February 13, 2024

Franklin Templeton Takes First Step Towards Ethereum Spot ETF with New SEC Filing

The firm initiated the process for the Franklin Ethereum ETF by filing an S-1 registration statement. The ETF aims to track the price movements of ether.

Investment powerhouse Franklin Templeton made a significant move towards the creation of an Ethereum Spot ETF, aligning itself with other financial firms seeking the green light from the U.S. Securities and Exchange Commission (SEC).

In a strategic maneuver, the firm submitted an S-1 registration statement for the Franklin Ethereum ETF, signaling its intention to mirror the price movements of ether within the fund. Coinbase Custody Trust Company and the Bank of New York Mellon are poised to act as custodians for ether and cash holdings, respectively.

The filing outlines plans for the ETF's shares to be listed and traded on the Cboe BZX Exchange, Inc. This move aims to provide investors with a seamless avenue to participate in Ethereum's market dynamics without grappling with the intricacies of direct investment in ether.

Emphasizing the ETF's role in simplifying investment processes, the filing noted:

"The shares are intended to offer a convenient means of making an investment similar to an investment in ether relative to acquiring, holding and trading ether directly on a peer-to-peer or other basis or via a digital asset platform."

Moreover, the filing emphasizes the ease of creation and redemption of shares, stating:

"The authorized participants will deliver only cash to create shares and will receive only cash when redeeming shares."

Franklin Templeton's move comes amid a flurry of similar endeavors in the financial landscape. Cathie Wood's Ark Invest / 21Shares, Grayscale Investments, and BlackRock have all recently filed for spot ether ETFs. Ark and 21Shares even amended their registration statements last week, hinting at the possibility of incorporating a new staking component, a feature that Franklin Templeton's filing also includes. The filing elaborated:

"The sponsor may, from time to time, stake a portion of the fund’s assets through one or more trusted staking providers, which may include an affiliate of the sponsor. In consideration for any staking activity in which the fund may engage, the fund would receive certain staking rewards of ether tokens, which may be treated as income to the fund."

Despite the flurry of activity, the SEC has deferred decisions on various ether ETF applications, leaving experts divided on the likelihood of approval this year.

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