Franklin Templeton, an asset management company, has filed to launch a new exchange-traded fund, Franklin Crypto Index ETF, designed to provide investors with a comprehensive digital asset portfolio.

Description of the New ETF

According to an August 16 filing, the ETF will follow the performance of the CF Institutional Digital Asset Index, which currently includes only Bitcoin (BTC) and Ethereum (ETH), the two largest cryptocurrencies. The Fund will seek to achieve its investment objective by investing in the Digital Assets in approximately the same weights as they represent in the Underlying Index.

Competition and Market Analogs

This new product would be one of the first crypto index ETFs on the market. These kinds of ETFs, which let investors hold a mix of cryptocurrencies in one fund, are starting to attract more attention following the recent launches of Bitcoin and Ethereum-focused ETFs. Additionally, the Franklin Crypto Index ETF will compete with other similar funds, such as the Hashdex Nasdaq Crypto Index ETF, which is also seeking approval.

Expert Opinions and Regulatory Environment

According to Katalin Tischhauser, Head of Investment Research at Sygnum, a crypto bank, index-based ETFs make it easier for people to invest in a diversified portfolio, similar to traditional index funds like the S&P 500. However, current regulations limit crypto index ETFs to Bitcoin and Ethereum, as these are the only digital assets approved by the U.S. Securities and Exchange Commission (SEC) for ETF inclusion. Moreover, Grayscale, the largest crypto fund manager, is also exploring the idea of launching index and multi-asset ETFs.

Franklin Templeton's new product may help investors diversify their portfolios by including digital assets. However, limited regulatory frameworks remain a barrier to the broader adoption of crypto index ETFs.