S-1/A: 21Shares Files Amendment for Core Ethereum ETF, Eyes Cboe BZX Listing

21Shares US LLC has filed an amendment to its Form S-1 registration statement for the 21Shares Core Ethereum ETF, seeking to list shares on the Cboe BZX Exchange.

Summary

• 21Shares US LLC has filed Amendment No. 5 to its Form S-1 registration statement with the SEC for the 21Shares Core Ethereum ETF.
• The ETF aims to track the performance of ether, as measured by the CME CF Ether-Dollar Reference Rate New York Variant.
• The shares are intended to be listed on the Cboe BZX Exchange under the ticker symbol CETH.
• The ETF will hold ether, with Coinbase Custody Trust Company, LLC acting as the ether custodian.
• The Sponsor Fee is [ ]% of the Trusts ether holdings.
• The offering is intended to be a continuous offering and is not expected to terminate until three years from the date of the original offering, unless extended as permitted by applicable rules under the 1933 Act.
• The Sponsor served as the Seed Capital Investor to the Trust.
• On May 1, 2024, the Sponsor purchased Seed Creation Baskets comprising 2 Shares at a per-Share price of $50.00.
• Total proceeds to the Trust from the sale of these Seed Creation Baskets were $100.
• These Seed Creation Baskets were redeemed for cash on or about June 17, 2024.
• On June 18, 2024, the Sponsor purchased the initial Seed Creation Baskets comprising 20,000 Shares for $340,739.
• The Trust purchased ether with the proceeds of the Initial Seed Creation Baskets by transacting with an Ether Counterparty to acquire ether on behalf of the Trust in exchange for cash provided by 21Shares US LLC in its capacity as Seed Capital Investor.

Sentiment

Score: 7

Explanation: The document is a standard regulatory filing, indicating progress towards launching a new investment product. The sentiment is neutral to positive, reflecting the potential for increased market access to ether.

Positives

• The ETF provides investors with a regulated and potentially cost-effective way to gain exposure to ether.
• The ETF will use a reputable custodian, Coinbase Custody Trust Company, LLC, for its ether holdings.
• The ETF aims to track a well-established index, the CME CF Ether-Dollar Reference Rate New York Variant.

Negatives

• The Sponsor Fee is [ ]% of the Trusts ether holdings.
• The ETF will not engage in staking activities, foregoing potential returns from staking rewards.
• The ETF is subject to the risks associated with ether and the Ethereum network, including volatility, security breaches, and regulatory uncertainty.

Risks

• The value of the Shares relates directly to the value of ether, the value of which may be highly volatile and subject to fluctuations due to a number of factors.
• Security threats to the Trusts account with the Ether Custodian could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust.
• A temporary or permanent fork of the Ethereum blockchain could adversely affect an investment in the Trust.
• Future and current regulations by a United States or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust.
• Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the Investment Company Act of 1940 (1940 Act) or the protections afforded by the Commodity Exchange Act (the CEA).

Future Outlook

The offering is intended to be a continuous offering and is not expected to terminate until three years from the date of the original offering, unless extended as permitted by applicable rules under the 1933 Act.

Industry Context

The filing comes amid increasing interest in cryptocurrency ETFs, particularly those holding ether directly. The approval of this ETF would provide another avenue for investors to gain exposure to ether within a regulated framework.

Comparison to Industry Standards

• The proposed ETF structure is similar to other commodity-based ETFs, such as those holding gold or silver, but with the unique challenges and considerations of digital assets.
• The Sponsor Fee is [ ]% of the Trusts ether holdings.
• The ETF will custody its ether with Coinbase Custody Trust Company, LLC.

Related Party Transactions

• The Sponsor served as the Seed Capital Investor to the Trust.
• The Sponsor will receive a Sponsor Fee of [ ]% of the Trusts ether holdings.
• The Prime Broker, Coinbase, Inc., and the Lender, Coinbase Credit, Inc., serve as Ether Counterparties.

Stakeholder Impact

• Shareholders will have a new way to invest in ether through a regulated ETF.
• Authorized Participants will have the opportunity to create and redeem Baskets of Shares.
• The Cboe BZX Exchange will benefit from the listing and trading of the ETF shares.

Next Steps

• The SEC will review the amended registration statement.
• If approved, the ETF shares will be listed on the Cboe BZX Exchange.
• Authorized Participants will begin creating and redeeming Baskets of Shares.

Key Dates

Keywords

Ethereum ETF, Ether, 21Shares, CETH, Cboe BZX, Cryptocurrency, ETF