Franklin Templeton has filed with the US Securities and Exchange Commission (SEC) to launch two exchange-traded funds designed to turn dividend income from US stocks into Bitcoin exposure. The proposal, disclosed in a June 18 SEC filing, targets investors who want a rules-based path to add Bitcoin exposure without abandoning an equity allocation.
The funds—titled the Franklin US Equity Bitcoin DRIP Index ETF and Franklin US Innovation Bitcoin DRIP Index ETF—would follow indexes that reinvest dividends from selected US stocks into a predetermined Bitcoin allocation. According to the filing, the initial allocation framework would place 5% into Bitcoin exposure and 95% into equities, with the index methodology governing how that balance is maintained over time.
Key takeaways
- Franklin Templeton filed for two dividend-reinvestment ETFs that convert stock dividends into Bitcoin exposure through proprietary index rules.
- The proposed funds would start with a 5% Bitcoin exposure and 95% US equities allocation, then keep that target within limits through periodic rebalancing.
- Bitcoin exposure could be gained through multiple instruments, including Bitcoin exchange-traded products, futures, options, and Bitcoin-backed depositary receipts, as described in the SEC filing.
- The “Equity” fund would track a broad US large-cap benchmark, while the “Innovation” version would focus on the 100 largest non-financial companies listed on Nasdaq.
- The filing arrives as at least several issuers continue experimenting with Bitcoin strategies beyond traditional spot ETF wrappers, amid reported softness in US spot ETF flows.
How Franklin Templeton’s “DRIP into Bitcoin” approach would work
In its SEC filing, Franklin Templeton describes two ETFs that use a Dividend Reinvestment Plan (DRIP) concept—but with the reinvestment redirected toward Bitcoin exposure. The indexes underlying each fund would systematically direct regular and special dividends from the equity holdings into Bitcoin within the index’s allocation framework.
Per the filing, the funds would launch with the same starting mix: 5% Bitcoin exposure and 95% US equities. The mechanism is intended to create a structured way to accumulate Bitcoin exposure over time as dividends are generated by the equity portfolio.
The SEC filing also outlines how the funds would maintain the allocation. It states that the indexes would be rebalanced quarterly to keep the Bitcoin allocation inside predefined boundaries, and that the indexes would be reconstituted semiannually.
Where the Bitcoin exposure could come from
One of the more practical details in the filing is how the funds plan to access Bitcoin exposure. Rather than relying on a single instrument, Franklin Templeton indicates that the proposed ETFs could gain Bitcoin exposure using a range of options. These include:
- Bitcoin exchange-traded products
- Bitcoin futures contracts
- Bitcoin options
- Bitcoin-backed depositary receipts
In addition, the filing states that the funds may hold certain Bitcoin-related investments through a wholly owned Cayman Islands subsidiary. The inclusion of a subsidiary structure signals that the issuer is planning for operational flexibility in how it sources or holds the relevant Bitcoin-linked instruments.
Two equity universes, one Bitcoin reinvestment rule
The two proposed ETFs differ in the equity set used to generate dividend income, even though both would follow the same dividend-to-Bitcoin investment concept.
According to the filing, the Franklin US Equity Bitcoin DRIP Index ETF would track an index built around a US large-cap equity benchmark. The Franklin US Innovation Bitcoin DRIP Index ETF, meanwhile, would track an index composed of the 100 largest non-financial companies listed on Nasdaq.
Both funds would be passive index ETFs tracking proprietary VettaFi indexes. Franklin Templeton’s filing also indicates that those indexes would be managed with quarterly rebalancing and semiannual reconstitution, meaning the reinvestment-to-Bitcoin process would remain rule-bound even as the underlying equity constituents potentially change.
Why this filing matters as issuers test income-focused Bitcoin products
Franklin Templeton’s proposal adds to a growing trend among asset managers: developing Bitcoin strategies designed to generate or enhance returns through structured rules, including income-focused methods. The filing comes after other major players explored Bitcoin-related products aimed at harvesting yield characteristics rather than relying solely on spot price appreciation.
Earlier this year, BlackRock filed for the iShares Bitcoin Premium Income ETF, which would use an options strategy tied to Bitcoin and its spot ETF to pursue additional returns. In April, Goldman Sachs outlined plans for a Bitcoin income ETF that would invest in spot Bitcoin exchange-traded products and sell call options against those holdings—aimed at generating yield while reducing sensitivity to price swings. Hamilton ETFs also moved toward a covered-call-style approach in Canada with a proposed leveraged Bitcoin income fund, as described in earlier reporting.
At the same time, the filing appears amid concerns about the near-term demand picture for US spot Bitcoin ETFs. CoinShares data cited that spot products have seen persistent outflows—though the source provided in the text points to SoSoValue, noting six consecutive weeks of net outflows between May 15 and June 18.
That backdrop helps explain why dividend-reinvestment mechanics could be appealing. By funneling cash generated from equity holdings into Bitcoin exposure on an ongoing basis, the strategy may offer a different “behavioral” path into Bitcoin—one anchored to equity dividends and disciplined index rules, rather than investor timing decisions alone.
What to watch next
Investors should watch how the SEC evaluates the proposed index methodology, particularly the practical implementation of Bitcoin exposure via futures, options, or Bitcoin-linked instruments, and whether the issuer specifies any additional constraints as part of the review. If approved, the funds would represent another step in Bitcoin ETF design—shifting the conversation from “spot access” to “systematic, income-linked allocation.”
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