SecProbe.io

CORRESP
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filename1.htm

VIA EDGAR

July 8, 2024

Division of Corporation Finance

Office of Crypto Assets

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

    Re:
    21Shares Core Ethereum ETF

Amendment No. 4 to Registration Statement on Form S-1

Filed June 21, 2024

File No. 333-274364

To Whom it May Concern:

On behalf of 21Shares Core Ethereum ETF (“Trust”),
submitted herewith via the EDGAR system are the responses to the comments of the staff of the Office of Crypto Assets of the Division
of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (“SEC”) with respect
to Amendment No. 4 to the Trust’s registration statement on Form S-1 filed on June 21, 2024 (“Registration Statement”).
The Trust has considered your comments and has authorized us to make the responses and changes discussed below to the registration statement
on its behalf. Below, we describe the changes that have been or will be incorporated into the Trust’s registration statement in
response to the Staff of the SEC’s comments, provided in correspondence dated June 28, 2024, and provide any responses to or any
supplemental explanations of such comments, as requested.

For your convenience, we have restated your comments
below followed by our responses. Capitalized terms used but not defined in this letter have the meaning given to them in the Registration
Statement. We will incorporate any changes referenced below into a future amendment to the Registration Statement.

Comment 1: Please disclose in the Prospectus
Summary, if true, that the Trust, the Sponsor, and the service providers will not loan or pledge the Trust’s assets, nor will the
Trust’s assets serve as collateral for any loan or similar arrangement. Also, we note your disclosure on pages 96 and 97 indicates
that there is an exception to the prohibition on loans or pledges, but the similar disclosure on pages 84 and 89 does not indicate this.
Please revise throughout for consistency.

Response: The Trust has incorporated this
comment and the impacted disclosure will be revised as follows:

The Trust will custody its ether
at a regulated third-party custodian, Coinbase Custody Trust Company, LLC (the “Ether Custodian”). The Ether Custodian is
chartered as a New York state limited liability trust company that provides custody and trade execution services for digital assets.
The Ether Custodian is not Federal Deposit Insurance Corporation (“FDIC”)-insured but carries insurance provided by private
insurance carriers. The Trust, the Sponsor and the service providers will not loan or pledge the Trust’s assets, nor will the
Trust’s assets serve as collateral for any loan or similar arrangement, other than in connection with the Post-Trade Financing Agreement.
The Trust will not invest in derivatives. The Sponsor believes that the Shares are designed to provide investors with a cost-effective
and convenient way to invest in ether without purchasing, holding and trading ether directly.

Additionally, the section “Custody of the Trust’s Assets”
will be revised as follows:

Ether held in the Trust’s account
with the Ether Custodian is the property of the Trust. The Trust, the Sponsor and the service providers will not loan or pledge the Trust’s
assets nor will the Trust’s assets serve as collateral for any loan or similar arrangement, other than in connection with the
Post-Trade Financing Agreement (as defined below). The Trust will not utilize leverage, derivatives or any similar arrangements in
seeking to meet its investment objective.

Additionally, the section “Prime Broker” will be revised
as follows:

Other than in connection with the
Post-Trade Financing Agreement, (1) the Trust, the Sponsor and the service providers will not loan or pledge the Trust’s assets
nor will the Trust’s assets serve as collateral for any loan or similar arrangement, other than in connection with the Post-Trade
Financing Agreement; and (2) the Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet
its investment objective.

Comment 2: With respect to the ether supply,
you provide market capitalization and market share information as of May 20, 2024, and ether issued and burned information as of May 22,
2024. Please update this information throughout as of June 30, 2024, or the most recent practicable date. Similarly update the Constituent
Exchanges comprising the CF Benchmarks Index to the extent more recent information is available.

Response: The Trust has incorporated this comment and the impacted
disclosure will be revised as follows:

The value of ether is determined
in part by the supply of and demand for, ether in the markets for exchange that have been organized to facilitate the trading of ether.
Ether is the second largest cryptocurrency by market capitalization behind bitcoin. As of June 30, 2024, ether had a total market
capitalization of approximately $405.1 billion and represented approximately 16.6% of the entire digital asset market. Ether
is maintained on the Ethereum network. No single entity owns or operates the Ethereum network. The Ethereum network is accessed through
software and governs ether’s creation and movement. The source code for the Ethereum network is open-source, and anyone can contribute
to its development.

Additionally, the sections “Limits on ether supply” will
be revised as follows:

Ether is the second largest cryptocurrency
by market capitalization behind bitcoin. As of June 30, 2024, ether had a total market capitalization of approximately $405.1
billion and represented approximately 16.6% of the entire digital asset market.

The rate at which new ether are
issued and put into circulation is expected to vary. The Ethereum network has no formal cap on the total supply of ether. As of the date
of this prospectus, the Ethereum network has a total outstanding supply of approximately 120.3M ether. The Ethereum network does,
however, feature several mechanisms that, individually and in aggregate, have the effect of limiting the total supply of ether outstanding.
These mechanisms are sometimes referred to collectively as the “Ethereum Triple Halving.”

As a result of the Merge, where the
Ethereum network moved from a proof-of-work to a proof-of-stake mechanism under Ethereum 2.0, the rate of issuance is greatly
reduced. Under proof-of-work, miners expend computational resources to compete to validate transactions and are rewarded coins in proportion
to the amount of computational resources expended, which resulted in comparably more new tokens rewarded. By contrast, under proof-of-stake,
validators risk or “stake” coins to compete to be randomly selected to validate transactions and are rewarded coins in proportion
to the amount of coins staked, which results in comparably fewer new tokens rewarded. Following the Merge, approximately 1,700 ether are
issued per day, though the issuance rate varies based on the number of validators on the network. As of June 30, 2024, approximately
2,638 ether were issued in the previous day. The issuance rate varies based on the number of validators on the network and other
factors. As of June 30, 2024, approximately 209 ether were burned in the previous day.

Additionally, the section “Ethereum and Ethereum Network”
will be revised as follows:

The value of ether is determined
in part by the supply of and demand for, ether in the markets for exchange that have been organized to facilitate the trading of ether.
Ether is the second largest cryptocurrency by market capitalization behind bitcoin. As of June 30, 2024, ether had a total market
capitalization of approximately $405.1 billion and represented approximately 16.6% of the entire digital asset market. Ether
is maintained on the Ethereum network. No single entity owns or operates the Ethereum network. The Ethereum network is accessed through
software and governs ether’s creation and movement. The source code for the Ethereum network is open-source, and anyone can contribute
to its development. The Ethereum network is governed by a set of rules that are commonly referred to as the “Ethereum protocol”.

    2

Additionally, the section “Use of the CME CF Ether-Dollar Reference
Rate — New York Variant” will be revised as follows:

As of June 30, 2024, the
Constituent Exchanges included in the CF Benchmarks Index that is utilized by the Trust are Coinbase, Bitstamp, itBit, Kraken, Gemini,
and LMAX Digital.

Coinbase: A U.S.-based exchange
registered as an MSB with FinCEN and licensed as a virtual currency business under the NYDFS BitLicense as well as a money transmitter
in various U.S. states.

Bitstamp: A U.K.-based exchange
registered as an MSB with FinCEN and licensed as a virtual currency business under the NYDFS BitLicense as well as money transmitter in
various U.S. states.

Itbit: A U.S.-based exchange
that is chartered by the NYDFS as a limited purpose trust company. It is also registered with FinCEN as an MSB and is licensed as a money
transmitter in various U.S. states.

Kraken: A U.S.-based exchange
that is registered as an MSB with FinCEN in various U.S. states. Kraken is registered with the FCA and is authorized by the Central
Bank of Ireland as a Virtual Asset Service Provider (“VASP”). Kraken also holds a variety of other licenses and regulatory
approvals, including those from the Japan Financial Services Agency (“JFSA”) and the Canadian Securities Administrators (“CSA”).

Gemini: A U.S.-based exchange
that is chartered by the NYDFS as a limited purpose trust company. It is also registered with FinCEN as an MSB and has money transmitter
licenses (or the statutory equivalent) in various U.S. states, an E-Money License from the Financial Conduct Authority in the U.K.,
and an E-Money License from the Central Bank of Ireland.

LMAX Digital: A Gibraltar based
exchange regulated by the Gibraltar Financial Services Commission (“GFSC”) as a DLT provider for execution and custody services.
LMAX Digital does not hold a BitLicense and is part of LMAX Group, a U.K-based operator of a FCA regulated Multilateral Trading Facility
and Broker-Dealer.

An oversight function is implemented
by the Index Provider in seeking to ensure that the Index is administered through the Index Provider’s codified policies for Index
integrity. The Index is administered through the Index Provider’s codified policies for Index integrity, including a conflicts of
interest policy, a control framework, an accountability framework, and an input data policy. It is also subject to the UK BMR regulations,
compliance with which regulations has been subject to a Limited Assurance Audit under the ISAE 3000 standard as of September 12, 2022, which is publicly
available.

The Index is subject to oversight
by the CME CF Oversight Committee. The CME CF Oversight Committee shall be comprised of at least five members, including at least: (i) two
who are representatives of CME (“CME Members”); (ii) one who is a representative of CF (“CF Member”); and
(iii) two who bring expertise and industry knowledge relating to benchmark determination, issuance and operations. The CME CF Oversight
Committee meets no less frequently than quarterly. The CME CF Oversight Committee’s Founding Charter and quarterly meeting minutes
are publicly available.

The Constituent Exchanges for
the Index were updated on May 3, 2022, when LMAX Digital was added to the Index following review by the Oversight Committee and a
determination that LMAX Digital was in conformance with the eligibility criteria for Constituent Exchanges.

Comment 3:  We note the use of the
term “unregulated” when referring to certain spot markets and digital asset exchanges. Please revise to qualify your use of
this term by clarifying that such markets and exchanges may be subject to regulation in a relevant jurisdiction but may not be complying.
Similarly revise the second to last bullet point of the summary of risks associated with Ether and the Ethereum network on page 11.

Response: The
Trust has incorporated this comment and the impacted disclosure will be revised as follows:

 ● Ether exchanges on which ether trades are relatively new
and, in some cases, may be subject to but not comply with their relevant jurisdiction’s regulations, and, therefore, may
be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which
could have a negative impact on the performance of the Trust.

    3

Additionally, the section “Spot markets on which ether trades
are relatively new and largely unregulated” will be revised as follows:

Digital asset markets, including
spot markets for ether, are growing rapidly. The spot markets through which ether and other digital assets trade are new and, in some
cases, may be subject to but not comply with their relevant jurisdiction’s regulations. These markets are local, national and
international and include a broadening range of digital assets and participants. Significant trading may occur on systems and platforms
with minimum predictability. Spot markets may impose daily, weekly, monthly or customer-specific transaction or withdrawal limits or suspend
withdrawals entirely, rendering the exchange of ether for fiat currency difficult or impossible. Participation in spot markets requires
users to take on credit risk by transferring ether from a personal account to a third party’s account.

Comment 4:
Please remove the first three sentences of the second paragraph on page 54 as this disclosure lacks the appropriate context for the referenced
statements.

Response: The Trust has incorporated this
comment and this disclosure will be removed.

Comment 5:
Refer to your response to prior comment 10. Please disclose the substance of your response in a separately captioned subsection within
the Ether, Ether Markets and Regulation of Ether section.

Response: The Trust has incorporated this
comment and the following disclosure will be added:

Limits on Ether Supply

Ether is the second largest cryptocurrency
by market capitalization behind bitcoin. As of June 30, 2024, ether had a total market capitalization of approximately $405.1 billion
and represented approximately 16.6% of the entire digital asset market.

The rate at which new ether are
issued and put into circulation is expected to vary. The Ethereum network has no formal cap on the total supply of ether. As of the date
of this prospectus, the Ethereum network has a total outstanding supply of approximately 120.3M ether. The Ethereum network does, however,
feature several mechanisms that, individually and in aggregate, have the effect of limiting the total supply of ether outstanding. These
mechanisms are sometimes referred to collectively as the “Ethereum Triple Halving.”

As a result of the Merge, where
the Ethereum network moved from a proof-of-work to a proof-of-stake mechanism under Ethereum 2.0, the rate of issuance is greatly
reduced. Under proof-of-work, miners expend computational resources to compete to validate transactions and are rewarded coins in proportion
to the amount of computational resources expended, which resulted in comparably more new tokens rewarded. By contrast, under proof-of-stake,
validators risk or “stake” coins to compete to be randomly selected to validate transactions and are rewarded coins in proportion
to the amount of coins staked, which results in comparably fewer new tokens rewarded. Following the Merge, approximately 1,700 ether are
issued per day, though the issuance rate varies based on the number of validators on the network. As of June 30, 2024, approximately
2,512 ether were issued in the previous day. The issuance rate varies based on the number of validators on the network and other factors.
As of June 30, 2024, approximately 210 ether were burned in the previous day.

The change from proof-of-work
to proof-of-stake also limits the total supply of ether in circulation by effectively lock