Franklin Templeton, a $1.7 trillion asset manager, has completed the final regulatory steps for two new exchange-traded funds that automatically convert stock dividends into bitcoin. On October 22, the firm filed Form 8-A with the Securities and Exchange Commission to register shares of the Franklin US Equity Bitcoin DRIP Index ETF (ticker FBEQ) and the Franklin US Innovation Bitcoin DRIP Index ETF for trading on Nasdaq. A prospectus filed the same day lists an effective launch date of October 27.
Both funds utilize a dividend reinvestment plan structure where every dividend paid by underlying companies is reinvested into bitcoin at the market open on the day following the ex-date. The Equity fund tracks the VettaFi US Large-Cap 500 Bitcoin DRIP Index, holding the 500 largest U.S. companies weighted by float-adjusted market cap. At inception, the portfolio allocates 95% to these stocks and 5% to bitcoin. As dividends accumulate, the bitcoin share grows until quarterly rebalancing trims any allocation above 5% back to 4.5%. If bitcoin exceeds 20% of the index between rebalances, it is cut back to 4.5% within two business days.
The Innovation fund applies the same mechanic to the VettaFi US Innovation 100 Bitcoin DRIP Index, which comprises the 100 largest non-financial companies listed on Nasdaq. Neither fund holds bitcoin directly on-chain; instead, they gain exposure through bitcoin exchange-traded products, futures, options, or depositary receipts. FBEQ carries a 0.09% expense ratio with no 12b-1 fee. This launch follows Franklin Templeton’s earlier entry into the spot bitcoin ETF market with EZBC in January 2024 and the formation of its institutional digital asset division, Franklin Crypto.
This development marks a strategic shift from direct crypto speculation to embedded accumulation within traditional equity portfolios. By routing standard dividend cash flows into bitcoin, Franklin Templeton lowers the barrier to entry for retail investors who may lack the technical knowledge or desire to manage wallets and exchanges. The product effectively transforms passive income streams into active digital asset accumulation without requiring additional capital outlay from the investor.
However, the structural constraints reveal a cautious approach to volatility management. The strict trimming mechanisms—capping bitcoin exposure at 5% initially and reducing it to 4.5% during rebalances—ensure these remain primarily stock funds with a crypto sleeve rather than dedicated bitcoin vehicles. This design mitigates the risk of significant net asset value swings caused by bitcoin’s price volatility, aligning with the conservative expectations of traditional equity holders. It also highlights the firm’s reliance on indirect exposure methods, such as ETPs and derivatives, to navigate custody and regulatory complexities while maintaining compliance with SEC registration standards.
