VanEck Ethereum ETF: Form 10-Q for the period ended Jun 30, 2025

This information should be read in conjunction with the financial statements and notes to financial statements included with this report. The discussion and analysis that follows may contain statements that relate to future events or future performance. In some cases, such forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this report that address activities, events or developments that may occur in the future, including such matters as changes in commodity prices and market conditions (for ETH and the Shares), the operations of the Trust, the plans of the Sponsor and references to the Trust’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions is subject to a number of risks and uncertainties, including the special considerations discussed in this report, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. Consequently, all the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of the Shares issued by the Trust. Moreover, neither the Sponsor nor any other person assumes responsibility for the accuracy or completeness of the forward-looking statements. Neither the Trust nor the Sponsor undertakes an obligation to publicly update or conform to actual results any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Introduction

The Trust is a Delaware statutory trust. The Trust does not have directors, officers or employees. The creation and operation of the Trust has been arranged by the Sponsor. The Trust is administered by the Trust Agreement, among the Sponsor, the Trustee and the Delaware Trustee. The Trust is managed and controlled by the Sponsor, a wholly-owned subsidiary of VanEck. The Sponsor is not governed by a board of directors.

The Trust’s investment objective is to reflect the performance of the price of ETH less the operating expenses of the Trust. The Trust is a passive investment vehicle that does not seek to pursue any investment strategy beyond tracking the price of ETH. The Trust does not engage in any activities designed to obtain a profit from, or ameliorate losses caused by, changes in the price of ETH.

The Trust issues and redeems Shares only in aggregations of 25,000 Shares, a Basket, or integral multiples thereof, and only in transactions with authorized participants.

Shares of the Trust trade on the Exchange under the ticker symbol “ETHV.”

Computation of Net Asset Value

The Trust’s NAV is calculated based on the Trust’s net asset holdings, as reconciled to the ETH Custodians’ accounts, on a market approach determined on a daily basis in accordance with the MarketVectorTM Ethereum Benchmark Rate price at 4:00 p.m. EST. The Trust’s NAV per Share is calculated by taking the current market value of its total assets, subtracting any liabilities, and then dividing that total by the total number of outstanding Shares. The Trust Agreement gives the Sponsor the exclusive authority to determine the Trust’s NAV and the Trust’s NAV per Share, which it has delegated to the Administrator.

Liquidity

The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs. In exchange for a fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the period covered by this report was the Sponsor’s Fee, which was waived during the period. The Trust’s only source of liquidity is its sales of ETH.

Significant Accounting Policies

In preparing financial statements in conformity with GAAP, management makes estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amount of revenue and expenses reported during the period. Actual results could differ from these estimates. A description of the valuation of ETH, a critical accounting policy that the Trust believes is important to understanding its results of operations and financial position, is provided in the section entitled “Computation of Net Asset Value” above. In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s accounting policies.

Results of Operations

The Period Ended June 30, 2024 (a)

The Trust’s NAV increased from $100,000 at May 20, 2024 (date of Seeding) to $10,234,617 at June 30, 2024, a 10,135% increase. The increase in the Trust’s NAV resulted primarily from an increase in the number of outstanding Shares, which increased from 2,000 Shares at May 20, 2024 to 200,000 Shares at June 30, 2024, as a result of 2,000 Seed Shares and 200,000 Shares (8 Baskets) being created and 2,000 Seed Shares being redeemed during the period and an increase in the price of ETH, which grew approximately 2% from $3,414 at June 25, 2024 (date of initial ETH investment) to $3,494 at June 30, 2024.

The 2% increase in the NAV per Share from $50.00 at May 20, 2024 to $51.17 at June 30, 2024 is primarily related to the 2% increase in the price of ETH during this period.

The NAV per Share of $50.48 on June 27, 2024, was the highest during the period, compared with a low during the period of $49.40 on June 28, 2024.

Net increase in net assets resulting from operations for the period ended June 30, 2024, was $234,617 resulting from a net change in unrealized appreciation on investment in ETH of $234,617. The Trust had no expenses during the period as the Trust had not commenced operations.

(a) Period commences upon Seed date of May 20, 2024

The Quarter Ended June 30, 2025

The Trust’s NAV increased from $84,668,819 at March 31, 2025 to $118,333,419 at June 30, 2025, a 39.76% increase. The increase in the Trust’s NAV resulted primarily from a increase in the price of ETH, which increased 35.40% from $1,836 at March 31, 2025 to $2,486 at June 30, 2025. The number of shares outstanding also increased from 3,150,000 Shares at March 31, 2025 to 3,250,000 Shares at June 30, 2025, a net result of 300,000 Shares (12 Baskets) being created and 200,000 Shares (8 Baskets) being redeemed during the period.

The 35.45% increase in the NAV per Share from $26.88 at March 31, 2025 to $36.41 at June 30, 2025 is directly related to the 35.40% increase in the price of ETH during this period.

The NAV per Share of $41.24 on June 11, 2025, was the highest during the quarter, compared with a low during the quarter of $21.45 on April 8, 2025.

Net increase in net assets resulting from operations for the quarter ended June 30, 2025, was $27,858,758 resulting from a net unrealized appreciation on investment in ETH of $32,481,594 and a net realized loss of $4,622,836 on ETH sold for the redemption of Shares and a net investment loss of $0. The Trust had no expenses during the quarter as they were all waived by the Sponsor.

The Six Months Ended June 30, 2025

The Trust’s NAV decreased from $146,428,902 at December 31, 2024 to $118,333,419 at June 30, 2025, a 19.19% decrease. The decrease in the Trust’s NAV resulted primarily from a decrease in the price of ETH, which decreased 25.41% from $3,333 at December 31, 2024 to $2,486 at June 30, 2025. The number of shares outstanding also increased from 3,000,000 Shares at December 31, 2024 to 3,250,000 Shares at June 30, 2025, a net result of 525,000 Shares (21 Baskets) being created and 275,000 Shares (11 Baskets) being redeemed during the period.

The 25.40% decrease in the NAV per Share from $48.81 at December 31, 2024 to $36.41 at June 30, 2025 is primarily related to the 25.41% decrease in the price of ETH during this period.

The NAV per Share of $54.06 on January 6, 2025, was the highest during the quarter, compared with a low during the quarter of $21.45 on April 8, 2025.

Net decrease in net assets resulting from operations for the six months ended June 30, 2025, was $41,651,452 resulting from a net unrealized depreciation on investment in ETH of $35,835,849 and a net realized loss of $5,815,603 on ETH sold for the redemption of Shares and a net investment loss of $0. The Trust had no expenses during the quarter as they were all waived by the Sponsor.

The duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, with the participation of the Trustee, have evaluated the effectiveness of the Trust’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Trust were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Trust would perform if the Trust had any officers, as appropriate to allow timely decisions regarding required disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

There were no changes in the Trust’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Trust’s internal control over financial reporting.

Except as set forth below, there have been no material changes to the Risk Factors last reported under Part I, Item 1A of the registrant’s Annual Report on Form 10-K for the period ended December 31, 2024, filed with the Securities and Exchange Commission on March 26, 2025.

Digital Asset Treasury Companies Risk

In recent times, a number of companies engaged in businesses outside the digital assets industry have begun to hold their corporate treasuries in digital assets instead of in fiat currency (“digital asset treasury companies”). In some cases, these companies have raised funds through financing or securities offerings and applied the proceeds to purchase digital assets, including ETH.

Digital asset treasury companies are a relatively new phenomenon and it is impossible to predict all of the risks they could pose to the Trust. On the one hand, digital asset treasury companies may increase procyclical dynamics in the market because they may purchase digital assets, such as ETH, when prices are rising and they may sell such assets when prices are decreasing, potentially making ETH more expensive in a rising market and then causing downward pressure on ETH prices in a falling market (causing prices to fall faster than they otherwise would). Digital asset treasury companies could cause greater volatility in digital asset markets, including markets for ETH. Negative events or sentiment surrounding digital asset treasury companies could affect the market for ETH. On the other hand, digital asset treasury companies may compete with the Trust in the marketplace as a perceived alternative means of achieving exposure to the price of ETH (to a greater or lesser extent) through investing in securities. The foregoing or similar events involving digital asset treasury companies could adversely affect holders of Shares in the Trust.