Franklin Templeton Proposes Dividend-to-Bitcoin ETFs in New SEC Filing

Key Highlights

• Franklin Templeton has submitted SEC applications for two innovative ETFs that convert stock dividends into bitcoin purchases
• The proposed funds are named Franklin US Equity Bitcoin DRIP Index ETF and Franklin US Innovation Bitcoin DRIP Index ETF
• Each fund maintains a 95% U.S. stocks and 5% bitcoin allocation, with dividend proceeds channeled into bitcoin
• Potential launch date set for September 1, 2026, subject to regulatory approval
• This filing comes after BlackRock’s bitcoin-linked product and during a period when bitcoin trades under $62,500

Franklin Templeton has submitted applications to the U.S. Securities and Exchange Commission for two novel exchange-traded funds. These products would convert dividend payments from equities directly into bitcoin holdings.

The asset manager filed registration documents on Thursday for the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF.

The investment structure is relatively simple. Each product maintains 95% of assets in U.S. large-capitalization stocks and 5% in bitcoin. Instead of distributing dividends to shareholders as cash payments, these proceeds are automatically deployed to acquire bitcoin exposure.

Bitcoin positions would be established using bitcoin ETPs, futures contracts, options, or alternative instruments. When quarterly rebalancing occurs, bitcoin allocations exceeding 5% would be reduced to 4.5%. Between rebalancing periods, a maximum threshold of 20% applies.

Product Structure and Mechanics

The first product follows the VettaFi US Large-Cap 500 Bitcoin DRIP Index, offering exposure to the broader equity market. The second concentrates on growth-oriented and innovative companies using a corresponding index variation.

As of April 30, the underlying equity index contained approximately 498 securities. These companies ranged from $7.5 billion to $4.9 trillion in market capitalization.

Should the SEC grant approval, trading could commence as soon as September 1, 2026. However, regulatory clearance remains uncertain.

This application represents another step in Franklin Templeton’s expanding cryptocurrency initiatives. The company’s current spot bitcoin ETF, EZBC, reported $358.9 million in net assets with cumulative net inflows totaling $329.6 million as of Thursday.

Expanding Digital Asset Initiatives

Franklin’s cryptocurrency involvement extends well beyond ETF products. In May, the company announced a collaboration with Payward, Kraken’s parent organization, to investigate tokenization of conventional investment vehicles.

More recently this month, Franklin revealed plans to incorporate its BENJI tokenized money market fund into MoonPay Trade. This integration enables institutional clients to exchange between stablecoins such as USDC and USDT and Franklin’s tokenized offering.

These new ETF applications arrive on the heels of BlackRock’s recent introduction of an income-focused ETF designed to allow institutions to capitalize on cryptocurrency market volatility.

The eleven spot bitcoin ETFs operating in the United States have collectively attracted over $53 billion in investor funds since their 2024 debut, based on SoSoValue statistics.

Bitcoin has experienced significant downward pressure lately. After reaching $126,000 in October 2025, the cryptocurrency has declined substantially. At the time of Franklin’s filing, bitcoin was changing hands below $62,500, representing a decline exceeding 2% over the previous 24 hours.

Market analysts identify approximately $59,000 to $60,000 as the critical support zone. A sustained close beneath $61,500 would signal a break in the prevailing trend.

Friday’s U.S. market closure for the Juneteenth holiday could contribute to reduced liquidity and heightened price volatility in the near term.

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