Franklin Templeton Joins the Race for Dual Crypto ETF Approval

Franklin Templeton, a leading global asset manager, is taking significant steps to strengthen its position in the cryptocurrency exchange-traded fund (ETF) market. On August 16, the company filed with the U.S. Securities and Exchange Commission (SEC) to launch a new “FRANKLIN CRYPTO INDEX ETF”. This fund will invest in both Bitcoin and Ethereum, the two largest cryptocurrencies, and will be traded on the Chicago Board Options Exchange (CBOE). Coinbase, a major U.S. crypto exchange, will act as the custodian for the ETF’s assets.

This move is part of Franklin Templeton's strategy to increase its presence in the U.S. crypto ETF market, where it has already launched separate Bitcoin and Ethereum ETFs. These funds have attracted $445 million in combined inflows, showing steady interest from investors. However, their performance has lagged behind similar offerings from other asset managers like BlackRock and Fidelity.

The timing of this filing is important, as it follows a similar application by Brazilian asset manager Hashdex. Hashdex also aims to launch a dual crypto ETF, but the SEC has delayed its decision on their proposal, citing the need for more time to evaluate the complexities involved.

An early approval could give Franklin Templeton a competitive edge in this emerging market. In the coming weeks, the company is expected to provide more details on the ETF, including the specific allocations of Bitcoin and Ethereum and the associated sponsor fee. Franklin Templeton has a reputation for offering low fees, as seen in its existing crypto ETFs with a sponsor fee of just 0.19%.

The increasing interest in crypto ETFs among traditional financial institutions reflects a significant shift in how the industry views digital assets. The SEC’s earlier approval of Bitcoin Spot ETFs has already boosted the market, now valued at around $17 billion. The recent introduction of an Ethereum Spot ETF has further heightened interest in these products.

As Franklin Templeton and Hashdex compete for SEC approval, the broader market is paying close attention. The success of these dual crypto ETFs could open the door for more cryptocurrency ETFs, with analysts predicting that Solana and XRP ETFs could emerge by 2025. Spot ETFs, which track the price of their underlying assets directly, are seen as crucial for driving crypto adoption in traditional finance.

For institutional investors, spot ETFs offer a regulated and accessible way to invest in cryptocurrencies without the challenges of buying and storing digital assets directly. As more institutions embrace crypto through these ETFs, demand is expected to rise, further integrating digital assets into the global financial system.

The SEC’s decisions on Franklin Templeton and Hashdex’s applications will be crucial in shaping the future of institutional crypto adoption. Approval of these dual crypto ETFs could expand investment options for institutions and underscore the growing acceptance of cryptocurrencies as a legitimate asset class in traditional finance.

Franklin Templeton’s proactive approach in filing for this dual crypto ETF demonstrates its commitment to staying ahead in a rapidly evolving financial landscape. While the SEC’s response is still pending, Franklin Templeton is positioning itself to be a key player in the competitive crypto ETF market.