Franklin Bitcoin ETF (EZBC) Annual Report Summary
Key Financial Metrics: - As of March 31, 2025, the Fund held 4,956.35 bitcoins, valued at $411.2 million, up from 4,842.99 bitcoins ($341.9 million) a year earlier. - Net assets at fiscal year-end were $410.9 million, up from $341.9 million at March 31, 2024. - NAV per share grew to $48.05 from $40.95. - For fiscal year 2025, the Fund had net realized and unrealized gains on bitcoin of $109.9 million, offset by a modest net investment loss of $720,559 (primarily the Sponsor’s fee). - Total return at NAV for the year ended March 31, 2025, was 17.34%. - The Fund’s ordinary recurring expense is a Sponsor fee at 0.19% per annum of NAV. For FY25, this amounted to $965,680 (with some waiver applied). - No off-balance sheet arrangements and no cash held; the Fund invests solely in bitcoin.
Management Discussion: - The ETF passively tracks the price of bitcoin, with no active management or strategy changes during the year. - Fund shares are issued/redeemed in blocks of 50,000 through Authorized Participants, exclusively in cash. - Administrative and security responsibilities are given to reputable service providers: BNY Mellon (administrator), Coinbase Custody Trust (bitcoin custodian), and Coinbase Inc. (prime broker). - The Fund reflects only the price movements of bitcoin, minus fees and minor operational costs. - Liquidity events (such as public health emergencies) have not materially affected fund operations or liquidity to date. - The Fund had substantial share creation/redemption activity: 7.85 million shares created and 7.65 million redeemed during the year.
Principal Risks: - Extreme volatility of bitcoin can lead to significant fluctuations in NAV and share price. - Regulatory uncertainty in the U.S. and abroad could introduce restrictions, increased compliance costs, or adverse rulings (particularly if bitcoin is designated a security). - Concentration risk: The Fund holds only bitcoin, offering no diversification. - Operational risk: Security breaches of custodial accounts, service provider failures, or blockchain events (such as forks or air-drops) could disrupt operations and reduce asset value. - No insurance coverage by FDIC or SIPC for digital assets. Liability of the Bitcoin Custodian and Prime Broker is contractually limited. - The Fund must sell bitcoin to pay its fees/expenses, gradually reducing the amount of bitcoin underlying each share. - Competition from other bitcoin ETFs, direct holdings, and alternative digital assets could impact market share and trading liquidity.
Additional Notes: - The Trust qualifies as an "emerging growth company," utilizing reduced disclosure requirements and some exemptions from Sarbanes-Oxley oversight. - Shares trade on the Cboe BZX Exchange under the symbol EZBC. - No material legal proceedings or cybersecurity breaches affected the Trust in the reporting period. - All Sponsor, custodian, and administrative relationships are arms-length, though Coinbase Global acts as both the bitcoin custodian and prime broker (potential conflict risk). - Sponsor fees are the only recurring expense; extraordinary/unusual expenses would be paid from fund assets and could negatively impact returns.
For investors, Franklin Bitcoin ETF offers regulated, low-cost, passive exposure to the price movements of bitcoin, but entails all associated digital asset and market structure risks.
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