Franklin Templeton has filed with the SEC to launch two exchange-traded funds that would hold US large-cap stocks and automatically funnel corporate dividends into bitcoin exposure.
The proposed products, the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF, could become effective as early as September 1, 2026.
How the funds would work
Both ETFs would launch with roughly 95% of assets in US equities and 5% in bitcoin-linked investments.
Instead of distributing dividends to shareholders or reinvesting them into more stocks, the funds would redirect that income toward bitcoin at market open on the day after each dividend ex-date.
The equity fund would track the VettaFi US Large-Cap 500 Bitcoin DRIP Index, covering about 500 of the largest US companies.
The innovation fund would follow a separate VettaFi index focused on the 100 largest non-financial Nasdaq-listed companies.
Built-in guardrails
Franklin built allocation limits into the design to keep bitcoin from overtaking the equity base.
At each quarterly rebalance, if bitcoin drifts above 5%, it gets trimmed to 4.5%.
An emergency cap kicks in if bitcoin exposure exceeds 20% between reviews, forcing a reduction to 4.5% within two business days.
Bitcoin exposure could come through spot bitcoin exchange-traded products, futures, options, or investments held through a wholly owned Cayman Islands subsidiary.
A crowding ETF landscape
The filing arrives as US spot bitcoin ETFs have pulled in $53.4 billion in net inflows since their 2024 launch, though roughly $6 billion has flowed out over the past six weeks.
BlackRock recently launched its own income-oriented bitcoin ETF using covered call strategies, signaling that issuers are now competing on product design rather than simple access.
Franklin has not disclosed management fees, tickers, or listing exchanges for either fund.
