Grayscale Ethereum Trust ETF

If Proposal 3 is adopted and the amendments relating thereto are implemented, the Sponsor would be permitted to restate, amend or supplement to the Trust Agreement in its sole discretion and without shareholder consent; provided that any restatement, amendment or supplement of 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. In addition, this proposal will allow the Sponsor to make certain 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.

Disenfranchisement of shareholders

Removal of the shareholder consent requirement for the Sponsor to restate, amend or supplement the Trust Agreement could potentially disenfranchise shareholders by reducing the protections that the existing consent process affords and removing their ability to consent or object to any restatement, amendment or supplement of the Trust Agreement that materially adversely affects their interests as determined by the Sponsor in its sole discretion.

Implementation of restatements, amendments or supplements that may not align with shareholder interests

There can be no assurance that the Sponsor will implement restatements, amendments or supplements that align with the interests of shareholders. To the extent shareholders do not agree with future amendments to the Trust Agreement, shareholders will not have any ability to consent or object to such amendments, and the shareholders’ sole recourse will be to divest or, through an Authorized Participant, redeem their Shares prior to the effective date of such amendments.

Implementation of restatements, amendments or supplements that may increase risk to the Trust’s intended tax treatment

It is possible that, in the future, the Sponsor will implement restatements, amendments or supplements to the Trust Agreement that could adversely affect the intended tax treatment of the Trust as a grantor trust for U.S. federal income tax purposes, including on the receipt of an opinion of counsel to the effect that doing so should not cause the Trust to fail to qualify as a grantor trust for those purposes. There can be no assurance that the IRS or any court will agree with any such position, or that the Trust will not cease to qualify as a grantor trust as a result of any such restatement, amendment or supplement. For a discussion of the potential consequences of any failure by the Trust to qualify as a grantor trust, see “Proposal 1—Increased uncertainty regarding the tax treatment of the Trust.”