Franklin Templeton has officially submitted a proposal for a Bitcoin and Ethereum index ETF (exchange-traded fund) to the US Securities and Exchange Commission (SEC). If approved, this could allow the global asset management giant to combine Bitcoin (BTC) and Ethereum (ETH) into a single fund, representing a significant advancement in the digital currency market.
The pending Bitcoin and Ethereum index ETF filing is poised to be the first ETF that holds both BTC and Ether, positioning it as a unique asset in the growing digital currency ETF landscape. Upon SEC approval, shares of the Franklin Crypto Index ETF will be issued in blocks of 50,000, with their value linked to the net asset value (NAV) of the Bitcoin and Ether held in the fund. Notably, this fund will abstain from direct staking or income-generating activities with its digital assets.
The index aims to provide indirect exposure to Bitcoin and Ethereum, helping to reduce the typical volatility associated with these digital currencies. Instead of holding these assets directly, BTC and ETH will be managed through a proxy, with the trust's assets consisting of Bitcoin, Ethereum, cash, and short-term financial instruments. Furthermore, the index will have a maturity of less than three months, reflecting its performance against a benchmark designed to track the largest digital assets — the CF Institutional Digital Asset Index.
BNY Mellon, a reputable American investment banking firm, will serve as the custodian and transfer agent for the fund, ensuring efficient operations. Additionally, Coinbase Custody will be responsible for managing the digital assets involved in this ETF.
The SEC's decision on whether to approve or reject this application will hinge on anti-fraud measures related to regulated futures markets, as the agency typically seeks robust protections against fraud and manipulation before granting approval for crypto ETFs. The proposal emphasizes existing oversight agreements with regulated futures markets to ensure the transparent and secure trading of the underlying assets.
This Bitcoin and Ethereum Index ETF proposal marks Franklin Templeton's second significant foray into blockchain technology in a mere two days. Recently, the firm launched the Franklin Onchain U.S. Government Money Fund (FOBXX) on the Aptos Layer-1 blockchain, enabling institutional investors direct access to assets via their digital wallets through Franklin Templeton's blockchain-integrated Benji Investments platform and its BENJI token.
Franklin Templeton continues to demonstrate its commitment to the ETF market by providing institutional investors with access to Bitcoin and Ethereum through its EZBC and EZET ETFs. The firm is also planning to introduce a mutual fund on the Solana blockchain.
These initiatives reflect a growing interest in decentralized finance (DeFi) among traditional finance (TradFi) players. However, uncertainties surrounding regulatory frameworks could impede broader adoption of TradFi-to-DeFi integration.
