Franklin Templeton Files for Spot Bitcoin ETF with SEC, Joining Wall Street Peers

Franklin Templeton, a colossal asset manager boasting a staggering $1.5 trillion in assets under management, has thrown its hat into the ring for the approval of a spot Bitcoin exchange-traded fund (ETF). The company recently submitted a filing to the U.S. Securities and Exchange Commission (SEC), marking its intent to launch the Franklin Bitcoin ETF on the Cboe BZX Exchange.

In the filed Form S-1, Franklin Templeton revealed that Coinbase, a prominent publicly traded company, would serve as its brokerage partner and custodian for Bitcoin (BTC). Furthermore, the firm proposed the Bank of New York Mellon to safeguard the fund’s cash capital.

Franklin Templeton now finds itself in the company of Wall Street giants like BlackRock and Fidelity, all of whom have pursued spot Bitcoin ETFs. These products would provide U.S. residents with a means to invest directly in Bitcoin without needing to hold the digital asset itself, simplifying access to cryptocurrency markets.

However, the SEC has historically rebuffed spot Bitcoin ETF applications due to concerns about potential market manipulation. Strikingly, the regulatory body has granted approval for Bitcoin future ETFs, a distinction that has confounded both cryptocurrency advocates and the legal system.

In a lawsuit against the SEC, a panel of judges found the commission’s denial of Grayscale’s application to convert the GBTC fund into a spot Bitcoin ETF to be “arbitrary and capricious.” Judge Neomi Rao specifically pointed out that the SEC had not sufficiently explained its disparate treatment of similar products, highlighting the approval of future ETFs.

Importantly, this ruling doesn’t automatically greenlight Grayscale’s quest to launch a spot Bitcoin ETF. The SEC must now reevaluate Grayscale’s application and either approve it or provide new grounds for denial or delay.

During a recent U.S. Senate hearing, SEC Chair Gary Gensler faced questions regarding the Grayscale ruling and the commission’s criteria for approving a spot Bitcoin ETF. Gensler responded, stating, “We’re reviewing that decision. There are multiple spot ETP filings that we’re also reviewing, and I’m looking forward to the staff’s recommendations.”

Gensler didn’t mince words about the digital asset industry’s compliance, emphasizing “wide-ranging non-compliance” in his written testimony prior to the hearing. He reiterated this position when addressing policymakers during the hearing.

Currently, there are over a dozen Bitcoin ETF applications from various issuers awaiting the SEC’s verdict. These include proposals for both spot Ethereum and Ethereum futures funds, underscoring the growing demand for regulated crypto investment vehicles in the United States. The crypto community eagerly awaits the SEC’s stance on these applications and the potential evolution of the cryptocurrency investment landscape.

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