Franklin Templeton Investments, a leading asset manager with trillions in assets under management, has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) suggesting the creation of an exchange-traded fund (ETF) that tracks a combined index of Bitcoin [BTC] and Ethereum [ETH].
If sanctioned, this proposal would allow the investment giant to consolidate BTC and ETH into one fund, giving investors a more straightforward way to participate in both digital assets.
The envisioned ETF would consist of Bitcoin, Ethereum, and cash equivalents – which are short-term securities maturing in less than three months – enabling investors to interact with these cryptocurrencies without possessing them directly.
Interestingly, this proposal has emerged at a time when BTC ETFs experienced outflows amounting to $52.9 million, while ETH ETFs observed inflows of $19.8 million according to Farside Investors.
What Could be the Impact on the Cryptocurrency Market?
If realized, Franklin Templeton’s proposed Bitcoin and Ethereum Crypto Index ETF would be the first fund ever to blend BTC and ETH in a single index product.
The ETF, as per the filing, aims to simplify the investment process for both institutional and retail investors, offering them uncomplicated access to the two largest cryptocurrencies by market capitalization.
Commenting on this move, a user noted,
As expected, this development would also mitigate the intricacies and volatility commonly linked with cryptocurrency exchanges.
Additional Details
The fund will be available in units of 50,000 shares, with pricing based on the net asset value (NAV) of the underlying Bitcoin and Ethereum.
It’s worth noting that the ETF will not participate in staking or other income-generating activities with its digital assets, maintaining a straightforward approach to cryptocurrency investment.
Providing more details, the filing mentioned,
“CSC Delaware Trust Company, a subsidiary of the Corporation Service Company, is the trustee (“Trustee”). Bank of New York Mellon is the custodian for the Fund’s cash and cash equivalents16 (the “Cash Custodian”) and also serves as the Fund’s administrator and transfer agent (the “Administrator” or “Transfer Agent”).
It further stated,
“Coinbase Custody Trust Company, LLC (the “Digital Custodian”) will be responsible for custody of the Fund’s bitcoin and ether. According to the Registration Statement, each Share will represent a fractional undivided beneficial interest in the Fund’s net assets.”
However, the final approval of the fund rests on the SEC’s evaluation, specifically in regard to anti-fraud measures.
Generally, the SEC greenlights crypto ETFs only after ensuring that robust measures are in place to prevent fraud and market manipulation in regulated futures markets.
Hashdex’s Proposal for a Crypto Index ETF
Franklin Templeton is not alone in this endeavor, as Hashdex, a well-known crypto asset management firm, had also made significant progress towards launching an innovative ETF that would directly hold spot BTC and ETH back in July.
The firm submitted its S-1 registration statement to the U.S. SEC, positioning the Hashdex Nasdaq Crypto Index US ETF as a potentially groundbreaking product in the U.S. market.