Franklin Templeton Eyes SEC Nod for New Crypto Index ETF

Franklin Templeton Seeks SEC Approval for New Cryptocurrency Index ETF

Franklin Templeton Investments has announced its intention to launch a new cryptocurrency index ETF, seeking regulatory approval from the U.S. Securities and Exchange Commission (SEC). The company joins a growing list of asset managers pursuing similar offerings, with several applications pending for ETFs consisting of cryptocurrencies other than Bitcoin and Ethereum, such as SOL and XRP.

In a recent regulatory filing, Franklin Templeton stated that the fund may not currently hold any digital assets other than BTC and ETH. The company also noted that it is uncertain whether any additional digital assets will be added to the underlying index in the future. However, if other cryptocurrency ETF applications receive approval from the U.S. SEC, this will provide Franklin with room to adjust its ETF strategy.

The proposed Franklin Crypto Index ETF aims to offer exposure to the spot prices of Bitcoin (BTC) and Ether (ETH) in a single fund on the Cboe BZX Exchange, weighted by their respective market capitalizations. As of the filing date, the index was 86.31% BTC and 13.69% ETH, with plans to rebalance and reconstitute the index quarterly in March, June, September, and December.

Franklin Templeton's filing also mentioned the possibility of adding more crypto tokens to the ETF in the future, subject to receiving the necessary regulatory approval. However, the firm emphasized that there is "no assurance" that any crypto tokens beyond the two largest by market cap will be approved for inclusion in the fund.

The filing highlighted several potential risks for investors, including competition from the "emergence or growth" of other crypto tokens like Solana (SOL), Avalanche (AVAX), and Cardano (ADA), which could negatively impact demand for the Franklin Crypto Index ETF.

On the same day as Franklin's filing, the Cboe BZX Exchange filed on behalf of four asset managers looking to list spot XRP ETFs in the US this year. The wave of crypto ETF applications has followed the inauguration of US President US Donald Trump and a number of staff changes at the SEC, including the resignation of former SEC Chair Gary Gensler on Jan. 20.

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