0000930413-24-001811.txt : 20240523 0000930413-24-001811.hdr.sgml : 20240523 20240523172246 ACCESSION NUMBER: 0000930413-24-001811 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20240523 DATE AS OF CHANGE: 20240523 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VanEck Ethereum Trust CENTRAL INDEX KEY: 0001860788 STANDARD INDUSTRIAL CLASSIFICATION: [6221] ORGANIZATION NAME: 09 Crypto Assets IRS NUMBER: 866752793 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-255888 FILM NUMBER: 24979732 BUSINESS ADDRESS: STREET 1: C/O VANECK DIGITAL ASSETS, LLC STREET 2: 666 THIRD AVENUE, 9TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 212-293-2048 MAIL ADDRESS: STREET 1: C/O VANECK DIGITAL ASSETS, LLC STREET 2: 666 THIRD AVENUE, 9TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: VanEck Ethereum ETF DATE OF NAME CHANGE: 20240215 FORMER COMPANY: FORMER CONFORMED NAME: VanEck Ethereum Trust DATE OF NAME CHANGE: 20210505 S-1/A 1 c109048_s1a.htm

As filed with the Securities and Exchange Commission on May 23, 2024

Registration No. 333-255888

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

VANECK ETHEREUM TRUST

(Exact name of registrant as specified in its charter)

Delaware	6221	86-6752793
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

	c/o VanEck Digital Assets, LLC
	Jonathan R. Simon, Esq.


	Matthew A. Babinsky, Esq.


	666 Third Avenue, 9th Floor
	New York, New York 10017
	(212) 293-2000

	(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices and for service of process purposes)

	Copy to:
	Clifford R. Cone, Esq.
	Jason D. Myers, Esq.
	Jesse Overall, Esq.
	Clifford Chance US LLP


	Two Manhattan West
	375 Ninth Avenue
	New York, New York 10001

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company x
	Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this Preliminary Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Preliminary Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus dated May 23, 2024

PRELIMINARY PROSPECTUS

VanEck Ethereum Trust

Neither the Trust nor the Sponsor, the ETH Custodian or any other person associated with the Trust will, directly or indirectly, engage in any action where any portion of the Trust’s ETH is used to earn staking rewards, to earn additional ETH or to generate income or other earnings (collectively, “Staking Activities”).

The Trust is an exchange-traded fund. The Trust intends to issue Shares on a continuous basis and is registering an indeterminate number of Shares with the Securities and Exchange Commission (the “SEC”) in accordance with Rule 456(d) and 457(u). When the Trust sells or redeems its Shares, it will do so in blocks of [25,000] Shares (a “Creation Basket”) that are based on the amount of ETH represented by the Creation Basket being created, the amount of ETH being equal to the combined net asset value of the number of Shares included in the Creation Basket (net of accrued but unpaid remuneration due to the Sponsor (the “Sponsor Fee”) and any accrued but unpaid expenses or liabilities not assumed by the Sponsor). The Trust currently conducts subscriptions and redemptions solely in cash. Financial firms that are authorized to purchase or redeem Shares with the Trust (known as “Authorized Participants” or “APs”) will deliver only cash to create Shares and will receive only cash when redeeming Shares. Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive ETH as part of the Creation Basket subscription or redemption process. The Trust conducts subscriptions and redemptions in cash. For a subscription in cash, the Authorized Participant’s subscription shall be in the amount of cash needed to purchase the amount of ETH represented by the Creation Basket being created, as calculated by State Street Bank and Trust Company (the “Administrator”) based on the Index or the other valuation policies described herein. The AP will deliver the cash to the Trust’s account at State Street Bank and Trust Company (the “Cash Custodian”), which the Sponsor will then use to purchase ETH from a third party selected by the Sponsor who (1) is not the Authorized Participant and (2) will not be acting as an agent, nor at the direction, of the Authorized Participant with respect to the delivery of ETH to the Trust (such third party, a “Liquidity Provider”). For a redemption in cash, the Sponsor shall arrange for the ETH represented by the Creation Basket to be sold to a Liquidity Provider selected by the Sponsor and the cash proceeds distributed from the Trust’s account at the Cash Custodian to the Authorized Participant in exchange for their Shares. In the future, subject to the Exchange receiving the necessary regulatory approval to permit the Trust to purchase and redeem Shares in-kind for ETH (the “In-Kind Regulatory Approval”), the Trust may elect to permit Authorized Participants to also deliver or direct the delivery of ETH by third parties, or take delivery or direct the taking of delivery of ETH by third parties, in connection with in-kind subscription or redemption transactions. There can be no assurance that In-Kind Regulatory Approval will ever be obtained or that “in-kind” subscription or redemption transactions will ever occur, meaning that the Trust may conduct subscriptions and redemptions solely in cash for the foreseeable future and indefinitely if necessary. The timing of In-Kind Regulatory Approval is unknown and there is no guarantee that the Exchange will receive In-Kind Regulatory Approval at any point in the future. To the extent that the Exchange receives In-Kind Regulatory Approval and the Sponsor

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chooses to allow in-kind creations and redemptions, notification will be made to Shareholders via a prospectus supplement and/or a current report filed with the SEC.

Following an Authorized Participant’s subscription in cash for a Creation Basket and issuance by the Trust of the corresponding Shares to such AP, Authorized Participants may then offer Shares to the public at prices that depend on various factors, including the supply and demand for Shares, the value of the Trust’s assets, and market conditions at the time of a transaction. Shareholders who buy or sell Shares during the day from their broker may do so at a premium or discount relative to the net asset value of the Shares of the Trust.

Except when aggregated in Creation Baskets, Shares are not redeemable securities. Creation Baskets are only redeemable by Authorized Participants.

Shareholders who decide to buy or sell Shares of the Trust will place their trade orders through their brokers and may incur customary brokerage commissions and charges. Prior to this offering, there has been no public market for the Shares. The Shares have been approved for listing, subject to notice of issuance, on the Exchange under the ticker symbol “ETHV.”

Investing in the Trust involves risks similar to those involved with an investment directly in ETH and other significant risks. See “Risk Factors” beginning on page [ ].

The offering of the Trust’s Shares is registered with the SEC in accordance with the Securities Act of 1933, as amended (the “1933 Act”). The offering is intended to be a continuous offering. The Trust is not registered under the Investment Company Act of 1940, as amended (the “1940 Act”) and is not subject to regulation under the 1940 Act. The Trust is not a commodity pool for purposes of the Commodity Exchange Act of 1936, as amended (the “CEA”), and the Sponsor is not subject to regulation by the Commodity Futures Trading Commission (the “CFTC”) as a commodity pool operator or a commodity trading advisor. The Trust’s Shares are neither interests in nor obligations of the Sponsor or the Trustee.

On May 20, 2024, Van Eck Associates Corporation (the “Seed Capital Investor”), the parent of the Sponsor, subject to certain conditions, purchased the “Seed Shares,” comprising 2,000 Shares at a per-Share price of $50.00. Delivery of the Seed Shares was made on May 20, 2024. Total proceeds to the Trust from the sale of the Seed Shares were $100,000. On [ ], 2024, the Seed Shares were redeemed for cash and the Seed Capital Investor purchased the “Seed Creation Baskets,” comprising of [ ] Shares at a per-Share price of $[ ]. Total proceeds to the Trust from the sale of the Seed Creation Baskets were $[ ], which resulted in the Trust receiving [ ] ETH. Delivery of the Seed Creation Baskets was made on [ ], 2024. The Seed Capital Investor has acted as a statutory underwriter in connection with this purchase.

The price of the Seed Creation Baskets was determined as described above and such Shares could be sold at different prices if sold by the Seed Capital Investor at different times.

The value of ETH and, therefore, the value of the Trust’s Shares could decline rapidly, including to zero. You could lose your entire investment. The Shares are neither insured nor guaranteed by the Federal Deposit Insurance Corporation, or any other governmental agency or other person or entity. The Shares are not interests in nor obligations of nor guaranteed by any of the Sponsor, the Trustee, Seed Capital Investor, MarketVector, the Administrator, the Cash Custodian, the ETH Custodian, any Liquidity Provider, or their respective affiliates.

AN INVESTMENT IN THE TRUST INVOLVES SIGNIFICANT RISKS AND MAY NOT BE SUITABLE FOR SHAREHOLDERS THAT ARE NOT IN A POSITION TO ACCEPT MORE RISK THAN MAY BE INVOLVED WITH OTHER EXCHANGE-TRADED PRODUCTS THAT DO NOT HOLD ETH OR INTERESTS RELATED TO ETH. THE SHARES ARE SPECULATIVE SECURITIES. THEIR PURCHASE INVOLVES A HIGH DEGREE OF RISK AND YOU COULD LOSE YOUR ENTIRE INVESTMENT. YOU SHOULD CONSIDER ALL RISK FACTORS BEFORE INVESTING IN THE TRUST. PLEASE REFER TO “RISK FACTORS” BEGINNING ON PAGE 11.

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NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED IN THIS PROSPECTUS, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE TRUST IS AN “EMERGING GROWTH COMPANY” AS THAT TERM IS USED IN THE JUMPSTART OUR BUSINESS STARTUPS ACT (THE “JOBS ACT”) AND, AS SUCH, MAY ELECT TO COMPLY WITH CERTAIN REDUCED REPORTING REQUIREMENTS.

The date of this Prospectus is , 2024

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TABLE OF CONTENTS	Page

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	vi
PROSPECTUS SUMMARY	1
RISK FACTORS	12
ETH, ETH MARKET, ETH EXCHANGES AND REGULATION OF ETH	66
THE TRUST AND ETH PRICES	72
NET ASSET VALUE DETERMINATIONS	77
ADDITIONAL INFORMATION ABOUT THE TRUST	86
THE TRUST’S SERVICE PROVIDERS	90
CUSTODY OF THE TRUST’S ASSETS	98
FORM OF SHARES	101
TRANSFER OF SHARES	102
PLAN OF DISTRIBUTION	103
CREATION AND REDEMPTION OF SHARES	105
USE OF PROCEEDS	111
OWNERSHIP OR BENEFICIAL INTEREST IN THE TRUST	112
CONFLICTS OF INTEREST	113
DUTIES OF THE SPONSOR	115
LIABILITY AND INDEMNIFICATION	117
PROVISIONS OF LAW	119
MANAGEMENT; VOTING BY SHAREHOLDERS	120
BOOKS AND RECORDS	121
STATEMENTS, FILINGS, AND REPORTS TO SHAREHOLDERS	122
FISCAL YEAR	123
GOVERNING LAW; CONSENT TO DELAWARE JURISDICTION	124
LEGAL MATTERS	125
EXPERTS	126
MATERIAL CONTRACTS	127
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES	129
PURCHASES BY EMPLOYEE BENEFIT PLANS	133
INFORMATION YOU SHOULD KNOW	134
SUMMARY OF PROMOTIONAL AND SALES MATERIAL	135
INTELLECTUAL PROPERTY	136
WHERE YOU CAN FIND MORE INFORMATION	137
PRIVACY POLICY	138
APPENDIX A GLOSSARY OF DEFINED TERMS	A-1


VANECK ETHEREUM TRUST STATEMENT OF ASSETS AND LIABILITIES	F-1

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This Prospectus contains information you should consider when making an investment decision about the Shares of the Trust. You may rely on the information contained in this Prospectus. The Trust and the Sponsor have not authorized any person to provide you with different information and, if anyone provides you with different or inconsistent information, you should not rely on it. This Prospectus is not an offer to sell the Shares in any jurisdiction where the offer or sale of the Shares is not permitted.

The Shares of the Trust are not registered for public sale in any jurisdiction other than the United States.

Until [ ], 2024, all dealers effecting transactions in the Shares, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions.

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STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes “forward-looking statements” which generally relate to future events or future performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend”, “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this Prospectus that address activities, events or developments that will or may occur in the future, including such matters as movements in the cryptocurrencies markets and indexes that track such movements, the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters, are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses the Sponsor has made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed in this Prospectus, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Consequently, all the forward-looking statements made in this Prospectus are qualified by these cautionary statements, and there can be no assurance that actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, that they will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of its Shares.

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PROSPECTUS SUMMARY

This is only a summary of the Prospectus and, while it contains material information about the Trust and its Shares, it does not contain or summarize all of the information about the Trust and the Shares contained in this Prospectus that is material and/or which may be important to you. You should read this entire Prospectus, including “Risk Factors” on page [ ], before making an investment decision about the Shares. For a glossary of defined terms, see Appendix A.

Overview of the Trust

The VanEck Ethereum Trust (the “Trust”) is an exchange-traded fund that issues common shares of beneficial interest (the “Shares”) that are expected to be approved for listing, subject to notice of issuance, on the Cboe BZX Exchange, Inc. (the “Exchange”) under the ticker symbol “ETHV”. The Trust is not registered as an investment company under the 1940 Act and is not required to register under such act. The Trust is not a commodity pool for purposes of the CEA, and the Sponsor is not subject to regulation by the Commodity CFTC as a commodity pool operator or a commodity trading advisor. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of Ether (“ETH”). As a result, the Trust will not attempt to avoid losses or hedge exposure arising from the risk of changes in the price of ETH. The Trust’s investment objective is to reflect the performance of the price of ETH less the expenses of the Trust’s operations. In seeking to achieve its investment objective, the Trust will hold ETH and will value its Shares daily based on the reported MarketVector^TM Ethereum Benchmark Rate, which is calculated based on prices contributed by trading platforms that the Sponsor’s affiliate, MarketVector Indexes GmbH (“MarketVector”), believes represent the top five ETH trading platforms based on the industry leading CCData Centralized Exchange Benchmark review report. See “The Trust and ETH Prices—Description of the MarketVector^TM Ethereum Benchmark Rate Construction and Maintenance” for more information. The Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective. The Trust is sponsored by VanEck Digital Assets, LLC (the “Sponsor”), a wholly-owned subsidiary of Van Eck Associates Corporation (“VanEck”), a U.S. registered investment adviser with approximately $99.66 billion in assets under management as of April 30, 2024. The Sponsor is not registered as an investment adviser and currently is not required to register under the Advisers Act in connection with its activities on behalf of the Trust. The Trust, the Sponsor and the service providers will not engage in Staking Activity or loan or pledge the Trust’s assets, nor will the Trust’s assets serve as collateral as of [ ] for any loan or similar arrangement.

Because peer-to-peer transfers of ETH are recorded on the Ethereum Blockchain, which is a digital public recordkeeping system or ledger, buying, holding and selling ETH is very different than buying, holding and selling more conventional instruments like cash, stocks or bonds. For example, ETH must either be acquired through the process of participating in the validation of transactions that are added to the Ethereum Blockchain (referred to interchangeably in this Prospectus as “validation” or “mining” and the parties performing such validation, “validators” or “miners”), obtained in a peer-to-peer transaction on the Ethereum network, or purchased through an online digital asset trading platform or other intermediary, such as a broker in the institutional over-the-counter (“OTC”) market. Peer-to-peer transactions may be difficult to arrange, and involve complex and potentially risky procedures around safekeeping, transferring and holding the ETH. Alternatively, purchasing ETH on an ETH trading platform requires choosing a trading platform, opening an account, and transferring funds to the trading platform in order to purchase the ETH. Transactions on trading platforms are not ordinarily recorded on the Ethereum Blockchain. There are currently a large number of ETH trading platforms from which to choose, the quality and reliability of which varies significantly. Some trading platforms have been subject to unauthorized cybersecurity breaches (“hacks”), resulting in significant losses to end users.

The Trust provides direct exposure to ETH and the Shares of the Trust are valued on a daily basis using prices drawn from a carefully evaluated group of trading platforms selected by MarketVector, which utilizes the CCData Centralized Exchange Benchmark data to construct the MarketVector^TMEthereum Benchmark Rate. The Trust provides investors with the opportunity to access the market for ETH through Shares held in a traditional brokerage account without the potential barriers to entry or risks involved with holding or transferring ETH directly, acquiring it from an exchange, or mining it, as referenced above. The Trust will custody its ETH at Gemini Trust Company, LLC (the “ETH Custodian”), a regulated third-party custodian that carries insurance and is chartered as a limited purpose trust company under the New York Banking Law. The Trust will not use derivatives such as swaps, futures, or options in its investment strategy. Using derivatives could subject the Trust to derivatives counterparty, credit, and other risks, though the Trust also will not attempt to use derivatives to hedge the risk of declines in the price of ETH held by the Trust. The Sponsor believes that the design of the Trust will enable certain investors to more effectively and efficiently implement strategic and tactical asset allocation strategies that use ETH by investing in the Shares rather than purchasing, holding and trading ETH directly or through derivatives.

ETH and the Ethereum Network

ETH is a digital asset that is created and transmitted through the operations of the peer-to-peer Ethereum network, a dispersed network of computers that operates on cryptographic software protocols based on open source code. It is widely understood that no single intermediary or entity operates or controls the Ethereum network (referred to as “decentralization”), the transaction validation and recordkeeping infrastructure of which is collectively maintained by a disparate user base. The Ethereum network allows people to exchange tokens of value, or ETH, which are recorded on a distributed public recordkeeping system or ledger known as a blockchain (the “Ethereum Blockchain”), and which can be used to pay for goods and services, including computational power on the Ethereum network, or converted to fiat currencies, such as the U.S. dollar, at rates determined on digital asset trading platforms or in individual peer-to-peer transactions. In addition, ETH is used to compensate validators on the Ethereum network for using computational resources to confirm transactions and secure the network. Furthermore, by combining the recordkeeping system of the Ethereum Blockchain with a flexible scripting language that is programmable and can be used to implement sophisticated logic and execute a wide variety of instructions, the Ethereum network is intended to act as a foundational infrastructure layer that users can build their own custom software programs on top of (instead of using centralized web servers), with users paying fees in ETH for the computational resources consumed by running their programs. In theory, anyone can build their own custom software programs on the Ethereum network. In this way, the Ethereum network represents a project to potentially expand blockchain deployment beyond just a limited-purpose, peer-to-peer private money system into a flexible, distributed alternative computing infrastructure that is resistant to censorship and available to all.

The Ethereum network was originally described in a 2013 white paper by Vitalik Buterin, a programmer involved with Bitcoin, with the goal of creating a global platform for decentralized applications powered by smart contracts. While bitcoin is used as a medium of exchange and store of value, ETH is used to interact with applications on the Ethereum network. Paying for transactions, creating smart contracts and using decentralized applications all require users to pay fees in ETH. An Ethereum client (“Ethereum Client”) is a software application that implements the Ethereum network specification and communicates with the Ethereum network. A “node” is a computer or other device that has downloaded the Ethereum Client and is connected to other computers also running the Ethereum Client software, together forming the peer to peer Ethereum network.

The formal development of the Ethereum network began through a Swiss firm called Ethereum Switzerland GmbH (“ETHSuisse”) in conjunction with several other entities. Subsequently, the Ethereum Foundation, a Swiss non-profit organization, was set up to oversee the protocol’s development. The Ethereum network went live on July 30, 2015. Unlike other digital assets, such as Bitcoin, which are solely created through a progressive mining process, 72.0 million ETH were created in connection with the launch of the Ethereum network. Coinciding with the network launch, it was decided that ETHSuisse would be dissolved, leaving the Ethereum Foundation to foster protocol development. Since then, various groups, including the Ethereum Foundation as well as third parties, have developed several forms of interoperable, but distinct, forms of Ethereum Client software (for example, prominent forms of Execution Client (defined below) software include Besu, Erigon, Geth, Nethermind, Reth and well-known Consensus Client (defined below) software implementations include Lighthouse, Lodestar, Nimbus, Prysm, Teku) which together make up the Ethereum network.

In December 2020, the Ethereum network began the process of updating the network’s consensus mechanism from proof-of-work to proof-of-stake and incorporate the use of sharding. The update was completed on September 15, 2022 and the Ethereum network continues to use a proof-of-stake consensus mechanism as of the date of this registration statement. Unlike proof-of-work, in which miners expend computational resources to compete to validate transactions and are rewarded ETH in proportion to the amount of computational resources expended, in proof-of-stake, miners (also known as validators) risk or “stake” ETH to compete to be randomly selected to validate transactions and are rewarded ETH in proportion to the amount of ETH staked. Any malicious activity by a miner, such as mining multiple blocks, disagreeing with the eventual consensus or otherwise violating protocol rules, results in the forfeiture or “slashing” of a portion of the staked ETH. Proof-of-stake is viewed as more energy efficient and scalable than proof-of-work. Following the switch to proof of stake, an Ethereum Client consists of two software programs, an execution-layer client (“Execution Client”) and a consensus-layer client (“Consensus Client”). Becoming a validator requires downloading additional software in addition to the Execution Client and Consensus Client.

MarketVector and the Sponsor believe that the ETH market has matured such that it is operating at a level of efficiency and scale similar in material respects to established global equity, fixed income and commodity markets. MarketVector and the Sponsor believe that this maturation is indicated by various objective factors, including, but not limited to:

	●	the February 2021 launch of futures contracts for ETH (“ETH Futures”) on major, established and regulated commodity futures exchanges in the United States;

	●	the subsequent growth of significant trading volume in those futures contracts (e.g., there were 3,835 ETH Futures contracts traded as of January 31, 2024 (approximately $437,892,000) compared to 3,279 ($260,085,750) contracts traded as of January 31, 2023) (all data sourced from Glassnode);

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	●	[increased participation by established institutional firms (e.g., MassMutual) and publicly traded companies of all types (e.g., Tesla), that are both helping to drive demand for ETH and building out market and blockchain infrastructures to accommodate established investment channels and ETH applications beyond investment;]

	●	the public offering of shares in registered investment companies, including ETFs, investing in ETH Futures pursuant to registration statements declared effective by the SEC, and the offering of interests in private investment vehicles that invest in ETH by numerous investment managers, as well as the approval by regulators in many countries, such as Canada, Australia, Brazil, Switzerland, and across Europe, of exchange-listed and traded products (including exchange-traded funds) allowing investors to gain exposure to physical ETH through traditional, regulated brokerage accounts;


	●	the arrival of major, established market makers that rely on sophisticated and technologically enabled trading systems to arbitrage price discrepancies that may appear between ETH prices on different exchanges;

	●	the development of a robust ETH lending market. For example, the total value locked (TVL), which is a metric used to determine the total U.S. dollar value of digital assets locked, or staked on a particular blockchain network via decentralized finance platforms or decentralized applications was $32.1 billion for Ethereum as of January 31, 2024;

	●	a significant expansion in the availability of institutional-quality custody services from regulated third-party custodians (e.g., additional companies like BNY Mellon and Fidelity have begun offering custodial solutions for institutional accounts); and

	●	the confirmation by the Office of the Comptroller of the Currency that national banks may provide custody services for ETH and other virtual currencies (see, e.g., OCC Interpretive Letter #1170) under certain circumstances.

MarketVector and the Sponsor believe that these, as well as other, factors have combined to improve the efficiency of the ETH market, creating a dynamic, institutional-quality, two-sided market. For more information on ETH and the Ethereum network, see “ETH, ETH Market, ETH Exchanges and Regulation of ETH” below.

The Trust’s Investment Objective and Strategies

The Trust’s investment objective is to reflect the performance of the price of ETH less the expenses of the Trust’s operations. In seeking to achieve its investment objective, the Trust will hold ETH and will value its Shares daily based on the reported MarketVector^TM Ethereum Benchmark Rate, which is calculated based on prices contributed by exchanges that the Sponsor’s affiliate, MarketVector, believes represent the top five ETH trading platforms based on the industry leading CCData Centralized Exchange Benchmark review report as described below, and process all creations and redemptions in transactions with Authorized Participants as described below. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of ETH. As a result, the Trust will not attempt to speculatively sell ETH at times when its price is high or speculatively acquire ETH at low prices in the expectation of future price increases, nor will the Trust attempt to avoid losses or hedge exposure arising from the risk of changes in the price of ETH. The Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective. The Trust will not employ its ETH in Staking Activities and accordingly will not earn any form of staking rewards or income of any kind, from Staking Activities. Foregoing potential returns from Staking Activities could cause an investment in Shares of the Trust to deviate from that which would have been obtained by purchasing and holding ETH directly by virtue of giving up staking as a source of return when an investor holds Shares of the Trust.

When the Trust sells or redeems its Shares, it will do so in blocks of [25,000] Shares (“Creation Baskets”) that are based on the amount of ETH represented by the Creation Basket being created, the amount of ETH being equal to the combined net asset value of the number of Shares included in the Creation Basket (net of the accrued but unpaid remuneration due the Sponsor (“Sponsor Fee”) and any accrued but unpaid expenses or liabilities not assumed by the Sponsor). The Trust currently conducts subscriptions and redemptions solely in cash. Financial firms that are authorized to purchase or redeem Shares with the Trust (known as “Authorized Participants” or “APs”) will deliver only cash to create Shares and will receive only cash when redeeming Shares. Authorized Participants must be registered broker-dealers. Registered broker-dealers are subject to various requirements of the federal securities laws and rules, including financial responsibility rules such as the customer protection rule, the net capital rule and recordkeeping requirements. There has yet to be definitive regulatory guidance on whether and how registered broker-dealers can comply with these rules with regard to transacting in or holding spot ETH. Until further regulatory clarity emerges regarding whether registered broker-dealers can hold and deal in ETH under such rules, there is a risk that registered broker-dealers participating in the in-kind creation or redemption of Shares for ETH may be unable to demonstrate compliance with such requirements. While compliance with these requirements would be the broker-dealer’s responsibility, a national securities exchange is required to enforce compliance by its member broker-dealers with applicable federal securities law and rules. As a result, the SEC is unlikely to permit an exchange to adopt listing rules for a product if it is not clear that the exchange’s members would be able to comply with applicable rules when transacting in the product as designed. To the extent further regulatory clarity emerges, the Sponsor expects the Exchange to seek In-Kind Regulatory Approval to amend its listing rules to permit the

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Trust to create and redeem Shares in-kind for ETH, in which Authorized Participants or their designees would deposit ETH directly with the Trust or receive ETH directly from the Trust. However, there can be no assurance as to when such regulatory clarity will emerge, or when the Exchange will seek or obtain In-Kind Regulatory Approval, if at all.

Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive ETH as part of the Creation Basket subscription or redemption process. For a subscription in cash, the Authorized Participant’s subscription for Shares shall be in the amount of cash needed to purchase the amount of ETH represented by the Creation Basket being created, as calculated by the Administrator based on the Index or the other valuation policies described herein. The AP will deliver the cash to the Trust’s account at the Cash Custodian, which the Sponsor will then use to purchase ETH from a third party selected by the Sponsor who (1) is not the Authorized Participant and (2) will not be acting as an agent, nor at the direction, of the Authorized Participant with respect to the delivery of ETH to the Trust (such third party, a “Liquidity Provider”). For a redemption in cash, the Sponsor shall arrange for the ETH represented by the Creation Basket to be sold to a Liquidity Provider selected by the Sponsor and the cash proceeds distributed from the Trust’s account at the Cash Custodian to the Authorized Participant in exchange for their Shares. In the future, subject to the Exchange receiving the necessary regulatory approval to permit the Trust to purchase and redeem Shares in-kind for ETH (the “In-Kind Regulatory Approval”), the Trust may elect to permit Authorized Participants to also deliver or direct the delivery of ETH by third parties, or take delivery or direct the taking of delivery of ETH by third parties, in connection with in-kind subscription or redemption transactions. There can be no assurance that In-Kind Regulatory Approval will ever be obtained or that “in-kind” subscription or redemption transactions will ever occur, meaning that the Trust may conduct subscriptions and redemptions solely in cash for the foreseeable future and indefinitely if necessary. The timing of In-Kind Regulatory Approval is unknown and that there is no guarantee that the Exchange will receive In-Kind Regulatory Approval at any point in the future. To the extent that the Exchange receives In-Kind Regulatory Approval and the Sponsor chooses to allow in-kind creations and redemptions, notification will be made to Shareholders via a prospectus supplement and/or a current report filed with the SEC.

In addition to selling ETH to distribute cash to Authorized Participants redeeming Shares, the Sponsor may sell ETH to pay certain expenses not assumed by the Sponsor (described below), which may be facilitated by one or more Liquidity Providers and/or the ETH Custodian or an affiliate thereof. All ETH will be held by the ETH Custodian, a third-party custodian that carries insurance and is chartered as a trust company under the New York Banking Law. The Transfer Agent (as defined below) will facilitate the processing of purchase and sale orders in Creation Baskets from the Trust.

The MarketVector^TM Ethereum Benchmark Rate

Market Vector is the index sponsor and index administrator for the MarketVector^TM Ethereum Benchmark Rate (“MarketVector^TM Ethereum Benchmark Rateˮ or “Indexˮ). MarketVector is a wholly-owned subsidiary of VanEck. CryptoCompare Data Limited is the calculation agent for the MarketVector^TM Ethereum Benchmark Rate and an affiliate of VanEck.

The MarketVector^TM Ethereum Benchmark Rate is a U.S. dollar-denominated composite reference rate for the price of ETH. The Index is calculated daily between 00:00 and 24:00 (CET) and the Index values are disseminated to data vendors. The Index is disseminated in U.S. dollars and the closing and intraday value is calculated over twenty three-minute intervals pursuant to a methodology referred to as an equal-weighted average of the volume-weighted median price.

The MarketVector^TM Ethereum Benchmark Rate is designed to be a robust price for ETH in U.S. dollars. There is no component other than ETH in the Index. The underlying trading platforms are sourced from the industry leading CCData Centralized Exchange Benchmark review report. CCData’s Centralized Exchange Benchmark was established in 2019 as a tool designed to bring clarity to the digital asset trading platforms sector by providing a framework for assessing risk and in turn bringing transparency and accountability to a complex and rapidly evolving market. The CCData Centralized Exchange Benchmark methodology utilizes a combination of qualitative and quantitative metrics to analyze a comprehensive data set across eight categories of evaluation: legal/regulation, KYC/transaction risk, data provision, security, team/exchange, asset quality/diversity, market quality and negative events. See “The Trust and ETH Prices—Description of the MarketVector^TMEthereum Benchmark Rate Construction and Maintenance” for more details. The CCData Centralized Exchange Benchmark review report provides a framework for assessing risk of each trading platform and brings transparency and accountability to a rapidly evolving market and industry. Based on the CCData Centralized Exchange Benchmark, MarketVector initially selects the top five trading platforms by rank for inclusion in the MarketVector^TMEthereum Benchmark Rate. If an eligible trading platform is downgraded by two or more notches in a semi-annual review and is no longer in the top five by rank, it is replaced by the highest ranked non-component trading platform. Adjustments to exchange coverage are announced four business days prior to the first business day of each of March and September at 23:00 CET. The MarketVector^TMEthereum Benchmark Rate is rebalanced at 16:00:00 GMT/BST on the last business day of each of February and August. The current exchange composition of the MarketVector^TMEthereum Benchmark Rate is [Bitstamp, Coinbase, itBit, LMAX, and Kraken].

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Pricing Information Available on the Exchange and Other Sources

The following table lists the Exchange symbols and their descriptions with respect to the Shares and the MarketVector^TM Ethereum Benchmark Rate:

	Ticker		Description
	ETHV		Market price per Share on the Exchange
	ETHV.IV		Indicative intra-day value per Share
	ETHV.NV		End of day NAV
	ETHV.SO		Number of outstanding Shares

The intra-day data in the above table is published once every 15 seconds throughout each trading day.

The current market price per Share (symbol: “ETHV”) will be published continuously as trades occur throughout each trading day on the consolidated tape by market data vendors.

The intra-day indicative value per Share (symbol: “ETHV.IV”) will be published by the Exchange once every 15 seconds throughout each trading day on the consolidated tape by market data vendors.

The Trust’s most recent end-of-day net asset value (“NAV”) (symbol: “ETHV.NV”) will be published as of the close of business by market data vendors and available on the Sponsor’s website at www.vaneck.com, or any successor thereto, and will be published on the consolidated tape.

Any adjustments made to the MarketVector^TM Ethereum Benchmark Rate will be published on the MarketVector website at https://www.MarketVector.com/ or any successor thereto.

The intra-day levels and closing levels of the MarketVector^TM Ethereum Benchmark Rate are published by MarketVector, and the closing NAV is published by the Administrator.

The Shares are not issued, sponsored, endorsed, sold or promoted by the Exchange, and the Exchange makes no representation regarding the advisability of investing in the Shares.

MarketVector makes no warranty, express or implied, as to the results to be obtained by any person or entity from the use of the MarketVector^TM Ethereum Benchmark Rate for any purpose. Index information and any other data calculated and/or disseminated, in whole or part, by MarketVector is for informational purposes only, not intended for trading purposes, and provided on an “as is” basis. MarketVector does not warrant that the Index information will be uninterrupted or error-free, or that defects will be corrected. MarketVector also does not recommend or make any representation as to possible benefits from any securities or investments, or third-party products or services. Shareholders should undertake their own due diligence regarding securities and investment practices.

For more information on the MarketVector^TMEthereum Benchmark Rate and MarketVector, see “The Trust and ETH Prices” below.

The Trust’s Legal Structure

The Trust is a Delaware statutory trust, formed on March 1, 2021 pursuant to the Delaware Statutory Trust Act. The Trust continuously issues common shares representing fractional undivided beneficial interest in and ownership of the Trust that may be purchased and sold on the Exchange. The Trust operates pursuant to the Amended and Restated Declaration of Trust and Trust Agreement (the “Trust Agreement”), dated as of April 18, 2024. Delaware Trust Company, a Delaware trust company, is the Delaware trustee of the Trust (the “Trustee”). The Trust is managed and controlled by the Sponsor. The Sponsor is a limited liability company formed in the state of Delaware on December 8, 2020.

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The Trust’s Service Providers

The Sponsor

The Sponsor arranged for the creation of the Trust and is responsible for the ongoing registration of the Shares for their public offering in the United States and the listing of Shares on the Exchange. The Sponsor has developed a marketing plan for the Trust, will prepare marketing materials regarding the Shares of the Trust, and will exercise the marketing plan of the Trust on an ongoing basis. The Sponsor appoints and may remove the Trust’s other service providers, including the Trustee, Administrator, Transfer Agent, ETH Custodian, and Marketing Agent (as defined below), as well as any additional, replacement, or successor service providers. The Sponsor has agreed to pay all ordinary operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor’s unified fee.

The Trustee

The Trustee, a Delaware trust company, acts as the trustee of the Trust as required to create a Delaware statutory trust in accordance with the Declaration of Trust and the Delaware Statutory Trust Act.

The Administrator

State Street Bank and Trust Company (“State Street”) serves as the Trust’s administrator (the “Administrator”). The Administrator’s principal address is One Congress Street, Boston, MA 02111 . Under the Trust’s Administration Agreement between State Street and the Trust (the “Trust Administration Agreement”) and a separate cash custodian agreement, the Administrator provides certain administrative and accounting services and financial reporting for the maintenance and operations of the Trust, including valuing the Trust’s ETH and calculating the net asset value per Share of the Trust and the net asset value of the Trust and maintaining the books of account of the Trust. In addition, the Administrator makes available the office space, equipment, personnel and facilities required to provide such services.

The Transfer Agent

State Street serves as the transfer agent for the Trust (the “Transfer Agent”). The Transfer Agent: (1) issues and redeems Shares of the Trust; (2) responds to correspondence by Shareholders and others relating to its duties; (3) maintains Shareholder accounts; and (4) makes periodic reports to the Trust. The Trust’s Transfer Agent will facilitate the settlement of Shares in response to the placement of creation orders and redemption orders from Authorized Participants.

The Cash Custodian

Under the cash custodian agreement (the “Cash Custody Agreement”), State Street will act as custodian for the Trust’s cash (in such capacity, the “Cash Custodian”). The Cash Custodian is responsible for, among other things, maintaining a separate deposit account or accounts for cash in the name of the Trust and determining the amount of ETH and/or cash required for the issuance or redemption, as the case may be, of Shares in creation unit aggregations of the Trust after the end of each trading day.

The ETH Custodian

Gemini Trust Company, LLC serves as the Trust’s ETH Custodian and is a fiduciary under § 100 of the New York Banking Law. The ETH Custodian is authorized to serve as the Trust’s custodian under the Trust Agreement and pursuant to the terms and provisions of the Custody Agreement. The ETH Custodian has its principal office at 315 Park Ave South, Floor 16, New York, NY 10010.

The Sponsor may, in its sole discretion, add or terminate other ETH custodians. The Sponsor may, in its sole discretion, change the custodian for the Trust’s ETH holdings, but it will have no obligation to do so or to seek any particular terms for the Trust from other such custodians. To the extent that the Sponsor adds or terminates other ETH custodians, or changes the

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custodian for the Trust’s ETH holdings, notification will be made to Shareholders via a prospectus supplement and/or a current report filed with the SEC.

In addition to the ETH custodial services in connection with the ETH Account, the ETH Custodian will also provide the Trust with clearing and settlement services for ETH purchase and sale transactions (“Clearing Services”) between the Trust and Liquidity Providers in connection with the Trust’s creation and redemption processes as well as in connection with transfers of ETH out of the Trust to pay the Sponsor Fee and to reimburse the Sponsor in ETH for payment of extraordinary expenses. These services are detailed within the clearing agreement between the Trust and the ETH Custodian (the “Clearing Agreement”). In connection with the Clearing Services, the ETH Custodian will make available to the Trust a clearing account (the “Clearing Account”), as further described below in “—Custody of the Trust’s Assets.”

The Marketing Agent

Van Eck Securities Corporation (the “Marketing Agent”), a wholly-owned subsidiary of VanEck, is responsible for reviewing and approving the marketing materials prepared by the Trust for compliance with applicable SEC and Financial Industry Regulatory Authority (“FINRA”) advertising laws, rules, and regulations.

The Trust’s Fees and Expenses

The Trust will pay the Sponsor the Sponsor Fee, which is a unified fee of [ ]%. The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement. The Administrator will make its determination regarding the Sponsor Fee in respect of each day by reference to the Trust’s NAV as of that day. The Sponsor Fee will accrue in U.S. dollars and be payable monthly in arrears in ETH on, or by, the tenth business day of the next month in respect of the prior month. Each month, the Administrator will calculate the Sponsor Fee for each day of the month, resulting in a cumulative total in U.S. dollars, which the Administrator will then calculate the ETH equivalent of by reference to the Index as of the date of calculation, and the Sponsor shall then withdraw the corresponding amount of ETH from the Trust’s ETH Account in payment of the Sponsor Fee. The Sponsor has agreed to pay all ordinary operating expenses (except for extraordinary expenses, including but not limited to, non-recurring expenses and costs of services performed by the Sponsor or a service provider on behalf of the Trust to protect the Trust or the interests of Shareholders, such as in connection with any indemnification of agents, service providers or counterparties of the Trust and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters) out of the Sponsor Fee. For extraordinary expenses not covered in the previous sentence, the Sponsor shall pay these expenses as they become due and seek contemporaneous reimbursement from the Trust in the form of ETH at the time of payment. For extraordinary expenses denominated in dollars, the Sponsor shall convert the expense amounts into ETH at the Index price on the date the Sponsor seeks such reimbursement from the Trust, and shall withdraw the corresponding amounts of ETH from the Trust as reimbursement for paying such extraordinary expenses of the Trust. For extraordinary expenses denominated in ETH, if any, the Sponsor shall withdraw the corresponding amounts of ETH from the Trust as reimbursement for paying such extraordinary expenses. Neither the Trust nor the Shareholders shall be responsible for any fees and expenses, including any Ethereum network fees, incurred by the Sponsor to withdraw ETH from the Trust’s ETH Account in connection with payment of the Sponsor Fee or Trust expenses not assumed by the Sponsor, or to convert such ETH, once withdrawn, into cash (if applicable). The Sponsor will sell ETH which may be facilitated by one or more Liquidity Providers and/or the ETH Custodian or an affiliate thereof, in connection with the termination of the Trust and the liquidation of the Trust’s ETH holdings, which the Sponsor shall do at a price which it is able to obtain through commercially reasonable efforts, and arrange for the distribution of the cash proceeds to the Trust’s Shareholders and creditors (if any). The amount of ETH held by the Trust may vary from time to time depending on the level of the Trust’s expenses and liabilities and the market price of ETH.

Custody of the Trust’s Assets

The Trust’s ETH Custodian will keep custody of all of the Trust’s ETH and will safeguard the private keys to the ETH associated with the Trust’s ETH Account and Clearing Account. ETH private keys are stored in two different forms: “hot” storage, whereby the private keys are stored on secure, internet-connected devices (a “hot wallet”), and “cold” storage, where digital currency private keys are stored completely offline. The ETH Custodian maintains the private keys to the Trust’s ETH in both the Trust’s ETH Account and Clearing Account in a geographically distributed fashion across the continental United States.

ETH Account

The Custody Agreement requires the ETH Custodian to hold the Trust’s ETH in cold storage, unless required to facilitate withdrawals as a temporary measure. Other than in connection with creations and redemptions, where the associated ETH is first transferred to the Trust’s Clearing Account (where they may be held in omnibus hot storage wallets, as described below) before being transferred to the Trust’s ETH Account (in the case of a creation) or to the Liquidity Provider’s Gemini account (in the case of a redemption),

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as well as in connection with transfers of ETH to pay the Sponsor Fee and to reimburse the Sponsor in ETH for payment of extraordinary expenses, which also are first transferred to the Trust’s Clearing Account before being transferred to the Sponsor, the ETH Custodian will use segregated cold storage ETH addresses for the Trust’s ETH Account. The addresses on the Ethereum Blockchain at which the Trust’s ETH in the ETH Account are held by the ETH Custodian are separate from the ETH addresses that the ETH Custodian uses for its other customers and are directly verifiable via the Ethereum Blockchain. The ETH Custodian will at all times record and identify in its books and records that such ETH constitute the property of the Trust. The ETH Custodian will not withdraw the Trust’s ETH from the Trust’s ETH Account with the ETH Custodian, or loan, hypothecate, pledge or otherwise encumber the Trust’s ETH, without the Trust’s instruction, nor will the Sponsor or any other entity or service provider. The Trust will not lease or loan ETH held in the Trust’s ETH Account with the ETH Custodian and will not give instructions to that effect.

The ETH Custodian has adopted the following security policies and practices with respect to digital assets held in cold storage: hardware security modules (“HSMs”) are used to generate, store and manage cold storage private keys; multi-signature technology is used to provide both security against attacks and tolerance for losing access to a key or facility, eliminating single points of failure; all HSMs are stored offline in air-gapped environments within a diverse network of guarded, monitored and access-controlled facilities that are geographically distributed; multiple levels of physical security and monitoring controls are implemented to safeguard HSMs within storage facilities; and all fund transfers require the coordinated actions of multiple employees.

The Sponsor has evaluated the ETH Custodian’s policies, procedures, and controls for safekeeping, exclusively possessing, and controlling the Trust’s ETH holdings and believes these are designed consistent with accepted industry practices to protect against theft, loss, and unauthorized and accidental use of the private keys, though the Sponsor does not control the ETH Custodian’s operations or implementation of such policies, procedures and controls and there can be no assurance that they will actually work as designed or prove to be successful in safeguarding the Trust’s assets against all possible sources of theft, loss or damage.

Although the ETH Custodian carries insurance, the ETH Custodian’s insurance does not cover any loss in value of ETH and only covers losses caused by certain events such as fraud or theft and, in such covered events, it is unlikely the insurance would cover the full amount of any losses incurred by the Trust. The insurance maintained by the ETH Custodian is shared among all of the ETH Custodian’s customers, is not specific to the Trust or to customers holding ETH with the ETH Custodian, and may not be available or sufficient to protect the Trust from all possible losses or sources of losses. The Trust is not a named beneficiary under the ETH Custodian’s insurance policies, though the ETH Custodian has represented to the Sponsor that the insurance covers customer losses, including losses suffered by the Trust, arising from specified events, including fraud, theft, and cyber-security breaches.

Clearing Account

The Trust will use the Clearing Account in connection with the Clearing Services, which the Trust utilizes to facilitate purchases and sales of ETH in connection with creations and redemptions of Creation Baskets as well as in connection with transfers of ETH out of the Trust to pay the Sponsor Fee and to reimburse the Sponsor in ETH for payment of extraordinary expenses. While the ETH Custodian maintains records of the Trust’s ETH balance in its Clearing Account, the actual ETH relating to the Trust’s Clearing Account is held in omnibus wallets by the ETH Custodian, meaning that ETH owned by multiple customers is held in the same wallet and at the same address on the Ethereum Blockchain. The Trust’s Clearing Account balance therefore represents an omnibus claim on the ETH Custodian’s ETH held in such wallets, and the Trust does not have an identifiable claim to specific ETH. The ETH Custodian holds the ETH across a combination of omnibus hot wallets and cold wallets. The Sponsor has no control over, and the ETH Custodian does not disclose to the Sponsor, the amount of ETH that the ETH Custodian holds in connection with the Trust’s Clearing Account in omnibus hot wallets, as compared to omnibus cold wallets. The ETH Custodian could hold substantially all ETH connected to the Trust’s Clearing Account in omnibus hot wallets, which permits more efficient transfers (thus facilitating the settlement of ETH purchase and sale transactions in connection with the Trust’s creation and redemption processes) but makes the ETH more vulnerable to hacking than if it were held in cold storage in the ETH Account. The ETH Custodian has represented to the Sponsor that it does not treat the Trust’s ETH in its Clearing Account as the ETH Custodian’s own property and will not loan, hypothecate, pledge or otherwise encumber the Trust’s ETH in its Clearing Account.

Fiat Account

The Trust expects to use the Fiat Account to facilitate the purchase and sale of ETH in connection with the cash creations and redemptions. In respect of the Fiat Account, the ETH Custodian holds the Trust’s cash held in its account at the ETH Custodian in one or more Customer Omnibus Accounts. “Customer Omnibus Account” means, with respect to fiat currency held for customers of the ETH Custodian in fiat accounts (including the Trust’s cash balance in its Fiat Account), omnibus bank accounts (each an “Omnibus Account”) at depository institutions (each, a “Bank”); money market accounts (each, a “Money Market Account”) at a Bank or financial institution; and/or payment accounts (each, a “Payment Account”) at a financial institution. The Trust intends to maintain any cash not held in the ETH Custodian’s Fiat Account at the Cash Custodian in accordance with the Cash Custody Agreement.

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The Trust generally does not intend to hold cash or cash equivalents except temporarily in connection with a cash creation or redemption transaction or to pay expenses. However, there may be situations where the Trust will unexpectedly hold cash on a temporary basis. For additional information, see “CUSTODY OF THE TRUST’S ASSETS” below.

Net Asset Value Determinations

As described in more detail below in “NET ASSET VALUE DETERMINATIONS,” “NAV” means the total assets of the Trust which shall consist solely of ETH and cash, less total liabilities of the Trust.

The Trust Agreement gives the Sponsor the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator. The Administrator determines the NAV of the Trust on each day that the Exchange is open for regular trading, as promptly as practical after 4:00 p.m. Eastern time based on the MarketVector^TMEthereum Benchmark Rate. The NAV of the Trust is the aggregate value of the Trust’s assets less its estimated accrued but unpaid liabilities (which include accrued expenses). In determining the Trust’s NAV, the Administrator values the ETH held by the Trust based on the price set by the MarketVector^TMEthereum Benchmark Rate as of 4:00 p.m. Eastern time. The Administrator also determines the NAV per Share. The Sponsor believes that use of the MarketVector^TM Ethereum Benchmark Rate mitigates against idiosyncratic market risk, as the failure of any individual spot market will not materially impact pricing for the Trust. It also allows the Administrator to calculate the NAV in a manner that significantly deters manipulation.

However, determining the value of Trust’s ETH using the MarketVector^TM Ethereum Benchmark Rate is not in accordance with U.S. generally accepted accounting principles (“GAAP”), and therefore is not used in the Trust’s financial statements. The Trust’s ETH are carried, for financial statement purposes, at fair value, as required by GAAP. The Trust determines the fair value of ETH based on the price provided by the ETH market that the Trust considers its “principal market” as of 4:00 p.m., Eastern time, on the valuation date.

Plan of Distribution

The Trust is an exchange-traded fund. When the Trust sells or redeems its Shares, it will do so in Creation Baskets that are based on the amount of ETH represented by the Creation Basket being created, the amount of ETH being equal to the combined net asset value of the number of Shares included in the Creation Basket (net of the Sponsor Fee and any accrued but unpaid expenses or liabilities not assumed by the Sponsor). The Trust currently conducts subscriptions and redemptions solely in cash. Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares. For a subscription in cash, the Authorized Participant’s subscription shall be in the amount of cash needed to purchase the amount of ETH represented by the Creation Basket being created, as calculated by the Administrator based on the Index or the other valuation policies described herein. The AP will deliver the cash to the Trust’s account at the Cash Custodian, which the Sponsor will then use to purchase ETH from a Liquidity Provider. For a redemption in cash, the Sponsor shall arrange for the ETH represented by the Creation Basket to be sold to a Liquidity Provider selected by the Sponsor and the cash proceeds distributed from the Trust’s account at the Cash Custodian to the Authorized Participant.

Following the issuance of Shares by the Trust to the AP in connection with a Creation Basket subscription, APs may then offer Shares to the public at prices that depend on various factors, including the supply and demand for Shares, the value of the Trust’s assets, and market conditions at the time of a transaction. Shareholders who buy or sell Shares during the day from their broker may do so at a premium or discount relative to the NAV of the Shares of the Trust.

Federal Income Tax Considerations

It is expected that owners of Shares will be treated, for U.S. federal income tax purposes, as if they own a proportionate share of the assets of the Trust, as if they directly receive a proportionate share of any income of the Trust, and as if they will incur a proportionate share of the expenses of the Trust. Consequently, each sale of ETH by the Trust (which includes under current Internal Revenue Service (“IRS”) guidance using ETH to pay expenses of the Trust) would constitute a taxable event to Shareholders. See “United States Federal Income Tax Consequences—Taxation of U.S. Shareholders.”

Use of Proceeds

Proceeds received by the Trust from the issuance of Creation Baskets consist of ETH, or cash. Deposits of ETH are held by the ETH Custodian on behalf of the Trust.

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Principal Investment Risks of an Investment in the Trust

An investment in the Trust involves a high degree of risk. Some of the risks you may face are summarized below. A more extensive discussion of these risks appears beginning on page [ ].

	●	Digital assets such as ETH were only introduced within the past decade, and the medium-to-long term value of the Shares is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets that are uncertain and difficult to evaluate.

	●	The trading prices of many digital assets, including ETH, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of ETH, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.

	●	The value of the Shares is subject to a number of factors relating to the fundamental investment characteristics of ETH as a digital asset, including the fact that digital assets are bearer instruments and loss, theft, destruction, or compromise of the associated private keys could result in permanent loss of the asset, and the capabilities and development of blockchain technologies such as the Ethereum Blockchain.

	●	Due to the nature of private keys, ETH transactions are irrevocable and stolen or incorrectly transferred ETH may be irretrievable. As a result, any incorrectly executed ETH transactions could adversely affect an investment in the Trust.

	●	The value of the Shares relates directly to the value of ETH, the value of which may be highly volatile and subject to fluctuations due to a number of factors.

	●	The Index has a limited history, the Index price could fail to track the global ETH price, and a failure of the Index price could adversely affect the value of the Shares.

	●	The Index price used to calculate the value of the Trust’s ETH may be volatile, adversely affecting the value of the Shares.

	●	Security threats to the Trust’s account with the ETH Custodian could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.

	●	The Ethereum network’s decentralized governance structure may negatively affect its ability to grow and respond to challenges.

	●	A temporary or permanent “fork” of the Ethereum Blockchain could adversely affect the short-, medium-, or long-term value of ETH and an investment in the Trust.

	●	Blockchain technologies are based on the theoretical conjectures as to the impossibility of solving certain cryptographical puzzles quickly. These premises may be incorrect or may become incorrect due to technological advances.

	●	Competition from the emergence or growth of other digital assets or methods of investing in ETH could have a negative impact on the price of ETH and adversely affect the value of the Shares.

	●	Due to the unregulated nature and lack of transparency surrounding the operations of ETH trading platforms, they may experience fraud, manipulation, security failures or operational problems, which may adversely affect the value of ETH and, consequently, the value of the Shares.

	●	Digital asset markets in the U.S. exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of ETH or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of ETH, mining activity, digital wallets, the provision of services related to trading and custodying ETH, the operation of the Ethereum network, or the digital asset markets generally.

	●	Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.

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	●	If regulatory changes or interpretations of an Authorized Participant’s, Liquidity Provider’s, the Trust’s or the Sponsor’s activities require the regulation of an Authorized Participant, Liquidity Provider, the Trust or the Sponsor as a money service business under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act or as a money transmitter or digital asset business under state regimes for the licensing of such businesses, an Authorized Participant, Liquidity Provider, the Trust or the Sponsor may be required to register and comply with such regulations, which could result in extraordinary, recurring and/or nonrecurring expenses to the Authorized Participant, Trust or Sponsor or increased commissions for the Authorized Participant’s clients, thereby reducing the liquidity of the shares.

	●	The treatment of digital currency for U.S. federal income tax purposes is uncertain.

	●	Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust. The Sponsor and its affiliates have no fiduciary duties to the Trust and its Shareholders other than as provided in the Trust Agreement, which may permit them to favor their own interests to the detriment of the Trust and its Shareholders.

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RISK FACTORS

You should consider carefully the risks described below before making an investment decision. You should also refer to the other information included in this Prospectus, as well as information found in documents incorporated by reference in this Prospectus, before you decide to purchase any Shares. These risk factors may be amended, supplemented or superseded from time to time by risk factors contained in any periodic report, prospectus supplement, post-effective amendment or in other reports filed with the SEC in the future.

Risks Associated with ETH And The Ethereum Network

The Trading Prices Of Many Digital Assets, Including ETH, Have Experienced Extreme Volatility In Recent Periods And May Continue To Do So. Extreme Volatility In The Future, Including Further Declines In The Trading Prices Of ETH, Could Have A Material Adverse Effect On The Value Of The Shares And The Shares Could Lose All Or Substantially All Of Their Value.

The trading prices of many digital assets, including ETH, have experienced extreme volatility in recent periods and may continue to do so. For instance, there were steep increases in the value of certain digital assets, including ETH, over the course of 2021, and multiple market observers asserted that digital assets were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2022 in digital asset trading prices, including for ETH. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout ETH’s history, including in 2017-2018 and in 2021-2022. Over the course of 2023, ETH prices have continued to exhibit extreme volatility.

Extreme volatility may persist and the value of the Shares may significantly decline in the future without recovery. The digital asset markets may still be experiencing a bubble or may experience a bubble again in the future. For example, in the first half of 2022, each of Celsius Network, Voyager Digital Ltd., and Three Arrows Capital declared bankruptcy, resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, FTX Trading Ltd. (“FTX”), one of the largest digital asset exchanges by volume at the time, halted customer withdrawals amid rumors of the company’s liquidity issues and likely insolvency, which were subsequently corroborated by its CEO. Shortly thereafter, FTX’s CEO resigned and FTX and many of its affiliates filed for bankruptcy in the United States, while other affiliates have entered insolvency, liquidation, or similar proceedings around the globe, following which the U.S. Department of Justice brought criminal fraud and other charges, and the SEC and CFTC brought civil securities and commodities fraud charges, against certain of FTX’s and its affiliates’ senior executives, including its former CEO. In addition, several other entities in the digital asset industry filed for bankruptcy following FTX’s bankruptcy filing, such as BlockFi Inc. and Genesis Global Capital, LLC (“Genesis”). In response to these events (collectively, the “2022 Events”), the digital asset markets have experienced extreme price volatility and other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital asset markets. These events have also negatively impacted the liquidity of the digital asset markets as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital asset markets continues to be negatively impacted by these events, digital asset prices, including ETH, may continue to experience significant volatility or price declines and confidence in the digital asset markets may be further undermined. In addition, regulatory and enforcement scrutiny has increased, including from, among others, the Department of Justice, the SEC, the CFTC, the White House and Congress, as well as state regulators and authorities. These events are continuing to develop and the full facts are continuing to emerge. It is not possible to predict at this time all of the risks that they may pose to the Trust, its service providers or to the digital asset industry as a whole.

Extreme volatility in the future, including further declines in the trading prices of ETH, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value. Furthermore, negative perception, a lack of stability and standardized regulation in the digital asset economy may reduce confidence in the digital asset economy and may result in greater volatility in the price of ether and other digital assets, including a depreciation in value. The Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of volatility in the price of ETH.

The Value Of The Shares Depends On The Development And Acceptance Of The Ethereum Network. The Slowing Or Stopping Of The Development Or Acceptance Of The Ethereum Network May Adversely Affect An Investment In The Trust.

Digital assets such as ETH were only introduced within the past 15 years, and the medium to long term value of the Shares is subject to a number of factors over time relating to the capabilities and development of blockchain technologies, such as the recentness of their development, their dependence on the internet and other technologies, their dependence on the role played by users, developers validators and the potential for malicious activity. For example, the realization of one or more of the following risks could materially adversely affect the value of the Shares: digital asset networks, including the Ethereum peer-to-peer network and associated blockchain ledger (such blockchain, the “Ethereum Blockchain” and together with the peer-to-peer network, the “Ethereum network” or “Layer 1 Ethereum network”), and the software used to operate them are in the early stages of development. Given the recentness of the development of digital asset networks, digital assets may not function as intended and

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parties may be unwilling to use digital assets, which would dampen the growth, if any, of digital asset networks. Because ETH is a digital asset, the value of the Shares is subject to a number of factors relating to the fundamental investment characteristics of digital assets, including the fact that digital assets are bearer instruments and loss, theft, compromise, or destruction of the associated private keys could result in permanent loss of the asset.

The Ethereum network, including the cryptographic and algorithmic protocols associated with the operation of the Ethereum Blockchain, has only been in existence since 2015, and ETH markets have a limited performance record, making them part of a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. For example, the following are some of the risks could materially adversely affect the value of the Shares:

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Digital assets, including ETH, are controllable only by the possessor of both the unique public key and private key or keys relating to the Ethereum network address, or “wallet”, at which the digital asset is held. Private keys must be safeguarded and kept private in order to prevent a third party from accessing the digital asset held in such wallet. The loss, theft, compromise or destruction of a private key required to access a digital asset may be irreversible. If a private key is lost, stolen, destroyed or otherwise compromised and no backup of the private key is accessible, the owner would be unable to access the digital asset corresponding to that private key and the private key will not be capable of being restored by the digital asset network resulting in the total loss of the value of the digital asset linked to the private key.

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Digital asset networks are dependent upon the internet. A disruption of the internet or a digital asset network, such as the Ethereum network, would affect the ability to transfer digital assets, including ether, and, consequently, their value.

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Governance of the Ethereum network is by voluntary consensus and open competition. As a result, there may be a lack of consensus or clarity on the governance of the Ethereum network, which may stymie the Ethereum network’s utility and ability to grow and face challenges. In particular, it may be difficult to find solutions or martial sufficient effort to overcome any future problems on the Ethereum network, especially long-term problems.

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The foregoing notwithstanding, the Ethereum network’s protocol is informally overseen by a collective of core developers who, along with members of the Ethereum community, can introduce proposals, known as Ethereum Improvement Proposals (“EIPs”), for updating the Ethereum network. The core developers evolve over time, largely based on self-determined participation. An “Ethereum Client” is a software application that implements the Ethereum network specification and communicates with the Ethereum network. Following the Merge, an Ethereum Client consists of two software programs, an Execution Client and a Consensus Client. Becoming a validator requires downloading additional software in addition to the Execution Client and Consensus Client. Each node must download the Ethereum Client and then connects to other computers also running the Ethereum Client software, together forming the Ethereum network. To the extent that node operators update their individual Ethereum Client to new specifications, the Ethereum network could be subject to new changes that may adversely affect the value of ether. In addition, if a digital asset network has high-profile contributors, a perception that such contributors will no longer contribute to the network could have an adverse effect on the market price of the related digital asset.

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To the extent that any validators cease to record transactions that do not include the payment of a transaction fee in solved blocks or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on the Ethereum Blockchain until a block is validated by a validator who does not require the payment of transaction fees or is willing to accept a lower fee. Any widespread delays in the recording of transactions could result in a loss of confidence in a digital asset network.

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As the Ethereum network continues to develop and grow, certain technical issues might be uncovered and the trouble shooting and resolution of such issues requires the attention and efforts of Ethereum’s global development community. Like all software, the Ethereum network is at risk of vulnerabilities and bugs that can potentially be exploited by malicious actors. For example, in July 2016, the Ethereum network underwent a hard fork to reverse the effects of a hack in which an unknown attacker drained funds from one account into an account controlled by the hacker. This hard fork resulted in the creation of a new digital asset network called Ethereum Classic. This hard fork was contentious, and as a result some users of the Ethereum Classic network may harbor ill will toward the Ethereum network. These users may attempt to negatively impact the use or adoption of the Ethereum network, as could constituencies adversely impacted by any contentious hard forks that take place in the future.

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Many digital asset networks, including the Ethereum network, face significant scaling challenges and are being upgraded with various features designed to increase the speed of digital asset transactions and the number of transactions that can processed in a given period (known as “throughput”). These attempts to increase the volume of transactions may not be effective, and such upgrades may fail, resulting in potentially irreparable damage to the Ethereum network and the value of ether.

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Moreover, in the past, bugs, defects and flaws in the source code for digital assets have been exposed and exploited, including flaws that disrupted normal Ethereum network, Ethereum Client, or DApp and smart contract operations or disabled related functionality for users, exposed users’ personal information and/or resulted in the theft of users’ digital assets. For example, in May 2023, the main Ethereum network itself reportedly suffered outages or bugs that for a short time prevented transactions from finalizing and being recorded in blocks twice in two days. Major Ethereum Clients which nodes use to access the Ethereum network, such as Geth, Besu and Nethermind, have in the past suffered outages or disruptions due to bugs. For more on an unplanned fork involving Geth clients, see “—A temporary or permanent “fork” could adversely affect the value of the Shares.” The cryptography underlying the Ethereum network or ether as an asset could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective. In any of these circumstances, a malicious actor may be able to compromise the security of the Ethereum network or take the Trust’s ether, which would adversely affect the value of the Shares. Moreover, normal operations and functionality of the Ethereum network may be negatively affected Such losses of functionality could lead to the Ethereum network losing attractiveness to users, nodes, validators, or other stakeholders, thereby dampening demand for ether. Even if another digital asset other than ether were affected by similar circumstances, any reduction in confidence in the source code or cryptography underlying digital assets generally could negatively affect the demand for digital assets and therefore adversely affect the value of the Shares.

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In December 2020, the Ethereum network launched a validator registry, referred to as the Beacon Chain, to commence an upgrade called Ethereum 2.0. Ethereum 2.0 was intended to be a new iteration of the Ethereum network that would change the Ethereum network’s consensus mechanism from proof-of-work to proof-of-stake and incorporate the use of sharding. The launch of Beacon Chain was intended to allow nodes to conduct staking transactions to test the new consensus mechanism. Upon its launch, Beacon Chain co-existed in parallel, but separately from, the main Ethereum network at the time (or “mainnet”), which was based on proof-of-work. On September 15, 2022, the proof-of-work-based Ethereum mainnet merged into the Beacon Chain and its proof-of-stake-based consensus system, integrating and unifying both networks into a single proof-of-stake-based Ethereum network (known also as the “Merge”). This upgraded network is referred to as Ethereum rather than Ethereum 2.0. A blockchain protocol’s consensus mechanism is a critical feature of its source code, and any failure to achieve the expected benefits or widespread adoption of the major structural changes to the core consensus mechanism of the Ethereum network contemplated as part of Ethereum 2.0 could have a material adverse effect on the value of ETH and the value of the Shares.

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The Ethereum network is still in the process of developing and making significant decisions that will affect policies that govern the supply and issuance of ether as well as other Ethereum network protocols. For example, the Ethereum network has on several occasions reduced the quantity of ether rewarded per block and may make additional changes in the future. The open-source nature of many digital asset network protocols, such as the protocol for the Ethereum network, means that developers and other contributors are generally not directly compensated for their contributions in maintaining and developing such protocols. As a result, the developers and other contributors of a particular digital asset may lack a financial incentive to maintain or develop the network, or may lack the resources to adequately address emerging issues. Alternatively, some developers may be funded by companies whose interests are at odds with other participants in a particular digital asset network. If the Ethereum network does not successfully develop its policies on supply and issuance, and other major design decisions or does so in a manner that is not attractive to network participants it could lead to a decline in adoption of the Ethereum network and price of ether.

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Software applications running on top of the Ethereum network (often referred to as “decentralized applications”, whether or not decentralized in fact) and smart contract developers depend on being able to obtain ether to be able to run their programs and operate their businesses. In particular, decentralized applications and smart contracts require ether in order to pay the gas fees needed to power such applications and smart contracts and execute transactions. As such, they represent a significant source of demand for ether. Ether’s price volatility (particularly where ether prices increase), or the Ethereum network’s wider inability to meet the demands of decentralized applications and smart contracts in terms of inexpensive, reliable, and prompt transaction execution (including during congested periods), or to solve its scaling challenges or increase its throughput, may discourage such decentralized application and smart contract developers from using the Ethereum network as the foundational infrastructure layer for building their applications and smart contracts. If decentralized application and smart contract developers abandon the Ethereum Blockchain for other blockchain or digital asset networks or protocols for whatever reason, the value of ether could be negatively affected.

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As of the date of this registration statement, the largest 100 ETH wallets held a substantial amount of the outstanding supply of ETH and it is possible that some of these wallets are controlled by the same person or entity. Moreover, it is possible that other persons or entities control multiple wallets that collectively hold a significant number of ETH, even if each wallet individually only holds a small amount. As a result of this concentration of ownership, large sales by such holders could have an adverse effect on the market price of ETH.

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Moreover, because digital assets, including ETH, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this Prospectus.

Digital Assets Represent A New And Rapidly Evolving Industry, And The Value Of The Shares Depends On The Acceptance Of ETH.

The first major blockchain-based digital asset, bitcoin, was launched in 2009. The Ethereum network launched in 2015 (though some ether was sold in a pre-mine in 2014). Ether, along with bitcoin, was one of the first cryptographic digital assets to gain global adoption and critical mass. In general, digital asset networks, including the Ethereum network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. For example, the realization of one or more of the following risks could materially adversely affect the value of the Shares:

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The prices of ether may be influenced by speculation, thus contributing to price volatility that makes commercial parties less likely to accept ether as a form of payment in the future, or creating challenges for the use of the Ethereum network as a blockchain infrastructure layer for third parties to build software programs on top of because of the volatility and variability of transaction fees from time to time.

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Banks and other established financial institutions may refuse to process funds for ETH transactions; process wire transfers to or from ETH trading platforms, ETH-related companies or service providers; or maintain accounts for persons or entities transacting in ETH. This could dampen liquidity in the market and damage the public perception of digital assets generally or any one digital asset in particular, such as ETH, and their or its utility as a payment system, which could decrease the price of digital assets generally or individually. Further, the lack of availability of banking services, including those provided by the Cash Custodian or the financial institutions at which the ETH Custodian maintains the cash credited to the Trust’s Fiat Account, could inhibit or prevent the Trust from being able to complete cash creations or redemptions, or the timely liquidation of ETH even if the Sponsor determined that such liquidation were appropriate or suitable.

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Certain privacy-preserving features have been or are expected to be introduced to digital asset networks, including the Ethereum network. For example, some prominent contributors to the Ethereum network have proposed the concept of “privacy pools,” zero-knowledge proofs, and other privacy-preserving features. If any such features are introduced to the Ethereum network, any exchanges or businesses that facilitate transactions in ether may be at an increased risk of criminal or civil lawsuits, or of having banking services cut off if there is a concern that these features interfere with the performance of anti-money laundering duties and economic sanctions checks or facilitate illicit financing or crime.

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Users, developers and miners may otherwise switch to or adopt certain digital assets at the expense of their engagement with other digital asset networks, which may negatively impact those networks, including the Ethereum network.

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The Trust is not actively managed and will not have any formal strategy relating to the development of the Ethereum network and will not attempt to avoid or mitigate losses caused by declines in the price of ETH.

Due To The Nature Of Private Keys, ETH Transactions Are Irrevocable And Stolen Or Incorrectly Transferred ETH May Be Irretrievable. As A Result, Any Incorrectly Executed ETH Transactions Could Adversely Affect An Investment In The Trust.

ETH transactions are typically not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been signed with private keys, verified and recorded in a block that is added to the Ethereum Blockchain, an incorrect transfer of cryptocurrency, such as ETH, or a theft of ETH generally will not be reversible and the Trust may not be capable of seeking compensation for any such transfer or theft. Although the Trust’s transfers of ETH will regularly be made to or from the Trust’s account at the ETH Custodian, it is possible that, through computer or human error, or through theft or criminal action, the Trust’s ETH could be transferred from the Trust’s account at the ETH Custodian in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. To the extent that the Trust is unable to successfully seek redress for such error or theft, such loss could adversely affect an investment in the Trust.

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The custody of the Trust’s ETH is handled by the ETH Custodian, and the transfer of ETH to and from Liquidity Providers normally takes place through the ETH Custodian’s Clearing Services and is directed by the Administrator and the Transfer Agent. The Sponsor has evaluated the procedures and internal controls of the Trust’s ETH Custodian to safeguard the Trust’s ETH holdings, as well as the procedures and internal controls of the Trust’s Administrator. However, it is possible that, through computer or human error, or through theft or criminal action, the Trust’s ETH could be transferred from the Trust’s ETH Account or Clearing Account at the ETH Custodian in incorrect amounts or to unauthorized third parties, or to incorrect destination addresses on the Ethereum Blockchain. Alternatively, if the ETH Custodian’s internal procedures and controls are inadequate to safeguard the Trust’s ETH holdings, and the Trust’s private key(s) is (are) lost, destroyed or otherwise compromised and no backup of the private key(s) is (are) accessible, the Trust will be unable to access its ETH, which could adversely affect an investment in the Shares of the Trust. In addition, if the Trust’s private key(s) is (are) misappropriated and the Trust’s ETH holdings are stolen, including from or by the ETH Custodian, the Trust could lose some or all of its ETH holdings, which could adversely impact an investment in the Shares of the Trust.

Such events have occurred in connection with digital assets in the past. For example, in September 2014, the Chinese digital asset exchange Huobi announced that it had sent approximately 900 bitcoins and 8,000 Litecoins (worth approximately $400,000 at the prevailing market prices at the time) to the wrong customers. To the extent that the Trust is unable to seek a corrective transaction with such third party or is incapable of identifying the third party which has received the Trust’s ETH through error or theft, the Trust will be unable to revert or otherwise recover incorrectly transferred ETH. The Trust will also be unable to convert or recover its ETH transferred to uncontrolled accounts. To the extent that the Trust is unable to seek redress for such error or theft, such loss could adversely affect the value of the Shares.

A Disruption Of The Internet May Affect Ethereum Operations, Which May Adversely Affect The ETH Industry And An Investment In The Trust.

The Ethereum network relies on the Internet. A significant disruption of Internet connectivity (i.e., one that affects large numbers of users or geographic regions) could disrupt the Ethereum network’s functionality and operations until the disruption in the Internet is resolved. A disruption in the Internet could adversely affect an investment in the Trust or the ability of the Trust to operate.

The Ethereum Network’s Decentralized Governance Structure May Negatively Affect Its Ability To Grow And Respond To Challenges.

The governance of decentralized networks, such as the Ethereum network, is by voluntary consensus and open competition. In other words, the Ethereum network has no central decision-making body or clear manner in which participants can come to an agreement other than through voluntary, widespread consensus. As a result, a lack of widespread consensus in the governance of the Ethereum network may adversely affect the network’s utility and ability to adapt and face challenges, including technical and scaling challenges. Historically the development of the source code of the Ethereum network has been overseen by the core developers. Core developers’ roles evolve over time, largely based on self determined participation. If a significant majority of users and validators adopt amendments to a decentralized network based on the proposals of such core developers, such network will be subject to new protocols that may adversely affect the value of the relevant digital asset. However, the Ethereum network would cease to operate successfully without both miners and users, and the core developers cannot formally compel them to adopt the changes to the source code desired by core developers, or to continue to render services or participate in the Ethereum network. As a general matter, the governance of the Ethereum network generally depends on most of members of the Ethereum community ultimately reaching some form of voluntary agreement on significant changes.

The decentralized governance of the Ethereum network may make it difficult to find or implement solutions or marshal sufficient effort to overcome existing or future problems, especially protracted ones requiring substantial directed effort and resource commitment over a long period of time, such as scaling challenges. Deeply-held differences of opinion have led to forks in the past, such as between Ethereum and Ethereum Classic, and could lead to additional forks in the future, with potentially divisive effects. The Ethereum network’s failure to overcome governance challenges could exacerbate problems experienced by the network or cause the network to fail to meet the needs of its users, and could cause users, miners, and developer talent to abandon the Ethereum network or to choose competing blockchain protocols, or lead to a drop in speculative interest, which could cause the value of ETH to decline. If the Ethereum community is unable to reach consensus in the future, it could have adverse consequences for the network or lead to a fork, which could affect the value of ETH.

The Scheduled Creation Of Newly Minted ETH And Their Subsequent Sale May Cause The Price Of ETH To Decline, Which Could Negatively Affect An Investment In The Trust.

In accordance with the Ethereum 2.0 upgrades, newly created or minted ETH are generated through a process referred to as “staking” which involves the collection of a staking reward of new ETH. To operate a node, a validator must acquire and lock 32 ETH

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by sending a special transaction to the staking contract, which transaction associates the staked ETH with a withdrawal address (to unlock the ETH and receive any staking rewards) and a validator address (to designate the validator node performing transaction verification). When the recipient makes newly minted ETH available for sale, there can be downward pressure on the price of ETH as the new supply is introduced into the Ethereum market.

There Is No Cap On ETH Supply.

The rate at which new ETH are issued and put into circulation is expected to vary. The Ethereum network has no formal cap on the total supply of ETH and the supply could theoretically be unlimited, which could put downward pressure on the price of ETH.

The Open-Source Structure Of The Ethereum Network Protocol Means That The Core Developers And Other Contributors Are Generally Not Directly Compensated For Their Contributions In Maintaining And Developing The Ethereum Network Protocol. A Failure To Properly Monitor And Upgrade The Ethereum Network Protocol Could Damage The Ethereum Network And An Investment In The Trust.

The Ethereum network operates based on an open-source protocol maintained by the core developers and other contributors, largely on the GitHub resource section dedicated to ETH development. As new ETH are rewarded solely for validator activity (other than the 2014 pre-mine) and are not sold on an ongoing basis to generate revenue to support development activity, and the Ethereum network protocol itself is made available for free rather than sold or made available subject to licensing or subscription fees and its use does not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating the source code for the Ethereum network protocol. Consequently, there is a lack of financial incentive for developers to maintain or develop the Ethereum network and the core developers may lack the resources to adequately address emerging issues with the Ethereum network protocol. Although the Ethereum network is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. The perception that high-profile contributors may no longer contribute to the network may have an adverse effect on the market price of any related digital assets. For example, in June 2017, an unfounded rumor circulated that Ethereum core developer Vitalik Buterin had died. Following the rumor, the price of ether decreased approximately 20% before recovering after Buterin himself dispelled the rumor. Some have speculated that the rumor led to the decrease in the price of ETH. In the event a high-profile contributor to the Ethereum network, such as Vitalik Buterin, is perceived as no longer able to contribute to the Ethereum network due to death, retirement, withdrawal, incapacity, or otherwise, whether or not such perception is valid, it could negatively affect the price of ETH, which could adversely impact the value of the Shares.

Alternatively, some developers may be funded by entities whose interests are at odds with other participants in the Ethereum network. In addition, a bad actor could also attempt to interfere with the operation of the Ethereum network by attempting to exercise a malign influence over a core developer. To the extent that material issues arise with the Ethereum network protocol and the core developers and open-source contributors are unable to address the issues adequately or in a timely manner, the Ethereum network and an investment in the Trust may be adversely affected.

A Temporary Or Permanent “Fork” Of The Ethereum Blockchain Could Adversely Affect An Investment In The Trust.

Ethereum software is open source. Any user can download the software and participate in the Ethereum network, and no permission of a central authority or body is needed to do so. In addition, anyone can propose a modification to the Ethereum network’s source code and then propose that the Ethereum network community adopt the modification. These proposed modifications to the Ethereum network’s source code, if adopted, can lead to forks (referred to as “volitional forksˮ because they take place through a formal process).

In the case of volitional forks, the core developers, including those associated with or funded by the Ethereum Foundation, are able to access and alter the Ethereum network source code and, as a result, they are typically responsible for proposing quasi-official or widely publicized releases of updates and other changes to the Ethereum network’s source code called EIPs. Any user can propose an idea for modifying the Ethereum network’s source code, and the core developers are responsible for merging the proposed idea into the EIP repository on GitHub, where it formally becomes an EIP. However, core developers are not monolithic. At the protocol level, certain core developers may support a given change while others oppose it. Developers of certain Ethereum Clients may support the change and incorporate the change into an update to their particular Ethereum Consensus Client or Execution Client, while developers of other Ethereum Clients may not do so. In addition, the release of proposed updates to the Ethereum network’s source code by core developers does not guarantee that the updates will be automatically adopted. The developers of each Ethereum Client must agree to implement the EIP’s changes to the Ethereum network in the source individual for their respective client software, nodes must accept the changes made available by the developers of the Ethereum Client software they use by choosing to individually download the modified Ethereum Client software, which they will likely not do unless a critical mass of validators and users – such as decentralized application (“DApp”) and smart contract developers, as well as end users of DApps and smart contracts, and anyone else who transacts on the Ethereum Blockchain or Ethereum network – support the shift as well. If no such critical mass emerges, node operators will not download the change, and the upgrades will lack adoption.

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respective source code they are responsible for developing and maintaining, the source code modification will be introduced and made available to download. Typically, after a modification is introduced and a substantial majority of users and validators express support, leading to node operators consenting to the modification by choosing to download it, the change is implemented at a specific block number on the Ethereum network and the network continues to operate uninterrupted on a single blockchain. However, if less than a substantial majority of core developers (whether at the protocol level or the individual Ethereum Client level), users, validators and node operators consent to the proposed modification, but the modification is nonetheless implemented by some core developers, Ethereum Clients, node operators, users and validators, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” (i.e., “split”) of the Ethereum network (and the Ethereum Blockchain), with one version (employed by those core developers, Ethereum Clients, node operators, validators and users who rejected the change) running the pre-modified software and the other (employed by core developers, Ethereum Clients, node operators, validators and users who chose to adopt the change) running the modified software. The effect of such a fork would be the existence of two (or more) versions of the Ethereum network running in parallel, but with each version’s ETH lacking interchangeability, and with different blockchains, transaction histories, and ownership ledgers associated with each. For example, in July 2016, Ethereum “forked” into Ethereum and a new digital asset, Ethereum Classic, as a result of the Ethereum network community’s response to a significant security breach in which an anonymous hacker exploited a smart contract running on the Ethereum network to syphon approximately $60 million of ETH held by The DAO, a distributed autonomous organization, into a segregated account. In response to the hack, most participants in the Ethereum community elected to adopt a “fork” that effectively reversed the hack. However, a minority of users, developers, and miners continued to develop and use the original blockchain, now referred to as “Ethereum Classic” with the digital asset on that blockchain now referred to as Ether Classic, or ETC. In practice, the two networks would compete with each other for users, validators, and adoption, potentially to their mutual detriment (for example, if the number of validators on each network is too small leading to security concerns, as discussed below, or if the number of users on each is reduced compared to the number of users of the single pre-fork blockchain network). Debates relating to hard forks can be contentious and hard fought among network participants, and can lead to ill will. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of validating power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual validator or validating pool’s validating power to exceed relevant thresholds of the total on either network, thereby making them both more susceptible to attack. If such a contentious hard fork were to occur on the Ethereum Blockchain in the future, it could cause the Ethereum network to lose users, miners, and developers, and could cause ETH to lose value, adversely affecting the price of the Shares. The pre-fork and post-fork blockchains could compete against each other for users, miners, and developer talent, to their mutual detriment.

Such a fork in the Ethereum Blockchain typically would be addressed by community-led efforts to merge the forked Ethereum Blockchains, and several prior forks have been so merged. Since the Ethereum network’s inception, modifications to the Ethereum network have generally been accepted by the majority of users and miners, ensuring that the Ethereum network remains a coherent economic system and the focal point of the majority of developer activity. There is no assurance, however, that this will continue to be the case, and if it is not, then the price of ETH could be negatively affected. The original blockchain and the forked blockchain could potentially compete with each other for users, developers, and miners, leading to a loss of these for the original blockchain. A fork of any kind could adversely affect an investment in the Trust or the ability of the Trust to operate and the Trust’s procedures may be inadequate to address the effects of a fork.

A future fork in the Ethereum network could adversely affect the value of the Shares or the ability of the Trust to operate. As with any change to software code, software upgrades and other changes to the source code or protocols of the Ethereum network could fail to work as intended or could introduce bugs, coding defects, unanticipated or undiscovered problems, flaws, or security risks, create problematic economic incentives which incentivize behavior which has a negative effect on the Ethereum network’s users, validators, or the Ethereum network as a whole, or otherwise adversely affect, the speed, security, usability, or value of the Ethereum network or ETH. A hard fork could also adversely affect the price of ether at the time of announcement or adoption or subsequently. After the hard fork, it is possible the aggregate price of the two versions of the digital asset running in parallel would be less than the price of the digital asset immediately prior to the fork. Alternatively, as with any change to software code, software upgrades and other changes to the source code or protocols of the Ethereum network could fail to work as intended or could introduce bugs, coding defects, unanticipated or undiscovered problems, flaws, or security risks, create problematic economic incentives which incentivize behavior which has a negative effect on the Ethereum network’s users, validators, or the Ethereum network as a whole, or otherwise adversely affect, the speed, security, usability, or value of the Ethereum network or ether. If a hard fork caused operational problems for either post-fork network or blockchain, the digital assets associated with the affected network could lose some or all of their value, or cause users and validators to abandon the Ethereum network in favor of other competing digital asset networks and blockchains. Furthermore, while the Sponsor will, as permitted by the terms of the Trust Agreement, determine which network is generally accepted as the Ethereum network and should therefore be considered the appropriate network for the Trust’s purposes, and there is no guarantee that the Sponsor will choose the network and the associated digital asset that is ultimately the most valuable fork. Any of these events could therefore adversely impact the value of the Shares.

On March 13, 2024, the Ethereum network underwent a volitional fork called “Dencunˮ implementing a series of EIPs. For example, EIP 4844 is intended to improve the economics of Layer 2s by reducing transaction fees for Layer 2s who batch transactions executed on the Layer 2s and upload them as a batch (or as a single proof) onto the main Layer 1 Ethereum network. Proponents hope it will achieve this objective by, among other things, providing Layer 2 scaling solutions a designated storage space on the Layer 1 Ethereum network, called Binary Large Objects (“blobsˮ), which attach large data chunks to transactions on the Layer 1 Ethereum network and are recorded on the Layer 1 Ethereum network’s blockchain. The data in blobs become inaccessible on the Layer 1 Ethereum network after a temporary period of time, thereby reducing demands for storage space on the Layer 1 Ethereum network, unlike the previous method of storing batched data from Layer 2s, which caused the data to remain permanently on the Layer 1 Ethereum network. This is expected by proponents of Dencun to reduce the cost of storing the data on the Ethereum Layer 1 network permanently, making Layer 2s more cost-efficient to operate and potentially more effective as a scaling solution. Immediately following the upgrade, some Layer 2s reportedly experienced reduced transaction fees when batching transactions to the main Layer 1 Ethereum network, which in turn lowered the transaction costs for executing transactions on such Layer 2s, but this also is believed to have resulted in ETH prices (as the native asset of the Layer 1 Ethereum network) dropping as well due, in part, to the reduced demand for ETH to pay the transaction costs of recording data on the Layer 1 Ethereum network. Decreased ETH prices could have an adverse effect on the value of the Shares. Additionally, some Layer 2s, such as Blast, reportedly experienced outages and other disruptions in the aftermath of the Dencun upgrade, which in the case of Blast halted block production on the Blast Layer 2 blockchain for a period of time, though it was reportedly restored shortly thereafter. As with any change to software code, volitional forks such as Dencun or other such forks could introduce bugs, coding defects, unanticipated or undiscovered problems, flaws, security risks, problematic incentive structures, or otherwise fail to work as intended or achieve the expected benefits that proponents hope for in the short term or the long term, which could also have an adverse effect on adoption of the Ethereum network and the value of ETH, and therefore the Shares.

In September 2022, the Ethereum network transitioned to a proof-of-stake consensus model, in an upgrade referred to as the “Merge.” Following the Merge, a hard fork of the Ethereum network occurred, as a small number of Ethereum validators and network participants planned to maintain the proof-of-work consensus mechanism that was removed as part of the Merge. This version of the network , which is not backwards-compatible with the Ethereum Layer 1 blockchain, is considered a forked branch and was rebranded as “Ethereum Proof-of-Work.” Unlike proof-of-work, in which miners expend computational resources to compete to validate transactions and are rewarded ETH in proportion to the amount of computational resources expended, in proof-of-stake, miners (also called validators) risk or “stake” ETH to compete to be randomly selected to validate transactions and are rewarded ETH in accordance with an algorithm calibrated according to the number of validators who have staked ETH. Any malicious activity by a miner, such as mining multiple blocks, disagreeing with the eventual consensus or otherwise violating protocol rules, results in the forfeiture or

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“slashing” of a portion of the staked ETH. Proof-of-stake is viewed as more energy efficient and scalable than proof-of-work. There can be no assurance that these or other benefits will be realized, and failure to achieve these intended benefits could cause ETH to lose some or all of its value, and could adversely affect the price of the Shares or the ability of the Trust to operate.

Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued digital assets exchanges through at least October 2016. A digital assets exchange announced in July 2016 that it had lost 40,000 Ether Classic, worth about $100,000 at that time, as a result of replay attacks. Similar replay attack concerns occurred in connection with the Bitcoin Cash and Bitcoin Satoshi’s Vision networks split in November 2018. In November 2016, the Ethereum network underwent a hard fork, Spurious Dragon, that was intended to provide some protection against replay attacks. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of mining power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual validator or validator pool’s hashing power to exceed 50% or 2/3 of the processing power of the network that retained or attracted less mining power, thereby making digital assets that rely on that network, which could include ETH, more susceptible to attack. Any of these events could cause the Ethereum network to be less attractive to potential users, including smart contract and decentralized application developers, or cause a decline in speculative interest, and thereby cause ETH to decline in value, causing a corresponding decrease in the price of the Shares.

A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Recently, such an accidental fork reportedly occurred in the Go-Ethereum (“Geth”) client, which is a popular Ethereum Client that many nodes use to access the Ethereum network. In November 2020, a bug was discovered in Geth (but not the other Ethereum Clients at the time, such as Besu, OpenEthereum, and Nethermind), and a patch was released that all users of the Geth Client were supposed to download and apply simultaneously. However, not all users of Geth did so, resulting with the non-patched Geth users temporarily running a different version of the Ethereum Blockchain than the patched Geth users and users of other Ethereum Clients. This temporarily created two conflicting versions of the Ethereum Blockchain, causing the non-patched Geth users to be unable to reach consensus with the rest of the users of the Ethereum Blockchain, interrupting their access to the Ethereum network. Ultimately, the problem was reportedly fixed by releasing a new upgraded version of Geth that all users of the Geth client were to promptly download. This reportedly harmonized the conflicting versions and restored synchronization among Geth users, fixing the problem and restoring access to the Ethereum network. In the future, if an accidental or unintentional fork similar to what happened within the Geth client in November 2020 were to reoccur within Geth (or any other major Ethereum Client), or were to happen to the Ethereum network as a whole (instead of being limited to a single Ethereum Client, in this case Geth), such a fork could lead to users and miners losing confidence in the Ethereum network and abandoning it in favor of other blockchain protocols. Furthermore, it is possible that, in a future accidental or unintentional fork, a substantial number of users and miners could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains, resulting in a permanent fork. Moreover, unlike Bitcoin, which has a single widely-accepted reference implementation in Bitcoin Core, after the Merge, nodes on the Ethereum network must run both an Execution Client and a Consensus Client paired together, with the implementations selected at the discretion of the node operator. There are multiple groups independently developing and implementing their respective Execution Clients and Consensus Clients; while some individual Execution Clients or Consensus Clients are more popular or widely adopted than others, there remains heterogeneity among Ethereum Clients. Each Execution Client and Consensus Client needs to interoperate seamlessly with each other Execution Client and Consensus Client. Although this diversity of Ethereum Clients is perceived by some to promote decentralization of the Ethereum network, it comes at a potential cost: if there are any unanticipated or undiscovered flaws, bugs, software defects, or interoperability failures causing any individual Execution Client to fail to interoperate seamlessly with any other individual Execution Client or any Consensus Client, the Ethereum network as a whole could suffer an unexpected hard fork, major disruption, catastrophic outage, system failure, loss of confidence or adoption among users or validators, or a variety of other problems. Any of these events could cause ETH to decline in value, adversely affecting the price of Shares.

Apart from the foregoing hard forks, which effectively constituted improvised responses to unplanned events, the Ethereum network also regularly implements volitional hard forks in order to achieve its development roadmap, advance the scalability process, and to improve the network generally. For example, in connection with the Ethereum development roadmap, the Ethereum network executed volitional hard forks to transition from the initial Frontier development stage into the Homestead development stage in 2016; to transition from the Homestead development stage to the first sub-stage, Byzantium, of the Metropolis development stage in 2017; to transition from the Byzantium sub-stage to the St. Petersburg sub-stage in early 2019; and to transition from the St. Petersburg sub-stage to the Istanbul sub-phase, in late 2019. In April 2021, Ethereum underwent the Berlin and Altair hard forks, among others. In 2022, Ethereum underwent the Bellatrix and Paris hard forks (collectively constituting the Merge). In 2023, Ethereum underwent the Capella and Shanghai hard forks (collectively, “Shapella”), which enabled withdrawals of staked assets to the Layer 1 Ethereum network’s blockchain for the first time (they had previously been locked on the Beacon Chain following the Merge). The next Ethereum hard fork is the expected to be the Prague and Electra (collectively, “Pectra”), hard forks, which may or may not be completed in 2024 (or ever). Any of these or future hard forks could fail to work as intended or could introduce bugs, coding defects, unanticipated or undiscovered problems, flaws, or security risks, create problematic economic incentives which incentivize behavior which has a negative effect on the Ethereum network’s users,

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validators, or the Ethereum network as a whole, or otherwise adversely affect, the speed, security, usability, or value of the Ethereum network or ETH. Alternatively, such hard forks could be contentious, leading to a split and fracture in the Ethereum community to its collective detriment, as discussed above. Any such outcomes could adversely affect the value of the Shares.

Shareholders May Not Receive The Benefits Of Any Forks Or “Airdrops.”

We refer to the right to receive any benefits arising from a fork, airdrop (defined below), or similar event as an “Incidental Right” and any such virtual currency acquired through an Incidental Right as “IR Virtual Currency.” The only crypto asset to be held by the Trust will be ETH. The Trust has adopted the following procedures to address situations involving any fork, airdrop or similar event that results in the issuance of Incidental Rights or IR Virtual Currency that the Trust may receive. The Trust Agreement stipulates that if a fork occurs, the Sponsor shall determine which asset constitutes ETH and which network constitutes the Ethereum network, and the Sponsor will as soon as possible cause the Trust to irrevocably abandon the Incidental Rights or IR Virtual Currency. Because the Trust will abandon any Incidental Rights and IR Virtual Currency, the Trust would not receive any direct or indirect consideration for the Incidental Rights or IR Virtual Currency and thus the value of the Shares will not reflect the value of the Incidental Rights or IR Virtual Currency. Such Incidental Rights or IR Virtual Currency will not be taken into account for purposes of determining NAV. In the event the Trust seeks to change this position, an application would need to be filed with the SEC by the Exchange seeking approval to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency that is not ETH in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor would arrange to sell or otherwise dispose of the Incidental Rights or IR Virtual Currency and for the proceeds (if any) to be distributed to the Shareholders. There can be no assurance as to whether or when the Sponsor would make such a decision, or when the Exchange will seek or obtain this approval, if at all.

In addition to forks, a digital asset may become subject to a similar occurrence known as an “airdrop.” In an airdrop, the promotors of a new digital asset announce to holders of another digital asset that such holders will be entitled to claim a certain amount of the new digital asset for free, based on the fact that they hold such other digital asset. Neither the Trust nor the Sponsor shall be under any obligation to claim or attempt to secure or realize any economic benefit from “airdropped” assets, and the Sponsor will cause the Trust to irrevocably and permanently abandon, for no consideration, such Incidental Rights or IR Virtual Currency. In the event the Trust seeks to change this position, an application would need to be filed with the SEC by the Exchange seeking approval to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency associated with the airdropped assets in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor would arrange to sell or otherwise dispose of the Incidental Rights or IR Virtual Currency and for the proceeds (if any) to be distributed to the Shareholders.

With respect to any fork, airdrop or similar event, the Sponsor will cause the Trust to irrevocably abandon the Incidental Rights and any IR Virtual Currency associated with such event. As such, Shareholders will not receive the benefits of any forks, and the Trust is not able to participate in any airdrop. In the event the Trust seeks to change this position, an application would need to be filed with the SEC by the Exchange seeking approval to amend its listing rules to permit the Trust to change this policy.

Even if required regulatory approval is sought and obtained, Shareholders may not receive the benefits of any forks, airdrops, or similar events, the Trust may not choose, or be able, to participate in an airdrop, and the timing of receiving any benefits from a fork, airdrop or similar event is uncertain. Any inability to recognize the economic benefit of a hard fork or airdrop could adversely affect the value of the Shares.

In The Event Of A Hard Fork Of The Ethereum Network, The Sponsor Will, If Permitted By The Terms Of The Trust Agreement, Use Its Discretion To Determine Which Network Should Be Considered The Appropriate Network For The Trust’s Purposes, And In Doing So May Adversely Affect The Value Of The Shares.

In the event of a hard fork of the Ethereum network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Ethereum network, is generally accepted as the Ethereum network and should therefore be considered the appropriate network for the Trust’s purposes. The Sponsor will base its determination on a variety of then relevant factors, including, but not limited to, the Sponsor’s beliefs regarding expectations of the core developers of Ethereum, users, service providers, businesses, miners and other constituencies, as well as the actual continued acceptance of, mining power on, and community engagement with, the Ethereum network. There is no guarantee that the Sponsor will choose the digital asset that is ultimately the most valuable fork, and the Sponsor’s decision may adversely affect the value of the Shares as a result. The Sponsor may also disagree with Shareholders, security vendors and MarketVector on what is generally accepted as Ethereum and should therefore be considered “ETH” for the Trust’s purposes, which may also adversely affect the value of the Shares as a result.

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The Ethereum Blockchain Could Be Vulnerable To Attacks on Transaction Finality and Consensus Processes, Which Could Adversely Affect An Investment In The Trust Or The Ability Of The Trust To Operate.

Following the Merge and the switch to proof-of-stake validation, the Ethereum network is currently vulnerable to several types of attacks, including:

	•	“>33% attack” where, if a validator or group of validators were to gain control of more than 33% of the total staked ether on the Ethereum network, a malicious actor could temporarily impede or delay block confirmation or even cause a temporary fork in the blockchain.

	•	“>50% attack” where, if a validator or group of validators acting in concert were to gain control of more than 50% of the total staked ether on the Ethereum network, a malicious actor would be able to gain full control of the Ethereum network and the ability to manipulate the blockchain on a forward-looking basis, including censoring transactions following the achievement of threshold, double-spending and fraudulent block propagation, while the attacker maintains the threshold.

	•	“>66% attack” where, if a validator or group of validators acting in concert were to gain control of more than 66% of the total staked ether on the Ethereum network, a malicious actor could permanently and irreversibly manipulate the blockchain, including censorship, double-spending and fraudulent block propagation, both on a forward- and backward-looking basis. The attacker could unilaterally finalize their preferred chain without the votes of any other stakers, and could also reverse past finalized blocks.

If a malicious actor, group or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains certain percentages of the validating power dedicated to validation on the Ethereum network is controlled by a bad actor (often referred to as a “51% attack”, though the numerical thresholds vary in the post-Merge proof-of-stake consensus mechanism of the Ethereum network), it may be able to alter the Ethereum Blockchain on which the Ethereum network and ETH transactions rely. The Ethereum network’s proof-of-stake consensus mechanism requires a 2/3 supermajority of validators who have staked ETH to vote in favor in order to finalize transactions and add blocks to the Ethereum Blockchain. If the bad actor were to obtain 2/3 of the total ETH staked in validation processes, it is widely believed that the bad actor could construct fraudulent blocks, “double-spend” its own ETH (i.e., spend the same ETH in more than one transaction), or censor other users’ transactions by preventing them from being confirmed while continuing to validate and confirm its own transactions and earn the associated block reward, thereby enriching itself while also entrenching its own control of the Ethereum Blockchain. If the bad actor were to obtain 1/3 of the total ETH staked in validation processes, the bad actor could prevent certain transactions from completing in a timely manner, or at all, and prevent the confirmation of other users’ transactions, though this would likely be temporary (since it would likely be penalized for inactivity leakage, resulting in the bad actor’s staked ETH being slashed) and it likely could not double spend or propagate fraudulent blocks without the 66% supermajority of staked assets. With control of the respective threshold of total staked assets on the Ethereum network, it could be possible for the malicious actor to control, exclude or modify the ordering of transactions on the Ethereum Blockchain and prevent the confirmation of other users’ transactions, while continuing to mine new ETH and confirm its own blocks, for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the validating power on the Ethereum network or the Ethereum community did not reject the fraudulent blocks as malicious or to the extent that such bad actor did not yield its control of processing power, reversing any changes made to the Ethereum Blockchain may be difficult or impossible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down the Ethereum network.

For example, in August 2020, the Ethereum Classic network was the target of two double-spend attacks by an unknown actor or actors that gained more than 50% of the processing power of the Ethereum Classic network. The attacks resulted in reorganizations of the Ethereum Classic blockchain that allowed the attacker or attackers to reverse previously recorded transactions in excess of $5.0 million and $1.0 million. Any similar attacks on the Ethereum network could negatively impact the value of ETH and the value of the Shares.

In addition, in May 2019, the Bitcoin Cash network experienced a 51% attack when two large mining pools reversed a series of transactions in order to stop an unknown miner from taking advantage of a flaw in a recent Bitcoin Cash protocol upgrade. Although this particular attack was arguably benevolent, the fact that such coordinated activity was able to occur may negatively impact perceptions of the Bitcoin Cash network. Although the two attacks described above took place on proof-of-work-based networks, it is possible that a similar attack may occur on the Ethereum network, which could negatively impact the value of ETH and the value of the Shares.

Although the Sponsor is unaware of any reports of malicious control of mining or validation processes of the Ethereum network at the protocol level leading to double-spending or similar malicious attacks since its early days, it is believed that certain validation pools already currently exceed the 33% threshold on the Ethereum network. See “Risk Factors—Liquid Staking Applications pose centralization concerns.” In the future, it is theoretically possible that certain validation pools could potentially exceed the 33% needed to interfere with transaction confirmation and potentially control even larger amounts of the Ethereum network’s total staked assets, such as the 51% majority to propagate fraudulent future blocks or 2/3 supermajority needed for total unilateral control and the ability to revert past finalized blocks. The possible crossing or near-crossing of the 33% threshold indicates a greater risk that a single validation or staking pool could exert authority over the validation of Ethereum network transactions, and there can be no assurance other thresholds would not be crossed. Also, if validators experience financial or other difficulties on a large scale and are unable to participate in validation activities, whether due to a downturn in the Ethereum market or other factors, the risks of the Ethereum network becoming more centralized could increase. Any such events could cause the price of ETH, and thus the value of the Shares, to decrease. See also “—Liquid staking applications pose centralization concerns”below.

A malicious actor may also obtain control over the Ethereum network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. To the extent that users and miners accept amendments to the source code proposed by the controlled core developer, other core developers do not counter such amendments, and such amendments enable the malicious exploitation of the Ethereum network, the risk that a malicious actor may be able to obtain control of the Ethereum network in this manner exists. Moreover, it is possible that a group of ETH holders that together control more than 50% of outstanding ether are in fact part of the initial or core developer group, or are otherwise influential members of the Ethereum community. To the extent that the initial or existing core developer groups also control more than the relevant thresholds of outstanding ETH, as some believe, the risk of and arising from this particular group of users obtaining control of the validating power on the Ethereum network will be even greater, and should this materialize, it may adversely affect the value of the Shares.

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Liquid Staking Applications Pose Centralization Concerns.

Validators must deposit 32 ETH to activate a unique validator key pair that is used to sign block proposals and attestations on behalf of its stake (i.e., vote on its view of the chain). For every 32 ETH deposit that is staked, a unique validator key pair is generated. This validator key pair is only used in validation processes (block proposal and attestation, and the staking associated therewith), and is separate from the public-private key pair generated in respect of the blockchain address on the Ethereum network which is used to hold the ETH. A, application built on the Ethereum network, or a single node operator, can manage many validator key pairs. For example, Lido, an application that provides a so-called “liquid staking” solution which permits holders of ETH to deposit them with Lido, which stakes the ETH while issuing the holder a transferrable token, is reported by some sources to have or have had up to 275,000 validator key pairs (each representing 32 staked ETH) divided across over 30 node operators. At times, Lido has reportedly controlled around or in excess of 33% of the total staked ETH on the Ethereum network. While it is widely believed that Lido has little incentive to attempt to interfere with transaction finality or block confirmations using its reported 33% stake, since doing so would likely cause its entire stake to be slashed and thus lost (assuming good actors unaffiliated with Lido controlled the remainder), and also because Lido is believed to not control most of the third party node operators where its ETH is staked, and finally since the occurrence of such manipulation of the Ethereum network’s consensus process by Lido or any other actor would likely cause ETH to lose substantial value (which would obviously hurt Lido economically), it nevertheless poses centralization concerns. If Lido, or a bad actor with a similar sized stake, were to attempt to interfere with transaction finality or block confirmations, it could negatively affect the use and adoption of the Ethereum network, the value of ETH, and thus the value of the Shares.

If Validators Exit The Ethereum Network, It Could Increase The Likelihood Of A Malicious Actor Obtaining Control.

Validators exiting the network could make the Ethereum network more vulnerable to a malicious actor obtaining control of a large percentage of staked ETH, which might enable them to manipulate the Ethereum Blockchain by censoring or manipulating specific transactions, as discussed previously. If the Ethereum Blockchain suffers such an attack, the price of ETH could be negatively affected, and a loss of confidence in the Ethereum network could result. Any reduction in confidence in the transaction confirmation process or staking power of the Ethereum network may adversely affect an investment in the Trust.

Blockchain Technologies Are Based On Theoretical Conjectures As To The Impossibility Of Solving Certain Cryptographical Puzzles Quickly. These Premises May Be Incorrect Or May Become Incorrect Due To Technological Advances.

Blockchain technologies are premised on theoretical conjectures as to the impossibility, in practice, of solving certain mathematical problems quickly. Those conjectures remain unproven, however, and mathematical or technological advances could conceivably prove them to be incorrect. Blockchain technology companies may also be negatively affected by cryptography or other technological or mathematical advances, such as the development of quantum computers with significantly more power than computers presently available, that undermine or vitiate the cryptographic consensus mechanism underpinning the Ethereum Blockchain and other distributed ledger protocols. If either of these events were to happen, markets that rely on blockchain technologies, such as the Ethereum network, could quickly collapse, and an investment in the Trust may be adversely affected.

The Price Of ETH On The ETH Market Has Exhibited Periods Of Extreme Volatility, Which Could Have A Negative Impact On The Performance Of The Trust.

The price of ETH as determined by the ETH market has experienced periods of extreme volatility and may be influenced by a wide variety of factors. Speculators and investors who seek to profit from trading and holding ETH generate a significant portion of ETH demand. Such speculation regarding the potential future appreciation in the value of ETH may cause the price of ETH to increase. Conversely, a decrease in demand for or speculative interest regarding ETH may cause the price to decline. The volatility of the price of ETH, particularly arising from speculative activity, may have a negative impact on the performance of the Trust.

MarketVector Has Analyzed ETH Trading Platform Data And Developed Insights That Have Informed Marketvector’s Understanding Of The ETH Market And The Design Of The Trust. If Such Data Or Insights Are Inaccurate Or Incorrect, The Value Of An Investment In The Trust May Be Adversely Affected.

MarketVector has relied upon ETH market data in developing its analysis of the ETH market. This analysis has informed MarketVector’s understanding of the ETH market, the design of the Trust and the design of the MarketVector^TM Ethereum Benchmark Rate. The continued viability of the Trust relies upon access to accurate data, and MarketVector’s continued ability to effectively analyze such data. If data is inaccurate or becomes unavailable, or if MarketVector’s analysis of such data is incorrect, the value of an investment in the Trust may be adversely affected.

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Smart Contracts, Including Those Relating To DeFi Applications, Are A New Technology And Their Ongoing Development And Operation May Result In Problems, Which Could Reduce The Demand For ETH Or Cause A Wider Loss Of Confidence In The Ethereum Network, Either Of Which Could Have An Adverse Impact On The Value Of ETH.

Smart contracts are programs that run on the Ethereum Blockchain that execute automatically when certain conditions are met. Since smart contracts typically cannot be stopped or reversed, vulnerabilities in their programming can have damaging effects. For example, in June 2016, a vulnerability in the smart contracts underlying The DAO, a distributed autonomous organization for venture capital funding, allowed an attack by a hacker to syphon approximately $60 million worth of ETH from The DAO’s accounts into a segregated account. In the aftermath of the theft, certain core developers and contributors pursued a “hard fork” of the Ethereum Network in order to erase any record of the theft. Despite these efforts, the price of ETH reportedly dropped approximately 35% in the aftermath of the attack and subsequent hard fork. In addition, in July 2017, a vulnerability in a smart contract for a multi-signature wallet software developed by Parity led to a reportedly $30 million theft of ETH, and in November 2017, a new vulnerability in Parity’s wallet software reportedly led to roughly $160 million worth of ETH being indefinitely frozen in an account. Furthermore, in April 2018, a batch overflow bug was found in many Ethereum-based ERC20-compatible smart contract tokens that allows hackers to create a large number of smart contract tokens, causing multiple crypto asset platforms worldwide to shut down ERC20-compatible token trading. Similarly, in March 2020, a design flaw in the MakerDAO smart contract caused forced liquidations of crypto assets at significantly discounted prices, resulting in millions of dollars of losses to users who had deposited crypto assets into the smart contract. Other smart contracts, such as bridges between blockchain networks and decentralized finance (“DeFi”) protocols have also been manipulated, exploited or used in ways that were not intended or envisioned by their creators such that attackers syphoned over $3.8 billion worth of digital assets from smart contracts in 2022. Problems with the development, deployment, and operation of smart contracts may have an adverse effect on the value of ETH.

In some cases, smart contracts can be controlled by one or more “admin keys” or users with special privileges, or “super users”. These users may have the ability to unilaterally make changes to the smart contract, enable or disable features on the smart contract, change how the smart contract receives external inputs and data, and make other changes to the smart contract. Furthermore, in some cases inadequate public information may be available about certain smart contracts or applications, and information asymmetries may exist, even with respect to open-source smart contracts or applications; certain participants may have hidden informational or technological advantages, making for an uneven playing field. There may be opportunities for bad actors to perpetrate fraudulent schemes and engage in illicit activities and other misconduct, such as exit scams and rug pulls (orchestrated by developers and/or influencers who promote a smart contract or application and, ultimately, escape with the money at an agreed time), or Ponzi or similar fraud schemes.

Many DeFi applications are currently deployed on the Ethereum network, and smart contracts relating to DeFi applications currently represent a significant source of demand for ETH. DeFi applications may achieve their investment purposes through self-executing smart contracts that may allow users to invest digital assets in a pool from which other users can borrow without requiring an intermediate party to facilitate these transactions. These investments may earn interest to the investor based on the rates at which borrowers repay the loan, and can generally be withdrawn by the investor. For smart contracts that hold a pool of digital asset reserves, smart contract super users or admin key holders may be able to extract funds from the pool, liquidate assets held in the pool, or take other actions that decrease the value of the digital assets held by the smart contract in reserves. Even for digital assets that have adopted a decentralized governance mechanism, such as smart contracts that are governed by the holders of a governance token, such governance tokens can be concentrated in the hands of a small group of core community members, who would be able to make similar changes unilaterally to the smart contract. If any such super user or group of core members unilaterally make adverse changes to a smart contract, the design, functionality, features and value of the smart contract, its related digital assets may be harmed. In addition, assets held by the smart contract in reserves may be stolen, misused, burnt, locked up or otherwise become unusable and irrecoverable. Super users can also become targets of hackers and malicious attackers. If an attacker is able to access or obtain the super user privileges of a smart contract, or if a smart contract’s super users or core community members take actions that adversely affect the smart contract, users who transact with the smart contract may experience decreased functionality of the smart contract or may suffer a partial or total loss of any digital assets they have used to transact with the smart contract. Furthermore, the underlying smart contracts may be insecure, contain bugs or other vulnerabilities, or otherwise may not work as intended. Any of the foregoing could cause users of the DeFi application to be negatively affected, or could cause the DeFi application to be the subject of negative publicity. Because DeFi applications may be built on the Ethereum network and represent a significant source of demand for ETH, public confidence in the Ethereum network itself could be negatively affected, such sources of demand could diminish and the value of ETH could decrease. Similar risks apply to any smart contract or decentralized application, not just DeFi applications.

Validators May Suffer Losses Due To Staking, Or Staking May Prove Unattractive To Validators, Which Could Make The Ethereum Network Less Attractive.

Validation on the Ethereum network requires ETH to be transferred into smart contracts on the underlying blockchain networks not under the Trust’s or anyone else’s control. If the Ethereum network source code or protocol fail to behave as expected, suffer

cybersecurity attacks or hacks, experience security issues, or encounter other problems, such assets may be irretrievably lost. In addition, the Ethereum networks dictate requirements for participation in validation activity, and may impose penalties, if the relevant activities are not performed correctly. The Ethereum network imposes three types of sanctions for validator misbehavior or inactivity, which would result in a portion of their staked ETH being destroyed or “burned”: penalties, slashing and inactivity leaks. A validator may face penalties if it fails to take certain actions, such as providing a timely attestation to a block proposed by another validator. Under this scenario, a validator’s staked ETH could be burned in an amount equal to the reward to which it would have been entitled for performing the actions. A more severe sanction (i.e., “slashing”) is imposed if a validator commits malicious acts related to the proposal or attestation of blocks with invalid transactions. Slashing can result in the validator having a portion of its staked ETH immediately burned. After this initial slashing, the validator is queued for forceful removal from the Ethereum network’s validator “pool,” and more of the validator’s stake is burned over a period of approximately 36 days (with the exact amount of ETH burned and time period determined by the protocol) regardless of whether the validator makes any further slashable errors, at which point the validator is automatically removed from the validator pool. Staked ETH may also be burned through a process known as an “inactivity leak,” which is triggered if the Ethereum network has gone too long without finalizing a new block. For a new block to be successfully added to the blockchain, validators that account for at least two-thirds of all staked ETH must agree on the validity of a proposed block. This means that if validators representing more than one-third of the total staked ETH are offline, no new blocks can be finalized. To prevent this, an inactivity leak causes the ETH staked by the inactive validators to gradually “bleed away” until these inactive validators represent less than one-third of the total stake, thereby allowing the remaining active validators to finalize proposed blocks. This provides a further incentive for validators to remain online and continue performing validation activities. Within the post-Merge Ethereum network, as part of the “activating” and “exiting” processes of staking, staked ETH will be inaccessible for a variable period of time determined by a range of factors, including network congestion, resulting in potential inaccessibility during those periods. “Activation” is the funding of a validator to be included in the active set, thereby allowing the validator to participate in the Ethereum network’s proof-of-stake consensus protocol. “Exit” is the request to exit from the active set and no longer participate in the Ethereum network’s proof-of-stake consensus protocol. As part of these “activating” and “exiting” processes of staking on the Ethereum network, any staked ETH will be inaccessible for a period of time. The duration of activating and exiting periods are dependent on a range of factors, including network conditions. However, depending on demand, un-staking can take between hours, days or weeks to complete.

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If validators’ staked ETH are slashed or otherwise subject to sanctions by the Ethereum network, their assets may be confiscated, withdrawn, or burnt by the network, resulting in losses to them. Furthermore, the Ethereum network requires the payment of base fees and the practice of paying tips is common, and such fees can become significant as the amount and complexity of the transaction grows, depending on the degree of network congestion and the price of ETH. Any cybersecurity attacks, security issues, hacks, penalties, slashing events, or other problems could damage validators’ willingness to participate in validation, discourage existing and future validators from serving as such, and adversely impact the Ethereum network’s adoption or the price of ether. Any disruption of validation on the Ethereum network could interfere with network operations and cause the Ethereum network to be less attractive to users and application developers than competing blockchain networks, which could cause the price of ETH to decrease. The limited liquidity during the “activation” or “exiting” processes could dissuade potential validators from participating, which could interfere with network operations or security and cause the Ethereum network to be less attractive to users and application developers than competing blockchain networks, which could cause the price of ETH to decrease.

Proof-Of-Stake Blockchains Are A Relatively Recent Innovation, And Have Not Been Subject To As Widespread Use Or Adoption Over As Long Of A Period Of Time As Traditional Proof-Of-Work Blockchains.

Certain digital assets, such as bitcoin, use a “proof-of-work” consensus algorithm. The genesis block on the Bitcoin blockchain was mined in 2009, and Bitcoin’s blockchain has been in operation since then. Many newer blockchains enabling smart contract functionality, including the current Ethereum network following the completion of the Merge in 2022, use a newer consensus algorithm known as “proof-of-stake.” While their proponents believe that they may have certain advantages, the “proof-of-stake” consensus mechanisms and governance systems underlying many newer blockchain protocols, including the Ethereum network following the Merge, and their associated digital assets – including the ETH held by the Trust – have not been tested at scale over as long of a period of time or subject to as widespread use or adoption as, for example, Bitcoin’s proof-of-work consensus mechanism has. This could lead to these blockchains, and their associated digital assets, having undetected vulnerabilities, structural design flaws, suboptimal incentive structures for network participants (e.g., validators), technical disruptions, or a wide variety of other problems, any of which could cause these blockchains not to function as intended, lead to outright failure to function entirely causing a total outage or disruption of network activity, or to suffer other operational problems or reputational damage, leading to a loss of users or adoption or a loss in value of the associated digital assets, including the Trust’s assets. Over the long term, there can be no assurance that the proof-of-stake blockchain on which the Trust’s assets rely will achieve widespread scale or adoption or perform successfully; any failure to do so could negatively impact the value of the Trust’s assets.

Operational Cost May Exceed The Award For Validating Transaction, And Increased Transaction Fees May Adversely Affect The Usage Of The Ethereum Network.

If transaction confirmation fees become too high, the marketplace may be reluctant to use the Ethereum network. This may result in decreased usage and limit expansion of the Ethereum network in the retail, commercial and payments space, adversely impacting investment in the Trust. Conversely, if the reward for validators or the value of the transaction fees is insufficient to motivate validators, they may cease to validate transactions.

Ultimately, if the awards of new ETH costs of validating transactions grow disproportionately, miners may operate at a loss, transition to other networks, or cease operations altogether. Each of these outcomes could, in turn, slow transaction validation and usage, which could have a negative impact on the Ethereum network and could adversely affect the value of the ETH held by the Trust.

As a result of ETH’s fee burning mechanism, the incentives for validators to validate transactions with higher gas fees are reduced, since those validators would not receive those gas fees.

An acute cessation of validator operations would reduce the collective processing power on the Ethereum network, which would adversely affect the transaction verification process by temporarily decreasing the speed at which blocks are added to the blockchain and make the blockchain more vulnerable to a malicious actor obtaining control in excess of 50% of the processing power on the blockchain. Reductions in processing power could result in material, though temporary, delays in transaction confirmation time. Any reduction in confidence in the transaction verification process or may adversely impact the value of Shares of the Trust or the ability of the Sponsor to operate.

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Risks Associated with the Digital Asset Markets

The Value Of The Shares Relates Directly To The Value Of ETH, The Value Of Which May Be Highly Volatile And Subject To Fluctuations Due To A Number Of Factors.

The value of the Shares relates directly to the value of the ETH held by the Trust and fluctuations in the price of ETH could adversely affect the value of the Shares. The market price of ETH may be highly volatile, and subject to a number of factors, including:

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an increase in the global ETH supply or a decrease in global ETH demand;

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market conditions of, and overall sentiment towards, the digital assets and blockchain technology industry;

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trading activity on digital asset trading platforms, which, in many cases, are largely unregulated or may be subject to manipulation;

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the adoption of ETH as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of the open-source software protocol of the Ethereum network, and their ability to meet user demands;

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manipulative trading activity on digital asset exchanges, which, in many cases, are largely unregulated;

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the needs of decentralized applications, smart contracts, their users, and users of the Ethereum network generally for ETH to pay gas fees to execute transactions;

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forks in the Ethereum network, particularly where changes to the Ethereum network source code are either not well-received by key constituencies within the Ethereum community or are not successfully executed or implemented and fail to achieve the functionality such changes were intended to bring about;

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governmental or regulatory actions by, or investigations or litigation in, countries around the world targeting well-known decentralized applications or smart contracts that are built on the Ethereum network, or other developments or problems, and associated publicity, involving or affecting such decentralized applications or smart contracts;

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Increased competition from other forms of digital assets or payment services, including digital currencies constituting legal tender that may be issued in the future by central banks, or digital assets meant to serve as a medium of exchange by major private companies or other institutions;

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increased competition from other blockchain networks combining smart contracts, programmable scripting languages, and an associated runtime environment, with blockchain-based recordkeeping, particularly where such other blockchain networks are able to offer users access to a larger consumer user base, greater efficiency, reliability, or processing speed, or more economical transaction processing fees than the Ethereum network;

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investors’ expectations with respect to interest rates, the rates of inflation of fiat currencies or ETH, and digital asset exchange rates;

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consumer preferences and perceptions of ETH specifically and digital assets generally, the Ethereum network relative to competing blockchain protocols, and ETH relative to competing digital assets;

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negative events, publicity, and social media coverage relating to the digital assets and blockchain technology industry;

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fiat currency withdrawal and deposit policies on digital asset trading platforms;

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the liquidity of digital asset markets and any increase or decrease in trading volume or market making on digital asset markets;

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business failures, bankruptcies, hacking, fraud, crime, government investigations, or other negative developments affecting digital asset businesses, including digital asset trading platforms, or banks or other financial institutions and service providers which provide services to the digital assets industry;

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the use of leverage in digital asset markets, including the unwinding of positions, “margin calls”, collateral liquidations and similar events;

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investment and trading activities of large or active consumer and institutional users, speculators, miners, and investors in ETH;

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a “short squeeze” resulting from speculation on the price of ETH, if aggregate short exposure exceeds the number of shares available for purchase;

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an active derivatives market for ETH or for digital assets generally;

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monetary policies of governments, legislation or regulation, trade restrictions, currency devaluations and revaluations and regulatory measures or enforcement actions, if any, that restrict the use of ETH as a form of payment or the purchase of ETH on the digital asset markets;

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global or regional political, economic or financial conditions, events and situations, such as the novel coronavirus outbreak;

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fees associated with processing a ETH transaction and the speed at which ETH transactions are settled;

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the maintenance, troubleshooting, and development of the Ethereum network including by miners and developers worldwide;

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the ability for the Ethereum network to attract and retain miners to secure and confirm transactions accurately and efficiently;

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ongoing technological viability and security of the Ethereum network and ETH transactions, including vulnerabilities against hacks and scalability;

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financial strength of market participants;

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the availability and cost of funding and capital;

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the liquidity and credit risk of digital asset trading platforms;

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interruptions in service from or closures or failures of major digital asset trading platforms or their banking partners, or outages or system failures affecting the Ethereum network;

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decreased confidence in digital assets and digital assets trading platforms;

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poor risk management or fraud by entities in the digital assets ecosystem;

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increased competition from other forms of digital assets or payment services; and

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the Trust’s own acquisitions or dispositions of ETH, since there is no limit on the number of ETH that the Trust may acquire.

Although returns from investing in ETH have at times diverged from those associated with other asset classes to a greater or lesser extent, there can be no assurance that there will be any such divergence in the future, either generally or with respect to any particular asset class, or that price movements will not be correlated. In addition, there is no assurance that ETH will maintain its value in the long, intermediate, short, or any other term. In the event that the price of ETH declines, the Sponsor expects the value of the Shares to decline proportionately.

The value of the Shares of the Trust are represented by the MarketVector^TM Ethereum Benchmark Rate that may also be subject to momentum pricing due to speculation regarding future appreciation in value of ETH, leading to greater volatility that could adversely affect the value of the Shares. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for future appreciation in value, if any. The Sponsor believes that momentum pricing of ETH has resulted, and may continue to result, in speculation regarding future appreciation in the value of ETH, inflating and making the MarketVector^TM Ethereum Benchmark Rate more volatile. As a result, ETH may be more likely to fluctuate in value due to changing investor confidence, which could impact future appreciation or depreciation in the MarketVector^TM Ethereum Benchmark Rate and could adversely affect the value of the Trust.

The Trust is not actively managed and does not and will not have any strategy relating to the development of the Ethereum network, nor will the Trust seek to avoid or mitigate losses from declines in the ETH price. Furthermore, the impact of the expansion of

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the Trust’s ETH holdings on the digital asset industry and the Ethereum network is uncertain. A decline in the popularity or acceptance of the Ethereum network, or the value of ETH, would harm the value of the Trust.

Digital Asset Networks Face Significant Scaling Challenges And Efforts To Increase The Volume Of Transactions May Not Be Successful.

Many digital asset networks, including the Ethereum Network, face significant scaling challenges due to the fact that public blockchains generally face a tradeoff between security and scalability. One means through which public blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. For example, a greater degree of decentralization generally means a given digital asset network is less susceptible to manipulation or capture. Achieving decentralization may mean that every single node on a given digital asset network is responsible for securing the system by processing every transaction and every single full node is responsible for maintaining a copy of the entire state of the network. However, this may involve tradeoffs from an efficiency perspective, and impose constraints on throughput. A digital asset network may be limited in the number of transactions it can process by the fact that all validators participate in validating in each block and the capabilities of each single fully participating node.

As of April 30, 2024, the Ethereum network could handle approximately 13 transactions per second. In an effort to increase the volume of transactions that can be processed on a given digital asset network, many digital assets are being upgraded with various features to increase the speed and throughput of digital asset transactions. In December 2020, the Ethereum network began the first of several stages of the upgrade called Ethereum 2.0, which was intended to transition Ethereum’s core consensus mechanism to proof-of-stake and to encompass additional new features over time, such as sharding. On September 15, 2022, the Ethereum 2.0 upgrade was completed and the network became a single proof-of-stake-based Ethereum network. However, this upgrade may fail to achieve the expected benefits or widespread adoption. An increasing number of wallets and digital asset intermediaries, such as exchanges, have begun supporting the proof-of-stake-based Ethereum network.

If increases in throughput on the Ethereum network lag behind growth in usage of ETH, average fees and settlement times may increase considerably. The Ethereum network has been, at times, at capacity, which has led to increased transaction fees and decreased settlement speeds. In December 2017, the popularity of the blockchain-based game Cryptokitties led to significant network congestion on the Ethereum network. The game, which allows players to trade and create virtual kitties, represented by non-fungible tokens (“NFTs”), was reported by some sources to have accounted for more than 10% of the entire Ethereum network traffic at the time causing increases in transaction fees and delays in transaction processing times, and driving Ethereum network traffic to a reported then-all time high. Since April 30, 2023, ETH transaction fees have decreased from $9.52per ETH transaction, on average, to a high of $3.83 per transaction, on average, on April 30, 2024. As of May 20, 2024, ETH transaction fees were $2.82 per transaction, on average. Increased fees and decreased settlement speeds could preclude certain uses for ETH (e.g., micropayments), and could reduce demand for, and the price of, ETH, which could adversely impact the value of the Shares. As of May 20, 2024, ETH transaction fees were averaging $2.82 per transaction.

In the second half of 2020, the Ethereum network began the first of several stages of an upgrade culminating in the Merge. The Merge amended the Ethereum network’s consensus mechanism to a process known as proof-of-stake, and was intended to address the perceived shortcomings of the proof-of-work consensus mechanism in terms of labor intensity and duplicative computational effort expended by validators (known under proof-of-work as “miners”) who did not win the race, under proof of work, to be the first in time to solve the cryptographic puzzle that would allow them to be the only validator permitted to validate the block and receive the resulting block reward (which was only given to the first validator to successfully solve the puzzle and hash a given block, and not to others). Instead, under proof-of-stake, a single validator is randomly selected to solve the cryptographic puzzle needed to validate a block, which it proposes to a committee of other validators, who vote for whether to include the block (or not), which reduces the computational work performed – and energy expended – to validate each block compared to proof-of-work. See “ETH, ETH Market, ETH Exchanges and Regulation of ETH —Creation of New ETH” for additional information.

Following the Merge, core development of the Ethereum source code has increasingly focused on modifications of the Ethereum protocol to increase speed, throughput and scalability and also improve existing or next generation uses. Future upgrades to the Ethereum protocol and Ethereum Blockchain to address scaling issues – such as network congestion, slow throughput and periods of high transaction fees owing to spikes in network demand – have been discussed by network participants, such as sharding. The purpose of sharding is to increase scalability of the Ethereum Blockchain by splitting the blockchain into subsections, called shards, and dividing validation responsibility so that a defined subset of validators would be responsible for each shard, rather than all validators being responsible for the entire blockchain, allowing for parallel processing and validation of transactions. However, there appears to be uncertainty and a lack of existing widespread consensus among network participants about how to solve the scaling challenges faced by the Ethereum network.

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The rapid development of other competing scalability solutions, such as those which would rely on handling the bulk of computational work relating to transactions or smart contracts and decentralized applications (“DApps”) outside of the main Ethereum network and Ethereum Blockchain, has caused alternatives to sharding to emerge. “Layer 2” is a collective term for solutions which are designed to help increase throughput and reduce transaction fees by handling or validating transactions off the main Ethereum network (known as “Layer 1”) and then attempting to take advantage of the perceived security and integrity advantages of the Layer 1 Ethereum network by uploading the transactions validated on the Layer 2 protocol back to the Layer 1 Ethereum network. The details of how this is done vary significantly between different Layer 2 technologies and implementations. For example, “rollups” perform transaction execution outside the Layer 1 Ethereum network and then post the data, typically in batches, back to the Layer 1 Ethereum network where consensus is reached. “Zero knowledge rollups” are generally designed to run the computation needed to validate the transactions off-chain, on the Layer 2 protocol, and submit a proof of validity of a batch of transactions (not the entire transactions themselves) that is recorded on the Layer 1 Ethereum network. By contrast, “optimistic rollups” assume transactions are valid by default and only run computation, via a fraud proof, in the event of a challenge. Other proposed Layer 2 scaling solutions include, among others, “state channels”, which are designed to allow participants to run a large number of transactions on the Layer 2 side channel protocol and only submit two transactions to the main Layer 1 Ethereum network (the transaction opening the state channel, and the transaction closing the channel), “side chains”, in which an entire Layer 2 blockchain network with similar capabilities to the existing Layer 1 Ethereum network runs in parallel with the existing Layer 1 Ethereum network and allows smart contracts and DApps to run on the Layer 2 side chain without burdening the main Layer 1 network, and others. To date, the Ethereum network community has not coalesced overwhelmingly around any particular Layer 2 solution, though this could change.

Many developers are actively researching and testing scalability solutions for public blockchains. However, there is no guarantee that any of the mechanisms in place or being explored for increasing speed and throughput of settlement of the Ethereum network transactions will be effective, which could cause the Ethereum network to not adequately resolve scaling challenges and adversely impact the adoption of ETH and the Ethereum network and the value of the Shares. There is no guarantee that any potential scaling solution, whether a change to the Layer 1 Ethereum network like sharding or the introduction of a Layer 2 solution like rollups, state channels or side chains, will achieve widespread adoption. It is possible that proposed changes to the Layer 1 Ethereum network could divide the community, potentially even causing a hard fork, or that the decentralized governance of the Ethereum network causes network participants to fail to coalesce overwhelmingly around any particular solution, causing the Ethereum network to suffer reduced adoption or causing users or validators to migrate to other blockchain networks. It is also possible that scaling solutions could fail to work as intended, could suffer from centralization concerns, or could introduce bugs, coding defects or flaws, security risks, or other problems that could cause them to suffer operational disruptions. For example, in April 2024, Starknet, a Layer 2 built on the Layer 1 Ethereum network, suffered an outage reportedly caused by a rounding error bug that halted production of new blocks on Starknet’s Layer 2 blockchain network. Similar outages, bugs, defects, or other problems could affect Layer 2s in the future. Similarly, in multiple instances throughout 2022 and 2023, the Arbitrum Layer 2 network experienced outages due to failures in its primary node responsible for submitting transactions to the Layer 1 Ethereum network. Although the Layer 1 Ethereum network is believed not to have been affected by those outages, problems on Layer 2s in the future could conceivably affect or cause issues for the Layer 1 Ethereum network. Alternatively, if a widely-used Layer 2 network were to fail, it could reduce demand for ether because it would eliminate a source of demand for using ether to record transactions from the Layer 2 onto the Layer 1 Ethereum network. Any of the foregoing could adversely affect the price of ETH or the value of the Shares of the Trust.

If The Digital Asset Award Or Transaction Fees For Recording Transactions On The Ethereum Network Are Not Sufficiently High To Incentivize Validators, Or If Certain Jurisdictions Continue To Limit Or Otherwise Regulate Validating Activities, Validators May Cease Expanding Validating Power Or Demand High Transaction Fees, Which Could Negatively Impact The Value Of ETH And The Value Of The Shares.

In 2021, the Ethereum network implemented the EIP-1559 upgrade. EIP-1559 changed the methodology used to calculate transaction fees paid to ETH validators in such a manner that reduced the total net issuance of ETH fees paid to validators. If the digital asset awards for validating blocks or the transaction fees for recording transactions on the Ethereum network are not sufficiently high to incentivize validators, or if certain jurisdictions continue to limit or otherwise regulate validating activities, validators may cease expending validating power to validate blocks and confirmations of transactions on the Ethereum Blockchain could be slowed. For example, the realization of one or more of the following risks could materially adversely affect the value of the Shares:

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A reduction in the processing power expended by validators on the Ethereum network could increase the likelihood of a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtaining control. See “—The Ethereum Blockchain could be vulnerable to attacks on transaction finality and consensus processes, which could adversely affect an investment in the trust or the ability of the trust to operate.”

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Validators have historically accepted relatively low transaction confirmation fees on most digital asset networks. If validators demand higher transaction fees for recording transactions in the Ethereum Blockchain or a software upgrade automatically charges fees for all transactions on the Ethereum network, the cost of using ETH may increase and the marketplace may be reluctant to accept ETH as a means of payment. Alternatively, validators could collude in an anti-competitive manner to reject low transaction fees on the Ethereum network and force users to pay higher fees, thus reducing the attractiveness of the Ethereum network. Higher transaction confirmation fees resulting through collusion or otherwise may adversely affect the attractiveness of the Ethereum network, the value of ETH and the value of the Shares.

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To the extent that any validators cease to record transactions that do not include the payment of a transaction fee in blocks or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on the Ethereum Blockchain until a block is validated by a validator who does not require the payment of transaction fees or is willing to accept a lower fee. Any widespread delays or disruptions in the recording of transactions could result in a loss of confidence in the Ethereum network and could prevent the Trust from completing transactions associated with the day-to-day operations of the Trust, including creations and redemptions of the Shares in exchange for ETH with Authorized Participants.


	●	During the course of the block validation processes, validators exercise the discretion to select which transactions to include within a block and in what order to include these transactions. Beyond the standard block reward and transaction fees, validators have the ability to extract what is known as Maximal Extractable Value (“MEV”) by strategically choosing, reordering, or excluding certain transactions during block production in return for increased transaction fees or other forms of profit for such validators. In blockchain networks that facilitate DeFi protocols in particular, such as the Ethereum network, users may attempt to gain an advantage over other users by offering additional fees to validators for effecting the order or inclusions of transactions within a block. Certain software solutions, such as MEV Boost by Flashbots, have been developed which facilitate validators and other parties in the ecosystem in capturing MEV. The presence of MEV may incentivize associated practices such as sandwich attacks or front running that can have negative repercussions on DeFi users. A “sandwich attack” is executed by placing two transactions around a large, detected transaction to capitalize on the expected price impact. For instance, a market participant might identify a sizable transaction within the mempool that will significantly alter an asset’s price on a decentralized exchange. The participant could then for example orchestrate a transaction bundle: one transaction to acquire the asset prior to the detected transaction, followed by the large transaction itself, and a final transaction to sell the asset after the market price has increased due to the large transaction’s execution. Such transaction bundles can be submitted to validators through mechanisms like MEV-Boost, with validators receiving a share of the profits as an incentive to include the specific transaction bundle in the block. In the context of MEV, “front running” is said to occur when a user spots a transaction in the publicly visible so-called memory pool (“mempool”) of pending but unexecuted transactions awaiting validation, and then pays a high transaction fee to a validator to have their transaction executed on a priority basis in a manner designed to profit from the pending but unexecuted transaction that is still in the mempool. MEV may also compromise the predictability of transaction execution, which may deter usage of the network as a whole. Although based on widely available information given that transactions in the mempool are publicly visible, any potential perception of MEV as unfair manipulation may also discourage users and other stakeholders from engaging with DeFi protocols or the Ethereum network in general. In addition, it is possible regulators or legislators could enact rules which restrict practices associated with MEV, which could diminish the popularity of the Ethereum network among users and validators. Any of these or other outcomes related to MEV may adversely affect the value of ETH and the value of the Shares.

Due To The Unregulated Nature And Lack Of Transparency Surrounding The Operations Of ETH Trading Platforms, They May Experience Fraud, Manipulation, Security Failures Or Operational Problems, Which May Adversely Affect The Value Of ETH And, Consequently, The Value Of The Shares.

Digital asset trading platforms are relatively new and, in some cases, unregulated. Many operate outside the United States. Furthermore, while many prominent digital asset trading platforms provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance, many digital asset trading platforms do not provide this information. Digital asset trading platforms may not be subject to, or may not comply with, regulation in a similar manner as other regulated trading platforms, such as national securities exchanges or designated contract markets. As a result, the marketplace may lose confidence in digital asset trading platforms, including prominent trading platforms that handle a significant volume of ETH trading.

Many digital asset trading platforms are unlicensed, unregulated, operate without extensive supervision by governmental authorities, and do not provide the public with significant information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance. In particular, those located outside the United States may be subject to significantly less stringent regulatory and compliance requirements in their local jurisdictions, and may take the position that they are not subject to laws and regulations that would apply to a national securities exchange or designated contract market in the United States, or may, as a practical matter, be beyond the ambit of U.S. regulators. As a result, trading activity on or reported by these digital asset trading platforms is generally significantly less regulated than trading in regulated U.S. securities and commodities markets, and may reflect behavior that would be prohibited in regulated U.S. trading venues. For example, in 2019 there were reports claiming that 80.95% of bitcoin trading volume on digital asset trading platforms was false or noneconomic in nature, with specific focus on unregulated trading platforms located outside of the United States. Such reports alleged that certain overseas trading platforms have displayed suspicious trading

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activity suggestive of a variety of manipulative or fraudulent practices, such as fake or artificial trading volume or trading volume based on non-economic “wash trading” (where offsetting trades are entered into for other than bona fide reasons, such as the desire to inflate reported trading volumes), and attributed such manipulative or fraudulent behavior to motives like the incentive to attract listing fees from token issuers who seek the most liquid and high-volume trading platforms on which to list their coins. Although these reports concerned bitcoin, it is possible that similar concerns are present for ETH markets as well.

Other academics and market observers have put forth evidence to support claims that manipulative trading activity has occurred on certain digital asset trading platforms. For example, in a 2017 paper titled “Price Manipulation in the Bitcoin Ecosystem” sponsored by the Interdisciplinary Cyber Research Center at Tel Aviv University, a group of researchers used publicly available trading data, as well as leaked transaction data from a 2014 Mt. Gox security breach, to identify and analyze the impact of “suspicious trading activity” on Mt. Gox between February and November 2013, which, according to the authors, caused the price of bitcoin to increase from around $150 to more than $1,000 over a two-month period.

In August 2017, it was reported that a trader or group of traders nicknamed “Spoofy” was placing large orders on Bitfinex without actually executing them, presumably in order to influence other investors into buying or selling by creating a false appearance that greater demand existed in the market. In December 2017, an anonymous blogger (publishing under the pseudonym Bitfinex’d) cited publicly available trading data to support his or her claim that a trading bot nicknamed “Picasso” was pursuing a paint-the-tape-style manipulation strategy by buying and selling bitcoin and bitcoin cash between affiliated accounts in order to create the appearance of substantial trading activity and thereby influence the price of such assets. Although bitcoin and ether are different assets, ether prices may be subject to similar activity. Even in the United States, there have been allegations of wash trading even on regulated venues. Any actual or perceived false trading in the digital asset exchange market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of digital assets and/or negatively affect the market perception of digital assets.

The ETH market globally and in the United States is not subject to comparable regulatory guardrails as exist in regulated securities markets. Furthermore, many ETH trading venues lack certain safeguards put in place by exchanges for more traditional assets to enhance the stability of trading on the exchanges and prevent “flash crashes,” such as limit-down circuit breakers. As a result, the prices of ETH on trading venues may be subject to larger and/or more frequent sudden declines than assets traded on more traditional exchanges. Tools to detect and deter fraudulent or manipulative trading activities such as market manipulation, front-running of trades, and wash-trading may not be available to or employed by digital asset trading platforms, or may not exist at all.

ETH Trading Platforms May Be Exposed To Fraud And Manipulation

The SEC has identified possible sources of fraud and manipulation in the ETH market generally, including, among others (1) “wash trading”; (2) persons with a dominant position in ETH manipulating ETH pricing; (3) hacking of the ETH network and trading platforms; (4) malicious control of the Ethereum network; (5) trading based on material, non-public information (for example, plans of market participants to significantly increase or decrease their holdings in ETH, new sources of demand for ETH) or based on the dissemination of false and misleading information; (6) manipulative activity involving purported “stablecoins,” including Tether (for more information, see “Risk Factors—Risk Factors Related to Digital Assets—Prices of ETH may be affected due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment”); and (7) fraud and manipulation at ETH trading platforms. The effect of potential market manipulation, front-running, wash-trading, and other fraudulent or manipulative trading practices may inflate the volumes actually present in crypto market and/or cause distortions in price, which could adversely affect the Trust or cause losses to Shareholders.

Over the past several years, some digital asset trading platforms have been closed due to fraud and manipulative activity, business failure or security breaches. In many of these instances, the customers of such digital asset trading platforms were not compensated or made whole for the partial or complete losses of their account balances in such digital asset trading platforms. While, generally speaking, smaller digital asset trading platforms are less likely to have the infrastructure and capitalization that make larger digital asset trading platforms more stable, larger digital asset trading platforms are more likely to be appealing targets for hackers and malware and their shortcomings or ultimate failures are more likely to have contagion effects on the digital asset ecosystem, and may be more likely to be targets of regulatory enforcement action. For example, the collapse of Mt. Gox, which filed for bankruptcy protection in Japan in late February 2014, demonstrated that even the largest digital asset trading platforms could be subject to abrupt failure with consequences for both users of digital asset exchanges and the digital asset industry as a whole. In particular, in the two weeks that followed the February 7, 2014 halt of bitcoin withdrawals from Mt. Gox, the value of one bitcoin fell on other trading platforms from around $795 on February 6, 2014 to $578 on February 20, 2014. Additionally, in January 2015, Bitstamp announced that approximately 19,000 bitcoin had been stolen from its operational or “hot” wallets. Further, in August 2016, it was reported that almost 120,000 bitcoins worth around $78 million were stolen from Bitfinex. The value of bitcoin and other digital assets immediately decreased over 10% following reports of the theft at Bitfinex. In July 2017, FinCEN assessed a $110 million fine against BTC-E, a now defunct digital asset trading platform, for facilitating crimes such as drug sales and ransomware attacks. In addition, in December 2017, Yapian, the operator

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of Seoul-based cryptocurrency trading platform Youbit, suspended digital asset trading and filed for bankruptcy following a hack that resulted in a loss of 17% of Yapian’s assets. Following the hack, Youbit users were allowed to withdraw approximately 75% of the digital assets in their platform accounts, with any potential further distributions to be made following Yapian’s pending bankruptcy proceedings. In addition, in January 2018, the Japanese digital asset trading platform, Coincheck, was hacked, resulting in losses of approximately $535 million, and in February 2018, the Italian digital asset trading platform, Bitgrail, was hacked, resulting in approximately $170 million in losses. In May 2019, one of the world’s largest digital asset trading platform, Binance, was hacked, resulting in losses of approximately $40 million. In November 2022, FTX Trading Ltd. (“FTX”), one of the largest digital asset trading platform by volume at the time, halted customer withdrawals amid rumors of the company’s liquidity issues and likely insolvency, which were subsequently corroborated by its CEO. Shortly thereafter, FTX’s CEO resigned and FTX and many of its affiliates filed for bankruptcy in the United States, while other affiliates have entered insolvency, liquidation, or similar proceedings around the globe. The U.S. Department of Justice brought criminal fraud and other charges, and the SEC and CFTC brought civil securities and commodities fraud charges, against certain of FTX’s and its affiliates’ senior executives, including its former CEO. Around the same time, there were reports that approximately $300-600 million of digital assets were removed from FTX and the full facts remain unknown, including whether such removal was the result of a hack, theft, insider activity, or other improper behavior.

The potential consequences of a digital asset trading platform failure or failure to prevent market manipulation could adversely affect the value of the Shares. Manipulative trading or market abuse could create artificial or distorted prices, cause a loss of investor confidence in ETH, adversely impact pricing trends in ETH markets broadly, and cause losses from an investment in Shares of the Trust.

In addition, Negative perception, a lack of stability and standardized regulation in the digital asset markets and the closure or temporary shutdown of digital asset trading platforms due to fraud, business failure, security breaches or government mandated regulation, and associated losses by customers, may reduce confidence in the Ethereum network and result in greater volatility or decreases in the prices of ETH. Furthermore, the closure or temporary shutdown of a digital asset exchange used in calculating the Index may result in a loss of confidence in the Trust’s ability to determine its NAV on a daily basis. The potential consequences of a digital asset exchange’s failure could adversely affect the value of the Shares.

ETH Trading Platforms May Be Exposed To Front-Running

ETH trading platforms on which ETH trades may be susceptible to “front-running,” which refers to the process when someone uses access to confidential information, or technology or market advantage to get prior knowledge of upcoming transactions. Front-running is a frequent activity on centralized as well as decentralized exchanges. By using bots functioning on a millisecond-scale timeframe, bad actors are able to take advantage of the forthcoming price movement and make economic gains at the cost of those who had introduced these transactions. The objective of a front runner is to buy a chunk of tokens at a low price and later sell them at a higher price while simultaneously exiting the position. Front-running can occur via manipulation of transaction validation and mining processes, or the theft or misappropriation of confidential information by insiders. To extent that front-running occurs in ETH markets, it may result in concerns as to the price integrity of digital asset exchanges and digital assets more generally.

ETH Trading Platforms May Be Exposed To Wash Trading

ETH trading platforms on which ETH trades may be susceptible to wash trading. Wash trading occurs when offsetting trades are entered into for other than bona fide reasons, such as the desire to inflate reported trading volumes. Wash trading may be motivated by non-economic reasons, such as a desire for increased visibility on popular websites that monitor markets for digital assets so as to improve their attractiveness to investors who look for maximum liquidity, or it may be motivated by the ability to attract listing fees from token issuers who seek the most liquid and high-volume exchanges on which to list their coins. Results of wash trading may include unexpected obstacles to trade and erroneous investment decisions based on false information.

Even in the United States, there have been allegations of wash trading even on regulated venues. Any actual or perceived false trading in the global digital asset trading market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of ETH and/or negatively affect the market perception of ETH. If they were to affect trading at a trading platform which is used to calculate the MarketVector^TM Ethereum Benchmark Rate, they could cause the Trust’s NAV to be calculated incorrectly and cause Shareholders to suffer losses. See “—The MarketVector^TMEthereum Benchmark Rate may be affected by manipulative or fraudulent practices in the global ETH market or at constituent platforms.”

To the extent that wash trading either occurs or appears to occur in ETH trading platforms on which ETH trades, investors may develop negative perceptions about ETH and the digital assets industry more broadly, which could adversely impact the price of ETH and, therefore, the price of Shares. Wash trading also may place more legitimate digital asset trading platforms at a relative competitive disadvantage.

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Competition From Central Bank Digital Currencies And Emerging Payments Initiatives Involving Financial Institutions Could Adversely Affect The Value Of ETH And Other Digital Assets.

Central banks in various countries have introduced digital forms of legal tender (“CBDCs”). Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could have an advantage in competing with, or replace, ETH and other cryptocurrencies as a medium of exchange or store of value. Central banks and other governmental entities have also announced cooperative initiatives and consortia with private sector entities, with the goal of leveraging blockchain and other technology to reduce friction in cross-border and interbank payments and settlement, and commercial banks and other financial institutions have also recently announced a number of initiatives of their own to incorporate new technologies, including blockchain and similar technologies, into their payments and settlement activities, which could compete with, or reduce the demand for, ETH. As a result of any of the foregoing factors, the value of ETH could decrease, which could adversely affect an investment in the Trust.

Prices Of ETH May Be Affected Due To Stablecoins (Including Tether And US Dollar Coin (“USDC”)), The Activities Of Stablecoin Issuers And Their Regulatory Treatment.

While the Trust does not invest in and will not hold stablecoins, it may nonetheless be exposed to risks that stablecoins pose for the ETH market and other digital asset markets. Stablecoins are digital assets designed to have a stable value over time as compared to typically volatile digital assets, and are typically marketed as being pegged to a fiat currency, such as the U.S. dollar, at a certain value. Although the prices of stablecoins are intended to be stable, their market value may fluctuate. This volatility has in the past apparently impacted the price of ETH. Stablecoins are a relatively new phenomenon, and it is impossible to know all of the risks that they could pose to participants in the ETH market. In addition, some have argued that some stablecoins, particularly Tether, are improperly issued without sufficient backing in a way that, when the stablecoin is used to pay for ETH, could cause artificial rather than genuine demand for ETH, artificially inflating the price of ETH, and also argue that those associated with certain stablecoins may be involved in laundering money. On February 17, 2021 the New York Attorney General entered into an agreement with Tether’s operators, including Bitfinex, requiring them to cease any further trading activity with New York persons and pay $18.5 million in penalties for false and misleading statements made regarding the assets backing Tether. On October 15, 2021, the CFTC announced a settlement with Tether’s operators, Tether Holdings Limited, Tether Operations Limited, Tether Limited, and Tether International Limited, in which they agreed to pay $42.5 million in fines to settle charges that, among others, Tether’s claims that it maintained sufficient U.S. dollar reserves to back every Tether stablecoin in circulation with the “equivalent amount of corresponding fiat currency” held by Tether were untrue. Bitfinex also agreed to pay the CFTC a $1.5 million fine to settle charges that Bitfinex offered off-exchange leveraged, margined, or financed transactions involving cryptocurrencies, including ETH, with U.S. customers who were not eligible contract participants and accepted funds (including in the form of Tether stablecoins) and orders in connection with such illegal off-exchange transactions, triggering an obligation to register with the CFTC, which the CFTC order asserts it violated. The CFTC previously fined Bitfinex in 2016 on similar charges. In addition, a large amount of Tether is issued as ERC-20 tokens on the Ethereum network. If Tether were to no longer be issued or operating on the Ethereum network, there would be no need to use ether to pay the gas fees needed to record ERC-20 Tether transactions on the Ethereum Blockchain, and a substantial source of demand for ether could be eliminated, which could cause the price of ether to decrease, affecting the value of the Shares.

USDC is a reserve-backed stablecoin issued by Circle Internet Financial that is commonly used as a method of payment in digital asset markets, including the ETH market. While USDC is designed to maintain a stable value at 1 U.S. dollar at all times, on March 10, 2023, the value of USDC fell below $1.00 for multiple days after Circle Internet Financial disclosed that US$3.3 billion of the USDC reserves were held at Silicon Valley Bank, which had entered Federal Deposit Insurance Corporation (“FDIC”) receivership earlier that day. Stablecoins are reliant on the U.S. banking system and U.S. treasuries, and the failure of either to function normally could impede the function of stablecoins, and therefore could adversely affect the value of the Shares.

Given the foundational role that stablecoins play in global digital asset markets, their fundamental liquidity can have a dramatic impact on the broader digital asset market, including the market for ETH. Because a large portion of the digital asset market still depends on stablecoins such as Tether and USDC, there is a risk that a disorderly de-pegging or a run on Tether or USDC could lead to dramatic market volatility in digital assets more broadly. Volatility in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency of any reserves that support stablecoins or potential manipulative activity when unbacked stablecoins are used to pay for other digital assets (including ETH), or regulatory concerns about stablecoin issuers or intermediaries, such as exchanges, that support stablecoins, or the removal or migration of prominent stablecoins away from the Ethereum network, could impact individuals’ willingness to trade on trading venues that rely on stablecoins, reduce liquidity in the ETH market, and affect the value of ETH, and in turn impact an investment in the Shares. [Given Bitfinex has in the past been a component of the MarketVector^TM Ethereum Benchmark Rate and Bitfinex and Tether are understood to be under common ownership and management, problems with Tether specifically could potentially affect pricing of transactions on Bitfinex or otherwise disrupt Bitfinex’s operations.]

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Competition From The Emergence Or Growth Of Other Digital Assets Or Methods Of Investing In ETH Could Have A Negative Impact On The Price Of ETH And Adversely Affect The Value Of The Shares.

As of April 30, 2024, ETH was believed to be the second largest digital asset by market capitalization of the more than approximately 8,000 digital assets (source: CoinGecko). In addition, many consortiums and financial institutions are also researching and investing resources into private or permissioned smart contracts platforms rather than open platforms like the Ethereum network. Competition from the emergence or growth of alternative digital assets and smart contracts platforms, such as EOS, Tezos, Tron, and numerous others, could have a negative impact on the demand for, and price of, ETH and thereby adversely affect the value of the Shares.

In addition, some digital asset networks, including the Ethereum network, may be the target of ill will from users of other digital asset networks. For example, in July 2016, the Ethereum network underwent a contentious hard fork that resulted in the creation of a new digital asset network called Ethereum Classic. As a result, some users of the Ethereum Classic network may harbor ill will toward the Ethereum network. These users may attempt to negatively impact the use or adoption of the Ethereum network.

Investors may invest in ETH through means other than the Shares, including through direct investments in ETH and other potential financial vehicles, possibly including securities backed by or linked to ETH and digital asset financial vehicles similar to the Trust, or other futures-based products. Market and financial conditions, and other conditions beyond the Sponsor’s control, may make it more attractive to invest in other financial vehicles or to invest in ETH directly, which could limit the market for, and reduce the liquidity of, the Shares. In addition, to the extent digital asset financial vehicles other than the Trust tracking the price of ETH are formed and represent a significant proportion of the demand for ETH, large purchases or redemptions of the securities of these digital asset financial vehicles, or private funds holding ETH, could negatively affect the Index, the Trust’s ETH holdings, the price of the Shares, the net asset value of the Trust and the NAV.

Failure Of Funds That Hold Digital Assets To Receive SEC Approval To List Their Shares On Exchanges Could Adversely Affect The Value Of The Shares.

There have been a growing a number of attempts to list on national securities exchanges the shares of funds that hold digital assets. These investment vehicles attempt to provide institutional and retail investors exposure to markets for digital assets and related products. The exchange listing of shares of digital asset funds would create more opportunities for institutional and retail investors to invest in the digital asset market. However, the SEC has repeatedly denied such requests. If exchange-listing requests continue to be denied by the SEC, increased investment interest by institutional or retail investors could fail to materialize, which could reduce the demand for digital assets generally and therefore adversely affect the value of the Shares.

Risks Associated with the MarketVector^TM Ethereum Benchmark Rate

The MarketVector^TM Ethereum Benchmark Rate Has A Limited History.

The MarketVector^TM Ethereum Benchmark Rate was developed by MarketVector and has a limited history. MarketVector has substantial discretion at any time to change the methodology used to calculate the MarketVector^TM Ethereum Benchmark Rate, including the trading platforms that contribute prices to the Trust’s NAV. MarketVector does not have any obligation to take the needs of the Trust, the Trust’s Shareholders, or anyone else into consideration in connection with such changes. There is no guarantee that the methodology currently used in calculating the MarketVector^TM Ethereum Benchmark Rate will appropriately track the price of ETH in the future.

The MarketVector^TM Bitcoin Benchmark Rate is based on various inputs which may include price data from various third-party trading platforms and markets. MarketVector does not guarantee the validity of any of these inputs, which may be subject to technological error, manipulative activity, or fraudulent reporting from their initial source. The MarketVector^TM Bitcoin Benchmark Rate could be calculated now or in the future in a way that adversely affects an investment in the Trust.

The MarketVector^TM Ethereum Benchmark Rate Could Fail To Track The Global ETH Price, And A Failure Of The MarketVector^TM Ethereum Benchmark Rate Could Adversely Affect The Value Of The Shares.

Although the MarketVector^TM Ethereum Benchmark Rate is intended to accurately capture the market price of ETH, third parties may be able to purchase and sell ETH on public or private markets not included among the ETH trading platforms used in calculating the MarketVector^TM Ethereum Benchmark Rate, and such transactions may take place at prices materially higher or lower than the MarketVector^TM Ethereum Benchmark Rate. Moreover, there may be variances in the prices of ETH on the various ETH trading platforms used in calculating the MarketVector^TM Ethereum Benchmark Rate, including as a result of differences in fee structures or administrative procedures on different trading platforms. While the MarketVector^TM Ethereum Benchmark Rate provides a U.S. dollar-

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denominated composite index for the price of ETH based on, at any given time, the prices on each such Constituent Trading Platform or pricing source may not be equal to the value of a ETH as represented by the Index. It is possible that the price of ETH on the ETH trading platforms could be materially higher or lower than the MarketVector^TM Ethereum Benchmark Rate price. To the extent the MarketVector^TM Ethereum Benchmark Rate price differs materially from the actual prices available on a ETH trading platforms used to calculate it, or the global market price of ETH, the price of the Shares may no longer track, whether temporarily or over time, the global market price of ETH, which could adversely affect an investment in the Trust by reducing investors’ confidence in the Shares’ ability to track the market price of ETH. To the extent such prices differ materially from the MarketVector^TM Ethereum Benchmark Rate, investors may lose confidence in the Shares’ ability to track the market price of ETH, which could adversely affect the value of the Shares.

If the MarketVector^TM Ethereum Benchmark Rate is not available, the Trust’s holdings may be fair valued in accordance with the policy approved by the Sponsor. To the extent the valuation determined in accordance with the policy approved by the Sponsor differs materially from the actual market price of ETH, the price of the Shares may no longer track, whether temporarily or over time, the global market price of ETH, which could adversely affect an investment in the Trust by reducing investors’ confidence in the Shares’ ability to track the global market price of ETH. To the extent such prices differ materially from the market price for ETH, investors may lose confidence in the Shares’ ability to track the market price of ETH, which could adversely affect the value of the Shares.

MarketVector Has Analyzed ETH Trading Platform Data And Developed Insights That Have Informed MarketVector’s Understanding Of The ETH Market And The Design Of The Trust. If Such Data Or Insights Are Inaccurate Or Incorrect, The Value Of An Investment In The Trust May Be Adversely Affected.

The MarketVector^TM Ethereum Benchmark Rate Used To Calculate The Value Of The Trust’s ETH May Be Volatile, Adversely Affecting The Value Of The Shares.

The price of ETH on public digital asset trading platforms has a limited history, and during this history, ETH prices on the digital asset markets more generally, and on digital asset exchanges individually, have been volatile and subject to influence by many factors, including operational interruptions. While the MarketVector^TM Ethereum Benchmark Rate is designed to limit exposure to the interruption of individual digital asset trading platforms, the MarketVector^TM Ethereum Benchmark Rate, and the price of ETH generally, remains subject to volatility experienced by digital asset trading platforms, and such volatility could adversely affect the value of the Shares.

Furthermore, because the number of liquid and credible ETH trading platforms is limited, the MarketVector^TM Ethereum Benchmark Rate will necessarily be composed of a limited number of ETH trading platforms. If a ETH trading platform were subjected to regulatory, volatility or other pricing issues, in the case of the MarketVector^TM Ethereum Benchmark Rate, the calculation agent would have limited ability to remove such ETH trading platform from the MarketVector^TM Ethereum Benchmark Rate, which could skew the price of ETH as represented by the MarketVector^TM Ethereum Benchmark Rate. Trading on a limited number of ETH trading platform may result in less favorable prices and decreased liquidity of ETH and, therefore, could have an adverse effect on the value of the Shares.

Purchasing activity associated with acquiring ETH required for the creation of Creation Baskets may increase the market price of ETH on the digital asset markets, which will result in higher prices for the Shares. Increases in the market price of ETH may also occur as a result of the purchasing activity of other market participants. Other market participants may attempt to benefit from an increase in the market price of ETH that may result from increased purchasing activity of ETH connected with the issuance of Creation Baskets. Consequently, the market price of ETH may decline immediately after Creation Baskets are created. Decreases in the market price of ETH may also occur as a result of sales in secondary markets by other market participants. If the Index price declines, the value of the Shares will generally also decline.

The MarketVector^TM Ethereum Benchmark Rate May Be Affected By Manipulative Or Fraudulent Practices In The Global ETH Market Or At Constituent Trading Platforms.

The global ETH market may be subject to fraud and manipulation, see “—Due to the unregulated nature and lack of transparency surrounding the operations of ETH trading platforms, they may experience fraud, manipulation, security failures or operational problems, which may adversely affect the value of ETH and, consequently, the value of the Shares,” and the MarketVector^TM

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Ethereum Benchmark Rate may be affected to the extent they cause global prices of ETH to be subject to factors other than bona fide market forces.

Fraud or manipulation may also affect the constituent trading platforms used to calculate the MarketVector^TM Bitcoin Benchmark Rate. For example, Coinbase paid $6.5 million in 2021 to settle a CFTC enforcement action for reckless false, misleading, or inaccurate reporting as well as wash trading by a former employee on Coinbase’s GDAX platform. According to the CFTC’s order, during the relevant period prior to the enforcement action, Coinbase operated at least two trading programs which generated orders that, at times, matched with one another. Coinbase included the transactional information for these transactions, such as price and volume data, on its website and provided that information to reporting services, either directly or through access to its website, resulting in a perceived volume and level of liquidity of digital assets, including ETH, on GDAX that was false, misleading or inaccurate. Additionally, between August and September 2016, the CFTC order finds that a former Coinbase employee intentionally placed buy and sell orders in the Litecoin/ETH trading pair on GDAX, which he intended to match with one another and result in no loss or gain while creating the appearance of liquidity and trading interest in Litecoin. Ultimately, the transactions resulted in wash transactions that depicted a misleading picture of the Litecoin/ETH market.

Fraudulent and manipulative trading practices remain a risk at many cryptocurrency trading platforms. To the extent they occur at constituent trading platforms used to calculate the MarketVector^TM Ethereum Benchmark Rate, they could cause the MarketVector^TM Ethereum Benchmark Rate to report inaccurate prices of ETH, causing the NAV of the Trust to be calculated incorrectly and thereby causing Shareholders to suffer losses.

The Index Administrator Could Experience System Failures Or Errors.

If the computers or other facilities of the index administrator, data providers and/or relevant constituent ether platforms malfunction for any reason, calculation and dissemination of the MarketVectorTM Ethereum Benchmark Rate may be delayed. Errors in the MarketVectorTM Ethereum Benchmark Rat data, the MarketVectorTM Ethereum Benchmark Rate computations and/or construction may occur from time to time and may not be identified and/or corrected for a period of time or at all, which may have an adverse impact on the Trust and the Shareholders. Any of the foregoing may lead to the errors in the MarketVectorTM Ethereum Benchmark Rate, which may lead to a different investment outcome for the Trust and the Shareholders than would have been the case had such events not occurred.

The MarketVector^TM Ethereum Benchmark Rate Price Being Used To Determine The Net Asset Value Of The Trust May Not Be Consistent With GAAP. To The Extent That The Trust’s Financial Statements Are Determined Using A Different Pricing Source That Is Consistent With GAAP, The Net Asset Value Reported In The Trust’s Periodic Financial Statements May Differ, In Some Cases Significantly, From The Trust’s Net Asset Value Determined Using The MarketVector^TM Ethereum Benchmark Rate Pricing.

The Trust will determine the net asset value of the Trust on each Business Day based on the value of ETH as reflected by the MarketVector^TM Ethereum Benchmark Rate. The methodology used to calculate the MarketVector^TM Ethereum Benchmark Rate to value ETH in determining the net asset value of the Trust may not be deemed consistent with GAAP. To the extent the methodology used to calculate the MarketVector^TMEthereum Benchmark Rate is deemed inconsistent with GAAP, the Trust will utilize a GAAP-consistent pricing source for purposes of the Trust’s periodic financial statements. Creation and redemption of Creation Baskets, the Sponsor’s management fee and other expenses borne by the Trust will be determined using the Trust’s net asset value determined daily based on the MarketVector^TM Ethereum Benchmark Rate. Such net asset value of the Trust determined using the MarketVector^TMEthereum Benchmark Rate may differ, in some cases significantly, from the net asset value reported in the Trust’s periodic financial statements.

The Sponsor Can Remove The MarketVector^TM Ethereum Benchmark Rate And Use A Different Pricing Or Valuation Methodology Instead.

Under the Trust Agreement, the Sponsor has the exclusive authority to select, remove, change, or replace the pricing or valuation methodology or policies used to value the Trust’s assets and determine NAV and NAV per Share, in its sole discretion. The Sponsor has the right to change the pricing source used to determine NAV and NAV per Share from the MarketVector^TM Ethereum Benchmark Rate to a different source or index. To the extent that there are material changes to the pricing or valuation methodology or policies or the pricing source described within this paragraph, notification will be made to Shareholders via a prospectus supplement and/or a current report filed with the SEC.

Intellectual Property Rights Claims May Adversely Affect The Trust And The Value Of The Shares.

The Sponsor is not aware of any intellectual property rights claims that may prevent the Trust from operating and holding ETH. However, third parties may assert intellectual property rights claims relating to the operation of the Trust and the mechanics instituted

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for the investment in, holding of and transfer of ETH. Regardless of the merit of an intellectual property or other legal action, any legal expenses to defend or payments to settle such claims would be extraordinary expenses that would be borne by the Trust through the sale or transfer of its ETH. Additionally, a meritorious intellectual property rights claim could prevent the Trust from operating and force the Sponsor to terminate the Trust and liquidate its ETH. As a result, an intellectual property rights claim against the Trust could adversely affect the value of the Shares.

Risk Associated with Investing in the Trust

The Value Of The Shares May Be Influenced By A Variety Of Factors Unrelated To The Value Of ETH.

The value of the Shares may be influenced by a variety of factors unrelated to the price of ETH and the ETH trading platforms included in the MarketVector^TM Ethereum Benchmark Rate that may have an adverse effect on the price of the Shares. These factors include the following factors:

●

Unanticipated problems or issues with respect to the mechanics of the Trust’s operations and the trading of the Shares may arise, including the Clearing Services, in particular due to the fact that the mechanisms and procedures governing the creation and redemption of the Shares and storage of ETH have been developed specifically for this product;

●

The Trust could experience difficulties in operating and maintaining its technical infrastructure, including in connection with expansions or updates to such infrastructure, which are likely to be complex and could lead to unanticipated delays, unforeseen expenses and security vulnerabilities;

●

The Trust could experience unforeseen issues relating to the performance and effectiveness of the security procedures used to protect the Trust’s account with the ETH Custodian, or the security procedures may not protect against all errors, software flaws or other vulnerabilities in the Trust’s technical infrastructure, which could result in theft, loss or damage of its assets;

●

service providers may default on or fail to perform their obligations or deliver services under their contractual agreements with the Trust, or decide to terminate their relationships with the Trust, for a variety of reasons, which could affect the Trust’s ability to operate; or

●

if the Ethereum network introduces privacy enhancing features in the future, service providers may decide to terminate their relationships with the Trust due to concerns that the introduction of privacy enhancing features to the Ethereum network may increase the potential for ether to be used to facilitate crime, exposing such service providers to potential reputational harm.

Any of these factors could affect the value of the Shares, either directly or indirectly through their effect on the Trust’s assets.

The Trust Is Subject To Market Risk.

Market risk refers to the risk that the market price of ETH held by the Trust will rise or fall, sometimes rapidly or unpredictably. An investment in the Shares is subject to market risk, including the possible loss of the entire principal of the investment.

An Investment In Shares Of The Trust Is Different From Directly Owning ETH.

The market value of Shares of the Trust may not have a direct relationship with the prevailing price of ETH, and changes in the prevailing price of ETH similarly will not necessarily result in a comparable change in the market value of Shares of the Trust. The performance of the Trust will not reflect the specific return an investor would realize if the investor actually held or purchased ETH directly. The differences in performance may be due to factors such as fees, transaction costs, operating hours of the Exchange and index tracking risk. Investors will also forgo certain rights conferred by owning ether directly, such as the right to claim airdrops, or to participate in Staking Activities.

The NAV May Not Always Correspond To The Market Price Of ETH And, As A Result, Creation Baskets May Be Created Or Redeemed At A Value That Is Different From The Market Price Of The Shares.

The NAV of the Trust will change as fluctuations occur in the market price of the Trust’s ETH holdings. Shareholders should be aware that the public trading price per Share may be different from the NAV for a number of reasons, including price volatility, trading activity, the closing of ETH trading platforms due to fraud, failure, security breaches or otherwise, and the fact that supply and demand forces at work in the secondary trading market for Shares are related, but not identical, to the supply and demand forces influencing the market price of ETH.

An Authorized Participant may be able to create or redeem a Creation Basket at a discount or a premium to the public trading price per Share, and the Trust will therefore maintain its intended fractional exposure to a specific amount of ETH per Share.

Shareholders also should note that the size of the Trust in terms of total ETH held may change substantially over time and as Creation Baskets are created and redeemed.

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Authorized Participants’ Buying And Selling Activity Associated With The Creation And Redemption Of Creation Baskets May Adversely Affect An Investment In The Shares Of The Trust.

Liquidity Provider’s purchases of ETH in connection with Creation Basket creation orders may cause the price of ETH to increase, which will result in higher prices for the Shares. Increases in the ETH prices may also occur as a result of ETH purchases by other market participants who attempt to benefit from an increase in the market price of ETH when Creation Baskets are created. The market price of ETH may therefore decline immediately after Creation Baskets are created.

Selling activity associated with sales of ETH by Liquidity Providers in connection with redemption orders may decrease the ETH prices, which will result in lower prices for the Shares. Decreases in ETH prices may also occur as a result of selling activity by other market participants.

In addition to the effect that purchases and sales of ETH by Liquidity Providers may have on the price of ETH, sales and purchases of ETH by similar investment vehicles, including competing exchange-traded products in the U.S. and other global markets that do or seek to hold ETH, could impact the price of ETH. If the price of ETH declines, the trading price of the Shares will generally also decline.

The Inability Of Liquidity Providers To Hedge Their ETH Exposure May Adversely Affect The Liquidity Of Shares And The Value Of An Investment In The Shares.

Liquidity Providers will generally want to hedge their ETH exposure in connection with Creation Basket creation and redemption orders, while Authorized Participants would generally want to hedge their exposure to the Trust’s Shares to the extent possible. To the extent Authorized Participants and/or Liquidity Providers are unable to hedge their exposure to the Trust’s Shares or ETH respectively due to market conditions (e.g., insufficient ETH liquidity in the market, inability to locate an appropriate hedge counterparty, etc.), such conditions may make it difficult to create or redeem Creation Baskets or cause them to not participate in creating or redeeming Creation Baskets. In addition, the hedging mechanisms employed by Authorized Participants and/or Liquidity Providers to hedge their exposure to the Trust’s Shares or ETH, respectively, may not function as intended, which may make it more difficult for them to enter into such transactions. Such events could negatively impact the market price of the Trust and the spread at which the Trust trades on the open market. To the extent Liquidity Providers turn to the market for exchange-traded ETH Futures as well as the non-exchange traded ETH derivatives markets for their hedging needs in connection with their ETH sales to and purchases from the Trust, both the exchange-traded ETH Futures market and the non-exchange traded ETH derivatives markets have limited trading history and operational experience and may be less liquid, more volatile and more vulnerable to economic, market and industry changes than more established futures and derivatives markets. The liquidity of the market will depend on, among other things, the adoption of ETH and the commercial and speculative interest in the market for the ability to hedge against the price of ETH with exchange-traded ETH Futures and non-exchange traded ETH derivatives. There can be no assurance that such markets will be able to meet the hedging needs of Liquidity Providers, which could cause such Liquidity Providers to refrain from participation in the Trust’s creation and redemption processes, which could have adverse effects on Shareholders such as wider spreads, a breakdown of the arbitrage mechanism used to keep the Trust’s Shares trading in line with NAV of the Trust’s ETH holdings, and potentially a disruption of the creation or redemption processes altogether, as described in the following Risk Factors.

If The Process Of Creation And Redemption Of Creation Baskets Encounters Any Unanticipated Difficulties, The Possibility For Arbitrage Transactions By Authorized Participants Intended To Keep The Price Of The Shares Closely Linked To The Price Of ETH May Not Exist And, As A Result, The Price Of The Shares May Fall Or Otherwise Diverge From NAV.

The processes of creation and redemption of Shares (which depend on timely transfers of ETH to and by the ETH Custodian and through the Clearing Services) could be disrupted or encounter challenges due to, for example, the price volatility of ETH, the insolvency, business failure or interruption, default, failure to perform, security breach, or other problems affecting the ETH Custodian, in its capacity as ETH Custodian under the Custody Agreement and the provider of Clearing Services under the Clearing Agreement. Also, the change from the Trust’s originally contemplated model of in-kind creations and redemptions to the current model involving cash creations and redemptions, could cause potential market participants, such as the Authorized Participants and Liquidity Providers, who would otherwise be willing to purchase or redeem Creation Baskets or ETH, as applicable, to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying ETH, to decide not to take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect, and reduce their transactions with or even refrain entirely from transacting with the Trust, which could disrupt the processes of creation and redemption of Shares. If such events rise to the level of an emergency or cause creations and redemptions of Shares to be impracticable, the Sponsor may suspend the process of creation and redemption of Creation Baskets. Any disruptions to the process of creating and redeeming Shares could cause trading spreads, and the resulting premium or discount, on Shares compared to NAV to widen. Alternatively, in the case of a Ethereum network

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outage or other problems affecting the Ethereum network, the processing of transactions on the Ethereum network may be disrupted, which in turn may prevent Liquidity Providers from depositing or withdrawing ETH from their accounts at the ETH Custodian, which in turn could affect the creation or redemption of Creation Baskets. If this is the case, the liquidity of the Shares may decline and the price of the Shares may fluctuate independently of the price of ETH and may fall or otherwise diverge from NAV. Furthermore, in the event that the market for ETH should become relatively illiquid and thereby materially restrict opportunities for arbitraging, the price of the Shares may diverge from the value of ETH.

In addition, the use of cash creations and redemptions, as opposed to in-kind creations and redemptions, creates transaction costs of buying and selling ETH that are not present in an in-kind model. These costs include the bid-ask spread along with the operational costs from the labor and overhead involved in calculating, executing, monitoring, and accounting for transactions in the ETH markets and related cash movements. Furthermore, there are timing costs involved in the risk that the ETH price moves between the time when the NAV is established for a creation/redemption and the time when the ETH is traded (“slippage”). Transaction costs and slippage would be reduced if the Trust were permitted to use an in-kind creation and redemption model. The Trust’s Authorized Participant Agreement provides that transaction costs and slippage related to Creation Basket creation and redemption are the responsibility of the Authorized Participant. Whether Authorized Participants and Liquidity Providers as market participants will find it economically viable or commercially attractive to participate in a cash creation and redemption model for a ETH exchange-traded product like the Trust, including a cash creation and redemption model where the Trust selects the Liquidity Provider with whom it executes transactions to buy or sell ETH and the Authorized Participant is not permitted to designate the Liquidity Provider from whom ETH is purchased or sold in connection with the Authorized Participant’s Creation Basket subscription or redemption, is not known; however, there is a risk they will not. If the Trust is unable to attract sufficient Authorized Participants and Liquidity Providers, it will be unable to maintain an efficient arbitrage mechanism for keeping the trading price of the Shares in line with NAV and the value of the underlying ETH held by the Trust, which could negatively affect Shareholders and cause them to purchase or sell Shares at a premium or discount to the value of the underlying ETH, causing losses; alternatively, it could be unable to operate, as there would no parties who would be able to create new Shares or redeem existing Shares, leading to the Trust being unsuccessful commercially and the Sponsor deciding to terminate and wind up the Trust’s operations. There can be no assurance that In-Kind Regulatory Approval will ever be obtained or that in-kind subscription or redemption transactions will ever occur, meaning that the Trust may conduct subscriptions and redemptions solely in cash for the foreseeable future and indefinitely if necessary.

The Lack Of Ability To Facilitate In-Kind Creations And Redemptions Of Shares Could Have Adverse Consequences For The Trust.

The Trust is currently only able to conduct subscriptions and redemptions in cash, which means that an Authorized Participant will deposit cash into, or accept cash from, the Trust’s account with the Cash Custodian in connection with the creation and redemption of Creation Baskets, and will obtain or receive ETH in exchange for cash in connection with such order. However, and in common with other spot ETH exchange-traded products, the Trust is not at this time able to create and redeem Shares via in-kind transactions with Authorized Participants in exchange for ETH.

Authorized Participants must be registered broker-dealers. Registered broker-dealers are subject to various requirements of the federal securities laws and rules, including financial responsibility rules such as the customer protection rule, the net capital rule and recordkeeping requirements. There has yet to be definitive regulatory guidance on whether and how registered broker-dealers can comply with these rules with regard to transacting in or holding spot ETH. Until further regulatory clarity emerges regarding whether registered broker-dealers can hold and deal in ETH under such rules, there is a risk that registered broker-dealers participating in the in-kind creation or redemption of Shares for ETH may be unable to demonstrate compliance with such requirements. While compliance with these requirements would be the broker-dealer’s responsibility, a national securities exchange is required to enforce compliance by its member broker-dealers with applicable federal securities law and rules. As a result, the SEC is unlikely to permit an exchange to adopt listing rules for a product if it is not clear that the exchange’s members would be able to comply with applicable rules when transacting in the product as designed. To the extent further regulatory clarity emerges, the Sponsor expects the Exchange to seek In-Kind Regulatory Approval to amend its listing rules to permit the Trust to create and redeem Shares in-kind for ETH, in which Authorized Participants or their designees would deposit ETH directly with the Trust or receive ETH directly from the Trust. However, there can be no assurance as to when such regulatory clarity will emerge, or when the Exchange will seek or obtain In-Kind Regulatory Approval, if at all.

To the knowledge of the Sponsor, exchange-traded products for all spot-market commodities other than ETH, such as gold and silver, employ in-kind creations and redemptions with the underlying asset. The Sponsor believes that it is generally more efficient, and therefore less costly, for spot commodity exchange-traded products to utilize in-kind orders rather than cash orders, because there are fewer steps in the process and therefore there is less operational risk involved when an authorized participant can manage the buying and selling of the underlying asset itself, rather than depend on an unaffiliated party such as the issuer or sponsor of the exchange-traded product. As such, a spot commodity exchange-traded product that only employs cash creations and redemptions and does not permit in-kind

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creations and redemptions is a novel product that has not been tested, and could be impacted by any resulting operational inefficiencies.

In particular, the Trust’s inability to facilitate in-kind creations and redemptions could result in the exchange-traded product arbitrage mechanism failing to function as efficiently as it otherwise would, leading to the potential for the Shares to trade at premiums or discounts to the NAV per Share, and such premiums or discounts could be substantial. Furthermore, if cash orders are unavailable, either due to the Sponsor’s decision to reject or suspend such orders or otherwise, it will not be possible for Authorized Participants to redeem or create Shares, in which case the arbitrage mechanism would be unavailable. This could result in impaired liquidity for the Shares, wider bid/ask spreads in secondary trading of the Shares and greater costs to investors and other market participants. In addition, the Trust’s inability to facilitate in-kind creations and redemptions, and resulting reliance on cash creations and redemptions, could cause the Sponsor to halt or suspend the creation of redemption of Shares during times of market volatility or turmoil, among other consequences.

Even if In-Kind Regulatory Approval were obtained, there can be no assurance that in-kind creations or redemptions of the Shares will be available in the future, or that broker-dealers would be willing to serve as Authorized Participants with respect to the in-kind creation and redemption of Shares. Any of these factors could adversely affect the performance of the Trust and the value of the Shares.

The Trust Is Subject To Risks Due To Its Concentration Of Investments In A Single Asset Class.

Unlike other funds that may invest in diversified assets, the Trust’s investment strategy is concentrated in a single asset class: ETH. This concentration maximizes the degree of the Trust’s exposure to a variety of market risks associated with ETH. By concentrating its investment strategy solely in ETH, any losses suffered as a result of a decrease in the value of ETH can be expected to reduce the value of an interest in the Trust and will not be offset by other gains if the Trust were to invest in underlying assets that were diversified.

An investment in the Trust may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons financially able to maintain their investment and who can bear the risk of total loss associated with an investment in the Trust. Investors should review closely the objective and strategy of the Trust and redemption rights, as discussed herein, and familiarize themselves with the risks associated with an investment in the Trust.

The Lack Of Active Trading Markets For The Shares Of The Trust May Result In Losses On Shareholders’ Investments At The Time Of Disposition Of Shares.

Although Shares of the Trust are expected to be publicly listed and traded on an exchange, there can be no guarantee that an active trading market for the Trust will develop or be maintained. If Shareholders need to sell their Shares at a time when no active market for them exists, the price Shareholders receive for their Shares, assuming that Shareholders are able to sell them, likely will be lower than the price that Shareholders would receive if an active market did exist and, accordingly, a Shareholder may suffer losses.

Possible Illiquid Markets May Exacerbate Losses, Increase The Variability Between The Trust’s NAV And Its Market Price Or Affect the Trust’s Ability to Meet Cash Creation and Redemption Orders.

ETH is a relatively new asset with a limited trading history. Therefore, the markets for ETH may be less liquid and more volatile than other markets for more established products. It may be difficult to execute a ETH trade at a specific price when there is a relatively small volume of buy and sell orders in the ETH market. A market disruption can also make it more difficult to liquidate a position or find a suitable counterparty at a reasonable cost.

Market illiquidity may cause losses for the Trust. The large size of the positions that the Trust may acquire will increase the risk of illiquidity by both making the positions more difficult to liquidate and increasing the losses incurred while trying to do so should the Trust need to liquidate its ETH, or making it more difficult for Authorized Participants to acquire or liquidate ETH as part of the creation and/or redemption of Shares of the Trust. To the extent that the Trust conducts creation and redemption transactions for cash, such illiquidity may affect the Trust’s ability to meet such cash creation and redemption orders. Any type of disruption or illiquidity will potentially be exacerbated due to the fact that the Trust will typically invest in ETH, which is highly concentrated.

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The Trust Is An “Emerging Growth Company” And It Cannot Be Certain If The Reduced Disclosure Requirements Applicable To Emerging Growth Companies Will Make The Shares Less Attractive To Investors.

The Trust is an “emerging growth company” as defined in the JOBS Act. For as long as the Trust continues to be an emerging growth company it may choose to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to emerging public companies, which include, among other things:

●

exemption from the auditor attestation requirements under Section 404(b) of the Sarbanes-Oxley Act;

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reduced disclosure obligations regarding executive compensation in the Trust’s periodic reports and audited financial statements in this Prospectus; exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on “golden parachute” compensation; and

●

exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless otherwise determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight Board.

The Trust could be an emerging growth company until the last day of the fiscal year following the fifth anniversary after its initial public offering, or until the earliest of (1) the last day of the fiscal year in which it has annual gross revenue of $1.235 billion or more, (2) the date on which it has, during the previous three year period, issued more than $1 billion in non-convertible debt or (3) the date on which it is deemed to be a large accelerated filer under the federal securities laws. The Trust will qualify as a large accelerated filer as of the first day of the first fiscal year after it has (A) more than $700 million in outstanding equity held by nonaffiliates, (B) been public for at least 12 months and (C) filed at least one annual report on Form 10-K.

Under the JOBS Act, emerging growth companies are also permitted to elect to delay adoption of new or revised accounting standards until companies that are not subject to periodic reporting obligations are required to comply, if such accounting standards apply to non-reporting companies. However, the Trust has chosen to opt out of this extended transition period for complying with new or revised accounting standards. Section 107 of the JOBS Act provides that the decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

The Trust cannot predict if investors will find an investment in the Trust less attractive if it relies on these exemptions.

Several Factors May Affect The Trust’s Ability To Achieve Its Investment Objective On A Consistent Basis.

There is no guarantee that the Trust will meet its investment objective. Factors that may affect the Trust’s ability to meet its investment objective include, without limitation: (1) Liquidity Providers’ ability and willingness to purchase and sell ETH in an efficient manner to effectuate creation and redemption orders; (2) transaction fees associated with the Ethereum network; (3) the ETH market becoming illiquid or disrupted; (4) the Trust’s Share prices being rounded to the nearest cent and/or valuation methodologies; (5) the need to conform the Trust’s portfolio holdings to comply with investment restrictions or policies or regulatory or tax law requirements; (6) early or unanticipated closings of the markets on which ETH trades, resulting in the inability of Liquidity Providers to execute intended portfolio transactions; (7) accounting standards; (8) Authorized Participants refraining from participating in creation and redemption of Creation Baskets; and (9) the MarketVector^TM Ethereum Benchmark Rate becoming disrupted or unavailable.

The Amount Of ETH Represented By The Shares Will Decline Over Time.

The amount of ETH represented by the Shares will continue to be reduced during the life of the Trust due to the transfer of the Trust’s ETH to pay for the Sponsor Fee, and to pay for litigation expenses or other extraordinary expenses. This dynamic will occur irrespective of whether the trading price of the Shares rises or falls in response to changes in the price of ETH.

Although the Sponsor has agreed to assume all fees and other expenses incurred by the Trust in the ordinary course of its affairs incurred by the Trust, not all Trust expenses have been assumed by the Sponsor. For example, any taxes and other governmental charges that may be imposed on the Trust’s property will not be paid by the Sponsor.

Each outstanding Share represents a fractional, undivided interest in the ETH held by the Trust. The Trust does not generate any income and transfers ETH to pay for the Sponsor Fee, and to pay for litigation expenses or other extraordinary expenses. Therefore, the amount of ETH represented by each Share will gradually decline over time. This is also true with respect to Shares that are issued in exchange for additional deposits of ETH over time, as the amount of ETH required to create Shares proportionally reflects the amount of ETH represented by the Shares outstanding at the time of such creation unit being created. Assuming a constant ETH price, the trading price of the Shares is expected to gradually decline relative to the price of ETH as the amount of ETH represented by the Shares gradually declines.

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Shareholders should be aware that the gradual decline in the amount of ETH represented by the Shares will occur regardless of whether the trading price of the Shares rises or falls in response to changes in the price of ETH.

The Trust Is A Passive Investment Vehicle. The Trust Is Not Actively Managed And Will Be Affected By A General Decline In The Price Of ETH.

The Sponsor does not actively manage the ETH held by the Trust. This means that the Sponsor does not sell ETH at times when its price is high, or acquire ETH at low prices in the expectation of future price increases. It also means that the Sponsor does not make use of any of the hedging techniques available to professional ETH investors to attempt to reduce the risks of losses resulting from price decreases. Any losses sustained by the Trust will adversely affect the value of your Shares.

The Development And Commercialization Of The Trust Is Subject To Competitive Pressures.

The Trust and the Sponsor face competition with respect to the creation of competing products, including with respect to the potential creation of competing exchange-traded ETH products. If the SEC were to approve many or all of the currently pending applications for such exchange-traded ETH products, many or all of such products, including the Trust, could fail to acquire substantial assets, initially or at all. Such competing products may become available for public exchange trading before the Trust and/or have a lower expense ratio than the Trust, which could have a detrimental effect on the scale and sustainability of the Trust. The Sponsor’s competitors may have greater financial, technical and human resources than the Sponsor. These competitors may also charge a substantially lower fee than the Sponsor’s Fee in order to achieve initial market acceptance and scale and compete with the Sponsor in recruiting and retaining qualified personnel. Smaller or early stage companies may also prove to be effective competitors, particularly through collaborative arrangements with large and established companies. Accordingly, the Sponsor’s competitors may commercialize a product involving ETH more rapidly or effectively than the Sponsor is able to, which could adversely affect the Sponsor’s competitive position, the likelihood that the Trust will achieve initial market acceptance and the Sponsor’s ability to generate meaningful revenues from the Trust. If the Trust fails to achieve sufficient scale due to competition, the Sponsor may have difficulty raising sufficient revenue to cover the costs associated with launching and maintaining the Trust and such shortfalls could impact the Sponsor’s ability to properly invest in robust ongoing operations and controls of the Trust to minimize the risk of operating events, errors, or other forms of losses to the Shareholders. In addition, the Trust may also fail to attract adequate liquidity in the secondary market due to such competition, resulting in a sub-standard number of Authorized Participants willing to make a market in the Shares, which in turn could result in a significant premium or discount in the Shares for extended periods and the Trust’s failure to reflect the performance of the price of ETH.

Security Threats To The Trust’s Account With The ETH Custodian Could Result In The Halting Of Trust Operations And A Loss Of Trust Assets Or Damage To The Reputation Of The Trust, Each Of Which Could Result In A Reduction In The Price Of The Shares.

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in relation to digital assets. The Sponsor believes that the Trust’s ETH held in the Trust’s ETH Account and Clearing Account with the ETH Custodian will be an appealing target to hackers or malware distributors seeking to destroy, damage or steal the Trust’s ETH and will only become more appealing as the Trust’s assets grow. To the extent that the Trust, the Sponsor or the ETH Custodian is unable to identify and mitigate or stop new security threats or otherwise adapt to technological changes in the digital asset industry, the Trust’s ETH may be subject to theft, loss, destruction or other attack.

The Sponsor has evaluated the security procedures in place for safeguarding the Trust’s ETH. Nevertheless, the security procedures cannot guarantee the prevention of any loss due to a security breach, hack, software defect or act of God that may be borne by the Trust and the security procedures may not protect against all errors, software flaws or other vulnerabilities in the Trust’s technical infrastructure, which could result in theft, loss or damage of its assets. The Sponsor does not control the ETH Custodian’s operations or implementation of such security procedures and there can be no assurance that such security procedures will actually work as designed or prove to be successful in safeguarding the Trust’s assets against all possible sources of theft, loss or damage.

The security procedures and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of the Sponsor, the ETH Custodian, or otherwise, and, as a result, an unauthorized party may obtain access to the Trust’s account with the ETH Custodian, the private keys (and therefore ETH) or other data of the Trust. Additionally, outside parties may attempt to fraudulently induce employees of the Sponsor, the ETH Custodian, or the Trust’s other service providers to disclose sensitive information in order to gain access to the Trust’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, the Sponsor and the ETH Custodian may be unable to anticipate these techniques or implement adequate preventative measures. The ETH Custodian is also dependent on key service providers, including, without limitation, its data centers, and if these were to cease operation or be the subject of operational problems or security threats, it could affect the Trust’s ETH Account or Clearing Account with the ETH Custodian.

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An actual or perceived breach of the Trust’s ETH Account or Clearing Account with the ETH Custodian could harm the Trust’s operations, result in partial or total loss of the Trust’s assets, damage the Trust’s reputation and negatively affect the market perception of the effectiveness of the Trust, all of which could in turn reduce demand for the Shares, resulting in a reduction in the price of the Shares. The Trust may also cease operations, the occurrence of which could similarly result in a reduction in the price of the Shares.

The Clearing Account Permits Hot Storage Which Is Less Secure Than Cold Storage.

Although the Custody Agreement requires the ETH Custodian to hold the Trust’s ETH in its ETH Account in cold storage, ETH may be temporarily stored in an omnibus hot storage wallet associated with the Trust’s Clearing Account in connection with both creations and redemptions, as well as in connection with transfers of ETH out of the Trust to pay the Sponsor Fee and to reimburse the Sponsor in ETH for payment of reimbursable extraordinary expenses paid by the Sponsor. Cold storage is a safeguarding method by which the private key(s) corresponding to ETH is (are) generated and stored in an offline manner. Private keys are generated in offline computers or devices that are not connected to the internet so that they are more resistant to being hacked. By contrast, in hot storage, the private keys are held online, where they are more accessible, leading to more efficient transfers, though they are potentially more vulnerable to being hacked or stolen.

If A Liquidity Provider Agreement, The Custody Agreement, an Authorized Participant Agreement Or Clearing Agreement Is Terminated Or A Liquidity Provider, an Authorized Participant Or The ETH Custodian Fails To Participate In The Creation Or Redemption Processes Of The Trust Or Fails To Provide Services As Required, The Sponsor May Need To Find And Appoint A Replacement Liquidity Provider, Authorized Participant Or ETH Custodian Quickly, Which Could Pose A Challenge To The Trust’s Ability To Create And Redeem Shares Or The Safekeeping Of The Trust’s ETH, And The Trust’s Ability To Continue To Operate May Be Adversely Affected.

The Trust is dependent on the ETH Custodian to operate, pursuant to the Custody Agreement and the Clearing Agreement. The ETH Custodian performs essential functions in terms of safekeeping the Trust’s ETH and, via the Clearing Services, facilitates the transfer of ETH to the Trust by Liquidity Providers and from the Trust in connection with creations and redemptions and to pay the Sponsor Fee and extraordinary Trust expenses, and in extraordinary circumstances, to liquidate the Trust. If the ETH Custodian fails to perform the functions it performs for the Trust, the Trust may be unable to operate or create or redeem Creation Baskets, which could force the Trust to liquidate or adversely affect the price of the Shares.

The Sponsor could decide to replace the ETH Custodian as the custodian of the Trust’s ETH, pursuant to the Custody Agreement. Similarly, the ETH Custodian under the Custody Agreement and Clearing Agreement may terminate the Custody Agreement and Clearing Agreement respectively upon providing the applicable notice to the Trust for any reason, or immediately, upon the occurrence of a Termination Event that is incapable of being cured within ten business days or if it determines in its sole discretion it is necessary to take such action to comply with applicable laws and regulations or in connection with Gemini’s fraud or other compliance program. Under the Custody Agreement, a Termination Event occurs when (i) any representation, warranty, certification or statement made by the Trust was or becomes incorrect in any material respect when made; (ii) the Trust materially breaches, or fails in any material respect to perform any of its obligations under the Custody Agreement; (iii) the Trust requests a postponement of maturity or a moratorium with respect to any indebtedness or is adjudged bankrupt or insolvent, or there is commenced against the Trust a case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the Trust files a petition for bankruptcy or an application for an arrangement with its creditors, seeks or consents to the appointment of a receiver, administrator or other similar official for all or any substantial part of its property, admits in writing its inability to pay its debts as they mature, or takes any corporate action in furtherance of any of the foregoing, or fails to meet applicable legal minimum capital requirements; or (iv) a change of control of the Trust, or an event, change or development that causes or is likely to cause a material adverse effect on the Trust, or in the ability of the Trust to fulfill its responsibilities under the Custody Agreement, occurs. Transferring maintenance responsibilities of the Trust’s account at the ETH Custodian to another custodian will likely be complex and could subject the Trust’s ETH to the risk of loss during the transfer, which could have a negative impact on the performance of the Shares or result in loss of the Trust’s assets. Also, if the ETH Custodian becomes insolvent, suffers business failure, ceases business operations, defaults on or fails to perform its obligations under the Custody Agreement or Clearing Agreement with the Trust, or abruptly discontinues the services it provides to the Trust for any reason, the Trust’s operations would be adversely affected.

The Sponsor may not be able to find a party willing to serve as the custodian or perform clearing services under the same terms as the current Custody Agreement and Clearing Agreement. To the extent that Sponsor is not able to find a suitable party willing to serve as the custodian or to perform clearing services, the Sponsor may be required to terminate the Trust and liquidate the Trust’s ETH. In addition, to the extent that the Sponsor finds a suitable party but must enter into a modified Custody Agreement or Clearing Agreement that is less favorable for the Trust or Sponsor, the value of the Shares could be adversely affected.

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If an Authorized Participant or a Liquidity Provider suffers insolvency, business failure or interruption, default, failure to perform, security breach, or if an Authorized Participant or a Liquidity Provider chooses not to participate in the creation and redemption processes of the Trust due to the risks described in “--The Inability Of Liquidity Providers To Hedge Their ETH Exposure May Adversely Affect The Liquidity Of Shares And The Value Of An Investment In The Shares” And ” -- If The Process Of Creation And Redemption Of Creation Baskets Encounters Any Unanticipated Difficulties, The Possibility For Arbitrage Transactions By Authorized Participants Intended To Keep The Price Of The Shares Closely Linked To The Price Of ETH May Not Exist And, As A Result, The Price Of The shares May Fall Or Otherwise Diverge From NAV”, and the Trust is unable to engage replacement Authorized Participants or Liquidity Providers on commercially acceptable terms or at all, then the creation and redemption processes of the Trust or the arbitrage mechanism used to keep the Trust’s Shares trading in line with NAV could be negatively affected.

The Lack Of Full Insurance And Shareholders’ Limited Rights Of Legal Recourse Against The Trust, Trustee, Sponsor, Administrator, Cash Custodian And ETH Custodian Expose The Trust And Its Shareholders To The Risk Of Loss Of The Trust’s ETH For Which No Person Or Entity Is Liable.

The Trust is not a banking institution or otherwise a member of the Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation (“SIPC”) and, therefore, deposits held with or assets held by the Trust are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions. Shareholders cannot be assured that the ETH Custodian will maintain adequate insurance, that such coverage will cover losses with respect to the Trust’s ETH, or that sufficient insurance proceeds will be available to cover the Trust’s losses in full. The ETH Custodian’s insurance may not cover the type of losses experienced by the Trust. Alternatively, the Trust may be forced to share such insurance proceeds with other clients or customers of the ETH Custodian, which could reduce the amount of such proceeds that are available to the Trust. The Trust is not a named insured under the ETH Custodian’s insurance policies, though the ETH Custodian has represented to the Sponsor that the insurance covers customer losses, including losses suffered by the Trust, arising from specified events, including fraud, theft, and cyber-security breaches. In addition, the ETH insurance market is limited, and the level of insurance maintained by the ETH Custodian may be substantially lower than the assets of the Trust, or the amount of claims against the ETH Custodian of all of the customers whose losses are covered by the ETH Custodian’s insurance coverage. While the ETH Custodian maintains certain capital reserve requirements depending on the assets under custody, and such capital reserves may provide additional means to cover client asset losses, the Trust cannot be assured that the ETH Custodian will maintain capital reserves sufficient to cover actual or potential losses with respect to the Trust’s digital assets.

Furthermore, under the Custody Agreement, the ETH Custodian’s liability is limited in various ways, including that the ETH Custodian cannot be held responsible for any failure or delay to act by the ETH Custodian, its service providers, or its banks that is within the time limits permitted by the Custody Agreement, or that is caused by the Trust’s negligence or is required to comply with applicable laws and regulations. The ETH Custodian is not liable for any System Failure or Downtime (both as defined in the Custody Agreement), which prevents the ETH Custodian from fulfilling its obligations under the Custody Agreement, provided that ETH Custodian took reasonable care and used commercially reasonable efforts to prevent or limit such System Failures or Downtime and otherwise complied with the Custody Agreement. The Custody Agreement provides that “Downtime” means scheduled maintenance and a “System Failure” shall mean a failure of any computer hardware, software, computer systems, or telecommunications lines or devices used by the ETH Custodian, or interruption, loss, or malfunction of utility, data center, Internet or network provider services used by the ETH Custodian; provided, however, that a cybersecurity attack, data breach, hack, or other intrusion, or unauthorized disclosure by a third party, the ETH Custodian, a service provider to the ETH Custodian, or an agent or subcontractor of the ETH Custodian, shall not be deemed a System Failure, to the extent such events or any losses arising therefrom are due to the ETH Custodian’s failure to comply with its obligations under the Custody Agreement. The ETH Custodian cannot be held responsible for any circumstances beyond the ETH Custodian’s reasonable control, provided the ETH Custodian took reasonable care and used commercially reasonable efforts in executing its responsibilities to the Trust pursuant to the Custody Agreement, which includes exercising the degree of care, diligence and skill that a prudent and competent professional provider of services similar to the custodial services would exercise in the circumstances, or such higher care where required by law or the Custody Agreement (collectively, the “Standard of Care”). The ETH Custodian makes no guarantees regarding the Ethereum network’s security, functionality, or availability, and will not be liable for or in connection with any acts, decisions, or omissions made by developers of the Ethereum network. The ETH Custodian is not liable for any losses or claims arising out of actions that are in the Trust’s control and related to the Trust’s use of the ETH Custodian’s online platform, including but not limited to, the Trust’s failure to follow security protocols, the ETH Custodian’s platform controls, improper instructions, failure to secure the Trust’s credentials from third parties, or anything else in the Trust’s control and is also not liable for any amount greater than the value of the assets on deposit in Trust’s account at the ETH Custodian at the time of, and directly relating to, the events giving rise to the liability occurred, the value of which shall be determined in accordance with the Chicago Mercantile Exchange Ether-Dollar Reference Rate or any successor thereto. The ETH Custodian is not liable to the Trust (whether under contract, tort (including negligence) or otherwise) for any indirect, incidental, special, punitive or consequential losses suffered or incurred by the Trust (whether or not any such losses were foreseeable). The ETH Custodian is not liable to the Trust or anyone else for any loss or injury resulting directly or indirectly from any damage or interruptions caused by any computer viruses, spyware, scamware, trojan horses, worms, or other malware that may affect the Trust’s computer or other equipment, provided such malware did not originate from the ETH Custodian or its agents.

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The Custody Agreement’s “Force Majeure” provision provides that the ETH Custodian is not liable for delays, suspension of operations, failure in performance, or interruption of service to the extent it is directly due to a cause or condition beyond the reasonable control of the ETH Custodian including, but not limited to, any act of God, nuclear or natural disaster, epidemic, action or inaction of civil or military authorities, act of war, terrorism, sabotage, civil disturbance, strike or other labor dispute, accident, or state of emergency; provided, however, that for the avoidance of doubt, the Custody Agreement’s Force Majeure provision shall not apply in respect of System Failures or Downtime, which are subject to other respective provisions of the Custody Agreement. The occurrence of an event described in the Force Majeure provision shall not affect the validity and enforceability of any remaining provisions of the Custody Agreement.

In the event of potential losses incurred by the Trust as a result of the ETH Custodian losing control of the Trust’s ETH or failing to properly execute instructions on behalf of the Trust, the ETH Custodian’s liability with respect to the Trust will be subject to certain limitations which may allow it to avoid liability for potential losses or may be insufficient to cover the value of such potential losses. Furthermore, the insurance maintained by the ETH Custodian may be insufficient to cover its liabilities to the Trust. Both the Trust and the ETH Custodian are required to indemnify each other under certain circumstances.

Subject to the Force Majeure provision and as limited by the limitations of liability in the Custody Agreement, the ETH Custodian shall be liable to the Trust for the Loss (defined below) of any of the Trust’s ETH or fiat currency to the extent that such Loss was caused by the negligence, fraud, willful or reckless misconduct of the ETH Custodian or breach by the ETH Custodian of its Standard of Care. The Custody Agreement provides that “Loss” means if, at any time the Trust’s ETH Account or Fiat Account, as applicable, does not hold the ETH or fiat currency that had been (1) received by ETH Custodian in connection with the Trust’s ETH Account or Fiat Account pursuant to the Custody Agreement, or (2) duly sent to the ETH Custodian by the Trust or Authorized Participants in connection with the Trust’s ETH Account pursuant to the Custody Agreement but not received because of a failure caused by the ETH Custodian. The Custody Agreement provides that “Loss” shall include situations where the ETH Custodian fails to execute a valid withdrawal request, ETH are withdrawn from the Trust’s ETH Account other than pursuant to a withdrawal request, or the Trust is not able to timely withdraw ETH from the ETH Account pursuant to a withdrawal request, in each case due to a failure caused by the ETH Custodian; provided, however, that the ETH Custodian’s failure to permit timely withdrawals because it has determined that it cannot do so due to the requirements of applicable laws and regulations or because of the operation of its fraud detection controls shall not be considered a Loss, provided the ETH Custodian is acting reasonably and in good faith. The Custody Agreement provides that should a Loss of the Trust’s ETH or fiat currency due to the negligence, fraud, willful or reckless misconduct of the ETH Custodian or a breach by the ETH Custodian of its Standard of Care occur, the ETH Custodian will, as soon as practicable, return to the Trust a quantity of the same digital asset that is equal to the quantity of digital assets involved in the Loss, or return to the Trust a quantity of the same fiat currency that is equal to the quantity of fiat currency involved in the Loss (if the Loss involved the Fiat Account). However, the Trust does not control the ETH Custodian and cannot guarantee that the ETH Custodian will perform its obligations to the Trust under the Custody Agreement, in a timely manner or at all. The Custody Agreement provides that (i) the ETH Custodian does not own or control the underlying software protocols of networks which govern the operation of digital assets (including the Ethereum Blockchain), (ii) the ETH Custodian makes no guarantees regarding their security, functionality, or availability, and (iii) in no event shall the ETH Custodian be liable for or in connection with any acts, decisions, or omissions made by developers or promoters of digital assets, including ETH.

Similarly, under the Clearing Agreement, the ETH Custodian’s liability in connection with the Clearing Services is limited as follows, among others: the ETH Custodian does not have any responsibility for any sale or purchase of ETH for cash to a Liquidity Provider through the Clearing Services (such a transaction, a “Clearing Transaction”), other than as specifically identified in the Clearing Agreement. The ETH Custodian may rely upon, without liability on its part, any clearing request submitted through Gemini’s platform. Absent gross negligence, willful misconduct or fraud, the ETH Custodian shall not be liable for any loss resulting from a clearing request or the use of Clearing Services. Validation and confirmation procedures used by Gemini are designed only to verify the source of clearing requests and that each party has met its respective obligations in respect of a clearing request and not to detect errors in the content of a clearing request or to prevent duplicate clearing requests. The Trust is responsible for losses resulting from clearing requests provided by it and for any errors made by or on behalf of the Trust, any errors resulting, directly or indirectly, from fraud or the duplication of any clearing request by or on behalf of the Trust, or any losses resulting from the malfunctioning of any devices used by the Trust or loss or compromise of credentials used by the Trust to deliver clearing requests. The ETH Custodian may reject, refuse to settle or otherwise not complete any request to settle a ETH transaction through the Clearing Services for any reason necessary to comply with applicable laws and regulations or in connection with its fraud or other compliance controls and systems, and the ETH Custodian shall have no liability whatsoever to the Trust, any transaction counterparty or any other party in connection with or arising out of the ETH Custodian rejecting, refusing or otherwise not completing the settlement of a transaction through the Clearing Services. The ETH Custodian will not settle transactions through the Clearing Services: (i) if either party to a Clearing Transaction has not fully funded its accounts held with the ETH Custodian and used in connection with the Clearing Services (in the Trust’s case, the Clearing Account and Fiat Account), as applicable, with the required fiat currency amount or ETH amount, as applicable, prior to the agreed expiration time; (ii) if either party to a Clearing Transaction has not confirmed its acceptance of the clearing request to the ETH Custodian prior to the

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agreed expiration time; (iii) if either party to a transaction is not a Gemini customer; or (iv) for any other reason as determined by the ETH Custodian in its sole discretion to comply with applicable laws and regulation or in connection with the ETH Custodian’s fraud or other compliance controls and systems. Although the ETH Custodian has represented to the Sponsor that Clearing Transactions ordinarily settle automatically within minutes once the ETH and cash have been funded by both the Trust and the Liquidity Provider in their respective accounts at the ETH Custodian used in connection with the Clearing Services (in the Trust’s case, the Clearing Account and Fiat Account), the ETH Custodian is not required by the Clearing Agreement to settle the Clearing Transaction that quickly. These and the other limitations on the ETH Custodian’s liability may allow it to avoid liability for potential losses, even if the ETH Custodian directly caused such losses.

The Clearing Agreement provides that it is subject to Gemini’s User Agreement. Pursuant to Gemini’s User Agreement, Gemini agrees to take reasonable care and use commercially reasonable efforts in executing Gemini’s responsibilities to the Trust pursuant to the User Agreement, or such higher care where required by law or as specified by the User Agreement. Gemini uses commercially reasonable efforts to provide the Trust with a reliable and secure platform. From time to time, interruptions, errors or other deficiencies in service may occur due to a variety of factors, some of which are outside of our control. These factors can contribute to delays, errors in service, or system outages, creating difficulties in accessing the Trust’s account, withdrawing fiat currency or ETH, depositing fiat currency or ETH, and/or placing and/or canceling orders.

Under the User Agreement, Gemini is not liable for any delays, failure in performance or interruption of service which result directly or indirectly from any cause or condition, whether or not foreseeable, beyond Gemini’s reasonable control, including, but not limited to, any act of God, nuclear or natural disaster, epidemic, action or inaction of civil or military authorities, act of war, terrorism, sabotage, civil disturbance, strike or other labor dispute, accident, state of emergency or interruption, loss, or malfunction of equipment or utility, communications, computer (hardware or software), Internet or network provider services.

Except to the extent required by law, Gemini is not liable under the User Agreement, whether in contract or tort, for any punitive, special, indirect, consequential, incidental, or similar damages, including lost trading or other profits, diminution in asset value, or lost business opportunities (even if Gemini have been advised of the possibility thereof) in connection with the transactions subject to the User Agreement. Gemini’s total liability for breach of the User Agreement shall be limited by the value of any of the Trust’s allegedly lost fiat currency and digital assets in the custody of Gemini at the time of loss. Under the User Agreement Gemini is not liable for delays or interruptions in service caused by automated or other compliance checks or for other reasonable delays or interruptions in service, by definition to include any delay or interruption shorter than one week, or delays or interruptions in service beyond the control of Gemini or its service providers. The limitation on liability under the User Agreement includes, but is not limited to any damage or interruptions caused by any computer viruses, spyware, scamware, trojan horses, worms, or other malware that may affect the Trust’s computer or other equipment, or any phishing, spoofing, domain typosquatting, or other attacks, failure of mechanical or electronic equipment or communication lines, telephone or other interconnect problems (e.g., you cannot access your internet service provider), unauthorized access, theft, operator errors, strikes or other labor problems, or any force majeure. Gemini does not guarantee continuous, uninterrupted, or secure access to Gemini. Gemini is not responsible for any failure or delay to act by any Gemini service provider, including Gemini’s banks, or any other participant that is within the time limits permitted by the User Agreement or prescribed by law, or that is caused by the Trust’s negligence.

Under the User Agreement, Gemini is not responsible for any “System Failure” (defined as a failure of any computer hardware or software used by Gemini, a Gemini service provider, or any telecommunications lines or devices used by Gemini or a Gemini service provider), or scheduled or unscheduled maintenance or downtime, which prevents Gemini from fulfilling its obligations under the User Agreement, provided that Gemini used commercially reasonable efforts to prevent or limit such System Failures, or downtime. Gemini cannot be held responsible for any other circumstances beyond Gemini’s reasonable control.

Moreover, in the event of an insolvency or bankruptcy of the ETH Custodian in the future, given that the contractual protections and legal rights of customers with respect to digital assets held on their behalf by third parties are relatively untested in a bankruptcy of an entity such as the ETH Custodian in the virtual currency industry, there is a risk that customers’ assets – including the Trust’s assets – may be considered the property of the bankruptcy estate of the ETH Custodian, and customers – including the Trust – may be at risk of being treated as general unsecured creditors of such entities and subject to the risk of total loss or markdowns on value of such assets.

The Custody Agreement contains an agreement by the parties to treat the ETH credited to the Trust’s Vault Balance as financial assets under Article 8 of the New York Uniform Commercial Code (“Article 8”), in addition to stating that the ETH Custodian will serve as fiduciary and custodian on the Trust’s behalf. It is possible that a court would not treat custodied digital assets as part of the ETH Custodian’s general estate in the event the ETH Custodian were to experience insolvency. However, due to the novelty of digital asset custodial arrangements courts have not yet considered this type of treatment for custodied digital assets and it is not possible to predict with certainty how they would rule in such a scenario. In the case of the Clearing Account, because it is an omnibus account in which the assets of multiple customers – including the Trust’s assets – are held together, it is likely the Trust would be treated as a general

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unsecured creditor in respect of the Clearing Account held with the ETH Custodian in the event of the ETH Custodian’s insolvency. The Clearing Agreement does not contain an Article 8 opt-in. If the ETH Custodian became subject to insolvency proceedings and a court were to rule that the custodied ETH were part of the ETH Custodian’s general estate and not the property of the Trust, then the Trust would be treated as a general unsecured creditor in the ETH Custodian’s insolvency proceedings and the Trust could be subject to the loss of all or a significant portion of its assets. Moreover, in the event of the bankruptcy of the ETH Custodian, an automatic stay could go into effect and protracted litigation could be required in order to recover the assets held with the ETH Custodian, all of which could significantly and negatively impact the Trust’s operations and the value of the Shares.

Under the Trust Agreement, the Trustee and the Sponsor will not be liable for any liability or expense incurred, including, without limitation, as a result of any loss of ETH by the ETH Custodian, absent gross negligence or bad faith on the part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as the case may be. As a result, the recourse of the Trust or the Shareholders to the Trustee or the Sponsor, including in the event of a loss of ETH by the ETH Custodian, is limited.

The Shareholders’ recourse against the Sponsor, the Trustee, and the Trust’s other service providers for the services they provide to the Trust, including, without limitation, those relating to the holding of ETH or the provision of instructions relating to the movement of ETH, is limited. For the avoidance of doubt, neither the Sponsor, the Trustee, nor any of their affiliates, nor any other party has guaranteed the assets or liabilities, or otherwise assumed the liabilities, of the Trust, or the obligations or liabilities of any service provider to the Trust, including, without limitation, the ETH Custodian. Consequently, a loss may be suffered with respect to the Trust’s ETH that is not covered by the ETH Custodian’s insurance and for which no person is liable in damages. As a result, the recourse of the Trust or the Shareholders, under applicable law, is limited.

Loss Of A Critical Banking Relationship For, Or The Failure Of A Bank Used By, The Trust Could Adversely Impact The Trust’s Ability To Create Or Redeem Creation Baskets, Or Could Cause Losses To The Trust.

The Cash Custodian and ETH Custodian, under the Clearing Agreement (as defined below), facilitate the creation and redemption of Creation Baskets (in exchange for cash subscriptions by Authorized Participants, or in exchange for redemptions of Shares by Authorized Participants), and other cash movements, including in connection with the purchase of ETH by the Trust to effectuate subscriptions for cash and the selling of ETH by the Trust to effect redemptions for cash or pay the Sponsor Fee and, to the extent applicable, other Trust expenses, and in extraordinary circumstances, to effect the liquidation of the Trust’s ETH. The Trust relies on the Cash Custodian and ETH Custodian, in connection with the Trust’s Fiat Account, to hold any cash related to the purchase or sale of ETH. To the extent that the Trust faces difficulty establishing or maintaining banking relationships, the loss of the Trust’s banking partners, including the Cash Custodian or the banks at which the ETH Custodian, in connection with the Trust’s Fiat Account, maintains customer cash balances (including the cash balance of the Trust held in the Fiat Account), or the imposition of operational restrictions by these banking partners and the inability for the Trust to utilize other financial institutions may result in a disruption of creation and redemption activity of the Trust, or cause other operational disruptions or adverse effects for the Trust. In the future, it is possible that the Trust could be unable to establish accounts at new banking partners or establish new banking relationships, or that the banks with which the Trust is able to establish relationships may not be as large or well-capitalized or subject to the same degree of prudential supervision as the existing providers.

The Trust could also suffer losses in the event that a bank or money market fund in which the Trust holds cash, including the cash associated with the Trust’s account at the Cash Custodian or the Trust’s Fiat Account with the ETH Custodian (which is held at the ETH Custodian’s Banks (as defined below) or Money Market Funds (as defined below) for the benefit of its customers, including the Trust), fails, becomes insolvent, enters receivership, is taken over by regulators, enters financial distress, or otherwise suffers adverse effects to its financial condition or operational status. Recently, some banks have experienced financial distress. For example, on March 8, 2023, the California Department of Financial Protection and Innovation (“DFPI”) announced that Silvergate Bank had entered voluntary liquidation, and on March 10, 2023, Silicon Valley Bank, (“SVB”), was closed by the DFPI, which appointed the FDIC, as receiver. Similarly, on March 12, 2023, the New York Department of Financial Services took possession of Signature Bank and appointed the FDIC as receiver. A joint statement by the Department of the Treasury, the Federal Reserve and the FDIC on March 12, 2023, stated that depositors in Signature and SVB will have access to all of their funds, including funds held in deposit accounts, in excess of the insured amount. On May 1, 2023, First Republic Bank was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Following a bidding process, the FDIC entered into a purchase and assumption agreement with JPMorgan Chase Bank, National Association, to acquire the substantial majority of the assets and assume certain liabilities of First Republic Bank from the FDIC.

If the Cash Custodian, the ETH Custodian, or the Banks or Money Market Funds at which the ETH Custodian holds customer cash balances, including those associated with the Trust’s Fiat Account, were to experience financial distress or its financial condition is otherwise affected, the Cash Custodian’s or ETH Custodian’s ability to provide services to the Trust could be affected. Moreover, the future failure of a bank or money market fund at which the Trust (including through the Fiat Account) maintains cash, could result in

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losses to the Trust, to the extent the balances are not subject to deposit insurance, notwithstanding the regulatory requirements to which the Cash Custodian is subject or other potential protections. In addition, the Trust may maintain cash balances with the Cash Custodian in the Fiat Account with the that are not insured or are in excess of the FDIC’s insurance limits, or which are maintained by the Cash Custodian or ETH Custodian at money market funds (in the case of the Fiat Account) and subject to the attendant risks (e.g., “breaking the buck”). As a result, the Trust could suffer losses.

The Trust May Be Required, Or The Sponsor May Deem It Appropriate, To Terminate And Liquidate At A Time That Is Disadvantageous To Shareholders.

Pursuant to the terms of the Trust Agreement, the Trust is required to dissolve under certain circumstances. In addition, the Sponsor may, in its sole discretion, dissolve the Trust for a number of reasons, including if the Sponsor determines, in its sole discretion, that it is desirable or advisable for any reason to discontinue the affairs of the Trust.

If the Trust is required to terminate and liquidate, or the Sponsor determines in accordance with the terms of the Trust Agreement that it is appropriate to terminate and liquidate the Trust, such termination and liquidation could occur at a time that is disadvantageous to Shareholders, such as when the actual exchange rate of ether is lower than the Index was at the time when Shareholders purchased their Shares. In such a case, when the Trust’s ether is sold as part of its liquidation, the resulting proceeds distributed to Shareholders will be less than if the actual exchange rate at such time were higher at the time of sale.

The Sponsor Is Solely Responsible For Determining The Value Of The ETH Holdings And ETH Holdings Per Share, And Any Errors, Discontinuance Or Changes In Such Valuation Calculations May Have An Adverse Effect On The Value Of The Shares.

The Sponsor has the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per share, which it has delegated to the Administrator. The Administrator will determine the Trust’s ETH holdings and ETH holdings per Share on a daily basis as soon as practicable after 4:00 p.m. Eastern time on each business day. The Administrator’s determination is made utilizing data from the operations of the Trust and the MarketVector^TM Ethereum Benchmark Rate, calculated at 4:00 p.m. Eastern time on such day. To the extent that the ETH holdings or ETH holdings per Share are incorrectly calculated, the Sponsor will not be liable (absent gross negligence or willful misconduct) for any error and such misreporting of valuation data could adversely affect the value of the Shares.

If the Sponsor determines in good faith that the MarketVector^TM Ethereum Benchmark Rate does not reflect an accurate ETH price, then the Sponsor will instruct the Administrator to employ an alternative method to determine the fair value of the Trust’s assets. There are no predefined criteria to make a good faith assessment as to which of the rules the Sponsor will apply and the Sponsor may make this determination in its sole discretion. The Administrator may calculate the NAV in a manner that ultimately inaccurately reflects the price of ETH. To the extent that the Trust’s NAV and the Trust’s NAV per share, the MarketVector^TMEthereum Benchmark Rate, or the Administrator’s or the Sponsor’s other valuation methodology are incorrectly calculated, neither the Sponsor, the Administrator nor the Trustee may be liable for any error and such misreporting of valuation data could adversely affect the value of the Shares and investors could suffer a substantial loss on their investment in the Trust. Moreover, the terms of the Trust Agreement do not prohibit the Sponsor from changing the index used to calculate NAV or other valuation method used to calculate the net asset value of the Trust. Any such change in the index or other valuation method could affect the value of the Shares and investors could suffer a substantial loss on their investment in the Trust.

To the extent the methodology used to calculate the MarketVector^TM Ethereum Benchmark Rate is deemed not to be consistent with GAAP, the Trust’s periodic financial statements may not utilize the Trust’s NAV or the Trust’s NAV per share. For purposes of the Trust’s financial statements, the Trust will utilize a pricing source that is consistent with GAAP, as of the financial statement measurement date. The Sponsor will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements. To the extent that such valuation sources and policies used to prepare the Trust’s financial statements result in an inaccurate price, the value of the Shares could be adversely affected and investors could suffer a substantial loss on their investment in the Trust. Moreover, the terms of the Trust Agreement do not prohibit the Sponsor from changing the valuation method used to calculate the net asset value to be reported in the Trust’s financial statements. Any such change in such valuation method could affect the value of the Shares and investors could suffer a substantial loss on their investment in the Trust.

Extraordinary Expenses Resulting From Unanticipated Events May Become Payable By The Trust, Adversely Affecting The Value Of The Shares.

In partial consideration for the Sponsor’s Fee, the Sponsor shall assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, with the exception of those described in “Additional Information About The Trust — The Trust’s Fees and Expenses.” Expenses incurred by the Trust but not assumed by the Sponsor, such as, among others, taxes and governmental charges; expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of Shareholders (including, for example, in connection with any fork of the

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Ethereum Blockchain, any Incidental Rights and any IR Virtual Currency); or extraordinary legal fees and expenses are not assumed by the Sponsor and are borne by the Trust. [The Sponsor may sell ETH to pay certain expenses not assumed by the Sponsor. Accordingly, the Sponsor may be required to sell or otherwise dispose of ETH at a time when the trading prices for those assets are depressed.]

The sale or other disposition of assets of the Trust in order to pay extraordinary expenses could have a negative impact on the value of the Shares for several reasons. These include the following factors:

●

The Trust is not actively managed and no attempt will be made to protect against or to take advantage of fluctuations in the price of ETC. Consequently, if the Trust incurs expenses in U.S. dollars, the Trust’s ETH may be sold at a time when the values of the disposed assets are low, resulting in a negative impact on the value of the Shares.

●

Because the Trust does not generate any income, every time that the Trust pays expenses, it will deliver ETH to the Sponsor or sell ETH. Any sales of the Trust’s assets in connection with the payment of expenses will decrease the amount of the Trust’s assets represented by each Share each time its assets are sold by or transferred to the Sponsor.

The Value Of The Shares Will Be Adversely Affected If The Trust Is Required To Indemnify The Sponsor, The Trustee, The Transfer Agent, The ETH Custodian Or The Cash Custodian Under The Trust Documents.

Under the Trust Documents, each of the Sponsor, the Trustee, the Transfer Agent, the ETH Custodian and the Cash Custodian has a right to be indemnified by the Trust for certain liabilities or expenses that it incurs without gross negligence, bad faith or wilful misconduct on its part. Therefore, the Sponsor, Trustee, Transfer Agent, the ETH Custodian or the Cash Custodian may require that the assets of the Trust be used for indemnification in order to cover losses or liability suffered by them. This would reduce the ETH holdings of the Trust and the value of the Shares.

Gemini Serves As The ETH Custodian For Several Competing Exchange-Traded ETH Products, and The Trust’s Cash Custodian and Liquidity Providers May Also Transact With Competing Exchange-Traded ETH Products or With Other Companies in the Digital Assets Industry, Which Could Heighten Interconnectedness and Contagion Risks And Adversely Affect Creation and Redemption Processes of the Trust.

By virtue of its prominent market position and capabilities, and the relatively limited number of institutionally-capable providers of cryptoasset brokerage and custody services, Gemini serves as the ETH custodian for several competing exchange-traded ETH products. Therefore, Gemini’s size and market share creates the risk that Gemini may fail to properly resource its operations to support all such products that use its services, and the broader risk that its concentrated focus on the industry could adversely affect its financial condition or disrupt its operations if its customers in the digital assets industry experience problems or issues, which could harm the Trust, the Shareholders and the value of the Shares. If Gemini were to favor the interests of certain products over others, it could result in inadequate attention or comparatively unfavorable commercial terms to less favored products, which could adversely affect the Trust’s operations and ultimately the value of the Shares. Similarly, although the Sponsor presently has no knowledge of the Cash Custodian’s customer base, if and to the extent the Cash Custodian serves other competing exchange-traded cryptocurrency products or other similar investment vehicles, it could conceivably divert the Cash Custodian’s focus and resources away from serving the Trust, leading to harm to the Trust and its Shareholders.

The ETH Custodian is, and Liquidity Providers in many cases are, prominent companies with active operations in the digital assets industry. As illustrated by the 2022 Events, many of the players in the digital assets markets are interconnected – for example, certain market participants may be active in both borrowing and lending, or engage in a wide variety of trading relationships and transactions, with respect to many of the same counterparties, or with respect to the same digital assets or blockchain networks – which can heighten the contagion risks if one of them defaults on its obligations to others or a given digital blockchain network or digital asset were to stop functioning properly or lose substantial value, as applicable, leading to correlated failures in a wider market downturn or a disruption or market dislocation affecting that particular blockchain network or that particular digital asset. It is possible that, in circumstances similar to the 2022 Events, this interconnectedness risk affecting the ETH Custodian and the Liquidity Providers to the Trust could adversely affect the Trust or its Shareholders, for instance by disrupting creation and redemption processes.

The Trust’s Authorized Participants Act in Similar or Identical Capacities for Several Competing Exchange-Traded ETH Products, Which May Impact the Ability or Willingness of One or More Authorized Participants to Participate in the Creation and Redemption Process, Adversely Affect the Trust’s Ability to Create or Redeem Baskets and Adversely Affect the Trust’s Operations and Ultimately the Value of the Shares.

Many of the Trust’s Authorized Participants, now or in the future, act or may act in the same capacity for several competing exchange-traded ETH products. Due to balance sheet capacity or other concerns or constraints, Authorized Participants, none of which are obligated to engage in creation and/or redemption transactions, may not be able or willing to submit creation or redemption orders

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with the Trust or may do so in limited capacities, particularly during times of heightened market trading activity or market volatility or turmoil. The inability or unwillingness of Authorized Participants to do so could lead to the potential for the Shares to trade at premiums or discounts to the NAV, and such premiums or discounts could be substantial.

Furthermore, if creations or redemptions are unavailable due the inability or unwillingness of one or more of the Trust’s Authorized Participants to submit creation or redemption orders with the Trust (or do so in a limited capacity), the arbitrage mechanism may fail to function as efficiently as it otherwise would or be unavailable. This could result in impaired liquidity for the Shares, wider bid/ask spreads in the secondary trading of the Shares and greater costs to investors and other market participants, all of which could cause the Sponsor to halt or suspend the creation or redemption of Shares during such times, among other consequences.

Regulatory Risk

Digital Asset Markets In The United States Exist In A State Of Regulatory Uncertainty, And Adverse Legislative Or Regulatory Developments Could Significantly Harm The Value Of ETH Or The Shares, Such As By Banning, Restricting Or Imposing Onerous Conditions Or Prohibitions On The Use Of ETH, Mining Activity, Digital Wallets, The Provision Of Services Related To Trading And Custodying ETH, The Operation Of The Ethereum Network, Or The Digital Asset Markets Generally.

There is a lack of consensus regarding the regulation of digital assets, including ETH, and their markets. As a result of the growth in the size of the digital asset market, as well as the 2022 Events, the U.S. Congress and a number of U.S. federal and state agencies (including FinCEN, SEC, OCC, CFTC, FINRA, the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the IRS, state financial institution regulators, and others) have been examining the operations of digital asset networks, digital asset users and the digital asset markets. Many of these state and federal agencies have brought enforcement actions or issued consumer advisories regarding the risks posed by digital assets to investors. Ongoing and future regulatory actions with respect to digital assets generally or ETH in particular may alter, perhaps to a materially adverse extent, the nature of an investment in the Shares or the ability of the Trust to continue to operate.

The 2022 Events, including among others the bankruptcy filings of FTX and its subsidiaries, Three Arrows Capital, Celsius Network, Voyager Digital, Genesis, BlockFi and others, and other developments in the digital asset markets, have resulted in calls for heightened scrutiny and regulation of the digital asset industry, with a specific focus on intermediaries such as digital asset exchanges, platforms, and custodians. Federal and state legislatures and regulatory agencies may introduce and enact new laws and regulations to regulate crypto asset intermediaries, such as digital asset exchanges and custodians. The March 2023 collapses of Silicon Valley Bank, Silvergate Bank, and Signature Bank, which in some cases provided services to the digital assets industry, may amplify and/or accelerate these trends. On January 3, 2023, the federal banking agencies issued a joint statement on crypto-asset risks to banking organizations following events which exposed vulnerabilities in the crypto-asset sector, including the risk of fraud and scams, legal uncertainties, significant volatility, and contagion risk. Although banking organizations are not prohibited from crypto-asset related activities, the agencies have expressed significant safety and soundness concerns with business models that are concentrated in crypto-asset related activities or have concentrated exposures to the crypto-asset sector.

US federal and state regulators, as well as the White House, have issued reports and releases concerning crypto assets, including ETH and crypto asset markets. Further, in 2023 the House of Representatives formed two new subcommittees: the Digital Assets, Financial Technology and Inclusion Subcommittee and the Commodity Markets, Digital Assets, and Rural Development Subcommittee, each of which were formed in part to analyze issues concerning crypto assets and demonstrate a legislative intent to develop and consider the adoption of federal legislation designed to address the perceived need for regulation of and concerns surrounding the crypto industry. However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near future. A divided Congress makes any prediction difficult. We cannot predict how these and other related events will affect us or the crypto asset business.

In August 2021, the chair of the SEC stated that he believed investors using digital asset trading platforms are not adequately protected, and that activities on the platforms can implicate the securities laws, commodities laws and banking laws, raising a number of issues related to protecting investors and consumers, guarding against illicit activity, and ensuring financial stability. The chair expressed a need for the SEC to have additional authorities to prevent transactions, products, and platforms from “falling between regulatory cracks,” as well as for more resources to protect investors in “this growing and volatile sector.” The chair called for federal legislation centering on digital asset trading, lending, and decentralized finance platforms, seeking “additional plenary authority” to write rules for digital asset trading and lending. Moreover, President Biden’s March 9, 2022 Executive Order, asserting that technological advances and the rapid growth of the digital asset markets “necessitate an evaluation and alignment of the United States Government approach to digital assets,” signals an ongoing focus on digital asset policy and regulation in the United States. A number of reports issued pursuant to the Executive Order have focused on various risks related to the digital asset ecosystem, and have recommended

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additional legislation and regulatory oversight. There have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset markets.

It is not possible to predict whether Congress will grant additional authorities to the SEC or other regulators, what the nature of such additional authorities might be, how they might impact the ability of digital asset markets to function or how any new regulations that may flow from such authorities might impact the value of digital assets generally and ETH held by the Trust specifically. The consequences of increased federal regulation of digital assets and digital asset activities could have a material adverse effect on the Trust and the Shares.

FinCEN requires any administrator or exchanger of convertible digital assets to register with FinCEN as a money transmitter and comply with the anti-money laundering regulations applicable to money transmitters. Entities which fail to comply with such regulations are subject to fines, may be required to cease operations, and could have potential criminal liability. For example, in 2015, FinCEN assessed a $700,000 fine against a sponsor of a digital asset for violating several requirements of the Bank Secrecy Act by acting as an MSB and selling the digital asset without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering program. In 2017, FinCEN assessed a $110 million fine against BTC-e, a now defunct digital asset exchange, for similar violations. The requirement that exchangers that do business in the U.S. register with FinCEN and comply with anti-money laundering regulations may increase the cost of buying and selling ETH and therefore may adversely affect the price of ETH and an investment in the Shares.

The Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury (the “U.S. Treasury Department”) has added digital currency addresses, including on the Ethereum Blockchain, to the list of Specially Designated Nationals whose assets are blocked, and with whom U.S. persons are generally prohibited from dealing. Such actions by OFAC, or by similar organizations in other jurisdictions, may introduce uncertainty in the market as to whether ETH that has been associated with such addresses in the past can be easily sold. This “tainted” ETH may trade at a substantial discount to untainted ETH. Reduced fungibility in the ETH markets may reduce the liquidity of ETH and therefore adversely affect their price.

In February 2020, then-U.S. Treasury Secretary Steven Mnuchin stated that digital assets were a “crucial area” on which the U.S. Treasury Department has spent significant time. Secretary Mnuchin announced that the U.S. Treasury Department is preparing significant new regulations governing digital asset activities to address concerns regarding the potential use for facilitating money laundering and other illicit activities. In December 2020, FinCEN, a bureau within the U.S. Treasury Department, proposed a rule that would require financial institutions to submit reports, keep records, and verify the identity of customers for certain transactions to or from so-called “unhosted” wallets, also commonly referred to as self-hosted wallets. In January 2021, U.S. Treasury Secretary nominee Janet Yellen stated her belief that regulators should “look closely at how to encourage the use of digital assets for legitimate activities while curtailing their use for malign and illegal activities.”

Under regulations from the New York State Department of Financial Services (“NYDFS”), businesses involved in digital asset business activity for third parties in or involving New York, excluding merchants and consumers, must apply for a license, commonly known as a BitLicense, from the NYDFS and must comply with anti-money laundering, cyber security, consumer protection, and financial and reporting requirements, among others. As an alternative to a BitLicense, a firm can apply for a charter to become a limited purpose trust company under New York law qualified to engage in certain digital asset business activities. Other states have considered or approved digital asset business activity statutes or rules, passing, for example, regulations or guidance indicating that certain digital asset business activities constitute money transmission requiring licensure.

The inconsistency in applying money transmitting licensure requirements to certain businesses may make it more difficult for these businesses to provide services, which may affect consumer adoption of ETH and its price. In an attempt to address these issues, the Uniform Law Commission passed a model law in July 2017, the Uniform Regulation of Virtual Currency Businesses Act, which has many similarities to the BitLicense and features a multistate reciprocity licensure feature, wherein a business licensed in one state could apply for accelerated licensure procedures in other states. It is still unclear, however, how many states, if any, will adopt some or all of the model legislation.

Law enforcement agencies have often relied on the transparency of blockchains to facilitate investigations. However, certain privacy-enhancing features have been, or are expected to be, introduced to a number of digital asset networks. If the Ethereum network were to adopt any of these features, these features may provide law enforcement agencies with less visibility into transaction-level data. For example, “privacy pools,” zero knowledge proofs, and other technologies that could enhance privacy have been discussed by participants in the Ethereum network. Europol, the European Union’s law enforcement agency, released a report in October 2017 noting the increased use of privacy-enhancing digital assets like Zcash and Monero in criminal activity on the internet. In August 2022, OFAC banned all U.S. citizens from using Tornado Cash, a digital asset protocol designed to obfuscate blockchain transactions, by adding certain Ethereum wallet addresses associated with the protocol to its Specially Designated Nationals list. On October 19, 2023, FinCEN

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published a proposed rulemaking to apply the authorities in Section 311 of the USA PATRIOT Act to impose requirements on financial institutions that engage in convertible virtual currency (“CVC”) transactions with CVC mixers. The proposed rule, if adopted, would require covered financial institutions to report to FinCEN any CVC transactions they process that involves CVC mixing within or involving a jurisdiction outside the United States. The term “CVC mixing” covers more than just transactions that involve CVC mixers like Tornado Cash, and seemingly could cover a broader range of conduct involving technologies, services, or methods that have the effect of obfuscating the source, destination, or amount of a CVC transaction, whether or not the obfuscation was intentional. If the rule were to be adopted as proposed and if the Ethereum network were to be deemed to or were to adopt features which come within the rule’s ambit, it could cause covered financial institutions – such as many virtual currency exchanges, or the Trust’s service providers, such as the Cash Custodian – to reduce support for or cease offering services for ETH or to the Trust, which could impair the utility of ETH, the value of the Shares and the Trust’s ability to operate in compliance with new laws and regulations.

A Determination That ETH Or Any Other Digital Asset Is A “Security” May Adversely Affect The Value Of ETH And The Value Of The Shares, And Result In Potentially Extraordinary, Nonrecurring Expenses To, Or Termination Of, The Trust.

Depending on its characteristics, a digital asset may be considered a “security” 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, statements made in the past by senior officials at the SEC and endorsed by its previous Chairman in a letter to a member of Congress appeared to indicate that the SEC did not consider ETH to be a security at that time. However, a recent federal court decision ruled that the SEC has not to date issued a definitive statement of its position on whether ETH is a security for purposes of federal law. HODL Law, PLLC v. Securities and Exchange Commission, Case No. 22-cv-1832-L-JLB, 2023 WL 4852322 (Jul. 28, 2023), at *6. The SEC has brought enforcement actions against the issuers and promoters of several other digital assets on the basis that the digital assets in question are securities. The CFTC has for years considered ETH to be a commodity subject to its regulatory jurisdiction, supported by certain federal district court decisions, and ETH futures have been listed for years on CFTC-regulated exchanges while cleared ETH swaps have been listed for trading on CFTC-regulated swap execution facilities not registered with the SEC without being deemed “mixed swaps” subject to joint CFTC and SEC jurisdiction to the Sponsor’s knowledge.

Whether a digital asset is a security under the federal securities laws depends on whether it is included in the lists of instruments making up the definition of “security” in the Securities Act, the Exchange Act and the Investment Company Act. Digital assets as such do not appear in any of these lists, although each list includes the terms “investment contract” and “note,” and the SEC has typically analyzed whether a particular digital asset is a security by reference to whether it meets the tests developed by the federal courts interpreting these terms, known as the Howey and Reves tests, respectively. For many digital assets, whether or not the Howey or Reves tests are met is difficult to resolve definitively, and substantial legal arguments can often be made both in favor of and against a particular digital asset qualifying as a security under one or both of the Howey and Reves tests. Adding to the complexity, the SEC staff has indicated that the security status of a particular digital asset can change over time as the relevant facts evolve.

As part of determining whether ETH is a security for purposes of the federal securities laws, the Sponsor takes into account a number of factors, including the various definitions of “security” under the federal securities laws and federal court decisions interpreting elements of these definitions, such as the U.S. Supreme Court’s decisions in the Howey and Reves cases, as well as reports, orders, press releases, public statements and speeches by the SEC and its staff providing guidance on when a digital asset may be a security for purposes of the federal securities laws, and other materials relevant to the status of ETH as a security (or not). Finally, the Sponsor discusses the security status of ETH with its external securities lawyers. Through this process the Sponsor believes that it is applying the proper legal standards in making a good faith determination that it believes ETH is not presently a security under federal law in light of the uncertainties inherent in the Howey and Reves tests. In light of these uncertainties and the fact-based nature of the analysis, the Sponsor acknowledges that ETH may currently be a security, based on the facts as they exist today, or may in the future be found by the SEC or a federal court to be a security under the federal securities laws notwithstanding the Sponsor’s prior conclusion; and the Sponsor’s prior conclusion, even if reasonable under the circumstances and made in good faith, would not preclude legal or regulatory action based on the presence of a security.

The Sponsor may dissolve the Trust if the Sponsor determines ETH is a security under the federal securities laws, whether that determination is initially made by the Sponsor itself, or because the SEC or a federal court subsequently makes that determination. Because the legal tests for determining whether a digital asset is or is not a security often leave room for interpretation, and because the SEC has not taken a definitive position, for so long as the Sponsor believes there to be good faith grounds to conclude that the Trust’s ETH is not a security, the Sponsor does not intend to dissolve the Trust on the basis that ETH could at some future point be determined to be a security.

Any enforcement action by the SEC or a state securities regulator asserting that ETH is a security, or a court decision to that effect would be expected to have an immediate material adverse impact on the trading value of ETH, as well as the Shares. This is because the business models behind most digital assets are incompatible with regulations applying to transactions in securities. The New

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York Attorney General alleged in a lawsuit filed in March 2023 that ETH was a security under New York and federal securities law and that a cryptocurrency exchange that deals in ETH, unlawfully failed to register as a securities dealer under New York state law. However, the New York Attorney General alleged in the alternative in the same case that ETH was a commodity under both New York state and federal law. The defendant settled the New York Attorney General’s lawsuit without a court adjudicating whether ETH was a security, a commodity, or neither for purposes of New York state or federal law.

If a digital asset is determined or asserted to be a security, it is likely to become difficult or impossible for the digital asset to be traded, cleared or custodied in the United States through the same channels used by non-security digital assets, which in addition to materially and adversely affecting the trading value of the digital asset is likely to significantly impact its liquidity and market participants’ ability to convert the digital asset into U.S. dollars. For example, in 2020 the SEC filed a complaint against the issuer of XRP, Ripple Labs, Inc., and two of its executives, alleging that they raised more than $1.3 billion through XRP sales that should have been registered under the federal securities laws, but were not. In the years prior to the SEC’s action, XRP’s market capitalization at times reached over $140 billion. However, in the weeks following the SEC’s complaint, XRP’s market capitalization fell to less than $10 billion, which was less than half of its market capitalization in the days prior to the complaint. The SEC’s action against XRP’s issuer underscores the continuing uncertainty around which digital assets are securities, and demonstrates that such factors as how long a digital asset has been in existence, how widely held it is, how large its market capitalization is and that it has actual usefulness in commercial transactions, ultimately may have no bearing on whether the SEC or a court will find it to be a security.

In addition, if ETH is determined to be a security, the Trust could be considered an unregistered “investment company” under SEC rules, 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 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.

Moreover, whether or not the Sponsor or the Trust were subject to additional regulatory requirements as a result of any SEC or federal court determination that its assets include securities, the Sponsor may nevertheless decide to terminate the Trust, in order, if possible, to liquidate the Trust’s assets while a liquid market still exists. For example, in response to the SEC’s action against the issuer of XRP, certain significant market participants announced they would no longer support XRP and announced measures, including the delisting of XRP from major digital asset trading platforms. The sponsor of the Grayscale XRP Trust subsequently dissolved this trust and liquidated its assets. If the SEC or a federal court were to determine that ETH is a security, it is likely that the value of the Shares of the Trust would decline significantly, and that the Trust itself may be terminated and, if practical, its assets liquidated.

The SEC is adopting new rules to interpret the statutory definitions of terms including “dealer” under sections 3(a)(5) and 3(a)(44), respectively, of the Exchange Act which are expected to expand the scope of market participants required to register as a dealer with the SEC or become a member of FINRA. The Sponsor is studying the impact these may have on the Trust and its arrangements with Liquidity Providers and other service providers and counterparties. Among others, if and to the extent that ETH is classified as a security, the activities of any Liquidity Provider of the Trust might, under some circumstances, cause it to be deemed as acting as a dealer under the new rules and would thus require registration with the SEC. The Liquidity Provider may instead decide to terminate its role as Liquidity Provider of the Trust and the Trust’s operations in relation to creations and redemptions of Creation Baskets could be significantly impacted, the Trust could dissolve (including at a time that is potentially disadvantageous to Shareholders), and the value of the Shares or an investment in the Trust could be affected. Further, if and to the extent that ETH is classified as a security and the new rules require a broader range of digital asset market participants to register with the SEC or cease operations in the US market, there could be significant negative impacts on the broader digital asset markets, the price of digital assets such as ETH and therefore the value of the Shares.

Competing Industries May Have More Influence With Policymakers Than The Digital Asset Industry, Which Could Lead To The Adoption Of Laws And Regulations That Are Harmful To The Digital Asset Industry.

The digital asset industry is relatively new and it does not have the same access to policymakers and lobbying organizations in many jurisdictions compared to industries with which digital assets may be seen to compete, such as banking, payments and consumer finance. Competitors from other, more established industries may have greater access to and influence with governmental officials and regulators and may be successful in persuading these policymakers that digital assets require heightened levels of regulation compared to the regulation of traditional financial services. As a result, new laws and regulations may be proposed and adopted in the United States and elsewhere, or existing laws and regulations may be interpreted in new ways, that disfavor or impose compliance burdens on the digital asset industry or digital asset platforms, which could adversely impact the value of ether and therefore the value of the Shares.

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Shareholders Do Not Have The Protections Associated With Ownership Of Shares In An Investment Company Registered Under The 1940 Act Or The Protections Afforded By The CEA.

The 1940 Act is designed to protect investors by preventing insiders from managing investment companies to their benefit and to the detriment of public investors, such as: the issuance of securities having inequitable or discriminatory provisions; the management of investment companies by irresponsible persons; the use of unsound or misleading methods of computing earnings and asset value; changes in the character of investment companies without the consent of investors; and investment companies from engaging in excessive leveraging. To accomplish these ends, the 1940 Act requires the safekeeping and proper valuation of fund assets, restricts greatly transactions with affiliates, limits leveraging, and imposes governance requirements as a check on fund management.

The Trust is not registered as an investment company under the 1940 Act, and the Sponsor believes that the Trust is not required to register under such act. Consequently, Shareholders do not have the regulatory protections provided to investors in investment companies.

The Trust will not hold or trade in commodity interests regulated by the CEA, as administered by the CFTC. Furthermore, the Sponsor believes that the Trust is not a commodity pool for purposes of the CEA, and that neither the Sponsor nor the Trustee is subject to regulation by the CFTC as a commodity pool operator or a commodity trading advisor in connection with the operation of the Trust. Consequently, Shareholders will not have the regulatory protections provided to investors in CEA-regulated instruments or commodity pools.

Future Legal Or Regulatory Developments May Negatively Affect The Value Of ETH Or Require The Trust Or The Sponsor To Become Registered With The SEC Or CFTC, Which May Cause The Trust To Liquidate.

Current and future legislation, SEC and CFTC rulemaking, and other regulatory developments may impact the manner in which ETH are treated for classification and clearing purposes. In particular, although ETH is currently understood to be a commodity when transacted on a spot basis, ETH itself in the future might be classified by the CFTC as a “commodity interest” under the CEA, subjecting all transactions in ETH to full CFTC regulatory jurisdiction. Alternatively, in the future ETH might be classified by the SEC as a “security” under U.S. federal securities laws. The Sponsor and the Trust cannot be certain as to how future regulatory developments will impact the treatment of ETH under the law. In the face of such developments, the required registrations and compliance steps may result in extraordinary, nonrecurring expenses to the Trust. If the Sponsor decides to terminate the Trust in response to the changed regulatory circumstances, the Trust may be dissolved or liquidated at a time that is disadvantageous to Shareholders.

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 the outcome is difficult to predict. If ETH is in the future 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 would likely have material adverse consequences for the value of ETH. For example, it may become more difficult or impossible for ETH to be traded, cleared and custodied in the United States 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 ETH and cause users to migrate to other digital assets.

To the extent that ETH is determined to be a security, the Trust and the Sponsor may also be subject to additional regulatory requirements, including under the 1940 Act, and the Sponsor may be required to register as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). If the Sponsor determines not to comply with such additional regulatory and registration requirements, the Sponsor will terminate the Trust. Any such termination could result in the liquidation of the Trust’s ETH at a time that is disadvantageous to Shareholders.

To the extent that ETH is deemed to fall within the definition of a “commodity interest” under the CEA, the Trust and the Sponsor may be subject to additional regulation under the CEA and CFTC regulations. These additional requirements may result in extraordinary, recurring and/or nonrecurring expenses of the Trust, thereby materially and adversely impacting the Shares. If the Sponsor and/or the Trust determines not to comply with such additional regulatory and registration requirements, the Sponsor may terminate the Trust. Any such termination could result in the liquidation of the Trust’s ETH at a time that is disadvantageous to Shareholders.

The SEC has recently proposed amendments to the custody rules under Rule 406(4)-2 of the Advisers Act. The proposed rule changes would amend the definition of a “qualified custodian” under Rule 206(4)-2(d)(6) and expand the current custody rule in 406(4)-2 to cover all digital assets, including ETH, and related advisory activities. If enacted as proposed, these rules would likely impose additional regulatory requirements with respect to the custody and storage of digital assets, including ETH. The Sponsor is studying the impact that such amendments may have on the Trust and its arrangements with the ETH Custodian. It is possible that such amendments, if adopted, could prevent the ETH Custodian from serving as service providers to the Trust, or require potentially significant modifications to existing arrangements under the Custody Agreement, which could cause the Trust to bear potentially significant increased costs. If the Sponsor is unable to make such modifications or appoint successor service providers to fill the role that the ETH

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Custodian currently plays, the Trust’s operations (including in relation to creations and redemptions of Creation Baskets and the holding of ETH) could be negatively affected, the Trust could dissolve (including at a time that is potentially disadvantageous to Shareholders), and the value of the Shares or an investment in the Trust could be affected.

Further, the proposed amendments could have a severe negative impact on the price of ETH and therefore the value of the Shares if enacted, by, among other things, making it more difficult for investors to gain access to ETH, or causing certain holders of ETH to sell their holdings.

If Regulatory Changes Or Interpretations Of An Authorized Participant’s, Liquidity Provider’s, The Trust’s Or The Sponsor’s Activities Require The Regulation Of An Authorized Participant, Liquidity Provider, The Trust Or The Sponsor As A Money Service Business Under The Regulations Promulgated By FinCEN Under The Authority Of The U.S. Bank Secrecy Act Or As A Money Transmitter Or Digital Asset Business Under State Regimes For The Licensing Of Such Businesses, An Authorized Participant, Liquidity Provide, The Trust Or The Sponsor May Be Required To Register And Comply With Such Regulations, Which Could Result In Extraordinary, Recurring And/Or Nonrecurring Expenses To The Authorized Participant, Trust Or Sponsor Or Increased Commissions For The Authorized Participant’s Clients, Thereby Reducing The Liquidity Of The Shares.

To the extent that the activities of any Authorized Participant, Liquidity Provider, the Trust or the Sponsor cause it to be deemed a “money services business” under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, such Authorized Participant, Liquidity Provider, the Trust or the Sponsor may be required to comply with FinCEN regulations, including those that would mandate the Authorized Participant, Liquidity Provider, Trust or the Sponsor to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records. Similarly, the activities of an Authorized Participant, Liquidity Provider, the Trust or the Sponsor may require it to be licensed as a money transmitter or as a digital asset business, such as under NYDFS’ BitLicense regulation.

Such additional regulatory obligations may cause the Authorized Participant, Liquidity Provider, the Trust or the Sponsor to incur extraordinary expenses. If the Authorized Participant, Liquidity Provider, the Trust or the Sponsor decide to seek the required licenses, there is no guarantee that they will timely receive them. The Authorized Participant or Liquidity Provider may also instead decide to terminate its role as Authorized Participant or Liquidity Provider of the Trust, or the Sponsor may decide to terminate the Trust. Termination by the Authorized Participant may decrease the liquidity of the Shares, which may adversely affect the value of the Shares, and any termination of the Trust in response to the changed regulatory circumstances may be at a time that is disadvantageous to the Shareholders.

Additionally, to the extent the Authorized Participant, Liquidity Provider, the Trust or the Sponsor is found to have operated without appropriate state or federal licenses by any regulator or court, it may be subject to investigation, administrative or court proceedings, operating restrictions, and civil or criminal monetary fines and penalties, all of which would harm the reputation of the Authorized Participant, Liquidity Provider, the Trust or the Sponsor, disrupt their operations, and have a material adverse effect on the price of the Shares.

Anonymity, Sanctions, And Illicit Financing Risk.

Although transaction details of peer-to-peer transactions are recorded on the Ethereum Blockchain, a buyer or seller of digital assets on a peer-to-peer basis directly on the Ethereum network may never know to whom the public key belongs or the true identity of the party with whom it is transacting. Public key addresses are randomized sequences of alphanumeric characters that, standing alone, do not provide sufficient information to identify users. In addition, certain technologies, such as tumbling or mixing services, may obscure the origin or chain of custody of digital assets. In August 2022, OFAC banned all U.S. citizens from using Tornado Cash, a digital asset protocol designed to obfuscate blockchain transactions, by adding certain Ethereum wallet addresses associated with the protocol to its Specially Designated Nationals list. On October 19, 2023, FinCEN published a proposed rulemaking under authorities in Section 311 of the USA PATRIOT Act that would impose requirements on financial institutions that engage in CVC transactions that involve CVC mixing within or involving a jurisdiction outside the United States. FinCEN’s rulemaking states that CVC mixing transactions can play a central role in facilitating the laundering of CVC derived from a variety of illicit activity, and are frequently used by criminals and state actors to facilitate a range of illicit activity, including, but not limited to, money laundering, sanctions evasion and weapons of mass destruction proliferation. Given that the Ethereum network is global and anyone can program DApps or smart contracts that will operate and record transactions on the Ethereum Blockchain, and the fact that their creators or programmers sometimes remain anonymous, it is not inconceivable that bad actors, such as those subject to sanctions, could seek to do so.

The opaque nature of the market poses asset verification challenges for market participants, regulators and auditors and gives rise to an increased risk of manipulation and fraud, including the potential for Ponzi schemes, bucket shops and pump and dump schemes. Digital assets have in the past been used to facilitate illicit activities. If a digital asset was used to facilitate illicit activities, or a digital asset, or prominent DApp or smart contract were associated with bad actors or illicit activity, businesses that facilitate transactions in such digital assets could be at increased risk of potential criminal or civil lawsuits, or of having banking or other services cut off, and such digital asset could be removed from digital asset exchanges. Any of the aforementioned occurrences

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could adversely affect the price of the relevant digital asset, the attractiveness of the respective blockchain network and an investment in the Shares. If the Trust or the Sponsor or the Trustee were to transact with a sanctioned entity, the Trust, the Sponsor or the Trustee would be at risk of potential criminal or civil lawsuits or liability.

The Trust takes measures with the objective of reducing illicit financing risks in connection with the Trust’s activities. However, illicit financing risks are present in the digital asset markets, including markets for ETH. There can be no assurance that the measures employed by the Trust will prove successful in reducing illicit financing risks, and the Trust is subject to the complex illicit financing risks and vulnerabilities present in the digital asset markets. If such risks eventuate, the Trust or the Sponsor or their affiliates could face civil or criminal liability, fines, penalties, or other punishments, be subject to investigation, have their assets frozen, lose access to banking services or services provided by other service providers, or suffer disruptions to their operations, any of which could negatively affect the Trust’s ability to operate or cause losses in value of the Shares.

The Sponsor and the Trust have adopted and implemented policies and procedures that are designed to ensure that they do not violate applicable anti-money laundering and sanctions laws and regulations and to comply with any applicable KYC laws and regulations. The Sponsor and the Trust will only interact with known third party service providers with respect to whom it has engaged in a due diligence process to ensure a thorough KYC process, such as the Authorized Participants, Liquidity Providers and the ETH Custodian. Authorized Participants, as broker-dealers, and the ETH Custodian, as a limited purpose trust company subject to New York Banking Law, are subject to the U.S. Bank Secrecy Act (as amended) (“BSA”) and U.S. economic sanctions laws.

In addition, the Trust will only accept creations and redemption requests from regulated Authorized Participants who themselves are subject to applicable sanctions and anti-money laundering laws and have compliance programs that are designed to ensure compliance with those laws. In addition, the Liquidity Providers are contractually obligated to have policies and procedures reasonably designed to comply with the money laundering and related provisions of the BSA and implementing regulations, and applicable sanctions laws. The Trust will not hold any ETH except those that have been delivered by a Liquidity Provider in connection with creation requests.

The ETH Custodian has adopted and implemented an anti-money laundering and sanctions compliance program, which provides additional protections to ensure that the Sponsor and the Trust do not transact with a sanctioned party. Notably, the ETH Custodian performs Know-Your-Transaction (“KYT”) screening using blockchain analytics to identify, detect, and mitigate the risk of transacting with a sanctioned or other unlawful actor. Pursuant to the ETH Custodian’s KYT program, any ETH that is delivered to the Trust’s custody account will undergo screening to ensure that the origins of that ETH are not illicit.

There is no guarantee that such procedures will always be effective. If the Authorized Participants or Liquidity Providers have inadequate policies, procedures and controls for complying with applicable anti-money laundering and applicable sanctions laws or the Trust’s diligence is ineffective, violations of such laws could result, which could result in regulatory liability for the Trust, the Sponsor, the Trustee or their affiliates under such laws, including governmental fines, penalties, and other punishments, as well as potential liability to or cessation of services by the ETH Custodian. Any of the foregoing could result in losses to the Shareholders or negatively affect the Trust’s ability to operate.

Trading On ETH Exchanges Outside The United States Is Not Subject To U.S. Regulation, And May Be Less Reliable Than U.S. Exchanges.

Barring cash creations and redemptions, or a liquidation of the Trust, the Trust does not purchase or sell ETH. To the extent any of the Trust’s trading is conducted on ETH trading platforms outside the United States, trading on such exchanges is not regulated by any U.S. governmental agency and may involve certain risks not applicable to trading on U.S. exchanges. Certain foreign markets may be more susceptible to disruption than U.S. exchanges. These factors could adversely affect the performance of the Trust.

Regulatory Changes Or Actions In Foreign Jurisdictions May Affect The Value Of The Shares Or Restrict The Use Of ETH, Mining Activity Or The Operation Of Their Networks Or The Global ETH Markets In A Manner That Adversely Affects The Value Of The Shares.

Various foreign jurisdictions have, and may continue to adopt laws, regulations or directives that affect digital asset networks (including the Ethereum network), the digital asset markets (including the ETH market), and their users, particularly digital asset exchanges and service providers that fall within such jurisdictions’ regulatory scope. For example, if China or other foreign jurisdictions were to ban or otherwise restrict validating activity, including by regulating or limiting manufacturers’ ability to produce or sell semiconductors or hard drives in connection with ETH mining, it would have a material adverse effect on digital asset networks (including the Ethereum network), the digital asset market, and as a result, impact the value of the Shares.

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A number of foreign jurisdictions have recently taken regulatory action aimed at digital asset activities. China has made transacting in cryptocurrencies illegal for Chinese citizens in mainland China, and additional restrictions may follow. Both China and South Korea have banned initial coin offerings entirely and regulators in other jurisdictions, including Canada, Singapore and Hong Kong, have opined that initial coin offerings may constitute securities offerings subject to local securities regulations. In May 2021, the Chinese government announced renewed efforts to restrict cryptocurrency trading and mining activities. Regulators in the Inner Mongolia and other regions of China have proposed regulations that would create penalties for companies engaged in cryptocurrency mining activities and introduce heightened energy saving requirements on industrial parks, data centers and power plants providing electricity to cryptocurrency miners. The United Kingdom’s Financial Conduct Authority published final rules in October 2020 banning the sale of derivatives and exchange traded notes that reference certain types of digital assets, contending that they are “ill-suited” to retail investors citing extreme volatility, valuation challenges and association with financial crime. A new bill, the Financial Services and Markets Bill (“FSMB”), became law in 2023. The FSMB brings digital asset activities within the scope of existing laws governing financial institutions, markets and assets. In addition, the European Council of the European Union approved the text of Markets in Crypto-Assets (“MiCA”) in October 2022. MiCA came into effect in 2024, establishing a regulatory framework for digital asset services across the European Union. MiCA is intended to serve as a comprehensive regulation of digital asset markets and imposes various obligations on digital asset issuers and service providers. The main aims of MiCA are industry regulation, consumer protection, prevention of market abuse and upholding the integrity of digital asset markets.

Foreign laws, regulations or directives may conflict with those of the United States and may negatively impact the acceptance of one or more digital assets by users, merchants and service providers outside the United States and may therefore impede the growth or sustainability of the digital asset economy in the European Union, China, Japan, Russia and the United States and globally, or otherwise negatively affect the value of ETH. Moreover, other events, such as the interruption in telecommunications or internet services, cyber-related terrorist acts, civil disturbances, war or other catastrophes, could also negatively affect the digital asset economy in one or more jurisdictions. For example, Russia’s invasion of Ukraine on February 24, 2022 led to volatility in digital asset prices, with an initial steep decline followed by a sharp rebound in prices. The effect of any future regulatory change on the Trust or ETH is impossible to predict, but such change could be substantial and adverse to the Trust and the value of the Shares.

Tax Risk

The Treatment Of The Trust For U.S. Federal Income Tax Purposes Is Uncertain.

The Sponsor intends to take 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.

The Trust may take certain positions with respect to the tax consequences of Incidental Rights and IR Virtual Currency. If the IRS were to disagree with, and successfully challenge, any of these positions, the Trust might not qualify as a grantor trust. In addition, the Sponsor has committed to cause the Trust to irrevocably abandon any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future. However, there can be no assurance that these abandonments would be treated as effective for U.S. federal income tax purposes, or that the Sponsor will continue to cause the Trust to irrevocably abandon any Incidental Rights and IR Virtual Currency if there are future regulatory developments that would make it feasible for the Trust to retain those assets. If the Trust were treated as owning any asset other than ETH as of any date on which it creates or redeems Shares, it may likely cease to qualify as a grantor trust for U.S. federal income tax purposes.

Because of the evolving nature of digital currencies, it is not possible to predict potential future developments that may arise with respect to digital currencies, including forks, airdrops, and other similar occurrences. Assuming that the Trust is currently a grantor trust for U.S. federal income tax purposes, certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated as a grantor trust for such purposes.

If the Trust is 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 currency for U.S. federal income tax purposes, future developments regarding the treatment of digital currency for U.S. federal income tax purposes could adversely affect the value of the Shares. 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 of the recognition of taxable income or loss and (in certain circumstances) withholding taxes. 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 generally would be classified as a corporation for such purposes. If it were treated as a corporation, the Trust would be subject to entity-level U.S. federal income tax (currently at the rate of 21%), plus possible

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state and/or local taxes, 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. Any such dividend distributed to a beneficial owner of Shares that is a non-U.S. person for U.S. federal income tax purposes generally would be subject to U.S. federal withholding tax at a rate of 30% (or such lower rate as provided in an applicable tax treaty).

The Treatment Of Digital Currency For U.S. Federal Income Tax Purposes Is Uncertain.

Assuming that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes, each beneficial owner of Shares will be treated for U.S. federal income tax purposes as the owner of an undivided interest in the ETH held in the Trust. Due to the new and evolving nature of digital currencies and the absence of comprehensive guidance with respect to digital currencies, many significant aspects of the U.S. federal income tax treatment of digital currency are uncertain.

In 2014, the IRS released a notice (the “Notice”) discussing certain aspects of “convertible virtual currency” (that is, digital currency that has an equivalent value in fiat currency or that acts as a substitute for fiat currency) for U.S. federal income tax purposes and, in particular, stating that such digital currency (i) is “property” (ii) is not “currency” for purposes of the rules relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released a revenue ruling and a set of “Frequently Asked Questions” (the “Ruling & FAQs”) that provide some additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of digital currency. However, the Notice and the Ruling & FAQs do not address other significant aspects of the U.S. federal income tax treatment of digital currencies. Moreover, although the Ruling & FAQs address the treatment of hard forks, there continues to be uncertainty with respect to the timing and amount of the income inclusions.

Future developments that may arise with respect to digital currencies may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income tax purposes. For example, the Notice addresses only digital currency that is “convertible virtual currency,” and it is conceivable that, as a result of a fork, airdrop or similar occurrence, the Trust will hold certain types of digital currency that are not within the scope of the Notice.

There can be no assurance that the IRS will not alter its position with respect to digital currencies in the future or that a court would uphold the treatment set forth in the Notice and the Ruling & FAQs. It is also unclear what additional guidance on the treatment of digital currencies for U.S. federal income tax purposes may be issued in the future. Any future guidance on the treatment of digital currencies for U.S. federal income tax purposes could increase the expenses of the Trust and could have an adverse effect on the prices of digital currencies, including on the price of ETH in the digital asset markets. As a result, any such future guidance could have an adverse effect on the value of the Shares.

Shareholders are urged to consult their tax advisers regarding the tax consequences of owning and disposing of Shares and digital currencies in general.

Future Developments Regarding The Treatment Of Digital Currency For U.S. Federal Income Tax Purposes Could Adversely Affect The Value Of The Shares.

As discussed above, many significant aspects of the U.S. federal income tax treatment of digital currency, such as ETH, are uncertain, and it is unclear what guidance on the treatment of digital currency for U.S. federal income tax purposes may be issued in the future. It is possible that any such guidance would have an adverse effect on the prices of digital currency, including on the price of ETH in digital asset exchanges, and therefore may have an adverse effect on the value of the Shares.

Because of the evolving nature of digital currencies, it is not possible to predict potential future developments that may arise with respect to digital currencies, including forks, airdrops and similar occurrences. Such developments may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income tax purposes. Moreover, certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated as a grantor trust for U.S. federal income tax purposes.

Future Developments In The Treatment Of Digital Currency For Tax Purposes Other Than U.S. Federal Income Tax Purposes Could Adversely Affect The Value Of The Shares.

The taxing authorities of certain states, including New York, (i) have announced that they will follow the Notice with respect to the treatment of digital currencies for state income tax purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital currencies for fiat currency from state sales tax. Other states have not issued any guidance on these points, and could take different positions (e.g., imposing sales taxes on purchases and sales of digital currencies for fiat currency), and states that have issued

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guidance on their tax treatment of digital currencies could update or change their tax treatment of digital currencies. It is unclear what further guidance on the treatment of digital currencies for state or local tax purposes may be issued in the future. A state or local government authority’s treatment of ETH may have negative consequences, including the imposition of a greater tax burden on investors in ETH or the imposition of a greater cost on the acquisition and disposition of ETH generally.

The treatment of digital currencies for tax purposes by non U.S. jurisdictions may differ from the treatment of digital currencies for U.S. federal, state or local tax purposes. It is possible, for example, that a non U.S. jurisdiction would impose sales tax or value-added tax on purchases and sales of digital currencies for fiat currency. If a foreign jurisdiction with a significant share of the market of ETH users imposes onerous tax burdens on digital currency users, or imposes sales or value-added tax on purchases and sales of digital currency for fiat currency, such actions could result in decreased demand for ETH in such jurisdiction.

Any future guidance on the treatment of digital currencies for state, local or non U.S. tax purposes could increase the expenses of the Trust and could have an adverse effect on the prices of digital currencies, including on the price of ETH in digital asset exchanges. As a result, any such future guidance could have an adverse effect on the value of the Shares.

A U.S. Tax-Exempt Shareholder May Recognize “Unrelated Business Taxable Income” A Consequence Of An Investment In Shares.

Under the guidance provided in the Ruling & FAQs, hard forks, airdrops and similar occurrences with respect to digital currencies will under certain circumstances be treated as taxable events giving rise to ordinary income. In the absence of guidance to the contrary, it is possible that any such income recognized by a U.S. Tax-Exempt Shareholder (as defined under “United States Federal Income Tax Consequences” below) would constitute “unrelated business taxable income” (“UBTI”). Tax-exempt Shareholders should consult their tax advisers regarding whether such Shareholder may recognize UBTI as a consequence of an investment in Shares.

Shareholders Could Incur A Tax Liability Without An Associated Distribution Of The Trust.

In the normal course of business, it is possible that the Trust could incur a taxable gain in connection with the sale of ETH (such as sales of ETH to obtain fiat currency with which to pay the Sponsor Fee or Trust expenses, and including deemed sales of ETH as a result of the Trust using ETH to pay the Sponsor Fee or its expenses) that is otherwise not associated with a distribution to Shareholders. Shareholders may be subject to tax due to the grantor trust status of the Trust even though there is not a corresponding distribution from the Trust.

A Hard “Fork” Of The Ethereum Blockchain Could Result In Shareholders Incurring A Tax Liability.

If a hard fork occurs in the Ethereum Blockchain, the Trust could temporarily hold both the original ETH and the alternative new ETH. The IRS has held that a hard fork resulting in the creation of new units of cryptocurrency is a taxable event giving rise to ordinary income. Moreover, if such an event occurs, the Trust Agreement provides that the Sponsor shall have the discretion to determine whether the original or the alternative asset shall constitute ETH. The Trust shall treat whichever asset the Sponsor determines is not ETH as Incidental Rights or IR Virtual Currency, which it has committed to irrevocably abandon.

The Ruling & FAQs do not address whether income recognized by a non-U.S. person as a result of a fork, airdrop or similar occurrence could be subject to the 30% withholding tax imposed on U.S.-source “fixed or determinable annual or periodical” income. Non-U.S. Shareholders (as defined under “United States Federal Income Tax Consequences” below) should assume that, in the absence of guidance, a withholding agent (including the Sponsor) is likely to withhold 30% of any such income recognized by a Non-U.S. Shareholder in respect of its Shares, including by deducting such withheld amounts from proceeds that such Non-U.S. Shareholder would otherwise be entitled to receive in connection with a distribution of Incidental Rights or IR Virtual Currency. The Sponsor has committed to cause the Trust to irrevocably abandon any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future. However, there can be no assurance that these abandonments would be treated as effective for U.S. federal income tax purposes, or that the Sponsor will continue to cause the Trust to irrevocably abandon any Incidental Rights and IR Virtual Currency if there are future regulatory developments that would make it feasible for the Trust to retain those assets.

The receipt, distribution and/or sale of the alternative ETH may cause Shareholders to incur a United States federal, state, and/or local, or non-U.S., tax liability. Any tax liability could adversely impact an investment in the Shares and may require Shareholders to prepare and file tax returns they would not otherwise be required to prepare and file.

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Other Risks

Potential Conflicts Of Interest May Arise Among The Sponsor Or Its Affiliates And The Trust. The Sponsor And Its Affiliates Have No Fiduciary Duties To The Trust And Its Shareholders Other Than As Provided In The Trust Agreement, Which May Permit Them To Favor Their Own Interests To The Detriment Of The Trust And Its Shareholders.

The Sponsor will manage the affairs of the Trust. Conflicts of interest may arise among the Sponsor and its affiliates, on the one hand, and the Trust and its Shareholders, on the other hand. As a result of these conflicts, the Sponsor may favor its own interests and the interests of its affiliates over the Trust and its Shareholders. These potential conflicts include, among others, the following:

●

the Sponsor has no fiduciary duties to, and is allowed to take into account the interests of parties other than, the Trust and its Shareholders in resolving conflicts of interest, provided the Sponsor does not act in bad faith;

●

the Trust has agreed to indemnify the Sponsor, the Trustee and their respective affiliates pursuant to the Trust Agreement;

●

the Sponsor is responsible for allocating its own limited resources among different clients and potential future business ventures, to each of which it may owe fiduciary duties;

●

the Sponsor and its staff also service affiliates of the Sponsor, and may also service other digital asset investment vehicles, and their respective clients and cannot devote all of its, or their, respective time or resources to the management of the affairs of the Trust;

●

MarketVector, which is the index administrator of the MarketVector^TM Ethereum Benchmark Rate, is an affiliate of the Sponsor;

●

the Sponsor, its affiliates and their officers and employees are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with the Trust;

●

affiliates of the Sponsor may start to have substantial direct investments in ETH, or other digital assets or companies in the digital assets ecosystem that they are permitted to manage taking into account their own interests without regard to the interests of the Trust or its Shareholders, and any increases, decreases or other changes in such investments could affect the Index price and, in turn, the value of the Shares;

●

the Sponsor decides whether to retain separate counsel, accountants or others to perform services for the Trust;

●

the Sponsor may appoint an agent to act on behalf of the Shareholders, which may be the Sponsor or an affiliate of the Sponsor.

By purchasing the Shares, Shareholders agree and consent to the provisions set forth in the Trust Agreement.

Shareholders Cannot Be Assured Of The Sponsor’s Continued Services, The Discontinuance Of Which May Be Detrimental To The Trust.

Shareholders cannot be assured that the Sponsor will be willing or able to continue to serve as sponsor to the Trust for any length of time. If the Sponsor discontinues its activities on behalf of the Trust and a substitute sponsor is not appointed, the Trust will terminate and liquidate its ETH.

Appointment of a substitute sponsor will not guarantee the Trust’s continued operation, successful or otherwise. Because a substitute sponsor may have no experience managing a digital asset financial vehicle, a substitute sponsor may not have the experience, knowledge or expertise required to ensure that the Trust will operate successfully or continue to operate at all. Therefore, the appointment of a substitute sponsor may not necessarily be beneficial to the Trust and the Trust may terminate.

Although The ETH Custodian Is A Fiduciary With Respect To The Trust’s Assets, It Could Resign Or Be Removed By The Sponsor, Which May Trigger Early Dissolution Of The Trust.

The ETH Custodian is a fiduciary under § 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the Advisers Act and is licensed to custody the Trust’s ETH in trust on the Trust’s behalf. However, the ETH Custodian may terminate the Custody Agreement immediately or upon providing the applicable notice provided under the Custody

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Agreement. If the ETH Custodian resigns, is removed, or is prohibited by applicable law or regulation to act as custodian, and no successor custodian has been employed, the Sponsor may dissolve the Trust in accordance with the terms of the Trust Agreement.

Shareholders May Be Adversely Affected By The Lack Of Independent Advisers Representing Investors In The Trust.

The Sponsor has consulted with counsel, accountants and other advisers regarding the formation and operation of the Trust. No counsel was appointed to represent investors in connection with the formation of the Trust or the establishment of the terms of the Trust Agreement and the Shares. Moreover, no counsel has been appointed to represent an investor in connection with the offering of the Shares. Accordingly, an investor should consult his, her or its own legal, tax and financial advisers regarding the desirability of the value of the Shares. Lack of such consultation may lead to an undesirable investment decision with respect to investment in the Shares.

Shareholders And Authorized Participants Lack The Right Under The Custody Agreement To Assert Claims Directly Against The ETH Custodian, Which Significantly Limits Their Options For Recourse.

Neither the Shareholders nor any Authorized Participant or Liquidity Provider have a right under the Custody Agreement to assert a claim against the ETH Custodian. Claims under the Custody Agreement may only be asserted by the Sponsor on behalf of the Trust.

The Exchange On Which The Shares Are Listed May Halt Trading In The Trust’s Shares, Which Would Adversely Impact A Shareholder’s Ability To Sell Shares.

The Trust’s Shares have been approved for listing, subject to notice of issuance, on the Exchange under the market symbol “HODL.” Trading in Shares may be halted due to market conditions or, in light of the Exchange rules and procedures, for reasons that, in the view of the Exchange, make trading in Shares inadvisable. In addition, trading is subject to trading halts caused by extraordinary market volatility pursuant to “circuit breaker” rules that require trading to be halted for a specified period based on a specified market decline. Additionally, there can be no assurance that the requirements necessary to maintain the listing of the Trust’s Shares will continue to be met or will remain unchanged.

The Liquidity Of The Shares May Also Be Affected By The Withdrawal From Participation Of Authorized Participants, Which Could Adversely Affect The Market Price Of The Shares.

In the event that one or more Authorized Participants or market makers that have substantial interests in the Trust’s Shares withdraw or “step away” from participation in the purchase (creation) or sale (redemption) of the Trust’s Shares, the liquidity of the Shares will likely decrease, which could adversely affect the market price of the Shares and result in Shareholders incurring a loss on their investment.

The Market Infrastructure Of The ETH Spot Market Could Result In The Absence Of Active Authorized Participants Able To Support The Trading Activity Of The Trust.

ETH is extremely volatile, and concerns exist about the stability, reliability and robustness of many trading platforms where ETH trade. In a highly volatile market, or if one or more exchanges supporting the ETH market faces an issue, it could be extremely challenging for any Authorized Participants to provide continuous liquidity in the Shares. There can be no guarantee that the Sponsor will be able to find an Authorized Participant to actively and continuously support the Trust.

ETH Spot Exchanges Are Not Subject To Same Regulatory Oversight As Traditional Equity Exchanges, Which Could Negatively Impact The Ability Of Authorized Participants To Implement Arbitrage Mechanisms.

The trading for spot ETH occurs on multiple trading venues that have various levels and types of regulation, but are not regulated in the same manner as traditional stock and bond exchanges. If these exchanges do not operate smoothly or face technical, security or regulatory issues, that could impact the ability of Authorized Participants to make markets in the Shares. In such an event, trading in the Shares could occur at a material premium or discount against the NAV.

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Shareholders That Are Not Authorized Participants May Only Purchase Or Sell Their Shares In Secondary Trading Markets, And The Conditions Associated With Trading In Secondary Markets May Adversely Affect Shareholders’ Investment In The Shares.

Only Authorized Participants may create or redeem Creation Baskets. All other Shareholders that desire to purchase or sell Shares must do so through the Exchange or in other markets, if any, in which the Shares may be traded. Shares may trade at a premium or discount to the NAV per Share.

As The Sponsor And Its Management Have Limited History Of Operating Investment Vehicles Like The Trust, Their Experience May Be Inadequate Or Unsuitable To Manage The Trust.

The past performances of the Sponsor’s management in other investment vehicles are no indication of their ability to manage an investment vehicle such as the Trust. If the experience of the Sponsor and its management is inadequate or unsuitable to manage an investment vehicle such as the Trust, the operations of the Trust may be adversely affected.

Furthermore, the Sponsor is currently engaged in the management of other investment vehicles which could divert their attention and resources. If the Sponsor were to experience difficulties in the management of such other investment vehicles that damaged the Sponsor or its reputation, it could have an adverse impact on the Sponsor’s ability to continue to serve as Sponsor for the Trust.

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in relation to digital assets. The Sponsor believes that the Trust’s ETH held in the Trust’s account with the ETH Custodian will be an appealing target to hackers or malware distributors seeking to destroy, damage or steal the Trust’s ETH and will only become more appealing as the Trust’s assets grow. To the extent that the Trust, the Sponsor or the ETH Custodian is unable to identify and mitigate or stop new security threats or otherwise adapt to technological changes in the digital asset industry, the Trust’s ETH may be subject to theft, loss, destruction or other attack.

The Sponsor has evaluated the security procedures in place for safeguarding the Trust’s ETH, including, but not limited to, offline storage, or cold storage, multiple encrypted private key “shards,” and other measures. Nevertheless, the security procedures cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Trust and the security procedures may not protect against all errors, software flaws or other vulnerabilities in the Trust’s technical infrastructure, which could result in theft, loss or damage of its assets. The Sponsor does not control the ETH Custodian’s operations or its implementation of such security procedures and there can be no assurance that such security procedures will actually work as designed or prove to be successful in safeguarding the Trust’s assets against all possible sources of theft, loss or damage. Assets not held in cold storage, such as assets held in a trading account, may be more vulnerable to security breach, hacking or loss than assets held in cold storage. Furthermore, assets held in a trading account are held on an omnibus, rather than segregated basis, which creates greater risk of loss.

The security procedures and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of the Sponsor, the ETH Custodian, the Trust’s other service providers, or otherwise, and, as a result, an unauthorized party may obtain access to the Trust’s account with the ETH Custodian, the private keys (and therefore ETH) or other data of the Trust. Additionally, outside parties may attempt to fraudulently induce employees of the Sponsor, the ETH Custodian, or the Trust’s other service providers to disclose sensitive information in order to gain access to the Trust’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, the Sponsor, the ETH Custodian, and the Trust’s other service providers may be unable to anticipate these techniques or implement adequate preventative measures.

An actual or perceived breach of the Trust’s account with the ETH Custodian could harm the Trust’s operations, result in partial or total loss of the Trust’s assets, damage the Trust’s reputation and negatively affect the market perception of the effectiveness of the Trust, all of which could in turn reduce demand for the Shares, resulting in a reduction in the price of the Shares. The Trust may also cease operations, the occurrence of which could similarly result in a reduction in the price of the Shares.

The Sponsor Is Leanly Staffed And Relies Heavily On Key Personnel.

The Sponsor is leanly staffed and relies heavily on key personnel to manage its activities. These key personnel intend to allocate their time managing the Trust in a manner that they deem appropriate. If such key personnel were to leave or be unable to carry out their present responsibilities, it may have an adverse effect on the management of the Sponsor.

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The Trust Is New, And If It Is Not Profitable, The Trust May Terminate And Liquidate At A Time That Is Disadvantageous To Shareholders.

The Trust is new. If the Trust does not attract sufficient assets to remain open, then the Trust could be terminated and liquidated at the direction of the Sponsor. Termination and liquidation of the Trust could occur at a time that is disadvantageous to Shareholders. When the Trust’s assets are sold as part of the Trust’s liquidation, the resulting proceeds distributed to Shareholders may be less than those that may be realized in a sale outside of a liquidation context. Shareholders may be adversely affected by redemption or creation orders that are subject to postponement, suspension or rejection under certain circumstances.

Shareholders Do Not Have The Rights Enjoyed By Investors In Certain Other Vehicles And May Be Adversely Affected By A Lack Of Statutory Rights And By Limited Voting And Distribution Rights.

The Shares have limited voting and distribution rights. For example, Shareholders do not have the right to elect directors, the Trust may enact splits or reverse splits without Shareholder approval and the Trust is not required to pay regular distributions, although the Trust may pay distributions at the discretion of the Sponsor.

The Sponsor and the Trustee may agree to amend the Trust Agreement, including to increase the Sponsor Fee, without Shareholder consent. If an amendment imposes new fees and charges or increases existing fees or charges, including the Sponsor’s Fee (except for taxes and other governmental charges, registration fees or other such expenses), or prejudices a substantial existing right of Shareholders, it will become effective for outstanding Shares 30 days after notice of such amendment is given to registered owners. Notwithstanding the foregoing, the Sponsor shall have the right to increase or decrease the amount of the Sponsor Fee (i) upon three (3) business days’ prior notice of the increase or decrease being posted on the website of the Trust and (ii) upon three (3) business days’ prior written notice of the increase or decrease being given to the Trustee. Shareholders that are not registered owners (which most shareholders will not be) may not receive specific notice of a fee increase other than through an amendment to the prospectus. Moreover, at the time an amendment becomes effective, by continuing to hold Shares, Shareholders are deemed to agree to the amendment and to be bound by the Trust Agreement as amended without specific agreement to such increase (other than through the “negative consent” procedure described above).

The Trust Agreement Includes Provisions That Limit Shareholders’ Voting Rights And Restrict Shareholders’ Right To Bring A Derivative Action.

Under the Trust Agreement, Shareholders generally have no voting rights and the Trust will not have regular Shareholder meetings. Shareholders take no part in the management or control of the Trust. Accordingly, Shareholders do not have the right to authorize actions, appoint service providers or take other actions as may be taken by shareholders of other trusts or companies where shares carry such rights. The Sponsor may take actions in the operation of the Trust that may be adverse to the interests of Shareholders and may adversely affect the value of the Shares.

Moreover, pursuant to the terms of the Trust Agreement, Shareholders’ statutory right under Delaware law to bring a derivative action (i.e., to initiate a lawsuit in the name of the Trust in order to assert a claim belonging to the Trust against a fiduciary of the Trust or against a third-party when the Trust’s management has refused to do so) is restricted. Under Delaware law, a shareholder may bring a derivative action if the shareholder is a shareholder at the time the action is brought and either (i) was a shareholder at the time of the transaction at issue or (ii) acquired the status of shareholder by operation of law or the Trust’s governing instrument from a person who was a shareholder at the time of the transaction at issue. Additionally, Section 3816(e) of the Delaware Statutory Trust Act specifically provides that a “beneficial owner’s right to bring a derivative action may be subject to such additional standards and restrictions, if any, as are set forth in the governing instrument of the statutory trust, including, without limitation, the requirement that beneficial owners owning a specified beneficial interest in the statutory trust join in the bringing of the derivative action.” In addition to the requirements of applicable law and in accordance with Section 3816(e), the Trust Agreement provides that no Shareholder will have the right, power or authority to bring or maintain a derivative action, suit or other proceeding on behalf of the Trust unless two or more Shareholders who (i) are not “Affiliates” (as defined in the Trust Agreement and below) of one another and (ii) collectively hold at least 10% of the outstanding Shares join in the bringing or maintaining of such action, suit or other proceeding. This provision applies to any derivative actions brought in the name of the Trust other than claims under the federal securities laws and the rules and regulations thereunder.

Due to this additional requirement, a Shareholder attempting to bring or maintain a derivative action in the name of the Trust will be required to locate other Shareholders with which it is not affiliated and that have sufficient Shares to meet the 10% threshold based on the number of Shares outstanding on the date the claim is brought and thereafter throughout the duration of the action, suit or proceeding. This may be difficult and may result in increased costs to a Shareholder attempting to seek redress in the name of the Trust in court. Moreover, if Shareholders bringing a derivative action, suit or proceeding pursuant to this provision of the Trust Agreement do not hold 10% of the outstanding Shares on the date such an action, suit or proceeding is brought, or such Shareholders are unable to maintain Share ownership meeting the 10% threshold throughout the duration of the action, suit or proceeding, such Shareholders’ derivative action may be subject to dismissal. As a result, the Trust Agreement limits the likelihood that a Shareholder will be able to

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successfully assert a derivative action in the name of the Trust, even if such Shareholder believes that he or she has a valid derivative action, suit or other proceeding to bring on behalf of the Trust.

The Non-Exclusive Jurisdiction For Certain Types Of Actions And Proceedings And Waiver Of Trial By Jury Clauses Set Forth In The Trust Agreement May Have The Effect Of Limiting A Shareholder’s Rights To Bring Legal Action Against The Trust And Could Limit A Purchaser’s Ability To Obtain A Favorable Judicial Forum For Disputes With The Trust.

The Trust Agreement provides that the courts of the state of Delaware and any federal courts located in Wilmington, Delaware will be the non-exclusive jurisdiction for any claims, suits, actions or proceedings, provided that suits brought to enforce a duty or liability created by the 1933 Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction and the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the 1933 Act, the Exchange Act, or the rules and regulations promulgated thereunder. By purchasing Shares in the Trust, Shareholders waive certain claims that the courts of the state of Delaware and any federal courts located in Wilmington, Delaware is an inconvenient venue or is otherwise inappropriate. As such, Shareholder could be required to litigate a matter relating to the Trust in a Delaware court, even if that court may otherwise be inconvenient for the Shareholder.

The Trust Agreement also waives the right to trial by jury in any such claim, suit, action or proceeding, including any claim under the U.S. federal securities laws, to the fullest extent permitted by applicable law. If a lawsuit is brought against the Trust, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have, including results that could be less favorable to the plaintiffs in any such action. No Shareholder can waive compliance with respect to the U.S. federal securities laws and the rules and regulations promulgated thereunder.

If a Shareholder opposed a jury trial demand based on the waiver, the applicable court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with applicable federal laws. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the U.S. federal securities laws has not been finally adjudicated by the U.S. Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of Delaware, which govern the Trust Agreement. By purchasing Shares in the Trust, Shareholders waive a right to a trial by jury which may limit a Shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Trust.

An Investment In The Trust May Be Adversely Affected By Competition From Other Investment Vehicles Focused On ETH Or Other Cryptocurrencies.

The Trust will compete with direct investments in ETH, other cryptocurrencies, ETH Futures, and other potential financial vehicles, possibly including securities backed by or linked to cryptocurrency and other investment vehicles that focus on other digital assets. Market and financial conditions, and other conditions beyond the Trust’s control, may make it more attractive to invest in other vehicles, which could adversely affect the performance of the Trust.

Shareholders Cannot Be Assured Of The Sponsor’s Continued Services, The Discontinuance Of Which May Be Detrimental To The Trust.

Shareholders cannot be assured that the Sponsor will be able to continue to service the Trust for any length of time. If the Sponsor discontinues its activities on behalf of the Trust, the Trust may be adversely affected, as there may be no entity servicing the Trust for a period of time. Such an event could result in termination of the Trust.

Shareholders May Be Adversely Affected By Creation Or Redemption Orders That Are Subject To Postponement, Suspension Or Rejection Under Certain Circumstances.

The Trust may, in its discretion, suspend the right of creation or redemption or may postpone the redemption or purchase settlement date, for (1) any period during which the Exchange is closed other than customary weekend or holiday closings, or trading on the Exchange is suspended or restricted, (2) any period during which an emergency exists as a result of which the fulfillment of a purchase order or the redemption distribution is not reasonably practicable (for example, as a result of a significant technical failure, power outage, or network error), or (3) such other period as the Sponsor determines to be necessary for the protection of the Shareholders of the Trust (for example, where acceptance of the total deposit required to create each Creation Basket (“Creation Basket Deposit”) would have certain adverse tax consequences to the Trust or its Shareholders). In addition, the Trust may reject a redemption order if (1) the order is not in proper form as described in the Authorized Participant Agreement, (2) the fulfillment of the order counsel advises may be illegal under applicable laws and regulations, or (3) if circumstances outside the control of the Sponsor, the person authorized

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to take redemption orders in the manner provided in the Authorized Participant Agreement, Cash Custodian or the ETH Custodian make it for all practical purposes not feasible for the Shares to be delivered or the redemption distribution to be made. Any such postponement, suspension or rejection could adversely affect a redeeming Authorized Participant. Suspension of creation privileges may adversely impact how the Shares are traded and arbitraged on the secondary market, which could cause them to trade at levels materially different (premiums and discounts) from the fair value of their underlying holdings.

If such a suspension or postponement occurs at a time when an Authorized Participant intends to redeem Shares, and the price of ETH decreases before such Authorized Participant is able again to surrender for redemption Creation Baskets, such Authorized Participant will sustain a loss with respect to the amount that it would have been able to obtain in exchange for the ETH received from the Trust upon the redemption of its Shares, had the redemption taken place when such Authorized Participant originally intended it to occur. As a consequence, Authorized Participants may reduce their trading in Shares during periods of suspension, decreasing the number of potential buyers of Shares in the secondary market and, therefore, decreasing the price a Shareholder may receive upon sale.

Shareholders May Be Adversely Affected By An Overstatement Or Understatement Of The NAV Calculation Of The Trust Due To The Valuation Method Employed On The Date Of The NAV Calculation.

In certain circumstances, the Trust’s ETH investments may be valued using techniques other than reliance on the price established by the MarketVector^TM Ethereum Benchmark Rate. As described further in “Net Asset Value Determinations,” the Sponsor will monitor for significant events related to crypto assets that may impact the value of ETH and will determine in good faith, and in accordance with its valuation policies and procedures, whether to fair value the Trust’s ETH on a given day based on whether certain pre-determined criteria have been met. For example, if the MarketVector^TM Ethereum Benchmark Rate deviates by more than a pre-determined amount from an alternate benchmark available to the Sponsor, then the Sponsor may determine to utilize the alternate benchmark. The value of the Shares of the Trust established by using the MarketVector^TM Ethereum Benchmark Rate may be different from what would be produced through the use of another methodology. ETH or other digital asset investments that are valued using techniques other than those employed by the MarketVector^TM Ethereum Benchmark Rate, including ETH investments that are “fair valued,” may be subject to greater fluctuation in their value from one day to the next than would be the case if market-price valuation techniques were used.

The Liability Of The Sponsor And The Trustee Is Limited, And The Value Of The Shares Will Be Adversely Affected If The Trust Is Required To Indemnify The Trustee Or The Sponsor.

Under the Trust Agreement, the Trustee and the Sponsor are not liable, and have the right to be indemnified, for any liability or expense incurred absent gross negligence or willful misconduct on the part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as the case may be. As a result, the Sponsor may require the assets of the Trust to be sold in order to cover losses or liability suffered by it or by the Trustee. Any sale of that kind would reduce the NAV of the Trust and the value of its Shares.

Due To The Increased Use Of Technologies, Intentional And Unintentional Cyber-Attacks Pose Operational And Information Security Risks.

With the increased use of technologies such as the internet and the dependence on computer systems to perform necessary business functions, the Trust is susceptible to operational and information security risks. In general, cyber incidents can result from deliberate attacks or unintentional events. Cyber-attacks include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites. Cyber security failures or breaches of one or more of the Trust’s service providers (including, but not limited to, MarketVector, the administrator, transfer agent, and the ETH Custodian) have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, the inability of the Shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs.

In addition, substantial costs may be incurred in order to prevent any cyber incidents in the future. The Trust and its Shareholders could be negatively impacted as a result. While the Trust has established business continuity plans, there are inherent limitations in such plans.

The Trust And Its Service Providers Are Subject To Certain Operational Risks.

The Trust and its service providers, including the Sponsor, Administrator, Transfer Agent, ETH Custodian and Cash Custodian (as well as Authorized Participants and market makers) may experience disruptions that arise from human error, processing and communications errors, counterparty or third-party errors, or technology or systems failures, any of which may have an adverse impact

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on the Trust. Although the Trust and its service providers seek to mitigate these operational risks through their internal controls and operational risk management processes, these measures may not identify or may be inadequate to address all such risks. Additionally, the ETH Custodian, which was established in 2015, has a limited operating company and experience, which could heighten certain operational risks.

Risk Factors Related to ERISA

In General.

Notwithstanding the commercially reasonable efforts of the Sponsor, it is possible that the underlying assets of the Trust will be deemed to include “plan assets” for the purposes of Title I of ERISA or Section 4975 of the Code. If the assets of the Trust were deemed to be “plan assets,” this could result in, among other things, (i) the application of the prudence and other fiduciary standards of ERISA to investments made by the Trust and (ii) the possibility that certain transactions in which the Trust might otherwise seek to engage in the ordinary course of its business and operation could constitute non-exempt “prohibited transactions” under Section 406 of ERISA and/or Section 4975 of the Code, which could restrict the Trust from entering into an otherwise desirable investment or from entering into an otherwise favorable transaction. In addition, fiduciaries who decide to invest in the Trust could, under certain circumstances, be liable for “prohibited transactions” or other violations as a result of their investment in the Trust or as co-fiduciaries for actions taken by or on behalf of the Trust or the Sponsor. There may be other federal, state, local, non-U.S. law or regulation that contains one or more provisions that are similar to the foregoing provisions of ERISA and the Code that may also apply to an investment in the Trust.

The application of ERISA (including the corresponding provisions of the Code and other relevant laws) may be complex and dependent upon the particular facts and circumstances of the Trust and of each Plan, and it is the responsibility of the appropriate fiduciary of each investing Plan to ensure that any investment in the Trust by such Plan is consistent with all applicable requirements. Each Shareholder, whether or not subject to Title I of ERISA or Section 4975 of the Code, should consult its own legal and other advisors regarding the considerations discussed above and all other relevant ERISA and other considerations before purchasing the Shares.

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ETH, ETH MARKET, ETH EXCHANGES AND REGULATION OF ETH

This section of the Prospectus provides a more detailed description of ETH. In this Prospectus, Ethereum with an upper case “E” is used to describe the system as a whole that is involved in maintaining the ledger of ETH ownership and facilitating the transfer of ETH among parties, while “Ethereum network” refers to the peer-to-peer network and “Ethereum Blockchain” refers to the blockchain ledger.

ETH

ETH is a digital asset that can be transferred among participants on the Ethereum network on a peer-to-peer basis via the Internet. Unlike other means of electronic payments, ETH can be transferred without the use of a central administrator or clearing agency. Because a central party is not necessary to administer ETH transactions or maintain the ETH ledger, the term decentralized is often used in descriptions of ETH.

Ethereum Network – Overview

ETH was first described in a white paper released in 2013 by Vitalik Buterin, a programmer involved with Bitcoin, with the goal of creating a global platform for decentralized applications powered by smart contracts. While bitcoin is used as a medium of exchange and store of value, ETH is used to interact with applications on the Ethereum network. Paying for transactions, creating smart contracts and using decentralized applications all require users to pay fees in ETH. The formal development of the Ethereum network began through a Swiss firm called Ethereum Switzerland GmbH (“ETHSuisse”) in conjunction with several other entities. Subsequently, the Ethereum Foundation, a Swiss non-profit organization, was set up to oversee the protocol’s development. The Ethereum network went live on July 30, 2015. Unlike other digital assets, such as Bitcoin, which are solely created through a progressive mining process, 72.0 million ETH were created in connection with the launch of the Ethereum network. Coinciding with the network launch, it was decided that ETHSuisse would be dissolved, leaving the Ethereum Foundation to foster protocol development. Since then, various groups, including the Ethereum Foundation as well as third parties, have developed several forms of interoperable, but distinct, forms of Ethereum Client software (for example, prominent forms of Execution Client (defined below) software include Besu, Erigon, Geth, Nethermind, Reth and wellknown Consensus Client (defined below) software implementations include Lighthouse, Lodestar, Nimbus, Prysm, Teku) which together make up the Ethereum network.

The first step in using ETH for transactions on a peer-to-peer basis is to download specialized software referred to as an “ETH wallet.” A user’s ETH wallet can run on a computer or smartphone, and can be used both to send and to receive ETH. Within an ETH wallet, a user can generate one or more unique “ETH addresses,” which are conceptually similar to bank account numbers on the Ethereum Blockchain and are associated with a pair of public and private keys. After establishing a ETH address, a user can send or receive ETH from his or her ETH address to another user’s address using the public and private keys. Sending ETH from one ETH address to another is similar in concept to sending a bank wire from one person’s bank account to another person’s bank account.

The amount of ETH associated with each ETH address is listed in a public ledger, referred to as a “blockchain.” Copies of the Ethereum Blockchain exist on thousands of computers on the Ethereum network throughout the Internet. A user’s ETH wallet will either contain a copy of the Ethereum Blockchain or be able to connect with another computer that holds a copy of the Ethereum Blockchain.

When an ETH user wishes to transfer ETH to another user, the sender must first request a ETH address from the recipient. The sender then uses his or her ETH wallet software to create a data packet containing the proposed addition (often referred to as a “transaction”) to the Ethereum Blockchain. The proposed transaction would reduce the sender’s address and increase the recipient’s address by the amount of ETH desired to be transferred, and is sent on a peer-to-peer basis to other computers participating in the Ethereum network.

Ethereum Protocol Development and Modifications

Ethereum is an open source project with no central authority that controls the Ethereum network, and anyone can review the underlying code and suggest changes. However, historically the Ethereum network’s development has been loosely overseen by the Ethereum Foundation and core developers at both the protocol and Ethereum Client Level who are able to access and alter the Ethereum network source code and, as a result, are responsible for quasi-official releases of updates and other changes to the Ethereum network’s source code. However, because Ethereum has no central authority, the release of updates to the Ethereum network’s source code does not guarantee that the updates will be automatically adopted by the other participants in the Ethereum network. Core developers are not monolithic. At the protocol level, certain core developers may support a given change while others oppose it. Developers of certain Ethereum Clients may support the change and incorporate the change into an update to their particular Ethereum Consensus Client or Execution Client, while developers of other Ethereum Clients may not do so. In addition, the release of proposed updates to the Ethereum network’s source code by core developers does not guarantee that the updates will be automatically adopted. Node operators must accept any changes made to the Ethereum source code by choosing to download the proposed modification of the Ethereum network’s source code in their individual Ethereum Client, which they will likely not do unless a critical mass of validators and users – such as decentralized application (“DApp”) and smart contract developers, as well as users of DApps and smart contracts, and anyone else who transacts on the Ethereum Blockchain or Ethereum network – support the shift as well. If no such critical mass emerges, node operators will not download the change, and the upgrades will lack adoption.

Modifications are typically introduced by core developers in the form of EIPs, and are often followed by a robust debate within the Ethereum community as to the advisability of the proposed change. Assuming the core developers at the protocol level and the developers of individual Ethereum Clients reach a broad consensus among themselves in favor of introducing the change into the respective source code they are responsible for developing and maintaining, the source code modification will be introduced and made available to download. Typically, after a modification is introduced and a substantial majority of users and miners express support, leading to node operators consenting to the modification by choosing to download it, the change is implemented at a specific block number on the Ethereum network and the network continues to operate uninterrupted on a single blockchain. However, if less than a substantial majority of core developers (whether at the protocol level or the individual Ethereum Client level), users, miners and node operators consent to the proposed modification, but the modification is nonetheless implemented by some core developers, Ethereum Clients, node operators, users and miners, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” (i.e., “split”) of the Ethereum network (and the Ethereum Blockchain), with one version (employed by those core developers, Ethereum Clients, node operators, validators and users who rejected the change) running the pre-modified software and the other (employed by core developers, Ethereum Clients, node operators, validators and users who chose to adopt the change) running the modified software. The effect of such a fork would be the existence of two (or more) versions of the Ethereum network running in parallel, but with each version’s ETH lacking interchangeability, and with different blockchains, transaction histories, and ownership ledgers associated with each. See “Risk Factors—A temporary or permanent “fork” could adversely affect an investment in the Trust.” Consequently, as a practical

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matter, a modification to the source code becomes part of the Ethereum network only if accepted by participants collectively having most of the processing power on the Ethereum network.

A hard fork may adversely affect the price and tax status of ETH at the time of announcement or adoption. For example, the announcement of a hard fork could lead to increased demand for the pre fork digital asset, in anticipation that ownership of the pre fork digital asset would entitle holders to a new digital asset following the fork. The increased demand for the pre fork digital asset may cause the price of the digital asset to rise. After the hard fork, it is possible the aggregate price of the two versions of the digital asset running in parallel would be less than the price of the digital asset immediately prior to the fork. Furthermore, while the Sponsor will, as permitted by the terms of the Trust Agreement, determine which network is generally accepted as the Ethereum network and should therefore be considered the appropriate network for the Trust’s purposes, there is no guarantee that the Sponsor will choose the network and the associated digital asset that is ultimately the most valuable fork. Either of these events could therefore adversely impact the value of the Shares.

The only crypto asset to be held by the Trust will be ETH. The Trust may from time to time be entitled to come into possession of rights incident to its ownership of ETH, which permit the Trust to acquire, or otherwise establish dominion and control over, other digital assets or tokens. These rights are generally expected to arise in connection with forks in the Ethereum Blockchain, airdrops offered to holders of ETH or other similar events and arise without any action of the Trust or of the Sponsor or Trustee on behalf of the Trust. We refer to these rights as “Incidental Rights” and any such digital assets or tokens acquired through Incidental Rights as “IR Virtual Currency.”

The Trust has adopted the following procedures to address situations involving any fork, airdrop or similar event that results in the issuance of Incidental Rights or IR Virtual Currency that the Trust may receive. The Trust Agreement stipulates that if a fork occurs, the Sponsor shall determine which asset constitutes ETH and which network constitutes the Ethereum network, and the Sponsor will as soon as possible cause the Trust to irrevocably abandon the Incidental Rights or IR Virtual Currency. Because the Trust will abandon any Incidental Rights and IR Virtual Currency, the Trust would not receive any direct or indirect consideration for the Incidental Rights or IR Virtual Currency and thus the value of the Shares will not reflect the value of the Incidental Rights or IR Virtual Currency. Such Incidental Rights or IR Virtual Currency will not be taken into account for purposes of determining NAV. In the event the Trust seeks to change this position, an application would need to be filed with the SEC by the Exchange seeking approval to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency that is not ETH in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor would arrange to sell or otherwise dispose of the Incidental Rights or IR Virtual Currency and for the proceeds (if any) to be distributed to the Shareholders.

Core development of the Ethereum network source code has increasingly focused on modifications of the ETH network protocol to increase speed, throughput and scalability and also allow for non-financial, next generation uses. Future upgrades to the Ethereum protocol and Ethereum Blockchain to address scaling issues – such as network congestion, slow throughput and periods of high transaction fees owing to spikes in network demand – have been discussed by network participants, such as sharding. The purpose of sharding is to increase scalability of the Ethereum Blockchain by splitting the blockchain into subsections, called shards, and dividing validation responsibility so that a defined subset of validators would be responsible for each shard, rather than all validators being responsible for the entire blockchain, allowing for parallel processing and validation of transactions. However, there appears to be uncertainty and a lack of existing widespread consensus among network participants about how to solve the scaling challenges faced by the Ethereum network.

The Trust’s activities will not directly relate to such projects, though such projects may utilize ETH as tokens for the facilitation of their non-financial uses, thereby potentially increasing demand for ETH and the utility of the Ethereum network as a whole. Conversely, projects that operate and are built within the Ethereum Blockchain may increase the data flow on the Ethereum network and could either bloat the size of the Ethereum Blockchain or slow confirmation times. At this time, such projects remain in early stages and have not been materially integrated into the Ethereum Blockchain or the Ethereum network.

Summary of an ETH Transaction

A “transaction request” refers to a request to the Ethereum network made by a user, in which the requesting user (the “sender”) asks the Ethereum network to send some ETH or execute some code. A “transaction” refers to a fulfilled transaction request and the associated change in the Ethereum network’s state. An Ethereum Client is a software application that implements the Ethereum network specification and communicates with the Ethereum network. A node is a computer or other device, such as a mobile phone, running an individual Ethereum Client that is connected to other computers also running their own Ethereum Clients, which collectively form the Ethereum network. Nodes can be full nodes (meaning they host a local copy of the entire Ethereum Blockchain), or light nodes, which only host a local copy of a sub-portion of the full Ethereum Blockchain with reduced data. Nodes may (but do not have to) be validators, which requires them to download an additional piece of software in the node’s Ethereum Client and stake a certain amount of ETH, which is discussed below.

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Any user can broadcast a transaction request to the Ethereum network from a node located on the network. A user can run their own node, or they can connect to a node operated by others. For the transaction request to actually result in a change to the current state of the Ethereum network, it must be validated, executed, and “committed to the network” by another node (specifically, a validator node). Execution of the transaction request by the validator results in a change to Ethereum network’s state once the transaction is broadcast to all other nodes across the Ethereum network. Transactions can include, for example, sending ETH from one account to another, as discussed below; publishing a new smart contract onto the Ethereum network; or activating and executing the code of an existing smart contract, in accordance with the terms and conditions specified in the sender’s transaction request.

The Ethereum Blockchain can be thought of as a ledger recording a history of transactions and the balances associated with individual accounts, each of which has an address on the Ethereum network. An Ethereum network account can be used to store ETH. There are two types of Ethereum accounts: “externally owned accounts,” which are controlled by a private key, and “smart contract accounts,” which are controlled by their own code. Externally owned accounts are controlled by users, do not contain executable code, and are associated with a unique “public key” and “private key” pair, commonly referred to as a “wallet,” with the private key being used to execute transactions. Smart contract accounts contain, and are controlled by, their own executable code: every time the smart contract account receives a transaction from, or is “called” by, another user, the smart contract account’s code activates, allowing it to read and write to internal storage, send ETH, or perform other operations. Both externally owned accounts and smart contract accounts can be used to send, hold, or receive ETH, and both can interact with other smart contracts. However, only externally owned accounts have the power to initiate transactions; smart contract accounts can only send transactions of their own after they are first activated or called by another transaction. An externally owned account is associated with both a public address on the Ethereum network and a private key, while a smart contract account is only associated with a public address. While a smart contract account does not use a private key to authorize transactions, including transfers of ETH, the developer of a smart contract may hold an “admin key” to the smart contract account, or have special access privileges, allowing the developer to make changes to the smart contract, enable or disable features on the smart contract, or change how the smart contract receives external inputs and data, among others.

Accounts depend on nodes to access the peer-to-peer Ethereum network. Through the node’s Ethereum Client, a user’s Ethereum wallet and its associated Ethereum network address enable the user to connect to the Ethereum network and transfer ETH to, and receive ETH from, other users, and interact with smart contracts, on a peer-to-peer basis. A user with an externally owned account can either run their own node (and their own Ethereum Client) and connect that node to their Ethereum wallet, allowing them to make transactions from their Ethereum wallet on the Ethereum network, or a user’s wallet can connect to third-party nodes operated as a service (e.g., Infura) and access the Ethereum network that way. Multiple accounts can access the Ethereum network through one node.

Each user’s Ethereum wallet is associated with a unique “public key” and “private key” pair. To receive ETH in a peer-to-peer transaction, the ETH recipient must provide its public key to the sender. This activity is analogous to a recipient for a transaction in U.S. dollars providing a routing address in wire instructions to the payor so that cash may be wired to the recipient’s account. The sender approves the transfer to the address provided by the recipient by “signing” a transaction that consists of the recipient’s public key with the private key of the address from which the sender is transferring the ETH. The recipient, however, does not make public or provide to the sender the recipient’s related private key, only its public key.

Neither the recipient nor the sender reveal their private keys in a peer-to-peer transaction, because the private key authorizes transfer of the funds in that address to other users. Therefore, if a user loses their private key, the user may permanently lose access to the ETH contained in the associated address. Likewise, ETH is irretrievably lost if the private key associated with them is deleted and no backup has been made. When sending ETH, a user’s Ethereum wallet must sign the transaction with the sender’s associated private key. In addition, since every computation on the Ethereum network requires processing power, there is a mandatory transaction fee involved with the transfer that is paid by the sender to the Ethereum network itself (“base fee”), plus additional transaction fees the sender can elect (or not) to pay at their discretion to the validators who validate their transaction (“tip”). The resulting digitally signed transaction is sent by the user’s Ethereum wallet, via a node (whether run by the user or operated by others), to other Ethereum network nodes, who in turn broadcast it on a peer-to-peer basis to validators to allow transaction confirmation.

Ethereum network validators record and confirm transactions when they validate and add blocks of information to the Ethereum Blockchain. Validators operate through nodes whose Ethereum Clients have an extra piece of software that permits the node to perform validation transactions. In a proof-of-stake consensus protocol like that used by the Ethereum network, validators compete to be randomly selected to validate transactions. A validator must stake 32 ETH to become a validator, which allows them to activate a unique validator key pair (consisting of a public and private validator key). Each 32 ETH that is staked results in issuance of a validator key pair, meaning that multiple validators can operate through a single validator node (including a validator node operated by a third party as a service). There are two types of validators, those who propose blocks (“proposers”) and those who participate in a committee which approves the block (“attesters”). Staking more ETH (in chunks of 32 ETH) can increase the numerical chances that a given validator will be randomly selected. When a validator is randomly selected by the protocol’s algorithm to propose a block, it creates that block,

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which includes data relating to (i) the verification of newly submitted transaction requests submitted by senders and (ii) a reference to the prior block in the Ethereum Blockchain to which the new block is being added. The proposing validator becomes aware of outstanding transaction requests through peer-to-peer data packet transmission and distribution enforced by the Ethereum protocol rules, which connects the proposer to users who want transactions recorded. If – once created – the proposing validator’s block is confirmed by a committee of randomly selected attesters, the block is broadcast to the Ethereum network and added to the Ethereum Blockchain. Any smart contract code that has been called by the transaction request is also executed (provided the base fee is paid for the Ethereum network’s computational power associated with executing the code, and up to the amount of the base fee). Upon the addition of a block included in the Ethereum Blockchain, an adjustment to the ETH balance in both the sender and recipient’s Ethereum network public key will occur, completing the ETH transaction. Once a transaction is confirmed on the Ethereum Blockchain, it is irreversible.

As a reward for their services in adding the block to the Blockchain, both the proposing validator and the attesting validators receive newly minted ETH from the Ethereum network. If the proposing validator’s block is determined to be faulty or to break protocol rules by the approving validator committee, the proposer is penalized by having their staked ETH reduced. Validators can also be penalized for attesting to transactions that break protocol rules or are inconsistent with the majority of other validators, or for inactivity or missing attestations that the Ethereum network protocol assigned to them. In extreme cases, a proposing or attesting validator can be “slashed”, meaning forcibly ejected by other validators, with their staked ETH continuously drained, potentially up to the loss of their entire stake. In this way, the Ethereum network attempts to reduce double-spend and other attacks by validators and incentivize validator integrity.

Some ETH transactions are conducted “off-blockchain” and are therefore not recorded in the Ethereum Blockchain. Some “off-blockchain transactions” involve the transfer of control over, or ownership of, a specific digital wallet holding ETH or the reallocation of ownership of certain ETH in a pooled-ownership digital wallet, such as a digital wallet owned by a digital asset exchange. If a transaction can also take place through a centralized digital asset exchange or a custodian’s internal books and records, it is not broadcast to the Ethereum network or recorded on the Ethereum Blockchain. In contrast to on-blockchain transactions, which are publicly recorded on the Ethereum Blockchain, information and data regarding off-blockchain transactions are generally not publicly available. Therefore, off-blockchain transactions are not peer-to-peer ETH transactions in that they do not involve a transaction on the Ethereum network and do not reflect a movement of ETH between addresses recorded in the Ethereum Blockchain. For these reasons, off-blockchain transactions are not immutable or irreversible as any such transfer of ETH ownership is not cryptographically protected by the protocol behind the Ethereum network or recorded in, and validated through, the blockchain mechanism.

Creation of New ETH

Initial Creation of ETH

Unlike other digital assets such as Bitcoin, which are solely created through a progressive mining process, 72.0 million ETH were created in connection with the launch of the Ethereum network. The initial 72.0 million ETH were distributed as follows:

Initial Distribution: 60.0 million ETH, or 83.33% of the supply, was sold to the public in a crowd sale conducted between July and August 2014 that raised approximately $18 million.

Ethereum Foundation: 6.0 million ETH, or 8.33% of the supply, was distributed to the Ethereum Foundation for operational costs.

Ethereum Developers: 3.0 million ETH, or 4.17% of the supply, was distributed to developers who contributed to the Ethereum network.

Developer Purchase Program: 3.0 million ETH, or 4.17% of the supply, was distributed to members of the Ethereum Foundation to purchase at the initial crowd sale price.

Following the launch of the Ethereum network, ETH supply initially increased through a progressive validation process. Following the introduction of EIP-1559, described below, ETH supply and issuance rate varies based on factors such as recent use of the network.

Proof-of-Work Validation Process

Prior to September 2022, Ethereum operated using a proof-of-work consensus mechanism. Under proof-of-work, in order to incentivize those who incurred the computational costs of securing the network by validating transactions, there was a reward given to the computer (under proof-of-work, validators were known as “miners”) that was able to create the latest block on the chain. Every 12 seconds, on average, a new block was added to the Ethereum Blockchain with the latest transactions processed by the network, and the miner that generated this block was awarded a variable amount of ETH, depending on use of the network at the time. In certain validation scenarios, ETH was sometimes sent to another miner if they were also able to find a solution, but their block was not included. This is referred to as an “uncle/aunt reward.” Due to the nature of the algorithm for block generation, this process (generating a “proof-of-work”) was

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guaranteed to be random. Prior to the Merge upgrade, described below, miners on the Ethereum network engaged in a set of prescribed complex mathematical calculations in order to add a block to the Ethereum Blockchain and thereby confirm ETH transactions included in that block’s data.

Proof-of-Stake Process

In the second half of 2020, the Ethereum network began the first of several stages of an upgrade that was initially known as “Ethereum 2.0.” and eventually became known as the “Merge” to transition the Ethereum network from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism. The Merge was completed on September 15, 2022 and the Ethereum network has operated on a proof-of-stake model since such time.

Unlike proof-of-work, in which validators expend computational resources to compete to validate transactions and are rewarded coins in proportion to the amount of computational resources expended, in proof-of-stake, validators risk or “stake” coins to compete to be randomly selected to validate transactions and are rewarded coins in proportion to the amount of coins staked. Any malicious activity, such as validating multiple blocks, disagreeing with the eventual consensus or otherwise violating protocol rules, results in the forfeiture or “slashing” of a portion of the staked coins. Proof-of-stake is believed by some to be more energy efficient and scalable than proof-of-work. Every 12 seconds, approximately, a new block is added to the Ethereum Blockchain with the latest transactions processed by the network, and the validator that generated this block is awarded ETH.

Limits on ETH Supply

The rate at which new ETH are issued and put into circulation is expected to vary. In September 2022 the Ethereum network converted from proof-of-work to a new proof-of-stake consensus mechanism. Following the Merge, approximately 1,700 ETH are issued per day, though the issuance rate varies based on the number of validators on the network. In addition, the issuance of new ETH could be partially or completely offset by the burn mechanism introduced by the EIP-1559 modification, under which ETH are removed from supply at a rate that varies with network usage. See “—Modifications to the ETH Protocol.” On occasion, the ETH supply has been deflationary over a 24 hour period as a result of the burn mechanism. The attributes of the new consensus algorithm are subject to change, but in sum, the new consensus algorithm and related modifications reduced total new ETH issuances and could turn the ETH supply deflationary over the long term.

As of April 30, 2024, approximately 120 million ETH were outstanding.

ETH Market and ETH Exchanges

ETH can be transferred in direct peer-to-peer transactions through the direct sending of ETH over the Ethereum Blockchain from one ETH address to another. Among end-users, ETH can be used to pay other members of the Ethereum network for goods and services under what resembles a barter system. Consumers can also pay merchants and other commercial businesses for goods or services through direct peer-to-peer transactions on the Ethereum Blockchain or through third-party service providers.

In addition to using ETH to engage in transactions, investors may purchase and sell ETH to speculate as to the value of ETH in the ETH market, or as a long-term investment to diversify their portfolio. The value of ETH within the market is determined, in part, by the supply of and demand for ETH in the global ETH market, market expectations for the adoption of ETH as a store of value, the number of merchants that accept ETH as a form of payment, and the volume of peer-to-peer transactions, among other factors.

A ETH trading platform provides investors with a website that permits investors to open accounts with the exchange and then purchase and sell ETH. Prices for trades on ETH trading platforms are typically reported publicly. An investor opening a trading account must deposit an accepted government-issued currency into their account with the exchange, or a previously acquired digital asset, before they can purchase or sell assets on the exchange. The process of establishing an account with a ETH trading platform and trading ETH is different from, and should not be confused with, the process of users sending ETH from one ETH address to another ETH address on the Ethereum Blockchain. This latter process is an activity that occurs on the Ethereum network, while the former is an activity that occurs entirely on the private website operated by the exchange. The exchange typically records the investor’s ownership of ETH in its internal books and records, rather than on the Ethereum Blockchain. The exchange ordinarily does not transfer ETH to the investor on the Ethereum Blockchain unless the investor makes a request to the exchange to withdraw the ETH in their exchange account to an off-exchange ETH wallet.

Outside of exchanges, ETH can be traded OTC in transactions that are not publicly reported. The OTC market is largely institutional in nature, and OTC market participants generally consist of institutional entities, such as firms that offer two-sided liquidity for ETH, investment managers, proprietary trading firms, high-net-worth individuals that trade ETH on a proprietary basis, entities with

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sizeable ETH holdings, and family offices. The OTC market provides a relatively flexible market in terms of quotes, price, quantity, and other factors, although it tends to involve large blocks of ETH. The OTC market has no formal structure and no open-outcry meeting place. Parties engaging in OTC transactions will agree upon a price—often via phone or email—and then one of the two parties will then initiate the transaction. For example, a seller of ETH could initiate the transaction by sending the ETH to the buyer’s ETH address. The buyer would then wire U.S. dollars to the seller’s bank account. OTC trades are sometimes hedged and eventually settled with concomitant trades on ETH spot exchanges.

Authorized Participants will deliver, or facilitate the delivery of, ETH or cash to the Trust’s account with the ETH Custodian in exchange for Shares of the Trust, and the Trust, through the ETH Custodian, will deliver ETH or cash when such Authorized Participants redeem Shares of the Trust. Based on the CCData Exchange Benchmark, MarketVector selects the top five exchanges by rank for inclusion in the MarketVector^TM Ethereum Benchmark Rate, which the Trust will then use to price its NAV at the end of every business day. See “The Trust and ETH Prices—Description of the MarketVector^TM Ethereum Benchmark Rate Construction and Maintenance” for more information.

Regulation of Ethereum and Government Oversight

As digital assets have grown in both popularity and market size, the U.S. Congress and a number of U.S. federal and state agencies (including FinCEN, SEC, CFTC, FINRA, the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the IRS and state financial institution regulators) have been examining the operations of digital asset networks, digital asset users and the digital asset exchange markets, with particular focus on the extent to which digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist enterprises and the safety and soundness of exchanges or other service-providers that hold digital assets for users. Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors. In addition, federal and state agencies, and other countries have issued rules or guidance about the treatment of digital asset transactions or requirements for businesses engaged in digital asset activity. For more information, see “Risk Factors—Digital asset markets in the U.S. exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of ETH or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of ETH, mining activity, digital wallets, the provision of services related to trading and custodying ETH, the operation of the Ethereum network, or the digital asset markets generally.”

Various foreign jurisdictions have, and may continue to, in the near future, adopt laws, regulations or directives that affect the Ethereum network, the ETH markets, and their users, particularly ETH trading platforms and service providers that fall within such jurisdictions’ regulatory scope. For more information, see “Risk Factors—Regulatory changes or actions in foreign jurisdictions may affect the value of the Shares or restrict the use of ETH, mining activity or the operation of their networks or the global ETH markets in a manner that adversely affects the value of the Shares.”

The effect of any future regulatory change on the Trust or Ethereum is impossible to predict, but such change could be substantial and adverse to the Trust and the value of the Shares.

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THE TRUST AND ETH PRICES

Overview of the Trust

The Trust is an exchange-traded fund that issues Shares that trade on the Exchange. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of ETH. As a result, the Trust will not attempt to avoid losses or hedge exposure arising from the risk of changes in the price of ETH. The Trust’s investment objective is to reflect the performance of the price of ETH less the expenses of the Trust’s operations. In seeking to achieve its investment objective, the Trust will hold ETH and will value its Shares daily based on the reported MarketVector^TM Ethereum Benchmark Rate, which is calculated based on prices contributed by exchanges that MarketVector believes represent the top five ETH trading platforms, based on the industry leading CCData Exchange Benchmark review report. The Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective. The Trust is sponsored by VanEck Digital Assets, LLC, a wholly-owned subsidiary of VanEck. The Trust, the Sponsor and the service providers will not loan or pledge the Trust’s assets, nor will the Trust’s assets serve as collateral for any loan or similar arrangement. The Trust is not actively managed. It does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of ETH.

The Sponsor believes that the Trust will provide a cost-efficient way for Shareholders to implement strategic and tactical asset allocation strategies that use ETH by investing in the Trust’s Shares rather than purchasing, holding and trading ETH directly. The latter alternative would require selecting a ETH trading platform and opening an account or arranging a private transaction, establishing a personal computer system capable of transacting directly on the blockchain, and incurring the risk associated with maintaining and protecting a private key that is irrecoverable if lost, among other difficulties.

ETH Value

The value of ETH is determined by the value that various market participants place on ETH through their transactions. The most common means of determining the value of a ETH is by surveying one or more ETH trading platforms where ETH is traded publicly and transparently. The price of ETH on the ETH market has exhibited periods of extreme volatility, which could have a negative impact on the performance of the Trust. For example, between November 2021 and November 2022, the price of ETH fell from an all-time high of $4,819.01 to $1,099.80. As of April 30, 2024, the price of ETH has increased to $3,016.89. (source: Glassnode).

On exchanges, ETH is traded with publicly disclosed valuations for each executed trade, measured by one or more fiat currencies such as the U.S. dollar or Euro. OTC dealers or market makers do not typically disclose their trade data.

Currently, there are many exchanges operating worldwide, representing a substantial percentage of ETH buying and selling activity, and providing the most data with respect to prevailing valuations of ETH. The below table reflects the average daily trading volume (in thousands of USD) of each of the ETH trading platforms included in the MarketVector^TM Ethereum Benchmark Rate as of April 30, 2024 using data reported by MarketVector from May 1, 2023 to April 30, 2024:

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Ethereum Exchanges included in the MarketVector^TM Ethereum Benchmark Rate as of April 30, 2024	Average Daily Volume
Bitstamp	$	15,570,198.51
Coinbase	$	371,919,583.03
itBit	$	8,144,885.10
LMAX	$	61,737,802.53
Kraken	$	67,436,942.12

The market share for ETH/USD trading of the five constituent platforms over the past four calendar quarters is shown in the table below:

Period	itBit	LMAX	Bitstamp	Coinbase	Kraken	Others
2023 Q2	0.52%	12.85%	4.22%	57.38%	12.98%	12.05%
2023 Q3	0.64%	11.02%	4.11%	56.74%	9.81%	17.70%
2023 Q4	0.48%	7.88%	2.07%	41.30%	9.92%	38.36%
2024 Q1	0.68%	8.74%	2.61%	39.05%	7.35%	41.58%

* Source: MarketVector

Trust Structure

The Sponsor designed the Trust in what it believes is a straight-forward structure to provide exposure to ETH. By utilizing the MarketVector^TMEthereum Benchmark Rate, the Trust draws prices for its Shares off of what is in effect a “consolidated tape” for ETH, similar to the consolidated tapes or “ticker tapes” used by major stock exchanges to report trades and quotes. The term “consolidated” refers to the fact that securities, just like ETH, often trade on more than one exchange, and a consolidated tape reports not only a security’s trading activity on its primary listing exchange but the trading activity on all or substantially all exchanges on which it is traded. However, the global ETH market is not subject to comparable regulatory guardrails as regulated securities markets. See “Risk Factors—Due to the unregulated nature and lack of transparency surrounding the operations of ETH trading platforms, they may experience fraud, manipulation, security failures or operational problems, which may adversely affect the value of ETH and, consequently, the value of the Shares.”

The use of the MarketVector^TM Ethereum Benchmark Rate is designed to eliminate from the NAV calculation pursuant to which the Trust prices its Shares those ETH trading platforms with indicia of suspicious, fake, or non-economic volume. However, there is no guarantee that such measures will be effective. See “Risk Factors— The MarketVector^TM Ethereum Benchmark Rate may be affected by manipulative or fraudulent practices in the global ETH market or at constituent platforms.” In addition, the use of five ETH trading platforms is designed to mitigate the potential for idiosyncratic exchange risk, as the failure of any individual ETH trading platform should not materially impact pricing for the Trust. Moreover, any attempt to manipulate the NAV would require a substantial amount of

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capital distributed across a majority of the five exchanges, and potentially coordinated activity across those exchanges, making it more difficult to conduct, profit from, or avoid the detection of market manipulation. The Sponsor believes that this is especially true in a well-arbitraged and distributed market, as MarketVector believes the real ETH market to be.

In addition to the above safeguards, the MarketVector^TM Ethereum Benchmark Rate is calculated over twenty three-minute intervals pursuant to a methodology referred to as an equal-weighted average of the volume-weighted median price. The use of twenty consecutive three-minute segments over a sixty-minute period means a malicious actor would need to sustain efforts to manipulate the market over an extended period of time, or would need to replicate efforts multiple times, potentially triggering review from the exchange or regulators, or both. The use of a “median” price by its nature limits the ability of outlier prices that may have been caused by attempts to manipulate the price on a particular exchange, to impact the NAV, as it systematically excludes those prices from the NAV calculation.

Description of the MarketVector^TM Ethereum Benchmark Rate Construction and Maintenance

The Sponsor has entered into a licensing agreement with MarketVector to use the MarketVector^TM Ethereum Benchmark Rate. The Trust is entitled to use the MarketVector^TMEthereum Benchmark Rate pursuant to a sub-licensing arrangement with the Sponsor. The MarketVector^TMEthereum Benchmark Rate is a U.S. dollar-denominated composite reference rate for the price of ETH. The index administrator is Market Vector, a wholly-owned subsidiary of VanEck. On each day that the Exchange is open for regular trading, as promptly as practical after 4:00 p.m. Eastern time, the Administrator determines the NAV of the Trust, based on the MarketVector^TMEthereum Benchmark Rate. In determining the Trust’s NAV, the Administrator values the ether held by the Trust based on the price set by the MarketVector^TMEthereum Benchmark Rate as of 4:00 p.m. Eastern time.

The Index is calculated daily between 00:00 and 24:00 (CET) and the Index values are disseminated every 15 seconds to data vendors. The Index is disseminated in USD and the closing and intraday value is calculated over twenty three-minute intervals pursuant to a methodology referred to as an equal-weighted average of the volume-weighted median price. The intra-day data available in the MarketVector^TM Ethereum Benchmark Rate is published once every 15 seconds throughout each trading day. The intra-day levels and closing levels of the MarketVector^TMEthereum Benchmark Rate are published by MarketVector. The current exchange composition of the MarketVector^TM Ethereum Benchmark Rate is Bitstamp, Coinbase, itBit, LMAX and Kraken. The MarketVector^TM Ethereum Benchmark Rate index was launched on March 24, 2021.

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Coinbase: A U.S.-based exchange registered as an MSB with FinCEN and licensed as a virtual currency business under the NYDFS BitLicense as well as a money transmitter in various U.S. states.

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Bitstamp: A U.K.-based exchange registered as an MSB with FinCEN and licensed as a virtual currency business under the NYDFS BitLicense as well as money transmitter in various U.S. states.

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itBit: a U.S.-based exchange that is licensed as a virtual currency business under the NYDFS BitLicense. It is also registered FinCEN as an MSB and is licensed as a money transmitter in various U.S. states.

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Kraken: A U.S.-based exchange that is registered as an MSB with FinCEN in various U.S. states. Kraken is registered with the FCA and is authorized by the Central Bank of Ireland as a Virtual Asset Service Provider (“VASP”). Kraken also holds a variety of other licenses and regulatory approvals, including those from the Japan Financial Services Agency (“JFSA”) and the Canadian Securities Administrators (“CSA”).

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LMAX Digital: A Gibraltar based exchange regulated by the Gibraltar Financial Services Commission (“GFSC”) as a DLT provider for execution and custody services. LMAX Digital does not hold a BitLicense and is part of LMAX Group, a U.K-based operator of a FCA regulated Multilateral Trading Facility and Broker-Dealer.

The underlying exchanges are sourced from the industry leading CCData Centralized Exchange Benchmark review report. CCData Centralized Exchange Benchmark was established in 2019 as a tool designed to bring clarity to the digital asset exchange sector by providing a framework for assessing risk and in turn bringing transparency and accountability to a complex and rapidly evolving market. The CCData Centralized Exchange Benchmark methodology utilizes a combination of qualitative and quantitative metrics to analyze a comprehensive data set, covering eight categories of evaluation. The categories of evaluation include legal/regulation, KYC/transaction risk, data provision, security, team/exchange, asset quality/diversity, market quality and negative events.

The legal/regulation category considers, among other inputs, an exchange’s offering of some form of cryptocurrency insurance and whether the exchange is registered as a money services business. The KYC/transaction risk category assesses an exchange’s market surveillance system, transaction protocols and KYC/AML procedures. Data provisions measure an exchange’s quality of connectivity and data processing, including its API average response time and order book availability, among others. The security category takes into account, among others, an exchange’s use of cold wallets, two-factor authentication policy, and encryption quality. The team/exchange category gauges the experience of an exchange’s senior leadership and funding sources, among others. Asset quality/diversity considerations include the fundamental health and mix of digital assets available on each exchange. The market quality category includes, but is not limited to, average spreads on exchange, volatility and volume correlation, and depth of market. Negative events

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impose a 5% penalty factor in determining the overall ranking of an exchange and captures negative events such as a flash crash, legal matters, or a large breach in data privacy.

The CCData Centralized Exchange Benchmark review report provides a framework for assessing risk of each exchange and brings transparency and accountability to a rapidly evolving market and industry. Based on the CCData Centralized Exchange Benchmark, MarketVector initially selects the top five exchanges by rank for inclusion in the MarketVector^TM Ethereum Benchmark Rate. If an eligible non-component exchange is in the top five by rank for two consecutive semi-annual reviews, it replaces the lowest ranked component exchange. If an eligible exchange is downgraded by two or more notches in a semi-annual review and is no longer in the top five by rank, it is replaced by the highest ranked non-component exchange. Adjustments to exchange coverage are announced four business days prior to the first business day of each of March and September at 23:00 CET. Once it has actual knowledge of material changes to the component exchanges used to calculate the Index, the Trust will notify Shareholders in a prospectus supplement and a current report on Form 8-K or in its annual or quarterly reports. The MarketVector^TM Ethereum Benchmark Rate is rebalanced at 16:00:00 GMT/BST on the last business day of each of February and August.

The initial exchange composition of the MarketVector Ethereum Benchmark Rate at its March 2021 inception was Bitstamp, Coinbase, Gemini, itBit and Kraken. In April 2022, itBit was removed because the exchange dropped in the CCData Centralized Exchange Benchmark rankings. LMAX was added in its place. In May 2023, Gemini was removed because the exchange dropped in the CCData Centralized Exchange Benchmark rankings and was replaced by Bitfinex. In November 2023, Bitfinex was removed due to downgrades and a drop in its CCData Centralized Exchange Benchmark ranking. Bitfinex was replaced by itBit. The current exchange composition of the MarketVector^TM Bitcoin Benchmark Rate is Bitstamp, Coinbase, itBit, LMAX and Kraken.

As noted above, the MarketVector^TM Ethereum Benchmark Rate is disseminated in USD and the closing and intraday value is calculated over twenty three-minute intervals pursuant to a methodology referred to as an equal-weighted average of the volume-weighted median price. In other words, MarketVector^TM Ethereum Benchmark Rate seeks to provide the average price that ETH has traded at during the past hour. This is calculated as the average of the volume-weighted median price on the constituent platforms of each of the twenty three-minute intervals, as displayed below:

Volume-weighted median price of ETH for each three minute period (20 total) / 20 = MarketVector Ethereum Benchmark Rate price.

When determining the volume-weighted median price during a three minute period, the highest and lowest contributed prices from the five constituent platforms are removed and the volume-weight median is derived from the contributed prices of the other three exchanges. Using twenty consecutive three-minute segments over a sixty-minute period means malicious actors would need to sustain efforts to manipulate the market over an extended period of time, or would need to replicate efforts multiple times across exchanges, potentially triggering review. This extended period also supports Authorized Participant activity by capturing volume over a longer time period, rather than forcing Authorized Participants to mark an individual close or auction. The use of a median price reduces the ability of outlier prices to impact the NAV, as it systematically excludes those prices from the NAV calculation. The use of a volume-weighted median (as opposed to a traditional median) serves as an additional protection against attempts to manipulate the NAV by executing a large number of low-dollar trades, because, any manipulation attempt would have to involve a majority of global spot ETH volume in a three-minute window to have any influence on the NAV. As discussed herein, removing the highest and lowest prices further protects against attempts to manipulate the NAV, requiring bad actors to act on multiple exchanges at once to have any ability to influence the price.

Disclaimers

VanEck Ethereum Trust (the “Product”) is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH (“Licensor”) and any of its affiliates. Licensor and any of its affiliates make no representation or warranty, express or implied, to the owners of the Product or any member of the public regarding the advisability of investing in tokens generally or in the Product particularly or the ability of the MarketVector^TM Ethereum Benchmark Rate to track the performance of the digital assets market. Licensor’s only relationship to the Licensee is the licensing of certain service marks and trade names of Licensor and of the Index that is determined, composed and calculated by Licensor without regard to the Licensee or the Product. Licensor has no obligation to take the needs of the Licensee or the owners of the Product into consideration in determining, composing or calculating the Index. Licensor is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the Product to be issued or in the determination or calculation of the equation by which the Product is to be converted into cash. Licensor has no obligation or liability in connection with the administration, marketing or trading of the Product.

LICENSOR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE MARKETVECTOR ETHEREUM BENCHMARK RATE OR ANY DATA INCLUDED THEREIN AND LICENSOR AND ANY OF ITS AFFILIATES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. LICENSOR AND ANY OF

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ITS AFFILIATES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE VANECK ETHEREUM TRUST, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE MARKETVECTOR ETHEREUM BENCHMARK RATE OR ANY DATA INCLUDED THEREIN. LICENSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE MARKETVECTOR ETHEREUM BENCHMARK RATE OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL LICENSOR AND ANY OF ITS AFFILIATES HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

The Product is not sponsored, promoted, sold or supported in any other manner by CC Data Limited nor does CC Data Limited offer any express or implicit guarantee or assurance either with regard to the results of using the Index and/or Index trade mark or the Index price at any time or in any other respect. The Index is calculated and published by CC Data Limited. CC Data Limited uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Issuer, CC Data Limited has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by CC Data Limited nor the licensing of the Index or Index trade mark for the purpose of use in connection with the financial instrument constitutes a recommendation by CC Data Limited to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of CC Data Limited with regard to any investment in this financial instrument. CC Data Limited is not responsible for fulfilling the legal requirements concerning the accuracy and completeness of the financial instrument’s prospectus.

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NET ASSET VALUE DETERMINATIONS

Calculation of NAV and NAV per Share

The Trust’s NAV will be calculated based on the Trust’s net asset holdings as reconciled to the ETH Custodian’s accounts on a market approach, determined on a daily basis in accordance with the MarketVector^TM Ethereum Benchmark Rate price at 4:00 p.m. Eastern time. The Sponsor believes that use of the MarketVector^TM Ethereum Benchmark Rate mitigates against idiosyncratic exchange risk, as the failure of any individual exchange will not materially impact pricing for the Trust. It also allows the Administrator to calculate the NAV in a manner that significantly deters manipulation.

The Sponsor holds full discretion to change either the index used for calculating NAV or the index provider subject to proper notification to shareholders (such notification will be made via a prospectus supplement and/or a current report filed with the SEC and will occur in advance of any such change). Shareholder approval is not required.

As discussed, the fact that there are multiple exchanges contributing prices to the MarketVector^TM Ethereum Benchmark Rate used to calculate NAV makes manipulation more difficult in a well-arbitraged and fractured market, as a malicious actor would need to manipulate multiple exchanges simultaneously to impact the NAV, or dramatically skew the historical distribution of volume between the various exchanges.

In calculating the MarketVector^TM Ethereum Benchmark Rate, the methodology captures trade prices and sizes from exchanges and examines twenty three-minute periods leading up to 4:00 p.m. Eastern time to produce the closing value. It then calculates an equal-weighted average of the volume-weighted median price of these twenty three-minute periods, removing the highest and lowest contributed prices. Using twenty consecutive three-minute segments over a sixty-minute period means malicious actors would need to sustain efforts to manipulate the market over an extended period of time, or would need to replicate efforts multiple times across exchanges, potentially triggering review. This extended period also supports Authorized Participant activity by capturing volume over a longer time period, rather than forcing Authorized Participants to mark an individual close or auction. The use of a median price eliminates the ability of outlier prices to impact the NAV, as it systematically excludes those prices from the NAV calculation. The use of a volume-weighted median (as opposed to a traditional median) protects against attempts to manipulate the NAV by executing a large number of low-dollar trades, because, any manipulation attempt would have to involve a majority of global spot ETH volume in a three-minute window to have any influence on the NAV. As discussed, trimming the highest and lowest prices further protects against attempts to manipulate the NAV, requiring bad actors to act on multiple exchanges at once to have any ability to influence the price. Additional information about the MarketVector^TM Ethereum Benchmark Rate, including its methodology and calculation formula, are available the MarketVector website, which is accessible at www.marketvector.com.

The MarketVector™ Ethereum Benchmark Rate is designed to be a robust price for ETH in USD. There is no component other than ETH in the index.

Review procedure (for eligible exchanges with USD pair/agreement):

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If an eligible exchange is in the top 5 by rank based on the CCData’s Centralized Exchange Benchmark table for two consecutive semiannual reviews, it replaces the lowest ranked exchange.

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If an eligible exchange is downgraded by two or more notches in a semiannual review and is not in the top 5 by rank anymore, it is replaced by the highest ranked non-component exchange.

Adjustments to exchange coverage will be announced four business days prior to the first business day of June/December at 23:00 CET/CEST; the indexes are rebalanced at 16:00:00 ET on the last business day of May/November.

In case of a hard fork, which results in several active lines, rule 5.2.2 applies.

In the unlikely event a spun-off coin is larger than ETH (by market capitalization) and is in general accepted as the successor of the original chain, the index owner might decide to keep it as the only index component.

The index is calculated daily between 00:00 and 24:00 (ET) and the index values are disseminated to data vendors every 15 seconds. The index is disseminated in USD and the closing value is calculated at 16:00:00 ET with fixed 16:00 ET exchange rates.

The following provides a hypothetical example of the MarketVector™ Ethereum Benchmark Rate calculation*:

1. On a given calculation day, the below relevant transactions are observed at 9:02 p.m. Eastern time:

- 77 -

Bucket	Time (NY)	Price (USD)	Size (ETH)	Exchange
1	2023-06-30 00:01:55	1851.48	535.07772	Coinbase
1	2023-06-30 00:02:27	1851.64	1214.82201	Coinbase
1	2023-06-30 00:00:50	1851.72	441.890739	Kraken
1	2023-06-30 00:01:37	1851.79	535.16731	Coinbase
1	2023-06-30 00:02:59	1851.83	371.995925	Coinbase
1	2023-06-30 00:01:08	1851.87	9.95080122	Coinbase
1	2023-06-30 00:00:39	1851.96	24.7516121	Coinbase
1	2023-06-30 00:00:05	1852.07	196.804866	Coinbase
1	2023-06-30 00:00:18	1852.16	250.010113	Coinbase
2	2023-06-30 00:03:14	1851.43	1500	Coinbase
2	2023-06-30 00:03:03	1851.63	299.995538	Coinbase
2	2023-06-30 00:05:55	1851.74	99.8242665	Coinbase
2	2023-06-30 00:04:23	1851.84	818.166116	Coinbase
2	2023-06-30 00:05:01	1852.03	4.62081485	Coinbase
2	2023-06-30 00:05:18	1852.1	0.39999804	itBit
2	2023-06-30 00:03:34	1852.22	1852.22	Coinbase
2	2023-06-30 00:05:31	1852.26	2758.12311	Coinbase
2	2023-06-30 00:03:55	1852.31	3.98994983	Coinbase
2	2023-06-30 00:04:01	1852.49	147.40752	Coinbase
3	2023-06-30 00:06:03	1851.59	0.02999576	Coinbase
3	2023-06-30 00:07:17	1851.8	9.94999917	itBit
3	2023-06-30 00:07:37	1851.91	100.504952	Coinbase
3	2023-06-30 00:08:25	1852	1848.51759	Kraken
3	2023-06-30 00:08:23	1852.55	0.39998407	itBit
3	2023-06-30 00:08:12	1852.91	17.0207386	Coinbase
3	2023-06-30 00:08:42	1853.2	50.0269857	Coinbase
4	2023-06-30 00:11:14	1851.3	0.66439454	itBit
4	2023-06-30 00:10:54	1851.43	478.05774	Coinbase
4	2023-06-30 00:10:39	1851.68	1499.99503	Coinbase
4	2023-06-30 00:10:37	1852.01	190.368664	Coinbase
4	2023-06-30 00:10:23	1852.39	555.717	Coinbase
4	2023-06-30 00:09:09	1853.03	535.52567	Coinbase
4	2023-06-30 00:10:02	1853.2	0.20294393	itBit
4	2023-06-30 00:09:20	1853.4	40.0753824	Coinbase
4	2023-06-30 00:09:55	1853.48	299.996859	Coinbase
4	2023-06-30 00:09:40	1853.56	58.0120536	Coinbase
5	2023-06-30 00:14:49	1849.12	347.230768	Coinbase
5	2023-06-30 00:14:48	1849.56	903.541632	Coinbase
5	2023-06-30 00:14:42	1849.89	49.9989564	Coinbase
5	2023-06-30 00:14:34	1850.31	47.7683986	Coinbase
5	2023-06-30 00:12:22	1850.6	49.999992	Coinbase
5	2023-06-30 00:12:22	1850.97	334.636866	Coinbase
5	2023-06-30 00:12:58	1851.12	19.668224	Kraken
5	2023-06-30 00:12:48	1851.24	6.43896446	Coinbase
5	2023-06-30 00:13:59	1851.3	3.06867785	itBit

- 78 -

5	2023-06-30 00:12:56	1851.33	178.528325	Coinbase
5	2023-06-30 00:12:53	1851.37	5.57775199	Coinbase
5	2023-06-30 00:13:47	1851.44	140.019482	Coinbase
5	2023-06-30 00:13:39	1851.72	9258.6	lmax
6	2023-06-30 00:15:54	1847.75	0.01964158	Coinbase
6	2023-06-30 00:15:41	1847.88	299.979296	Coinbase
6	2023-06-30 00:15:34	1848.02	303.04427	Coinbase
6	2023-06-30 00:15:41	1848.17	1954.47347	Coinbase
6	2023-06-30 00:15:33	1848.33	19.9059966	Coinbase
6	2023-06-30 00:15:05	1848.55	155.683328	Coinbase
6	2023-06-30 00:15:03	1848.73	691.850228	Coinbase
6	2023-06-30 00:15:11	1849	2902.93	lmax
6	2023-06-30 00:16:12	1849.37	21.041651	Coinbase
6	2023-06-30 00:16:41	1849.69	664.099972	Coinbase
6	2023-06-30 00:16:41	1849.79	1199.32722	Coinbase
6	2023-06-30 00:16:34	1850.01	50.0273044	Coinbase
6	2023-06-30 00:17:23	1850.32	5.36124669	Coinbase
6	2023-06-30 00:17:58	1850.64	18.4118878	Coinbase
6	2023-06-30 00:17:40	1850.91	555.273	Coinbase
6	2023-06-30 00:17:47	1851.28	598.818157	Coinbase
7	2023-06-30 00:20:15	1850	25568.742	Coinbase
7	2023-06-30 00:20:32	1850.19	31.1167174	Coinbase
7	2023-06-30 00:20:30	1850.29	23.4961111	Coinbase
7	2023-06-30 00:20:36	1850.5	7.02562681	Coinbase
7	2023-06-30 00:18:05	1850.69	300.022759	Coinbase
7	2023-06-30 00:19:44	1850.82	5.26998785	Coinbase
7	2023-06-30 00:18:28	1851.19	1500.00093	Coinbase
7	2023-06-30 00:19:16	1851.35	1.24999449	itBit
7	2023-06-30 00:18:46	1851.59	299.989057	Coinbase
8	2023-06-30 00:21:08	1850.37	1104.93472	Coinbase
8	2023-06-30 00:21:48	1850.85	0.39998719	itBit
8	2023-06-30 00:21:20	1851.1	2500.01299	Coinbase
8	2023-06-30 00:21:32	1851.18	1181.05284	Coinbase
8	2023-06-30 00:21:24	1851.3	555.39	Coinbase
8	2023-06-30 00:23:50	1851.52	199.915206	Coinbase
8	2023-06-30 00:22:21	1851.66	1183.48116	Coinbase
8	2023-06-30 00:22:51	1851.75	99.0048137	Coinbase
8	2023-06-30 00:22:44	1851.9	0.80998402	itBit
9	2023-06-30 00:24:03	1851.68	852.846774	Coinbase
9	2023-06-30 00:24:26	1852.37	683.861772	Coinbase
9	2023-06-30 00:24:45	1852.61	4.97523973	Coinbase
9	2023-06-30 00:25:00	1852.9	17.1973764	Coinbase
9	2023-06-30 00:25:11	1853.2	38.7302862	Coinbase
9	2023-06-30 00:25:00	1853.7	222.44388	lmax
9	2023-06-30 00:25:39	1854.31	50.0272441	Coinbase
9	2023-06-30 00:26:33	1854.65	8.96456205	Coinbase

- 79 -

9	2023-06-30 00:26:46	1854.8	1.04998373	itBit
9	2023-06-30 00:26:03	1855.06	487.476284	Coinbase
9	2023-06-30 00:26:01	1855.28	60.0610351	Coinbase
10	2023-06-30 00:29:59	1855.06	0.01567526	Coinbase
10	2023-06-30 00:27:36	1855.4	25.1253815	itBit
10	2023-06-30 00:29:57	1855.55	0.97999018	itBit
10	2023-06-30 00:29:24	1855.63	536.27707	Coinbase
10	2023-06-30 00:29:16	1855.77	27.7194509	Coinbase
10	2023-06-30 00:28:12	1855.92	0.6291012	Coinbase
10	2023-06-30 00:27:26	1856.15	4955.9205	lmax
10	2023-06-30 00:29:00	1856.35	17.1699937	itBit
10	2023-06-30 00:29:06	1856.46	29.3501499	Coinbase
10	2023-06-30 00:28:45	1856.67	1038.22493	Coinbase
11	2023-06-30 00:32:19	1854.19	45.0061605	Coinbase
11	2023-06-30 00:30:07	1854.33	0.00120531	Coinbase
11	2023-06-30 00:30:05	1854.41	50.0003085	Coinbase
11	2023-06-30 00:30:05	1854.5	49.9999905	Coinbase
11	2023-06-30 00:30:03	1854.6	0.01852745	Coinbase
11	2023-06-30 00:32:11	1854.68	478.107738	Coinbase
11	2023-06-30 00:30:34	1854.78	796.593752	Coinbase
11	2023-06-30 00:32:11	1854.91	117.193214	Coinbase
11	2023-06-30 00:32:07	1855.1	974.317071	Coinbase
12	2023-06-30 00:35:56	1852.57	245.095696	Coinbase
12	2023-06-30 00:35:33	1852.97	478.06626	Coinbase
12	2023-06-30 00:35:17	1853.34	15.0583875	Coinbase
12	2023-06-30 00:35:15	1853.62	2.27998967	Coinbase
12	2023-06-30 00:34:05	1853.71	4.99495135	Coinbase
12	2023-06-30 00:33:51	1853.85	298.499994	itBit
12	2023-06-30 00:33:05	1853.99	49.9835704	Coinbase
12	2023-06-30 00:34:54	1854.18	71.8185844	Coinbase
12	2023-06-30 00:34:25	1854.47	598.863997	Coinbase
12	2023-06-30 00:34:26	1854.81	598.803781	Coinbase
13	2023-06-30 00:36:21	1852.23	2.778345	Coinbase
13	2023-06-30 00:37:22	1852.35	2.05999844	itBit
13	2023-06-30 00:36:19	1852.43	91.6870602	Coinbase
13	2023-06-30 00:36:36	1852.53	320.689579	Coinbase
13	2023-06-30 00:36:42	1852.61	71.5728084	Coinbase
13	2023-06-30 00:36:01	1852.7	2.85999446	itBit
13	2023-06-30 00:37:53	1852.75	23.392451	Coinbase
13	2023-06-30 00:38:49	1852.93	24.8740658	Coinbase
14	2023-06-30 00:39:14	1852.22	719.112227	Coinbase
14	2023-06-30 00:41:52	1852.39	0.99967931	Coinbase
14	2023-06-30 00:40:00	1852.5	51.6974211	Coinbase
14	2023-06-30 00:41:01	1852.55	1.39748962	itBit
14	2023-06-30 00:40:24	1852.6	10.1299983	itBit
14	2023-06-30 00:39:29	1852.65	0.68146025	Coinbase

- 80 -

14	2023-06-30 00:41:44	1852.73	63.4276557	Coinbase
14	2023-06-30 00:40:43	1852.93	131.793352	Coinbase
15	2023-06-30 00:43:37	1851.81	749.816387	Coinbase
15	2023-06-30 00:44:16	1852	99.4999964	itBit
15	2023-06-30 00:43:30	1852.1	9.19439855	Coinbase
15	2023-06-30 00:44:13	1852.2	111.132	Coinbase
15	2023-06-30 00:44:46	1852.29	838.819121	Coinbase
15	2023-06-30 00:42:51	1852.41	537.352298	Coinbase
15	2023-06-30 00:43:16	1852.61	2999.60331	Coinbase
15	2023-06-30 00:42:04	1852.8	0.59999222	itBit
16	2023-06-30 00:46:27	1849.69	49.9989889	Coinbase
16	2023-06-30 00:46:25	1850.05	0.22999822	itBit
16	2023-06-30 00:46:52	1850.3	0.63448637	itBit
16	2023-06-30 00:45:58	1850.44	107.56778	Coinbase
16	2023-06-30 00:45:57	1850.55	1980.0885	Coinbase
16	2023-06-30 00:45:48	1850.81	49.9993175	Coinbase
16	2023-06-30 00:47:03	1851.01	120.120831	Coinbase
16	2023-06-30 00:45:46	1851.3	0.02706601	Coinbase
16	2023-06-30 00:45:43	1851.6	249.973406	Coinbase
16	2023-06-30 00:45:34	1852.01	14.8463048	Coinbase
16	2023-06-30 00:45:07	1852.2	24.903681	Bitstamp
16	2023-06-30 00:47:37	1852.4	25.6110786	Coinbase
16	2023-06-30 00:45:11	1852.57	177.476206	Coinbase
17	2023-06-30 00:50:41	1850.6	341.707979	Coinbase
17	2023-06-30 00:50:58	1850.84	299.987849	Coinbase
17	2023-06-30 00:50:30	1851.3	999.694947	Coinbase
17	2023-06-30 00:50:06	1851.9	6.93990266	Coinbase
17	2023-06-30 00:48:02	1852.09	555.627	Coinbase
17	2023-06-30 00:49:50	1852.23	340.612743	Coinbase
17	2023-06-30 00:50:11	1852.3	100.349983	itBit
17	2023-06-30 00:48:55	1852.44	99.9473443	Coinbase
17	2023-06-30 00:49:03	1852.53	0.17408224	Coinbase
17	2023-06-30 00:49:46	1852.65	1.19999846	itBit
17	2023-06-30 00:49:12	1852.81	93.604832	Coinbase
17	2023-06-30 00:49:08	1853.2	50.0060446	Coinbase
18	2023-06-30 00:53:51	1850.23	24.3699899	Coinbase
18	2023-06-30 00:51:03	1850.4	0.00716105	Coinbase
18	2023-06-30 00:51:59	1850.49	24.9993242	Coinbase
18	2023-06-30 00:51:37	1850.61	249.987801	Coinbase
18	2023-06-30 00:51:09	1850.73	534.86097	Coinbase
18	2023-06-30 00:52:55	1850.8	182.48627	Coinbase
18	2023-06-30 00:52:47	1850.97	720.071753	Coinbase
18	2023-06-30 00:52:13	1851.13	1500.00801	Coinbase
18	2023-06-30 00:52:35	1851.8	50.017118	Coinbase
19	2023-06-30 00:56:59	1849.14	20.2924809	Coinbase
19	2023-06-30 00:56:37	1849.3	133.783817	Coinbase

- 81 -

19	2023-06-30 00:56:15	1849.41	487.57516	Coinbase
19	2023-06-30 00:54:37	1849.88	1622.91806	Kraken
19	2023-06-30 00:54:39	1850.02	196.00553	Coinbase
19	2023-06-30 00:55:01	1850.12	4.12611912	Coinbase
19	2023-06-30 00:54:05	1850.21	24.8744638	Coinbase
19	2023-06-30 00:55:34	1850.3	261.80126	Coinbase
19	2023-06-30 00:55:29	1850.42	299.98639	Coinbase
20	2023-06-30 00:57:41	1848.35	5.8569221	Coinbase
20	2023-06-30 00:58:33	1848.73	1065.29326	Coinbase
20	2023-06-30 00:57:03	1848.81	29.1771059	Coinbase
20	2023-06-30 00:57:27	1848.99	75.7558568	Coinbase
20	2023-06-30 00:58:04	1849.08	642.578284	Coinbase
20	2023-06-30 00:58:56	1849.3	46.768797	Coinbase
20	2023-06-30 00:59:10	1849.48	534.49972	Coinbase
20	2023-06-30 00:59:48	1849.84	59.2030378	Coinbase
20	2023-06-30 00:59:41	1850.05	1.81998669	itBit

2. These transactions are segmented by their timestamp into 20 buckets of equal 3-minute length as shown in the first column in the above table.

3. The volume weighted median price for each bucket is shown below:

Bucket	Volume (Ether)	Volume Weighted Median Price ($)
1	3580.471095	1851.83
2	7484.747311	1852.065
3	2026.450247	1852
4	3658.615735	1852.71
5	11345.07804	1851.12
6	9440.246664	1849.185
7	27736.91314	1850.69
8	6825.001693	1851.3
9	2427.634438	1853.699
10	6631.412242	1855.845
11	2511.237967	1854.6
12	2363.465212	1853.78
13	539.9143021	1852.57
14	979.2392838	1852.575
15	5346.017507	1852.245
16	2801.477645	1851.01
17	2889.852704	1852.265
18	3286.808401	1850.73
19	3051.363278	1850.02
20	2460.952973	1849.08

4. The average of the 20 volume weighted medians is calculated to be $ 1,851.97.

The Trust’s NAV per Share is calculated by:

●

taking the current market value of its total assets;

- 82 -

●

subtracting any liabilities; and

●

dividing that total by the total number of outstanding Shares.

The Administrator calculates the NAV of the Trust once each Exchange trading day. The NAV for a normal trading day will be released after 4:00 p.m. Eastern time. Trading during the core trading session on the Exchange typically closes at 4:00 p.m. Eastern time. However, NAVs are not officially struck until later in the day (often by 5:30 p.m. Eastern time and generally no later than 8:00 p.m. Eastern time). The pause between 4:00 p.m. Eastern time and 5:30 p.m. Eastern time (or later) provides an opportunity to detect, flag, investigate, and correct unusual pricing should it occur. The Sponsor will monitor for significant events related to crypto assets that may impact the value of ETH and will determine in good faith, and in accordance with its valuation policies and procedures, whether to fair value the Trust’s ETH on a given day based (e.g., if the MarketVector^TM Ethereum Benchmark Rate is not available the Sponsor). In certain circumstances, the Sponsor will determine whether to fair value the Trust’s ETH on a given day on whether certain pre-determined criteria have been met. For example, if the MarketVector^TM Ethereum Benchmark Rate deviates by more than a pre-determined amount from an alternate benchmark available to the Sponsor, then the Sponsor may determine to utilize the alternate benchmark. The Sponsor may also fair value the Trust’s ETH using observed market transactions from one or more exchanges. The Sponsor may also fair value the Trust’s ETH using a combination of inputs in certain situations (e.g., using observed market transactions, OTC quotations from brokers, etc.).

Accordingly, the NAV of the Trust may reflect the fair value of ETH rather than the ETH market prices on certain exchanges at 4:00 p.m. Eastern time. Fair value pricing involves subjective judgments and it is possible that a fair value determination for ETH or other assets is materially different than the value that could be realized upon the sale of such ETH or asset. In addition, fair value pricing could result in a difference between the prices used to calculate the Trust’s NAV and the prices used by the MarketVector^TM Ethereum Benchmark Rate. The Sponsor, in conjunction with the Administrator, will work in good faith to determine the fair value and implement the correct of the Trust’s NAV. The NAV for the Trust will be calculated by the Administrator once a day and will be disseminated daily to all market participants at the same time. Quotation and last-sale information regarding the Shares will be disseminated through the facilities of the Consolidated Tape Association (“CTA”). In addition, in order to provide updated information relating to the Trust for use by Shareholders and market professionals, [ ] will calculate and disseminate throughout the core trading session on each trading day an updated intraday indicative value (“IIV”). The IIV will be calculated by taking creation unit holdings and updating that value throughout the trading day to reflect changes in the price of ETH; this value is then divided by the numbers of shares per creation unit in order to calculate an IIV on a “per share” basis.

The IIV disseminated during the Exchange core trading session hours should not be viewed as an actual real time update of the NAV, because NAV per Share is calculated only once at the end of each trading day based upon the relevant end of day values of the Trust’s investments. The Trust will provide the IIV per Share updated every 15 seconds, as calculated by the Exchange or a third-party financial data provider during the Exchange’s regular trading hours (9:30 a.m. to 4:00 p.m. E.T.). The IIV will be disseminated on a per Share basis every 15 seconds during regular Exchange core trading session hours of 9:30 a.m. Eastern time to 4:00 p.m. Eastern time. [ ] will disseminate the IIV value through the facilities of CTA/CQ High Speed Lines. In addition, the indicative fund value will be published on the Exchange’s website and will be available through on-line information services such as Bloomberg and Reuters. The IIV may differ from the NAV due to the differences in the time window of trades used to calculate each price (the NAV uses a sixty-minute window, whereas the IIV draws prices from the last trade on each exchange in an effort to produce a relevant, real-time price). The Sponsor does not believe this will cause confusion in the marketplace, as Authorized Participants are the only Shareholders who interact with the NAV and the Sponsor will communicate its NAV calculation methodology clearly.

There are many instances in the market today where the IIV and the NAV of an ETF are subtly different, whether due to the calculation methodology, market hours overlap or other factors. The Sponsor has seen limited or no negative impact on trading, liquidity or other factors for exchange-traded funds in this situation. The Sponsor believes that the IIV will closely track the globally integrated ETH price as reflected on the contributing real ETH trading platforms.

Dissemination of the IIV provides additional information that is not otherwise available to the public and is useful to Shareholders and market professionals in connection with the trading of the Trust’s Shares on the Exchange. Shareholders and market professionals will be able throughout the trading day to compare the market price of the Trust and the IIV. If the market price of the Trust’s Shares diverges significantly from the IIV, market professionals will have an incentive to execute arbitrage trades. For example, if the Trust appears to be trading at a discount compared to the IIV, a market professional could buy the Trust’s Shares on the Exchange and sell short futures contracts. Such arbitrage trades can tighten the tracking between the market price of the Trust and the IIV and thus can be beneficial to all market participants.

The Trust does not expect that price differentials for ETH across exchanges would have a meaningful impact on this arbitrage mechanism. Furthermore, the Trust does not expect that the closure of any single one exchange would meaningfully impact the arbitrage mechanism because Liquidity Providers typically source underlying spot ETH liquidity from multiple exchanges. The Trust acknowledges, however, that this arbitrage mechanism could potentially be adversely impacted if halts in the trading of spot ETH were to occur across multiple exchanges, whether due to breaches or otherwise. See “Risk Factors-- ETH spot exchanges are not subject to

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same regulatory oversight as traditional equity exchanges, which could negatively impact the ability of Authorized Participants and Liquidity Providers to implement arbitrage mechanism” for additional information on these risks.

The Sponsor reserves the right to adjust the Share price of the Trust in the future to maintain convenient trading ranges for Shareholders. Any adjustments would be accomplished through stock splits or reverse stock splits. Such splits would decrease (in the case of a split) or increase (in the case of a reverse split) the proportionate NAV per Share, but would have no effect on the net assets of the Trust or the proportionate voting rights of Shareholders or the value of any Shareholder’s investment.

Calculation of Principal Market NAV and Principal Market NAV per Share

In addition to calculating NAV and NAV per Share, for purposes of the Trust’s financial statements, the Trust determines the Principal Market NAV and Principal Market NAV per Share on each valuation date for such financial statements. The determination of the Principal Market NAV and Principal Market NAV per Share is identical to the calculation of NAV and NAV per Share, respectively, except that the value of ETH is determined using the fair value of ETH based on the price in the ETH market that the Trust considers its “principal market” as of 4:00 p.m., Eastern time, on the valuation date, rather than using the Index.

The Trust has adopted a valuation policy, which provides for the procedure for valuing the Trust’s assets. The policy also sets forth the procedures to determine the principal market (or in the absence of a principal market, the most advantageous market) for purposes of determining the Principal Market NAV and Principal Market NAV per Share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820-10, which outlines the application of fair value accounting. Under ASC 820-10, fair value for ETH is determined to be the price that would be received in a current sale, assuming an orderly transaction between market participants on the valuation date in the principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. Under its valuation policy, the Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts an analysis at least on a quarterly basis to determine whether there have occurred any changes in ETH markets and its operations that would require a change in the Trust’s determination of its principal market.

ASC 820-10 determines fair value to be the price that would be received for ETH in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that ETH is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

Under ASC 820-10, a principal market is the market with the greatest volume and activity level for the asset or liability. The determination of the principal market will be based on the market with the greatest volume and level of activity that can be accessed.

The Trust does not itself transact on any Digital Asset Markets (as defined below). The Authorized Participants or Liquidity Providers transact in an Exchange Market, Brokered Market, a Dealer Market, and Principal-to-Principal Markets, each as defined in ASC 820-10-35-36A (collectively, “Digital Asset Markets”).

In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust obtains reliable volume and level of activity information and reviews these criteria in the following order:

First, the Trust reviews a list of Digital Asset Markets and scopes in the markets that the Trust reasonably believes are operating in compliance with applicable laws and regulations and those that are accessible to the Trust and the Authorized Participant.

Second, the Trust sorts the remaining Digital Asset Markets from high to low based on volume and level of activity of ETH traded on each Digital Asset Market.

Third, the Trust then reviews intra-day 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

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the Trust, Exchange Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market.

As a result of the analysis, the Trust will select an Exchange Market as the Trust’s principal market. Based on the Trust’s initial assessment, the NAV and NAV per Share will be calculated using the fair value of ETH based on the price provided by this Exchange, as of 4:00 p.m., Eastern time on the measurement date for GAAP purposes.

The Trust will update its principal market analysis periodically and as needed to the extent that events have occurred, or activities have changed in a manner that could change the Trust’s determination of the principal market.

The Sponsor on behalf of the Trust will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

The cost basis of the investment in ETH recorded by the Trust for financial reporting purposes is the fair value of ETH at the time of transfer. 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.

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ADDITIONAL INFORMATION ABOUT THE TRUST

The Trust

The Trust is a Delaware statutory trust, formed on March 1, 2021 pursuant to the Delaware Statutory Trust Act. The Trust continuously issues common shares representing fractional undivided beneficial interest in and ownership of the Trust that may be purchased and sold on the Exchange. The Trust operates pursuant to the Trust Agreement dated as April 18, 2024. Delaware Trust Company, a Delaware trust company, is the Delaware trustee of the Trust. The Trust is managed and controlled by the Sponsor. The Sponsor is a limited liability company formed in the state of Delaware on December 8, 2020.

The Trust is not registered as an investment company under the 1940 Act and currently is not required to register under the 1940 Act, and the Sponsor is not registered as an investment adviser and currently is not required to register under the Advisers Act in connection with its activities on behalf of the Trust. The Trust will not hold or trade in commodity futures contracts regulated by the Commodity Exchange Act (“CEA”), as administered by the Commodity Futures Trading Commission (the “CFTC”). The Trust is not a commodity pool for purposes of the CEA and neither the Sponsor, nor the Trustee is subject to regulation as a commodity pool operator or a commodity trading adviser in connection with their activity on behalf of the Trust.

The Trust has no operating history. The Trust and the Sponsor face competition with respect to the creation of competing products, such as exchange-traded products offering exposure to the spot ETH market or other digital assets. There can be no assurance that the Trust will grow to or maintain an economically viable size. While there are no predetermined criteria for determining whether the Trust has reached an economically viable size, the Sponsor will monitor the Trust’s assets and liabilities, average daily trading volume of the Shares and other factors on an ongoing basis. If the Trust is unable to reach or maintain an economically viable size, trading in Shares may occur at wider spreads than other competitor products, which could adversely affect the Shareholders. Additionally, Shareholders may be subject to a higher expense ratio than expected if the Trust incurred any operating expenses that are not borne by the Sponsor. There is no guarantee that the Sponsor will obtain or maintain a commercial advantage relative to competitors offering similar products. Whether or not the Trust is successful in achieving its intended scale may be impacted by a range of factors, such as the Trust’s timing in entering the market and its fee structure relative to those of competitive products.

The number of outstanding Shares is expected to increase and decrease from time to time as a result of the creation and redemption of Creation Baskets. The creation and redemption of Creation Baskets requires the delivery to the Trust or the distribution by the Trust of the amount of ETH represented by the NAV of the Creation Baskets being created or redeemed. The total amount of ETH required for the creation of Creation Baskets will be based on the combined net assets represented by the number of Creation Baskets being created or redeemed.

The Trust has no fixed termination date.

The Trust’s Fees and Expenses

The Trust will pay the Sponsor the Sponsor Fee, which is a unified fee of [ ]. The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement. The Administrator will make its determination regarding the Sponsor Fee in respect of each day by reference to the Trust’s NAV as of that day. The Sponsor Fee will be accrue in U.S. dollars daily and be payable monthly in arrears in ETH on, or by, the tenth business day of the next month in respect of the prior month. Each month, the Administrator will calculate the Sponsor Fee for each day of the month, resulting in a cumulative total in U.S. dollars, which the Administrator will then calculate the ETH equivalent of by reference to the Index as of the date of calculation, and the Sponsor shall then withdraw the corresponding amount of ETH from the Trust’s ETH Account in payment of the Sponsor Fee. The Sponsor has agreed to pay all operating expenses (except for extraordinary expenses, including but not limited to, non-recurring expenses and costs of services performed by the Sponsor or a service provider on behalf of the Trust to protect the Trust or the interests of Shareholders, such as in connection with any indemnification of agents, service providers or counterparties of the Trust and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters) out of the Sponsor Fee. For extraordinary expenses not covered in the previous sentence, the Sponsor shall pay these expenses as they become due and seek contemporaneous reimbursement from the Trust in the form of ETH at the time of payment. For extraordinary expenses denominated in dollars, the Sponsor shall convert the expense amounts into ETH at the Index price on the date the Sponsor seeks such reimbursement from the Trust, and shall withdraw the corresponding amounts of ETH from the Trust as reimbursement for paying such extraordinary expenses of the Trust. For extraordinary expenses denominated in ETH, if any, the Sponsor shall withdraw the corresponding amounts of ETH from the Trust as reimbursement for paying such extraordinary expenses. Neither the Trust nor the Shareholders shall be responsible for any fees and expenses, including any Ethereum network fees, incurred by the Sponsor to withdraw ETH from the Trust’s ETH Account in connection with payment of the Sponsor Fee or Trust expenses not assumed by the Sponsor, or to convert such ETH, once withdrawn, into cash (if applicable). The Sponsor will sell ETH which may be facilitated by one or more Liquidity Providers and/or the ETH Custodian or an affiliate thereof, in connection with the termination of the Trust and the liquidation

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of the Trust’s ETH holdings, which the Sponsor shall do at a price which it is able to obtain through commercially reasonable efforts, and arrange for the distribution of the cash proceeds to the Trust’s Shareholders and creditors (if any). Accordingly, the amount of ETH held by the Trust may vary from time to time depending on the level of the Trust’s expenses and liabilities and the market price of ETH.

As partial consideration for receipt of the Sponsor Fee, the Sponsor shall assume and pay all fees and other expenses incurred by the Trust in the ordinary course of its affairs, excluding taxes, but including (i) marketing-related expenses, (ii) fees to the Administrator, if any, (iii) fees to the ETH Custodian, (iv) fees to the Transfer Agent, (v) fees to the Trustee, (vi) the fees and expenses related to any future listing, trading or quotation of the Shares on any listing exchange or quotation system (including legal, marketing and audit fees and expenses), (vii) ordinary course legal fees and expenses but not litigation-related expenses, (viii) audit fees, (ix) regulatory fees, including if applicable any fees relating to the registration of the Shares under the 1933 Act or Exchange Act, (x) printing and mailing costs; (xi) costs of maintaining the Trust’s website and (xii) applicable license fees (each, a “Sponsor-paid Expense” and 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 Sponsor will not, however, assume certain extraordinary, non-recurring expenses that are not Sponsor-paid Expenses (each, “Additional Trust Expenses”), including, but not limited to, taxes and governmental charges, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of Shareholders, any indemnification of the ETH Custodian, Administrator or other agents, service providers or counterparties of the Trust, the fees and expenses related to the listing, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters. Certain of the Sponsor-paid Expenses, such as ordinary course legal fees and expenses, are capped. In the Sponsor’s sole discretion, all or any portion of a Sponsor-paid Expense may be redesignated as an Additional Trust Expense.

After the payment of the Sponsor Fee to the Sponsor, or reimbursement of Additional Trust Expenses the Sponsor may elect to convert some or all of the Sponsor Fee or reimbursement of Additional Trust Expenses into cash by selling this ETH at market prices, in the Sponsor’s sole discretion. Due to the variance in market prices for ETH, the rate at which the Sponsor converts ETH to cash may differ from the rate at which the Sponsor Fee or reimbursement of Additional Trust Expenses was initially paid in ETH.

The ETH Custodian will assume the transfer fees associated with the transfer of ETH to the Sponsor with respect to the Sponsor Fee or Additional Trust Expenses, and any further expenses associated with such transfer will be assumed by the Sponsor. The Trust shall not be responsible for any fees and expenses incurred by the Sponsor to convert ETH received in payment of the Sponsor Fee or as reimbursement of Additional Trust Expenses into cash.

The Sponsor from time to time will sell ETH, which may be facilitated by one or more Liquidity Providers and/or the ETH Custodian or an affiliate thereof, in connection with the termination of the Trust and the liquidation of its ETH holdings. The Sponsor is authorized to sell ETH, which may be facilitated by the ETH Custodian, at such times and in the smallest amounts required to permit such payments. Assuming that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes, each beneficial owner of Shares will be treated for U.S. federal income tax purposes as the owner of an undivided interest in the ETH held in the Trust.

Termination of the Trust

The Trust shall be dissolved at any time upon the happening of any of the following events:

●

a U.S. federal or state regulator requires the Trust to shut down or forces the Trust to liquidate its ETH or seizes, impounds or otherwise restricts access to the property of the Trust;

●

any ongoing event exists that either prevents the Trust from making or makes impractical the Trust’s reasonable efforts to make a fair determination of the price of ETH for purposes of determining the net asset value of the Trust;

●

any ongoing event exists that either prevents the Trust from converting or makes impractical the Trust’s reasonable efforts to convert ETH to U.S. Dollars; or

●

a certificate of dissolution or revocation of the Sponsor’s charter is filed (and ninety (90) days have passed after the date of notice to the Sponsor of revocation without a reinstatement of the Sponsor’s charter) or the withdrawal, removal, adjudication or admission of bankruptcy or insolvency of the Sponsor (each of the foregoing events an “Event of Withdrawal”) has occurred unless (i) at the time there is at least one remaining Sponsor or (ii) within ninety (90) days of such Event of Withdrawal, the Trustee agrees in writing to continue the affairs of the Trust and to select, effective as of the date of such event, one or more successor Sponsors.

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The Sponsor may, in its sole discretion, dissolve the Trust if any of the following events occur:

●

Shares are delisted from the Exchange and are not approved for listing on another national securities exchange within five business days of their delisting;

●

the SEC determines that ETH is a security or the Trust is an investment company under the 1940 Act;

●

the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act;

●

the Trust is determined to be a “money service business” under the regulations promulgated by FinCEN under the authority of the US Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder;

	●	the Trust is required to obtain a license or make a registration under any state law regulating money transmitters, money services businesses, providers of prepaid or stored value or similar entities, or virtual currency businesses;

	●	the Trust becomes insolvent or bankrupt;

●

the ETH Custodian resigns or is removed without replacement;

●

all of the Trust’s ETH are sold;

●

the Sponsor determines that the property of the Trust in relation to the expenses of the Trust makes it unreasonable or imprudent to continue the affairs of the Trust;

●

the Sponsor receives notice from the IRS or from counsel for the Trust or the Sponsor that the Trust fails to qualify for treatment, or will not be treated, as a grantor trust under the Internal Revenue Code of 1986, as amended (the “Code”);

●

60 days have elapsed since DTC or another depository has ceased to act as depository with respect to the Shares and the Sponsor has not identified another depository that is willing to act in such capacity; or

●

the Trustee notifies the Sponsor of the Trustee’s election to resign and the Sponsor does not appoint a successor trustee within one hundred and eighty (180) days.

In addition, the Trust may be dissolved if the Sponsor determines, in its sole discretion, that it is desirable or advisable for any reason to discontinue the affairs of the Trust. In respect of termination events that rely on Sponsor determinations to terminate the Trust (e.g., if the SEC determines that the Trust is an investment company under the 1940 Act; the CFTC determines that the Trust is a commodity pool under the CEA; the Trust is determined to be a money transmitter under the regulations promulgated by FinCEN; the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for U.S. federal income tax purposes; or, following a resignation by a trustee or custodian, the Sponsor determines that no replacement is acceptable to it), the Sponsor may consider, without limitation, the profitability to the Sponsor and other service providers of the operation of the Trust, any obstacles or costs relating to the operation or regulatory compliance of the Trust relating to the determination’s triggering event, and the ability to market the Trust to investors. To the extent that the Sponsor determines to continue operation of the Trust following a determination’s triggering event, the Trust will be required to alter its operations to comply with the triggering event. In the instance of a determination that the Trust is an investment company, the Trust and Sponsor would have to comply with the regulations and disclosure and reporting requirements applicable to investment companies and investment advisers. In the instance of a determination that the Trust is a commodity pool, the Trust and the Sponsor would have to comply with regulations and disclosure and reporting requirements applicable to commodity pools and commodity pool operators or commodity trading advisers. In the event that the Trust is determined to be a money transmitter, the Trust and the Sponsor will have to comply with applicable federal and state registration and regulatory requirements for money transmitters and/or money service businesses. In the event that the Trust ceases to qualify for treatment as a grantor trust for U.S. federal income tax purposes, the Trust will be required to alter its disclosure and tax reporting procedures and may no longer be able to operate or to rely on pass-through tax treatment. In each such case and in the case of the Sponsor’s determination as to whether a potential successor trustee or custodian is acceptable to it, the Sponsor will not be liable to anyone for its determination of whether to continue or to terminate the Trust.

Upon the dissolution of the Trust, the Sponsor (or in the event there is no Sponsor, such person (the “Liquidating Trustee”) as the majority in interest of the beneficial owners of the Trust may propose and approve) shall take full charge of the property of the Trust. Any Liquidating Trustee so appointed shall have and may exercise, without further authorization or approval of any of the parties hereto,

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all of the powers conferred upon the Sponsor under the terms of the Trust Agreement, subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers, and provided that the Liquidating Trustee shall not have general liability for the acts, omissions, obligations and expenses of the Trust. Thereafter, in accordance with Section 3808(e) of the Delaware Statutory Trust Act (“DSTA”), the affairs of the Trust shall be wound up and all assets owned by the Trust shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom shall be applied and distributed in the following order of priority: (a) to the expenses of liquidation and termination and to creditors, including registered owners and beneficial owners of the Trust who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Trust (whether by payment or the making of reasonable provision for payment thereof) other than liabilities for distributions to registered owners of the Trust, and (b) to the beneficial owners of the Trust pro rata in accordance with their respective percentage interests of the property of the Trust. The proceeds of the liquidation of the Trust’s assets are expected to be distributed in cash. Shareholders are not entitled to any of the Trust’s underlying ETH holdings upon the dissolution of the Trust. The Sponsor (or in the event there is no Sponsor, the Liquidating Trustee), on behalf of the Trust, would expect to sell the Trust’s ETH through the same processes and procedures as creation and redemption transactions or through the ETH Custodian or its affiliate. See “Creation and Redemption of Shares” for more information.

Following the dissolution and distribution of the assets of the Trust, the Trust shall terminate and the Sponsor or the Liquidating Trustee, as the case may be, shall instruct the Trustee in writing to execute and cause such certificate of cancellation of the Certificate of Trust to be filed in accordance with the Delaware Statutory Trust Act at the expense of the Sponsor or the Liquidating Trustee, as the case may be. Notwithstanding anything to the contrary contained in this Trust Agreement, the existence of the Trust as a separate legal entity shall continue until the filing of such certificate of cancellation.

Amendments

The Trustee and the Sponsor may amend any provision of the Trust Agreement without the consent of any other person, including any registered owner or beneficial owner of the Trust, provided that any amendment that imposes or increases any fees or charges (other than taxes and other governmental charges, registration fees or other such expenses), or that otherwise prejudices any substantial existing right of the registered owners or the beneficial owners of the Trust, will not become effective as to outstanding Shares until 30 days after notice of such amendment is given to the registered owners of the Trust. Notwithstanding the foregoing, the Sponsor shall have the right to increase or decrease the amount of the Sponsor Fee (i) upon three (3) business days’ prior notice of the increase or decrease being posted on the website of the Trust and (ii) upon three (3) business days’ prior written notice of the increase or decrease being given to the Trustee. Every registered owner or beneficial owner of the Trust, at the time any amendment so becomes effective, shall be deemed, by continuing to hold any Shares or an interest therein, to consent and agree to such amendment and to be bound by the Trust Agreement as amended thereby.

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THE TRUST’S SERVICE PROVIDERS

The Sponsor

The Sponsor is a wholly-owned subsidiary of VanEck. VanEck acts as adviser or sub-adviser to exchange-traded funds, mutual funds, other pooled investment vehicles and separate accounts. VanEck has been wholly owned by members of the van Eck family since its founding in 1955 and its shares are held by its Chief Executive Officer, Jan van Eck, and his family. See “Management; Voting by Shareholders” for a discussion of Mr. van Eck’s biography and positions with the Sponsor.

VanEck and its subsidiaries have considerable experience issuing and operating exchange-traded products, including three investment companies registered under the 1940 Act, that provide exposure to digital assets and digital asset companies (i.e., the equity securities of companies primarily engaged in the digital asset industry). As of April 30, 2024, VanEck and its affiliates oversee approximately $1,642 million in assets under management across over 16 digital asset-related products across various jurisdiction. Although the Sponsor is a relatively new entity within the broader structure of VanEck, the Sponsor utilizes a similar management team that VanEck has used in issuing and operating these exchange-traded products.

The principal office of the Sponsor is:

VanEck Digital Assets, LLC

666 Third Avenue, 9^th Floor
New York, NY 10017

The Trustee

Delaware Trust Company, a Delaware trust company, acts as the trustee of the Trust for the purpose of creating a Delaware statutory trust in accordance with the DSTA. The Trustee is appointed to serve as the trustee of the Trust in the State of Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the DSTA that the Trust have at least one trustee with a principal place of business in the State of Delaware.

General Duty of Care of Trustee

The Trustee is a fiduciary under the Trust Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee are limited by, and are only those specifically set forth in, the Trust Agreement.

Resignation, Discharge or Removal of Trustee; Successor Trustees

The Trustee may resign upon at least 60 days’ prior written notice to the Sponsor; provided, however, that such resignation shall not be effective until such time as a successor Trustee has accepted such appointment. The Sponsor may remove the Trustee at any time upon 60 days’ prior written notice to the Trustee; provided, however, that such removal shall not be effective until such time as a successor Trustee has accepted such appointment.

Upon the resignation or removal of the Trustee, the Sponsor shall appoint a successor Trustee. If no successor Trustee shall have been appointed and shall have accepted such appointment within 60 days after the giving of such notice of resignation or removal, the Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. Any successor Trustee appointed pursuant to the Trust Agreement shall be eligible to act in such capacity in accordance with this Trust Agreement and, following compliance with the Trust Agreement, shall become fully vested with the rights, powers, duties and obligations of its predecessor under the Trust Agreement, with like effect as if originally named as Trustee. Any such successor Trustee shall notify the Trustee of its appointment by providing a written instrument to the Trustee. At such time the Trustee shall be discharged of its duties herein. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Trustee may be transferred, shall, subject to the preceding sentence, be the Trustee under the Trust Agreement without further act.

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The Administrator

Under the Trust’s Administration Agreement and the Cash Custody Agreement, the Administrator provides certain administrative and accounting services and financial reporting for the maintenance and operations of the Trust. In addition, the Administrator makes available the office space, equipment, personnel and facilities to provide such services. The Administrator will also facilitate the transfer of ETH required for the operation of the Trust. Under the Cash Custody Agreement, State Street may act as custodian for the Trust’s non-ETH assets, if any, and as bank for the Trust’s cash.

Under the Trust Administration Agreement, the Administrator has agreed to prepare the Trust’s financial reports required to be included in and filed with the SEC. In addition, the Administrator has agreed to provide accounting services including valuing the Trust’s ETH, calculating the net asset value per Share of the Trust and the net asset value of the Trust and maintaining the books of account of the Trust. In addition, the Administrator makes available the office space, equipment, personnel and facilities required to provide such services.

The Administrator has agreed to provide its services under the Trust Administration Agreement for an initial term of one year with an automatic renewal of successive one year terms unless earlier terminated pursuant to the Trust Administration Agreement. In addition, the Administrator may terminate its services for certain material breaches of the Trust Administration Agreement or for terminations as may be required or occasioned by law. The Trust may terminate the Trust Administration Agreement for certain material breaches of the Trust Administration Agreement or for terminations as may be required or occasioned by law.

The Administrator also has agreed to act in good faith and without negligence and to exercise reasonable care (the “Standard of Care”) at all times in its performance of all services under the Trust Administration Agreement.

The Administrator shall not be liable for any special, indirect, incidental, punitive or consequential damages, including lost profits, of any kind whatsoever (including, without limitation, attorneys’ fees) under any provision of the Trust Administration Agreement or for any such damages arising out of any act or failure to act under the Trust Administration Agreement, regardless of whether such damages were foreseeable or whether the parties had been advised of the possibility of such damages. The Administrator’s cumulative liability for each calendar· year (a “Liability Period”) with respect to the Trust under the Trust Administration Agreement is limited to its total annual compensation earned and fees payable under the Trust Administration Agreement during the preceding Compensation Period, as defined in the Trust Administration Agreement, for any liability or loss suffered by the Trust.

Under the Trust Administration Agreement, the Administrator shall not be responsible or liable for any failure or delay in performance of its obligations under the Trust Administration Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, work stoppage, power or other mechanical failure, computer virus, natural disaster, governmental action, communication disruption or other similar· force majeure events or acts.

The fees of the Administrator are paid by the Sponsor on behalf of the Trust. In addition, upon termination of the Trust Administration Agreement, the Trust shall pay to the Administrator any compensation then due and reimburse the Administrator for its other fees, expenses and charges then due and payable under the Trust Administration Agreement, and any fees and expenses due in respect of any transitional services that the Administrator agrees to provide to the Trust. The Administrator and its directors, officers, employees and agents are exculpated and indemnified by the Trust from all loss, cost, damage and expense, including reasonable fees and expenses for counsel, incurred by the Administrator resulting from any claim, demand, action or suit in connection with the Administrator’s acceptance of the Trust Administration Agreement, any action or omission by it in the performance of its duties under the Trust Agreement, or as a result of acting upon any instructions reasonably believed by it to have been duly authorized by the Trust or upon reasonable reliance on information or records given or made by the Trust or its investment adviser, provided that the indemnification shall not apply to actions or omissions of the Administrator, its officers or employees in cases of its or their own bad faith, negligence or willful misconduct.

The Cash Custodian

Under the Cash Custody Agreement between State Street and the Trust, State Street may act as custodian for the Trust’s non-ETH assets, if any, and as custodian for the Trust’s cash (in such capacity, the “Cash Custodian”). The Cash Custodian has agreed to, among other things, open and maintain a separate deposit account or accounts of the Trust, to determine the amount of ETH and/or cash required for an issuance or redemption of shares in a Creation Basket and to release and deliver non-ETH assets and pay out cash.

The Cash Custodian shall credit to the deposit account(s) all cash received by the Cash Custodian from or for the account of the Trust. Upon an instruction to purchase Shares for the account of the Trust, the Cash Custodian shall pay out cash of the Trust to purchase Shares. Upon an instruction to redeem Shares for the account of the Trust, the Cash Custodian shall transfer the Shares so as to sell or redeem the Shares and receive proceeds of such sale or redemption.

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The Cash Custodian has agreed to provide its services under the Cash Custody Agreement for an initial term of one year with an automatic renewal of successive one year terms unless earlier terminated pursuant to the Cash Custody Agreement. Either the Cash Custodian or the Trust may terminate the Cash Custody Agreement for certain material breaches of the Cash Custody Agreement, for consistent breaches of established parameters in written service level agreements or for terminations as may be required or occasioned by law.

The Cash Custodian has agreed to act in good faith and without negligence and to exercise reasonable care (the “Standard of Care”) at all times in its performance of all services under the Cash Custody Agreement.

The fees of the Cash Custodian and its counsel are paid by the Sponsor on behalf of the Trust. In addition, upon termination of the Cash Custody Agreement, the Trust shall pay to the Cash Custodian any compensation then due and reimburse the Cash Custodian for its other fees, expenses and charges. The Cash Custodian is indemnified by the Trust from and against any loss, cost or expense in connection with the Cash Custodian’s acting or omitting to act under the Cash Custody Agreement in accordance with the Standard of Care, in good faith and without negligence.

Under the Cash Custody Agreement, the Cash Custodian shall not be liable for any events or circumstances beyond its reasonable control, including, without limitation: the interruption, suspension or restriction of trading on or the closure of any currency or securities market or system, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, acts of war, revolution, riots or terrorism or other similar force majeure events or acts. The Cash Custodian shall not be liable for any special, indirect, incidental, punitive or consequential damages associated with the services provided pursuant to the Cash Custody Agreement.

The ETH Custodian

Gemini serves as the Trust’s ETH Custodian and is a fiduciary under § 100 of the New York Banking Law. The ETH Custodian is authorized to serve as the Trust’s custodian under the Trust Agreement and pursuant to the terms and provisions of the Custody Agreement. The ETH Custodian has its principal office at 15 Park Ave South, Floor 16, New York, NY 10010.

The ETH Custodian makes available to the Trust a custodial account for ETH maintained by the ETH Custodian (“ETH Account”) and access to an omnibus custodial account held at depository institutions or money market funds in the ETH Custodian’s name for the benefit of its customers at which a cash balance may be maintained (“Fiat Account”). The ETH Custodian’s services in respect of the ETH Account (i) allow ETH to be deposited from a public blockchain address to the Trust’s ETH Account and (ii) allow ETH to be withdrawn from the ETH Account to a public blockchain address as instructed by the Trust. The Custody Agreement requires the ETH Custodian to hold the Trust’s ETH in cold storage, unless required to facilitate withdrawals as a temporary measure. Other than in connection with creations and redemptions and withdrawals of ETH to pay the Sponsor Fee and Additional Trust Expenses, where the associated ETH may temporarily be held in omnibus hot storage in the Clearing Account, the ETH Custodian will use segregated cold storage ETH addresses for the Trust. The addresses on the Ethereum Blockchain at which the Trust’s ETH in the ETH Account are held by the ETH Custodian are separate from the ETH addresses that the ETH Custodian uses for its other customers and are directly verifiable via the Ethereum Blockchain. The ETH Custodian will safeguard the private keys to the ETH associated with the Trust’s ETH Account. The ETH Custodian will at all times record and identify in its books and records that such ETH constitute the property of the Trust. The ETH Custodian will not withdraw the Trust’s ETH from the Trust’s ETH Account with the ETH Custodian, or loan, hypothecate, pledge or otherwise encumber the Trust’s ETH, without the Trust’s instruction, nor will the Sponsor or any other entity or service provider. The Trust will not lease or loan ETH held in the Trust’s ETH Account with the ETH Custodian and will not give instructions to that effect.

The Custody Agreement provides that ETH is deemed delivered to the address associated with the Trust’s ETH Account only after the required number of confirmations of the transaction on the Ethereum Blockchain, and that Gemini has no obligations for ETH that is not delivered in that manner. The Custody Agreement provides that once the Trust submits a request for a withdrawal transaction, the ETH subject to the withdrawal request shall be delivered by the ETH Custodian to the designated address on the Ethereum Blockchain specified in the Trust’s withdrawal transaction within [one business day of 4:00 p.m. Eastern time] of the business day on which the Trust submits the withdrawal request. If a withdrawal request is made by the Trust (i) by [4:00 p.m. Eastern time of the business day on which the Trust submits the withdrawal request], (ii) in connection with a redemption of shares of the Trust by an Authorized Participant (as defined in the Custody Agreement), and (iii) the delivery of ETH for such withdrawal request is to the account at the ETH Custodian of an Authorized Participant (as defined in the Custody Agreement), then the ETH subject to such withdrawal request shall be delivered to the destination blockchain address specified therein, by the [next business day from the business day when such withdrawal request was submitted]. The Custody Agreement provides that withdrawals may be delayed in connection with scheduled maintenance (“Downtime”) or the congestion or disruption of a digital asset network, including the Ethereum Blockchain.

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In respect of the Fiat Account, the ETH Custodian holds the Trust’s cash held in its account at the ETH Custodian in one or more Customer Omnibus Accounts. “Customer Omnibus Account” means, with respect to fiat currency held for customers of the ETH Custodian in fiat accounts (including the Trust’s cash balance in its Fiat Account), omnibus bank accounts (each an “Omnibus Account”) at depository institutions (each, a “Bank”); money market accounts (each, a “Money Market Account”) at a Bank or financial institution; and/or payment accounts (each, a “Payment Account”) at a financial institution. Each Omnibus Account is: (i) in the ETH Custodian’s name, and under its control; (ii) separate from the ETH Custodian’s business, operating, and reserve bank accounts; (iii) established specifically for the benefit of the ETH Custodian’s customers; and (iv) represents a banking relationship, not a custodial relationship, with each Bank. Omnibus Accounts do not create or represent any relationship between the Trust and any of the ETH Custodian’s Banks. Each Money Market Account is held at a Bank or financial institution: (i) in the ETH Custodian’s name, and under its control; (ii) separate from the ETH Custodian’s business, operating, and reserve money market accounts; (iii) established specifically for the benefit of the ETH Custodian’s customers; (iv) managed by a registered financial advisor, (v) custodied by a qualified custodian; and (vi) the monies within which are used to purchase money market funds invested in securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities. Money Market Accounts do not create or represent any relationship between the Trust and any of the related registered financial advisors and/or qualified custodians. Each Payment Account is held at a financial institution: (i) in the ETH Custodian’s name, and under its control; (ii) separate from the ETH Custodian’s business, operating, and reserve bank accounts; and (iii) established specifically for processing the fiat funds transfers of the ETH Custodian’s customers. Payment Accounts do not create or represent any relationship between the Trust and any of the related financial institutions. The Trust’s fiat currency deposits are: (i) held across the ETH Custodian’s Customer Omnibus Accounts in the exact proportion that all ETH Custodian customer fiat currency deposits are held across its Customer Omnibus Accounts; (ii) not treated as the ETH Custodian’s general assets; (iii) fully owned by the Trust; and (iv) recorded and maintained in good faith on the ETH Custodian’s books and records and reflected in a sub-account (i.e., the Fiat Account of the Trust’s Gemini Account) so that the Trust’s interests in the ETH Custodian’s Customer Omnibus Accounts are readily ascertainable. The ETH Custodian’s records permit the determination of the balance of U.S. dollars for a particular customer as a percentage of total commingled U.S. dollars held for the benefit of all of the ETH Custodian’s customers in all Customer Omnibus Accounts in a manner consistent with 12 C.F.R. § 330.5(a)(2). The Trust is not entitled to receive any interest that may be generated with respect to the cash held in its Fiat Account. U.S. dollar deposits in the Trust’s Fiat Account held in one or more Omnibus Accounts at one or more Banks located in the United States are held with the intention that they be eligible for Federal Deposit Insurance Corporation (“FDIC”) “pass-through” deposit insurance, subject to the Standard Maximum Deposit Insurance Amount per FDIC regulations (currently $250,000 per eligible customer of the ETH Custodian) and other applicable limitations. U.S dollar deposits held at banks or financial institutions located outside of the United States, may not be subject to or eligible for FDIC deposit insurance. The portion of the Trust’s cash holdings attributable to the Trust’s Fiat Account which is held at a Money Market Fund is not eligible for deposit insurance whether on a pass-through or any other basis. The Custody Agreement provides that wire deposit and withdrawal transfer times in respect of the Fiat Account are subject to bank holidays, the internal processes and jurisdiction of the Trust’s bank, and the internal processes of the ETH Custodian’s banks and financial institutions. In certain situations, wire deposit or withdrawal transfer times may be delayed in connection with Downtime or disruptions to the ETH Custodian’s banks and/or affiliates or service providers. ACH deposit and withdrawal transfer times are subject to bank holidays, the internal processes and jurisdiction of the Trust’s bank, and the internal processes of the Trust’s banks. The Custody Agreement provides that in certain situations, ACH withdrawal transfer times may be delayed in connection with Downtime or disruptions to the ETH Custodian’s banks and/or affiliates or service providers.

The Custody Agreement provides that no more than once per calendar year, the Trust shall be entitled to request that the ETH Custodian produce its Services Organization Controls 2 Type I report (a “SOC 2-I Report”) and a new Services Organization Controls 2 Type II report (a “SOC 2-II Report” and, together with a SOC 2-I Report, “SOC Reports”), or certify that there have been no material changes which would impact the previous SOC Reports provided to the Trust, and promptly deliver to the Trust a copy of each SOC Report within 45 days of the Trust’s request. No more than once per calendar year, the Trust shall be entitled to request that the ETH Custodian produce a copy of the ETH Custodian’s audited annual financial statements for each financial year ending on or after December 31, 2023, and the ETH Custodian shall promptly deliver such financial statements to the Trust.

The ETH Custodian agrees to take reasonable care and use commercially reasonable efforts in executing its responsibilities to the Trust pursuant to the Custody Agreement, which includes exercising the degree of care, diligence and skill that a prudent and competent professional provider of services similar to the services contemplated by the Custody Agreement would exercise in the circumstances, or such higher care where required by law or the Custody Agreement (collectively, the “Standard of Care”). The ETH Custodian cannot be held responsible for any failure or delay to act by the ETH Custodian, its affiliates or service providers, or its banks that is within the time limits permitted by the Custody Agreement, or that is caused by the Trust’s negligence or is required to comply with applicable laws and regulations. The ETH Custodian cannot be held responsible for any Downtime or System Failure (defined below), which prevents the ETH Custodian from fulfilling its obligations under the Custody Agreement, provided that ETH Custodian took reasonable care and used commercially reasonable efforts to prevent or limit such System Failures or Downtime and otherwise complied with this Agreement. The Custody Agreement provides that a “System Failure” shall mean a failure of any computer hardware, software, computer systems, or telecommunications lines or devices used by ETH Custodian, or interruption, loss, or malfunction of utility, data center, Internet or network provider services used by ETH Custodian; provided, however, that a cybersecurity attack, data breach, hack, or other intrusion, or unauthorized disclosure by a third party, ETH Custodian, a ETH Custodian affiliate or service provider, or an agent or subcontractor of ETH Custodian, shall not be deemed a System Failure, to the extent such events or any losses arising therefrom are due to ETH Custodian’s failure to comply with its obligations under the Custody Agreement. The ETH Custodian cannot be held responsible for any circumstances beyond the ETH Custodian’s reasonable control, provided ETH Custodian acted in accordance with the Standard of Care. Notwithstanding any other provision in the Custody Agreement, for the Trust’s ETH held in the ETH Account, the ETH Custodian represents, warrants, and covenants that it will maintain the private key or keys in a form accessible

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to the ETH Custodian and will take reasonable care and use commercially reasonable efforts to (i) protect and keep the private key or keys secure and (ii) not disclose them or allow access to them by any other person. The ETH Custodian shall take reasonable care and use commercially reasonable efforts to ensure that the Trust shall be able to access the ETH Account via the ETH Custodian’s online interface 97% of the time excluding Downtime and System Failures. The ETH Custodian shall not, without the prior written consent of the Trust, deposit or hold the Trust’s ETH with any third-party depositary, custodian, clearance system, wallet, or sub-custodian. Subject to the foregoing, the ETH Custodian is permitted to perform its obligations under the Custody Agreement using subcontractors or agents, provided that, in relation to each such subcontractor or agent used by the ETH Custodian, the ETH Custodian shall: (i) comply with the Standard of Care in the selection, appointment and use of each such subcontractor or agent; (ii) monitor such subcontractor’s or agent’s performance; and (iii) remain solely liable to Trust for the performance of the ETH Custodian’s obligations under the Custody Agreement, notwithstanding any use of subcontractors or agents.

Subject to the “Force Majeure” provision (defined below) and as limited by the limitations of liability in the Custody Agreement, the ETH Custodian shall be liable to the Trust for the Loss (defined below) of any of the Trust’s ETH or fiat currency to the extent that such Loss was caused by the negligence, fraud, willful or reckless misconduct of the ETH Custodian or breach by the ETH Custodian of its Standard of Care. The Custody Agreement provides that “Loss” means if, at any time the Trust’s ETH Account or Fiat Account, as applicable, does not hold the ETH or fiat currency that had been (1) received by ETH Custodian in connection with the Trust’s ETH Account or Fiat Account pursuant to the Custody Agreement, or (2) duly sent to the ETH Custodian by the Trust or Authorized Participants in connection with the Trust’s ETH Account pursuant to the Custody Agreement but not received because of a failure caused by the ETH Custodian. The Custody Agreement provides that “Loss” shall include situations where the ETH Custodian fails to execute a valid withdrawal request, ETH are withdrawn from the Trust’s ETH Account other than pursuant to a withdrawal request, or the Trust is not able to timely withdraw ETH from the ETH Account pursuant to a withdrawal request, in each case due to a failure caused by the ETH Custodian; provided, however, that the ETH Custodian’s failure to permit timely withdrawals because it has determined that it cannot do so due to the requirements of applicable laws and regulations or because of the operation of its fraud detection controls shall not be considered a Loss, provided the ETH Custodian is acting reasonably and in good faith. The Custody Agreement provides that should a Loss of the Trust’s ETH or fiat currency due to the negligence, fraud, willful or reckless misconduct of the ETH Custodian or a breach by the ETH Custodian of its Standard of Care occur, the ETH Custodian will, as soon as practicable, return to the Trust a quantity of the same digital asset that is equal to the quantity of digital assets involved in the Loss, or return to the Trust a quantity of the same fiat currency that is equal to the quantity of fiat currency involved in the Loss (if the Loss involved the Fiat Account). The Custody Agreement provides that (i) the ETH Custodian does not own or control the underlying software protocols of networks which govern the operation of digital assets (including the ETH Blockchain), (ii) the ETH Custodian makes no guarantees regarding their security, functionality, or availability, and (iii) in no event shall the ETH Custodian be liable for or in connection with any acts, decisions, or omissions made by developers or promoters of digital assets, including ETH.

The Custody Agreement’s “Force Majeure” provision provides that in no event shall the ETH Custodian be liable for any delays, failure in performance or interruption of service which result directly or indirectly from any cause or condition, whether or not foreseeable, beyond the ETH Custodian’s reasonable control, including, but not limited to, any act of God, nuclear or natural disaster, epidemic, action or inaction of civil or military authorities, act of war, terrorism, sabotage, civil disturbance, strike or other labor dispute, accident, or state of emergency; provided, however, that for the avoidance of doubt, the Custody Agreement’s Force Majeure provision shall not apply in respect of System Failures or Downtime, which are subject to other respective provisions of the Custody Agreement. The occurrence of an event described in the Force Majeure provision shall not affect the validity and enforceability of any remaining provisions of the Custody Agreement.

Under the Custody Agreement, each of the ETH Custodian and the Trust has agreed to indemnify and hold harmless the other party from any third-party claim or third-party demand (including reasonable attorneys’ fees and expenses) (collectively, “Damages”) arising out of or related to the ETH Custodian’s or the Trust’s, as the case may be, non-performance of its obligations under or material breach of the Custody Agreement and inaccuracy in any of the ETH Custodian’s or the Trust’s, as the case may be, representations or warranties in the Custody Agreement. In addition, the ETH Custodian agrees to indemnify the Trust in the event of Damages relating to the holding of the Trust’s ETH and fiat currency by the ETH Custodian as contemplated by the Custody Agreement, including any loss or damage caused by any act or omission of any employee of the ETH Custodian or any agent, representative or independent contractor engaged by the ETH Custodian, whether or not such act or omission occurred within the scope of his employment or engagement. The Custody Agreement provides that “Damages” shall not include any losses, claims, damages, liabilities or expenses arising from any fluctuation in market price, forks, governance changes, airdrops or other events which impact all holders of a digital asset such as ETH globally as a class.

The Custody Agreement provides the ETH Custodian, its affiliates, service providers, or any of their respective officers, directors, agents, joint venturers, employees or representatives, shall not be liable for (i) any losses or claims arising out of actions that are in the Trust’s control and related to its use of the ETH Custodian’s online platform, including but not limited to, the Trust’s failure to follow security protocols, the ETH Custodian’s controls, improper instructions, failure to secure the Trust’s credentials from third parties, or anything else in the Trust’s control and (ii) any amount greater than the value of the ETH on deposit in the Trust’s ETH

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Account at the time of, and directly relating to, the events giving rise to the liability occurred, the value of which shall be determined in accordance with the Chicago Mercantile Exchange Ether-Dollar Reference Rate or any successor thereto. No party shall be liable to the other parties (whether under contract, tort (including negligence) or otherwise) for any indirect, incidental, special, punitive or consequential losses suffered or incurred by the other parties (whether or not any such losses were foreseeable or within the contemplation of the parties). This means, by way of example only (and without limiting the scope of the above), that if the Trust claims that the ETH Custodian failed to process a withdrawal request properly, the Trust’s damages are limited to no more than the value of the ETH at issue in the withdrawal request, and that the Trust may not recover for lost profits, lost business opportunities, or other types of special, incidental, indirect, intangible, or consequential damages in excess of the value of the ETH at issue in the withdrawal. The ETH Custodian shall not be liable to the Trust or anyone else for any loss or injury resulting directly or indirectly from any damage or interruptions caused by any computer viruses, spyware, scamware, trojan horses, worms, or other malware that may affect the Trust’s computer or other equipment, provided such malware did not originate from the ETH Custodian or its agents.

The Custody Agreement provides that the ETH Custodian has obtained insurance coverage by a reputable insurance company with respect to digital assets custodied with the ETH Custodian, in accordance with its internal standards for maintaining such insurance and subject to change at the ETH Custodian’s discretion. The Custody Agreement provides that the ETH Custodian shall provide the Trust with notice of material changes in its insurance coverage. For more information, see “CUSTODY OF THE TRUST’S ASSETS—Insuranceˮ and “RISK FACTORS—The Lack Of Full Insurance And Shareholders’ Limited Rights Of Legal Recourse Against The Trust, Trustee, Sponsor, Administrator, Cash Custodian And ETH Custodian Expose The Trust And Its Shareholders To The Risk Of Loss Of The Trust’s ETH For Which No Person Or Entity Is Liable.ˮ

The Custody Agreement will commence on the date of execution and continue until terminated in accordance with its provisions. The Custody Agreement may be terminated by either party upon 90 days written notice to the other party; provided, however, that if the Custody Agreement is terminated, the ETH Custodian shall use commercially reasonable efforts to cooperate with the Trust’s transition to a replacement custodian and if the Trust is unable to engage a replacement custodian using commercially reasonable efforts within such 90 day period, the ETH Custodian terminates the Custody Agreement, then the ETH Custodian shall continue to act as ETH Custodian pursuant to the terms of the Custody Agreement until such time as the Trust engages a replacement custodian, provided that the Trust uses reasonable commercial efforts to promptly engage a replacement custodian. Either party (the “Terminating Party”) may terminate the Custody Agreement at any time on written notice to the other party (the “Defaulting Party”), such termination to take effect (i) on the tenth business day after the delivery of written notice of termination by the Terminating Party to the Defaulting Party, unless the Defaulting Party has cured the event triggering a termination right to the satisfaction of the Terminating Party, acting reasonably, or (ii) immediately after delivery of written notice of termination by the Terminating Party to the Defaulting Party if the event triggering a termination right is incapable of being cured within ten business days, in the following circumstances. First, any representation, warranty, certification or statement made by the Defaulting Party under the Custody Agreement was or becomes incorrect in any material respect when made; second, the Defaulting Party materially breaches, or fails in any material respect to perform any of its obligations under, the Custody Agreement; third, the Defaulting Party requests a postponement of maturity or a moratorium with respect to any indebtedness or is adjudged bankrupt or insolvent, or there is commenced against the Defaulting Party a case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the Defaulting Party files a petition for bankruptcy or an application for an arrangement with its creditors, seeks or consents to the appointment of a receiver, administrator or other similar official for all or any substantial part of its property, admits in writing its inability to pay its debts as they mature, or takes any corporate action in furtherance of any of the foregoing, or fails to meet applicable legal minimum capital requirements; fourth, a Change of Control (as defined in the Custody Agreement) of the Defaulting Party, or an event, change or development that causes or is likely to cause a Material Adverse Effect (as defined in the Custody Agreement) on the Defaulting Party, or in the ability of the Defaulting Party to fulfill its responsibilities under the Custody Agreement, occurs; fifth, with respect to the Trust’s right to terminate, the Ethereum Blockchain undergoes a fork and becomes a forked network, and the Trust disagrees with the ETH Custodian’s choice of which forked network to support; or with respect to the Trust’s right to terminate, applicable laws and regulations or any change therein or in the interpretation or administration thereof that may have a Material Adverse Effect (as defined in the Custody Agreement) on the Trust or the rights of the Trust with respect to any services covered by the Custody Agreement.

The ETH Custodian has the right to immediately (i) take actions the ETH Custodian determines appropriate to comply with applicable law and regulations and in accordance with its Bank Secrecy Act and Anti-Money Laundering compliance program (“BSA/AML Program”), (ii) suspend the Trust’s ETH Account or Fiat Account, (iii) freeze/lock the funds and assets in all such accounts, and (iv) suspend the Trust’s access to the ETH Custodian’s platform or its account there (collectively, an “account suspension”), if: (A) the ETH Custodian is required to do so by a regulatory authority, court order, facially valid subpoena, or binding order of a governmental authority, (B) the ETH Custodian reasonably and in good faith believes the Trust has violated applicable laws and regulations in connection with the Trust’s ETH Account or Fiat Account, or the ETH Custodian is required to do so under the ETH Custodian’s BSA/AML Program, (C) the ETH Custodian believes someone is attempting to gain unauthorized access to the account, or (D) the ETH Custodian believes there is unusual activity in the account. Except as set forth above, the ETH Custodian shall not suspend the Trust’s access to the ETH Account or the Fiat Account, and any suspension of the Trust’s access to such accounts shall constitute a breach of the Custody Agreement. In the case of an account suspension due to (C) or (D) of this paragraph, the ETH Custodian shall restore the

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Trust’s normal access to the ETH Account or Fiat Account as promptly as reasonably possible without putting the ETH and fiat currency in such accounts at risk. In the case of an account suspension due to (A) or (B) of this paragraph, the ETH Custodian shall permit the Trust to withdraw the Trust’s ETH and fiat currencies from ETH Account or Fiat Account as soon as permitted by applicable laws and regulations or the applicable court order, subpoena, or regulatory or governmental authority, and for ninety (90) days thereafter.

In addition to the ETH custodial services described herein, the ETH Custodian will also provide the Trust with clearing and settlement services for ETH purchase and sale transactions between the Trust and its trading partners. These services are detailed within the clearing agreement between the Trust and the ETH Custodian (the “Clearing Agreement”).

The ETH Custodian’s Role in the Clearing Agreement

The ETH Custodian’s clearing services (“Gemini Clearing”) has been in operation since 2019 as a settlement platform to clear off-exchange trades, allowing the submission, acceptance, funding, and settlement of purchase and sale transactions with respect to ETH that the Trust arranges and negotiates with another party that is also a customer of the ETH Custodian (“Counterparty”) without the involvement of the ETH Custodian (such transactions, “Clearing Transactions”). The Trust engages in Clearing Transactions with Liquidity Providers (as defined in “CREATION AND REDEMPTION OF SHARES—Creation Procedures”) to source ETH in connection with purchase orders made in cash by Authorized Participants, or to sell ETH for cash to fill redemption orders in cash made by Authorized Participants. Gemini Clearing does not charge additional fees as the cost of Clearing Transactions is included in the ETH Custodian’s custody fees. As further described below under “CREATION AND REDEMPTION OF SHARES”, the Trust’s Authorized Participant Agreement provides that transaction costs and slippage related to Creation Basket creation and redemption are the responsibility of the Authorized Participant.

Gemini Clearing has adopted the Gemini BSA/AML Program for its digital asset trading platform and custody service in an effort to maintain the highest possible compliance with applicable laws and regulations relating to anti-money laundering in the U.S. and other countries where it conducts business. This program includes robust internal policies, procedures and controls that combat any attempted use of Gemini Clearing for illegal or illicit purposes, including, among others, a customer identification program, annual training of all employees and officers in anti-money laundering regulation, filing of Suspicious Activity Reports and Currency Transaction Reports with the U.S. Financial Crimes Enforcement Network and annual internal and independent audits of the Gemini BSA/AML Program.

Gemini has represented to the Sponsor that it has policies in place to mitigate conflicts of interest in connection with the Clearing Services, including a conflicts of interest policy and a trading policy for employees. The Trust’s Clearing Account is subject to Gemini’s User Agreement, which provides that ETH custodied in the Trust’s Clearing Account are not treated as general assets of Gemini. Gemini has represented to the Sponsor that Gemini treats the ETH credited to the Trust’s Clearing Account as belonging to the Trust and does not pledge, hypothecate, or otherwise encumber the Trust’s ETH in its Clearing Account except pursuant to instructions from the Trust, which the Trust has not granted and will not grant.

Each Clearing Transaction has one party that will act as buyer owing an amount of fiat currency (such party, the “Buyer” and such amount, the “Fiat Currency Amount”) and a party that will act as a seller owing an amount of ETH (such party, the “Seller” and such amount, the “Digital Asset Amount”). The Trust will act as Buyer in connection with a purchase order or Seller in connection with a redemption order, while the Liquidity Provider – which must be a customer and have established accounts at the ETH Custodian – will be the Seller in connection with a purchase order or the Buyer in connection with a redemption order.

For each Clearing Transaction, the Trust or the Counterparty is responsible for submitting a request (such party, the “Submitting Party” and such request a “Clearing Request”) to settle a transaction through Gemini Clearing in the form and manner, and otherwise in accordance with the instructions, technical specifications and other information, that the ETH Custodian may require. For each Clearing Transaction and Clearing Request, the Submitting Party must, at a minimum, (i) identify the account at the ETH Custodian (“Gemini Account”) of the other party to the Clearing Transaction (such party, the “Confirming Party”), (ii) the Buyer and the applicable Fiat Currency Amount for the Clearing Transaction, (iii) the Seller and the applicable Digital Asset Amount for the Clearing Transaction, and (iv) the time period by when the Clearing Request will expire if not completed (“Expiration Time”).

Once the Submitting Party successfully submits a Clearing Request, the ETH Custodian shall notify the Confirming Party of the Clearing Request and the relevant information in such Clearing Request. The Trust is responsible for funding its Fiat Account or ETH Account, as applicable, with the Fiat Currency Amount and the Digital Asset Amount, as applicable based on the Clearing Request, in each case prior to the Expiration Time. The Counterparty must fund its applicable account at the ETH Custodian as well.

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If, prior to the Expiration Time, both the Trust and the Counterparty have funded their applicable account at the ETH Custodian with their respective obligation of the Fiat Currency Amount and the Digital Asset Amount, the ETH Custodian shall (i) transfer the Fiat Currency Amount from the Buyer’s Gemini Account to the Seller’s Gemini Account and (ii) transfer the Digital Asset Amount from the Seller’s Gemini Account to the Buyer’s Gemini Account. If the parties do not fund their respective accounts with the amounts specified in the Clearing Request by the Expiration Time, the Clearing Request will expire and Gemini have no obligations with respect to such Clearing Request.

The Trust acknowledges and agrees that the ETH Custodian is not involved in and does not have any responsibility for any Clearing Transaction, other than as specifically identified in the Clearing Agreement. The ETH Custodian has represented to the Sponsor that it has policies and procedures in place for mitigating conflicts of interest when executing the Trust’s orders pursuant to the Clearing Services. Absent gross negligence, willful misconduct or fraud, the ETH Custodian shall not be liable for any loss resulting from a Clearing Request or the use of Clearing Services. Validation and confirmation procedures used by Gemini are designed only to verify the source of Clearing Requests and that each party has met its respective obligations in respect of a Clearing Request and not to detect errors in the content of that Clearing Request or to prevent duplicate Clearing Requests. The Trust is responsible for losses resulting from Clearing Requests provided by it and for any errors made by or on behalf of the Trust, any errors resulting, directly or indirectly, from fraud or the duplication of any Clearing Request by or on behalf of the Trust, or any losses resulting from the malfunctioning of any devices used by the Trust or loss or compromise of credentials used by the Trust to deliver Clearing Requests.

The Trust also agrees and understands that the ETH Custodian may reject, refuse to settle or otherwise not complete any request to settle a Clearing Request through Gemini Clearing for any reason necessary to comply with applicable laws and regulations or in connection with its fraud or other compliance controls and systems, and the Trust agrees that the ETH Custodian shall have no liability whatsoever to the Trust, any transaction counterparty or any other party in connection with or arising out of the ETH Custodian rejecting, refusing or otherwise not completing the settlement of a transaction through Gemini Clearing.

The ETH Custodian will not settle transactions through Gemini Clearing: (i) if either party to a Clearing Transaction has not fully funded its applicable account at the ETH Custodian, with the required Fiat Currency Amount or Digital Asset Amount, as applicable, prior to the Expiration Time; (ii) if either party to a Clearing Transaction has not confirmed its acceptance of the Clearing Request to the ETH Custodian prior to the Expiration Time; (iii) if either party to a transaction is not a customer of the ETH Custodian; or (iv) for any other reason as determined by the ETH Custodian in its sole discretion to comply with applicable laws and regulation or in connection with the ETH Custodian’s fraud or other compliance controls and systems.

The Transfer Agent

The Transfer Agent: (1) issues and redeems Shares of the Trust; (2) responds to correspondence by Trust Shareholders and others relating to its duties; (3) maintains Shareholder accounts; and (4) makes periodic reports to the Trust.

The Marketing Agent

The Marketing Agent is responsible for: (1) working with the Administrator to review and approve, or reject, purchase and redemption orders of Creation Baskets placed by Authorized Participants with the Administrator; (2) providing assistance in the marketing of the Shares; (3) reviewing and approving the marketing materials prepared by the Sponsor for compliance with applicable SEC and FIRA advertising laws, rules and regulations; and (4) maintaining a public website on behalf of the Trust, containing information about the Trust and the Shares. The internet address of the Trust’s website is [ ]. This internet address is only provided here as a convenience, and the information contained on or connected to the Trust’s website is not considered part of this Prospectus.

MarketVector Indexes GmbH is an indirectly wholly owned-subsidiary of Van Eck Associates Corporation.

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CUSTODY OF THE TRUST’S ASSETS

The Trust’s ETH Custodian will keep custody of all of the Trust’s ETH relating to its ETH Account and Clearing Account. ETH private keys are stored in two different forms: “hot wallet” storage, whereby the private keys are stored on secure, internet-connected devices, and “cold” storage, where digital currency private keys are stored completely offline. The Custody Agreement requires the ETH Custodian to hold the Trust’s ETH in its ETH Account in cold storage, unless required to facilitate withdrawals as a temporary measure. ETH temporarily held in the Clearing Account in connection with creations and redemptions or withdrawals of ETH to pay the Sponsor Fee or extraordinary expenses may be held in omnibus hot storage wallets.

As a fiduciary under Section 100 of the New York Banking Law, the ETH Custodian is held to specific capital reserve requirements and banking compliance standards. The ETH Custodian is also subject to the laws, regulations and rules of applicable governmental or regulatory authorities, including: money service business regulations under FinCEN; U.S. state money transmission laws; laws, regulations, and rules of relevant tax authorities; applicable regulations and guidance set forth by FinCEN; the Bank Secrecy Act of 1970; the USA PATRIOT Act of 2001; other anti-money laundering regulations as mandated by U.S. federal law and any other rules and regulations regarding anti-money laundering/counter-terrorist financing; issuances from the Office of Foreign Assets Control; the New York Banking Law; regulations promulgated by the New York State Department of Financial Services from time to time; the National Futures Association; the Financial Industry Regulatory Authority; and the Commodity Exchange Act.

The ETH Custodian provides custody, clearing/settlement, and other capital markets services specifically designed for digital asset exchange-traded funds and other fund vehicles. The ETH Custodian currently custodies and supports ETFs, including certain Canadian ETH ETF issuers.

The ETH Custodian has been providing services as a limited purpose trust company licensed by the New York State Department of Financial Services (NYSDFS) since 2015. The ETH Custodian is a fiduciary under Section 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the Advisers Act, and it was the world’s first digital asset platform to achieve a SOC 1 Type II and SOC 2 Type II certification for custody. Gemini Custody^® is also regularly audited and subject to stringent capital reserve requirements. The ETH Custodian has represented to the Sponsor that it also maintains $[ ] million in digital asset insurance covering fraud, theft, and cyber-security breaches that result in a loss of digital assets belonging to customers, including the Trust, where Gemini has been deemed responsible, with exclusions including losses that are determined to be the fault or responsibility of the customer, acts of terrorism, war, etc. The Trust is not a named insured on such insurance policies and such insurance is not specific to the Trust, but the ETH Custodian has represented to the Sponsor that such insurance covers events that result in a loss of digital assets belonging to customers, including the Trust.

The ETH Custodian will use segregated cold storage ETH addresses for the Trust’s ETH Account, which is separate from the ETH addresses that the ETH Custodian uses for its other customers and which are directly verifiable via the ETH blockchain. The ETH Custodian will at all times record and identify in its books and records that such ETH constitute the property of the Trust. The ETH Custodian will not loan, hypothecate, pledge or otherwise encumber the Trust’s ETH, as applicable, without the Trust’s instruction, nor will the Sponsor or any other entity or service provider. The Trust will not lease or loan ETH held in the Trust’s account with the ETH Custodian and will not give instructions to that effect.

ETH Storage Structure

ETH private keys are stored in two different forms: “hot wallet” storage, whereby the private keys are connected to the internet, and “cold” storage, where digital currency private keys are stored completely offline. The Trust’s ETH will be stored by the ETH Custodian offline in cold storage. When under the purview of the ETH Custodian, ETH will only enter “hot” storage in the case of creations and redemptions or withdrawals to pay the Sponsor Fee or extraordinary expenses, meaning that the ETH will only be in “hot” storage for a temporary period. The ETH Custodian will store private keys in geographically diverse regions across the continental United States.

The ETH Custodian has adopted the following security policies and practices with respect to digital assets held in cold storage: HSMs are used to generate, store and manage cold storage private keys; multi-signature technology is used to provide both security against attacks and tolerance for losing access to a key or facility, eliminating single points of failure; all HSMs are stored offline in air-gapped environments within a diverse network of guarded, monitored and access-controlled facilities that are geographically distributed; multiple levels of physical security and monitoring controls are implemented to safeguard HSMs within storage facilities; and all fund transfers require the coordinated actions of multiple employees.

The ETH Custodian has adopted the following security policies and practices with respect to digital assets held in its hot wallet: HSMs are used to store and manage hot wallet private keys; operational redundancy is achieved through geographic disbursement of failover storage facilities and hardware, thus protecting against service disruptions and single points of failure; all hot wallet HSMs are

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stored within secured facilities that are access-controlled, guarded, and monitored; tiered access-controls are applied to the ETH Custodian’s production environment to restrict access to employees based on role, following the principle of least-privilege; administrative access to its production environment requires multi-factor authentication; and it offers additional account level protections such as crypto address whitelisting, which allows customers to restrict withdrawals to addresses only included in the customer’s whitelist.

The Trust will use the Clearing Account in connection with the Clearing Services. While the ETH Custodian maintains records of the Trust’s ETH balance in its Clearing Account, the actual ETH relating to the Trust’s Clearing Account is held in omnibus wallets by the ETH Custodian, meaning that ETH owned by multiple customers is held in the same wallet and at the same address on the Ethereum Blockchain. The Trust’s Clearing Account balance therefore represents an omnibus claim on the ETH Custodian’s ETH held in such wallets, and the Trust does not have an identifiable claim to specific ETH. The ETH Custodian holds the ETH across a combination of omnibus hot wallets and cold wallets. The Sponsor has no control over, and the ETH Custodian does not disclose to the Sponsor, the amount of ETH that the ETH Custodian holds in connection with the Trust’s Clearing Account in omnibus hot wallets, as compared to omnibus cold wallets. The ETH Custodian could hold substantially all ETH connected to the Trust’s Clearing Account in omnibus hot wallets.

Gemini BSA/AML Program

The ETH Custodian has adopted the Gemini BSA/AML Program for its digital asset trading platform and custody service in an effort to maintain the highest possible compliance with applicable laws and regulations relating to anti-money laundering in the U.S. and other countries where it conducts business. This program includes robust internal policies, procedures and controls that combat any attempted use of Gemini for illegal or illicit purposes, including a customer identification program, annual training of all employees and officers in anti-money laundering regulation, filing of Suspicious Activity Reports and Currency Transaction Reports with the U.S. Financial Crimes Enforcement Network and annual internal and independent audits of the Gemini BSA/AML Program.

Website Security

The ETH Custodian has implemented certain security policies and practices to enhance security on its website, including through the use of two-factor authentication for certain user actions, such as withdrawals; a requirement for strong passwords from its users, which are cryptographically hashed using modern standards; encryption of sensitive user information, both in transit and at rest; the application of rate-limiting procedures to certain account operations such as login attempts to thwart brute force attacks; the transmission of website data over encrypted transport layer security connections; the leveraging of content-security policy and HTTP strict transport security features in modern browsers; partnerships with enterprise vendors to mitigate-potential distributed denial-of-service attacks; and the use of separate access controls on internal-only sections of the ETH Custodian’s website.

Internal Control

In addition to the security policies and procedures discussed above, the ETH Custodian has also instituted the following internal controls: multiple signatories are required to transfer funds out of cold storage; the ETH Custodian’s Chief Executive Officer and President are unable to individually or jointly transfer funds out of cold storage; all private keys are stored offsite in secure facilities; all employees undergo criminal and credit background checks, and are subject to ongoing background checks throughout their employment; and all remote-access by employees uses public-key authentication (e.g. no passwords, one-time passwords or other phishable credentials are used).

Insurance

The ETH Custodian, as custodian of the Trust’s ETH, is responsible for securing the Trust’s ETH. The ETH Custodian currently maintains $[ ] million in specie coverage for digital assets held in its cold storage system, which the ETH Custodian has represented to the Trust applies to all customer assets held at the ETH Custodian, including the Trust’s assets. Such insurance is shared with other customers and is not specific to the Trust. The Trust is not a named beneficiary under the ETH Custodian’s insurance policies, though the ETH Custodian has represented to the Sponsor that the insurance covers customer losses, including losses suffered by the Trust, arising from specified events, including fraud, theft, and cyber-security breaches. For more information, see “RISK FACTORS—The Lack Of Full Insurance And Shareholders’ Limited Rights Of Legal Recourse Against The Trust, Trustee, Sponsor, Administrator, Cash Custodian And ETH Custodian Expose The Trust And Its Shareholders To The Risk Of Loss Of The Trust’s ETH For Which No Person Or Entity Is Liable.ˮ The amounts and continuing availability of this coverage are subject to change at the ETH Custodian’s sole discretion. The ETH Custodian also maintains separate commercial crime insurance coverage for digital assets custodied in its “hot wallet”. To date, the ETH Custodian has never experienced a loss due to unauthorized access from its hot wallet or the cold storage vaults.

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Each Liquidity Provider is required to maintain a Liquidity Provider ETH account at the Trust’s ETH Custodian.

The Trust’s Transfer Agent will facilitate the settlement of Shares in response to the placement of creation orders and redemption orders from Authorized Participants. The Trust generally does not intend to hold cash or cash equivalents except in connection with cash creation and redemption orders. However, there may be situations where the Trust will unexpectedly hold cash on a temporary basis.

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FORM OF SHARES

Registered Form

Shares are issued in registered form in accordance with the Trust Agreement. The Transfer Agent has been appointed registrar and transfer agent for the purpose of transferring Shares in certificated form. The Transfer Agent keeps a record of all Shareholders and holders of the Shares in certified form in the registry (“Register”). The Sponsor recognizes transfers of Shares in certificated form only if done in accordance with the Trust Agreement. The beneficial interests in such Shares are held in book-entry form through participants and/or accountholders in DTC.

Book Entry

Individual certificates are not issued for the Shares. Instead, Shares are represented by one or more global certificates, which are deposited by the Administrator with DTC and registered in the name of Cede & Co., as nominee for DTC. The global certificates evidence all of the Shares outstanding at any time. Shareholders are limited to (1) participants in DTC such as banks, brokers, dealers and trust companies (“DTC Participants”), (2) those who maintain, either directly or indirectly, a custodial relationship with a DTC Participant (“Indirect Participants”), and (3) those who hold interests in the Shares through DTC Participants or Indirect Participants, in each case who satisfy the requirements for transfers of Shares. DTC Participants acting on behalf of Shareholders holding Shares through such participants’ accounts in DTC will follow the delivery practice applicable to securities eligible for DTC’s Same-Day Funds Settlement System. Shares are credited to DTC Participants’ securities accounts following confirmation of receipt of payment.

DTC

DTC has advised us as follows: It is a limited purpose trust company organized under the laws of the State of New York and is a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities for DTC Participants and facilitates the clearance and settlement of transactions between DTC Participants through electronic book-entry changes in accounts of DTC Participants.

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TRANSFER OF SHARES

The Shares are only transferable through the book-entry system of DTC. Shareholders who are not DTC Participants may transfer their Shares through DTC by instructing the DTC Participant holding their Shares (or by instructing the Indirect Participant or other entity through which their Shares are held) to transfer the Shares. Transfers are made in accordance with standard securities industry practice.

Transfers of interests in Shares with DTC are made in accordance with the usual rules and operating procedures of DTC and the nature of the transfer. DTC has established procedures to facilitate transfers among the participants and/or accountholders of DTC. Because DTC can only act on behalf of DTC Participants, who in turn act on behalf of Indirect Participants, the ability of a person or entity having an interest in a global certificate to pledge such interest to persons or entities that do not participate in DTC, or otherwise take actions in respect of such interest, may be affected by the lack of a certificate or other definitive document representing such interest.

DTC has advised us that it will take any action permitted to be taken by a Shareholder (including, without limitation, the presentation of a global certificate for exchange) only at the direction of one or more DTC Participants in whose account with DTC interests in global certificates are credited and only in respect of such portion of the aggregate principal amount of the global certificate as to which such DTC Participant or Participants has or have given such direction.

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PLAN OF DISTRIBUTION

Buying and Selling Shares

Most investors buy and sell Shares of the Trust in secondary market transactions through brokers. Shares have been approved for listing, subject to notice of issuance, on the Exchange under the ticker symbol “ETHV.” Shares are bought and sold throughout the trading day like other publicly traded securities. When buying or selling Shares through a broker, most investors incur customary brokerage commissions and charges. Shareholders are encouraged to review the terms of their brokerage account for details on applicable charges.

Authorized Participants

The offering of the Trust’s Shares is a best efforts offering. The Trust continuously offers Creation Baskets consisting of [25,000] Shares to Authorized Participants. Authorized Participants pay a transaction fee for each order they place to create or redeem one or more Creation Baskets.

The offering of Creation Baskets is being made in compliance with Rule 2310 of the FINRA Rules. Accordingly, Authorized Participants will not make any sales to any account over which they have discretionary authority without the prior written approval of a purchaser of Shares.

The per share price of shares offered in Creation Baskets on any day will be the total NAV of the Trust calculated shortly after the close of the Exchange on that day divided by the number of issued and outstanding Shares of the Trust. An Authorized Participant is not required to sell any specific number or dollar amount of Shares.

By executing an Authorized Participant Agreement, an Authorized Participant becomes part of the group of parties eligible to purchase Creation Baskets from, and put Creation Baskets for redemption to, the Trust. An Authorized Participant is under no obligation to create or redeem Creation Baskets or to offer to the public Shares of any Creation Basket it does create. Authorized Participants as of the date of this Prospectus are: [Jane Street Capital, LLC, Virtu Americas LLC, and ABN AMRO Clearing USA LLC]. Additional Authorized Participants may be added at any time, subject to the Sponsor’s discretion.

[Jane Street Capital, LLC is an affiliate of JSCT, LLC, a Liquidity Provider of the Trust, since both entities are under the common control and ownership of Jane Street Group, LLC.] Current or future Liquidity Providers may be affiliates of, or have material relationships with, the Trust’s current or future Authorized Participants.

Because new Shares can be created and issued on an ongoing basis, at any point during the life of the Trust, a “distribution,” as such term is used in the 1933 Act, will be occurring. Authorized Participants, other broker-dealers and other persons are cautioned that some of their activities may result in their being deemed participants in a distribution in a manner that would render them statutory underwriters and subject them to the prospectus-delivery and liability provisions of the 1933 Act. Any purchaser who purchases Shares with a view towards distribution of such Shares may be deemed to be a statutory underwriter. In addition, an Authorized Participant, other broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a Creation Basket from the Trust, breaks the Creation Basket down into the constituent Shares and sells the Shares to its customers; or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for the Shares. In contrast, Authorized Participants may engage in secondary market or other transactions in Shares that would not be deemed “underwriting.” For example, an Authorized Participant may act in the capacity of a broker or dealer with respect to Shares that were previously distributed by other Authorized Participants. A determination of whether a particular market participant is an underwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that would lead to designation as an underwriter and subject them to the prospectus-delivery and liability provisions of the 1933 Act.

Dealers who are neither Authorized Participants nor “underwriters” but are nonetheless participating in a distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with Shares that are part of an “unsold allotment” within the meaning of Section 4(a)(3)(C) of the 1933 Act, would be unable to take advantage of the prospectus-delivery exemption provided by Section 4(a)(3) of the 1933 Act.

The Authorized Participants may be indemnified by the Sponsor for (i) any material breach by the Sponsor of any provision of the Authorized Participant Agreement that relates to the Sponsor; (ii) any representations provided by the Sponsor relating to the Authorized Participant Agreement, the Registration Statement, the Prospectus or the issuance or distribution of Shares that is false or misleading in any material respect or omits material information necessary to make the statement contained therein complete; (iii) any failure on the part of the Sponsor to perform any obligation of the Sponsor set forth in the Authorized Participant Agreement; (iv) any

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failure by the Sponsor to comply with applicable laws in connection with the Authorized Participant Agreement and the offer, sale, creation, redemption and marketing of the Shares; (v) actions of the Authorized Participant taken in reasonable reliance upon any instructions issued or representations reasonably believed by it to be genuine and to have been given by or on behalf of the Sponsor; (vi) any (1) representation by the Sponsor that is not consistent with the Trust’s then-current Registration Statement made in connection with the offer or the solicitation of an offer to buy or sell Shares or applicable prospectus, and (2) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally declared effective by the SEC or in any amendment thereof or applicable prospectus, or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (vii) any untrue statement or alleged untrue statement of a material fact, or omission or alleged omission of a material fact, made in any marketing materials prepared by or for the Sponsor or Trust and/or furnished to the Authorized Participant by the Sponsor or the Trust, or any disclosure provided by the Sponsor to the Authorized Participant for inclusion in marketing materials prepared by the Authorized Participant. Notwithstanding the foregoing, the Authorized Participants will not be entitled to receive a discount or commission from the Trust or the Sponsor for their purchases of Creation Baskets.

Seed Capital Investor

The price of the seed Creation Baskets was determined as described above and such Shares could be sold at different prices if sold by the Seed Capital Investor at different times.

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CREATION AND REDEMPTION OF SHARES

The Trust creates and redeems Shares from time to time, but only in one or more Creation Baskets. Creation Baskets are only made in exchange for delivery to the Trust of the amount of ETH represented by the Creation Baskets being created (subject to In-Kind Regulatory Approval), or an amount of cash sufficient purchase such amount of ETH, the amount of which is equal to the combined NAV of the number of Shares included in the Creation Baskets being created determined as of 4:00 p.m. Eastern time on the day the order to create Creation Baskets is properly received. Creation Baskets are only redeemed in exchange for delivery to the Trust of the amount of Shares represented by the Creation Basket. The Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares. For a redemption in cash, the Sponsor shall arrange for the ETH represented by the Creation Basket to be sold to a Liquidity Provider selected by the Sponsor and the cash proceeds distributed from the Trust’s account at the Cash Custodian to the Authorized Participant. The Liquidity Providers as of the date of this Prospectus, that have agreed to serve as a Liquidity Provider and have consented to be named in this Prospectus are [ ]. Additional Liquidity Providers may be added at any time, subject to the Sponsor’s sole discretion. In the future, subject to In-Kind Regulatory Approval, the Trust may elect to permit Authorized Participants to also deliver or direct the delivery of ETH by third parties, or take delivery or direct the taking of delivery of ETH by third parties, in connection with in-kind subscription or redemption transactions. Based on the current price of ETH and corresponding size of the Creation Baskets, the Sponsor does not believe such size will have a material impact on the arbitrage mechanism.

Authorized Participants are the only persons that may place orders to create and redeem Creation Baskets. Authorized Participants must be (1) registered broker-dealers or other securities market participants, such as banks and other financial institutions, that are not required to register as broker-dealers to engage in securities transactions described below, and (2) DTC Participants. Registered broker-dealers are subject to various requirements of the federal securities laws and rules, including financial responsibility rules such as the customer protection rule, the net capital rule and recordkeeping requirements. There has yet to be definitive regulatory guidance on whether and how registered broker-dealers can comply with these rules with regard to transacting in or holding spot ETH. Until further regulatory clarity emerges regarding whether registered broker-dealers can hold and deal in ETH under such rules, there is a risk that registered broker-dealers participating in the in-kind creation or redemption of Shares for ETH may be unable to demonstrate compliance with such requirements. While compliance with these requirements would be the broker-dealer’s responsibility, a national securities exchange is required to enforce compliance by its member broker-dealers with applicable federal securities law and rules. As a result, the SEC is unlikely to permit an exchange to adopt listing rules for a product if it is not clear that the exchange’s members would be able to comply with applicable rules when transacting in the product as designed. To the extent further regulatory clarity emerges, the Sponsor expects the Exchange to seek In-Kind Regulatory Approval to amend its listing rules to permit the Trust to create and redeem Shares in-kind for ETH, in which Authorized Participants or their designees would deposit ETH directly with the Trust or receive ETH directly from the Trust. However, there can be no assurance as to when such regulatory clarity will emerge, or when the Exchange will seek or obtain In-Kind Regulatory Approval, if at all.

To become an Authorized Participant, a person must enter into an Authorized Participant Agreement with the Sponsor. The Authorized Participant Agreement provides the procedures for the creation and redemption of Creation Baskets and for the delivery, or facilitation of the delivery, of the ETH required for such creation and redemptions. The Authorized Participant Agreement and the related procedures attached thereto may be amended by the Trust or the Sponsor (as the case may be), without the consent of any Shareholder or Authorized Participant. Authorized Participants pay the Transfer Agent a fee for each order they place to create or redeem one or more Creation Baskets. The transaction fee may be reduced, increased or otherwise changed by the Sponsor. Authorized Participants who make deposits (directly in the case of cash creations and, subject to In-Kind Regulatory Approval, indirectly in the case of ETH deposits) with the Trust in exchange for Creation Baskets receive no fees, commissions or other form of compensation or inducement of any kind from either the Trust or the Sponsor, and no such person will have any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares.

Each Authorized Participant will be required to be registered as a broker-dealer under the Exchange Act and a member in good standing with FINRA, or exempt from being or otherwise not required to be licensed as a broker-dealer or a member of FINRA, and will be qualified to act as a broker or dealer in the states or other jurisdictions where the nature of its business so requires. Certain Authorized Participants may also be regulated under federal and state banking laws and regulations. Each Authorized Participant has its own set of rules and procedures, internal controls and information barriers as it determines is appropriate in light of its own regulatory regime.

The following description of the procedures for the creation and redemption of Creation Baskets is only a summary and a Shareholder should refer to the relevant provisions of the Trust Agreement and the form of Authorized Participant Agreement for more detail. The Trust Agreement and form of Authorized Participant Agreement are filed as exhibits to the registration statement of which this Prospectus is a part.

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Authorized Participants will place orders through the Transfer Agent. The Transfer Agent will coordinate with the Sponsor, who will in turn coordinate with the Trust’s ETH Custodian in order to facilitate settlement of the Shares and ETH as described in more detail in the Creation Procedures and Redemption Procedures sections below.

The trading prices of many digital assets, including ETH, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility may persist and the value of the Shares may significantly decline in the future without recovery. The digital asset markets may still be experiencing a bubble or may experience a bubble again in the future. Extreme volatility in the future, including further declines in the trading prices of ETH, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value. The Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of volatility in the price of ETH.

In addition, the use of cash creations and redemptions has transaction costs of buying and selling ETH. These costs include the bid-ask spread along with the operational costs from the labor and overhead involved in calculating, executing, monitoring, and accounting for transactions in the ETH markets and related cash movements. The Trust’s Authorized Participant Agreement provides that transaction costs and slippage related to Creation Basket creation and redemption are the responsibility of the Authorized Participant. Under ordinary circumstances, the Trust does not anticipate that there would be fees or costs related to purchases and sales of ETH because Clearing Services are provided to the Trust without additional charges by the ETH Custodian. To the extent there are unusual or unanticipated fees or costs associated with ETH purchases and sales in connection with creation and redemption activity, the Sponsor would seek to pass these costs to the Liquidity Providers or the Authorized Participants. If unable to do so, the Sponsor would treat these as extraordinary expenses and could decide to seek reimbursement from the Trust to the extent the fees or expenses were paid by the Sponsor on the Trust’s behalf.

Creation Procedures

On any business day, an Authorized Participant may place an order with the Transfer Agent to create one or more Creation Baskets. Currently, creation orders are only accepted in cash. For purposes of processing creation and redemption orders, a “business day” means any day other than a day when the Exchange is closed for regular trading (“Business Day”). Purchase orders must be placed by the order cut-off time for a purchase order on a Business Day (the “Creation Order Cut-Off Time”). The Creation Order Cut-Off Time is 3:59:59 p.m. Eastern time on a trade date or as otherwise communicated by the Sponsor. The day on which an order is received by the Transfer Agent is considered the purchase order date.

Prior to the delivery of Creation Baskets for a purchase order, the Authorized Participant must also have wired to the Transfer Agent the nonrefundable transaction fee due for the creation order to offset the transfer and other transaction costs associated with the issuance of the Creation Basket. Authorized Participants may not withdraw a creation request. The manner by which creations are made is dictated by the terms of the Authorized Participant Agreement. By placing a creation order, an Authorized Participant agrees to facilitate the deposit of cash with the Cash Custodian or ETH, if In-Kind Regulatory Approval is obtained. If an Authorized Participant fails to consummate the foregoing, the order will be cancelled.

The total deposit of cash required to create each Creation Basket is an amount of cash that is in the same proportion to the total assets of the Trust, net of accrued expenses and other liabilities, on the date the order to purchase is properly received, as the number of Shares to be created under the purchase order is in proportion to the total number of Shares outstanding on the date the order is received. On the trade date for a purchase order (the “Creation Trade Date”), following receipt of the purchase order from the Authorized Participant, the Trust shall, in its sole discretion, select a Liquidity Provider and execute a trade to purchase ETH from that Liquidity Provider in the amount of the Creation Basket Deposit (the calculation of which is explained below), with the purchased ETH to be delivered by the Liquidity Provider on the Creation Settlement Date in exchange for a cash price to be delivered by the Trust on Creation Settlement Date. The Liquidity Provider, not the Authorized Participant, shall be responsible for delivering ETH to the Trust.

Subject to In-Kind Regulatory Approval, of which there can be no assurance that such approval will ever be obtained, following an Authorized Participant’s purchase order, the Trust’s ETH Custodian account must be credited with the required ETH by the end of the business day following the purchase order date, or the Trust’s Cash Custodian account must be credited with the required cash by the end of the business day following the purchase order date, as applicable. Upon receipt of the ETH deposit amount in the Trust’s ETH Custodian account, or the cash deposit amount in the Trust’s Cash Custodian account, the ETH Custodian or Cash Custodian, respectively, will notify the Transfer Agent, the Authorized Participant, and the Sponsor that the ETH or cash has been deposited. The Transfer Agent will then direct DTC to credit the number of Shares created to the applicable DTC account.

No Shares will be issued unless and until the ETH Custodian (in the case of in-kind deposits) or Cash Custodian (in the case of cash deposits) has informed the Transfer Agent that the ETH or cash (as applicable) has been received. Disruption of services at the ETH Custodian would have the potential to delay settlement of the ETH related to Share creations. To the extent a Liquidity Provider, is not able to deliver ETH associated with a purchase order as of a specified time on the settlement date, the Authorized Participant will

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have the option to cancel the order, or the Sponsor may select an alternative execution method for the ETH purchase. To the extent that ETH transfers in connection with a creation order are delayed due to congestion or other issues with the Ethereum network, such ETH will not be held in cold storage in until such transfers can occur.

ETH held in the Trust’s ETH Custodian account is the property of the Trust and is not leased, or loaned under any circumstances.

Determination of Required Deposits

The Basket Cash Component changes from day to day. To determine the Basket Cash Component, the Administrator starts by determining the number of ETH held by the Trust as of the opening of business on that trade date, and subtracts the amount of ETH constituting estimated accrued but unpaid fees and expenses of the Trust as of the opening of business on that trade date. Fractions of a ETH smaller than [0.000001] are disregarded for purposes of the computation of the Creation Basket Deposit. Second, this figure, in ETH, is divided by the quotient of the number of Shares outstanding at the opening of business on trade date divided by [25,000]. This produces the Creation Basket Deposit, which is the number of ETH attributable to each Creation Basket as of the opening of business on trade date. Third, the resulting ETH amount is then valued, in cash, at the Index calculated on trade date, or in accordance with the other valuation policies described in the Registration Statement if the Index is not available. This produces the Basket Cash Component. The Creation Basket Deposit, and the Basket Cash Component, so determined is communicated via electronic mail message to all Authorized Participants, and made available on the Sponsor’s website for the Shares. The Exchange also publishes the Creation Basket Deposit determined by the Administrator as indicated above.

By the end of day Eastern time (or such other time as the parties may agree) on the trade date for a purchase order, the Administrator will calculate and transmit the Required Cash Creation Total, consisting of (1) the Basket Cash Component, (2) Cash Amount, and (3) any Purchase Slippage, to the Authorized Participant, which the Authorized Participant shall be responsible for delivering in cash on the settlement date for a purchase order (which shall be the Business Day immediately following the trade date unless the Trust, Sponsor, Authorized Participant agree to a different date) (the “Creation Settlement Date”) to the Trust’s account at the Cash Custodian ETH in cleared, immediately available funds by 1:00 p.m. Eastern time. The Trust acknowledges that, if the actual cash purchase price of ETH from the Liquidity Provider is below the Basket Cash Component, the Authorized Participant shall be entitled to retain the difference and the Required Cash Creation Total shall be reduced accordingly.

Delivery of Required Deposits

On the Creation Settlement Date, the Authorized Participant who places a purchase order must follow the procedures outlined in the “Creation Procedures” section of this Prospectus. The Trust shall instruct the Cash Custodian to transfer the cash proceeds to the Trust’s Fiat Account. The Liquidity Provider delivers ETH to the Trust’s Clearing Account in exchange for the cash purchase price, a delivery facilitated by the ETH Custodian under the Clearing Agreement. Upon settlement by the ETH Custodian, in its capacity as the provider of Clearing Services pursuant to the Clearing Agreement, of the ETH purchase from the Liquidity Provider and the deposit of ETH in the Trust’s Clearing Account, the Trust instructs the Transfer Agent to release the Shares to the Authorized Participant, and the Transfer Agent directs DTC to credit the number of Shares ordered to the applicable DTC account, by close of business on the Creation Settlement Date and the Creation Order is settled. If the ETH purchase transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant shall have the option to cancel the Creation Order, in which case the Trust will return the Required Cash Creation Total less the Cash Amount to the Authorized Participant and the Shares will not be issued, or the Sponsor may use an alternative execution method for the Trust to purchase ETH, in which case the Authorized Participant agrees and acknowledges it is responsible for any Purchase Slippage and Cash Amount relating to such alternative execution method. The expense and risk of delivery and ownership of cash until such cash has been received in immediately available, cleared federal funds by the Cash Custodian on behalf of the Trust will be borne solely by the Authorized Participant.

Rejection of Purchase Orders

The Sponsor or its designee has the absolute right, but does not have any obligation, to reject any purchase order or Creation Basket Deposit if the Sponsor determines that:

●

the purchase order or Creation Basket Deposit is not in proper form;

●

it would not be in the best interest of the Shareholders of the Trust;

●

the acceptance of the purchase order or the Creation Basket Deposit would have adverse tax consequences to the Trust or its Shareholders;

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●

the acceptance or receipt of the purchase order or the Creation Basket Deposit would, in the opinion of counsel to the Sponsor, be unlawful; or

●

circumstances outside the control of the Trust, the Sponsor, the Marketing Agent or the ETH Custodian or Cash Custodian make it, for all practical purposes impracticable or not feasible to process Creations Baskets (including if the Sponsor determines that the investments available to the Trust at that time will not enable it to meet its investment objective).

None of the Sponsor, the Transfer Agent, the ETH Custodian or the Cash Custodian will be liable for the rejection of any purchase order or Creation Basket Deposit.

Redemption Procedures

The procedures by which an Authorized Participant can redeem one or more Creation Baskets mirror the procedures for the creation of Creation Baskets with an additional safeguard on ETH or cash being removed from the Trust’s ETH Custodian or Cash Custodian account. Currently, redemption orders are only processed in cash. On any business day, an Authorized Participant may place an order with the Transfer Agent to redeem one or more Creation Baskets. Redemption orders must be placed by the order cut-off time for an order on a Business Day (the “Redemption Order Cut-Off Time”). The Redemption Order Cut-Off Time is 3:59:59 p.m. Eastern time on a trade date or as otherwise communicated by the Sponsor. A redemption order will be effective on the date it is received by the Transfer Agent (“Redemption Order Date”).

On the trade date for a Redemption Order (the “Redemption Trade Date”), following receipt of the Redemption Order from the Authorized Participant, the Trust shall instruct the ETH Custodian to move the ETH in the amount of the Creation Basket Deposit out of the Trust’s account at the ETH Custodian into the Trust’s Clearing Account. On the Redemption Trade Date, the Trust in its sole discretion, shall select a Liquidity Provider and execute a trade to sell the ETH in exchange for cash to be delivered on the settlement date for a Redemption Order (which shall be the Business Day immediately following the Redemption Trade Date unless the Trust, Sponsor, and Authorized Participant agree to a different date) (the “Redemption Settlement Date”). The Liquidity Providers as of the date of this Prospectus, that have agreed to serve as a Liquidity Provider and have consented to be named in this Prospectus are [ ]. Additional Liquidity Providers may be added at any time, subject to the Sponsor’s sole discretion. The Redemption Settlement Date shall be the immediately following Business Day after the Redemption Trade Date, unless the parties otherwise agree in writing. The Liquidity Provider, not the Authorized Participant, shall be responsible for purchasing ETH from the Trust. By placing a Redemption Order, an Authorized Participant agrees to facilitate the delivery of the Basket of Shares.

Once the Transfer Agent notifies the ETH Custodian or Cash Custodian (as applicable), the Sponsor and the Administrator that the Shares have been received in the Trust’s DTC account, the Administrator instructs the ETH Custodian or Cash Custodian (as applicable) to transfer the redemption ETH or cash amount from the Trust’s ETH Custodian or Cash Custodian account to the Authorized Participant.

ETH held in the Trust’s ETH Custodian account is the property of the Trust and is not leased, or loaned under any circumstances.

Determination of Redemption Distribution

By 8:00 p.m. Eastern time (or such other time as the parties may agree) on the Redemption Trade Date, the Administrator will calculate and transmit the Required Cash Redemption Total that the Trust is responsible for delivering in cash on Redemption Settlement Date to the Authorized Participant’s designated bank account. The Required Cash Redemption Total consists of (1) Basket Cash Component, minus (2) the Cash Amount, and minus (3) any Redemption Slippage. The Trust acknowledges that, if the actual cash sale price realized from selling ETH to the Liquidity Provider is above the Basket Cash Component, the Authorized Participant shall be entitled to retain the difference and the Required Cash Redemption Total shall be increased accordingly.

Delivery of Redemption Distribution

On the Redemption Settlement Date, the Liquidity Provider delivers cash to the Trust’s Fiat Account in exchange for the cash purchase price, as facilitated by the ETH Custodian under the Clearing Agreement. Upon settlement of the ETH sale by the Trust to the Liquidity Provider and the receipt of the Liquidity Provider’s cash in the Trust’s Fiat Account, the Trust instructs the ETH Custodian to transfer the cash to the Trust’s Cash Custodian account. The Trust then instructs the Transfer Agent to deliver the Authorized Participant’s Shares in the Creation Basket Deposit back to the Trust, in exchange for which the Trust instructs the Cash Custodian to transfer the Required Cash Redemption Total to the Authorized Participant’s designated bank account and the Redemption Order is settled. If the ETH sale transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant shall have the option to cancel the Redemption Order, in which case the Trust will retain its ETH and the Authorized Participant will retain the associated Shares

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and will not receive any cash, or the Sponsor may use an alternative execution method for the Trust to sell ETH, in which case the Authorized Participant agrees and acknowledges it is responsible for any Redemption Slippage and Cash Amount relating to such alternative execution method. If the Trust’s DTC account has not been credited with all of the Creation Baskets to be redeemed by such time, the redemption distribution will also be delayed.

Suspension or Rejection of Redemption Orders

The Sponsor may, in its discretion, suspend the right of redemption, or postpone the redemption settlement date, (1) for any period during which the Exchange is closed other than customary weekend or holiday closings, or trading on the Exchange is suspended or restricted, (2) for any period during which an emergency exists as a result of which delivery, disposal or evaluation of ETH is not reasonably practicable, or (3) for such other period as the Sponsor determines to be necessary for the protection of the Shareholders. For example, the Sponsor may determine that it is necessary to suspend redemptions to allow for the orderly liquidation of the Trust’s assets. If the Sponsor has difficulty liquidating the Trust’s positions, e.g., because of a market disruption event or an unanticipated delay in the liquidation of a position in an over the counter contract, it may be appropriate to suspend redemptions until such time as such circumstances are rectified. If any of these events occurs at a time when an Authorized Participant intends to redeem Shares, and the price of ETH decreases before such Authorized Participant is able to complete such redemption order, such Authorized Participant may sustain a loss with respect to the amount that it would have been able to obtain in exchange for the ETH received from the Trust upon the redemption of its Shares, had the redemption taken place when such Authorized Participant originally intended it to occur. As a consequence, Authorized Participants may reduce their trading in Shares during periods of suspension, decreasing the number of potential buyers of Shares in the secondary market and, therefore, decreasing the price a Shareholder may receive upon sale. None of the Sponsor, the person authorized to take redemption orders in the manner provided in the Authorized Participant Agreement, the provider of Clearing Services, the Cash Custodian or the ETH Custodian will be liable to any person or in any way for any loss or damages that may result from any such suspension or postponement. To the extent that the Sponsor suspends the right of redemption, the Trust will notify Shareholders in a prospectus supplement and a current report on Form 8-K or in its annual or quarterly reports.

Redemption orders must be made in whole Creation Baskets. The Sponsor acting by itself or through the person authorized to take redemption orders in the manner provided in the Authorized Participant Agreement may, in its sole discretion, reject any redemption order (1) the Sponsor determines not to be in proper form, (2) the fulfillment of which its counsel advises may be illegal under applicable laws and regulations, or (3) if circumstances outside the control of the Sponsor, the person authorized to take redemption orders in the manner provided in the Authorized Participant Agreement or the ETH Custodian make it for all practical purposes not feasible for the Shares to be delivered under the redemption order. The Sponsor may also reject a redemption order if the number of Shares being redeemed would reduce the remaining outstanding Shares to [25,000] Shares (i.e., 1 Creation Basket) or less.

The Marketing Agent shall notify the Authorized Participant of a rejection or suspension of any redemption order. The Marketing Agent is under no duty, however, to give notification of any specific defects or irregularities nor shall the Marketing Agent or the Trust incur any liability for the failure to give any such notification. The Trust and the Marketing Agent may not revoke a previously accepted redemption order.

Creation and Redemption Transaction Fee

To compensate the Transfer Agent for expenses incurred in connection with the creation and redemption of Creation Baskets, an Authorized Participant is required to pay a transaction fee to the Transfer Agent to create or redeem Creation Baskets, which does not vary in accordance with number of Creation Baskets in such order. The transaction fee may be reduced, increased or otherwise changed by the Sponsor. The Sponsor will notify DTC of any change in the transaction fee and will not implement any increase in the fee for the redemption of baskets until thirty (30) days after the date of notice.

Tax Responsibility

Authorized Participants are responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax or governmental charge applicable to the creation or redemption of Creation Baskets, regardless of whether or not such tax or charge is imposed directly on the Authorized Participant, and agree to indemnify the Sponsor and the Trust if they are required by law to pay any such tax, together with any applicable penalties, additions to tax and interest thereon.

Secondary Market Transactions

As noted, the Trust will create and redeem Shares from time to time, but only in one or more Creation Baskets. The creation and redemption of Creation Baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of ETH (or corresponding amount of cash) equal to the number of Shares included in the Creation Baskets being created or redeemed determined on the day the order to create or redeem Creation Baskets is properly received.

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As discussed above, Authorized Participants are the only persons that may place orders to create and redeem Creation Baskets. Authorized Participants must be registered broker-dealers or other securities market participants, such as banks and other financial institutions that are not required to register as broker-dealers to engage in securities transactions. An Authorized Participant is under no obligation to create or redeem Creation Baskets, and an Authorized Participant is under no obligation to offer to the public Shares of any Creation Baskets it does create.

Authorized Participants that do offer to the public Shares from the Creation Baskets they create will do so at per-Share offering prices that are expected to reflect, among other factors, the trading price of the Shares on the Exchange, the NAV of the Trust at the time the Authorized Participant purchased the Creation Baskets, the NAV of the Shares at the time of the offer of the Shares to the public, the supply of and demand for Shares at the time of sale, and the liquidity of ETH or other portfolio investments. Creation Baskets are generally redeemed when the price per Share is at a discount to the NAV per Share. Shares initially comprising the same Creation Basket but offered by Authorized Participants to the public at different times may have different offering prices. An order for one or more Creation Baskets may be placed by an Authorized Participant on behalf of multiple clients. Authorized Participants who make deposits with the Trust in exchange for Creation Baskets receive no fees, commissions or other forms of compensation or inducement of any kind from either the Trust or the Sponsor and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares. Shares trade in the secondary market on the Exchange.

Shares are expected to trade in the secondary market on the Exchange. Shares may trade in the secondary market at prices that are lower or higher relative to their NAV per Share. The amount of the discount or premium in the trading price relative to the NAV per Share may be influenced by various factors, including the number of Shareholders who seek to purchase or sell Shares in the secondary market and the liquidity of ETH.

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USE OF PROCEEDS

Proceeds received by the Trust from the issuance of Creation Baskets consist of ETH or cash. Deposits of ETH are held by the ETH Custodian on behalf of the Trust. Deposits of cash are delivered to the Cash Custodian, following which the Sponsor shall instruct the Cash Custodian to transfer the cash to the ETH Custodian to enable the ETH Custodian to facilitate the purchase of ETH from Liquidity Providers, followed by the transfer of such ETH to the ETH Custodian, in each case, at the Sponsor’s instruction.

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OWNERSHIP OR BENEFICIAL INTEREST IN THE TRUST

The beneficial interest in the Trust is divided into shares. Each Share of the Trust represents an equal beneficial interest in the net assets of the Trust, and each holder of Shares is entitled to receive such holder’s pro rata share of distributions of income and capital gains, if any.

All Shares are fully paid and non-assessable. No Share will have any priority or preference over any other Share of the Trust. All distributions, if any, will be made ratably among all Shareholders from the assets of the Trust according to the number of Shares held of record by such Shareholders on the record date for any distribution or on the date of termination of the Trust, as the case may be. Except as otherwise provided by the Sponsor, Shareholders will have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Every Shareholder, by virtue of having purchased or acquired a Share, shall have expressly consented and agreed to be bound by the terms of the Trust Agreement.

The Sponsor will have full power and authority, in its sole discretion, without seeking the approval of the Trustee or the Shareholders (a) to establish and designate and to change in any manner and to fix such preferences, voting powers, rights, duties and privileges of the Trust as the Sponsor may from time to time determine, (b) to divide the beneficial interest in the Trust into an unlimited amount of shares, with or without par value, as the Sponsor will determine, (c) to issue shares without limitation as to number (including fractional shares), to such persons and for such amount of consideration, subject to any restriction set forth in the By-Laws, if any, at such time or times and on such terms as the Sponsor may deem appropriate, (d) to divide or combine the shares into a greater or lesser number without thereby materially changing the proportionate beneficial interest of the shares in the assets held, and (e) to take such other action with respect to the shares as the Sponsor may deem desirable. The ownership of Shares will be recorded on the books of the Trust or a transfer or similar agent for the Trust. No certificates certifying the ownership of Shares will be issued except as the Sponsor may otherwise determine from time to time. The Sponsor may make such rules as it considers appropriate for the issuance of share certificates, transfer of Shares and similar matters. The record books of the Trust as kept by the Trust, or any transfer or similar agent, as the case may be, will be conclusive as to the identity of the Shareholders and as to the number of Shares held from time to time by each.

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CONFLICTS OF INTEREST

There are present and potential future conflicts of interest in the Trust’s structure and operation you should consider before you purchase Shares. The Sponsor will use this notice of conflicts as a defense against any claim or other proceeding made. If the Sponsor is not able to resolve these conflicts of interest adequately, it may impact the Trust’s ability to achieve its investment objective.

The officers, directors and employees of the Sponsor do not devote their time exclusively to the Trust. These persons are directors, officers or employees of other entities which may compete with the Trust for their services. They could have a conflict between their responsibilities to the Trust and to those other entities.

The Sponsor has the authority to manage the investments and operations of the Trust, and this may allow it to act in a way that furthers its own interests which may create a conflict with your best interests. Shareholders have very limited voting rights, which will limit their ability to influence matters such as amendment of the Trust Agreement, change in the Trust’s basic investment policy, dissolution of the Trust, or the sale or distribution of the Trust’s assets.

The Sponsor serves as the sponsor to the Trust. The Sponsor may have a conflict to the extent that its trading decisions for the Trust may be influenced by the effect they would have on other funds its affiliates may manage. In addition, the Sponsor may be required to indemnify its officers, directors and key employees with respect to their activities on behalf of other funds, if the need for indemnification arises. This potential indemnification could cause the Sponsor’s assets to decrease. If the Sponsor’s other sources of income are not sufficient to compensate for the indemnification, it could cease operations, which could in turn result in Trust losses and/or termination of the Trust.

Affiliates of the Sponsor, including Van Eck Associates Corporation, have and may in the future issue various exchange traded products and other pooled investment vehicles that provide exposure to certain digital assets in US and non-US jurisdictions. In addition, the Sponsor’s affiliates may engage in trading of ETH across affiliates. The Sponsor has adopted and implemented policies and procedures that are reasonably designed to ensure compliance with applicable law, including a Compliance Manual and Code of Ethics, which address conflicts of interest. Additionally, the Sponsor has adopted policies and procedures requiring that certain personnel pre-clear trading activity in certain digital assets, including ETH. The Sponsor believes that these pre-clearance requirements, in addition to other controls, are reasonably designed to mitigate the risk of conflicts of interest and other impermissible activity.

The Sponsor and affiliates thereof may participate in transactions related to ETH, either for their own account (subject to certain internal employee trading operating practices) or for the account of others, such as clients, and such transactions may occur prior to, during, or after the commencement of this offering. Such transactions may not serve to benefit the Shareholders of the Trust and may have a positive or negative effect on the value of the ETH held by the Trust and, consequently, on the market value of ETH.

Because these parties may trade ETH for their own accounts at the same time as the Trust, prospective Shareholders should be aware that such persons may take positions in ETH which are opposite, or ahead of, the positions taken for the Trust. There can be no assurance that any of the foregoing will not have an adverse effect on the performance of the Trust.

If the Sponsor acquires knowledge of a potential transaction or arrangement that may be an opportunity for the Trust, it will have no duty to offer such opportunity to the Trust. The Sponsor will not be liable to the Trust or the Shareholders for breach of any fiduciary or other duty if Sponsor pursues such opportunity or directs it to another person or does not communicate such opportunity to the Trust. Neither the Trust nor any Shareholder has any rights or obligations by virtue of the Trust Agreement, the trust relationship created thereby, or this Prospectus in such business ventures or the income or profits derived from such business ventures. The pursuit of such business ventures, even if competitive with the activities of the Trust, will not be deemed wrongful or improper.

MarketVector is the index sponsor and index administrator for the MarketVector^TM Ethereum Benchmark Rate and a wholly-owned subsidiary of VanEck, which may create conflicts of interest as a result of such relationship. In addition, CryptoCompare Data Limited is the calculation agent for the MarketVector^TM Ethereum Benchmark Rate and an affiliate of VanEck. Appropriate procedures have been implemented to avoid any conflicts of interest adversely affecting the interests of Shareholders. However, Shareholders should be aware that MarketVector has not taken the interests of the Shareholders into consideration when creating the MarketVector^TMEthereum Benchmark Rate, and MarketVector will have no obligation to take the interests of the Shareholders into account when maintaining, modifying, rebalancing, reconstituting or discontinuing the MarketVector^TMEthereum Benchmark Rate. Actions taken by MarketVector^TM in respect of the MarketVector^TMEthereum Benchmark Rate may have an adverse impact on the value or liquidity of the Shares. The interests of MarketVector and the Shareholders may not be aligned. MarketVector will have no responsibility or liability to the Shareholders.

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VanEck is a minority interest holder in the parent company of Gemini Trust Company, LLC, which is the ETH Custodian, representing less than 1% of its equity. The ETH Custodian serves as a fiduciary and custodian on the Trust’s behalf, and is responsible for safeguarding the ETH, and holding the private keys that provide access to the ETH in the Trust’s ETH Account.

Resolution of Conflicts Procedures

The Trust Agreement provides that whenever a conflict of interest exists between the Sponsor or any of its affiliates, on the one hand, and the Trust or any Shareholders or any other person, on the other hand, the Sponsor will resolve such conflict of interest considering the relative interest of each party (including its own interest) and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable accepted accounting practices or principles.

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DUTIES OF THE SPONSOR

The general fiduciary duties which would otherwise be imposed on the Sponsor (which would make its operation of the Trust as described herein impracticable due to the strict prohibition imposed by such duties on, for example, conflicts of interest on behalf of a fiduciary in its dealings with its beneficiaries), are replaced entirely by the terms of the Trust Agreement (to which terms all Shareholders, by subscribing to the Shares, are deemed to consent).

Additionally, under the Trust Agreement, the Sponsor has the following obligations as a sponsor of the Trust:

●

execute, file, record and/or publish all certificates, statements and other documents and do any and all other things as may be appropriate for the formation, qualification and operation of the Trust and for the conduct of its business in all appropriate jurisdictions;

●

retain independent public accountants to audit the accounts of the Trust;

●

employ attorneys to represent the Trust;

●

select the Trust’s Trustee, administrator, transfer agent, custodian(s), ETH trading platform counterparties and OTC market participant counterparties, index provider, marketing agent(s); insurer(s) and any other service provider(s) and cause the Trust to enter into contracts with such service provider(s);

●

negotiate and enter into insurance agreements to secure and maintain the insurance coverage to the extent described in the Prospectus;

●

develop a marketing plan for the Trust on an ongoing basis and prepare marketing materials regarding the Trust;

●

maintain the Trust’s website;

●

acquire and sell ETH, which may be facilitated by the ETH Custodian, with a view to providing Shareholders with exposure to ETH at a price that reflects the performance of the price of ETH less the expenses of the Trust’s operations, valuing the Trust’s Shares daily based on the reported MarketVector^TMEthereum Benchmark Rate, or any other pricing or valuation methodology adopted by the Sponsor in its discretion (for the avoidance of doubt, the Sponsor may select such subsequent pricing or valuation methodology without Shareholder approval);

●

determine the Trust’s NAV and NAV per Share, and select, remove, change, or replace the pricing or valuation methodology or policies used to value the Trust’s assets and determine NAV and NAV per Share, in its sole discretion;

●

enter into an Authorized Participant Agreement with each Authorized Participant and discharge the duties and responsibilities of the Trust and the Sponsor thereunder;

●

receive directly or through its delegates from Authorized Participants and process or cause its delegates to process properly submitted purchase orders, as described in the Trust Agreement and in the Authorized Participant Agreement;

●

in connection with purchase orders, receive directly or through its delegates the number of ETH and/or cash in an amount equal to the Creation Basket Deposit from Authorized Participants;

●

in connection with purchase orders, after accepting an Authorized Participant’s purchase order and receiving ETH in an amount equal to the Creation Basket Deposit, or the amount of cash needed to purchase the quantity of ETH corresponding to the Creation Basket Deposit, the Sponsor or its delegate will direct the Trust’s appointed transfer agent to credit the Creation Baskets to fill the Participant’s purchase order within one Business Day immediately following the receipt of ETH and/or cash;

●

receive directly or through its delegates from Authorized Participants and process or cause its delegates to process properly submitted redemption orders, as described in the Trust Agreement and in the Authorized Participant Agreement;

●

in connection with redemption orders, after receiving the redemption order specifying the number of Creation Baskets that the Authorized Participant wishes to redeem and after the Trust’s DTC account has been credited with the Creation

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Baskets to be redeemed, the Sponsor or its delegates will transfer to the redeeming Authorized Participant: i) in the case of an in-kind redemption, an amount of ETH equal to the amount of ETH represented by the Creation Baskets being redeemed; ii) in the case of a redemption for cash, the cash proceeds of the sale of such ETH;

●

the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Ethereum network, is generally accepted as the Ethereum network and should therefore be considered the appropriate network for the Trust’s purposes;

●

assist in the preparation and filing of reports and proxy statements (if any) to the Shareholders, the periodic updating of the Registration Statement and Prospectus and other reports and documents for the Trust required to be filed by the Trust with the SEC and other governmental bodies;

●

use its best efforts to maintain the status of the Trust as a grantor trust for U.S. federal income tax purposes, including making such elections, filing such tax returns, and preparing, disseminating and filing such tax reports, as it is advised by its counsel or accountants are from time to time required by any statute, rule or regulation of the United States, any State or political subdivision thereof, or other jurisdiction having taxing authority in respect of the Trust or its administration;

●

monitor all fees charged to the Trust, and the services rendered by the service providers to the Trust, to determine whether the fees paid by, and the services rendered to, the Trust are at competitive rates and are the best price and services available under the circumstances, and if necessary, renegotiate the fee structure to obtain such rates and services for the Trust;

●

perform such other services as the Sponsor believes the Trust may from time to time require; and

●

in general, to carry out any other business in connection with or incidental to any of the foregoing powers, to do everything necessary, suitable or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power herein set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant or growing out of or connected with the aforesaid business or purposes, objects or powers.

To the extent that a law (common or statutory) or in equity, the Sponsor has duties (including fiduciary duties) and liabilities relating thereto to the Trust, the Shareholders or to any other person, the Sponsor will not be liable to the Trust, the Shareholders or to any other person for its good faith reliance on the provisions of the Trust Agreement or this Prospectus unless such reliance constitutes gross negligence, bad faith, or willful misconduct on the part of the Sponsor.

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LIABILITY AND INDEMNIFICATION

Trustee

The Trustee will not be liable for the acts or omissions of the Sponsor, the Transfer Agent or any other person, nor will the Trustee be liable for supervising or monitoring the performance and the duties and obligations of the Sponsor, the Transfer Agent, the Trust or any other person under the Trust Agreement. The Trustee will not be personally liable under any circumstances, except for its own willful misconduct, bad faith or gross negligence. In particular, but not by way of limitation:

(a)

the Trustee will not be personally liable for any error of judgment made in good faith except to the extent such error of judgment constitutes gross negligence on its part;

(b)

no provision of the Trust Agreement will require the Trustee to expend or risk its personal funds or otherwise incur any financial liability in the performance of its rights or powers hereunder, if the Trustee shall have reasonable grounds for believing that the payment of such funds or adequate indemnity against such risk or liability is not reasonably assured or provided to it;

(c)

under no circumstances will the Trustee be personally liable for any representation, warranty, covenant, agreement, or indebtedness of the Trust;

(d)

the Trustee will not be personally responsible for or in respect of the validity or sufficiency of the Trust Agreement or for the due execution hereof by the Sponsor;

(e)

the Trustee has not prepared or verified, and shall have no duty, responsibility or obligation or any liability therefore, for any information, disclosure, or other statement in any memorandum or other documents issued in connection with the sale or transfer of any Shares;

(f)

the Trustee will not be liable or any actions taken or omitted to be taken by it in accordance with the written instructions of the Sponsor;

(g)

the Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Trust Agreement, or to institute, conduct or defend any litigation under the Trust Agreement or any other agreements to which the Trust is a party, at the request, order or direction of the Sponsor unless the Sponsor has offered Delaware Trust Company (in its individual capacity and in its capacity as Trustee) security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred by it (including, without limitation, the reasonable fees and expenses of its counsel) therein or thereby;

(h)

Notwithstanding anything contained herein to the contrary, the Trustee will not be required to take any action in any jurisdiction other than in the State of Delaware if the taking of such action would (i) require the consent, approval, authorization or order of, giving of notice to, or the registration with or taking any action in respect of, any state or other governmental authority or agency of any jurisdiction other than the State of Delaware, (ii) result in any fee, tax or other governmental charge becoming payable by the Trustee under the laws of any jurisdiction or any political subdivision thereof other than the State of Delaware, or (iii) subject the Trustee to personal jurisdiction, other than in the State of Delaware, for causes of action arising from personal acts unrelated to the consummation of the actions of the trustee contemplated by this Trust Agreement;

(i)

the Trustee will incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. The Trustee may accept a certified copy of a resolution of any governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically prescribed herein, the Trustee may for all purposes hereof rely on a certificate, signed by an authorized officer of the Sponsor or any other corresponding directing party, as to such fact or matter, and such certificate will constitute full protection to the Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon;

(j)

in the exercise or administration of the trust hereunder, the Trustee (i) may act directly or through agents or attorneys pursuant to agreements entered into with any of them, and the Trustee will not be liable for the default or misconduct of such agents or attorneys if such agents or attorneys will have been selected by the Trustee in good faith and with

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due care and (ii) may consult with counsel, accountants and other skilled persons to be selected by it in good faith and with due care and employed by it, and it will not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons;

(k)

except as expressly provided in Article III of the Trust Agreement, the Trustee acts solely as a trustee under the Trust Agreement and not in its individual capacity, and all persons having any claim against the Trustee by reason of the transactions contemplated by the Trust Agreement will look only to the Trust’s property for payment or satisfaction thereof; and

(l)

the Trustee will not be liable for punitive, exemplary, consequential, special or other similar damages under any circumstances.

The Trustee, in its individual capacity and in its capacity as Trustee, or any officer, affiliate, director, employee, or agent of the Trustee (each, an “Indemnified Person”) will be entitled to indemnification from the Sponsor or the Trust, to the fullest extent permitted by law, from and against any and all losses, claims, taxes, damages, reasonable expenses, and liabilities (including liabilities under State or federal securities laws) of any kind and nature whatsoever (collectively, “Expenses”), to the extent that such Expenses arise out of or are imposed upon or asserted against such Indemnified Persons with respect to the creation, operation or termination of the Trust, the execution, delivery or performance of the Trust Agreement or the transactions contemplated in the Trust Agreement; provided, however, that the Sponsor and the Trust will not be required to indemnify any Indemnified Person for any Expenses that are a result of the willful misconduct, bad faith or gross negligence of such Indemnified Person. The obligations of the Sponsor and the Trust to indemnify the Indemnified Persons will survive the termination of the Trust Agreement.

Sponsor

The Sponsor will not be under any liability to the Trust, the Trustee or any Shareholder for any action taken or for refraining from the taking of any action in good faith pursuant to the Trust Agreement, or for errors in judgment or for depreciation or loss incurred by reason of the sale of any ETH or other assets held in trust hereunder; provided, however, that this provision will not protect the Sponsor against any liability to which it would otherwise be subject by reason of its own gross negligence, bad faith, or willful misconduct. The Sponsor may rely in good faith on any paper, order, notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment, draft or any other document of any kind prima facie properly executed and submitted to it by the Trustee, the Trustee’s counsel or by any other Person for any matters arising hereunder. The Sponsor will in no event be deemed to have assumed or incurred any liability, duty, or obligation to any Shareholder or to the Trustee other than as expressly provided for herein. The Trust will not incur the cost of that portion of any insurance which insures any party against any liability, the indemnification of which is herein prohibited.

In addition, as described in the Trust Agreement, (i) whenever a conflict of interest exists or arises between the Sponsor or any of its Affiliates, on the one hand, and the Trust, on the other hand; or (ii) whenever the Trust Agreement or any other agreement contemplated herein or therein provides that the Sponsor will act in a manner that is, or provides terms that are, fair and reasonable to the Trust, the Sponsor will resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Sponsor, the resolution, action or terms so made, taken or provided by the Sponsor will not constitute a breach of the Trust Agreement or any other agreement contemplated herein or of any duty or obligation of the Sponsor at law or in equity or otherwise.

The Sponsor and its shareholders, members, directors, officers, employees, Affiliates and subsidiaries (each a “Sponsor Indemnified Party”) will be indemnified by the Trust and held harmless against any loss, liability or expense incurred hereunder without gross negligence, bad faith, or willful misconduct on the part of such Sponsor Indemnified Party arising out of or in connection with the performance of its obligations under the Trust Agreement or any actions taken in accordance with the provisions of the Trust Agreement. Any amounts payable to a Sponsor Indemnified Party under Section 4.06 of the Trust Agreement may be payable in advance or will be secured by a lien on the Trust. The Sponsor will not be under any obligation to appear in, prosecute or defend any legal action that in its opinion may involve it in any expense or liability; provided, however, that the Sponsor may, in its discretion, undertake any action that it may deem necessary or desirable in respect of the Trust Agreement and the rights and duties of the parties hereto and the interests of the Shareholders and, in such event, the legal expenses and costs of any such action will be expenses and costs of the Trust and the Sponsor will be entitled to be reimbursed therefor by the Trust. The obligations of the Trust to indemnify the Sponsor Indemnified Parties will survive the termination of the Trust Agreement.

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PROVISIONS OF LAW

According to applicable law, indemnification of the Sponsor is payable only if the Sponsor determined, in good faith, that the act, omission or conduct that gave rise to the claim for indemnification was in the best interest of the Trust and the act, omission or activity that was the basis for such loss, liability, damage, cost or expense was not the result of negligence or misconduct and such liability or loss was not the result of negligence or misconduct by the Sponsor, and such indemnification or agreement to hold harmless is recoverable only out of the assets of the Trust.

Provisions of Federal and State Securities Laws

This offering is made pursuant to federal and state securities laws. The SEC and state securities agencies take the position that indemnification of the Sponsor that arises out of an alleged violation of such laws is prohibited unless certain conditions are met.

These conditions require that no indemnification of the Sponsor or any underwriter for the Trust may be made in respect of any losses, liabilities or expenses arising from or out of an alleged violation of federal or state securities laws unless: (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the party seeking indemnification and the court approves the indemnification; (ii) such claim has been dismissed with prejudice on the merits by a court of competent jurisdiction as to the party seeking indemnification; or (iii) a court of competent jurisdiction approves a settlement of the claims against the party seeking indemnification and finds that indemnification of the settlement and related costs should be made, provided that, before seeking such approval, the Sponsor or other indemnitee must apprise the court of the position held by regulatory agencies against such indemnification. These agencies are the SEC and the securities administrator of the State or States in which the plaintiffs claim they were offered or sold interests.

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MANAGEMENT; VOTING BY SHAREHOLDERS

The Shareholders of the Trust take no part in the management or control, and have no voice in, the Trust’s operations or business. Except in limited circumstances, Shareholders have no voting rights under the Trust Agreement.

The Sponsor generally has the right to amend the Trust Agreement as it applies to the Trust provided that the Shareholders have the right to vote only if expressly required under Delaware or federal law or rules or regulations of the Exchange, or if submitted to the Shareholders by the Sponsor in its sole discretion. No amendment affecting the Trustee will be binding upon or effective against the Trustee unless consented to by the Trustee in the form of an instruction letter.

The Trust does not have any directors, officers or employees. The creation and operation of the Trust has been arranged by the Sponsor. The Sponsor is not governed by a board of directors. The following persons, in their respective capacities as directors or executive officers of the Sponsor perform certain functions with respect to the Trust that, if the Trust had directors or executive officers, would typically be performed by them. The principals and executive officers of the Sponsor are as follows:

Jan F. van Eck

Mr. van Eck, (born 1963), serves as the Chief Executive Officer and President of the Sponsor and VanEck. Mr. van Eck joined VanEck in 1992 and its Executive Management Team in 1998. Additionally, he is the President and CEO of Van Eck Securities Corporation. Furthermore, Mr. van Eck is a Trustee, the President and Chief Executive Officer of VanEck Vectors ETF Trust, VanEck Funds and VanEck VIP Trust. Furthering VanEck’s mission to anticipate asset classes and trends, Mr. van Eck has created strategic beta, tactical allocation, emerging markets, and commodity-related investment strategies in mutual fund, ETF, and institutional formats. Mr. van Eck founded the VanEck’s ETF business in 2006. One of the world’s largest ETF sponsors, the Van Eck offers ETFs, branded VanEck Vectors®, globally across equity and fixed income asset classes. Mr. van Eck holds a JD from Stanford University and graduated Phi Beta Kappa from Williams College with a major in Economics. He has registrations with the National Futures Association and the Financial Industry Regulatory Authority. Mr. van Eck is a Director of the National Committee on United States-China Relations. He routinely appears on CNBC and Bloomberg Television, and was a 2013 Finalist for Institutional Investor’s Fund Leader of the Year and a 2019 finalist for ETF.com’s Lifetime Achievement Award.

John J. Crimmins

Mr. Crimmins (born 1957) serves as Vice President, Treasurer and Chief Financial Officer of the Sponsor. Mr. Crimmins joined VanEck in 2009 as Vice President of Portfolio Administration. He is primarily responsible for overseeing portfolio accounting and administration. He also serves as Chief Financial Officer and Treasurer to the VanEck Funds, VanEck VIP Trust and VanEck ETF Trust. Prior to joining VanEck, Mr. Crimmins was the Chief Financial, Operating and Compliance Officer for Kern Capital Management LLC from 1997 to 2009 and the Vice President and Director of Mutual Fund Administration for Evergreen Investment Services from 1987 to 1997. Previously, Mr. Crimmins acted as Vice President and Controller for Pilgrim Group for three years and was in public accounting for six years. Mr. Crimmins is a Certified Public Accountant and received a BS in Accounting from St. John’s University.

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BOOKS AND RECORDS

The Trust keeps its books of record and account at the office of the Sponsor located at 666 Third Avenue, 9^th Floor, New York, NY 10017, or at the offices of the Administrator, or such office, including of an administrative agent, as it may subsequently designate upon notice. The books and records are open to inspection by any person who establishes to the Trust’s satisfaction that such person is a Shareholder upon reasonable advance notice at all reasonable times during usual business hours of the Trust.

The Trust keeps a copy of the Trust Agreement on file in the Sponsor’s office which will be available for inspection by any Shareholder at all times during its usual business hours upon reasonable advance notice.

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STATEMENTS, FILINGS, AND REPORTS TO SHAREHOLDERS

After the end of each fiscal year, the Sponsor will cause to be prepared an annual report for the Trust containing audited financial statements. The annual report will be in such form and contain such information as will be required by applicable laws, rules and regulations and may contain such additional information which the Sponsor determines shall be included. The annual report will be filed with the SEC and the Exchange and will be distributed to such persons and in such manner, as is required by applicable laws, rules and regulations.

The Sponsor is responsible for the registration and qualification of the Shares under the federal securities laws. The Sponsor will also prepare, or cause to be prepared, and file any periodic reports or updates required under the Exchange Act. The Administrator will assist and support the Sponsor in the preparation of such reports.

The Administrator will make such elections, file such tax returns, and prepare, disseminate and file such tax reports, as it is advised to by its counsel or accountants or as required from time to time by any applicable statute, rule or regulation.

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FISCAL YEAR

The fiscal year of the Trust is the calendar year. The Sponsor may select an alternate fiscal year.

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GOVERNING LAW; CONSENT TO DELAWARE JURISDICTION

The rights of the Sponsor, the Trust, DTC (as registered owner of the Trust’s global certificate for Shares) and the Shareholders are governed by the laws of the State of Delaware. The Sponsor, the Trust and DTC and, by accepting Shares, each DTC Participant and each Shareholder, consent to the non-exclusive jurisdiction of the courts of the State of Delaware and any federal courts located in Delaware, provided that (i) the forum selection provisions do not apply to suits brought to enforce a duty or liability created by the 1933 Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction and (ii) the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the 1933 Act, the Exchange Act, or the rules and regulations promulgated thereunder. Such consent is not required for any person to assert a claim of Delaware jurisdiction over the Sponsor and the Trust.

Section 22 of the 1933 Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the 1933 Act or the rules and regulations thereunder. Investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

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LEGAL MATTERS

Litigation and Claims

Within the past five years of the date of this Prospectus, there have been no material administrative, civil or criminal actions against the Sponsor, the Trust or any principal or affiliate of any of them. This includes any actions pending, on appeal, concluded, threatened, or otherwise known to them.

Legal Opinion

Clifford Chance US LLP has advised the Sponsor in connection with the Shares being offered and has also rendered an opinion regarding the material federal income tax consequences relating to the shares. Clifford Chance US LLP also advises the Sponsor with respect to its responsibilities as sponsor of, and with respect to matters relating to, the Trust. Certain opinions of counsel will be filed with the SEC as exhibits to the Registration Statement of which this Prospectus is a part.

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EXPERTS

The financial statements of VanEck Ethereum Trust are included herein in reliance on the report of [ ] an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

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MATERIAL CONTRACTS

Administration and Accounting Agreement

For more information, see the description of the Administration and Accounting Agreement provided in “THE TRUST’S SERVICE PROVIDERS—The Administrator” above.

Cash Custody Agreement

For more information, see the description of The Cash Custody Agreement provided in “THE TRUST’S SERVICE PROVIDERS—The Cash Custodian”.

Clearing Agreement

For more information, see the description of The Clearing Agreement provided in “THE TRUST’S SERVICE PROVIDERS—The Clearing Agreement – The ETH Custodian’s Role in the Clearing Agreement”.

Custodial Services Agreement

For more information, see the description of the Custodial Services Agreement provided in “THE TRUST’S SERVICE PROVIDERS—The ETH Custodian” above.

Transfer Agency Agreement

On May 21, 2024, the Trust entered into a transfer agency and service agreement (the “Transfer Agency Agreement”) with State Street.

Pursuant to the Transfer Agency Agreement, the Transfer Agent is generally responsible for the day-to-day administration of the Trust. The responsibilities of the Transfer Agent include: (i) establishing and maintaining each Authorized Participant’s account in the Trust; (ii) receiving and processing orders for the purchase of creation units from the Sponsor or Trust and deliver any cash payment to the custodian; (iii) receiving and processing redemption requests and directions from the Sponsor or Trust; and (iv) recording the issuance of Shares of the Trust and maintaining a record of the total number of Shares of the Trust which are issued and outstanding, based upon data provided to it by the Trust.

The Transfer Agreement will have a one-year initial term and will automatically be renewed for successive one year periods, unless terminated pursuant to the terms of the agreement.

Marketing Agreement

On April 12, 2024, the Sponsor entered into a marketing agent agreement (the “Marketing Agreement”) with the Marketing Agent.

Under the Marketing Agreement, the Sponsor has agreed to develop and prepare, subject to the review and written approval of the Marketing Agent, marketing materials for the Trust, which will comply with all applicable laws, rules and regulations in all material respects. The Sponsor shall prepare and make all regulatory filings for all marketing materials prepared by either party on a timely basis.

The Marketing Agreement also provides that the Marketing Agent shall develop and prepare, subject to the review and written approval of the Sponsor, marketing materials for the Trust, which will comply with all applicable laws, rules and regulations in all material respects. If the Marketing Agent becomes the sponsor of the trust, it shall prepare and make all regulatory filings for all marketing materials prepared by either party on a timely basis.

The Marketing Agent will use its best efforts to market the Shares in accordance with the terms of the Marketing Agreement. In addition, the Marketing Agent will develop a “landing page” for the Trust, which can be part of an existing non-exclusive website. The website may include, among other things, sales material, prospectuses, and closing prices.

Sublicense Agreement

On May 20, 2024, the Trust entered into an index sublicense agreement (the “Sublicense Agreement”) with the Sponsor, pursuant to which the Sponsor has granted the Trust a transferable, worldwide license to use (i) the MarketVector™ Ethereum Benchmark Rate and (ii) the trade name and service mark rights to “Market Vector”. The Sublicense Agreement is effective for three years and shall

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automatically renew for successive one-year terms unless the Trust terminates the agreement in accordance with the terms of the Sublicense Agreement or provides notice of its intent to not renew the Sublicense Agreement.

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following discussion of the material U.S. federal income tax consequences that generally will apply to the purchase, ownership and disposition of Shares by a U.S. Shareholder (as defined below) represents, insofar as it describes conclusions as to U.S. federal income tax law and subject to the limitations and qualifications described therein, the opinion of Clifford Chance US LLP, special U.S. federal income tax counsel to the Sponsor. The discussion below is based on the Code, Treasury Regulations promulgated thereunder and judicial and administrative interpretations of the Code, all as in effect on the date of this Prospectus and all of which are subject to change either prospectively or retroactively. The tax treatment of Shareholders may vary depending upon their own particular circumstances. Certain Shareholders (including but not limited to banks, financial institutions, insurance companies, regulated investment companies, real estate investment trusts, tax-exempt organizations, tax-exempt or tax-advantaged retirement plans or accounts, brokers or dealers, traders, partnerships for U.S. federal income tax purposes, persons holding Shares as a position in a “hedging,” “straddle,” “conversion,” “constructive sale” or other integrated transaction for U.S. federal income tax purposes, persons whose “functional currency” is not the U.S. dollar, persons required for U.S. federal income tax purposes to accelerate the recognition of any item of gross income with respect to the Shares as a result of such income being recognized on an applicable financial statement, Shareholders who do not acquire their Shares solely for cash, or other investors with special circumstances) may be subject to special rules not discussed below. In addition, the following discussion applies only to investors who will hold Shares as “capital assets” (generally, property held for investment). Moreover, the discussion below does not address the effect of any state, local or foreign tax law consequences (or any consequences under any U.S. federal tax law other than U.S. federal income tax law) that may apply to an investment in Shares. Purchasers of Shares are urged to consult their own tax advisers with respect to all U.S. federal, state, local and foreign tax law considerations potentially applicable to their investment in Shares.

For purposes of this discussion, a “U.S. Shareholder” is a Shareholder that is for U.S. federal income tax purposes:

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an individual who is a citizen or resident of the United States;

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a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

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an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

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a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership or other entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Shares, the tax treatment of a partner generally depends upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Shares, the discussion below may not be applicable and we urge you to consult your own tax adviser for the U.S. federal income tax implications of the purchase, ownership and disposition of such Shares.

Taxation of the Trust

The Sponsor and the Trustee will treat the Trust as a “grantor trust” for U.S. federal income tax purposes. In the opinion of Clifford Chance US LLP, although not free from doubt due to the lack of directly governing authority, the Trust should be classified as a “grantor trust” for U.S. federal income tax purposes (and the following discussion assumes such classification). As a result, the Trust itself should not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses should “flow through” to the Shareholders, and the Trustee will report the Trust’s income, gains, losses and deductions to the IRS on that basis. The opinion of Clifford Chance US LLP is not binding on the IRS or any court. Accordingly, there can be no assurance that the IRS will agree with the conclusions of counsel’s opinion and it is possible that the IRS or another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position. Neither the Sponsor nor the Trustee will request a ruling from the IRS with respect to the classification of the Trust for U.S. federal income tax purposes or with respect to any other matter. If the IRS were to assert successfully that the Trust is not classified as a “grantor trust,” the Trust would likely be classified as a partnership for U.S. federal income tax purposes, which may affect the timing and other tax consequences to the Shareholders, and might be classified as a publicly traded partnership that would be taxable as a corporation for U.S. federal income tax purposes, in which case the Trust would be taxed in the same manner as a regular corporation on its taxable income and distributions to Shareholders out of the earnings and profits of the Trust would be taxed to Shareholders as ordinary dividend income. However, due to the uncertain treatment of digital currency for U.S. federal income tax purposes, there can be no assurance in this regard. Except as otherwise indicated, the remainder of this discussion assumes that the Trust is classified as a grantor trust for U.S. federal income tax purposes.

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Taxation of U.S. Shareholders

Shareholders will be treated, for U.S. federal income tax purposes, as if they directly owned a pro rata share of the underlying assets held in the Trust. Shareholders also will be treated as if they directly received their respective pro rata shares of the Trust’s income, if any, and as if they directly incurred their respective pro rata shares of the Trust’s expenses. For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder’s Shares are acquired on the same date and at the same price per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their own tax advisers as to the determination of the tax basis and holding period for the underlying ETH related to such Shares.

Current IRS guidance on the treatment of convertible virtual currencies classifies ETH as “property” that is not currency for U.S. federal income tax purposes and clarifies that ETH could be held as a capital asset, but it does not address several other aspects of the U.S. federal income tax treatment of ETH. Because ETH is a new technological innovation, the U.S. federal income tax treatment of ETH or transactions relating to investments in ETH may evolve and change from those discussed below, possibly with retroactive effect. In this regard, the IRS indicated that it has made it a priority to issue additional guidance related to the taxation of virtual currency transactions, such as transactions involving ETH. While it has started to issue such additional guidance, whether any future guidance will adversely affect the U.S. federal income tax treatment of an investment in ETH or in transactions relating to investments in ETH is unknown. Moreover, future developments that may arise with respect to digital currencies may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income tax purposes. This discussion assumes that any ETH the Trust may hold is properly treated for U.S. federal income tax purposes as property that may be held as a capital asset and is not currency for purposes of the provisions of the Code relating to foreign currency gain and loss.

Although the Trust generally does not intend to sell ETH, it may use ETH to pay certain expenses of the Trust, which under current IRS guidance will be treated as a sale of such ETH, and/or it may periodically sell ETH in an amount sufficient to pay those expenses using fiat currency. If the Trust sells ETH (for example to generate cash to pay fees or expenses) or is treated as selling ETH (for example by using ETH to pay fees or expenses), a Shareholder will recognize gain or loss in an amount equal to the difference between (a) the Shareholder’s pro rata share of the amount realized by the Trust upon the sale and (b) the Shareholder’s tax basis for its pro rata share of the ETH that was sold. A Shareholder’s tax basis for its share of any ETH sold by the Trust should generally be determined by multiplying the Shareholder’s total basis for its share of all of the ETH held in the Trust immediately prior to the sale, by a fraction the numerator of which is the amount of ETH sold, and the denominator of which is the total amount of the ETH held in the Trust immediately prior to the sale. After any such sale, a Shareholder’s tax basis for its pro rata share of the ETH remaining in the Trust should be equal to its tax basis for its share of the total amount of the ETH held in the Trust immediately prior to the sale, less the portion of such basis allocable to its share of the ETH that was sold.

Upon a Shareholder’s sale of some or all of its Shares (other than a redemption), the Shareholder will be treated as having sold the portion or all, respectively, of its pro rata share of the ETH held in the Trust at the time of the sale that is attributable to the Shares sold. Accordingly, the Shareholder generally will recognize gain or loss on the sale in an amount equal to the difference between (a) the amount realized pursuant to the sale of the Shares, and (b) the Shareholder’s tax basis for the portion of its pro rata share of the ETH held in the Trust at the time of sale that is attributable to the Shares sold, as determined in the manner described in the preceding paragraph. Based on current IRS guidance, such gain or loss (as well as any gain or loss realized by a Shareholder on account of the Trust selling ETH) will generally be long-term or short-term capital gain or loss, depending upon whether the Shareholder has a holding period of greater than one year in its pro rata share of the ETH that was sold. The Trust plans to treat a redemption of a some or all of a Shareholder’s Shares, in exchange for cash, in the same manner as a sale of some or all of a Shareholder’s Shares (as described above) for that amount of cash, though no assurance can be provided that the IRS will not take a different position.

Gains or losses from the sale of ETH to fund cash redemptions are expected to be treated as incurred by the Shareholder that is being redeemed, and the amount of such gain or loss generally will equal the difference between (a) the amount realized pursuant to the sale of the ETH, and (b) the Shareholder’s tax basis for the portion of its pro rata share of the ETH held in the Trust that is sold to fund the redemption, as determined in the manner described in the paragraph that is two paragraphs above this one. A redemption of some or all of a Shareholder’s Shares in exchange for the cash received from such sale is not expected to be treated as a separate taxable event to the Shareholder.

An in-kind redemption of some or all of a Shareholder’s Shares in exchange for the underlying ETH represented by the Shares redeemed generally will not be a taxable event to the Shareholder. The Shareholder’s tax basis for the ETH received in the in-kind redemption generally will be the same as the Shareholder’s tax basis for the portion of its pro rata share of the ETH held in the Trust immediately prior to the in-kind redemption that is attributable to the Shares redeemed. The Shareholder’s holding period with respect to the ETH received should include the period during which the Shareholder held the Shares redeemed in kind. A subsequent sale of the ETH received by the Shareholder will be a taxable event, unless a nonrecognition provision of the Code applies to such sale.

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After any sale or redemption of less than all of a Shareholder’s Shares, the Shareholder’s tax basis for its pro rata share of the ETH held in the Trust immediately after such sale or redemption generally will be equal to its tax basis for its share of the total amount of the ETH held in the Trust immediately prior to the sale or redemption, less the portion of such basis which is taken into account in determining the amount of gain or loss recognized by the Shareholder upon such sale or, in the case of a redemption, that is treated as the basis of the ETH received by the Shareholder in the redemption.

If a hard fork occurs in the Ethereum Blockchain, the Trust could temporarily hold both the original ETH and the alternative new asset as the Sponsor determines, in its sole discretion, which asset it believes is generally accepted as ether. The other asset will be treated as an Incidental Right and/or IR Virtual Currency, in accordance with the procedures specified herein. The IRS has held that a hard fork resulting in the creation of new units of cryptocurrency is a taxable event giving rise to ordinary income. The receipt, distribution and/or sale of the new alternative asset may cause Shareholders to incur a U.S. federal income tax liability. While the IRS has not addressed all situations in which airdrops occur, it is clear from the reasoning of the IRS’s current guidance that it generally would treat an airdrop as a taxable event giving rise to ordinary income and it is anticipated that any gain or loss from disposition of any assets received in the airdrop would generally be treated as giving rise to capital gain or loss that generally would be short-term capital gain or loss, unless the holding period of those assets were treated as being greater than one year as of the time they are sold. The Sponsor has committed to cause the Trust to permanently and irrevocably abandon any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future. However, there can be no assurance that these abandonments would be treated as effective for U.S. federal income tax purposes, or that the Sponsor will continue to cause the Trust to permanently and irrevocably abandon any Incidental Rights and IR Virtual Currency if there are future regulatory developments that would make it feasible for the Trust to retain those assets.

3.8% Tax on Net Investment Income

Certain U.S. Shareholders who are individuals are required to pay a 3.8% tax on the lesser of the excess of their modified adjusted gross income over a threshold amount ($250,000 for married persons filing jointly and $200,000 for single taxpayers) or their “net investment income,” which generally includes capital gains from the disposition of property. This tax is in addition to any capital gains taxes due on such investment income. A similar tax applies to estates and trusts. U.S. Shareholders should consult their own tax advisers regarding the effect, if any, this tax may have on their investment in the Shares.

Brokerage Fees and Trust Expenses

Any brokerage or other transaction fee incurred by a Shareholder in purchasing Shares will be treated as part of the Shareholder’s tax basis in the underlying assets of the Trust. Similarly, any brokerage fee incurred by a Shareholder in selling Shares will reduce the amount realized by the Shareholder with respect to the sale. It is also possible that, based on the mechanics associated with redemptions, a Shareholder may recognize some amount of income, expense, gain or loss in connection with redemptions of other Shareholders, based on differences between the prices at which Shareholders generally will be redeemed and the actual prices at which the Trust sells ether.

Shareholders will be required to recognize the full amount of gain or loss upon a sale or deemed sale of ETH by the Trust (as discussed above), even though some or all of the proceeds of such sale are used by the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata shares of each expense incurred by the Trust to the same extent as if they directly incurred the expense. Shareholders who are individuals, estates or trusts, however, may be required to treat some or all of the expenses of the Trust as miscellaneous itemized deductions. An individual may not deduct miscellaneous itemized deductions for tax years beginning after December 31, 2017 and before January 1, 2026. For tax years beginning after December 31, 2025, individuals may deduct certain miscellaneous itemized deductions only to the extent they exceed in the aggregate 2% of the individual’s adjusted gross income.

Similar rules apply to certain miscellaneous itemized deductions of estates and trusts. In addition, such deductions may be subject to phase outs and other limitations under applicable provisions of the Code.

Investment by Certain Retirement Plans

Individual retirement accounts (“IRAs”) and participant-directed accounts under tax-qualified retirement plans are limited in the types of investments they may make under the Code. Potential purchasers of Shares that are IRAs or participant-directed accounts under a Code section 401(a) plan should consult with their own tax advisors as to the tax consequences of a purchase of Shares.

United States Information Reporting and Backup Withholding

The Trustee will file certain information returns with the IRS, and provide certain tax-related information to Shareholders, in connection with the Trust. To the extent required by applicable regulations, each Shareholder will be provided with information regarding its allocable portion of the Trust’s annual income, expenses, gains and losses (if any). A U.S. Shareholder may be subject to United States backup withholding tax in certain circumstances unless it provides its taxpayer identification number and complies with certain certification procedures. Shareholders may be required to meet certain information reporting or certification requirements imposed by the Foreign Account Tax Compliance Act, in order to avoid certain information reporting and withholding tax requirements.

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The amount of any backup withholding will be allowed as a credit against a Shareholder’s U.S. federal income tax liability and may entitle the Shareholder to a refund, provided that the required information is furnished to the IRS in a timely manner.

Taxation in Jurisdictions Other Than the United States

Prospective purchasers of Shares that are based in or acting out of a jurisdiction other than the United States are advised to consult their own tax advisers as to the tax consequences under the laws of such jurisdiction (or any other jurisdiction other than the United States to which they are subject) of their purchase, holding, sale and redemption of or any other dealing in Shares and, in particular, as to whether any value added tax, other consumption tax or transfer tax is payable in relation to such purchase, holding, sale, redemption or other dealing.

PROSPECTIVE SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS BEFORE DECIDING WHETHER TO INVEST IN THE SHARES OF THE TRUST.

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PURCHASES BY EMPLOYEE BENEFIT PLANS

The Employee Retirement Income Security Act of 1974 (“ERISA”) and/or Section 4975 of the Code impose certain requirements on: (i) employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh plans and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to Title I of ERISA and/or Section 4975 of the Code (collectively, “Plans”); and (ii) persons who are fiduciaries with respect to the investment of assets treated as “plan assets” within the meaning of U.S. Department of Labor (the “DOL”) regulation 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA (the “Plan Assets Regulation”), of a Plan. Investments by Plans are subject to the fiduciary requirements and the applicability of prohibited transaction restrictions under ERISA and the Code.

“Governmental plans” within the meaning of Section 3(32) of ERISA, certain “church plans” within the meaning of Section 3(33) of ERISA and “non-U.S. plans” described in Section 4(b)(4) of ERISA, while not subject to the fiduciary responsibility and prohibited transaction provisions of Title I of ERISA or Section 4975 of the Code, may be subject to any federal, state, local, non-U.S. or other law or regulation that is substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans are advised to consult with their counsel prior to an investment in the Shares.

In contemplating an investment of a portion of Plan assets in the Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and circumstances of the Plan, the “Risk Factors” discussed above and whether such investment is consistent with its fiduciary responsibilities. The Plan fiduciary should consider, among other issues, whether: (1) the fiduciary has the authority to make the investment under the appropriate governing plan instrument; (2) the investment would constitute a direct or indirect non-exempt prohibited transaction with a “party in interest” or “disqualified person” within the meaning of ERISA and Section 4975 of the Code respectively; (3) the investment is in accordance with the Plan’s funding objectives; and (4) such investment is appropriate for the Plan under the general fiduciary standards of investment prudence and diversification, taking into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the Plan’s need for sufficient liquidity to pay benefits when due. When evaluating the prudence of an investment in the Shares, the Plan fiduciary should consider the DOL’s regulation on investment duties, which can be found at 29 C.F.R. § 2550.404a-1.

It is intended that: (a) none of the Sponsor, the Trustee, the ETH Custodian, the Cash Custodian or any of their respective affiliates (the “Transaction Parties”) has through this report and related materials provided any investment advice within the meaning of Section 3(21) of ERISA to the Plan in connection with the decision to purchase or acquire such Shares; and (b) the information provided in this report and related materials will not make a Transaction Party a fiduciary to the Plan.

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INFORMATION YOU SHOULD KNOW

This Prospectus contains information you should consider when making an investment decision about the Shares. You should rely only on the information contained in this Prospectus or any applicable prospectus supplement. None of the Trust or the Sponsor has authorized any person to provide you with different information and, if anyone provides you with different or inconsistent information, you should not rely on it. This Prospectus is not an offer to sell the Shares in any jurisdiction where the offer or sale of the Shares is not permitted.

The information contained in this Prospectus was obtained from us and other sources we believe to be reliable.

You should disregard anything we said in an earlier document that is inconsistent with what is included in this Prospectus or any applicable prospectus supplement. Where the context requires, when we refer to this “Prospectus,” we are referring to this Prospectus and (if applicable) the relevant prospectus supplement.

You should not assume that the information in this Prospectus or any applicable prospectus supplement is current as of any date other than the date on the front page of this Prospectus or the date on the front page of any applicable prospectus supplement.

We include cross references in this Prospectus to captions in these materials where you can find further related discussions. The table of contents tells you where to find these captions.

- 134 -

SUMMARY OF PROMOTIONAL AND SALES MATERIAL

The Trust expects to use the following sales material it has prepared:

☐

the Trust’s website, [ ] ; and

☐

the Trust Fact Sheet found on the Trust’s website.

The materials described above are not a part of this Prospectus or the registration statement of which this Prospectus is a part.

- 135 -

INTELLECTUAL PROPERTY

The Sponsor owns trademark registrations for the Trust. The Sponsor relies upon these trademarks through which it markets its services and strives to build and maintain brand recognition in the market and among current and potential investors. So long as the Sponsor continues to use these trademarks to identify its services, without challenge from any third party, and properly maintains and renews the trademark registrations under applicable laws, rules and regulations, it will continue to have indefinite protection for these trademarks under current laws, rules and regulations.

The Sponsor also owns trademark registrations for the Sponsor. The Sponsor relies upon these trademarks through which it markets its services and strives to build and maintain brand recognition in the market and among current and potential investors. So long as the Sponsor continues to use these trademarks to identify its services, without challenge from any third party, and properly maintains and renews the trademark registrations under applicable laws, rules and regulations; it will continue to have indefinite protection for these trademarks under current laws, rules and regulations.

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WHERE YOU CAN FIND MORE INFORMATION

The Trust has filed a registration statement on Form S-1 with the SEC under the 1933 Act. This Prospectus does not contain all of the information set forth in the registration statement (including the exhibits to the registration statement), parts of which have been omitted in accordance with the rules and regulations of the SEC. For further information about the Trust or the Shares, please refer to the registration statement, which is available online at www.sec.gov.

Information about the Trust and the Shares can also be obtained from the Trust’s website, which is [ ]. The Trust’s website address is only provided here as a convenience to you and the information contained on or connected to the website is not part of this Prospectus or the registration statement of which this Prospectus is part. The Trust is subject to the informational requirements of the Exchange Act and will file certain reports and other information with the SEC under the Exchange Act.

The reports and other information is available online at www.sec.gov.

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PRIVACY POLICY

The Trust and the Sponsor may collect or have access to certain nonpublic personal information about current and former Shareholders. Nonpublic personal information may include information received from Shareholders, such as a Shareholder’s name, social security number and address, as well as information received from brokerage firms about Shareholder holdings and transactions in Shares of the Trust.

The Trust and the Sponsor do not disclose nonpublic personal information except as required by law or as described in their Privacy Policy. In general, the Trust and the Sponsor restrict access to the nonpublic personal information they collect about Shareholders to those of their and their affiliates’ employees and service providers who need access to such information to provide products and services to Shareholders.

The Trust and the Sponsor maintain safeguards that comply with federal law to protect Shareholders’ nonpublic personal information. These safeguards are reasonably designed to (1) ensure the security and confidentiality of Shareholders’ records and information, (2) protect against any anticipated threats or hazards to the security or integrity of Shareholders’ records and information, and (3) protect against unauthorized access to or use of Shareholders’ records or information that could result in substantial harm or inconvenience to any Shareholder.

Third-party service providers with whom the Trust and the Sponsor share nonpublic personal information about Shareholders must agree to follow appropriate standards of security and confidentiality, which includes safeguarding such nonpublic personal information physically, electronically and procedurally.

A copy of the Sponsor’s current Privacy Policy, which is applicable to the Trust, is provided to Shareholders annually and is also available at www.vaneck.com.

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APPENDIX A

GLOSSARY OF DEFINED TERMS

In this Prospectus, each of the following terms have the meanings set forth after such term:

“1933 Act”: The Securities Act of 1933.

“1940 Act”: Investment Company Act of 1940.

“Administrator”: State Street Bank and Trust Company.

“Advisers Act”: Investment Advisers Act of 1940.

“Authorized Participant”: One that purchases or redeems Creation Baskets from or to the Trust.

“Authorized Participant Agreement”: An agreement entered into by an Authorized Participant, the Sponsor and the Trustee that provides the procedures for the creation and redemption of Baskets.

“Cash Custodian”: State Street Bank and Trust Company.

“Cash Custody Agreement”: The agreement pursuant to which the Cash Custodian acts as custodian for the Trust’s cash and non-ETH assets, if any.

“Custody Agreement”: The agreement which establishes the rights and responsibilities the ETH Custodian, the Sponsor and the Trust with respect to the custody of the Trust’s ETH.

“Business Day”: Any day other than a day when the Exchange or the New York Stock Exchange is closed for regular trading.

“CBDC”: Central Bank Digital Currencies.

“CEA”: Commodity Exchange Act of 1936.

“CFPB”: The U.S. Consumer Financial Protection Bureau.

“CFTC”: The U.S. Commodity Futures Trading Commission.

“Code”: Internal Revenue Code of 1986, as amended.

“Creation Basket”: A block of [25,000] Shares used by the Trust to issue or redeem Shares.

“Creation Basket Deposit”: The total deposit required to create each basket.

“DOL”: The U.S. Department of Labor, responsible for promulgating and enforcing rules under ERISA.

“DSTA”: The Delaware Statutory Trust Act.

“DTC”: The Depository Trust Company. DTC will act as the securities depository for the Shares.

“DTC Participant”: An entity that has an account with DTC.

“ERISA”: The Employment Retirement Income Security Act of 1974.

“ETH Account”: The special account opened by the ETH Custodian for the purpose of holding the Trust’s ETH and facilitating the transfer of ETH required for the operation of the Trust.

“ETH Custodian”: Gemini Trust Company, LLC.

“ETH Futures”: Futures contracts for ETH recently launched on major, established, and regulated U.S. commodity futures exchanges.

Appendix A-1

“Ethereum network”: The decentralized, open source protocol, peer-to-peer electronic network that comprises the infrastructure of Ethereum.

“Exchange”: The Cboe BZX Exchange, Inc.

“Exchange Act”: The Securities Exchange Act of 1934.

“Expenses”: Any and all losses, claims, taxes, damages, reasonable expenses, and liabilities (including those under State or federal securities laws) of any kind of nature whatsoever for which an Indemnified Person will be entitled to Indemnification, to the fullest extent permitted by law, from the Sponsor or the Trust.

“FinCEN”: The U.S. Department of Treasury Financial Crimes Enforcement Network.

“FINRA”: Financial Industry Regulatory Authority, formerly the National Association of Securities Dealers.

“IIV”: Intraday indicative value.

“Incidental Rights”: Rights to acquire, or otherwise establish dominion and control over, any virtual currency or other asset or right, other than ETH, which rights are incident to the Trust’s ownership of ETH and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust. The Sponsor shall cause the Trust to irrevocably abandon Incidental Rights.

“Indemnified Person”: The Trustee or any officer, affiliate, director, employee, or agent of the Trustee who is entitled to indemnification from the Sponsor or the Trust.

“Indirect Participants”: Banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly.

“IR Virtual Currency”: Any virtual currency tokens, or other asset or right, that is not ETH, and is acquired by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right.

“IRA”: Individual retirement account.

“IRS”: U.S. Internal Revenue Service.

“Marketing Agent”: Van Eck Securities Corporation.

“MarketVector”: MarketVector Indexes GmbH, the sponsor of MarketVector^TM Ethereum Benchmark Rate.

“NAV”: Net asset value of the Trust.

“NFA”: National Futures Association.

“OTC”: Over-the-counter market.

“Plans”: Employee benefit plans and/or certain other plans and arrangements subject to Title I of ERISA and/or Section 4975 of the Code.

“Plan Assets Regulation”: U.S. Department of Labor (DOL) Regulation 29 C.F.R. §2510.3-101, as modified by Section 3(42) of ERISA, which defines plan assets.

“Redemption Order Date”: The date a redemption order is received in satisfactory form and approved by the Marketing Agent.

“Register”: The record of all shareholders and holders of the Shares in certificated form kept by the Administrator.

“SEC”: The U.S. Securities and Exchange Commission.

“Shares”: Common shares representing fractional undivided beneficial interests in the Trust.

“Shareholders”: Holders of Shares.

Appendix A-2

“Transfer Agent”: State Street Bank and Trust Company.

“Sponsor Indemnified Party”: The Sponsor and its shareholders, members, directors, officers, employees, Affiliates and subsidiaries who are indemnified by the Trust and held harmless against any loss, liability, or expense incurred arising out of or in connection with the performance of its obligations under or actions taken according to the Trust Agreement, except for those incurred as a result of gross negligence, bad faith, or willful misconduct.

“The Sponsor”: VanEck Digital Assets, LLC, a Delaware limited liability company.

“The Sponsor Fee”: The unified fee of [ ]% to be paid to the Sponsor by the Trust as compensation for services performed under the Trust Agreement.

“The Trust”: VanEck Ethereum Trust.

“Trust Agreement”: The Amended and Restated Declaration of Trust and Trust Agreement of VanEck Ethereum Trust, dated as of April 18, 2024.

“Trustee”: Delaware Trust Company, a Delaware trust company.

“VanEck”: Van Eck Associates Corporation.

“You”: The owner or holder of Shares.

Appendix A-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

[To be filed by amendment]

Appendix A-1

VanEck Ethereum Trust

STATEMENT OF ASSETS AND LIABILITIES

At May 20, 2024

ASSETS:

Cash	$	100,000
Total Assets		100,000

LIABILITIES:

Total Liabilities		–
Commitments and contingent liabilities (Note 6)		–
NET ASSETS	$	100,000

Shares issued and outstanding (a)		2,000
Net Asset Value per Share (Note 2)		50.00

(a)	No par value, unlimited amount authorized

Appendix A-2

See Notes to Financial Statement

Appendix A-3

NOTES TO FINANCIAL STATEMENT

May 20, 2024

Note 1. Organization:

The VanEck Ethereum Trust (the “Trust”), a Delaware statutory trust, is an exchange-traded fund that issues common shares of beneficial interest in an ownership of the Trust. The shares are traded on the Cboe BZX Exchange, Inc. (the “Exchange”). The Trust’s investment objective is to reflect the performance of ether (“ETH”) less the operating expenses of the Trust. The Trust is managed and controlled by VanEck Digital Assets, LLC (the “Sponsor”), a wholly-owned subsidiary of Van Eck Associates Corporation (“VanEck”). The Delaware Trust Company, is the “Trustee” of the Trust. The Trust had no operations other than the initial seed transaction.

Note 2. Significant Accounting Policies:

A.	Basis of Preparation and Use Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows accounting and reporting requirements of Accounting Standards Codification (“ASC”) 946 Financial Services—Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended.

Cash

Cash represents cash deposits held at a major financial institution and is subject to credit risk to the extent its balance exceeds the federally insured limits. As of May 20, 2024, the Trust’s cash balance did not exceed the federal insured limits.

C.	Investment Valuation

The Trust values its investments in ETH and other assets and liabilities at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.

The Trust identifies and determines the ETH principal market (or in the absence of a principal market, the most advantageous market) for GAAP purposes consistent with the application of fair value measurement framework in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 as of 4:00 p.m. Eastern time. Under ASC 820, a principal market is the market with the greatest volume and activity level for the asset or liability. The determination of the principal market will be based on the market with the greatest volume and level of activity that can be accessed. The Sponsor on behalf of the Trust will determine in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (observable inputs) or they may be internally developed (unobservable inputs). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The three levels of the fair value hierarchy are as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and

Level 3 – Unobservable inputs where there are little or no market activity for the asset or liability, including the Trust’s assumptions used in determining the fair value of investments.

Appendix A-4

D.	Ethereum

ETH transactions are accounted for on trade date. Realized gains and losses on sale of ETH are determined based on the average cost method. Proceeds received by the Trust from the issuance of creation baskets consist of ETH. Such deposits are held by the custodian on behalf of the Trust until (i) delivered out in connection with redemptions of creation baskets or (ii) sold by the Sponsor, which may be facilitated by the custodian, to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor.

For accounting purposes only, the Trust is an investment company and, therefore, will apply the specialized accounting and reporting guidance ASC Topic 946. Under ASC Topic 946, the average cost method is an accepted method to determine realized gains and losses on the sale of ETH.

There was no ETH, held as of May 20, 2024.

E.	Calculation of Net Asset Value

On each business day, at 4:00 p.m. EST, the net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair value of total assets held by the Trust. The administrator computes the net asset value per Share by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made.

F.	Federal Income Taxes

The Trust is treated as a grantor trust for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are passed through to the holders of Shares of the Trust. The Sponsor has reviewed the tax positions as of May 20, 2024, and has determined that no provision for income tax is required in the Trust’s financial statements.

Note 3. Trust Expenses and Other Agreements

The Trust will pay to the Sponsor a unified fee (the “Sponsor Fee”) that will accrue daily. The Sponsor has agreed to pay all operating expenses (except for litigation expenses and other extraordinary expenses) out of the Sponsor Fee. The Sponsor from time to time will sell ETH, which may be facilitated by the custodian, in such quantity as is necessary to permit payment of the Sponsor Fee and Trust expenses and liabilities not assumed by the Sponsor.

The Trustee’s fee is paid by the Sponsor and is not a separate expense of the Trust.

The Trust will custody its ETH at Gemini Trust Company, LLC (the “ETH Custodian”), a regulated third-party custodian that carries insurance and is chartered as a trust company under the New York Banking Law and is responsible for safekeeping of ETH owned by the Trust.

State Street Bank and Trust Company serves as the Trust’s administrator, transfer agent and cash custodian.

Note 4. Related Parties

The Sponsor is considered to be a related party to the Trust.

MarketVector Indexes GmbH is the index sponsor and index administrator for the MarketVector Ethereum Benchmark Rate, which is used by the Trust to determine its net asset value. MarketVector Indexes GmbH is an indirectly wholly-owned subsidiary of Van Eck Associates Corporation.

Van Eck Securities Corporation, a marketing agent to the Trust, is a wholly owned-subsidiary of VanEck.

Van Eck Associates Corporation is the initial seed investor on May 20, 2024.

Note 5. Capital Share Transactions

Investors can buy and sell Shares of the Trust in secondary market transactions through brokers. Shares trade on the Exchange under the ticker symbol ETHV. Shares are bought and sold throughout the trading day like other publicly traded securities.

Appendix A-5

The Trust continuously offers the Trust Shares in creation baskets consisting of 25,000 Shares to authorized participants. Authorized participants pay a transaction fee for each order they place to create or redeem one or more creation baskets. The Administrator calculates the cost to purchase (or sell in the case of a redemption order) the amount of ETH represented by the baskets being created (or redeemed); the amount of ETH represented is equal to the combined NAV of the number of Shares included in the baskets being created (or redeemed).

The Trust creates and redeems Shares, but only in one or more creation baskets. Creation baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of ETH represented by the baskets being created or redeemed, the amount of which is equal to the combined NAV of the number of Shares included in the baskets being created or redeemed determined as of 4:00 p.m. EST on the day the order to create or redeem baskets is properly received. Only authorized participants may place orders to create and redeem baskets through the transfer agent. The transfer agent will coordinate with the Trust’s custodian in order to facilitate settlement of the Shares and ETH.

Share activity is as follows:

	Shares		Amount
Shares issued	2,000	(a)	$	100,000
Shares redeemed	—			—
Net increase	2,000		$	100,000

(a)	Van Eck Associates Corporation is the sole shareholder as of May 20, 2024.

Note 6. Commitments and Contingent Liabilities

In the normal course of business, the Trust enters into contracts that contain a variety of general indemnifications. The Trust’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, the Sponsor believes the risk of loss under these arrangements to be remote.

Appendix A-6

Note 7. Concentration Risk

Substantially all of the Trust’s assets are holdings of ETH, which creates a concentration risk associated with fluctuations in the value of ETH due to number of factors. Accordingly, a decline in the value of ETH will have an adverse effect on the value of the Shares of the Trust. Factors that may have the effect of causing a decline in the value of ETH include high volatility, which could have a negative impact on the performance of the Trust. Ethereum exchanges are relatively new and, in some cases, unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust. The value of the Shares depends on the development and acceptance of the Ethereum network. The slowing or stopping of the development or acceptance of the Ethereum network may adversely affect an investment in the Trust. The price of ETH on the ethereum market has exhibited periods of extreme volatility. Digital assets such as ETH were only introduced within the past decade, and the medium-to-long term value of the Shares is subject to a number of factors relating to the capabilities and development of block-chain technologies and to the fundamental investment characteristics of digital assets that are uncertain and difficult to evaluate. The Trust is subject to risks due to its concentration of investments in a single asset class. Possible illiquid markets may exacerbate losses or increase the variability between the Trust’s NAV and its market price. The amount of ETH represented by the Shares may decline over time.

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 1940 Act or the protections afforded by the Commodity Exchange Act. Future legal or regulatory developments may negatively affect the value of ETH or require the Trust or the Sponsor to become registered with the SEC or CFTC, which may cause the Trust to liquidate.

The Exchange on which the Shares are listed may halt trading in the Trust’s Shares, which would adversely impact a Shareholder’s ability to sell Shares. The market infrastructure of the ETH spot market could result in the absence of active authorized participants able to support the trading activity of the Trust.

Shareholders that are not authorized participants may only purchase or sell their Shares in secondary trading markets, and the conditions associated with trading in secondary markets may adversely affect Shareholders’ investment in the Shares.

Note 8. Subsequent Event Review

The Trust has evaluated subsequent events and transactions for potential recognition or disclosure through the date the financial statements were issued and has determined that there are no material events that would require disclosure.

Appendix A-7

VANECK ETHEREUM TRUST

PROSPECTUS

[ ], 2024

Until [ ], 2024 (25 calendar days after the date of this Prospectus) all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a Prospectus. This is in addition to the dealers’ obligation to deliver a Prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Part II-1

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

Set forth below is an estimate (except as indicated) of the amount of fees and expenses (other than underwriting commissions and discounts) payable by the Sponsor in connection with the issuance and distribution of the Shares pursuant to the Prospectus contained in this registration statement.

SEC registration fee (actual)	$		^*
Listing fee (actual)	$	4,500
Auditor’s fees and expenses	$	12,000	^*
Legal fees and expenses	$	750,000	^*
Printing expenses	$	75,000	^*
Miscellaneous expenses	$	12,500	^*
Total	$	854,000	^*

*	An indeterminate number of the securities is being registered as may from time to time be sold at indeterminate prices. In accordance with Rules 456(d) and 457(u), the Trust is deferring payment of all of the registration fee and will pay the registration fee subsequently on an annual basis.

Item 14. Indemnification of Directors and Officers.

The Trust Agreement provides that the Sponsor and its shareholders, members, directors, officers, employees, Affiliates and subsidiaries (each a “Sponsor Indemnified Party”) will be indemnified by the Trust and held harmless against any loss, liability or expense incurred under the Trust Agreement without gross negligence, bad faith, or willful misconduct on the part of such Sponsor Indemnified Party arising out of or in connection with the performance of its obligations hereunder or any actions taken in accordance with the provisions of the Trust Agreement. Any amounts payable to a Sponsor Indemnified Party under the Trust Agreement may be payable in advance or will be secured by a lien on the Trust. The Sponsor will not be under any obligation to appear in, prosecute or defend any legal action that in its opinion may involve it in any expense or liability; provided, however, that the Sponsor may, in its discretion, undertake any action that it may deem necessary or desirable in respect of the Trust Agreement and the rights and duties of the parties hereto and the interests of the Shareholders and, in such event, the legal expenses and costs of any such action will be expenses and costs of the Trust and the Sponsor will be entitled to be reimbursed therefor by the Trust. The obligations of the Trust to indemnify the Sponsor Indemnified Parties will survive the termination of the Trust Agreement.

Item 15. Recent Sales of Unregistered Securities.

None.

Item 16. Exhibits and Financial Statement Schedules.

(a)

Exhibit.

The exhibits to this registration statement are listed in the Exhibit Index to this registration statement, which is incorporated herein by reference.

(b)

Financial Statement Schedules.

Not applicable.

II-1

Item 17. Undertakings.

The undersigned registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)

to include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii)

to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Fee Tables” or “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

Provided, however, That:

(1)

Paragraphs (1)(i), (ii), and (iii) of this section do not apply if the registration statement is on Form S-1 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement; and

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(i)

If the registrant is relying on Rule 430B:

(A)

each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B)

each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

II-2

(ii)

If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)

any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)

any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)

the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)

any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(6)

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(7)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Tampa, State of Florida, on May 23, 2024.

	VanEck Ethereum Trust


	By:	VanEck Digital Assets, LLC, as Sponsor of the Trust

	By:	/s/ Jonathan R. Simon
		Name: Jonathan R. Simon
		Title: Senior Vice President, General Counsel and Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities* and on the dates indicated.

Signature	Title	Date
	Jan F. van Eck
/s/ Jan F. van Eck	President and Chief Executive Officer	May 23, 2024
	(Principal Executive Officer)

	John J. Crimmins
/s/ John J. Crimmins	Vice President, Chief Financial Officer and Treasurer	May 23, 2024
	(Principal Financial Officer and Principal Accounting Officer)

* The registrant will be a trust and the persons are signing in their capacities as officers of VanEck Digital Assets, LLC, the Sponsor of the registrant.

EXHIBIT INDEX

Exhibit No.	Exhibit Description

3.1	Certificate of Trust*

4.1	Declaration of Trust and Trust Agreement

5.1	Opinion of Clifford Chance US LLP as to legality*

8.1	Opinion of Clifford Chance US LLP as to tax matters*

10.1	Form of Sponsor Agreement*

10.2	Form of Initial Authorized Participant Agreement

10.3	Marketing Agreement

10.4	ETH Custodian Agreement

10.5	Trust Administration and Accounting Agreement

10.6	Transfer Agency Agreement

10.7	Index SubLicense Agreement

10.8	Cash Custody Agreement

10.9	Subscription Agreement

23.1	Consent of Independent Registered Public Accounting Firm*

23.2	Consent of Clifford Chance US LLP (included in Exhibits 5.1 and 8.1)*

107	Filing Fee Tables⁽¹⁾

*	To be filed by amendment.


(1)	Previously filed as an exhibit to the Trust’s Registration Statement on Form S-1 on February 16, 2024.

EX-4.1 2 c109048_ex4-1.htm

Exhibit 4.1

CLIFFORD CHANCE US LLP

AMENDED AND RESTATED

DECLARATION OF TRUST

AND

TRUST AGREEMENT

VANECK ETHEREUM TRUST

Dated as of April 18, 2024

By and Between

VANECK DIGITAL ASSETS, LLC

as Sponsor

and

DELAWARE TRUST COMPANY

as Trustee

TABLE CONTENTS

		Page

ARTICLE I NAME, PURPOSE AND DEFINITIONS		1
Section 1.01	Name	1
Section 1.02	Purpose	1
Section 1.03	Definitions	2
Section 1.04	Delaware Trustee; Offices	7
Section 1.05	Declaration of Trust	8
Section 1.06	Grantor Trust	8
Section 1.07	Legal Title	8
ARTICLE II SHARES		8
Section 2.01	Division of Beneficial Interest	8
Section 2.02	Form of Certificates; Book Entry; Transferability of Shares	9
Section 2.03	Transfer of Shares	10
Section 2.04	Investments in the Trust	11
Section 2.05	Status of Shares and Limitation of Personal Liability	11
Section 2.06	Designation and Rights of Shares	12
Section 2.07	Creation and Redemption of Shares	12
Section 2.08	Creation and Issuance of Creation Baskets	13
Section 2.09	Redemption of Creation Baskets	15
Section 2.10	Cash Distributions	18
Section 2.11	Other Distributions	18
ARTICLE III TRUSTEE		19
Section 3.01	Duties	19
Section 3.02	Liability of Trustee	19
Section 3.03	Compensation and Expenses of the Trustee	21
Section 3.04	Term; Resignation	21
Section 3.05	Successor Trustee	21
Section 3.06	Indemnification	21
ARTICLE IV THE SPONSOR		22
Section 4.01	Management of the Trust	22
Section 4.02	Authority of Sponsor	22
Section 4.03	Obligations of Sponsor	24

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Section 4.04	Compensation of the Sponsor	27
Section 4.05	Sponsor’s Obligations With Respect to Hard Forks	28
Section 4.06	Liability of Sponsor and Indemnification	29
Section 4.07	Voluntary Withdrawal of the Sponsor	31
Section 4.08	Litigation	31
Section 4.09	Bankruptcy; Merger of the Sponsor	31
ARTICLE V BOOKS OF ACCOUNT, REPORTS AND FISCAL YEAR		31
Section 5.01	Books of Account	31
Section 5.02	Annual Updates, Quarterly Updates and Account Statements	32
Section 5.03	Maintenance of Records	32
Section 5.04	Calculation of Net Asset Value	32
Section 5.05	Fiscal Year	32
ARTICLE VI AMENDMENT OF TRUST AGREEMENT; MEETINGS		32
Section 6.01	Amendments to the Trust Agreement	32
Section 6.02	Meetings of the Trust	33
Section 6.03	Action Without a Meeting	33
ARTICLE VII TERM		33
ARTICLE VIII TERMINATION		34
Section 8.01	Events Requiring Dissolution of the Trust	34
Section 8.02	Distributions on Dissolution	35
Section 8.03	Termination; Certificate of Cancellation	36
ARTICLE IX THE BENEFICIAL OWNERS		36
Section 9.01	No Management or Control; Limited Liability; Exercise of Rights through a Participant	36
Section 9.02	Rights and Duties	36
Section 9.03	Limitation on Liability	37
Section 9.04	Business of Beneficial Owners	37
Section 9.05	Authorization of Registration Statement	37
Section 9.06	Voting Rights	38
ARTICLE X MISCELLANEOUS PROVISIONS		38
Section 10.01	Governing Law	38
Section 10.02	Submission to Jurisdiction	38
Section 10.03	Derivative Actions	38
Section 10.04	Provisions in Conflict with Law or Regulations	38
Section 10.05	Merger and Consolidation	39

- ii -

Section 10.06	Construction	39
Section 10.07	Notices	39
Section 10.08	Counterparts; Electronic Signatures	40
Section 10.09	Binding Nature of Trust Agreement	40
Section 10.10	No Legal Title to Trust Property	40
Section 10.11	Creditors	40
Section 10.12	Integration	41
Section 10.13	Goodwill; Use of Name	41

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THIS AMENDED AND RESTATED DECLARATION OF TRUST AND TRUST AGREEMENT, dated as of April 18, 2024, between VanEck Digital Assets, LLC, a Delaware limited liability company, as sponsor, and DELAWARE TRUST COMPANY, a Delaware trust company, as trustee.

W I T N E S S E T H:

WHEREAS, the Sponsor formed the Trust on March 1, 2021 as a statutory trust established under the Delaware Act by the filing of the Certificate of Trust in the Office of the Secretary of State of the State of Delaware;

WHEREAS, the Sponsor and the Trustee were parties to a trust agreement dated March 1, 2021 (the “Initial Trust Agreement”); and

WHEREAS, the Sponsor and the Trustee desire to amend and restate the Initial Trust Agreement to revise and/or clarify certain terms and conditions upon which the Trust is administered, as hereinafter provided.

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each party agrees as follows:

ARTICLE I

NAME, PURPOSE AND DEFINITIONS

Section 1.01 Name. The Trust shall be known as the “VanEck Ethereum Trust.” The Sponsor and the Trustee shall conduct the business of the Trust under this name or any other name as the Sponsor may from time to time determine in its sole discretion. Any name change shall become effective on the execution by the Sponsor of an instrument setting forth the new name and the filing of a Certificate of Amendment pursuant to Section 3810(b)(1) of the Delaware Act. Any such instrument shall not require the approval of the Registered Owners or Beneficial Owners (together, “Shareholders”) but shall have the status of an amendment to this Trust Agreement.

Section 1.02 Purpose. The purpose of the Trust is to generally reflect the performance of the price of ether before payment of the Trust’s expenses and liabilities. The Sponsor intends for the Trust to be operated and treated for U.S. federal income tax purposes as an “investment trust” as defined in Treasury Regulation Section 301.7701-4(c)(1) and to be treated as a “grantor trust” described in Sections 671-679 of the Code, as hereinafter defined. All provisions in this Trust Agreement are intended to be construed such that the Trust does not lose its status as an “‘investment’ trust” treated as a “grantor trust.” It is not the intention of the Sponsor to create a general partnership, limited partnership, limited liability company, joint stock association, corporation, bailment or any form of legal relationship other than a Delaware statutory trust. The Trust shall be entitled to exercise all of the powers and privileges granted to a statutory trust formed under the laws of the State of Delaware, now or hereafter in force, except as otherwise provided herein. The Trust shall not take any action that could cause the Trust to be treated other than as a grantor trust for U.S. federal income tax purposes. Without limiting the generality of the foregoing, nothing in this Trust Agreement shall be construed to give the Trustee or the Sponsor the power to

vary the investment of the Beneficial Owners within the meaning of Section 301.7701-4(c) or similar provisions of the Treasury Regulations, nor shall the Trustee or the Sponsor take any action that would vary the investment of the Beneficial Owners.

Section 1.03 Definitions. Whenever used herein, unless otherwise required by the context or specifically provided:

“Administrator” means the Initial Administrator and any substitute or additional administrator engaged to perform administration services for the Trust pursuant to a written agreement with the Trust or Sponsor on behalf of the Trust.

“Affiliate” shall mean, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.

“Authorized Participant” means a person who (1) is a registered broker-dealer under the Exchange Act and is a member in good standing of the Financial Industry Regulatory Authority (“FINRA”) or other securities market participant such as a bank or other financial institution that is not required to register as a broker-dealer or be a member of FINRA to engage in securities transactions, (2) is a participant in DTC and (3) has entered into an Authorized Participant Agreement. Only Authorized Participants may place orders to create or redeem one or more Creation Baskets.

“Authorized Participant Agreement” shall mean an agreement entered into by each Authorized Participant that provides the procedures for the creation and redemption of Creation Baskets and for the delivery of the ether and/or cash required for such creations and redemptions.

“Basket Cash Component” shall have the meaning and be calculated in the manner specified in Section 2.08.

“Basket Deposit” means Creation Basket Deposit, and the two terms are used interchangeably herein.

“Beneficial Owner” means any Person owning a beneficial interest in any Shares.

“Business Day” shall mean any day the Exchange is open for business and the Trust accepts Purchase Orders and Redemption Orders for Creation Baskets.

“By-Laws” shall mean the By-Laws of the Trust, if any, as amended from time to time, which By-Laws are expressly herein incorporated by reference as part of the “governing instrument” within the meaning of the Delaware Act (as defined herein).

“Cash” shall mean U.S. dollars, the legal tender of the United States of America.

“Cash Amount” shall mean an amount of cash sufficient to pay any applicable transaction fee (including the Transaction Fee), redemption fee and any additional fixed and/or variable charges, costs, taxes, or expenses, applicable to Creation Orders or Redemption Orders effected

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fully in cash, as described in the Authorized Participant Agreement and/or in the Registration Statement.

“Cash Custodian Agreement” means the agreement pursuant to which the cash custodian acts as custodian for the Trust’s cash and non-ether assets, if any. The initial cash custodian shall be the Administrator.

“Certificate” means a certificate that is executed and delivered by the Sponsor evidencing Shares.

“Certificate of Trust” means the Certificate of Trust of the Trust in the form filed with the Secretary of State of the State of Delaware on March 1, 2021 pursuant to Section 3810 of the Delaware Act as amended or restated from time to time.

“Clearing Account” has the meaning given in the Registration Statement.

“Clearing Agreement” means the agreement between the Trust and the Initial Ether Custodian in respect of the Clearing Services (as defined in the Registration Statement).

“Code” means the Internal Revenue Code of 1986, as amended.

“Conflicting Provisions” shall have the meaning assigned to such term in Section 10.02(a) herein.

“Control” and/or “Controlled” mean that the specified party, directly or indirectly, has the power to direct or cause the direction of the management and policies of an entity through the ownership of voting securities, by contract or otherwise.

“Corporate Trust Office” means the principal office at which at any particular time the corporate trust business of the Trustee is administered, which office at the date hereof is located at 251 Little Falls Drive, Wilmington, DE 19808.

“Covered Person” means the Sponsor and its Affiliates and their respective members, managers, directors, officers, employees, agents and controlling persons.

“Creation Basket” or “Basket” shall mean a block of Shares in such amount as established from time to time by the Sponsor. Multiple blocks are called “Creation Baskets” or “Baskets.”

“Creation Basket Deposit” shall have the meaning and be calculated in the manner specified in Section 2.08 herein.

“Creation Order” means a Purchase Order, and these two terms are used interchangeably herein.

“Creation Order Cut-Off Time” shall mean the Order Cut-Off Time for a Creation Order on a Business Day.

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“Creation Settlement Date” shall mean the settlement date for a Creation Order, which shall be the Business Day immediately following the Creation Trade Date unless the Trust, Sponsor and Authorized Participant agree in writing to a different date.

“Creation Trade Date” shall mean the Trade Date for a Creation Order, and shall have the same meaning as Purchase Order Date and the two terms shall be used interchangeably herein.

“CTA” has the meaning given in Section 10.14 herein.

“Custody Agreement” means a written agreement entered into by the Trust or Sponsor with an Ether Custodian providing for the deposit, safekeeping or delivery of ether held by the Trust and related services.

“Delaware Act” shall mean the Delaware Statutory Trust Act (12 Del. C. § 3801 et seq.), as such statute may be amended or interpreted from time to time, and any legislative enactment that may replace or supersede such Act.

“DTC” shall mean the Depository Trust Company. DTC is a limited purpose trust company organized under New York law, a member of the U.S. Federal Reserve System and a clearing agency registered with the SEC pursuant to the provisions of Section 17A of the Exchange Act. DTC will act as the securities depository for the Shares.

“DTC Participant” shall mean a participant in DTC, such as a bank, broker, dealer or trust company.

“ether” or “ETH” shall mean the unit of account within the Ethereum network, which is based on the decentralized, open source protocol of a peer-to-peer network of computers running the software protocol underlying ether involved in maintaining the database of ether ownership and facilitating the transfer of ether among parties.

“Ether Custodian” means the Initial Ether Custodian and any substitute or additional custodian of the Trust’s ether pursuant to a written agreement with the Trust or Sponsor on behalf of the Trust.

“Exchange” means the primary exchange or other securities market on which the Shares are listed for trading.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Expenses” shall have the meaning assigned to such term in Section 3.06 herein.

“Fiscal Year” shall have the meaning assigned to such term in Section 5.06 herein.

“Indemnified Person” shall have the meaning assigned to such term in Section 3.06 herein.

“Index” means the MarketVector^TM Ethereum Benchmark Rate or any successor selected by the Sponsor in accordance with the policies described in the Registration Statement.

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“Indirect Participant” means a Person that, by clearing securities through, or maintaining a custodial relationship with, a DTC Participant, either directly or indirectly, has access to the DTC clearing system.

“Initial Administrator” means, as of the date of this Trust Agreement, State Street Bank and Trust Company as Administrator.

“Initial Ether Custodian” means the Ether Custodian named in the registration statement for the Trust that is declared effective by the SEC, as such may be amended from time to time.

“Initial Trust Agreement” shall have the meaning assigned to such term in the recitals.

“Liquidating Trustee” shall have the meaning assigned to such term in Section 8.02 herein.

“Liquidity Provider” means a third party selected by the Sponsor, in the Sponsor’s sole discretion, who (1) is not an Authorized Participant and (2) will not be acting as an agent, nor at the direction, of an Authorized Participant with respect to the delivery of ether to the Trust.

“NAV” means net asset value, and is the aggregate value of the Trust’s assets including, but not limited to, all ether and cash, less the Trust’s estimated accrued but unpaid liabilities (which includes accrued expenses).

“Order” shall mean any Purchase Order or Redemption Order.

“Order Cut-Off Time” means the cut-off time for placing Orders with the Trust, which shall be 3:59:59 p.m. Eastern Standard Time on Trade Date or as otherwise communicated by the Sponsor.

“Percentage Interest” means, with respect to any Beneficial Owner at any time, a fraction, the numerator of which is the number of Shares held by such Beneficial Owner and the denominator of which is the total number of Shares outstanding, in each case as of 4:00 p.m., Eastern time, on the date of determination.

“Person” means and includes individuals, corporations, partnerships, trusts, associations, joint ventures, estates and other entities, whether or not legal entities, and governments and agencies and political subdivisions thereof, whether domestic or foreign.

“Prime Broker Agreement” means an agreement with a prime broker whereby the prime broker provides certain services to the Trust as needed, such as facilitating the purchase of ether for Creation Basket Deposits in connection with Purchase Orders made in cash, and the sale of ether for cash in connection with Redemption Orders where the redemption distribution is made in cash.

“Prospectus” shall have the meaning assigned to such term in Section 4.02(e) herein.

“Purchase Order” shall have the meaning assigned to such term in Section 2.08 herein.

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“Purchase Order Date” shall have the meaning assigned to such terms in Section 2.08 herein.

“Purchase Slippage” means, with respect to a Purchase Order, any amount by which the actual cash purchase price of the ether from the Liquidity Provider exceeds the Basket Cash Component.

“Redemption Order” shall have the meaning assigned to such term in Section 2.09 herein.

“Redemption Order Cut-Off Time” shall mean the Order Cut-Off Time for a Creation Order on a Business Day.

“Redemption Order Date” shall have the meaning assigned to such term in Section 2.09 herein.

“Redemption Settlement Date” shall mean the settlement date for a Redemption Order, which shall be the Business Day immediately following the Redemption Trade Date unless the Trust, Sponsor and Authorized Participant agree in writing to a different date.

“Redemption Slippage” means, with respect to a Redemption Order, any amount by which the actual cash sale price of the ether to the Liquidity Provider is less than the Basket Cash Component.

“Redemption Trade Date” shall mean the Trade Date for a Redemption Order.

“Registered Owner” means the Person in whose name Shares are registered on the books of the Transfer Agent maintained for that purpose.

“Registration Statement” means the current registration statement of the Trust as filed with the SEC, either pending effectiveness or already effective, as the same may at any time and from time to time be amended or supplemented.

“Required Cash Creation Total” means, for a Creation Order, the amount the Authorized Participant shall be responsible for delivering in cash on Creation Settlement Date to the Trust’s account at the Cash Custodian, consisting of (1) the Basket Cash Component, plus the (2) Cash Amount, plus any (3) Purchase Slippage.

“Required Cash Redemption Total” means, for a Redemption Order, the amount the Trust shall be responsible for instructing the Cash Custodian to deliver to the Authorized Participant’s designated bank account in cash on Redemption Settlement Date, consisting of the Basket Cash Component, minus the Cash Amount, minus the Purchase Slippage.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Shareholders” means Registered Owners and Beneficial Owners.

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“Shares” means the common units of fractional undivided beneficial interest in the profits, losses, distributions, capital and assets of, and ownership of, the Trust.

“Sponsor” means VanEck Digital Assets, LLC, a Delaware limited liability company, or its successors.

“Sponsor Fee” shall have the meaning assigned to such term in Section 4.04 herein.

“Sponsor Indemnified Party” shall have the meaning assigned to such term in Section 4.06(c) herein.

“Trade Date” shall mean a Business Day on which an Order is placed by an Authorized Participant.

“Transaction Fee” shall have the meaning given in Section 2.09(e).

“Transfer Agent” means any Person from time to time engaged to register Shares and transfers of Shares, provide such services or related services to the Trust pursuant to authority delegated by the Sponsor.

“Trust” refers to the Delaware statutory trust established under the Delaware Act by the filing of the Certificate of Trust in the Office of the Secretary of State of the State of Delaware on March 1, 2021.

“Trust Agreement” shall mean this Amended and Restated Declaration of Trust and Trust Agreement, as amended or restated from time to time.

“Trust Property” means the property of the Trust and, specifically, the ether and cash owned or held by or for the account of the Trust.

“Trustee” refers to Delaware Trust Company or any successor Trustee designated as such by operation of law or appointed as herein, acting not in its individual capacity but solely as trustee of the Trust.

Section 1.04 Delaware Trustee; Offices.

(a) The sole Trustee of the Trust is Delaware Trust Company, which is located at the Corporate Trust Office or at such other address in the State of Delaware as the Trustee may designate in writing to the Registered Owners. The Trustee shall receive service of process on the Trust in the State of Delaware at the foregoing address. In the event Delaware Trust Company resigns or is removed as the Trustee, the trustee of the Trust in the State of Delaware shall be the successor Trustee, subject to Section 3.04.

(b) The principal office of the Trust, and such additional offices as the Sponsor may establish, shall be located at such place or places inside or outside the State of Delaware as the Sponsor may designate from time to time in writing to the Trustee and the Registered Owners. Initially, the principal office of the Trust shall be at c/o VanEck Digital Assets, LLC, 666 Third Avenue, 9th Floor, New York, New York 10017.

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Section 1.05 Declaration of Trust. The Trust Property shall be held in trust for the Beneficial Owners. It is the intention of the parties hereto that the Trust shall be a statutory trust, under the Delaware Trust Statute and that this Trust Agreement shall constitute the governing instrument of the Trust. It is not the intention of the parties hereto to create a general partnership, limited partnership, limited liability company, joint stock association, corporation, bailment or any form of legal relationship other than a Delaware statutory trust that is treated as a grantor trust for U.S. federal income tax purposes and for purposes of applicable state and local tax laws. Nothing in this Trust Agreement shall be construed to make the Beneficial Owners partners or members of a joint stock association. Effective as of the date hereof, the Trustee and the Sponsor shall have all of the rights, powers and duties set forth herein and in the Delaware Trust Statute with respect to accomplishing the purposes of the Trust. The Sponsor has filed the certificate of trust required by Section 3810 of the Delaware Trust Statute in connection with the formation of the Trust under the Delaware Trust Statute.

Section 1.06 Grantor Trust. Notwithstanding any other provision of the Trust Agreement, nothing in this Trust Agreement, any Custody Agreement, or otherwise shall be construed to give the Trustee or Sponsor the power to vary the investment of the Beneficial Owners (within the meaning of Treasury Regulation Section 301.7701-4(c) or any similar or successor provision of the Code or the regulations under the Code), nor shall the Sponsor give the Trustee any direction that would vary the investment of the Beneficial Owners. Neither the Trustee nor the Sponsor shall be liable to any Person for any failure of the Trust to qualify as a “grantor trust” under the Code or any comparable provision of the laws of any State or other jurisdiction where that treatment is sought, except that this sentence shall not limit the Trustee’s or Sponsor’s responsibility for the administration of the Trust in accordance with this Trust Agreement.

Section 1.07 Legal Title. Legal title to all of the Trust Property shall be vested in the Trust as a separate legal entity; provided, however, that if applicable law in any jurisdiction requires legal title to any portion of the Trust Property to be vested otherwise, the Sponsor may cause legal title to such portion of the Trust Property to be held by or in the name of the Sponsor or any other Person (other than a Beneficial Owner) as nominee.

ARTICLE II

SHARES

Section 2.01 Division of Beneficial Interest. The beneficial interest in the Trust shall be divided into Shares. Each Share of the Trust shall represent an equal beneficial interest in the net assets of the Trust, and each holder of Shares shall be entitled to receive such holder’s pro rata share of distributions of income and capital gains, if any.

All Shares issued hereunder shall be fully paid and non-assessable. No Share shall have any priority or preference over any other Share of the Trust. All distributions, if any, shall be made ratably among all Registered Owners from the assets of the Trust according to the number of Shares held of record by such Registered Owner on the record date for any distribution or on the date of termination of the Trust, as the case may be. Except as otherwise provided by the Sponsor, Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust. Every Registered Owner, by virtue of having purchased or acquired

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a Share, shall have expressly consented and agreed to be bound by the terms of this Trust Agreement.

The Sponsor shall have full power and authority, in its sole discretion, without seeking the approval of the Trustee or the Shareholders (a) to establish and designate and to change in any manner and to fix such preferences, voting powers, rights, duties and privileges of the Trust as the Sponsor may from time to time determine, (b) to divide the beneficial interest in the Trust into an unlimited amount of Shares, with or without par value, as the Sponsor shall determine, (c) to issue Shares without limitation as to number (including fractional Shares), to such Persons and for such amount of consideration, subject to any restriction set forth in the By-Laws, if any, at such time or times and on such terms as the Sponsor may deem appropriate, (d) to divide or combine the Shares into a greater or lesser number without thereby materially changing the proportionate beneficial interest of the Shares in the assets held, and (e) to take such other action with respect to the Shares as the Sponsor may deem desirable.

Section 2.02 Form of Certificates; Book Entry; Transferability of Shares.

(a) Other than the initial global Certificate, the Certificates evidencing Shares shall be substantially in the form set forth in Exhibit A attached to this Agreement, with appropriate insertions, modifications and omissions, as hereinafter provided. No Shares shall be entitled to any benefits under this Agreement or be valid or obligatory for any purpose unless a Certificate evidencing those Shares has been executed by the Sponsor by the manual or facsimile signature of a duly authorized signatory of the Sponsor and, if a Transfer Agent for the Shares shall have been appointed, countersigned by the manual signature of a duly authorized officer of the Transfer Agent. The Administrator shall maintain books on which the registered ownership of each Share and transfers, if any, of such registered ownership shall be recorded. Certificates evidencing Shares bearing the manual or facsimile signature of a duly authorized signatory of the Administrator and the manual signature of a duly authorized officer of the Transfer Agent, if applicable, who was, at the time such Certificates were executed, a proper signatory of the Administrator or Transfer Agent, if applicable, shall bind the Administrator, notwithstanding that such signatory has ceased to hold such office prior to the delivery of such Certificates.

(b) The Trust shall not engage in any business or activities other than those authorized by this Agreement or incidental and necessary to carry out the duties and responsibilities set forth in this Agreement. The Trust shall not issue or sell any certificates or other obligations other than the Shares and shall not otherwise incur, assume or guarantee any indebtedness for money borrowed.

(c) The Administrator and the Sponsor will apply to DTC for acceptance of the Shares in its book-entry settlement system. The Sponsor shall enter into such customary agreements as may be required by DTC in connection therewith. Shares deposited with DTC shall be evidenced by one or more global Certificates that shall be registered in the name of Cede & Co., as nominee for DTC, and shall bear the following legend:

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PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

(d) So long as the Shares are eligible for book-entry settlement with DTC and such settlement is available, unless otherwise required by law, notwithstanding the provisions of Sections 2.02(a) and (b), all Shares shall be evidenced by one or more global Certificates the Registered Owner of which is DTC or a nominee of DTC and (i) no Beneficial Owner of Shares will be entitled to receive a separate Certificate evidencing those Shares, (ii) the interest of a Beneficial Owner in Shares represented by a global Certificate will be shown only on, and transfer of that interest will be effected only through, records maintained by DTC or a DTC Participant or Indirect Participant through which the Beneficial Owner holds that interest and (iii) the rights of a Beneficial Owner with respect to Shares represented by a global Certificate will be exercised only to the extent allowed by, and in compliance with, the arrangements in effect between such Beneficial Owner and DTC or the DTC Participant or Indirect Participant through which that Beneficial Owner holds an interest in Shares. So long as DTC or another authorized Depository selected by Sponsor is the Registered Owner, the Trustee and Sponsor may treat DTC or such other Depository as the absolute owner of the Shares for all purposes whatsoever, including with respect to the payment of distributions and the giving of notices of redemption, tender and other matters with respect to the Shares.

(e) If, at any time when Shares are evidenced by a global Certificate, DTC ceases to make its book-entry settlement system available for such Shares, the Sponsor shall execute and deliver separate Certificates evidencing Shares to a successor authorized Depository identified by Sponsor and available to act, or, if no successor Depository is identified and able to act, the Trustee shall terminate the Trust in accordance with Section 8.01.

(f) Title to a Certificate evidencing Shares (and to the Shares evidenced thereby), when properly endorsed or accompanied by proper instruments of transfer, shall be transferable by delivery with the same effect as in the case of a certificated security under Article 8 of the Uniform Commercial Code of the State of Delaware; provided, however, that the Trustee and the Sponsor, notwithstanding any notice to the contrary, may treat the Registered Owner of Shares as the absolute owner thereof for the purpose of determining the Person entitled to any distribution or to any notice provided for in this Agreement and for all other purposes.

Section 2.03 Transfer of Shares.

(a) The Shares are only transferable through the book-entry system of DTC. Registered Owners who are not DTC Participants may transfer their Shares through DTC by instructing the DTC Participant holding their Shares (or by instructing the Indirect Participant or other entity

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through which their Shares are held) to transfer the Shares. Transfers shall be made in accordance with standard securities industry practice.

(b) Transfers of interests in Shares with DTC are made in accordance with the usual rules and operating procedures of DTC and the nature of the transfer. DTC has established procedures to facilitate transfers among the participants and/or accountholders of DTC. Because DTC can only act on behalf of DTC Participants, who in turn act on behalf of Indirect Participants, the ability of a person or entity having an interest in a global Certificate to pledge such interest to persons or entities that do not participate in DTC, or otherwise take actions in respect of such interest, may be affected by the lack of a Certificate or other definitive document representing such interest.

(c) DTC shall take any action permitted to be taken by a Registered Owner (including, without limitation, the presentation of a global Certificate for exchange) only at the direction of one or more DTC Participants in whose account with DTC interests in global Certificates are credited and only in respect of such portion of the aggregate principal amount of the global Certificate as to which such DTC Participant or Authorized Participants has or have given such direction.

Section 2.04 Investments in the Trust. Investments in the Trust may be accepted by the Trust from such Persons, at such times and on such terms as the Sponsor from time to time may authorize. Each investment shall be credited to the Registered Owner’s account in the form of full and fractional Shares of the Trust at the net asset value per Share next determined after receipt of the investment; provided, however, that the Sponsor may, in its sole discretion, impose a sales charge, transaction fee or other charges upon investments or place such other restrictions on investments as the Sponsor, in its sole discretion, deems appropriate.

Section 2.05 Status of Shares and Limitation of Personal Liability. The ownership of the Trust Property and the right to conduct the business of the Trust described herein are vested exclusively in the Sponsor and the Trustee (solely to the extent set forth herein). The Beneficial Owner shall have no interest therein other than the beneficial interest conferred by their Shares, and they shall have no right to call for any partition or division of any Trust Property, rights or interests of the Trust, nor can they be called upon to share or assume any losses of the Trust or suffer an assessment of any kind by virtue of their ownership of Shares. Every Registered Owner or Beneficial Owner, by virtue of having purchased a Share, shall become a Registered Owner or Beneficial Owner of the Trust and shall be held to have expressly assented and agreed to be bound by the terms hereof and to have become a party hereto. The death, incapacity, dissolution, termination or bankruptcy of a Registered Owner or Beneficial Owner during the existence of the Trust shall not operate to terminate the Trust, nor entitle the representative of any deceased Registered Owner or Beneficial Owner to an accounting or to take any action in court or elsewhere against the Trust, the Sponsor or the Trustee, but entitles such representative only to the rights of such Registered Owner or Beneficial Owner under this Trust Agreement. Ownership of Shares shall not constitute the Beneficial Owner as partners. The Shares shall not entitle the holder to preference, preemptive, appraisal, conversion or exchange rights (except as specified in this Trust Agreement or as specified by the Trust or the Sponsor when creating the Shares). No Registered Owner or Beneficial Owner shall be subject in such capacity to any personal liability whatsoever to any Person in connection with Trust Property or the acts, obligations or affairs of the Trust. Beneficial Owners shall have the same limitation of personal liability as is extended to

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stockholders of a private corporation for profit incorporated under the Delaware General Corporation Law.

Section 2.06 Designation and Rights of Shares. Shares of the Trust shall have the following rights and preferences:

(a) Voting. All Shares of the Trust entitled to vote on a matter shall vote without differentiation on a one vote per each Share (including fractional votes for fractional shares) basis, as set forth in Article IX herein.

(b) Equality. All the Shares shall represent an equal proportionate undivided interest in the assets of the Trust (subject to the liabilities of the Trust), and each Share shall be equal to each other Share.

(c) Fractions. Any fractional Share shall carry proportionately all the rights and obligations of a whole Share, including rights with respect to voting, receipt of dividends and distributions, redemption of Shares and termination of the Trust.

Section 2.07 Creation and Redemption of Shares. The Trust will create and redeem Shares from time to time, but only in one or more Creation Baskets. The creation and redemption of baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of ether, in the case of “in-kind” creations and redemptions, or cash, in the case of cash creations and redemptions, represented by the baskets being created or redeemed, as set forth herein. Subject to the Exchange receiving the necessary regulatory approvals to permit the Trust to create and redeem Shares in-kind (i.e., in ether) (the “In-Kind Regulatory Approval”), all Purchase Orders and Redemption Orders will take place in exchange for cash.

Authorized Participants are the only persons that may place orders to create and redeem Creation Baskets. Authorized Participants must be (a) registered broker-dealers or other securities market participants, such as banks and other financial institutions, that are not required to register as broker-dealers to engage in securities transactions described below, and (b) DTC Participants. To become an Authorized Participant, a person must enter into an Authorized Participant Agreement with the Sponsor. The Authorized Participant Agreement shall provide procedures for the creation and redemption of Creation Baskets and for the delivery, or facilitation of delivery, of the cash (or, following the receipt of In-Kind Regulatory Approval, ether, if applicable) required for such creation and redemptions. The Authorized Participant Agreement and the related procedures attached thereto may be amended by the Trust or the Sponsor (as the case may be), without the consent of any Registered Owner or Beneficial Owner. Authorized Participants shall pay the Transfer Agent a fee for each order they place to create or redeem one or more Creation Baskets. The transaction fee may be reduced, increased or otherwise changed by the Sponsor. Authorized Participants who make deposits with the Trust in exchange for Creation Baskets receive no fees, commissions or other form of compensation or inducement of any kind from either the Trust or the Sponsor, and no such person will have any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares.

Each Authorized Participant shall be required to be registered as a broker-dealer under the Exchange Act, and a member in good standing with FINRA, or exempt from being or otherwise

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not required to be licensed as a broker-dealer or a member of FINRA, and shall be qualified to act as a broker or dealer in the states or other jurisdictions where the nature of its business so requires. Certain Authorized Participants may also be regulated under federal and state banking laws and regulations. Each Authorized Participant shall have its own set of rules and procedures, internal controls and information barriers as it determines is appropriate in light of its own regulatory regime.

Sections 2.08 and 2.09 below specify the procedures that shall be used for the creation and issuance of Creation Baskets and the redemption of Creation Baskets.

Section 2.08 Creation and Issuance of Creation Baskets. The following procedures, except to the extent otherwise provided in the Authorized Participant Agreement for each Authorized Participant, which may be amended from time to time in accordance with the provisions of such Authorized Participant Agreement (and any such amendment shall not constitute an amendment of this Trust Agreement), shall apply to the creation and issuance of Creation Baskets. Subject to the limitations upon and requirements for issuance of Creation Baskets stated herein and in such procedures, the number of Creation Baskets that may be issued by the Trust shall be unlimited.

(a) Creation and Issuance of Creation Baskets. On any Business Day, an Authorized Participant may place an order to create one or more Baskets in the manner provided in the Authorized Participant Agreement (such request by an Authorized Participant, a “Purchase Order”). Purchase Orders must be placed by the Creation Order Cut-Off Time. The day on which a valid Purchase Order is received in the manner provided in the Authorized Participant Agreement is referred to as the “Purchase Order Date.” Authorized Participants may not withdraw a creation request.

Prior to the delivery of Creation Baskets for a Purchase Order, the Authorized Participant must have wired to the Transfer Agent the nonrefundable transaction fee due for the Purchase Order. An Authorized Participant shall also be responsible for any transfer tax, sales or use tax, recording tax, value added tax or similar tax or other governmental charge applicable to the creation or redemption of Creation Baskets, regardless of whether such tax or charge is imposed directly on the Authorized Participant; and by placing a Purchase Order an Authorized Participant agrees to indemnify the Sponsor, the Trustee and the Trust if any of them is required by law to pay any such tax or charge, together with any applicable penalties, additions to tax and interest thereon.

The manner by which creations are made is dictated by the terms of the Authorized Participant Agreement. By placing a Purchase Order, an Authorized Participant agrees to facilitate the deposit of cash with the Cash Custodian, unless In-Kind Regulatory Approval has been obtained, in which case the Authorized Participant agrees to facilitate the deposit of ether with the Ether Custodian. If an Authorized Participant fails to consummate the foregoing, the order will be cancelled.

Prior to the receipt of In-Kind Regulatory Approval, if applicable, the total amount of cash required to create each Creation Basket is an amount of cash that is sufficient to purchase an amount of ether that is in the same proportion to the total assets of the Trust, net of accrued expenses and other liabilities, on the date the Purchase Order is properly received, as the number

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of Shares to be created under the Purchase Order is in proportion to the total number of Shares outstanding on the date the Order is received. On Creation Trade Date, following receipt of the Purchase Order from the Authorized Participant, the Trust shall, in its sole discretion, select a Liquidity Provider and execute a trade to purchase ether from that Liquidity Provider in the amount of the Creation Basket Deposit (the calculation of which is explained below), with the purchased ether to be delivered by the Liquidity Provider to the Trust on the Creation Settlement Date in exchange for a cash price to be delivered by the Trust to the Liquidity Provider on Creation Settlement Date. The Liquidity Provider, not the Authorized Participant, shall be responsible for delivering ether to the Trust.

Determination of Required Deposits. Pending the receipt of In-Kind Regulatory Approval, the total deposit, in cash, required to create each Basket (“Basket Cash Component”) changes from day to day. To determine the Creation Basket Deposit, the Administrator starts by determining the number of ether held by the Trust as of the opening of business on Trade Date, and subtracts the amount of ether constituting estimated accrued but unpaid fees and expenses of the Trust as of the opening of business on Trade Date. Fractions of a ether smaller than 0.0000001 are disregarded for purposes of the computation of the Creation Basket Deposit. Second, this figure, in ether, is divided by the quotient of the number of Shares outstanding at the opening of business on Trade Date divided by the number of Shares in a Basket as specified in the Registration Statement (“Creation Basket Deposit”). This produces the Creation Basket Deposit, which is the number of ether attributable to each Creation Basket as of the opening of business on Trade Date. Third, the resulting ether amount is then valued, in cash, at the Index calculated on Trade Date, or in accordance with the other valuation policies described in the Registration Statement if the Index is not available. This produces the Basket Cash Component.

The Creation Basket Deposit, and the Basket Cash Component, is communicated via DTC through the Administrator and is made available on the Sponsor’s website for the Shares. The Exchange may also publish the Creation Basket Deposit determined by the Administrator as indicated above.

By the end of day Eastern Standard Time (or such other time as the parties may agree) on Creation Trade Date, the Administrator will calculate and transmit the Required Cash Creation Total, consisting of (1) the Basket Cash Component, (2) Cash Amount, and (3) any Purchase Slippage, to the Authorized Participant, which the Authorized Participant shall be responsible for delivering in cash on Creation Settlement Date to the Trust’s account at the Cash Custodian. The Trust acknowledges that, if the actual cash purchase price of ether from the Liquidity Provider is below the Basket Cash Component, the Authorized Participant shall be entitled to retain the difference and the Required Cash Creation Total shall be reduced accordingly.

Delivery of Required Deposits. On the Creation Settlement Date, the Authorized Participant shall wire the Required Cash Creation Total to the Trust’s account at the Cash Custodian in cleared, immediately available funds by 1:00 p.m. Eastern Standard Time. The Trust shall instruct the Cash Custodian to transfer the cash proceeds to the Trust’s Clearing Account. The Liquidity Provider delivers ether to the Trust’s Clearing Account in exchange for the cash purchase price, a delivery facilitated by the Ether Custodian under the Clearing Agreement. Upon settlement by the Ether Custodian, in its capacity as the provider of Clearing Services pursuant to the Clearing Agreement, of the ether purchase from the Liquidity Provider and the deposit of ether

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in the Trust’s Clearing Account, the Trust instructs the Transfer Agent to release the Shares to the Authorized Participant, and the Transfer Agent directs DTC to credit the number of Shares ordered to the applicable DTC account, by close of business on the Creation Settlement Date and the Creation Order is settled. If the ether purchase transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant shall have the option to cancel the Creation Order, in which case the Trust will return the Required Cash Creation Total less the Cash Amount to the Authorized Participant and the Shares will not be issued, or the Sponsor may use an alternative execution method for the Trust to purchase ether, in which case the Authorized Participant agrees and acknowledges it is responsible for any Purchase Slippage and Cash Amount relating to such alternative execution method. The expense and risk of delivery and ownership of cash until such cash has been received in immediately available, cleared federal funds by the Cash Custodian on behalf of the Trust will be borne solely by the Authorized Participant.

(b) Rejection of Purchase Orders. The Sponsor acting by itself or through the Person authorized to take Purchase Orders in the manner provided in the Authorized Participant Agreement may, in its sole discretion, reject any Purchase Order (1) the Sponsor or the Person authorized to take Purchase Orders determines not to be in proper form, (2) that would not be in the best interest of the Shareholders of the Trust, (3) the acceptance of the purchase order or the Creation Basket Deposit would have adverse tax consequences to the Trust or its Shareholders, (4) the fulfillment of which its counsel advises may be illegal under applicable laws and regulations, or (5) if circumstances outside the control of the Sponsor, the Person authorized to take Purchase Orders in the manner provided in the Authorized Participant Agreement, the Ether Custodian or cash custodian make it for all practical purposes impracticable or not feasible to process Creations Baskets (including if the Sponsor determines that the investments available to the Trust at that time will not enable it to meet its investment objective). None of the Sponsor, the Transfer Agent, the Person authorized to take Purchase Orders in the manner provided in the Authorized Participant Agreement, the Ether Custodian, or the cash custodian shall be liable for the rejection of any Purchase Order or Creation Basket Deposit.

(c) Changes in Creation Procedures. The procedures set forth in this Section 2.08 may be changed from time-to-time at the sole discretion of the Sponsor. In the event of any conflict between the procedures described in this Section 2.08 and the procedures set forth in the Authorized Participant Agreement, the Authorized Participant Agreement shall control.

Section 2.09 Redemption of Creation Baskets. The following procedures, except to the extent otherwise provided in the Authorized Participant Agreement for each Authorized Participant, which may be amended from time to time in accordance with the provisions of such Authorized Participant Agreement (and any such amendment shall not constitute an amendment of this Trust Agreement), apply to the redemption of Creation Baskets.

(a) Redemption of Creation Baskets.

(i) The procedures by which an Authorized Participant can redeem one or more baskets mirror the procedures for the creation of Creation Baskets with an additional safeguard on ether or cash, if any, being removed from the Trust’s Ether Custodian or cash custodian account. On any Business Day, an Authorized Participant may place an order with the Transfer Agent to redeem one or more Creation Baskets (each, a “Redemption Order”).

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Redemption Orders must be placed by the Redemption Order Cut-Off Time. A Redemption Order so received shall be effective on the date it is received in satisfactory form by the Transfer Agent (“Redemption Order Date”). The redemption procedures shall allow Authorized Participants to redeem baskets but do not entitle an individual Beneficial Owner to redeem any Shares in an amount less than a Creation Basket, or to redeem Creation Baskets other than through an Authorized Participant.

(ii) By placing a Redemption Order, an Authorized Participant agrees to deliver the baskets to be redeemed through DTC’s book-entry system to the Trust not later than 4:00 p.m. Eastern Time on the first Business Day following the effective date of the Redemption Order. Prior to the delivery of the redemption distribution for a Redemption Order, the Authorized Participant must also have wired to the Transfer Agent the non-refundable transaction fee due for the Redemption Order. As a condition precedent to the surrender of any Shares or withdrawal of any Trust Property, the Sponsor (i) may require payment from the applicable Authorized Participant of a sum sufficient to reimburse it for any tax or other governmental charges and any transfer or other fee with respect thereto (including any such tax or charge and fee with respect to any ether being withdrawn) and payment of any applicable fees as herein provided and (ii) may also require compliance with any regulations the Trust may establish consistent with the provisions of this Agreement. If an Authorized Participant fails to consummate the foregoing, the order may be cancelled. The applicable Authorized Participant agrees to indemnify the Sponsor, the Trustee and the Trust if any of them is required by law to pay any such tax, charge or fee, together with any applicable penalties, additions to tax and interest thereon.

An Authorized Participant may not withdraw a Redemption Order.

(iii) The manner by which redemptions are made shall be dictated by the terms of the Authorized Participant Agreement. On Redemption Trade Date, following receipt of the Redemption Order from the Authorized Participant, the Trust shall instruct the Ether Custodian to move the ether in the amount of the Creation Basket Deposit out of the Trust’s Custody Account into the Trust’s Clearing Account. On Redemption Trade Date, the Trust in its sole discretion, shall select a Liquidity Provider and execute a trade to sell the ether in exchange for cash to be delivered on the Redemption Settlement Date. The Redemption Settlement Date shall be the immediately following Business Day after the Redemption Trade Date, unless the parties otherwise agree in writing. The Liquidity Provider, not the Authorized Participant, shall be responsible for purchasing ether from the Trust. By placing a Redemption Order, an Authorized Participant agrees to facilitate the delivery of the Basket of Shares to be redeemed through DTC’s book-entry system to the Trust’s account with the Transfer Agent no later than 4:00 p.m. Eastern Time on the Redemption Settlement Date. If an Authorized Participant fails to consummate the foregoing, the order may be cancelled.

(b) Determination of Redemption Distribution. By 8:00 p.m. Eastern Standard Time (or such other time as the parties may agree) on Redemption Trade Date, the Administrator will calculate and transmit the Required Cash Redemption Total that the Trust is responsible for delivering in cash on Redemption Settlement Date to the Authorized Participant’s designated bank account. The Required Cash Redemption Total consists of (1) Basket Cash Component, minus (2) the Cash Amount, and minus (3) any Redemption Slippage. The Trust acknowledges that, if the actual cash sale price realized from selling ether to the Liquidity Provider is above the Basket Cash

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Component, the Authorized Participant shall be entitled to retain the difference and the Required Cash Redemption Total shall be increased accordingly.

(c) Delivery of Redemption Distribution. On the Redemption Settlement Date, the Liquidity Provider delivers cash to the Trust’s Clearing Account in exchange for the cash purchase price, as facilitated by the Ether Custodian under the Clearing Agreement. Upon settlement of the ether sale by the Trust to the Liquidity Provider and the receipt of the Liquidity Provider’s cash in the Trust’s Clearing Account, the Trust instructs the Ether Custodian to transfer the cash to the Trust’s Cash Custodian account. The Trust then instructs the Transfer Agent to deliver the Authorized Participant’s Shares in the Creation Basket Deposit back to the Trust, in exchange for which the Trust instructs the Cash Custodian to transfer the Required Cash Redemption Total to the Authorized Participant’s designated bank account and the Redemption Order is settled. If the ether sale transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant shall have the option to cancel the Redemption Order, in which case the Trust will retain its ether and the Authorized Participant will retain the associated Shares and will not receive any cash, or the Sponsor may use an alternative execution method for the Trust to sell ether, in which case the Authorized Participant agrees and acknowledges it is responsible for any Redemption Slippage and Cash Amount relating to such alternative execution method. If the Trust’s DTC account has not been credited with all of the Creation Baskets to be redeemed by such time, the redemption distribution will also be delayed.

(d) Suspension or Rejection of Redemption Orders. The Sponsor may, in its sole discretion, suspend the right of redemption, or postpone the redemption settlement date, (1) for any period during which the Exchange is closed other than customary weekend or holiday closings, or trading on the Exchange is suspended or restricted, (2) for any period during which an emergency exists as a result of which delivery, disposal or evaluation of ether is not reasonably practicable, or (3) for such other period as the Sponsor determines to be necessary for the protection of the Shareholders. None of the Sponsor, the Person authorized to take Redemption Orders in the manner provided in the Authorized Participant Agreement, the provider of Clearing Services, Cash Custodian or the Ether Custodian shall be liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.

Redemption Orders must be made in whole Creation Baskets. The Sponsor acting by itself or through the Person authorized to take Redemption Orders in the manner provided in the Authorized Participant Agreement may, in its sole discretion, reject any Redemption Order (1) the Sponsor determines not to be in proper form, (2) the fulfillment of which its counsel advises may be illegal under applicable laws and regulations, or (3) if circumstances outside the control of the Sponsor, the Person authorized to take Redemption Orders in the manner provided in the Authorized Participant Agreement, prime broker, cash custodian or the Ether Custodian make it for all practical purposes not feasible for the Shares to be delivered or the redemption distribution to be made under the Redemption Order. The Sponsor may also reject a Redemption Order if the number of Shares being redeemed would reduce the remaining outstanding Shares to less than the size of a Creation Basket as specified in the Registration Statement.

(e) Creation and Redemption Transaction Fee. To compensate the Transfer Agent for its expenses in connection with the creation and redemption of Creation Baskets, an Authorized Participant shall be required to pay a transaction fee to the Transfer Agent to create or redeem

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Creation Baskets, regardless of the number of baskets in such order (the “Transaction Fee”). The Transaction Fee may be reduced, increased or otherwise changed by the Sponsor. The Sponsor shall notify DTC of any change in the Transaction Fee and shall not implement any increase in the fee for the redemption of baskets until thirty (30) days after the date of notice.

(f) Changes in Redemption Procedures. The procedures set forth in this Section 2.09 may be changed from time-to-time at the sole discretion of the Sponsor. In the event of any conflict between the procedures described in this Section 2.09 and the procedures set forth in the Authorized Participant Agreement, the Authorized Participant Agreement shall control.

(g) Liability or Authorized Participants for Taxes and Other Governmental Charges. An Authorized Participant is responsible for any transfer tax, sales or use tax, recording tax, value added tax or similar tax or other governmental charge applicable to the redemption of Shares or the transfer of ether in connection therewith, regardless of whether such tax or charge is imposed directly on the Authorized Participant. The applicable Authorized Participant agrees to indemnify the Sponsor, the Trustee and the Trust if any of them is required by law to pay any such tax, charge or fee, together with any applicable penalties, additions to tax and interest thereon.

Section 2.10 Cash Distributions. In the event the Trust distributes any cash, other than in connection with a Redemption Order, the Trust shall distribute the amount available for the distribution to the Registered Owners entitled thereto, in proportion to the number of Shares held by them respectively; provided, however, that, if the Trust is required to withhold and does withhold from such cash an amount on account of trading costs, transaction fees and/or taxes, the amount distributed to the Registered Owners shall be reduced accordingly. The Trust shall distribute only such amount, however, as can be distributed without attributing to any Registered Owner a fraction of one cent. Any such fractional amounts shall be rounded down to the nearest whole cent. The Trust will not accept any deposits if it holds any cash or other property besides ether.

Section 2.11 Other Distributions. Unless otherwise provided herein, whenever the Trust receives any property in respect of Trust Property other than cash proceeds of a sale of Trust Property (including any claim that accrues in favor of the Trust on account of any loss of deposited ether or other Trust Property), the Sponsor shall cause the Trust to distribute such property to the Registered Owners entitled thereto, in proportion to the number of Shares held by them respectively, after deduction or upon payment of the expenses of the Trust or the Sponsor (acting for the Trust), in such manner as the Sponsor may deem lawful, equitable and feasible for accomplishing such distribution, in its sole discretion; provided, however, that if in the opinion of the Sponsor such distribution cannot be made proportionately among the Registered Owners entitled thereto, or if for any other reason (including any requirement that the Trust, or the Sponsor on behalf of the Trust, withhold an amount on account of taxes or other governmental charges or that securities must be registered under the Securities Act in order to be distributed to Registered Owners) the Sponsor deems such distribution not to be lawful and feasible, the Trust shall adopt such method as the Sponsor deems lawful, equitable and feasible for the purpose of effecting such distribution, after deduction or upon payment of the expenses of the Trust or the Sponsor (acting for the Trust), including the public or private sale of property thus received, or any part thereof, and the net proceeds of any such sale shall be distributed by the Trust to the Registered Owners entitled thereto as in the case of a distribution received in cash. Neither the Trust not the Sponsor

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shall be liable for any loss or depreciation resulting from any sale or other disposition of property made by the Trust pursuant to the Sponsor’s instruction or otherwise made by the Trust in good faith.

ARTICLE III

TRUSTEE

Section 3.01 Duties. Delaware Trust Company is appointed to serve as the Trustee of the Trust in the State of Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the Delaware Act that the Trust have at least one trustee with a principal place of business in Delaware. It is understood and agreed by the parties hereto that the Trustee shall have none of the duties or liabilities of the Sponsor and no such duties shall be implied. The duties of the Trustee shall be limited to (a) accepting legal process served on the Trust in the State of Delaware, and (b) the execution of any certificates required to be filed with the Secretary of State of the State of Delaware which the Trustee is required to execute under Section 3811 of the Delaware Act. To the extent that, at law or in equity, the Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or any Registered Owner or Beneficial Owner or any other Person, it is hereby understood and agreed by the Sponsor that such duties and liabilities are replaced by the duties and liabilities of the Trustee expressly set forth in this Trust Agreement.

Section 3.02 Liability of Trustee. The Trustee shall not be liable for the acts or omissions of the Sponsor, the Transfer Agent, or any other person, nor shall the Trustee be liable for supervising or monitoring the performance and the duties and obligations of the Sponsor, the Transfer Agent, the Trust or any other person under this Agreement. The Trustee shall not be personally liable under any circumstances, except for its own willful misconduct, bad faith or gross negligence. In particular, but not by way of limitation:

(a) the Trustee shall not be personally liable for any error of judgment made in good faith except to the extent such error of judgment constitutes gross negligence on its part;

(b) no provision of this Agreement shall require the Trustee to expend or risk its personal funds or otherwise incur any financial liability in the performance of its rights or powers hereunder, if the Trustee shall have reasonable grounds for believing that the payment of such funds or adequate indemnity against such risk or liability is not reasonably assured or provided to it;

(c) under no circumstances shall the Trustee be personally liable for any representation, warranty, covenant, agreement, or indebtedness of the Trust;

(d) the Trustee shall not be personally responsible for or in respect of the validity or sufficiency of this Trust Agreement or for the due execution hereof by the Sponsor;

(e) the Trustee has not prepared or verified, and shall have no duty, responsibility or obligation or any liability therefore, for any information, disclosure, or other statement in any memorandum or other documents issued in connection with the sale or transfer of any Shares;

(f) the Trustee shall not be liable or any actions taken or omitted to be taken by it in accordance with the written instructions of the Sponsor;

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(g) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement, or to institute, conduct or defend any litigation under this Trust Agreement or any other agreements to which the Trust is a party, at the request, order or direction of the Sponsor unless the Sponsor has offered Delaware Trust Company (in its individual capacity and in its capacity as Trustee) security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred by it (including, without limitation, the reasonable fees and expenses of its counsel) therein or thereby;

(h) Notwithstanding anything contained herein to the contrary, the Trustee shall not be required to take any action in any jurisdiction other than in the State of Delaware if the taking of such action would (i) require the consent, approval, authorization or order of, giving of notice to, or the registration with or taking any action in respect of, any state or other governmental authority or agency of any jurisdiction other than the State of Delaware, (ii) result in any fee, tax or other governmental charge becoming payable by the Trustee under the laws of any jurisdiction or any political subdivision thereof other than the State of Delaware, or (iii) subject the Trustee to personal jurisdiction, other than in the State of Delaware, for causes of action arising from personal acts unrelated to the consummation of the actions of the trustee contemplated by this Trust Agreement;

(i) the Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. The Trustee may accept a certified copy of a resolution of any governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically prescribed herein, the Trustee may for all purposes hereof rely on a certificate, signed by an authorized officer of the Sponsor or any other corresponding directing party, as to such fact or matter, and such certificate shall constitute full protection to the Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon;

(j) in the exercise or administration of the trust hereunder, the Trustee (i) may act directly or through agents or attorneys pursuant to agreements entered into with any of them, and the Trustee shall not be liable for the default or misconduct of such agents or attorneys if such agents or attorneys shall have been selected by the Trustee in good faith and with due care and (ii) may consult with counsel, accountants and other skilled persons to be selected by it in good faith and with due care and employed by it, and it shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons;

(k) except as expressly provided in this Article III, in accepting and performing the trust hereby created the Trustee acts solely as a trustee hereunder and not in its individual capacity, and all persons having any claim against the Trustee by reason of the transactions contemplated by this Trust Agreement shall look only to the Trust Property for payment or satisfaction thereof; and

(l) the Trustee shall not be liable for punitive, exemplary, consequential, special or other similar damages under any circumstances.

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Section 3.03 Compensation and Expenses of the Trustee. The Trustee (or any successor Trustee) shall be entitled to receive compensation from the Sponsor or from the Trust for its services in accordance with such schedules as shall have been separately agreed to from time to time by the Sponsor and the Trustee or Trust. The Trustee may consult with counsel (who may be counsel for the Sponsor or for the Trustee). The reasonable legal fees incurred in connection with such consultation shall be reimbursed to the Trustee pursuant to this Section; provided that no such fees shall be payable to the extent that they are incurred as a result of the Trustee’s gross negligence, bad faith or willful misconduct. The Trustee may earn compensation in the form of short-term interest on items like uncashed distribution checks (from the date issued until the date cashed), funds that the Trustee is directed not to invest, deposits awaiting investment direction or received too late to be invested overnight in previously directed investments. Any amounts paid to the Trustee pursuant to this Article III shall be deemed to not be part of the Trust Estate immediately after such payment. Any amounts owing to the Trustee under this Trust Agreement shall constitute a claim against the Trust Estate. Notwithstanding any other provisions of this Trust Agreement, all payments to the Trustee, including fees, expenses and any amounts paid in connection with indemnification of the Trustee in accordance with the terms of this Trust Agreement will be payable only in Cash.

Section 3.04 Term; Resignation. The Trustee shall serve for the duration of the Trust and until the earlier of (a) the effective date of the Trustee’s resignation, or (b) the effective date of the removal of the Trustee. The Trustee is permitted to resign upon at least sixty (60) days’ prior written notice to the Sponsor; provided, however, that said resignation shall not be effective until such time as a successor Trustee has accepted such appointment. The Trustee may be removed by the Sponsor at any time, upon sixty (60) days’ prior written notice to the Trustee; provided, however, such removal shall not be effective until such time as a successor Trustee has accepted such appointment.

Section 3.05 Successor Trustee. Upon the resignation or removal of the Trustee, the Sponsor shall appoint a successor Trustee. If no successor Trustee shall have been appointed and shall have accepted such appointment within sixty (60) days after the giving of such notice of resignation or removal, the Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. Any successor Trustee appointed pursuant to this Section shall be eligible to act in such capacity in accordance with this Trust Agreement and, following compliance with this Section, shall become fully vested with the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Trustee. Any successor Trustee shall file any necessary amendments to the Certificate of Trust with the Secretary of State. Any such successor Trustee shall notify the Trustee of its appointment by providing a written instrument to the Trustee. At such time the Trustee shall be discharged of its duties herein. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Trustee may be transferred, shall, subject to the preceding sentence, be the Trustee under this Trust Agreement without further act.

Section 3.06 Indemnification. The Trustee, in its individual capacity and in its capacity as Trustee, or any officer, affiliate, director, employee, or agent of the Trustee (each, an “Indemnified Person”) shall be entitled to indemnification from the Sponsor or the Trust, to the

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fullest extent permitted by law, from and against any and all losses, claims, taxes, damages, reasonable expenses, and liabilities (including liabilities under State or federal securities laws) of any kind and nature whatsoever (collectively, “Expenses”), to the extent that such Expenses arise out of or are imposed upon or asserted against such Indemnified Persons with respect to the creation, operation or termination of the Trust, the execution, delivery or performance of this Trust Agreement or the transactions contemplated hereby; provided, however, that the Sponsor and the Trust shall not be required to indemnify any Indemnified Person for any Expenses that are a result of the willful misconduct, bad faith or gross negligence of such Indemnified Person. The obligations of the Sponsor and the Trust to indemnify the Indemnified Persons as provided herein shall survive the termination of this Trust Agreement.

The Trustee shall not be obligated to give any bond or other security for the performance of any of its duties hereunder.

ARTICLE IV

THE SPONSOR

Section 4.01 Management of the Trust. Pursuant to Sections 3806(a) and 3806(b)(7) of the Delaware Act, the Trust shall be managed by the Sponsor and the conduct of the Trust’s business shall be controlled and conducted solely by the Sponsor in its sole discretion in accordance with this Trust Agreement. The Sponsor may delegate, as provided herein, the duty and authority to manage the affairs of the Trust. Any determination as to what is in the interests of the Trust made by the Sponsor in good faith shall be conclusive. In construing the provisions of this Trust Agreement, the presumption shall be in favor of a grant of power to the Sponsor except as limited, restricted or prohibited by the express provisions of this Trust Agreement (see, e.g., Section 1.06). The enumeration of any specific power in this Trust Agreement shall not be construed as limiting the aforesaid or any other power.

The Trust shall not engage in any business or activities other than those authorized by this Trust Agreement or incidental and necessary to carry out the duties and responsibilities set forth in this Trust Agreement. Other than issuance of the Shares, the Trust shall not issue or sell any certificates or other obligations or, except as provided in this Trust Agreement, otherwise incur, assume or guarantee any indebtedness for money borrowed.

Section 4.02 Authority of Sponsor. In addition to and not in limitation of any rights and powers conferred by law or other provisions of this Trust Agreement, and except as limited, restricted or prohibited by the express provisions of this Trust Agreement (see, e.g., Sections 1.02 and 1.04) or the Delaware Act, the Sponsor shall have and may exercise on behalf of the Trust, all powers and rights the Sponsor, in its sole discretion, deems necessary, proper, convenient or advisable to effectuate and carry out the purposes, activities and objectives of the Trust, which shall include, without limitation, the following:

(a) to enter into, execute, accept, deliver and maintain, and to cause the Trust to perform its obligations under, contracts, agreements (including, but not limited to, insurance agreements) and any or all other documents and instruments, and to do and perform all such acts as may be in furtherance of Trust purposes or necessary or appropriate for the offer and sale of the Shares and

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the conduct of Trust activities and administration, and the activities and administration of the Trust, including, but not limited to contracts with third parties for services, it being understood that any document or instrument executed or accepted by the Sponsor in the Sponsor’s name shall be deemed executed and accepted on behalf of the Trust by the Sponsor; provided, however, that such services may be performed by an Affiliate or Affiliates of the Sponsor so long as the Sponsor has made a good faith determination that (A) the Affiliate that it proposes to engage to perform such services is qualified to do so (considering the prior experience of the Affiliate or the individuals employed by the Affiliate); and (B) the terms and conditions of the agreement pursuant to which such Affiliate is to perform services for the Trust are no less favorable to the Trust than could be obtained from equally-qualified unaffiliated third parties;

(b) to establish, maintain, deposit into, and/or otherwise draw upon accounts on behalf of the Trust with appropriate custodial, banking or other institutions, and execute and/or accept any instrument or agreement incidental to the Trust’s business and in furtherance of its purposes, any such instrument or agreement so executed or accepted by the Sponsor in the Sponsor’s name shall be deemed executed and accepted on behalf of the Trust, as applicable, by the Sponsor;

(c) to deposit, withdraw, pay, retain and distribute ether and Trust Property, or any portion thereof, in any manner consistent with the provisions of this Trust Agreement;

(d) to place ether orders for the Trust with ether exchanges and/or OTC market participants directly or through any electronic or other trading system;

(e) to supervise the preparation and filing of the Registration Statement and the Trust’s prospectus (the “Prospectus”) and to execute the Registration Statement on behalf of the Trust;

(f) to pay or authorize the payment of distributions to the Registered Owners and pay or authorize the payment of the expenses of the Trust;

(g) to hold or dispose of Trust Property and to subscribe for, purchase or otherwise acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, or otherwise deal in Trust Property, in each case subject to the limitations imposed by Article 1, and to do any and all acts and things for the maintenance, preservation, and protection of Trust Property; provided, however, that the Sponsor may withdraw ether from the Trust to pay the Sponsor Fee or extraordinary expenses, costs, and liabilities of the Trust not assumed by the Sponsor pursuant to this Agreement; solely if withdrawal of ether for such purpose is impracticable or unavailable, the Sponsor may sell ether to pay the Sponsor Fee or extraordinary expenses; if the Sponsor sells ether, which may be facilitated by the Ether Custodian, in accordance with the foregoing, the Sponsor shall endeavor to sell ether at such times and in the smallest amounts required to permit payment of expenses as they come due, it being the intention to avoid or minimize the Trust’s holdings of assets other than ether. Neither the Trustee nor the Sponsor shall be liable or responsible in any way for loss or depreciation resulting or incurred by reason of any sale made pursuant to this Section 4.02;

(h) to exercise powers and right of subscription or otherwise with respect to the ownership of Trust Property;

(i) (A) prepare, or cause to be prepared, and file, or cause to be filed, an application to register any Shares under the Securities Act and/or the Exchange Act and to take any other action and

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execute and deliver any certificates or documents that may be necessary to effectuate such registration and take such action as is necessary from time to time to qualify the Shares for offering and sale under the federal securities laws, including the preparation and filing of amendments and supplements to the registration statement, (B) promptly notify the Trustee of any amendment or supplement to the registration statement or prospectus, of any order preventing or suspending the use of the prospectus, or of any request for amending or supplementing the registration statement or prospectus, (C) provide the Trustee from time to time with copies, including copies in electronic form, of the prospectus, as amended and supplemented if such be the case, in such quantities as the Trustee may reasonably request and (D) prepare and file any periodic reports or updates that may be required under the Exchange Act;

(j) from time to time adopt, implement or amend such disclosure controls and procedures as are necessary or desirable, in the Sponsor’s reasonable judgment, to ensure compliance with the disclosure and ongoing reporting obligations under any applicable securities laws, and seek from the relevant securities or other regulatory authorities such relief, clarification or other action as the Sponsor shall deem necessary or desirable regarding the disclosure or financial reporting obligations of the Trust;

(k) to prepare and file an application to enable the Shares to be traded on the Exchange and to take any other action and execute and deliver any documents that may be necessary to effectuate such trading;

(l) to litigate, compromise, arbitrate, settle or otherwise adjust claims in favor of or against the Trust, or any matter in controversy, including but not limited to claims for taxes; and

(m) to contract with any Person(s) appointing, suspending, terminating, removing, or replacing such Person(s), including any Affiliate, to provide services to the Trust, including without limitation, accountants, administrators, auditors, ether exchanges and over-the-counter (“OTC”) market participants, index providers, transfer agents, shareholder servicing agents, marketing agents or other agents for the Trust.

The agreement pursuant to which an Affiliate is to perform services for the Trust shall be terminable by the Trust without penalty upon discovery of acts of fraud or willful malfeasance of the Affiliate in performing its duties thereunder.

Section 4.03 Obligations of Sponsor. In addition to the obligations expressly provided by the Delaware Act or this Trust Agreement, the Sponsor shall:

(a) execute, file, record and/or publish all certificates, statements and other documents and do any and all other things as may be appropriate for the formation, qualification and operation of the Trust and for the conduct of its business in all appropriate jurisdictions;

(b) retain independent public accountants to audit the accounts of the Trust;

(d) select, remove, or replace the Trust’s Trustee, Administrator, Transfer Agent, custodian(s), ether exchange counterparties and OTC market participant counterparties, index provider,

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marketing agent(s), insurer(s) and any other service provider(s), as the Sponsor deems appropriate in its sole discretion, and cause the Trust to enter into, suspend, terminate, or take other action in connection with contracts with such service provider(s), as the Sponsor deems appropriate in its sole discretion;

(e) negotiate and enter into insurance agreements to secure and maintain the insurance coverage to the extent described in the Prospectus;

(f) develop a marketing plan for the Trust on an ongoing basis and prepare marketing materials regarding the Trust;

(g) maintain the Trust’s website;

(h) acquire and sell ether, which may be facilitated by the Ether Custodian or prime broker subject in each instance to the limitations imposed by Section 1.06, with a view to providing Shareholders with exposure to the performance of the price of ether before payment of the Trust’s expenses and liabilities, valuing its Shares daily based on the pricing or valuation methodology adopted by the Sponsor in its discretion (for the avoidance of doubt, the Sponsor may change or adopt different pricing or valuation methodology without approval of the Shareholders);

(i) determine the Trust’s NAV and NAV per Share or appoint a designee to perform such task, and select, remove, change, or replace the pricing or valuation methodology or policies used to value the Trust’s assets and determine NAV and NAV per Share, in its sole discretion;

(j) pay all of the Trust’s extraordinary fees, expenses and liabilities not assumed by the Sponsor, if any, including, without limitation, non-recurring fees such as taxes and governmental charges, any applicable brokerage commissions, Ethereum network fees and similar transaction fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider or legal counsel engaged by the Sponsor) on behalf of the Trust to protect the Trust or the interests of Shareholders (including, for example, in connection with any fork of the Ethereum blockchain, any assets issued or connected with such fork), any indemnification of the cash custodian, Ether Custodian, prime broker, Administrator, Authorized Participants, or other agents, service providers or counterparties of the Trust, legal claims and liabilities, judgments, damages, litigation, regulatory proceedings or investigation costs or penalties, one-time regulatory licensing or registration costs or expenses, and such other extraordinary and non-recurring fees and expenses as determined in the sole discretion of the Sponsor. For extraordinary fees, expenses, and liabilities not assumed by the Sponsor, the Sponsor shall pay these expenses as they become due and seek contemporaneous reimbursement from the Trust in the form of ether at the time of payment by the Sponsor of such extraordinary fees, expenses and liabilities not assumed by the Sponsor. For extraordinary expenses denominated in dollars, the Sponsor shall convert the expense amounts into ether at the Index price on the date the Sponsor seeks such reimbursement from the Trust, and shall withdraw the corresponding amounts of ether from the Trust as reimbursement for paying such extraordinary expenses of the Trust. For extraordinary expenses denominated in ether, if any, the Sponsor shall withdraw the corresponding amounts of ether from the Trust as reimbursement for paying such extraordinary expenses. Only if the former is impracticable or unavailable, from time to time the Sponsor may arrange for or facilitate the selling of ether of the Trust in such quantity as may be necessary to permit the payment of such extraordinary Trust fees,

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expenses and liabilities not assumed by the Sponsor. The Sponsor may, but is not obligated, to sell ether at such times and in the smallest amounts required to permit such payments to be made as they become due, with the intention to avoid or minimize the Trust’s holdings of assets other than ether.

(k) pay all ordinary operating expenses (except for extraordinary expenses not assumed by the Sponsor as described in Section 4.03(j) above) out of the Sponsor Fee, and the Sponsor may from time to time withdraw ether in such quantity as is necessary to permit payment of the Sponsor Fee;

(l) enter into an Authorized Participant Agreement with each Authorized Participant and discharge the duties and responsibilities of the Trust and the Sponsor thereunder;

(m) receive directly or through its delegates from Authorized Participants and process or cause its delegates to process properly submitted Purchase Orders, as described in Section 2.08 herein and in the Authorized Participant Agreement;

(n) in connection with Purchase Orders, receive directly or through its delegates the number of ether and/or cash in an amount equal to the net asset value of a Creation Basket from Authorized Participants;

(o) in connection with Purchase Orders, after accepting an Authorized Participant’s Purchase Order and receiving ether in an amount equal to the Creation Basket Deposit, or the amount of cash needed to purchase the quantity of ether corresponding to the Creation Basket Deposit, in accordance with Section 2.08 herein and the Authorized Participant Agreement, the Sponsor or its delegate shall direct the Trust’s appointed Transfer Agent to credit the Creation Baskets to fill the Participant’s Purchase Order within one Business Day immediately following the receipt of ether and/or cash;

(p) receive directly or through its delegates from Authorized Participants and process or cause its delegates to process properly submitted Redemption Orders, as described in Section 2.09 herein and in the Authorized Participant Agreement;

(q) in connection with Redemption Orders, after receiving the Redemption Order specifying the number of Creation Baskets that the Authorized Participant wishes to redeem and after the Trust’s DTC account has been credited with the Creation Baskets to be redeemed, the Sponsor or its delegates shall transfer to the redeeming Authorized Participant, in accordance with Section 2.09 herein and the Authorized Participant Agreement: (i) in the case of an in-kind redemption, an amount of ether equal to the number of Creation Baskets being redeemed, or (ii) in the case of an in-kind redemption, the cash proceeds of the sale of such ether;

(r) assist in the preparation and filing of reports and proxy statements (if any) to the Registered Owners, the periodic updating of the Registration Statement and Prospectus and other reports and documents for the Trust required to be filed by the Trust with the SEC and other governmental bodies;

(s) use its best efforts to maintain the status of the Trust as a grantor trust for U.S. federal income tax purposes, including making such elections, filing such tax returns, and preparing, disseminating and filing such tax reports, as it is advised by its counsel or accountants are from

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time to time required by any statute, rule or regulation of the United States, any State or political subdivision thereof, or other jurisdiction having taxing authority in respect of the Trust or its administration;

(t) monitor all fees charged to the Trust, and the services rendered by the service providers to the Trust, to determine whether the fees paid by, and the services rendered to, the Trust are at competitive rates and are the best price and services available under the circumstances, and if necessary, renegotiate the fee structure to obtain such rates and services for the Trust;

(u) perform such other services as the Sponsor believes the Trust may from time to time require; and

(v) in general, to carry out any other business in connection with or incidental to any of the foregoing powers, to do everything necessary, suitable or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power herein set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant or growing out of or connected with the aforesaid business or purposes, objects or powers.

The foregoing clauses shall be construed as both objects and powers, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Sponsor. Any action by the Sponsor hereunder shall be deemed an action on behalf of the Trust, and not an action in an individual capacity.

The Sponsor shall be entitled to delegate its obligations under this Trust Agreement and applicable law to third parties, including any Affiliate, and shall not be liable for the actions of such third party to the extent the selection of such third party was made with reasonable care or, as applicable, the selection of such Affiliate was made in accordance with Section 4.02(a).

Section 4.04 Compensation of the Sponsor. The Sponsor shall be entitled to compensation for its services as Sponsor of the Trust as set forth herein. The Trust shall pay the Sponsor a unified fee specified in the Registration Statement (the “Sponsor Fee”). The Administrator will make its determination regarding the Sponsor Fee each day by reference to the Trust’s NAV as of that day. The Sponsor Fee will be accrued daily and payable monthly in arrears on, or by, the tenth Business Day of each month in respect of the prior month (or on the date of termination of this Trust Agreement, in respect of the period commencing on the first day of the period beginning after the last period in respect of which the Sponsor Fee was paid and ending on such termination date). The Sponsor Fee will accrue daily in U.S. dollars and be payable monthly in arrears in ether. Each month, the Administrator will calculate the Sponsor Fee for each day of the month, resulting in a cumulative total in U.S. dollars, which the Administrator will then calculate the ether equivalent of by reference to the Index as of the date of calculation, and the Sponsor shall then withdraw the corresponding amount of ether from the Trust’s Ethereum Account in payment of the Sponsor Fee. The Trustee shall have no liability or responsibility for amounts paid to the Sponsor pursuant to this Section 4.04. The Sponsor may, at its sole discretion and from time to time, waive all or a portion of its fee payable under this Section 4.04. The Sponsor is under no obligation to waive its fees hereunder, and any such waiver shall create no obligation to waive fees during any period not covered by the applicable waiver. Any fee waiver by the Sponsor shall not operate to reduce the Sponsor’s obligations hereunder.

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Section 4.05 Sponsor’s Obligations With Respect to Hard Forks. Because ether software is open source, any user can download the software, modify it and then propose that ether users and miners adopt the modification. When a modification is introduced and a substantial majority of users and miners consent to the modification, the change is implemented and the Ethereum network remains uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is nonetheless implemented by some users and miners and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” (i.e., a “split”) of the Ethereum network (and the blockchain), with one version running the pre-modified software and the other running the modified software. The effect of such a “hard” fork would be the existence of two (or more) versions of the Ethereum network running in parallel, but with each version’s ether lacking interchangeability. Additionally, a fork could be introduced by an unintentional, unanticipated software flaw in the multiple versions of otherwise compatible software users run.

Neither the Trust nor the Sponsor shall have any obligation to take any actions that would impact hard fork events or similar events at the network level. However, if such an event does occur, the Sponsor in its sole discretion may determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Ethereum network, is generally accepted as the Ethereum network and should therefore be considered the appropriate network for the Trust’s purposes. If as a result of the hard fork the Trust ends up holding the original ether and the new alternative forked asset, the Trust shall as soon as possible direct the Ether Custodian to distribute the new alternative forked asset in-kind to the Sponsor, as agent for the Shareholders of the Trust, and the Sponsor shall arrange to sell the new alternative forked asset and distribute the proceeds to the Registered Owners, provided that the Sponsor determines that claiming or attempting to claim the forked asset that is not ether is not impossible, impractical, prohibited by law, operationally burdensome, will expose the Trust, the Sponsor, or the Trust’s (original) ether holdings to risk, may cause the Trust to fail to qualify as a grantor trust under the Code or any comparable provision of the laws of any State or other jurisdiction where such treatment is sought, unjustified given the costs of taking possession and/or maintaining ownership of the forked asset exceed the benefits of owning the forked asset, or is otherwise inadvisable, in each case, as determined by the Sponsor in its sole and absolute discretion, taking into account whatever factors it deems necessary or appropriate. The Sponsor will make a similar determination in the event of an airdrop. The Sponsor may also consider whether the Ether Custodian supports the forked asset or will permit the Trust to make a one-time withdrawal of the forked or airdropped asset. Notwithstanding the foregoing, neither the Trust nor the Sponsor shall be under any obligation to claim or attempt to secure or realize any economic benefit from the forked asset. The Sponsor may determine, in its sole and absolute discretion, to cause the Trust to irrevocably and permanently abandon, for no consideration, such forked assets, including, without limitation, if claiming or attempting to secure or realize economic benefit from the forked asset is impossible, impractical, prohibited by law, operationally burdensome, not supported by service providers such as the Ether Custodian, will expose the Trust, the Sponsor, or the Trust’s (original) ether holdings to risk, may cause the Trust to fail to qualify as a grantor trust under the Code or any comparable provision of the laws of any State or other jurisdiction where such treatment is sought, is unjustified given the costs of taking possession and/or maintaining ownership of the forked asset exceed the benefits of owning the forked asset, or such abandonment is otherwise advisable, in each case, as determined by the Sponsor in its sole and absolute discretion, taking into account whatever factors it deems necessary or appropriate.

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Similarly, neither the Trust nor the Sponsor shall be under any obligation to claim or attempt to secure or realize any economic benefit from “airdropped” assets, and the Sponsor may determine, in its sole and absolute discretion, to cause the Trust to irrevocably and permanently abandon, for no consideration, such forked assets.

Section 4.06 Liability of Sponsor and Indemnification.

(a) The Sponsor shall not be under any liability to the Trust, the Trustee, any Registered Owner or any Beneficial Owner for any action taken or for refraining from the taking of any action in good faith pursuant to this Trust Agreement, or for errors in judgment or for depreciation or loss incurred by reason of the sale of any ether or other assets held in trust hereunder; provided, however, that this provision shall not protect the Sponsor against any liability to which it would otherwise be subject by reason of its own gross negligence, bad faith, or willful misconduct. The Sponsor may rely in good faith on any paper, order, notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment, draft or any other document of any kind prima facie properly executed and submitted to it by the Trustee, the Trustee’s counsel or by any other Person for any matters arising hereunder. The Sponsor shall in no event be deemed to have assumed or incurred any liability, duty, or obligation to any Registered Owner or any Beneficial Owner or to the Trustee other than as expressly provided for herein. The Sponsor shall not have any implied duties (including fiduciary duties) or liabilities otherwise existing at law or in equity with respect to the Trust or any other Person. To the extent that, at law or in equity, the Sponsor has duties (including fiduciary duties) and liabilities relating thereto to the Trust, the Registered Owners, the Beneficial Owners, the Authorized Participants, or any other Person, the Sponsor acting under this Trust Agreement shall not be liable to the Trust, the Registered Owners, the Beneficial Owners, the Authorized Participants, or any other Person for its good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict or eliminate the duties and liabilities of the Sponsor otherwise existing at law or in equity are agreed by the parties hereto to replace such other duties and liabilities of the Sponsor. The Trust shall not incur the cost of that portion of any insurance which insures any party against any liability, the indemnification of which is herein prohibited.

(b) Unless otherwise expressly provided herein:

(i) whenever a conflict of interest exists or arises between the Sponsor or any of its Affiliates, on the one hand, and the Trust, any Registered Owner, any Beneficial Owner or any other Person, on the other hand; or

(ii) whenever this Trust Agreement or any other agreement contemplated herein provides that the Sponsor shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust, any Registered Owner, any Beneficial Owner or any other Person, the Sponsor shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Sponsor, the resolution, action or terms so made, taken or provided by the Sponsor shall not constitute a breach of this Trust Agreement

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or any other agreement contemplated herein or of any duty or obligation of the Sponsor at law or in equity or otherwise.

(c) The Sponsor and its shareholders, members, directors, officers, employees, Affiliates and subsidiaries (each a “Sponsor Indemnified Party”) shall be indemnified by the Trust and held harmless against any loss, liability or expense incurred hereunder without gross negligence, bad faith, or willful misconduct on the part of such Sponsor Indemnified Party arising out of or in connection with the performance of its obligations hereunder or any actions taken in accordance with the provisions of this Trust Agreement. Any amounts payable to a Sponsor Indemnified Party under this Section 4.06 may be payable in advance or shall be secured by a lien on the Trust. The Sponsor shall not be under any obligation to appear in, prosecute or defend any legal action that in its opinion may involve it in any expense or liability; provided, however, that the Sponsor may, in its discretion, undertake any action that it may deem necessary or desirable in respect of this Trust Agreement and the rights and duties of the parties hereto and the interests of the Shareholders and, in such event, the legal expenses and costs of any such action shall be expenses and costs of the Trust and the Sponsor shall be entitled to be reimbursed therefor by the Trust. The obligations of the Trust to indemnify the Sponsor Indemnified Parties as provided herein shall survive the termination of this Trust Agreement.

(d) Notwithstanding any other provision of this Trust Agreement or of applicable law, whenever in this Trust Agreement the Sponsor is permitted or required to make a decision:

(i) in its “discretion” or under a grant of similar authority, the Sponsor shall be entitled to consider such interests and factors as it desires, including its own interests, and, to the fullest extent permitted by applicable law, shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust, any Registered Owner, any Beneficial Owner, any Authorized Participant, or any other Person;

(ii) in its “good faith” or under another express standard, the Sponsor shall act under such express standard and shall not be subject to any other or different standard. The term “good faith” as used in this Trust Agreement shall mean subjective good faith as such term is understood and interpreted under Delaware law.

(iii) The Sponsor and any of their respective Affiliates may engage in or possess an interest in other profit-seeking or business ventures of any nature or description, independently or with others, whether or not such ventures are competitive with the Trust, and the doctrine of corporate opportunity, or any analogous doctrine, shall not apply to the Sponsor. If the Sponsor acquires knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the Trust, it shall have no duty to communicate or offer such opportunity to the Trust, and the Sponsor shall not be liable to the Trust or to the Registered Owners, the Beneficial Owners, the Authorized Participants or other Person for breach of any fiduciary or other duty by reason of the fact that the Sponsor pursues or acquires for, or directs such opportunity to, another Person or does not communicate such opportunity or information to the Trust. Neither the Trust nor any Registered Owner, Beneficial Owner, Authorized Participant or other Person shall have any rights or obligations by virtue of this Trust Agreement or the trust relationship created hereby in or to such independent ventures or the income or profits or losses

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derived therefrom, and the pursuit of such ventures, even if competitive with the activities of the Trust, shall not be deemed to be wrongful or improper.

Section 4.07 Voluntary Withdrawal of the Sponsor. The Sponsor may withdraw voluntarily as the Sponsor of the Trust only upon one hundred and twenty (120) days’ prior written notice to all Registered Owners and the Trustee. If the withdrawing Sponsor is the last remaining Sponsor, the Trustee may elect and appoint, effective as of a date on or prior to the withdrawal, a successor Sponsor who shall carry on the affairs of the Trust. If the Sponsor withdraws and a successor Sponsor is named, the withdrawing Sponsor shall pay all expenses as a result of its withdrawal.

Section 4.08 Litigation. The Sponsor is hereby authorized to prosecute, defend, settle or compromise actions or claims at law or in equity as may be necessary or proper to enforce or protect the Trust’s interests. The Sponsor shall satisfy any judgment, decree or decision of any court, board or authority having jurisdiction or any settlement of any suit or claim prior to judgment or final decision thereon, first, out of any insurance proceeds available therefor, next, out of the Trust’s assets and, thereafter, out of the assets (to the extent that it is permitted to do so under the various other provisions of this Trust Agreement) of the Sponsor.

Section 4.09 Bankruptcy; Merger of the Sponsor.

(a) The Sponsor shall not cease to be a Sponsor of the Trust merely upon the occurrence of its making an assignment for the benefit of creditors, filing a voluntary petition in bankruptcy, filing a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, filing an answer or other pleading admitting or failing to contest material allegations of a petition filed against it in any proceeding of this nature or seeking, consenting to or acquiescing in the appointment of a trustee, receiver or liquidator for itself or of all or any substantial part of its properties.

(b) To the fullest extent permitted by law, and on sixty (60) days’ prior written notice to the Registered Owners of their right to vote thereon, if any such transaction is other than with an affiliated entity, nothing in this Trust Agreement shall be deemed to prevent the merger of the Sponsor with another corporation or other entity, the reorganization of the Sponsor into or with any other corporation or other entity, the transfer of all the capital stock of the Sponsor or the assumption of the rights, duties and liabilities of the Sponsor by, in the case of a merger, reorganization or consolidation, the surviving corporation or other entity by operation of law. Without limiting the foregoing, none of the transactions referenced in the preceding sentence shall be deemed to be a voluntary withdrawal for purposes of Section 4.07 or an Event of Withdrawal for purposes of Section 8.01(a)(iv).

ARTICLE V

BOOKS OF ACCOUNT, REPORTS AND FISCAL YEAR

Section 5.01 Books of Account. Proper books of account for the Trust shall be kept and shall be audited annually by an independent certified public accounting firm selected by the

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Sponsor in its sole discretion, and there shall be entered therein all transactions, matters and things relating to the Trust as are required by the applicable law and regulations and as are usually entered into books of account kept by trusts. The books of account shall be kept at the principal office of the Trust and each Beneficial Owner (or any duly constituted designee of a Beneficial Owner) shall have, at all times during normal business hours, free access to and the right to inspect and copy the same for any purpose reasonably related to the Beneficial Owner’s interest as a beneficial owner of the Trust. Such books of account shall be kept, and the Trust shall report its profits and losses on, the accrual method of accounting for financial accounting purposes on a Fiscal Year basis as described in Section 5.05.

Section 5.02 Annual Updates, Quarterly Updates and Account Statements. So long as the Shares are listed, quoted or traded on an Exchange or registered under the Securities Act or the Exchange Act, the Sponsor shall prepare and publish the Trust’s Annual Reports and Quarterly Reports as required by the rules and regulations of such Exchange or the SEC, as applicable.

Section 5.03 Maintenance of Records. The Sponsor shall maintain for a period of at least six Fiscal Years (a) all books of account required by Section 5.01 hereof; (b) a list of the names and last known address of, and number of Shares owned by, all Registered Owners; (c) a copy of the Certificate of Trust and all certificates of amendment thereto; (d) executed copies of any powers of attorney pursuant to which any certificate has been executed; (e) copies of the Trust’s U.S. federal, state and local income tax returns and reports, if any; (f) copies of any effective written Trust Agreements, Authorized Participant Agreements, including any amendments thereto; and (g) any financial statements of the Trust. The Sponsor may keep and maintain the books and records of the Trust in paper, magnetic, electronic or other format as the Sponsor may determine in its sole discretion, provided that the Sponsor shall use reasonable care to prevent the loss or destruction of such records. If there is a conflict between this Section 5.03 and the rules and regulations of any Exchange on which the Shares are listed, quoted or traded or, if applicable, the SEC with respect to the maintenance of records, the records shall be maintained pursuant to the rules and regulations of such Exchange or the SEC.

Section 5.04 Calculation of Net Asset Value. The Trust’s NAV per Share is calculated by: (i) taking the current market value of its total assets; (ii) subtracting any liabilities; and (iii) dividing that total by the total number of outstanding Shares. The Sponsor has the exclusive authority to determine the Trust’s NAV and NAV per Share, which it may delegate in its discretion. The NAV for a normal trading day will be released after 4:00 p.m. Eastern Time.

Section 5.05 Fiscal Year. The fiscal year of the Trust shall initially be the period ending December 31 of each year (the “Fiscal Year”). The Sponsor shall have the continuing right to select an alternate fiscal year permitted by the Code and other applicable law.

ARTICLE VI

AMENDMENT OF TRUST AGREEMENT; MEETINGS

Section 6.01 Amendments to the Trust Agreement. Subject to Section 1.02 and 1.06, the Trustee and the Sponsor may amend any provision of this Agreement without the consent of any Person, including any Registered Owner or Beneficial Owner, provided that any amendment

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that imposes or increases any fees or charges (other than taxes and other governmental charges, registration fees or other such expenses), or that otherwise prejudices any substantial existing right of the Registered Owners or the Beneficial Owners, will not become effective as to outstanding Shares until 30 days after notice of such amendment is given to the Registered Owners. Notwithstanding the foregoing, the Sponsor shall have the right to increase or decrease the amount of the Sponsor Fee (i) upon three (3) Business Days’ prior notice of the increase or decrease being posted on the website of the Trust and (ii) upon three (3) Business Days’ prior written notice of the increase or decrease being given to the Trustee. Every Registered Owner and Beneficial Owner, at the time any amendment so becomes effective, shall be deemed, by continuing to hold any Shares or an interest therein, to consent and agree to such amendment and to be bound by this Agreement as amended thereby.

Section 6.02 Meetings of the Trust. Meetings of the Beneficial Owners may be called by the Sponsor in its sole discretion. The Sponsor shall furnish written notice to all Beneficial Owners thereof of the meeting and the purpose of the meeting, which shall be held on a date not less than ten (10) nor more than sixty (60) days after the date of mailing of said notice, at a reasonable time and place. Any notice of meeting shall be accompanied by a description of the action to be taken at the meeting. Beneficial Owners may vote in person or by proxy at any such meeting.

Section 6.03 Action Without a Meeting. Any action required or permitted to be taken by Beneficial Owners by vote may be taken without a meeting by written consent setting forth the actions so taken. Such written consents shall be treated for all purposes as votes at a meeting. If the vote or consent of any Beneficial Owner to any action of the Trust or any Beneficial Owner, as contemplated by this Trust Agreement, is solicited by the Sponsor, the solicitation shall be effected by notice to each Beneficial Owner given in the manner provided in Section 10.06. The vote or consent of each Beneficial Owner so solicited shall be deemed conclusively to have been cast or granted as requested in the notice of solicitation, whether or not the notice of solicitation is actually received by that Beneficial Owner, unless the Beneficial Owner expresses written objection to the vote or consent by notice given in the manner provided in Section 10.06 and actually received by the Trust within twenty (20) days after the notice of solicitation is sent. The Covered Persons dealing with the Trust shall be entitled to act in reliance on any vote or consent that is deemed cast or granted pursuant to this Section 6.03 and shall be fully indemnified by the Trust in so doing. Any action taken or omitted in reliance on any such deemed vote or consent of one or more Beneficial Owners shall not be void or voidable by reason of any communication made by or on behalf of all or any of such Beneficial Owners in any manner other than as expressly provided in Section 10.06.

ARTICLE VII

TERM

The term for which the Trust shall exist shall be perpetual, unless terminated pursuant to the provisions of Article VIII hereof or as otherwise provided by law.

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ARTICLE VIII

TERMINATION

Section 8.01 Events Requiring Dissolution of the Trust.

(a) The Trust shall dissolve at any time upon the happening of any of the following events:

(i) a U.S. federal or state regulator requires the Trust to shut down or forces the Trust to liquidate its ether or seizes, impounds or otherwise restricts access to the Trust Property;

(ii) any ongoing event exists that either prevents the Trust from making or makes impractical the Trust’s reasonable efforts to make a fair determination of the price of ether for purposes of determining the net asset value of the Trust;

(iii) any ongoing event exists that either prevents the Trust from converting or makes impractical the Trust’s reasonable efforts to convert ether to U.S. Dollars; or

(iv) a certificate of dissolution or revocation of the Sponsor’s charter is filed (and ninety (90) days have passed after the date of notice to the Sponsor of revocation without a reinstatement of the Sponsor’s charter) or the withdrawal, removal, adjudication or admission of bankruptcy or insolvency of the Sponsor (each of the foregoing events an “Event of Withdrawal”) has occurred unless (i) at the time there is at least one remaining Sponsor or (ii) within ninety (90) days of such Event of Withdrawal, the Trustee agrees in writing to continue the affairs of the Trust and to select, effective as of the date of such event, one or more successor Sponsors.

(b) The Sponsor may, in its sole discretion, dissolve the Trust if any of the following events occur:

(i) the Shares are delisted from the Exchange and are not approved for listing on another national securities exchange within five Business Days of their delisting;

(ii) the SEC determines that ether is a security or the Trust is an investment company required to be registered under the Investment Company Act of 1940;

(iii) the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act;

(iv) the Trust is determined to be a “money service business” under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder;

(v) the Trust is required to obtain a license or make a registration under any state law regulating money transmitters, money services businesses, providers of prepaid or stored value or similar entities, or virtual currency businesses;

(vi) the Trust becomes insolvent or bankrupt;

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(vii) the Ether Custodian, cash custodian or prime broker resigns or is removed without replacement;

(viii) all of the Trust’s ether are sold;

(ix) the Sponsor determines that the size of the Trust Property in relation to the expenses of the Trust makes it unreasonable or imprudent to continue the affairs of the Trust;

(x) the Sponsor receives notice from the IRS or from counsel for the Trust or the Sponsor that the Trust fails to qualify for treatment, or will not be treated, as a grantor trust under the Code;

(xi) 60 days have elapsed since DTC or another Depository has ceased to act as depository with respect to the Shares and the Sponsor has not identified another Depository that is willing to act in such capacity;

(xii) the Trustee notifies the Sponsor of the Trustee’s election to resign and the Sponsor does not appoint a successor trustee within one hundred and eighty (180) days; or

(xiii) the Sponsor determines, in its sole discretion, that it is desirable or advisable for any reason to discontinue the affairs of the Trust.

(c) The death, legal disability, bankruptcy, insolvency, dissolution, or withdrawal of any Beneficial Owner (as long as such Beneficial Owner is not the sole Beneficial Owner of the Trust) shall not result in the termination of the Trust, and such Beneficial Owner, his or her estate, custodian or personal representative shall have no right to a redemption of such Beneficial Owner’s Shares. Each Beneficial Owner (and any assignee thereof) expressly agrees that in the event of his or her death, he or she waives on behalf of himself or herself and his or her estate, and he or she directs the legal representative of his or her estate and any person interested therein to waive the furnishing of any inventory, accounting or appraisal of the Trust Property and any right to an audit or examination of the books of account for the Trust, except for such rights as are set forth in Article VI hereof relating to the books of account and reports of the Trust.

Section 8.02 Distributions on Dissolution. Upon the dissolution of the Trust, the Sponsor (or in the event there is no Sponsor, such person (the “Liquidating Trustee”) as the majority in interest of the Beneficial Owners may propose and approve) shall take full charge of the Trust Property. Any Liquidating Trustee so appointed shall have and may exercise, without further authorization or approval of any of the parties hereto, all of the powers conferred upon the Sponsor under the terms of this Trust Agreement, subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers, and provided that the Liquidating Trustee shall not have general liability for the acts, omissions, obligations and expenses of the Trust. Thereafter, in accordance with Section 3808(e) of the Delaware Act, the affairs of the Trust shall be wound up and all assets owned by the Trust shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom shall be applied and distributed in the following order of priority: (a) to the expenses of liquidation and termination and to creditors, including Registered Owners and Beneficial Owners who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Trust (whether by payment or the making of reasonable provision for payment thereof) other than liabilities for distributions to

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Registered Owners, and (b) to the Beneficial Owners pro rata in accordance with their respective Percentage Interests of the Trust Property.

Section 8.03 Termination; Certificate of Cancellation. Following the dissolution and distribution of the assets of the Trust, the Trust shall terminate and the Sponsor or the Liquidating Trustee, as the case may be, shall instruct the Trustee in writing to execute and cause such certificate of cancellation of the Certificate of Trust to be filed in accordance with the Delaware Act at the expense of the Sponsor or the Liquidating Trustee, as the case may be. Notwithstanding anything to the contrary contained in this Trust Agreement, the existence of the Trust as a separate legal entity shall continue until the filing of such certificate of cancellation.

ARTICLE IX

THE BENEFICIAL OWNERS

Section 9.01 No Management or Control; Limited Liability; Exercise of Rights through a Participant. The Beneficial Owners shall not participate in the management or control of the Trust nor shall they enter into any transaction on behalf of the Trust or have the power to sign for or bind the Trust, said power being vested solely and exclusively in the Sponsor. Except as provided in Section 9.03 hereof, no Beneficial Owner shall be bound by, or be personally liable for, the expenses, liabilities or obligations of the Trust in excess of its Percentage Interest of the Trust Property. Except as provided in Section 9.03 hereof, each Share owned by a Beneficial Owner shall be fully paid and no assessment shall be made against any Beneficial Owner. No salary shall be paid to any Beneficial Owner in its capacity as a Beneficial Owner, nor shall any Beneficial Owner have a drawing account or earn interest on its Percentage Interest of the Trust Property. By the purchase and acceptance or other lawful delivery and acceptance of Shares, each owner of such Shares shall be deemed to be a Beneficial Owner and beneficiary of the Trust and vested with beneficial undivided interest in the Trust to the extent of the Shares owned beneficially by such Beneficial Owner, subject to the terms and conditions of this Trust Agreement.

Section 9.02 Rights and Duties. The Beneficial Owners shall have the following rights, powers, privileges, duties and liabilities:

(a) The Beneficial Owners shall have the right to obtain from the Sponsor information on all things affecting the Trust, provided that such information is for a purpose reasonably related to the Beneficial Owner’s interest as a beneficial owner of the Trust.

(b) The Beneficial Owners shall receive the share of the distributions provided for in this Trust Agreement in the manner and at the times provided for in this Trust Agreement.

(c) Except for the Beneficial Owners’ transfer rights set forth in Section 2.03 and the Beneficial Owners’ redemption rights set forth in Section 2.09 hereof, Beneficial Owners shall have the right to demand a redemption of their Shares only upon the dissolution and winding up of the Trust and only to the extent of funds available therefor, as provided in Section 8.02. In no event shall a Beneficial Owner be entitled to demand or receive property other than cash upon the dissolution and winding up of the Trust. No Beneficial Owner shall have priority over any other

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Beneficial Owner as to distributions. The Beneficial Owner shall not have any right to bring an action for partition against the Trust.

Except as set forth above, the Beneficial Owners shall have no voting or other rights with respect to the Trust.

Section 9.03 Limitation on Liability.

(a) Except as provided under Delaware law, the Beneficial Owners shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of Delaware and no Beneficial Owner shall be liable for claims against or debts of the Trust in excess of its Percentage Interest of the Trust Property, except in the case of a Beneficial Owner that is an Authorized Participant, in the event that the liability is founded upon misstatements or omissions contained in such Authorized Participant Agreement. In addition, and subject to the exceptions set forth in the immediately preceding sentence, the Trust shall not make a claim against a Beneficial Owner with respect to amounts distributed to such Beneficial Owner or amounts received by such Beneficial Owner upon redemption of such Beneficial Owner’s Shares unless, under Delaware law, such Beneficial Owner is liable to repay such amount.

(b) The Trust shall indemnify to the full extent permitted by law and the other provisions of this Trust Agreement, and to the extent of the Trust Property, each Beneficial Owner against any claims of liability asserted against such Beneficial Owner solely because it is a beneficial owner of one or more Shares as a Beneficial Owner.

(c) Every written note, bond, contract, instrument, certificate or undertaking made or issued by the Sponsor on behalf of the Trust shall give notice to the effect that the same was executed or made by or on behalf of the Trust and that the obligations of such instrument are not binding upon the Beneficial Owners individually but are binding only upon the assets and property of the Trust, and no resort shall be had to the Beneficial Owners’ personal property for satisfaction of any obligation or claim thereunder, and appropriate references may be made to this Trust Agreement and may contain any further recital that the Sponsor deems appropriate, but the omission thereof shall not operate to bind the Beneficial Owners individually or otherwise invalidate any such note, bond, contract, instrument, certificate or undertaking.

Section 9.04 Business of Beneficial Owners. Except as otherwise specifically provided herein, any of the Beneficial Owners and any shareholder, officer, director, employee or other Person holding a legal or beneficial interest in an entity that is a Beneficial Owner, may engage in or possess an interest in business ventures of every nature and description, independently or with others, and the pursuit of such ventures, even if competitive with the affairs of the Trust, shall not be deemed wrongful or improper.

Section 9.05 Authorization of Registration Statement. Each Beneficial Owner (or any permitted assignee thereof) hereby agrees that the Trust, the Sponsor and the Trustee are authorized to execute, deliver and perform the agreements, acts, transactions and matters contemplated hereby or described in, or contemplated by, the Registration Statement on behalf of the Trust without any

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further act, approval or vote of the Beneficial Owners, notwithstanding any other provision of this Trust Agreement, the Delaware Trust Statute or any applicable law, rule or regulation.

Section 9.06 Voting Rights. Notwithstanding any other provision hereof, on each matter submitted to a vote of the Beneficial Owners, each Beneficial Owner shall be entitled to a proportionate vote based upon its Percentage Interest at such time.

ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.01 Governing Law. This Agreement shall be interpreted under, and all rights and duties under this Agreement shall be governed by, the internal substantive laws (but not the choice of law rules) of the State of Delaware.

Section 10.02 Submission to Jurisdiction. Each party hereto, each Authorized Participant by its delivery of an Authorized Participant Agreement and each Registered Owner and Beneficial Owner by the acceptance of a Share irrevocably consents to the jurisdiction of the courts of the State of Delaware, and of any federal court located in New Castle County, Delaware, in connection with any action, suit or other proceeding arising out of or relating to the Shares, the Trust Property or this Agreement or any action taken or omitted under this Agreement and waives any claim of forum non conveniens and any objections as to laying of venue; provided however, that actions for violations of the Securities Act, or the rules and regulations promulgated thereunder, or the Exchange Act or the rules and regulations promulgated can be brought in any forum pursuant to applicable federal securities laws. Each party further waives personal service of any summons, complaint or other process and agrees that service thereof may be made by certified or registered mail directed to such Person at such Person’s address last specified for purposes of notices hereunder.

Section 10.03 Derivative Actions. Subject to any other requirements of applicable law including Section 3816 of the Delaware Act, no holder of Shares shall have the right, power or authority to bring or maintain a derivative action, suit or other proceeding on behalf of the Trust unless two or more Shareholders who (i) are not Affiliates of one another and (ii) collectively hold at least 10% of the outstanding Shares join in the bringing or maintaining of such action, suit or other proceeding.

Section 10.04 Provisions in Conflict with Law or Regulations.

(a) The provisions of this Trust Agreement are severable, and if the Sponsor shall determine, with the advice of counsel, that any one or more of such provisions (the “Conflicting Provisions”) are in conflict with the Code, the Delaware Trust Statute, the Securities Act, if applicable, or other applicable U.S. federal or state laws or the rules and regulations of any Exchange, the Conflicting Provisions shall be deemed never to have constituted a part of this Trust Agreement, even without any amendment of this Trust Agreement pursuant to this Trust Agreement; provided, however, that such determination by the Sponsor shall not affect or impair any of the remaining provisions of this Trust Agreement or render invalid or improper any action taken or omitted prior to such

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determination. No Sponsor or Trustee shall be liable for making or failing to make such a determination.

(b) If any provision of this Trust Agreement shall be held invalid or unenforceable in any jurisdiction, such holding shall not in any manner affect or render invalid or unenforceable such provision in any other jurisdiction or any other provision of this Trust Agreement in any jurisdiction.

Section 10.05 Merger and Consolidation. Subject to the provisions of Section 1.02 and Section 1.06, the Sponsor may cause (i) the Trust to be merged into or consolidated with, converted to or to sell all or substantially all of its assets to, another trust or entity; (ii) the Shares of the Trust to be converted into beneficial interests in another statutory trust (or series thereof); or (iii) the Shares of the Trust to be exchanged for shares in another trust or company under or pursuant to any U.S. state or federal statute to the extent permitted by law. For the avoidance of doubt, subject to the provisions of Section 1.02, the Sponsor, with written notice to the Registered Owners, may approve and effect any of the transactions contemplated under (i), (ii) and (iii) above without any vote or other action of the Registered Owners.

Section 10.06 Construction. In this Trust Agreement, unless the context otherwise requires, words used in the singular or in the plural include both the plural and singular and words denoting any gender include all genders. The title and headings of different parts are inserted for convenience and shall not affect the meaning, construction or effect of this Trust Agreement.

Section 10.07 Notices. All notices or communications under this Trust Agreement (other than notices of pledge or encumbrance of Shares, and reports and notices by the Sponsor to the Registered Owners) shall be in writing and shall be effective upon personal delivery, or if sent by mail, postage prepaid, or if sent electronically, by email, or by overnight courier, and addressed, in each such case, to the address set forth in the books and records of the Trust or such other address as may be specified in writing, of the party to whom such notice is to be given, upon the deposit of such notice in the United States mail, upon transmission and electronic confirmation thereof or upon deposit with a representative of an overnight courier, as the case may be. Notices of pledge or encumbrance of Shares shall be effective upon timely receipt by the Sponsor in writing. Any reports or notices by the Sponsor to the Registered Owners which are given electronically shall be effective upon receipt without requirement of confirmation.

All notices that are required to be provided to the Trustee shall be sent to:

Delaware Trust Company
Attn: Corporate Trust Administration
251 Little Falls Drive
Wilmington, DE 19808

All notices that the Trustee is required to provide shall be sent to:

If to the Trust, to:

VanEck Ethereum Trust
Attn: Legal Department

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666 Third Avenue, 9^th Floor
New York, New York 10017

If to the Sponsor, to:

VanEck Digital Assets, LLC
Attn: Legal Department
666 Third Avenue, 9^th Floor
New York, New York 10017

Any and all notices to be given to a Registered Owner shall be deemed to have been duly given (i) when actually delivered by messenger or a recognized courier service, (ii) when mailed, postage prepaid, or (iii) when sent by email or facsimile transmission confirmed by letter, in each case at or to the address of such Registered Owner as it appears on the transfer books of the Trustee, or, if such Registered Owner shall have filed with the Trustee a written request that any notice or communication intended for such Registered Owner be delivered to some other address, at the address designated in such request, provided that, if the Registered Owner is DTC, notices may be given to the Registered Owner in any manner consistent with the rules of DTC as they may exist from time to time. Notices to Beneficial Owners shall be delivered to Authorized Participants and DTC Participants designated by DTC or any successor securities depository.

Section 10.08 Counterparts; Electronic Signatures. This Trust Agreement may be executed in one or more counterparts (including those by facsimile or other electronic means), all of which shall constitute one and the same instrument binding on all of the parties hereto, notwithstanding that all parties are not signatory to the original or the same counterpart. This Trust Agreement, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

Section 10.09 Binding Nature of Trust Agreement. The terms and provisions of this Trust Agreement shall be binding upon and inure to the benefit of the heirs, custodians, executors, estates, administrators, personal representatives, successors and permitted assigns of the respective Registered Owners or Beneficial Owners. For purposes of determining the rights of any Beneficial Owner or assignee hereunder, the Trust and the Sponsor may rely upon the Trust records as to who are Beneficial Owners and permitted assignees, and all Beneficial Owners and assignees agree that the Trust and the Sponsor, in determining such rights, shall rely on such records and that Beneficial Owners and their assignees shall be bound by such determination.

Section 10.10 No Legal Title to Trust Property. Subject to the provisions of Section 1.07 in the case of the Sponsor, the Beneficial Owners shall not have legal title to any part of the Trust Property.

Section 10.11 Creditors. No creditors of any Registered Owner or Beneficial Owner shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the Trust Property.

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Section 10.12 Integration. This Trust Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.

Section 10.13 Goodwill; Use of Name. No value shall be placed on the name or goodwill of the Trust, which shall belong exclusively to VanEck Digital Assets, LLC.

Section 10.14 Corporate Transparency Act. The Corporate Transparency Act (31 U.S.C. § 5336) and its implementing regulations (collectively, the “CTA”), may require the Trust to file reports with Financial Crimes Enforcement Network. It shall be Sponsor’s duty and not the Trustee’s duty to prepare such filings, cause the Trust to make such filings, and to cause the Trust to comply with its obligations under the CTA, if any.

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Declaration of Trust and Trust Agreement to be duly executed and delivered as of April 18, 2024.

	VANECK DIGITAL ASSETS, LLC, as Sponsor

	By:	/s/ Matthew Babinsky
		Name: Matthew Babinsky
		Title: Assistant Vice President

	DELAWARE TRUST COMPANY, as Trustee

	By:	/s/ Gregory Daniels
		Name: Gregory Daniels
		Title: Vice President

EXHIBIT A

FORM OF CERTIFICATE

THE SHARES EVIDENCED HEREBY REPRESENT RIGHTS WITH RESPECT TO UNDERLYING TRUST PROPERTY (AS DEFINED IN THE DECLARATION OF TRUST AND TRUST AGREEMENT REFERRED TO HEREIN) HELD BY THE TRUST AND DO NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND ARE NOT GUARANTEED BY, THE SPONSOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SHARES NOR THE UNDERLYING TRUST PROPERTY ARE INSURED UNDER ANY AGREEMENT THAT DIRECTLY BENEFITS THE TRUST OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

A-1

VANECK ETHEREUM TRUST SHARES
ISSUED BY
VANECK ETHEREUM TRUST REPRESENTING
FRACTIONAL INTERESTS IN DEPOSITED ETHEREUM
AND ANY OTHER TRUST PROPERTY

No.

CUSIP:

This is to certify that Cede & Co., as nominee of The Depository Trust Company, or registered assigns, is the owner of * Shares issued by VANECK ETHEREUM TRUST, each representing a fractional undivided interest in the profits, losses, distributions, capital and assets of, and ownership of, the Trust, as provided in the Agreement referred to below. The Trustee’s Corporate Trust Office and the Trustee’s principal executive office are each located at 251 Little Falls Drive, Wilmington, Delaware 19808.

This Certificate is issued upon the terms and conditions set forth in the Amended and Restated Declaration of Trust and Trust Agreement dated as of April 18, 2024 (the “Agreement”) between VanEck Digital Assets, LLC (the “Sponsor”) and the Trustee. By becoming a Registered Owner or Beneficial Owner, or by depositing ether, a Person is bound by all the terms and conditions of the Agreement. The Agreement sets forth the rights of Authorized Participants and Registered Owners and the rights and duties of the Trustee and the Sponsor. Copies of the Agreement are on file at the Trustee’s Corporate Trust Office in Wilmington, Delaware.

The Agreement is hereby incorporated by this reference into and made a part of this Certificate as if set forth in full in this place. Capitalized terms not defined herein and the term “ether” shall have the meanings set forth in the Agreement.

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This Certificate shall not be entitled to any benefits under the Agreement or be valid or obligatory for any purpose unless it is executed by the Sponsor by the manual or facsimile signature of a duly authorized signatory of the Sponsor and, if a Transfer Agent for the Shares shall have been appointed, countersigned by the manual signature of a duly authorized officer of the Transfer Agent.

Dated: , 2024

	VANECK DIGITAL ASSETS, LLC, as Sponsor

	By:

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EX-10.2 3 c109048_ex10-2.htm

Exhibit 10.2

FORM OF
PARTICIPANT AGREEMENT

This Participant Agreement (the “Agreement”), dated as of May 20, 2024, is entered into by and among [ ] (the “Authorized Participant”), the VanEck Ethereum Trust (the “Trust”), and VanEck Digital Assets, LLC, a Delaware limited liability company, as sponsor of the Trust (the “Sponsor”) and is subject to acceptance by State Street Bank and Trust Company, as Transfer Agent of the Trust (the “Transfer Agent”).

SUMMARY

As provided in the Trust’s Amended and Restated Declaration of Trust (the “Trust Agreement”) as currently in effect and described in the Registration Statement (defined below), units of fractional undivided beneficial interest in and ownership of the Trust (the “Shares”) may be created or redeemed in aggregations (each aggregation, a “Basket”) as specified in the Registration Statement only in transactions with an authorized participant who, at the time of the transaction, shall have signed and entered into an effective Agreement with the Trust. Baskets are offered only pursuant to the registration statement of the Trust on Form S-1, as amended (Registration No. 333-255888), as declared effective by the Securities and Exchange Commission (“SEC”) and as the same may be amended from time to time thereafter or any successor registration statement in respect of Shares of the Trust (the “Registration Statement”) filed with the SEC under the Securities Act of 1933, as amended (the “1933 Act”), as amended from time to time. Under the Trust Agreement, the Sponsor is authorized to issue Baskets to, and redeem Baskets from, authorized participants, only through the facilities of The Depository Trust Company (“DTC” or the “Depository”), or a successor depository, and only in exchange for cash or Shares, or, following the receipt of In-Kind Regulatory Approval (defined below), Ether (ETH). This Agreement sets forth the specific procedures by which the Authorized Participant may create or redeem Baskets.

Capitalized terms used but not otherwise defined in this Agreement shall have the meanings assigned to such terms in the Trust Agreement. To the extent there is a conflict between any provision of this Agreement and the provisions of the Trust Agreement, the provisions of the Trust Agreement shall control. To the extent there is a conflict between any provision of this Agreement and the provisions of the Registration Statement, the Registration Statement shall control.

Nothing in this Agreement shall obligate the Authorized Participant to create or redeem one or more Baskets of Shares or to sell or offer to sell Shares.

Until the Exchange listing the Trust’s Shares obtains the necessary regulatory approvals to permit the Trust to create and redeem Shares in-kind (the “In-Kind Regulatory Approval”), all purchases and redemptions by the Authorized Participant shall be in cash pursuant to this Agreement, including the procedures described in Exhibit C hereto (the “Procedures”).

To give effect to the foregoing premises and in consideration of the mutual covenants and agreements set forth below, the parties hereto agree as follows:

Section 1. Order Placement. To place orders to create or redeem one or more Baskets, the Authorized Participant must follow the procedures for creation and redemption referred to in

Section 3 of this Agreement and the “Procedures”, as each may be amended, modified or supplemented from time to time with notice to the Authorized Participant.

Section 2. Status of Authorized Participant. The Authorized Participant represents and warrants and covenants the following:

(a) The Authorized Participant is a participant of DTC (as such a participant, a “DTC Participant”). If the Authorized Participant ceases to be a DTC Participant, the Authorized Participant shall give prompt notice to the Sponsor and the Transfer Agent of such event, and this Agreement shall terminate immediately as of the date the Authorized Participant ceased to be a DTC Participant.

(b) Unless Section 2(d) applies, the Authorized Participant either (i) is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended (the “1934 Act”), and is a member in good standing of the Financial Industry Regulatory Authority (“FINRA”), or (ii) is exempt from being, or otherwise is not required to be, licensed as a broker-dealer or a member of FINRA, and in either case is qualified to act as a broker or dealer in the states or other jurisdictions where the nature of its business so requires. The Authorized Participant shall maintain any such registrations, qualifications and membership in good standing, or, if applicable, exempt status, in full force and effect throughout the term of this Agreement. The Authorized Participant shall comply with all applicable United States federal laws and all applicable rules of the SEC, the laws of the states or other jurisdictions concerned, and the rules and regulations promulgated thereunder, and with FINRA’s Constitution and By-Laws and the Conduct Rules of FINRA (the “FINRA Conduct Rules”), if it is a FINRA member, and shall not offer or sell Shares in any state or jurisdiction where they may not lawfully be offered and/or sold. A “Liquidity Provider,” where applicable, shall mean a third party selected by the Sponsor who (1) is not the Authorized Participant and (2) will not be acting as an agent, nor at the direction, of the Authorized Participant with respect to the delivery of Ether to the Trust or receipt of Ether from the Trust.

(c) The Authorized Participant understands and acknowledges that the proposed method by which Baskets will be created and traded may raise certain issues under applicable securities laws. For example, because new Shares can be created and issued on an ongoing basis, depending upon the facts and circumstances, at any point during the life of the Trust, a “distribution,” as such term is defined in Regulation M promulgated under the 1934 Act, may be occurring. The Authorized Participant is cautioned that, depending on the circumstances and under certain possible interpretations of applicable law, some of its activities may be deemed participation in a distribution in a manner that would render it a statutory underwriter and subject it to the prospectus delivery and liability provisions of the 1933 Act. The Authorized Participant should review the “Plan of Distribution” section of the Registration Statement and consult with its own counsel in connection with entering into this Agreement and submitting an order for the creation of Basket(s) on a Creation/Redemption Order Form (as defined below).

(d) If the Authorized Participant is offering or selling Shares in jurisdictions outside the several states, territories and possessions of the United States and is not otherwise required to be registered, qualified or a member of FINRA as set forth in Section 2(b) above, the Authorized Participant shall (i) observe the applicable laws of the jurisdiction in which such offer and/or sale is made, (ii) comply with the full disclosure requirements of the 1933 Act, and the regulations

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promulgated thereunder, and (iii) conduct its business in accordance with the spirit of the FINRA Conduct Rules.

(e) [Reserved.]

(f) The anti-money laundering program (“AML Program”) of the Authorized Participant is maintained in compliance with all applicable federal laws, rules and regulations, including the United and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended (“USA Patriot Act”), U.S. Bank Secrecy Act, as amended (“BSA”), the U.S. Money Laundering Control Act of 1986, as amended, and applicable rules and regulations promulgated by the SEC, FINRA, and the U.S. Treasury Financial Crimes Enforcement Network (“FinCEN”) in connection therewith (together, “AML Laws”), and that its AML Program, at a minimum, (i) complies with applicable law, (ii) designates a compliance officer to administer and oversee the AML Program, (iii) provides ongoing employee training, (iv) includes an independent audit function to test the effectiveness of the AML Program, (v) establishes internal policies, procedures, and controls that are tailored to its particular business, (vi) includes a customer identification program consistent with the rules under Section 326 of the USA Patriot Act, and procedures for verifying the beneficial ownership of legal entity customers, (vii) provides for the filing of all necessary anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, (viii) provides for screening all new and existing customers and counterparties against suspicious activity reports, (ix) provides for screening all new and existing customers and counterparties against the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) list, including any Ether addresses listed therein, and any other government list that is or becomes required under the USA Patriot Act, and (xi) complies with applicable recordkeeping and record retention requirements, and allows for appropriate regulators to examine its anti-money laundering books and records.

(g) The Authorized Participant has formed a reasonable belief as to the identities of and has conducted all necessary due diligence with respect to its customers and any counterparties from whom it obtained the cash being transferred.

(h) The Authorized Participant does not know or have any reason to suspect, based on reasonable inquiry, that any part of the cash being transferred was derived from, or associated with, unlawful or criminal activities. The Authorized Participant, and its owners and controllers, are not (a) the target of any economic, financial or trade sanctions or embargoes, export controls or other restrictive measures imposed by, or on any list of prohibited individuals or entities enacted or promulgated by, the United States of America (including those administered by OFAC), the European Union, any member state of the European Union, the United Kingdom or the United Nations (the “Sanctions”), or (b) located, organized or resident in a country or territory with which dealings are broadly restricted, embargoed or prohibited by any Sanctions (as of the date hereof, Crimea, Cuba, Iran, North Korea and Syria, and certain other territories) (any such country, territory, entity or individual described in this subsection (i), a “Sanctioned Party”).

(i) The Authorized Participant does not know or have any reason to suspect that (a) any part of the cash it is transferring (if applicable) is or will be derived from, held for the benefit of, or related in any way to transactions with or on behalf of, any Sanctioned Party, and (b) any Sanctioned Party has or will have any legal or beneficial interest in the Authorized Participant or such cash. The Authorized Participant is in material compliance, and has instituted reasonable

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policies and procedures to comply, with Sanctions laws and regulations and prevent transactions with Sanctioned Parties.

(j) The Authorized Participant hereby represents, covenants and warrants that it has all requisite authority, whether arising under applicable federal or state law, the rules and regulations of any self-regulatory organization to which it is subject, or its certificate of incorporation, formation or limited liability company operating agreement or other organizational document, as the case may be, to enter into this Agreement and to discharge the duties and obligations apportioned to it in accordance with the terms hereof.

(k) The Authorized Participant hereby represents, covenants and warrants that there are no actions, grievances, proceedings (including, without limitation, arbitration proceedings), orders, investigations, inquiries or claims pending, or to the Authorized Participant’s knowledge, threatened against or affecting it or any employee (in his or her capacity as such), that would affect the Authorized Participant’s ability to fulfill its obligations hereunder.

(l) The Authorized Participant, does conduct and intends to continue to conduct its business in material compliance with all applicable laws and regulations, and has obtained all regulatory licenses, approvals, authorizations and consents necessary to carry on its business as now conducted, including, without limitation, any money transmitter license or license to engage in virtual currency business activity that it is required to obtain under any state laws to which the Authorized Participant is subject, if any.

(m) To the extent Baskets are issued in exchange for cash, the Authorized Participant owns all cash being transferred by it free and clear of any and all liens, claims, security interests and encumbrances of any kind, it has all rights, title and interest in and to such cash, and it has the power to transfer such cash to the Trust. For the avoidance of doubt, the term “cash” when used throughout this agreement shall mean U.S. dollars.

Section 3. Orders. (a) All orders to create or redeem Baskets shall be made in accordance with the terms of the Trust Agreement, this Agreement, the Registration Statement and the Procedures. Each party shall comply with such foregoing terms and procedures to the extent applicable to it. The Authorized Participant hereby consents to the use of recorded telephone lines whether or not such use is reflected in the Procedures and the Authorized Participant may reasonably request that it be provided with copies or transcripts of such recordings. The Sponsor and the Transfer Agent may issue additional or other procedures from time to time relating to the manner of creating or redeeming Baskets which are not related to the Procedures, and the Authorized Participant shall comply with such procedures of which it has reasonable prior notice in accordance with this Agreement. Any notice of additional or other procedures relating to the manner of creating or redeeming Baskets shall be provided simultaneously to all authorized participants. Revised procedures shall not apply retroactively to orders submitted prior to such change in procedure, unless otherwise required by applicable law.

(b) The Authorized Participant acknowledges and agrees on behalf of itself and any party for which it is acting (whether such party is a customer or otherwise) that each order to create or redeem a Basket (an “Order”) may not be revoked by the Authorized Participant after its delivery to and acceptance by the Sponsor. Notwithstanding the foregoing, the Sponsor and the Transfer Agent on behalf of the Trust each agrees to undertake commercially reasonable efforts to accommodate requests by the Authorized Participant to cancel any Purchase Order or Redemption

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Order before the Order Cut-Off Time. In the event that the Sponsor and/or Transfer Agent cancels a Purchase Order or Redemption Order at the Authorized Participant’s request, the Authorized Participant agrees to bear reasonable exchange or processing fees, if applicable. A form of Creation/Redemption Order Form is attached hereto as Exhibit B (a “Creation/Redemption Order Form”).

(c) The Sponsor shall have the absolute right, but shall have no obligation, to reject any Creation/Redemption Order Form, and the associated Order, (i) it determines not to be in proper form; (ii) the acceptance or receipt of which could, in the opinion of counsel to the Sponsor, be unlawful; or (iii) if the Sponsor, in its sole discretion, believes it is impracticable, not reasonably feasible, or not in the best interest of the Trust or its Shareholders to process Baskets. The Sponsor shall reject a Creation/Redemption Order Form if it believes that such order would have adverse tax consequences to the Trust or its shareholders. The Sponsor shall notify the Authorized Participant prior to such rejection of its intention to reject such Purchase Order or Redemption Order and (to the extent it is permitted to do so), the reason for such rejection, and in the event that the rejection was due to the Purchase Order or Redemption Order not being in proper form, to the extent possible, provide the Authorized Participant an opportunity to place the Purchase Order or Redemption Order in proper form prior to rejection. Neither the Sponsor nor the Transfer Agent shall be liable to any person by reason of the rejection of any Creation/Redemption Order Form or Creation Basket Capital Contribution. Notwithstanding the foregoing, the Sponsor will promptly cause to be returned to the Authorized Participant upon rejection of a Purchase Order or Redemption Order all consideration, including cash tendered by the Authorized Participant, including any transaction fees, in respect of such rejected Purchase Order.

(d) The Sponsor shall reject any Redemption Order whereby the fulfillment of which counsel to the Sponsor advises in writing would be illegal under applicable laws and regulations, in which case the Sponsor or the Transfer Agent shall notify the Authorized Participant of such rejection as set forth in Section 3I above. Neither the Sponsor nor the Transfer Agent shall have liability to any person for the rejection of a Redemption Order in such circumstances, except for the return to the Authorized Participant all consideration tendered by the Authorized Participant in respect of such rejected Redemption Order as set forth in Section (c) above.

(e) The Sponsor may, in its discretion, suspend the right of redemption, or postpone the applicable Redemption Settlement Time, (i) for any period during which the Cboe BZX Exchange, Inc. or any exchange on which the Trust’s assets are regularly traded is closed other than for customary weekend or holiday closings, or trading is suspended or restricted; (ii) for any period during which a Force Majeure Event exists as a result of which delivery, disposal or evaluation of the Trust’s assets is not reasonably practicable; (iii) for such other period as the Sponsor determines in good faith to be necessary for the protection of the Beneficial Owners; or (iv) as otherwise provided herein, in the Registration Statement or in the Trust Agreement. The Sponsor shall promptly notify the Authorized Participant of any action taken pursuant to this Section 3(e). The Sponsor and the Transfer Agent shall not be liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.

(f) Without limiting any other provisions herein, in the event the Sponsor intends to prevent or prohibit creations or redemptions, it will do so by a disclosure made to all authorized participants simultaneously.

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Section 4. Fees. In connection with each Order by an Authorized Participant to create or redeem one or more Baskets, the Authorized Participant agrees to pay the Transaction Fee prescribed in the Trust Agreement and/or the Registration Statement (as applicable) with respect to such creation or redemption prior to the delivery of Shares by the Trust to the Authorized Participant (in a creation) or the delivery of cash by the Trust to the Authorized Participant (in a redemption). The Transaction Fee may be adjusted from time to time as set forth in the Trust Agreement and/or the Registration Statement (as applicable) provided, however, that the Authorized Participant shall be notified of any change in the Transaction Fee in advance of any such change. As described in the Procedures, the Authorized Participant agrees to pay an additional processing charge if the Authorized Participant fails to timely deliver the Baskets. The Sponsor agrees that no change to the Transaction Fee shall be applied to orders placed by the Authorized Participant unless the Authorized Participant has had advance notice of the change to the Transaction Fee (at least as soon as notice has been provided to any other authorized participant) or the change to the Transaction Fee has been disclosed in the prospectus. In no event will any change to the Transaction Fee be applied retroactively.

Section 5. Authorized Persons. Concurrently with the execution of this Agreement and from time to time thereafter, the Authorized Participant shall deliver to the Sponsor and the Transfer Agent, duly certified as appropriate by its secretary or other duly authorized person, a certificate in the form of Exhibit A setting forth the names and signatures of all persons authorized to give instructions relating to activity contemplated hereby or by any other notice, request or instruction given on behalf of the Authorized Participant (each, an “Authorized Person”). The Sponsor and the Transfer Agent may accept and rely upon such certificate as conclusive evidence of the facts set forth therein and shall consider such certificate to be in full force and effect until the Sponsor and the Transfer Agent receive a superseding certificate bearing a subsequent date. Upon the termination or revocation of authority of any Authorized Person by the Authorized Participant, the Authorized Participant shall give prompt written notice of such fact to the Sponsor and the Transfer Agent and such notice shall be effective upon receipt by Sponsor and the Transfer Agent. The Transfer Agent shall issue to each Authorized Person a unique personal identification number (the “PIN Number”) by which such Authorized Person shall be identified and by which instructions issued by the Authorized Participant to the Transfer Agent and/or the Sponsor, as applicable, hereunder shall be authenticated. The PIN Number shall be kept confidential by the Authorized Participant and shall only be provided to the Authorized Person and the Transfer Agent. If, after issuance, the Authorized Person’s PIN Number is changed, the new PIN Number shall become effective on a date mutually agreed upon by the Authorized Participant and the Transfer Agent. If for some reason, the Authorized Participant’s PIN Number is compromised, the Authorized Participant must contact the Transfer Agent promptly in order for a new one to be issued.

Section 6. Redemption. The Authorized Participant represents and warrants, as of the close of business on any business day, that it shall not obtain an Order Number (as described in the Procedures) from the Transfer Agent for the purpose of redeeming a Basket unless (i) it or its customer, as the case may be, owns (within the meaning of Rule 200 of Regulation SHO) or has a reasonable basis to believe that it can acquire the Basket of Shares for delivery to the Transfer Agent on or prior to the redemption settlement date or has full legal authority and legal and beneficial right to tender for redemption the Baskets to be redeemed and to receive the entire proceeds of the redemption, and (ii) if such Baskets submitted for redemption have been loaned or

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pledged to another party or are the subject of a repurchase agreement, securities lending agreement or any other arrangement, there are no restrictions which would preclude the delivery of such Baskets to the Transfer Agent on the redemption settlement date.

Section 7. Role of Authorized Participant. (a) The Authorized Participant acknowledges that, for all purposes of this Agreement and the Trust Agreement, the Authorized Participant shall be deemed to be an independent contractor and shall have no authority to act as agent for the Trust, the Sponsor or the Transfer Agent in any matter or in any respect.

(b) The Authorized Participant will make commercially reasonable efforts to make itself and its employees available, upon reasonable request, during normal business hours to consult with the Sponsor or their designees concerning the performance of the Authorized Participant’s responsibilities under this Agreement.

(c) With respect to any creation or redemption transaction made by the Authorized Participant pursuant to this Agreement for the benefit of any customer or any other DTC Participant or Indirect Participant, or any other Beneficial Owner, the Authorized Participant shall extend to any such party all of the rights, and shall be bound by all of the obligations, of a DTC Participant in addition to any obligations that it undertakes hereunder or in accordance with the Trust Agreement.

(d) Upon reasonable request by the Sponsor, the Authorized Participant will, subject to any limitations, privacy obligations or other obligations arising under federal or state laws or other obligations it may have to its customers, provide the Sponsor written notice indicating the number of Shares that the Authorized Participant may hold as record holder and the number of such Shares that it holds for the benefit of other broker-dealers that clear and settle transactions in Shares through the Authorized Participant, in each case as of the date of such request, with respect to the Trust. In addition, the Authorized Participant agrees, upon request of the Sponsor, and subject to applicable laws, rules and regulations, to transmit to its account holders who are Beneficial Owners of Shares, such written materials received from the Sponsor (including notices, annual reports, disclosure or other informational or tax materials and any amendments or supplements thereto and other communications) as may be required to be transmitted to Beneficial Owners pursuant to the Trust Agreement or applicable law, provided that the expenses associated with such transmissions shall be borne by the Sponsor in accordance with usual custom and practice in respect of such communications. The Sponsor agrees that the names, addresses and other information concerning the Authorized Participant’s customers are and shall remain the sole property of the Authorized Participant and the Sponsor, the Trust or any of their respective affiliates shall not use such names, addresses or other information for any purpose except to the extent strictly necessary to comply with applicable law and regulation. Notwithstanding the foregoing, such names, addresses or other information shall not be deemed to be the sole property of the Authorized Participant if it is obtained by the Sponsor or the Trust (i) from a source not known by it to be under any obligation of confidentiality to the Authorized Participant, (ii) which was, is or hereafter becomes part of the public domain without any violation of this Agreement on the part of the Trust or the Sponsor, (iii) the names and address and other information are that of Shareholders of the Trust and were independently compiled as a result thereof.

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Section 8. Indemnification.

(a) The Authorized Participant hereby indemnifies and holds harmless the Trust, the Trustee, the Sponsor, the Transfer Agent, the Trust’s Cash Custodian and Ether Custodian and their respective direct or indirect affiliates (as defined below) and their respective directors, trustees, Sponsors, partners, members, managers, officers, employees and agents (each, an “AP Indemnified Party”) from and against any losses, liabilities, damages, costs and expenses (including reasonable attorneys’ fees and the reasonable costs of investigation) incurred by such AP Indemnified Party as a result of or in connection with: (i) any breach by the Authorized Participant of any provisions of this Agreement, including its representations, warranties and covenants; (ii) any failure on the part of the Authorized Participant to perform any of its obligations set forth in this Agreement; (iii) any failure by the Authorized Participant to comply with applicable laws and the rules and regulations of self-regulatory organizations, to the extent relating to its role as an authorized participant hereunder, except the Authorized Participant shall not be required to indemnify an AP Indemnified Party to the extent that such failure was caused by the Authorized Participant’s reasonable reliance on instructions given or representations made by one or more AP Indemnified Parties that provided such instructions or representations and the Authorized Participant did not know that such reliance would cause it not to be in compliance with such applicable laws; (iv) any actions of such AP Indemnified Party in reliance upon any instructions issued in accordance with the Procedures reasonably believed by the AP Indemnified Party to be genuine and to have been given by the Authorized Participant, except to the extent that such instructions were provided by a person whom the Authorized Participant duly informed the Transfer Agent and the Sponsor was no longer an Authorized Person prior to the time of such instructions; or (v) (A) any representation by the Authorized Participant, its employees or its agents or other representatives about the Shares, any AP Indemnified Party or the Trust that is not consistent with the Trust’s Registration Statement made in connection with the offer or the solicitation of an offer to buy or sell Shares and (B) any untrue statement or alleged untrue statement of a material fact contained in any research reports, marketing material and sales literature described in Section 12(b) hereof or any alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent that such statement or omission relates to the Shares, any AP Indemnified Party or the Trust, unless, in either case, such representation, statement or omission was made or included by the Sponsor or the Trust in materials furnished by the Sponsor or the Trust to the Authorized Participant, or, was made or included by the Authorized Participant at the written direction of the Sponsor or the Trust or is based upon any omission or alleged omission by the Sponsor to state a material fact in connection with such representation, statement or omission necessary to make such representation, statement or omission not misleading. The Authorized Participant shall not have any obligation to indemnify the AP Indemnified Party for any damages to the extent arising out of mistakes or errors in data provided to the Authorized Participant by an AP Indemnified Party, mistakes or errors by, or out of interruptions or delays of communications with the AP Indemnified Parties who are service providers to the Trust, or extreme weather, a Force Majeure Event or other similar event outside the control of the Authorized Participant. The Authorized Participant shall not be liable under the indemnity contained in this Section with respect to any claim made against any AP Indemnified Party unless the AP Indemnified Party shall have notified the Authorized Participant in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the AP Indemnified Party (or after the AP Indemnified Party shall have received notice of service on any designated agent). However, failure to notify the Authorized Participant of any claim shall not

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relieve the Authorized Participant from any liability that it may have to any AP Indemnified Party against whom such action is brought otherwise than on account of the indemnity agreement contained in this Section and shall only release it from such liability under this Section to the extent it has been materially prejudiced by such failure to receive notice.

(b) The Sponsor hereby agrees to indemnify and hold harmless the Authorized Participant, its respective subsidiaries, affiliates, directors, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the 1933 Act (each, a “Sponsor Indemnified Party”) from and against any losses, liabilities, damages, costs and expenses (including reasonable attorneys’ fees and the reasonable cost of investigation) incurred by such Sponsor Indemnified Party as a result of (i) any material breach by the Sponsor of any provision of this Agreement that relates to the Sponsor including a breach of any representation, warranty, covenant or agreement herein; (ii) any representations provided by the Sponsor herein relating to this Agreement, the Registration Statement, the prospectus or the issuance or distribution of Shares that is false or misleading in any material respect or omits material information necessary to make the statement contained therein complete; (iii) any failure on the part of the Sponsor to perform any obligation of the Sponsor set forth in this Agreement; (iv) any failure by the Sponsor to comply with applicable laws in connection with this Agreement and the offer, sale, creation, redemption and marketing of the Shares, including rules and regulations of self-regulatory organizations; (v) actions of such Sponsor Indemnified Party taken in reasonable reliance upon any instructions issued or representations reasonably believed by the Sponsor Indemnified Party to be genuine and to have been given by or on behalf of the Sponsor; (vi) any (1) representation by the Sponsor, its employees or its agents or other representatives about the Trust, the Shares or any affiliated person of Trust that is not consistent with the Trust’s then-current Registration Statement made in connection with the offer or the solicitation of an offer to buy or sell Shares or applicable prospectus, and (2) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally declared effective by the SEC or in any amendment thereof or applicable prospectus, or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (vii) any untrue statement or alleged untrue statement of a material fact, or omission or alleged omission of a material fact, made in any Marketing Materials prepared by or for the Sponsor or Trust and/or furnished to the Authorized Participant by the Sponsor or the Trust or any agent on behalf of the Sponsor or the Trust, or any disclosure provided by the Sponsor to the Authorized Participant for inclusion in Marketing Materials prepared by the Authorized Participant.

(c) This Section 8 shall not apply to the extent any such losses, liabilities, damages, costs and expenses are incurred as a result of or in connection with any gross negligence, bad faith or willful misconduct on the part of the AP Indemnified Party or the Sponsor Indemnified Party, as the case may be. The term “affiliate” in this Section 8 shall include, with respect to any person, entity or organization, any other person, entity or organization which directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, entity or organization.

(d) The indemnity agreements contained in this Section 8 shall remain in full force and effect regardless of any investigation made by or on behalf of the Authorized Participant, its partners, stockholders, members, directors, officers, employees or any person (including each

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partner, stockholder, member, director, officer or employee of such person) who controls the Authorized Participant within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, or by or on behalf of the Sponsor, its partners, stockholders, members, managers, directors, officers, employees or any person who controls the Sponsor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and shall survive any termination of this Agreement. The Sponsor, for itself and on behalf of the Trust, Sponsor Indemnified Party, and the Authorized Participant agree promptly to notify, to the extent practicable and legally permissible, each other of the commencement of any Proceeding against it or any AP Indemnified Party or Sponsor Indemnified Party, as the case may be, relating to this Agreement and, in the case of the Sponsor, against any of the Sponsor’s officers or directors, in connection with the issuance and sale of the Shares or in connection with the Registration Statement.

Section 9. Limitation of Liability.

(a) Limitation of Liability. Other than in connection with a material misstatement or omission of a material fact in the Registration Statement, in the absence of gross negligence, bad faith or willful misconduct, neither the Sponsor, whether acting on its own behalf or on behalf of the Trust, nor the Authorized Participant shall be liable to each other or to any other person, including any party claiming by, through or on behalf of the Authorized Participant, for any losses, liabilities, damages, costs or expenses arising out of any mistake or error in data or other information provided to any of them by each other or any other person or out of any interruption or delay in the electronic means of communications used by them. In the absence of gross negligence, bad faith or willful misconduct, the Transfer Agent shall not be liable to the Sponsor, whether acting on its own behalf or on behalf of the Trust, or to the Authorized Participant or to any other person, including any party claiming by, through or on behalf of the Authorized Participant, for any losses, liabilities, damages, costs or expenses arising out of any mistake or error in data or other information provided to it by the Sponsor, the Authorized Participant or any other person or out of any interruption or delay in the electronic means of communications used by it. Subject to the foregoing, any references to the Transfer Agent or the Trust’s custodian herein shall not be deemed to imply, nor have such parties agreed, to undertake any obligations under this Agreement nor made any representations or warranties under this Agreement and none of such parties shall be required to advance, expend or risk its own funds or otherwise incur, become exposed to or be responsible for any loss, liability, damages, costs or expenses hereunder or in connection herewith regardless of form of action or legal theory including, without limitation, any type of special, indirect or consequential loss or damage of any kind whatsoever. Notwithstanding the foregoing, the Transfer Agent shall not be liable for any error of judgment made in good faith unless it shall have been grossly negligent in ascertaining the pertinent facts necessary to make such judgment. In no event shall the Sponsor, Transfer Agent or Authorized Participant be liable for the acts or omissions of DTC, NSCC or any other securities depository or clearing corporation. In no event shall the Transfer Agent be liable for losses incurred by the Authorized Participant as a result of unauthorized use of any PIN. In no event shall the Sponsor, Transfer Agent or Authorized Participant be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profit), even if such parties have been advised of the likelihood of such loss or damage and regardless of the form of action. Neither the Sponsor nor the Transfer Agent shall be liable to the Authorized Participant or to any other person for any damages arising out of mistakes or errors in data provided to the Sponsor or the Transfer Agent by

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a third party, or out of interruptions or delays of electronic means of communications with the Sponsor or the Transfer Agent.

(b) Trust Liability. It is expressly acknowledged and agreed that (i) the obligations of the Trust hereunder shall not be binding upon any shareholder, Trustee, officer, employee or agent of the Trust or the Sponsor, personally, and (ii) the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to the Trust shall be enforceable against the assets of the Trust only, and not against the assets of any other trust sponsored by the Sponsor, and none of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to any other trust shall be enforceable against the assets of the Trust. This Agreement has been duly authorized, executed and delivered by the Trust and neither such authorization nor such execution and delivery shall be deemed to have been made by any of them individually or to impose any liability on any of them personally.

(c) Tax Liability. The Authorized Participant shall be responsible for the payment of any transfer tax, sales or use tax, stamp tax, recording tax, value added tax and any other similar tax or government charge applicable to the creation or redemption of any Basket made pursuant to this Agreement, regardless of whether or not such tax or charge is imposed directly on the Authorized Participant. To the extent the Sponsor or the Trust is required by law to pay any such tax or charge, the Authorized Participant agrees to promptly indemnify such party for any such payment, together with any applicable penalties, additions to tax or interest thereon.

Section 10. Acknowledgment. The Authorized Participant acknowledges receipt of (i) a copy of the Trust Agreement and (ii) the current Registration Statement.

Section 11. Effectiveness and Termination. Upon the execution of this Agreement by the parties hereto, this Agreement shall become effective in this form as of the date first set forth above, and may be terminated at any time by any party upon thirty (30) days prior written notice to the other parties unless earlier terminated: (i) in accordance with Section 2(a) hereof; (ii) upon notice to the Authorized Participant or the Sponsor in the event of a breach by the Authorized Participant or the Sponsor of this Agreement or the procedures described or incorporated herein; (iii) immediately in the circumstances described in Section 17(j) hereof; or (iv) at such time as the Trust is terminated pursuant to the Trust Agreement.

Section 12. Marketing Materials; Representations Regarding Shares; Identification in Registration Statement.

(a) The Authorized Participant represents, warrants and covenants that (i) without the written consent of the Sponsor, the Authorized Participant shall not make, or permit any of its representatives to make, any representations concerning the Shares or any AP Indemnified Party other than representations contained (A) in the then-current Registration Statement, (B) in printed information approved by the Sponsor as information supplemental to such Registration Statement’ (C) the applicable prospectus or (D) in any promotional materials or sales literature furnished to the Authorized Participant by the Sponsor (each of (B) and (C) referred to herein as “Marketing Materials”), or (D) other information and materials filed by the Trust with the SEC or made available on any website controlled Sponsor or the Trust, and (ii) the Authorized Participant shall not furnish or cause to be furnished to any person or display or publish any information or material

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relating to the Shares, any AP Indemnified Person or the Trust that are not consistent with the Trust’s then current Registration Statement. The foregoing shall not apply to (i) written materials of any kind which relate to asset allocation or strategic or economic matters that generally mention the Trust without recommending or describing the Trust; (ii) materials prepared and used for the Authorized Participant’s internal use only; (iii) brokerage communications prepared by the Authorized Participant in the normal course of its business; and (iv) research reports as described in Section 12(b) of this Agreement ((i) through (iv) of this Section 12(a) are hereinafter referred to as “Excluded Materials”). Copies of the then current Registration Statement and any such printed supplemental information or amendments thereto will be supplied by the Sponsor to the Authorized Participant in reasonable quantities upon request.

(b) Notwithstanding the foregoing, the Authorized Participant may, without the written approval of the Sponsor, prepare and circulate in the regular course of its business, Excluded Material, research reports, institutional communications (as such term in defined in FINRA Rule 2210 or any successor rule), correspondence (as such term is defined in FINRA Rule 2210 or any successor rule) marketing material, sales literature that includes information, opinions or recommendations relating to the Shares other similar materials that include information, opinions or recommendations relating to Shares (i) for public dissemination, provided that such research reports, marketing material or sales literature comply with all applicable laws, rules and regulations; and (ii) for internal use by the Authorized Participant. The Authorized Participant shall file all such Excluded Materials, research reports, marketing material and sales literature related to the Shares with FINRA to the extent required by the FINRA Conduct Rules.

(c) The Authorized Participant hereby agrees that for the term of this Agreement the Sponsor may deliver the then-current Registration Statement, and any supplements or amendments thereto or recirculation thereof, to the Authorized Participant in Portable Document Format (“PDF”) via electronic mail to [●], in printable form, in lieu of delivering the Registration Statement in paper form. The Authorized Participant acknowledges that it has the capability to access, view, save and print material provided to it in PDF and that it will incur no appreciable extra costs by receiving the Registration Statement in PDF instead of in paper form.

(d) The Sponsor, on its own behalf and on behalf of the Trust, agrees, for as long as this Agreement is effective, not to identify or name the Authorized Participant in any Marketing Materials for the Trust without the prior written consent of the Authorized Participant, which consent shall not be unreasonably be withheld, conditioned or delayed. The Authorized Participant hereby consents to be named as an authorized participant of the Trust in the Registration Statement. If the Authorized Participant agrees to be identified in any of such documents, upon the termination of this Agreement, (i) the Sponsor shall remove such identification from the Registration Statement in the amendment of either the Registration Statement or a supplement to the Registration Statement, as applicable, next occurring after the date of the termination of this Agreement and (ii) the Sponsor shall promptly update the Trust’s website to remove any identification of the Authorized Participant as an authorized participant of the Trust. Notwithstanding the foregoing the Sponsor may, without the prior written consent of the Authorized Participant, disclose whether the Authorized Participant acts as an authorized participant for the Trust in the Registration Statement and as otherwise necessary to comply with applicable laws, regulatory requests and rules of securities exchanges.

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(e) Except as required by court order or requested by any regulatory or self-regulatory authority of competent jurisdiction, the Sponsor agrees that it will not, without prior written consent of the Authorized Participant, use in advertising or publicity the name of the Authorized Participant or any affiliate of the Authorized Participant, any trade name, trademark, trade device, service mark, symbol or any abbreviation, contraction or simulation thereof owned by the Authorized Participant or any of its affiliates or represent, directly or indirectly, that any product or any service provided or distributed by the Trust or the Sponsor has been approved or endorsed by the Authorized Participant or any of its affiliates or that the Authorized Participant acts as underwriter, distributor or selling group member with respect to the Shares. This provision shall survive termination or expiration of this Agreement.

Section 13. Certain Representations, Warranties and Covenants of the Sponsor. The Sponsor, on its own behalf and as sponsor of the Trust, covenants and agrees:

(a) that (i) it has taken all actions necessary to execute this Agreement; (ii) the person(s) executing this Agreement on its behalf has been duly authorized to do so; (iii) the Registration Statement conforms in all material respects to the requirements of the 1933 Act and the rules and regulations of the SEC thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the prospectus and any amendment or supplement thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (iv) the sale and distribution of the Shares as contemplated herein will not conflict with or result in a breach or violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Trust or the Sponsor, and (v) no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency is required for the issuance of the Shares, except registration of the Shares under the 1933 Act, which has occurred and is in effect for the Shares; (vi) the Registration Statement has been declared effective by the SEC under the 1933 Act, and the SEC has not issued any stop order or other order or notice preventing or suspending the use of the Registration Statement or the prospectus, and no proceedings for such purpose have been instituted, are pending or, to the best of its knowledge, are being contemplated or threatened by the SEC; (vii) the Shares, when issued and delivered against payment of consideration, as provided in this Agreement, will be validly issued, fully paid and non-assessable and free of statutory and contractual preemptive rights, rights of first refusal and similar rights; (viii) prior to the launch of the Trust, the Trust’s Shares have been approved for listing on the Cboe BZX Exchange, Inc.; and (ix) all Marketing Materials prepared by the Trust, the Sponsor or any of their agents on their behalf, or to be prepared by any of them in the future and provided to the Authorized Participant in connection with the offer and sale of Shares, comply with applicable law, including without limitation, as applicable, the provisions of the 1933 Act, FINRA’s marketing rules, and the rules and regulations of the SEC.

(b) to notify the Authorized Participant promptly of the happening of any event during the term of this Agreement which could require the making of any change in the Registration Statement so that the Registration Statement would not include an untrue statement of material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading, and, will promptly coordinate with the Trust to amend such Registration Statement so that it is complete and accurate in all material

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respects and complies with applicable law and furnish, at the expense of the Trust, as applicable, to the Authorized Participant promptly such amendments or supplements to such Registration Statement as may be necessary to reflect any such change.

Section 14. Third Party Beneficiaries. Each AP Indemnified Party or Sponsor Indemnified Party, as applicable, to the extent it is not a party to this Agreement, is a third-party beneficiary of this Agreement (each, a “Third Party Beneficiary”) and may proceed directly against the Authorized Participant or Sponsor, as applicable (including by bringing proceedings against the Authorized Participant or Sponsor, as applicable, in its own name) to enforce any obligation of the Authorized Participant or Sponsor under this Agreement which directly or indirectly benefits such Third Party Beneficiary.

Section 15. Force Majeure. No party to this Agreement shall incur any liability for any delay in performance, or for the non-performance, of any of its obligations under this Agreement by reason of any cause beyond its reasonable control. This includes, but is not limited to, any Act of God or war or terrorism, any breakdown, disruption, outage, malfunction or failure of transmission in connection with or other unavailability of any Internet, data center, power, wire, communication or computer (software or hardware) facilities, services, networks, equipment or programs beyond its reasonable control, any transport, port, or airport disruption, industrial action, acts and regulations and rules of any governmental or supra-national bodies or authorities or regulatory or self-regulatory organization or failure of any such body, authority or organization for any reason to perform its obligations (each, a “Force Majeure Event”).

Section 16. Ambiguous Instructions. If a Creation/Redemption Order Form otherwise in good form contains order terms that differ from the information provided in the telephone call at the time of issuance of the applicable order number, the Transfer Agent will attempt to contact one of the Authorized Persons of the Authorized Participant to request confirmation of the terms of the Order. If an Authorized Person confirms the terms as they appear in the Order, then the Order shall be accepted and processed. If an Authorized Person contradicts the Order terms, the Order shall be deemed invalid, and a corrected Order must be received by the Transfer Agent not later than the earlier of: (i) within 15 minutes of such contact with the Authorized Person; or (ii) 45 minutes after the Order Cut-Off Time. The Transfer Agent will attempt to promptly contact an Authorized Person regarding any inconsistency with the terms of the telephone information. In the event that an Order contains terms that are illegible, the Order shall be deemed invalid and the Transfer Agent will use reasonable efforts to contact one of the Authorized Persons of the Authorized Participant to request retransmission of the Order. A corrected Order must be received by the Transfer Agent not later than the earlier of (i) within 15 minutes of such contact with the Authorized Person or (ii) 45 minutes after the Order Cut-Off Time, as the case may be.

Section 17. Miscellaneous.

(a) Amendment and Modification. This Agreement and the exhibits hereto (the “Exhibits”) may be amended, modified or supplemented by the Trust and the Sponsor, without consent of any Beneficial Owner or the Authorized Participant from time to time by the following procedure. After the proposed amendment, modification or supplement has been agreed to by the Sponsor, the Sponsor shall mail a copy of the proposed amendment, modification or supplement to the Authorized Participant. Within ten (10) business days after its deemed receipt, the

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amendment, modification or supplement will become part of this Agreement or the Exhibits, as the case may be, in accordance with its terms.

(b) Waiver of Compliance. Any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but any such written waiver, or the failure to insist upon strict compliance with any obligation, covenant, agreement or condition herein, shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

(c) Notices. Except as otherwise specifically provided in this Agreement, all notices required or permitted to be given pursuant to this Agreement shall be given in writing and delivered by personal delivery, by postage prepaid registered or certified United States first class mail, return receipt requested, by nationally recognized overnight courier (delivery confirmation received) or by telex, electronic mail, telegram or telephonic facsimile or similar means of same day delivery (transmission confirmation received), with a confirming copy by regular mail, postage prepaid. Unless otherwise notified in writing, all notices to the Trust shall be given or sent to the Sponsor and, if applicable, the Transfer Agent. All notices shall be directed to the address or telephone or facsimile numbers or electronic mail addresses indicated below the signature line of the parties on the signature page hereof.

(d) Successors and Assigns. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

(e) Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party without the prior written consent of the other parties, except that any entity into which a party hereto may be merged or converted or with which it may be consolidated or any entity resulting from any merger, conversion, or consolidation to which such party hereunder shall be a party, or any entity succeeding to all or substantially all of the business of the party, shall be the successor of the party under this Agreement and except that the Sponsor may delegate its obligations hereunder by notice to the Authorized Participant, provided however that the Sponsor shall remain liable for any such delegated obligations hereunder as if performed by Sponsor itself. The party resulting from any such merger, conversion, consolidation or succession shall notify the other parties hereto of the change. Any purported assignment in violation of the provisions hereof shall be null and void. Notwithstanding the foregoing, this Agreement shall be automatically assigned to any successor trustee or Sponsor at such time such successor qualifies as a successor trustee or Sponsor under the terms of the Trust Agreement.

(f) Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable conflict of laws principles) as to all matters, including matters of validity, construction, effect, performance and remedies. Each party hereto irrevocably consents to the jurisdiction of the courts of New York State or the Southern District of New York of U.S. federal courts, in either case, located in the borough of Manhattan in New York City in connection with any action, suit or other proceeding arising out of or relating to this Agreement or any action taken or omitted hereunder, and waives any claim of forum non conveniens and any

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objections as to laying of venue. Each party further waives personal service of any summons, complaint or other process and agrees that service thereof may be made by certified or registered mail directed to such party at such party’s address for purposes of notices hereunder.

(g) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement, and it shall not be necessary in making proof of this Agreement as to any party hereto to produce or account for more than one such counterpart executed and delivered by such party.

(h) Interpretation. The section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.

(i) Entire Agreement. This Agreement and the Trust Agreement, along with any other agreement or instrument delivered pursuant to this Agreement and the Trust Agreement, supersede all prior agreements and understandings between the parties with respect to the subject matter hereof, provided, however, that the Authorized Participant shall not be deemed by this provision to be a party to the Trust Agreement.

(j) Severance. If any provision of this Agreement is held by any court or any act, regulation, rule or decision of any other governmental or supra-national body or authority or regulatory or self-regulatory organization to be invalid, illegal or unenforceable for any reason, it shall be invalid, illegal or unenforceable only to the extent so held and shall not affect the validity, legality or enforceability of the other provisions of this Agreement and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein, provided, however, that if a party to this Agreement determines in its reasonable judgment that the provision of this Agreement that was held invalid, illegal or unenforceable does affect the validity, legality or enforceability of one or more other provisions of this Agreement, and that this Agreement should not be continued without the provision that was held invalid, illegal or unenforceable, then the party shall notify the other party to this Agreement of such determination, whereupon this Agreement shall immediately terminate.

(k) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

(l) Survival. Section 8 (Indemnification), Section 9(a) (Limitation of Liability), Section 14 (Third Party Beneficiaries), Section 17(f) (Governing Law; Consent to Jurisdiction), and this Section 17(l) shall survive the termination of this Agreement.

(m) Other Usages. The following usages shall apply in interpreting this Agreement: (i) references to a governmental or quasi-governmental agency, authority or instrumentality shall also refer to a regulatory body that succeeds to the functions of such agency, authority or instrumentality; and (ii) “including” means “including, but not limited to.”

[Signature Page Follows]

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IN WITNESS WHEREOF, the Authorized Participant and the Sponsor, on behalf of itself and the Trust, have caused this Agreement to be executed by their duly authorized representatives as of the date first set forth above.

	VanEck Ethereum Trust

	By: VanEck Digital Assets, LLC

	By:
		Name:
		Title:

	[AUTHORIZED PARTICIPANT]

	By:
		Name:
		Title:

ACCEPTED BY:

State Street Bank and Trust Company, as Transfer Agent

By:
	Name:
	Title:

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EXHIBIT A

AUTHORIZED PERSONS

The following individuals are Authorized Persons (each an “Authorized Person”) authorized to give instructions relating to any activity contemplated by the Participant Agreement or any other notice, request or instruction on behalf of the Authorized Participant pursuant to the Participant Agreement by and among [insert parties].

The Authorized Persons named herein shall be in addition to any current Authorized Persons.

	,
Participant Name		NSCC #

NAME⁽¹⁾	TITLE⁽¹⁾	SIGNATURE⁽¹⁾	TELEPHONE NUMBER⁽¹⁾	E-MAIL ADDRESS⁽¹⁾	User Location (Country)	PERMISSION⁽²⁾*

*Permissions:

RO- Read-Only (Allows users to see account information and run reports, but not place trades)

ET – Execute Trades (Allows user to place trades directly on to Fund Connect)

(1)

Required information.

(2)

Required information to use the Web Order Site.

Signed on behalf of the Authorized Participant:
By:

Name:

Title:

Date:

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EXHIBIT B

CREATION / REDEMPTION ORDER FORM

(for use only in connection with non-Fund Connect orders)

VanEck Ethereum Trust

CONTACT INFORMATION FOR ORDER EXECUTION:

Telephone Order Number: [ ] Fax Number: [ ]

Business Numbers, After the EXCHANGE CLOSING [ ] or [ ]

STATE STREET BANK AND TRUST COMPANY, TRANSFER AGENT

ALL ITEMS IN PART I MUST BE COMPLETED BY THE AUTHORIZED PARTICIPANT. THE SPONSOR, THE TRANSFER AGENT, AND/OR THE TRUST, IN THEIR DISCRETION, MAY REJECT ANY ORDER NOT SUBMITTED IN COMPLETE FORM OR CONTAINING AMBIGUOUS INSTRUCTIONS. DEFINED TERMS SET FORTH BELOW SHALL HAVE THE MEANING AS SET FORTH IN THE PARTICIPANT AGREEMENT.

I. TO BE COMPLETED BY AUTHORIZED PARTICIPANT

Date:________________________ Time: __________________ Authorized Person:______________

Firm Name:___________________________________ NSCC/DTC Participant Number:_________________________

Telephone Number:______________________ Fax Number:__________________

Type of Order (Check one): CREATION o REDEMPTION o

Indicate Fund for transaction:

o VanEck Ethereum Trust

o Standard Order (In-Cash)

o Negotiated In-Kind (Subject to obtaining In-Kind Regulatory Approval, as defined in the Authorized Participant Agreement)

The Authorized Participant represents and warrants that it will not redeem a Basket unless it, or the party for which it is acting, as the case may be, first owns outright or has a reasonable basis to believe that it can acquire the requisite number of Shares to be redeemed as a Basket, or has full legal authority and legal and beneficial right to tender for redemption the Baskets to be redeemed and to receive the entire proceeds of the redemption.

THIS TRANSACTION SHALL BE EFFECTED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE TRUST’S CURRENT REGISTRATION STATEMENT, THE ETF ORDER PROCEDURES AND THE PARTICIPANT AGREEMENT.

Number of Baskets (CU) Being Transacted: Number:____________ Number Written Out:________

(One Basket = 25,000 Shares)

ORDER NUMBER:_____________________________ ___________________________

(To be entered by Authorized Participant after issuance

Authorized Person’s Signature

by telephone representative)

II. TO BE COMPLETED BY TRANSFER AGENT

This certifies that the above order has been:

o Accepted o Declined -Reason: ________________________________________

Date

Time

Authorized Signature

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EXHIBIT C

This document (the “Procedures”) supplements the Registration Statement with respect to the procedures to be used by (i) the Transfer Agent and Sponsor in processing orders for the purchase of Baskets of the Trust (“Creation Orders”) and (ii) the Transfer Agent in processing orders redeeming Baskets of the Trust (“Redemption Orders,” and together with Creation Orders, “Orders”). Each Order will specify the number of Baskets being purchased or redeemed.

The Authorized Participant is required to have signed this Agreement, of which these Procedures form a part. Capitalized terms used but not defined in these Procedures have the meaning given to them in this Agreement. Upon acceptance by the Trust of the Participant Agreement, the Transfer Agent or Sponsor, as the case may be, will assign a personal identification number (“PIN”) to each Authorized Person authorized to act for the Authorized Participant. This will allow the Authorized Participant through its Authorized Person(s) to place an Order with respect to Baskets.

“Basket Cash Component” shall be calculated in the following manner. First, for a Business Day on which any Order is placed (“Trade Date”), the Administrator determines the Creation Basket Deposit (as defined in the Trust Agreement). The Administrator starts determining the number of Ether held by the Trust as of the opening of business on Trade Date, and subtracts the amount of Ether constituting estimated accrued but unpaid fees and expenses of the Trust as of the opening of business on Trade Date. Second, this figure, in Ether, is divided by the quotient of the number of Trust Shares outstanding at the opening of business on Trade Date divided by 25,000. This produces the Creation Basket Deposit, which is the number of Ether attributable to each Basket as of the opening of business on Trade Date. Third, the resulting Ether amount is then valued, in cash, at the MarketVector^TMEthereum Benchmark Rate (the “Index”) calculated on Trade Date, or in accordance with the other valuation policies described in the Registration Statement if the Index is not available or in the Sponsor’s discretion. The resulting cash amount is the Basket Cash Component, which is calculated on the evening of Trade Date.

“Business Day” means any day the Exchange is open for business and the Trust accepts Purchase Orders and Redemption Orders for Creation Baskets.

“Cash Amount” shall mean an amount of cash sufficient to pay any applicable transaction fee (including the Transaction Fee), redemption fee and any additional fixed and/or variable charges, costs, taxes, or expenses, applicable to Creation Orders or Redemption Orders effected fully in cash, as described herein and/or in the Registration Statement.

TO PLACE AN ORDER FOR PURCHASE OR REDEMPTION OF BASKETS

Orders by Telephone.

a. Order Number. Call to Receive an Order Number. An Authorized Person for the Authorized Participant will call the telephone representative at the number listed on the Trust’s order form (“Order Form”) not later than the cut-off time for placing Orders with the Trust, which shall be 3:59:59 p.m. Eastern Standard Time on Trade Date or as otherwise communicated by the Sponsor (the “Order Cut-Off Time”) to receive an Order Number. Non-standard Orders generally must be arranged with the Trust in advance of Order placement. The Order Form (as may be revised from time to time) is incorporated into and made a part of this Agreement.

Upon verifying the authenticity of the caller (as determined by the use of the appropriate PIN) and the terms of the Order, the telephone representative will issue a unique Order Number. All Orders

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with respect to the purchase or redemption of Baskets are required to be in writing and accompanied by the designated Order Number. Incoming telephone calls are queued and will be handled in the sequence received. Calls placed before the Order Cut-Off Time will be processed even if the call is taken after this cut-off time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE ATTEMPTED LATER THAN THE Order Cut-Off Time WILL NOT BE ACCEPTED.

NOTE THAT THE TELEPHONE CALL IN WHICH THE ORDER NUMBER IS ISSUED INITIATES THE ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE ORDER. AN ORDER IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS VIA THE ORDER FORM CONTAINING THE DESIGNATED ORDER NUMBER, AUTHORIZED INDIVIDUALS’ SIGNATURES AND TRANSMITTED BY FACSIMILE.

b.	Place the Order. An Order Number is only valid for a limited time. The Order Form for purchase or redemption of Baskets must be sent by facsimile to the telephone representative within 20 minutes of the issuance of the Order Number. In the event that the Order Form is not received within such time period, the telephone representative will attempt to contact the Authorized Participant to request immediate transmission of the Order. Unless the Order Form is received by the telephone representative upon the earlier of (i) within 15 minutes of contact with the Authorized Participant or (ii) 45 minutes after the Order Cut-Off Time, the Order will be deemed invalid.

	c. Await Receipt of Confirmation.

(i)

Clearing Process. The Sponsor (in the case of purchases) or the Transfer Agent (in the case of redemptions) shall issue a confirmation of Order acceptance within approximately 15 minutes of its receipt of an Order Form received in good form. In the event the Authorized Participant does not receive a timely confirmation from the Sponsor or the Transfer Agent, it should contact the telephone representative at the business number indicated.

(ii)

Outside the Clearing Process. In lieu of receiving a confirmation of Order acceptance, the DTC Participant will receive an acknowledgment of Order acceptance. The DTC Participant shall deliver on settlement date the required quantity of cash (in the case of purchases) or the Basket size aggregation of Shares on trade date plus one (in the case of redemptions) to the Trust through DTC. The Trust shall settle the transaction on the prescribed settlement date.

Ambiguous Instructions. In the event that an Order Form contains terms that differ from the information provided in the telephone call at the time of issuance of the Order Number, the telephone representative will attempt to contact the Authorized Participant to request confirmation of the terms of the Order. If an Authorized Person confirms the terms as they appear in the Order Form then the Order will be accepted and processed. If an Authorized Person contradicts its terms, the Order will be deemed invalid and a corrected Order Form must be received by the telephone representative not later than the earlier of (i) within 15 minutes of such contact with the Authorized Participant or (ii) 45 minutes after the Order Cut-Off Time. If the telephone representative is not able to contact an Authorized Person, then the Order shall be accepted and processed in accordance with the terms of the Order Form notwithstanding any inconsistency from the terms of the telephone information. In the event that an Order Form contains terms that are illegible, as determined in the sole discretion of the Transfer Agent or Sponsor (in the case of a Creation Order) or the Transfer

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Agent (in the case of a Redemption Order), the Order will be deemed invalid and will not be processed. A telephone representative will attempt to contact the Authorized Participant to request retransmission of the Order Form, and a corrected Order Form must be received by the telephone representative not later than the earlier of (i) within 15 minutes of such contact with the Authorized Participant or (ii) 45 minutes after the Order Cut-Off Time.

Election to Place Orders by Internet.

a. General. Notwithstanding the foregoing provisions, Orders may be submitted through the Internet (“Web Order Site” or “Fund Connect”), but must be done so in accordance with the terms of this Agreement, the Registration Statement, the Web Order Site, the State Street Fund Connect Buy-Side User Agreement (which must be separately entered into by the Authorized Participant) (the “Fund Connect Agreement”) and the applicable Fund Connect User Guide (or any successor documents). To the extent that any provision of this Agreement is inconsistent with any provision of any Fund Connect Agreement, the Fund Connect Agreement shall control with respect to State Street’s provision of the Web Order Site; provided, however, it is not the intention of the parties to otherwise modify the rights, duties and obligations of the parties under the Agreement, which shall remain in full force and effect until otherwise expressly modified or terminated in accordance with its terms. Notwithstanding the forgoing, the Authorized Participant acknowledges that references to the applicable Fund Connect User Guide (or any successor documents) contained herein are for instructional purposes only, and such Fund Connect User Guide (or any successor documents) does not contain any additional representations, warranties or obligations by the Trust, the Transfer Agent, the Sponsor or their respective agents.

b. Certain Acknowledgements. The Authorized Participant acknowledges and agrees (i) that the Trust, the Transfer Agent, the Sponsor and their respective agents may elect to review any Order placed through the Web Order Site manually before it is executed and that such manual review may result in a delay in execution of such Order; (ii) that during periods of heavy market activity or other times, it may be difficult to place Orders via the Web Order Site and the Authorized Participant may place Orders as otherwise set forth in Exhibit C; and (iii) that any transaction information, content, or data downloaded or otherwise obtained through the use of the Web Order Site are done at the Authorized Participant’s own discretion and risk.

EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THE FUND CONNECT AGREEMENT AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE AUTHORIZED PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE WEB ORDER SITE IS PROVIDED “AS IS,” “AS AVAILABLE” WITH ALL FAULTS AND WITHOUT ANY WARRANTY OF ANY KIND. SPECIFICALLY, WITHOUT LIMITING THE FOREGOING, ALL WARRANTIES, CONDITIONS, OTHER CONTRACTUAL TERMS, REPRESENTATIONS, INDEMNITIES AND GUARANTEES WITH RESPECT TO THE WEB ORDER SITE, WHETHER EXPRESS, IMPLIED OR STATUTORY, ARISING BY LAW, CUSTOM, PRIOR ORAL OR WRITTEN STATEMENTS BY THE TRUST, THE TRANSFER AGENT, THE SPONSOR OR THEIR RESPECTIVE AGENTS, AFFILIATES, LICENSORS OR OTHERWISE (INCLUDING, BUT NOT LIMITED TO AS TO TITLE, SATISFACTORY QUALITY, ACCURACY, COMPLETENESS, UNINTERRUPTED USE, NON-INFRINGEMENT, TIMELINESS, TRUTHFULNESS, SEQUENCE, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE AND ANY IMPLIED WARRANTIES, CONDITIONS AND OTHER CONTRACTUAL TERMS ARISING FROM TRADE USAGE, COURSE OF DEALING OR COURSE OF PERFORMANCE) ARE HEREBY OVERRIDDEN, EXCLUDED AND DISCLAIMED.

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c. Election to Terminate Placing Orders by Internet. The Authorized Participant may elect at any time to discontinue placing Orders through the Web Order Site without providing notice under the Agreement.

Acknowledgment Regarding Telephone and Internet Transactions. During periods of heavy market activity or other times, the Authorized Participant acknowledges it may be difficult to reach the Trust by telephone or to transact business over the Internet via the Web Order Site. Technological irregularities may also make the use of the Internet and Web Order Site slow or unavailable at times. The Trust may terminate the receipt of Creation Orders or Redemption Orders by telephone or the Internet at any time, in which case you may redeem or exchange Shares by other means.

4.	Purchase of Creation Baskets. If the Order is placed by the Authorized Participant in proper form prior to the Order Cut-Off Time for a Creation Order on a Business Day (the “Creation Order Cut-Off Time”), that Business Day shall be the Trade Date for the Creation Order (“Creation Trade Date”); if the Order is not placed in proper form prior to the Creation Order Cut-Off Time on such date, it shall be deemed to be received on the immediately following Business Day. On the Creation Trade Date, following receipt of the Creation Order from the Authorized Participant, the Trust shall, in its sole discretion, select a Liquidity Provider and execute a trade to purchase Ether from that Liquidity Provider in the amount of the Creation Basket Deposit, with the purchased Ether to be delivered by the Liquidity Provider on the settlement date (“Creation Settlement Date”) in exchange for a cash price to be delivered by the Trust on the Creation Settlement Date. The Creation Settlement Date shall be the immediately following Business Day after the Creation Trade Date, unless the parties otherwise agree. The Liquidity Provider, not the Authorized Participant, shall be responsible for delivering Ether to the Trust, and the Authorized Participant hereby acknowledges that the Liquidity Provider is not acting as an agent of the Authorized Participant in delivering Ether to the Trust. By end of the calendar day Eastern Standard Time (or such other time as the parties may agree) on the Creation Trade Date, the Administrator will calculate and transmit the (1) Basket Cash Component, (2) Cash Amount, and (3) any amount by which the actual cash purchase price of the Ether from the Liquidity Provider exceeds the Basket Cash Component (“Purchase Slippage”), to the Authorized Participant (collectively, the Adjusted Basket Cash Component, the Cash Amount, and the Purchase Slippage, the “Required Cash Creation Total”), which the Authorized Participant shall be responsible for delivering in cash on the Creation Settlement Date to the Trust’s account at the Cash Custodian. The Trust acknowledges that, if the actual cash purchase price of Ether from the Liquidity Provider is below the Adjusted Basket Cash Component, the Authorized Participant shall be entitled to retain the difference and the Required Cash Creation Total shall be reduced accordingly.

	On the Creation Settlement Date, the Authorized Participant shall wire the Required Cash Creation Total to the Trust’s account at the Cash Custodian in cleared, immediately available funds by 1:00 p.m. Eastern Standard Time. The Trust shall instruct the Cash Custodian to transfer the cash proceeds to the Trust’s Fiat Account in connection with the Clearing Services (as defined in the Registration Statement) at the Ether Custodian, who provides the Trust with Clearing Services (as defined in the Registration Statement). The Liquidity Provider delivers Ether to the Trust’s Clearing Account in exchange for the cash purchase price, a delivery facilitated by the Ether Custodian under the Clearing Agreement (as defined in the Registration Statement). Upon settlement of the Ether purchase from the Liquidity Provider and the deposit of Ether in the Trust’s Clearing Account, the Trust instructs the Transfer Agent to release the Shares to the Authorized Participant by close of business on the Creation Settlement Date and the Creation Order is settled. If the Ether purchase transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant shall have the option to cancel the Creation Order, in which case the Trust will return the Required

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Cash Creation Total less the Cash Amount to the Authorized Participant and the Shares will not be issued, or the Sponsor may use an alternative execution method for the Trust to purchase Ether, in which case the Authorized Participant agrees and acknowledges it is responsible for any Purchase Slippage and Cash Amount relating to such alternative execution method.

Redemption of Creation Baskets. If the Order is placed by the Authorized Participant in proper form prior to the Order Cut-Off Time for a Redemption Order on a Business Day (the “Redemption Order Cut-Off Time”), that Business Day shall be the Trade Date for the Redemption Order (“Redemption Trade Date”); if the Order is not placed in proper form prior to the Redemption Order Cut-Off Time on such date, it shall be deemed to be received on the immediately following Business Day. On the Redemption Trade Date, following receipt of the Redemption Order from the Authorized Participant, the Trust shall instruct the Ether Custodian to move the Ether in the amount of the Creation Basket Deposit out of the Trust’s Custody Account (as defined in the Registration Statement) into the Trust’s Clearing Account. On the Redemption Trade Date, the Trust in its sole discretion, shall select a Liquidity Provider and execute a trade to sell the Ether in exchange for cash on the settlement date (the “Redemption Settlement Date”). The Redemption Settlement Date shall be the immediately following Business Day after the Redemption Trade Date, unless the parties otherwise agree in writing. The Liquidity Provider, not the Authorized Participant, shall be responsible for purchasing Ether from the Trust, and the Authorized Participant hereby acknowledges that the Liquidity Provider is not acting as an agent of the Authorized Participant in purchasing Ether from the Trust. By 8:00 p.m. Eastern Standard Time (or such other time as the parties may agree) on the Redemption Trade Date, the Administrator will calculate and transmit the (1) Basket Cash Component, minus (2) the Cash Amount, and minus (3) any amount by which the actual cash sale price of the Ether to the Liquidity Provider is less than the adjusted Basket Cash Component (“Redemption Slippage”), to the Authorized Participant (collectively, the Basket Cash Component, minus the Cash Amount, minus the Redemption Slippage, the “Required Cash Redemption Total”), which the Trust shall be responsible for instructing the Cash Custodian to deliver in cash on the Redemption Settlement Date to the Authorized Participant’s designated bank account. The Trust acknowledges that, if the actual cash sale price realized from selling Ether to the Liquidity Provider is above the Basket Cash Component, the Authorized Participant shall be entitled to retain the difference and the Required Cash Redemption Total shall be increased accordingly.

On the Redemption Settlement Date, the Liquidity Provider delivers cash to the Trust’s Fiat Account for the cash purchase price of the Trust’s Ether, as facilitated by the Ether Custodian under the Clearing Agreement. Upon settlement of the Ether sale to the Liquidity Provider and the deposit of cash in the Trust’s Fiat Account used in connection with the Clearing Services, the Trust instructs the Ether Custodian to transfer the cash to the Trust’s Cash Custodian account. The Trust then instructs the Transfer Agent to deliver the Authorized Participant’s Shares in the Creation Basket Deposit back to the Trust, in exchange for which the Trust instructs the Cash Custodian to transfer the Required Cash Redemption Total to the Authorized Participant’s designated bank account and the Redemption Order is settled. If the Ether sale transaction between the Trust and the Liquidity Provider fails to settle, the Authorized Participant shall have the option to cancel the Redemption Order, in which case the Trust will retain its Ether and the Authorized Participant will retain the associated Shares and will not receive any cash, or the Sponsor may use an alternative execution method for the Trust to sell Ether, in which case the Authorized Participant agrees and acknowledges it is responsible for any Redemption Slippage and Cash Amount relating to such alternative execution method.

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EX-10.3 4 c109048_ex10-3.htm

Exhibit 10.3

Certain confidential information contained in this document, marked by [***], has been omitted because the registrant has determined that the information (i) is not material and (ii) is the type that the registrant treats as private or confidential.

MARKETING AGENT AGREEMENT

THIS MARKETING AGENT AGREEMENT (this “Agreement”), made as of this 12^th day of April, 2024, by and between VANECK DIGITAL ASSETS, LLC (“VDA”), a Delaware limited liability company, for itself and as sponsor of VanEck Ethereum Trust (the “Trust”) (CBOE Ticker: ETHV) and VAN ECK SECURITIES CORPORATION (“VanEck”), a Delaware corporation.

WHEREAS, the Trust is governed by the Declaration of Trust dated March 1, 2021 (the “Trust Agreement”) between VDA and Delaware Trust Company, as the trustee (the “Trustee”), as amended from time to time, pursuant to which the Trust issues from time to time shares (the “Shares”), which represent units of fractional undivided beneficial interest in the Trust, upon the deposit of Ether with Gemini Trust Company, LLC as custodian of the Trust;

WHEREAS, the Trust filed with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-1 (Registration No. 333-255888), including as part thereof a prospectus (as amended or supplemented from time to time, the “Prospectus”; the registration statement in whole, together with any amendments and supplements thereto from time to time and with all documents filed as a part thereof, the “Registration Statement”), under the Securities Act of 1933, as amended (the “1933 Act”), which have been delivered to VanEck pursuant to the terms of this Agreement;

WHEREAS, all references herein to the Registration Statement shall be read to include any additional replacement registration of Shares on Form S-3 after the date hereof by the Trust at the direction of the then applicable sponsor of the Trust, and all references to the Prospectus shall be read at such time to include the prospectus included as a part of such registration on Form S-3;

WHEREAS, pursuant to the Trust Agreement, VDA wishes to retain VanEck to provide certain assistance, and VanEck wishes to provide such assistance, with respect to the marketing of the Shares;

NOW, THEREFORE, in consideration of their mutual promises, VDA, for itself and in its capacity as sponsor of the Trust, and VanEck agree as follows:

1.	Representations, Warranties and Covenants

1.1 VDA, on its own behalf and in its capacity as sponsor of the Trust, as applicable, represents, warrants as of the date of this Agreement and covenants as follows:

(1) VDA is a limited liability company duly organized and validly existing under the laws of the jurisdiction of its organization, with full power and authority to conduct its business as presently conducted, is the named sponsor of the Trust, has full power and legal right to execute and deliver this Agreement and to perform the provisions of this Agreement on its part to be performed, and is in good standing in each jurisdiction where the conduct of its business requires such qualification, except to the extent that such failure to qualify would not have a materially adverse effect on VDA or the conduct of its business;

(2) VDA’s execution, delivery and performance of this Agreement have been and remain duly authorized by all necessary corporate action and do not contravene any provision of its certificate of formation or limited liability company agreement (including any amendments thereto) or any law, regulation or contractual restriction binding on it or its assets;

(3) VDA, as sponsor of the Trust, has obtained all consents, authorizations, approvals and clearances (including, without limitation, any necessary exchange control approval) and filed such notifications, reports and registrations requisite for its due execution, delivery and performance of this Agreement from or with, as applicable, the relevant governmental authorities having jurisdiction with respect to VDA’s and the Trust’s activities and VDA’s position as sponsor of the Trust, and such items remain in full force and effect and all conditions thereof have been duly complied with and no other action by, and no notice to or filing with, any governmental authority having jurisdiction is required for such execution, delivery or performance;

(4) This Agreement is a legal, valid and binding obligation enforceable against VDA in accordance with its terms except as enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights or by general equity principles;

(5) VDA owns, or has obtained valid and enforceable licenses for, or other rights to use, on behalf of the Trust, the inventions, patent applications, patents, trademarks (both registered and unregistered), tradenames, copyrights, trade secrets and other proprietary information described in the Registration Statement and the Prospectus as being owned or licensed by it that are necessary for the conduct of its business as sponsor of the Trust (collectively, “Intellectual Property”); (i) there are no third parties who have or will be able to establish rights to any Intellectual Property; (ii) to the knowledge of VDA, there is no infringement by third parties of any Intellectual Property; (iii) there is no pending or, to the knowledge of VDA, threatened action, suit, proceeding or claim by others challenging VDA’s rights in or to any Intellectual Property, and VDA is unaware of any facts which could form a reasonable basis for any such claim; (iv) there is no pending or, to the knowledge of VDA, threatened action, suit, proceeding or claim by others challenging the validity or scope of any Intellectual Property, and VDA are unaware of any facts which could form a reasonable basis for any such claim; (v) there is no pending or, to the knowledge of VDA, threatened action, suit, proceeding or claim by others that VDA’s use of the Intellectual Property in conducting its business as sponsor of the Trust infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of others, and VDA is unaware of any facts which could form a reasonable basis for any such claim; (vi) there is no patent or, to the knowledge of VDA, patent application that contains claims that interfere with the issued or pending claims of any of the Intellectual Property;

(6) The Trust has been duly formed and is validly existing as a statutory trust under the laws of the State of Delaware pursuant the Trust Agreement;

(7) The SEC has not issued any stop order with respect to the sale of Shares and, to the knowledge of VDA, no proceedings for such purpose have been instituted by or are contemplated by the SEC;

(8) Each of the Registration Statement and Prospectus complies and, for such period as VDA is the sponsor of the Trust, will comply at the time of any sale of Shares in all material respects with all applicable laws, rules and regulations; any statutes, regulations, legal or governmental proceedings, transactions, contracts or other documents that are required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement have been, and for such period as VDA is the sponsor of the Trust, will be so described or filed in all material respects; the conditions to the use of the applicable form of registration statement have been satisfied; each of the Registration Statement and Prospectus does not and, for such period as VDA is the sponsor of the Trust, will not contain an untrue

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statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading;

(9) During such period as VDA is the sponsor of the Trust, VDA will notify VanEck immediately upon knowledge of the institution of proceedings for, or the entry of a stop order suspending the effectiveness of the Registration Statement and, if the SEC should enter a stop order suspending the effectiveness of the Registration Statement, VDA will use its best efforts to obtain the lifting or removal of such order as soon as possible;

(10) Complete and correct copies of (i) the Trust Agreement, and any and all amendments thereto, and (ii) each of the Registration Statement and Prospectus, as filed with the SEC and all amendments and supplements thereto (including all exhibits thereto, excluding all free-writing prospectuses) have been and will be, as necessary, delivered to VanEck;

(11) The Shares registered pursuant to the Registration Statement have been duly and validly authorized and registered under the 1933 Act and, when issued and delivered against payment, will be duly and validly issued, fully paid and non-assessable and free of statutory and contractual preemptive rights, rights of first refusal and similar rights;

(12) The Shares are expected to be listed on The Cboe BZX Exchange, Inc. and, for such period as VDA is the sponsor of the Trust, VDA shall use reasonable best efforts to maintain such listing or timely obtain listing of the Shares on an alternate national securities exchange;

(13) All required periodic reports to be filed by the Trust with the SEC, including without limitation Forms 10-K and 10-Q (collectively, “Regulatory Filings”) have been and, for such period as VDA is the sponsor of the Trust, will be made on a timely basis (which shall include filing within any allowable extended period after the filing of Form 12b-25, if applicable), and copies of all such Regulatory Filings have been and will be provided to VanEck;

(14) The Shares conform in all material respects to the description thereof contained in the Registration Statement;

(15) VDA is not in breach or violation of or in default under (nor has any event occurred which with notice, lapse of time or both would result in any breach or violation of, constitute a default under or give the holder of any indebtedness (or a person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of such indebtedness under) its respective constitutive documents, or any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which VDA, as sponsor of the Trust, is a party or by which any of them or any of their properties may be bound or affected;

(16) The execution, delivery and performance of this Agreement, the issuance and sale of Shares and the consummation of the transactions contemplated hereby will not conflict with, result in any breach or violation of or constitute a default under (nor constitute any event which with notice, lapse of time or both would result in any breach or violation of or constitute a default under), respectively, the limited liability company agreement of VDA or the Trust Agreement (and any amendments thereto respectively), or any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or other agreement or instrument to which VDA, as sponsor of the Trust, or the Trust is a party or by which VDA, the Trust or any of its properties may be bound or

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affected, or any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to VDA or the Trust, except in all instances as would not have a material effect, individually or in the aggregate, on the operation of VDA or the Trust;

(17) Except as set forth in the Registration Statement and the Prospectus, (i) no person has the right, contractual or otherwise, to cause the Trust to issue or sell to it any Shares or other equity interests of the Trust, and (ii) no person has the right to act as an underwriter or as a financial advisor to the Trust in connection with the offer and sale of the Shares, in the case of each of the foregoing clauses (i), and (ii), whether as a result of the filing or effectiveness of the Registration Statement or the sale of the Shares as contemplated thereby or otherwise; no person has the right, contractual or otherwise, to cause VDA as sponsor of the Trust or the Trust to register under the 1933 Act any other equity interests of the Trust, or to include any such shares or interests in the Registration Statement or the offering contemplated thereby, whether as a result of the filing or effectiveness of the Registration Statement or the sale of the Shares as contemplated thereby or otherwise;

(18) There are no actions, suits, claims, investigations or proceedings pending, or to VDA’s knowledge, threatened or contemplated to which VDA as sponsor of the Trust or the Trust or any of the VDA’s members or officers, is or would be a party or of which any of their respective properties are or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency;

(19) The audited financial statement included in the Prospectus, together with the related notes and schedules, presents fairly the financial position of the Trust as of the date indicated and has been prepared in compliance with the requirements of the 1933 Act and in conformity with generally accepted accounting principles as applicable to the Trust; there are no financial statements (historical or pro forma) that are required to be included in the Registration Statement and the Prospectus that are not included as required; and the Trust does not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations) not disclosed in the Registration Statement and the Prospectus;

(20) All tax returns required to be filed by VDA as sponsor with respect to the Trust have been filed, and all taxes and other assessments of a similar nature (whether imposed directly or through withholding) including any interest, additions to tax or penalties applicable thereto due or claimed to be due from such entities have been paid; and no tax returns or tax payments are due and payable with respect to the Trust as of the date of this Agreement;

(21) The Trust is not and, after giving effect to the offering and sale of the Shares, will not be an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended;

(22) Neither VDA as sponsor of the Trust nor, to VDA’s knowledge, the Trustee on behalf of the Trust, has sent or received any communication regarding termination of, or intent not to renew, any of the material contracts or agreements filed as an exhibit to the Registration Statement, and no such termination or non-renewal has been threatened by VDA or, to VDA’s knowledge, the Trustee on behalf of the Trust or any other party to any such contract or agreement;

(23) As sponsor of the Trust, VDA has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended (“1934 Act”), giving effect to the rules and regulations and related SEC staff

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interpretations); such disclosure controls and procedures are designed to ensure that material information relating to the Trust are made known to the sponsor of the Trust and Trustee for disclosure, and such disclosure controls and procedures are effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles applicable to the Trust; on behalf of the Trust, as sponsor thereof, VDA has been advised of: (i) any significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect the Trust’s ability to record, process, summarize, and report financial information; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Trust’s internal controls; any material weaknesses in internal controls have been identified for the Trust’s auditors;

(24) Any statistical and market-related data included in the Registration Statement and the Prospectus are based on or derived from sources that VDA believes to be reliable and accurate, and VDA has obtained the written consent to the use of such data from such sources to the extent required;

(25) Neither VDA, nor any of VDA’s directors, members, officers, affiliates or controlling persons nor the Trustee has taken, directly or indirectly, any action designed, or which has constituted or might reasonably be expected to cause or result in, under the 1934 Act or otherwise, the stabilization or manipulation of the price of any security or asset of the Trust to facilitate the sale or resale of the Shares;

(26) To VDA’s knowledge, there are no affiliations or associations between any member of the Financial Industry Regulatory Authority (“FINRA”) and any of VDA’s members, officers, directors or 5% or greater securityholders, except as set forth in the Registration Statement and the Prospectus, subsequent Regulatory Filings or Section 13 or 16 filings made by such persons; and

(27) For such period as VDA is the sponsor of the Trust, VDA will develop and prepare, subject to review and written approval of VanEck (which approval shall not be unreasonably withheld), marketing materials for the Trust (“Marketing Materials”), which will comply with all applicable laws, rules and regulations in all material respects. VDA acknowledges that VanEck’s consent may be contingent upon the filing by the current sponsor of the Trust of such Marketing Materials with the SEC as a free writing prospectus. VDA will, for such period it is the sponsor of the Trust, prepare and make all Regulatory Filings for all Marketing Materials prepared by either party on a timely basis. VDA will respond promptly to VanEck with respect to any Marketing Materials submitted to it for review, but in no event later than five (5) business days after such submission.

For such period as VDA is the sponsor of the Trust, VDA will notify VanEck promptly if to VDA’s knowledge any of the representations, warranties and covenants in this Section 1.1 ceases to be accurate in all material respects. All items requiring delivery by VDA under this Agreement shall be deemed timely delivered if available on EDGAR or VDA’s website(s) accessible by the public.

1.2 VanEck represents, warrants as of the date of this Agreement and covenants as follows:

(1) It is duly organized and validly existing under the laws of the jurisdiction of its incorporation, with full power and authority to conduct its business as presently conducted, has full power and legal right to execute and deliver this Agreement and to perform the provisions of this Agreement on its part to be performed, and is in good standing in each jurisdiction where the conduct of its business

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requires such qualification, except to the extent that such failure to qualify would not have a materially adverse effect on VanEck or the conduct of its business;

(2) Its execution, delivery and performance of this Agreement have been and remain duly authorized by all necessary corporate action and do not contravene any provision of its certificate of incorporation or by-laws (including any amendments thereto) or any law, regulation or contractual restriction binding on it or its assets;

(3) It has obtained all consents, authorizations, approvals and clearances (including, without limitation, any necessary exchange control approval) and filed such notifications, reports and registrations requisite for its due execution, delivery and performance of this Agreement from or with, as applicable, the relevant governmental authorities having jurisdiction with respect to VanEck’s business activities, and such items remain in full force and effect and all conditions thereof have been duly complied with and no other action by, and no notice to or filing with, any governmental authority having jurisdiction is required for such execution, delivery or performance;

(4) This Agreement is a legal, valid and binding obligation enforceable against it in accordance with its terms except as enforcement hereof may be limited by applicable with bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights or by general equity principles;

(5) It is a member in good standing of FINRA, is registered as a broker-dealer with the SEC under the 1934 Act, and is qualified to act as a broker or dealer in each state or other jurisdiction where the nature of its business requires such qualification, and will maintain all such memberships, registrations and qualifications in good standing and in full force and effect throughout the term of this Agreement, including obtaining additional memberships, registrations or qualifications at its own expense if reasonably necessary to perform its obligations under this Agreement from time to time. In performing its obligations under this Agreement, VanEck will comply with all applicable laws, including without limitation federal and state securities and commodities laws, and the rules and regulations promulgated thereunder, and the Constitution, By-Laws and Conduct Rules of FINRA;

(6) It will develop and prepare, subject to review and written approval of VDA (which approval shall not be unreasonably withheld) Marketing Materials, which will comply with all applicable laws, rules and regulations in all material respects. VanEck acknowledges that VDA’s consent may be contingent upon the filing by the current sponsor of the Trust of such Marketing Materials with the SEC as a free writing prospectus. VanEck will, if it becomes the sponsor of the Trust, prepare and make all Regulatory Filings for all Marketing Materials prepared by either party on a timely basis. VanEck will respond promptly to VDA with respect to any Marketing Materials submitted to it for review, but in no event later than five (5) business days after such submission;

(7) It will use its best efforts to market Shares and will provide (on a non-exclusive basis) appropriately licensed and trained personnel sufficient to market Shares as contemplated by this Agreement;

(8) It will develop a “landing page” (which can be a part of an existing non-exclusive website (“Website”)) for the Trust, which may be placed in a “cul-de-sac” on such Website. The cul-de-sac may include, among other things, sales material, prospectuses, and closing prices, subject to compliance

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with applicable laws, rules and regulations. Development of the cul-de-sac shall be treated as “Marketing Material” for purposes of this Agreement; and

(9) It will maintain books and records (including financial records) related to the services provided under this Agreement and make such books and records (including financial records) available to VDA for inspection at VanEck’s principal offices during VanEck’s normal business hours upon reasonable notice.

VanEck will notify VDA promptly if to VanEck’s knowledge any of the representations, warranties and covenants in this Section 1.2 ceases to be accurate in all material respects.

Expenses

2.1. Except as otherwise set forth in this Agreement, each of VDA and VanEck shall be responsible for its own expenses in complying with this Agreement; the Trust shall have no financial obligations pursuant to this Agreement. By way of example, and not by limitation, such expenses include the expenses of registration as a broker dealer with the SEC, registration of Shares with the SEC and amendments and supplements thereto, FINRA filing and registration fees, state or foreign jurisdiction qualification, licensing or registration, maintaining corporate existence, design and printing costs, compensation of employees, internal legal and accounting and taxes.

Fees

3.1 Fees Payable to VanEck. [RESERVED].

3.2 Fee Cap. Any fees payable to VanEck under Section 3.1 shall be calculated in conformity with applicable FINRA rules to ensure that in no event will aggregate compensation from any source payable to underwriters, broker-dealers, or affiliates thereof for distribution-related services in connection with the offering of Shares exceed 10% of the gross proceeds of such offering (the “Fee Cap”). VDA agrees that it will provide VanEck with any information required by VanEck to ensure compliance with the Fee Cap.

4.	Non-Exclusivity; Right of First Refusal; Sponsorship

4.1 Non-Exclusive. VDA acknowledges that the services provided by VanEck pursuant to this Agreement are non-exclusive and VanEck may, in its sole discretion, enter into similar arrangements with third parties. VDA acknowledges that VanEck may be considering, and may in the future consider similar or the same business ideas, products and technologies. Nothing in this Agreement shall prevent either party from pursuing any such ideas or pursuing businesses similar to or related to the businesses of the other party, either internally or through investments in or representation of third parties.

5.	Termination; Effect of Early Termination

5.1 This Agreement shall continue in full force and effect from the date hereof unless terminated by mutual agreement of the parties or pursuant to the provisions of this Section 5.

5.2 Either party may terminate this Agreement upon at least 10 days’ prior written notice, for any reason or no reason.

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5.3 The provisions of Section 7 of this Agreement shall remain in full force and effect, regardless of the termination of this Agreement and shall survive any such termination.

6.	Use of Servicemarks During Term

6.1 The name, logos, service marks and trademarks or any derivative thereof (“Servicemarks”) of each party are and shall remain the valuable property of that party.

7.	Indemnification

7.1 VDA will indemnify, defend and hold VanEck and each of its respective directors, officers, agents and employees (a “VanEck Indemnified Person”) free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims and any reasonable attorney fees incurred in connection therewith) which a VanEck Indemnified Person may incur arising out of or based upon (i) any breach of any representation or warranty made by VDA herein or failure by VDA to perform when and as required any agreement or covenant contained herein; or (ii) solely for such period during which VDA remains as sponsor of the Trust, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, Prospectus or Marketing Materials or any amendment thereof or any supplement thereto, or any omission or alleged omission or failure to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except for information furnished in writing by or on behalf of VanEck (“VanEck Information”) to VDA expressly for use in the Registration Statement or in a Prospectus or any amendment thereof or any supplement thereto.

7.2 VanEck will indemnify, defend and hold VDA and the Trust and each of its respective directors, officers, agents and employees (an “VDA Indemnified Person”) free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims and any reasonable attorney fees incurred in connection therewith) which an VDA Indemnified Person may incur arising out of or based upon (i) any breach of any representation or warranty made by VanEck herein or failure by VanEck to perform when and as required any agreement or covenant contained herein; or (ii) any untrue statement or alleged untrue statement of a material fact contained in and in conformity with VanEck Information or arises out of or is based upon any omission or alleged omission to state a material fact in connection with such VanEck Information required to be stated in such Registration Statement or such Prospectus or necessary to make such VanEck Information not misleading, or (iii) if VanEck becomes sponsor of the Trust, any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, Prospectus or Marketing Materials or any amendment thereof or any supplement thereto, or any omission or alleged omission or failure to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except for information furnished in writing by or on behalf of VDA after such change in sponsor of the Trust to VanEck expressly for use in the Registration Statement or in a Prospectus or any amendment thereof or any supplement thereto.

7.3 A party shall not be liable under this section for indemnification unless the party seeking indemnification shall have notified the other party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim served upon such party. Failure to notify the indemnifying party of any such claim shall not relieve the indemnifying party from any liability which it may have to the other party otherwise than on account of this section. The indemnifying party will

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be entitled to participate, at its own expense, in the defense thereof or, after notice, to assume the defense thereof, with counsel satisfactory to the party seeking indemnification.

7.4 In any proceeding, the indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include an indemnifying party and an indemnified party and representation of all parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The indemnifying party shall, in connection with any proceeding or related proceedings in the same jurisdiction at the same time, be liable for the reasonable fees and expenses of only one separate firm (in addition to any local counsel) for the indemnified party. The indemnifying party shall not have the right to compromise or settle the litigation without the prior written consent of the indemnified party if the compromise or settlement results, or may result in a finding of wrongdoing on the part of or requires any admission by the indemnified party.

7.5 An indemnifying party, however, will not be responsible for any losses, claims, damages or liabilities (or expenses related thereto) that are finally judicially determined to have resulted from the gross negligence, bad faith, or willful misconduct of the indemnified party.

8.	Relationship of the Parties

8.1 The parties hereto are independent contractors with respect to each other. Nothing herein shall constitute VDA, the Trust and VanEck as partners, joint venturers or co-venturers.

8.2 Neither party is authorized in any manner to act for, or to make any representations on behalf of, the other party without the written consent of that party. Neither party shall take any actions or make any representations or statements that are intended or purport to bind the other party without the written consent of that party. This Agreement does not constitute written consent to such effect.

9.	Miscellaneous

9.1 Notices. All notices required or desired to be given under this Agreement must be in writing and may be sent by e-mail, mail, or facsimile, and will be deemed given by e-mail, mail, or facsimile on the date delivered to the recipient, at the address set forth on the signature page hereof for such party (or to such other address as the party entitled to notice hereafter notifies the other party in accordance with the terms hereof).

9.2 Amendment; Modification. This Agreement may not be amended or, modified, except by the written consent of both parties hereto.

9.3 Governing Law and Jurisdiction. Both parties agree that this Agreement shall be governed by, and construed in accordance with the internal laws of the State of New York. The parties specifically consent to the jurisdiction of any state or federal court of competent jurisdiction located in the City of New York, Borough of Manhattan.

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9.4 No Jury Trial. TO THE FULLEST EXTENT ALLOWABLE UNDER APPLICABLE LAW, THE PARTIES UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL FOR ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR RELATING TO, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF THE RELATED DOCUMENTS, OR ANY DEALINGS BETWEEN THEM ARISING OUT OF OR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS.

9.5 Assignment. Neither party may transfer, sell, encumber, or assign any of its rights or obligations hereunder in whole or in part without the express written consent of the other party, except to a wholly-owned subsidiary if the party agrees in writing to guarantee the performance obligations of the assignee.

9.6 Complete Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the Marketing Agent services that are subject hereof and the ancillary rights related thereto, other than as otherwise explicitly referenced, and supersedes all prior agreements, written or oral, and no other agreement, verbal or otherwise, shall be binding as between the parties hereto unless in writing and signed by the party against whom enforcement is sought.

9.7 Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and permitted assigns. Except as explicitly contemplated with respect to the indemnification provisions set forth in Section 7, no other person shall have any right or obligation under this Agreement.

9.8 Headings. Headings to sections herein are for the convenience of the parties only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

9.9 Waiver of Breach. The waiver by a party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by a party. The failure of a party to insist upon strict adherence to any provision of this Agreement shall not constitute a waiver or thereafter deprive such party of the right to insist upon strict adherence.

9.10 Counterparts. This Agreement may be executed in any number of counterparts, including via electronic signature or PDF scan of such signature, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

9.11 Severability. If any provision of this Agreement is deemed to be unenforceable or invalid, then that provision shall be deemed severed from this Agreement and the rest of this Agreement shall be binding upon the parties. The parties will use their best efforts to agree upon any changes in this Agreement which may be necessary in order to adjust its remaining provisions with regard to the omission of any invalid term in order to make this Agreement workable.

9.12 Use of Terms; Definitions.

(1) Where the context requires, use of the singular or plural shall include the other.

(2) For purposes of this Agreement, the term “affiliate” means with respect to any person or entity, any other person or entity, that directly or indirectly, through one or more intermediaries, is controlling, controlled by, or under common control with, such person or entity. For the avoidance of

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doubt, beneficial owners of at least 10% of the equity of any party shall be deemed an affiliate of such party.

(3) For purposes of this Agreement, the term “knowledge” means actual knowledge of the officers, members, directors and employees of a party, and the knowledge that each such person would have reasonably obtained (i) after making due and appropriate inquiry of a particular matter or (ii) in the performance of such person’s duties.

[signature page follows]

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IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of the undersigned as of the day and year first above written.

VAN ECK SECURITIES CORPORATION

VANECK DIGITAL ASSETS, LLC


By:	/s/ Lee Rappaport	By:	/s/ Matthew Babinsky

Name: Lee Rappaport		Name: Matthew Babinsky

Title: Vice President & CFO		Title: Assistant Vice President

Address: 666 Third Avenue, Floor 9		Address: 666 Third Avenue, Floor 9

New York, NY 10017		New York, NY 10017

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Schedule A

Servicemarks

[***]

EX-10.4 5 c109048_ex10-4.htm

Exhibit 10.4

Custodial Services Agreement

This Custodial Services Agreement (“Custody Agreement” or “Agreement”) is entered into and effective as of [*] between VanEck Ethereum Trust (the “Customer”) and Gemini Trust Company, LLC, a New York State-chartered limited purpose trust company (“Gemini” or “Custodian”, and together with Customer the “Parties,” and each individually, a “Party”), as custodian to the Customer. This Agreement governs Customer’s use of Custodial Services (as defined below).

RECITALS

WHEREAS:

Gemini provides digital asset custody services whereby it, among other services, holds digital assets on behalf of customers and operates and provides access to a Digital Asset exchange.

Customer wishes to be provided with custody services for certain Digital Assets, and Gemini is willing to provide such custody services on the terms and subject to the conditions contained in this Agreement.

TERMS

NOW, THEREFORE, in consideration of the covenants and promises in this Custody Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Definitions

Whenever used in this Agreement, the following words shall have the meanings set forth below:

(a)

“Applicable Laws and Regulations” means all laws, regulations, and rules of any applicable governmental, self-regulatory, or other regulatory authority, including, but not limited to: Money Service Business (“MSB”) regulations under the Financial Crimes Enforcement Network (“FinCEN”); state money transmission laws; laws, regulations, and rules of relevant tax authorities; applicable regulations and guidance set forth by FinCEN; the Bank Secrecy Act of 1970 (“BSA”); the USA PATRIOT Act of 2001 (“Patriot Act”); anti-money laundering and counter-terrorist financing (“AML/CTF”) provisions as mandated by U.S. federal law and any other rules and regulations regarding AML/CTF; issuances from the Office of Foreign Assets Control (“OFAC”); the New York Banking Law (the “NYBL”); regulations promulgated by the New York Department of Financial Services (“NYSDFS”) from time to time; the National Futures Association (“NFA”); the Financial Industry Regulatory Authority (“FINRA”); and the Commodity Exchange Act (“CEA”).

(b)

“Assets” means any Supported Digital Asset that has been Delivered to Gemini to be held in a Custody Account established by Gemini on Customer’s behalf, in each case

until such Assets are withdrawn or cease to be Assets pursuant to this Custody Agreement. Assets shall also mean any Digital Assets resulting from Forks or Airdrops that Gemini, in its sole discretion, deems to be a Supported Digital Asset.

(a)

“Asset Balance” means the quantity of each Asset denominated in the appropriate Supported Digital Asset type.

(b)

“Authorized Agent” means VanEck Digital Assets, LLC, the sponsor of the Customer.

(c)

“Authorized Person” is any person designated by Customer or the Authorized Agent to have access to its Gemini Account and any sub-account based on the role-based permissions Customer or the Authorized Agent assigns.

(d)

“Blockchain Address” means a public address on a blockchain in which Assets can be held (including, but not limited to, an Ethereum address for the Asset commonly known as Ether).

(e)

A “BSA/AML Program” means Gemini’s Bank Secrecy Act and Anti-Money Laundering Compliance Program, available on Gemini’s website at, https://www.gemini.com/legal/user-agreement#section-bsa-aml-compliance, which may be amended from time to time at Gemini’s discretion.

(f)

“Business Day” means any day other than a Saturday, a Sunday, or day when federal banks located in the State of New York are closed for a legal holiday or by government directive.

(g)

“Change of Control” means:

the merger or consolidation of a Party with or into another Person or the merger of another Person with or into a Party, or the sale of all or substantially all the assets of a Party to another Person, unless holders of a majority of the aggregate voting power of the outstanding equity securities of such Party, immediately prior to such transaction, hold securities of the surviving or transferee Person that represent, immediately after such transaction, at least a majority of the aggregate voting power of the outstanding equity securities of the surviving or transferee Person; or

ii.

any “person” or “group” (as such terms are used for purposes of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of the total voting power of the outstanding equity securities of a Party.

(h)

“Cold Storage System” means Gemini’s proprietary offline storage system that Gemini uses to custody the Customer’s Assets.

(i)

“Custody Account” means a sub-account of a Gemini Account that is a segregated custody or cold storage account.

(j)

“Custody Interface” means the interface of the Gemini Platform located at exchange.gemini.com that allows for Custody Account actions including, but not limited to, the ability to view balances and request and approve withdrawals.

(k)

“Custody-Only Assets” means Assets for which Gemini only provides custody services and does not list for trading on its exchange.

(l)

“Cut-Off Time” means 4pm Eastern Time each Business Day.

(m)

“Customer Omnibus Account” means, with respect to fiat currency held for customers in Fiat Accounts, omnibus bank accounts (each an “Omnibus Account”) at depository institutions (each, a “Bank”); money market accounts (each, a “Money Market Account”) at a Bank or financial institution; and/or payment accounts (each, a “Payment Account”) at a financial institution.

(n)

“Delivery” (or “Deliver,” Delivering,” or “Delivered”) means the transfer of Supported Digital Assets to one or more Blockchain Addresses controlled by the receiving Party and provided by the receiving Party to the sending Party for such transfer. Supported Digital Assets will only be considered Delivered to Gemini after the required number of network confirmations, as determined by Gemini in its sole discretion, have occurred on the blockchain for such Supported Digital Assets.

(o)

“Digital Asset” means a digital asset (also called a “cryptocurrency,” “virtual currency,” “digital currency,” or “virtual commodity”), such as ether, which is a digital representation of value based on (or built on top of) a cryptographic protocol of a computer network.

(p)

“Effective Date” means [*].

(q)

“Ether” means the native digital asset of the Ethereum network known as ether or ETH.

(r)

“ETP Redemption Cut-Off Time” means 4pm Eastern Time on a Business Day.

(s)

“Exchange” means the exchange operated by Gemini that facilitates the buying and selling of Digital Assets.

(t)

“Fiat Account” means a fiat currency account that reflects a customer’s fiat currency balance.

(u)

“Fork” means changes in operating rules of an underlying protocol of a Supported Network.

(v)

“Gemini Service Provider” means any of (a) Gemini’s affiliates, service providers, including data centers that Gemini uses in connection with the operation and management of its business, and (b) its and their respective officers, directors, non-employee agents, joint venturers, employees and representatives.

(w)

“General Instructions” means any notice, instruction, or other communication that is not Proper Instructions, as agreed between the Parties. Gemini may rely upon any General Instruction that it believes in good faith and in a commercially reasonable

manner has been given by an Authorized Person, and provided that withdrawals of Digital Assets from the Custody Account or fiat currency from the Fiat Account shall only be conducted pursuant to Proper Instructions, unless otherwise agreed by the Parties.

(x)

“Lien” means pledges, liens, charges, security interests, collateral assignment agreements, leases, title retention agreements, mortgages, options, adverse claims or encumbrances of any kind or character whatsoever or any other right of or arrangement with any creditor to have such creditor’s claim satisfied out of specified assets, or the proceeds therefrom, prior to the general creditors of the person owning such assets.

(y)

“Material Adverse Effect” means a material adverse effect on:

the financial condition, business, assets, results of operations or prospects of the applicable Party;

ii.

Gemini’s safekeeping of Customer’s Assets or fiat currency; or

iii.

Gemini’s ability to provide the services contemplated by this Agreement.

(z)

“Other Functionality” means functionality that may be associated with certain Digital Assets including, but not limited to, staking, protocol governance, smart contract functionality, and other similar uses.

(aa)

“Person” means any individual, sole proprietorship, partnership, firm, unincorporated association, unincorporated syndicate, unincorporated organization, trust, corporation, limited liability company, and any other entity regardless of form, as well as any governmental authority, and where the context requires any of the foregoing when they are acting as trustee, executor, administrator or other legal representative.

(bb)

“Proper Instructions” means instructions that have been entered and confirmed via the Custody Interface on the Gemini Platform.

(cc)

“Supported Digital Asset” means Digital Assets of Supported Networks that Gemini supports, in its sole discretion, a current list of which is available on Gemini’s website (https://www.gemini.com/legal/user-agreement#section-supported-digital-assets-and-waiver-of-conflicts).

(dd)

“System Failure” has the meaning specified in Section 9.

(ee)

“User Agreement” means the Gemini User Agreement, available at Gemini’s website (https://www.gemini.com/legal/user-agreement#section-gemini-exchange), which may be amended, amended and restated, or otherwise modified from time-to-time, and made available on such website or a replacement website.

(ff)

“Withdrawal Request” means a request sent to Gemini via Proper Instructions that specifies the type and amount of Assets to be withdrawn from Customer’s Custody Account and the destination Blockchain Address, or by General Instructions in a manner agreed to by the Parties.

Other Definitional and Interpretative Provisions.

In this Agreement:

(a) Currency – Unless otherwise specified, all references to money amounts or fiat currency are to lawful currency of the United States.

(b) Headings – Headings of Articles and Sections are inserted for convenience of reference only and do not affect the construction or interpretation of this Agreement.

(c) Including – Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.

(d) No Strict Construction – The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party.

(e) Number and Gender – Unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

(f) Severability – If, in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions of this Agreement and without affecting the validity or enforceability of such provision in any other jurisdiction or without affecting its application to other Parties or circumstances.

(g) Statutory References – A reference to a statute includes all regulations and rules made pursuant to such statute and, unless otherwise specified, the provisions of any statute or regulation which amends, supplements or supersedes any such statute or any such regulation.

(h) Time – Time is of the essence in the performance of the Parties’ respective obligations

(i) Time Periods – Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day.

Custodial Relationship; Services.

(a) The Customer hereby appoints Gemini, and Gemini accepts such appointment, as Customer’s custodian, with effect from the Effective Date, of Customer’s Assets and fiat currency, which shall be held in (i) Customer’s Custody Account, for Assets, and (ii) Customer’s Fiat Account, for fiat currency (“Custodial Services”).

(b) Gemini hereby acknowledges and agrees that it is a custodian of the Assets stored by Customer in the Custody Account and fiat currency stored by Customer in the Fiat Account, and that Gemini has no right, interest, or title in such Assets and fiat currency. Gemini further represents that it is a fiduciary under §100 of the NYBL and a custodian that is licensed to hold Customer’s Assets and fiat currency in trust on its behalf. Gemini represents, warrants, and covenants that Gemini does not

engage in any fractional reserve banking and, as such, none of the Assets nor fiat currency will be used by Gemini in connection with any loan, hypothecation, Lien or claim of (or by) Gemini or transferred, pledged, or otherwise made subject to a Lien to (or by) any third party, that none of the Assets constitute an asset on the balance sheet of Gemini, and that the Assets and fiat currency will at all times be identifiable in Gemini’s database as being stored in the Custody Account, or Fiat Account, respectively, on behalf of Customer, in accordance with this Agreement. Gemini tracks the balances and ownership of Assets and fiat currency of each such account.

Opt-in to Article 8 of the Uniform Commercial Code of the State of New York.

(a) The Parties agree that (i) all property, including all Assets, credited to Customer’s Custody Account will be treated as “financial assets” under Article 8 of the Uniform Commercial Code as in effect of the State of New York (“UCC”), (ii) Gemini will be acting as “securities intermediary” within the meaning of Article 8 of the UCC and an “intermediary” within the meaning of the Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary, July 5, 2006, 17 U.S.T. 401, 46 I.L.M. 649 (entered into force April 1, 2017) (the “Hague Securities Convention”) in maintaining Customer’s Custody Account, (iii) Customer’s Custody Account will constitute a “securities account” within the meaning of Article 8 of the UCC and the Hague Securities Convention with respect to all property, including all Assets, credited thereto, (iv) Gemini will treat Customer as the “entitlement holder” having “security entitlements” within the meaning of Article 8 of the UCC with respect to all property, including all Assets, credited to Customer’s Custody Account, and (v) Customer will be the “account holder” within the meaning of the Hague Securities Convention with respect to Customer’s Custody Account. The parties understand and agree that the foregoing election does not affect the characterization or treatment of any Assets under any law, rule, or regulation, other than the UCC and the Hague Securities Convention.

(b) Gemini shall maintain each Digital Asset in a quantity corresponding to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that Digital Asset. Gemini may maintain such Digital Assets directly or through one or more other securities intermediaries and may maintain such Digital Assets in one or more omnibus accounts (though for the avoidance of doubt, Customer’s Assets shall be maintained as provided in this Agreement). Gemini shall only be responsible for the performance of those duties and obligations as are expressly set forth herein. Gemini shall have no implied duties or other obligations whatsoever.

(c) New York is the “securities intermediary’s jurisdiction” for purposes of the UCC, and the law in force in the State of New York is applicable to all issues specified in Article 2(1) of the Hague Securities Convention.

5. Other Services. In addition to the Custodial Services, Gemini shall make available to Customer other Gemini Services, including access to the Exchange for the purpose of buying and selling of Digital Assets and Gemini Clearing services to settle certain transactions through Gemini’s trade settlement platform. In each case, Customer’s use of these services is subject to the terms of the User Agreement or such other agreement as the Parties may enter into and outside the scope of this Agreement.

Fees.

(a) Customer shall pay to Gemini:

Fees for the Custodial Services as set out in the Custodial Fee Schedule attached as “Exhibit 1: Fee Schedule,” denominated in the respective Asset type as set out in the Custodial Fee Schedule from the Digital Assets held by Gemini on Customer’s behalf (the “Custody Fee”), and

ii.

an administrative withdrawal fee (the “Withdrawal Fee”) in connection with a Withdrawal Request and in accordance with the Custodial Fee Schedule of this Agreement.

(b) Gemini shall not change the Custody Fee without providing ninety (90) days prior notice to the Customer. The Custody Fee is: (i) calculated on a daily basis at 4pm Eastern Time; and (ii) accrues each calendar day against Customer’s respective Asset Balance beginning on the day the Supported Digital Assets were Delivered to Gemini (i.e., becoming Assets).

(c) The Parties agree that all Custody Fees, Withdrawal Fees or other amounts incurred under this Agreement shall be invoiced by Gemini to and paid by Customer’s Authorized Agent, Van Eck Associates Corporation.

(d) Such fees may be paid in the form of either (i) United States Dollar (“USD”) as provided in Exhibit 1, or (ii) in the notional USD equivalent in ETH as reasonably calculated by Gemini based on the average trailing 24-hour U.S. dollar denominated volume-weighted-average-price for ETH on the Gemini Exchange at the time such fees are incurred.

7.	Custodial Account Creation and Structure.

(a) Gemini shall establish a Gemini Account for Customer in Customer’s name that will consist of one or more of the following sub-accounts, as directed by Customer: (i) a Custody Account for Digital Assets and (ii) a Fiat Account to custody Customer’s fiat currency.

i. Customer’s Custody Account will have one or more associated unique Blockchain Addresses. In the Custody Account, Customer’s Assets will be segregated from any and all other Digital Assets held by Gemini (and those of any other Person) and directly verifiable via the applicable blockchain.

ii. Gemini will provide Customer with all Blockchain Addresses associated with its Custody Account. The ownership of Customer’s Assets and fiat currency will be clearly recorded in Gemini’s books as belonging to Customer.

iii. Gemini’s records will at all times provide for the separate identification of Customer’s Assets. Gemini will not loan, hypothecate, pledge, or otherwise encumber any Assets in Customer’s Custody Account.

iv. Customer agrees and understands that nothing herein prevents Gemini from using its Cold Storage System to custody its own property and/or the property of third parties; provided, however, that, at a minimum, separate Blockchain Addresses are utilized to segregate Customer’s Assets from such other property.

The Custodial Services shall be provided through Gemini’s website and associated technology including applications and application programming interfaces (“APIs” and together the “Gemini Platform”). Customer is responsible for opening a Gemini Account through the Gemini Platform, which includes

successfully completing the Gemini BSA/AML Program and registering one or more “User Accounts” for Authorized Persons, which will have access to the Customer’s Gemini Account. Use of the Gemini Platform shall be subject to the terms of the User Agreement, and accessing the Custody Account and other Gemini Platform functionality through an API shall be subject to the terms of the API Agreement, each of which may be amended, amended and restated, or otherwise modified from time to time and made available on such website or a replacement website; provided, however, that Gemini shall provide as notice of material changes to the User Agreement or API Agreement prior to such changes becoming effective on Customer.

(b) A Gemini Account may be opened and accessed on behalf of Customer by a beneficial owner and/or designated representative, including the Authorized Agent. By opening an account, the Customer warrants and agrees that the person opening such account is a beneficial owner and/or designated representative of the Customer. Customer authorizes Gemini, or a third-party service provider, to take any measure that Gemini considers necessary to verify and authenticate the identity and confirm the information Customer submits about its linked bank account, and to take any action Gemini deems necessary based on the results.

(c) Customer acknowledges and agrees that it and the Authorized Agent are responsible for designating Authorized Persons to have access to its Gemini Account and to assign role-based permissions for such Authorized Persons with respect to the Gemini Account, and as applicable, each sub-account. Customer agrees that it will not allow any persons who have not successfully completed the Gemini BSA/AML Program to access or use its Gemini Account.

(d) Authorized Persons may submit instructions to Gemini with respect to Customer’s Gemini Account. The types of instructions that may be submitted and actions that may be performed will differ for each sub-account, as described in this Agreement, and may change from time to time. Instructions may be submitted by Authorized Persons via the Gemini Platform as Proper Instructions or communicated to Gemini as General Instructions, as applicable (together, “Instructions”). Instructions to withdraw Assets from the Custody Account or Fiat Currency from the Fiat Account can only be submitted as Proper Instructions, unless otherwise agreed to by the Parties.

i. In each case, Customer acknowledges that it is familiar with, and has been fully informed of, the risks associated with giving Instructions, and is willing to accept such risks, and it shall (and shall cause each Authorized Person to) safeguard and treat with extreme care any credentials related to Instructions. Customer understands that there may be more secure methods of giving or delivering Instructions than the methods selected by Gemini and Customer agrees that the security procedures (if any) to be followed in connection therewith provide a commercially reasonable degree of protection in light of particular needs and circumstances. Customer agrees and understands that with respect to Proper Instructions, Gemini cannot authenticate whether or not such Instructions originated from an Authorized Person. Customer agrees and understands that, in accordance with this Agreement, Gemini may rely upon, without liability on its part, any Instruction that it believes in good faith and in a commercially reasonable manner to have been given by an Authorized Person in a manner authorized by this Agreement.

ii. For Instructions other than Proper Instructions, if Gemini believes that any such Instructions are illegible, unclear or ambiguous, Gemini shall promptly notify Customer and may refuse to execute such Instructions until any ambiguity or conflict has been resolved to its satisfaction. Except to the extent resulting from a breach of Gemini’s Standard of Care, Gemini shall not be liable for any loss resulting from a delay while it obtains the relevant resolution.

Validation and confirmation procedures used by Gemini are designed only to verify the source of the Instruction and not to detect errors in the content of that Instruction or to prevent duplicate Instructions. Customer is responsible for losses resulting from Instructions provided by it or its Authorized Persons in accordance with this Agreement. For the avoidance of doubt, Customer is responsible for losses resulting from inaccurate Instructions provided by Customer (e.g., if Customer provides the wrong destination Blockchain Address to Gemini for executing a Withdrawal Request). Gemini is responsible for losses resulting from its errors in executing Instructions (e.g., if Customer provides the correct destination Blockchain Address for executing a Withdrawal Request to Gemini, but Gemini erroneously sends Customer’s Assets to a different destination Blockchain Address).

iii. Customer acknowledges and agrees that Gemini may refuse to execute Instructions if in its reasonable opinion such Instructions are outside the scope of Gemini’s duties under this Agreement or are contrary to Applicable Laws and Regulations, in which case Gemini will promptly notify the Customer unless legally prohibited from doing so.

(e) Gemini hereby represents, warrants and covenants that the Assets in the Customer’s Custody Account will, unless required to facilitate withdrawals from the Custody Account as a temporary measure, be custodied using the Cold Storage System; that separate Blockchain Addresses are utilized to segregate the Customer’s Assets from Gemini’s Digital Assets and other property and the Digital Assets and property of all other Persons; and that Assets will not be withdrawn from the Custody Account except pursuant to Proper Instructions, unless otherwise agreed by the Parties.

(f) Account Access.

i. Customer is only permitted to access its Gemini Account using its User Account login credentials and other required forms of authentication. [***]

ii. [***]

iii. Customer agrees and understands that it is solely responsible (and will not hold Gemini responsible) for managing and maintaining the security of its User Account login credentials and any other required forms of authentication [***].

Custody Account Provisions. The following provisions describe the operation of the Custody Account.

(a) Delivery. Customer agrees and understands that Supported Digital Assets will only be considered Assets after they have been Delivered to a Blockchain Address provided by Gemini to Customer. Customer agrees and understands that Gemini shall have no obligation with respect to any Supported Digital Assets unless such Supported Digital Assets have been so Delivered to it.

(b) Deposits. Deposits of Supported Digital Assets to a Blockchain Address of Customer’s Custody Account may occur without Gemini’s involvement. Deposits will be credited to Customer’s Custody Account once they are Delivered.

i. Upon submission of a Withdrawal Request via the Custody Interface, all Authorized Persons will receive an email notification informing them of the Withdrawal

Request. An Authorized Person (other than the Authorized Person who initiated the Withdrawal Request) must then approve the Withdrawal Request via the Custody Interface (a “Withdrawal Confirmation”).

ii. If only one Authorized Person is designated on a Gemini Account, a Withdrawal Request will be approved following a new or recently successful multi-factor authentication.

iii. Once a Withdrawal Confirmation has been made, Customer’s Withdrawal Request will be processed, and the Digital Assets subject to the Withdrawal Request shall be Delivered to the destination Blockchain Address specified therein, within one Business Day of the next Cut-Off-Time. If a Withdrawal Request is made (i) by the ETP Redemption Cut-Off Time on a Business Day, (ii) in connection with a redemption of shares for Customer’s exchange traded product, and (iii) the Delivery of Digital Assets for such Withdrawal Request is to the Gemini Account of a Person that has signed and executed an agreement with Customer to be an “Authorized Participant” with respect to Customer’s exchange traded product, then the Digital Assets subject to such Withdrawal Request shall be Delivered to the destination Blockchain Address specified therein, by the next of the Business Day from the Business Day when such Withdrawal Request was submitted.

iv. Customer agrees and understands that with respect to Proper Instructions, Gemini cannot authenticate whether or not such Proper Instructions originated from an Authorized Person. Customer further agrees and understands that Gemini has the right to refuse to execute any Withdrawal Request that it believes may be in violation of any Applicable Laws and Regulations, in which case Gemini will promptly notify the Customer unless legally prohibited from doing so. Customer agrees and understands that Gemini may rely upon any action that it believes in good faith and in a commercially reasonable manner to have been taken by an Authorized Person in a manner authorized by this Agreement.

v. Digital Assets withdrawals will typically be processed at the speed of a Digital Asset network. In certain situations, Digital Asset withdrawals may be delayed in connection with Downtime or the congestion or disruption of a Digital Asset network.

vi. If Customer is unable to meet requirements under Applicable Law and Regulations or its operating agreements related to the timing for the creation and redemption of shares for its exchange traded products as a direct result of Gemini’s Custody Interface preventing Customer from submitting Withdrawal Requests via Proper Instructions, Gemini will cooperate with Customer and will use reasonable efforts to put in place an alternative procedure for Customer to submit requests for withdrawals of Customer’s Assets or fiat currency, including through the use of General Instructions, so long as Gemini, in consultation with the Customer, can reasonably determine that such alternative procedure can be processed in a secure manner and consistent with Gemini’s risk management standards.

(d) Statements. Gemini will provide Customer with an itemized account statement (“Custody Statement”) monthly via Gemini’s Custody Interface, which will list the accrued Fees for Customer’s Assets. Customer can view Customer’s prior Custody Statements, current Asset Balance, and other account information at any time through the Custody Interface.

(e) Sub-Contractors. Subject to Section 11(a)(iii) of this Agreement, Customer understands that Gemini may perform its duties or obligations under this Custody Agreement through subcontractors or agents (including Gemini Service Providers). In relation to each such subcontractor or agent used by

Gemini, Gemini shall: (i) comply with the Standard of Care in the selection, appointment and use of each such subcontractor or agent; (ii) monitor such subcontractor’s or agent’s performance; and (iii) remain solely liable to Customer for the performance of Gemini’s obligations under this Agreement, notwithstanding any use of subcontractors or agents.

(f) Authorized Participants. Subject to any legal and regulatory requirements, in order to support Customer’s ordinary course of deposits and withdrawals, which involves, or will in the future involve, deposits from and withdrawals of Assets owned by Customer to Digital Asset accounts owned by a person that is an “Authorized Participant” of the Customer, within the meaning of an authorized participant agreement between such Authorized Participant and Customer (an “Authorized Participant”), Gemini will use commercially reasonable efforts to cooperate with Customer to design and put in place via the Custodial Services a secure procedure to allow such Authorized Participants to receive a Digital Asset address for deposits by such Authorized Participants and to initiate withdrawals to Digital Asset addresses controlled by such Authorized Participants, including to meet certain of Customer’s timing requirements for the creation and redemption of shares for its exchange traded product.

9.	Standard of Care.

(a) Gemini agrees to take reasonable care and use commercially reasonable efforts in executing its responsibilities to Customer pursuant to this Agreement, which includes exercising the degree of care, diligence and skill that a prudent and competent professional provider of services similar to the Custodial Services would exercise in the circumstances, or such higher care where required by law or this Agreement (collectively, the “Standard of Care”).

i. Customer agrees that Gemini cannot be held responsible for any failure or delay to act by Gemini, any Gemini Service Provider or its banks that is within the time limits permitted by this Agreement, or that is caused by Customer’s negligence or is required to comply with Applicable Laws and Regulations.

ii. Customer further agrees that Gemini cannot be held responsible for any System Failure or Downtime (both as defined herein), which prevents Gemini from fulfilling its obligations under this Agreement, provided that Gemini took reasonable care and used commercially reasonable efforts to prevent or limit such System Failures or Downtime and otherwise complied with this Agreement. For purposes of this provision, a “System Failure” shall mean a failure of any computer hardware, software, computer systems, or telecommunications lines or devices used by Gemini, or interruption, loss, or malfunction of utility, data center, Internet or network provider services used by Gemini; provided, however, that a cybersecurity attack, data breach, hack, or other intrusion, or unauthorized disclosure by a third party, Gemini, a Gemini Service Provider, or an agent or subcontractor of Gemini, shall not be deemed a System Failure, to the extent such events or any losses arising therefrom are due to Gemini’s failure to comply with its obligations under this Agreement. Customer also agrees that Gemini cannot be held responsible for any circumstances beyond Gemini’s reasonable control, provided Gemini acted in accordance with the Standard of Care.

iii. Notwithstanding any other provision in this Agreement, for all Assets held in Customer’s Custody Account with Gemini, Gemini represents, warrants, and covenants that it will maintain the private key or keys in a form accessible to Gemini and will take reasonable

care and use commercially reasonable efforts to (i) protect and keep the private key or keys secure and (ii) not disclose them or allow access to them by any other Person.

iv. Gemini shall take reasonable care and use commercially reasonable efforts to ensure that Customer and the Authorized Agent shall be able to access the Custody Account via the Custody Interface and the Gemini Platform 97% of the time (excluding Downtime (as defined herein) and Systems Failures).

(b) Subject to the “Force Majeure” provision and as limited by the “Limitation of Liability” provision in this Agreement, Gemini shall be liable to Customer for the Loss of any of Customer’s Digital Assets or fiat currency to the extent that such Loss was caused by the negligence, fraud, willful or reckless misconduct of Gemini or breach by Gemini of its Standard of Care as defined in this Section 9.

i. For purposes of this Section 9(b), “Loss” shall mean if, at any time the Customer’s Custody Account or Fiat Account, as applicable, does not hold the Assets or fiat currency that had been (1) received by Gemini in connection with Customer’s Custody Account or Fiat Account pursuant to this Agreement, or (2) duly sent to Gemini by Authorized Persons in connection with Customer’s Custody Account pursuant to this Agreement but not received because of a failure caused by Gemini.

ii. “Loss” shall include situations where Gemini fails to execute a valid Withdrawal Request, Assets are withdrawn from Customer’s Custody Account other than pursuant to a Withdrawal Request, or Customer is not able to timely withdraw Assets from the Custody Account pursuant to a Withdrawal Request, in each case due to a failure caused by Gemini; provided, however, that Gemini’s failure to permit timely withdrawals because it has determined that it cannot do so due to the requirements of Applicable Laws and Regulations or because of the operation of its fraud detection controls shall not be considered a Loss, provided Gemini is acting reasonably and in good faith.

iii. Subject to any other provision of this Agreement, should a Loss of the Customer’s Digital Assets or fiat currency due to the negligence, fraud, willful or reckless misconduct of Gemini or a breach by Gemini of its Standard of Care occur, whether discovered by Gemini or by Customer (and following prompt written notice to the other Party), Gemini will, as soon as practicable, return to Customer a quantity of the same Digital Asset that is equal to the quantity of Digital Assets involved in the Loss, or return to Customer a quantity of the same fiat currency that is equal to the quantity of fiat currency involved in the Loss (if the Loss involved the Fiat Account).

10.

Representations, Warranties and Covenants. Gemini and Customer hereby make the following representations and warranties, as applicable to each, which representations and warranties shall be continuing.

(a) Gemini represents, warrants and covenants that:

i. it is duly organized and existing under the laws of New York, validly existing and in good standing under the laws of its jurisdiction of incorporation, has all corporate powers required to carry on its business as now conducted, and is duly qualified to do business and is in good standing in each jurisdiction where such qualification is necessary;

ii. it is a New York State-chartered limited purpose trust company that is authorized under Article III §§ 96 and 100 of the New York Banking Law to provide custodial services with respect to Digital Assets and fiat currency;

iii. it has full power to execute and deliver this Agreement and to perform all the duties and obligations to be performed by it under this Agreement;

iv. the execution, delivery and performance by Gemini of this Agreement and the provision of the services contemplated hereby are within Gemini’s corporate powers and have been duly authorized by all necessary corporate action on the part of Gemini;

v. this Agreement constitutes a valid and binding agreement of Gemini enforceable against Gemini in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity) and does not contravene, or constitute a default under, any provision of Applicable Laws and Regulations or of the articles of incorporation or other documents under which Gemini is organized or of any agreement, judgment, injunction, order, decree or other similar instrument binding upon Gemini;

vi. it has and shall maintain any necessary consents, permits, licenses, approvals, authorizations or exemptions of any governmental or other regulatory authority or agency required to fully and timely provide Custodial Services to Customer under this Agreement in accordance with Applicable Laws and Regulations;

vii. it has complied and shall continue to comply with all Applicable Laws and Regulations with respect to the Custodial Services;

viii. it shall immediately notify Customer if, at any time after the date of this Agreement, any of the representations, warranties, or covenants made by Gemini under this Agreement, fail to be true and correct as if made at and as of such time, and provide details of such deficiency;

ix. beneficial and legal ownership of Customer’s Digital Assets and fiat currency is, and shall remain, freely transferable without the payment of money or value, and Gemini has no ownership interest in Customer’s Digital Assets or fiat currency;

x. Gemini waives any right of Lien, pledge, retention or set-off or similar right it may have under any provision of law, regulation or contract with respect to the Assets or fiat currency;

xi. Gemini will maintain adequate capital and reserves to the extent required by Applicable Laws and Regulations; and

xii. the Gemini BSA/AML Program is consistent with Applicable Laws and Regulations and acceptable industry standards for such policies.

(b) Customer represents, warrants and covenants that:

i. it has full power to execute and deliver this Agreement and to perform all the duties and obligations to be performed by it under this Agreement;

ii. the execution, delivery and performance by Customer of this Agreement are within Customer’s corporate powers and have been duly authorized by all necessary corporate action on the part of Customer;

iii. this Agreement constitutes a valid and binding agreement of Customer enforceable against Customer in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity) and does not contravene, or constitute a default under, any provision of Applicable Laws and Regulations in the jurisdictions where Customer operates or of the articles of incorporation or other documents under which Customer is organized or of any agreement, judgment, injunction, order, decree or other similar instrument binding upon Customer;

iv. Customer is in compliance with all Applicable Laws and Regulations in the jurisdictions in which Customer operates, and to its best knowledge has obtained all required regulatory licenses, approvals and consents as applicable with respect to this Agreement and any Withdrawal Requests (as defined herein), and such licenses, approvals and consents are in full force and effect and all conditions of any such consents have been complied with; without limiting the generality of the foregoing, Customer will not use the services provided by Gemini under this Agreement in any manner that is, or would result in, a violation of any Applicable Laws and Regulations in jurisdictions in which Customer operates;

v. it has all rights, title and interest in and to the Digital Assets and fiat currency as necessary for Gemini to perform its obligations under this Agreement, there is no claim pending, or to the Customer’s knowledge, threatened, and no encumbrance or other Lien, in each case, that may adversely affect any delivery of Assets made in accordance with this Agreement, and the safekeeping of the Digital Assets and fiat currency pursuant to this Agreement is on terms consistent with the Customer’s governing documents;

vi. Customer shall immediately notify Gemini if, at any time after the date of this Agreement, any of the representations, warranties and covenants made by Customer under this Agreement fail to be true and correct as if made at and as of such time and provide details of such deficiency;

vii. Customer is aware of and familiar with, and has been fully informed of, the risks associated with giving Instructions, and is willing to accept such risks in accordance with this Agreement, and Customer shall (and shall cause each Authorized Person to) safeguard and treat with extreme care any credentials related to Instructions. Customer understands that there may be more secure methods of giving or delivering Instructions than the methods selected by Gemini and Customer agrees that the security procedures (if any) to be followed in connection therewith provide a commercially reasonable degree of protection in light of particular needs and circumstances. Customer agrees and understands that a Withdrawal Request given pursuant to Instructions in a manner authorized by this Agreement may conclusively be presumed by Gemini to have been given by an Authorized Person, and may be acted upon as given;

viii. Customer agrees and understands that Supported Digital Assets are new forms of assets, that the law regarding their ownership, custody, and transfer is developing and uncertain, and that custody of such assets poses certain risks that are not present in the case of more traditional asset classes; and Customer further agrees and understands that Customer will bear

such risks as set forth in this Agreement and the potential loss or diminution in value of Supported Digital Assets due to changes or developments in the law or conditions under existing law in which Customer’s rights in and to such Supported Digital Assets are not adequately protected;

ix. Customer agrees and understands that (i) Gemini does not own or control the underlying software protocols of networks which govern the operation of Supported Digital Assets, (ii) Gemini makes no guarantees regarding their security, functionality, or availability, and (iii) in no event shall Gemini be liable for or in connection with any acts, decisions, or omissions made by developers or promoters of such Supported Digital Assets;

x. Customer will not Deliver or cause to be Delivered any Custody-Only Assets to its Custody Account and does not intend to hold such assets with Gemini; and

xi. Customer is not, and no transferee of Assets pursuant to any Withdrawal Request is, (i) a blocked person or otherwise the target of any laws or sanctions programs administered by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), that would prohibit the sale or transfer of Assets to Customer or such transferee, or (ii) located, organized, or resident in a country or territory that is the subject of country or territory-wide sanctions that prohibit the sale or transfer of Assets to them (presently, Crimea, Cuba, Iran, North Korea and Syria).

11. Duties and Obligations of Gemini. In addition to those duties and obligations of Gemini set out elsewhere in this agreement, the duties and obligations of Gemini shall also include the following:

(a) Safekeeping of Digital Assets and Fiat Currency. In accordance with the Standard of Care, Gemini represents, warrants, and covenants that Gemini shall keep in safe custody on behalf of Customer all Assets and fiat currency received by Gemini and meet the following obligations:

i. Assets credited to the Custody Account and fiat currency credited to the Fiat Account shall be held in the applicable Gemini sub-account at all times, which accounts shall be controlled by Gemini at all times;

ii. The ownership of Assets and fiat currency deposited by Customer will be clearly recorded in Gemini’s books as being held in custody for Customer and Gemini’s records will at all times provide for the separate identification of Assets and fiat currency deposited by Customer from Digital Assets or property belonging to Gemini or any other person; and

iii. Gemini shall not, without the prior written consent of Customer, deposit or hold Customer’s Assets or fiat currency with any third-party depositary, custodian, clearance system, wallet, or sub-custodian, other than in the case of Fiat Currency, held in Customer Omnibus Accounts.

(b) No more than once per calendar year, Customer shall be entitled to request that Gemini produce its Services Organization Controls 2 Type I report (a “SOC 2-I Report”) and a new Services Organization Controls 2 Type II report (a “SOC 2-II Report” and, together with a SOC 2-I Report, “SOC Reports”), or certify that there have been no material changes which would impact the previous SOC Reports provided to Customer, and promptly deliver to Customer a copy of each SOC Report within 45 days of Customer’s request.

(c) No more than once per calendar year, Customer shall be entitled to request that Gemini produce a copy of Gemini’s audited annual financial statements for each financial year ending on or after December 31, 2023, and Gemini shall promptly deliver such financial statements to Customer.

(d) Gemini has implemented and will maintain a reasonable information security program that includes policies and procedures that are reasonably designed to safeguard Gemini’s electronic systems and software and Customer’s Confidential Information (as defined in Section 16) from, among other things, unauthorized access or misuse, in each case as set out and to the extent set out in Gemini’s SOC Reports (“Information Security Program”). In the event of a Data Security Event (defined below), Gemini shall promptly (subject to any legal or regulatory requirements) notify Customer and such notice shall include the following information to the extent available at the time using commercially reasonable efforts: (i) the timing and nature of the Data Security Event, (ii) the information related to Customer that was compromised, (iii) when the Data Security Event was discovered, and (iv) remedial actions that have been taken and that Gemini plans to take. “Data Security Event” is defined as any event whereby (x) an unauthorized person (whether within Gemini or a third party) acquired or accessed Customer’s or an Authorized Person’s personal identifying information, or (y) Customer’s or an Authorized Person’s personal identifying information is otherwise lost, stolen or compromised.

12.	Indemnification.

Gemini agrees to indemnify and hold harmless Customer from and against any and all losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees and expenses) (collectively “Damages”) arising out of or caused by (whether directly or indirectly) a third-party claim (except where such claim directly results from Customer’s willful misconduct, fraud, or gross negligence) relating to:

i. the non-performance or material breach by Gemini of its duties and obligations under this Agreement, including the Standard of Care;

ii. Customer’s reasonable reliance on any representations or warranties made by Gemini under this Agreement that were or are in fact untrue; or

iii. the holding of the Assets and fiat currency by Gemini as contemplated by this Agreement, including any loss or damage caused by any act or omission of any employee of Gemini or any agent, representative or independent contractor engaged by Gemini, whether or not such act or omission occurred within the scope of his employment or engagement.

(b) Customer agrees to indemnify and hold harmless Gemini from and against any and all Damages arising out of or caused by (whether directly or indirectly) a third-party claim (except where such claim directly results from Gemini’s willful misconduct, fraud, or gross negligence) relating to:

i. the non-performance or material breach by Customer of its duties and obligations under this Agreement; or

ii. Gemini’s reasonable reliance on any representations or warranties made by Customer under this Agreement that were or are in fact untrue.

(c) For the avoidance of doubt, “Damages” shall not include any losses, claims, damages, liabilities or expenses arising from any fluctuation in market price, forks, governance changes, airdrops or other events which impact all holders of a Digital Asset globally as a class.

13. Force Majeure. Customer agrees and understands that in no event shall Gemini be liable for any delays, failure in performance or interruption of service which result directly or indirectly from any cause or condition, whether or not foreseeable, beyond Gemini’s reasonable control, including, but not limited to, any act of God, nuclear or natural disaster, epidemic, action or inaction of civil or military authorities, act of war, terrorism, sabotage, civil disturbance, strike or other labor dispute, accident, or state of emergency; provided, however, that for the avoidance of doubt, this Section 13 shall not apply to the events or occurrences governed by Section 9(a)(ii). The occurrence of an event described in this Section 13 shall not affect the validity and enforceability of any remaining provisions of this Agreement.

14.	Termination.

(a) This Agreement will commence on the Effective Date and will continue until terminated as provided in this Section 14.

(b) This Agreement may be terminated by either Party upon 90 days written notice to the other Party; provided, however, that if this Agreement is terminated pursuant to this Section 14, Gemini shall use commercially reasonable efforts to cooperate with Customer’s transition to a replacement custodian and if Customer is unable to engage a replacement custodian using commercially reasonable efforts within such 90 day period, Gemini terminates this Agreement, then Gemini shall continue to act as Custodian pursuant to the terms of this Agreement until such time as Customer engages a replacement custodian, provided that Customer uses reasonable commercial efforts to promptly engage a replacement custodian.

(c) Either Customer or Gemini (for the purpose of this Section 14(c), the “Terminating Party”) may terminate this Agreement at any time by written notice to the other Party (the “Defaulting Party” which, for greater certainty, shall be Gemini, where Customer is the Terminating Party and shall be Customer where Gemini is the Terminating Party) upon the occurrence of one or more of the following events (a “Termination Event”), such termination to take effect: (i) on the tenth Business Day after the delivery of written notice of termination by the Terminating Party to the Defaulting Party, unless the Defaulting Party has cured the Termination Event to the satisfaction of the Terminating Party, acting reasonably, or (ii) immediately after delivery of written notice of termination by the Terminating Party to the Defaulting Party if such Termination Event is incapable of being cured within ten Business Days:

i. any representation, warranty, certification or statement made by the Defaulting Party under this Agreement was or becomes incorrect in any material respect when made;

ii. the Defaulting Party materially breaches, or fails in any material respect to perform any of its obligations under, this Agreement;

iii. the Defaulting Party requests a postponement of maturity or a moratorium with respect to any indebtedness or is adjudged bankrupt or insolvent, or there is commenced against the Defaulting Party a case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the Defaulting Party files a petition for bankruptcy or an application for an arrangement with its creditors, seeks or consents to the appointment of a receiver, administrator or other similar official for all or any substantial part of its property, admits in

writing its inability to pay its debts as they mature, or takes any corporate action in furtherance of any of the foregoing, or fails to meet applicable legal minimum capital requirements;

iv. a Change of Control of the Defaulting Party, or an event, change or development that causes or is likely to cause a Material Adverse Effect on the Defaulting Party, or in the ability of the Defaulting Party to fulfill its responsibilities under this Agreement, occurs;

v. with respect to Customer’s right to terminate, a Supported Network relating to Customer’s Digital Assets undergoes a Fork and becomes a Forked Network, and Customer disagrees with Gemini’s choice of which Forked Network to support; or

vi. with respect to Customer’s right to terminate, Applicable Laws and Regulations or any change therein or in the interpretation or administration thereof that may have a Material Adverse Effect on Customer or the rights of Customer with respect to any services covered by this Agreement.

(d) Upon termination of this Agreement:

i. Gemini shall promptly upon Customer’s Instructions deliver or cause to be delivered to Customer all Customer Assets and fiat currency held or controlled by Gemini as of the effective date of termination;

ii. Customer shall pay to Gemini all fees, if any, as set forth in the Agreement accrued to the date of such termination;

iii. the license granted to Customer to access and use the Gemini Platform and Custodial Services shall terminate, and Customer (and its Authorized Persons) shall immediately discontinue all access and use of Custodial Services; and

iv. any such termination shall not affect any right or liability arising out of events occurring, or services delivered, prior to the effectiveness thereof.

15.	Forks; Unsupported Forked Assets; Airdrops.

(a) Forks.

i. Customer agrees and understands that the underlying protocols of Supported Networks are subject to Forks that may result in more than one version (each, a “Forked Network”) and Gemini holding a specified amount of Digital Assets associated with each Forked Network. Customer further agrees and understands that Forks may materially affect the value, function, and/or name of the Assets it holds on Gemini.

ii. In the event of a Fork, Customer agrees and understands that Gemini may temporarily suspend the operations of Gemini (with notice, which may be provided by public notice to its customers on its website or by other means) while Gemini chooses, in its sole discretion, except as described herein, which Forked Networks to support. Once Gemini has chosen which Forked Network to support, it will promptly make such notification public on its website or by other means. Customer agrees and understands that in Gemini’s best estimation it is unlikely to support most Forked Networks and that the Digital Assets of most Forked Networks will likely not be made available to Customer.

iii. DIGITAL ASSET VALUES CAN FLUCTUATE SUBSTANTIALLY, INCLUDING DUE TO CHANGES IN DIGITAL ASSET PROTOCOLS AND NETWORKS WHICH MAY RESULT IN A TOTAL LOSS OF THE VALUE OF DIGITAL ASSETS HELD BY GEMINI ON CUSTOMER’S BEHALF. THE SUPPLY OF DIGITAL ASSETS AVAILABLE TO GEMINI TO PROVIDE TO CUSTOMER AS A RESULT OF A FORKED NETWORK AND GEMINI’S ABILITY TO DELIVER DIGITAL ASSETS RESULTING FROM A FORKED NETWORK MAY DEPEND ON THIRD PARTY PROVIDERS THAT ARE OUTSIDE OF GEMINI’S CONTROL. GEMINI DOES NOT OWN OR CONTROL ANY OF THE PROTOCOLS THAT ARE USED IN CONNECTION WITH DIGITAL ASSETS AND THEIR RELATED DIGITAL ASSET NETWORKS, INCLUDING THOSE RESULTING FROM A FORKED NETWORK. ACCORDINGLY, GEMINI DISCLAIMS ALL LIABILITY RELATING TO SUCH PROTOCOLS AND ANY CHANGE IN THE VALUE OF ANY DIGITAL ASSETS (WHETHER OF A FORKED NETWORK OR OTHERWISE) INCLUDING IF SUCH CHANGE IS CAUSED BY A CHANGE IN SUCH PROTOCOLS OR NETWORKS, AND GEMINI MAKES NO GUARANTEES REGARDING THE SECURITY, FUNCTIONALITY, OR AVAILABILITY OF SUCH PROTOCOLS OR DIGITAL ASSET NETWORKS. CUSTOMER ACCEPTS THE RISKS ASSOCIATED WITH CHANGES IN DIGITAL ASSET PROTOCOLS OR NETWORKS, INCLUDING FORKS.

iv. In the event of a Fork of a Supported Network, Gemini will support the Forked Network that requires the greatest total threshold number of hash attempts to mine all existing blocks measured during the 48-hour period following a Fork (the “Greatest Cumulative Computational Difficulty”) and will retain the name and ticker of the Digital Asset that existed prior to the Fork. Customer agrees and understands that Gemini may, in its sole discretion, suspend operations, in whole or in part (with notice, which may be provided by public notice to its customers on its website or by other means), for as long as Gemini reasonably deems necessary, while it makes this determination. If Gemini is unable to make a conclusive determination as to which Forked Network has the Greatest Cumulative Computational Difficulty, or if Gemini reasonably determines in good faith that Greatest Cumulative Computational Difficulty is not a reasonable criterion upon which to make a determination, it will support the Forked Network that it reasonably deems in good faith is most likely to be supported by the greatest number of users and miners and will retain the name and ticker of the Digital Asset that existed prior to the Fork. Gemini may also support the other Forked Network, in which case Gemini will call its Digital Asset by a different name and use a different ticker. Once Gemini has made a determination regarding the Forked Network(s) it will support, it will promptly make such determination publicly available through its website or other means.

(b) Unsupported Forked Digital Assets. In the event that the Customer is entitled to take delivery of Digital Assets pursuant to the protocol of a Forked Network and Gemini elects, in its sole direction, not to support such Forked Network, Gemini shall, in good faith upon request of Customer:

i. use commercially reasonable efforts to calculate the amount of specified Unsupported Fork Network Assets Customer would be entitled to based upon the Customer’s balance of Digital Assets at the time of the applicable Fork (the “Unsupported Forked Assets”);

ii. use commercially reasonable efforts to notify the Customer in writing (which may be via email) of the amount of Unsupported Forked Assets and shall not account for, or

pursue such, Unsupported Forked Assets as its own property or the property of any other person other than Customer;

iii.

in the discretion of Gemini:

make such Unsupported Forked Assets available to Customer via a one-time withdrawal mechanism (“One-Time Withdrawal”) (subject to the withholding and retention by Gemini of any amount reasonably necessary, as determined in Gemini’s sole discretion, to fairly compensate Gemini for the efforts expended to make such Digital Assets available); or

not pursue obtaining such Unsupported Forked Assets on behalf of the Customer; and

iv.

if Gemini elects not to pursue obtaining Unsupported Forked Assets under this section, in the event that Gemini in the future elects to support such Forked Network, Gemini shall use commercially reasonable efforts to take such action as may be necessary to pursue and credit such Unsupported Forked Assets to the Customer’s Gemini Account.

(c) Airdrops. Customer agrees and understands that in the event that a Digital Asset network attempts to or does distribute (sometimes called “airdropping” or “bootstrapping”) its Digital Assets to Digital Asset addresses of a Supported Network, Gemini will treat this Digital Asset network as an Unsupported Forked Network. The Parties further agree and understand that airdropped Digital Assets do not create or represent any relationship between Gemini and the sender and/or the related Digital Asset network and does not subject Gemini to any obligations whatsoever as they relate to the sender and/or the related Digital Asset network.

16.	Confidentiality.

(a) The Parties acknowledge that a copy of the final, executed Agreement will be filed publicly with the Securities and Exchange Commission by the Customer as part of its obligations as a reporting company under applicable securities laws, subject to reasonable redaction for economic or other confidential commercial terms as reasonably agreed by both Parties. The Parties agree that each shall treat confidentially the terms and conditions of this Agreement which are redacted from the publicly filed version of this Agreement and all information provided by each Party to the other regarding its business and operations which is not publicly available.

(b) As used herein, the term “Confidential Information” means all non-public information disclosed directly or indirectly by one party (including its employees, agents and representatives, the “Disclosing Party”) to the other party (“Receiving Party”) in connection with the provision of services contemplated by this Agreement, whether furnished before or after the date of this Agreement, and whether written, oral or in electronic form.

(c) The Receiving Party shall maintain the strict confidentiality of any Confidential Information and shall not disclose any part of it to any other person except as set forth herein. The Receiving Party shall treat the Confidential Information with the same degree of care as it would its own, but in no event with less than reasonable care, and subject to the Standard of Care and other applicable provisions of this Agreement.

(d) The Receiving Party shall not disclose or permit disclosure of any Confidential Information to third parties, other than to those who have (i) a reasonable need to know such information in order to assist the Receiving Party in connection with the services under this Agreement and (b) have agreed to preserve the confidentiality of the Confidential Information; provided, however, that such obligation shall not apply to any information that the Receiving Party is required to disclose or provide to NYSDFS or FinCEN pursuant to Applicable Laws and Regulations.

(e) The Receiving Party further agrees to notify the Disclosing Party in writing of any actual or suspected misuse, misappropriation or unauthorized disclosure of the Disclosing Party’s Confidential Information which may come to Receiving Party’s attention.

(f) Exceptions: Notwithstanding the above, the Receiving Party shall not have liability to the Disclosing Party with regard to any Confidential Information which:

Was in the public domain at the time it was disclosed to the Receiving Party or has entered the public domain through no fault of Receiving Party;

ii.

Was known to Receiving Party, without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;

iii.

Is disclosed with the prior written approval of the Disclosing Party; or

iv.

Subject to Section 18(b), is disclosed pursuant to applicable federal, state or local laws, rules, regulations or policies, or the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Receiving Party shall provide (if allowed) prompt notice of such court order or requirement to the Disclosing Party to enable the Disclosing Party to seek a protective order or otherwise prevent or restrict such disclosure.

17.	Limitations of Liability.

(a) Gemini, its affiliates, Gemini Service Providers, or any of their respective officers, directors, agents, joint venturers, employees or representatives, shall not be liable for (i) any losses or claims arising out of actions that are in Customer’s control and related to its use of the Gemini Platform, including but not limited to, the Customer’s failure to follow security protocols, Gemini controls, improper Instructions, failure to secure Customer’s credentials from third parties, or anything else in Customer’s control, (ii) any amount greater than the value of the Assets on deposit in Customer’s Custody Account, at the time of, and directly relating to, the events giving rise to the liability occurred, the value of which shall be determined in accordance with the Chicago Mercantile Exchange Ether-Dollar Reference Rate or any successor thereto. No Party shall be liable to the other Parties (whether under contract, tort (including negligence) or otherwise) for any indirect, incidental, special, punitive or consequential losses suffered or incurred by the other Parties (whether or not any such losses were foreseeable or within the contemplation of the Parties). This means, by way of example only (and without limiting the scope of the above), that if Customer claims that Gemini failed to process a Withdrawal Request properly, Customer’s damages are limited to no more than the value of the Supported Digital Assets at issue in the Withdrawal Request, and that Customer may not recover for lost profits, lost business opportunities, or other types of special, incidental, indirect, intangible, or consequential damages in excess of the value of the Assets at issue in the withdrawal.

(b) Gemini shall not be liable to Customer or anyone else for any loss or injury resulting directly or indirectly from any damage or interruptions caused by any computer viruses, spyware, scamware, trojan horses, worms, or other malware that may affect Customer’s computer or other equipment, provided such malware did not originate from Gemini or its agents.

18.	Account Suspension; Legal Process

(a) Account Suspension. Customer agrees and understands that Gemini has the right to immediately (i) take actions Gemini determines appropriate to comply with Applicable Law and Regulations and in accordance with its BSA/AML Program, (ii) suspend Customer’s Custody Account or Fiat Account, (iii) freeze/lock the funds and assets in all such accounts, and (iv) suspend Customer’s access to Gemini (collectively, an “account suspension”), if: (A) Gemini is required to do so by a regulatory authority, court order, facially valid subpoena, or binding order of a governmental authority, (B) Gemini reasonably and in good faith believes Customer has violated Applicable Laws and Regulations in connection with Customer’s Custody Account or Fiat Account, or Gemini is required to do so under Gemini’s BSA/AML Program, (C) Gemini believes someone is attempting to gain unauthorized access to the account, or (D) Gemini believes there is unusual activity in the account. If Customer’s account has been suspended, Customer will be notified when accessing Gemini. Gemini shall also give immediate notice to Customer as provided in this Agreement that Customer’s account has been suspended and shall disclose the reasons for suspension, unless specifically prohibited from doing so by Applicable Laws and Regulations. If Gemini suspects any of the e-mail addresses associated with Customer that are listed in Section 20 are compromised, it may omit sending notice of the account suspension to that e-mail address. Except as set forth above, Gemini shall not suspend Customer’s access to the Custody Account or the Fiat Account, and any suspension of Customer’s access to such accounts shall constitute a breach of this Agreement. In the case of an account suspension due to (C) or (D) of this paragraph, Gemini shall restore Customer’s normal access to the Custody Account or Fiat Account as promptly as reasonably possible without putting the Assets and fiat currency in such accounts at risk. In the case of an account suspension due to (A) or (B) of this paragraph, Gemini shall permit Customer to withdraw Customer’s Assets and fiat currencies from Customer’s Custody Account or Fiat Account as soon as permitted by Applicable Laws and Regulations or the applicable court order, subpoena, or regulatory or governmental authority, and for ninety (90) days thereafter.

(b) Legal Process. Customer agrees and understands that Gemini is authorized to supply information to law enforcement agencies regarding any Custody Accounts, Fiat Accounts or Assets that is required by Applicable Laws and Regulations and to comply with any writ of attachment, execution, garnishment, tax levy, restraining order, subpoena, warrant or other legal process. To the extent permitted by Applicable Laws and Regulations, Gemini will promptly provide Customer with notice of any such request for information or other legal process and use reasonable efforts to allow customer to seek an appropriate protective order or take other necessary action in respect of such request or legal process prior to complying with such request or legal process. Customer agrees to pay the reasonable expenses (including reasonable attorney’s fees or expenses) incurred by Gemini in connection therewith, and indemnify and hold Gemini harmless against all resulting actions, claims, liabilities, losses, costs, or damages.

19.	Digital Assets; Supported Networks.

(a) Digital Asset Networks. Customer understands that Gemini does not own or control the underlying software protocols of Digital Asset networks which govern the operation of Digital Assets. In general, the underlying protocols are open source and anyone can use, copy, modify, and distribute

them. Customer agrees and understands that: (i) Gemini is not responsible for the operation of the underlying protocols, and (ii) Gemini makes no guarantees regarding their security, functionality, or availability.

(b) Supported Networks. Customer agrees and understands that Gemini supports, in its sole discretion, certain Digital Asset networks (each, a “Supported Network”). Supported Networks are available on the Gemini website at https://www.gemini.com/legal/user-agreement#section-supported-networks, and may be updated from time-to-time. Customer agrees and understands that a Digital Asset network is not a Supported Network (each, an “Unsupported Network”), unless it is explicitly named as a Supported Network by Gemini on its website. Customer also agrees and understands that Gemini may, in its sole discretion, choose to support an Unsupported Network and make it a Supported Network on Gemini at any time. Customer further agrees and understands that Gemini may, in its sole discretion, choose to no longer support a Supported Network on Gemini and make it an Unsupported Network at any time, subject to subsection (e) below.

i. Customer agrees and understands that Gemini supports, in its sole discretion, certain Digital Assets of Supported Networks on Gemini (each, a “Supported Digital Asset”). Supported Digital Assets are available on the Gemini website at https://www.gemini.com/legal/user-agreement#section-supported-digital-assets-and-waiver-of-conflicts, and may be updated from time-to-time. Customer agrees and understands that a Digital Asset of an Unsupported Network or a Digital Asset that operates “on top of” a Supported Network is not a Supported Digital Asset (each, an “Unsupported Digital Asset”), unless it is explicitly named as a Supported Digital Asset by Gemini. Customer also agrees and understands that Gemini may, in its sole discretion, choose to support an Unsupported Digital Asset and make it a Supported Digital Asset on Gemini at any time. Customer further agrees and understands that Gemini may, in its sole discretion, choose to no longer support a Supported Digital Asset on Gemini and make it an Unsupported Digital Asset at any time, subject to subsection (e) below.

ii. Customer agrees and understands that Gemini is solely responsible for the operation of Gemini, the Gemini Platform and the Custodial Services and for making all decisions and determinations with respect to such. Such decisions and determinations could include, without limitation, the choice to support or not support a Digital Asset or Digital Asset network, or a change to the terms of trading or transacting on or through Gemini in connection with any such Digital Asset or Digital Asset network.

iii. Customer agrees and understands that Gemini may use its own services. Customer further agrees and understands that Gemini’s Related Parties may be other customers of Gemini (other than the Customer) and may use the services offered by Gemini.

(d) Unsolicited Transfers. Customer agrees and understands that in the event that it or a third-party deposits Unsupported Digital Assets into a Digital Asset address that Gemini controls (an “Unsolicited Transfer”), Gemini has the right to and will account for any such Unsupported Digital Assets as Gemini’s property, subject to Section 15.

(e) Gemini shall use reasonable efforts to provide at least 90 days’ prior notice to Customer prior to choosing to no longer support a Supported Digital Asset held in Customer’s Custody Account and make it an Unsupported Digital Asset, or prior to making its associated Supported Network an

Unsupported Network, provided, however, that Gemini may take immediate action under this Section 19(e) with or without notice to Customer if a Supported Digital Asset or Supported Network poses a material regulatory or operational risk as determined by Gemini, or if such action is required to comply with Applicable Law.

20.	Miscellaneous.

(a) Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each Party hereto shall have received a counterpart hereof signed by all of the other Parties hereto. Until and unless each Party has received a counterpart hereof signed by the other Parties hereto, this Agreement shall have no effect and no Party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the Parties hereto and their respective successors and assigns.

(b) Notices. All notices, requests and other communications to any Party hereunder shall be [***] given,

if to Customer, to:

[***]

if to Gemini, to:

[***]

[***] Notice will not be deemed to be given unless it has been received.

(c) Relationship of the Parties. Nothing in this Agreement shall be deemed or is intended to be deemed, nor shall it cause, Gemini or Customer to be treated as partners, joint ventures, or otherwise as joint associates for profit.

(d) Governing Law; Arbitration. This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of New York (excluding the conflicts of law provisions). Any controversy, claim or dispute arising out of or relating to this Agreement or the breach thereof shall be settled solely and exclusively by binding arbitration in New York, New York administered by JAMS and conducted in English. All such controversies, claims or disputes, including any relating to the scope of this section and/or the arbitrability of any claim, shall be settled in this manner in lieu of any action at law or equity. Such arbitration shall be conducted in accordance with the then prevailing JAMS Comprehensive Arbitration Rules & Procedures (the “Rules”), with the following exceptions to such Rules if in conflict: (a) the arbitration shall be conducted by one neutral arbitrator; (b) each party to the arbitration will pay an equal share of the expenses and fees of the arbitrator, together with other expenses of the arbitration incurred or approved by the arbitrator; and (c) arbitration may proceed in the absence of any party if written notice (pursuant to the Rules) of the proceedings has been given to such party. Each party shall bear its own attorney’s fees and expenses. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity. To the extent a Party seeks emergency relief in

connection with any dispute, the “Emergency Relief Procedures” provision of the Rules, currently Rule 2(c), shall govern. The Parties acknowledge that this Agreement restricts any Party from seeking emergency relief from any court, including without limitation temporary restraining orders and/or preliminary injunctions, and the Parties agree that, to the extent any Party breaches this Agreement by seeking such relief from a court, the Party seeking such relief shall be responsible for paying the other Party’s attorneys’ fees in opposing such relief, and the arbitrator shall render an award of such attorneys’ fees at the earliest possible time after such fees are incurred. IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT APPLICABLE THEN EACH PARTY, (i) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES HERETO, AND (ii) SUBMITS TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE FEDERAL OR STATE COURTS LOCATED IN NEW YORK COUNTY, NEW YORK AND EACH PARTY HERETO AGREES NOT TO INSTITUTE ANY SUCH ACTION OR PROCEEDING IN ANY OTHER COURT IN ANY OTHER JURISDICTION. Each party irrevocably and unconditionally waives any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in the arbitration forum or venue referred to in this section.

(e) Amendments and Waivers.

i. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each Party to this Agreement, or in the case of a waiver, by the Party against whom the waiver is to be effective.

ii. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

(f) Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns but the Parties agree that no Party can assign its rights and obligations under this Agreement without the prior written consent of the other Parties, which consent shall not be unreasonably withheld or delayed.

(g) Entire Agreement. This Agreement embodies the entire agreement and understanding among the Parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter of this Agreement.

(h) Privacy of Information.

i. Customer acknowledges and agree to the collection, use, and disclosure of its personal information in accordance with Gemini’s Privacy Policy, which is available on the Gemini website at https://www.gemini.com/legal/privacy-policy, and which may be amended from time to time and is incorporated into this Agreement by reference.

ii. Customer agrees and understands that Gemini may use third parties to gather, review, and submit or facilitate submitting Customer’s data and activity from Gemini to

regulatory authorities on Gemini’s behalf when required by Applicable Law or Gemini’s generally applied compliance program. By using Gemini, Customer agrees to grant third-party providers that Gemini may engage, the right, power, and authority to access and submit Customer’s data and activity to regulatory authorities on Gemini’s behalf and in accordance with and pursuant to their terms and conditions, privacy policy, and/or other policies, when required by Applicable Law or Gemini’s generally applied compliance program.

(i) Gemini shall provide to Customer and the Authorized Agent such information as is necessary to make deposits to the Custody Account and Fiat Account.

(j) Insurance. Gemini has obtained insurance coverage by a reputable insurance company with respect to Digital Assets custodied with Gemini, in accordance with its internal standards for maintaining such insurance and subject to change at Gemini’s discretion. Gemini shall provide Customer with notice of material changes in its insurance coverage.

(k) Business Continuity Plan. Gemini has established and will maintain a business continuity plan that will reasonably support its ability to conduct business in the event of a significant business disruption and Gemini aims to minimize business interruption as quickly and efficiently as reasonably possible, in each case as set out and to the extent set out in Gemini’s SOC Reports.

(l) Recording and Recordkeeping. Customer also agrees and understands that Gemini may maintain and retain records of all information, activities, and communications relating to Customer’s Gemini Account, and use of Gemini.

(m) Proprietary Rights and Limitations on Use.

i. The Gemini Platform is a proprietary platform and is protected by copyright and other intellectual property laws. Except as set forth in Gemini’s API agreement (“API Agreement”), available on Gemini’s website at https://www.gemini.com/legal/api-agreement#section-welcome-to-the-gemini-api, which may be amended from time to time, and Gemini’s Market Data Agreement, available on Gemini’s website at https://www.gemini.com/legal/market-data-agreement#section-introduction, which may be amended from time to time, Customer agrees and understands not to modify, copy, reproduce, retransmit, distribute, sell, publish, broadcast, create derivative works from, or store Gemini source code or similar proprietary or confidential data or other similar information provided via Gemini, without Gemini’s express prior written consent. Customer may not use Gemini for any unlawful purpose.

ii. Gemini hereby grants Customer a non-assignable and non-exclusive personal, worldwide, royalty-free license to use the Gemini Platform and to access Gemini Market Data and other informational content through the Gemini Platform in accordance with the API Agreement, Market Data Agreement, and this Agreement. All other uses are prohibited. All rights in and to the Gemini Platform, and not granted herein, are reserved.

iii. Gemini and the Gemini’s logos (whether registered or unregistered) are proprietary marks licensed to Gemini and protected by applicable trademark laws. Nothing contained in this Agreement should be construed as granting any license or right to use any of the Gemini Marks displayed here without our express written consent. Any unauthorized use of the Gemini Marks is strictly prohibited. Customer may not use any of the Gemini Marks in connection with the creation, issuance, sale, offer for sale, trading, distribution, solicitation,

marketing, or promotion of any investment products (e.g., Digital Assets, fiat currency, securities, commodities, investment or trading products, derivatives, structured products, investment funds, investment portfolios, commodity pools, swaps, securitizations or synthetic products, etc.), including where the price, return, and/or performance of the investment product is based on, derived from, or related to Gemini or any portion thereof, without a separate written agreement with Gemini.

iv. Notwithstanding the foregoing, for the term of this Agreement, Gemini hereby grants to Customer a nonexclusive, non-transferable, non-sublicensable, revocable, and royalty-free license, subject to the terms of this Agreement, to display the marks listed in Exhibit 2 (“Gemini Marks”), or otherwise refer to Gemini by name, for the sole and limited purpose of identifying Gemini as a provider of Custodial Services to Customer on Customer’s website or to investors or the public, only to the extent required by Customer’s investment activities. Client may not use the Gemini Marks, or otherwise refer to Gemini’s name, in published form, including but not limited to investor or related marketing materials, without prior written notice, and then solely for such limited purpose. Any unauthorized use of the Gemini Marks is strictly prohibited.

v. Gemini has rights to one or more granted patents that cover certain aspects of the Gemini Platform and the provision of digital asset custody services. For the term of this Agreement, Gemini grants to Customer a nonexclusive, non-transferable, non-sublicensable, revocable and royalty free license to the patents set forth in Exhibit 3 (“Patentsˮ) to make, have made, use, import, offer to sell, sell, and have sold any and all products and systems and to practice and perform any and all methods and processes claimed in the Patents solely for the purposes of executing the terms of this Custody Agreement with Gemini. Gemini also covenants not to commence or bring any claim, action or proceeding against Customer for infringement of the Patents during the term of this Agreement.

(n) Service Modifications. Customer agrees and understands that part of or all of Gemini may be periodically unavailable during scheduled maintenance (collectively, “Downtime”). For information on Gemini’s scheduled maintenance windows, please see Gemini’s Marketplace page here: https://www.gemini.com/fees/marketplace#section-downtime-and-maintenance. Subject to the Standard of Care and other provisions of this Agreement, Customer agrees and understands that Gemini is not liable or responsible to Customer for any inconvenience or damage as a result of Downtime. Following Downtime, when services resume, Customer understands that market conditions and prices may differ significantly from the market conditions and prices prior to such Downtime.

(o) Third-Party Information Accuracy and Usage. An information provider is any company or person who directly or indirectly provides Gemini with information (“Information Provider”). Such information could include, but is not limited to, overall market data, quotations from other exchanges, markets, dealers, and/or miners of Digital Assets. The third-party information Gemini may provide through Gemini has been obtained from Information Providers and sources Gemini believes are reliable; however, Gemini cannot guarantee that this information is accurate, complete, timely, or in the correct order. The information belongs to the Information Providers. Customer may use this information only for its own benefit. Customer may not reproduce, sell, distribute, circulate, create derivative works from, store, commercially exploit in any way, or provide it to any other person or entity without Gemini’s written consent or the consent of the Information Provider, if required.

(p) Other Functionality. Customer agrees and understands that, unless provided explicitly in this Agreement, or unless otherwise agreed between the Parties, Gemini will not support any Other Functionality associated with any Digital Assets.

(q) Customer agrees and understands that Gemini has no duty or responsibility to make recommendations with respect to, supervise or determine the suitability of any transactions involving any Digital Assets, Supported Digital Assets, or Assets (and nothing herein shall be construed as such).

(r) Customer agrees and understands that Gemini has no duties or responsibilities with respect to any Custody Account or Assets except such duties and responsibilities as are specifically set forth in this Agreement, and no covenant or obligation shall be implied against Gemini in connection with this Agreement.

(s) Customer acknowledges that Customer is responsible for paying all taxes or other governmental charges owed with respect to the Assets.

(t) Customer agrees and understands that it and any and all Authorized Persons are required to successfully complete Gemini’s customer onboarding process pursuant to Gemini’s applicable compliance policies, which may be amended from time to time.

(u) Neither Gemini nor any Gemini Service Provider are giving investment advice, tax advice, legal advice, or other professional advice to Customer. Customer acknowledges and agrees that all investment decisions are made solely by Customer. Customer agrees and understands that under no circumstances will the operation of Gemini and Customer’s use of Gemini be deemed to create a relationship that includes the provision of or tendering of investment advice.

[Signature Page Follows.]

Each of the undersigned has caused this Agreement to be executed by its duly authorized officer.

VanEck Ethereum Trust, by its Sponsor VanEck Digital Assets, LLC

/s/ Matthew Babinsky
By: Matthew Babinsky
Title: Assistant Vice President, VanEck Digital Assets, LLC

GEMINI TRUST COMPANY, LLC

/s/ Marshall Beard
By: Marshall Beard
Title: President

Gemini VanEck Custody Agreement Signature Page

Appendix A – Fiat Account Schedule

This Fiat Account Schedule (“Fiat Account Schedule”) forms a part of and is subject to the terms of the Agreement. In the event of an inconsistency between this Fiat Account Schedule and the remainder of the Agreement, the remainder of the Agreement shall govern to the extent and only to the extent of such inconsistency. Terms used in this Fiat Account Schedule but not defined herein have the meaning as defined in the Agreement. This Fiat Account Schedule applies to the Customer’s use of a Fiat Account.

1.	Fiat Balance Maintenance.

(a) Gemini is a fiduciary under § 100 of the NYBL and holds Customer’s fiat currency deposits in one or more Customer Omnibus Accounts.

(b) Each Omnibus Account is: (i) in Gemini’s name, and under Gemini’s control; (ii) separate from Gemini’s business, operating, and reserve bank accounts; (iii) established specifically for the benefit of Gemini Customers; and (iv) represents a banking relationship, not a custodial relationship, with each Bank. Customer agrees and understands that Omnibus Accounts do not create or represent any relationship between Customer and any of Gemini’s banks.

(c) Each Money Market Account is held at a Bank or financial institution: (i) in Gemini’s name, and under Gemini’s control; (ii) separate from Gemini’s business, operating, and reserve money market accounts; (iii) established specifically for the benefit of Gemini Customers; (iv) managed by a registered Financial Advisor, (v) custodied by a Qualified Custodian; and (vi) the monies within which are used to purchase money market funds invested in securities issued or guaranteed by the United States or certain U.S. government agencies or instrumentalities. Customer agrees and understands that Money Market Accounts do not create or represent any relationship between Customer and any of the related registered Financial Advisors and/or Qualified Custodians.

(d) Each Payment Account is held at a financial institution: (i) in Gemini’s name, and under Gemini’s control; (ii) separate from Gemini’s business, operating, and reserve bank accounts; and (iii) established specifically for processing the fiat funds transfers of Gemini Customers. Customer agrees and understands that Payment Accounts do not create or represent any relationship between Customer and any of the related financial institutions.

(e) Customer’s fiat currency deposits are: (i) held across Gemini’s Customer Omnibus Accounts in the exact proportion that all Gemini Customer fiat currency deposits are held across its Customer Omnibus Accounts; (ii) not treated as Gemini’s general assets; (iii) fully owned by Customer; and (iv) recorded and maintained in good faith on Gemini’s Exchange Ledger and reflected in a sub-account (i.e., the Fiat Account of Customer’s Gemini Account) so that Customer’s interests in Gemini’s Customer Omnibus Accounts are readily ascertainable. Gemini’s records permit the determination of the balance of U.S. dollars for a particular Gemini Customer as a percentage of total commingled U.S. dollars held FBO all Gemini Customers in all Customer Omnibus Accounts in a manner consistent with 12 C.F.R. § 330.5(a)(2).

(f) Notwithstanding anything herein to the contrary, Customer agrees and understands that (i) Gemini may hold some or all of Customer’s fiat currency deposits in Customer Omnibus Accounts that do not receive any interest, and (ii) Gemini may hold some or all of Customer’s fiat currency deposits in Customer Omnibus Accounts and/or Gemini dollar Accounts that do receive interest and/or other earnings and, in such case, Customer agrees to pay Gemini a fee equal to the amount of any such interest and/or other earnings attributable or allocable to Customer’s fiat currency deposits as payment for the services we provide to Customer under this Agreement. Customer agrees and understands that Gemini shall collect any such payment, equal to the amount of such allocable interest and/or other earnings, simultaneously upon being paid such interest and/or other earnings to Gemini’s Customer Omnibus Accounts and/or Gemini dollar Accounts. In addition, Customer agrees and understands that Gemini may receive compensation for its Customer Omnibus Accounts and/or Gemini dollar Accounts, either in the form of services provided at a reduced rate, the payment of a referral fee, or otherwise. Any such compensation will be retained by Gemini and Customer agrees and understands that it will not receive any portion of such compensation.

(g) Customer should note the following information about each of Gemini’s Customer Omnibus Accounts and Gemini dollar Accounts:

i. In accepting Customer’s fiat currency deposits, Gemini is acting as a custodian;

ii. Gemini does not have a reversionary interest in any of Gemini’s Customer Omnibus Accounts or Gemini dollar Accounts;

iii. Customer’s rights in Gemini’s Customer Omnibus Accounts and/or Gemini dollar Accounts are limited to the specific amount of fiat currency in Customer’s Fiat Account;

iv. Customer directs the movement of fiat currency into and out of Gemini’s Customer Omnibus Accounts by providing direction to Gemini through Gemini as specified in this Agreement.

v. Customer directs the movement of fiat currency into and out of Gemini’s Gemini dollar Accounts by providing direction to Gemini through Gemini to create or redeem Gemini dollars;

vi. To the extent that interest and/or other earnings are attributable or allocable to Customer’s fiat currency deposits held across Gemini’s Customer Omnibus Accounts and/or across Gemini’s Gemini dollar accounts, Customer agrees to pay Gemini a fee equal to the amount of any such interest and/or other earnings as payment for the services Gemini provides to Customer under this Agreement, which Customer agrees and understands that Gemini shall collect simultaneously upon being paid such interest and/or other earnings to its Customer Omnibus Accounts and/or Gemini dollar Accounts;

vii. Gemini’s Customer Omnibus Accounts and Gemini dollar Accounts are comprised of fiat currency belonging to Customer and other Gemini Customers;

viii. Gemini’s banks and financial institutions accept instruction only from Gemini and its agents and will not accept any instruction from Customer; and

ix. Gemini’s banks and financial institutions do not act as custodians for Digital Assets, and are not involved in Gemini’s Digital Asset exchange activities or in the oversight of such activities.

2.	FDIC Insurance.

(a) U.S. dollar deposits in Customer’s Fiat Account held in one or more Omnibus Accounts at one or more banks located in the United States are held with the intention that they be eligible for Federal Deposit Insurance Corporation (“FDIC”) “pass-through” deposit insurance, subject to the Standard Maximum Deposit Insurance Amount per FDIC regulations (currently $250,000 per eligible Gemini Customer) and other applicable limitations. Gemini’s policy is to comply, in good faith, with the regulations and other requirements of the FDIC for pass-through deposit insurance, including those contained in 12 C.F.R. § 330. Non U.S. dollar deposits held at any banks or financial institutions, as well as U.S dollar deposits held at banks or financial institutions located outside of the United States, may not be subject to or eligible for FDIC deposit insurance.

(b) Certain circumstances may require Gemini to transfer fiat currency between two or more of Gemini’s Omnibus Accounts or terminate its relationship with one of its banks. Movements of fiat currency between Omnibus Accounts are recorded in detail and will not affect the available balance in the Fiat Account of Customer’s Gemini Account or jeopardize the availability of FDIC insurance, subject to applicable limitations.

(c) If Customer is a U.K. user, it should note that if U.S. dollar deposits are held in an Omnibus Account at a Bank located in the United States, Customer is not entitled to lodge a complaint with the UK Financial Ombudsman Service (“FOS”) with respect to these U.S. dollar deposits, however, Customer may be entitled to lodge a complaint with the U.S. Consumer Financial Protection Bureau (“CFPB”).

3.	Deposits and Withdrawals. Gemini will email Customer receipt confirmation for all deposits and withdrawals.

(a) Fiat Currency Deposits. Gemini does not accept fiat currency deposits from third parties for Customer’s benefit. Fiat currency deposits are only accepted from: (i) bank accounts that have successfully completed Gemini’s BSA/AML Program, (ii) are in the name of an individual or institution named on the Gemini Account, and (iii) are domiciled in the country of residence of the individual or institution named on the Gemini Account (each, a “User Bank Account”). If a fiat currency deposit does not originate from a User Bank Account, it will be rejected and returned immediately.

(b) Wire Deposits. Gemini accepts wire deposits from User Bank Accounts. Wire deposits are made available for trading as soon as they settle to one of Gemini’s Customer Omnibus Accounts; however, Gemini reserves the right to hold funds in the amount of the wire deposit and/or Digital Assets sufficient to cover these funds, which may exceed the amount of funds from

the wire deposit based on Gemini’s assessment of potential fluctuations of the price of such Digital Assets, and to prevent withdrawal until the wire deposit is considered settled (typically within one Business Day). Once Customer’s wire deposit is considered settled, Customer will be able to withdraw these funds and any such Digital Assets. Wire deposits sent before 3pm ET by domestic wire from Customer’s User Bank Account will typically settle and be credited to its Gemini Account on the same day or next Business Day. Wire deposits may not be credited outside of normal banking hours. Customer agrees and understands that wire deposit settlement times are subject to bank holidays, the internal processes and jurisdiction of Customer’s bank, and the internal processes of Gemini’s banks and financial institutions. Customer further agrees and understands that in certain situations, wire deposit settlement times may be delayed in connection with Downtime or disruptions to Gemini’s banks and/or Gemini Service Providers.

(c) ACH Deposits. Gemini accepts Automated Clearing House (“ACH”) deposits from User Bank Accounts. ACH deposits are made available for trading immediately; however, Gemini reserves the right to hold funds in the amount of the ACH deposit and/or Digital Assets sufficient to cover the funds, which may exceed the amount of funds from the ACH deposit based on Gemini’s assessment of potential fluctuations of the price of such Digital Assets, and to prevent withdrawal until the ACH deposit is considered settled (typically within four to five Business Days). Once Customer’s ACH deposit is considered settled, it will be able to withdraw these funds and any such Digital Assets. Customer agrees and understands that ACH deposit settlement times are subject to bank holidays, the internal processes and jurisdiction of Customer’s bank, and the internal processes of Gemini’s banks. Customer further agrees and understands that in certain situations, ACH deposit settlement times may be delayed in connection with Downtime or disruptions to Gemini Service Providers. If Customer’s ACH deposit is returned to its bank, Gemini reserves the right to avail itself of remedies set forth in this Agreement to recover any amount owed to Gemini.

(d) ACH Deposit Limits. Customer agrees and understands that Gemini reserves the right to increase and/or decrease Customer’s daily and monthly ACH deposit limits, in Gemini’s sole discretion and without notice.

(e) Fiat Currency Withdrawals. Fiat currency withdrawals are only permitted to User Bank Accounts. Customer’s initiation of a fiat currency withdrawal using its User Account login credentials and other required forms of authentication, when applicable, will be deemed to be Customer’s authorization for Gemini to execute any such withdrawal.

(f) Wire Withdrawals. Gemini processes wire withdrawals to User Bank Accounts. Wire withdrawals initiated before 3pm ET will typically be processed on the same day or next Business Day. Wire withdrawals may not be processed outside of normal banking hours. Gemini cannot guarantee that Customer will be able to cancel a wire withdrawal instruction. Gemini is not liable to Customer if, for any reason, it does not cancel a wire withdrawal. Customer agrees and understands that wire withdrawal transfer times are subject to bank holidays, the internal processes and jurisdiction of Customer’s bank, and the internal processes of Gemini’s banks and financial institutions. Customer further agrees and understands that in certain situations, wire withdrawal transfer times may be delayed in connection with Downtime or disruptions to Gemini’s banks and/or Gemini Service Providers.

(g) ACH Withdrawals. Gemini processes ACH withdrawals to User Bank Accounts. ACH withdrawals initiated before 3pm ET will typically be processed on the same day or next Business Day. ACH withdrawals may not be processed outside of normal banking hours. Gemini cannot guarantee that Customer will be able to cancel an ACH withdrawal instruction. Gemini is not liable to Customer if, for any reason, Gemini does not cancel an ACH withdrawal. Customer agrees and understands that ACH withdrawal transfer times are subject to bank holidays, the internal processes and jurisdiction of Customer’s bank, and the internal processes of Gemini’s banks. Customer further agrees and understands that in certain situations, ACH withdrawal transfer times may be delayed in connection with Downtime or disruptions to Gemini’s banks and/or Gemini Service Providers.

Exhibit 1: Fee Schedule

[***]

Exhibit 2

[***]

Exhibit 3

[***]

EX-10.5 6 c109048_ex10-5.htm

Exhibit 10.5

Execution Version

ADMINISTRATION AGREEMENT

This Administration Agreement (“Agreement”) is made as of May 20, 2024 by and between STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company (the “Administrator”), and VANECK ETHEREUM TRUST, a Delaware trust (the “Trust”).

WHEREAS, the Trust is an exchange-traded fund that is registered with the U.S. Securities and Exchange Commission (“SEC”) by means of a registration statement under the Securities Act of 1933, as amended (the “1933 Act”); and

WHEREAS, the Trust desires to retain the Administrator to furnish certain administrative services to the Trust, and the Administrator is willing to furnish such services, on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows:

1.	Appointment of Administrator

The Trust hereby appoints the Administrator to act as administrator to the Trust for purposes of providing certain administrative services for the period and on the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to render the services stated herein.

2.	Delivery of Documents

The Trust will promptly deliver to the Administrator copies of each of the following documents and all future amendments and supplements, if any:

The Trust’s Declaration of Trust and By-laws (“Governing Documents”);

The Trust’s currently effective prospectus and most recently filed registration statement under the 1933 Act (the “Registration Statement”);

Copies of the resolutions of the Trustee of the Trust certified by the Trust’s Secretary authorizing (1) the Trust to enter into this Agreement and (2) certain individuals on behalf of the Trust to (a) give instructions to the Administrator pursuant to this Agreement and (b) sign checks and pay expenses;

Such other certificates, documents or opinions which the Administrator may, in its reasonable discretion, deem necessary or appropriate in the proper performance of its duties.

3.	Representations and Warranties of the Administrator

The Administrator represents and warrants to the Trust that:

It is a Massachusetts trust company, duly organized and existing under the laws of The Commonwealth of Massachusetts;

It has the requisite power and authority to carry on its business in The Commonwealth of Massachusetts;

All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement;

No legal or administrative proceedings have been instituted or threatened which would materially impair the Administrator’s ability to perform its duties and obligations under this Agreement;

It is in compliance with all material federal and state laws, rules, and regulations applicable to the Administrator with respect to its administrative services business and the performance of its duties, obligations and services under this Agreement;

It has and will continue to maintain access to the necessary facilities, equipment and personnel determined by Administrator to perform its duties and obligations under this Agreement; and

Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Administrator or any law or regulation applicable to it.

4.	Representations and Warranties of the Trust

The Trust represents and warrants to the Administrator that:

It is a statutory trust, duly organized, existing and in good standing under the laws of its state of formation;

It has the requisite power and authority under applicable laws and by its Governing Documents to enter into and perform this Agreement;

All requisite proceedings have been taken to authorize it to enter into and perform this Agreement;

The Trust is exempt from registration under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Registration Statement has been filed and will be effective and remain effective during the term of this Agreement. The Trust also warrants to the Administrator that as of the effective date of this Agreement, all necessary filings under the securities laws of the states in which the Trust offers or sells its shares have been made;

No legal or administrative proceedings have been instituted or threatened which would impair the Trust’s ability to perform its duties and obligations under this Agreement;

Its entrance into this Agreement will not cause a material breach or be in material conflict with any other agreement or obligation of the Trust or any law or regulation applicable to it;

As of the close of business on the date of this Agreement, the Trust is authorized to issue unlimited shares of beneficial interest;

	i.	Where information provided by the Trust or the Trust’s investors includes information about an identifiable individual (“Personal Information”), the Trust represents and warrants that it has obtained all consents and approvals, as required by all applicable laws, regulations, by-laws and ordinances that regulate the collection, processing, use or disclosure of Personal Information, necessary to disclose such Personal Information to the Administrator, and as required for the Administrator to use and disclose such Personal Information in connection with the performance of the services hereunder. The Trust acknowledges that the Administrator may perform any of the services, and may use and disclose Personal Information outside of the jurisdiction in which it was initially collected by the Trust, including the United States and that information relating to the Trust, including Personal Information may be accessed by national security authorities, law enforcement and courts. The Administrator shall be kept indemnified by and be without liability to the Trust for any action taken or omitted by it in reliance upon this representation and warranty, including without limitation, any liability or costs in connection with claims or complaints for failure to comply with any applicable law that regulates the collection, processing, use or disclosure of Personal Information; and

	j.	The Trust will not hold any Digital Assets other than those specifically listed, if any, on Schedule A hereto. The term “Digital Assets” means an asset that is issued and/or transferred using distributed ledger or blockchain technology (“distributed ledger technology”), including, but not limited to, so-called “virtual currencies”, “coins” and “tokens” and with respect to which the Administrator has agreed to provide services hereunder.

5.	Administration Services

The Administrator shall provide the services as listed on Schedule A, subject to the authorization and direction of the Trust and, in each case where appropriate, the review and comment by the Trust’s independent accountants and legal counsel and in accordance with procedures which may be established from time to time between the Trust and the Administrator.

The Administrator shall perform such other services for the Trust that are mutually agreed to by the parties from time to time, for which the Trust will pay such fees as may be mutually agreed upon. The provision of such services shall be subject to the terms and conditions of this Agreement. “Authorized Participants” means those entities that have entered into an Authorized Participant Agreement with the Trust, the Sponsor and the Fund’s transfer agent. “Creation Units” shall have the meaning given in the Trust’s transfer agency and service agreement with State Street Bank and Trust Company as transfer agent, dated as of the date of this Agreement.

The Administrator shall provide the office facilities and the personnel determined by it to perform the services contemplated herein.

6.	Compensation of Administrator; Expense Reimbursement; Trust Expenses

The Administrator shall be entitled to reasonable compensation for its services and expenses, as agreed upon from time to time in writing between the Trust and the Administrator. Upon termination of this Agreement, the Trust shall pay to the Administrator any compensation then due and shall reimburse the Administrator for its other fees, expenses and charges then due and payable hereunder, along with the fees

and expenses due to the Administrator in respect of any transitional services that the Administrator agrees, in its sole discretion, to provide to the Trust.

7.	Instructions and Advice

At any time, the Administrator may apply to any officer of the Trust or his or her designee for instructions with respect to any matter arising in connection with the services to be performed by the Administrator under this Agreement. The Administrator shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Trust) on all matters and shall be without liability for any action reasonably taken or omitted pursuant to such advice.

The Administrator shall not be liable, and shall be indemnified by the Trust, for any action taken or omitted by it in good faith in reliance upon any such instructions or advice or upon any paper or document believed by it to be genuine and to have been signed by the person or persons on the current list of authorized persons as provided or agreed to by the Trust in writing and as may be amended from time to time (each, an “Authorized Person”), including without limitation any confirmation received from the Trust, the Sponsor or any other Authorized Person as to the delivery by an Authorized Participant of required Digital Assets determined to be sufficient for the related issuance of Creation Units. The Administrator shall not be held to have notice of any change of authority of any Authorized Person until receipt of written notice thereof from the Trust. Nothing in this section shall be construed as imposing upon the Administrator any obligation to seek such instructions or advice, or to act in accordance with such advice when received.

8.	Limitation of Liability and Indemnification

The Administrator shall act in good faith and without negligence and shall be held to the exercise of reasonable care (the “Standard of Care”) at all times in its performance of all services performed under this Agreement. The Administrator shall be responsible for the performance only of such duties as are set forth in this Agreement and, except as otherwise provided under Section 14, shall have no responsibility for the actions or activities of any other party, including other service providers. The Administrator shall have no liability in respect of any loss, damage or expense suffered by the Trust insofar as such loss, damage or expense arises from the performance of the Administrator’s duties hereunder in reliance upon records that were maintained for the Trust by entities other than the Administrator prior to the Administrator’s appointment as administrator for the Trust. The Administrator shall have no liability for any error of judgment or mistake of law or for any loss or damage resulting from the performance or nonperformance of its duties hereunder unless solely caused by or resulting from the bad faith, negligence or willful misconduct of the Administrator, its officers or employees. The Administrator shall not be liable for any special, indirect, incidental, punitive or consequential damages, including lost profits, of any kind whatsoever (including, without limitation, attorneys’ fees) under any provision of this Agreement or for any such damages arising out of any act or failure to act hereunder, each of which is hereby excluded by agreement of the parties regardless of whether such damages were foreseeable or whether either party or any entity had been advised of the possibility of such damages. In any event, the Administrator’s cumulative liability for each calendar year (a “Liability Period”) with respect to the Trust under this Agreement regardless of the form of action or legal theory shall be limited to its total annual compensation earned and fees payable hereunder during the preceding Compensation Period, as defined herein, for any liability or loss suffered by the Trust including, but not limited to, any liability relating to the Trust’s compliance with any federal or state tax or securities statute, regulation or ruling during such Liability Period. “Compensation Period” shall mean the calendar year ending immediately prior to each Liability Period in which the event(s) giving rise to the Administrator’s liability for that period have occurred. Notwithstanding the foregoing, the Compensation Period for purposes of calculating the annual cumulative liability of the Administrator for the Liability Period commencing on the date of this Agreement and terminating on December 31, 2024 shall be the date of this Agreement through

December 31, 2024, calculated on an annualized basis, and the Compensation Period for the Liability Period commencing January 1, 2025 and terminating on December 31, 2025 shall be the date of this Agreement through December 31, 2024, calculated on an annualized basis.

The Administrator shall not be responsible or liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, work stoppage, power or other mechanical failure, computer virus, natural disaster, governmental action, communication disruption or other similar force majeure events or acts (provided, however, the occurrence of such an event shall not excuse or modify the Administrator’s obligations with respect to business continuity and disaster recovery procedures as set forth in Section 21).

The Trust agrees and understands that Digital Assets are new forms of assets, that the law regarding their ownership, taxation, custody, and transfer is developing and uncertain, and that such assets pose certain risks that are not present in the case of more traditional asset classes; and the Trust further agrees and understands that the Administrator will have no liability or responsibility for any obligations now or hereafter imposed on the Trust or the Sponsor or State Street as administrative agent to the Trust as a result of changes in the tax or other applicable law as they apply to Digital Assets.

The Administrator shall have no obligation to provide services under this Agreement with respect to any new asset class or asset types, including Digital Assets, unless such assets have been previously approved in writing by the Administrator, which writing in the case of Digital Assets must include specific reference to such assets on Schedule A. The Administrator shall have no liability for any loss, liability, claim or expense related to the servicing of any asset class or asset type acquired by the Trust, including the failure or refusal of the Administrator to account for or incorporate such assets as part of the services provided hereunder, unless the Administrator has expressly approved in writing the servicing of such asset class or asset type in advance.

The Trust shall indemnify and hold the Administrator and its directors, officers, employees and agents harmless from all loss, cost, damage and expense, including reasonable fees and expenses for counsel, incurred by the Administrator resulting from any claim, demand, action or suit in connection with the Administrator’s acceptance of this Agreement, any action or omission by it in the performance of its duties hereunder, or as a result of acting upon any instructions reasonably believed by it to have been duly authorized by the Trust or upon reasonable reliance on information or records given or made by the Trust its investment adviser, provided that this indemnification shall not apply to actions or omissions of the Administrator, its officers or employees in cases of its or their own bad faith, negligence or willful misconduct.

The limitation of liability and indemnification contained herein shall survive the termination of this Agreement.

9.	Confidentiality

independently derived by the Receiving Party without the use of any information provided by the Disclosing Party in connection with this Agreement, (c) that is disclosed to comply with any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, (d) that is disclosed as required by operation of law or regulation or as required to comply with the requirements of any market infrastructure that the Disclosing Party or its agents direct the Administrator or its Affiliates to employ (or which is required in connection with the holding or settlement of instruments included in the assets subject to this Agreement), or (e) where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld.

10.

Use of Data

In connection with the provision of the services and the discharge of its other obligations under this Agreement, the Administrator (which term for purposes of this Section 10 includes each of its parent company, branches and affiliates (“Affiliates”)) may collect and store information regarding the Trust and share such information with its Affiliates, agents and service providers in order and to the extent reasonably necessary (i) to carry out the provision of services contemplated under this Agreement and other agreements between the Trust and the Administrator or any of its Affiliates and (ii) to carry out management of its businesses, including, but not limited to, financial and operational management and reporting, risk management, legal and regulatory compliance and client service management.

Subject to paragraph (d) below, the Administrator and/or its Affiliates may use any Confidential Information of the Trust (“Data”) obtained by such entities in the performance of their services under this Agreement or any other agreement between the Trust and the Administrator or one of its Affiliates, including Data regarding transactions and portfolio holdings relating to the Trust to develop, publish or otherwise distribute to third parties certain investor behavior “indicators” or “indices” that represent broad trends in the flow of investment funds into various markets, sectors or investment instruments (collectively, the “Indicators”), but only so long as (i) the Data is combined or aggregated with (A) information of other customers of the Administrator and/or (B) information derived from other sources, in each case such that the Indicators do not allow for attribution or identification of such Data with the Trust, (ii) the Data represents less than a statistically meaningful portion of all of the data used to create the Indicators and (iii) the Administrator publishes or otherwise distributes to third parties only the Indicators and under no circumstance publishes, makes available, distributes or otherwise discloses any of the Data to any third party, whether aggregated, anonymized or otherwise, except as expressly permitted under this Agreement.

The Trust acknowledged that the Administrator may seek to realize economic benefit from the publication or distribution of the Indicators.

Except as expressly contemplated by this Agreement, nothing in this Section 10 shall limit the confidentiality and data-protection obligations of the Administrator and its Affiliates under this Agreement and applicable law. The Administrator shall cause any Affiliate, agent or service provider to which it has disclosed Data pursuant to this Section 10 to comply at all times with confidentiality and data-protection obligations as if it were a party to this Agreement.

11.

Compliance with Governmental Rules and Regulations; Records

The Trust assumes full responsibility for complying with all securities, tax, commodities and other laws, rules and regulations applicable to it.

The Administrator agrees that all records which it maintains for the Trust shall at all times remain the property of the Trust, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of the Agreement or otherwise on written request except as otherwise provided in Section 13. The Administrator further agrees that all records that it maintains for the Trust pursuant to this section will be preserved in compliance with the Administrator’s policies unless any such records are earlier surrendered as provided above. Records may be surrendered in either written or machine-readable form, at the option of the Administrator. In the event that the Administrator is requested or authorized by the Trust, or required by subpoena, administrative order, court order or other legal process, applicable law or regulation, or required in connection with any investigation, examination or inspection of the Trust by state or federal regulatory agencies, to produce the records of the Trust or the Administrator’s personnel as witnesses or deponents, the Trust agrees to pay the Administrator for the Administrator’s time and expenses, as well as the fees and expenses of the Administrator’s counsel incurred in such production.

12.

Services Not Exclusive

The services of the Administrator are not to be deemed exclusive, and the Administrator shall be free to render similar services to others. The Administrator shall be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by the Trust from time to time, have no authority to act or represent the Trust in any way or otherwise be deemed an agent of the Trust.

13.

Effective Period and Termination

This Agreement shall remain in full force and effect for an initial term ending one year from the date hereof (the “Initial Term”). After the expiration of the Initial Term, this Agreement shall automatically renew for successive one (1) year terms (each, a “Renewal Term”) unless a written notice of non-renewal is delivered by the non-renewing party no later than ninety (90) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be. During the Initial Term and thereafter, either party may terminate this Agreement: (i) in the event of the other party’s material breach of a material provision of this Agreement that the other party has either (a) failed to cure or (b) failed to establish a remedial plan to cure that is reasonably acceptable to the non-breaching party, within 30 days’ written notice of such breach, or (ii) in the event of the appointment of a conservator or receiver for the other party or upon the happening of a like event to the other party at the direction of an appropriate agency or court of competent jurisdiction or at the direction of such party’s regulators. Upon termination of this Agreement pursuant to this paragraph with respect to the Trust, the Trust shall pay Administrator its compensation due and shall reimburse Administrator for its costs, expenses and disbursements.

In the event of: (i) the Trust’s termination of this Agreement with respect to the Trust for any reason other than as set forth in the immediately preceding paragraph or (ii) a transaction not in the ordinary course of business pursuant to which the Administrator is not retained to continue providing services hereunder to the Trust (or its respective successor), the Trust or shall pay the Administrator its compensation due through the end of the then-current term (based upon the average monthly compensation previously earned by Administrator with respect to the Trust) and shall reimburse the Administrator for its costs, expenses and disbursements then due with respect to this Agreement. Upon receipt of such payment and reimbursement, the Administrator will deliver the Trust’s records as set forth herein. For the avoidance of doubt, no payment will be required pursuant to clause (ii) of this paragraph in the event of any transaction such (a)

the liquidation or dissolution of the Trust and distribution of the Trust’s assets as a result of the Trustee’s determination in its reasonable business judgment that the Trust shall be liquidated or dissolved (b) a merger of the Trust into, or the consolidation of the Trust with, another entity, or (c) the sale by the Trust of all, or substantially all, of the Trust’s assets to another entity.

14.

Delegation.

The Administrator shall have the right to employ agents, subcontractors, consultants and other third parties, whether affiliated or unaffiliated, to provide or assist it in the provision of any part of the services stated herein other than services required by applicable law to be performed by the Administrator (each, a “Delegate” and collectively, the “Delegates”), without the consent or approval of the Trust. The Administrator shall be responsible for the services delivered by, and the acts and omissions of, any such Delegate as if the Administrator had provided such services and committed such acts and omissions itself. Unless otherwise agreed in a Fee Schedule, the Administrator shall be responsible for the compensation of its Delegates.

The Administrator will provide the Trust with information regarding its global operating model for the delivery of the services on a quarterly or other periodic basis, which information shall include the identities of Delegates affiliated with the Administrator that perform or may perform parts of the services, and the locations from which such Delegates perform services, as well as such other information about its Delegates as the Trust may reasonably request from time to time.

Nothing in this Section 14 shall limit or restrict the Administrator’s right to use affiliates or third parties to perform or discharge, or assist it in the performance or discharge, of any obligations or duties under this Agreement other than the provision of the services.

15.

Interpretive and Additional Provisions

In connection with the operation of this Agreement, the Administrator and the Trust may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties, provided that no such interpretive or additional provisions shall contravene any applicable laws or regulations or any provision of the Trust’s Governing Documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of the Agreement.

16.

Notices

Any notice, instruction or other instrument required to be given hereunder will be in writing and may be sent by hand, or by email, or overnight delivery by any recognized delivery service, to the parties at the following address or such other address as may be notified by any party from time to time:

If to the Trust:

[REDACTED]

If to the Administrator:

[REDACTED]

with a copy to:

[REDACTED]

17.

Amendment

This Agreement may be amended at any time in writing by mutual agreement of the parties hereto.

18.

Assignment

Neither this Agreement nor any rights or obligations hereunder shall be assigned by (a) the Trust without the written consent of the Administrator or (b) the Administrator without the written consent of the Trust, except that the Administrator may assign this Agreement to an affiliate of the Administrator. Any attempt to do so in violation of this Section shall be void. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement.

Except as explicitly stated elsewhere in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Administrator and the Trust, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Administrator and the Trust. This Agreement does not constitute an agreement for a partnership or joint venture between the Administrator and the Trust.

19.

Successors

This Agreement shall be binding on and shall inure to the benefit of the Trust and the Administrator and their respective successors and permitted assigns.

20.

Data Protection

The Administrator shall implement and maintain a comprehensive written information security program that contains appropriate security measures to safeguard the personal information of the Trust’s shareholders, employees, directors and/or officers that the Administrator receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder. For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) driver’s license number, (c) state identification card number, (d) debit or credit card number, (e) financial account number or (f) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

21.

Disaster Recovery and Business Continuity.

The Administrator shall implement and maintain disaster recovery and business continuity procedures that are reasonably designed to recover data processing systems, data communications facilities, information, data and other business related functions of the Administrator in a manner and time frame consistent with legal, regulatory and business requirements applicable to the Administrator in its provision

of services hereunder. In the event of any disaster which causes a business interruption, the Administrator shall act in accordance with its Standard of Care and take reasonable steps to minimize service interruptions.

22.

Entire Agreement

This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all previous representations, warranties or commitments regarding the services to be performed hereunder whether oral or in writing.

23.

Waiver

The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any such term, right or remedy or a waiver of any other rights or remedies, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise or any other right or remedy. Any waiver must be in writing signed by the waiving party.

24.

Severability

If any provision or provisions of this Agreement shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

25.

Governing Law

This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of State of New York, without regard to its conflict of laws rules. The obligations of the Trust (or particular series or class thereof) entered into in the name or on behalf thereof by any Trustee, representative or agent of the Trust (or particular series or class thereof) are made not individually, but in such capacities, and are not binding upon any past, present or future Trustee, shareholder, representative or agent of the Trust (or particular series or class thereof) personally, but bind only the assets of the Trust (or particular series or class thereof), and all persons dealing with any series and/or class of shares of the Trust must look solely to the assets of the Trust belonging to such series and/or class for the enforcement of any claims against the Trust (or particular series or class thereof).

The execution and delivery of this Agreement have been authorized by the Trustees, and this Agreement has been signed and delivered by an authorized officer of the Trust, acting as such, and neither such authorization by the Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Trust (or particular series or class thereof) as provided in the Trust’s charter.

26.	Reports/Certifications

Upon reasonable request of the Trust, the Administrator shall provide the Trust with a copy of the Administrator’s Service Organizational Control (SOC) 1 reports prepared in accordance with the requirements of AT section 801, Reporting on Controls at a Service Organization (formerly Statement on Standards for Attestation Engagements (SSAE) No. 16). The Administrator shall use commercially reasonable efforts to provide the Trust with such reports as the Trust may reasonably request or otherwise

reasonably require to fulfill its duties under Rule 38a-1 of the 1940 Act or similar legal and regulatory requirements.

27.

Reproduction of Documents

This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, xerographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

28.

Counterparts

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same Agreement. Counterparts may be executed in either original or electronically transmitted form (e.g., faxes or emailed portable document format (PDF) form), and the parties hereby adopt as original any signatures received via electronically transmitted form.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the date first written above.

VANECK ETHEREUM TRUST

By:	VanEck Digital Assets, LLC, solely in its capacity as Sponsor of VanEck Ethereum Trust

By:		/s/ John J. Crimmins
Name:		John J. Crimmins
Title:		Vice President

STATE STREET BANK AND TRUST COMPANY

By:		/s/ Brock Hill
Name:		Brock Hill
Title:		Senior Vice President

ADMINISTRATION AGREEMENT

Schedule A

LIST OF SERVICES

I. Fund Administration Treasury Services as described in Schedule A1 attached hereto; and

II. Fund Accounting Services as described in Schedule A2 attached hereto.

For the avoidance of doubt, to the extent a Trust holds Digital Assets, the Administrator will provide the above services only with respect to the specific Digital Assets held by the Trust listed below:

Ethereum

Schedule A1

Fund Administration Treasury Services

Prepare for the review by designated officer(s) of the Trust financial information for financial reports (e.g., financial statements, schedules and notes) required to be included in and filed with the SEC as part of or in connection with the Trust’s (i) annual reports on Form 10-K, quarterly reports on Form 10-Q, annual shareholder reports, and other periodic reports (as mutually agreed upon).

Schedule A2

Fund Accounting Services

The Administrator shall cooperate with and supply necessary information to any organization appointed by the Sponsor of the Trust to keep the books of account of the Trust and compute the net asset value per share of the Trust or, if directed in writing to do so by the Trust, shall itself keep such books of account and compute such net asset value per share of the Trust, as more particularly set forth below. The Administrator shall transmit the net asset value per share of the Trust to the Sponsor, the Trust’s transfer agent, the Trust’s distributor, the Exchange and such other entities as directed in writing by the Trust. If and as so directed, the Administrator shall also calculate daily the net income of the Trust as described in the Trust’s prospectus and shall advise the Trust and the Trust’s transfer agent daily of the total amounts of such net income and, if instructed in writing by an officer of the Trust to do so, shall advise the Trust’s transfer agent periodically of the division of such net income among its various components. Each Trust acknowledges and agrees that, with respect to investments maintained with the Underlying Transfer Agent, the Underlying Transfer Agent is the sole source of information on the number of Underlying Shares held by it on behalf of the Trust and that the Administrator has the right to rely on holdings information furnished by the Underlying Transfer Agent to the Administrator in performing its duties under this Agreement; provided, however, that the Administrator shall be obligated to reconcile information as to purchases and sales of Underlying Shares contained in trade instructions and confirmations received by the Administrator and to report promptly any discrepancies to the Underlying Transfer Agent. If and as so directed, the calculations of the net asset value per share and the daily income of each Trust shall be made at the time or times described from time to time in the Trust’s prospectus. The terms “Underlying Shares” and “Underlying Transfer Agent shall have the meanings ascribed to them in the Trust’s custodian agreement with State Street Bank and Trust Company as custodian, dated as of the date of this Agreement.

“Sponsor” means the entity identified by the Trust to the Administrator as the entity having investment responsibility with respect to the Trust, currently VanEck Digital Assets, LLC. “Exchange” means the Cboe BZX Exchange, Inc. or such other exchange as is specified by the Trust to the Administrator in writing.

Books of Account

The Administrator in its role as accounting agent for the Trust shall maintain the books of account of the Trust and shall perform its duties, including but not limited to the following, in the manner prescribed by the Trust’s currently effective Prospectus or other governing document, certified copies of which have been supplied to the Administrator (each, a “governing document”):

		i.		Maintain the books of account in accordance with Generally Accepted Accounting Principles;
		ii.		Record general ledger entries;
		iii.		Record and reconcile capital stock activity with the transfer agent
		iv.		Accrue/calculate daily expenses;
		v.		Timely record corporate action events
		vi.		Calculate daily income & amortization (including securities lending income, if applicable) designated by the Trust on an Amortization Policy form;
		vii.		Capture and reconcile daily activity, including cash and investment balances, to the trial balance and the custodian, including the Trust’s Digital Asset custodian;
		viii.		Calculate net asset value; and

ix.

Disseminate NAV’s and other information for accounting data or any information pertaining to the books and records maintained by the Administrator as instructed by an officer of the Trust.

The Trust shall provide timely prior notice to the Administrator of any modification in the manner in which the calculations set forth above are to be performed as prescribed in any revision to the Trust’s governing document and shall supply the Administrator with certified copies of all amendments and/or supplements to the governing document in a timely manner.

For purposes of calculating the net asset value of the Trust, the Administrator shall value the Trust’s portfolio securities or other assets utilizing prices obtained from sources designated by the Trust or the Sponsor (collectively, the “Authorized Price Sources”) on a Price Source Authorization form, as the same may be amended by mutual written agreement from time to time (the “Price Source Authorization”). The Administrator shall not be responsible for any revisions to calculations methods unless such revisions are communicated in writing to the Administrator.

Reliance on Data

Subject to its standard of care under this Agreement, the Administrator may rely upon the information it receives from the Trust or any authorized third party with respect to portfolio securities. The Administrator shall have no responsibility to confirm or otherwise verify the accuracy or completeness of any data supplied to it by or on behalf of the Trust.

With respect to ethereum held by the Trust through its Digital Asset custodian, the Administrator will utilize quotes from pricing services approved by the Sponsor, or if such quotes are unavailable (including due to a lack of production by a pricing source or the inability of Administrator systems to consume such information), then obtain such prices from the Sponsor, and in either case, calculate the market value of the Trust’s investments in accordance with the Trust’s valuation policies or guidelines; provided, however, that the Administrator shall not under any circumstances be under a duty to independently price or value any of the Trust’s investments itself or to confirm or validate any information or valuation provided by the Sponsor or any other pricing source, nor shall the Administrator have any liability relating to inaccuracies or otherwise with respect to such information or valuations.

Instructions – Accounting Practices

The Trust shall give timely instructions to the Administrator in regard to matters affecting accounting practices and the Administrator’s performance pursuant to this Agreement.

EX-10.6 7 c109048_ex10-6.htm

Exhibit 10.6

Execution Version

TRANSFER AGENCY AND SERVICE AGREEMENT

THIS AGREEMENT is made as of May 20, 2024 by and between STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its principal office and place of business at One Congress Street, Boston, Massachusetts 02114 (“State Street” or the “Transfer Agent”), and VanEck Ethereum Trust, a Delaware business trust having its principal office and place of business at 666 Third Avenue, 9^th Floor, New York, New York 10017 (the “Trust”).

WHEREAS, the Trust is an exchange-traded fund that issues and redeems common shares of beneficial interest (the “Shares”) only in aggregations of Shares known as “Creation Units,” as described in the currently effective prospectus and most recently filed registration statement (collectively, the “Prospectus”);

WHEREAS, only those entities (“Authorized Participants”) that have entered into an Authorized Participant Agreement with the Trust, the sponsor of the Trust, currently VanEck Digital Assets, LLC (the “Sponsor”) and the Transfer Agent, are eligible to place orders for Creation Units with the Sponsor;

WHEREAS, the Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York (“DTC”) or its nominee will be the record or registered owner of all outstanding Shares;

WHEREAS, Trust desires to appoint Transfer Agent to act as its transfer agent, dividend disbursing agent and agent in connection with certain other activities; and Transfer Agent is willing to accept such appointment.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto, agree as follows:

TERMS OF APPOINTMENT

1.1

Subject to the terms and conditions set forth in this Agreement, the Trust hereby employs and appoints the Transfer Agent to act as, and the Transfer Agent agrees to act as, transfer agent for the Creation Units and dividend disbursing agent of the Trust.

1.2

Transfer Agency Services. In accordance with procedures established from time to time by agreement between the Trust and the Transfer Agent, and in acknowledgement of the terms and conditions of the form of Participant Agreement attached as Exhibit A hereto, but only to the extent that such terms and conditions do not deviate from such Participant Agreement, the Transfer Agent shall:

(i)

establish each Authorized Participant’s account in the Fund on the Transfer Agent’s recordkeeping system and maintain such account for the benefit of such Authorized Participant;

(ii)

receive and process orders for the purchase of Creation Units from the Sponsor or the Trust, and promptly deliver any cash payment and appropriate documentation thereof to the custodian of the Trust (the “Custodian”);

(iii)

generate or cause to be generated and transmitted confirmation of receipt of such purchase orders to the Sponsor, Authorized Participants and/or DTC, and, if applicable, transmit appropriate trade instruction to the National Securities Clearance Corporation (“NSCC”);

(iv)

receive and process redemption requests and redemption directions from the Sponsor or the Trust and deliver the appropriate documentation thereof to the Custodian;

(v)

with respect to items (i) through (iv) above, the Transfer Agent may execute transactions directly with Authorized Participants;

(vi)

at the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies, if any, to the redeeming Authorized Participant as instructed by the Sponsor or the Trust;

(vii)

prepare and transmit by means of DTC’s book-entry system payments for any dividends and distributions declared by the Trust;

(viii)

record the issuance of Shares of the Trust and maintain a record of the total number of Shares of the Trust which are issued and outstanding; and provide the Trust on a regular basis with the total number of Shares which are issued and outstanding; provided that Transfer Agent shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares to determine if there are authorized Shares available for issuance or to take cognizance of any laws relating to, or corporate actions required for, the issue or sale of such Shares, which functions shall be the sole responsibility of the Trust; and, excluding DTC or its nominee as the record or registered owner, the Transfer Agent shall have no obligations or responsibilities to account for, keep records of, or otherwise related to, the beneficial owners of the Shares;

(ix)

maintain and manage, as agent for the Trust such bank accounts as the Transfer Agent shall deem necessary for the performance of its duties under this Agreement, including but not limited to, the processing of cash Creation Unit purchases and redemptions and the payment of the Trust’s cash dividends and distributions. The Transfer Agent may maintain such accounts at the bank or banks deemed appropriate by the Transfer Agent in accordance with applicable law;

(x)

process any request from an Authorized Participant to change its account registration; and

(xi)

except as otherwise instructed by the Trust, the Transfer Agent shall process all transactions in accordance with the procedures mutually agreed upon by the Trust and the Transfer Agent with respect to the proper net asset value to be applied to purchase orders received in good order by the Transfer Agent or by the Trust or any other person or firm on behalf of the Trust or from an Authorized Participant before cut-offs established by the Trust. The Transfer Agent shall report to the Trust any known exceptions to the foregoing.

1.3

Additional Services. In addition to, and neither in lieu of nor in contravention of the services set forth in Section 1.2 above, the Transfer Agent shall perform the following services:

(i)

The Transfer Agent shall perform such other services for the Trust that are mutually agreed to by the parties from time to time, for which the Trust will pay such fees as may be mutually agreed upon. The provision of such services shall be subject to the terms and conditions of this Agreement.

(ii)

DTC and NSCC. The Transfer Agent shall: (a) accept and effectuate the registration and maintenance of accounts, and the purchase and redemption of Creation Units in such accounts, in accordance with instructions transmitted to and received by the Transfer Agent by transmission from DTC or NSCC (if applicable) on behalf of Authorized Participants; and (b) issue instructions to the Trust’s banks for the settlement of transactions between the Trust and DTC or NSCC (if applicable) (acting on behalf of the applicable Authorized Participant).

1.4

Authorized Persons. The Trust hereby agrees and acknowledges that the Transfer Agent may rely on the current list of authorized persons, including the Sponsor, as provided or agreed to by the Trust in writing and as may be amended from time to time (each, an “Authorized Person”), in receiving instructions to issue or redeem Creation Units. The Trust agrees and covenants for itself and each such Authorized Person that any order or sale of or transaction in Creation Units received by it after the order cut-off time as set forth in the Prospectus or such earlier time as designated by the Trust (the “Order Cut-Off Time”), shall be effectuated at the net asset value determined on the next business day or as otherwise required pursuant to the Trust’s Prospectus, and the Trust or such Authorized Person shall so instruct the Transfer Agent of the proper effective date of the transaction. The term “Digital Assets” means an asset that is issued and/or transferred using distributed ledger or blockchain technology (“distributed ledger technology”), including, but not limited to, so-called “virtual currencies”, “coins” and “tokens” and with respect to which State Street has agreed to provide services pursuant to other services agreements between State Street and the Trust.

1.5

Anti-Money Laundering and Client Screening. With respect to the Trust’s offering and sale of Creation Units at any time, and for all subsequent transfers of such interests, the Trust or its delegate shall, to the extent applicable, directly or indirectly and to the extent required by law: (i) conduct know your customer/client identity due diligence with respect to potential investors and transferees in the Shares and Creation Units and shall obtain and retain due diligence records for each investor and transferee; (ii) use its best efforts to ensure that each investor’s and any transferee’s funds used to purchase Creation Units or Shares shall not be derived from, nor the product of, any criminal activity; (iii) if requested, provide periodic written verifications that such investors/transferees have been checked against the United States Department of the Treasury Office of Foreign Assets Control database for any non-compliance or exceptions; and (iv) perform its obligations under this Section in accordance with all applicable anti-money laundering laws and regulations. In the event that the Transfer Agent has received advice from counsel that access to underlying due diligence records pertaining to the investors/transferees is necessary to ensure compliance by the Transfer Agent with relevant anti-money laundering (or other applicable) laws or regulations, the Trust shall, upon receipt of written request from the Transfer Agent, provide the Transfer Agent copies of such due diligence records.

1.6

State Transaction (“Blue Sky”) Reporting. If applicable, the Trust shall be solely responsible for its “blue sky” compliance and state registration requirements.

1.7

Tax Law. The Transfer Agent shall have no responsibility or liability for any obligations now or hereafter imposed on the Trust, any Creation Units, any Shares, a beneficial owner thereof, an Authorized Participant or the Transfer Agent in connection with the services provided by the Transfer Agent hereunder by the tax laws of any country or of any state or political subdivision thereof. It shall be the responsibility of the Trust to notify the Transfer Agent of the obligations imposed on the Trust, the Creation Units, or the Shares in connection with the services provided by the Transfer Agent hereunder by the tax law of countries, states and political subdivisions thereof, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting.

1.8

The Transfer Agent shall provide the office facilities and the personnel determined by it to perform the services contemplated herein.

2.	FEES AND EXPENSES

2.1

Fee Schedule. For the performance by the Transfer Agent of services provided pursuant to this Agreement, the Transfer Agent shall be entitled to receive the fees and expenses set forth in a written fee schedule agreed to by the parties.

3.	REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT

The Transfer Agent represents and warrants to the Trust that:

3.1

It is a trust company duly organized and existing under the laws of the Commonwealth of Massachusetts.

3.2

It is duly registered as a transfer agent under Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), it will remain so registered for the duration of this Agreement, and it will promptly notify the Trust in the event of any material change in its status as a registered transfer agent, including if it is de-registered.

3.3

It is duly qualified to carry on its business in the Commonwealth of Massachusetts.

3.4

It is empowered under applicable laws and by its organizational documents to enter into and perform the services contemplated in this Agreement.

3.5

All requisite organizational proceedings have been taken to authorize it to enter into and perform this Agreement.

3.6

It is in compliance with all material federal and state laws, rules, and regulations applicable to the Transfer Agent with respect to its transfer agency business and the performance of its duties, obligations and services under this Agreement.

3.7

It has and will continue to maintain access to the necessary facilities, equipment and personnel determined by Transfer Agent to perform its duties and obligations under this Agreement.

REPRESENTATIONS AND WARRANTIES OF THE TRUST

The Trust represents and warrants to the Transfer Agent that:

4.1

The Trust is a business trust duly organized, existing and in good standing under the laws of the state of its formation.

4.2

The Trust is empowered under applicable laws and by its organizational documents to enter into and perform this Agreement.

4.3

All requisite proceedings have been taken to authorize the Trust to enter into, perform and receive services pursuant to this Agreement.

4.4

The Trust is exempt from registration under the Investment Company Act of 1940, as amended (the “1940 Act”).

4.5

A registration statement under the Securities Act of 1933, as amended (the “Securities Act”), is currently effective and will remain effective, and all appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Trust being offered for sale.

4.6

Where information provided by the Trust or a Trust’s investors includes information about an identifiable individual (“Personal Information”), the Trust represents and warrants that it has obtained all consents and approvals, as required by all applicable laws, regulations, by-laws and ordinances that regulate the collection, processing, use or disclosure of Personal Information, necessary to disclose such Personal Information to the Transfer Agent, and as required for the Transfer Agent to use and disclose such Personal Information in connection with the performance of the services hereunder. The Trust acknowledges that the Transfer Agent may perform any of the services, and may use and disclose Personal Information outside of the jurisdiction in which it was initially collected by the Trust, including the United States and that information relating to the Trust, including Personal Information of investors may be accessed by national security authorities, law enforcement and courts. The Transfer Agent shall be kept indemnified by and be without liability to the Trust for any action taken or omitted by it in reliance upon this representation and warranty, including without limitation, any liability or costs in connection with claims or complaints for failure to comply with any applicable law that regulates the collection, processing, use or disclosure of Personal Information.

DATA ACCESS AND PROPRIETARY INFORMATION

5.1

The Trust acknowledges that the databases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Trust by the Transfer Agent as part of the Trust’s ability to access certain Trust-related data (“Trust Data”) maintained by the Transfer Agent or another third party on databases under the control and ownership of the Transfer Agent (“Data Access Services”) constitute copyrighted, trade secret, or other proprietary information (collectively, “Proprietary Information”) of substantial value to the Transfer Agent or another third party. In no event shall Proprietary Information be deemed Authorized Participant information or the confidential information of the Trust. The Trust agrees to treat all Proprietary Information as proprietary to the Transfer Agent and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided

		hereunder. The parties acknowledge that Trust Data shall not be deemed Proprietary Information. Without limiting the foregoing, the Trust agrees for itself and its officers and trustees and their agents, to:

(i)

use such programs and databases solely on the Trust’s, or such agents’ computers, or solely from equipment at the location(s) agreed to between the Trust and the Transfer Agent, and solely in accordance with the Transfer Agent’s applicable user documentation;

(ii)

refrain from copying or duplicating in any way the Proprietary Information;

(iii)

refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform the Transfer Agent in a timely manner of such fact and dispose of such information in accordance with the Transfer Agent’s instructions;

(iv)

refrain from causing or allowing Proprietary Information transmitted from the Transfer Agent’s computers to the Trust’s, or such agents’ computer to be retransmitted to any other computer facility or other location, except with the prior written consent of the Transfer Agent;

(v)

allow the Trust or such agents to have access only to those authorized transactions agreed upon by the Trust and the Transfer Agent; and

(vi)

honor all reasonable written requests made by the Transfer Agent to protect at the Transfer Agent’s expense the rights of the Transfer Agent in Proprietary Information at common law, under federal copyright law and under other federal or state law.

5.2

Proprietary Information shall not include all or any portion of any of the foregoing items that are or become publicly available without breach of this Agreement; that are released for general disclosure by a written release by the Transfer Agent; or that are already in the possession of the receiving party at the time of receipt without obligation of confidentiality or breach of this Agreement.

5.3

Notwithstanding any other provision to the contrary, the Trust may disclose Proprietary Information in the event that it is required to be disclosed by law or in a judicial or administrative proceeding, or by an appropriate regulatory authority having jurisdiction over the Trust; provided that all reasonable legal remedies for maintaining such information in confidence have been exhausted including but not limited to giving the Transfer Agent as much advance notice of the possibility of such disclosure as practical so the Transfer Agent may attempt to stop such disclosure or obtain a protective order concerning such disclosure.

5.4

If the Trust notifies the Transfer Agent that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Transfer Agent shall endeavor in a timely manner to correct such failure. Organizations from which the Transfer Agent may obtain certain data included in the Data Access Services are solely responsible for the contents of such data, and the Trust agrees to make no claim against the Transfer Agent arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND

ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN “AS IS, AS AVAILABLE” BASIS. THE TRANSFER AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

5.5

If the transactions available to the Trust include the ability to originate electronic instructions to the Transfer Agent in order to effect the transfer or movement of cash or Creation Units or transmit Authorized Participant information or other information, then in such event the Transfer Agent shall be entitled to rely on the validity and authenticity of an instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by the Transfer Agent from time to time.

5.6

Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section. The obligations of this Section shall survive any earlier termination of this Agreement.

5.7

Subject to Section 5.1, the Trust may use reports generated in connection with the Trust’s receipt of transfer agency services hereunder; provided, however, that (i) such use is limited to the Trust’s internal business purposes and (ii) such reports may not be re-distributed by the Trust except in the ordinary course of its business to Authorized Participants and internal organizations for informational purposes.

RESERVED

STANDARD OF CARE / LIMITATION OF LIABILITY

7.1

The Transfer Agent shall act in good faith and without negligence and shall be held to the exercise of reasonable care (the “Standard of Care”) at all times in its performance of all services performed under this Agreement, but assumes no responsibility and shall not be liable for loss or damage due to errors, including encoding and payment processing errors, unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its employees or agents. The parties agree that any encoding or payment processing errors shall be governed by this Standard of Care, and that Section 4-209 of the Uniform Commercial Code is superseded by this Section.

7.2

In any event, the Transfer Agent’s cumulative liability for each calendar year (a “Liability Period”) with respect to the services provided pursuant to this Agreement regardless of the form of action or legal theory shall be limited to its total annual compensation earned and fees payable hereunder during the preceding Compensation Period, as defined herein, for any liability or loss suffered by the Trust including any liability relating to the Trust’s compliance with any federal or state tax or securities statute, regulation or ruling during such Liability Period. “Compensation Period” shall mean the calendar year ending immediately prior to each Liability Period in which the event(s) giving rise to the Transfer Agent’s liability for that period have occurred. Notwithstanding the foregoing, the Compensation Period for purposes of calculating the annual cumulative liability of the Transfer Agent for the Liability Period commencing on the date of this Agreement and terminating on December 31, 2024 shall be the date of this Agreement through December 31, 2024, calculated on an annualized basis, and the Compensation Period for the Liability Period commencing January 1, 2025

and terminating on December 31, 2025 shall be the date of this Agreement through December 31, 2024, calculated on an annualized basis. In no event shall the Transfer Agent be liable for any special, incidental, indirect, punitive or consequential damages, regardless of the form of action and even if the same were foreseeable.

INDEMNIFICATION

8.1

The Transfer Agent shall not be responsible for, and the Trust shall indemnify and hold the Transfer Agent harmless from and against, any and all losses, damages, costs, charges, reasonable counsel fees (including the defense of any lawsuit in which the Transfer Agent or affiliate is a named party), payments, reasonable expenses and liability arising out of or attributable to:

(i)

all actions of the Transfer Agent or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in accordance with the Standard of Care;

(ii)

the Trust’s breach of any representation, warranty or covenant of the Trust hereunder;

(iii)

the Trust’s lack of good faith, negligence or willful misconduct;

(iv)

reliance upon, and any subsequent use of or action taken or omitted, by the Transfer Agent, or its agents or subcontractors on: (a) any information, records, documents, data, stock certificates or services, which are received by the Transfer Agent or its agents or subcontractors by machine readable input, facsimile, electronic data entry, electronic instructions or other similar means authorized by the Trust, and which have been prepared, maintained or performed by the Trust or any other person or firm on behalf of the Trust, including but not limited to any broker-dealer, third party administrator or previous transfer agent; (b) any instructions or requests of the Trust or its officers or the Trust’s agents or subcontractors or their officers or employees, in each case who the Transfer Agent reasonably believes has been designated by the Trust as Authorized Persons; (c) any instructions or opinions of legal counsel to the Trust with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement which are provided to the Transfer Agent after consultation with such legal counsel; (d) any confirmation received from the Trust, the Sponsor or any other Authorized Person as to the delivery by an Authorized Participant of required Digital Assets determined to be sufficient for the related issuance of Creation Units; or (e) any paper or document, reasonably believed to be genuine, authentic, or signed by the proper person or persons;

(v)

the offer or sale of Creation Units in violation of any requirement under federal or state securities laws or regulations requiring that such Creation Units be registered, or in violation of any stop order or other determination or ruling by any federal or state agency with respect to the offer or sale of such Creation Units;

(vi)

the negotiation and processing in accordance with the Standard of Care of any checks, wires and ACH transmissions, including without limitation, for deposit into, or credit to, the Trust’s demand deposit accounts maintained by the Transfer Agent;

	(vii)	all actions taken in accordance with the Standard of Care relating to the transmission of Trust, Creation Unit or Authorized Participant data through the NSCC clearing systems, if applicable; and

(viii)

any tax obligations under the tax laws of any country or of any state or political subdivision thereof, including taxes, withholding and reporting requirements, claims for exemption and refund, additions for late payment, interest, penalties and other expenses (including legal expenses) that may be assessed, imposed or charged against the Transfer Agent as transfer agent hereunder, but excluding income, excise, franchise or other similar taxes ordinarily imposed on the Transfer Agent’s income, property or business generally.

8.2

At any time the Transfer Agent may apply to any officer of the Trust for instructions, and may consult with legal counsel (which may be Trust counsel) with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement, and the Transfer Agent and its agents or subcontractors shall not be liable and shall be indemnified by the Trust for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. The Transfer Agent, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Trust, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Transfer Agent or its agents or subcontractors by machine readable input, electronic data entry or other similar means authorized by the Trust, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Trust.

ADDITIONAL COVENANTS OF THE TRUST AND THE TRANSFER AGENT

9.1

Delivery of Documents. The Trust shall promptly furnish to the Transfer Agent the following:

(i)

A copy of the resolution of the Board of Trustees of the Trust or its functional equivalent (the “Board”) certified by the Trust’s Secretary authorizing the appointment of the Transfer Agent and the execution and delivery of this Agreement.

(ii)

A copy of the Declaration of Trust and By-Laws of the Trust and all amendments thereto.

9.2

Certificates, Checks, Facsimile Signature Devices. The Transfer Agent hereby agrees to establish and maintain facilities and procedures for safekeeping of any stock certificates, check forms and facsimile signature imprinting devices; and for the preparation or use, and for keeping account of, such certificates, forms and devices.

9.3

Records. The Transfer Agent shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the 1940 Act and the Rules thereunder, the Transfer Agent agrees that all such records prepared or maintained by the Transfer Agent relating to the services to be performed by the Transfer Agent hereunder are the property of the Trust and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Trust on and in accordance with its request. Records

may be surrendered in either written or machine-readable form, at the option of the Transfer Agent. In the event that the Transfer Agent is requested or authorized by the Trust, or required by subpoena, administrative order, court order or other legal process, applicable law or regulation, or required in connection with any investigation, examination or inspection of the Trust by state or federal regulatory agencies, to produce the records of the Trust or the Transfer Agent’s personnel as witnesses or deponents, the Trust agrees to pay the Transfer Agent for the Transfer Agent’s time and expenses, as well as the fees and expenses of the Transfer Agent’s counsel, incurred in such production.

10.

CONFIDENTIALITY AND USE OF DATA

10.1

All information provided under this Agreement by a party (the “Disclosing Party”) to the other party (the “Receiving Party”) regarding the Disclosing Party’s business and operations shall be treated as confidential. Subject to Section 10.2 below, all confidential information provided under this Agreement by Disclosing Party shall be used, including disclosure to third parties, by the Receiving Party, or its agents or service providers, solely for the purpose of performing or receiving the services and discharging the Receiving Party’s other obligations under the Agreement or managing the business of the Receiving Party and its Affiliates (as defined in Section 10.2 below), including financial and operational management and reporting, risk management, legal and regulatory compliance and client service management. The foregoing shall not be applicable to any information (a) that is publicly available when provided or thereafter becomes publicly available, other than through a breach of this Agreement, (b) that is independently derived by the Receiving Party without the use of any information provided by the Disclosing Party in connection with this Agreement, (c) that is disclosed to comply with any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, (d) that is disclosed as required by operation of law or regulation or as required to comply with the requirements of any market infrastructure that the Disclosing Party or its agents direct the Transfer Agent or its Affiliates to employ (or which is required in connection with the holding or settlement of instruments included in the assets subject to this Agreement), or (e) where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld.

10.2

(a) In connection with the provision of the services and the discharge of its other obligations under this Agreement, the Transfer Agent (which term for purposes of this Section 10.2 includes each of its parent company, branches and affiliates (“Affiliates”)) may collect and store information regarding the Trust or Fund and share such information with its Affiliates, agents and service providers in order and to the extent reasonably necessary (i) to carry out the provision of services contemplated under this Agreement and other agreements between the Trust and the Transfer Agent or any of its Affiliates and (ii) to carry out management of its businesses, including, but not limited to, financial and operational management and reporting, risk management, legal and regulatory compliance and client service management.

(b) Subject to paragraph (d) below, the Transfer Agent and/or its Affiliates may use any Confidential Information of the Trust (“Data”) obtained by such entities in the performance of their services under this Agreement or any other agreement between the Trust and the Transfer Agent or one of its Affiliates, including Data regarding transactions and portfolio holdings relating to the Trust to develop, publish or otherwise distribute to third parties certain investor behavior “indicators” or “indices” that represent broad trends

		in the flow of investment funds into various markets, sectors or investment instruments (collectively, the “Indicators”), but only so long as (i) the Data is combined or aggregated with (A) information of other customers of the Transfer Agent and/or (B) information derived from other sources, in each case such that the Indicators do not allow for attribution or identification of such Data with the Trust, (ii) the Data represents less than a statistically meaningful portion of all of the data used to create the Indicators and (iii) the Transfer Agent publishes or otherwise distributes to third parties only the Indicators and under no circumstance publishes, makes available, distributes or otherwise discloses any of the Data to any third party, whether aggregated, anonymized or otherwise, except as expressly permitted under this Agreement.

		(c) The Trust acknowledges that the Transfer Agent may seek to realize economic benefit from the publication or distribution of the Indicators.

		(d) Except as expressly contemplated by this Agreement, nothing in this Section 10.2 shall limit the confidentiality and data-protection obligations of the Transfer Agent and its Affiliates under this Agreement and applicable law. The Transfer Agent shall cause any Affiliate, agent or service provider to which it has disclosed Data pursuant to this Section 10.2 to comply at all times with confidentiality and data-protection obligations as if it were a party to this Agreement.

10.3

The Transfer Agent affirms that it has and will continue to have throughout the term of this Agreement, procedures in place that are reasonably designed to protect the privacy of non-public personal consumer/customer financial information to the extent required by applicable laws, rules and regulations.

11.

Effective Period and Termination

This Agreement shall remain in full force and effect for an initial term ending one year from the date hereof (the “Initial Term”). After the expiration of the Initial Term, this Agreement shall automatically renew for successive one (1) year terms (each, a “Renewal Term”) unless a written notice of non-renewal is delivered by the non-renewing party no later than ninety (90) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be. During the Initial Term and thereafter, either party may terminate this Agreement: (i) in the event of the other party’s material breach of a material provision of this Agreement that the other party has either failed to cure or failed to establish a remedial plan to cure that is reasonably acceptable, within 60 days’ written notice being given by the non-breaching party of such breach, (ii) in the event there are consistent breaches of established parameters in mutually agreed upon written service level agreement, or (iii) in the event of the appointment of a conservator or receiver for the other party or upon the happening of a like event to the other party at the direction of an appropriate agency or court of competent jurisdiction or at the direction of such party’s regulators. Upon termination of this Agreement pursuant to this paragraph with respect to the Trust, the Trust shall pay Transfer Agent its compensation due and shall reimburse Transfer Agent for its costs, expenses and disbursements.

In the event of: (i) the Trust’s termination of this Agreement for any reason other than as set forth in the immediately preceding paragraph or (ii) a transaction not in the ordinary course of business pursuant to which the Transfer Agent is not retained to continue providing services hereunder to the Trust (or its respective successor), the Trust shall pay the Transfer Agent its compensation due through the end of the then-current term (based upon the average monthly compensation previously earned by Transfer Agent with respect to the Trust for the previous twelve (12) month period) and shall reimburse the Transfer Agent for its costs, expenses and disbursements. Upon receipt of such payment and reimbursement, the Transfer Agent will deliver the Trust’s records as set forth herein. For the avoidance of doubt, no payment will be required pursuant to clause (ii) of this paragraph in the event of any transaction such as (a) the liquidation

or dissolution of the Trust and distribution of the Trust’s assets as a result of the Board’s determination in its reasonable business judgment that the Trust shall be liquidated or dissolved, (b) a merger of the Trust into, or the consolidation of the Trust with, another entity, or (c) the sale by the Trust of all, or substantially all, of its assets to another entity.

12.

assignment

13.1

Neither this Agreement nor any rights or obligations hereunder may be assigned by (a) the Trust without the written consent of the Transfer Agent or (b) the Transfer Agent without the written consent of each applicable Fund, except that the Transfer Agent may assign this Agreement to an affiliate of the Transfer Agent. Any attempt to do so in violation of this Section shall be void. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement.

13.2

Except as explicitly stated elsewhere in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Transfer Agent and the Trust, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Transfer Agent and the Trust. This Agreement shall inure to the benefit of, and be binding upon, the parties and their respective permitted successors and assigns.

13.3

This Agreement does not constitute an agreement for a partnership or joint venture between the Transfer Agent and the Trust. Other than as provided in Section 14.16, neither party shall make any commitments with third parties that are binding on the other party without the other party’s prior written consent.

13.

DELEGATION; SUBCONTRACTORS

13.1 The Transfer Agent shall have the right to employ agents, subcontractors, consultants and other third parties, whether affiliated or unaffiliated, to provide or assist it in the provision of any part of the services stated herein (each, a “Delegate” and collectively, the “Delegates”), without the consent or approval of the Trust. The Transfer Agent shall be responsible for the services delivered by, and the acts and omissions of, any such Delegate as if the Transfer Agent had provided such services and committed such acts and omissions itself. Where required, such Delegate shall be a duly registered transfer agent pursuant to Section 17A(c)(2) of the 1934 Act.

13.2 The Transfer Agent will provide the Trust with information regarding its global operating model for the delivery of the services on a quarterly or other periodic basis, which information shall include the identities of Delegates affiliated with the Transfer Agent that perform or may perform parts of the services, and the locations from which such Delegates perform services, as well as such other information about its Delegates as the Trust may reasonably request from time to time. Nothing in this Section 13 shall limit or restrict the Transfer Agent’s right to use affiliates or third parties to perform or discharge, or assist it in the performance or discharge, of any obligations or duties under this Agreement other than the provision of the services.

14.

miscellaneous

14.1

Amendment. This Agreement may be amended by a written agreement executed by both parties.

14.2

Governing Law. This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York without giving effect to any conflicts of law rules thereof. The obligations of the Trust (or particular series or class thereof) entered into in the name or on behalf thereof by any Trustee, representative or agent of the Trust (or particular series or class thereof) are made not individually, but in such capacities, and are not binding upon any past, present or future Trustee, shareholder, representative or agent of the Trust (or particular series or class thereof) personally, but bind only the assets of the Trust (or particular series or class thereof), and all persons dealing with any series and/or class of shares of the Trust must look solely to the assets of the Trust belonging to such series and/or class for the enforcement of any claims against the Trust (or particular series or class thereof).

14.3

Force Majeure. The Transfer Agent shall not be responsible or liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, work stoppage, power or other mechanical failure, computer virus, natural disaster, governmental action, communication disruption or other similar force majeure events or acts (provided, however, the occurrence of such an event shall not excuse or modify the Transfer Agent’s obligations with respect to business continuity and disaster recovery procedures as set forth in Section 14.5).

14.4

Data Protection. The Transfer Agent will implement and maintain a comprehensive written information security program that contains appropriate security measures to safeguard the personal information of the Trust’s shareholders, employees, directors and/or officers that the Transfer Agent receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder. For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) driver’s license number, (c) state identification card number, (d) debit or credit card number, (e) financial account number or (f) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

14.5

Business Continuity. The Transfer Agent shall implement and maintain disaster recovery and business continuity procedures that are reasonably designed to recover data processing systems, data communications facilities, information, data and other business related functions of the Transfer Agent in a manner and time frame consistent with legal, regulatory and business requirements applicable to the Transfer Agent in its provision of services hereunder. In the event of any disaster which causes a business interruption, the Transfer Agent shall act in accordance with it Standard of Care and take reasonable steps to minimize service interruptions.

14.6

Survival. All provisions regarding indemnification, warranty, liability, and limits thereon, and confidentiality and/or protections of proprietary rights and trade secrets shall survive the termination of this Agreement.

14.7

Severability. If any provision or provisions of this Agreement shall be held invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.

14.8

Priorities Clause. In the event of any conflict, discrepancy or ambiguity between the terms and conditions contained in this Agreement and any schedules or attachments hereto, the terms and conditions contained in this Agreement shall take precedence.

14.9

Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive such party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any such term, right or remedy or a waiver of any other rights or remedies, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy. Any waiver must be in writing signed by the waiving party.

14.10

Entire Agreement. This Agreement and any schedules, exhibits, attachments or amendments hereto constitute the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.

14.11

Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same Agreement. Counterparts may be executed in either original or electronically transmitted form (e.g., faxes or emailed portable document format (PDF) form), and the parties hereby adopt as original any signatures received via electronically transmitted form.

14.12

Reproduction of Documents. This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

14.13

Notices. Any notice instruction or other instrument required to be given hereunder will be in writing and may be sent by hand, or by email or overnight delivery by any recognized delivery service, to the parties at the following address or such other address as may be notified by any party from time to time:

(a) If to Transfer Agent, to:

[REDACTED]

With a copy to:

[REDACTED]

(b) If to the Trust, to:

[REDACTED]

14.14

Interpretive and Other Provisions. In connection with the operation of this Agreement, the Transfer Agent and the Trust on behalf of each of the Funds, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties, provided that no such interpretive or additional provisions shall contravene any applicable laws or regulations or any provision of the Trust’s governing documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement.

14.15

Reports. Upon reasonable request of the Trust, the Transfer Agent shall provide the Trust with a copy of the Transfer Agent’s Service Organizational Control (SOC) 1 reports prepared in accordance with the requirements of AT section 801, Reporting on Controls at a Service Organization (formerly Statement on Standards for Attestation Engagements (SSAE) No. 16). The Transfer Agent shall use commercially reasonable efforts to provide the Trust with such reports as the Trust may reasonably request or otherwise reasonably require to fulfill its duties under Rule 38a-1 of the 1940 Act or similar legal and regulatory requirements.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

State Street Bank and Trust Company

By:	/s/ Brock Hill

	Name:	Brock Hill

	Title:	Senior Vice President

VANECK ETHEREUM TRUST

By: VanEck Digital Assets, LLC, solely in its capacity as Sponsor of VanEck Ethereum Trust

By:	/s/ John J. Crimmins

	Name:	John J. Crimmins

	Title:	Vice President

Exhibit A

FORM OF PARTICIPANT AGREEMENT

PARTICIPANT AGREEMENT

[To be provided.]

EX-10.7 8 c109048_ex10-7.htm

Exhibit 10.7

INDEX SUBLICENSE AGREEMENT

This INDEX SUBLICENSE AGREEMENT (“Agreement”), effective as of May 20, 2024 (the “Commencement Date”) is made by and between VanEck Digital Assets, LLC (“Sponsor”), having an office at [***], United States of America, and the VanEck Ethereum Trust (“Licensee”).

WHEREAS, Sponsor has licensed the use of MarketVector™ Ethereum Benchmark Rate (the “Index”); and Sponsor uses in commerce and has the right to use, the trade name and service mark rights to “MarketVector” (the “Mark”); and

WHEREAS, Licensee wishes to use the Index and the Mark; and

WHEREAS, Licensee wishes to obtain Sponsor’s authorization to use the Index and the Marks pursuant to the terms and conditions hereinafter set forth.

1. Grant of License. Sponsor hereby grants to Licensee a transferable, worldwide license, (i) to use the and (ii) to use and refer to the Mark as Licensee deems necessary or desirable under any applicable law, rules, regulations or provisions of this Agreement, but, in each case, only to the extent necessary to indicate the source of the Index. It is expressly agreed and understood by Licensee that no rights to use the Index and the Mark are granted hereunder other than those specifically described and expressly granted herein.

2. Notices and Disclaimers.

(a) Licensee shall use the following notice when referring to an Index in any informational materials, including, where applicable, all prospectuses, registration statements, web sites, investor letters, advertisements, brochures and promotional and any other similar informational materials (including documents required to be filed with governmental or regulatory agencies) that in any way use or refer to Sponsor, the Index:

“The [Fund] is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH and MarketVector Indexes GmbH makes no representation regarding the advisability of investing in the [Fund].

[Index] (the “Index”) is the exclusive property of MarketVector Indexes GmbH, which has contracted with Structured Solutions AG to maintain and calculate the Index. Structured Solutions AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the MarketVector Indexes GmbH, Structured Solutions AG has no obligation to point out errors in the Index to third parties.”

or such similar language as may be approved in advance by Sponsor.

(b) Licensee shall at all times be responsible for ensuring compliance by each sublicensee and subsidiary with the terms of this Agreement.

“The Fund is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH (“Licensor”). Licensor makes no representation or warranty, express or implied, to the owners of the [Fund] or any member of the public regarding the advisability of investing in securities generally or in the [Fund] particularly or the ability of the [Index] to track the performance of the relevant securities markets. The [Index] is determined and composed by the Licensor without regard to the Licensee or the [Fund]. The Licensor has no obligation to take the needs of the Licensee or the owners of the [Fund] into consideration in determining or composing the [Index]. Licensor is not responsible for and has not participated in the determination of the timing of, prices at, or quantities of the [Fund] to be issued or in the determination or calculation of the equation by which the [Fund] is to be converted into cash. Licensor has no obligation or liability in connection with the administration, marketing or trading of the [Fund].

LICENSOR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE [INDEX] OR ANY DATA INCLUDED THEREIN AND LICENSOR SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. LICENSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE [FUND], OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE [INDEX] OR ANY DATA INCLUDED THEREIN. LICENSOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE [INDEX] OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL LICENSOR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

The [Fund] is not sponsored, promoted, sold or supported in any other manner by Structured Solutions AG nor does Structured Solutions AG offer any express or implicit guarantee or assurance either with regard to the results of using the [Index] and/or [Index] trade mark or the Index price at any time or in any other respect. The [Index] is calculated and published by Structured Solutions AG. Structured Solutions AG uses its best efforts to ensure that the [Index] is calculated correctly. Irrespective of its obligations towards the Licensor, Structured Solutions AG has no obligation to point out errors in the [Index] to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the [Index] by Structured Solutions AG nor the licensing of the [Index] or [Index] trade mark for the purpose of use in connection with the financial instrument constitutes a recommendation by Structured Solutions AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Structured Solutions AG with regard to any investment in this financial instrument. Structured Solutions AG is not responsible for fulfilling the legal requirements concerning the accuracy and completeness of the financial instrument’s prospectus.”

(d) Any changes in the foregoing disclaimers and limitations must be approved in advance in writing by an authorized officer of Licensor.

3. Term. The term of this Agreement shall commence on the Commencement Date and shall continue in effect thereafter for a period of three (3) years from the date hereof. Thereafter, it shall automatically renew for successive renewal terms of one (1) year each, unless Licensee provides to Sponsor at least sixty (60) days’ prior written notice of its intention not to renew this Agreement effective upon expiration of the then-current term or renewal term. Notwithstanding the foregoing, Licensee, at its sole discretion, may terminate this Agreement immediately with respect to any Index, to the extent no Fund is based on such Index.

4. License Fees. Licensee shall pay to Sponsor the license fees (“License Fees”) specified and provide the data called for in Exhibit A, attached hereto and made a part hereof.

5. Other Matters.

(a) For the avoidance of doubt, Licensee shall have the right to grant a sub-license to any Fund for which the Licensee (or its affiliate) serves as the investment adviser, provided that such sub-license incorporates the restrictions with respect to the license set forth in this Agreement.

(b) This Agreement constitutes the entire agreement of the parties hereto with respect to its subject matter and may be amended or modified only by a writing signed by duly authorized officers of both parties. This Agreement supersedes all previous agreements between the parties with respect to the subject matter of this Agreement. There are no oral or written collateral representations, agreements, or understandings except as provided herein. If any provisions of this Agreement are for any reason declared to be invalid or unenforceable, the validity of the remaining provisions shall not be affected thereby.

(c) This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of New York and the parties hereby submit to the exclusive jurisdiction of the federal courts of the New York or any New York state court with respect to any dispute arising out of or under this Agreement.

(d) No breach, default, or threatened breach of this Agreement by either party shall relieve the other party of its obligations or liabilities under this Agreement with respect to the protection of the property or proprietary nature of any property which is the subject of this Agreement.

(e) All notices and other communications under this Agreement shall be (i) in writing, (ii) delivered by hand, by registered or certified mail, return receipt requested, or by email, and (iii) deemed given upon receipt.

	Notice to Sponsor:	[***]

	Notice to Licensee:	[***]

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first set forth above.

VanECk Ethereum TRUST
By: VanEck Digital Assets, LLC, solely in its capacity as sponsor

	/s/	Matthew Babinsky
	Name:	Matthew Babinsky
	Title:	Assistant Vice President

VANECK digital assets, llc

	/s/	Matthew Babinsky
	Name:	Matthew Babinsky
	Title:	Assistant Vice President

EXHIBIT A

LICENSE FEES

The compensation for the license fees is included in the Sponsor Fee (as such term is defined in the Licensee’s current registration statement) the Licensee will pay the Sponsor.

D-1

EX-10.8 9 c109048_ex10-8.htm

Exhibit 10.8

Execution Version

Master Custodian Agreement

This Agreement (this “Agreement”) is made as of May 20, 2024 between each entity identified on Appendix A and each entity which becomes a party to this Agreement in accordance with the terms hereof (in each case, a “Fund”) and State Street Bank and Trust Company, a Massachusetts trust company (the “Custodian”).

Witnesseth:

Whereas, each Fund desires for the Custodian to provide certain custodial services relating to securities and other assets of the Fund;

Whereas, the Custodian is willing to provide the services upon the terms contained in this Agreement; and

Whereas, each Fund is an exchange-traded fund that issues and redeems common shares of beneficial interest (the “Shares”) only in aggregations of Shares known as “Creation Units,” generally in exchange for a basket of digital assets and/or a specified cash payment, as more fully described in the Fund’s currently effective prospectus and most recently filed registration statement (collectively, the “Prospectus”).

Now, Therefore, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows:

Section 1. Definitions. In addition to terms defined elsewhere in this Agreement, (a) terms defined in the UCC have the same meanings herein as therein and (b) the following other terms have the following meanings for purposes of this Agreement:

“1940 Act” means the Investment Company Act of 1940, as amended from time to time.

“Authorized Participants” means those entities that have entered into an Authorized Participant Agreement with the Fund, the Sponsor and the Fund’s transfer agent.

“Board” means, in relation to a Fund, the board of directors, trustees or other governing body of the Fund.

“Client Publications” means the general client publications of State Street Bank and Trust Company available from time to time to clients and their investment managers.

“Deposit Account Agreement” means the Deposit Account Agreement and Disclosure, as may be amended from time to time, issued by the Custodian and available on the Custodian’s internet customer portal, “my.statestreet.com”.

“Digital Assets” means an asset that is issued and/or transferred using distributed ledger or blockchain technology, including, but not limited to, so-called “virtual currencies,” “coins” and “tokens” and with respect to which the Custodian has agreed to provide services hereunder.

“Domestic securities” means securities held within the United States.

“Exchange” means the Cboe BZX Exchange, Inc. or such other exchange as is specified by a Fund to the Custodian in writing.

“Foreign Assets” means a the Fund’s securities or other investments (including foreign currencies) for which the primary market is outside the United States, and any cash and cash equivalents that are reasonably necessary to effect transactions in those investments.

“Foreign securities” means securities held primarily outside of the United States.

“Held outside of the United States” means not held within the United States.

“Held within the United States” means (a) in relation to a security or other financial asset, the security or other financial asset (i) is a certificated security registered in the name of the Custodian or its sub-custodian, agent or nominee or is endorsed to the Custodian or its sub-custodian, agent or nominee or in blank and the security certificate is located within the United States, (ii) is an uncertificated security or other financial asset registered in the name of the Custodian or its sub-custodian, agent or nominee at an office located in the United States, or (iii) has given rise to a security entitlement of which the Custodian or its sub-custodian, agent or nominee is the entitlement holder against a U.S. Securities System or another securities intermediary for which the securities intermediary’s jurisdiction is within the United States, and (b) in relation to cash, the cash is maintained in a deposit account denominated in U.S. dollars with the banking department of the Custodian or with another bank or trust company’s office located in the United States.

“On book currency” means (a) U.S. dollars or (b) a foreign currency that, when credited to a deposit account of a customer maintained in the banking department of the Custodian or a foreign sub-custodian, the Custodian maintains on its books as an amount owing as a liability by the Custodian to the customer.

“Proper Instructions” means instructions in accordance with Section 9 received by the Custodian from a Fund, the Fund’s Sponsor, or an individual or organization duly authorized by the Fund or the Sponsor. The term includes standing instructions.

“SEC” means the U.S. Securities and Exchange Commission.

“Sponsor” means the entity identified by the Fund to the Custodian as the entity having investment responsibility with respect to the Fund, currently VanEck Digital Assets, LLC.

“UCC” means the Uniform Commercial Code of the Commonwealth of Massachusetts as in effect from time to time.

“Underlying Portfolios” means a group of investment companies as defined in Section 12(d)(1)(F) of the 1940 Act.

“Underlying Shares” means shares or other securities, issued by a U.S. issuer, of Underlying Portfolios and other registered “investment companies” (as defined in Section 3(a)(1) of the 1940 Act), whether or not in the same “group of investment companies” (as defined in Section 12(d)(1)(G)(ii) of the 1940 Act).

“Underlying Transfer Agent” means State Street Bank and Trust Company or such other organization which may from time to time be appointed by the Fund to act as a transfer agent for the Underlying Portfolios and with respect to which the Custodian is provided with Proper Instructions.

-2-

“U.S. Securities System” means a securities depository or book-entry system authorized by the U.S. Department of the Treasury or a “clearing corporation” as defined in Section 8-102 of the UCC.

Section 2.

Employment of Custodian.

Section 2.1 General. Each Fund hereby employs the Custodian as a custodian of (a) securities and cash of each of Fund and (b) other assets of each Fund that the Custodian agrees to treat as financial assets. Each Fund agrees to deliver to the Custodian (i) all securities and cash of the Fund, (ii) all other assets that the Fund desires the Custodian, and the Custodian is willing, to treat as a financial asset and (iii) all cash and other proceeds of the securities and financial assets held in custody under this Agreement. The holding of confirmation statements that identify Underlying Shares as being recorded in the Custodian’s name on behalf of a Fund will be custody for purposes of this Section 2.1. This Agreement does not require the Custodian to accept an asset for custody hereunder or to treat any asset that is not a security as a financial asset. Furthermore, except as otherwise agreed in writing with the Fund, the Custodian will only accept custody of securities and other assets that it is operationally equipped and licensed to hold in the relevant market where it provides custodial services either directly or through an existing sub-custodian and may decline to accept custody of certain securities or asset types that it determines present an unacceptable risk profile or that it or its sub-custodians are not operationally equipped or permitted to hold under any law or regulation.

Without limiting the foregoing, the Custodian further reserves the right, in its sole discretion, to decline to accept custody of, and to provide services with respect to, any Digital Asset. For the avoidance of doubt, the parties agree that the Custodian is not providing any custody services pursuant to this Agreement with respect to any Digital Assets, including ether.

Section 2.2 Sub-custodians. Upon receipt of Proper Instructions, the Custodian shall on behalf of a Fund appoint one or more banks, trust companies or other entities located in the United States and designated in the Proper Instructions to act as a sub-custodian for the purposes of effecting such transactions as may be designated by the Fund in the Proper Instructions. The Custodian may place and maintain each Fund’s foreign securities with foreign banking institution sub-custodians employed by the Custodian or foreign securities depositories, all in accordance with the applicable provisions of Section 5. An entity acting in the capacity of Underlying Transfer Agent is not an agent or sub-custodian of the Custodian for purposes of this Agreement.

Section 2.3 Relationship. With respect to securities and other financial assets, the Custodian is a securities intermediary and the Fund is the entitlement holder. With respect to cash maintained in a deposit account and denominated in an “on book” currency, the Custodian is a bank and the Fund is the bank’s customer. If cash is maintained in a deposit account with a bank other than the Custodian and the cash is denominated in an “on book” currency, the Custodian is that bank’s customer. The Custodian agrees to treat the claim to the cash as a financial asset for the benefit of the Fund. The Custodian does not otherwise agree to treat cash as financial asset. The duties of the Custodian as securities intermediary and bank set forth in the UCC are varied by the terms of this Agreement to the extent that the duties may be varied by agreement under the UCC.

Section 3.

Activities of the Custodian with Respect to Property Held in the United States.

Section 3.1 Holding Securities. The Custodian may deposit and maintain securities or other financial assets of a Fund in a U.S. Securities System. Upon receipt of Proper Instructions on behalf of a Fund, the Custodian shall establish and maintain a segregated account or accounts for and on behalf of the

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Fund and into which account or accounts may be transferred cash or securities and other financial assets, including securities and financial assets maintained in a U.S. Securities System. The Custodian shall hold and physically segregate for the account of each Fund all securities and other financial assets held by the Custodian in the United States, including all domestic securities of the Fund, other than (a) securities or other financial assets maintained in a U.S. Securities System and (b) Underlying Shares maintained pursuant to Section 3.6 in an account of an Underlying Transfer Agent. The Custodian may at any time or times in its discretion appoint any other bank or trust company as the Custodian’s agent to carry out such of the provisions of this Section as the Custodian may from time to time direct. The appointment of any agent shall not relieve the Custodian of any of its duties hereunder. The Custodian may at any time or times in its discretion remove the bank or trust company as the Custodian’s agent.

Section 3.2 Registration of Securities. Domestic securities or other financial assets held by the Custodian and that are not bearer securities shall be registered in the name of the applicable Fund or in the name of any nominee of a Fund or of any nominee of the Custodian, or in the name or nominee name of any agent or any sub-custodian permitted hereby. All securities accepted by the Custodian on behalf of a Fund under the terms of this Agreement shall be in “street name” or other good delivery form. However, if a Fund directs the Custodian to maintain securities or other financial assets in “street name,” the Custodian shall utilize commercially reasonable best efforts only to timely collect income due the Fund on the securities and other financial assets and to notify the Fund of relevant issuer actions including, without limitation, pendency of calls, maturities, tender or exchange offers.

Section 3.3 Bank Accounts. The Custodian shall open and maintain upon the terms of the Deposit Account Agreement a separate deposit account or accounts in the United States in the name of each Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Agreement. The Custodian shall credit to the deposit account or accounts, subject to the provisions hereof, all cash received by the Custodian from or for the account of the Fund. Funds held by the Custodian for a Fund may be deposited by the Custodian to its credit as Custodian in the banking department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable. The funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity.

Section 3.3A Specialized ETF Services. Subject to and in accordance with the directions of the Sponsor, the Custodian shall determine for each Fund after the end of each trading day on the Exchange, in accordance with the respective Fund’s policies and in accordance with the procedures set forth in the Prospectus, the amount of ether and/or cash required for the issuance or redemption, as the case may be, of Shares in Creation Unit aggregations of such Fund on such date. The Custodian shall provide or cause to be provided this information to the Sponsor, the Fund’s distributor and other persons as instructed according to the policies established by the Board and/or instructions from an officer of the Fund or the Sponsor and shall disseminate such information on each day that the Exchange is open, including through the facilities of the National Securities Clearing Corporation, if applicable, prior to the opening of trading on the the Exchange to the extent required.

Section 3.4 Collection of Income. Subject to the domestic securities or other financial assets held in the United States being registered as provided in Section 3.2, the Custodian shall collect on a timely basis all income and other payments with respect to the securities and other financial assets and to which a Fund shall be entitled either by law or pursuant to custom in the securities business. The Custodian shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, the securities are held by the Custodian or its agent, and shall credit such income, as collected, to such Fund’s custodian account. The Custodian shall present for payment all income

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items requiring presentation as and when they become due and shall collect interest when due on securities and other financial assets held hereunder.

Section 3.5 Delivery Out. The Custodian shall release and deliver out domestic securities and other financial assets of a Fund held in a U.S. Securities System, or in an account at the Underlying Transfer Agent, only upon receipt of Proper Instructions on behalf of the applicable Fund, specifying the domestic securities or financial assets held in the United States to be delivered out and the person or persons to whom delivery is to be made. The Custodian shall pay out cash of a Fund upon receipt of Proper Instructions specifying the amount of the payment and the person or persons to whom the payment is to be made.

Section 3.6 Deposit of Fund Assets with the Underlying Transfer Agent. Underlying Shares of a Fund shall be deposited and held in an account or accounts maintained with an Underlying Transfer Agent. The Custodian’s only responsibilities with respect to the Underlying Shares shall be limited to the following:

Upon receipt of a confirmation or statement from an Underlying Transfer Agent that the Underlying Transfer Agent is holding or maintaining Underlying Shares in the name of the Custodian (or a nominee of the Custodian) for the benefit of a Fund, the Custodian shall identify by book-entry that the Underlying Shares are being held by it as custodian for the benefit of the Fund.

Upon receipt of Proper Instructions to purchase Underlying Shares for the account of a Fund, the Custodian shall pay out cash of the Fund as so directed to purchase the Underlying Shares and record the payment from the account of the Fund on the Custodian’s books and records.

Upon receipt of Proper Instructions for the sale or redemption of Underlying Shares for the account of a Fund, the Custodian shall transfer the Underlying Shares as so directed to sell or redeem the Underlying Shares, record the transfer from the account of the Fund on the Custodian’s books and records and, upon the Custodian’s receipt of the proceeds of the sale or redemption, record the receipt of the proceeds for the account of such Fund on the Custodian’s books and records.

Section 3.7 Proxies. The Custodian shall cause to be promptly executed by the registered holder of domestic securities or other financial assets held in the United States of a Fund, if the securities or other financial assets are registered otherwise than in the name of the Fund or a nominee of the Fund, all proxies, without indication of the manner in which the proxies are to be voted, and shall promptly deliver to the Fund such proxies, all proxy soliciting materials and all notices relating to the securities or other financial assets.

Section 3.8 Communications. Subject to the domestic securities or other financial assets held in the United States being registered as provided in Section 3.2, the Custodian shall transmit promptly to the applicable Fund all written information received by the Custodian from issuers of the securities and other financial assets being held for the Fund. The Custodian shall transmit promptly to the applicable Fund all written information received by the Custodian from issuers of the securities and other financial assets whose tender or exchange is sought and from the party or its agent making the tender or exchange offer. The Custodian shall also transmit promptly to the applicable Fund all written information received by the Custodian regarding any class action or other collective litigation relating to Fund securities or other financial assets issued in the United States and then held, or previously held, during the relevant class-action period

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during the term of this Agreement by the Custodian for the account of the Fund, including, but not limited to, opt-out notices and proof-of-claim forms. The Custodian does not support class-action participation by a Fund beyond such forwarding of written information received by the Custodian.

Section 4.

Reserved.

Section 5.

Activities of the Custodian with Respect to Property Held Outside the United States.

Section 5.1. Appointment of Foreign Sub-Custodians. Each Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the Fund’s securities and other assets maintained outside the United States in the countries listed on Schedule A (“foreign countries”) the foreign banking institutions designated on Part I of Schedule A hereto (“foreign sub-custodians”).

Section 5.2. Foreign Securities Systems. Except as may otherwise be agreed upon in writing by the Custodian and a Fund, securities of the Fund shall be maintained in a clearing agency which acts as a securities depository or in a book-entry system for the central handling of securities located outside the United States (each, as listed on Part II of Schedule A, a “Foreign Securities System”).

Section 5.3. Holding Securities. Foreign securities and other financial assets held outside of the United States shall be maintained in a Foreign Securities System in a foreign country through arrangements implemented by the Custodian or foreign sub-custodian, as applicable, in the foreign country. Securities and cash held in a U.S. Securities System or Foreign Securities System will be held subject to the rules, terms and conditions of such entity. Securities and cash held through foreign sub-custodians shall be held subject to the terms and conditions of Custodian’s agreements with such subcustodians. Foreign sub-custodians may be authorized to hold Securities in Foreign Securities Systems in which such foreign sub-custodians participate. The Custodian shall identify on its books as belonging to the Funds the foreign securities and other financial assets held by each foreign sub-custodian or Foreign Securities System. The Custodian may hold foreign securities and other financial assets for all of its customers, including the Funds, with any foreign sub-custodian in an account that is identified as the Custodian’s account for the benefit of its customers; provided however, that (a) the records of the Custodian with respect to foreign securities or other financial assets of a Fund maintained in the account shall identify those securities and other financial assets as belonging to the Fund and (b) to the extent permitted and customary in the market in which the account is maintained, the Custodian shall require that securities and other financial assets so held by the foreign sub-custodian be held separately from any assets of the foreign sub-custodian or of other customers of the foreign sub-custodian.

Section 5.4. Registration of Foreign Securities. Foreign securities and other financial assets held outside of the United States maintained in the custody of a foreign sub-custodian and that are not bearer securities shall be registered in the name of the applicable Fund or in the name of the Custodian or in the name of any foreign sub-custodian or in the name of any nominee of any of the foregoing. The Fund agrees to hold any such nominee harmless from any liability as a holder of record of the foreign securities or other financial assets. The Custodian or a foreign sub-custodian reserves the right not to accept securities or other financial assets on behalf of a Fund under the terms of this Agreement unless the form of the securities or other financial assets and the manner in which they are delivered are in accordance with local market practice.

Section 5.5. Indemnification by Foreign Sub-Custodians. Each contract pursuant to which the Custodian employs a foreign sub-custodian shall, to the extent possible, require the foreign sub-custodian to exercise reasonable care in the performance of its duties and indemnify and hold harmless the Custodian

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from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the foreign sub-custodian’s performance of its obligations. At a Fund’s election, a Fund shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a foreign sub-custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Fund has not been made whole for the loss, damage, cost, expense, liability or claim. In no event shall the Custodian be obligated to bring suit in its own name or to allow suit to be brought in its name.

Section 5.6 Bank Accounts.

5.6.1 General. The Custodian shall identify on its books as for the account of the applicable Fund the amount of cash (including cash denominated in foreign currencies) deposited with the Custodian. The Custodian shall maintain cash deposits in on book currencies on its balance sheet. The Custodian shall be liable for such balances. If the Custodian is unable to maintain, or market practice does not facilitate the maintenance for the Fund of a cash balance in a currency as an on book currency, a deposit account shall be opened and maintained by the Custodian outside the United States on behalf of the Fund with a foreign sub-custodian. The Custodian shall not maintain the cash deposit on its balance sheet. The foreign sub-custodian will be liable for such balance directly to the Fund. All deposit accounts referred to in this Section shall be subject only to draft or order by the Custodian or, if applicable, the foreign sub-custodian acting pursuant to the terms of this Agreement. Cash maintained in a deposit account and denominated in an “on book” currency will be maintained under and subject to the laws of the Commonwealth of Massachusetts. The Custodian will not have any deposit liability for deposits in any currency that is not an “on book” currency.

5.6.2 Non-U.S. Branch and Non-U.S. Dollar Deposits. In accordance with the laws of the Commonwealth of Massachusetts, the Custodian shall not be required to repay any deposit made at a non-U.S. branch of the Custodian or any deposit made with the Custodian and denominated in a non-U.S. dollar currency, if repayment of the deposit or the use of assets denominated in the non-U.S. dollar currency is prevented, prohibited or otherwise blocked due to (a) an act of war, insurrection or civil strife; (b) any action by a non-U.S. government or instrumentality or authority asserting governmental, military or police power of any kind, whether such authority be recognized as a de facto or a de jure government, or by any entity, political or revolutionary movement or otherwise that usurps, supervenes or otherwise materially impairs the normal operation of civil authority; or (c) the closure of a non-U.S. branch in order to prevent, in the reasonable judgment of the Custodian, harm to the employees or property of the Custodian.

Section 5.7. Collection of Income. The Custodian shall use reasonable commercial efforts to collect all income and other payments with respect to the Foreign Assets held hereunder to which a Fund shall be entitled and shall credit such income, as collected, to the applicable Fund. If extraordinary measures are required to collect the income or payment, the Fund and the Custodian shall consult as to such measures and as to the compensation and expenses of the Custodian relating to such measures.

Section 5.8. Transactions in Foreign Custody Account.

5.8.1 Delivery Out. The Custodian or a foreign sub-custodian shall release and deliver foreign securities or other financial assets held outside of the United States owned by a Fund and held by the Custodian or such foreign sub-custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, specifying the foreign securities to be delivered and the person or persons to whom delivery is to be made. The Custodian shall pay out, or direct the respective foreign sub-custodian or the respective Foreign Securities System to pay out, cash of a Fund only upon receipt of Proper Instructions specifying the amount of the payment and the person or persons to payment is to be made.

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5.8.2 Market Conditions. Notwithstanding any provision of this Agreement to the contrary, settlement and payment for Foreign Assets received for the account of the Funds and delivery of Foreign Assets maintained for the account of the Funds may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for the Foreign Assets from such purchaser or dealer.

5.8.3 Reserved.

Section 5.9 Shareholder or Bondholder Rights. The manner in which any voting rights with respect to foreign securities, however registered, shall be exercised will be decided by the Fund or its designee. The Custodian shall use reasonable commercial efforts to facilitate the exercise of voting and other shareholder and bondholder rights with respect to foreign securities and other financial assets held outside the United States, subject always to the laws, regulations and practical constraints that may exist in the country where the securities or other financial assets are issued. Upon request, the Custodian shall make available to the Fund any documents (including proxy statements, annual reports and signed proxies) actually received by Custodian relating to the exercise of such voting rights. The Custodian may utilize Broadridge Financial Solutions, Inc. or another proxy service firm of recognized standing as its delegate to provide proxy services for the exercise of shareholder and bondholder rights. Local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of a Fund to exercise shareholder and bondholder rights.

Section 5.10. Communications. The Custodian shall transmit promptly to the applicable Fund written information with respect to materials received by the Custodian through foreign sub-custodians from issuers of the foreign securities and other financial asset assets being held outside the United States for the account of a Fund. The Custodian shall transmit promptly to the applicable Fund written information with respect to materials so received by the Custodian from issuers of foreign securities whose tender or exchange is sought or from the party or its agent making the tender or exchange offer. The Custodian shall also transmit promptly to the Fund all written information received by the Custodian through foreign sub-custodians from issuers of the foreign securities or other financial assets issued outside of the United States and being held for the account of the Fund regarding any class action or other collective litigation relating to the Fund’s foreign securities or other financial assets issued outside the United States and then held, or previously held, during the relevant class-action period during the term of this Agreement by the Custodian via a foreign sub-custodian for the account of the Fund, including, but not limited to, opt-out notices and proof-of-claim forms. The Custodian does not support class-action participation by a Fund beyond such forwarding of written information received by the Custodian.

Section 6.

Foreign Exchange.

Section 6.1. Generally. Upon receipt of Proper Instructions, which for purposes of this section may also include security trade advices, the Custodian shall facilitate the processing and settlement of foreign exchange transactions. Such foreign exchange transactions do not constitute part of the services provided by the Custodian under this Agreement.

Section 6.2. Fund Elections. Each Fund (or its Sponsor acting on its behalf) may elect to enter into and execute foreign exchange transactions with third parties that are not affiliated with the Custodian, with State Street Global Markets, which is the foreign exchange division of State Street Bank and Trust Company and its affiliated companies (“SSGM”), or with a sub-custodian. Where the Fund or its Sponsor

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gives Proper Instructions for the execution of a foreign exchange transaction using an indirect foreign exchange service described in the Client Publications, the Fund (or its Sponsor) instructs the Custodian, on behalf of the Fund, to direct the execution of such foreign exchange transaction to SSGM or, when the relevant currency is not traded by SSGM, to the applicable sub-custodian. The Custodian shall not have any agency (except as contemplated in preceding sentence), trust or fiduciary obligation to the Fund, its Sponsor or any other person in connection with the execution of any foreign exchange transaction. The Custodian shall have no responsibility under this Agreement for the selection of the counterparty to, or the method of execution of, any foreign exchange transaction entered into by the Fund (or its Sponsor acting on its behalf) or the reasonableness of the execution rate on any such transaction.

Section 6.3. Fund Acknowledgement Each Fund acknowledges that in connection with all foreign exchange transactions entered into by the Fund (or its Sponsor acting on its behalf) with SSGM or any sub-custodian, SSGM and each such sub-custodian:

(i)

shall be acting in a principal capacity and not as broker, agent or fiduciary to the Fund or its Sponsor;

(ii)

shall seek to profit from such foreign exchange transactions, and are entitled to retain and not disclose any such profit to the Fund or its Sponsor; and

(iii)

shall enter into such foreign exchange transactions pursuant to the terms and conditions, including pricing or pricing methodology, (a) agreed with the Fund or its Sponsor from time to time or (b) in the case of an indirect foreign exchange service, (i) as established by SSGM and set forth in the Client Publications with respect to the particular foreign exchange execution services selected by the Fund or the Sponsor or (ii) as established by the sub-custodian from time to time.

Section 6.4. Transactions by State Street. The Custodian or its affiliates, including SSGM, may trade based upon information that is not available to the Fund (or its Sponsor acting on its behalf), and may enter into transactions for its own account or the account of clients in the same or opposite direction to the transactions entered into with the Fund (or its Sponsor), and shall have no obligation, under this Agreement, to share such information with or consider the interests of their respective counterparties, including, where applicable, the Fund or the Sponsor.

Section 7.

Tax Services.

Section 7.1 Fund Information. Each Fund will provide documentary evidence of its tax domicile, organizational specifics and other documentation and information as may be required by the Custodian from time to time for tax purposes, including, without limitation, information relating to any special ruling or treatment to which the Fund may be entitled that is not applicable to the general nationality and category of person to which the Fund belongs under general laws and treaty obligations and documentation and information required in relation to countries where the Fund engages or proposes to engage in investment activity or where Fund assets are or will be held. The provision of such documentation and information shall be deemed to be a Proper Instruction, upon which the Custodian shall be entitled to rely and act. In giving such documentation and information, the Fund represents and warrants that it is true and correct in all material respects and that it will promptly provide the Custodian with all necessary corrections or updates upon becoming aware of any changes or inaccuracies in the documentation or information supplied.

Section 7.2 Tax Responsibility. The Fund shall be liable for all taxes (including Taxes, as defined below) relating to its investment activity, including with respect to any cash or securities held by the

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Custodian on behalf of the Fund or any transactions related thereto. Subject to compliance by the Fund with its obligations under Section 7.1, the Custodian shall withhold (or cause to be withheld) the amount of any Tax which is required to be withheld under applicable law in connection with the collection on behalf of the Fund pursuant to this Agreement of any dividend, interest income or other distribution with respect to any security and the proceeds or income from the sale or other transfer of any security held by the Custodian. If any Taxes become payable with respect to any prior payment made to the Fund by the Custodian or otherwise, the Custodian may apply any credit balance in the Fund’s deposit account to the extent necessary to satisfy such Tax obligation. The Fund shall remain liable for any tax deficiency. The Custodian is not liable for any tax obligations relating to the Fund, other than those Tax services as set out specifically in this Section 7. The Fund agrees that the Custodian is not, and shall not be deemed to be, providing tax advice or tax counsel. The capitalized terms “Tax” or “Taxes” means any withholding or capital gains tax, stamp duty, levy, impost, charge, assessment, deduction or related liability, including any addition to tax, penalty or interest imposed on or in respect of (i) cash or securities, (ii) the transactions effected under this Agreement, or (iii) the Fund.

Section 7.3 Tax Relief. The Custodian will provide tax relief services in relation to designated markets as may be specified from time to time in the Client Publications. Subject to the preceding sentence and compliance by the Fund with its obligations under Section 7.1, the Custodian will apply for a reduction of withholding tax and refund of any tax paid or tax credits which apply in each applicable market in respect of income payments on securities for the benefit of the Fund. Unless otherwise informed by the Fund, the Custodian shall be entitled to apply categorical treatment of the Fund according to its nationality, particulars of its organization and other relevant details supplied by the Fund.

Section 8.

Payments for Sales or Redemptions of Shares.

Section 8.1 Payment for Shares Issued. If a Fund shall sell any Shares, the Fund shall deliver instructions, or cause the Fund’s Transfer Agent to provide instructions, to the Custodian, specifying the amount of cash, if any, to be received by the Custodian in connection with the sale of such Shares and specifically allocated to the Fund’s account. The Custodian will provide timely notification to the Fund and the Transfer Agent of any receipt of the cash payments by the Custodian.

Section 8.2 Payment for Shares Redeemed. Whenever the Fund desires Custodian to make a payment, if any, out of cash held by Custodian hereunder in connection with a redemption of any Shares, the Fund shall deliver instructions , or cause the Fund’s Transfer Agent to provide instructions, to the Custodian, specifying the total amount of cash, if any, to be paid, for the redemption of such Shares, and the Custodian shall make such payment out of the cash held in the Fund’s Account in accordance with such instructions.

Section 9.

Proper Instructions.

Section 9. 1 Form and Security Procedures. Proper Instructions may be in writing signed by the authorized individual or individuals or may be in a tested communication or in a communication utilizing access codes effected between electro-mechanical or electronic devices or may be by such other means and utilizing such intermediary systems and utilities as may be agreed to from time to time by the Custodian and the individual or organization giving the instruction, provided that the Fund has followed any security procedures agreed to from time to time by the applicable Fund and the Custodian. The Custodian may agree to accept oral instructions, and in such case oral instructions will be considered Proper Instructions. The Fund shall cause all oral instructions to be confirmed in writing, provided that the Fund’s failure to do so shall not impact the Custodian’s authority to rely on such oral instructions. The Custodian shall only accept Proper

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Instructions, including oral instructions, from the person or persons on the current list of authorized persons as provided or agreed to by the Fund in writing and as may be amended from time to time.

Section 9.2 Reliance on Officer’s Certificate. Concurrently with the execution of this Agreement, and from time to time thereafter, as appropriate, each Fund shall deliver to the Custodian an officer’s certificate setting forth the names, titles, signatures and scope of authority of all individuals authorized to give Proper Instructions or any other notice, request, direction, instruction, certificate or instrument on behalf of the Fund. The certificate may be accepted and conclusively relied upon by the Custodian and shall be considered to be in full force and effect until receipt by the Custodian of a similar certificate to the contrary and the Custodian has had a reasonable time to act thereon.

Section 9.3 Untimely Proper Instructions. If the Custodian is not provided with reasonable time to execute a Proper Instruction (including any Proper Instruction not to execute, or any other modification to, a prior Proper Instruction), the Custodian will use good faith efforts to execute the Proper Instruction but will not be responsible or liable if the Custodian’s efforts are not successful (including any inability to change any actions that the Custodian had taken pursuant to the prior Proper Instruction).

Section 10.

Actions Permitted without Express Authority.

The Custodian may in its discretion, without express authority from the applicable Fund:

Make payments to itself or others for minor expenses of handling securities or other financial assets relating to its duties under this Agreement; provided that all such payments shall be accounted for to the Fund;

Surrender securities or other financial assets in temporary form for securities or other financial assets in definitive form;

Endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and

In general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and other financial assets of the Fund except as otherwise directed by the applicable Board.

Section 11.

Duties of Custodian with Respect to Underlying Shares.

Each Fund acknowledges and agrees that, with respect to investments maintained with the Underlying Transfer Agent, the Underlying Transfer Agent is the sole source of information on the number of Underlying Shares held by it on behalf of a Fund and that the Custodian has the right to rely on holdings information furnished by the Underlying Transfer Agent to the Custodian in performing its duties under this Agreement, including without limitation, the duties set forth in this Section 11 and in Section 12; provided, however, that the Custodian shall be obligated to reconcile information as to purchases and sales of Underlying Shares contained in trade instructions and confirmations received by the Custodian and to report promptly any discrepancies to the Underlying Transfer Agent.

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Section 12.

Records.

The Custodian shall create and maintain all records relating to its activities and obligations under this Agreement in such manner as may be agreed to from time to time by the applicable Fund and the Custodian. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the SEC. The Custodian shall, at the Fund’s request, supply the Fund with a tabulation of securities owned by each Fund and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. In the event that the Custodian is requested or authorized by a Fund, or required by subpoena, administrative order, court order or other legal process, applicable law or regulation, or required in connection with any investigation, examination or inspection of the Fund by state or federal regulatory agencies, to produce the records of the Fund or the Custodian’s personnel as witnesses, the Fund agrees to pay the Custodian for the Custodian’s time and expenses, as well as the fees and expenses of the Custodian’s counsel, incurred in responding to such request, order or requirement.

Section 13.

Fund’s Independent Accountants; Reports.

Section 13.1 Opinions. The Custodian shall take all reasonable action, as a Fund may from time to time request, to obtain from year to year favorable opinions from the Fund’s independent accountants with respect to its activities hereunder.

Section 13.2 Reports. Upon reasonable request of a Fund, the Custodian shall provide the Fund with a copy of the Custodian’s Service Organizational Control (SOC) 1 reports prepared in accordance with the requirements of AT section 801, Reporting on Controls at a Service Organization (formerly Statement on Standards for Attestation Engagements (SSAE) No. 16). The Custodian shall use commercially reasonable efforts to provide the Fund with such reports as the Fund may reasonably request or otherwise reasonably require to fulfill its duties under Rule 38a-1 of the 1940 Act or similar legal and regulatory requirements.

Section 14.

Custodian’s Standard of Care; Exculpation.

14.1 Standard of Care. In carrying out the provisions of this Agreement, the Custodian shall act in good faith and without negligence and shall be held to the exercise of reasonable care (the “Standard of Care”) at all times in its performance of all services performed under this Agreement.

14.2 Reliance on Proper Instructions. The Custodian shall be entitled conclusively to rely and act upon Proper Instructions until the Custodian has received notice of any change from the Fund and has had a reasonable time to act thereon. The Custodian may act on a Proper Instruction if it reasonably believes that it contains sufficient information and may refrain from acting on any Proper Instructions until such time that it has determined, in its sole discretion, that is has received any required clarification or authentication of Proper Instructions. The Custodian may rely upon and shall be protected in acting upon any Proper Instruction or any other instruction, notice, request, consent, certificate or other instrument or paper believed by it in good faith to be genuine and to have been properly executed by or on behalf of the applicable Fund.

14.3 Other Reliance. The Custodian is authorized and instructed to rely upon the information that the Custodian receives from the Fund or any third party on behalf of the Fund (including, without limitation, any confirmation received from the Fund, the Sponsor or any other authorized person as to the delivery by an Authorized Participant of required Digital Assets determined to be sufficient for the related issuance of Creation Units). The Custodian shall have no responsibility to review, confirm or otherwise assume any duty

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with respect to the accuracy or completeness of any information supplied to it by or on behalf of any Fund. The Custodian shall have no liability in respect of any loss, cost or expense incurred or sustained by the Fund arising from the performance of the Custodian’s duties hereunder in reliance upon records that were maintained for the Fund by any individual or organization, other than the Custodian, prior to the Custodian’s appointment as custodian hereunder. The Custodian shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters and shall be without liability for any action reasonably taken or omitted pursuant to the advice.

14.4 Liability for Foreign Custodians. The Custodian shall be liable for the acts or omissions of a foreign sub-custodian to the same extent as if the action or omission were performed by the Custodian itself, taking into account the facts and circumstances and the established local market practices and laws prevailing in the particular jurisdiction in which the Fund elects to invest.

14.5 Insolvency and Country Risk. The Custodian shall in no event be liable for (a) the insolvency of any foreign sub-custodian, (b) the insolvency of any depositary bank maintaining in a deposit account cash denominated in any currency other than an “on book” currency, or (c) any loss, cost or expense incurred or sustained by a Fund resulting from or caused by Country Risk.

14.6 Force Majeure and Third Party Actions. The Custodian shall be without responsibility or liability to any Fund for: (a) events or circumstances beyond the reasonable control of the Custodian, including, without limitation, the interruption, suspension or restriction of trading on or the closure of any currency or securities market or system, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, acts of war, revolution, riots or terrorism or other similar force majeure events or acts (provided, however, the occurrence of such an event shall not excuse or modify the Custodian’s obligations with respect to business continuity and disaster recovery procedures, as set forth in Section 21.17); (b) errors by any Fund, its Sponsor or any other duly authorized person in their instructions to the Custodian; (c) the insolvency of or acts or omissions by a U.S. Securities System, Foreign Securities System, Underlying Transfer Agent or domestic sub-custodian designated pursuant to Section 2.2; (d) the failure of any Fund, its Sponsor, or any duly authorized individual or organization to adhere to the Custodian’s previously made-available operational policies and procedures; (e) any delay or failure of any broker, agent, securities intermediary or other intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodian’s sub-custodian or agent securities or other financial assets purchased or in the remittance or payment made in connection with securities or other financial assets sold; (f) any delay or failure of any organization in charge of registering or transferring securities or other financial assets in the name of the Custodian, any Fund, the Custodian’s sub-custodians, nominees or agents including non-receipt of bonus, dividends and rights and other accretions or benefits, provided such delay or failure is not the result of the Custodian’s actions or inactions; (g) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security, other financial asset, U.S. Securities System or Foreign Securities System; and (h) the effect of any provision of any law or regulation or order of the United States of America, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction.

14.7 Indirect/Special/Consequential Damages. Notwithstanding any other provision set forth herein, in no event shall the Custodian or a Fund be liable for any special, indirect, incidental, punitive or consequential damages of any kind whatsoever (including, without limitation, lost profits) with respect to the services provided pursuant to this Agreement, regardless of whether either party has been advised of the possibility of such damages.

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14.8 Delivery of Property. The Custodian shall not be responsible for any securities or other assets of a Fund which are not received by the Custodian or which are delivered out in accordance with Proper Instructions. The Custodian shall not be responsible for the title, validity or genuineness of any securities or other assets or evidence of title thereto received by it or delivered by it pursuant to this Agreement.

14.9 No Investment Advice. The Custodian has no responsibility to monitor or oversee the investment activity undertaken by a Fund or its Sponsor. The Custodian has no duty to ensure or to inquire whether an Sponsor complies with any investment objectives or restrictions agreed upon between a Fund and the Sponsor or whether the Sponsor complies with its legal obligations under applicable securities laws or other laws, including laws intended to protect the interests of investors. The Custodian shall neither assess nor take any responsibility or liability for the suitability or appropriateness of the investments made by a Fund or on its behalf.

14.10 Communications. The Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with securities or other financial assets of a Fund at any time held by the Custodian unless (a) the Custodian or the foreign sub-custodian is in actual possession of such securities or other financial assets, (b) the Custodian receives Proper Instructions with regard to the exercise of the right or power, and (c) both of the conditions referred to in the foregoing clauses (a) and (b) have been satisfied at least two business days prior to the date on which the Custodian is to take action to exercise the right or power.

14.11 Loaned Securities. Income due to each Fund on securities or other financial assets loaned shall be the responsibility of the Fund. The Custodian will have no duty or responsibility in connection with loaned securities or other financial assets, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Fund is entitled.

14.12 Trade Counterparties. A Fund’s receipt of securities or other financial assets from a counterparty in connection with any of its purchase transactions and its receipt of cash from a counterparty in connection with any sale or redemption of securities or other financial assets will be at the Fund’s sole risk, and the Custodian shall not be obligated to make demands on the Fund’s behalf if the Fund’s counterparty defaults. If a Fund’s counterparty fails to deliver securities, other financial assets or cash, the Custodian will, as its sole responsibility, notify the Fund’s Sponsor of the failure within a reasonable time after the Custodian became aware of the failure.

Section 15.

Compensation and Indemnification of Custodian; Security Interest.

Section. 15.1 Compensation. The Custodian shall be entitled to reasonable compensation for its services and expenses as agreed upon from time to time between each Fund and the Custodian.

Section 15.2 Indemnification. Each Fund agrees to indemnify the Custodian and to hold the Custodian harmless from and against any loss, cost or expense sustained or incurred by the Custodian in acting or omitting to act under or in respect of this Agreement in accordance with the Standard of Care, in good faith and without negligence, including, without limitation, (a) the Custodian’s compliance with Proper Instructions and (b) in connection with the provision of services to a Fund pursuant to Section 7, any obligations, including taxes, withholding and reporting requirements, claims for exemption and refund, additions for late payment, interest, penalties and other expenses, that may be assessed against the Fund or the Custodian as custodian of the assets of the Fund. If a Fund instructs the Custodian to take any action with

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respect to securities or other financial assets, and the action involves the payment of money or may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund being liable therefor, the Fund, as a prerequisite to the Custodian taking the action, shall provide to the Custodian at the Custodian’s request such further indemnification in an amount and form satisfactory to the Custodian.

Section 15.3 Security Interest. Each Fund hereby grants to the Custodian, to secure the payment and performance of the Fund’s obligations under this Agreement, whether contingent or otherwise, a security interest in and right of recoupment and setoff against all cash and all securities and other financial assets at any time held for the account of a Fund by or through the Custodian. The obligations include, without limitation, the Fund’s obligations to reimburse the Custodian if the Custodian or any of its affiliates, subsidiaries or agents advances cash or securities or other financial assets to the Fund for any purpose (including but not limited to settlements of securities or other financial assets, foreign exchange contracts and assumed settlement), or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominee’s own negligence, as well as the Fund’s obligation to compensate the Custodian pursuant to Section 15.1 or indemnify the Custodian pursuant to Section 15.2. Should the Fund fail to reimburse or otherwise pay the Custodian any obligation under this Agreement promptly, the Custodian shall have the rights and remedies of a secured party under this Agreement, the UCC and other applicable law, including the right to utilize available cash and to sell or otherwise dispose of the Fund’s assets to the extent necessary to obtain payment or reimbursement. The Custodian may at any time decline to follow Proper Instructions to deliver out cash, securities or other financial assets if the Custodian determines in its reasonable discretion that, after giving effect to the Proper Instructions, the cash, securities or other financial assets remaining will not have sufficient value fully to secure the Fund’s payment or reimbursement obligations, whether contingent or otherwise.

Section 16.

Effective Period and Termination.

Section 16.1 Term. This Agreement shall remain in full force and effect for an initial term ending one year from the date hereof (the “Initial Term”). After the expiration of the Initial Term, this Agreement shall automatically renew for successive one (1) year terms unless a written notice of non-renewal is delivered by the non-renewing party no later than ninety (90) days prior to the expiration of the initial term or any renewal term, as the case may be. A written notice of non-renewal may be given as to a Fund.

Section 16.2 Termination. Either party may terminate this Agreement as to a Fund: (a) in the event of the other party’s material breach of a material provision of this Agreement that the other party has either failed to cure, or failed to establish a remedial plan to cure that is reasonably acceptable to the non-breaching party, within 60 days’ written notice being given by the non-breaching party of the breach, (b) in the event that there are consistent breaches of established parameters in mutually agreed upon written service level agreements, or (c) in the event of the appointment of a conservator or receiver for the other party, the commencement by or against the other party of a bankruptcy or insolvency case or proceeding, or upon the happening of a like event to the other party at the direction of an appropriate agency or court of competent jurisdiction or at the direction of such party’s regulators.

Section 16.3 Payments Owing to the Custodian. Upon termination of this Agreement pursuant to Section 16.1 or 16.2 with respect to any Fund, the applicable Fund shall pay to the Custodian any compensation then due and shall reimburse the Custodian for its other fees, expenses and charges. In the event of: (a) any Fund’s termination of this Agreement with respect to such Fund for any reason other than as set forth in Section 16.1 or 16.2 or (b) a transaction not in the ordinary course of business pursuant to which the Custodian is not retained to continue providing services hereunder to a Fund (or its successor), the

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applicable Fund shall pay to the Custodian any compensation due through the end of the then-current term (based upon the average monthly compensation previously earned by the Custodian with respect to the Fund for the previous twelve (12) month period) and shall reimburse the Custodian for its other fees, expenses and charges actually incurred. Upon receipt of such payment and reimbursement, the Custodian will deliver the Fund’s cash and its securities and other financial assets as set forth in Section 17.

Section 16.4 Exclusions. No payment will be required pursuant to clause (b) of Section 16.3 in the event of any transaction consisting of (a) the liquidation or dissolution of a Fund and distribution of the Fund’s assets as a result of the Board’s determination in its reasonable business judgment that the Fund shall be liquidated or dissolved, (b) a merger of a Fund into, or the consolidation of a Fund with, another organization, or (c) the sale by a Fund of all or substantially all of its assets to another organization or series.

Section 16.5 Effect of Termination. Termination of this Agreement with respect to any one particular Fund shall in no way affect the rights and duties under this Agreement with respect to any other Fund. Following termination with respect to a Fund, the Custodian shall have no further responsibility to forward information under Section 3.8 or 5.8. The provisions of Sections 7, 14, 15 and 17 of this Agreement shall survive termination of this Agreement.

Section 17.

Successor Custodian.

Section 17.1 Successor Appointed. If a successor custodian shall be appointed for a Fund by its Board, the Custodian shall, upon termination of this Agreement and receipt of Proper Instructions, deliver to the successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all cash and all securities and other financial assets of the Fund then held by the Custodian hereunder and shall transfer to an account of the successor custodian all of the securities and other financial assets of the Fund held in a U.S. Securities System or Foreign Securities System or at the Underlying Transfer Agent.

Section 17.2 No Successor Appointed. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of Proper Instructions, deliver at the office of the Custodian and transfer the cash and the securities and other financial assets of the Fund in accordance with the Proper Instructions.

Section 17.3 No Successor Appointed and No Proper Instructions. If no successor custodian has been appointed and no Proper Instructions have been delivered to the Custodian on or before the termination of this Agreement, then the Custodian shall have the right to deliver to a bank or trust company of its own selection, all cash and all securities and other financial assets of the Fund then held by the Custodian hereunder, and to transfer to an account of the bank or trust company all of the securities and other financial assets of the Fund held in any U.S. Securities System or Foreign Securities System or at the Underlying Transfer Agent. The transfer will be on such terms as are contained in this Agreement or as the Custodian may otherwise reasonably negotiate with the bank or trust company. Any compensation payable to the bank or trust company, and any cost or expense incurred by the Custodian, in connection with the transfer shall be for the account of the Fund.

Section 17.4 Remaining Property. If any cash or any securities or other financial assets of a Fund held by the Custodian hereunder remain held by the Custodian after the termination of this Agreement owing to the failure of the Fund to provide Proper Instructions, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian holds the cash or the securities or other financial assets (the existing agreed-to compensation at the time of termination shall be one indicator of what

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is considered fair compensation). The provisions of this Agreement relating to the duties, exculpation and indemnification of the Custodian shall apply in favor of the Custodian during such period.

Section 18. Remote Access Services Addendum. The Custodian and each Fund agree to be bound by the terms of the Remote Access Services Addendum hereto.

Section 19. Loan Services Addendum. If a Fund directs the Custodian in writing to perform loan services, the Custodian and the Fund will be bound by the terms of the Loan Services Addendum attached hereto. The Fund shall reimburse Custodian for its fees and expenses related thereto as agreed upon from time to time in writing by the Fund and the Custodian.

Section 20. Qualified Financial Contracts Addendum. Each Fund and the Custodian hereby agree to be bound by the terms of the QFC Addendum (the “QFC Addendum”) attached hereto.

Section 21. General.

Section 21.1 Governing Law. Any and all matters in dispute between the parties hereto, whether arising from or relating to this Agreement, shall be governed by and construed in accordance with laws of the State of New York, without giving effect to any conflict of laws rules.

SECTION 21.2 Insurance. The Custodian shall at all times during the term of this Agreement maintain, at its cost, insurance coverage regarding its business in such amount and scope as it deems adequate in connection with the services provided by the Custodian under this Agreement. Upon the Fund’s reasonable request, which in no event shall be more than once annually, the Custodian shall furnish to the Fund a summary of the Custodian’s applicable insurance coverage.

Section 21.3 Prior Agreements; Amendments. This Agreement supersedes all prior agreements between each Fund and the Custodian relating to the custody of the Fund’s assets. This Agreement may be amended at any time in writing by mutual agreement of the parties hereto.

Section 21.4 Assignment; Delegation. Neither this Agreement nor any rights or obligations hereunder may be assigned by (a) any Fund without the written consent of the Custodian or (b) the Custodian without the written consent of each applicable Fund, except that the Custodian may assign this Agreement to an affiliate of the Custodian. Any attempt to do so in violation of this Section shall be void. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement.

Except as explicitly stated in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Custodian and the Fund, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Custodian and the Fund. This Agreement shall inure to the benefit of, and be binding upon, the parties and their respective permitted successors and assigns. This Agreement does not constitute an agreement for a partnership or joint venture between the Custodian and the Fund.

The Custodian shall retain the right to employ agents, subcontractors, consultants or other third parties, including, without limitation, affiliates (each, a “Delegate” and collectively, the “Delegates”) to provide or assist it in the provision of any part of the non-custodial services described herein or the discharge of any other non-custodial obligations or duties under this Agreement without the consent or approval of any Fund. Except as otherwise provided below, the Custodian shall be responsible for the acts and omissions of any such Delegate so

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employed as if the Custodian had committed such acts and omissions itself. The Custodian shall be responsible for the compensation of its Delegates. Notwithstanding the foregoing, in no event shall the term Delegate include sub-custodians, foreign sub-custodians, U.S. Securities Systems and Foreign Securities Systems, and the Custodian shall have no liability for their acts or omissions except as otherwise expressly provided elsewhere in this Agreement. The liability of the Custodian for the acts and omissions of sub-custodians, foreign sub-custodians, U.S. Securities Systems and Foreign Securities Systems shall be as set forth in Section 14 above. The Custodian will provide the Fund with information regarding its global operating model for the delivery of the services provided hereunder on a quarterly or other periodic basis, which information shall include the identities of Delegates affiliated with the Custodian that perform or may perform parts of the services (excluding services performed by sub-custodians, U.S. Securities Systems and Foreign Securities Systems), and the locations from which such Delegates perform services, as well as such other information about its Delegates as the Fund may reasonably request from time to time. Nothing in this paragraph shall limit or restrict the Custodian’s right to use affiliates or third parties to perform or discharge, or assist it in the performance or discharge, of any obligations or duties under this Agreement other than the provision of the services.

Section 21.5 Interpretive and Additional Provisions. In connection with the operation of this Agreement, the Custodian and each Fund may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties, provided that no such interpretive or additional provisions shall contravene any applicable laws or regulations or any provision of a Fund’s governing documents and Prospectus. No interpretive or additional provisions made as provided in the preceding sentence shall be an amendment of this Agreement.

Section 21.6 Additional Funds. If any entity in addition to those listed on Appendix A desires the Custodian to render services as custodian under the terms of this Agreement, the entity shall so notify the Custodian in writing. If the Custodian agrees in writing to provide the services, the entity shall become a Fund hereunder and be bound by all terms and conditions and provisions hereof including, without limitation, the representations and warranties set forth in Section 21.7 below.

Section 21.7 The Parties; Representations and Warranties. All references in this Agreement to the “Fund” are to each of the entities listed on Appendix A, and each entity made subject to this Agreement in accordance with Section 21.6 above, individually, as if this Agreement were between the individual Fund and the Custodian. Any reference in this Agreement to “the parties” shall mean the Custodian and such other individual Fund as to which the matter pertains.

21.7.1 Fund Representations and Warranties. Each Fund hereby represents and warrants that (a) it is duly organized and validly existing in good standing in its jurisdiction of organization; (b) it has the requisite power and authority under applicable law and its governing documents to enter into and perform this Agreement; (c) all requisite proceedings have been taken to authorize it to enter into and perform this Agreement; (d) no legal or administrative proceedings have been instituted or threatened which would materially impair the Fund’s ability to perform its duties and obligations under this Agreement; and (e) its entering into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Fund or any law or regulation applicable to it.

21.7.2 Custodian Representations and Warranties. The Custodian hereby represents and warrants that (a) it is a trust company, duly organized and validly existing under the laws of the Commonwealth of Massachusetts; (b) it has the requisite power and authority to carry on its business in the Commonwealth of Massachusetts; (c) all requisite proceedings have been taken to authorize it to enter into and perform this

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Agreement; (d) no legal or administrative proceedings have been instituted or threatened which would impair the Custodian’s ability to perform its duties and obligations under this Agreement; (e) its entering into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Custodian or any law or regulation applicable to it; (f) it is in compliance with all material federal and state laws, rules and regulations applicable to the Custodian with respect to its custody business and the performance of its duties, obligations and services under this Agreement; and (g) it has and will maintain access to the necessary facilities, equipment and personnel determined by Custodian to perform its duties and obligations under this Agreement.

Section 21.8 Notices. Any notice, instruction or other communication required to be given hereunder will, unless otherwise provided in this Agreement, be in writing and may be sent by hand, or by email, or overnight delivery by any recognized delivery service, to the parties at the following addresses or such other addresses as may be notified by any party from time to time.

To any Fund:

[REDACTED]

To the Custodian:

[REDACTED]

with a copy to: [REDACTED]

Section 21.9 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same Agreement. Counterparts may be executed in either original or electronically transmitted form (e.g., faxes or emailed portable document format (PDF) form), and the parties hereby adopt as original any signatures received in electronically transmitted form.

Section 21.10 Severability; No Waiver. If any provision of this Agreement shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. The failure of a party hereto to insist upon strict adherence to any term of this Agreement on any occasion or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any the term, right or remedy or a waiver of any other rights or remedies, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy.

Section 21.11 Confidentiality. All information provided under this Agreement by a party (the “Disclosing Party”) to the other party (the “Receiving Party”) regarding the Disclosing Party’s business and operations shall be treated as confidential. Subject to Section 21.12 below, all confidential information provided under this Agreement by Disclosing Party shall be used, including disclosure to third parties, by the Receiving Party, or its agents or service providers, solely for the purpose of performing or receiving the services and discharging the Receiving Party’s other obligations under the Agreement or managing the business of the Receiving Party and its affiliates, including financial and operational management and reporting, risk management, legal and regulatory compliance and client service management. The foregoing shall not be applicable to any information (a) that is publicly available when provided or thereafter becomes publicly available, other than through a breach of this Agreement, (b) that is independently derived by the Receiving Party without the use of any information provided by the Disclosing Party in connection with this Agreement, (c) that is disclosed to comply with any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, (d) that is disclosed as required by operation of law or regulation or as required to comply with the requirements of any market infrastructure that

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the Disclosing Party or its agents direct the Custodian or its affiliates to employ (or which is required in connection with the holding or settlement of instruments included in the assets subject to this Agreement), or (e) where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld.

Section 21.12 Use of Data.

(a) In connection with the provision of the services and the discharge of its other obligations under this Agreement, the Custodian (which term for purposes of this Section 20.12 includes each of its parent company, branches and affiliates (“Affiliates”)) may collect and store information regarding a Fund and share such information with its Affiliates, agents and service providers in order and to the extent reasonably necessary (i) to carry out the provision of services contemplated under this Agreement and other agreements between the Fund and the Custodian or any of its Affiliates and (ii) to carry out management of its businesses, including, but not limited to, financial and operational management and reporting, risk management, legal and regulatory compliance and client service management.

(b) Subject to paragraph (d) below, the Custodian and/or its Affiliates may use any Confidential Information of the Fund (“Data”) obtained by such entities in the performance of their services under this Agreement or any other agreement between the Fund and the Custodian or one of its Affiliates, including Data regarding transactions and portfolio holdings relating to the Customer to develop, publish or otherwise distribute to third parties certain investor behavior “indicators” or “indices” that represent broad trends in the flow of investment funds into various markets, sectors or investment instruments (collectively, the “Indicators”), but only so long as (i) the Data is combined or aggregated with (A) information of other customers of the Custodian and/or (B) information derived from other sources, in each case such that the Indicators do not allow for attribution or identification of such Data with the Fund, (ii) the Data represents less than a statistically meaningful portion of all of the data used to create the Indicators and (iii) the Custodian publishes or otherwise distributes to third parties only the Indicators and under no circumstance publishes, makes available, distributes or otherwise discloses any of the Data to any third party, whether aggregated, anonymized or otherwise, except as expressly permitted under this Agreement.

(c) The Fund acknowledges that the Custodian may seek to realize economic benefit from the publication or distribution of the Indicators.

(d) Except as expressly contemplated by this Agreement, nothing in this Section 20.12 shall limit the confidentiality and data-protection obligations of the Custodian and its Affiliates under this Agreement and applicable law. The Custodian shall cause any Affiliate, agent or service provider to which it has disclosed Data pursuant to this Section 20.12 to comply at all times with confidentiality and data-protection obligations as if it were a party to this Agreement.

Section 21.13 Data Privacy. The Custodian will implement and maintain a written information security program that contains appropriate security measures to safeguard the personal information of the Fund’s shareholders, employees, directors and/or officers that the Custodian receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder. The term, “personal information”, as used in this Section, means (a) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (i) Social Security number, (ii) driver’s license number, (iii) state identification card number, (iv) debit or credit card number, (v) financial account number or (vi) personal identification number or password that would permit access to a person’s account, or (b) any combination of any of the foregoing that would allow a person to log onto or access an individual’s account. The term does

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not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

Section 21.14 Reproduction of Documents. This Agreement and all schedules, addenda, exhibits, appendices, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

Section 21.15 Regulation GG. Each Fund represents and warrants that it does not engage in an “Internet gambling business,” as such term is defined in Section 233.2(r) of Federal Reserve Regulation GG (12 CFR 233) and covenants that it shall not engage in an Internet gambling business. In accordance with Regulation GG, each Fund is hereby notified that “restricted transactions,” as such term is defined in Section 233.2(y) of Regulation GG, are prohibited in any dealings with the Custodian pursuant to this Agreement or otherwise between or among any party hereto.

Section 21.16 Shareholder Communications Election. SEC Rule 14b-2 requires banks that hold securities, as that term is used in federal securities laws, for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, as may be applicable, the Custodian needs each Fund to indicate whether it authorizes the Custodian to provide such Fund’s name, address, and share position to requesting companies whose securities the Fund owns. If a Fund tells the Custodian “no,” the Custodian will not provide this information to requesting companies. If a Fund tells the Custodian “yes” or does not check either “yes” or “no” below, the Custodian is required by the rule, as applicable, to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For a Fund’s protection, the Rule, as applicable, prohibits the requesting company from using the Fund’s name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below.

YES [ ]

The Custodian is authorized to release the Fund’s name, address, and share positions.

NO [X]

The Custodian is not authorized to release the Fund’s name, address, and share positions.

Section 21.17 Disaster Recovery and Business Continuity. The Custodian shall implement and maintain disaster recovery and business continuity procedures that are reasonably designed to recover data processing systems, data communications facilities, information, data and other business related functions of the Custodian in a manner and time frame consistent with legal, regulatory and business requirements applicable to the Custodian in its provision of services hereunder. In the event of any disaster which causes a business interruption, the Custodian shall act in accordance with its Standard of Care and take reasonable steps to minimize service interruptions.

Section 21.18 Limitation on Liability of Trustees. Notice is hereby given that this Agreement is not executed on behalf of any directors or trustees of any Fund as individuals, and the obligations of this Agreement are not binding on any of the directors, trustees, officers, shareholders or partners of any Fund individually, but are binding only upon the property of each Fund. In relation to each Fund which is a business trust, this Agreement is executed and made by the Trustees of the Fund not individually, but as trustees under

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the Declarations of Trust of the Fund and the obligations of this Agreement are not binding upon any of such Trustees or upon any of the shareholders of the Fund individually, but bind only the trust estate of the Fund. The Custodian agrees that no shareholder, director, trustee, officer or partner of any Fund may be held personally liable or responsible for any obligations of any Fund arising out of this Agreement.

[Remainder of the page intentionally left blank]

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Signature Page

In Witness Whereof, each of the parties has caused this Agreement to be executed in its name and behalf by its duly authorized representative under seal as of the date first above-written.

EACH OF THE ENTITIES

SET FORTH ON APPENDIX A HERETO

By: VanEck Digital Assets, LLC, solely in its capacity as Sponsor of VanEck Ethereum Trust

By:	/s/ John J. Crimmins
	Name: John J. Crimmins
	Title: Vice President

STATE STREET BANK AND TRUST COMPANY

By:

/s/ Brock Hill

Name: Brock Hill

Title: Senior Vice President

APPENDIX A

Master Custodian Agreement

VanEck Ethereum Trust

D-1

QFC ADDENDUM
INCORPORATING ISDA PROTOCOL BY REFERENCE

State Street and its parent company is subject to certain U.S. banking regulations that are part of the “too big to fail” regulatory regimes. Among other things, these regulations impose mandatory requirements on the contents of certain types of “qualified financial contracts or “QFC’s”, (including custody or depositary contracts pursuant to which services may result in short-term extensions of credit or overdrafts) In particular, pursuant to these regulations, State Street is required to amend such contracts to expressly recognize the “stay-and-transfer” powers of the U.S. banking regulators that will apply under the U.S. Special Resolution Regimes. These powers become effective upon the occurrence of certain resolution-related trigger events, as if the contract and all contractual parties were subject to such U.S. Special Resolution Regimes.

1. Opt-In to U.S. Special Resolution Regime. Notwithstanding anything to the contrary in the Agreement or any other agreement, the parties hereto expressly acknowledge and agree that the terms of the ISDA Protocol are incorporated into and form a part of this Agreement. For purposes of incorporating the ISDA Protocol into this Agreement, (i) each party hereto that has identified itself as an Regulated Entity in its adherence letter to the ISDA Protocol shall be deemed to be a Regulated Entity (and all other parties hereto shall be deemed to be an Adhering Party) and (ii) this Agreement shall be deemed a Protocol Covered Agreement. In the event of any inconsistences between this Agreement and the ISDA Protocol, the ISDA Protocol will prevail.

2. Definitions. As used in this QFC Addendum:

“ISDA” refers to the International Swaps and Derivatives Association, Inc.

“ISDA Protocol” means the ISDA 2018 U.S. Resolution Stay Protocol as published by ISDA as of July 31, 2018

-2-

EX-10.9 10 c109048_ex10-9.htm

Exhibit 10.9

SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT is entered into as of the 20^th day of May, 2024, between VanEck EthereumTrust, a statutory trust organized and existing under the laws of Delaware (the “Trust”), and Van Eck Associates Corporation, a corporation organized and existing under the laws of Delaware (the “Purchaser”).

THE PARTIES HEREBY AGREE AS FOLLOWS:

I. PURCHASE AND SALE OF THE SHARES

(1) SALE AND ISSUANCE OF SHARES. Subject to the terms and conditions of this Agreement, the Trust agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Trust, 2,000 shares of beneficial interest, representing fractional undivided beneficial interests in the net assets of the Trust (the “Shares”), at a price per Share of $50.00 for an aggregate purchase price of $100,000, payable in U.S. dollars or the equivalent value, after any associated transaction fees, in Ether (ETH).

II. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The Purchaser hereby represents and warrants to, and covenants for the benefit of, the Trust that:

(1) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made by the Trust with the Purchaser in reliance upon the Purchaser’s representation to the Trust, which by the Purchaser’s execution of this Agreement the Purchaser hereby confirms, that the Shares are being acquired for investment for the Purchaser’s own account, and not as a nominee or agent and not with a view to the resale or distribution by the Purchaser of any of the Shares, and that the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the Shares, in either case in violation of any securities registration requirement under applicable law, but subject nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. By executing this Agreement, the Purchaser further represents that the Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Shares.

(2) INVESTMENT EXPERIENCE. The Purchaser acknowledges that it can bear the economic risk of the investment for an indefinite period of time and has such knowledge and experience in financial and business matters (and particularly in the business in which the Trust operates) as to be capable of evaluating the merits and risks of the investment in the Shares. The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “1933 Act”).

(3) RESTRICTED SECURITIES. The Purchaser understands that the Shares are characterized as “restricted securities” under the United States securities laws inasmuch as they are being acquired from the Trust in a transaction not involving a public offering and that under such laws

and applicable regulations such Shares may be resold without registration under the 1933 Act only in certain circumstances. In connection therewith, the Purchaser represents that it understands the resale limitations imposed by the 1933 Act and is generally familiar with the existing resale limitations imposed by Rule 144 under the 1933 Act.

(4) LEGENDS. It is understood that the certificate evidencing the Shares, if any, may bear either or both of the following legends:

(i) “These securities have not been registered under the Securities Act of 1933. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the Shares under such Act or an opinion of counsel reasonably satisfactory to the Trustee(s) of VanEck Ethereum Trust that such registration is not required.”

(ii) Any legend required by the laws of any other applicable jurisdiction.

The Purchaser and the Trust agree that the legends contained in the paragraph above shall be removed at a holder’s request when they are no longer necessary to ensure compliance with federal securities laws.

(5) COUNTERPARTS. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

[Signature page follows]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

VANECK ETHEREUM TRUST

By: VanEck Digital Assets, LLC, solely in its

capacity as sponsor to VanEck Ethereum Trust

By: /s/ Matthew Babinsky

Name: Matthew Babinsky

Title: Assistant Vice President

VANECK ASSOCIATES CORPORATION

By: /s/ Lee Rappaport

Name: Lee Rappaport

Title: Vice President, Chief Financial Officer and Treasurer

[Signature Page to Subscription Agreement]

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