By
Godfrey Benjamin
April 26th, 2024
Franklin Templeton’s foray into the ETH ETF space comes on the heels of its recent launch of a spot Bitcoin ETF, among 10 other issuers.
Ethereum (ETH), the world’s second-largest cryptocurrency, has surged past the $2600 mark, now standing at $2,649, marking a 6% increase in the past 24 hours, according to CoinMarketCap data. Driving this surge in price is Franklin Templeton, a $1.5 trillion asset manager, who has submitted a filing for a spot Ethereum Exchange-Traded Fund (ETF).
Franklin Templeton’s Ethereum ETF Filing
Franklin Templeton’s move to file for a spot Ethereum ETF highlights the growing traction of cryptocurrencies within traditional financial institutions. The filing aims to provide investors with a convenient avenue to gain exposure to Ethereum, mirroring an investment similar to acquiring, holding, and trading the cryptocurrency directly.
By introducing an Ethereum ETF, Franklin Templeton joins a league of financial heavyweights, including BlackRock Inc (NYSE: BLK), Fidelity Investments, Ark 21Shares, Grayscale Investments, VanEck, Invesco, Galaxy, and Hashdex, who have all recently submitted applications for similar offerings.
A notable aspect of Franklin Templeton’s ETF proposal is its interest in staking Ethereum. Staking, a process crucial to Ethereum’s network security and decentralization, involves participants locking up their Ether to support the blockchain and earn rewards. Unlike other filings, Franklin’s proposal explicitly mentions staking, indicating the asset manager’s commitment to embracing innovative features within the crypto space.
According to the filing, Franklin Templeton intends to stake a portion of the fund’s assets with trustworthy staking providers, which may include the sponsor’s affiliates. In exchange for participating in staking activities, the fund expects to receive staking incentives in the form of Ether tokens, which can be viewed as income.
Comparative Analysis with Bitcoin ETFs
Franklin Templeton’s foray into the ETH ETF space comes on the heels of its recent launch of a spot Bitcoin ETF, among 10 other issuers. While asset management giants like BlackRock and Fidelity have witnessed substantial demand for their Bitcoin funds, Franklin’s Bitcoin ETF has experienced a more modest start, attracting approximately $70 million in inflows since its launch.
In contrast, BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) have seen inflows exceeding $3.5 billion and $3 billion, respectively, over the past month. Despite the growing interest in Ethereum ETFs, regulatory hurdles persist, with the SEC delaying decisions on approval.
Experts speculate on the likelihood of approval before May, with JPMorgan Chase & Co (NYSE: JPM) estimating a less than 50% chance. Traders on platforms like Polymarket are also optimistic, betting on a 50% chance of approval by May 31. Bloomberg Intelligence analyst James Seyffart projects a 60% chance of SEC approval for spot Ethereum ETFs, signaling cautious optimism among market observers.
Franklin Templeton’s venture into cryptocurrencies under CEO Jenny Johnson’s leadership reflects the company’s proactive approach toward embracing digital assets. With initiatives like adding “laser eyes” to its logo on social media platform X, Franklin Templeton is demonstrating its willingness to engage with the growing crypto culture.
