Franklin Templeton Proposes Dividend-to-Bitcoin ETF Strategy

The asset manager submitted a registration statement on Thursday for the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF. These funds are set to track indices managed by VettaFi, utilizing a strategy that steers dividends from underlying U.S. large-cap portfolios directly into Bitcoin exposure rather than holding them in cash. The firm anticipates an effective date for these products of September 1, 2026.

Under the proposed methodology, the portfolios will launch with a 95% allocation to U.S. equities and a 5% stake in Bitcoin-linked vehicles, which may include spot ETFs, futures, or options. Quarterly rebalancing will keep the digital asset portion disciplined, resetting any allocation that exceeds 5% back to 4.5%, with a hard ceiling of 20% between rebalancing periods. The equity indices currently encompass roughly 498 securities, ranging in market capitalization from $7.5 billion to $4.9 trillion.

This filing deepens Franklin Templeton’s aggressive expansion into the crypto ecosystem, building on its existing spot Bitcoin ETF, EZBC, which has secured $329.6 million in cumulative net inflows. The firm has recently prioritized digital asset infrastructure, including tokenization partnerships with Ondo Finance, MoonPay, and Kraken to integrate its BENJI fund into broader on-chain trading and collateral services.