Franklin files ETFs that turn stock dividends into Bitcoin buys

Franklin Templeton has asked the SEC to approve two ETFs that would let investors build Bitcoin exposure through stock dividends instead of a direct crypto purchase. For investors watching how Bitcoin is being packaged for standard brokerage accounts, the filing shows the market moving past plain spot funds and into mixed portfolio products.

The proposed funds, the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF, would track VettaFi indexes. One would hold the 500 largest US companies by market value. The other would target the 100 largest non-financial Nasdaq-listed companies. Each index would start with a 95% equity allocation and 5% Bitcoin allocation.

The structure is built around dividend reinvestment. When portfolio companies pay regular or special dividends, those payouts would be redirected into Bitcoin-related assets at the next market open after the ex-dividend date. Franklin also set guardrails: if Bitcoin rises above 5% at a quarterly review, the weight would be cut to 4.5%, and if it jumps above 20% between reviews, it would also be reduced to 4.5%.

The filing leaves open several ways to get Bitcoin exposure, including Bitcoin ETPs, futures, options, and a Cayman subsidiary that can hold up to 25% of assets for tax reasons. Franklin has not yet disclosed tickers, fees, or listing venues.