Key Points
- Grayscale plans to start distributing Grayscale Ethereum Mini-Trust shares to Grayscale Ethereum Trust (ETHE) shareholders from July 18.
- The new ETH Trust shares are intended to be listed on the NYSE Arca, pending regulatory approval.
Cryptocurrency asset manager Grayscale announced plans to begin distribution of its Grayscale Ethereum Mini-Trust shares to Grayscale Ethereum Trust (ETHE) shareholders from July 18.
ETHE shareholders will receive the new ETH Trust shares in a 1:1 ratio. Additionally, Grayscale plans to contribute approximately 10% of ETHE’s Ether holdings to the new trust.
Listing and Distribution of ETH Trust Shares
Grayscale has expressed its desire to list the ETH Trust on the NYSE Arca under the ticker symbol “ETH”, pending approval from the SEC. If approved, this could potentially increase liquidity and accessibility for Ethereum investors.
The process of distributing the ETH Trust shares has been designed to be straightforward for existing ETHE shareholders. No additional action is required from them to receive the ETH trust shares, nor do they need to pay any consideration, exchange, or surrender any existing shares.
Post the record date, ETHE shares will trade ex-distribution rights for ETH Trust shares, with the distribution date scheduled for no earlier than July 19, 2024.
Conditions and Tax Implications
Grayscale has set certain conditions that must be met before the distribution of the ETH Trust shares. These include the filing and approval of registration statements on Forms 8-A and S-1 for the ETH Trust, and obtaining listing approval on NYSE Arca. Grayscale has cautioned that the distribution may not proceed as planned due to regulatory considerations.
From a tax perspective, Grayscale believes that neither the ETHE shareholders nor the trust itself will incur any taxable gains or losses for US federal income tax purposes related to the distribution. However, they advise shareholders to consult their tax advisors regarding individual tax implications.
Ethereum’s central role in the digital asset sector and the demand for targeted investment opportunities within the cryptocurrency landscape has been a driving factor for this move. The distribution of ETH Trust shares is expected to coincide with the launch of the spot Ethereum ETF, likely around July 15. The price of Ethereum has recently bounced back above $3,000 after a significant sell-off.
