SecProbe.io

CORRESP
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filename1.htm

    Richard
Coyle

Partner

    Chapman
and Cutler LLP

320
South Canal Street, 27th Floor

Chicago,
Illinois 60606

T
(312) 845-3724

rcoyle@chapman.com

June 18, 2024

Via EDGAR Correspondence

United States Securities and Exchange Commission

Division of Corporation Finance

Office of Crypto Assets

100 F Street, N.E.

Washington, D.C. 20549

Re: Bitwise Ethereum ETF

       File
                                         No. 333-278308

Dear Ms. Miller and Mr. Niethamer:

This letter responds to your
comments regarding amendment no. 1 to the registration statement filed on Form S-1 for the Bitwise Ethereum ETF (the “Trust”)
with the Staff of the Securities and Exchange Commission (the “Staff”) on May 31, 2024 (the “Registration
Statement”). Capitalized terms used herein, but not otherwise defined, have the meanings ascribed to them in the Registration
Statement.

Comment 1 – General

To the extent that you intend
to use a fact sheet, please provide us with a copy for our review. In that regard, we note your disclosure that your Trust Fact Sheet
can be found on the Trust’s website, ETHWetf.com. Please confirm whether this website will be operational at effectiveness..

Response to Comment 1

The fact sheet has been attached
as Exhibit A hereto. The Sponsor, on behalf of the Trust, confirms that the Trust’s website, ETHWetf.com, will be operational upon
the effectiveness of the Registration Statement.

June 18, 2024

Page 2

Comment 2 – Cover
Page

Please revise the cover page
to state that the Trust will not participate in the proof-of-stake validation mechanism of the Ethereum network (i.e., the Trust
will not “stake” its ether) to earn additional ether or seek other means of generating income from its ether holdings.

Response to Comment 2

Pursuant to the Staff’s
comment, the cover page of the prospectus has been revised to include the following disclosure:

Neither the Trust, nor the Sponsor, nor the
Ether Custodian (defined below), nor any other person associated with the Trust will, directly or indirectly, engage in action where any
portion of the Trust’s ether becomes subject to the Ethereum proof-of-stake validation or is used to earn additional ether or generate
income or other earnings.

Comment 3 – Prospectus
Summary

We note your disclosure on
pages 78-79 regarding the Ether Trading Counterparties. Please revise your Summary disclosure to:

 ● Identify any Ether Trading Counterparties with
whom the Sponsor has entered into an agreement. Clarify whether and to what extent any of the Ether Trading Counterparties are affiliated
with or have any material relationships with any of the Authorized Participants. Alternatively, clarify, if true, that you are not able
to identify any particular Ether Trading Counterparties at this time.

 ● Disclose, if known, the material terms of any
agreement you have entered into, or will enter into, with an Ether Trading Counterparty, including whether and to what extent there will
be any contractual obligations on the part of the Ether Trading Counterparty to participate in cash orders for creations or redemptions.

Response to Comment 3

Pursuant to the Staff’s
comment, the Prospectus Summary has been revised to include the following disclosure set forth below:

As of June 18, 2024, Cumberland DRW LLC, FalconX
(d/b/a Solios, Inc.), Kraken (d/b/a Payward OTC Ltd), JSCT, LLC and Nonco LLC have been approved as Ether Trading Counterparties. JSCT,
LLC is an affiliate of Jane Street Capital, LLC, which is an Authorized Participant to the Trust. The Sponsor has entered into contractual
agreements with the Ether Trading Counterparties, and these agreements set forth the general parameters under which a transaction in ether
will be effectuated, should any transaction with an Ether Trading Counterparty occur. These agreements do not require the Sponsor to utilize
any particular Ether Trading Counterparty, and do not create any contractual obligations on the part of any Ether Trading Counterparty
to participate in cash orders for creations or redemptions. All transactions between the Sponsor, on behalf of the Trust, and an Ether
Trading Counterparty will be done on an arm’s-length basis.

June 18, 2024

Page 3

Comment 4 – The
Trust’s Investment Objective and Strategies

We note your disclosure on
page 54 regarding the drawbacks of conducting creations and redemptions for cash rather than in-kind. Please revise your disclosure in
this section to:

 ● Disclose that the Trust may only conduct cash
creations and redemptions and that it would need regulatory approval to commence in-kind creations and redemptions;

 ● Clarify that the timing of in-kind regulatory
approval is unknown and that there is no guarantee that the Exchange will receive in-kind regulatory approval; and

 ● Disclose how you will inform shareholders if
the Exchange receives in-kind regulatory approval and if the Sponsor chooses to allow in-kind creations and redemptions.

Response to Comment 4

Pursuant to the Staff’s
comment, the following disclosure has been added to the Prospectus Summary as well as in the referenced portion of the section entitled
“Risk Factors”:

As of the date of this prospectus, the Trust
only creates and redeems Shares in exchange for cash. If the Trust were to create or redeem Shares in exchange for ether, the Trust would
first need to seek certain regulatory approvals, including an amendment to Exchange’s listing rules and an amendment to the Trust’s
registration statement of which this prospectus forms a part. There can be no guarantee that the Trust will be successful in obtaining
such regulatory approvals, and the timing of any such approvals is unknown. If the Trust is successful in obtaining the necessary regulatory
approvals to allow for creations and redemptions in-kind, the Trust will notify Shareholders in a prospectus supplement and/or a current
report on Form 8-K or in its annual or quarterly reports.

June 18, 2024

Page 4

Comment 5 – The
Trust’s Investment Objective and Strategies

We note your disclosure on
page 28 that “[p]ursuant to the Trust Agreement, the Trust has explicitly disclaimed all Incidental Rights and IR Assets”
and that “[s]uch assets are not considered assets of the Trust at any point in time and will not be taken into account for purposes
of determining the Trust’s NAV and the NAV per Share.” Please provide such disclosure in the Prospectus Summary.

Response to Comment 5

Pursuant to the Staff’s
comments, the Prospectus Summary has been revised to include the following disclosure:

The Trust will not benefit from any forks or
airdrops occurring on the Ethereum network. A right to receive any such benefit
of a fork or airdrop is referred to as an “Incidental Right” and any digital asset acquired through an
Incidental Right is known as an “IR Assets.” Pursuant to the Trust Agreement, the Trust has explicitly disclaimed all Incidental
Rights and IR Assets. Such assets are not considered assets of the Trust at any point in time and will not be taken into account for purposes
of determining the Trust’s NAV and the NAV per Share.

Comment 6 – Risk
Factors — Many digital assets, including ether, were only introduced within the past decade

We note your disclosure that
“[u]pgrades currently being considered, such as the upcoming “Dencun” upgrade, which is part of the “sharding”
roadmap or so-called “Layer 2” solutions, could have effects which are difficult to anticipate at this time, but could - if
unsuccessfully implemented, or if they contain undiscovered flaws - materially adversely impact or even effectively eliminate the value
of ether, and therefore impact the price of the Shares.” Please update your disclosure regarding recent developments, including
the “Dencun” upgrade.

June 18, 2024

Page 5

Response to Comment 6

Pursuant to the Staff’s
comment, the referenced disclosure has been revised as set forth below:

On March 13, 2024, the Ethereum network underwent
a planned fork called “Dencun” implementing a series of EIPs. EIP 4844, which some commentators perceive to be the most significant
EIP within the Dencun series, is intended to improve the economics of Layer 2s by reducing transaction fees for Layer 2s who batch transactions
executed on the Layer 2s and upload them as a batch (or as a single proof) onto the main Layer 1 Ethereum network. Among other objectives,
the Dencun software upgrade was designed to provide Layer 2 scaling solutions a designated storage space on the Layer 1 Ethereum network,
called Binary Large Objects (“blobs”), which attach large data chunks to transactions on the Layer 1 Ethereum network and
are recorded on its blockchain. The data in blobs become inaccessible on the Layer 1 Ethereum network after a temporary period of time
(three weeks), unlike the previous method of storing batched data from Layer 2s on the Layer 1 Ethereum network, which was stored permanently.
The cost of accessing the temporary storage in blobs is expected by proponents of the Dencun upgrade to be substantially lower than the
cost of storing the data on the Ethereum Layer 1 network permanently, making Layer 2s more cost-efficient to operate and, some commentators
hope, making them more attractive as a scaling solution. Immediately following the upgrade, some Layer 2s reportedly experienced reduced
transaction fees when batching transactions to the main Layer 1 Ethereum network, which in turn lowered the transaction costs for executing
transactions on such Layer 2s, but some believe this also resulted in ether prices (ether being the native asset of the Layer 1 Ethereum
network) dropping as well due, in part, to the reduced demand for ether to pay the transaction costs of recording data on the Layer 1
Ethereum network. Decreased ether prices could have an adverse effect on the value of the Shares. Additionally, some Layer 2s, such as
Blast, reportedly experienced outages and other disruptions in the aftermath of the Dencun upgrade, which in the case of Blast halted
block production on the Blast Layer 2 blockchain for a period of time, though it was reportedly restored afterward. As with any change
to software code, planned forks such as Dencun could introduce bugs, coding defects, unanticipated or undiscovered problems, flaws, security
risks, problematic incentive structures, or otherwise fail to work as intended or achieve the expected benefits that proponents hope for
in the short term or the long term, which could also have an adverse effect on adoption of the Ethereum network and the value of ether,
and therefore the Shares.

June 18, 2024

Page 6

Comment 7 – Risk
Factors — Validators may suffer losses due to staking, which could make the Ethereum network less attractive

Please expand this risk factor
to also address the risks associated with staking becoming less attractive to validators, including through the types of sanctions the
Ethereum network may impose for validator misbehavior or inactivity.

June 18, 2024

Page 7

Response to Comment 7

Pursuant to the Staff’s
comment, the referenced disclosure has been revised as set forth below:

Validators may suffer losses due to staking,
which could make the Ethereum network less attractive.

Validation on the Ethereum network requires
ether to be transferred into smart contracts on the underlying blockchain networks not under the Trust’s or anyone else’s
control. If the Ethereum network source code or protocol fail to behave as expected, suffer cybersecurity attacks or hacks, experience
security issues, or encounter other problems, such assets may be irretrievably lost. The Ethereum network imposes three types of sanctions
for validator misbehavior or inactivity, which would result in a portion of their staked ether being destroyed or “burned”:
penalties, slashing and inactivity leaks. A validator may face penalties if it fails to take certain actions, such as providing a timely
attestation to a block proposed by another validator. Under this scenario, a validator’s staked ether could be burned in an amount
equal to the reward to which it would have been entitled for performing the actions. A more severe sanction (i.e., “slashing”)
is imposed if a validator commits malicious acts related to the proposal or attestation of blocks with invalid transactions. Slashing
can result in the validator having a portion of its staked ether immediately confiscated, withdrawn or burned by the network, resulting
in losses to them. After this initial slashing, the validator is queued for forceful removal from the Ethereum network’s validator
“pool,” and more of the validator’s stake is burned over a period of approximately 36 days with the exact amount of
ether burned and time period determined by the network regardless of whether the validator makes any further slashable errors, at which
point the validator is automatically removed from the validator pool. Staked ether may also be burned through a process known as an “inactivity
leak,” which is triggered if the Ethereum network has gone too long without finalizing a new block. For a new block to be successfully
added to the blockchain, validators that account for at least two-thirds of all staked ether must agree on the validity of a proposed
block. This means that if validators representing more than one-third of the total staked ether are offline, no new blocks can be finalized.
To prevent this, an inactivity leak causes the ether staked by the inactive validators to gradually “bleed away” until these
inactive validators represent less than one-third of the total stake, thereby allowing the remaining active validators to finalize proposed
blocks. This provides a further incentive for validators to remain online and continue performing validation activities. Within the post-Merge
network, as part of the “activating” and “exiting” processes of staking, staked ether will be inaccessible for
a variable period of time determined by a range of factors, including network congestion, resulting in potential inaccessibility during
those periods. “Activation” is the funding of a validator to be included in the active set, thereby allowing the validator
to participate in the Ethereum network’s proof-of-stake consensus protocol. “Exit” is the request to exit from the active
set and no longer participate in the Ethereum network’s proof-of-stake consensus protocol. As part of these “activating”
and “exiting” processes of staking on the Ethereum network, any staked ether will be inaccessible for a period of time. The
duration of activating and exiting periods are dependent on a range of factors, including network conditions. However, depending on demand,
un-staking can take between hours, days or weeks to complete. Furthermore, the Ethereum network requires the payment of base fees and
the practice of paying tips is common, and such fees can become significant as the amount and complexity of the transaction grows, depending
on the degree of network congestion and the price of ether. Any cybersecurity attacks, security issues, hacks, penalties, slashing events,
or other problems could damage validators’ willingness to participate in validation, discourage existing and future validators from
serving as such, and adversely impact the Ethereum network’s adoption or the price of ether. Any disruption of validation on the
Ethereum network could interfere with network operations and cause the Ethereum network to be less attractive to users and application
developers than competing blockchain networks, which could cause the price of ether to decrease. The limited liquidity during the “activation”
or “exiting” processes could dissuade potential validators from participating, which could interfere with network operations
or security and cause the Ethereum network to be less attractive to users and application developers than competing blockchain networks,
which could cause the price of ether to decrease.

June 18, 2024

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Comment 8