Franklin Templeton ETF Trust Registers Two Bitcoin Dividend ETFs for Nasdaq

Franklin Templeton ETF Trust registered shares of two Bitcoin (BTC) dividend strategy funds with Nasdaq on Thursday, Oct. 22, adding an exchange-registration milestone for products designed to direct stock dividends toward Bitcoin exposure.

The funds are the Franklin US Equity Bitcoin DRIP Index ETF (FBEQ) and Franklin US Innovation Bitcoin DRIP Index ETF (FIBT). FBEQ tracks the VettaFi US Large-Cap 500 Bitcoin DRIP Index and has an annual fee of 0.09%. FIBT tracks the VettaFi US Innovation 100 Bitcoin DRIP Index and has an annual fee of 0.19%. Each index starts with roughly 95% U.S. equity exposure and 5% Bitcoin exposure.

The indexes cover different groups of companies. The listed fees consist of management fees, with no 12b-1 charges; each prospectus estimates other expenses at 0.00% for the current year.

Under the index rules, ordinary and special dividends are allocated to Bitcoin exposure at the market open on the trading day after a stock’s ex-dividend date. That is the date when a stock begins trading without the right to its most recently declared dividend. The index directs those payments toward Bitcoin exposure rather than reinvesting them in stocks.

The prospectuses allow Bitcoin exposure through related exchange-traded products, options, futures and depositary receipts. Some positions may be held through a Cayman subsidiary. The prospectuses do not establish that either fund will hold Bitcoin directly. Most of each index’s starting exposure is in equities, making the products distinct from funds designed to track spot Bitcoin.

The indexes use rebalancing thresholds to manage Bitcoin’s share of their weights. At a quarterly review, an allocation above 5% is reduced to 4.5%; an allocation at or below 5% is left unchanged. Between reviews, a closing weight above 20% triggers a reduction to 4.5% at the close of the second trading day afterward.

The Nasdaq registration follows the trust’s earlier filing for the two funds. As of Monday, Oct. 26, neither fund had begun trading, and no first trading date had been announced. The next stated milestone is Tuesday, Oct. 27, when the prospectuses are scheduled to take effect.