Franklin Templeton’s Ethereum ETF Gets Permission to Trade In-Kind Instead of Cash-Only

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• Franklin Ethereum Trust filed a post-effective amendment with the SEC on October 16, 2026, converting its registration statement from Form S-1 to the shelf-eligible Form S-3
• The amendment also gives the fund, ticker EZET, the ability to conduct in-kind creation and redemption transactions, rather than relying solely on cash
• The fund charges a sponsor’s fee of 0.19 percent per year of net asset value, accrued daily and paid quarterly, covering most of the trust’s ordinary operating expenses

Franklin Templeton’s spot Ethereum exchange-traded fund took a structural step forward on October 16, 2026, when Franklin Ethereum Trust filed a post-effective amendment to its SEC registration statement. The amendment converts the trust’s registration from Form S-1, the form typically used for a company’s or fund’s initial public registration, to Form S-3, a shorter shelf-registration form generally available only to issuers that already meet certain reporting history and market-value thresholds.

Alongside the form conversion, the amendment grants the fund the ability to conduct in-kind creation and redemption transactions. Previously, the fund operated on a cash-only basis, meaning authorized participants creating or redeeming shares had to exchange cash for fund shares rather than exchanging the underlying Ethereum itself. In-kind creation and redemption lets those authorized participants instead deliver or receive actual Ethereum directly, a mechanism that can reduce certain transaction costs and tax consequences compared with a purely cash-based structure, and one that several competing spot crypto ETFs have moved toward over time.

The fund itself, formally named the Franklin Ethereum ETF and trading under the ticker EZET on the Cboe BZX Exchange, charges a sponsor’s fee of 0.19 percent per year of net asset value, accrued daily and paid out to Franklin Templeton quarterly. In exchange for that fee, the sponsor covers most of the trust’s ordinary operating expenses, including costs tied to the fund’s administrator, custodian and trustee, exchange listing fees, fees owed to the Depository Trust Company, and up to $500,000 per year in legal expenses. The fund itself remains responsible for extraordinary expenses and for the transaction costs incurred whenever it buys or sells Ethereum, while authorized participants separately cover Ethereum network fees generated by their own create and redeem activity.

The trust operates under a Second Amended and Restated Declaration of Trust, a governing document executed on August 7, 2026, which lays out the legal framework under which the fund and its sponsor operate. Shifting to Form S-3 status does not register any new securities on its own; rather, it changes the mechanics of how future share issuances under the existing program can be registered and offered going forward, generally with less procedural friction than repeated S-1 filings would require.

The move represents more of an operational and structural upgrade for an already-launched product than a new product launch in itself, bringing Franklin Templeton’s Ethereum ETF in line with the in-kind mechanics that some of its larger competitors in the spot Bitcoin and Ethereum ETF categories already use. The amendment, filed with the SEC, did not disclose a specific date on which in-kind transactions would begin in practice.