Franklin Templeton Expands Crypto Offerings

Nonetheless, firms like Franklin Templeton, BlackRock, Grayscale Investments, and Ark Invest have submitted spot-ether ETF proposals to the SEC.

Franklin Templeton, which has already introduced a bitcoin-focused ETF and is considering the launch of an ether-focused ETF, continues to develop another segment of cryptocurrency products.

The fund behemoth, which manages over $1 trillion in assets, announced Tuesday that it has established the Franklin Templeton Digital Asset Dynamic BTC/ETH separately managed account (SMA).

SMAs provide investors with a more sophisticated method of investing, enabling them to tailor asset diversification and tax optimization strategies to their specific needs.

SMAs expose investors to various crypto asset exposures beyond bitcoin, the only crypto asset that US ETFs can hold directly at this time.

Actively managed, the product attempts to outperform a portfolio of bitcoin and ether weighted by market capitalization.

Registered investment advisers (RIAs) and other wealth managers in the United States will have access to it via the SMA platform of Eaglebrook Advisors. The assets will be held in possession by Anchorage Digital.

Franklin Templeton issued the most recent SMA after the introduction of two such investment vehicles in 2022.

The Digital Assets Core SMA allocates capital towards ten to fifteen of the most prominent digital assets. Utilizing a comparable approach, the Franklin Templeton Digital Assets Core Capped SMA restricts its investments in ETH and BTC to 25% of the overall portfolio.

On January 11, Franklin Templeton introduced its Bitcoin ETF (EZBC) in competition with several rivals.

As of Monday’s market close, the fund is positioned ninth among the ten spot bitcoin funds in the United States in terms of assets under management, amounting to $312 million.

Net inflows into spot bitcoin exchange-traded funds (ETFs) amount to approximately $11.3 billion. Observers of the industry anticipate that an increasing number of wealth managers will offer these funds to clients in the coming months, thereby driving the segment’s expansion.

Executives have stated that besides providing diversified exposure, SMAs enable investors to offset capital gains taxation through purposeful capital loss harvesting and permit clients to hold the underlying assets directly in their names at a qualified custodian.

Eaglebrook CEO Christopher King stated last year, “[Crypto ETFs] enable more people to dip their toes in…in an easier manner, which will drive demand for our solutions from advisers due to the additional value prop via strategies and assets they cannot access in the ETF wrapper.”

Franklin Templeton’s Role in Cryptocurrency Investment Evolution

Although the Securities and Exchange Commission has approved ether futures ETFs, investors in the United States are unable to gain exposure to ether through direct ownership of the asset in the form of an ETH.

Franklin Templeton, BlackRock, Grayscale Investments, Ark Invest, and several other firms are among those that have submitted spot-ether ETF proposals to the SEC.

Prospective US ETFs investing in cryptocurrencies other than Bitcoin and Ethereum are “slightly improbable,” Bitwise Chief Investment Officer Matt Hougan stated in January on the Blockworks podcast.

Hougan further stated that establishing a Solana ETF would be a significant undertaking, citing the absence of a regulated futures market for SOL as an illustration.