Franklin Templeton launches ETFs that convert stock dividends into Bitcoin
Asset management firm Franklin Templeton has filed an application to launch two exchange-traded funds (ETFs) that automatically reinvest stock dividends into bitcoin (BTC). According to the documents, the funds could begin operations as early as September 1, 2026.
How the new funds work
These 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 stakes, 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. The idea is that dividends from stocks within the fund will be systematically invested not back into equities, 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% in effect between rebalancing periods.
As of April 30, the underlying equity index included approximately 498 stocks with market capitalizations ranging from $7.5 billion to $4.9 trillion. Thus, the funds offer investors a broad basket of US stocks, while building a growing bitcoin position through dividend income.
Part of a broader crypto strategy
The filing is the latest step in Franklin Templeton's expansion into crypto. 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 a 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 will allow institutional users to exchange USDC and USDT stablecoins for the Franklin tokenized fund via MoonPay's infrastructure.
My expert opinion: This is a very elegant hybrid product. Franklin Templeton is essentially building a bridge between the traditional stock market and bitcoin, using dividend income as "fuel" to accumulate BTC. For institutional investors seeking crypto diversification without active management, this is an ideal tool. If such ETFs gain approval and demand, we could see a wave of similar offerings from other asset managers, which would become a powerful driver of capital inflows into bitcoin.