Franklin Templeton is seeking regulatory approval for two exchange-traded funds (ETFs) that would combine U.S. stocks with automatic Bitcoin exposure, reflecting growing demand for crypto-linked investment products.
The asset manager filed the proposals with the U.S. Securities and Exchange Commission (SEC) on Thursday. If approved, the funds could begin trading as early as September. The products would maintain a 95% allocation to U.S. equities and a 5% allocation to Bitcoin-related assets, while using stock dividends to increase their Bitcoin exposure.
The proposed funds, the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF, are designed to give investors access to Bitcoin alongside traditional stock investments without requiring separate crypto purchases.
Dividend income would feed Bitcoin holdings
The two new funds to be launched will have varying targets within the United States’ equity markets. The first fund, Franklin US Equity Bitcoin DRIP Index ETF, is expected to cover large-cap stocks, while the other, Franklin US Innovation Bitcoin DRIP Index ETF, is geared towards companies that are innovative and growing.
Dividends arising from the equities invested in will help grow the Bitcoin holding, creating a connection between income from the equities investments and cryptocurrency investments. The funds will enforce a quarterly rebalancing rule. If market appreciation pushes the Bitcoin allocation past the 5% threshold, the fund will trim it back to 4.5%. However, the methodology allows the asset allocation to flexibly scale to an absolute intra-quarter ceiling of 20% to capture localized momentum.
The 5% allocation cap heavily mirrors traditional wealth management frameworks, which often advise retail portfolios to keep alternative digital asset exposure below a 5% risk threshold.
The filing underscores the growing role of digital assets in mainstream investment strategies. Franklin Templeton already operates a spot Bitcoin ETF and has expanded its crypto business in recent months. Earlier this year, the firm launched a dedicated digital-asset division following its acquisition of 250 Digital, a company spun out of CoinFund.
The asset manager has also broadened its tokenization efforts through a partnership with Kraken parent Payward. Its BENJI tokenized money market fund platform is now available across multiple blockchain networks, reflecting the firm’s wider push into blockchain-based financial products.
Competition intensifies across crypto ETFs
Franklin Templeton’s pivot to hybrid structures coincides with massive saturation in basic spot crypto products. So far, the total net inflows into U.S. spot Bitcoin ETFs launched in 2024 exceed $53 billion, according to SoSoValue. Asset managers are seeking ways to offer investors something unique to stand out among competitors.
Instead of providing only spot exposure to Bitcoin, issuers began launching funds based on income generation and other investment approaches. This year, for example, BlackRock introduced the iShares Bitcoin Premium Income ETF (BITA), which aims at generating extra income through writing calls on Bitcoin exposure.
Other firms are also expanding their offerings. Morgan Stanley has filed plans for a staking-enabled Ethereum ETF designed with a lower-fee structure, highlighting the industry’s push toward more specialized crypto investment products.
The pipeline remains crowded. Bloomberg Intelligence analyst James Seyffart has previously said that more than 100 crypto ETF applications are under review. Asset manager Bitwise Asset Management has also projected that more than 100 crypto-related funds could launch in 2026, signaling that competition is increasingly shifting beyond basic Bitcoin exposure toward new fund structures and income-focused strategies.
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