iset20240930c

iset20240930c_10q.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-42166

iShares® Ethereum Trust ETF

(Exact name of registrant as specified in its charter)

Delaware

99-6353885

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

c/o iShares Delaware Trust Sponsor LLC
400 Howard Street
San Francisco, California 94105

(Address of principal executive offices) (Zip Code)

(415) 670-2000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Shares	ETHA	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☒

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 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2024, the Registrant had 61,560,000 Shares outstanding.

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

	Statement of Assets and Liabilities at September 30, 2024	1

	Statements of Operations for the three months ended September 30, 2024 and the Period from May 21, 2024 (Date of Seeding) to September 30, 2024	2

	Statements of Changes in Net Assets for the three months ended September 30, 2024 and the Period from May 21, 2024 (Date of Seeding) to September 30, 2024	3

	Statement of Cash Flows for the Period from May 21, 2024 (Date of Seeding) to September 30, 2024	4

	Schedule of Investments at September 30, 2024	5

	Notes to Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13

Item 4.	Controls and Procedures	13

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	14

Item 1A.	Risk Factors	14

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3.	Defaults Upon Senior Securities	14

Item 4.	Mine Safety Disclosures	14

Item 5.	Other Information	14

Item 6.	Exhibits	15

SIGNATURES		16

	September 30, 2024
Assets
Investment in ether, at fair value(a)	$	1,019,423,341
Cash		3,260
Total Assets		1,019,426,601

Liabilities
Sponsor’s fees payable		84,058
Total Liabilities		84,058

Commitments and contingent liabilities (Note 6)		—

Net Assets	$	1,019,342,543
Shares issued and outstanding(b)		51,200,000
Net asset value per Share (Note 2C)	$	19.91

(a)	Cost of investment in ether: $1,157,342,168.
(b)	No par value, unlimited amount authorized.

	Three Months Ended September 30,			For the Period from May 21, 2024 (Date of Seeding) to September 30,
	2024			2024
Expenses
Sponsor’s fees	$	358,491		$	358,911
Sponsor’s fees waiver		(186,634	)		(186,634	)
Total expenses		171,857			172,277
Net investment loss		(171,857	)		(172,277	)

Net Realized and Unrealized Gain (Loss)
Net realized loss from:
Ether sold to pay expenses		(21,660	)		(21,660	)
Net change in unrealized appreciation/depreciation		(138,509,122	)		(137,918,827	)
Net realized and unrealized loss		(138,530,782	)		(137,940,487	)

Net (decrease) in net assets resulting from operations	$	(138,702,639	)	$	(138,112,764	)

Net (decrease) in net assets per Share(a)	$	(4.67	)	$	(6.69	)

	For the Period from May 21, 2024 (Date of Seeding) to September 30,
	2024
Net Assets at May 21, 2024	$	—

Operations:
Net investment loss		(420	)
Net change in unrealized appreciation/depreciation		590,295
Net increase in net assets resulting from operations		589,875

Capital Share Transactions:
Contributions for Shares issued		10,000,000
Net increase in net assets from capital share transactions		10,000,000

Increase in net assets		10,589,875

Net Assets at June 30, 2024	$	10,589,875

Operations:
Net investment loss		(171,857	)
Net realized loss		(21,660	)
Net change in unrealized appreciation/depreciation		(138,509,122	)
Net decrease in net assets resulting from operations		(138,702,639	)

Capital Share Transactions:
Contributions for Shares issued		1,147,455,307
Net increase in net assets from capital share transactions		1,147,455,307

Increase in net assets		1,008,752,668

Net Assets at September 30, 2024	$	1,019,342,543

Shares issued and redeemed
Shares issued		51,200,000
Shares redeemed		—
Net increase in Shares issued and outstanding		51,200,000

	For the Period from May 21, 2024 (Date of Seeding) to September 30,
	2024
Cash Flows from Operating Activities
Net decrease in net assets resulting from operations	$	(138,112,764	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of ether		(1,157,427,156	)
Proceeds from ether sold to pay expenses		63,328
Net realized (gain) loss		21,660
Net change in unrealized appreciation/depreciation		137,918,827
Change in operating assets and liabilities:
Sponsor’s fees payable		84,058
Net cash used in operating activities	$	(1,157,452,047	)

Cash Provided by Financing Activities
Proceeds from issuance of Shares		1,157,455,307
Net cash provided by financing activities	$	1,157,455,307

Cash
Net increase in cash		3,260
Cash, beginning of period		—
Cash, end of period		3,260

Description	Quantity		Cost		Fair Value
Ether		387,843	$	1,157,342,168	$	1,019,423,341

Total Investments — 100.01%						1,019,423,341
Other Assets less Liabilities — (0.01)%						(80,798	)
Net Assets — 100.00%					$	1,019,342,543

Three Months Ended September 30, 2024	Quantity			Cost			Fair Value			Realized Gain (Loss)
Beginning balance		3,031		$	10,000,000		$	10,590,295		$	—
Ether purchased		384,840			1,147,427,156			1,147,427,156			—
Ether sold to pay expenses		(28	)		(84,988	)		(63,328	)		(21,660	)
Net realized loss		—			—			(21,660	)		—
Net change in unrealized appreciation/depreciation		—			—			(138,509,122	)		—
Ending balance		387,843		$	1,157,342,168		$	1,019,423,341		$	(21,660	)

Period from May 21, 2024 (Date of Seeding) to September 30, 2024	Quantity			Cost			Fair Value			Realized Gain (Loss)
Beginning balance		—		$	—		$	—		$	—
Ether purchased		387,871			1,157,427,156			1,157,427,156			—
Ether sold to pay expenses		(28	)		(84,988	)		(63,328	)		(21,660	)
Net realized loss		—			—			(21,660	)		—
Net change in unrealized appreciation/depreciation		—			—			(137,918,827	)		—
Ending balance		387,843		$	1,157,342,168		$	1,019,423,341		$	(21,660	)

	Three Months Ended September 30,			Period from May 21, 2024 (Date of Seeding) to September 30,
	2024			2024
Net asset value per Share, beginning of period	$	26.47		$	25.00

Net investment loss(a)		(0.01	)		(0.01	)
Net realized and unrealized loss(b)		(6.55	)		(5.08	)
Net decrease in net assets from operations		(6.56	)		(5.09	)
Net asset value per Share, end of period	$	19.91		$	19.91

Total return, at net asset value(c)(d)		(24.78	)%	(20.20		)%(e)(f)

Ratio to average net assets:
Net investment loss(g)		(0.12	)%		(0.12	)%
Total Expenses(g)		0.24	%		0.24	%
Total expenses after fees waived(g)		0.12			0.12	%

(a)	Based on average Shares outstanding during the period.
(b)	The amounts reported for a Share outstanding may not accord with the change in aggregate gains and losses on investment for the period due to the timing of Share transactions in relation to the fluctuating fair values of the Trust’s underlying investment.
(c)	Based on the change in net asset value of a Share during the period.
(d)	Percentage is not annualized.
(e)	For the period June 24, 2024 (Effective Date) to September 30, 2024.
(f)	For the period May 21, 2024 to September 30, 2024, the Trust’s total return was (20.36)%.
(g)	Percentage is annualized.

101.INS*		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File included as Exhibit 101 (embedded within the Inline XBRL document)

Exhibit No.			Description
3.1			Certificate of Trust of iShares Ethereum Trust incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S‑1 (File No. 333-275583) filed by the Registrant on November 16, 2023

3.2			Certificate of Amendment to Certificate of Trust of iShares Ethereum Trust incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S‑1/A (File No. 333-275583) filed by the Registrant on May 29, 2024

3.3			Certificate of Amendment to Certificate of Trust of iShares Ethereum Trust incorporated by reference to Exhibit 3.3 of the Registration Statement on Form S‑1/A (File No. 333-275583) filed by the Registrant on June 21, 2024

4.1			Second Amended and Restated Trust Agreement incorporated by reference to Exhibit 4.1 of the Registration Statement on Form S-1/A (File No. 333-275583) filed by the Registrant on July 8, 2024

4.2			Form of Authorized Participant Agreement incorporated by reference to Exhibit 4.2 of the Registration Statement on Form S-1/A (File No. 333-275583) filed by the Registrant on May 29, 2024

10.1			Third Amended and Restated Coinbase Prime Broker Agreement incorporated by reference to Exhibit 10.1 of the Registration Statement on Form S‑1/A (File No. 333-275583) filed by the Registrant on May 29, 2024

10.2			Coinbase Custody Custodial Services Agreement (included as Exhibit A in Exhibit 10.1) incorporated by reference to Exhibit 10.2 of the Registration Statement on Form S-1/A (File No. 333-275583) filed by the Registrant on May 29, 2024)

10.3			Services Agreement with The Bank of New York Mellon, as cash custodian and trust administrator incorporated by reference to Exhibit 10.3 of the Registration Statement on Form S-1/A (File No. 333-275583) filed by the Registrant on May 29, 2024

10.4			ETF Services Agreement with BRIL incorporated by reference to Exhibit 10.4 of the Registration Statement on Form S-1/A (File No. 333‑275583) filed by the Registrant on May 29, 2024

10.5			Amendment to the Third Amended and Restated Coinbase Prime Broker Agreement incorporated by reference to Exhibit 10.1 of Form of 8-K (File No. 001-42166 filed by the Registrant on September 19, 2024

31.1*			Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*			Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*			Certification by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002

32.2*			Certification by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002

SEC Form 10-Q filed by iShares Ethereum Trust ETF