Franklin Templeton Digital Holdings Trust Liquidation Value

Franklin Templeton Digital Holdings Trust (EZBC) is a Delaware statutory trust operating as a single-series grantor trust holding bitcoin exclusively through its Franklin Bitcoin ETF series. The structure is pass-through for tax purposes and classified as an Investment Company under ASC 946 solely for accounting. Under a liquidation lens, the analysis is unusually clean: essentially all assets are a single Level 1 crypto asset, liabilities are minimal, and there are no PP&E, goodwill, operating leases, pension obligations, or intangibles to haircut or preserve at face value.

As of December 31, 2025, the Fund held 5,727.6529 BTC with a GAAP fair value of $500,957,877 at a principal market price of approximately $87,463 per BTC. Cost basis was $426,448,438, implying an embedded unrealized gain of approximately $74.5M. Under a liquidation scenario, the sole question is the realized value of bitcoin on forced sale. The filing classifies bitcoin as Level 1 (unadjusted quoted prices in active markets), which supports a narrow bid/ask discount; however, forced liquidation of approximately 5,728 BTC in a single event could move the market and compress realized proceeds below mark. That said, applying even a 5-10% liquidity haircut to $501M would still leave substantial positive net equity.

Total liabilities at period end were $5,134,151, consisting primarily of $83,286 in management fee payable and $5,050,812 in receivable for investment sale (a settlement item on the asset side, not a liability offset issue). Net assets per the financial statements were $500,874,538. The sole ongoing obligation is the Sponsor's fee at 0.19% annualized, payable in cash via bitcoin sales. No waiver was in effect for the current period; the prior fee waiver (0.00% through August 2, 2024) has fully lapsed.

QoQ comparison: Net assets declined from $661,050,465 at September 30, 2025 to $500,874,538 at December 31, 2025, a decrease of approximately $160M, driven entirely by the 23.43% decline in bitcoin price from $114,223 to $87,463. Share count decreased from 10,000,000 to 9,900,000, reflecting net redemption of 100,000 shares during the quarter. The nine-month period April 1 to December 31, 2025 shows net assets increased from $410,857,343 to $500,874,538 despite bitcoin price volatility, reflecting net positive capital flows of $90.7M from share issuances exceeding redemptions (2,950,000 shares issued vs. 1,600,000 redeemed).

The liability stack is de minimis. There are no debt obligations, operating lease commitments, pension liabilities, deferred revenue, or production commitments. The trust has no off-balance sheet arrangements per management's disclosure. Recovery to equity under any plausible liquidation scenario is strongly positive and essentially tracks bitcoin's liquidation value minus the $5.1M in total liabilities at face value. The MFFAIS CLV/LLV/OLV values of zero appear to reflect the product-specific nature of this entity rather than a genuine nil recovery assessment.