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Franklin Templeton Enters Spot Ethereum ETF Competition

Last Updated February 13, 2024 11:29 AM
Teuta Franjkovic
Last Updated February 13, 2024 11:29 AM

Key Takeaways

  • Wall Street giant Franklin Templeton joins the Ethereum ETF race.
  • Staking question looms over Ethereum ETF approval.
  • SEC hasn’t decided on Ethereum ETFs; experts predict less than 50% chance of approval before May.

The competition for spot Ethereum ETFs intensifies as Franklin Templeton, a prominent Wall Street firm, has entered the fray by submitting a proposal  to the Securities and Exchange Commission today.

The asset manager now stands alongside BlackRock, Fidelity, Ark and 21Shares, Grayscale, VanEck, Invesco and Galaxy, and Hashdex, all of whom have filed applications for spot Ethereum ETFs in the recent months.

Spot Ethereum ETF Filing Following Bitcoin ETF Launch

Four weeks after launching a spot Bitcoin ETF alongside nine other issuers, Franklin Templeton has submitted a filing  for a spot Ethereum ETF. This move positions the asset manager in a competitive market where BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) have experienced the highest demand.

Despite a less auspicious start with only about $70 million in inflows, Franklin is pushing forward, contrasting with IBIT’s $3.5 billion and Fidelity’s $3 billion in Bitcoin inflows over the past month.

The Securities and Exchange Commission (SEC) has postponed any decisions on approving an Ethereum ETF, aligning with expert predictions. JP Morgan estimated a less than 50% likelihood of approval before May, whereas predictions from Polymarke t suggest a 50% chance of approval by May 31.

Under the leadership of CEO Jenny Johnson since 2020, Franklin Templeton has been venturing into the cryptocurrency space, shedding its “old-fashioned” image. In a recent nod to crypto culture, the company added  laser eyes to its logo, featuring Ben Franklin, on the social media platform X.

New Ethereum ETF Proposed, Raising SEC Staking Questions

The S-1 registration  form filed by the firm details that the proposed “Franklin Ethereum Trust” aims to hold ETH and might occasionally stake a portion of the Fund’s assets with one or more reputable staking providers.

Staking┬áinvolves the act of ‘securing’ digital coins or tokens to support the operation of a blockchain network. Participants in staking receive token rewards for their contribution.

This has sparked debate among traditional finance entities and regulators. The SEC has penalized prominent crypto firms, such as Coinbase, for supposedly offering unregistered securities through their staking services.

Bitcoin ETFs Unlocked: Wall Street Invests, ETH Awaits

In a significant move, the SEC approved 10 spot Bitcoin (BTC) ETFs for trading in January. Following a decade of rejections, these investment products are now available on stock exchanges, enabling traditional investors to gain exposure to cryptocurrency without direct ownership.

Following the approval of spot BTC ETFs, there has been a significant influx of billions of dollars into these funds, which has contributed to an increase in the price of the cryptocurrency.

Last month, British multinational bank Standard Chartered released a report forecasting that the SEC is likely to approve ETH ETFs by May.

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