Ethereum ETF: Franklin Templeton Enters The Fray As ETH Rallies

Wall Street titan and Asset manager Franklin Templeton has applied for an Ethereum Spot Exchange-Traded Funds (ETF) after a struggle to gain approval for their Bitcoin Spot ETF in early January.

Asset Manager Files For Spot Ethereum ETF

Asset managers have gravitated toward the Ethereum spot ETF since the United States Securities and Exchange Commission (SEC) approved the Spot Bitcoin ETF. Franklin Templeton is the latest manager to apply with the SEC to get approval for this financial product. 

The asset manager’s move came after successfully introducing the BTC spot ETFs. This is a notable step toward making more crypto investment products accessible to institutional and individual investors.

James Seyffart, a senior analyst from Bloomberg Intelligence, also shared the update with the crypto community on X (formerly Twitter). Seyffart’s X post included a screenshot of the asset manager’s filing and data regarding other applicants.

According to the post, Franklin Templeton is the eighth company in the cryptocurrency market to file for product approval. Previous asset managers to file applications for Ethereum ETFs include Hashdex, BlackRock, Fidelity, Ark and 21Shares, Grayscale, VanEck, Invesco, and Galaxy. 

Per the official filing, a Delaware statutory trust is how the Franklin Ethereum Trust is set up. The ETF aims to give investors access to ETH in a regulated manner by allowing them to store it directly through a custodian.

It states in the company’s S-1 filing that the proposed “Franklin Ethereum Trust” will hold ETH and “may, from time to time, stake a portion of the fund’s assets through one of the more trusted staking providers.”

Staking is the act of locking up digital currency to maintain the operations of a blockchain network. They plan to stake some of the ETF’s ETH holdings to supplement its income through staking rewards.

The Price Of ETH Rallies Amidst The Update

Franklin Templeton’s spot Ethereum ETF application was made in light of the price of ETH experiencing an uptick. However, no solid proof exists that the latest development impacted the price of crypto assets.

Related Reading: Ethereum ETFs Approval Date Set For May 23, Forecasts Suggest ETH Could Reach $4,000

Ethereum was trading at $2,661 as of press time, indicating an increase of over 7% in the past 24 hours. Data from CoinMarketCap shows that its market capitalization is also on the upside, marking an increase of over 7%. 

Meanwhile, its trading volume has increased significantly by over 172% in the past day. Due to the rise, ETH now ranks third in the entire crypto market by trading volume.

Ethereum

US Bitcoin ETF Approval Could See North America’s ETF Volume Rise To 99.5%

North America could see its share in the global trading volume for crypto-related exchange-traded funds (ETFs) grow even further if spot Bitcoin ETFs are approved in the United States, a Bloomberg analyst said.

This comes after the US Securities and Exchange Commission (SEC) issued a delay letter regarding Ark Invest’s application for a spot Bitcoin ETF. In a widely-anticipated delay, the SEC is asking for new written comments on the spot Bitcoin application.

Some of the issues raised by the commission include the suitability of Bitcoin as an underlying asset of an exchange-traded product, and the resistance of Bitcoin to price manipulation, amongst other things.

The Ark Invest spot ETF, proposed by leading asset management firm ARK Invest in conjunction with Swiss-based 21Shares, would give investors indirect exposure to Bitcoin, the largest cryptocurrency in the market. 

This recent setback has raised questions about the fate of the spot Bitcoin ETF applications of other asset management companies, including Blackrock, Valkyrie, WisdomTree, etc.

North America’s Share Of Global ETF Trading Volume To Reach 99.5%?

In the event that the spot Bitcoin ETF applications get greenlighted by the SEC, Bloomberg ETF analyst Eric Balchunas said that the North American region may see its percentage of the crypto ETF trading volumes reach 99.5%.

According to his post on X (formerly Twitter), North America currently accounts for 97.67% of the total crypto ETF trading volume in the world. “If/when spot ETFs come out in the US this will likely go to like 99.5%,” Balchunas noted.

In another post, the Bloomberg analyst disclosed that most of the best-performing equity ETFs in 2023 are crypto-related. At the top of this list is $WGMI, the Valkyrie Bitcoin Miners ETF, with a year-to-date return of 227%.

This actively-managed fund invests in public companies in the Bitcoin mining industry, including Riot, Bitdeer, Cipher Mining, etc. Given the positive performance of these mining firms’ stocks, it is no surprise that investment products, like $WGMI, are doing well.

Other top-performing crypto-related exchange-traded products on this list include the VanEck Digital Transformation ETF, with a YTD return of 182%; the Global X Blockchain ETF, which has returned 168% so far in 2023; and the Bitwise Crypto Industry Innovators ETF, also up by roughly 168% year to date.

Pending Grayscale Lawsuit To Be Pivotal To Bitcoin ETF Approval

In 2022, Grayscale Investments sued the SEC for rejecting the application to convert its flagship product, GBTC, into a spot Bitcoin ETF. 

According to Nathan Geraci, president of the ETF Store, the final judgment in this lawsuit could prove pivotal in the race for Bitcoin exchange-traded fund. 

Geraci commented on the delay of Ark Invest ETF: 

It all comes down to the outcome of the Grayscale lawsuit & SEC’s view of question #4 here (referring to the fourth subject the commission is seeking comments on).

Earlier in March, Grayscale argued against the commission, questioning the logic behind allowing Bitcoin futures ETFs while disapproving similar spot Bitcoin funds.

Subsequently, the Grayscale legal team submitted a letter in July, urging the Securities and Exchange Commission to approve all eight applications for Bitcoin spot ETF.

Bitcoin ETF