ETHV 10-Q
VanEck Ethereum ETF (ETHV)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended |
or
| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from_________________to______________________. |
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
c/o VanEck Digital Assets, LLC
Jonathan R. Simon, Esq.
Matthew A. Babinsky, Esq.
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |
| ☒ | Smaller Reporting Company | |||
| Emerging Growth Company |
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VanEck Ethereum ETF
Table of Contents
Part I. FINANCIAL INFORMATION.
Item 1. Unaudited Financial Statements.
VANECK ETHEREUM ETF
Statement of Assets and Liabilities
| March
31, 2025 (Unaudited) | December
31, 2024 | |||||||
| Assets | ||||||||
| Investment in ether, at fair value (cost $ | $ | $ | ||||||
| Total assets | ||||||||
| Liabilities | ||||||||
| Total liabilities | ||||||||
| Net assets | $ | $ | ||||||
| Net Asset Value per Share | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
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VANECK ETHEREUM ETF
Statement of Operations (Unaudited)
| Three Months Ended March 31, 2025(a) | ||||
| Expenses | ||||
| Sponsor fee, related party | $ | |||
| Total expenses | ||||
| Sponsor fee waiver, related party | ( | ) | ||
| Net expenses | ||||
| Net investment loss | ||||
| Net realized loss and change in unrealized appreciation (depreciation) | ||||
| Net realized loss on: | ||||
| Ether sold for redemption of shares | ( | ) | ||
| Net realized loss from investment in ether | ( | ) | ||
| Net change in unrealized appreciation (depreciation) from investment in ether | ( | ) | ||
| Net realized loss and change in unrealized appreciation (depreciation) | ( | ) | ||
| Net decrease in net assets resulting from operations | $ | ( | ) | |
(a)
The accompanying notes are an integral part of these financial statements.
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VANECK ETHEREUM ETF
Statement of Changes in Net Assets (Unaudited)
| Three Months Ended March 31, 2025(a) | ||||
| Net decrease from operations | ||||
| Net investment loss | $ | |||
| Net realized loss from investment in ether | ( | ) | ||
| Change in net unrealized appreciation (depreciation) from investments in ether | ( | ) | ||
| Net decrease in net assets resulting from operations | ( | ) | ||
| Capital Share transactions | ||||
| Contributions for shares issued | ||||
| Withdrawals for shares redeemed | ( | ) | ||
| Total capital share transactions | ||||
| Net decrease in net assets | ( | ) | ||
| Net assets: | ||||
| Beginning of period | ||||
| End of period | $ | |||
(a) No comparative financial statements have been provided as the Trust did not have any operations as of March 31, 2024.
The accompanying notes are an integral part of these financial statements.
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VANECK ETHEREUM ETF
Schedule of Investment
| March 31, 2025 (Unaudited) | Quantity of Ether | Cost | Fair Value | % of Net Assets | ||||||||||||
| Investment in ether | $ | $ | % | |||||||||||||
| Net Assets | $ | % | ||||||||||||||
| December 31, 2024 | Quantity of Ether | Cost | Fair Value | % of Net Assets | ||||||||||||
| Investment in ether | $ | $ | % | |||||||||||||
| Net Assets | $ | % | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
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VANECK ETHEREUM ETF
Notes to Unaudited Financial Statements
March 31, 2025
Note 1. Organization:
The VanEck Ethereum ETF (the “Trust”), a Delaware statutory trust, is an exchange-traded fund that issues common shares of beneficial interest in an ownership of the Trust (the “Shares”). The Shares are traded on the Cboe BZX Exchange, Inc. (the “Exchange”). The Trust’s investment objective is to reflect the performance of the price of ether (“ETH”) less the net operating expenses of the Trust. The Trust is managed and controlled by VanEck Digital Assets, LLC (the “Sponsor”), a wholly-owned subsidiary of Van Eck Associates Corporation (“VanEck”). The CSC Delaware Trust Company is the “Trustee” of the Trust.
Note 2. Significant Accounting Policies:
| A. | |
| B. | |
| C. | |
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VANECK ETHEREUM ETF
Notes to Unaudited Financial Statements (continued)
March 31, 2025
The following is a summary of the fair value hierarchy as of March 31, 2025, and December 31, 2024:
| March 31, 2025 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | |||||||||||||||||
| Investment in ETH | $ | $ | $ | $ | |||||||||||||
| December 31, 2024 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets | |||||||||||||||||
| Investment in ETH | $ | $ | $ | $ | |||||||||||||
The following represents the changes in quantity of ETH and the respective fair value:
| ETH | Fair Value | ||||||||
| Beginning balance as of January 1, 2025 | $ | ||||||||
| ETH contributed | |||||||||
| ETH withdrawn | ( | ) | ( | ) | |||||
| Net change in unrealized appreciation (depreciation) from investment in ETH | ( | ) | |||||||
| Net realized loss on investment in ETH | ( | ) | |||||||
| Ending balance as of March 31, 2025 | $ | ||||||||
| ETH | Fair Value | ||||||||
| Beginning balance as of May 20, 2024(a) | $ | ||||||||
| ETH contributed | |||||||||
| ETH withdrawn | ( | ) | ( | ) | |||||
| Net unrealized appreciation (depreciation) from investment in ETH | |||||||||
| Net realized loss on investment in ETH | ( | ) | |||||||
| Ending balance as of December 31, 2024 | $ | ||||||||
| (a) |
| D. | |
| E. | |
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VANECK ETHEREUM ETF
Notes to Unaudited Financial Statements (continued)
March 31, 2025
| F. | |
| G. | |
| H. | |
Note 3. Trust Expenses and Other Agreements
The Trustee fee is paid by the Sponsor and is not an expense of the Trust.
The Trust holds its ETH at the ETH Custodian and at the Additional ETH Custodian, both of which are regulated third-party custodians that carry insurance (in the case of the Additional ETH Custodian, such insurance is carried by its parent, Coinbase Inc., and is intended to cover the loss of client assets held by Coinbase Inc. and its subsidiaries, including the Additional ETH Custodian) and are responsible for safekeeping of ETH owned by the Trust and holding private keys that provide access to the ETH in the Trust’s ETH account.
State Street Bank and Trust Company serves as the Trust’s administrator, transfer agent and cash custodian.
Note 4. Related Parties
The Sponsor is considered to be a related party to the Trust.
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VANECK ETHEREUM ETF
Notes to Unaudited Financial Statements (continued)
March 31, 2025
MarketVector Indexes GmbH is the index sponsor and index administrator for the MarketVector Ethereum Benchmark Rate, which is used by the Trust to determine its NAV. MarketVector Indexes GmbH is an indirectly wholly-owned subsidiary of VanEck.
Van Eck Securities Corporation, a marketing agent to the Trust, is a wholly-owned subsidiary of VanEck.
VanEck was the initial seed investor (“Seed Capital Investor”)
on May 20, 2024. On June 25, 2024, the
VanEck is a minority interest holder in the parent company of
the ETH Custodian, representing less than
Note 5. Capital Share Transactions
Investors can buy and sell Shares of the Trust in secondary market transactions through brokers. Shares trade on the Exchange under the ticker symbol ETHV. Shares are bought and sold throughout the trading day like other publicly traded securities.
The Trust continuously offers the Trust Shares in baskets consisting
of
The Trust creates and redeems Shares, but only in one or more baskets. Baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of ETH represented by the baskets being created or redeemed, the amount of which is equal to the combined NAV of the number of Shares included in the baskets being created or redeemed determined as of 4:00 p.m. EST on the day the order to create or redeem baskets is properly received. For an order to create baskets, an authorized participant will deliver cash to the Trust’s account at the cash custodian, which the Sponsor will then use to purchase ETH from a liquidity provider chosen by the Sponsor. For an order to redeem baskets, the Sponsor will arrange for the ETH represented by the basket to be sold to a liquidity provider chosen by the Sponsor and the cash proceeds distributed from the Trust’s account at the cash custodian to the authorized participant in exchange for their Shares. Only authorized participants may place orders to create and redeem baskets through the transfer agent. The transfer agent will coordinate with the Trust’s ETH Custodians to facilitate settlement of the Shares and ETH.
Share and capital activity is as follows:
| Three Months Ended March 31, 2025(a) | ||||||||
| Shares | Amount | |||||||
| Beginning of period | $ | |||||||
| Shares issued | ||||||||
| Shares redeemed | ( | ) | ( | ) | ||||
| End of period | $ | |||||||
| (a) |
Note 6. Commitments and Contingent Liabilities
In the normal course of business, the Trust enters into contracts that contain a variety of general indemnifications. The Trust’s maximum exposure under these agreements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, the Sponsor believes the risk of loss under these arrangements to be remote.
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VANECK ETHEREUM ETF
Notes to Unaudited Financial Statements (continued)
March 31, 2025
Note 7. Concentration Risk
Substantially all of the Trust’s assets are holdings of
ETH, which creates a concentration risk associated with fluctuations in the value of ETH due to a number of factors. Accordingly,
a decline in the value of ETH will have an adverse effect on the value of the Shares of the Trust. Factors that may have the effect
of causing a decline in the value of ETH include high volatility, which could have a negative impact on the performance of the
Trust. ETH platforms are relatively new and may be unregulated or may be subject to regulation in a relevant jurisdiction, but
may not be complying, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for
other financial assets or instruments, which could have a negative impact on the performance of the Trust. The value of the Shares
depends on the development and acceptance of the ethereum network. The slowing or stopping of the development or acceptance of
the ethereum network may adversely affect an investment in the Trust. The price of ETH on the ETH market has exhibited periods
of extreme volatility. Digital assets such as ETH were only introduced within the past decade, and the medium-to-long term value
of the Shares is subject to a number of factors relating to the capabilities and development of block-chain technologies and to
the fundamental investment characteristics of digital assets that are uncertain and difficult to evaluate. The Trust is subject
to risks due to its concentration of investments in a single asset class. Possible illiquid markets may exacerbate losses or increase
the variability between the Trust’s NAV and its market price. The amount of ETH represented by the Shares may decline over
time. ETH with a fair value of $
Future and current regulations by a United States or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust. Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the 1940 Act or the protections afforded by the Commodity Exchange Act. Future legal or regulatory developments may negatively affect the value of ETH or require the Trust or the Sponsor to become registered with the SEC or CFTC, which may cause the Trust to liquidate.
The Exchange on which the Shares are listed may halt trading in the Trust’s Shares, which would adversely impact a Shareholder’s ability to sell Shares. The market infrastructure of the ETH spot market could result in the absence of active authorized participants able to support the trading activity of the Trust.
Shareholders that are not authorized participants may only purchase or sell their Shares in secondary trading markets, and the conditions associated with trading in secondary markets may adversely affect Shareholders’ investment in the Shares.
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VANECK ETHEREUM ETF
Notes to Unaudited Financial Statements (continued)
March 31, 2025
Note 8. Financial Highlights(a)
The financial highlights summarize certain per share operating information and financial ratios of net investment income (loss) and expenses, to daily average net assets for the three months ended March 31, 2025. An individual investor’s return and ratios may vary based on the timing of capital transactions:
| Three Months Ended March 31, 2025 |
||||
| Net asset value per share, beginning of period | $ | |||
| From investment operations: | ||||
| Net investment loss(b) | ||||
| Net realized gain (loss) and change in unrealized appreciation/depreciation from investments in ether(c) | ( | ) | ||
| Net decrease resulting from operations | ( | ) | ||
| Net asset value per share, end of period(d) | $ | |||
| Total return (%)(e) | ( | )% | ||
| Ratios to average net assets(f) | ||||
| Expenses before fee waiver | % | |||
| Expenses after fee waiver | % | |||
| Net investment loss | % | |||
| Portfolio turnover rate(e) | % | |||
| (a) | |
| (b) | |
| (c) | |
| (d) | |
| (e) | |
| (f) |
Note 9. Subsequent Event Review
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This information should be read in conjunction with the financial statements and notes to financial statements included with this report. The discussion and analysis that follows may contain statements that relate to future events or future performance. In some cases, such forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this report that address activities, events or developments that may occur in the future, including such matters as changes in commodity prices and market conditions (for ETH and the Shares), the operations of the Trust, the plans of the Sponsor and references to the Trust’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions is subject to a number of risks and uncertainties, including the special considerations discussed in this report, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Consequently, all the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of the Shares issued by the Trust. Moreover, neither the Sponsor nor any other person assumes responsibility for the accuracy or completeness of the forward-looking statements. Neither the Trust nor the Sponsor undertakes an obligation to publicly update or conform to actual results any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Introduction
The Trust is a Delaware statutory trust. The Trust does not have directors, officers or employees. The creation and operation of the Trust has been arranged by the Sponsor. The Trust is administered by the Trust Agreement, among the Sponsor, the Trustee and the Delaware Trustee. The Trust is managed and controlled by the Sponsor, a wholly-owned subsidiary of VanEck. The Sponsor is not governed by a board of directors.
The Trust’s investment objective is to reflect the performance of the price of ETH less the operating expenses of the Trust. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of ETH. The Trust does not engage in any activities designed to obtain a profit from, or ameliorate losses caused by, changes in the price of ETH.
The Trust issues and redeems Shares only in aggregations of 25,000 Shares, a Basket, or integral multiples thereof, and only in transactions with authorized participants.
Shares of the Trust trade on the Exchange under the ticker symbol “ETHV.”
Computation of Net Asset Value
The Trust’s NAV is calculated based on the Trust’s net asset holdings as reconciled to the ETH Custodians’ accounts on a market approach, determined on a daily basis in accordance with the MarketVectorTM Ethereum Benchmark Rate price at 4:00 p.m. EST. The Trust’s NAV per Share is calculated by taking the current market value of its total assets, subtracting any liabilities, and then 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.
Liquidity
The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs. In exchange for a fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s Fee. The Trust’s only source of liquidity is its sales of ETH.
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Significant Accounting Policies
In preparing financial statements in conformity with GAAP, management makes estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amount of revenue and expenses reported during the period. Actual results could differ from these estimates. A description of the valuation of ETH, a critical accounting policy that the Trust believes is important to understanding its results of operations and financial position, is provided in the section entitled “Computation of Net Asset Value” above. In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s accounting policies.
Results of Operations
The Quarter Ended March 31, 2024
The Trust had no operations for the quarter ended March 31, 2024.
The Quarter Ended March 31, 2025
The Trust’s NAV decreased from $146,428,902 at December 31, 2024 to $84,668,819 at March 31, 2025, a 42.16% decrease. The decrease in the Trust’s net asset value resulted primarily from a decrease in the price of ETH, which contracted 44.91% from $3,333 at December 31, 2024 to $1,836 at March 31, 2025. The number of shares outstanding increased from 3,000,000 Shares at December 31, 2024 to 3,150,000 Shares at March 31, 2025, a net result of 225,000 Shares (9 Baskets) being created and 75,000 Shares (3 Baskets) being redeemed during the period.
The 44.93% decrease in the NAV per Share from $48.81 at December 31, 2024 to $26.88 at March 31, 2025 is directly related to the 44.91% decrease in the price of ETH during this period.
The NAV per Share of $54.06 on January 6, 2025, was the highest during the quarter, compared with a low during the quarter of $26.88 on March 31, 2025.
Net decrease in net assets resulting from operations for the quarter ended March 31, 2025, was $69,510,210 resulting from a net unrealized depreciation on investment in ether of $68,317,443, a net realized loss of $1,192,767 on ETH sold for the redemption of Shares and a net investment loss of $0. The Trust had no expenses during the quarter as they were all waived by the Sponsor.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
The duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, with the participation of the Trustee, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions regarding required disclosure.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.
There were no changes in the Trust’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.
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Part II. OTHER INFORMATION.
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
There have been no material changes to the Risk Factors last reported under Part I, Item 1A of the registrant’s Annual Report on Form 10-K for the period ended December 31, 2024, filed with the Securities and Exchange Commission on March 26, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
a) None.
b) Not applicable.
c) 75,000 Shares (3 Baskets) were redeemed during the period ended March 31, 2025.
| Period | Total Number of Shares Redeemed |
Average Per Share |
||||||
| 01/01/25 to 01/31/25 | - | $ | - | |||||
| 02/01/25 to 02/28/25 | - | - | ||||||
| 03/01/25 to 03/31/25 | 75,000 | 29.43 | ||||||
| Total | 75,000 | $ | 29.43 | |||||
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits.
See the Exhibit Index below, which is incorporated by reference herein.
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EXHIBIT INDEX
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities* indicated thereunto duly authorized.
VANECK DIGITAL ASSETS, LLC
Sponsor of VanEck Ethereum ETF
| By: | /s/ Jan F. van Eck* | |
| Jan F. van Eck | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ John J. Crimmins* | |
| John J. Crimmins | ||
| Vice President, Chief Financial Officer and Treasurer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
Date: May 14, 2025
* The Registrant is a trust and the persons are signing in their capacities as officers of VanEck Digital Assets, LLC., the Sponsor of the Registrant.
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