Franklin Templeton Files ETFs to Convert Dividends Into Bitcoin

Franklin Templeton submitted registration statements with the U.S. Securities and Exchange Commission proposing exchange-traded funds that would reinvest cash dividends from equity holdings into purchases of Bitcoin for the fund’s shareholders.

Under the proposed structure, each ETF would hold dividend-paying stocks and route dividend proceeds into the fund’s Bitcoin allocation instead of distributing cash. Dividends received by the fund would be segregated and used to acquire Bitcoin through prearranged trading venues and custodial arrangements, adding cryptocurrency to the fund’s holdings while the ETF retains exposure to the underlying equities.

The filings describe operational and governance arrangements the firm would put in place. They call for separate custody agreements for digital assets, systems to convert cash to Bitcoin, valuation methods to reflect combined equity and crypto positions in the fund’s net asset value, and defined counterparties for trades. The documents say final details on creation and redemption mechanics and permitted trading counterparties would be set in the completed prospectus.

Regulatory review will examine custody practices, valuation and liquidity procedures and investor protections tied to the inclusion of digital assets. The ETFs cannot launch or trade until the SEC concludes its review and declares the registration statements effective.

Franklin Templeton’s filings note that tax and accounting treatment for any hybrid fund would depend on the final product design and applicable guidance. The manager is seeking to offer a regulated vehicle that gives investors exposure to Bitcoin alongside traditional equity allocations without requiring separate, direct purchases of cryptocurrency.

The proposal follows other efforts to provide Bitcoin access through regulated investment products rather than direct ownership. The filings warn investors about Bitcoin’s price volatility, custody risks for digital assets, and the potential for differing performance between the fund’s equity holdings and its Bitcoin allocation.