Fund giant Franklin Templeton plots spot bitcoin ETF

Franklin Templeton has become the latest traditional finance giant to join the spot bitcoin ETF race.

The firm, which manages nearly $1.5 trillion in assets, revealed in a Tuesday filing that it intends to list such a fund on the Cboe BZX Exchange. 

The Franklin Bitcoin ETF would be a “series” within the Franklin Templeton Digital Holdings Trust, the document notes. It intends to “reflect generally the performance of the price of bitcoin before payment of the fund’s expenses.” 

The ETF’s shares would be backed by bitcoin held by Coinbase Custody Trust Company, the fund’s custodian. 

A spokesperson for Franklin Templeton declined to comment beyond the filing. 

The proposal joins a long list of such applications currently before the Securities and Exchange Commission. 

Ark and 21Shares re-filed for a spot bitcoin ETF in April, about two months before asset management titan BlackRock shared plans to launch a similar offering. BlackRock’s entrance into the bitcoin ETF pursuit prompted Fidelity, Invesco, Bitwise and a handful of other issuers to also retry their own attempts. 

Though issuers have long sought to bring to the US market an ETF that holds bitcoin directly, the SEC has never permitted one to begin trading.

Franklin Templeton’s filing comes a couple weeks after Grayscale Investments won a case against the SEC in the DC Circuit Court of Appeals. 

The judges in that case said the SEC’s denial of Grayscale’s conversion of its Bitcoin Trust (GBTC) to an ETF — while allowing bitcoin futures ETFs to come to market — was “arbitrary and capricious.” Though the decision does not force the SEC to approve the GBTC conversion, the judges told the agency it can’t deny the conversion with the reasons it previously used. 

Read more: What Grayscale’s win against the SEC actually means

Some industry watchers told Blockworks they believed the ruling positively impacted the chances that the SEC would approve a spot bitcoin ETF at some point — perhaps by as early as the end of the year. 

The decision prompted Bloomberg Intelligence analysts, for example, to up the likelihood of bitcoin ETF approval from 65% to 75% by the end of 2023. The analysts wrote in an August research note they believe there is a 95% chance such a product launches in the US by the end of 2024.

Franklin Templeton is not exactly a stranger to the crypto space.

Roger Bayston, the firm’s head of digital assets, told Blockworks in June that blockchain technology is set to be “transformational” for capital markets. The firm has a mutual fund that utilizes the Stellar and Polygon blockchains.

Updated Sept. 12, 2023 at 10:12 am ET: Added context about Roger Bayston.

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