Franklin (BEN) Expands Crypto Reach, Files for Spot Ethereum ETF

Franklin Resources, Inc. BEN becomes the eighth firm within the crypto industry to file for a spot Ethereum exchange-traded fund (ETF).

With the U.S. Securities and Exchange Commission (“SEC”) giving approval for the trading of spot Bitcoin ETFs last month, there are now 11 firms that have the green light to launch the product.

On Jan 10, 2024, the SEC approved rule changes to allow the launch of spot Bitcoin ETFs in the United States. This was a turning point for the crypto markets, which have been under regulatory scrutiny for some time now.

Notably, a spot crypto ETF tracks the market price of the underlying digital asset, giving investors exposure to the token without having to buy it.

In this case, the ETF would track the spot price of Ethereum, meaning that investors would invest in the price of Ethereum itself rather than in a company that is involved in the Ethereum ecosystem.

For years, the SEC warned of the risks of the largely unregulated crypto markets, turning various crypto-based investment applications away and levying fines on alleged crypto scams.

Now, the SEC’s decision to allow trading of spot Bitcoin ETFs marks a shift in how cryptocurrencies are viewed and traded by investors.

Including BEN, all eight firms that are now competing to introduce spot Ethereum ETFs rolled out spot Bitcoin products last month.

In November 2023, BlackRock BLK filed for a spot Ethereum ETF, named iShares Ethereum Trust, with the SEC, following which, the price of Ethereum surged to its highest level during the year before pulling back afterward.

In June 2023, BLK became the first asset manager to file for a spot Bitcoin ETF, paving the way for a wave of filings by other asset managers like Fidelity, Invesco IVZ and WisdomTree WT.

The applications had come at a time when the cryptocurrency industry was battling criticism by the SEC over alleged securities law violations.

In October 2021, IVZ withdrew its original application for a Bitcoin ETF (made earlier in 2021) because of regulatory headwinds within the industry. At that time, the SEC was resistant to approving such funds due to concerns over potential fraud and market manipulation.

Likewise, in October 2022, WT’s application for the launch of the WisdomTree Bitcoin Trust was not approved by the SEC on account of insufficient investor protection.

Over the past three months, shares of BEN have gained 7.1% compared with the industry’s 18.8% rally.

 

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Currently, BEN carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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