Franklin Templeton Files Bitcoin DRIP ETFs with Dividend-to-Crypto Twist

Franklin Resources, Inc., the parent company of Franklin Templeton, has filed two new exchange-traded fund (ETF) proposals that would convert dividend payments into Bitcoin exposure. The funds, dubbed the BTC-linked Franklin US Equity Bitcoin DRIP Index ETF and Franklin US Innovation Bitcoin DRIP Index ETF, are set to start tracking VettaFi indexes tied to large-cap and innovation-focused U.S. equities.

The key feature of these ETFs is that they would direct dividend reinvestments into Bitcoin-linked assets instead of distributing them as cash income. This approach builds on traditional dividend reinvestment plans (DRIPs), but applies it to Bitcoin accumulation.

The funds' initial Bitcoin exposure would start at 5%, with a maximum allocation of 20% between scheduled rebalances. The quarterly rebalancing rules aim to limit sharp swings in Bitcoin exposure, trimming it back if it rises above 5%.

This new structure adds another variation to the growing crypto ETF market as issuers experiment with more complex fund structures. Franklin Templeton has already been active in the digital asset space, operating a spot Bitcoin ETF and expanding its crypto business through acquisitions.