Spot Bitcoin ETF Franklin Templeton Digital Holdings Trust (EZBC) has lowered its fees, making them (as of late Friday morning) the lowest among all current issuers. The asset management company will also waive fees until the fund reaches $10 billion in assets under management.
Newly approved spot Bitcoin ETFs saw over $4 billion in volume on their first day of trading. Sandy Cole, head of digital asset and investor advisory services at Franklin Templeton, joins Yahoo Finance Live to discuss the company’s involvement in the digital asset space.
Cowell believes that adding a Bitcoin ETF to the company’s portfolio “provides a new type of alternative exposure” that will, ideally, provide investors with the opportunity to diversify their portfolios at a lower price. Cowell notes that there are higher costs the company will have to absorb, but he remains optimistic: “We have confidence, over the long term, that we will raise enough assets to be able to deliver that really strong incentive early on.”
Cowell acknowledges the concerns and fears many investors have about investing in Bitcoin, stating clearly that “there were bad actors who took advantage of the lack of oversight in the early years” of Bitcoin, but notes that regulation will expand globally.
Cowell also discusses the “peer-to-peer” nature of the Bitcoin industry, noting that “this is truly the next generation of platform economics” and predicting the sector will become more accessible to all types of investors.
For more expert insights and the latest market action, click here to watch this full episode of Yahoo Finance Live.
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– This morning Franklin Templeton immediately reduced fees. Bitcoin ETF now makes it the lowest of all current issuers. The manager will also waive fees until the fund reaches $10 billion in assets under management. Now the newly approved spot Bitcoin ETFs as a group saw $4.6 billion in volume on their first day of trading. We want to bring Sandy Cole. She’s head of digital assets and investor advisory services at Franklin Templeton here. Sandy, great to see you.
Let’s start with the news released this morning. Franklin Templeton, you guys are once again now the cheapest option on the street when it comes to this Bitcoin ETF. Talk to us or walk us through your strategy, how you stand out and what has become or is likely to become a more crowded market?
Sandy Cole: Yes. It’s great to be here. First of all, thank you for having me. We strongly believe in the potential of the new digital asset space. This is something Franklin Templeton has invested in for more than five years. We were the first asset manager to have a mutual fund registered on blockchain technology. This Bitcoin ETF is an exciting new addition to our comprehensive product portfolio. We want to be as competitive as possible.
We believe this provides a new type of alternative exposure that investors can have in their portfolio that can really help diversify their portfolio and give them exposure to a whole new area of technology and growth where innovation is happening every day. So we want this to be as easy to access as possible, that’s why we have our Easy BC index and we want our investors to be as incentivized as possible to invest with us, that’s why we want our fees to be the most competitive we can offer as an asset manager.
– Yes, Sandy, we’ve seen some innovative indicators for Bitcoin ETFs, and yours is certainly one of them. So finally here– we’re taking a look at some of the fees and this is where it gets a little bit more competitive as well. What goes into this account has a lot of potential investors trying to wade through who got the best fees, what those commissions really mean, and where they should put their money.
Sandy Cole: Yes. Well, offering these Bitcoin ETFs involves somewhat higher costs than traditional stocks, bonds, or even gold and commodities ETFs, simply because the custody arrangements you need to think about for both cash and Bitcoin require some nuances that are not necessary. Truly some of the most popular products. So there is a slightly higher cost that we, as an asset manager, have to absorb.
So, what we think about is where do we expect to raise assets, and how much assets do we expect to raise. We are very bullish on our product given our deep engagement with digital natives in this space and our great position as a trusted name in asset management. So we have confidence over the long term that we will accumulate enough assets to be able to offer this really strong incentive to our clients early on. This will be compensated in the long run but we have to weigh it all against the cost of managing the fund and maintaining proper discipline. These are, sort of, the calculations that go into our thinking.
– Sandy, we’ve seen mixed reception here just in terms of the reaction, I should say, on Wall Street in terms of how open some of these companies are to giving their clients access to Bitcoin ETFs. One company came out of Vanguard and said it wouldn’t allow its clients, most of its clients that are here, to buy Bitcoin ETFs. I’m interested in your view on that and what it will do here in terms of confidence among investors in buying these products.
Sandy Cole: Yes. I think there’s sometimes a lot of misunderstanding about what the digital asset space represents. A lot of people think about the early days of Bitcoin when it was really operating within a regulatory environment, and when there wasn’t a lot of oversight in terms of what was happening. There were bad actors who took advantage of the lack of oversight in the early years of its launch. But we have already seen a significant increase in participation around the world.
Regarding these new assets like Bitcoin, we have regulations issued in many regions of the world. We are working here in the United States to establish our own regulations and think about what might be required to participate in this area. We’ve already put in place regulatory tools that are able to monitor wallet activity and really understand when bad actors are trying to get into the space.
So I think there’s been a lot of progress that a lot of people who don’t care about space may not be aware of. They may have had some early concerns about what Bitcoin had built up as a reputation in its early years of operation. But a lot of that has been put aside, and now this is actually a network that creates trillions of dollars worth of value.
We have now actually seen more transactions in Bitcoin than we have seen in Visa or Mastercard in a given year. So, these are very large ecosystems that are growing very dynamically and were only accessible by directly getting into the cryptocurrency itself until the Bitcoin ETFs were launched and that’s what’s so exciting about this new product.
– Sandy is only the second day of trading, but it is clear that the initial reaction and excitement among investors is very encouraging. And that brings me to what’s next for this space, right? There has been a lot of talk about the launch of these products, could we see more spot products here for other crypto products? How likely do you think this is?
Sandy Cole: Well, if you think about the innovation that’s happening, there’s a lot of places where we’re seeing that innovation, right. When you think about companies and platform companies, you see a lot of companies involved in the platform space, right. These are network economies that they manage but are run by private companies. Bitcoin is a platform network but it is a peer-to-peer network. So no company owns it.
And when you think about other similar companies that are growing very dynamically, you have Ethereum, you have Solana, you have Polygon, you have other blockchains and you have other cryptocurrency ecosystems that are all creating real value within their participants. They have entrepreneurs building applications in these areas, introducing new technologies like oracle networks, and using smart contracts, which are self-executing code.
This is truly the next generation of platform economies. Perhaps, over time, we will see many of these opportunities become available to ordinary investors through wrappers such as ETFs that they find easy to use.
– Thank you so much for joining us. Sandy Cole is President of Franklin Templeton Digital Assets and Investor Advisory Services. Great details on all the things we tracked around the Bitcoin ETF launch this week. Thank you.
Sandy Cole: Thank you.