Franklin Templeton Prepares Nasdaq Debut For ETFs That Turn Stock Dividends Into Bitcoin

Franklin Templeton’s funds start with 95% in U.S. stocks and 5% in Bitcoin.

• Franklin Templeton registered two Bitcoin dividend reinvestment ETFs for trading on Nasdaq on Thursday.
• The filings follow a June proposal and several delays to the funds' launch date.
•  SoSoValue Data shows the company also operates the Franklin Bitcoin ETF (EZBC), which had around $467 million in assets as of Friday. 

Franklin Templeton has registered two exchange-traded funds (ETFs) for trading on Nasdaq (NDAQ) that will reinvest stock dividends into Bitcoin (BTC), moving the long-delayed products closer to launch. Now, the firm has cleared the last regulatory step to launch its new ETF.

The $1.8 trillion asset manager filed a Form 8-A with the U.S. Securities and Exchange Commission (SEC) on Thursday, registering shares of the Franklin U.S. Equity Bitcoin DRIP Index ETF and the Franklin U.S. Innovation Bitcoin DRIP Index ETF on the Nasdaq Stock Market. According to a prospectus filed on Thursday, the funds’ registration is now set to become effective on Oct. 27, though Franklin Templeton has not announced a trading date.

How The Funds Work

The Equity fund tracks the VettaFi U.S. Large-Cap 500 Bitcoin DRIP Index, which tracks the 500 largest U.S. companies by market value. DRIP stands for dividend reinvestment plan, and the index will begin with 95% in stocks and 5% in Bitcoin. All regular and special dividends from those companies will be reinvested into Bitcoin at the market open the day after the ex-dividend date. 

This process will steadily raise the fund's Bitcoin share over time. If Bitcoin's weight goes above 5% at a quarterly rebalance, it will be trimmed to 4.5%. If it passes 20% between rebalances, it will also be cut back to 4.5%. The fund can gain Bitcoin exposure through exchange-traded products (ETPs), including the ones "sponsored by affiliates of the Fund's investment manager," as well as futures and options. 

Franklin Templeton first filed the funds in June but pushed back the effective date several times. The new filing also came the same day investors pulled $635.49 million from U.S. spot Bitcoin ETFs. 

Bitcoin’s price fell more than 1% over 24 hours. On Stocktwits, retail sentiment around BTC remained in the ‘bearish’ zone, while chatter stayed at ‘low’ levels over the past day. 

Not Franklin’s First Bitcoin Fund

This was not Franklin’s first Bitcoin ETF. It already runs the Franklin Bitcoin ETF (EZBC), which held about $467 million in assets as of Friday, according to SoSoValue Data. 

Other funds already mix Bitcoin with traditional assets, including the Simplify U.S. Equity PLUS Bitcoin Strategy ETF (SPBC), which pairs U.S. stocks with roughly 10% Bitcoin exposure, and the STKd 100% Bitcoin & 100% Gold ETF (BTGD), which tracks both Bitcoin and gold.

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