Correspondence 0001193125-23-252442 from Grayscale Ethereum Trust (ETH) (ETHE) (CIK 0001725210) (ETHE)
Grayscale Ethereum Trust (ETH) (ETHE) (CIK 0001725210)
Date: Oct. 6, 2023 · CIK: 0001725210 · Accession: 0001193125-23-252442
AI Filing Summary & Sentiment
File numbers found in text: 000-56193
Letter
Division of Corporation Finance Office of Crypto Assets U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549
Dear Mr. Envall and Mr. Lin:
On behalf of our client, Grayscale Investments, LLC, a Delaware limited liability company and the sponsor (the “Sponsor”) of Grayscale Ethereum Trust (ETH) (the “Trust”), this letter sets forth the Sponsor’s responses to the comment letter of the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) dated September 14, 2023, relating to the Trust’s Form 10-K for the fiscal year ended December 31, 2022 (the “2022 10-K”).
In preparing the 2022 10-K, the Sponsor considered prior guidance from the Staff regarding developments in the crypto asset markets, including in particular the sample letter to companies regarding recent developments in crypto asset markets published by the Staff in December 2022. Accordingly, and as more fully discussed below, the Sponsor believes that many of the considerations highlighted in the Staff’s comment letter are appropriately addressed in the 2022 10-K, to the extent material to the Trust and its investors.
For your convenience, we have reproduced the Staff’s comments preceding the Sponsor’s responses below. All capitalized terms used and not defined herein shall have the meaning given to them in the 2022 10-K.
Form 10-K for the Fiscal Year Ended December 31, 2022
Item 1. Business, page 1
1. If material to an understanding of your business, describe in future filings any direct or indirect exposures to other counterparties, custodians, or other participants in crypto asset markets known to:
◾ Have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment for the benefit of creditors, or have had a receiver appointed for them.
◾ Have experienced excessive redemptions or suspended redemptions or withdrawals of crypto assets.
◾ Have the crypto assets of their customers unaccounted for.
◾ Have experienced material corporate compliance failures.
Response
The Sponsor has evaluated the Trust’s direct and indirect exposure to other counterparties, custodians and participants in the crypto asset markets that have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment for the benefit of creditors, or have had a receiver appointed and has determined that the risks to the Trust arising from such exposures are primarily related to volatility and disruption in the crypto asset markets, loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital asset market participants and digital assets broadly that they may cause. The material risks to the Trust arising from such exposures are discussed in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity” (page 57) and “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Due to the unregulated nature and lack of transparency surrounding the operations of Digital Asset Exchanges, they may experience fraud, business failures, security failures or operational problems, which may adversely affect the value of ETH and, consequently, the value of the Shares” (pages 58-59). The Sponsor does not believe that the Trust at this time has any other material direct or indirect exposures to participants in crypto asset markets that have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment for the benefit of creditors, or have had a receiver appointed.
The Trust does not have any material direct exposure to counterparties, custodians or other participants in the crypto asset market that have experienced excessive redemptions or suspended redemptions or withdrawals of crypto assets, have the crypto assets of their customers unaccounted for or have experienced material corporate compliance failures. However, the Trust has indirect exposure to such entities to the extent their circumstances cause volatility and disruption in the crypto asset markets, loss of confidence in participants of the digital asset ecosystem or significant negative publicity around digital asset market participants and digital assets broadly. The Sponsor has disclosed such risks in the 2022 10-K under the risk factors referred to in the first paragraph to this response.
To the extent the Trust has any other material direct or indirect exposures to such other counterparties, custodians or participants in crypto asset markets in the future, it will include disclosure regarding such exposures in future filings.
Item 1A. Risk Factors, page 47
2. We note that Digital Currency Group, Inc., the parent company of the Sponsor, is currently party to various litigation claims and legal proceedings and experiencing financial difficulties, as indicated by recent news reports. To the extent material, please include risk factor disclosure in future filings describing the current and potential impacts therefrom on your business, including how such difficulties or any unfavorable outcomes in these claims and proceedings could negatively impact the Sponsor’s ability to continue managing the Trust or conduct its business.
October 6, 2023
Response
The Sponsor believes the risks to the Trust arising from the litigation claims and legal proceedings against, and any financial difficulties being experienced by, Digital Currency Group, Inc. (“DCG”) consist primarily of: (i) the risk that negative publicity surrounding DCG and its subsidiaries could negatively impact the reputation of the Sponsor and have an adverse impact on the trading price and/or value of the Trust’s Shares, (ii) the risk that these difficulties could lead to sales of a significant number of the Trust’s Shares and negatively impact the trading price of the Shares and (iii) the risk that these financial difficulties or any unfavorable outcomes in these claims and proceedings could cause the ownership of the Sponsor to be affected.
With respect to the first two risks described above, the Sponsor refers the Staff to the disclosure regarding the related difficulties experienced by DCG and its subsidiaries and the potential impact they could have on the Sponsor and the Trust included in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity” (page 57).
With respect to the third risk described above, the Sponsor does not believe there is a material risk at this time that any legal and financial difficulties being experienced by DCG would cause the ownership of the Sponsor to be affected and the Sponsor to be unable to continue managing the Trust or conducting its business. The Sponsor refers the Staff to the more general discussion of the risks of the discontinuance of the Sponsor’s services in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to Potential Conflicts of Interest—Shareholders cannot be assured of the Sponsor’s continued services, the discontinuance of which may be detrimental to the Trust” (page 77).
To the extent there are any updates with respect to the risks to the Sponsor and the Trust arising from any legal and financial difficulties of DCG that are material to the Trust, the Sponsor will disclose such updates in future filings.
3. To the extent material, discuss in future filings any reputational harm you may face in light of the recent disruption in the crypto asset markets. For example, discuss how market conditions have affected how your business is perceived by counterparties and regulators, and whether there is a material impact on your operations or financial condition.
Response
The Sponsor has evaluated the recent disruption in crypto markets and believes that such disruption could cause the Trust to face reputational harm primarily as a result of (i) market participants’ loss of confidence in crypto asset markets and acceptance of Ethereum and digital assets more generally, (ii) changes in how regulators view the crypto industry and, consequently, how they may view the Trust, the Sponsor and/or the other service providers of the Trust, and (iii) negative publicity surrounding digital asset market participants, including affiliates of the Sponsor and the Trust, and digital assets more broadly.
The aforementioned risks, to the extent material to the Trust, are disclosed in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Recent developments in
October 6, 2023
the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity” (page 57).
To the extent there are any material updates with respect to any reputational harm that the Trust may face in light of the recent disruption in the crypto asset markets, including how market conditions might affect how the Trust’s business is perceived by counterparties and regulators, and material impacts on the Trust’s operations or financial condition, the Sponsor will disclose such updates in future filings.
4. Describe in future filings any material risks to your business from the possibility of regulatory developments related to crypto assets and crypto asset markets. Identify material pending crypto legislation or regulation and describe any material effects it may have on your business, financial condition, and results of operations.
Response
The Sponsor believes that the risks faced by the Trust arising from the possibility of regulatory developments related to crypto assets and crypto asset markets consist primarily of: (i) the risk that regulatory developments could negatively impact the market for digital assets and how they function and lead to a decline in the prices and/or liquidity of Ethereum, and (ii) the risk that regulatory developments could negatively impact the ability of the Trust to continue to operate as currently structured.
The Sponsor has disclosed the first risk described above, to the extent material to the Trust, and identified material pending crypto legislation and regulation that could have a material effect on the Trust as a result thereof, in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares” and in particular refers the Staff to the disclosure under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—Regulatory changes or actions by the U.S. Congress or any U.S. federal or state agencies may affect the value of the Shares or restrict the use of ETH, validating activity or the operation of the Ethereum Network or the Digital Asset Markets in a manner that adversely affects the value of the Shares” (pages 68-69), “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—A determination that ETH or any other digital asset is a ‘security’ may adversely affect the value of ETH and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust” (pages 69-71) and in the subsequent updates thereto included in the Trust’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2023, and “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—Regulatory changes or other events in foreign jurisdictions may affect the value of the Shares or restrict the use of one or more digital assets, validating activity or the operation of their networks or the Digital Asset Exchange Market in a manner that adversely affects the value of the Shares” (pages 71-72). The Sponsor also refers the Staff to the disclosure included in the 2022 10-K under “Part I—Item 1. Business—Overview of the ETH Industry and Market—Government Oversight” (pages 16-18) for a further discussion of regulatory developments, including recently adopted and pending legislation and regulation, related to crypto assets and crypto asset markets.
The second risk described above is disclosed, to the extent material to the Trust, in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—A determination that ETH or any other digital asset is a ‘security’ may adversely affect the value of ETH and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust” (pages 69-71) and in the subsequent updates thereto included in the Trust’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2023, and “Part I—Item 1A. Risk Factors—Risk Factors
October 6, 2023
Related to the Regulation of the Trust and the Shares—Regulatory changes or interpretations could obligate the Trust or the Sponsor to register and comply with new regulations, resulting in potentially extraordinary, nonrecurring expenses to the Trust” (page 72).
To the extent there are any material updates with respect to risks arising from legislative or regulatory developments related to crypto assets and crypto asset markets, the Sponsor will disclose such updates in future filings.
5. Describe in future filings any material risks you face related to the assertion of jurisdiction by U.S. and foreign regulators and other government entities over crypto assets and crypto asset markets.
Response
As discussed in response to comment 4 above, the Sponsor believes that the risks faced by the Trust from the possibility of U.S. and foreign regulators and other government entities asserting jurisdiction over crypto assets and crypto asset markets consist primarily of: (i) the risk that U.S. and foreign regulators and other government entities asserting jurisdiction over crypto assets and crypto assets markets could negatively impact the markets for digital assets and how they function and lead to a decline in the price and/or liquidity of Ethereum, and (ii) the risk that U.S. and foreign regulators and other government entities asserting jurisdiction over crypto assets and crypto asset markets could negatively impact the ability of the Trust to continue to operate as currently structured.
The Sponsor has disclosed the first risk described above, to the extent material to the Trust, and identified potential actions by U.S. and foreign regulators and other government entities which could have a material effect on the Trust as a result thereof, in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares” and in particular refers the Staff to the disclosure under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—Regulatory changes or actions by the U.S. Congress or any U.S. federal or state agencies may affect the value of
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CORRESP 1 filename1.htm CORRESP Hillary A. Coleman +1 212 450 4733 hillary.coleman@davispolk.com Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 davispolk.com October 6, 2023 Re: Grayscale Ethereum Trust (ETH) Form 10-K for the Fiscal Year Ended December 31, 2022 Filed March 1, 2023 File No. 000-56193 Eric Envall David Lin Division of Corporation Finance Office of Crypto Assets U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Dear Mr. Envall and Mr. Lin: On behalf of our client, Grayscale Investments, LLC, a Delaware limited liability company and the sponsor (the “Sponsor”) of Grayscale Ethereum Trust (ETH) (the “Trust”), this letter sets forth the Sponsor’s responses to the comment letter of the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (the “Commission”) dated September 14, 2023, relating to the Trust’s Form 10-K for the fiscal year ended December 31, 2022 (the “2022 10-K”). In preparing the 2022 10-K, the Sponsor considered prior guidance from the Staff regarding developments in the crypto asset markets, including in particular the sample letter to companies regarding recent developments in crypto asset markets published by the Staff in December 2022. Accordingly, and as more fully discussed below, the Sponsor believes that many of the considerations highlighted in the Staff’s comment letter are appropriately addressed in the 2022 10-K, to the extent material to the Trust and its investors. For your convenience, we have reproduced the Staff’s comments preceding the Sponsor’s responses below. All capitalized terms used and not defined herein shall have the meaning given to them in the 2022 10-K. Form 10-K for the Fiscal Year Ended December 31, 2022 Item 1. Business, page 1 1. If material to an understanding of your business, describe in future filings any direct or indirect exposures to other counterparties, custodians, or other participants in crypto asset markets known to: ◾ Have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment for the benefit of creditors, or have had a receiver appointed for them. ◾ Have experienced excessive redemptions or suspended redemptions or withdrawals of crypto assets. ◾ Have the crypto assets of their customers unaccounted for. ◾ Have experienced material corporate compliance failures. Response The Sponsor has evaluated the Trust’s direct and indirect exposure to other counterparties, custodians and participants in the crypto asset markets that have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment for the benefit of creditors, or have had a receiver appointed and has determined that the risks to the Trust arising from such exposures are primarily related to volatility and disruption in the crypto asset markets, loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital asset market participants and digital assets broadly that they may cause. The material risks to the Trust arising from such exposures are discussed in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity” (page 57) and “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Due to the unregulated nature and lack of transparency surrounding the operations of Digital Asset Exchanges, they may experience fraud, business failures, security failures or operational problems, which may adversely affect the value of ETH and, consequently, the value of the Shares” (pages 58-59). The Sponsor does not believe that the Trust at this time has any other material direct or indirect exposures to participants in crypto asset markets that have filed for bankruptcy, been decreed insolvent or bankrupt, made any assignment for the benefit of creditors, or have had a receiver appointed. The Trust does not have any material direct exposure to counterparties, custodians or other participants in the crypto asset market that have experienced excessive redemptions or suspended redemptions or withdrawals of crypto assets, have the crypto assets of their customers unaccounted for or have experienced material corporate compliance failures. However, the Trust has indirect exposure to such entities to the extent their circumstances cause volatility and disruption in the crypto asset markets, loss of confidence in participants of the digital asset ecosystem or significant negative publicity around digital asset market participants and digital assets broadly. The Sponsor has disclosed such risks in the 2022 10-K under the risk factors referred to in the first paragraph to this response. To the extent the Trust has any other material direct or indirect exposures to such other counterparties, custodians or participants in crypto asset markets in the future, it will include disclosure regarding such exposures in future filings. Item 1A. Risk Factors, page 47 2. We note that Digital Currency Group, Inc., the parent company of the Sponsor, is currently party to various litigation claims and legal proceedings and experiencing financial difficulties, as indicated by recent news reports. To the extent material, please include risk factor disclosure in future filings describing the current and potential impacts therefrom on your business, including how such difficulties or any unfavorable outcomes in these claims and proceedings could negatively impact the Sponsor’s ability to continue managing the Trust or conduct its business. October 6, 2023 2 Response The Sponsor believes the risks to the Trust arising from the litigation claims and legal proceedings against, and any financial difficulties being experienced by, Digital Currency Group, Inc. (“DCG”) consist primarily of: (i) the risk that negative publicity surrounding DCG and its subsidiaries could negatively impact the reputation of the Sponsor and have an adverse impact on the trading price and/or value of the Trust’s Shares, (ii) the risk that these difficulties could lead to sales of a significant number of the Trust’s Shares and negatively impact the trading price of the Shares and (iii) the risk that these financial difficulties or any unfavorable outcomes in these claims and proceedings could cause the ownership of the Sponsor to be affected. With respect to the first two risks described above, the Sponsor refers the Staff to the disclosure regarding the related difficulties experienced by DCG and its subsidiaries and the potential impact they could have on the Sponsor and the Trust included in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity” (page 57). With respect to the third risk described above, the Sponsor does not believe there is a material risk at this time that any legal and financial difficulties being experienced by DCG would cause the ownership of the Sponsor to be affected and the Sponsor to be unable to continue managing the Trust or conducting its business. The Sponsor refers the Staff to the more general discussion of the risks of the discontinuance of the Sponsor’s services in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to Potential Conflicts of Interest—Shareholders cannot be assured of the Sponsor’s continued services, the discontinuance of which may be detrimental to the Trust” (page 77). To the extent there are any updates with respect to the risks to the Sponsor and the Trust arising from any legal and financial difficulties of DCG that are material to the Trust, the Sponsor will disclose such updates in future filings. 3. To the extent material, discuss in future filings any reputational harm you may face in light of the recent disruption in the crypto asset markets. For example, discuss how market conditions have affected how your business is perceived by counterparties and regulators, and whether there is a material impact on your operations or financial condition. Response The Sponsor has evaluated the recent disruption in crypto markets and believes that such disruption could cause the Trust to face reputational harm primarily as a result of (i) market participants’ loss of confidence in crypto asset markets and acceptance of Ethereum and digital assets more generally, (ii) changes in how regulators view the crypto industry and, consequently, how they may view the Trust, the Sponsor and/or the other service providers of the Trust, and (iii) negative publicity surrounding digital asset market participants, including affiliates of the Sponsor and the Trust, and digital assets more broadly. The aforementioned risks, to the extent material to the Trust, are disclosed in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Digital Asset Markets—Recent developments in October 6, 2023 3 the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity” (page 57). To the extent there are any material updates with respect to any reputational harm that the Trust may face in light of the recent disruption in the crypto asset markets, including how market conditions might affect how the Trust’s business is perceived by counterparties and regulators, and material impacts on the Trust’s operations or financial condition, the Sponsor will disclose such updates in future filings. 4. Describe in future filings any material risks to your business from the possibility of regulatory developments related to crypto assets and crypto asset markets. Identify material pending crypto legislation or regulation and describe any material effects it may have on your business, financial condition, and results of operations. Response The Sponsor believes that the risks faced by the Trust arising from the possibility of regulatory developments related to crypto assets and crypto asset markets consist primarily of: (i) the risk that regulatory developments could negatively impact the market for digital assets and how they function and lead to a decline in the prices and/or liquidity of Ethereum, and (ii) the risk that regulatory developments could negatively impact the ability of the Trust to continue to operate as currently structured. The Sponsor has disclosed the first risk described above, to the extent material to the Trust, and identified material pending crypto legislation and regulation that could have a material effect on the Trust as a result thereof, in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares” and in particular refers the Staff to the disclosure under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—Regulatory changes or actions by the U.S. Congress or any U.S. federal or state agencies may affect the value of the Shares or restrict the use of ETH, validating activity or the operation of the Ethereum Network or the Digital Asset Markets in a manner that adversely affects the value of the Shares” (pages 68-69), “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—A determination that ETH or any other digital asset is a ‘security’ may adversely affect the value of ETH and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust” (pages 69-71) and in the subsequent updates thereto included in the Trust’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2023, and “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—Regulatory changes or other events in foreign jurisdictions may affect the value of the Shares or restrict the use of one or more digital assets, validating activity or the operation of their networks or the Digital Asset Exchange Market in a manner that adversely affects the value of the Shares” (pages 71-72). The Sponsor also refers the Staff to the disclosure included in the 2022 10-K under “Part I—Item 1. Business—Overview of the ETH Industry and Market—Government Oversight” (pages 16-18) for a further discussion of regulatory developments, including recently adopted and pending legislation and regulation, related to crypto assets and crypto asset markets. The second risk described above is disclosed, to the extent material to the Trust, in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—A determination that ETH or any other digital asset is a ‘security’ may adversely affect the value of ETH and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust” (pages 69-71) and in the subsequent updates thereto included in the Trust’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2023, and “Part I—Item 1A. Risk Factors—Risk Factors October 6, 2023 4 Related to the Regulation of the Trust and the Shares—Regulatory changes or interpretations could obligate the Trust or the Sponsor to register and comply with new regulations, resulting in potentially extraordinary, nonrecurring expenses to the Trust” (page 72). To the extent there are any material updates with respect to risks arising from legislative or regulatory developments related to crypto assets and crypto asset markets, the Sponsor will disclose such updates in future filings. 5. Describe in future filings any material risks you face related to the assertion of jurisdiction by U.S. and foreign regulators and other government entities over crypto assets and crypto asset markets. Response As discussed in response to comment 4 above, the Sponsor believes that the risks faced by the Trust from the possibility of U.S. and foreign regulators and other government entities asserting jurisdiction over crypto assets and crypto asset markets consist primarily of: (i) the risk that U.S. and foreign regulators and other government entities asserting jurisdiction over crypto assets and crypto assets markets could negatively impact the markets for digital assets and how they function and lead to a decline in the price and/or liquidity of Ethereum, and (ii) the risk that U.S. and foreign regulators and other government entities asserting jurisdiction over crypto assets and crypto asset markets could negatively impact the ability of the Trust to continue to operate as currently structured. The Sponsor has disclosed the first risk described above, to the extent material to the Trust, and identified potential actions by U.S. and foreign regulators and other government entities which could have a material effect on the Trust as a result thereof, in the 2022 10-K under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares” and in particular refers the Staff to the disclosure under “Part I—Item 1A. Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—Regulatory changes or actions by the U.S. Congress or any U.S. federal or state agencies may affect the value of