CoinShares Physical Ethereum
A physically-backed Exchange Traded Product (ETP) providing secure, transparent exposure to the Ethereum blockchain’s native asset, Ether.
Ethereum's investment case
Strategic
Ethereum portfolio allocation sharpe impact
- A small weighting of ether within a multi-asset portfolio has historically had an outsized positive impact on both risk-adjust returns and diversification relative to other alternative assets, including bitcoin
- Ether’s historical lack of correlation to assets outside of cryptocurrencies make it a useful alternative asset that can help reduce exposure to economic cycles
- Quarterly adjustments (rebalancing) of ether, back to the original weight in the portfolio can help limit volatility and enhance returns
Fundamental
Given Ethereum’s open and flexible nature, some argue the network will host a new digital economy, where customisable goods and services are inherently trust-minimised and without single points of failure. And within its online domain, ether, the native Ethereum asset, would accrue value as the digital oil that fuels new types of products and services.
Ether is not uniquely scarce as its predecessor bitcoin, instead, ether is utilised to operate programs deployed on its blockchain network. There is no supply cap and on average, issuance policies have historically changed more than once per year.
- Ethereum’s Decentralised Finance (DeFi) sector has rapidly grown to establish a variety of financial primitives including exchange, lending, and synthetic assets. In 2020, the total value of this sector grew over 20x (Source: DeFiPulse)
- Ether is establishing itself as a highly liquid asset, with daily spot trade volumes averaging over US$4 billion since 2017 (Source Kaiko, CoinShares Research, data available as of February 2021)
- Over the course of 2020, the Ethereum blockchain cleared over US$566 billion worth of transfer value (Source: CoinMetrics)
Tactical
Within ether’s institutional and platform-specific markets, professional traders and funds have historically taken advantage of volatile, short-term price movements driven by supply/demand imbalances.
- Many indicators used for tactical purposes in ether markets are the same as in traditional and bitcoin markets, such as price, spot volumes, derivative volumes, futures basis, and implied volatility
- The transparency of the Ethereum blockchain also enables a range of unique indicators that depict the settlement activity of the system itself or the behavior of ethereum holders, such as Network-to-Transaction Value Ratio (NTV), Market Value to Realised Value ratio (MVRV), Total Value Locked (TVL), and net exchange flows
- Due to Ethereum’s open and programmable environment, newer DeFi applications have created markets that offer unique trading opportunities such as perpetual swaps, flash loans, liquidity mining, and automated market-making.
Ethereum's investment case
Strategic
Ethereum portfolio allocation sharpe impact
- A small weighting of ether within a multi-asset portfolio has historically had an outsized positive impact on both risk-adjust returns and diversification relative to other alternative assets, including bitcoin
- Ether’s historical lack of correlation to assets outside of cryptocurrencies make it a useful alternative asset that can help reduce exposure to economic cycles
- Quarterly adjustments (rebalancing) of ether, back to the original weight in the portfolio can help limit volatility and enhance returns
Fundamental
Given Ethereum’s open and flexible nature, some argue the network will host a new digital economy, where customisable goods and services are inherently trust-minimised and without single points of failure. And within its online domain, ether, the native Ethereum asset, would accrue value as the digital oil that fuels new types of products and services.
Ether is not uniquely scarce as its predecessor bitcoin, instead, ether is utilised to operate programs deployed on its blockchain network. There is no supply cap and on average, issuance policies have historically changed more than once per year.
- Ethereum’s Decentralised Finance (DeFi) sector has rapidly grown to establish a variety of financial primitives including exchange, lending, and synthetic assets. In 2020, the total value of this sector grew over 20x (Source: DeFiPulse)
- Ether is establishing itself as a highly liquid asset, with daily spot trade volumes averaging over US$4 billion since 2017 (Source Kaiko, CoinShares Research, data available as of February 2021)
- Over the course of 2020, the Ethereum blockchain cleared over US$566 billion worth of transfer value (Source: CoinMetrics)
Tactical
Within ether’s institutional and platform-specific markets, professional traders and funds have historically taken advantage of volatile, short-term price movements driven by supply/demand imbalances.
- Many indicators used for tactical purposes in ether markets are the same as in traditional and bitcoin markets, such as price, spot volumes, derivative volumes, futures basis, and implied volatility
- The transparency of the Ethereum blockchain also enables a range of unique indicators that depict the settlement activity of the system itself or the behavior of ethereum holders, such as Network-to-Transaction Value Ratio (NTV), Market Value to Realised Value ratio (MVRV), Total Value Locked (TVL), and net exchange flows
- Due to Ethereum’s open and programmable environment, newer DeFi applications have created markets that offer unique trading opportunities such as perpetual swaps, flash loans, liquidity mining, and automated market-making.
Ethereum's
Investment Universe
Click on each investment method to learn more
Exchange
Traded Products (ETPs)
Trade like shares, slot into existing brokerage accounts and portfolio management systems.
Exchange Traded
Products (ETPs)
Trade like shares, slot into existing brokerage accounts and portfolio management systems.
Brokers
Intermediaries such as CoinShares Capital Markets acting as a bridge between crypto exchanges and professional investors.
OTC
Trusts
Publicly traded investment trusts, bought and sold over-the-counter (OTC). Significant premiums often apply.
Ether CFDs
Often offered by traditional trading platforms for high fees. Cash settled derivative contracts offering leveraged speculative trading.
Crypto
Exchanges
Exchange venues where individual investors can deposit fiat and trade crypto. Liquidity is fragmented across multiple venues.
Ether
Futures
Regulated cash settled CME Ether Futures, or ‘crypto only’ bitcoin settled futures via unregulated exchanges like BitMex.
Crypto Hedge
Funds
Hedge funds running active digital asset strategies, including quantitative, long only, long-short & multi-strategy.
Exchange
Traded Products (ETPs)
Trade like shares, slot into existing brokerage accounts and portfolio management systems.
CoinShares Physical ETP Structure
CoinShares Physical Ether (ETHE) is a physically backed exchange traded product (ETP). ETHE Securities derive their value from the underlying cryptocurrency. All ether is securely held with Komainu - an institutional-grade regulated digital asset custodian.
CoinShares Physical ETP Structure
- Investor places buy order for ETHE Securities with a Broker
- Broker either sources existing inventory or asks Liquidity Provider to apply for new ETHE Securities
- Liquidity Provider purchases ether in the crypto markets for delivery to the Issuer
- Liquidity Provider then sends ether to the Issuer’s custodian
- Only after ether has been received, Issuer delivers ETHE Securities to Liquidity Provider
- Liquidity Provider settles securities with Broker and Investor receives those ETHE Securities in exchange for the cash
- Investor places sell order with a Broker
- Broker sells ETHE Securities to Liquidity Provider for cash
- Liquidity Provider delivers ETHE Securities to Issuer
- Only after the ETHE Securities have been delivered, Issuer delivers relevant amount of ether to Liquidity Provider
- Liquidity Provider either holds or sells ether for cash in the crypto markets
| Underlying Asset | Ether |
| Base Currency | USD |
| Management fee | 1.25% |
| Bloomberg Code | ETHE SW |
| Securities Lending | No |
| ISIN | GB00BLD4ZM24 |
| Leverage Factor | N/A |
| Coin Entitlement (CE) | 0.03 ETH at launch (Download CE Calculator) |
| Price per security | Coin Entitlement (CE) x Ether price |
| Domicile | Jersey |
| Replication method | Physical |
| Legal structure | Debt Security (ETP) |
| UCITS Eligible | Yes *UCITS eligibility varies by jurisdiction. Please contact CoinShares if you would like to discuss. |
| UK Reporting Fund Status | Pending |
| Custodian | Komainu (Jersey) Limited |
| Administrator | JTC Fund Solutions (Jersey) Limited |
| Trustee | The Law Debenture Trust Corporation p.l.c. |
| Auditor | Baker Tilly Channel Islands Limited |
| Issuer | CoinShares Digital Securities Limited |
| Registrar | Computershare Investor Services (Jersey) Ltd |
| Country | Exchange | Trading Currency | Bloomberg Code | ISIN | SEDOL | WKN | Listing Date |
| Switzerland | SIX | USD | ETHE SW | GB00BLD4ZM24 | BLD4ZM2 | A3GQ2N | 23/02/2021 |
| Switzerland | SIX | EUR | ETHEEUR SW | GB00BLD4ZM24 | BKPKL67 | A3GQ2N | 23/02/2021 |
| Switzerland | SIX | CHF | ETHECHF SW | GB00BLD4ZM24 | BKPKL89 | A3GQ2N | 23/02/2021 |
| Germany | Börse Xetra | EUR | CETH GY | GB00BLD4ZM24 | BKPKL67 | A3GQ2N | 07/06/2021 |
| France | Euronext Paris | EUR | CETH FP | GB00BLD4ZM24 | BMYX796 | A3GQ2N | 07/09/2021 |
| Netherlands | Euronext Amsterdam | EUR | CETH NA | GB00BLD4ZM24 | BMYX785 | A3GQ2N | 07/09/2021 |
How To Invest
Platforms
CoinShares Physical Ethereum (ETHE) can be bought and sold in the same way as shares or funds. You can invest in ETHE via your existing investment platform or broker:
- Search for ETHE, CoinShares Physical Ethereum, or GB00BLD4ZM24 on your investment platform
- Input the number or value of securities you wish to buy or sell
- Place the order
Institutions
We’ve partnered with liquidity providers Flow Traders, DRW and Jane Street.
Our Capital Markets desk has decades of experience in traditional securities trading, and has also crucially been trading in spot and derivative crypto markets since 2014.
Institutions can contact us to discuss efficient execution, or for unique & direct insight into the digital asset ecosystem.
FAQs
-
An Exchange Traded Product (ETP) is a financial instrument traded on a stock exchange, like shares. They can provide investors with exposure to a huge variety of investments, such as equities, commodities, fixed income, and cryptocurrencies, and can often be purchased through tax-efficient wrappers.
Similar to shares, ETPs can be bought and sold whenever the stock exchange is open as prices are quoted throughout the day, and can often be purchased through tax-efficient wrappers.
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Every share of ETHE is ‘physically backed’ by an amount of ether, which is securely stored with a custodian. You can see how much ether is backing your shares by checking the daily Coin Entitlement figure (i.e. how much ether each ETHE Security entitles the holder to).
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We believe there are three main investment cases for bitcoin: strategic, fundamental and tactical. You can learn more about these here.
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CoinShares is Europe’s largest digital asset ETP provider with over $4bn in assets under management for clients across the continent (as of 15 Feburary 2021).
We pioneered the first regulated bitcoin fund in 2014, and are solely focused on cryptocurrencies and digital assets.
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CoinShares Physical Bitcoin is listed on the SIX Swiss Exchange in Zurich, Switzerland's principal stock exchange.
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The risk factors relating to the underlying cryptocurrencies are outlined in the Risk Factors section of the Prospectus.
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ETPs provide exposure to a wide range of asset classes and indices that can be difficult or costly to access directly, whilst trading through the same brokers and platforms as shares.
Similar to shares, ETPs can be bought and sold whenever the stock exchange is open as prices are quoted throughout the day, and can often be purchased through tax-efficient wrappers.
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