Franklin Templeton files for ETF converting stock dividends into bitcoin
Asset management firm Franklin Templeton has filed an application to launch two exchange-traded funds (ETFs) that will automatically reinvest stock dividends into Bitcoin (BTC). The funds are expected to begin operations as early as September 1, 2026.
The funds in question are the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF. The acronym DRIP refers to dividend reinvestment plans, which have long been used to increase equity holdings, but here the mechanism is reconfigured to accumulate Bitcoin.
The funds will track the VettaFi US Large-Cap 500 Bitcoin DRIP Index and its related innovation variant. Under the plan, dividends from stocks within the fund will be systematically invested not back into the securities, but into BTC. The funds will gain exposure to Bitcoin through exchange-traded products on the leading cryptocurrency, futures, options, and other instruments.
At launch, the index allocates 95% of assets to large-cap US stocks and 5% to Bitcoin. During quarterly rebalancing, any BTC share exceeding 5% will be reduced to 4.5%, with an overall cap of 20% between rebalancing periods. As of April 30, the underlying stock index included approximately 498 securities with market capitalizations ranging from $7.5 billion to $4.9 trillion. Thus, the funds provide investors with a broad basket of US stocks, while the growing Bitcoin share is built through dividend income.
The filing marks another step in the development of Franklin Templeton's crypto initiatives. Its spot Bitcoin ETF (EZBC) holds $358.9 million in net assets and has attracted $329.6 million in total inflows. In May, Franklin Templeton partnered with Payward, the parent company of crypto exchange Kraken, to explore new ways of tokenizing traditional investment products. Tokenization involves issuing digital representations of real-world assets on the blockchain.
Earlier this month, the company announced the integration of its tokenized money market fund BENJI and other products into the MoonPay Trade service. This allows institutional users to exchange USDC and USDT stablecoins for Franklin's tokenized fund through MoonPay's infrastructure.
Expert opinion: This move by Franklin Templeton is a logical continuation of the trend toward merging traditional finance and cryptocurrencies. The mechanism of automatically converting dividends into BTC not only simplifies entry into crypto assets for conservative investors but also creates a steady stream of Bitcoin purchases, which could exert long-term upward pressure on its price. I see this as a signal that institutional adoption of BTC is transitioning from passive holding to active use in investment strategies.