Curry, DeepChain TechFlow
DeepChain Summary: On October 22, Franklin Templeton filed a Form 8-A registration with the SEC, announcing the upcoming launch of two new ETFs on Nasdaq. The initial structure of these funds consists of 95% U.S. equities and 5% Bitcoin. The core mechanism is that all stock dividends generated by the fund will not be distributed in cash but will instead be automatically reinvested into Bitcoin purchases. Wall Street is using traditional automated investment rules to connect a continuous stream of capital to the cryptocurrency market.
Franklin Templeton is set to launch two new products: the U.S. Large-Cap ETF (ticker: FBEQ) and the U.S. Innovation Growth ETF (ticker: FIBT).
According to the SEC filing submitted on October 22, the prospectuses for these two Nasdaq-listed funds are expected to become effective around October 27.
On the underlying assets, FBEQ tracks the broad market index with an expense ratio of 0.09%; FIBT tracks the innovation index with an expense ratio of 0.19%. Both indices are provided by VettaFi.
The initial allocation target for these two funds is 95% in stocks and 5% in Bitcoin exposure. The real highlight lies in their modification of DRIP (Dividend Reinvestment Plan).
Traditional stock ETFs typically reinvest dividends by automatically purchasing additional shares of the underlying stocks to achieve compounding.
Franklin has altered the fund flow. According to the product mechanism, all ordinary and special stock dividends generated by these two funds will be automatically used to purchase Bitcoin at the open of the next trading day following the ex-dividend date.
To reduce regulatory friction associated with directly holding spot assets, the fund will not directly hold spot Bitcoin. Dividend conversion funds will be used to gain exposure to Bitcoin through purchases of Bitcoin ETPs (including Franklin’s own spot ETF, EZBC), futures, and options.
While enabling purchases, this automated buying system is equipped with strict risk control thresholds.
Franklin clarified in the rebalancing rules that this is not a crypto fund dressed up as a U.S. stock fund.
The system has set two liquidation trigger points:
First, at the end of each quarter during portfolio rebalancing, if Bitcoin's weight exceeds 5%, the system will automatically sell the excess amount to reduce its weight back to 4.5%.
Second, if Bitcoin experiences a sharp price increase during the period, causing its weight in the portfolio to exceed the 20% hard cap, the fund must forcibly rebalance and return the position to 4.5% within two business days.
ETF analyst Nate Geraci, in evaluating the product, highlighted its core appeal: zero friction.
For traditional stock investors, purchasing this ETF does not require opening an account on a cryptocurrency exchange or managing a private key wallet. Simply holding a conventional fund with a fee of less than 0.2% in your U.S. stock account is equivalent to setting up a long-term automatic investment program in Bitcoin.
From a short-term capital perspective, the dividend yield of the U.S. stock market remains relatively stable.
Before the assets under management (AUM) of the two ETFs experience a surge, the actual spot Bitcoin purchases generated by dividend conversions can be expected to be relatively limited; thus, this action is unlikely to create substantial buying pressure on BTC and is more akin to a sentiment-boosting positive development.
From the perspective of financial product evolution, this channel has already been opened. Traditional asset management giants are moving beyond the narrow “spot ETF” framework, incorporating crypto assets as satellite positions directly into mainstream equity portfolios.
Over the past two years, it has become evident that the integration of cryptocurrency and traditional finance has deepened, which is beneficial for expanding access channels and awareness; however, it also makes the market more vulnerable to shifts in macroeconomic conditions.
Finally, the author believes that, in the eyes of broader investors, Bitcoin has moved beyond the narrative of "decentralized rebellion" and "fighting mainstream finance"; today, investment in Bitcoin may be more straightforward:
We no longer need technical evangelism; we need clear rules and pathways.