Franklin Templeton files for spot Ethereum ETF, becoming ninth applicant overall

Franklin Templeton has become the latest asset manager to apply for a spot Ethereum exchange-traded fund (ETF) with the publication of a Feb. 12 filing.

The company detailed its plans in an S-1 registration statement with the U.S. Securities and Exchange Commission (SEC). Like other similar proposals, the fund will issue shares representing its assets — primarily Ethereum (ETH), which will be held by a custodian on its behalf. The fund also aims to reflect the price performance of ETH.

Franklin Templeton identified Coinbase Custody as its cryptocurrency custodian and Bank of New York Mellon as its cash custodian, administrator, and transfer agent.

The proposal only allows for cash creations and redemptions, as opposed to in-kind creations and redemptions that would allow for certain participants to transact in crypto. It also describes how potential Ethereum staking rewards could be treated as income for the fund. Competing applicants Ark Invest and 21Shares also addressed these issues in an amended filing on Feb. 7.

Data from Bloomberg ETF analyst James Seyffart suggests that Franklin Templeton is the ninth asset manager to apply for a spot Ethereum ETF. Separately, the firm’s Franklin Bitcoin ETF (EZBC) was one of several spot Bitcoin ETFs to gain approval in January.

SEC must decide on VanEck’s ETH ETF in May

The SEC must decide to approve or reject a competing spot Ethereum ETF application from VanEck by May 23, 2023 without further postponing its decision. The securities agency will likely decide on several other similar applications with similar content at that time.

One Polymarket prediction market predicts a 48% chance that a spot Ethereum ETF will be approved in May. James Seyffart expects 60% odds of approval in May, while JP Morgan analyst Nikolaos Panigirtzoglou anticipates 50% odds of approval in May.

Standard Chartered believes that a spot Ethereum ETF will be approved in May, while TD Cowen expects that this type of fund will not be approved until 2025 or 2026.

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