Summary
- On Thursday, Franklin Templeton submitted applications to the SEC for two ETFs designed to invest U.S. stock dividends directly into Bitcoin.
- The funds will track newly established VettaFi "Bitcoin DRIP" indices, initiating with a 5% allocation to Bitcoin, limited to a maximum of 20%.
- This filing contributes to a busy 2026 schedule, with analysts anticipating over 100 crypto ETFs to debut this year.
Franklin Templeton, a global investment management firm, has filed with the Securities and Exchange Commission to introduce two exchange-traded funds that will reinvest dividends into Bitcoin.
The proposed Franklin U.S. Equity Bitcoin DRIP Index ETF and the Franklin U.S. Innovation Bitcoin DRIP Index ETF will consist of a selection of U.S. stocks, utilizing a VettaFi U.S. large-cap 500 index for one and a VettaFi U.S. innovation 100 index for the other, and will systematically allocate the dividends these stocks generate into Bitcoin instead of reinvesting them into the stocks themselves.
The term "DRIP" in the funds’ names references traditional dividend reinvestment strategies used to grow stock holdings, now creatively applied to accumulate Bitcoin. According to the filing, each underlying index will start with a 5% Bitcoin allocation and 95% equity, with the Bitcoin exposure capped at 20% and adjusted during quarterly rebalances.
The funds will achieve this Bitcoin exposure through various crypto exchange-traded products, including Bitcoin ETPs affiliated with Franklin Templeton, as well as options, futures, and potentially through a wholly-owned subsidiary located in the Cayman Islands. VettaFi will oversee the indices.
This filing is preliminary and does not yet disclose any fees. Following the rule utilized by Franklin, the funds might become active approximately 75 days after filing, suggesting a possible launch in early September.
The ETFs would be part of a surge in crypto ETF introductions. Following the SEC's release of general listing standards for crypto-related funds in late 2025, issuers have hastened to bring products to market. Bitwise has estimated that over 100 such ETFs could be launched in 2026, while Bloomberg Intelligence's James Seyffart identified significantly more than 100 filings in progress at the end of the previous year, noting that issuers are "throwing A LOT of product at the wall."
This influx goes beyond simple spot exposure, where BlackRock's iShares Bitcoin Trust leads with substantial assets, to funds that are competing based on structure and yield. New offerings have emerged, such as covered-call income products like BlackRock's recently launched iShares Bitcoin Premium Income ETF, alongside other innovative structures, with Franklin's dividend-into-Bitcoin approach being the latest addition to this trend.
This ETF filing marks Franklin Templeton's ongoing aggressive strategy in the digital asset space. The firm has already launched its own spot Bitcoin ETF and established a dedicated Franklin Crypto division through its acquisition of CoinFund spinoff 250 Digital, plus formed a tokenization partnership with Kraken parent Payward. Their BENJI tokenized money-market funds are now operational across multiple blockchains.