# Grayscale Ethereum Classic Trust (ETC): Form 10-Q for the period ended Mar 31, 2025

- Company: [Grayscale Ethereum Classic Trust (ETC)](/companies/etcg.md) (CIK 1705181)
- Form: 10-Q
- Filed: 2025-05-02
- Accepted by EDGAR: May 2, 2025, 16:04 ET
- Period: 2025-03-31
- Accession: 0000950170-25-062736
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1705181/000095017025062736/etcg-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1705181/000095017025062736/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$94.5m | us-gaap:NetIncomeLoss |
| Total assets | at 2025-03-31 | $188.5m | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $0 | us-gaap:Liabilities |

## Management's discussion and analysis

As filed, 21,336 characters.

*The following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, our unaudited financial statements and related notes included elsewhere in this Quarterly Report, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those set forth under “Part II, Item 1A. Risk Factors” in this Quarterly Report, or in “Part I, Item 1A. Risk Factors” and “Forward-Looking Statements” or other sections of our Annual Report.*

### Trust Overview

The Trust is a passive entity that is managed and administered by the Sponsor and does not have any officers, directors or employees. The Trust holds ETC and, from time to time on a periodic basis, issues Creation Baskets in exchange for deposits of ETC. As a passive investment vehicle, the Trust’s investment objective is for the value of the Shares (based on ETC per Share) to reflect the value of the ETC held by the Trust, determined by reference to the Index Price, less the Trust’s expenses and other liabilities. While an investment in the Shares is not a direct investment in ETC, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to ETC. To date, the Trust has not met its investment objective and the Shares quoted on OTCQX have not reflected the value of the ETC held by the Trust, less the Trust’s expenses and other liabilities, but instead have traded at both premiums and discounts to such value, which at times have been substantial. The Trust is not managed like a business corporation or an active investment vehicle. The Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective.

On January 1, 2025, GSI consummated an internal corporate reorganization (the “Reorganization”), pursuant to which GSI, the Sponsor of the Trust prior to the Reorganization, merged with and into GSO, a Delaware limited liability company and a wholly owned indirect subsidiary of DCG, with GSO continuing as the surviving company (the “Merger”). As a result of the Merger, GSO succeeded by operation of law to all the rights, powers, privileges and franchises and became subject to all of the obligations, liabilities, restrictions and disabilities of GSI, including with respect to the Sponsor Contracts (as defined below), all as provided under the Delaware Limited Liability Company Act. The Reorganization is not expected to have any material impact on the operations of the Trust.

In connection with the Reorganization, on January 1, 2025, and promptly following the effectiveness of the Merger, GSO assigned certain contracts pertaining to its role as Sponsor (as such term is defined in the Trust Agreement) of the Trust (such contracts, the “Sponsor Contracts”) to GSIS, a Delaware limited liability company and a wholly owned direct subsidiary of GSO, whereby GSIS assumed all of the rights and obligations of GSO under the Sponsor Contracts. Other than the assumption of the Sponsor Contracts by GSIS, the Reorganization does not alter the rights or obligations under any of the Sponsor Contracts.

In connection with the Reorganization, on January 1, 2025, and promptly following the effectiveness of the Merger, GSO and GSIS executed a Certificate of Admission, pursuant to which GSIS was admitted as an additional Sponsor of the Trust under the Trust Agreement, by and among GSO (as successor in interest to GSI), the Trustee, and the shareholders from time to time thereunder, as amended from time to time. GSIS shall be subject to the rights and obligations of a Sponsor under the Trust Agreement.

On January 3, 2025, GSO voluntarily withdrew as a Sponsor of the Trust pursuant to the terms of the Trust Agreement, and, effective May 3, 2025, GSIS shall be the sole remaining Sponsor of the Trust.

### Critical Accounting Policies and Estimates

### Investment Transactions and Revenue Recognition

The Trust considers investment transactions to be the receipt of ETC by the Trust in connection with Share creations and the delivery of ETC by the Trust in connection with Share redemptions or for payment of expenses in ETC. At this time, the Trust is not accepting redemption requests from shareholders. The Trust records its investment transactions on a trade date basis and changes in fair value are reflected as net change in unrealized appreciation or depreciation on investments. Realized gains and losses are calculated using the specific identification method. Realized gains and losses are recognized in connection with transactions including settling obligations for the Sponsor’s Fee in ETC.

### Principal Market and Fair Value Determination

To determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s net asset value in accordance with U.S. GAAP (“Principal Market NAV”), the Trust follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820-10, *Fair Value Measurement*, which outlines the application of fair value accounting. ASC 820-10 determines fair value to be the price that would be received for ETC in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that ETC is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

The Trust only receives ETC in connection with a creation order from the Authorized Participant (or a Liquidity Provider) and does not itself transact on any Digital Asset Markets. Therefore, the Trust looks to market-based volume and level of activity for Digital Asset Markets. The Authorized Participant(s), or a Liquidity Provider, may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets (referred to as “Trading Platform Markets” in this Quarterly Report), each as defined in the FASB ASC Master Glossary (collectively, “Digital Asset Markets”).

In determining which of the eligible Digital Asset Markets is the Trust’s principal market, the Trust reviews these criteria in the following order:

- First, the Trust reviews a list of Digital Asset Markets that maintain practices and policies designed to comply with anti-money laundering (“AML”) and know-your-customer (“KYC”) regulations, and non-Digital Asset Trading Platform Markets that the Trust reasonably believes are operating in compliance with applicable law, including federal and state licensing requirements, based upon information and assurances provided to it by each market.
- Second, the Trust sorts these Digital Asset Markets from high to low by market-based volume and level of activity of ETC traded on each Digital Asset Market in the trailing twelve months.
- Third, the Trust then reviews pricing fluctuations and the degree of variances in price on Digital Asset Markets to identify any material notable variances that may impact the volume or price information of a particular Digital Asset Market.
- Fourth, the Trust then selects a Digital Asset Market as its principal market based on the highest market-based volume, level of activity and price stability in comparison to the other Digital Asset Markets on the list. Based on information reasonably available to the Trust, Trading Platform Markets have the greatest volume and level of activity for the asset. The Trust therefore looks to accessible Trading Platform Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market. As a result of the aforementioned analysis, a Trading Platform Market has been selected as the Trust’s principal market.

The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market.

The cost basis of the ETC received by the Trust in connection with a creation order is recorded by the Trust at the fair value of ETC at 4:00 p.m., New York time, on the creation date for financial reporting purposes. The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors.

### Investment Company Considerations

The Trust is an investment company for U.S. GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, *Financial Services—Investment Companies*. The Trust uses fair value as its method of accounting for ETC in accordance with its classification as an investment company for accounting purposes. The Trust is not a registered investment company under the Investment Company Act. U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates and these differences could be material.

### Review of Financial Results (unaudited)

### Financial Highlights for the Three Months Ended March 31, 2025 and 2024

### (All amounts in the following table and the subsequent paragraphs, except Share, per Share, ETC and price of ETC amounts, are in thousands)

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net realized and unrealized (loss) gain on investment in ETC | $(93,030) | $139,176 |
| Net (decrease) increase in net assets resulting from operations | $(94,541) | $137,185 |
| Net assets(1) | $188,514 | $391,143 |

(1) Net assets in the above table and subsequent paragraphs are calculated in accordance with U.S. GAAP based on the Digital Asset Market price of ETC on the Digital Asset Trading Platform that the Trust considered its principal market, as of 4:00 p.m., New York time, on the valuation date.

Net realized and unrealized loss on investment in ETC for the three months ended March 31, 2025 was ($93,030), which includes a realized gain of $989 on the transfer of ETC to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in ETC of ($94,019). Net realized and unrealized loss on investment in ETC for the period was driven by ETC price depreciation from $25.13 per ETC as of December 31, 2024, to $16.84 per ETC as of March 31, 2025. Net decrease in net assets resulting from operations was ($94,541) for the three months ended March 31, 2025, which consisted of the net realized and unrealized loss on investment in ETC, plus the Sponsor’s Fee of $1,511. Net assets decreased to $188,514 at March 31, 2025, a 33% decrease for the three-month period. The decrease in net assets resulted from the aforementioned ETC price depreciation and the withdrawal of approximately 69,222 ETC to pay the foregoing Sponsor’s Fee.

Net realized and unrealized gain on investment in ETC for the three months ended March 31, 2024 was $139,176, which includes a realized gain of $1,450 on the transfer of ETC to pay the Sponsor’s Fee and net change in unrealized appreciation on investment in ETC of $137,726. Net realized and unrealized gain on investment in ETC for the period was driven by ETC price appreciation from $21.99 per ETC as of December 31, 2023, to $34.08 per ETC as of March 31, 2024. Net increase in net assets resulting from operations was $137,185 for the three months ended March 31, 2024, which consisted of the net realized and unrealized gain on investment in ETC, less the Sponsor’s Fee of $1,991. Net assets increased to $391,143 at March 31, 2024, a 54% increase for the three-month period. The increase in net assets resulted from the aforementioned ETC price appreciation, partially offset by the withdrawal of approximately 71,565 ETC to pay the foregoing Sponsor’s Fee.

### Cash Resources and Liquidity

The Trust has not had a cash balance at any time since inception. When selling ETC, Incidental Rights and/or IR Virtual Currency in the Digital Asset Market to pay Additional Trust Expenses on behalf of the Trust, the Sponsor endeavors to sell the exact amount of ETC, Incidental Rights and/or IR Virtual Currency needed to pay expenses in order to minimize the Trust’s holdings of assets other than ETC. As a consequence, the Sponsor expects that the Trust will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period. Furthermore, the Trust is not a party to any off-balance sheet arrangements.

In exchange for the Sponsor’s 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 periods covered by this Quarterly Report was the Sponsor’s Fee. 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.

### Selected Operating Data

| ETC: | Three Months Ended March 31, 2025 (All ETC balances are rounded to the nearest whole ETC) | 2024 |
| --- | ---: | ---: |
| Opening balance | 11,263,626 | 11,548,776 |
| Creations | - | - |
| Sponsor’s Fee, related party | (69,222) | (71,565) |
| Closing balance | 11,194,404 | 11,477,211 |
| Accrued but unpaid Sponsor’s Fee, related party | - | - |
| Net closing balance | 11,194,404 | 11,477,211 |
| **Number of Shares:** |  |  |
| Opening balance | 13,993,800 | 13,993,800 |
| Creations | - | - |
| Closing balance | 13,993,800 | 13,993,800 |

|  | As of March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Price of ETC on principal market(1) | $16.84 | $34.08 |
| Principal Market NAV per Share(2) | $13.47 | $27.95 |
| Index Price | $16.84 | $34.09 |
| NAV per Share(3) | $13.47 | $27.96 |

(1) The Trust performed an assessment of the principal market at March 31, 2025 and 2024, and identified the principal market as Coinbase.

(2) As of March 31, 2025 and 2024, the Principal Market NAV per Share was calculated using the fair value of ETC based on the price provided by Coinbase, the Digital Asset Trading Platform that the Trust considered its principal market, as of 4:00 p.m., New York time, on the valuation date. Prior to February 23, 2024, Principal Market NAV was referred to as NAV and Principal Market NAV per Share was referred to as NAV per Share.

(3) The Trust’s NAV per Share is derived from the Index Price, as represented by the Index as of 4:00 p.m., New York time, on the valuation date. The Trust’s NAV per Share is calculated using a non-GAAP methodology where the price is derived from multiple Digital Asset Trading Platforms. Prior to February 23, 2024, NAV was referred to as Digital Asset Holdings and NAV per Share was referred to as Digital Asset Holdings per Share. See “Item 1. Business—Overview of the ETC Industry and Market—ETC Value—The Index and the Index Price” in our Annual Report for a description of the Index and the Index Price. The Digital Asset Trading Platforms included in the Index as of March 31, 2025 were Coinbase, Kraken, and Bitfinex. The Digital Asset Trading Platforms included in the Index as of March 31, 2024 were Coinbase, Kraken, and Crypto.com. See “Item 1. Business—Valuation of ETC and Determination of NAV” in our Annual Report for a description of the Trust’s NAV per Share.

For accounting purposes, the Trust reflects creations and the ETC receivable with respect to such creations on the date of receipt of a notification of a creation but does not issue Shares until the requisite amount of ETC is received. At this time, the Trust is not accepting redemption requests from shareholders. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. The Trust currently has no intention of seeking regulatory approval to operate an ongoing redemption program.

As of March 31, 2025, the Trust had a net closing balance with a value of $188,513,766, based on the Index Price (non-GAAP methodology). As of March 31, 2025, the Trust had a total market value of $188,513,766, based on the Digital Asset Market price of ETC on the Trust’s principal market (Coinbase).

As of March 31, 2024, the Trust had a net closing balance with a value of $391,258,121, based on the Index Price (non-GAAP methodology). As of March 31, 2024, the Trust had a total market value of $391,143,349, based on the Digital Asset Market price of ETC on the Trust’s principal market (Coinbase).

### Historical NAV and ETC Prices

As movements in the price of ETC will directly affect the price of the Shares, investors should understand recent movements in the price of ETC. Investors, however, should also be aware that past movements in the ETC price are not indicators of future movements. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by service providers, as well as political and economic uncertainties around the world.

The following chart illustrates the movement in the Trust’s NAV per Share versus the Index Price and the Trust’s Principal Market NAV per Share from April 24, 2017 (the inception of the Trust’s operations) to March 31, 2025. For more information on the determination of the Trust’s NAV, see “Item 1. Business—Overview of the ETC Industry and Market—ETC Value—The Index and the Index Price” in our Annual Report.

The following table illustrates the movements in the Index Price from April 1, 2020 to March 31, 2025. During such period, the Index Price has ranged from $4.86 to $148.63, with the straight average being $24.63 through March 31, 2025. The Sponsor has not observed a material difference between the Index Price and average prices from the Constituent Trading Platforms individually or as a group.

| Period | Average | High Index Price | Date | Low Index Price | Date | End of period | Last business day |
| --- | ---: | ---: | --- | ---: | --- | ---: | ---: |
| Twelve months ended March 31, 2021 | $7.16 | $16.93 | 2/13/2021 | $4.86 | 11/3/2020 | $13.55 | $13.55 |
| Twelve months ended March 31, 2022 | $47.27 | $148.63 | 5/6/2021 | $14.19 | 4/3/2021 | $47.19 | $47.19 |
| Twelve months ended March 31, 2023 | $24.63 | $47.16 | 4/1/2022 | $12.80 | 6/18/2022 | $20.69 | $20.69 |
| Twelve months ended March 31, 2024 | $20.49 | $38.44 | 3/8/2024 | $14.52 | 9/11/2023 | $34.09 | $32.46 |
| Twelve months ended March 31, 2025 | $23.60 | $40.26 | 12/4/2024 | $16.59 | 3/29/2025 | $16.84 | $16.84 |
| April 1, 2020 to March 31, 2025 | $24.63 | $148.63 | 5/6/2021 | $4.86 | 11/3/2020 | $16.84 | $16.84 |

The following table illustrates the movements in the Digital Asset Market price of ETC, as reported on the Trust’s principal market, from April 1, 2020 to March 31, 2025. During such period, the price of ETC has ranged from $4.86 to $148.51, with the straight average being $24.65 through March 31, 2025.

| Period | Average | High Digital Asset Market Price | Date | Low Digital Asset Market Price | Date | End of period | Last business day |
| --- | ---: | ---: | --- | ---: | --- | ---: | ---: |
| Twelve months ended March 31, 2021 | $7.24 | $16.93 | 2/13/2021 | $4.86 | 11/3/2020 | $13.53 | $13.53 |
| Twelve months ended March 31, 2022 | $47.32 | $148.51 | 5/6/2021 | $14.23 | 4/4/2021 | $47.20 | $47.20 |
| Twelve months ended March 31, 2023 | $24.63 | $47.16 | 4/1/2022 | $12.77 | 6/18/2022 | $20.68 | $20.68 |
| Twelve months ended March 31, 2024 | $20.49 | $38.47 | 3/8/2024 | $14.53 | 9/11/2023 | $34.08 | $32.44 |
| Twelve months ended March 31, 2025 | $23.60 | $40.38 | 12/4/2024 | $16.60 | 3/29/2025 | $16.84 | $16.84 |
| April 1, 2020 to March 31, 2025 | $24.65 | $148.51 | 5/6/2021 | $4.86 | 11/3/2020 | $16.84 | $16.84 |

20

The following chart sets out the historical closing prices for the Shares as reported by OTCQX and the Trust’s NAV per Share from May 10, 2018 to March 31, 2025.

### ETCG Premium/(Discount): ETCG Share Price vs. NAV per Share (Non-GAAP) ($)

The following chart sets out the historical premium and discount for the Shares calculated as a percentage of the historical closing prices for the Shares as reported by OTCQX and the Trust’s NAV per Share from May 10, 2018 to March 31, 2025.

### ETCG Premium/(Discount): ETCG Share Price vs. NAV per Share (Non-GAAP) (%)

## Market risk

As filed, 386 characters.

The Trust Agreement does not authorize the Trust to borrow for payment of the Trust’s ordinary expenses. The Trust does not engage in transactions in foreign currencies which could expose the Trust or holders of Shares to any foreign currency related market risk. The Trust does not invest in derivative financial instruments and has no foreign operations or long-term debt instruments.

## Controls and procedures

As filed, 1,382 characters.

The Trust maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Principal Executive Officer and Principal Financial and Accounting Officer of the Sponsor, and to the audit committee of the Sponsor, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Principal Executive Officer and the Principal Financial and Accounting Officer of the Sponsor, the Sponsor conducted an evaluation of the Trust’s disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based on this evaluation, the Principal Executive Officer and the Principal Financial and Accounting Officer of the Sponsor concluded that the Trust’s disclosure controls and procedures were effective as of the end of the period covered by this report.

### Changes in Internal Control Over Financial Reporting

There was no change in the Trust’s internal controls over financial reporting that occurred during the Trust’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, these internal controls.

## Risk factors

As filed, 129 characters.

There have been no material changes to the Risk Factors last reported under “Part I, Item 1A. Risk Factors” of our Annual Report.

Filed May 2, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-062736. Last ingested by Listed: Oct 24, 2026, 15:07 ET. No prices; not investment advice.