Franklin Templeton Files for Spot Ethereum ETF with SEC
In terms of creation and redemption mechanisms, the filing states that authorized participants will deliver cash to create shares and receive cash when redeeming shares.
Investment firm Franklin Templeton has taken a significant step towards launching a spot Ethereum ETF by filing an S-1 registration statement with the Securities and Exchange Commission (SEC). The proposed ETF, named the Franklin Ethereum ETF, aims to track the price of ether, the native cryptocurrency of the Ethereum blockchain, according to The Block report.
According to the filing, the ETF will generally reflect the price of ether, providing investors with a convenient means of gaining exposure to the cryptocurrency without directly acquiring, holding, or trading it on digital asset platforms. Coinbase Custody Trust Company and the Bank of New York Mellon will serve as custodians for ether and cash holdings, respectively.
The shares of the Franklin Ethereum ETF are intended to be listed and traded on the Cboe BZX Exchange, Inc. The filing highlights the ETF's objective of removing obstacles associated with direct investments in ether, citing complexities and operational burdens.
In terms of creation and redemption mechanisms, the filing states that authorized participants will deliver cash to create shares and receive cash when redeeming shares. This process simplifies the investment process for investors compared to directly holding ether.
Other asset managers, including Cathie Wood's Ark Invest, 21Shares, Grayscale Investments, and BlackRock, have also filed for spot Ethereum ETFs in recent months. Notably, Ark Invest and 21Shares have included a staking component in their ETF proposals, allowing for potential staking rewards of ether tokens.
Franklin Templeton's filing also includes provisions for staking, where a portion of the ETF's assets may be staked through trusted Staking Providers. In return for staking activity, the ETF may receive staking rewards in the form of ether tokens, which could be treated as income.
While several asset managers have submitted applications for Ethereum ETFs, the SEC has delayed decisions on these proposals. Experts have expressed mixed opinions on the likelihood of approval for such products in the current regulatory environment. Nonetheless, the increasing interest from institutional investors and asset managers underscores the growing demand for regulated investment vehicles in the crypto space.
