Franklin Templeton Expands Crypto Footprint with Ethereum ETF Application

Table of Contents

• The "Franklin Ethereum Trust
• Crypto ETF Competition Heats Up
• Market Dynamics

Franklin Templeton joins the competition for Ethereum ETF approval amidst growing interest from traditional financial institutions as regulatory delays persist.

The "Franklin Ethereum Trust

On Monday, Feb 12, Franklin Templeton made a significant move in the cryptocurrency market by filing for a spot in the Ethereum exchange-traded fund (ETF). With $1.4 trillion in assets under management, Franklin Templeton's decision underscores the growing interest of traditional financial institutions in digital assets.

The proposed "Franklin Ethereum Trust" aims to expose investors to Ethereum (ETH), the second-largest cryptocurrency by market capitalization. According to the firm's S-1 registration form, the trust would hold ETH and potentially stake a portion of its assets through trusted staking providers.

Coinbase Custody, a division of the cryptocurrency exchange Coinbase, is set to act as the custodian for the ether held in the proposed ETF. Additionally, the company is slated to serve as the custodian for BlackRock's Ethereum ETF.

Crypto ETF Competition Heats Up

Franklin Templeton's move comes amidst a flurry of activity in the crypto ETF space. Following the US Securities and Exchange Commission's (SEC) approval of 11 spot bitcoin ETFs in January, several players have joined the race to introduce similar products for Ethereum. With Franklin's registration, eight ETF providers are now competing for a spot in the Ethereum ETF market.

Despite the growing interest, challenges persist. The SEC recently delayed its decision on Grayscale Investments' application to convert its Ethereum trust into a spot ETF, along with BlackRock's application for a similar product. VanEck, the first to file for a spot Ethereum ETF, awaits the SEC's decision by May 23.

Market Dynamics

While ETFs like BlackRock's iShares Bitcoin Trust (IBIT) and Fidelity's Wise Origin Bitcoin Fund (FBTC) have seen significant demand, Franklin's spot Bitcoin ETF has had a slower start, with approximately $70 million in assets compared to over $3.5 billion for IBIT. However, experts remain optimistic about the potential for Ethereum ETFs, with some predicting approval from the SEC by May.

As anticipated by analysts, the SEC has consistently postponed decisions regarding the approval of an Ethereum ETF. JP Morgan assesses the likelihood of approval before May to be below 50%. In contrast, Standard Chartered, a British multinational bank, stated in a recent report that it anticipates SEC approval for ETH ETFs by May.

Despite its traditional image, Franklin Templeton has been actively exploring opportunities in the crypto space under CEO Jenny Johnson's leadership since 2020. The firm's foray into Ethereum ETFs signifies its commitment to adapting to evolving market trends and meeting the changing demands of investors.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.