Highlights:
- Franklin Templeton files for a crypto index ETF tracking BTC and ETH, with potential for future additions.
- Coinbase Custody Trust and Bank of New York Mellon will manage the fund’s assets and cash.
- Institutional interest in crypto ETFs grows, with Grayscale and others exploring similar products.
On August 16, asset manager Franklin Templeton filed an S-1 application with the United States Securities and Exchange Commission (SEC) to launch a crypto index exchange-traded fund (ETF). The proposed fund — dubbed “Franklin Crypto Index ETF” — will track the CF Institutional Digital Asset Index, which currently includes only Bitcoin (BTC) and Ethereum (ETH), the two largest cryptocurrencies. However, the filing states that the fund may add more cryptocurrencies in the future, depending on regulatory changes and market conditions.
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Franklin Templeton files for Crypto Index ETF…
Would initially hold btc & eth.
Here we go. pic.twitter.com/K3o8qI2QZq
— Nate Geraci (@NateGeraci) August 16, 2024
Coinbase Custody Trust Company will serve as the custodian for the fund’s digital assets. Bank of New York Mellon will handle cash holdings and administrative tasks. If approved, the ETF will be listed on the Cboe BZX Exchange under the ticker symbol “EZPZ.” The Cboe is also seeking regulatory approval to enable in-kind creation and redemption of ETF shares using digital assets.
The filling reads:
“The Fund will seek to achieve its investment objective by investing in the Digital Assets in approximately the same weights as they represent in the Underlying Index.”
Franklin Templeton’s latest move comes as institutional interest in digital assets, especially Bitcoin and Ethereum, is increasing. Despite recent struggles in Bitcoin’s price, the rising adoption of crypto ETFs highlights a broader trend of traditional financial institutions recognizing digital assets’ value in diversified portfolios.
Crypto Index ETFs Spark Institutional Interest
This new product could be among the first crypto index ETFs on the market. These ETFs, which allow investors to hold a mix of cryptocurrencies in one fund, are gaining attention after recent launches of Bitcoin and Ethereum-focused ETFs. In July, Hashdex also filed to launch the Hashdex Nasdaq Crypto Index US ETF, aiming to be the first US ETF to include both Bitcoin and Ethereum. Earlier this month, the SEC announced it would extend the decision deadline for Hashdex’s proposed ETF to September 30.
Hashdex files S-1 for combined spot btc & eth ETF… https://t.co/XurKX448Ab pic.twitter.com/je3PRiszPJ
— Nate Geraci (@NateGeraci) July 24, 2024
Head of investment research at crypto bank Sygnum, Katalin Tischhauser, told Cointelegraph:
“The next logical step is index ETFs because indices are efficient for investors—just like how people buy the S&P 500 in an ETF. This will be the same in crypto.”
Tischhauser stated that crypto index ETFs are currently limited to BTC and ETH because these are the only digital assets the SEC has approved for inclusion in ETFs so far. Further, she said the demand for new single-asset ETFs, such as a Solana ETF, remains limited.
Grayscale Intends to Lunch Crypto Index ETF
Other asset managers, including Grayscale, have suggested plans to launch similar ETFs, and VanEck has applied to introduce a spot Solana ETF. Interest in crypto ETFs shows growing institutional engagement with digital assets.
In an August 12 filing, Dava alaValle, Grayscale’s global head of ETFs, stated, “Grayscale is going to see a number of more single asset products, and then also certainly some index-based and diversified products.”
Grayscale is a leading issuer of crypto ETFs, managing over $25 billion in assets across its US-listed crypto ETFs. Its US exchange-traded products (ETPs) currently include single-asset funds for Bitcoin and Ether.
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