Franklin Templeton Joins the Race for Spot Bitcoin ETF

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In a significant move, global asset management leader Franklin Templeton has submitted an application to the U.S. Securities and Exchange Commission (SEC) to introduce its own spot Bitcoin ETF, known as ‘The Franklin Bitcoin ETF.’

This ETF is set to be listed on the Cboe BZX Exchange, with cryptocurrency exchange Coinbase once again playing a pivotal role as a ‘surveillance-sharing partner’ and the trusted custodian.

In the uncharted waters of the cryptocurrency market, where regulations are still taking shape, the SEC’s vigilance is paramount. Having a partner like Coinbase, willing to offer full transparency on all the transactions it handles, is essential for the SEC to exercise the necessary oversight.

Everybody wants to launch a spot bitcoin ETF

This application marks another stride toward a spot Bitcoin ETF, where the asset manager would physically purchase and safeguard Bitcoin. This approach stands in contrast to the existing Bitcoin ETFs, which are tied to futures contracts and do not possess actual Bitcoin holdings.

The growing number of applications from reputable entities on Wall Street is steadily mounting pressure on the SEC to grant approval. The arguments once used to halt spot ETFs are now being challenged in court. A recent example is the SEC’s defeat in a lawsuit brought by Grayscale Investments, which is seeking to transform its closed Bitcoin fund, GBTC, into an ETF. In this case, the court ruled that the SEC’s rejection was arbitrary.

The crux of the matter for the SEC lies in the need for surveillance-sharing agreements. Bitcoin trades occur on unregulated platforms like Coinbase, differing from the strictly regulated stock exchanges. Releasing transaction information on these platforms enables the SEC to oversee these activities effectively.

Coinbase as a big winner

If spot Bitcoin ETFs secure approval, Coinbase is poised to emerge as a prominent winner in this equation. Coinbase’s role as a ‘surveillance-sharing partner’ appears in applications submitted by Fidelity, VanEck, Ark Invest, Valkyrie, Invesco, and now Franklin Templeton.

The allure of ETFs lies in their stock market accessibility, which eliminates a significant barrier for many potential Bitcoin investors. It allows individuals to engage with Bitcoin without the need to navigate the intricacies of cryptocurrency exchanges, opting for the familiar brokerage account instead.

Influx of investors

The green light for spot ETFs could pave the way for an influx of new investors, providing a convenient and regulated path to Bitcoin investment. Asset management firms are likely to actively promote their new ETFs to their clients, which has the potential to further bolster the price of Bitcoin. This surge of interest in cryptocurrency is indicative of a broader trend, where digital assets are steadily gaining traction in traditional financial markets.