February 25, 2024

Franklin Templeton Joins Race for Bitcoin ETF as Regulatory Hurdles Persist

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In a move signaling growing interest in digital assets, global investment firm Franklin Templeton has filed for a spot Bitcoin exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC). This development follows in the footsteps of major players like BlackRock and Fidelity, all vying to launch the first Bitcoin ETF.

The filing from Franklin Templeton aligns with the terms seen in recent ETF applications from prominent names in traditional finance. According to the filing, Coinbase, a well-known cryptocurrency exchange, will serve as the custodian responsible for safeguarding the Bitcoin held by the fund. Additionally, the ETF intends to trade on the Cboe BZX Exchange and will rely on the CME’s CF Bitcoin Reference Rate–New York Variant for pricing.

Notably, this marks Franklin Templeton’s inaugural attempt to create a Bitcoin ETF product, despite the firm managing approximately $1.45 trillion in assets.

The move by Franklin Templeton is particularly significant because of remarks made by the company’s CEO, Jenny Johnson, in the past. Johnson had previously stated that “Bitcoin is the greatest distraction from the greatest disruption in financial services, which is blockchain.” This filing represents a shift in perspective for the firm, reflecting the evolving landscape of digital assets within traditional finance.

Franklin Templeton’s filing is part of a broader wave of new spot Bitcoin ETF applications that was initiated by BlackRock in June. The anticipation surrounding the potential approval of a spot Bitcoin ETF has grown significantly, mainly due to BlackRock’s reputation and its pivotal role in the U.S. financial system. Alongside BlackRock, Fidelity and VanEck have also submitted their own applications for similar products. However, decisions on these ETFs and others have been delayed by the SEC until October, keeping the industry and investors eagerly waiting.

A recent development in the digital asset space was the victory of digital asset firm Grayscale in their appeal against the SEC’s decision to disallow the transformation of the Bitcoin Investment Trust (GBTC) into a full-fledged ETF. While this victory signifies a potential shift in the regulatory landscape, it does not guarantee approval for other ETFs. SEC Chair Gary Gensler, speaking at a Senate Banking Committee hearing, mentioned that the agency was still reviewing the decision and stated, “We have multiple filings around Bitcoin exchange-traded products; we’re reviewing them, and I’m looking forward to staff’s recommendations.”

The competition among financial giants for a Bitcoin ETF highlights the growing institutional interest in cryptocurrencies. However, regulatory hurdles remain a significant challenge on the path to launching such products. As the SEC continues its review process, the industry awaits further clarity on the future of spot Bitcoin ETFs in the United States.

Digital Assets Desk

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