Franklin Templeton, a global asset management firm with over $1.5 trillion in assets under management (AUM), has officially entered the spot Solana ETF race, making it the largest institutional firm to seek approval for a Solana-based exchange-traded fund (ETF).
The firm’s S-1 filing with the U.S. Securities and Exchange Commission (SEC), submitted on February 21, signals growing institutional confidence in Solana, one of the most widely adopted Layer-1 blockchains in the crypto industry.
Franklin Templeton Expands Institutional Interest in Solana
Franklin Templeton’s filing follows the recent incorporation of the Franklin Solana Trust, a Delaware-based statutory trust, reinforcing its longstanding interest in Solana.
The asset management firm has previously publicly expressed optimism about Solana’s ecosystem, highlighting its growing artificial intelligence (AI) sector and its own deployment of a tokenized money market fund (FOBXX) on the Solana blockchain.
With this move, Franklin Templeton joins an expanding list of traditional finance (TradFi) institutions filing for a Solana ETF, including VanEck, Grayscale, 21Shares, Bitwise, and Canary Funds. However, Franklin Templeton’s market influence far surpasses the combined AUM of the other applicants, positioning it as a major player in the potential approval and adoption of a Solana ETF.
Staking Rewards: A Unique Feature of Franklin Templeton’s ETF?
One of the most notable aspects of Franklin Templeton’s Solana ETF proposal is the potential integration of staking rewards, a feature that has not been widely explored in crypto ETFs.
According to the filing, Franklin Templeton may stake a portion of the fund’s assets through trusted staking providers, allowing the fund to earn Solana staking rewards.
“The Sponsor [Franklin Templeton] may, from time to time, stake a portion of the Fund’s assets through one or more trusted staking providers… In consideration for any staking activity in which the Fund may engage, the Fund would receive certain staking rewards of Solana tokens, which may be treated as income to the Fund.”
This potential inclusion of staking within a regulated ETF structure could set a groundbreaking precedent, as U.S. policymakers and regulatory bodies seek to better understand staking in an institutional context.
Earlier in February, SEC Commissioner Hester Peirce’s Crypto Task Force held discussions with Solana staking operator Jito Labs and venture capital firm Multicoin Capital regarding the potential role of staking and liquid staking tokens (LSTs) in exchange-traded products (ETPs).
Institutional Infrastructure: Custody and Trading Details
Franklin Templeton’s filing names Coinbase Custody Trust Company, LLC, as the fund’s official custodian. If approved, shares of the Franklin Solana ETF would be listed on the Cboe BZX Exchange, further cementing institutional adoption of digital assets.
A Defining Moment for Solana ETFs
Franklin Templeton’s entry into the Solana ETF market is pivotal, not only due to its institutional influence but also because of its potential staking rewards mechanism.
With the SEC gradually warming up to cryptocurrency-based financial products, particularly following the approval of spot Bitcoin ETFs in January 2024 and Ethereum ETFs in July 2024, the growing interest in Solana ETFs could mark another major milestone in crypto’s institutional adoption.
