What changed in this filing

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Item 1. Business

2026-03-30 compared with 2025-03-26 · 1008 added, 921 removed, 257 unchanged (88% of the section changed)

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Delaware statutory trust on March 1, 2021.

The Trust operates pursuant to the Second Amended and Restated Trust Agreement dated as of

July 28, 2024 (the “Trust Agreement”).

The purpose of the Trust is to own ETH transferred to the Trust in exchange for

shares issued by the Trust (the “Shares”).

Each Share represents a fractional undivided beneficial interest in and ownership

of the Trust.

The Trust operates pursuant to the Second Amended and Restated Declaration of Trust

and Trust Agreement dated as of July 28, 2024 (the “Trust Agreement”).

The purpose of the Trust is to own ETH transferred

to the Trust in exchange for shares issued by the Trust (the “Shares”).

Each Share represents a fractional undivided

beneficial interest in and ownership of the Trust.

The assets of the Trust consist primarily of ETH held by a third-party custodian.

The Trust is managed and controlled by the sponsor VanEck Digital Assets,

LLC (the “Sponsor”), a Delaware limited liability company.

The Sponsor is a wholly-owned subsidiary of Van Eck Associates

Corporation (“VanEck”).

CSC Delaware Trust Company, a Delaware trust company, is the Delaware trustee of the Trust (the “Trustee”).

Gemini Trust Company, LLC (the “ETH Custodian”) and Coinbase Custody Trust Company, LLC (the “Additional ETH

Custodian”) are the custodians of the Trust who hold all of the Trust’s ethereum on the Trust’s behalf.

Bank and Trust Company (“State Street”) serves as the Trust’s administrator (the “Administrator”), the transfer

agent for the Trust (the “Transfer Agent”) and the cash custodian of the Trust (the “Cash Custodian”).

The Trust is managed and controlled by the sponsor VanEck Digital

Assets, LLC (the “Sponsor”), a Delaware limited liability company.

The Sponsor is a wholly-owned subsidiary of Van

Eck Associates Corporation (“VanEck”).

CSC Delaware Trust Company, a Delaware trust company, is the Delaware trustee

of the Trust (the “Trustee”).

Gemini Trust Company, LLC (the “ETH Custodian”) and Coinbase Custody Trust

Company, LLC (the “Additional ETH Custodian”) are the custodians of the Trust who hold all of the Trust’s ethereum

on the Trust’s behalf.

State Street Bank and Trust Company (“State Street”) serves as the Trust’s administrator

(the “Administrator”), the transfer agent for the Trust (the “Transfer Agent”) and the cash custodian of

the Trust (the “Cash Custodian”).

On May 20, 2024, Van Eck Associates Corporation (“VanEck”

or 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.

or 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 June 25, 2024, the Seed Shares were redeemed for cash and the Seed Capital Investor

purchased the “Seed Creation Baskets,” comprising of 200,000 Shares at a per-Share price of $50.00.

Total proceeds to the

Trust from the sale of the Seed Creation Baskets were $10,000,000, which resulted in the Trust receiving 2,929.06 ETH.

the Seed Creation Baskets was made on June 26, 2024.

proceeds to the Trust from the sale of the Seed Shares were $100,000.

On June 25, 2024, the Seed Shares were redeemed for cash

and the Seed Capital Investor purchased the “Seed Creation Baskets,” comprising of 200,000 Shares at a per-Share price

Total proceeds to the Trust from the sale of the Seed Creation Baskets were $10,000,000, which resulted in the Trust

receiving 2,929.06 ETH.

Delivery of the Seed Creation Baskets was made on June 26, 2024.

The Trust’s net asset value (“NAV”) was $157,578,941

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Outstanding Shares of the Trust were 3,625,000 at December 31, 2025.

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 activities of the Trust include (i) selling Shares in blocks of

25,000 Shares (“Baskets”) to financial firms that are registered broker-dealers (“Authorized Participants” or

“APs”) in exchange for cash to purchase ETH;

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 activities of the Trust include (i) selling Shares in blocks

of 25,000 Shares (“Baskets”) to financial firms that are registered broker-dealers (“Authorized Participants”

or “APs”) in exchange for cash to purchase ETH;

(ii) selling ETH to distribute cash to Authorized Participants redeeming

(iii) purchasing ETH represented by the Basket being created;

and (iv) selling ETH to distribute cash to Authorized

Participants redeeming Shares or to pay the Sponsor’s Fee and Trust expenses not assumed by the Sponsor, if any.

The Trust sells or redeems its Shares in Baskets that are

based on the amount of ETH represented by the Basket being created, the amount of ETH being equal to the combined NAV of the

number of Shares included in the 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

Authorized Participants deliver cash to create Baskets and will receive only cash when redeeming Shares.

and (iv) selling ETH to distribute cash to Authorized Participants

redeeming Shares or to pay the Sponsor’s Fee and Trust expenses not assumed by the Sponsor, if any.

The Trust sells or redeems its Shares in Baskets that are based on

the amount of ETH represented by the Basket being created, the amount of ETH being equal to the combined NAV of the number of Shares

included in the 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 conducts subscriptions and redemptions in cash or in-kind.

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 Basket being created, as calculated

by the Administrator based on the Index or the other valuation policies described in the prospectus relating to the offering of

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 in connection with

such cash creation (such third party, a “Liquidity Provider”).

For a redemption in cash, the Sponsor shall arrange

for the ETH represented by the Basket to be sold to a Liquidity Provider selected by the Sponsor and the cash proceeds to be distributed

from the Trust’s account at the Cash Custodian to the Authorized Participant in exchange for their Shares.

For an “in-kind”

subscription, Authorized Participants will deliver, or arrange for the delivery by the Authorized Participant’s designee

of, ETH to the Trust’s Custody Account with the ETH Custodian in exchange for Shares when they purchase Shares.

For an “in-kind”

redemption transaction with the Trust, when Authorized Participants redeem Shares, the Trust through the ETH Custodian, will deliver

ETH to such Authorized Participants, or a designee thereof, in exchange for their Shares.

The Sponsor of the Trust maintains a website at https://www.vaneck.com/us/en/investments/ethereum-trust-ETHV/,

through which the Trust’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments

to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange

Act”), are made

available free of charge after they have been filed or furnished

to the Securities and Exchange Commission (the “SEC”).

The information on the Trust’s website is not, and shall not

be deemed to be, part of this report or incorporated into any other filings we make with the SEC.

Additional information regarding the

Trust may also be found on the SEC’s EDGAR database at www.sec.gov.

to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the

“Exchange Act”), are made available free of charge after they have been filed or furnished to the Securities and Exchange

Commission (the “SEC”).

The information on the Trust’s website is not, and shall not be deemed to be, part of

this report or incorporated into any other filings we make with the SEC.

Additional information regarding the Trust may also be

found on the SEC’s EDGAR database at www.sec.gov.

Trust Objective

The Trust’s investment objective is to reflect the

performance of the price of ETH less the expenses of the Trust’s operations.

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 earning it as a reward for performing

validation services.

The Sponsor believes that the design of the Trust enables 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.

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’s investment objective is to reflect the performance

of the price of ETH less the expenses of the Trust’s operations.

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 earning it as a reward for performing validation services.

The Sponsor believes that the design of the Trust enables 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.

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 Shares are listed for trading on the Cboe BZX Exchange, Inc.

“Exchange”) under the ticker symbol “ETHV.”

(the “Exchange”) under the ticker symbol “ETHV.”

Overview of the Ethereum Industry

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The supply of ETH is not determined by a central government, but

rather by an open-source software program that governs the rate at which new ETH

is released into the network.

The responsibility for maintaining the official ledger of who owns what ETH and for validating new

ETH transactions is not entrusted to any single central entity.

rather by an open-source software program that governs the rate at which new ETH is released into the network.

The responsibility

for maintaining the official ledger of who owns what ETH and for validating new ETH transactions is not entrusted to any single

central entity.

Instead, it is distributed among the network’s participants.

There is no hard cap which would limit the number of outstanding ethereum at any one time to a predetermined maximum.

There is no hard cap which would limit the number

of outstanding ethereum at any one time to a predetermined maximum.

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.

Validators authenticate and bundle ETH transactions

sequentially into files called “blocks,” which requires performing computational work to solve a cryptographic puzzle set

by the Ethereum network’s software protocol.

Because each solved block contains a reference to the previous block, they form a chronological

“chain” back to the first ETH transaction.

Copies of the Ethereum Blockchain are stored in a decentralized manner on

the computers of each individual Ethereum network full node, i.e., any user who chooses to maintain on their computer a full copy of the

Ethereum Blockchain as well as related software.

Each ETH is associated with a set of unique cryptographic “keys,” in

the form of a string of numbers and letters, which allow whoever is in possession of the private key to assign that ETH in a transfer

that the Ethereum network will recognize.

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.

Validators authenticate and bundle ETH

transactions sequentially into files called “blocks,” which requires performing computational work to solve a cryptographic

puzzle set by the Ethereum network’s software protocol.

Because each solved block contains a reference to the previous block,

they form a chronological “chain” back to the first ETH transaction.

Copies of the Ethereum Blockchain are stored in

a decentralized manner on the computers of each individual Ethereum network full node, i.e., any user who chooses to maintain on

their computer a full copy of the Ethereum Blockchain as well as related software.

Each ETH is associated with a set of unique

cryptographic “keys,” in the form of a string of numbers and letters, which allow whoever is in possession of the private

key to assign that ETH in a transfer that the Ethereum network will recognize.

ETH must either be acquired through the process of participating

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institutional over-the-counter (“OTC”) market.

transactions may be difficult to arrange, and involve complex and potentially risky procedures around safekeeping, transferring and holding

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

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The value of ETH within the market is determined,

in part, by the supply of and demand for ethereum in the global ETH market, market expectations for the adoption of ETH as a

store of value, the number of merchants that accept ethereum as a form of payment, and the volume of peer-to-peer transactions, among

in part, by the supply of and demand for ethereum in the global ETH market, market expectations for the adoption of ETH as a store

of value, the number of merchants that accept ethereum as a form of payment, and the volume of peer-to-peer transactions, among

other factors.

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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 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.

market has no formal structure and no open-outcry meeting place.

Parties engaging in OTC transactions will agree upon a price and then

one of the two parties will then initiate the transaction.

Although ETH was among the first digital

assets, in the ensuing years, the number of digital assets, market participants and companies in the space has increased

dramatically.

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 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

The OTC market has no formal structure and no open-outcry meeting place.

Parties engaging in OTC transactions will agree

upon a price and then one of the two parties will then initiate the transaction.

Although ETH was among the first digital assets,

in the ensuing years, the number of digital assets, market participants and companies in the space has increased dramatically.

In addition to ETH, other well-known digital assets include, among others, Bitcoin, XRP, Solana, Avalanche, Cardano, Cash, and

The category and protocols are still being defined and evolving.

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 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.

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 an 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.

February 28, 2025, the price of ETH has increased to $2,215.

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.

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 February 28, 2025 using

data reported by MarketVector from December 31, 2022 to February 28, 2025:

Ethereum Exchanges included in the MarketVector TM

Ethereum Benchmark Rate

The most common means of determining the value of an

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.

As of February

(in thousands of USD)

The market share for ETH/USD trading of the five

constituent trading platforms over the past four calendar quarters is shown in the table below:

27, 2026, the price of ETH has decreased to $1,922.54.

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.

The Trust and the Sponsor face competition with respect to the creation

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that the Trust will grow to or maintain an economically viable size.

In addition, commercial banks and other financial institutions

have a number of initiatives that incorporate new technologies, including blockchain and similar technologies, into their payments

and settlement activities, which could compete with, or reduce the demand for, ETH.

The Trust competes with direct investments in

ETH, other cryptocurrencies, futures contracts for ETH (“ETH Futures”), and other potential financial vehicles,

including securities backed by or linked to cryptocurrency and other investment vehicles that focus on other digital assets,

including other exchange-traded ETH products.

The MarketVector TM Ethereum Benchmark Rate

MarketVector is the index sponsor and index administrator for the Index.

In addition, commercial banks and other financial institutions have

a number of initiatives that incorporate new technologies, including blockchain and similar technologies, into their payments and

settlement activities, which could compete with, or reduce the demand for, ETH.

The Trust competes with direct investments in ETH,

other cryptocurrencies, futures contracts for ETH (“ETH Futures”), and other potential financial vehicles, including

securities backed by or linked to cryptocurrency and other investment vehicles that focus on other digital assets, including other

exchange-traded ETH products.

The MarketVector Ethereum Benchmark Rate

MarketVector is the index sponsor and index administrator for the

MarketVector TM Ethereum Benchmark Rate (“MarketVector 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.

MarketVector is the calculation agent for the MarketVector Ethereum Benchmark

Rate and an affiliate of VanEck.

The MarketVector 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 Central European Time (“CET”)

and the Index values are disseminated to data vendors.

The Index is calculated daily between 00:00 and 24:00 (ET) 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 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 Ethereum Benchmark Rate is designed to be

a robust price for ETH in U.S.

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.

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 TM Ethereum

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 TM Ethereum Benchmark

Rate is rebalanced at 16:00:00 GMT/BST on the last business day of each of February and August.

The current constituent trading platforms

of the MarketVector TM Ethereum Benchmark Rate are Bitstamp, Bullish, Coinbase, Gemini, and Kraken.

The underlying trading platforms are sourced

from the industry leading BITA Exchange Ranking report, which is issued by BITA GmbH.

BITA GmbH (“BITA”) is a Germany-based

fintech company that provides enterprise-grade indexes, data and infrastructure to institutions operating in the passive and quantitative

investment spaces.

Active in the digital asset industry since 2018, BITA GmbH provides crypto calculation, index administration and infrastructure

solutions to financial institutions globally.

BITA reviews various trading exchanges and analyzes such exchanges to determine whether

the exchanges should be approved as a data source (approved exchanges are referred to by BITA as “whitelisted”).

methodology for evaluating exchanges utilizes a combination of qualitative and quantitative metrics to analyze a comprehensive data set,

covering five categories of evaluation.

The categories of evaluation include regulatory stability, liquidity, data quality, technology

and usability.

BITA evaluates each category of each exchange with respect to each different digital asset, with different weights assigned

to each category to arrive at a “total score” for each exchange.

BITA then ascribes a rating to each exchange and determines

the minimum total score for an exchange to be included in each pricing index.

Each qualifying exchange is then ranked by BITA according

to their “total score” to determine their BITA ranking, which determines the weighting of such exchange in the MarketVector Ethereum Benchmark Rate.

The BITA Exchange Ranking 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 BITA Exchange Ranking report, MarketVector initially

selects the top five trading platforms by rank for inclusion in the MarketVector Ethereum 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 June and December at 23:00 CET.

The MarketVector Ethereum Benchmark Rate is rebalanced at

16:00:00 ET on the last trading day of each of May and November.

The current exchange composition of the MarketVector Ethereum Benchmark Rate is Coinbase, Crypto.com, Gemini, Kraken and OKX.

As noted above, the MarketVector 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 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.

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.

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’s NAV is 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.

NAV means the total assets of the Trust which shall consist solely

of ETH and cash, less total liabilities of the Trust.

The Trust’s NAV is 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 Ethereum Benchmark Rate price at 4:00 p.m.

Eastern Time (“ET”).

The Trust’s NAV per Share is calculated by:

The Trust’s NAV per Share is calculated

● taking the current market value of its total assets;

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● dividing that total by the total number of outstanding Shares.

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 calculates the NAV of the Trust

once each Exchange trading day.

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 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.

Trading during the core trading

session on the Exchange typically closes at 4:00 p.m.

However, NAVs are not officially struck until later in the day (often by 5:30

Trading during the

core trading session on the Exchange typically closes at 4:00 p.m.

However, NAVs are not officially struck until later in the

day (often by 5:30 p.m.

ET and generally no later than 8:00 p.m.

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ET and 5:30 p.m.

ET (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 (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 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 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.

ET (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 (e.g., if the MarketVector 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 based on whether certain pre-determined criteria have been met.

For example, if the MarketVector 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.

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

judgements 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.

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 Ethereum Benchmark Rate.

Intraday Indicative Value

The Sponsor, in conjunction with the Administrator, will work

in good faith to determine the fair value and the correct calculation of the Trust’s NAV.In addition, in order to provide updated

The Sponsor, in conjunction with the Administrator, will work in

good faith to determine the fair value and the correct calculation of the Trust’s NAV.

In addition, in order to provide updated

information relating to the Trust for use by Shareholders and market professionals, ICE Data Indices, LLC will calculate and disseminate

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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

ICE Data Indices, LLC will disseminate the IIV value through the facilities of CTA/CQ High Speed Lines.

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 tracks 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 are 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.

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.

ICE Data Indices, LLC 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

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 tracks 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 are 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.

Secondary Market Trading

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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 ETH (or corresponding amount of cash) equal to the number of Shares included in the Baskets being created

or redeemed determined on the day the order to create or redeem Baskets is properly received.

As discussed above, Authorized Participants are the only persons that

may place orders to create and redeem 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 Baskets, and an Authorized Participant is under no obligation to

offer to the public Shares of any Baskets it does create.

by the Trust of the amount of ETH (or corresponding amount of cash) equal to the number of Shares included in the Baskets being

created or redeemed determined on the day the order to create or redeem Baskets is properly received.

As discussed above, Authorized Participants are the only persons

that may place orders to create and redeem 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 Baskets, and an Authorized Participant

is under no obligation to offer to the public Shares of any Baskets it does create.

Authorized Participants that do offer to the public Shares from the

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 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.

Baskets are generally redeemed when the price per Share is at a discount to the NAV per Share.

initially comprising the same Basket but offered by Authorized Participants to the public at different times may have different offering

An order for one or more Baskets may be placed by an Authorized Participant on behalf of multiple clients.

Authorized Participants

who make deposits with the Trust in exchange for 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.

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 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.

Baskets are generally redeemed when the price per Share is at a discount to the NAV per

Shares initially comprising the same Basket but offered by Authorized Participants to the public at different times may

have different offering prices.

An order for one or more Baskets may be placed by an Authorized Participant on behalf of multiple

Authorized Participants who make deposits with the Trust in exchange for 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.

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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.

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.

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.

Sponsor has developed a marketing plan for the Trust, prepares marketing materials regarding the Shares of the Trust, and exercises 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, Additional ETH Custodian and Marketing Agent (as defined below),

The Sponsor has developed a marketing plan for the Trust, prepares marketing materials regarding the Shares of the Trust, and exercises

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, Additional ETH Custodian and Marketing Agent (as defined below),

as well as any additional, replacement, or successor service providers.

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State Street acts as custodian for the Trust’s cash.

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 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

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 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.

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 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.

The Ethereum Custodian

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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 agreement which establishes the rights and responsibilities

the ETH Custodian, the Sponsor and the Trust with respect to the custody of the Trust’s ethereum (the “Custody Agreement”).

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 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 (the “Custody

The ETH Custodian has its principal office at 315 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 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 Fiat Account in one or more omnibus accounts for the benefit of the ETH Custodian’s

customers at depository institutions or money market funds.

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 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 Fiat Account in one or more omnibus accounts for the benefit of the ETH Custodian’s customers

at depository institutions or money market funds.

The Sponsor may, in its sole discretion, add or terminate other ETH

The Sponsor has executed an agreement with Coinbase Custody Trust Company (“Coinbase Custody”) that allows Coinbase

Custody to serve as an additional custodian for the Trust’s assets.

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 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.

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

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.

The Sponsor has executed an agreement with Coinbase Custody Trust Company (“Coinbase Custody”) that allows

Coinbase Custody to serve as an additional custodian for the Trust’s assets.

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 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.

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.

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.

The ETH Custodian will use segregated cold storage ETH addresses

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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.

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

1 unchanged sentence

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 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”) in connection with the Trust’s creation and redemption

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 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”) 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

ethereum 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”).

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”).

The Additional ETH Custodian

Coinbase Custody Trust Company, LLC, serves as the Trust’s Additional

ETH Custodian and 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 Investment Advisers Act of 1940, as amended.

The Additional ETH Custodian is authorized to serve as the Trust’s custodian

under the Trust Agreement and pursuant to the terms and provisions of the Additional ETH Custody Agreement.

The Additional ETH

Custodian has its principal address at 55 Hudson Yards, 550 West 34th Street, 4th Floor, New York, NY 10001.

Coinbase Custody Trust Company, LLC, serves as the Trust’s

Additional ETH Custodian and 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 Investment Advisers Act of 1940, as amended.

The Additional ETH Custodian is authorized to serve

as the Trust’s custodian under the Trust Agreement and pursuant to the terms and provisions of the Additional ETH Custody

The Additional ETH Custodian has its principal address at 55 Hudson Yards, 550 West 34th Street, 4th Floor, New York,

The Additional ETH Custodian makes available to the Trust a custodial

account for ETH maintained by the Additional ETH Custodian (the “Additional ETH Account”).

The Additional ETH

Custodian’s services in respect of the Additional ETH Account (i) allow all or a portion of the Trust’s ETH allocated

to the vault balance (the “Additional ETH Vault Balance”) to be held in the Additional ETH Account, (ii) allow ETH

to be deposited from a public blockchain address to the Trust’s Additional ETH Account, (iii) allow ETH to be withdrawn

from the Additional ETH Account to a public blockchain address as instructed by the Trust and (iv) certain additional services as

may be agreed to between the Trust and the Additional ETH Custodian from time to time.

The Trustee, a Delaware trust company, acts as the trustee of the Trust

for the purpose of creating a Delaware statutory trust in accordance with the Delaware Statutory Trust Act (“DSTA”).

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.

The Additional ETH Custodian’s

services in respect of the Additional ETH Account (i) allow all or a portion of the Trust’s ETH allocated to the vault balance

(the “Additional ETH Vault Balance”) to be held in the Additional ETH Account, (ii) allow ETH to be deposited from

a public blockchain address to the Trust’s Additional ETH Account, (iii) allow ETH to be withdrawn from the Additional ETH

Account to a public blockchain address as instructed by the Trust and (iv) certain additional services as may be agreed to between

the Trust and the Additional ETH Custodian from time to time.

The Trustee, a Delaware trust company, acts as the trustee of the

Trust for the purpose of creating a Delaware statutory trust in accordance with the Delaware Statutory Trust Act (“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.

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

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 the 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.

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 the 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

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.

The Administrator

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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, maintaining the books

of account of the Trust, including calculating the NAV of the Trust and disseminating the NAV and other information for accounting data

or any information pertaining to the books and records maintained by the Administrator.

In addition, the Administrator makes available

the office space, equipment, personnel and facilities required to provide such services.

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, maintaining

the books of account of the Trust, including calculating the NAV of the Trust and disseminating the NAV and other information for

accounting data or any information pertaining to the books and records maintained by the Administrator.

In addition, the Administrator

makes available the office space, equipment, personnel and facilities required to provide such services.

The Administrator also

facilitates 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.

facilitates 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.

The Transfer Agent

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and (4) makes periodic reports to the Trust.

The Trust’s Transfer Agent facilitates the settlement

of Shares in response to the placement of creation orders and redemption orders from Authorized Participants.

The Trust’s Transfer Agent facilitates the

settlement of Shares in response to the placement of creation orders and redemption orders from Authorized Participants.

The Marketing Agent

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and redemption orders of Baskets placed by Authorized Participants with the Administrator;

(2) providing assistance in the marketing of

(3) reviewing and approving the marketing materials prepared by the Sponsor for compliance with applicable SEC and the Financial

Industry Regulatory Authority (“FINRA”) advertising laws, rules and regulations;

and (4) maintaining a public website on behalf

of the Trust, containing information about the Trust and the Shares.

(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

the Financial Industry Regulatory Authority (“FINRA”) 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 Trust’s Fees and Expenses

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Fee”) of 0.20% of average daily net assets that accrues daily and pays monthly.

Effective for the period from July 23, 2024

through July 22, 2025, the Sponsor has agreed to waive the entire Sponsor Fee for the first $1.5 billion of the Trust’s net assets.

If the Trust’s net assets exceed $1.5 billion prior to July 22, 2025, the Sponsor Fee charged on net assets over $1.5 billion will

be 0.20% of average daily net assets.

All investors will incur the same Sponsor Fee which is the weighted average of those fee

After July 22, 2025, the Sponsor Fee will be 0.20% of average daily net assets.

The Sponsor Fee is paid by the Trust to the

Sponsor as compensation for services performed under the Trust Agreement.

The Administrator makes 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 accrues in U.S.

is payable monthly in arrears in ETH on, or by, the tenth business day of the next month in respect of the prior month.

month, the Administrator calculates the Sponsor Fee for each day of the month, resulting in a cumulative total in U.S.

which the Administrator then calculates 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

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

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.

Furthermore, the Sponsor may, in its sole discretion, agree to

rebate all or a portion of the Sponsor Fee attributable to Shares held by certain investors subject to certain minimum Share holding and

lock up requirements as determined by the Sponsor to foster stability in the Trust’s asset levels.

Any such rebate will be subject

to negotiation and agreement between the Sponsor and the investor on a case-by-case basis.

The Sponsor is under no obligation to provide

any rebates of the Sponsor Fee.

Neither the Trust nor the Trustee will be a party to any Sponsor Fee rebate

arrangements negotiated by

Any Sponsor Fee rebate will be paid from the funds of the Sponsor and not from the assets of the Trust.

For the period from July 23, 2024 through July

22, 2025, the Sponsor waived the entire Sponsor Fee for the first $1.5 billion of the Trust’s net assets.

The Sponsor Fee is

paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement.

The Administrator makes 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

accrues in U.S.

dollars daily and is 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 calculates the Sponsor Fee for each day of the month, resulting in a

cumulative total in U.S.

dollars, which the Administrator then calculates 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

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).

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.

In addition, the Sponsor may,

at its sole discretion, and from time to time, waive all or a portion of the Sponsor Fee for stated periods of time.

is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during

any period not covered by the waiver.

In the future, if the Sponsor decides to waive all or a portion of the Sponsor Fee, Shareholders

will be notified in a prospectus supplement, in the Trust’s periodic Exchange Act reports and/or on the Trust’s website.

Creation and Redemption of Shares

The Trust creates and redeems Shares from time to time, but only in

one or more Baskets.

The Trust creates and redeems Shares from time to time, but only

in one or more Baskets.

Baskets are only made in exchange for delivery to the Trust of the amount of ETH represented by the Baskets

being created (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”)), 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 Baskets being created determined as of 4:00 p.m.

day the order to create Baskets is properly received.

Baskets are only redeemed in exchange for delivery to the Trust of the amount of

Shares represented by the 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 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

The Liquidity Providers as of the date of this Report, that have agreed to serve as a Liquidity Provider and have consented

to be named in the Trust’s registration statement are Virtu Financial Singapore Pte., JSCT, LLC, Nonco LLC and Cumberland New York

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 Baskets, the Sponsor does not believe

such size will have a material impact on the arbitrage mechanism.

being created, or an amount of cash sufficient to purchase such amount of ETH, the amount of which is equal to the combined NAV

of the number of Shares included in the Baskets being created determined as of 4:00 p.m.

ET on the day the order to create Baskets

is properly received.

Baskets are only redeemed in exchange for delivery to the Trust of the amount of Shares represented by the

The Authorized Participants will deliver cash or ETH to create Shares and will receive cash or ETH when redeeming Shares.

For a redemption in cash, the Sponsor shall arrange for the ETH represented by the Basket to be sold to a Liquidity Provider selected

by the Sponsor and the cash proceeds to be distributed from the Trust’s account at the

Cash Custodian to the Authorized Participant.

The Liquidity Providers as of the date of this Report, that have agreed to serve as a Liquidity Provider and have consented to

be named in the Trust’s registration statement are Nonco LLC, Virtu Financial Singapore Pte., JSCT, LLC and Cumberland DRW

LLC Additional Liquidity Providers may be added at any time, subject to the Sponsor’s sole discretion.

For an “in-kind”

subscription, Authorized Participants will deliver, or arrange for the delivery by the Authorized Participant’s designee

of, ETH to the Trust’s account with the ETH Custodian in exchange for Shares when they purchase Shares.

For an “in-kind”

redemption transaction with the Trust, when Authorized Participants redeem Shares, the Trust through the ETH Custodian, will deliver

ETH to such Authorized Participants, or a designee thereof, in exchange for their Shares.

Authorized Participants

Authorized Participants are the only persons that may place orders to

create and redeem 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) participants in the Depository Trust Company (“DTC”) such as banks, brokers, dealers and trust companies (“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 ethereum, 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 agreement

with the Sponsor and the Trustee that provides the procedures for the creation and redemption of Baskets (the “Authorized Participant

The Authorized Participant Agreement provides the procedures for the creation and redemption of 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 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 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 has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale

Authorized Participants are the only persons that may place orders

to create and redeem 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) participants in the Depository Trust Company (“DTC”) such as banks, brokers, dealers and trust

companies (“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.

On May 15, 2025, the SEC and FINRA withdrew their 2019 joint statement regarding broker-dealer custody of crypto

asset securities, which was widely perceived as prohibiting broker-dealers from offering custodial services for crypto assets that

are not securities.

Additionally, on the same day, the SEC released a set of Frequently Asked Questions (FAQs) clarifying its views

on broker-dealers’ crypto asset activities.

The FAQs stated that (i) SEC Rule 15c3-3 applies only to crypto asset securities,

and (ii) broker-dealers are permitted to facilitate in-kind creations and redemptions in connection with spot crypto exchange-traded

To become an Authorized Participant, a person must enter into an

agreement with the Sponsor and the Trustee that provides the procedures for the creation and redemption of Baskets (the “Authorized

Participant Agreement”).

The Authorized Participant Agreement provides the procedures for the creation and redemption of

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 Baskets.

The transaction fee may be reduced, increased or otherwise changed by

Authorized Participants who make deposits (directly in the case of cash creations and indirectly in the case of ETH

deposits) with the Trust in exchange for 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 is 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 qualified to act as a broker or dealer in the states or other jurisdictions where the nature of its business

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.

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 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.

As of the date of this Report, the Authorized Participants that have

consented to be named in the Trust’s registration statement are Jane Street Capital, LLC, Virtu Americas LLC, Macquarie Capital

Inc., and ABN

AMRO Clearing USA LLC.

Additional Authorized Participants may be added

at any time, subject to the Sponsor’s discretion.

The following description of the procedures for the creation and redemption

of 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 incorporated by reference

to this Report.

Inc., and ABN AMRO Clearing USA LLC.

Additional Authorized Participants may be added at any time, subject to the Sponsor’s

The following description of the procedures for the creation and

redemption of 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

incorporated by reference to this Report.

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 ethereum.

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 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.

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.

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 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.

Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of volatility in the price

In addition, the use of cash creations and redemptions has transaction

2 unchanged sentences

involved in calculating, executing, monitoring, and accounting for transactions in the ETH markets and related cash movements.

Trust’s Authorized Participant Agreement provides that transaction costs and slippage related to 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 ethereum 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.

The Trust’s Authorized Participant Agreement provides that transaction costs and slippage related to 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 ethereum 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 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

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”).

On any business day, an Authorized Participant may place an order

with the Transfer Agent to create one or more Baskets.

Currently, creation orders are accepted in cash or in-kind.

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.

ET 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.

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 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 Basket.

Authorized Participants may not withdraw a creation request.

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.

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 Basket.

Authorized Participants may not withdraw a creation

The manner by which creations are made is dictated by the terms of the Authorized Participant Agreement.

creation order, an Authorized Participant agrees to facilitate the deposit of cash with the Cash Custodian or ETH with the ETH

If an Authorized Participant fails to consummate the foregoing, the order will be cancelled.

The total deposit of cash required to create each 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, 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 total deposit required to create each Basket (“Basket Deposit”),

with the purchased ETH to be delivered by the Liquidity Provider 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”) 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

For a cash creation, the total deposit of cash required to create

each 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 total deposit required to create each Basket (“Basket Deposit”) (the calculation of which is explained

below), with the purchased ETH to be delivered by the Liquidity Provider 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”) in exchange for a cash price to be delivered by the Trust on Creation Settlement

The Liquidity Provider, not the Authorized Participant, shall be responsible for delivering ETH to the Trust.

The Authorized

Participant shall be responsible for delivering cash to the Trust.

For an in-kind creation, following an Authorized Participant’s

placement of a 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 in the case of cash deposits, 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.

If the Authorized

Participant or its designee fails to consummate the foregoing, the order shall be cancelled.

Upon receipt of the ETH deposit

amount in the Trust’s ETH Custodian account, in the case of in-kind creations, or the cash deposit amount in the Trust’s

Cash Custodian account, in the case of cash creations, the Trust will notify the Transfer Agent to release the shares to the Authorized

Participant by directing 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 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 ETH network, such ETH will not be held in cold storage in until

such transfers can occur.

Ethereum held in the Trust’s ETH Custodian account is the

property of the Trust and is not leased, or loaned under any circumstances.

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 cash purchase

order as of a specified time on the settlement date, the Authorized Participant will 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.

Ethereum 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.

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 ethereum constituting estimated accrued but unpaid fees and expenses of the

Trust as of the opening of business on that trade date.

Fractions of an ETH smaller than 0.000001 are disregarded for purposes of

the computation of the 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 Basket Deposit, which is the number of ETH attributable

to each 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

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.

For the purposes of the computation of the Basket Deposit, the ETH

quantity is displayed to the hundred millionth.

Second, this figure, in ETH, is divided by the quotient of the number of Shares

outstanding at the opening of business on the trade date divided by 25,000.

This produces the Basket Deposit, which is the number

of ETH attributable to each Basket as of the opening of business on the 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 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.

also publishes the Basket Deposit determined by the Administrator as indicated above.

By the end of day ET (or such other time as the parties may agree) on

the trade date for an order for the purchase of Baskets of the Trust, the Administrator will calculate and transmit the (1) the Basket

Cash Component, (2) an amount of cash sufficient to pay any applicable 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 (the “Cash

Amount”), and (3) any amount by which the actual cash purchase price of the ETH from the Liquidity Provider exceeds the adjusted

Basket Cash Component (“Purchase Slippage”), to the Authorized Participant (collectively, the 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 ETH in cleared, immediately

available funds by 1:00 p.m.

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.

The 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 Basket Deposit determined by the Administrator as indicated above.

In the case of cash creation only, by the end of day ET (or such

other time as the parties may agree) on the trade date for a purchase order, the Administrator will calculate and transmit the

(1) the Basket Cash Component, (2) an amount of cash sufficient to pay any applicable 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 (the “Cash Amount”), and (3) any amount by which the actual cash purchase price of the ETH from the Liquidity

Provider exceeds the adjusted Basket Cash Component (“Purchase Slippage”), to the Authorized Participant (collectively,

the 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 ETH in cleared, immediately available funds by 1:00 p.m.

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.

In the case of an in-kind creation only, 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 Creation Basket Deposit, to the Authorized Participant, which the Authorized Participant shall be responsible for delivering

in ETH on Creation Settlement Date to the Trust’s Custodian Account.

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 Report.

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 ethereum 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

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.

For a cash creation, on the Creation Settlement Date, the Authorized

Participant who places a purchase order must follow the procedures outlined in the “Creation Procedures” section of

In the case of a cash creation only, 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 shall instruct the Transfer Agent to release the

Shares to the Authorized Participant, and the Transfer Agent shall direct DTC to credit the number of Shares ordered to the applicable

DTC account, by 1:00 p.m.

Eastern time 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

For an in-kind creation, on the Creation Settlement Date, the Authorized

Participant or its designee shall deposit the amount of ETH specified in the Creation Basket Deposit in the Trust’s account

at the ETH Custodian by 1:00 p.m.

Eastern time.

Upon settlement by the ETH Custodian, the Trust shall instruct the Transfer Agent

to release the Shares to the Authorized Participant, and the Transfer Agent shall direct 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 shall be settled.

the ETH deposit transaction between the Trust and the Authorized Participant or its designee fails to settle, the Authorized Participant

shall have the option to cancel the Creation Order, in which case the Trust will return the Creation Basket Deposit 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 providing any Basket Cash Component,

plus any Purchase Slippage and Cash Amount, relating to such alternative execution method.

The expense and risk of delivery and

ownership of ETH until such ETH has been credited to the Trust’s Custody Account by the ETH 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 Basket Deposit if the Sponsor determines that:

The Sponsor or its designee has the absolute right, but does not

have any obligation, to reject any purchase order or Basket Deposit if the Sponsor determines that:

● the purchase order or Basket Deposit is not in proper form;

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Redemption Procedures

The procedures by which an Authorized Participant can redeem one or

more Baskets mirror the procedures for the creation of 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 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.

The procedures by which an Authorized Participant can redeem one

or more Baskets mirror the procedures for the creation of 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 processed in cash or ETH.

On any business

day, an Authorized Participant may place an order with the Transfer Agent to redeem one or more 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.

ET 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 business day on which any order redeeming Baskets of the Trust

is placed (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 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

A redemption order will be effective

on the date it is received by the Transfer Agent (“Redemption Order Date”).

For a cash redemption, 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 Basket Deposit out of the Trust’s account at the ETH Custodian

into the Trust’s Clearing Account.

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 Report, that

have agreed to serve as a Liquidity Provider and have consented to be named in the Trust’s registration statement are Virtu Financial

Singapore Pte., JSCT, LLC, Nonco LLC and Cumberland New York LLC.

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.

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 the Trust’s registration statement are

Nonco LLC, Virtu Financial Singapore Pte., JSCT, LLC and Cumberland DRW LLC.

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.

For an in-kind redemption transaction with the Trust, on the Redemption

Trade Date, the Trust shall instruct the ETH Custodian to deliver ETH to the Authorized Participant or its designee on the Redemption

Settlement Date.

The Redemption Settlement Date, in the case of an in-kind redemption order, shall be the immediately following

Business Day after the Redemption Trade Date, unless the parties otherwise agree in writing.

The Authorized Participant, or its

designee, shall be responsible for receiving ETH from the Trust in the case of an in-kind redemption order.

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

shall instruct 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 Account is the property

of the Trust and is not leased, or loaned under any circumstances.

ETH held in the Trust’s ETH Account is the property of the

Trust and is not leased, or loaned under any circumstances.

Determination of Redemption Distribution

ET (or such other time as the parties may agree) on the

Redemption Trade Date, the Administrator will calculate and transmit (1) Basket Cash Component, minus (2) the Cash Amount, and minus (3)

any amount by which the actual cash sale price of the ethereum 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 Purchase Slippage, the “Required Cash Redemption Total,”), which the Trust shall be responsible for instructing the Cash

Custodian to deliver in cash on Redemption Settlement Date to the Authorized Participant’s designated bank account.

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.

ET (or such other time as the parties may agree) on

the Redemption Trade Date, in the case of a cash Redemption Order, the Administrator will calculate 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.

Eastern Standard Time (or such other time as the parties

may agree) on Redemption Trade Date, in the case of an in-kind Redemption Order, the Administrator will calculate the Creation

Basket Deposit that the Trust is responsible for delivering in ETH on Redemption Settlement Date to the Authorized Participant’s

or its designee’s account at the ETH Custodian.

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

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 Ethereum Custodian to transfer the cash to the Trust’s Cash Custodian

The Trust then instructs the Transfer Agent to deliver the Authorized Participant’s Shares in the 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 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 Baskets to be redeemed by such time, the redemption distribution will also be delayed.

On the Redemption Settlement Date, in the case of a cash Redemption

Order, the Liquidity Provider shall deliver cash to the Trust’s Fiat Account in exchange for ETH, 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 shall instruct the Ethereum 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 Basket Deposit back to the Trust, in exchange for which the Trust shall instruct the Cash Custodian to transfer the

Required Cash Redemption Total to the Authorized Participant’s designated bank account and the Redemption Order shall be

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 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

Baskets to be redeemed by such time, the redemption distribution will also be delayed.

On the Redemption Settlement Date, in the case of an in-kind Redemption

Order, the Trust shall instruct 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 shall instruct the ETH Custodian to transfer the ETH in the Creation

Basket Deposit to the Authorized Participant’s or its designee’s account at the SOL Custodian and the Redemption Order

shall be settled.

The Trust shall have no obligation to instruct the ETH Custodian to transfer ETH to the Authorized Participant

or its designee unless and until the Trust’s DTC account has been credited with all of the Shares relating to the Creation

Baskets to be redeemed.

the ETH transfer between the Trust’s ETH Custodian Account and the Authorized Participant’s

or its designee’s ETH Custodian account 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 and will not

receive any ETH, or the Sponsor may use an alternative execution method for the Trust to sell ETH, in which case the Authorized

Participant will receive cash, and the Authorized Participant agrees and acknowledges it is responsible for any Redemption Slippage

and Cash Amount relating to such alternative execution method.

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 ethereum 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 ethereum 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 ethereum 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.

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 ethereum 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

ethereum 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 ethereum received from the

Trust upon the redemption of its Shares, had the redemption taken place when such Authorized Participant originally intended it

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

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 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.

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 Basket)

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.

and the Marketing Agent may not revoke a previously accepted redemption order.

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 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 Baskets, an Authorized Participant is required to pay a transaction fee to the Transfer Agent to create

or redeem Baskets, which does not vary in accordance with number of 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.

with the creation and redemption of Baskets, an Authorized Participant is required to pay a transaction fee to the Transfer Agent

to create or redeem Baskets, which does not vary in accordance with number of 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 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.

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 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.

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

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 Internal

Revenue Code of 1986, as amended (“Code”), Treasury Regulations promulgated thereunder and judicial and administrative interpretations

of the Code, all as in effect on the date of this Report 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

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, 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).

The discussion

below is based on the Internal Revenue Code of 1986, as amended (“Code”), Treasury Regulations promulgated thereunder

and judicial and administrative interpretations of the Code, all as in effect on the date of this Report 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, 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

1 unchanged sentence

federal tax law other than U.S.

income tax law) that may apply to an investment in Shares.

Purchasers of Shares are urged to consult their own tax advisers with respect

federal, state, local and foreign tax law considerations potentially applicable to their investment in Shares.

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

For purposes of this discussion, a “U.S.

Shareholder” is

a Shareholder that is for U.S.

is a Shareholder that is for U.S.

federal income tax purposes:

1 unchanged sentence

● 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;

federal income tax purposes) created or organized in or under the

laws of the United States, any state thereof or the District of Columbia;

● an estate, the income of which is includible in gross income for U.S.

federal income tax purposes regardless of its source;

● 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.

● 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

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

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

2 unchanged sentences

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.

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

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 Internal Revenue Service (“IRS”) on that basis.

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

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.

tax purposes If the Trust is properly treated as a grantor trust for U.S.

federal income tax purposes, 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 Internal Revenue Service

(“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

Neither the Sponsor nor the Trustee will request a ruling from the IRS with respect to the classification of the Trust

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 might be classified as a partnership 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 assets 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.

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.

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 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.

Except as otherwise indicated, the remainder of

this discussion assumes the correctness of the opinion of Clifford Chance US LLP, and that the Trust is classified as a grantor

trust for U.S.

federal income tax purposes.

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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.

In the case of a Shareholder that acquires its Shares as part of the creation of a Basket (if In-Kind

Regulatory Approval is obtained), the delivery of ETH to the Trust in exchange for a pro rata share of the underlying ETH represented

by the Shares will not be a taxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the Shareholder’s

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.

In the case of a Shareholder that acquires its Shares as part of the

creation of a Basket, the delivery of ETH to the Trust in exchange for a pro rata share of the underlying ETH represented by the

Shares will not be a taxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the Shareholder’s

pro rata share of the ETH held in the Trust will be the same as its tax basis and holding period for the ETH delivered in exchange

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

ethereum related to such Shares.

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

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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.

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 asset transactions, such as transactions involving

it has made it a priority to issue additional guidance related to the taxation of virtual asset 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

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.

This discussion assumes that any ETH the Trust may hold is properly treated for

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

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

periodically sell ETH in an amount sufficient to pay those expenses

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(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.

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

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.

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.

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.

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.

Shareholder’s tax basis for the ETH received in the in-kind redemption generally will be the same as the Shareholder’s

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.

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.

After any sale or redemption of less than all of a Shareholder’s

1 unchanged sentence

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

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 hold

both the original ETH and the alternative new asset.

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, the Trust Agreement requires that, if such a transaction occurs,

the Trust will as soon as possible, and subject to the Custody Agreement, direct the ETH Custodian to distribute the alternative

new asset in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor will arrange to sell the new alternative asset and for

the proceeds to be distributed to the Shareholders.

The receipt, distribution and/or sale of the new alternative asset may cause Shareholders

to incur a U.S.

If a hard fork occurs in the Ethereum Blockchain, the Trust could

hold both the original ETH and the alternative new asset.

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, the Trust Agreement requires that, if such a transaction

occurs, the Trust will as soon as possible, and subject to the Custody Agreement, direct the ETH Custodian to distribute the alternative

new asset in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor will arrange to sell the new alternative asset

and for the proceeds to be distributed to the Shareholders.

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.

However, the Sponsor has committed to cause the Trust to irrevocably

abandon any rights to acquire, or otherwise establish dominion and control over, any virtual currency or other asset or right, other than

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 (“Incidental Rights”) and any such virtual currency acquired through an Incidental Right

as “IR Virtual Currency” to which the Trust may become entitled in the future.

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.

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.

Sponsor has committed to cause the Trust to irrevocably abandon any 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 (“Incidental Rights”)

and any such virtual currency acquired through an Incidental Right as “IR Virtual Currency” to which the Trust may

become entitled in the future.

There can be no assurance that these abandonments would be treated as effective for U.S.

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.

3.8% Tax on Net Investment Income

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.

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

Shareholders should consult their own tax advisers regarding the effect, if any, this tax may have on their investment

in the Shares.

tax applies to estates and trusts.

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.

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

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.

any brokerage fee incurred by a Shareholder in selling Shares will reduce the amount realized by the Shareholder with respect to

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, which are nondeductible.

Similar rules apply to certain miscellaneous itemized deductions

of estates and trusts.

In addition, deductions may be subject to phase outs and other limitations under applicable provisions of

Investment by Certain Retirement Plans

2 unchanged sentences

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.

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

5 unchanged sentences

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.

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.

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.

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.

Individual U.S.

Shareholders will generally be required to report on

their federal income tax return the receipt, acquisition, sale, or exchange of any financial interest in virtual currency, which includes

a Shareholder’s interest in ethereum held by the Trust.

Shareholders will generally be required to report

on their federal income tax return the receipt, acquisition, sale, or exchange of any financial interest in virtual currency, which

includes a Shareholder’s interest in ethereum held by the Trust.

Taxation in Jurisdictions Other Than the United States

1 unchanged sentence

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.

(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.

SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS BEFORE DECIDING

3 unchanged sentences

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,

and (ii) persons who are fiduciaries with respect to the investment of assets treated as “plan assets”

within the meaning of U.S.

(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.

§ 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

“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.

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;

(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.

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.

1 unchanged sentence

(a) none of the Sponsor, the Trustee, the Ethereum

Custodian, the Additional Ethereum 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.

Custodian, the Additional Ethereum 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business