Franklin Templeton filed with the SEC to launch two ETFs that blend U.S. large-cap equities with bitcoin, using a dividend reinvestment mechanism to accumulate more BTC. The Franklin US Equity Bitcoin DRIP Index ETF and the Franklin US Innovation Bitcoin DRIP Index ETF could go effective as early as Sept. 1, 2026.
How the DRIP works
Both funds allocate 95% of assets to a portfolio of roughly 498 U.S. large-cap stocks — market caps range from $7.5 billion to $4.9 trillion — and the remaining 5% to bitcoin. Dividends from the stock side flow into bitcoin-linked instruments: spot bitcoin ETPs, futures, options, or a wholly-owned subsidiary in the Cayman Islands. That's a twist on the classic DRIP, which typically reinvests dividends into more shares of the same stock. Here they're buying bitcoin instead.
Rebalancing with a hard cap
The funds rebalance quarterly. If bitcoin's share of the portfolio exceeds 5%, they trim it back to 4.5%. But between rebalances, a hard cap limits bitcoin exposure to 20% — meaning even a wild rally won't let it dominate the portfolio. No fees have been disclosed in the preliminary filing yet.
Franklin's broader crypto push
Franklin Templeton, a $1.5 trillion asset manager, has been building out digital asset infrastructure for a while. It partnered with Payward (Kraken) to tokenize products, launched the BENJI tokenized money market fund on Kraken, integrated into MoonPay Trade, acquired CoinFund spinoff 250 Digital for its Franklin Crypto division, and struck a deal with Ondo Finance for tokenized ETFs outside the U.S. This filing is the latest step in that strategy.
A crowded field gets more crowded
The SEC published generic listing standards for crypto-linked funds in late 2025, which opened the door for a wave of products. Bitwise predicted more than 100 crypto ETFs could launch in 2026; Bloomberg Intelligence counted over 100 filings in the pipeline at the end of last year. BlackRock's iShares Bitcoin Trust still dominates with tens of billions in net assets, and BlackRock just launched the iShares Bitcoin Premium Income ETF (BITA) this week — a covered-call fund that targets 15%-25% annual yields. Franklin's DRIP ETFs take a different approach, but the timing is notable: BTC trades below $62,700 as of Friday morning, off more than 50% from its October 2025 peak near $126,000.
The SEC will review the filings over the summer. If approved, the funds could start trading by early September. That's when the real test begins — whether investors want their dividends converted into a volatile asset that's currently in a deep slump.
