In August, we filed a Registration Statement on Form 10 with the SEC on behalf of Grayscale® Ethereum Trust. Today, the Form 10 has become effective, and the Trust has become the second digital currency investment vehicle to become an SEC reporting company, following Grayscale® Bitcoin Trust on January 21, 2020.
Grayscale Ethereum Trust has grown to become the world’s largest Ethereum investment product and continues to gain traction with the broader investment community. This designation marks an incredible milestone for our product, Grayscale, and the digital currency industry.
What should investors know about Grayscale Ethereum Trust (OTCQX: ETHE) now that it’s an SEC reporting company?
- TRADITIONAL SECURITY: The Trust is solely and passively invested in Ethereum. The shares of the Trust are designed to provide investors with a cost-effective and convenient way to gain investment exposure to ETH.* Modeled after popular commodity investment products, the Trust’s structure is familiar to financial and tax advisors.
- FIRST MOVER: Grayscale Ethereum Trust’s shares are now registered with the SEC,** the second digital currency investment vehicle to do so, following Grayscale Bitcoin Trust. This follows past milestones, such as in June 2019 when the Trust became the first publicly-traded Ethereum investment vehicle in the U.S. under symbol: ETHE, broadening the product’s availability to all investors with access to U.S. securities markets.
- LIQUIDITY OPPORTUNITY: The Trust launched as an on-going private placement solely available to institutional and individual accredited investors. Accredited investors who own shares in the Trust’s private placement now have an earlier liquidity opportunity, as the statutory holding period of their private placement shares will be reduced from 12 to 6 months, provided the other requirements under Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”) have been satisfied.***
- INVESTOR AUDIENCE: As many institutions restrict investments in instruments that are not registered with the SEC, a broader set of investors may now begin to consider the Trust accordingly. Grayscale Ethereum Trust continues to be supported by a network of trusted, best-in-class service providers with institutional-grade custody, audited financial statements, and more.
- SEC REPORTING: While the Trust has historically published quarterly and annual reports as well as financial statements pursuant to the OTC Markets Alternative Reporting Standard (ARS), the Trust will now file its quarterly and annual reports as well as financial statements as 10-Qs and 10-Ks with the SEC, along with current reports on Form 8-K, in addition to complying with all other obligations under the Exchange Act. These are the same reporting standards that public companies and exchange traded products that trade on national exchanges are held to.
- SAME STRUCTURE: The Trust is solely and passively invested in Ethereum. The investment objective of the Trust is for the shares to reflect the value of Ethereum held by the Trust (based on Ethereum per share****), less expenses and other liabilities. The structure of the Trust will not change and it will continue to not operate a redemption program nor trade on a national securities exchange. We want to be clear that this voluntary process to classify the Trust as an SEC reporting company is not and should not be confused as an effort to classify the Trust as an ETF. Our products are not ETFs, but they do have a familiar structure to investors because they’re modeled after popular commodity investment products.
Today, we celebrate this incredible milestone. It has become clear that there is strong demand for Ethereum access products. As noted in our 3Q20 Digital Asset Investment Report, we saw the largest investment into the Trust ever, with over $202 million in quarterly inflows.
For more information on today’s announcement, please refer to our press release, the Form 10 filing, and the published. Additionally, we encourage prospective or current Grayscale Ethereum Trust shareholders to view our FAQ page for further details on the Form 10 process and its implications.
*The Trust offers a private placement to accredited investors. The investment objective of the Trust is for the Shares (based on ETH per Share) to reflect the value of ETH held by the Trust, determined by reference to the Index Price (as defined in the Information Statement), less the Trust’s expenses and other liabilities. To date, the Trust has not met its investment objective and the Shares quoted on OTCQX have not reflected the value of ETH held by the Trust, less the Trust’s expenses and other liabilities, but have instead traded at a substantial premium over such value.
**The Trust is now an SEC reporting company with its shares registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
***The holding period reduction will become effective after Grayscale Ethereum Trust has been a reporting company for at least 90 days and has satisfied the other requirements under Rule 144 of the Securities Act.
****As of September 30, 2020, there are 0.09324941 Ethereum per Share.
This article is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal, nor shall there be any sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.