Franklin Solana Trust

Franklin Solana Trust

Description

Franklin Solana Trust is a Delaware statutory trust formed on February 10, 2025 and governed by a Third Amended and Restated Agreement and Declaration of Trust. The Trust offers a single series, the Franklin Solana ETF (the Fund), which issues Shares traded on NYSE Arca under the symbol SOEZ.

Structure

• Organized as a Delaware statutory trust with the Fund as a series of the Trust.
• Inter‑Series Limitation on Liability: debts and liabilities of one series are enforceable only against that series’ assets.

Principal roles

• Sponsor: Franklin Holdings, LLC (affiliate of Franklin Resources, Inc.)
• Administrator / Transfer Agent: The Bank of New York Mellon (BNY Mellon) Asset Servicing
• Cash Custodian: The Bank of New York Mellon
• Solana Custodian: Coinbase Custody Trust Company, LLC
• Staking Provider: Coinbase Crypto
• Prime Broker: Coinbase
• Marketing Agent: Franklin Distributors, LLC
• Trustee: CSC Delaware Trust Company (subsidiary of Corporation Service Company)

Officers / Employees

• The Trust and the Fund have no officers, directors, or employees.

Website and disclosures

• Fund information is available on the Sponsor’s website; material disclosures are in SEC EDGAR filings and the prospectus.

Investment objective

• Seek to reflect the price of Solana and, to the extent practicable, staking rewards (up to 100% of the Fund’s Solana), before expenses and liabilities.
• The Sponsor determines, in its sole discretion, whether staking can be conducted in a manner that preserves the Fund’s status as a grantor trust for U.S. federal income tax purposes (the “Staking Requirement”).

Strategy and structure

• Passive, non-leveraged vehicle; does not use derivatives or leverage.
• Provides exposure to Solana through Shares rather than direct ownership of Solana by shareholders.
• Staking rewards are expected to be received in Solana and may be treated as ordinary income for U.S. federal tax purposes.
• The Fund is backed by Solana held by the Solana Custodian (Vault Balance) and cash.

Market / listing

• Shares are listed on NYSE Arca under the ticker SOEZ.

Investment structure and assets

Custody and safekeeping

• Coinbase Custody stores private keys in cold storage (Vault Balance) with segregated wallets.
• A Trading Balance may hold a portion of Solana and cash with the Prime Broker (Coinbase Prime) for creation/redemption activity and to pay fees and expenses, with on/off-chain transfers between Trading and Vault Balances.
• End-of-day sweeps move assets from the Trading Balance to the Vault Balance.

Stake and liquidity

• Staking Provider(s) stake the Fund’s Solana while the Fund retains control of its Solana.
• The Fund may unstake or adjust staking subject to activation/deactivation periods and liquidity constraints.
• The Fund may hold unstaked Solana to pay fees/expenses, liquidate staking rewards for cash, or facilitate creations/redemptions.

Prime Broker framework

• The Prime Broker holds Solana and cash on an omnibus basis for the Trading Balance; titles and custody arrangements are described in the fund documents.
• The Prime Broker can use Connected Trading Venues and other counterparties to execute trades; insolvency or service disruption could affect asset safety or liquidity.

Other protections and limitations

• The Sponsor bears many ordinary expenses; some fees and expenses remain the Fund’s responsibility.
• The Fund may incur Solana network fees and other transaction fees in connection with transfers, creations, or redemptions.
• The Fund holds only Solana and cash.

Fees, expenses, and distributions

Sponsor’s fee

• 0.19% per year of the Fund’s NAV (accrued daily, payable quarterly in USD).
• The Sponsor bears ordinary expenses (Administrator, Marketing Agent, Custodians, Trustee, listing fees, regulatory fees, audit, legal, etc.).

Waiver

• From the listing date (December 3, 2025) through May 31, 2026, the Sponsor waived the entire Sponsor’s Fee on the first $5.0 billion of the Fund’s assets.

Additional expenses

• Creation/redemption transaction costs (including Custody Transaction Costs and Solana Network fees) are borne by Authorized Participants (APs) for cash creations/redemptions; the Administrator reimburses Custody Transaction Costs to the Solana Custodian.
• Extraordinary or non-routine expenses can be allocated to the Fund; the Sponsor may elect to assume some such costs.
• Taxes and governmental charges related to transfer/creation/redemption processes are borne by the Fund.

Distributions

• The Sponsor intends to convert staking rewards to cash and distribute them to shareholders monthly, generally calculated on a three-month lagged basis.
• For U.S. federal tax purposes, staking rewards are treated as ordinary income to beneficiary owners.

Creation / decreation economics

• Creation Unit size: 50,000 Shares (continuous creation and redemption; in-kind or cash).
• Creation Unit Deposit Amounts and Creation Solana Amounts are NAV-based and CF Benchmarks Index-based; final amounts are set after NAV determination and settlement mechanics (typically T+1 for Solana delivery; cash settlement timing varies).
• Redemptions: 50,000 Shares per Creation Unit; cash redemptions typically settle T+3; in-kind redemptions settle with Solana delivery.

Creation / redemption and Authorized Participants

• Only Authorized Participants (registered broker-dealers with a contract with the Sponsor and Administrator) may create or redeem Creation Units.
• Authorized Participants (as of 3/31/2026): Jane Street Capital, LLC; Virtu Americas LLC; Macquarie Capital (USA) Inc.; J.P. Morgan Securities LLC. Additional APs may be added at the Sponsor’s discretion.
• Cash and in-kind creation options are available; cash creations may involve Solana trading with third-party Solana Trading Counterparties or through the Prime Broker.
• Redemptions can be cash or in-kind; unstaking may be required depending on redemption size.
• Disruptions at the Prime Broker or Solana Custodian could delay settlements or affect liquidity for creations/redemptions.

Taxation

• The Sponsor treats the Fund as a grantor trust for U.S. federal income tax purposes; beneficial owners are generally treated as owning pro rata shares of the Fund’s assets and income, with income passing through to them.
• Staking rewards are considered ordinary income for federal tax purposes; distributions may be made in cash and/or Solana.

Key risk factors

• Digital asset risk: high volatility in Solana and digital asset markets; potential for loss of value and dependence on Solana’s technology and ecosystem.
• Market / price risks: the Index may not perfectly track global Solana prices, which can cause tracking error.
• Operational / technology risk: dependency on multiple service providers (Custodian, Prime Broker, APs, Staking Providers); cybersecurity and system risks; potential delays due to network issues or outages.
• Counterparty risk: insolvency or failure of the Solana Custodian, Prime Broker, APs, or Staking Providers could affect safekeeping, settlement, and liquidity.
• Governance, forks and MEV: protocol upgrades or forks could create multiple assets or reduce liquidity; MEV may affect transaction costs and execution.
• Regulation and tax risk: digital asset regulatory uncertainty and potential changes in tax treatment of staking and crypto assets.
• Concentration risk: the Fund holds only Solana and cash; performance and NAV depend on Solana’s price and staking outcomes.
• Reinvestment and expense risk: Sponsor fee and the conversion of Solana to pay expenses can reduce NAV per share over time.
• Structural risk: the Fund is not registered under the Investment Company Act; protections under the Investment Company Act and certain commodity exchange protections do not apply.

Notable quantitative details

• Creation unit size: 50,000 Shares
• Exchange listing: NYSE Arca, ticker SOEZ
• Investment objective: track Solana price and staking rewards (up to 100%)
• Annual Sponsor’s fee: 0.19% of NAV (accrued daily, payable quarterly)
• Fee waiver: Dec 3, 2025–May 31, 2026 — Sponsor waived the Sponsor’s Fee on the first $5.0 billion of assets
• Distributions: staking rewards converted to cash and distributed monthly, generally on a three-month lag
• NAV calculation: each Business Day after 4:00 PM ET using the CF Benchmarks Solana‑Dollar Index (with a Fair Value Event option if the Index is unavailable)
• Authorized Participants (as of 3/31/2026): Jane Street Capital, Virtu Americas LLC, Macquarie Capital (USA) Inc., J.P. Morgan Securities LLC
• Selected service providers: Administrator/Transfer Agent (BNY Mellon), Solana Custodian (Coinbase Custody), Cash Custodian (BNY Mellon), Prime Broker (Coinbase), Staking Provider (Coinbase Crypto)
• Tax treatment: grantor trust; income passed through to beneficial owners

Practical observations

• The Fund is a specialized, single-asset, grantor-trust-backed vehicle designed to provide exposure to Solana with staking rewards rather than a diversified ETF.
• It operates with a network of crypto-native service providers and uses on-chain and off-chain processes for creations and redemptions.
• The Sponsor bears a substantial portion of ordinary costs while charging a formal 0.19% annual fee; certain expenses and transaction costs are borne by APs or the Fund under specified conditions.
• The Trust imposes limitations on shareholder rights typical of trust-based structures.