Franklin Templeton Files for Spot Bitcoin ETF   

The move comes as SEC Chairman Gensler reiterates belief that crypto is 'rife with fraud.'

Franklin Templeton entered the spot bitcoin ETF race on Tuesday, the most recent of the traditional Wall Street investment firms that are looking to sell digital asset products alongside more upstart companies. 

According to a filing with the Securities and Exchange Commission, the Franklin Bitcoin ETF would be listed on the CBOE BZX Exchange. Crypto trading platform Coinbase would be the custodian. The proposed fund doesn’t have a ticker symbol yet. 

Franklin Templeton has $13.1 billion in assets under management across 60 exchange-traded funds. 

The firm’s filing comes as more traditional financial firms move into cryptocurrency ETFs. Investment giants BlackRock Inc. and Fidelity Investment Co. have both filed for spot bitcoin ETFs, and many experts speculate that the SEC could give those firms priority if it approves the investment vehicles.  

While the SEC allows funds that track bitcoin futures contracts, such as the ProShares Bitcoin Strategy ETF (BITO), the agency has blocked and delayed proposals for ETFs that track physically backed bitcoin. The SEC has rejected more than 30 proposals for a spot bitcoin ETF since 2021, including those from Fidelity and VanEck and has blocked such funds since 2017 on the grounds that they are vulnerable to fraud and market manipulation. 

On Aug. 29, however, cryptocurrency investment firm Grayscale Investments prevailed in a watershed legal victory over the SEC, when the U.S. Court of Appeals D.C. Circuit ruled that the SEC must reconsider Grayscale’s application to convert its Grayscale Bitcoin Trust into an ETF. The SEC had previously rejected Grayscale’s application. The ruling could mean that the SEC will eventually approve spot bitcoin ETFs. 

SEC Chairman Gensler: ‘Crypto Rife With Fraud’ 

As the SEC faces mounting pressure to approve more cryptocurrency ETFs, Chairman Gary Gensler hasn’t backed down from his position that digital assets are an unsafe investment. At a Senate Banking Committee oversight hearing on Tuesday, Gensler said that cryptocurrency has “significant noncompliance” problems and that the asset class as a whole is “rife with fraud, abuse and misconduct.”  

The SEC has 45 days to appeal the court’s ruling in Grayscale’s lawsuit, either in the D.C. Circuit or the Supreme Court. The agency could go as far as to roll back its approval of bitcoin futures ETFs if it doubles down on an anti-cryptocurrency stance.  

The fund would be Franklin Templeton’s first jump into digital asset ETFs. Its largest ETF is the Franklin U.S. Core Bond ETF (FLCB) with $1.6 billion in assets.