Franklin Templeton Clears Last Step for ETFs That Turn Stock Dividends Into Bitcoin

Franklin Templeton has completed the final regulatory step before launching two exchange-traded funds that channel stock dividends into bitcoin, Bitcoin Magazine reported.

The filings

On Oct. 22, the asset manager filed a Form 8-A with the SEC to register shares of the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF for trading on Nasdaq. A prospectus filed the same day lists Oct. 27 as the effective date.

How they work

The equity fund, ticker FBEQ, tracks an index of the 500 largest U.S. companies. At the start, the index holds 95% stocks and 5% bitcoin. Instead of buying more shares, each dividend the companies pay is reinvested into bitcoin exposure, so the bitcoin share grows over time.

There are limits. At each quarterly rebalance, a bitcoin weighting above 5% is cut back to 4.5%, and if it tops 20% between rebalances it is trimmed within two business days. The fund does not hold coins directly; it gains exposure through bitcoin exchange-traded products, futures, options or similar instruments. FBEQ's expense ratio is 0.09%, according to the report. The innovation fund applies the same approach to the 100 largest non-financial Nasdaq companies.

Why it matters

The products could give mainstream stock investors gradual bitcoin exposure without opening a crypto account or managing a wallet. They add to a growing list of traditional asset managers building bitcoin into familiar fund formats. The prospectus warns that investors can lose money and that bitcoin's volatility may affect the funds' value.