Franklin BTC Trust ETF Application

Martin Walker
Sep 13, 2023 at 10:22 am

Franklin Templeton, a well-established and esteemed asset management firm, has taken a noteworthy step by formally submitting an application to the United States Securities and Exchange Commission (SEC) on September 12th. Their application seeks the SEC's approval for the launch of a Bitcoin exchange-traded fund (ETF), a development that has been widely anticipated within the financial industry.

This strategic move by Franklin Templeton comes on the heels of recent developments in the ETF arena, including the SEC's decision to postpone its verdict on spot ETF proposals from several prominent players in the crypto space, including WisdomTree, Valkyrie, Fidelity, VanEck, Bitwise, and Invesco, as of August 31st. Furthermore, the landscape was influenced by a significant court ruling on August 29th, which mandated that the SEC carefully consider Grayscale's request to transform its existing Bitcoin (BTC) futures ETF into a more robust and versatile spot ETF.

Intriguingly, the proposed structure for Franklin Templeton's ETF would take the form of a trust, a structure that has gained popularity in recent years for its versatility and investor-friendly features. Notably, Coinbase, a leading name in the cryptocurrency custody space, would play a pivotal role by safeguarding the Bitcoin (BTC) assets, ensuring their security and integrity. Simultaneously, the reputable Bank of New York Mellon would step in as the designated custodian and administrator for the fund's cash holdings, adding an extra layer of credibility and oversight to the operation. The plan is for fund shares to be available for trading on the Cboe BZX Exchange, a platform known for its transparency and efficiency.

The SEC, tasked with safeguarding the interests of investors and maintaining market integrity, has set October 16th as its next crucial deadline for reviewing the application. This timeline adds a layer of anticipation to the proceedings, as stakeholders eagerly await the regulatory body's decision.

In their application, Franklin Templeton has astutely acknowledged and articulated the potential risks associated with the current regulatory landscape. They express genuine concern about the state of "regulatory uncertainty" in the digital asset markets in the U.S. Their concerns revolve around the possibility of adverse legislative or regulatory developments that could adversely affect the value of Bitcoin or the fund's shares. Such developments could take various forms, including bans, restrictions, or the imposition of onerous conditions on various aspects of the cryptocurrency ecosystem, such as Bitcoin usage, mining activities, digital wallet services, trading, custody solutions, the operation of the Bitcoin network itself, or even the broader digital asset markets.

For the critical task of providing daily valuations, Franklin Templeton intends to partner with CF Benchmarks, a digital asset index provider that operates under the regulatory framework of the United Kingdom. This choice ensures a level of trust and compliance that is increasingly sought after in the rapidly evolving cryptocurrency industry. CF Benchmarks would utilize data from multiple reputable exchanges, including Coinbase, Bitstamp, iBit, Kraken, Gemini, and LMAX Digital, with the added precision of indexing trades at five-minute intervals, catering to the demand for real-time market insights and pricing accuracy.

Lastly, it's worth highlighting that Franklin Templeton is a financial powerhouse, managing an impressive portfolio of assets totaling $1.5 trillion. This extensive experience and financial clout add another layer of credibility to their ETF proposal. Furthermore, at the time of composing this text, the price of Bitcoin (BTC) was notably on the rise, having experienced a significant increase of over 4%, reflecting the ongoing dynamism and potential of the cryptocurrency market.

In conclusion, Franklin Templeton's application for a Bitcoin ETF marks a significant milestone in the evolving cryptocurrency landscape, and all eyes are now firmly fixed on the upcoming decision from the SEC.

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