10-K: Franklin Crypto Index ETF posts 2025 debut 10-K

Newly launched multi-asset crypto ETF EZPZ reports $10.2M AUM, -9.67% NAV return, and tight index tracking with a 0.19% sponsor fee.

Summary

• Franklin Crypto Index ETF (ticker: EZPZ), a series of Franklin Crypto Trust, commenced operations on February 20, 2025 and filed its first Annual Report on Form 10‑K for the year ended December 31, 2025.
• Net assets were $10,215,391 with 450,000 shares outstanding, implying a NAV per share of $22.70 at December 31, 2025.
• For the period since launch, total return at NAV was -9.67% (NAV per share decreased from $25.13 to $22.70), closely aligning with the Underlying Index decline of -10.05%.
• Holdings tracked the CF Institutional Digital Asset Index – US Settlement Price with quarter-end weights: BTC 74.81%, ETH 13.78%, XRP 5.91%, SOL 3.29%, DOGE 0.86%, ADA 0.68%, LINK 0.39%, XLM 0.28%.
• Fair value of digital assets held at year-end totaled $10,216,868 (BTC $7.64M; ETH $1.41M; XRP $0.60M; SOL $0.34M; DOGE $0.09M; ADA $0.07M; LINK $0.04M; XLM $0.03M).
• Net realized and unrealized losses on investments were $1,536,361, driven by market declines and rebalancing activity.
• Sponsor’s fee is 0.19% annually; the Sponsor waived fees on the first $10.0B of assets from February 20, 2025 to August 29, 2025 (accrued $9,294; net after waiver $5,250).
• Authorized Participants at year-end: Jane Street Capital, LLC; J.P. Morgan Securities LLC; Virtu Americas LLC; Goldman Sachs & Co. LLC.
• Service providers: Coinbase Custody Trust (digital asset custodian), Coinbase Inc. (prime broker), The Bank of New York Mellon (administrator/transfer agent/cash custodian), CF Benchmarks (index).
• Shareholder rights are highly limited; the Sponsor controls most governance functions and may amend the Declaration of Trust and suspend creations/redemptions under certain circumstances.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a balanced debut: low fees, solid tracking and institutional infrastructure offset by small AUM, limited shareholder rights, and material operational and regulatory risks inherent to multi-asset crypto exposure.

Positives

• Low sponsor fee of 0.19% with an initial fee waiver through August 29, 2025, supporting net costs ($5,250 net fees for the period).
• Tight index tracking: fund NAV return -9.67% vs Underlying Index -10.05% from launch to year-end.
• Institutional infrastructure: Coinbase Custody (cold storage; SOC 1/2 reporting), BNY Mellon (admin/TA/cash), Coinbase Prime (execution), CF Benchmarks (FCA-regulated benchmark administrator).
• Multiple Authorized Participants (Jane Street, J.P. Morgan, Virtu, Goldman Sachs) support primary market liquidity.
• Transparent daily NAV methodology using CF Reference Rates with clear fair value fallback protocol.
• Diversified multi-asset crypto exposure across eight large-cap tokens as of December 31, 2025.
• No material legal proceedings and cybersecurity risk oversight reported; disclosure controls deemed effective.

Negatives

• Negative performance since launch: NAV per share fell from $25.13 to $22.70 (-9.67%), with $1.54M net realized/unrealized losses.
• Small scale at year-end (AUM ~$10.2M) increases risks around trading spreads, liquidity, and operating leverage.
• Ongoing NAV erosion mechanism: fund must sell digital assets to pay sponsor fees and any non-routine expenses, reducing assets per share over time.
• Shareholder rights are very limited; the Sponsor controls most decisions and can amend the Declaration of Trust; derivative actions require a 10% ownership threshold.
• Operational concentration risks: reliance on Coinbase entities (custody/prime broker/trade credit) and a limited set of APs.
• Potential for suspensions of creations/redemptions and fair value determinations by the Sponsor could lead to premiums/discounts and tracking variance.
• Tax complexity: pass-through partnership status with uncertain digital asset tax treatment; investors may incur taxable income without cash distributions.

Risks

• Extreme digital asset price volatility may cause substantial losses; crypto bear markets and liquidity shocks can materially impact NAV.
• Regulatory uncertainty in the U.S. and abroad, including potential classification of certain digital assets as securities, could constrain operations and depress prices.
• Custody and cybersecurity risks: theft, loss of private keys, exchange/venue outages, or service disruptions at custodians or prime broker could impair operations and assets.
• Creation/redemption disruptions due to network congestion, outages, or AP/prime broker service issues could widen premiums/discounts.
• Valuation risk if CF Reference Rates are unavailable or deemed unreliable, triggering Sponsor fair value determinations that could diverge from market prices.
• Authorized Participant concentration: exits or inactivity by a limited AP set can reduce liquidity and hinder tracking.
• Tax risks: uncertainty over treatment of digital assets and potential partnership tax status changes could harm investors.
• Forks, airdrops, and protocol upgrades may cause tracking issues; the Fund abandons non-index assets from forks/airdrops and does not stake assets.
• Reliance on Trade Credits from affiliates to facilitate timely executions poses financing and collateral risks if not repaid by the settlement deadline.
• GAAP vs. NAV divergence risk due to different valuation conventions could create confusion and reported NAV differences.

Future Outlook

The ETF will continue to passively track the CF Institutional Digital Asset Index using a replication approach, rebalancing quarterly as the index is reconstituted. Management highlights that results will depend on digital asset market conditions and evolving regulation, and that fees and any non-routine expenses will be funded by selling portfolio assets, modestly reducing assets per share over time.

Management Comments

• The investment objective is to provide results that closely correspond, before fees and liabilities, to the performance of the CF Institutional Digital Asset Index; the Fund does not use leverage or derivatives.
• The Sponsor applied an initial fee waiver through August 29, 2025 to support shareholders while the Fund scaled.
• Disclosure controls and procedures were evaluated as effective as of December 31, 2025.
• The Fund’s service model relies on institutional providers (Coinbase Custody/Prime and BNY Mellon) to support secure custody, administration, and efficient primary market operations.

Industry Context

StockSavvy.ai notes that EZPZ launches into a market increasingly comfortable with spot crypto ETPs, with sizable inflows to single-asset bitcoin and ether products in 2025. Unlike single-asset peers, EZPZ offers diversified large-cap crypto exposure at a competitive 0.19% fee. Its reliance on Coinbase infrastructure mirrors many competitors, while multi-asset scope could appeal to allocators seeking simplified exposure with quarterly rebalancing.

Comparison to Industry Standards

• Expense ratio: At 0.19%, EZPZ is competitive versus many spot crypto ETPs (e.g., several spot bitcoin ETFs commonly range ~0.19–0.25% with promotional waivers), and below some crypto ETPs charging 0.30%+.
• Tracking: From launch to year-end, tracking difference of ~38 bps vs the index is reasonable given rebalancing and trading costs; comparable commodity ETPs often exhibit several to tens of basis points tracking difference over partial periods.
• Service providers: Coinbase Custody/Prime and BNY Mellon align with common counterparties used by leading spot crypto ETPs, consistent with institutional norms for custody, administration and cash management.
• Liquidity support: Four APs (Jane Street, J.P. Morgan, Virtu, Goldman Sachs) is in line with early-stage crypto ETPs; larger, older ETPs often expand AP rosters over time to enhance depth.

Corporate Governance

Legal Proceedings

• No material legal proceedings as of March 27, 2026.

Related Party Transactions

• Franklin Resources, Inc. (affiliate of the Sponsor) provided initial seed capital: purchased 4,000 shares on January 22, 2025 and later purchased 100,000 shares via Seed Creation Units on February 10, 2025; it paid transaction and conversion costs for the seed, which were not borne by the Fund.
• Franklin Distributors, LLC, an affiliate of the Sponsor, serves as Marketing Agent; costs of ordinary services are assumed by the Sponsor.
• The Sponsor paid organization and initial offering costs and may assume certain legal expenses per the Sponsor Agreement.

Stakeholder Impact

• Shareholders: NAV is reduced over time by sponsor fees and any non-routine expenses, with potential premiums/discounts if creations/redemptions are suspended.
• Authorized Participants: bear creation/redemption transaction and network fees; responsible for NAV vs execution price slippage differences.
• Service providers (custody/prime/admin): central to operational continuity; outages or service changes could impair liquidity and tracking.
• Regulators/Exchanges: compliance with FCA-regulated benchmarks and Cboe/SEC listing and reporting standards supports market integrity.

Next Steps

• Continue quarterly index rebalancing and replication of CF Institutional Digital Asset Index.
• Maintain and potentially expand the Authorized Participant roster to deepen liquidity.
• Monitor disclosures for any future fee waiver changes or extraordinary expenses.
• Assess regulatory developments affecting digital assets, custody, AP participation and tax treatment.
• Evaluate index composition changes post-December 2025 expansion to eight constituents.

Key Dates

Recommendation

The filing reflects a low-cost, well-structured multi-asset crypto ETF with solid early tracking but modest scale and extensive operational/regulatory risks. Institutional investors may monitor for AUM growth, liquidity depth, and sustained tracking before upgrading conviction.

Keywords

crypto index ETF, EZPZ, Franklin Crypto Trust, CF Benchmarks, Cboe BZX, Coinbase Custody, Coinbase Prime, BNY Mellon, Authorized Participants, Bitcoin, Ether, XRP, Solana, Dogecoin, Cardano, Chainlink, Stellar Lumens, sponsor fee 0.19%, NAV, AUM