (NAV) of the Bitcoin and Ether held by the fund. Importantly, the fund will not engage in any direct staking or yield-generating activity with digital assets.
This index provides indirect exposure to Bitcoin and Ethereum, mitigating the typical volatility of these cryptocurrencies. Instead, BTC and ETH are held through a proxy, and the trust assets consist of Bitcoin, Ethereum, cash, and short-term financial instruments.
Read more: What is the difference between a crypto ETN and a crypto ETF?
In particular, the index has a maturity of less than three months and reflects the performance of a benchmark that tracks the largest digital assets — the CF Institutional Digital Asset Index — which is consistent with current capital markets.
BNY Mellon, an investment bank in the United States, oversees operations as the fund’s trustee and transfer agent. Digital assets are managed by Coinbase Custody.
However, the SEC’s decision to approve or reject is still unclear. Historically, SEC approval would depend on whether there are sufficient fraud prevention measures in place in the regulated futures market. The SEC has so far approved cryptocurrency ETFs after ensuring strong protections against fraud and manipulation.
In response, Franklin Templeton’s latest proposal highlights existing oversight agreements with regulated futures markets to ensure safe and transparent trading of the underlying assets.
Cryptocurrency ETF Applications Continue… Traditional Financial Industry Interest Increases
Franklin Templeton has been making big moves with cryptocurrency ETFs recently. Just two days after filing for a Bitcoin and Ethereum index ETF, they have launched the Franklin On-Chain U.S. Government Money Fund (FOBXX) on layer-1 blockchain APOS.
This tokenization initiative will allow institutional investors to directly access the asset using Franklin Templeton’s blockchain-integrated BENJI investment platform and their BENJI token. The fund also operates on the Stellar, Polygon, Arbitrum, and Avalanche blockchains.
The company also plans to launch a Solana-based ETF in the near future.
Read more: What is Tokenization on Blockchain?
These developments highlight the growing interest in decentralized finance (DeFi) among traditional finance (TradFi) participants. However, uncertainty over the regulatory framework may hinder wider adoption of integration from TradFi to DeFi.
