United States securities and exchange commission logo
January 8, 2024
David Mann
President and Chief Executive Officer
Franklin Templeton Digital Holdings Trust
One Franklin Parkway
San Mateo, CA 94403
Re: Franklin Templeton
Digital Holdings Trust
Amendment No. 3 to
Registration Statement on Form S-1
Filed January 8,
2024
File No. 333-274474
Dear David Mann:
We have reviewed your amended registration statement and have the
following
comments.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe a comment applies to your
facts and circumstances
or do not believe an amendment is appropriate, please tell us why in
your response.
After reviewing any amendment to your registration statement and
the information you
provide in response to this letter, we may have additional comments.
Unless we note otherwise,
any references to prior comments are to comments in our January 5, 2024
letter.
Amendment No. 3 to Registration Statement on Form S-1
General
1. In order to meet your
anticipated timing, please respond to these comments and amend
your registration
statement no later than 10:00 a.m. (EST) on January 9, 2024.
2. Please revise your
disclosure to clarify whether and to what extent any of the Bitcoin
Trading Counterparties
are affiliated with or have any material relationships with any of
the Authorized
Participants.
Cover Page
3. Refer to your response
to comment 2. We continue to note that your registration
statement includes a
number of blanks or bracketed information. For example purposes
only, please revise
your disclosure on the cover page to disclose the amount of cash paid
David Mann
Franklin Templeton Digital Holdings Trust
January 8, 2024
Page 2
to the Seed Capital Investor for the redeemed Initial Seed Shares and
disclose the price per
Share of the Seed Creation Units and the aggregate price of the Seed
Creation Units. In
addition, the fact sheet attached as Exhibit A to your response letter
indicates that the
Sponsor Fee is 0.39% of the net asset value of the fund but your
prospectus indicates that
it is 0.29% of the net asset value of the fund. Please revise for
clarity and consistency.
Prospectus Summary
Key Service Providers - The Sponsor, Trustee, Custodians, Administrator,
Marketing Agent and
Trade Credit Lender, page 1
4. Refer to your response to comment 5 and your disclosure that "[t]he
Fund may borrow
bitcoin or cash as trade credit ('Trade Credit') from Coinbase Credit,
Inc. (the Trade
Credit Lender ) on a short-term basis pursuant to the Coinbase
Credit Post-Trade
Financing Agreement (the Trade Financing Agreement )." Please
revise your disclosure
on page 3 to clarify, if true, that, with the exception of the
transactions with the Trade
Credit Lender, neither the Fund, Sponsor, Prime Broker nor any other
entity is permitted
to loan, pledge, hypothecate or re-hypothecate any of the Fund's
assets.
The Offering
Forks, page 10
5. Refer to your response to comment 8. Please revise your disclosure on
pages 10, 20,
39 and throughout to clarify that with respect to any fork, airdrop or
similar event the
Sponsor will cause the Fund to irrevocably abandon the Incidental
Rights or IR Virtual
Currency, and, in the event that the Fund seeks to change this
position, an application
would need to be filed with the SEC by your listing exchange seeking
approval to amend
its listing rules.
Risk Factors, page 13
6. Please add risk factor disclosure addressing the risks related to your
Authorized
Participants acting in the same capacity for several competing
products.
Business of the Fund
Net Asset Value, page 57
7. Refer to your response to comment 10. We note that the five-step
methodology you
describe on page 58 differs from the five-step methodology described on
Lukka Prime's
website at
https://lukka.tech/fair-value-accounting-for-actively-traded-crypto-assets/.
Please advise or revise your disclosure as necessary. In addition,
please revise to clarify
what you mean by your disclosure regarding Step 1 that the executed
transaction from
eligible
FirstName exchanges areMann
LastNameDavid "consumed" by Lukka. Further, please disclose
how the Sponsor
will notify investors of any material adjustments to the Secondary
Index, including a
Comapany NameFranklin Templeton Digital Holdings Trust
change in methodology or a change in the exchanges, and disclose here
and in your risk
Januaryfactor
8, 2024
on Page 2 the date that the Secondary Index was first launched.
page 24
FirstName LastName
David Mann
FirstName LastNameDavid Mann
Franklin Templeton Digital Holdings Trust
Comapany
January NameFranklin Templeton Digital Holdings Trust
8, 2024
January
Page 3 8, 2024 Page 3
FirstName LastName
Description of the Shares and the Trust
Amendments to the Declaration of the Trust, page 68
8. Refer to your response to comment 13. Please tell us why you believe
that it is not
necessary to notify Shareholders of material changes to the
Declaration of Trust in a
Current Report on Form 8-K or revise your disclosure on page 68
accordingly.
Limitations of the Right to Bring Derivative Actions, page 68
9. Refer to your response to comment 13. Please revise your disclosure on
page 68 to
describe the Share ownership requirements to bring a derivative
action.
U.S. Federal Income Tax Consequences, page 88
10. Refer to your response to comment 20. Please revise to clearly state
that the disclosure in
this section is the opinion of Stradely, Ronon Stevens & Young LLP.
Please contact David Irving at 202-551-3321 or Robert Telewicz at
202-551-3438 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Sonia Bednarowski at 202-551-3666 or Sandra Hunter Berkheimer at
202-551-3758 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of Crypto
Assets
cc: Miranda L. Sturgis