Franklin Templeton has completed the final regulatory requirement ahead of introducing two unique exchange-traded funds designed to convert stock payouts into bitcoin.
The asset manager submitted a Form 8-A to the Securities and Exchange Commission on October 22 to secure trading privileges for the Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF on the Nasdaq exchange. According to a prospectus submitted concurrently, the targeted effective date is October 27.
Initial paperwork for both investment products was submitted back in June without specific tickers or fee structures, which have now been finalized four months later.
How the funds work
The equity-focused product, trading under the ticker FBEQ, follows the VettaFi US Large-Cap 500 Bitcoin DRIP Index. This underlying index tracks the 500 biggest U.S. corporations based on market capitalization, applying a float-adjusted market cap weighting method.
Records as of September 30 show the index contained 499 equities with valuations spanning from $10.2 billion to $5.5 trillion, heavily weighted toward the technology sector.
Upon launch, the index maintains a 95% weighting in equities alongside a 5% allocation to bitcoin. Whenever constituent firms distribute regular or special dividends, that cash is used to purchase bitcoin at the market open on the business day following the ex-dividend date. Consequently, the portfolio’s bitcoin proportion increases with every subsequent distribution.
While standard dividend reinvestment plans purchase additional shares of the issuing company, Franklin’s approach channels that capital directly into bitcoin.
For investors, payouts generated by top U.S. corporations translate into ongoing bitcoin acquisitions, eliminating the need for cryptocurrency exchanges, private wallets, or independent custody management.
However, the cryptocurrency component is subject to strict allocation boundaries. During quarterly rebalancing procedures, any weighting above 5% is reduced back to 4.5%. Furthermore, if bitcoin’s share breaches 20% of the index between scheduled rebalances, the holdings are trimmed back to 4.5% within a two-day window, with excess proceeds reinvested into equities. Ultimately, the product functions as a traditional equity fund featuring a built-in bitcoin component rather than a standalone crypto fund.
The ETF avoids direct on-chain cryptocurrency storage. Instead, exposure is achieved through bitcoin exchange-traded vehicles—including Franklin’s proprietary spot product—alongside futures contracts, options, and depositary receipts, sometimes routed through a subsidiary based in the Cayman Islands.
FBEQ features a net expense ratio of 0.09% and excludes 12b-1 distribution fees. The fund is overseen by Franklin Advisory Services, with Franklin Templeton Institutional acting as sub-advisor. Portfolio management duties are handled by Dina Ting, Hailey Harris, Joe Diederich, and Basit Amin.
Meanwhile, the innovation-focused fund utilizes an identical mechanism tracking the VettaFi US Innovation 100 Bitcoin DRIP Index, which comprises the top 100 non-financial companies trading on the Nasdaq exchange.
A deeper bet on bitcoin
Franklin Templeton previously entered the digital asset space by applying for a spot bitcoin ETF in September 2023, which debuted under the ticker EZBC in January 2024. The company subsequently bought 250 Digital in April and established Franklin Crypto, a dedicated digital asset division for institutions. Jenny Johnson, CEO of Franklin Templeton, has previously stated that blockchain networks pose a greater threat to traditional Wall Street fee models than to existing financial technology.
These new DRIP-based funds broaden this institutional strategy to reach everyday investors who might otherwise avoid purchasing cryptocurrency independently. For example, a retiree maintaining a broad-market equity portfolio in a standard brokerage account can utilize FBEQ to steadily accumulate bitcoin over time using dividends generated by familiar corporate holdings.
The official prospectus cautions that participants can incur financial losses and that volatility in cryptocurrency markets may impact the fund’s net asset value. Market reception and investor appetite for this strategy will become evident following the October 27 launch.
Frequently Asked Questions
What do the Franklin Templeton Bitcoin DRIP ETFs do?
They automatically convert stock dividends from major U.S. companies into bitcoin purchases.
What is the ticker symbol for the equity fund?
The equity fund trades under the ticker FBEQ.
Does the ETF hold bitcoin directly on-chain?
No, the ETF gains exposure through exchange-traded products, futures, options, and depositary receipts rather than holding raw cryptocurrency.
What is the expense ratio for FBEQ?
FBEQ carries an expense ratio of 0.09% with no 12b-1 fee.
