Franklin Ethereum Trust EZET

Franklin Ethereum Trust is a Delaware statutory trust that offers a single series, the Franklin Ethereum ETF (the “Fund”), designed to reflect the performance of the price of ether before expenses. The Fund issues common units of beneficial interest, or Shares, which represent fractional undivided ownership in the Fund’s net assets. These Shares are listed on the Cboe BZX Exchange under the ticker symbol “EZET.” The Trust operates as a passive investment vehicle, with no active management of its ether holdings by the Sponsor, Franklin Holdings, LLC. The Fund seeks to provide investors with a cost-effective and accessible means of gaining exposure to ether through traditional brokerage accounts, avoiding the complexities of direct cryptocurrency ownership such as wallet management and private key handling.

The Fund generates revenue primarily through the Sponsor’s fee, which is accrued daily at an annual rate of 0.19% of the Fund’s net asset value and paid quarterly in arrears by Franklin Holdings, LLC. This fee compensates the Sponsor for assuming ordinary Fund expenses, including administration, custody, transfer agent, marketing agent, trustee, exchange listing, and other operational costs. The Sponsor may, at its discretion, waive all or part of this fee, as it did from July 23, 2024, to January 31, 2025, reducing the effective fee to 0.00% on the first $10.0 billion of assets. The Fund does not generate income from trading or appreciation of ether; instead, it sells ether as needed to cover the Sponsor’s fee and any expenses not assumed by the Sponsor, which results in a gradual reduction in the ether amount represented by each Share over time.

The company operates through the following segments:

• Franklin Ethereum ETF: This segment encompasses the Franklin Ethereum Trust’s sole series, the Fund, which issues Shares tracking the price of ether. The Fund’s investment objective is to reflect the performance of ether before payment of expenses, using the CF Benchmarks Index as its primary pricing source. The Shares are designed to offer a convenient, exchange-traded alternative to direct investment in ether, eliminating the need for investors to manage digital wallets or private keys. The Fund holds ether in custody with Coinbase Custody Trust Company, LLC, which stores the assets in segregated cold storage wallets, while a portion may be temporarily held in the Trading Balance with the Prime Broker for creation and redemption activities. Shares are created and redeemed only in Creation Units of 50,000 Shares or multiples thereof, exclusively through Authorized Participants such as Jane Street Capital, LLC, J. P. Morgan Securities LLC, Virtu Americas LLC, Citadel Securities LLC, and Goldman Sachs & Co. LLC. The Fund does not use leverage, derivatives, or engage in active trading of its ether holdings.

Franklin Ethereum Trust operates in the rapidly growing exchange-traded product (ETP) space focused on digital assets, competing with other ether-linked investment vehicles such as Grayscale Ethereum Trust (ETHE) and Bitwise Ethereum ETF (ETHW). Its competitive advantage lies in its low Sponsor fee of 0.19%, which is among the lowest in the industry for spot ether ETFs, and its structure as a grantor trust that avoids corporate-level taxation. The Fund benefits from the infrastructure and reputation of its Sponsor, Franklin Resources, Inc., a globally recognized investment management firm with significant scale and distribution capabilities. Unlike futures-based ether products, the Fund holds actual ether, providing direct exposure to spot price movements without roll yield or contango risks associated with futures contracts.

The Fund serves investors seeking exposure to ether through traditional brokerage accounts, including retail investors, financial advisors, and institutional investors who prefer regulated, exchange-traded vehicles over direct cryptocurrency ownership. Specific Authorized Participants that facilitate creation and redemption of Shares include Jane Street Capital, LLC, J. P. Morgan Securities LLC, Virtu Americas LLC, Citadel Securities LLC, and Goldman Sachs & Co. LLC. These entities act as intermediaries, enabling institutional and professional trading activity in the Fund’s Shares. The Shares are accessible to any investor with a brokerage account, allowing broad market participation without requiring knowledge of blockchain technology or cryptocurrency custody.