Franklin Templeton Officially Launches 2 Bitcoin DRIP ETFs That Turn Dividends Into Bitcoin

Bitcoin Magazine

Franklin Templeton Officially Launches 2 Bitcoin DRIP ETFs That Turn Dividends Into Bitcoin

Two Nasdaq-listed funds route dividends from large U.S. companies into a bitcoin sleeve that grows with every payment.

Franklin Templeton has officially launched two exchange-traded funds that convert stock dividends into bitcoin. The Franklin U.S. Equity Bitcoin DRIP Index ETF (FBEQ) and the Franklin U.S. Innovation Bitcoin DRIP Index ETF (FIBT) will trade on Nasdaq. 

The launch completes the last regulatory step after Franklin filed registration papers with the Securities and Exchange Commission on October 22. The filings for both funds arrived in June without tickers or fees. Four months after that filing, the details are in. 

How the funds work

FBEQ tracks the VettaFi U.S. Large-Cap 500 Bitcoin DRIP Index. The index holds the 500 largest U.S. companies by market capitalization, weighted by float-adjusted market cap. As of September 30, it held 499 stocks ranging from $10.2 billion to $5.5 trillion in size, with the heaviest concentration in information technology.

At inception, the index allocates 95% to those stocks and 5% to BTC. Each dividend the companies pay, whether regular or special, is reinvested into BTC at the market open on the day after the ex-date. The BTC share of the portfolio grows with each payment.

A traditional dividend reinvestment plan, or DRIP, uses cash dividends to buy more shares of the company that paid them. Franklin’s version routes that cash into BTC. For a holder, the dividend stream from the largest companies in America becomes a recurring BTC purchase, with no exchange account, no wallet and no custody decisions.

The bitcoin position has limits. At each quarterly rebalance, any allocation above 5% gets trimmed to 4.5%. If BTC exceeds 20% of the index between rebalances, the index cuts it to 4.5% within two business days, and the proceeds return to stocks. 

The result is a stock fund with a bitcoin sleeve, a different product from a BTC fund.

The fund holds no BTC on-chain. It gains exposure through BTC exchange-traded products, including Franklin’s own spot fund, through bitcoin futures and options, or through depositary receipts, in some cases via a Cayman Islands subsidiary.

FBEQ carries a 0.09% expense ratio and charges no 12b-1 fee. Franklin Advisory Services manages the fund, with Franklin Templeton Institutional as sub-advisor.

Bitcoin as a mature, investable asset

“Bitcoin has matured as an investable asset, supported by deeper market infrastructure, broader adoption and a growing understanding of the role it can play in portfolios,” said Dina Ting, SVP and Head of Index Investments at Franklin Templeton. “A systematic approach to building exposure is one way to address this next stage of adoption.”

Jeff Masom, Head of U.S. Distribution and Global Wealth Management Private Markets, framed the funds as a new way to combine U.S. equities and bitcoin through a differentiated index methodology.

This post Franklin Templeton Officially Launches 2 Bitcoin DRIP ETFs That Turn Dividends Into Bitcoin first appeared on Bitcoin Magazine and is written by Micah Zimmerman.