Ben Strack

After Franklin Templeton became the latest large traditional finance firm to file for a spot bitcoin ETF, industry watchers await who could be the next big company to throw its hat in the ring.&nbsp;



Several market observers have named fund giants Schwab Asset Management and State Street Global Advisors as those who could soon follow, though the firms aren’t letting on.&nbsp;



BlackRock, a fund group managing $9.4 trillion in assets as of June 30, <a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">applied for a spot bitcoin fund in June</a>. Fellow financial titans <a href="https://blockworks.co/news/fidelity-bitcoin-etf-refiling">Fidelity</a> and <a href="https://blockworks.co/news/bitcoin-etf-invesco-wisdomtree">Invesco</a> re-filed for their own planned spot bitcoin ETFs later that month.&nbsp;



Franklin Templeton’s filing signals there are even more large companies to follow, according to Ric Edelman, founder of Edelman Financial Engines and the Digital Assets Council of Financial Professionals.&nbsp;



Read more: <a href="https://blockworks.co/news/franklin-templeton-bitcoin-etf">Fund giant Franklin Templeton plots spot bitcoin ETF</a>



“This will be a snowball effect; every fund sponsor will have no choice but to offer a spot bitcoin ETF,” he told Blockworks. “Even those that don’t agree with the investment premise will recognize that they are losing [assets under management], and in some cases even clients, to competitors that do offer these products.”&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">You may think bitcoin is a scam, but some of the world&#39;s largest asset managers believe it&#39;s worth their time&#8230; BlackRock, Fidelity, Invesco, Franklin Templeton, etc. We&#39;re talking a who&#39;s who of asset management. That should get your attention regardless. <a href="https://t.co/omn3QGKdmC">https://t.co/omn3QGKdmC</a>&mdash; Nate Geraci (@NateGeraci) <a href="https://twitter.com/NateGeraci/status/1701640086373441883?ref_src=twsrc%5Etfw">September 12, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h2 class="wp-block-heading">So, who’s next?</h2>



Nate Geraci, president of The ETF Store, said in an X <a href="https://twitter.com/NateGeraci/status/1672708730939424768">post</a> in June that Schwab Asset Management was a “dark horse” candidate to pursue a spot bitcoin ETF.&nbsp;



David Botset, head of equity product management and innovation at Schwab Asset Management, told Blockworks in January 2022 that the company was evaluating “opportunities such as spot cryptocurrency or blockchain technologies in the form of an ETF.”



<a href="https://blockworks.co/news/first-charles-schwab-crypto-etf-set-to-launch-next-week">The firm launched the Schwab Crypto Thematic ETF</a> (STCE) last year. Investing in crypto-related stocks such as Coinbase, MicroStrategy and various bitcoin miners, the fund has about $11 million in assets. Schwab was also <a href="https://blockworks.co/news/tradfi-launches-crypto-exchange">among the backers of crypto exchange EDX Markets</a>, which launched in June.



A company spokesperson declined to comment on whether it could pursue a spot bitcoin ETF.



State Street Global Advisors (SSGA) is another candidate for entering the spot bitcoin ETF race, according to CK Zheng, co-founder of crypto hedge fund ZX Squared Capital. The firm’s US ETFs hold nearly $1.1 trillion — the second-largest of which is its SPDR Gold Trust (GLD), which manages $54 billion.&nbsp;&nbsp;



“As we view BTC as a commodity and a digital gold, State Street is in a unique position to expand their SPDR GLD ETF to a SPDR BTC ETF with their expertise and influence,” Zheng told Blockworks.&nbsp;



Bloomberg Intelligence senior analyst Eric Balchunas agrees, noting in a <a href="https://twitter.com/EricBalchunas/status/1672949604210429954">response</a> to Geraci’s June post: “How on Earth do you be the [company with]<a href="https://twitter.com/search?q=%24GLD&amp;src=cashtag_click"> GLD</a> and not look to add spot bitcoin asap?”



“We continuously evaluate our product lineup and pricing structure in order to offer investors attractive solutions to help them meet their goals,” a State Street spokesperson told Blockworks in an email Monday, declining to comment further.&nbsp;



State Street <a href="https://blockworks.co/news/state-street-launches-digital-finance-unit-for-crypto">formally launched a digital finance division</a> in 2021 — a unit whose priorities this year were set to include <a href="https://blockworks.co/news/state-street-sees-significant-opportunity-in-tokenization">tokenizing funds and private assets</a>.&nbsp;



But Rory Tobin, head of SSGA&#8217;s ETF business, told Financial News in June the firm didn’t have immediate plans to launch crypto products — noting “it’s been hard to come up with an investment case for crypto.”



ProShares runs the largest bitcoin-related ETF in the US — albeit one that holds bitcoin futures instead of BTC directly. Roughly $900 million of its $65 billion in US ETF assets under management reside in its Bitcoin Strategy ETF (BITO).&nbsp;



The firm has not yet applied with the US Securities and Exchange Commission for a spot product. A spokesperson declined to comment.&nbsp;



“If they can bring this success to a spot BTC ETF, they will become a dominant player in this space,” Zheng said.&nbsp;



<h2 class="wp-block-heading">Remaining on the sidelines</h2>



Matthew Sigel, head of digital assets research at prospective bitcoin ETF issuer VanEck, said jumping into the bitcoin ETF race isn’t exactly attractive right now, considering the SEC has blocked every such launch attempt over the last decade.&nbsp;



Read more: <a href="https://blockworks.co/news/sec-delay-decision-bitcoin-etf-blackrock">Delays mount: SEC defers ruling on BlackRock, Fidelity bitcoin ETFs</a>



“Who would possibly want to join the stampede to offer a bitcoin ETF, given that an over-zealous regulator is making the usual process impossible, fees will race to the bottom, and there may be little differentiation among sponsors?” Sigel said.&nbsp;&nbsp;



Though Edelman expects others to look to offer a spot bitcoin ETF, there will be a few exceptions, he said.&nbsp;



“Some fund companies and advisory firms specialize in certain market segments, and they won’t offer crypto funds if those aren’t consistent with their brand,” Edelman said. “But these will be in the minority.”&nbsp;



JPMorgan is “very unlikely” to join the bitcoin ETF race, according to Zheng, given CEO Jamie Dimon’s repeated criticisms of the asset class. Dimon called bitcoin a “hyped-up fraud” in January during an <a href="https://www.youtube.com/watch?v=qdIooHrQeK8">interview</a> with CNBC.



Vanguard, whose US ETFs manage nearly $2.2 trillion, has not signaled any interest in the space to date.



Chief investment officer Greg Davis <a href="https://investor.vanguard.com/investor-resources-education/article/vanguard-view-on-investing-in-cryptocurrency">called</a> crypto “more of a speculative asset class” in May 2022. He added that while the firm finds blockchain technology compelling, crypto “doesn’t fit from an investment perspective.”



JPMorgan and Vanguard did not return requests for comment.&nbsp;



Edelman said there will eventually be widespread availability of spot bitcoin ETFs from most registered investment advisers (RIAs) and brokerage firms. Wirehouses, he added, are likely to be slower to offer a spot bitcoin ETF — whether it’s their own product or ones issued by others.



“They will certainly engage eventually due to demand from both their reps and their clients,” Edelman said. “The barrier to all this is the SEC’s refusal to approve the applications to date. There is widespread optimism that this will soon change.”



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Which TradFi giant could jump into the bitcoin ETF race next?

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.&nbsp;



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.”&nbsp;



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.&nbsp;



The <a href="https://www.sec.gov/Archives/edgar/data/1992870/000113743923001074/ftdhts1092023.htm">proposal</a> joins a long list of such applications currently before the Securities and Exchange Commission.&nbsp;



<a href="https://blockworks.co/news/sec-delays-bitcoin-etf-decision">Ark and 21Shares re-filed for a spot bitcoin ETF</a> in April, about two months before asset management titan BlackRock shared plans to launch a similar offering. <a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">BlackRock’s entrance into the bitcoin ETF pursuit</a> prompted Fidelity, Invesco, Bitwise and a handful of other issuers to also retry their own attempts.&nbsp;



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.&nbsp;



<a href="https://blockworks.co/news/judges-grayscale-sec-ruling">The judges in that case said</a> 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.&nbsp;



Read more: <a href="https://blockworks.co/news/grayscale-sec-spot-bitcoin-etf">What Grayscale’s win against the SEC actually means</a>



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.&nbsp;



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 <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">blockchain technology is set to be “transformational”</a> 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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Fund giant Franklin Templeton plots spot bitcoin ETF

In 2021, Franklin Templeton introduced a money market fund that used a public blockchain to record transactions. This marked the beginning of the financial institution&#8217;s exploration of cryptocurrency&#8217;s underlying technology.



Roger Bayston, head of digital assets at Franklin Templeton, told Blockworks the company is working with the SEC to unlock “a rich set of features” that blockchain tech enables for mutual funds, including efficiency gains and, in turn, potential lower fees.



Going forward, such funds could be used alongside stablecoins, or even an alternative to them, he added.&nbsp;



“The learnings we are having by just doing [research and development] activity inside of blockchain and assembling development technology resources, gives us confidence that the blockchain seems to enable and probably refresh the ‘40 Act mutual fund and create continued relevance for it as an investment tool.”&nbsp;&nbsp;



<h2 class="wp-block-heading">A ‘refresh’ to the mutual fund&nbsp;</h2>



The $1.4 trillion asset manager’s OnChain U.S. Government Money Fund, which trades on the Nasdaq under the ticker (FOBXX), had more than $290 million in assets under management as of May 31.&nbsp;&nbsp;



It began using the Stellar blockchain for its record-keeping two years ago — allowing the transaction activity to be publicly viewable. Shareholders’ private information remains kept in a separate secure database.&nbsp;



Franklin Templeton revealed in April the fund would be supported on the Polygon blockchain as well.&nbsp;



“Whether it’s Polygon now…or even other new layer-1s that are developing, this is all part of the future journey,” Bayston said.&nbsp;



The fund invests more than 99% of its assets in US government securities, cash and repurchase agreements collateralized by such assets. It also tries to maintain a stable $1 share price.



One share of the fund is represented by one BENJI token, and token holders can access the fund in digital wallets through the Benji Investments app. Franklin Templeton does know-your-customer (KYC) and anti-money laundering (AML) checks while onboarding users.



Though BENJI is not a stablecoin, Bayston explained, its regulatory construct — which seeks to keep its net asset value stable — allows it to act as one while also generating income.&nbsp;



“Investors are waking up to the opportunity that there’s probably, on a forward basis, going to be an array of on- and off-ramps for you to be able to utilize in and out of digital assets,” he said.&nbsp;



“If a money fund continues to offer attractive yield, we would expect investors to continue to find it as, at a minimum, a complementary product as they use currency stablecoins, which do not offer income.”



<h2 class="wp-block-heading">Blockchain tech to be ‘transformational’ in other ways</h2>



Blockchain technology is set to be “transformational” for other capital markets going forward, Bayston said.



Bayston, who began working at Franklin Templeton, noted his deep familiarity in mortgage-backed securities, which comprise a collection of home loans and other real estate debt.



While NFTs are often thought of as digital art, Bayston said, each individual loan issued in the economy could be an NFT.&nbsp;



“I would question whether this Wall Street machine of securitization isn’t somehow transformed by blockchain, because through smart contracts I don’t have to pool a whole bunch of loans and then apply that cash flow structure,” Bayston added during a panel at the DACFP Vision conference Tuesday. “I can do that right at the loan level.”&nbsp;



Bayston’s comments come after Mike Muir, Franklin Templeton’s head of digital assets technology, told Blockworks last December the firm was <a href="https://blockworks.co/news/asset-manager-exploring-nft-use-cases">exploring NFT use cases</a>. The company issued NFTs to attendees of its first Innovation Forum held in September.



Traditional finance players have expressed that they understand the potential of tokenization.



WisdomTree is <a href="https://blockworks.co/news/wisdomtrees-latest-blockchain-enabled-funds-to-use-ethereum-stellar">getting set to debut “blockchain-enabled funds”</a> that utilize the Stellar blockchain on its upcoming financial app. Private markets investment firm <a href="https://blockworks.co/news/private-markets-investment-firm-hamilton-lane-to-tokenize-3-funds">Hamilton Lane first revealed last year</a> it would be tokenizing several of its funds using Polygon and potentially other public chains.



BlackRock CEO Larry Fink said in a <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-annual-chairmans-letter">letter</a> to investors in March that <a href="https://blockworks.co/news/blackrock-ceo-us-lagging-innovation-tokenization">the tokenization of assets could offer various opportunities</a>, including “driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”



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A stablecoin with yield? Tokenized fund perhaps just the start for fund giant

Michael Bodley

In its latest foray into the cryptocurrency industry, asset management giant Franklin Templeton is exploring the world of blockchain private equity.



An SEC filing on Tuesday registered the Franklin Templeton Blockchain Fund II with the US financial regulator — one key indicator that the firm is looking to raise institutional capital for the new commingled vehicle.&nbsp;



Franklin Templeton representatives designated the vehicle as a private equity fund with the SEC. This is a separate categorization from a liquid cryptocurrency hedge fund setup, for instance. The private equity fund also differs from a blockchain-focused venture capital vehicle, which <a href="https://blockworks.co/news/franklin-templeton-prepping-blockchain-fund">the asset manager previously established</a> in the fourth quarter of 2021.



A spokesperson for Franklin Templeton declined to comment on Wednesday, citing private placement regulations.&nbsp;



This is the latest move into institutional crypto products by the firm’s institutional investment arm. Its <a href="https://blockworks.co/news/franklin-templeton-preps-first-institutional-crypto-accounts">crypto separately managed account (SMA) push</a> started taking shape in the fourth quarter of 2022.&nbsp;



Franklin Templeton, which oversees some $1.4 trillion in assets under management, has also gotten involved in other crypto-related products, including <a href="https://blockworks.co/news/stellar-foundation-head-bullish-stablecoin-law">its money-market fund that taps the Stellar blockchain’s tech stack</a>. More recently, the asset manager moved to tokenize one of its funds on Polygon, The Defiant <a href="https://thedefiant.io/templeton-money-fund-polygon">reported</a>. 



Specific strategy details and fundraising aspirations of the private equity-focused Franklin Templeton Blockchain Fund II remain under wraps. However, the SEC filing indicates that the vehicle imposes a $100,000 minimum on its investors.&nbsp;



Interest in industry private equity plays more broadly appears to be holding strong on the heels of <a href="https://blockworks.co/news/10t-tapiero-launching-crypto-firm">a number of substantial new raises earlier this year</a>.&nbsp;



Generally speaking, limited partners in private equity investments often exceed minimum investment amounts in their contributions. However, the six-figure minimum investment for Franklin Templeton Blockchain Fund II is relatively modest compared to traditional asset classes in conventional private equity.



That said, cryptocurrency market capitalizations and related private investment opportunities point to opportunities to deploy relatively small sums of capital for potentially outsized returns, industry participants say.&nbsp;



Franklin Templeton’s fund, according to the filing, is not intended to remain open for longer than a 12 month period.&nbsp;



It comes as crypto markets, on the whole, have continued to mark a 2023 upswing.



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Blockchain Private Equity Fund Franklin Templeton’s Latest Crypto Ambition

The assets for one of Franklin Templeton&#8217;s key digital asset products, which is an open-ended US mutual fund using the Stellar blockchain, are increasing. As a result, the CEO of the Stellar Development Foundation is now focusing on the regulatory direction of the cryptocurrency industry.



Franklin Templeton’s OnChain U.S. Government Money Fund, which trades on the Nasdaq under the ticker (FOBXX) eclipsed the $270 million mark in terms of assets under management this week. The vehicle, meanwhile, became available for direct investment on the Stellar blockchain via an application managed by <a href="https://blockworks.co/tag/franklin-templeton">Franklin Templeton</a>, the Benji Investments app.&nbsp;



According to representatives of the traditional finance banking giant, the growth of the fund reflects a wider trend of institutional investment in blockchain-focused vehicles within the crypto industry.



In an interview with Blockworks, Stellar Development Foundation CEO Denelle Dixon said healthy investor appetite for the liquid FOXBB vehicle is one indicator that Wall Street and crypto native investors alike are continuing to pay attention to digital asset plays.&nbsp;



The foundation, which operates as a nonprofit in the Stellar ecosystem, has put its own capital into the fund under the partnership. Franklin Templeton oversees its investment processes.&nbsp;



The firm has chipped in about $20 million of its own capital, according to Dixon. That amount added up to a “significant chunk” for her foundation to contribute, she said.&nbsp;



“We love the product, because it’s actually leveraging the best of what the network has to offer,” she said. “And what I mean by that is that it’s an asset issuance. It’s a user who is an asset issuer [that] really looked into the compliance piece and [has gone through] all of the efforts with the SEC to demonstrate why an asset like this on Stellar makes sense.”&nbsp;



<h2 class="wp-block-heading">Stellar’s role in Washington, industry</h2>



A number of additional <a href="https://blockworks.co/news/wisdomtrees-latest-blockchain-enabled-funds-to-use-ethereum-stellar">fund structures have tapped the Stellar blockchain</a> in a bid to power their products, including strategies managed by WisdomTree.



The sentiment comes as crypto markets continue to stabilize off of their 2022 lows, where the prices and volumes of a number of significant industry crypto assets plummeted.&nbsp;



The company claimed that Franklin Templeton’s mutual fund — which launched in 2021 — is the first such vehicle approved by US regulators that used “a public blockchain to process transactions and record share ownership.”&nbsp;



Its liquid strategy of deriving yield from a basket of low risk US government securities taps the Stellar blockchain (<a href="https://blockworks.co/price/xlm">XLM</a>) to rebalance its assets on-chain.&nbsp;



“Blockchains like Stellar’s are important to the investment process of the future, and assets built on blockchain rails…will eventually be interoperable with the rest of the digital asset ecosystem,” said Roger Bayston, head of digital assets at Franklin Templeton, in a statement on Monday.&nbsp;



The blockchain’s founder Jed McCaleb is <a href="https://blockworks.co/news/on-chain-billionaires-buterin-nakamoto">believed to be one of crypto’s on-chain billionaires</a>.&nbsp;



McCaleb started Stellar after moving on from his involvement in the <a href="https://blockworks.co/tag/ripple">Ripple</a> blockchain’s ecosystem, which runs on its native <a href="https://blockworks.co/price/xrp">XRP</a> token and has been long enmeshed in its own regulatory struggles.&nbsp;



The fund comes with associated high costs of operation on a relative basis, clocking in with a gross expense ratio of 8.76% and a net expense ratio of 0.2%, according to the most recently available Franklin Templeton data.&nbsp;



High gross expense ratios are generally associated with lower net returns for investors — reflecting one baked-in cost of putting institutional capital to work in strategies that attempt to marry traditional and digital assets.&nbsp;



And institutional investors as a general rule tend to be more savvy than their retail counterparts in terms of negotiating fee discounts via separately managed account vehicles.&nbsp;



<h2 class="wp-block-heading">Stellar Foundation’s head US regulatory outlook</h2>



In 2023, both the SEC and the CFTC have conducted regulatory investigations into various top cryptocurrency companies that have dealings in the US. As a result, the industry’s perspective has shifted towards anticipating the enforcement actions that may be taken in the coming months.



Dixon said she had “a bit of an epiphany” two or so weeks ago, she “thought about our industry versus the traditional [finance] industry, where there’s trillions of trillions of dollars.”



The Stellar Development Foundation has a number of relationships on Capitol Hill in Washington, DC, as well as with state financial regulators throughout the US, she said.&nbsp;



The digital asset sector, broadly speaking, she said, could stand to “actually all pay attention” to the CFTC’s role in shaping the industry’s path forward in the US this year.&nbsp;



Dixon, who said she recently met with CFTC Chair Rostin Behnam in DC, believes the financial regulator’s role is “really important” when it comes to getting the industry to “that layer of naturalization that’s going to make it so that it can go mainstream.” 



“You need to have those rules of the road, and we&#8217;re not going to get them by what we have today,” she said, adding that a big missing piece in terms of US industry regulation is when it comes to the intersection of regulated commodities and digital assets.&nbsp;



Cryptocurrencies tied to the Stellar blockchain ecosystem have been employed in humanitarian efforts around the globe, including last year in a bid to supply aid to Ukrainian refugees.



Read more: <a href="https://blockworks.co/news/ukraine-bank-finds-stellar-blockchain-brings-key-advantages">Ukraine Bank Finds Stellar Blockchain Brings ‘Key Advantages’</a>



Its native XLM token has faced industry concerns of being overly centralized, while its proponents say the blockchain via its support of the stablecoin <a href="https://blockworks.co/price/usdc">USDC</a> acts as a means to facilitate instantaneous transactions across borders — with relatively low fees.



“The one miss” in the US now when it comes to the oversight of the industry is the intersection between crypto assets and commodities, she said.&nbsp;



Registered physical commodities — like oil and corn, for example — and the derivatives that are tied to those underlying assets fall under the CFTC’s regulatory purview.&nbsp;



Multiple efforts at the US federal level to establish stablecoin legislation this year have designated the CFTC as their preferred conduit to execute that oversight.&nbsp;



If a stablecoin bill passes into US law, that is. A <a href="https://blockworks.co/news/house-grapples-with-stablecoins">growing number of US politicians on both sides of the aisle have voiced their discontent</a> with the state of affairs when it comes to stablecoin oversight between the SEC and CFTC.&nbsp;



“I would love to see that legislation,” Dixon said. “I think this year, we need to at least see stablecoin legislation. I&#8217;m still bullish on the fact that by now, lots of people think that&#8217;s crazy, but I&#8217;m still bullish on it.”



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Stellar Foundation Head ‘Still Bullish’ on US Stablecoin Law in 2023

One of the world’s largest asset managers is exploring the use cases for NFTs despite a turbulent crypto market environment, noting such tokens’ relevance beyond just digital art.



The company minted its first NFTs — issuing them to attendees of its first Innovation Forum held in September to offer clients a way to explore the digital assets ecosystem — and now seeks to move further into the space.



“We see NFTs in their literal sense and more generally than just for their application with artwork or collectibles,” <a href="https://www.linkedin.com/in/mikemuir/" target="_blank" rel="noreferrer noopener">Mike Muir</a>, Franklin Templeton’s head of digital assets technology, told Blockworks. “[An NFT] is an applicable construct for any unique asset for which only one exists.”



For example, Muir added, loans and property titles are unique assets that are not fungible.&nbsp;



Franklin Templeton allowed attendees of its Innovation Forum the ability to download the NFT through the firm’s Benji Investments app. It acted as “a badge” and was non-transferrable, the company said, and clients could use the token to access research from the Franklin Templeton digital assets team.



US clients across asset management and financial services have shown interest in interacting with digital assets such as NFTs, according to the company.



“Firsthand practical experiences like this create understanding and foster contemplation and thought as to what else may be possible,” Muir said. “In the long term, we are considering generalizing our issuance of NFTs for a variety of purposes and are devoted to uncovering new applications for these assets.”



Dmitriy Berenzon, a research partner at early-stage venture fund 1kx, said that exploring the issuance of on-chain assets is the right way to go for institutions. He added that Franklin Templeton is correctly using this tool to drive more engagement with their community.



<blockquote class="wp-block-quote">“It is not about permissioned blockchains that try to improve the efficiency of walled gardens, but rather about permissionless, crypto networks that drive human coordination at scale through the use of tokens,” Berenzon told Blockworks. </blockquote>



For other large financial services companies, NFTs can offer additional avenues for interacting with on-chain assets and liquidity, such as liquidity pools gated by know-your-customer (KYC) requirements, the 1kx research partner added.



“That said, they likely need more regulatory clarity prior to committing any significant amount of balance sheet,” Berenzon said.&nbsp;



<h3 class="wp-block-heading">An evolution for fund managers</h3>



Franklin Templeton, which had roughly $1.3 trillion in assets under management as of Oct. 31, has been moving deeper into the crypto space in recent months.



The company launched the <a href="https://www.franklintempleton.com/investments/options/money-market-funds/products/29386/SINGLCLASS/franklin-on-chain-u-s-government-money-fund/FOBXX" target="_blank" rel="noreferrer noopener">Franklin OnChain U.S. Government Money Fund</a> — a mutual fund using blockchain to process transactions and record share ownership — in April 2021.



The fund manager unveiled <a href="https://blockworks.co/news/franklin-templeton-preps-first-institutional-crypto-accounts" target="_blank" rel="noreferrer noopener">its first crypto-focused separately managed accounts</a> (SMAs) for investment professionals in September.



<a href="https://www.linkedin.com/in/roger-bayston-46256517a/" target="_blank" rel="noreferrer noopener">Roger Bayston</a>, the company’s segment lead, called digital assets “frontier risk alternatives” in <a href="https://blockworks.co/news/franklin-templeton-exec-digital-assets-are-frontier-risk-alternatives" target="_blank" rel="noreferrer noopener">an October interview with Blockworks</a>. He added that Franklin Templeton was looking into bringing additional digital asset investment strategies to market.



The fund giant’s move into NFTs comes after asset manager <a href="https://blockworks.co/news/vaneck-exec-use-cases-of-nfts-approaching-unlimited" target="_blank" rel="noreferrer noopener">VanEck launched an NFT collection</a> in May designed to ​​”build an active community of crypto-focused investors,” the firm said.



Though ProChain Capital President David Tawil said at the time VanEck’s launch was “a bit of a gimmicky way” to draw people into NFTs, he added that the effort could bridge gaps between the collectibles aspect of NFTs and their broader use cases.



VanEck’s NFT community started off with nearly 50,000 sign-ups, and the firm connected its members at in-person and virtual events, according to Matthew Bartlett, who leads VanEck’s NFT community and Web3 efforts.&nbsp;



Bartlett told Blockworks that the firm is encouraged to see another global asset manager using NFTs to foster client engagement and community building.&nbsp;



“We strongly believe that NFTs and related blockchain applications will become integral parts of the client engagement experience across a range of industries, from finance to social media to consumer technology,” he said.



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$1.3T Asset Manager Exploring Use Cases for NFTs

<div id="highlights-block_635c34e84a51b" class="highlights">
 <ul>
 <li>Future crypto products “could take many forms” based on how regulatory environment evolves, according to the firm’s head of digital assets </li>
 <li>The firm’s clients are seeking a streamlined process to invest in this space </li>
 </ul>
 
</div>



Franklin Templeton is exploring ways to bring additional digital asset investment strategies to market following the launch of its crypto-focused separately managed accounts (SMAs) last month.



<a href="https://www.linkedin.com/in/roger-bayston-46256517a/">Roger Bayston</a>, the company’s segment lead, called digital assets “frontier risk alternatives” in a recent interview with Blockworks.&nbsp;



Franklin Templeton had roughly $1.3 trillion in assets under management, as of Sept. 30. One of its <a href="https://cms.blockworks.co/franklin-templeton-preps-first-institutional-crypto-accounts/">new crypto-focused SMAs</a> invests in 10 to 15 of the largest digital assets, excluding stablecoins and meme coins. Its other takes a similar approach, but bitcoin and ether are both capped at 25% of the portfolio.



The products come as <a href="https://cms.blockworks.co/74-of-institutions-plan-to-buy-crypto-fidelity-survey/" target="_blank" rel="noreferrer noopener">institutional adoption of crypto is on the rise</a>, according to a recent Fidelity survey, with 74% such investors saying they plan on buying digital assets in the future.



Bayston <a href="https://cms.blockworks.co/franklin-templeton-exec-crypto-asset-class-has-thematic-tailwinds/" target="_blank" rel="noreferrer noopener">said in May</a> that crypto was an asset class with “a great deal of thematic tailwinds,” as industries begin to unlock the potential of blockchain. 



More recently <a href="https://www.linkedin.com/in/sandy-kaul-8571877/" target="_blank" rel="noreferrer noopener">Sandy Kaul</a>, Franklin Templeton’s senior vice president of digital assets and industry advisory services, <a href="https://www.franklintempletonglobal.com/articles/disruption/evolution-of-commercial-technologies-and-impact-on-business-delivery" target="_blank" rel="noreferrer noopener">published research</a> about, in part, how decentralization is poised to disrupt traditional finance over the next decade. 



Blockworks checked back in with Bayston about what’s next.



Blockworks: Following the launch of crypto-focused SMAs, what other types of crypto offerings might the firm be looking to offer?



Bayston: We are committed to providing industry relevant opportunities to meet the evolving investment needs of our clients.



Our robust team of investment talent provides deep tokenomics research for our strategies, which are managed on a proprietary management platform built from the ground up. This gives us the expertise to offer the best advice and active management possible for our clients.&nbsp;



We are continuing to develop delivery mechanisms to deliver digital asset investment strategies for a variety of investors.



Blockworks: Could these include more SMAs? How about crypto-related ETFs?



Our experienced investment team has created many portfolio strategies utilizing various degrees of discretionary decision-making and research intensity.&nbsp;



Given the ripe field of innovation that blockchain technologies offer, you can expect Franklin Templeton to continue to bring relevant product ideas to the market. These products could take many forms based on current or future regulatory permissions.



Blockworks: What is the firm hearing from clients right now in regards to crypto?&nbsp;



Bayston: We believe that digital assets are frontier risk alternatives – new investable opportunities that capture the return streams of novel business models and can generate long-term growth.&nbsp;



We are seeing investors with a variety of interest, experience and exposure levels with these assets across the world and the desire for sound investment advice.&nbsp;



We are hearing from clients on the need for a streamlined process to invest in this space, founded on deep asset research and professional portfolio management, in order to generate the highest capital appreciation with an eye on risk management.



Blockworks: What are your thoughts on the <a href="https://cms.blockworks.co/ethereum-switches-to-proof-of-stake-after-7-years-of-work/" target="_blank" rel="noreferrer noopener">Ethereum Merge</a>? How could it impact adoption?  



Bayston: The transition to a proof-of-stake protocol illustrates the continuous innovation we see with blockchains, but more specifically represents a major software upgrade for the network with the possibility for improved security and capital and energy efficiency.&nbsp;



A resulting outcome of this event is a major reduction in Ethereum’s carbon footprint, which is desirable to appeal toward institutional ESG [environmental, social, governance] mandates. The evolution of Ethereum is an example of how this technology continues to evolve. Our investment platform will also evolve as the platforms grow and innovation in this space continues.



Blockworks: What crypto trends is Franklin Templeton most focused on right now?



Bayston: We believe that mass adoption of digital assets likely starts with the tokens themselves, and inclusion of these assets in investment portfolios will pave the way for other use cases for blockchain technology.&nbsp;



The digital asset space can bring two broad themes to investment management: expanding the opportunity set for investment options to include the blockchains themselves or bringing assets on chain in a more fungible way, and using the blockchain rails to create operational efficiencies across traditional asset management processes.



Blockworks: What does the company expect from a crypto regulatory perspective in the coming months? How might it be engaging to influence policy in the segment?



Bayston: There is substantial global regulatory development with digital assets in a variety of geographies, and we believe regulators are conducting their due diligence to take a measured approach to regulation.&nbsp;



We are comfortable navigating the global regulatory environment as it develops around the world.&nbsp; We’re a collaborator with regulators, given our focus on providing the best advice and service to our clients and view that the future of asset management includes blockchain technology and digital assets.



The interview was edited for clarity and brevity.



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Franklin Templeton Exec: Digital Assets Are ‘Frontier Risk Alternatives’

<div id="highlights-block_631a2becd2248" class="highlights">
 <ul>
 <li>The firm is offering a market cap-weighted strategy that invests in 10 to 15 of the largest digital assets, as well as a similar one that caps allocations to BTC and ETH</li>
 <li>Franklin Templeton made a strategic investment in SMA platform Eaglebrook Advisors in April</li>
 </ul>
 
</div>



Franklin Templeton is set to offer cryptocurrency-focused separately managed accounts (SMAs) to investment professionals for the first time.



The move is the latest example of a traditional finance giant diving into digital assets — despite the ongoing bear market. Separately managed accounts are sometimes favored by institutional investors over commingled funds, because they come with customized strategy and risk profiles, as well as instant liquidity.&nbsp;



The launches follow Franklin Templeton’s <a href="https://www.prnewswire.com/news-releases/eaglebrook-advisors-raises-strategic-capital-from-franklin-templeton-301518638.html" target="_blank" rel="noreferrer noopener">strategic investment</a> in SMA platform Eaglebrook Advisors in April. The $1.4 trillion asset manager’s first crypto strategies will be available to financial advisers and wealth managers working with US investors via Eaglebrook’s turnkey platform by mid-October.



Roger Bayston, Franklin’s head of digital assets, told Blockworks the firm’s registered investment adviser (RIA) partners have a growing interest in alternative investments, including crypto. But regulatory ambiguity in the US means cryptoassets are not yet securities, he added.&nbsp;



“Customized SMAs are a perfect delivery mechanism for these assets constructed by sound advice,” Bayston said in an email. “SMAs are a significant business in traditional finance, and we are bringing these digital assets into a high-quality product offering delivered via RIAs. This is a further extension of what we do.”



Eaglebrook Advisors CEO Christopher King said Franklin Templeton’s new offerings represent “an inflection point” for crypto, as the US wealth management market is demanding professionally managed digital asset SMA strategies from trusted asset managers.



He called the segment the “lowest-hanging fruit” for the crypto market <a href="https://cms.blockworks.co/eaglebrook-ceo-advisors-the-lowest-hanging-fruit-for-crypto-market/" target="_blank" rel="noreferrer noopener">in an interview with Blockworks last year</a>, adding at the time that about 95% of the adviser market had not yet invested in cryptoassets.



“We are working together on sales and distribution of these strategies and helping wealth managers and the clients they serve understand the digital asset market,” King told Blockworks.&nbsp;



Franklin Templeton’s Digital Assets Core SMA is a market cap-weighted strategy that invests in 10 to 15 of the largest digital assets, excluding stablecoins and meme coins.



Its Digital Assets Core Capped SMA takes a similar approach, but caps its allocations to bitcoin (BTC) and ether (ETH) at 25% of the portfolio each.&nbsp;



Though competing asset managers, such as <a href="https://cms.blockworks.co/blackrock-lists-blockchain-etf-days-after-similar-fidelity-launch/" target="_blank" rel="noreferrer noopener">BlackRock</a> and <a href="https://cms.blockworks.co/fidelity-launches-metaverse-experience-in-tandem-with-new-etfs/" target="_blank" rel="noreferrer noopener">Fidelity</a>, launched ETFs focused on blockchain technologies in April, Bayston said then that Franklin Templeton was still mulling the right time for an entrance. 



Fidelity in April moved to allow certain US workers to <a href="https://cms.blockworks.co/fidelity-delves-deeper-into-crypto-by-allowing-bitcoin-in-401ks/" target="_blank" rel="noreferrer noopener">allocate a portion of their retirement savings to bitcoin</a> through the company’s 401(k) plan investment lineup. BlackRock, the world’s largest asset manager with roughly $8.5 trillion, <a href="https://cms.blockworks.co/industry-watchers-execs-weigh-significance-of-blackrock-coinbase-deal/" target="_blank" rel="noreferrer noopener">partnered with Coinbase</a> last month and days later <a href="https://cms.blockworks.co/blackrock-launches-spot-bitcoin-private-trust/" target="_blank" rel="noreferrer noopener">launched a bitcoin private trust</a>.



“I’m sure more and more TradFi firms are preparing to enter this innovation-driven asset class,” said CK Zheng, an ex-Credit Suisse executive who co-founded crypto hedge fund ZX Squared Capital last year. “Even though we can’t forecast when the crypto winter will end, we know much demand from both institutional investors and high-net-worth individuals will come when the next crypto bull market starts.” 



Franklin Templeton’s product rollout came the same day as <a href="https://cms.blockworks.co/mysten-labs-300m-fundraise-values-business-at-more-than-2b/" target="_blank" rel="noreferrer noopener">Mysten Labs’ $300 million fundraise</a>. The asset manager participated in the Series B round — valuing the Web3 infrastructure company at roughly $2 billion — alongside FTX Ventures, a16z and others.



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Franklin Templeton Preps First Institutional Crypto Accounts

<div id="highlights-block_627cbf3a3c697" class="highlights">
 <ul>
 <li>Franklin Templeton expects to offer crypto products “when the regulatory landscape provides that opportunity,” firm’s head of digital assets says</li>
 <li>The company recently completed fundraising for its first blockchain-focused venture capital fund</li>
 </ul>
 
</div>



Though Franklin Templeton is bullish on crypto as an asset class, the asset manager is seeking more regulatory clarity before offering ETFs focused on the segment.&nbsp;



The San Mateo, California-based company managed roughly $1.45 trillion in assets, as of April 30, and has clients in more than 150 countries.



“Franklin Templeton understands that cryptocurrencies represent various tokenomics of blockchain and distributed ledger technology systems,” Roger Bayston, Franklin’s head of digital assets, told Blockworks.



<blockquote class="wp-block-quote">“We believe they are an asset class that has a great deal of thematic tailwinds as industries begin to unlock the potential of blockchain and new types of digital assets are created.”</blockquote>



The firm has 55 ETFs trading in the US with combined assets of nearly $1.7 billion, according to ETF.com. Bayston said Franklin Templeton is monitoring regulations around ETFs and considering that delivery mechanism for providing clients exposure to important blockchain investment strategies.&nbsp;



Though competing asset managers, such as <a href="https://cms.blockworks.co/blackrock-lists-blockchain-etf-days-after-similar-fidelity-launch/" target="_blank" rel="noreferrer noopener">BlackRock</a> and <a href="https://cms.blockworks.co/fidelity-launches-metaverse-experience-in-tandem-with-new-etfs/" target="_blank" rel="noreferrer noopener">Fidelity</a>, recently launched ETFs focused on blockchain technologies, Franklin Templeton is still mulling the right time for an entrance.&nbsp;



“We expect to provide quality products when the regulatory landscape provides that opportunity for investors,” Bayston said.



LinkedIn job postings from last week indicate that Franklin Templeton is seeking an investment research analyst to join its crypto asset management team.&nbsp;



The analyst would cover assets such as bitcoin and ether, develop and maintain valuation models and keep executives informed of protocol regulatory, staking and business opportunities, according to the posting. They would also help develop and manage new products in the cryptoasset space.



The firm did not comment on other crypto-related roles that it could seek to fill.&nbsp;



<h3 class="wp-block-heading">Other involvement in crypto</h3>



Franklin Templeton revealed in <a href="https://www.sec.gov/Archives/edgar/data/1882656/000188265621000001/xslFormDX01/primary_doc.xml" target="_blank" rel="noreferrer noopener">a regulatory filing</a> in September that it was <a href="https://cms.blockworks.co/franklin-templeton-prepping-blockchain-fund/" target="_blank" rel="noreferrer noopener">prepping a venture capital fund</a> focused on the blockchain space. The document indicated that the firm had so far raised $10 million for the fund and was looking to raise an additional $10 million before launching.&nbsp;



Bayston confirmed that the company recently completed fundraising for the fund but did not comment about the fund’s specifics, such as its final size.&nbsp;



“Franklin Templeton is active in projects all across the lifecycle of blockchains, ranging from investment activity at the early stages where new protocols and companies building on those protocols are being built, to offering advice on various portfolio constructions of more mature and more widely adopted blockchains,” he said.&nbsp;



The fund group’s parent company <a href="https://www.prnewswire.com/news-releases/eaglebrook-advisors-raises-strategic-capital-from-franklin-templeton-301518638.html" target="_blank" rel="noreferrer noopener">made a strategic investment</a> in crypto separately managed account platform Eaglebrook Advisors in April.



Roger Paradiso, Franklin Templeton’s head of product solutions, said in a statement at the time that the firm would look to bring advised solutions within the asset class to its partner firms, advisors and clients.



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Franklin Templeton Exec: Crypto Asset Class Has ‘Thematic Tailwinds’

<div id="highlights-block_614395ff8802b" class="highlights">
 <ul>
 <li>Venture capital fund, which requires a minimum investment of $1 million, has already raised half of its targeted amount</li>
 <li>The fund group invested in Galaxy Digital’s fund of funds and participated in a $15 million Series A funding round for Amberdata</li>
 </ul>
 
</div>



Franklin Templeton has so far raised $10 million for a blockchain fund, according to <a href="https://www.sec.gov/Archives/edgar/data/1882656/000188265621000001/xslFormDX01/primary_doc.xml" target="_blank" rel="noreferrer noopener">a regulatory filing</a>, and the firm is looking to raise an additional $10 million before launching.&nbsp;



The offering will be a venture capital fund that requires a minimum investment of $1 million, the September 14 document indicates.



A spokesperson did not immediately respond to Blockworks’ request for comment.&nbsp;



It’s the San Mateo, California-based fund group’s latest step into the crypto space. The firm, which managed $1.56 trillion in assets as of the end of July, <a href="https://cms.blockworks.co/franklin-templeton-seeking-to-hire-crypto-trader-researcher/" target="_blank" rel="noreferrer noopener">posted job listings</a> earlier this month to hire a cryptocurrency-focused trader and research analyst.&nbsp;



The trader will be tasked with executing trades for strategies using bitcoin and ether, as well developing quantitative trading strategies, according to the job post. The research analyst will keep portfolio managers and senior executives informed of various protocol regulatory, staking and business opportunities, a separate listing stated, as well as help develop and manage new crypto products.&nbsp;



The firm is still accepting applications for the jobs on its website.



Galaxy Digital <a href="https://cms.blockworks.co/galaxy-closes-venture-fund-of-funds-backed-by-franklin-templeton/" target="_blank" rel="noreferrer noopener">previously revealed</a> that Franklin Templeton is an investor in Galaxy’s first venture-focused multi-manager fund of funds, which is focused on providing institutional investors access to pre-vetted managers investing across digital assets.



The mutual fund giant <a href="https://cms.blockworks.co/citi-leads-15m-investment-into-digital-asset-company-amberdata/" target="_blank" rel="noreferrer noopener">also participated</a> in a $15 million Series A funding round for digital asset data company Amberdata.



Franklin Templeton is looking to enter the crypto fund space as more — much larger — offerings have popped up in recent weeks.&nbsp;



Most recently, venture capital firm Jump Capital <a href="https://cms.blockworks.co/jump-capital-launches-350m-fund-with-focus-on-crypto-defi/" target="_blank" rel="noreferrer noopener">launched a crypto-focused fund</a> over 17 times larger, with $350 million total capital commitment — its largest to date.&nbsp;



Pantera Capital is also launching a <a href="https://cms.blockworks.co/as-crypto-vc-funding-hits-record-high-pantera-launched-600m-fund/" target="_blank" rel="noreferrer noopener">new blockchain fund,</a> and it is already more than halfway to its goal of a whopping $600 million. Meanwhile, Private equity firm 10T Holdings <a href="https://cms.blockworks.co/10t-holdings-raises-750m-for-first-growth-equity-funds/" target="_blank" rel="noreferrer noopener">announced last week</a> that it has so far raised $750 million for its first two growth equity funds focused on digital asset companies. As of mid-June, venture capital funds in 2021 had put an <a href="https://cms.blockworks.co/crypto-venture-funding-is-at-an-all-time-high-this-is-where-the-money-is-going/" target="_blank" rel="noreferrer noopener">all-time high of $17 billion</a> into crypto companies and projects, according to data provider PitchBook.



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

Franklin Templeton Prepping Blockchain Fund

<div id="highlights-block_613105a87213b" class="highlights">
 <ul>
 <li>Crypto trader to trade for strategies using “the largest, most liquid listed and tradable crypto assets,” according to Sept. 1 job posting</li>
 <li>Research analyst will keep portfolio managers and senior executives informed of various protocol regulatory, staking and business opportunities</li>
 </ul>
 
</div>



Franklin Templeton is seeking to hire a cryptocurrency trader and research analyst as it builds out a new investment unit focused on the space.&nbsp;



The San Mateo, California-based fund group managed $1.56 trillion in assets, as of the end of July. The company, which acquired competing asset manager Legg Mason last year, becomes the latest traditional financial services titan looking to dabble in the crypto space.



Franklin is looking for a cryptocurrency trader to execute trades for strategies using “the largest, most liquid listed and tradable crypto assets,” such as bitcoin and Ether, according to a Sept. 1 job post.&nbsp;



“The quantitative trader will also bring a process automation mindset to build or work with developers to construct tools to support the platform’s growth,” the listing states. “The trader will add insight and develop quantitative trading strategies.”



The firm is also seeking to hire a crypto research analyst, according to a separate listing published on the same day.&nbsp;



“This person will develop and maintain valuation models and keep portfolio managers and senior executives informed of various protocol regulatory, staking and business opportunities,” the post states. “The analyst will be expected to help develop and manage new products in the crypto asset space.”&nbsp;



The trader will join Franklin Templeton’s digital asset management team, while the research analyst would be added to a crypto asset management unit, the job postings indicate. It is unclear if these are two separate divisions.



A spokesperson for Franklin Templeton did not immediately respond to Blockworks’ request for comment.



Anthony Hardy, a research analyst for Franklin Templeton’s equity group, wrote in a March blog post that a search for inflation hedges and returns in a low interest rate environment were among the factors driving the runup of bitcoin’s price. The rise of decentralized finance and institutional adoption also contributed, he added.



Hardy wrote at the time that the birth of a new financial and internet ecosystem can co-exist with the current one, noting that these trends are likely to play out over the course of many years.&nbsp;



<blockquote class="wp-block-quote">“My view is that crypto is here to stay,” he said. “There will undoubtedly be future bull and bear markets, but in my view, the technological feat of solving for digital scarcity and the innovations currently happening in the space cannot be forgotten.”</blockquote>



The job postings come as fellow large financial companies have entered the crypto space.&nbsp;



<a href="https://cms.blockworks.co/goldman-sachs-doubles-down-on-crypto-with-derivatives-trading-team/" target="_blank" rel="noreferrer noopener">Goldman Sachs revealed in May </a>that it would offer bitcoin derivatives to clients as well as opening a dedicated trading desk for cryptocurrency.&nbsp;



In June, custody bank State Street, which oversees $40 trillion in assets, <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">launched a new division</a> focused on the shift to digital finance, and Bank of America announced about a month later that it was set to begin <a href="https://cms.blockworks.co/state-street-launches-digital-finance-unit-for-crypto/" target="_blank" rel="noreferrer noopener">research coverage</a> of cryptocurrency and digital assets.

Franklin Templeton Seeking to Hire Crypto Trader, Researcher

Casey Wagner

<div id="highlights-block_610025bac104d" class="highlights">
 <ul>
 <li>Galaxy Digital closes its first fund of funds since Vision Hill acquisition in an oversubscribed amount of $33.75 million</li>
 <li>The fund will invest in projects working on DeFi, NFTs, Web 3.0 and infrastructure and services, with a focus on pre-seed and seed funding</li>
 </ul>
 
</div>



Galaxy Digital has closed its first fund of funds since its Vision Hill Group acquisition in May. The Galaxy Vision Hill Venture Fund of Funds I closed in an oversubscribed amount of $33.75 million, the company announced Tuesday.&nbsp;



The Fund was Galaxy’s first venture-focused multi-manager fund of funds vehicle. It focused specifically on providing institutional investors access to pre-vetted managers investing across digital assets, Galaxy said.&nbsp;



“Our goal is to be the first call for institutions seeking exposure to crypto,” said Steve Kurz, partner and head of asset management at Galaxy Digital. “This fund represents another foundational step in building the most comprehensive, institutional fund platform in the blockchain and digital assets industry.”



The fund of funds is the second fund in Galaxy Vision Hill’s product suite within Galaxy Fund Management, Galaxy’s asset management arm, which has $1.4B in assets under management as of June.



The fund will invest in projects working on DeFi, NFTs, Web 3.0 and infrastructure and services, with a focus on pre-seed and seed funding, Galaxy said. Capital has already been deployed to Spartan Group, a boutique blockchain investment firm which <a href="https://cms.blockworks.co/coinfund-parafi-capital-co-lead-seed-round-for-staking-platform-claystack/" target="_blank" rel="noreferrer noopener">recently participated</a> in ClayStack’s seed round. 



“We’ve witnessed promising growth in crypto, evidenced by Fidelity’s recent survey indicating that more than half of institutions across Asia, Europe, and the U.S. currently invest in digital assets,” said Scott Army, CIO of Galaxy Vision Hill, referring to <a href="https://cms.blockworks.co/fidelity-71-of-institutional-investors-plan-to-buy-crypto/" target="_blank" rel="noreferrer noopener">Fidelity’s report</a> that 71% of institutional investors plan to gain crypto exposure. 



Galaxy’s asset management division plans to offer additional actively managed and market neutral funds, appealing to a range of investors, from high net worth to family offices, the firm said.&nbsp;



“As institutional interest continues to swell, this fund unlocks access to promising projects across every investable corner of the crypto economy to bring more people into the tent,” said Army.&nbsp;



The fund is the latest example of Galaxy leaning into emerging areas of crypto. Galaxy Interactive, the multi-limited partner venture fund that sits under Galaxy Digital’s asset management unit, became lead investor in virtual real estate developer Republic Realm earlier this year.&nbsp;



Franklin Templeton, the mutual fund giant with more than $1.4 trillion in assets under management as of 2020, is an investor in the fund, Galaxy revealed. Other investors and capital recipients were not disclosed.&nbsp;