Global X 21Shares Ethereum ETF

About Global X ETFs 

Global X ETFs is a leading global ETF provider with a growing range of cost-effective and innovation-led products which are built to help investors and their advisers achieve better investment outcomes. While we are distinguished for our Thematic Growth, Income, and International Access ETFs, we also offer Core, Commodity, and Digital Assets funds to suit a wide range of investment objectives. Explore our ETFs, research, and insights, and more at www.globalxetfs.com.au.

Global X is a member of Mirae Asset Financial Group, a global leader in financial services, with more than US$528 billion in assets under management worldwide.¹ Mirae Asset has an extensive global ETF platform ranging across the US, Australia, Brazil, Canada, Colombia, Europe, Hong Kong, India, Japan, Korea, and Vietnam with almost $100 billion in assets under management.²

¹ Assets under management as at March 2023, Mirae Asset Global Investments 

² Assets under management as at June 2023, Mirae Asset Global Investments 

Amun Holdings Limited is the parent company of 21Shares AG and Jura Pentium AG (21Shares Group). Jura Pentium AG is the Administrator of the Fund and provides a range of services to the Responsible Entity in relation to the Fund.

The 21Shares Group pioneered the development of physically backed crypto-asset exchange traded  products (“ETPs”). Established in 2018, 21Shares AG was the first issuer to create and launch physically backed cryptocurrency exchange traded products.

Since then, the group has gone on to develop and operate the world’s most comprehensive suite of products providing access to cryptocurrencies including more than 20 cryptocurrency ETPs available across Europe on some of the largest regulated markets including Euronext, Xetra and SIX. Funds under management across all exchange traded products issued and operated within the 21Shares Group total approximately US$2.5 billion as at the date of this PDS.

Jura Pentium AG also provides issuance and administration services to third parties looking to gain access to the crypto-ETP space. Both 21Shares and third-party products are operated using Onyx, the proprietary administration software developed and managed by the 21Shares Group.

Jura Pentium AG will provide the administration services to the Responsible Entity and also support the responsible Entity through the provision of high-quality cryptocurrency research.

Since the crypto market is still relatively young, there can be issues with buying ether directly. These include low exchange quality, weak custody arrangements, vulnerability to security problems, the loss of private keys and passwords, and much more. At Global X, our mission is to bring a higher quality Ethereum proposition than what is already available to Australians.

EETH is 100% physically backed by ether, the private keys to which are segregated, and deposited into an offline wallet, known as "cold storage". Investors can buy the ETF directly through their existing brokerage account and do not require any resources for the management, custody and security of ether.

Ethereum is the name of the blockchain network that aims to be something like an all-purpose internet service, attempting to disrupt Amazon's AWS, Apple's app store and much else. Within the Ethereum blockchain, ether is the currency or token that is used to reward miners and make payments. As with Bitcoins, ether is mined and collected by those who maintain the network. EETH therefore invests in ether, however as ether is the currency of the Ethereum network, it is also inextricably investing in the network.

Bitcoin and Ethereum are both examples of blockchain technology. However, the similarities end there. Bitcoin is like a pocket calculator. It has one function: keeping track of transactions between parties. Ethereum, by contrast, has more use cases. Thanks to its “smart contracts” function, which are contracts that are automatically executed on its blockchain, Ethereum can be used more broadly. For this reason, Ethereum is at the heart of much crypto innovation, including non-fungible tokens (NFTs), and decentralised autonomous organisations (DAO).

There are various ways to secure an Ethereum wallet, the popular ones being to encrypt a wallet by using a strong password and to make a backup of the wallet. However, the best method is cold storage. This involves storing Ethereum private keys offline, meaning away from any internet access. Keeping ether offline substantially reduces the threat of hacking. As an additional layer of security, all movements from these cold storage accounts require approvals from multiple individuals, as the private keys are “sharded” – meaning they are broken up and distributed across many global servers– before funds can be released.

Coinbase is the custodian.

Coinbase’s vault has become the preferred storage of many institutions and it holds one of the largest stores of cryptocurrencies.

The vault offers advanced encryption and key management, multi-signature Ethereum addresses, military-grade physical security (like Faraday cages and former military bases) and highly secure processes to keep ether offline and geographically dispersed across three continents.

The key to this process is removing all access to private keys via the internet by physically isolating them.

The net asset value (NAV) of an ETF that holds shares is usually calculated using share prices at the close of trading. However, cryptocurrencies trade around the clock: there is no close. As such, the NAV of EETH must be calculated using a reference benchmark. For our purposes, we calculate the NAV by multiplying the coin entitlement of every outstanding EETH unit by the price of ether, as measured by CryptoCompare at 3pm Central European time. We then convert that amount into AUD using the WM/Refinitiv London 4pm AUD rate. We use European time because our partner 21Shares is based in Switzerland.

Ether has been among the best-performing assets over the past five years. Meaning that it may be used as an alpha tilt or satellite. However, past performance is not an indication of future performance. Alternatively, as cryptocurrency like ether is a completely different asset class and uncorrelated to shares, bonds, and commodities like gold, ether can be bought as a portfolio diversifier.