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iShares Ethereum Trust ETF

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Business Summary

The iShares Ethereum Trust ETF (the "Trust") was established on November 8, 2023, as a Delaware statutory trust, with its primary purpose being to own ether purchased in exchange for its issued shares . Each Share represents a fractional undivided beneficial interest in the net assets of the Trust, which consist primarily of ether held by a custodian . The Trust's net asset value significantly increased from $3,571,262,167 at December 31, 2024, to $10,300,756,520 at December 31, 2025. Concurrently, the outstanding Shares of the Trust grew from 141,480,000 at December 31, 2024, to 458,720,000 at December 31, 2025. The Trust is not actively managed and does not engage in activities to profit from or ameliorate losses caused by changes in ether prices .

The core business model of the Trust involves issuing blocks of 40,000 Shares, known as a "Basket," in exchange for cash deposited with the Cash Custodian . It also sells or delivers ether to cover the Sponsor's Fee, Trust expenses not assumed by the Sponsor, and other liabilities . Additionally, the Trust buys and sells ether through designated third parties, referred to as Ether Trading Counterparties, or via the Prime Execution Agent, in connection with creation and redemption of Baskets . The Trust's objective is to generally reflect the performance of the price of ether before the payment of its expenses and liabilities, offering investors an alternative to direct ether investment by mitigating complexities like managing wallets and private keys .

The Trust's assets are backed by ether held by Coinbase Custody Trust Company, LLC (the "Ether Custodian") in segregated accounts, known as the Vault Balance, which are separate from the custodian's principal assets and other customer assets . A temporary Trading Balance is maintained with Coinbase, Inc. (the "Prime Execution Agent") for limited purposes such as creations, redemptions, and fee payments . The Ether Custodian stores private keys for the Vault Balance in cold storage facilities within the United States and Europe, with no single individual having access to full private keys . The Prime Execution Agent holds customer entitlements in omnibus cold wallets, hot wallets, or accounts on trading venues, with the majority in cold wallets for security . The Bank of New York Mellon serves as the Cash Custodian and Trust Administrator .

The Trust's only ordinary recurring expense is the Sponsor's Fee, accrued daily at an annualized rate of 0.25% of the net asset value of the Trust, payable quarterly in arrears . The Sponsor assumes various administrative and marketing expenses, including fees for the Trustee, Delaware Trustee, Trust Administrator, Custodians, NASDAQ listing fees, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees, and up to $500,000 per annum in ordinary legal fees and expenses . From the initial NASDAQ listing date through July 23, 2025, the Sponsor waived a portion of its fee, resulting in a 0.12% fee for the first $2.5 billion of the Trust's assets . Extraordinary, non-recurring expenses, such as taxes, governmental charges, brokerage commissions, financing fees, Ethereum network fees, and extraordinary legal fees, are borne by the Trust and covered by selling ether .

The Trust creates and redeems Shares continuously in Baskets of 40,000 Shares , exclusively through Authorized Participants who are registered broker-dealers . The Trust conducts ether purchase and sale transactions with Ether Trading Counterparties, currently including Cumberland DRW LLC, Flow Traders B.V., JSCT, LLC, and Virtu Financial Singapore Pte. Ltd., or through the Prime Execution Agent . Authorized Participants deliver cash to create Shares and receive cash when redeeming Shares, without directly handling ether . A standard creation transaction fee, comprising an ETF Servicing Fee and Custody Transaction Costs, is imposed on each purchase order . The Basket Ether Amount and Basket Amount are adjusted daily by the Trust Administrator based on the NAV and the CF Benchmarks Index .

Business Outlook

The filing does not provide specific forward-looking guidance on revenue, margin, or EPS for the upcoming period.

The Trust's growth is inherently tied to the performance and acceptance of ether and the Ethereum network. The filing highlights ongoing developments within the Ethereum network, such as the implementation of software upgrades like the Dencun planned fork on March 13, 2024 , which introduced EIP 4844 to improve Layer 2 economics by reducing transaction fees for batching transactions to the Layer 1 Ethereum network . This upgrade created designated temporary storage space called Binary Large Objects ("blobs") for Layer 2 data on the Layer 1 Ethereum network, expected to be substantially cheaper than permanent storage . The upcoming Fusaka hard fork, scheduled for December 2025 , aims to expand data capacity, reinforce denial-of-service attack defenses, and introduce new tools for developers and users, with a main feature being a new way of handling blob data to further improve Layer 2 data storage on the main Ethereum network . These upgrades are intended to advance scalability and improve the network generally, which could positively impact the adoption of ether and the Ethereum network.

Operationally, the Trust's cost structure is primarily driven by the Sponsor's Fee, which is 0.25% annually, and other Trust expenses not assumed by the Sponsor . The Sponsor has committed to paying ordinary legal fees and expenses up to $500,000 per annum . The Trust's reliance on the Prime Execution Agent and Ether Custodian for its operations, including the daily sweep of ether from the Trading Balance to the Vault Balance, is a key operational aspect . The Prime Execution Agent has represented that it keeps the majority of customer assets in cold wallets for security, while the balance is in hot wallets for rapid withdrawals . The Prime Execution Agent also maintains customer cash in FDIC-insured bank accounts or AAA-rated Money Market Funds, with an overnight sweep of excess cash into U.S. government Money Market Funds .

Planned capital allocation details are not explicitly provided in terms of specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy. However, the Trust's structure indicates that it will sell ether to cover the Sponsor's Fee and other expenses, as it does not generate income .

Management has explicitly flagged several structural headwinds and execution risks. The extreme volatility of ether prices, as evidenced by a 12.2% loss in mid-October 2025 during the "October 2025 Flash Crash," is a significant concern . The digital asset markets are new and rapidly evolving, with the value of Shares dependent on the acceptance of ether . Changes in the governance of the Ethereum network, such as EIPs, may not receive sufficient support from users and validators, potentially affecting the network's growth . Scaling challenges, such as the Ethereum network handling approximately 25 transactions per second as of December 31, 2025 , and the potential for increased transaction fees, could limit ether's utility . The concentration of ether ownership, with large wallets holding a significant percentage of circulating ether, poses a risk of adverse price effects from large sales . The potential for malicious actors to obtain control of more than 33% or 50% of the validating stake on the Ethereum network could lead to manipulation or delays . Liquid staking applications, such as Lido, which at times controlled around or in excess of 33% of total staked ether, also raise centralization concerns .

Geographic, regulatory, or macro factors identified as constraints include the regulatory uncertainty surrounding digital assets in the United States, with ongoing examinations by various federal and state agencies . The 2022 Events, including bankruptcies of major digital asset platforms, have led to calls for heightened scrutiny and regulation . Foreign jurisdictions, such as China, have implemented restrictions on crypto asset trading and mining activities . The enactment of the GENIUS Act on July 18, 2025 , which establishes a federal regulatory framework for payment stablecoins effective July 18, 2028 , could reduce market participants' willingness to engage in stablecoin-reliant digital asset transactions, diminishing ether market liquidity . A determination that ether is a "security" could significantly harm its value and potentially lead to the Trust's termination . The anonymity and illicit financing risks associated with digital assets, as highlighted by OFAC's ban on Tornado Cash and FinCEN's proposed rulemaking on CVC mixing, could lead to reduced support for ether services .

Risk Factors

The Trust faces material risks stemming from the extreme volatility of digital assets, including ether, which has experienced steep price fluctuations, such as a 12.2% decline in mid-October 2025 during the "October 2025 Flash Crash." The digital asset markets operate in a state of regulatory uncertainty, with ongoing scrutiny from U.S. federal and state agencies, and potential adverse legislative or regulatory developments could significantly harm the value of ether or the Shares . For instance, the enactment of the GENIUS Act on July 18, 2025 , effective July 18, 2028 , establishes a federal regulatory framework for payment stablecoins that could diminish liquidity in the ether market . A determination by the SEC or a federal court that ether is a "security" could lead to an immediate material adverse impact on ether's trading value and potentially necessitate the Trust's liquidation . Operational risks include security threats to the Trust's accounts at the Ether Custodian, with the Ether Custodian's aggregate liability generally limited to the greater of $5 million or the aggregate fees paid by the Trust in the preceding 12 months , and up to $100 million per cold storage address . The Prime Execution Agent's liability is similarly capped at the greater of $5 million or aggregate fees paid in the prior 12 months , or the value of affected assets . The Trust's reliance on third-party service providers, such as the Ether Custodian and Prime Execution Agent, exposes it to risks of service disruption or failure, which could impede the Trust's operations or lead to losses . Furthermore, the lack of full insurance coverage for the Trust's ether and limited legal recourse against service providers expose the Trust and its Shareholders to the risk of loss for which no entity is liable .

Management Priorities

Management's message to shareholders emphasizes the Trust's objective to reflect the performance of ether's price, providing a simplified investment avenue without the complexities of direct digital asset ownership. The Sponsor, iShares Delaware Trust Sponsor LLC, a consolidated subsidiary of BlackRock, Inc., is responsible for the oversight and overall management of the Trust, leveraging BlackRock's Enterprise Risk Management framework for cybersecurity risk management. A key strategic priority is maintaining the Trust's passive investment structure, as it does not actively manage ether holdings to capitalize on price fluctuations or employ leverage or derivatives. Management also highlights the importance of the creation and redemption mechanism, facilitated by Authorized Participants and Ether Trading Counterparties, to keep the Share price closely linked to ether's value, despite the use of cash creations and redemptions. The Sponsor has committed to irrevocably abandon any Incidental Rights and IR Digital Assets to which the Trust may become entitled in the future, ensuring the Trust's focus remains solely on ether. The Sponsor also manages the Trust's expenses, assuming most ordinary administrative and marketing costs, including up to $500,000 per annum in ordinary legal fees and expenses, with the Sponsor's Fee set at an annualized rate of 0.25% of the net asset value of the Trust.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Summary
  2. [2] Item 1, Business — Summary
  3. [3] Item 1, Business — Summary
  4. [4] Item 1, Business — Summary
  5. [5] Item 1, Business — Summary
  6. [6] Item 1, Business — Summary
  7. [7] Item 1, Business — Summary
  8. [8] Item 1, Business — Summary
  9. [9] Item 1, Business — Summary
  10. [10] Item 1, Business — Summary
  11. [11] Item 1, Business — Trust Objective
  12. [12] Item 1, Business — Trust Objective
  13. [13] Item 1, Business — Trust Objective
  14. [14] Item 1, Business — Coinbase Custody – The Ether Custodian
  15. [15] Item 1, Business — The Prime Execution Agent and The Trade Credit Lender – The Prime Execution Agent
  16. [16] Item 1, Business — Summary
  17. [17] Item 1, Business — Trust Expenses
  18. [18] Item 1, Business — Trust Expenses
  19. [19] Item 1, Business — Trust Expenses
  20. [20] Item 1, Business — Trust Expenses
  21. [21] Item 1, Business — Trust Expenses
  22. [22] Item 1, Business — Trust Expenses
  23. [23] Item 1, Business — Trust Expenses
  24. [24] Item 1, Business — Trust Expenses
  25. [25] Item 1, Business — Creation and Redemption
  26. [26] Item 1, Business — Creation and Redemption
  27. [27] Item 1, Business — Creation and Redemption
  28. [28] Item 1, Business — Creation and Redemption
  29. [29] Item 1, Business — Issuance of Baskets
  30. [30] Item 1, Business — Issuance of Baskets
  31. [31] Item 1A, Risk Factors — A temporary or permanent “fork” could adversely affect the value of the Shares.
  32. [32] Item 1A, Risk Factors — A temporary or permanent “fork” could adversely affect the value of the Shares.
  33. [33] Item 1A, Risk Factors — A temporary or permanent “fork” could adversely affect the value of the Shares.
  34. [34] Item 1A, Risk Factors — A temporary or permanent “fork” could adversely affect the value of the Shares.
  35. [35] Item 1A, Risk Factors — A temporary or permanent “fork” could adversely affect the value of the Shares.
  36. [36] Item 1, Business — Trust Expenses
  37. [37] Item 1, Business — Trust Expenses
  38. [38] Item 1, Business — Trust Expenses
  39. [39] Item 1, Business — Trust Expenses
  40. [40] Item 1, Business — Issuance of Baskets
  41. [41] Item 1, Business — The Prime Execution Agent and The Trade Credit Lender – The Prime Execution Agent
  42. [42] Item 1, Business — The Prime Execution Agent and The Trade Credit Lender – The Prime Execution Agent
  43. [43] Item 1, Business — Trust Expenses
  44. [44] Item 1A, Risk Factors — The trading prices of many digital assets, including ether, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of ether, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.
  45. [45] Item 1A, Risk Factors — The trading prices of many digital assets, including ether, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of ether, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.
  46. [46] Item 1A, Risk Factors — The trading prices of many digital assets, including ether, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of ether, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.
  47. [47] Item 1A, Risk Factors — Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on the acceptance of ether.
  48. [48] Item 1A, Risk Factors — Changes in the governance of a digital asset network may not receive sufficient support from users and validators, which may negatively affect that digital asset network’s ability to grow and respond to challenges.
  49. [49] Item 1A, Risk Factors — Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful.
  50. [50] Item 1A, Risk Factors — Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful.
  51. [51] Item 1A, Risk Factors — Digital asset networks face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful.
  52. [52] Item 1A, Risk Factors — Digital assets may have concentrated ownership and large sales or distributions by holders of such digital assets could have an adverse effect on the market price of such digital assets.
  53. [53] Item 1A, Risk Factors — If a malicious actor or botnet obtains control of more than 33% of the validating stake on the Ethereum network, or otherwise obtains control over the Ethereum network through its influence over core developers or otherwise, such actor or botnet could delay or manipulate the Ethereum blockchain in the short term, which could adversely affect the value of the Shares or the ability of the Trust to operate.
  54. [54] Item 1A, Risk Factors — If a malicious actor or botnet obtains control of more than 33% of the validating stake on the Ethereum network, or otherwise obtains control over the Ethereum network through its influence over core developers or otherwise, such actor or botnet could delay or manipulate the Ethereum blockchain in the short term, which could adversely affect the value of the Shares or the ability of the Trust to operate.
  55. [55] Item 1A, Risk Factors — If a malicious actor or botnet obtains control of more than 33% of the validating stake on the Ethereum network, or otherwise obtains control over the Ethereum network through its influence over core developers or otherwise, such actor or botnet could delay or manipulate the Ethereum blockchain in the short term, which could adversely affect the value of the Shares or the ability of the Trust to operate.
  56. [56] Item 1A, Risk Factors — Liquid staking applications pose centralization concerns.
  57. [57] Item 1A, Risk Factors — Liquid staking applications pose centralization concerns.
  58. [58] Item 1A, Risk Factors — Digital asset markets in the United States exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of ether or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of ether, validator activity, digital wallets, the provision of services related to trading and providing custody services for ether, the operation of the Ethereum network, or the digital asset markets generally.
  59. [59] Item 1A, Risk Factors — Digital asset markets in the United States exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of ether or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of ether, validator activity, digital wallets, the provision of services related to trading and providing custody services for ether, the operation of the Ethereum network, or the digital asset markets generally.
  60. [60] Item 1A, Risk Factors — Regulatory changes or actions in foreign jurisdictions may affect the value of the Shares or restrict the use of one or more digital assets, validating activity or the operation of their networks or the digital asset platform market in a manner that adversely affects the value of the Shares.
  61. [61] Item 1A, Risk Factors — Prices of ether may be affected due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment.
  62. [62] Item 1A, Risk Factors — Prices of ether may be affected due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment.
  63. [63] Item 1A, Risk Factors — Prices of ether may be affected due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment.
  64. [64] Item 1A, Risk Factors — A determination that ether or any other digital asset is a “security” may adversely affect the value of ether and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust.
  65. [65] Item 1A, Risk Factors — Anonymity and illicit financing risk.
  66. [66] Item 1A, Risk Factors — The trading prices of many digital assets, including ether, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of ether, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.
  67. [67] Item 1A, Risk Factors — The trading prices of many digital assets, including ether, have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of ether, could have a material adverse effect on the value of the Shares and the Shares could lose all or substantially all of their value.
  68. [68] Item 1A, Risk Factors — Digital asset markets in the United States exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of ether or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of ether, validator activity, digital wallets, the provision of services related to trading and providing custody services for ether, the operation of the Ethereum network, or the digital asset markets generally.
  69. [69] Item 1A, Risk Factors — Prices of ether may be affected due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment.
  70. [70] Item 1A, Risk Factors — Prices of ether may be affected due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment.
  71. [71] Item 1A, Risk Factors — Prices of ether may be affected due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment.
  72. [72] Item 1A, Risk Factors — A determination that ether or any other digital asset is a “security” may adversely affect the value of ether and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust.
  73. [73] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  74. [74] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  75. [75] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  76. [76] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  77. [77] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  78. [78] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  79. [79] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  80. [80] Item 1A, Risk Factors — If the Custodian Agreement, Prime Execution Agent Agreement, an Authorized Participant Agreement or Ether Trading Counterparty Agreement is terminated, or the Ether Custodian, Prime Execution Agent, an Authorized Participant or an Ether Trading Counterparty fails to provide services as required, the Trustee may operationalize the Additional Ether Custodian, or may need to find and appoint a replacement custodian, execution agent, authorized participant or ether trading counterparty, which could pose a challenge to the safekeeping of the Trust’s ether, the Trust’s ability to create and redeem Shares and the Trust’s ability to continue to operate may be adversely affected.
  81. [81] Item 1A, Risk Factors — The lack of full insurance and Shareholders’ limited rights of legal recourse against the Trust, Delaware Trustee, Sponsor, Trust Administrator, Cash Custodian, Prime Execution Agent, the Ether Custodian, if operationalized, the Additional Ether Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s ether for which no person or entity is liable.
  82. [82] Item 1, Business — Trust Expenses
  83. [83] Item 1, Business — Trust Expenses

Analysis on 5/21/2026