Post-XRP ETF launch, Franklin Templeton sees diversified crypto portfolios as the next big thing

As rewarding as launching an XRP exchange-traded fund has been, Franklin Templeton's Head of Digital Assets Roger Bayston is already looking ahead to offering clients packaged investments that contain an entire portfolio of cryptocurrencies.

"Single asset ETFs, super interesting, there's a lot of community enthusiasm around the single asset ETFs," Bayston told The Block, adding that a year from now, diversification could be what garners major interest. "There's going to be a bunch of ETF availability and diversified portfolios."

On the first day of trading, Grayscale and Franklin Templeton’s new spot XRP ETFs each attracted over $60 million in inflows. Since the success of Bitcoin- and Ethereum-based ETFs, financial institutions have been eager to launch altcoin-based funds that track popular tokens like XRP, Solana, and Dogecoin.

Bayston seemed enthusiastic about the next phase Franklin Templeton can offer its wide array of clients, which includes investment advisors and wealth managers: ETFs that track "a diversified basket" of cryptocurrencies, as opposed to only a single token. The executive pointed to Franklin Templeton's EZPZ fund, which holds both bitcoin and ether, as an example of a diversified ETF.

"Our strategy has been not is not just in the single asset ETFs but in diversified exposure," Bayston added.

This week, Bloomberg Senior ETF analyst Eric Balchunas predicted over 100 new crypto ETFs will launch in the next six months. As of last month, there were over 150 cryptocurrency-based exchange-traded product filings tracking 35 different digital assets. 

Issuers flooded the zone with proposals for 2x and 3x leveraged ETFs, among others, in addition to funds with staking components. The massive flow of proposals came in the wake of the U.S. Securities and Exchange Commission approving new listing standards. Even T. Rowe Price, the legacy asset management company with nearly $1.8 trillion in assets under management, filed to launch its first crypto exchange-traded fund.

"Highly bullish on index-based & actively managed crypto ETFs," NovaDius Wealth Management President Nate Geraci said last month on X. "No way tradfi investors ready to navigate all of these single tokens. They’re going to take a diversified, shotgun approach to an emerging asset class. Seems obvious."

Franklin Templeton's spot Bitcoin and Ethereum ETFs manage $501 million and $65 million, respectively. The firm has a total of $1.7 trillion in assets under management.