Franklin Templeton, a traditional finance giant managing nearly $1.5 trillion in assets, has announced its intention to launch a Bitcoin Exchange-Traded Fund (ETF). The firm disclosed its plans in a recent filing, aiming to list the fund on the Cboe BZX Exchange. This move places Franklin Templeton in the growing list of financial institutions seeking approval from the Securities and Exchange Commission (SEC) for Bitcoin ETFs.
The fund’s structure and custody
According to the filing, the proposed Franklin Bitcoin ETF would operate as a “series” within the Franklin Templeton Digital Holdings Trust. The fund aims to “reflect generally the performance of the price of bitcoin before payment of the fund’s expenses.” Notably, the ETF’s shares would be backed by Bitcoin held by Coinbase Custody Trust Company, serving as the fund’s custodian.
Franklin Templeton’s announcement comes on the heels of a significant legal victory for Grayscale Investments against the SEC. The DC Circuit Court of Appeals judges criticized the SEC’s denial of Grayscale’s Bitcoin Trust (GBTC) conversion to an ETF as “arbitrary and capricious.”
This ruling has led some industry experts to believe that the SEC might be more inclined to approve a spot Bitcoin ETF in the future. Bloomberg Intelligence analysts have even increased the likelihood of Bitcoin ETF approval from 65% to 75% by the end of 2023.
Jay Clayton, the former chairperson of the U.S Securities and Exchange Commission (SEC), stated earlier that the approval of a spot Bitcoin exchange-traded fund (ETF) is “inevitable”. This statement comes after the SEC postponed a decision on ETF filings from asset managers who manage a combined $15 trillion until October.
The SEC has been cautious about approving Bitcoin ETFs that hold Bitcoin directly, despite multiple applications from various financial institutions. Franklin Templeton’s filing adds to a long list of such applications, including those from asset management titan BlackRock and other issuers like Fidelity, Invesco, and Bitwise, who have also reattempted their own filings.
The decision to enter the Bitcoin ETF market is a significant one for Franklin Templeton, especially given the regulatory uncertainties and the high stakes involved. Whether or not the SEC will approve this new application remains to be seen. Still, the firm’s entry undeniably adds weight to the ongoing push for regulatory acceptance of Bitcoin ETFs.
