The SEC won’t play ball on bitcoin ETFs. Here’s how Franklin Templeton and others are launching funds with crypto and blockchain twists.
Asset managers haven’t been able to persuade the SEC to greenlight bitcoin exchange-traded funds. Now they’re turning to putting a crypto spin on other kinds of products.
The field is crowded with ETFs tracking benchmarks like stock and bond indexes, and firms are constantly looking for a new niche to lure assets. Intense competition has prompted a race to, and even below, zero for fees on some more basic funds.
$50 billion asset manager VanEck for years has been pursuing approval for an ETF that holds bitcoin. Another firm’s attempt to launch ETFs with bitcoin futures instead was a non-starter — in February, Reality Shares withdrew a filing for an actively-managed currency and bitcoin futures portfolio.
VanEck this week said it’s teamed with fintech partner SolidX on a bitcoin fund with the same behind-the-scenes plumbing as an ETF. But the new fund is not registered like an ETF, and it’s off-limits to individual investors.
And Franklin Templeton is putting a Blockchain twist on the staid money fund realm. It already has a suite of money market funds, but said in a statement the new product is aimed at a “different and unique customer base.”
The Franklin Blockchain Enabled US Government Money Fund keeps a traditional record of share ownership as well as a record on the Blockchain technology that underpins bitcoin. It does not hold any crypto.
A gradual process
The Franklin fund is “an interesting pilot,” said Ben Johnson, Morningstar’s director of global ETF research. Firms’ margins are getting squeezed as investors flee active management in favor of low-cost passive funds.
“Asset manager fees are under greater pressure than they’ve ever been,” Johnson said, leaving “no stone unturned” when it comes to their own expenses.
In 2017, Vanguard said it would work with two other groups to share index data using blo