Grayscale Splits Shares of Its Ethereum Trust (ETHE) to Improve Liquidity

UTC by Bhushan Akolkar · 2 min read
Grayscale Splits Shares of Its Ethereum Trust (ETHE) to Improve Liquidity
Photo: Coinspeaker

The latest decision of splitting the ETHE shares comes on the heels of improving its market liquidity and promote higher investor participation. The Grayscale Ethereum Trust (ETHE) holds more than $1.6 billion worth of assets under management.

On Wednesday, December 2, digital asset manager Grayscale announced a 9:1 share split for its Grayscale Ethereum Trust (ETHE). This share split comes as part of Grayscale’s plans to improve the affordability of ETHE shares as well as improve the liquidity.

The Grayscale Ethereum Trust (ETHE) is the company’s second-largest investment vehicle with $1.6 billion in assets under management. As part of the share split, Grayscale will take into account the final record of shareholders on December 14. Each shareholder holding the ETHE share will get 8 additional shares effective December 17.

Currently, the Grayscale Ethereum Trust (ETHE) has nearly 29.5 million outstanding shares wherein each share represents the ownership of 0.09284789 ETH. Thus, with the stock split effective December 17, there will be a total of 265.5 million ETHE shares. Also, each share then represents ownership of 0.01031643 of an ether token. The press release notes:

“Shareholders are not required to take any action to receive the Shares in connection with the Share Split and they will not be required to surrender or exchange their Shares in the Trust. The transfer agent will automatically issue the new Shares in the Share Split”.

Stock splits are very common in the traditional markets and happen only to create more outstanding shares. A stock split increases the total shares in circulation thereby making each share proportionately less valuable and more affordable. This improves liquidity as more investors can participate in buying the shares at lower prices.

Rise of Grayscale Ethereum Trust

As said, the Grayscale Ethereum Trust (ETHE) is the company’s second-biggest investment vehicle after the Grayscale Bitcoin Trust (GBTC). Value now at $1.6 billion, the ETHE represents over 10% of the total assets under management by Grayscale.

Just as the ETH price has surged nearly 350% year-to-date, shares of the Grayscale Ethereum Trust (ETHE) have also surged nearly 350% during the same period. Also, ETHE has attracted significant institutional money over the last few months.

In the last month of November, the total assets under management of ETH have jumped nearly 50%. Back in October 2020, the Grayscale Ethereum Trust also became an SEC reporting company thereby giving more legitimacy to the fund.

The ETH price has recently been moving around $600 as the Ethereum 2.0 Beacon Chain went live on Tuesday, December 1. This also triggers the beginning of the successful transition to the Proof-of-Stake Ethereum 2.0 blockchain.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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