Grayscale Ethereum Trust ETF

Under the Trust Agreement, the Trust is currently required to obtain shareholder consent from shareholders holding at least a majority of outstanding shares for any amendment to the Trust Agreement that materially adversely affects the interests of shareholders, with shareholders having been deemed to have consented to the amendment if no objections were made after twenty (20) calendar days of receipt of notice. Proposal 3 will permit the Sponsor to make restatements, amendments or supplements to the Trust Agreement in its sole discretion and without shareholder consent; provided that any restatement, amendment or supplement to the Trust Agreement which materially adversely affects the interests of the shareholders as determined by the Sponsor in its sole discretion shall not be effective any earlier than twenty (20) calendar days after receipt by the affected shareholders of a notice provided by the Sponsor with respect to any such restatement, amendment or supplement.

Under Proposal 3, in the Sponsor’s sole discretion, the Sponsor will be permitted to condition any restatement, amendment or supplement to the Trust Agreement upon the consent of shareholders holding at least a majority of outstanding shares. In addition, in the Sponsor’s sole discretion, the Sponsor would be permitted, but is not obligated, to provide that a shareholder shall be deemed to consent to a restatement, amendment or supplement of the Trust Agreement if the Sponsor has notified such shareholder in writing of the proposed restatement, amendment or supplement and the shareholder has not, within twenty (20) calendar days of such notice, notified the Sponsor in writing that the shareholder objects to such restatement, amendment or supplement.

In addition, any notice pursuant to the amended Sections 10.1(a)(ii) or 10.1(a)(iii) of the Trust Agreement would be permitted to be given by the Sponsor to the shareholder by email or other electronic transmission and shall be deemed given upon receipt without requirement of confirmation.

Finally, the Trust Agreement prevents the Sponsor from making any restatement, amendment or supplement to the Trust Agreement that adversely affects the status of the Trust as a grantor trust for U.S. federal income tax purposes. Under Proposal 3, the Trust Agreement would permit the Sponsor to make restatements, amendments or supplements to the Trust Agreement that could adversely affect the status of the Trust as a grantor trust for U.S. federal income tax purposes, but only if the Sponsor obtains an opinion of counsel to the effect that such amendments should not cause the Trust to be treated as other than a grantor trust for U.S. federal income tax purposes and/or certain other conditions are satisfied.

The Sponsor believes that having the ability to make restatements, amendments or supplements to the Trust Agreement with notice to, instead of consent of, shareholders would reduce expenses incurred in connection with the consent solicitation process and improve operational efficiency and administrative convenience. Meanwhile, the Sponsor believes that having the ability to make certain other restatements, amendments or supplements to the Trust Agreement that could adversely affect the status of the Trust as a grantor trust for U.S. federal income tax purposes, but only if the requisite opinion of counsel is obtained or another of the conditions set forth in the amendments are satisfied will enable the Trust to adapt to future developments in the digital asset ecosystem, including with respect to the taxation of digital assets and digital asset transactions, more efficiently and more nimbly than under the currently effective Trust Agreement, while retaining prudent safeguards of the Trust’s intended tax classification.

The primary amendments to the Trust Agreement are set forth in Section 10.1(a).

THE SPONSOR AND THE BOARD OF DIRECTORS RECOMMEND THAT YOU VOTE IN FAVOR OF PROPOSAL 3.