# 21Shares Ethereum ETF

> Clarifo company profile — qualitative business description generated from
> the company's filings. Financial statements, charts and ratios are
> available on Clarifo (https://www.clarifo.com/en/companies/21Shares Ethereum ETF).

## Overview

21Shares Ethereum ETF is a U.S.-listed spot ether exchange-traded product structured as a trust that holds ether and issues shares that trade on an exchange under the ticker CETH. Its investment objective is to track the performance of ether in U.S. dollars as measured by the CME CF Ether-Dollar Reference Rate—New York Variant, net of the trust’s expenses and liabilities. Shares are created and redeemed in large blocks (Creation Baskets) through registered broker-dealer Authorized Participants, with the trust historically using cash creations/redemptions and planning to allow in-kind creations/redemptions effective July 30, 2025. The vehicle is passive (not leveraged and not actively managed) and its economics are primarily driven by ether price movements, share creation/redemption activity, and the ongoing sponsor fee paid in ether.

## Products & services

• Spot ether exposure via exchange-traded shares (CETH)
• Creation/redemption mechanism for Authorized Participants
• Daily NAV and NAV per Share calculation (Index-based)
• Principal Market NAV for GAAP financial statements
• Ether custody and safekeeping via appointed custodians

- **Spot ether ETP shares (CETH)** (0%) — Exchange-traded shares designed to reflect ether price performance net of fees.
- **Index tracking and NAV services** (0%) — Daily valuation framework using the CME CF Ether-Dollar Reference Rate—New York Variant and NAV per Share publication.
- **Creation/redemption infrastructure** (0%) — Primary-market issuance and redemption of Creation Baskets via Authorized Participants (cash and planned in-kind).
- **Custody and asset administration** (0%) — Operational setup to hold ether with custodians and administer trust operations and reporting.

- Spot ether exposure via exchange-traded shares (CETH)
- Creation/redemption mechanism for Authorized Participants
- Daily NAV and NAV per Share calculation (Index-based)
- Principal Market NAV for GAAP financial statements
- Ether custody and safekeeping via appointed custodians

## Customers

The trust’s direct primary-market counterparties are Authorized Participants, which must be registered broker-dealers that create and redeem shares in Creation Baskets (10,000 shares or multiples). These broker-dealers participate to facilitate liquidity and arbitrage that helps keep the trading price of shares aligned with NAV. End investors buy and sell shares on the exchange through brokerage accounts, typically to gain spot ether exposure without directly holding or transacting in crypto. Market makers and liquidity providers are also important participants because their ability to hedge and arbitrage affects bid/ask spreads and premiums/discounts to NAV. Regulatory constraints on broker-dealers’ ability to transact in or hold ether can limit participation and reduce the effectiveness of the arbitrage mechanism.

- **Authorized Participants (registered broker-dealers)** (primary) — Create and redeem Creation Baskets (cash today; in-kind planned) to support primary-market flows and arbitrage versus NAV.
- **Institutional investors (RIAs, funds, corporates)** (primary) — Buy/sell shares on-exchange to obtain spot ether exposure with familiar custody, compliance, and reporting workflows.
- **Retail brokerage investors** (secondary) — Use exchange-traded shares to access ether price exposure without managing wallets, keys, or crypto exchange accounts.
- **Market makers and liquidity providers** (secondary) — Trade shares and hedge exposures to provide tight spreads; their participation influences premiums/discounts to NAV.

- Authorized Participants (registered broker-dealers) create/redeem baskets
- Market makers provide liquidity and help align price to NAV
- Retail investors seeking spot ether exposure in a brokerage account
- Institutional allocators using an exchange-traded wrapper for ether
- Traders using CETH for tactical positioning and liquidity access

## Geography

The trust is organized and reported in the United States and calculates NAV using a 4:00 p.m. ET valuation point. While shares trade on a U.S. exchange and the primary-market ecosystem is U.S.-centric (SEC-regulated broker-dealers as Authorized Participants), the underlying ether market is global and the trust references an index designed to reflect ether’s USD price. Operationally, geographic exposure shows up less through physical assets and more through where liquidity, trading venues, and regulatory regimes affect broker-dealer participation and price discovery. The trust also uses a “principal market” price for GAAP fair value measurement, which can differ from the index price used for operational NAV.

- United States listing and reporting framework (SEC registrant)
- NAV set daily using 4:00 p.m. ET valuation convention
- Underlying ether liquidity is global; USD index anchors pricing
- Principal market selection affects GAAP fair value measurement
- Regulatory geography influences broker-dealer AP participation

## Strategy

A core operational priority is maintaining an efficient creation/redemption and arbitrage mechanism so the shares trade close to NAV. The planned shift to allow in-kind creations and redemptions (effective July 30, 2025) is intended to reduce process steps and operational friction versus cash-only flows, which can improve tracking and lower implicit costs. The trust also emphasizes transparent, repeatable valuation by using the CME CF Ether-Dollar Reference Rate—New York Variant for daily NAV and a principal-market price for GAAP reporting. Because the product is passive, competitive positioning is driven by fee level (unitary sponsor fee), liquidity, and the reliability of custody/operations rather than active portfolio decisions.

- **Implement in-kind creation/redemption option** (short-term) — Fewer steps than cash orders can reduce friction and help shares track NAV.
- **Strengthen the arbitrage mechanism and liquidity ecosystem** (medium-term) — Efficient AP activity and market making reduce premiums/discounts and improve investor experience.

- Enable in-kind creations/redemptions to improve arbitrage efficiency
- Support tight premium/discount control via AP and market maker access
- Maintain robust custody and operational controls for ether holdings
- Use transparent index-based NAV with consistent 4:00 p.m. ET cut-off
- Compete on fee simplicity via a unitary sponsor fee structure

## Risks

The trust’s primary economic risk is ether price volatility, which directly drives NAV and can lead to sharp drawdowns. A key product-structure risk is that limitations on cash or in-kind creations/redemptions can impair arbitrage, causing shares to trade at substantial premiums or discounts to NAV. Regulatory uncertainty is material because Authorized Participants must be registered broker-dealers, and evolving SEC guidance on how broker-dealers can transact in or hold spot ether may constrain participation. Network-level risks on Ethereum (e.g., validator disruptions, hacks, penalties, or slashing events) can reduce network adoption and depress ether prices. Operational and custody risks (including reliance on custodians and trading counterparties for acquisitions/dispositions) can also affect the trust’s ability to process flows and safeguard assets.

- **Cash creations/redemptions may impair arbitrage and widen premiums/discounts** [high] — Cash-only flows add steps and friction, potentially weakening AP arbitrage that links share price to NAV.
- **Limited ability to facilitate in-kind creations/redemptions due to broker-dealer rules** [high] — Absent definitive regulatory guidance on how broker-dealers can comply when transacting in/holding spot ether, fewer APs may support in-kind activity.
- **Ethereum network validation disruptions and slashing/hack events** [medium] — Validator issues can reduce network attractiveness and adoption, pressuring ether price and therefore the trust’s NAV.

- Ether price volatility directly impacts NAV and investor returns
- Premium/discount risk if arbitrage weakens due to creation limits
- Broker-dealer regulatory constraints may limit in-kind participation
- Ethereum network disruptions (validators, slashing, hacks) can hit price
- Custody and operational risks around holding and transferring ether
- Index vs principal-market pricing differences can affect reported values

## Accounting

The trust prepares financial statements under U.S. GAAP and values its ether holdings at fair value under ASC 820, using an exchange-traded price from the trust’s principal market as of 4:00 p.m. ET on measurement dates. Operationally, it also calculates a daily NAV and NAV per Share based on the CME CF Ether-Dollar Reference Rate—New York Variant; these NAV measures are explicitly not GAAP and can differ from the “Principal Market NAV” used in the financial statements. Because the sponsor fee accrues daily at 0.21% and is payable in ether weekly in arrears (except during waiver periods), the trust periodically sells or transfers ether to pay expenses, creating realized gains/losses and reducing ether holdings over time. Investors should expect reported results to be dominated by unrealized appreciation/depreciation on ether and by share creation/redemption activity, which can drive large quarter-to-quarter changes in net assets that are not comparable to operating-company earnings.

- **Fair value measurement of ether (ASC 820) and principal market selection** — Impacts investment valuation, unrealized gains/losses, and NAV comparability
- **Non-GAAP NAV vs GAAP Principal Market NAV** — Affects interpretation of reported NAV per Share versus published NAV
- **Sponsor fee paid in ether (unitary fee) and fee waiver periods** — Affects expenses, ether balances, and period-to-period comparability

- ASC 820 fair value of ether using principal-market price at 4:00 p.m. ET
- Non-GAAP NAV (Index-based) differs from GAAP principal-market valuation
- Sponsor fee accrues daily (0.21%) and is paid in ether weekly in arrears
- Fee waivers change expense run-rate and comparability across periods
- Realized gains/losses arise when ether is sold/transferred for fees/redemptions
- Creations/redemptions change shares outstanding and net assets materially

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*Last updated: 2026-08-11T04:46:16.730138+00:00*