10-Q: Franklin Crypto ETF Sees NAV Drop Amid Digital Asset Depreciation

Franklin Crypto Index ETF reports a significant decrease in Net Asset Value per Share for the quarter ended June 30, 2026, driven by the depreciation of its underlying digital asset holdings.

Summary

• The Franklin Crypto Index ETF (EZPZ) reported a Net Asset Value (NAV) per Share of $14.67 as of June 30, 2026, a decrease from $22.70 at the beginning of the year and $17.30 at the start of the quarter.
• Total assets for the Trust were $11,735,475, with investments in digital assets valued at $11,735,475, down from $10,216,868 at the end of 2025.
• The fund experienced a net investment loss of $5,401 for the quarter and a net realized and unrealized loss of $1,698,861 on its digital asset investments.
• For the six months ended June 30, 2026, the NAV per Share decreased by 35.37%, from $22.70 to $14.67.
• The Sponsor's fee for the quarter was $5,401, and for the six months was $9,949.
• The fund's underlying index, the CF Institutional Digital Asset Index, also saw a decline, falling 15.61% in the quarter and 35.78% over the six months.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative score due to the significant depreciation in the Net Asset Value (NAV) per Share and the overall decline in the value of digital assets held by the fund during the reporting period.

Positives

• The fund successfully issued 200,000 new Shares in the quarter ended June 30, 2026, contributing $3,057,306 in capital.
• For the six months ended June 30, 2026, 350,000 Shares were issued, contributing $5,686,786 in capital.
• The Sponsor waived its fee on the first $10.0 billion of the Fund's assets from February 20, 2025, to August 29, 2025, which benefited the fund during its initial operational period.
• The fund's digital assets are valued using Level 1 inputs (unadjusted quoted prices in active markets), indicating transparency in valuation.

Negatives

• The Net Asset Value (NAV) per Share decreased significantly by 15.20% for the quarter ended June 30, 2026, from $17.30 to $14.67.
• For the six months ended June 30, 2026, the NAV per Share saw a substantial decline of 35.37%, from $22.70 to $14.67.
• The fund experienced a net realized loss and change in unrealized depreciation of $1,698,861 for the three months ended June 30, 2026.
• For the six months ended June 30, 2026, the net realized loss and change in unrealized depreciation on investments in Digital Assets was $4,158,536.
• The cost of investments in Digital Assets ($17,057,344 as of June 30, 2026) is higher than their fair value ($11,735,475), indicating unrealized losses.

Risks

• The fund holds only Digital Assets, creating a concentration risk associated with price fluctuations.
• Extreme volatility in digital asset prices could lead to substantial, sustained, or rapid declines, potentially causing the Shares to lose all or substantially all of their value.
• Factors adversely impacting digital asset value include changes in global supply and demand, market sentiment, trading platform activity (which may be unregulated or manipulated), adoption rates, and network developments.
• The market price of the Shares may differ from the Fund's Net Asset Value (NAV) per Share.

Future Outlook

The filing does not provide specific forward-looking guidance on future performance. However, it notes that the Fund generally seeks to reflect the price of the digital assets included in the CF Institutional Digital Asset Index and that changes in the price of the Shares may vary from changes in the underlying Digital Assets prices.

Management Comments

• "All statements (other than statements of historical fact) included in this report that address activities, events or developments that may occur in the future... are forward-looking statements. These statements are only predictions. Actual events or results may differ materially."
• "The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsors fee for stated periods of time."
• "The Fund will sell Digital Assets as needed to pay the Sponsors fee and will buy and sell Digital Assets to adjust the Funds investments to correspond with a rebalancing and/or reconstitution of the Underlying Index."

Industry Context

StockSavvy.ai notes that this filing reflects the inherent volatility and risk associated with passively managed digital asset funds. The significant depreciation in NAV per Share highlights the sensitivity of such funds to market downturns in cryptocurrencies like Bitcoin and Ether, which constitute the majority of the fund's holdings.

Comparison to Industry Standards

• The filing does not provide direct comparisons to specific industry benchmarks or competitor funds beyond referencing the CF Institutional Digital Asset Index.
• The expense ratio of 0.19% is competitive for passively managed digital asset index funds, especially considering the Sponsor assumes ordinary operating expenses.
• The fund's strategy of tracking an index is a common approach in the ETF space, but its application to volatile digital assets introduces higher risk compared to traditional asset ETFs.

Legal Proceedings

• As of August 14, 2026, the Trust and the Fund are not subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against the Trust or Fund.

Related Party Transactions

• The Sponsor, Franklin Holdings, LLC, receives a fee for its services.
• Franklin Distributors, LLC, an affiliate of the Sponsor, serves as the Marketing Agent.
• Franklin Resources, Inc. (FRI) is the ultimate parent company of the Sponsor and Marketing Agent.

Stakeholder Impact

• Shareholders have experienced a significant decrease in the Net Asset Value (NAV) per Share due to digital asset depreciation.
• The concentration of investments in digital assets exposes shareholders to high volatility and potential loss of principal.
• The fund's operational expenses, including the Sponsor's fee, are covered by selling digital assets, which can further reduce the amount of digital assets represented by each Share.

Next Steps

• The Fund will continue to seek to provide investment results that closely correspond to the performance of the CF Institutional Digital Asset Index.
• The Fund will buy and sell Digital Assets to adjust its investments to correspond with a rebalancing and/or reconstitution of the Underlying Index.
• The Fund will sell Digital Assets as needed to pay the Sponsor's fee and other expenses not assumed by the Sponsor.

Key Dates

Recommendation

While the fund's NAV has declined significantly, reflecting the current market conditions for digital assets, its passive strategy aims to track a specific index. For investors already holding this ETF, a 'hold' recommendation is appropriate given the market's inherent volatility. New investors should carefully consider the high-risk nature of digital assets and the fund's performance before investing. The fund's competitive expense ratio and the Sponsor's assumption of ordinary expenses are positive factors, but the substantial depreciation in NAV is a significant concern.

Keywords

Digital Assets, Bitcoin, Ether, ETF, Crypto Index, Franklin, NAV, Investment Fund