Grayscale Ethereum Mini Trust ETH

S-11 d756153ds1.htm S-1

As filed with the Securities and Exchange Commission on April 23, 2024

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Grayscale Ethereum Mini Trust (ETH)

(Exact Name of Registrant as Specified in Its Charter)

c/o Grayscale Investments, LLC

290 Harbor Drive, 4th Floor

Stamford, Connecticut 06902

(212) 668-1427

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Michael Sonnenshein

Chief Executive Officer

Grayscale Investments, LLC

290 Harbor Drive, 4th Floor

Stamford, Connecticut 06902

(212) 668-1427

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

Joseph A. Hall

Dan Gibbons

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

(212) 450-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

In connection with this registration statement, NYSE Arca, Inc. (“NYSE Arca”) has filed or intends to file an application with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to list the Shares of Grayscale Ethereum Mini Trust (ETH) (the “ETH Trust”) on NYSE Arca (the “ETH Trust 19b-4 Application”). In addition, the ETH Trust intends to rely on an exemption or other relief from the SEC under 17 CFR §§ 242.101 and 102 (“Regulation M”) to operate its redemption program.

As of the date of this filing, the ETH Trust 19b-4 Application has not been approved by the SEC and an exemption or other relief from Regulation M is not available for the ETH Trust. The ETH Trust makes no representation as to when or if such approval will be obtained and when such an exemption or relief will be available. The ETH Trust will not seek effectiveness of this registration statement and no offering of Shares hereunder will take place unless and until such approval is obtained and such an exemption or relief is available.

This prospectus has been prepared on the basis that the ETH Trust 19b-4 Application has been approved by the SEC and that the ETH Trust is able to rely on an exemption or has obtained other relief under Regulation M.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 23, 2024

PRELIMINARY PROSPECTUS

Grayscale Ethereum Mini Trust (ETH) (the “Trust”) is a Delaware statutory trust that issues common units of fractional undivided beneficial interest (“Shares”), which represent ownership in the Trust. The Trust’s purpose is to hold “Ether”, which are digital assets that are created and transmitted through the operations of the peer-to-peer Ethereum Network, a decentralized network of computers that operates on cryptographic protocols. The Trust’s investment objective is for the value of the Shares (based on Ether per Share) to reflect the value of Ether held by the Trust, as determined by reference to the Index Price (as defined herein), less the Trust’s expenses and other liabilities. While an investment in the Shares is not a direct investment in Ether, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to Ether. Grayscale Investments, LLC is the sponsor of the Trust (the “Sponsor”), Delaware Trust Company is the trustee of the Trust (the “Trustee”), The Bank of New York Mellon is the transfer agent of the Trust (in such capacity, the “Transfer Agent”) and the administrator of the Trust (in such capacity, the “Administrator”), Coinbase, Inc. is the prime broker of the Trust (the “Prime Broker”) and Coinbase Custody Trust Company, LLC is the custodian of the Trust (the “Custodian”).

Prior to this offering, there has been no public market for the Shares. The Trust intends to list the shares on NYSE Arca, Inc. (“NYSE Arca”) under the symbol “ETH.” It is expected that the Shares will be sold to the public at varying prices to be determined by reference to, among other considerations, the price of Ether and the trading price of the Shares on the NYSE Arca at the time of each sale.

The Shares may be purchased from the Trust only in one or more blocks of Shares (a block of Shares is called a “Basket”). The Trust issues Baskets of Shares to certain authorized participants (“Authorized Participants”) on an ongoing basis as described in “Plan of Distribution.” In addition, the Trust redeems Shares in Baskets on an ongoing basis from Authorized Participants. The Trust is currently able to accept Cash Orders (as defined herein), pursuant to which an Authorized Participant will deposit cash into, or accept cash from, the Cash Account in connection with the creation and redemption of Baskets, and a third party (a “Liquidity Provider”) that is not an agent of, or otherwise acting on behalf of, such Authorized Participant will obtain or receive Ether in exchange for cash in connection with such order. However, and in common with other spot digital asset exchange-traded products, the Trust is not at this time able to create and redeem shares via in-kind transactions with Authorized Participants, and there has yet to be definitive regulatory guidance on whether and how registered broker-dealers can hold and deal in Ether in compliance with the federal securities laws. To the extent further regulatory clarity emerges, the Sponsor expects NYSE Arca to seek the necessary regulatory approval to amend its listing rules to permit the Trust to do so (the “In-Kind Regulatory Approval”). Subject to NYSE Arca seeking and obtaining In-Kind Regulatory Approval, in the future the Trust may also create and redeem Shares via in-kind transactions with Authorized Participants or their designees (any such designee, an “AP Designee”) in exchange for Ether. There can be no assurance as to when such regulatory clarity will emerge, or when NYSE Arca will seek or obtain such regulatory approval, if at all. See “Description of Creation and Redemption of Shares.” Some of the activities of the Authorized Participants will result in their being deemed participants in a distribution in a manner which would render them statutory underwriters and subject them to the prospectus-delivery and liability provisions under the Securities Act of 1933, as amended (the “Securities Act”). See “Plan of Distribution.” As of , the number of Ether required to create a Basket of Shares is approximately Ether.

Investing in the Shares involves significant risks. You should carefully consider the risk factors described in “Risk Factors” starting on page 20 before you invest in the Shares.

The Trust is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act and will therefore be subject to reduced reporting requirements.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The Shares are neither interests in nor obligations of the Sponsor or the Trustee.

On , 2024, the Sponsor purchased $ in Shares (the “Seed Shares”), comprising Shares at a per Share price of $ . The Seed Shares are currently anticipated to be redeemed for cash in connection with, and immediately prior to the consummation of, the Initial Distribution (as defined below).

Prior to the creation of any Baskets through Authorized Participants pursuant to this prospectus, the Sponsor currently intends to effectuate the initial creation of Shares of the Trust (the “Initial Distribution Basket Creation”) through the contribution by Grayscale Ethereum Trust (ETH) (“ETHE”) of a certain amount of Ether to the Trust as consideration and in exchange for newly created Shares of the Trust. The newly created Shares of the Trust will then be distributed to shareholders of ETHE (“ETHE Shareholders”) (determined as of a date to be determined by the Sponsor (the “Record Date”)), pro rata based on a 1:1 ratio, such that for each one (1) share of ETHE (“ETHE Shares”) held by each ETHE Shareholder on the Record Date, such ETHE Shareholder will be entitled to receive one (1) Share of the Trust on a subsequent date to be determined by the Sponsor (the “Distribution Date”) (such transactions collectively, the “Initial Distribution”).

As a result of the contemplated Initial Distribution, following the Distribution Date (and prior to the creation of any Baskets through Authorized Participants pursuant to this prospectus), the Trust will hold approximately % of the Ether that was held by ETHE as of the Record Date and ETHE would hold the remaining approximately % of the Ether that was held by ETHE as of the Record Date, in each case, reduced by the portion of the Sponsor’s Fee (as defined herein) attributable to such Ether accrued and paid between the Record Date and the Distribution Date. Based on the number of ETHE Shares outstanding and amount of Ether held by ETHE as of the Record Date, the Sponsor anticipates that Shares will be distributed to ETHE Shareholders in the aggregate, and that the Trust will hold approximately Ether immediately following the consummation of the Initial Distribution, reflecting an illustrative per share price of $ for the Trust’s Shares. Prior to the creation of any Baskets through Authorized Participants pursuant to this prospectus, these Shares will represent all of the outstanding Shares of the Trust.

Neither the number of outstanding ETHE Shares nor the exposure of ETHE Shareholders to Ether underlying their aggregate shareholdings (including ETHE Shares and Shares of the Trust) are expected to change as a result of the contemplated Initial Distribution. No consent, authorization, approval or proxy is being sought from ETHE Shareholders in connection with the Initial Distribution, and ETHE Shareholders will not need to pay any consideration, exchange or surrender existing ETHE Shares or take any other action to receive Shares of the Trust on the Distribution Date. Following the Initial Distribution, the Trust and ETHE will operate as independent NYSE Arca listed exchanged-traded commodity products, and neither will have any share ownership, beneficial or otherwise, in the other.

The Sponsor does not expect the Initial Distribution to be a taxable event for ETHE or its shareholders.

The U.S. dollar value of a Basket of Shares at 4:00 p.m., New York time, on the trade date of a creation or redemption order is equal to the “Basket Amount”, which is the number of Ether required to create or redeem a Basket of Shares, multiplied by the “Index Price,” which is the U.S. dollar value of an Ether derived from the Digital Asset Trading Platforms (as defined herein) that are reflected in the CoinDesk Ether Price Index (ETX) (the “Index”), calculated at 4:00 p.m., New York time, on each business day. The Index Price is calculated using non-GAAP methodology and is not used in the Trust’s financial statements.

The date of this prospectus is , 2024.