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

21Shares US LLC files an amendment to its Form S-1 registration statement for the 21Shares Core Ethereum ETF, aiming for a listing on the Cboe BZX Exchange.

Summary

• 21Shares US LLC has filed Amendment No. 4 to its Form S-1 registration statement with the SEC for the 21Shares Core Ethereum ETF.
• The ETF intends to list its shares on the Cboe BZX Exchange under the ticker symbol CETH.
• The Trust's investment objective is to track the performance of ether, as measured by the CME CF Ether-Dollar Reference Rate New York Variant, adjusted for expenses and liabilities.
• The Trust will hold ether, valuing its shares daily based on the specified index.
• Coinbase Custody Trust Company, LLC will serve as the ether custodian.
• The Sponsor, Trustee, and Ether Custodian will not engage in staking activities.
• Authorized Participants will purchase shares by depositing cash, with ether acquired through an Ether Counterparty.
• The offering is intended to be a continuous offering for three years, unless extended.
• The Sponsor has purchased initial Seed Creation Baskets comprising 20,000 Shares for $340,739.
• The Sponsor Fee is [ ]% of the Trusts ether holdings, used to cover operating expenses.
• The Trust is an emerging growth company and may elect to comply with reduced reporting requirements.

Sentiment

Score: 7

Explanation: The document is a regulatory filing, so the sentiment is neutral. However, the fact that 21Shares is moving forward with the ETF suggests a positive outlook on the future of Ethereum.

Positives

• The ETF provides investors with indirect access to ether through a traditional brokerage account.
• The Trust will custody its ether at a regulated third-party custodian, Coinbase Custody Trust Company, LLC.
• The Sponsor believes that the Shares are designed to provide investors with a cost-effective and convenient way to invest in ether without purchasing, holding and trading ether directly.

Negatives

• The Trust will not engage in staking activities, foregoing potential returns.
• The amount of ether represented by the Shares will decline over time due to the Sponsor Fee and other liabilities.
• The insurance maintained by the Ether Custodian is shared among all of the Ether Custodians customers, is not specific to the Trust or to customers holding ether with the Ether Custodian, and may not be available or sufficient to protect the Trust from all possible losses or sources of losses.

Risks

• The value of the Shares relates directly to the value of ether, which is highly volatile.
• Security threats to the Trusts account with the Ether Custodian could result in the halting of Trust operations and a loss of Trust assets.
• Future regulations could adversely affect an investment in the Trust.
• Shareholders could incur a tax liability without an associated distribution of the Trust.
• The Exchange on which the Shares are listed may halt trading in the Trusts Shares.
• The Sponsor is leanly staffed and rely heavily on key personnel. The departure of any such key personnel could negatively impact the Trusts operations and adversely impact an investment in the Trust.

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

This filing is part of a broader trend of investment firms seeking to offer cryptocurrency-based ETFs to provide investors with easier access to the digital asset market.

Comparison to Industry Standards

• The document does not contain a comparison to industry standards.
• However, the document does mention that the CME CF Ether-Dollar Reference Rate New York Variant is based on materially the same methodology (except calculation time) as the Index Providers ETHUSD_RR, which was first introduced on November 14, 2016 and is the rate on which ether futures contracts are cash-settled in U.S. dollars at the CME.

Related Party Transactions

• The Sponsor served as the Seed Capital Investor to the Trust.
• The Sponsor has purchased initial Seed Creation Baskets comprising 20,000 Shares for $340,739.

Stakeholder Impact

• Shareholders will have a cost-effective way to invest in ether without purchasing, holding and trading ether directly.
• Shareholders will not have the regulatory protections afforded by investment companies registered under the 1940 Act.
• Shareholders will not benefit from the protections afforded to investors in ether futures contracts on regulated futures markets.

Next Steps

• The SEC needs to approve the registration statement.
• The Shares are expected to be listed for trading, subject to notice of issuance, on the Exchange under the ticker symbol CETH.

Key Dates

Keywords

Ethereum ETF, Ether, 21Shares, CETH, ETF, Cryptocurrency, Investment, Cboe BZX, Digital Asset