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tl;dr
Grayscale Investments has announced July 18, 2024, as the record date for the initial creation and distribution of shares of the Grayscale Ethereum Mini Trust (ETH Trust) to shareholders of Grayscale Ethereum Trust (ETHE). This Initial Distribution will entitle each ETHE shareholder to receive share...
Grayscale Investments has set July 18, 2024, as the record date for the initial issuance and distribution of shares of the Grayscale Ethereum Mini Trust (ETH Trust) to shareholders of Grayscale Ethereum Trust (ETHE). ETHE shareholders will receive shares of the ETH Trust in proportion to their ETHE holdings, with the ETH Trust aiming for listing on the NYSE Arca under the ticker symbol “ETH” subject to regulatory approval. The Distribution Date is contingent on specific events, with no assurance of the initial distribution taking place as projected.
ETHE will transfer 10% of its Ether holdings to the ETH Trust, and each ETHE share held at 4:00 PM ET on the Record Date will be exchanged for one ETH Share. The ETH Trust, sponsored by Grayscale, seeks to provide an expanded range of crypto investment products and increase value for shareholders. The Initial Distribution will not require payment or action from ETHE shareholders, as they will automatically receive ETH Shares once distribution conditions are met.
The Distribution Date is subject to meeting events such as the effectiveness of the registration statement of ETH Trust on Form 8-A and Form S-1 and the approval of NYSE Arca for the listing of the ETH Shares. Despite setting the earliest possible Distribution Date as the 19th day of July, Grayscale highlighted the uncertainty of the initial distribution due to legal and procedural factors.
This announcement follows Grayscale's strategic efforts to expand its product line and navigate the evolving legal landscape, including pursuing licenses for its crypto investment products. The creation of the ETH Trust holds implications for ETHE shareholders, indicating significant developments for trading and tax purposes. After the initial distribution, shareholders will see both ETHE Shares and ETH Shares in their investment accounts post-July 18, 2024.
Grayscale anticipates the Initial Distribution to be tax-neutral for U.S. federal income tax purposes, with neither the contribution of Ether to the ETH Trust nor the distribution of ETH Shares expected to result in taxable income, gain, loss, deduction, credit, or proceeds for ETHE shareholders.
This move underscores Grayscale's commitment to enhancing its crypto investment offerings in response to market demands and legal requirements, with the ETH Trust catering to long-term investors and featuring lower fees compared to the original ETHE.