iShares Ethereum Trust ETF (NASDAQ: ETHA)

iShares Ethereum Trust ETF is an exchange-traded product designed to provide investors with exposure to the price of ether through a traditional securities structure. The Trust holds ether as its primary asset and issues shares that represent fractional undivided beneficial interests in the Trust’s net assets. Each Share is backed by ether held in custody on behalf of the Trust, allowing investors to gain investment exposure to ether without directly purchasing, holding, or managing the digital asset on peer-to-peer platforms or digital asset exchanges. The Trust is not actively managed and does not seek to profit from or mitigate losses due to changes in ether’s price.

The Trust generates revenue through the Sponsor’s Fee, which is accrued daily at an annualized rate of 0.25% of the Trust’s net asset value and payable at least quarterly in arrears. This fee is paid by the Trust to the Sponsor, iShares Delaware Trust Sponsor LLC, in exchange for assuming certain marketing and administrative expenses, including Trustee fees, custodial fees, NASDAQ listing fees, SEC registration fees, audit fees, and other ordinary expenses. The Trust does not generate revenue from staking activities, lending, or any other income-generating use of its ether holdings, as neither the Trust nor its custodians engage in staking or similar activities. Revenue is derived solely from the fee structure tied to the Trust’s asset base.

The company operates through the following segments:

• Sponsor: iShares Delaware Trust Sponsor LLC serves as the Sponsor of the Trust and is responsible for overseeing the Trust’s operations, including marketing and administrative functions. The Sponsor maintains a website at www.ishares.com where the Trust’s SEC filings are made available free of charge. The Sponsor is a consolidated subsidiary of BlackRock, Inc. and may, at its sole discretion, waive all or a portion of the Sponsor’s Fee for stated periods of time.

• Trustee: BlackRock Fund Advisors serves as the Trustee of the Trust and is responsible for the overall administration and oversight of the Trust in accordance with the Trust Agreement. The Trustee works with the Sponsor and custodians to ensure proper custody, valuation, and reporting of the Trust’s ether and cash holdings. The Trustee is also a consolidated subsidiary of BlackRock, Inc. and may reimburse itself from the Trust’s assets for extraordinary services performed to protect the Trust or Shareholder interests.

• Ether Custodian: Coinbase Custody Trust Company, LLC serves as the primary custodian for the Trust’s ether holdings and maintains custody of the Trust’s ether in segregated accounts known as the Vault Balance. The Ether Custodian stores private keys associated with the Trust’s ether in cold storage facilities located within the United States and Europe, though exact locations are not disclosed for security reasons. The Ether Custodian may receive deposits of ether but may not send ether without using the corresponding private keys and has processes in place to manage cold storage wallets to limit exposure per wallet in line with insurance limits.

• Additional Ether Custodian: Anchorage Digital Bank N. A. serves as an additional available custodian for the Trust’s ether holdings and holds Trust assets in segregated wallets at Ethereum blockchain addresses exclusive to the Trust. The Additional Ether Custodian retains custody of private keys for the Trust’s ether and would store them in the Anchorage Vault Balance if utilized. Anchorage maintains crime insurance coverage with a minimum limit of $100 million intended to cover losses from fraud, theft, hacking, and other risks, though this insurance may be shared with other clients and may not be sufficient to cover all potential losses related to the Trust’s assets.

• Prime Execution Agent: Coinbase Inc., an affiliate of the Ether Custodian, serves as the Trust’s Prime Execution Agent and facilitates the purchase and sale of ether in connection with creation and redemption of Baskets. The Prime Execution Agent holds ether and cash in the Trading Balance on behalf of customers, including the Trust, and executes trades on approved venues such as Bitstamp, LMAX, Kraken, and its own platform. The Prime Execution Agent maintains assets primarily in cold wallets for security, with the balance in hot wallets to facilitate liquidity, based on ongoing risk analysis and market dynamics.

• Trade Credit Lender: Coinbase Credit, Inc. acts as the Trade Credit Lender and provides short-term extensions of credit in the form of cash or ether to the Trust to facilitate timely settlement of creation and redemption orders. The Trade Credit Lender extends credit only to the extent that such funds are available and is not obligated to lend if unable to borrow or during market disruptions. Trade Credits do not bear interest and must be repaid by 6:00 p.m. ET on the business day following the day the credit was extended. The Trust has granted a first-priority lien over its Trading Balance and Vault Balance to secure repayment of any Trade Credit.

iShares Ethereum Trust ETF operates in the competitive landscape of exchange-traded products tracking digital assets, particularly ether, and faces competition from other sponsors seeking to launch similar ether-backed ETFs. The Trust’s position is supported by the infrastructure and scale of its Sponsor and Trustee, both subsidiaries of BlackRock, Inc., which brings significant resources, brand recognition, and operational expertise to the product. Competitive advantages include the use of regulated custodians like Coinbase Custody Trust Company, LLC and Anchorage Digital Bank N. A., which provide institutional-grade security for ether holdings through cold storage and segregated wallets. The Trust benefits from a standardized creation and redemption process using Baskets of 40,000 Shares, which enables Authorized Participants to engage in arbitrage mechanisms that help align the Share price with net asset value.

The Trust serves investors seeking exposure to ether through a regulated, exchange-traded vehicle, including retail investors, financial advisors, and institutional investors who prefer to gain crypto exposure via traditional brokerage accounts. Specific Authorized Participants include ABN AMRO Clearing USA LLC, BMO Capital Markets Corp., Goldman Sachs & Co. LLC, HRT Financial LP, Jane Street Capital, LLC, Jefferies LLC, JP Morgan Securities LLC, Macquarie Capital (USA) Inc., UBS Securities LLC, and Virtu Americas LLC. These entities are registered broker-dealers that have entered into written agreements with the Sponsor and Trustee to create and redeem Baskets of Shares in exchange for cash or ether.