Wall Street investment giant Franklin Templeton becomes the latest in the line of traditional asset management firms to file an application for a spot Bitcoin exchange-traded fund (ETF) in the United States.
According to a filing submitted to the U.S. Securities and Exchange Commission (SEC) on September 12, the proposed fund called the Franklin Bitcoin ETF would be listed for trade on the Cboe BZX Exchange. American cryptocurrency exchange Coinbase will act as the custodian for the Trust’s Bitcoin (BTC).
Asset Manager Franklin Templeton Files For Spot Bitcoin ETF
The filing read that the assets of the fund will consist primarily of Bitcoin held by a custodian on behalf of Franklin Templeton. Moreover, the ETF seeks to reflect the price performance of Bitcoin and will “reflect such performance before payment of the Fund’s expenses”.
Franklin Templeton is one of the world’s largest fund managers with $13.1 billion worth of assets under management (AUM) across 60 exchange-traded funds. The company’s largest ETF, the Franklin U.S. Core Bond ETF (FLCB), has $1.6 billion in AUM.
The firm’s application further increases the chances of having a Bitcoin spot ETF in the United States as more traditional financial players are adopting cryptocurrencies. What’s interesting is that Templeton’s filing comes just days after the SEC postponed making a decision on six spot Bitcoin ETF applications.
These submissions were from BlackRock, Fidelity, Bitwise, Invesco Galaxy, Valkyrie, VanEck, and WisdomTree. The SEC will now confirm its decision on whether to accept or decline the applications around mid-October.
To date, the securities regulator has blocked more than 30 proposals for a spot Bitcoin ETF, citing the instruments are vulnerable to fraud and market manipulation.
However, the SEC does allow exchange-traded products that track Bitcoin futures contracts, which instead of directly holding the asset, track the price performance of derivatives tied to the asset.
Senate Questions The SEC On Why It Rejected Grayscale’s Bitcoin ETF Application
During the Senate Banking Committee hearing on September 12, SEC Chairman Gary Gensler proclaimed that crypto assets are an unsafe investment as they have “significant noncompliance” issues. He also argued that the crypto market was rifled with “fraud, abuse, and misconduct”.
Meanwhile, Senator Bill Hagerty of Tennessee brought up the recent loss of SEC in its legal battle against crypto asset manager Grayscale.
The case filed by Grayscale in 2022 was related to the securities regulator denying the company’s application to convert its GBTC Bitcoin Trust into a spot Bitcoin ETF. At the time Grayscale claimed that the Commission’s actions were unjustified.
On August 29, the U.S. Court of Appeals D.C. Circuit ruled that Grayscale’s arguments were fair and ordered the SEC to reconsider its application to covert the Grayscale Bitcoin Trust into an ETF. The SEC countered by saying that it would appeal the ruling to a higher court.
Senator Hagerty asked Gensler what the SEC needed to see in the spot ETF filing, to which the chairman replied that the Commission was still in the process of reviewing its decision regarding Grayscale. He also said the same about the Bitcoin spot ETF filings that are pending approval.
Approval Of First U.S. Spot Bitcoin ETF A Matter Of “When” Rather Than “If”
The Commission has 45 days to appeal the court’s ruling in the Grayscale lawsuit, either in a D.C. Circuit court or the Supreme Court.
As things stand, the SEC has two options on the table, one is to approve the Bitcoin spot ETF applications, or completely deny the product and also roll black on its approval of Bitcoin futures ETFs.
Market experts speculate that since industry giants like BlackRock, Fidelity, and now Franklin Templeton have filed for spot Bitcoin ETFs, it will be a matter of “when” and not “if” the SEC will approve the investment vehicles.
Spot Bitcoin ETFs will allow traditional market investors to get exposure to Bitcoin without having to directly buy, hold, or sell the assets, with trusted financial institutions doing it on their behalf.
At the time of writing, Bitcoin (BTC) was trading at $26,176 – rising 1.2% over its price from the previous day.
