Franklin Templeton Files For Spot Ether ETF: If Approved, 'Private Sector Buy-In' Coming, Expert Says

Global asset management giant Franklin Templeton has officially filed for a spot Ether exchange-traded fund (ETF).

What Happened: The proposed "Franklin Ethereum ETF" aims for listing on the Chicago Board Options Exchange, marking the firm's latest venture into the cryptocurrency ETF space, according to a filing on Feb. 12.

In a move mirroring ARK 21Shares' recent strategy, Franklin Templeton expressed its plans to engage in staking a portion of the ETF's Ether holdings.

"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," the firm stated.

This strategy involves utilizing Ether from the trust's cold storage wallets to earn staking rewards, which would be recognized as income for the fund.

Franklin Templeton, which boasts $1.5 trillion in assets under management, joins a competitive field of applicants seeking approval from the U.S. Securities and Exchange Commission (SEC) for spot Ether ETFs. Other industry heavyweights include BlackRock Inc., VanEck, Fidelity, Invesco Galaxy, Grayscale, and Hashdex.

The SEC's decision timeline for these applications spans from May 23 for VanEck's proposal to Aug. 7 for BlackRock's, with other key dates set for ARK 21Shares, Hashdex, Grayscale, and Invesco.

Also Read: Wall Street 'Loves Bitcoin,' Says Anthony Pompliano - All-Time High 'Pretty Much Guaranteed'

Why It Matters: Despite the crowded field, Bloomberg ETF analyst James Seyffart anticipates a unified decision by the SEC on all spot Ether ETF applications by May 23, drawing parallels to the regulator's approach to spot Bitcoin ETFs on Jan. 10.

However, his colleague Eric Balchunas recently adjusted the likelihood of a spot Ether ETF approval in 2024 from 70% to 60%, reflecting a cautious outlook on the regulatory climate.

Franklin Templeton's entry into the spot Ether ETF race follows its successful launch of a spot Bitcoin ETF in the U.S. last month, further solidifying its position in the digital asset investment landscape.

Daniel C. McCabe, CEO of Flexa, a digital payments network told Benzinga there was no reason why these assets should not be available in a regulated format and that the recent Grayscale legal win must have been an eye-opener for regulators and lawmakers regarding digital assets.

"Once one or more ETH ETFs are approved, and once we get stablecoin legislation, then we will see more and more positive signals. Then we’d certainly have more public and private sector buy-in, just as you had with the Bitcoin ETFs," he said.

Phillip Shoemaker, executive director of Identity.com, a non-profit organization providing decentralized identity verification, however believes the SEC has put out a lot of arbitrary arguments against ETH, but he doesn't see this other than an axe to grind against this industry.

"I think it will take a new administration with a new SEC head to bring in more logical thinking and fairness," he told Benzinga.

What's Next: Analysts are uncertain whether Ethereum ETH/USD will rally into the Ether ETF approval deadline on May 23. 

Read Next: Bitcoin Breaks $50,000 Mark, Fueled By ETF Inflows

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