Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 30, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Document Period End Date | Mar. 31, 2024 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Registrant Name | Grayscale Ethereum Trust (ETH) | |
Entity Central Index Key | 0001725210 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 310,158,500 | |
Entity Shell Company | false | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity File Number | 000-56193 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-6677805 | |
Entity Address, Address Line One | c/o Grayscale Investments, LLC | |
Entity Address, Address Line Two | 290 Harbor Drive, 4th Floor | |
Trading Symbol | ETHE | |
City Area Code | 212 | |
Local Phone Number | 668-1427 | |
Entity Address, City or Town | Stamford | |
Entity Address, Postal Zip Code | 06902 | |
Entity Address, State or Province | CT | |
Title of 12(g) Security | Grayscale Ethereum Trust (ETH) Shares |
STATEMENTS OF ASSETS AND LIABIL
STATEMENTS OF ASSETS AND LIABILITIES - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets: | ||
Investment in Ether, at fair value (cost $1,237,033 and $1,244,746 as of March 31, 2024 and December 31, 2023, respectively) | $ 10,711,110 | $ 6,758,054 |
Total assets | 10,711,110 | 6,758,054 |
Liabilities: | ||
Sponsor's Fee payable, related party | 0 | 0 |
Total liabilities | 0 | 0 |
Net assets | 10,711,110 | 6,758,054 |
Net Assets consists of: | ||
Paid-in-capital | 1,353,419 | 1,353,419 |
Accumulated net investment loss | (575,156) | (521,663) |
Accumulated net realized gain on investment in Ether | 458,770 | 412,990 |
Accumulated net change in unrealized appreciation on investment in Ether | 9,474,077 | 5,513,308 |
Net assets | $ 10,711,110 | $ 6,758,054 |
Shares issued and outstanding, no par value (unlimited Shares authorized) | 310,158,500 | 310,158,500 |
Principal market net asset value per Share | $ 34.53 | $ 21.79 |
STATEMENTS OF ASSETS AND LIAB_2
STATEMENTS OF ASSETS AND LIABILITIES (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Cost of investment in Ether, at fair value | $ 1,237,033 | $ 1,244,746 |
SCHEDULES OF INVESTMENT
SCHEDULES OF INVESTMENT $ in Thousands | Mar. 31, 2024 USD ($) Ethereum | Dec. 31, 2023 USD ($) Ethereum |
Schedule Of Investments [Line Items] | ||
Cost | $ 1,237,033 | $ 1,244,746 |
Fair Value | $ 10,711,110 | $ 6,758,054 |
% of Net Assets | 100% | 100% |
Investment in Ether | ||
Schedule Of Investments [Line Items] | ||
Quantity of Ethereum | Ethereum | 2,944,270.73954244 | 2,962,629.5014994 |
Cost | $ 1,237,033 | $ 1,244,746 |
Fair Value | $ 10,711,110 | $ 6,758,054 |
% of Net Assets | 100% | 100% |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Investment income: | ||
Investment income | $ 0 | $ 0 |
Expenses: | ||
Sponsor's Fee, related party | 53,493 | 29,638 |
Net investment loss | (53,493) | (29,638) |
Net realized and unrealized gain from: | ||
Net realized gain on investment in Ether | 45,780 | 21,794 |
Net change in unrealized appreciation on investment in Ether | 3,960,769 | 1,880,269 |
Net realized and unrealized gain on investment | 4,006,549 | 1,902,063 |
Net increase in net assets resulting from operations | $ 3,953,056 | $ 1,872,425 |
STATEMENTS OF CHANGES IN NET AS
STATEMENTS OF CHANGES IN NET ASSETS - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Increase in net assets from operations: | |||
Net investment loss | $ (53,493,000) | $ (29,638,000) | |
Net realized gain on investment in Ether | 45,780,000 | 21,794,000 | $ 102,973,000 |
Net change in unrealized appreciation on investment in Ether | 3,960,769,000 | 1,880,269,000 | 3,140,367,000 |
Net increase in net assets resulting from operations | 3,953,056,000 | 1,872,425,000 | |
Increase in net assets from capital share transactions: | |||
Shares issued | 0 | 0 | |
Net increase in net assets resulting from capital share transactions | 0 | 0 | |
Total increase in net assets from operations and capital share transactions | 3,953,056,000 | 1,872,425,000 | |
Net assets: | |||
Beginning of period | 6,758,054,000 | 3,649,198,000 | 3,649,198,000 |
End of period | $ 10,711,110,000 | $ 5,521,623,000 | $ 6,758,054,000 |
Change in Shares outstanding | |||
Shares outstanding at beginning of period | 310,158,500 | 310,158,500 | 310,158,500 |
Shares issued | 0 | 0 | |
Net increase in Shares | 0 | 0 | |
Shares outstanding at end of period | 310,158,500 | 310,158,500 | 310,158,500 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Organization
Organization | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 1. Organization Grayscale Ethereum Trust (ETH) (the “Trust”) is a Delaware Statutory Trust that was formed on December 13, 2017 and commenced operations on December 14, 2017. In general, the Trust holds Ethereum (“Ether”) and, from time to time, issues common units of fractional undivided beneficial interest (“Shares”) (in minimum baskets of 100 Shares, referred to as “Baskets”) in exchange for Ether. The redemption of Shares is not currently contemplated and the Trust does not currently operate a redemption program. Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. The Trust has not sought such relief as of the date of this Quarterly Report. The Trust’s investment objective is for the value of the Shares (based on Ether per Share) to reflect the value of Ether held by the Trust, less the Trust’s expenses and other liabilities. The Trust may also receive Incidental Rights and/or IR Virtual Currency as a result of the Trust’s investment in Ether, in accordance with the terms of the Trust Agreement. Incidental Rights are rights to claim, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust’s ownership of Ether and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust; IR Virtual Currency is any virtual currency tokens, or other asset or right, received by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right. Grayscale Investments, LLC (“Grayscale” or the “Sponsor”) acts as the Sponsor of the Trust and is a wholly owned subsidiary of Digital Currency Group, Inc. (“DCG”). The Sponsor is responsible for the day-to-day 19b-4 Authorized Participants of the Trust are the only entities who may place orders to create or, if permitted, redeem Baskets. Grayscale Securities, LLC (“Grayscale Securities” or, in such capacity, an “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary of the Sponsor, is the only Authorized Participant, and is party to a participant agreement with the Sponsor and the Trust. Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor. Liquidity Providers who are unaffiliated with the Trust may be engaged from time to time and at any time. The custodian of the Trust is Coinbase Custody Trust Company, LLC (the “Custodian”), a third-party service provider. The Custodian is responsible for safeguarding the Ether, Incidental Rights, and IR Virtual Currency held by the Trust, and holding the private key(s) that provide access to the Trust’s digital wallets and vaults. The transfer agent for the Trust (the “Transfer Agent”) is Continental Stock Transfer & Trust Company. The responsibilities of the Transfer Agent are to maintain creations, redemptions, transfers, and distributions of the Trust’s Shares which are primarily held in book-entry form. The administrator for the Trust (the “Administrator”) is BNY Mellon Asset Servicing, a division of The Bank of New York Mellon. BNY Mellon Asset Servicing provides administration and accounting services to the Trust. The Administrator’s fees are paid on behalf of the Trust by the Sponsor. On May 23, 2019, the Trust received notice that its Shares were qualified for public trading on the OTCQX U.S. Marketplace of the OTC Markets Group Inc. (“OTCQX”). The Trust’s trading symbol on OTCQX is “ETHE” and the CUSIP number for its Shares is 389638107. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies In the opinion of management of the Sponsor of the Trust, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2024 and December 31, 2023 and results of operations for the three months ended March 31, 2024 and 2023 have been made. The results of operations for the periods presented are not necessarily indicative of the results of operations expected for the full year. These unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2023 included in the Trust’s Annual Report on Form 10-K. The following is a summary of significant accounting policies followed by the Trust: The financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Trust qualifies as an investment company for accounting purposes pursuant to the accounting and reporting guidance under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies. The Trust uses fair value as its method of accounting for Ether in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment company under the Investment Company Act of 1940. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material. The Trust conducts its transactions in Ether, including receiving Ether for the creation of Shares and delivering Ether for the redemption of Shares and for the payment of the Sponsor’s Fee. At this time, the Trust is not accepting redemption requests from shareholders. Since its inception, the Trust has not held cash or cash equivalents. Principal Market and Fair Value Determination To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s net asset value in accordance with U.S. GAAP (“Principal Market NAV”), the Trust follows ASC 820-10, 820-10 820-10 The Trust only receives Ether in connection with a creation order from the Authorized Participant (or a Liquidity Provider) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. The Authorized Participant(s), or a Liquidity Provider, may transact in a Brokered Market, a Dealer Market, Principal-to-Principal In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order: First, the Trust reviews a list of Digital Asset Markets that maintain practices and policies designed to comply with anti-money laundering (“AML”) and know-your-customer (“KYC”) regulations, and non-Digital Second, the Trust sorts these Digital Asset Markets from high to low by market-based volume and level of activity of Ether traded on each Digital Asset Market in the trailing twelve months. Third, the Trust then reviews pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market. Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Trading Platform Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Trading Platform Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market. The cost basis of Ether received in connection with a creation order is recorded by the Trust at the fair value of Ether at 4:00 p.m., New York time, on the creation date for financial reporting purposes. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors. Investment Transactions and Revenue Recognition The Trust considers investment transactions to be the receipt of Ether for Share creations and the delivery of Ether for Share redemptions or for payment of expenses in Ether. At this time, the Trust is not accepting redemption requests from shareholders. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in Ether. Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the ‘exit price’) in an orderly transaction between market participants at the measurement date. GAAP utilizes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs reflect the Trust’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: • Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, these valuations do not entail a significant degree of judgment. • Level 2 – Valuations based on quoted prices in markets that are not active or for which significant inputs are observable, either directly or indirectly. • Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of valuation techniques and observable inputs can vary by investment. To the extent that valuations are based on sources that are less observable or unobservable in the market, the determination of fair value requires more judgment. Fair value estimates do not necessarily represent the amounts that may be ultimately realized by the Trust. Fair Value Measurement Using (Amounts in thousands) Amount at Fair Level 1 Level 2 Level 3 March 31, 2024 Assets Investment in Ether $ 10,711,110 $ 10,711,110 $ — $ — Fair Value Measurement Using (Amounts in thousands) Amount at Fair Level 1 Level 2 Level 3 December 31, 2023 Assets Investment in Ether $ 6,758,054 $ 6,758,054 $ — $ — Recently Issued Accounting Pronouncements In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): 2023-08”). 2023-08 2023-08 is permitted for both interim and ann ua |
Fair Value of Ether
Fair Value of Ether | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Ether | 3. Fair Value of Ether Ether is held by the Custodian on behalf of the Trust and is carried at fair value. As of March 31, 2024 and December 31, 2023 the Trust held 2,944,270.73954244 2,962,629.50149940 The Trust determined the fair value per Ether to be $ 3,637.95 2,281.10 The following represents the changes in quantity of Ether and the respective fair value (Amounts in thousands, except Ether amounts) Quantity Fair Value Beginning balance as of January 1, 2023 3,037,631.42522860 $ 3,649,198 Ether contributed — — Ether distributed for Sponsor’s Fee, related party (75,001.92372920 ) (134,484 ) Net change in unrealized appreciation on investment in Ether — 3,140,367 Net realized gain on investment in Ether — 102,973 Ending balance as of December 31, 2023 2,962,629.50149940 $ 6,758,054 (Amounts in thousands, except Ether amounts) Quantity Fair Value Beginning balance as of January 1, 2024 2,962,629.50149940 $ 6,758,054 Ether contributed — — Ether distributed for Sponsor’s Fee, related party (18,358.76195696 ) (53,493 ) Net change in unrealized appreciation on investment in Ether — 3,960,769 Net realized gain on investment in Ether — 45,780 Ending balance as of March 31, 2024 2,944,270.73954244 $ 10,711,110 |
Creations and Redemptions of Sh
Creations and Redemptions of Shares | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Creations and Redemptions of Shares | 4 At March 31, 2024 and December 31, 2023, there were an unlimited number of Shares authorized by the Trust. The Trust creates (and, should the Trust commence a redemption program, redeems) Shares from time to time, but only in one or more Baskets. The creation and redemption of Baskets on behalf of investors are made by the Authorized Participant in exchange for the delivery of Ether to the Trust or the distribution of Ether by the Trust. The amount of Ether required for each creation Basket or redemption Basket is determined by dividing (x) the amount of Ether owned by the Trust at 4:00 p.m., New York time, on such trade date of a creation or redemption order, after deducting the amount of Ether representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust, by (y) the number of Shares outstanding at such time and multiplying the quotient obtained by 100. Each Share represented approximately 0.0095 and 0.0096 of one Ether at March 31, 2024 and December 31, 2023, respectively. The decrease in the The cost basis of investments in Ether recorded by the Trust is the fair value of Ether, as determined by the Trust, at 4:00 p.m., New York time, on the date of transfer to the Trust by the Authorized Participant, or Liquidity Provider, based on the creation Baskets. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of each Share to investors. The Authorized Participant or Liquidity Provider may realize significant profits buying, selling, creating, and, if permitted, redeeming Shares as a result of changes in the value of Shares or Ether. At this time, the Trust is not operating a redemption program and is not accepting redemption requests. Subject to receipt of regulatory approval and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. On October 2, 2023, NYSE Arca filed an application with the SEC pursuant to Rule 19b-4 19b-4 and |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. Income Taxes The Sponsor takes the position that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes. Assuming that the Trust is a grantor trust, the Trust will not be subject to U.S. federal income tax. Rather, if the Trust is a grantor trust, each beneficial owner of Shares will be treated as directly owning its pro rata Share of the Trust’s assets and a pro rata portion of the Trust’s income, gain, losses and deductions will “flow through” to each beneficial owner of Shares. If the Trust were not properly classified as a grantor trust, the Trust might be classified as a partnership for U.S. federal income tax purposes. However, due to the uncertain treatment of digital assets, including forks, airdrops and similar occurrences for U.S. federal income tax purposes, there can be no assurance in this regard. If the Trust were classified as a partnership for U.S. federal income tax purposes, the tax consequences of owning Shares generally would not be materially different from the tax consequences described herein, although there might be certain differences, including with respect to timing. In addition, tax information reports provided to beneficial owners of Shares would be made in a different form. If the Trust were not classified as either a grantor trust or a partnership for U.S. federal income tax purposes, it would be classified as a corporation for such purposes. In that event, the Trust would be subject to entity-level U.S. federal income tax (currently at the rate of on its net taxable income and certain distributions made by the Trust to shareholders would be treated as taxable dividends to the extent of the Trust’s current and accumulated earnings and profits. In accordance with GAAP, the Trust has defined the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” “more-likely-than-not” “more-likely-than-not” “more-likely-than-not” The Sponsor of the Trust has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions related to federal, state and local income taxes existed as of March 31, 2024 or December 31, 2023. |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Parties | 6 The Trust considered the following entities, their directors, and certain employees to be related parties of the Trust as of March 31, 2024: DCG, Genesis, Grayscale and Grayscale Securities. As of March 31, 2024 and December 31, 2023, 7,158 and 12,277 Shares of the Trust were held by related parties of the Trust, respectively. The Sponsor’s parent, an affiliate of the Trust, holds a minority interest in Coinbase, Inc., the parent company of the Custodian, that represents less than 1.0% of Coinbase, Inc.’s ownership. In accordance with the Trust Agreement governing the Trust, the Trust pays a fee to the Sponsor, calculated as 2.5% of the aggregate value of the Trust’s assets, less its liabilities (which include any accrued but unpaid expenses up to, but excluding, the date of calculation), as calculated and published by the Sponsor or its delegates in the manner set forth in the Trust Agreement (the “Sponsor’s Fee”). The Sponsor’s Fee accrues daily in U.S. dollars and is payable in Ether, monthly in arrears. The amount of Ether payable in respect of each daily U.S. dollar accrual will be determined by reference to the same U.S. dollar value of Ether used to determine such accrual. For purposes of these financial statements, the U.S. dollar value of Ether is determined by reference to the Digital Asset Trading Platform Market that the Trust considers its principal market as of 4:00 p.m., New York time, on each valuation date. The Trust held no Incidental Rights or IR Virtual Currency as of March 31, 2024 and December 31, 2023. No Incidental Rights or IR Virtual Currencies have been distributed in payment of the Sponsor’s Fee during the three months ended March 31, 2024 and 2023. As partial consideration for receipt of the Sponsor’s Fee, the Sponsor is obligated under the Trust Agreement to assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including marketing fees; administrator fees, if any; custodian fees; transfer agent fees; trustee fees; the fees and expenses related to the listing, quotation or trading of the Shares on any secondary market (including customary legal, marketing and audit fees and expenses) in an amount up to $600,000 in any given fiscal year; ordinary course legal fees and expenses; audit fees; regulatory fees, including, if applicable, any fees relating to the registration of the Shares under the Securities Act or the Exchange Act; printing and mailing costs; the costs of maintaining the Trust’s website and applicable license fees (together, the “Sponsor-paid Expenses”), provided that any expense that qualifies as an Additional Trust Expense will be deemed to be an Additional Trust Expense and not a Sponsor-paid Expense. The Trust may incur certain extraordinary, non-recurring For the three months ended March 31, 2024 and 2023, the Trust incurred Sponsor’s Fees of $53,493,406 and $29,637,542, respectively. As of March 31, 2024 and December 31, 2023, there were no accrued and unpaid Sponsor’s Fees. In addition, the Sponsor may pay Additional Trust Expenses on behalf of the Trust, which are reimbursable by the Trust to the Sponsor. For the three months ended March 31, 2024 and 2023, the Sponsor did not pay any Additional Trust Expenses on behalf of the Trust. On March 2, 2022, the Board of the Sponsor (the “Board”) approved the purchase by DCG, the parent company of the Sponsor, of up to an aggregate total of $200 million worth of Shares of the Trust and shares of any of the following five investment products the Sponsor also acts as the sponsor and manager of, including Grayscale Bitcoin Trust (BTC) (NYSE Arca: GBTC), Grayscale Bitcoin Cash Trust (BCH) (OTCQX: BCHG), Grayscale Digital Large Cap Fund LLC (OTCQX: GDLC), Grayscale Ethereum Classic Trust (ETC) (OTCQX: ETCG), and Grayscale Stellar Lumens Trust (XLM) (OTCQX: GXLM). Subsequently, DCG authorized such purchase. The Share purchase authorization does not obligate DCG to acquire any specific number of Shares in any period, and may be expanded, extended, modified, or discontinued at any time. From March 2, 2022 through March 31, 2024, DCG had not purchased any Shares of the Trust under this authorization. |
Risks and Uncertainties
Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2024 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | 7 The Trust is subject to various risks including market risk, liquidity risk, and other risks related to its concentration in a single asset, Ether. Investing in Ether is currently highly speculative and volatile. The Principal Market NAV of the Trust, calculated by reference to the principal market price in accordance with U.S. GAAP, relates primarily to the value of Ether held by the Trust, and fluctuations in the price of Ether could materially and adversely affect an investment in the Shares of the Trust. The price of Ether has a limited history. During such history, Ether prices have been volatile and subject to influence by many factors, including the levels of liquidity. If the Digital Asset Markets continue to experience significant price fluctuations, the Trust may experience losses. Several factors may affect the price of Ether, including, but not limited to, global Ether supply and demand, theft of Ether from global trading platforms or vaults, competition from other forms of digital currency or payment services, global or regional political, economic or financial conditions, and other unforeseen events and situations. The Ether held by the Trust are commingled, and the Trust’s shareholders have no specific rights to any specific Ether. In the event of the insolvency of the Trust, its assets may be inadequate to satisfy a claim by its shareholders. There is currently no clearing house for Ether, nor is there a central or major depository for the custody of Ether. There is a risk that some or all of the Trust’s Ether could be lost or stolen. There can be no assurance that the Custodian will maintain adequate insurance or that such coverage will cover losses with respect to the Trust’s Ether. Further, transactions in Ether are irrevocable. Stolen or incorrectly transferred Ether may be irretrievable. As a result, any incorrectly executed Ether transactions could adversely affect an investment in the Shares. The SEC has stated that certain digital assets may be considered “securities” under the federal securities laws. The test for determining whether a particular digital asset is a “security” is complex and difficult to apply, and the outcome is difficult to predict. Public, though non-binding, no-action If Ether is determined to be a “security” under federal or state securities laws by the SEC or any other agency, or in a proceeding in a court of law or otherwise, it may have material adverse consequences for Ether. For example, it may become more difficult for Ether to be traded, cleared and custodied as compared to other digital assets that are not considered to be securities, which could, in turn, negatively affect the liquidity and general acceptance of Ether and cause users to migrate to other digital assets. As such, any determination that Ether is a security under federal or state securities laws may adversely affect the value of Ether and, as a result, an investment in the Shares. In addition, if Ether is in fact a security, the Trust could be considered an unregistered “investment company” under the Investment Company Act of 1940, which could necessitate the Trust’s liquidation. In this case, the Trust and the Sponsor may be deemed to have participated in an illegal offering of securities and there is no guarantee that the Sponsor will be able to register the Trust under the Investment Company Act of 1940 at such time or take such other actions as may be necessary to ensure the Trust’s activities comply with applicable law, which could force the Sponsor to liquidate the Trust. To the extent a private key required to access an Ether address is lost, destroyed or otherwise compromised and no backup of the private keys are accessible, the Trust may be unable to access the Ether controlled by the private key and the private key will not be capable of being restored by the Ethereum Network. The processes by which Ether transactions are settled are dependent on the Ethereum peer-to-peer The Trust relies on third-party service providers to perform certain functions essential to its operations. Any disruptions to the Trust’s service providers’ business operations resulting from business failures, financial instability, security failures, government mandated regulation or operational problems could have an adverse impact on the Trust’s ability to access critical services and be disruptive to the operations of the Trust. The Sponsor and the Trust may be subject to various litigation, regulatory investigations, and other legal proceedings that arise in the ordinary course of its business. |
Financial Highlights Per Share
Financial Highlights Per Share Performance | 3 Months Ended |
Mar. 31, 2024 | |
Investment Company, Financial Highlights [Abstract] | |
Financial Highlights Per Share Performance | 8 Three Months Ended 2024 2023 Per Share Data Principal market net asset value, beginning of period $ 21.79 $ 11.77 Net increase in net assets from investment operations: Net investment loss (0.17 ) (0.10 ) Net realized and unrealized gain 12.91 6.13 Net increase in net assets resulting from operations 12.74 6.03 Principal market net asset value, end of period $ 34.53 $ 17.80 Total return 58.47 % 51.23 % Ratios to average net assets: Net investment loss -2.50 % -2.50 % Expenses -2.50 % -2.50 % Ratios of net investment loss and expenses to average net assets have been annualized. An individual shareholder’s return, ratios, and per Share performance may vary from those presented above based on the timing of Share transactions. The amount shown for a Share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the number of Shares issued in Creations occurring at an operational value derived from an operating metric as defined in the Trust Agreement. Total return is calculated assuming an initial investment made at the Principal Market NAV at the beginning of the period and assuming redemption on the last day of the period. |
Indemnifications
Indemnifications | 3 Months Ended |
Mar. 31, 2024 | |
Indemnifications Disclosure [Abstract] | |
Indemnifications | 9 In the normal course of business, the Trust enters into certain contracts that provide a |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | 1 0 As of the close of business on April 30, 2024, the fair value of Ether determined in accordance with the Trust’s accounting policy was $2,923.79 per Ether. There are no known events that have occurred that require disclosure other than that which has already been disclosed in these notes to the financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Principal Market and Fair Value Determination | Principal Market and Fair Value Determination To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s net asset value in accordance with U.S. GAAP (“Principal Market NAV”), the Trust follows ASC 820-10, 820-10 820-10 The Trust only receives Ether in connection with a creation order from the Authorized Participant (or a Liquidity Provider) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. The Authorized Participant(s), or a Liquidity Provider, may transact in a Brokered Market, a Dealer Market, Principal-to-Principal In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order: First, the Trust reviews a list of Digital Asset Markets that maintain practices and policies designed to comply with anti-money laundering (“AML”) and know-your-customer (“KYC”) regulations, and non-Digital Second, the Trust sorts these Digital Asset Markets from high to low by market-based volume and level of activity of Ether traded on each Digital Asset Market in the trailing twelve months. Third, the Trust then reviews pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market. Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Trading Platform Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Trading Platform Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market. The cost basis of Ether received in connection with a creation order is recorded by the Trust at the fair value of Ether at 4:00 p.m., New York time, on the creation date for financial reporting purposes. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors. |
Investment Transactions and Revenue Recognition | Investment Transactions and Revenue Recognition The Trust considers investment transactions to be the receipt of Ether for Share creations and the delivery of Ether for Share redemptions or for payment of expenses in Ether. At this time, the Trust is not accepting redemption requests from shareholders. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in Ether. |
Fair Value Measurement | Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the ‘exit price’) in an orderly transaction between market participants at the measurement date. GAAP utilizes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs reflect the Trust’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: • Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, these valuations do not entail a significant degree of judgment. • Level 2 – Valuations based on quoted prices in markets that are not active or for which significant inputs are observable, either directly or indirectly. • Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The availability of valuation techniques and observable inputs can vary by investment. To the extent that valuations are based on sources that are less observable or unobservable in the market, the determination of fair value requires more judgment. Fair value estimates do not necessarily represent the amounts that may be ultimately realized by the Trust. Fair Value Measurement Using (Amounts in thousands) Amount at Fair Level 1 Level 2 Level 3 March 31, 2024 Assets Investment in Ether $ 10,711,110 $ 10,711,110 $ — $ — Fair Value Measurement Using (Amounts in thousands) Amount at Fair Level 1 Level 2 Level 3 December 31, 2023 Assets Investment in Ether $ 6,758,054 $ 6,758,054 $ — $ — |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): 2023-08”). 2023-08 2023-08 is permitted for both interim and ann ua |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Fair Value Estimates | Fair value estimates do not necessarily represent the amounts that may be ultimately realized by the Trust. Fair Value Measurement Using (Amounts in thousands) Amount at Fair Level 1 Level 2 Level 3 March 31, 2024 Assets Investment in Ether $ 10,711,110 $ 10,711,110 $ — $ — Fair Value Measurement Using (Amounts in thousands) Amount at Fair Level 1 Level 2 Level 3 December 31, 2023 Assets Investment in Ether $ 6,758,054 $ 6,758,054 $ — $ — |
Fair Value of Ether (Tables)
Fair Value of Ether (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Changes in Quantity of Ether and Respective Fair Value | The following represents the changes in quantity of Ether and the respective fair value (Amounts in thousands, except Ether amounts) Quantity Fair Value Beginning balance as of January 1, 2023 3,037,631.42522860 $ 3,649,198 Ether contributed — — Ether distributed for Sponsor’s Fee, related party (75,001.92372920 ) (134,484 ) Net change in unrealized appreciation on investment in Ether — 3,140,367 Net realized gain on investment in Ether — 102,973 Ending balance as of December 31, 2023 2,962,629.50149940 $ 6,758,054 (Amounts in thousands, except Ether amounts) Quantity Fair Value Beginning balance as of January 1, 2024 2,962,629.50149940 $ 6,758,054 Ether contributed — — Ether distributed for Sponsor’s Fee, related party (18,358.76195696 ) (53,493 ) Net change in unrealized appreciation on investment in Ether — 3,960,769 Net realized gain on investment in Ether — 45,780 Ending balance as of March 31, 2024 2,944,270.73954244 $ 10,711,110 |
Financial Highlights Per Shar_2
Financial Highlights Per Share Performance (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Investment Company, Financial Highlights [Abstract] | |
Summary of Per Share Data | Three Months Ended 2024 2023 Per Share Data Principal market net asset value, beginning of period $ 21.79 $ 11.77 Net increase in net assets from investment operations: Net investment loss (0.17 ) (0.10 ) Net realized and unrealized gain 12.91 6.13 Net increase in net assets resulting from operations 12.74 6.03 Principal market net asset value, end of period $ 34.53 $ 17.80 Total return 58.47 % 51.23 % Ratios to average net assets: Net investment loss -2.50 % -2.50 % Expenses -2.50 % -2.50 % |
Organization - Additional Infor
Organization - Additional Information (Details) | Mar. 31, 2024 shares |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Common units issued, minimum basket | 100 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary of Fair Value Estimates (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
Assets | |||
Investment in Ether | $ 10,711,110 | $ 6,758,054 | $ 3,649,198 |
Level 1 | |||
Assets | |||
Investment in Ether | 10,711,110 | 6,758,054 | |
Level 2 | |||
Assets | |||
Investment in Ether | 0 | 0 | |
Level 3 | |||
Assets | |||
Investment in Ether | $ 0 | $ 0 |
Fair Value of Ether - Additiona
Fair Value of Ether - Additional Information (Details) | Mar. 31, 2024 Ethereum $ / shares | Dec. 31, 2023 Ethereum $ / shares |
Fair Value Disclosures [Abstract] | ||
Investment owned balance shares held by custodian | Ethereum | 2,944,270.73954244 | 2,962,629.5014994 |
Ether Fair value per share | $ / shares | $ 3,637.95 | $ 2,281.1 |
Fair Value of Ether - Changes i
Fair Value of Ether - Changes in Quantity of Ether and Respective Fair Value (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 USD ($) Ethereum | Mar. 31, 2023 USD ($) Ethereum | Dec. 31, 2023 USD ($) Ethereum | |
Fair Value Disclosures [Abstract] | |||
Beginning balance, Quantity | Ethereum | 2,962,629.5014994 | 3,037,631.4252286 | 3,037,631.4252286 |
Ether contributed, Quantity | Ethereum | 0 | 0 | |
Ether distributed for Sponsor's Fee, related party, Quantity | Ethereum | (18,358.76195696) | (75,001.9237292) | |
Net change in unrealized appreciation on investment in Ether, Quantity | Ethereum | 0 | 0 | |
Net realized gain on investment in Ether, Quantity | Ethereum | 0 | 0 | |
Ending balance, Quantity | Ethereum | 2,944,270.73954244 | 2,962,629.5014994 | |
Beginning balance, Fair Value | $ | $ 6,758,054 | $ 3,649,198 | $ 3,649,198 |
Ether contributed, Fair Value | $ | 0 | 0 | |
Ether distributed for Sponsor's Fee, related party, Fair Value | $ | (53,493) | (134,484) | |
Net change in unrealized appreciation on investment in Ether | $ | 3,960,769 | 1,880,269 | 3,140,367 |
Net realized gain on investment in Ether | $ | 45,780 | $ 21,794 | 102,973 |
Ending balance, Fair Value | $ | $ 10,711,110 | $ 6,758,054 |
Creations and Redemptions of _2
Creations and Redemptions of Shares - Additional Information (Details) - Ethereum | Mar. 31, 2024 | Dec. 31, 2023 |
Equity [Abstract] | ||
Share represented as Ether | 0.0095 | 0.0096 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Federal income tax rate | 21% |
Related Parties - Additional In
Related Parties - Additional Information (Details) | 3 Months Ended | 12 Months Ended | 25 Months Ended | ||
Mar. 31, 2024 USD ($) Right shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) Right shares | Mar. 31, 2024 USD ($) Right shares | Mar. 02, 2022 USD ($) | |
Related Party Transaction [Line Items] | |||||
Shares of the Trust, held by related parties | shares | 7,158 | 12,277 | 7,158 | ||
Number of Incidental Right held | Right | 0 | 0 | 0 | ||
Number of Incidental Rights distributed | Right | 0 | 0 | |||
Sponsor's fee payable, related party | $ 0 | $ 0 | $ 0 | ||
Additional trust expenses paid by sponsor | $ 0 | $ 0 | |||
Digital Currency Group, Inc. | |||||
Related Party Transaction [Line Items] | |||||
Shares held in employee trust | $ 200,000,000 | ||||
Number of shares purchased under authorization | shares | 0 | ||||
Sponsor's Parent | Coinbase Inc | |||||
Related Party Transaction [Line Items] | |||||
Percentage of minority interest owned | 1% | 1% | |||
Sponsor | |||||
Related Party Transaction [Line Items] | |||||
Related party sponsor fee percentage | 2.50% | ||||
Sponsor's fees | $ 53,493,406 | $ 29,637,542 | |||
Sponsor | Maximum | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction in a fiscal year | 600,000 | ||||
Non Sponsor Paid Expenses | Minimum | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction in a fiscal year | $ 600,000 |
Financial Highlights Per Shar_3
Financial Highlights Per Share Performance - Summary of Per Share Data (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Per Share Data: | ||
Principal market net asset value, beginning of period | $ 21.79 | $ 11.77 |
Net increase in net assets from investment operations: | ||
Net investment loss | (0.17) | (0.1) |
Net realized and unrealized gain | 12.91 | 6.13 |
Net increase in net assets resulting from operations | 12.74 | 6.03 |
Principal market net asset value, end of period | $ 34.53 | $ 17.8 |
Total return | (58.47%) | 51.23% |
Ratios to average net assets: | ||
Net investment loss | (2.50%) | (2.50%) |
Expenses | (2.50%) | (2.50%) |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - $ / shares | Apr. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 |
Subsequent Event [Line Items] | |||
Ether Fair value per share | $ 3,637.95 | $ 2,281.1 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Subsequent event date | Apr. 30, 2024 | ||
Ether Fair value per share | $ 2,923.79 |