What is BlackRock’s iShares Ethereum Trust ETF? (ETHA)

The iShares Ethereum Trust ETF (ETHA) is a financial product designed to give investors exposure to ether (ETH), the second-largest cryptocurrency by market capitalization and the native token of the Ethereum blockchain. It allows individuals to gain access to ether’s price movements without directly purchasing or managing the cryptocurrency themselves. The ETF is managed by iShares, a brand under BlackRock, and is intended to track ether’s market price, — providing a regulated and straightforward way for traditional investors to participate in the cryptocurrency market.

BlackRock filed for its spot ether ETF in November 2023, with the SEC granting approval on May 23, 2024, along with seven other spot ether ETFs. The fund began trading on the NASDAQ stock exchange on July 23, 2024.

Since its launch, BlackRock’s ETHA has quickly grown to reach just under $750 million AUM in less than a month.

What is a spot ether ETF?

A spot ether ETF is an exchange-traded fund that holds ether, enabling investors to buy shares representing ownership of the underlying cryptocurrency. Unlike futures-based ETFs, which track contracts for the future delivery of ether, a spot ether ETF holds the actual ether tokens. This structure is designed to mirror the real-time price of ether, providing investors with direct exposure to its market value through a regulated financial product.

Gaining exposure through a spot ether ETF offers certain advantages over simply purchasing ether oneself, such as avoiding the need to store the digital asset. Additionally, since ETFs are traded on traditional stock exchanges, they generally offer higher liquidity and greater regulatory oversight. This can provide investors with an increased sense of security while still granting exposure to the asset and its price movements.

What is ETHA's issuer, BlackRock?

BlackRock is a global investment management corporation based in the United States. It is one of the largest asset management firms in the world, with $10.65 trillion in assets under management (AUM) for institutional and retail clients as of July. 15, 2024.

BlackRock offers a wide range of investment products and services, including mutual funds, ETFs, retirement planning, risk management and advisory services. The company is known for its expertise in portfolio management, risk assessment and investment research and plays a significant role in global financial markets.

BlackRock also offers a spot Bitcoin ETF, IBIT.

What fees does ETHA charge?

ETHA's sponsor fee is 0.25% as of August 2024, though this may be subject to change. The fee is charged by the ETF issuer, in this case, BlackRock, for managing and operating the fund. BlackRock temporarily reduced the fee to 0.12% on July 23rd, 2024 for 12 months for the fund's first $2.5 billion of assets.

How does BlackRock custody its ether?

Popular U.S. crypto exchange Coinbase is the custodian of BlackRock’s ether.  Specifically, one of Coinbase's legal entities, Coinbase Custody Trust Company, also known as Coinbase Prime, oversees BlackRock's ether for the fund. Coinbase Prime provides storage, staking, governance, decentralized finance and other services to large financial institutions.