KEY POINTS
- Franklin tapped Coinbase to take custody of its Ether holdings
- The asset management titan hasn't seen as much success as BlackRock and Fidelity in spot BTC ETFs
- Franklin previously said it sees a 'bright future' in the Ethereum ecosystem
Franklin Templeton has joined the list of asset management firms to apply for a spot Ethereum exchange-traded fund (ETF) in the United States, as per a Feb. 12 filing with the Securities and Exchange Commission (SEC).
Franklin's application shares similar plans with other firms that have applied for a spot ETH ETF. The proposed strategy involves issuing shares that represent various assets, including Ethereum. The fund manager revealed that it has chosen Coinbase Custody Trust Company to be in charge of its Ether holdings.
However, Franklin's proposed ETH ETF will only allow for cash creations and redemptions. In contrast, in-kind creations and redemptions will allow some participants to make cryptocurrency transactions.
The trillion-dollar asset management firm signaled its intent to produce more income through staking a portion of the ETF's Ether, as per its S-1 filing.
"The Sponsor may, from time to time, stake a portion of the Fund's assets through one or more trusted staking providers, which may include an affiliate of the Sponsor," the San Mateo-based investment management titan said in the filing.
Franklin's application comes several weeks after it launched a spot Bitcoin ETF following the SEC's approval. Unlike other spot Bitcoin ETF issuers such as BlackRock and Fidelity, Franklin's spot BTC ETF has not seen the same success. It has only had around $70 million in inflows since the ETF was launched, according to CoinDesk.
Last month, Franklin praised the ETH ecosystem and community, predicting a "bright future with many strong tailwinds to push the Ethereum ecosystem forward."
Amid hopes for the approval of spot Ethereum ETFs, the SEC in late January sought more time to decide on the approval of BlackRock's application until March 10, saying the regulator "finds it appropriate to designate a longer period" regarding its decision. The delay raised concerns about further delays in approving other ETH ETF applications.
There have also been reports that the SEC's stance on Ethereum ETFs is a "hard no" as there is "internal resistance to the idea." On the other hand, some approved BTC ETF issuers have expressed optimism over the approval of ETH ETFs, given the "smooth launch" of BTC spots.
Here’s the most recent table of other filers that I have pic.twitter.com/xCRRMwK76r
— James Seyffart (@JSeyff) February 12, 2024
Franklin, which manages roughly $1.5 trillion in assets, is the ninth company to file an application for a spot ETH ETF, according to industry analyst James Seyffart, indicating an increasing interest in Ethereum's potential.
Meanwhile, Franklin has continued to expand its views of cryptocurrencies and blockchain technology. It recently expressed confidence in the potential use cases that can be unlocked as blockchains improve fees and performance.
