In a significant development, Franklin Templeton Investments, a renowned trillion-dollar fund manager, has put forth a proposition to the U.S. Securities and Exchange Commission (SEC) for the creation of an index exchange-traded fund (ETF) that combines Bitcoin [BTC] and Ethereum [ETH].
If given the green light, this proposal would allow the well-established investment firm to unify BTC and ETH into a single fund, offering investors a more straightforward approach to gaining exposure to both digital currencies.
The envisioned ETF would consist of Bitcoin, Ethereum, and equivalents in cash—such as short-term securities with a maturity period of fewer than three months—granting investors the opportunity to participate in these cryptocurrencies without direct ownership.
Curiously, this proposal emerged against the backdrop of BTC ETFs experiencing outflows of $52.9 million, while ETH ETFs witnessed inflows amounting to $19.8 million, as reported by Farside Investors.
Implications on the Crypto Market
The proposed Bitcoin and Ethereum Crypto Index ETF by Franklin Templeton would mark a groundbreaking initiative by combining BTC and ETH in a single index product for the first time ever.
According to the filing, the ETF is structured to simplify the investment process for institutional and retail investors, granting them easier access to the two leading cryptocurrencies based on market capitalization.
Commenting on this development, a user pointed out that this move is expected to reduce the complexities and volatility associated with crypto exchanges.
Additional Features
The fund will be tradeable in units of 50,000 shares, priced according to the net asset value (NAV) of the underlying Bitcoin and Ethereum.
Notably, the ETF will refrain from engaging in activities like staking or generating income from digital assets, maintaining a straightforward investment strategy in the crypto space.
Further insights provided in the filing indicated that the CSC Delaware Trust Company would serve as the trustee, with Bank of New York Mellon acting as the custodian for the fund’s cash. Additionally, Coinbase Custody Trust Company, LLC, will be responsible for safeguarding the fund’s Bitcoin and Ether holdings.
Nevertheless, the final approval of the fund is contingent on the SEC’s assessment, especially concerning measures to prevent fraud and market manipulation in regulated futures markets.
Hashdex’s Proposal for a Crypto Index ETF
Franklin Templeton is not the sole player in this arena, as Hashdex, a prominent crypto asset manager, also made strides in July towards introducing a pioneering ETF that will directly hold spot BTC and ETH.
The firm has submitted its S-1 registration statement to the U.S. SEC, setting the stage for the Hashdex Nasdaq Crypto Index US ETF to potentially revolutionize the U.S. market.