Franklin Templeton Files for ETF That Converts Stock Dividends Into Bitcoin

Major asset manager Franklin Templeton has filed to launch two new ETFs that would automatically invest stock dividends into exposure to Bitcoin. This comes as the firm continues to explore ways to combine traditional investing with digital assets. The funds could begin trading as early as September 2026 once approved.

Franklin Templeton looks to use dividends to buy Bitcoin

According to a filing with the U.S. SEC, the asset manager plans to launch the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF towards the end of the year.

The "DRIP" in the fund names stands for dividend reinvestment plans. Basically, instead of the firm reinvesting dividends back into stocks, the funds would use those payments to gain further exposure to BTC.

The proposed funds would start out with a portfolio made up of 95% U.S. stocks and 5% Bitcoin-related investments. BTC exposure could come through spot Bitcoin ETFs, futures contracts, and options.

Franklin Templeton said the coin’s allocation would be monitored based on certain parameters. For example, if the coin’s exposure rises above 5% during quarterly reviews, it would be reduced to 4.5%. The funds would also have a maximum exposure limit of 20% between rebalancing periods.

The Wall Street firm builds on its crypto strategy

This new offering is just one of the firm's latest moves, and these developments come despite BTC’s price struggles.

The company already operates a spot Bitcoin ETF called EZBC. SoSoValue data shows that the fund manages $358.9 million in assets and has attracted cumulative inflows of around $329.6 million.

EZBC historical inflow chart. Source: SoSoValue

Franklin Templeton has also been away from just ETFs. Earlier this year, the firm partnered with Kraken parent company Payward to explore tokenized investment products. It also integrates its BENJI tokenized money market fund with MoonPay's trading platform. This would allow institutional investors to move between stablecoins and tokenized assets more easily.

More recently, Franklin Templeton announced plans to work with Ondo Finance. This is in a bid to offer tokenized versions of its ETFs that can be traded directly from crypto wallets daily. The company also shared in April that it aims to launch its crypto division, Franklin Crypto. This came after its acquisition of crypto investment firm 250 Digital.

Meanwhile, the new filing comes as competition in the crypto ETF market grows. Earlier in the week, BlackRock launched its Bitcoin income ETF, also expanding its offerings. That fund has already seen major interest from investors within days of its launch.

Since spot BTC ETFs launched in the US, investors have poured more than $53 billion into the products. It is now clear that asset managers are seeking more creative ways to stand out from the usual Bitcoin funds.