Franklin sets 27 October for FBEQ and FIBT, ETFs that move stock dividends into bitcoin

Franklin Templeton has filed the last SEC paperwork for two exchange-traded funds that send the dividends of US stocks into bitcoin. In a post-effective amendment filed on Thursday 22 October 2026, the asset manager gave the funds their tickers, FBEQ and FIBT, and their fees, 0.09% and 0.19% a year. The 485BPOS filing takes effect on 27 October, and a Form 8-A filed the same day registered both funds on the Nasdaq Stock Market.

The Franklin Templeton bitcoin dividend ETFs are stock funds with a bitcoin sleeve, not bitcoin funds. Each holds large US companies and starts with 5% of its index in bitcoin. After that, the sleeve grows only from dividends: every payment the companies make is moved into bitcoin exposure the next morning. Both index names carry the label “Bitcoin DRIP”, the usual abbreviation for a dividend reinvestment plan.

Franklin had published no press release on the two funds by 16:45 UTC on 23 October, and no Franklin executive is quoted on them in any source Coindaro read. Trading has not started. What follows comes from the prospectus, read on EDGAR on 23 October, and from trade press coverage of the June filing.

FBEQ and FIBT: two indexes, two fees, one bitcoin rule

Both funds track indexes calculated by VettaFi LLC. They share the bitcoin mechanism and differ in the stocks underneath and in what they cost.

FIBT got less attention. Bitcoin Magazine’s report of 23 October gave FBEQ’s ticker and fee but neither for the innovation fund; both sit in the amendment’s fee tables. Its parent index takes the 100 largest US companies listed on Nasdaq by market value and leaves out finance companies. FBEQ’s parent covers the 500 largest US companies. On 30 September, the prospectus says, both indexes were concentrated in information technology, and both funds are classed as non-diversified.

The fee is a unified one. Under the management agreement, Franklin Advisory Services pays the funds’ ordinary running costs and reimburses all acquired fund fees and expenses, and it has voluntarily agreed to waive the part of its fee that matches the sponsor fees Franklin earns when a fund buys a Franklin product, such as an affiliated spot bitcoin ETP. That waiver can be changed or ended at any time. The prospectus also warns that holding other ETPs may involve “duplication of advisory fees and certain other expenses”, and brokerage costs come on top.

How the bitcoin dividend ETFs turn a stock dividend into bitcoin

The design rests on one choice in the index rules. The stock part of each index is calculated on price return, which leaves out the dividends the companies pay. Those payments do not go back into the shares. In the prospectus wording, “all regular and special dividends are reinvested into bitcoin at the market open on the day following the dividend ex-date.” VettaFi prices bitcoin in the index with the Kaiko Bitcoin New York Reference Rate, taken at 4:00 pm Eastern time.

So the index starts at 95% stocks and 5% bitcoin. A company in the basket goes ex-dividend, and the next morning the value of that dividend moves to the bitcoin side.

The rules, as the prospectus sets them out:

• At each quarterly rebalance, a bitcoin weight above 5% is cut back to 4.5%. A weight of 5% or less is left as it is, with no top-up.
• If bitcoin is above 20% of the index at any close between two rebalances, it goes back to 4.5% at the close of the second business day after.
• The indexes are rebalanced every quarter and reconstituted twice a year.
• On the stock side, no single company can weigh more than 20%, and companies above 5% cannot add up to more than 40% together.

The 4.5% reset is the rule that will bite most often: any quarter that ends with the sleeve above 5%, whether from a bitcoin rally or from dividends alone, sends it back to 4.5%. The 20% cap is the emergency brake. In Coindaro’s own arithmetic, not a figure from the filing, a sleeve starting at 4.5% only passes 20% if bitcoin multiplies about 5.3 times relative to the stocks before the next rebalance, dividends aside. With stocks flat, that means bitcoin going from about $81,600 to roughly $430,000 within one quarter. When bitcoin falls, nothing refills the sleeve except new dividends.

How fast do dividends add up? Another piece of Coindaro arithmetic, using a dividend yield of 1.3% a year picked only for the example: the 95% stock side would pass about 1.2% of the index’s value to bitcoin over twelve months, roughly 0.3 percentage points a quarter. That is small next to bitcoin’s own moves, so the sleeve’s weight on a given day will depend far more on what bitcoin did since the last rebalance.

The fund may not even match the index on this point. Its tax risk text says a US regulated investment company must generally distribute substantially all of its net income, so the fund “may need to limit its dividend reinvestments” or sell other holdings to raise the cash. The prospectus says the funds intend to pay income dividends at least annually, with no guarantee of any distribution.

How the funds get bitcoin without holding coins

Neither fund will own bitcoin directly. Under normal conditions at least 80% of net assets must sit in the index stocks plus “bitcoin-related investments”, and the prospectus lists what those can be:

• exchange-traded products, including bitcoin-backed products sponsored by affiliates of the manager, and investment companies that give bitcoin exposure;
• options and futures that reference bitcoin or bitcoin ETPs;
• depositary receipts representing an ownership interest in bitcoin.

The filing names no product. Franklin’s own spot fund, the Franklin Bitcoin ETF (EZBC), is the obvious affiliate, but the prospectus only says “affiliates” and does not say which product the funds will buy first, or in what mix with futures.

The funds may also put up to 25% of total assets in a wholly-owned subsidiary in the Cayman Islands. The prospectus gives the reason: income and gains from bitcoin investments held there count as “good income” under the US tax code’s rules for regulated investment companies. That 25% ceiling sits above the index’s 20% bitcoin cap.

Because the funds hold no coins, the risk text on custody is about the products underneath and their custodians: coins kept outside wallet (portafoglio freddo) conserva offline le chiavi private che controllano le tue criptovalute, su un dispositivo o un supporto mai collegato a internet, proteggendole dagli attacchi online.">cold storage, for example in a trading account, are more exposed, and may be pooled in an omnibus account rather than segregated. EZBC’s coins are held by Coinbase Custody Trust Company, according to fund data pages. Franklin Advisory Services is the manager, with Franklin Templeton Institutional as sub-adviser; Dina Ting, Hailey Harris, Joe Diederich and Basit Amin are named as portfolio managers.

From a June filing to a 27 October date

Franklin first filed for the two funds in June 2026. That preliminary amendment listed no fees, Decrypt reported on 19 June, and Bitcoin Magazine said it pointed to an effective date as early as 1 September. The date slipped. EDGAR shows a run of extension filings for the trust in September and October, and the 22 October amendment now sets 27 October. Franklin has not said why it took longer.

Bitcoin Magazine headlined on 23 October that Franklin had cleared the “final hurdle”. On paper that holds: the amendment fixes the effective date and the 8-A registers the shares for trading on Nasdaq. It is not proof of a first trade, and no Nasdaq listing notice or launch announcement had appeared when this article was written.

The filing lands in a crowded season for crypto fund products. Decrypt’s June report cited Bloomberg Intelligence analyst James Seyffart, who had counted well over 100 crypto ETF filings in the pipeline at the end of 2025. On 20 October Coindaro covered BlackRock’s PBIT filing, a bitcoin ETF that caps gains to limit losses, and on 21 October Grayscale’s move to let investors swap coins for shares in ten crypto ETFs.

Where FBEQ sits next to EZBC, IBIT and BITA

Franklin has run a spot bitcoin fund since EZBC began trading on Cboe BZX on 11 January 2024, the first day of US spot bitcoin ETFs. On 1 April 2026 it agreed to buy 250 Digital, a crypto manager led by former CoinFund executives, together with the liquid crypto strategies CoinFund ran, and launched a unit called Franklin Crypto, according to its announcement. At the time, Franklin Templeton Digital Assets managed about $1.8 billion (31 December 2025).

The closest product by intent is BlackRock’s iShares Bitcoin Premium Income ETF (BITA), launched in the week of 19 June 2026, Bitcoin Magazine reported. It works the other way round. BITA holds bitcoin exposure through iShares Bitcoin Trust (IBIT) and sells covered calls on 25% to 35% of its holdings, targeting yields of 15% to 25%: it turns bitcoin into income. Franklin’s funds turn stock income into bitcoin. Coindaro had no verified BITA fee to set beside 0.09% and 0.19%, and the products do different jobs, so a straight fee comparison would say little.

IBIT itself, the spot benchmark with tens of billions of dollars in assets, gives full bitcoin exposure and nothing else. FBEQ and FIBT give stock market exposure first and a small, rule-bound bitcoin position second. Coindaro found no earlier ETF built on the same dividend-to-bitcoin rule, but it has not checked every filing and does not call these the first of their kind.

What the funds are not, and the risks in the prospectus

On the design alone, the funds trade a stock portfolio’s cash dividends for a slowly fed bitcoin position whose weight is capped by rule. For someone who wants bitcoin itself, that is a diluted route. For someone who lives on dividends, the index sends the income elsewhere.

The prospectus lists its own principal risks. Among those specific to this design:

• Bitcoin is described as a highly speculative asset with a history of significant price swings, and investors can lose money.
• Spot bitcoin ETPs are not registered under the Investment Company Act of 1940, so they lack the protections that apply to registered funds, and their shares can trade at a premium or discount to their assets.
• Derivatives can track their underlying imperfectly, and when futures markets are in contango, rolling contracts has a cost that can cause negative returns and tracking error.
• Custodians of the underlying bitcoin can suffer theft, loss, hacks or operational failures.
• Creations and redemptions are expected to be partly in cash, which can make the funds less tax-efficient than ETFs that work fully in kind.
• The funds are new, with no performance history, and may depend on a small number of authorized participants.

Two points come from Coindaro’s reading of the rules rather than the risk list: gains above 5% are trimmed each quarter, while losses are refilled only by dividends. In the US, distributions are taxable as ordinary income, capital gains or both, except inside a 401(k) or an IRA.

Several things are still unknown: how much money seeds the funds, which firms act as authorized participants, which bitcoin product or future the sleeve buys first and how much the Cayman subsidiary will be used.

For readers in Europe, a general point rather than anything in the filing: FBEQ and FIBT are US-domiciled funds, not UCITS. Selling an investment product to European retail investors usually requires a PRIIPs key information document, which US ETFs do not produce, so most retail brokers in France, Italy and the rest of the EU are unlikely to offer them. The prospectus tax text is written for US investors, with a section on withholding for foreign holders. Coindaro’s explainer on crypto ETFs covers how these funds are built and sold.

A small, mechanical bid for bitcoin

Bitcoin traded near $81,600 at 16:40 UTC on 23 October, according to Coinbase data, almost unchanged over 24 hours, a day after US spot bitcoin ETFs lost $635 million in a single session, as Coindaro reported this morning. Two new index funds will not change that picture quickly. Beyond the 5% bought at launch, they add bitcoin only as fast as their stocks pay dividends, and the size of that first purchase depends on assets nobody has disclosed.

The next date is 27 October, when the amendment takes effect. The first trading day, the opening assets and the first holdings report will show which bitcoin product Franklin chose for the sleeve.