Franklin Templeton has filed a registration statement to launch two exchange-traded funds that automatically redirect stock dividend income into Bitcoin exposure. The Franklin US Equity Bitcoin DRIP Index ETF and Franklin US Innovation Bitcoin DRIP Index ETF are expected to become effective September 1, 2026, tracking the VettaFi US Large-Cap 500 Bitcoin DRIP Index and an innovation-focused version respectively.
Dividends Go Digital: 95/5 Initial Allocation
The core mechanism: dividends generated by underlying stock portfolios are reinvested into Bitcoin-linked investments rather than kept as cash or distributed. Bitcoin exposure can come via spot Bitcoin ETPs, futures, options, or other instruments. The strategy starts with 95% U.S. large-cap equities and 5% Bitcoin exposure.
Quarterly Rebalancing and 20% Hard Cap
To manage crypto volatility, the funds impose strict rebalancing rules. Quarterly adjustments trim Bitcoin allocations above 5% back to 4.5%. Between rebalancing periods, Bitcoin exposure cannot exceed 20%. As of April 30, the equity index held approximately 498 securities with market caps ranging from $7.5 billion to $4.9 trillion.
Digital Asset Footprint Widens: Tokenization and Institutional Deals
Franklin Templeton already operates in crypto through its spot Bitcoin ETF EZBC, which held $358.9 million in net assets and attracted $329.6 million in cumulative net inflows as of Thursday (SoSoValue data). In June, the firm partnered with Ondo Finance to tokenize its ETFs, enabling non-U.S. investors to trade U.S. equity, fixed-income, and gold ETFs from crypto wallets 24/7. The same month, its tokenized money market fund BENJI integrated into MoonPay Trade, letting institutions swap stablecoins like USDC/USDT for BENJI. In May, Franklin teamed up with Kraken parent Payward to list BENJI as collateral and cash management product, with plans to build more tokenized products on Payward's xStocks infrastructure.
If approved, the new ETFs would offer traditional stock investors an automated on-ramp to Bitcoin exposure, while expanding Franklin Templeton's digital asset lineup beyond pure crypto ETFs and tokenized funds into hybrid structured products.