SecProbe.io

CORRESP
 1
 filename1.htm

 April 25, 2025

 VIA EDGAR

 Sonia Bednarowski

 Division of Corporation Finance

 U.S. Securities and Exchange Commission

 100 F Street, N.E.

 Washington, DC 20549

 RE: COtwo Advisors Physical European Carbon Allowance Trust

 Registration Statement on Form S-1 (File No. 333-271910) (the
"Registration Statement")

 Dear Ms. Bednarowski:

 In accordance with Rule 461
of the General Rules and Regulations under the Securities Act of 1933, as amended, COtwo Advisors Physical European Carbon Allowance Trust
(the "Trust") hereby respectfully requests that the Registration Statement be declared effective on Tuesday, April 29, 2025,
at 4:00 p.m. ET, or as soon thereafter as practicable.

 In connection with the submission of the Trust's
request for accelerated effectiveness of the Registration Statement, the Trust hereby acknowledges that:

 ● should the Securities and Exchange Commission (the "Commission") or the staff thereof (the "Staff"), acting
pursuant to delegated authority, declare the Registration Statement effective, it does not foreclose the Commission from taking any action
with respect to the Registration Statement;

 ● the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the Registration Statement effective,
does not relieve the Trust from its full responsibility for the adequacy and accuracy of the disclosure in the Registration Statement;
and

 ● the Trust may not assert Staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission
or any person under the federal securities laws of the United States.

 Once the Registration Statement has been declared
effective, please orally confirm that event with our counsel, Eversheds Sutherland (US), LLP, by calling Eric Simanek at (202) 220-8412.

 COtwo Advisors Physical European Carbon Allowance Trust

 By: COtwo Advisors LLC, Sponsor

 By:
 /s/ Ronald Gutstein

 Ronald Gutstein

 Chief Executive Officer

CORRESP
 1
 filename1.htm

 Eversheds Sutherland (US) LLP

 700 Sixth Street, NW, Suite 700

 Washington, DC 20001-3980

 D: +1 202. 220.8412

 ericsimanek@eversheds-sutherland.us

 April 4, 2025

 VIA EDGAR

 Kate Tillan

 Jason Niethamer

 Jessica Livingston

 Sonia Bednarowski

 Division of Corporation Finance

 Securities and Exchange Commission

 100 F. Street N.E.

 Washington, D.C. 20549

 Re: COtwo Advisors Physical European Carbon Allowance Trust

 Amendment No. 3 to Registration Statement on Form
S-1

 File No. 333-271910

 Dear Mss. Baynes, Miller, Livingston and Bednarowski:

 This letter sets forth responses to the written
comments received in a letter dated February 18, 2025, regarding Amendment No. 3 to the Registration Statement on Form S-1 (the "Registration
Statement") filed by COtwo Advisors Physical European Carbon Allowance Trust (the "Registrant") on January 27, 2025
for the purpose of registering shares of the Registrant. Unless otherwise noted, capitalized terms have the same meanings as used in the
Registration Statement.

 Set forth below are the comments and the Registrant's
response thereto.

 Page 2

 April 4, 2025

 Amendment No. 3 to Registration Statement on Form S-1

 Risk Factors

 Risk Related to the Trust's Investments

 The Trust will face currency exchange rate risk, page 13

 1. Comment : We note your disclosure on page 14 that "[a]s of March 8, 2024, the exchange rate was 1.0943 Euro/U.S.
dollar." Please revise to update this disclosure as of the most recent practicable date. Similarly, please revise to update your
disclosure on page 30 regarding the performance of EUAs, your disclosure on page 45 regarding the comparison between the daily settlement
price of the Daily EUA Futures and the daily EUA End of Day Index values and your disclosure on page 46 regarding the comparison between
the Daily EUA Futures and EUA spot prices.

 Response : The Registration Statement has been
revised accordingly.

 U.S. Federal Income Tax Consequences, page 63

 2. Comment : Refer to your first sentence in this section describing the discussion as "a summary of certain U.S.
federal income tax consequences relevant to the purchase, ownership and disposition of the Shares." Please revise to clarify, if
true, that you disclose all material U.S. federal income tax consequences relevant to the purchase, ownership and disposition of the Shares,
not just "certain" consequences or advise.

 Response : The tax opinion
has been revised accordingly.

 3. Comment : Item 601(b)(8) of Regulation S-K permits the tax opinion to be conditioned or qualified, provided the conditions
or qualifications are adequately described in the registration statement. Refer to your statement in the first paragraph that the discussion
in this section "represents, insofar as it describes conclusions as to the U.S. federal income tax law and subject to the limitations
and qualifications described herein, the opinion of Eversheds Sutherland (US) LLP, U.S. federal income tax counsel to the Sponsor."
Please also refer to the statement in the third paragraph of the tax opinion filed as Exhibit 8.1 to the effect that tax counsel's
opinion in the registration statement as to material U.S. federal income tax consequences is "subject to the qualifications and
assumptions stated in the Discussion, the limitations and qualifications set forth herein, and the representations in the Representation
Letter." Please revise this section of the registration statement to disclose all limitations, qualifications and legal representations
to which the tax opinion is subject and have counsel revise its tax option to clarify that all such limitations, qualifications and representations
are disclosed in the registration statement discussion that constitutes counsel's opinion and to state, if true, that the representations
in the Representation Letter are factual representations rather than legal representations.

 Response : The tax opinion
has been revised accordingly.

 Exhibits and Financial Statement
Schedules, page II-2

 4. Comment : Please file as an exhibit the Liquidity Provider Agreement with Vertis or advise why you believe it is not
required to be filed pursuant to Item 601b)(10) of Regulation S-K.

 Response : Each Liquidity
Provider Agreement has been filed as an exhibit to the Registration Statement.

 Page 3

 April 4, 2025

 5. Comment : The audit report on page F-2 is dated January 21, 2025. The consent included in Exhibit 23.3 refers to an audit
report dated January 6, 2025. In the next amendment, please ask your independent registered public accounting firm to ensure the date
in their consent is consistent with the date of their audit report.

 Response : The date of the
auditor's consent is consistent with the date of their audit report.

 6. Comment : Refer to the exclusion from the scope of counsel's opinion filed as Exhibit 5.1: "laws applicable due
to the particular nature or scope of the assets or activities of the Trust, and rules, regulations, orders, and decisions relating thereto"
and advise how this exclusion is consistent with the requirements of Item 601(b)(5) of Regulation S-K which must cover all applicable
Delaware statutory provisions and reported judicial decisions interpreting these laws.

 Response : The opinion has
been revised to remove the referenced exclusion.

 7. Comment : Refer to Exhibit 5.1. Pursuant to SLB 19 issued by the Division of Corporation Finance, the staff considers
it inappropriate for counsel to include in its opinion assumptions that are overly broad, that "assume away" the relevant
issue, or that assume any of the material facts underlying the opinion or any readily ascertainable facts. Accordingly, please have Potter
Anderson & Corroon LLP revise its legal opinion to exclude the Trust from assumption (ii) in paragraph B and remove assumption (v)
from paragraph C. For guidance, see Staff Legal Bulletin 19.II.b.3.

 Response : The opinion has
been revised accordingly.

 Best regards,

 /s/ Eric Simanek

 Eric Simanek

 202-220-8412

 ericsimanek@eversheds-sutherland.us

February 18, 2025
Ronald Gutstein
Chief Executive Officer
COtwo Advisors Physical European Carbon Allowance Trust
140 Elm Street, Suite 6
New Canaan, CT 06840
Re:COtwo Advisors Physical European Carbon Allowance Trust
Amendment No. 3 to Registration Statement on Form S-1
Filed January 27, 2025
File No. 333-271910
Dear Ronald Gutstein:
            We have reviewed your amended registration statement and have the following
comments.
            Please respond to this letter by amending your registration statement and providing
the requested information. If you do not believe a comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing any amendment to your registration statement and the information
you provide in response to this letter, we may have additional comments. Unless we note
otherwise, any references to prior comments are to comments in our May 9, 2024 letter.
Amendment No. 3 to Registration Statement on Form S-1
Risk Factors
Risk Related to the Trust's Investments
The Trust will face currency exchange rate risk, page 13
1.We note your disclosure on page 14 that "[a]s of March 8, 2024, the exchange rate
was 1.0943 Euro/U.S. dollar."  Please revise to update this disclosure as of the most
recent practicable date. Similarly, please revise to update your disclosure on page 30
regarding the performance of EUAs, your disclosure on page 45 regarding the
comparison between the daily settlement price of the Daily EUA Futures and the daily
EUA End of Day Index values and your disclosure on page 46 regarding the
comparison between the Daily EUA Futures and EUA spot prices.

February 18, 2025
Page 2
U.S. Federal Income Tax Consequences, page 63
2.Refer to your first sentence in this section describing the discussion as "a summary of
certain U.S. federal income tax consequences relevant to the purchase, ownership and
disposition of the Shares." Please revise to clarify, if true, that you disclose all
material U.S. federal income tax consequences relevant to the purchase, ownership
and disposition of the Shares, not just "certain" consequences or advise.
3.Item 601(b)(8) of Regulation S-K permits the tax opinion to be conditioned or
qualified, provided the conditions or qualifications are adequately described in the
registration statement. Refer to your statement in the first paragraph that the
discussion in this section "represents, insofar as it describes conclusions as to the U.S.
federal income tax law and subject to the limitations and qualifications described
herein, the opinion of Eversheds Sutherland (US) LLP, U.S. federal income tax
counsel to the Sponsor." Please also refer to the statement in the third paragraph of the
tax opinion filed as Exhibit 8.1 to the effect that tax counsel's opinion in the
registration statement as to material U.S. federal income tax consequences is "subject
to the qualifications and assumptions stated in the Discussion, the limitations and
qualifications set forth herein, and the representations in the Representation Letter."
Please revise this section of the registration statement to disclose all limitations,
qualifications and legal representations to which the tax opinion is subject and have
counsel revise its tax option to clarify that all such limitations, qualifications and
representations are disclosed in the registration statement discussion that constitutes
counsel's opinion and to state, if true, that the representations in the Representation
Letter are factual representations rather than legal representations.
Exhibits and Financial Statement Schedules, page II-2
4.Please file as an exhibit the Liquidity Provider Agreement with Vertis or advise why
you believe it is not required to be filed pursuant to Item 601b)(10) of Regulation S-K.
5.The audit report on page F-2 is dated January 21, 2025. The consent included in
Exhibit 23.3 refers to an audit report dated January 6, 2025. In the next amendment,
please ask your independent registered public accounting firm to ensure the date
in their consent is consistent with the date of their audit report.
6.Refer to the exclusion from the scope of counsel's opinion filed as Exhibit 5.1: "laws
applicable due to the particular nature or scope of the assets or activities of the Trust,
and rules, regulations, orders, and decisions relating thereto" and advise how this
exclusion is consistent with the requirements of Item 601(b)(5) of Regulation S-K
which must cover all applicable Delaware statutory provisions and reported judicial
decisions interpreting these laws.
7.Refer to Exhibit 5.1. Pursuant to SLB 19 issued by the Division of Corporation
Finance, the staff considers it inappropriate for counsel to include in its opinion
assumptions that are overly broad, that "assume away" the relevant issue, or that
assume any of the material facts underlying the opinion or any readily ascertainable
facts. Accordingly, please have Potter Anderson & Corroon LLP revise its legal
opinion to exclude the Trust from assumption (ii) in paragraph B and
remove assumption (v) from paragraph C. For guidance, see Staff Legal Bulletin
19.II.b.3.

February 18, 2025
Page 3
            Please contact Kate Tillan at 202-551-3604 or Jason Niethamer at 202-551-3855 if
you have questions regarding comments on the financial statements and related
matters. Please contact Jessica Livingston at 202-551-3448 or Sonia Bednarowski at 202-
551-3666 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets

CORRESP
1
filename1.htm

  Eversheds Sutherland (US) LLP

700 Sixth Street, NW, Suite 700

Washington, DC 20001-3980

D: +1 202. 220.8412

ericsimanek@eversheds-sutherland.us

January 24, 2025

VIA EDGAR

Bonnie Baynes

Michelle Miller

Jessica Livingston

Sonia Bednarowski

Division of Corporation Finance

Securities and Exchange Commission

100 F. Street N.E.

Washington, D.C. 20549

 Re: COtwo Advisors Physical European Carbon Allowance Trust

Amendment No. 2 to Registration Statement on Form
S-1

File No. 333-271910

Dear Mss. Baynes, Miller, Livingston and Bednarowski:

This letter sets forth responses to the written
comments received in a letter dated May 9, 2024, regarding Amendment No. 2 to the Registration Statement on Form S-1 (the “Registration
Statement”) filed by COtwo Advisors Physical European Carbon Allowance Trust (the “Registrant”) on April 4, 2024 for
the purpose of registering shares of the Registrant. Unless otherwise noted, capitalized terms have the same meanings as used in the Registration
Statement.

Set forth below are the comments and the Registrant’s
response thereto.

Amendment No. 2 to Registration Statement on Form S-1

Prospectus Summary

The Trust, page 1

 1. Comment: Refer to your response to comment 3 that
the Sponsor will determine the contents, manner and time of notice of any material Trust Agreement amendment, including to increase the
Sponsor’s Management Fee and that “[s]uch notice may be provided on the Trust’s website, prospectus supplement, post-effective
amendment or through a current report on Form 8-K and/or in the Trust’s annual or quarterly reports within a reasonable time of
a material amendment.” Please revise to clarify whether the investors will receive any notification prior to a material amendment
to the Trust Agreement and clarify that any material changes will be disclosed such that you satisfy your Exchange Act reporting obligations.

Response: The Registration Statement has been
revised accordingly.

Page 2

January 24, 2025

EUAs and the EUA Industry

Pricing of Allowances and Trading Volume, page 29

Comment: Refer to your response to comment 9. Please
revise to describe the EEX policies regarding whether adjustments will be made to the EUA End of Day Index published and to disclose how
the EEX evaluates its methodology. In addition, we note your disclosure that “[a]fter a Theoretical Price is determined, it is then
validated against the actual market situation at the relevant time, if available.” Please revise to clarify what you mean by “relevant
time.”

Response: The Registrant
intends to value its EUA holdings using the end of day settlement price for the Daily EUA Future. Therefore, the disclosure regarding
the calculation methodology of the EUA End of Day Index had been removed and the comment is no longer applicable.

Creation and Redemption of Shares, page 34

Comment: We note your revised disclosure on page 34 that
“[f]or a creation or redemption in cash, the Sponsor shall arrange for the EUAs represented by the baskets to be purchased from,
or sold to, a Liquidity Provider Selected by the Sponsor.” Please describe how the Sponsor selects a Liquidity Provider, identify
the Liquidity Providers the Sponsor has selected and describe the material terms of the agreements with the Liquidity Providers. Also
disclose whether any of the Liquidity Providers are affiliated with or have any material relationships with any of the Authorized Participants
or the Sponsor.

Response: The Registration
Statement has been revised accordingly.

Revision to Prior Response

We would like to revise our response to Comment 7
in the response letter dated January 16, 2024. We have reproduced the comment below. Our initial response explained why the EUA End of
Day Index is an appropriate price to use to value the Trust’s EUA holdings because EEX is a “principal market” for EUAs
for purposes of ASC 820. On account of comments received from the staff of the SEC’s Division of Trading and Markets during the
consideration of the Exchange’s rule proposal pursuant to Section 19(b)(1) of the Exchange Act and Rule 19b-4 thereunder, the Trust
has reverted to its original plan to use the end of day settlement price of the Daily EUA Future to value the trust’s EUA holdings.
Below is a revised ASC 820 accounting analysis regarding the use of the Daily EUA Futures settlement price as established by ICE ENDEX
to fair value EUAs.

Page 3

January 24, 2025

Comment: Please provide your ASC 820
principal market accounting analysis that supports the belief you expressed in your response to prior comment 11 that the Daily EUA Futures
price as established by ICE ENDEX represents the fair value of an EUA in accordance with ASC 820. That analysis should address, but not
be limited to, the following:

 ● Explain why you believe the Daily EUA Futures market is the principal market for the EUAs the trust will hold. In this regard, we
note that ASC 820-10-35-6 requires use of the price in the principal market for the asset or liability being fair valued and that the
asset you are measuring, EUAs, does not appear to be a futures contract.

 ● Tell us if the Trust has access to the EEX spot market and if not, why. See ASC 820-10-35-6A.

 ● By reference to the four types of markets defined in ASC 820, clarify for us to what type of market “OTC” refers and how
it operates.

 ● Explain how your principal market determination contemplates your disclosure on page 36 that the Trust will cause EUAs to be sold
through dealers in OTC transactions or directly on the EEX, ICE Endex, and Nasdaq Oslo exchanges. See ASC 820-10-35-5A. As part of this
explanation, clarify how you considered the fact that the Trust only transacts with Authorized Participants and what you mean when you
state “the Trust will cause EUAs to be sold” in certain markets.

Response: Under ASC Topic
820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
a willing buyer and a willing seller at the measurement date. Fair value is generally the amount that the Trust might reasonably expect
to receive upon the current sale of an EUA. The fair value measurement assumes that the sale occurs in the principal market for the security,
or in the absence of a principal market, in the most advantageous market for the security. If no market for the security exists or if
the Trust does not have access to the principal market, the asset should be valued based on the sale occurring in a hypothetical market.

ASC 820 specifies a fair value hierarchy
that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these
levels are summarized below:

 Level 1: Unadjusted quoted prices in active
markets for identical assets or liabilities that the Trust has the ability to access.

 Level 2:  Observable inputs other than quoted prices
included in level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices
for the identical instrument on an inactive market, prices for similar instruments and similar data.

 Level 3: Unobservable inputs for the asset or liability
to the extent that relevant observable inputs are not available, representing the Trust’s own assumptions about the assumptions
that a market participant would use in valuing the asset or liability, and that would be based on the best information available.

Page 4

January 24, 2025

A financial instrument is categorized
within the ASC 820 valuation hierarchy based upon the lowest level of input to the valuation process that is significant to the fair value
measurement. ASC 820-10-35-37A.

There is no single standard for determining
fair value in good faith, as fair value depends upon the specific circumstances of each individual investment. Assessing the significance
of a particular input to the fair value measurement requires judgment, and should consider factors specific to the asset or liability.
There are no bright lines for determining significance. A reporting entity should develop and consistently apply a policy for assessing
significance.

The Registrant believes that using the
last settlement price for the Daily EUA Future is an appropriate method for determining fair value of the Trust’s EUAs in good faith.
The Daily EUA Futures market functions as the “spot” market for EUAs. The purchase and sale of Daily EUA Futures is the functional
and economic equivalent of transactions in spot EUAs. The settlement, functionality and economic outcome for a spot purchase on the EEX
and a Daily EUA Future purchase on the ICE Endex are identical. Because the Daily EUA Future is physically settled through the delivery
of one lot of EUAs to the purchaser of the Daily EUA Future, whether the Trust acquires an EUA through a transaction on the EEX or through
the acquisition of a Daily EUA Future on ICE Endex, the Trust will acquire the same EUA on a T+1 basis. It is not possible for an acquirer
to roll a same day futures contract to a later dated future, as each day it would expire and the market participant would end up holding
physical EUAs. Therefore, Daily EUA Futures are identical instruments to spot EUAs.

The vast majority of secondary market
trading of EUA instruments with daily expiry trades occurs in the ICE Endex Daily EUA Futures market. For the twelve-months ended September
30, 2024, the average daily trading volume of Daily EUA Futures on the ICE Endex was 3,829 contracts, representing 3,829,000 EUAs, whereas
the average daily trading volume on the EEX was 146 round lots, representing 146,000 EUAs. Therefore, over that one year period, over
96% of all on-exchange secondary market trading of EUA instruments with daily expiry (which includes spot EUAs and Daily EUA Futures)
occurred on the ICE Endex. In fact, during the twelve-months ended September 30, 2024, 0 EUAs were traded on EEX on five different trading
days. Due to the extremely light volume transacted on the EEX, there is not always a bid or offer shown, and even when there is, it could
be well away from the actual tradeable market being shown on the ICE Endex. For this reason, the EEX may use prices of the Daily EUA Futures
as inputs for the calculation of its EUA End of Day Index if there are insufficient trades or orders on a certain day or if the Theoretical
Price does not reflect the actual market situation. Therefore, between the two potential markets for EUA instruments with daily expiry,
the ICE Endex Daily EUA Futures markets is the only one that can reliably provide an accurate price for spot EUAs.

Because the settlement price of the Daily
EUA Future is an observable input, it is not a Level 3 input. In addition, the Daily EUA Future settlement price is an observable input
for an identical instrument to a spot EUA, so it is a Level 2 input. There are no Level 1 inputs to use for valuing the Trust’s
EUA holdings. Because of the relative lack of EUA trading on the EEX, that cannot be used as a reliable source of prices for spot EUAs.
In addition, the Trust is not designed to operate as a commodity pool and the Sponsor is not registered as a commodity pool operator.
Therefore, the Trust does not have access to the Daily EUA Futures market on ICE Endex. For these reasons, the Sponsor anticipates categorizing
the Trust’s investment in EUAs as a Level 2 asset within the ASC 820 hierarchy, and the disclosure in the Registration Statement
has been revised accordingly.

The purchase or sale of EUAs by the Trust
are still separate and distinct transactions from the sale and redemption transactions in Trust Shares with Authorized Participants. The
Trust does not sell EUAs to Authorized Participants; rather, the Trust sells its Shares to Authorized Participants. The Trust enters into
the dealer market to transact with Liquidity Providers to buy and sell EUAs either in connection with cash creation and redemption transactions
or to pay Trust expenses. The Trust expects the Liquidity Providers and Authorized Participants to transaction on ICE Endex to acquire
the necessary EUAs to deliver to the Trust and to hedge its exposure. Because the ICE Endex functions as the spot market for EUAs, the
Trust believes that it is the best reference for valuing the Trust’s EUAs.

    Best regards,

    /s/ Eric Simanek

    Eric Simanek

    202-220-8412

    ericsimanek@eversheds-sutherland.us

United States securities and exchange commission logo
May 9, 2024
Ronald Gutstein
Chief Executive Officer
COtwo Advisors Physical European Carbon Allowance Trust
140 Elm Street, Suite 6
New Canaan, CT 06840
Re:COtwo Advisors Physical European Carbon Allowance Trust
Amendment No. 2 to Registration Statement on Form S-1
Filed April 4, 2024
File No. 333-271910
Dear Ronald Gutstein:
            We have reviewed your amended registration statement and have the following
comments.
            Please respond to this letter by amending your registration statement and providing the
requested information. If you do not believe a comment applies to your facts and circumstances
or do not believe an amendment is appropriate, please tell us why in your response.
            After reviewing any amendment to your registration statement and the information you
provide in response to this letter, we may have additional comments. Unless we note otherwise,
any references to prior comments are to comments in our February 23, 2024 letter.
Amendment No. 2 to Registration Statement on Form S-1
Prospectus Summary
The Trust, page 1
1.Refer to your response to comment 3 that the Sponsor will determine the contents, manner
and time of notice of any material Trust Agreement amendment, including to increase the
Sponsor's Management Fee and that "[s]uch notice may be provided on the Trust’s
website, prospectus supplement, post-effective amendment or through a current report on
Form 8-K and/or in the Trust’s annual or quarterly reports within a reasonable time of a
material amendment." Please revise to clarify whether the investors will receive any
notification prior to a material amendment to the Trust Agreement and clarify that any
material changes will be disclosed such that you satisfy your Exchange Act reporting
obligations.

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 May 9, 2024 Page 2
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
May 9, 2024
Page 2
EUAs and the EUA Industry
Pricing of Allowances and Trading Volume, page 29
2.Refer to your response to comment 9. Please revise to describe the EEX policies regarding
whether adjustments will be made to the EUA End of Day Index published and to disclose
how the EEX evaluates its methodology. In addition, we note your disclosure that "[a]fter
a Theoretical Price is determined, it is then validated against the actual market situation at
the relevant time, if available." Please revise to clarify what you mean by "relevant time."
Creation and Redemption of Shares, page 34
3.We note your revised disclosure on page 34 that "[f]or a creation or redemption in cash,
the Sponsor shall arrange for the EUAs represented by the baskets to be purchased from,
or sold to, a Liquidity Provider Selected by the Sponsor." Please describe how the Sponsor
selects a Liquidity Provider, identify the Liquidity Providers the Sponsor has selected and
describe the material terms of the agreements with the Liquidity Providers. Also disclose
whether any of the Liquidity Providers are affiliated with or have any material
relationships with any of the Authorized Participants or the Sponsor.
            Please contact Bonnie Baynes at 202-551-4924 or Michelle Miller at 202-551-3368 if
you have questions regarding comments on the financial statements and related matters. Please
contact Jessica Livingston at 202-551-3448 or Sonia Bednarowski at 202-551-3666 with any
other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets
cc:       Eric D. Simanek

CORRESP
1
filename1.htm

  Eversheds Sutherland (US) LLP

700 Sixth Street, NW, Suite 700

Washington, DC 20001-3980

D: +1 202. 220.8412

ericsimanek@eversheds-sutherland.us

April 4, 2024

VIA EDGAR

Bonnie Baynes

Michelle Miller

Jessica Livingston

Sonia Bednarowski

Division of Corporation Finance

Securities and Exchange Commission

100 F. Street N.E.

Washington, D.C. 20549

 Re: COtwo Advisors Physical European Carbon Allowance Trust

Amendment No. 2 to Registration Statement on Form
S-1

File No. 333-271910

Dear Mss. Baynes, Miller, Livingston and Bednarowski:

This letter sets forth responses to the written
comments received in a letter dated February 23, 2024, regarding Amendment No. 1 to the Registration Statement on Form S-1 (the “Registration
Statement”) filed by COtwo Advisors Physical European Carbon Allowance Trust (the “Registrant”) on January 16, 2024
for the purpose of registering shares of the Registrant. Unless otherwise noted, capitalized terms have the same meanings as used in the
Registration Statement.

Set forth below are the comments and the Registrant’s
response thereto.

Page 2

April 4, 2024

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

Cover Page

 1. Comment: Please revise your cover page to disclose the termination date of the offering, if any, disclose that you are
registering an indeterminate number of Shares and disclose here that the Trust will not utilize leverage, derivatives or any similar arrangements
in seeking to meet its investment objective. In addition, we note your disclosure that Goldman Sachs & Co. LLC is “expected to
be” the Initial Purchaser. Please revise to clarify what you mean by “expected to be.” You also disclose that the initial
amount of EUAs required for deposit with the Trust will be 10,000 EUAs per basket and that the Initial Purchaser will receive 50,000 Shares
such that the initial Basket will be created at a per basket price of 10,000 EUAs and a per Share price equal to 1/5 the value of a single
EUA on the purchase date. Please revise to disclose how the value of the EUAs will be calculated on the purchase date. Further, your disclosure
that the Initial Purchaser will receive 50,000 Shares appears to be inconsistent with your disclosure on page F-6 that “[t]he initial
Authorized Participant will make a minimum initial purchase of at least two Baskets of 50,000 Shares at a per Share price equal to the
value of 10,000 EUAs on the initial offering date.” Please revise for clarity and consistency.

Response: The Registrant notes that there
is no fixed termination date for the offering but has otherwise revised the Registration Statement accordingly. The inconsistency between
the number of Shares that will be purchased by the Initial Purchaser on the cover page and on page F-6, is due to revisions to NYSE Arca’s
rule proposal under Rule 19b-4 of the Exchange Act regarding the listing of the Shares. The financial statements were prepared prior to
the filing of NYSE Arca’s second rule proposal which revised the number of Shares that must be outstanding prior to commencement
of trading on NYSE Arca from 100,000 to 10,000. The Registrant has updated the disclosure on page F-6 accordingly.

Prospectus Summary

The Trust, page 1

 2. Comment: We note your disclosure on page 2 that the Trust is not involved in or responsible for the calculation or dissemination
of the indicative intra-day value per Share. Please revise to disclose who calculates the intra-day value per Share. In addition, your
disclosure on pages 2 and 38 that indicates that the IVF is calculated using the most recently reported EUA End of Day Index value seems
inconsistent with your disclosure on page 38 that describes the IVF as using the most recently reported mid-point of the bid/ask spread
of spot EUAs traded on the EEX. Please revise for consistency and clarity.

Response: The Registration
Statement has been revised accordingly.

 3. Comment: We note your disclosure on pages 2 and 18 that “the Sponsor and Trustee may agree to amend the Trust
Agreement, including to increase the Sponsor’s Management Fee, without shareholder consent.” Please revise to disclose when
and how Shareholders will be notified of a material change to the Trust Agreement.

Response: The Registration
Statement has been revised accordingly.

Page 3

April 4, 2024

The Offering

Trust Fees and Expenses, page
7

 4. Comment: Please revise to disclose whether any of the Trust’s expenses payable by the Sponsor from the Management
Fee are capped.

Response: The Registration
Statement has been revised accordingly.

Suspension of Issuance, Transfers
and Redemptions, page 8

 5. Comment: We note your disclosure that the Administrator will determine the NAV and the NAV per Share based on the value
of the EUA End of Day Index that is published daily on the EEX website. Please clarify why the ICE Endex and Nasdaq Oslo are material
to the valuation or operation of the Fund, and please disclose any other exchanges that are material to the valuation or operation of
the Fund. In addition, please disclose how you will inform Shareholders that creations and/or redemptions have been suspended.

Response: ICE Endex is material
to the valuation or operation of the Trust because of the large trading volume for EUAs with daily expiry that occurs on the ICE Endex.
As is noted in the Prospectus, ICE Endex currently is the only trading venue for Daily EUA Futures, which account for approximately 95%
of the EUAs with daily expiry. Therefore, even though the EEX is the principal market for EUAs and the end of day price disseminated by
EEX is used to calculate the Trust’s NAV each day, the price of the EUAs traded on the EEX and in over-the-counter markets is heavily
influenced by trading on the ICE Endex. Because of the volume of EUAs traded by means of the Daily EUA Future, the suspension of trading
on ICE Endex would significantly reduce the liquidity of EUAs. As a result, accurate price discovery would be impossible and bid/ask spreads
in EUA markets would significantly widen. Without accurate price discovery and with APs less willing to transact in EUAs due to the wider
spreads, disposal of the Shares of the Trust and determination of the NAV of the Shares would not be reasonably practicable in the event
that trading of the Daily EUA Future on ICE Endex was halted and, therefore, the Trust has to reserve the right to suspend creations and
redemptions of Shares in such a circumstance.

Nasdaq Oslo has been removed from the
above referenced disclosure because the single day EUA futures contract offered by Nasdaq Oslo is not traded in sufficient quantity to
be material to the valuation of the Trust’s holdings. No other exchange is material to the valuation or operation of the Trust.
The Registration Statement has been amended to disclose how the Trust will inform Shareholders that creations and/or redemptions have
been suspended.

Page 4

April 4, 2024

Risk Factors

Risks Related to the Trust’s Investments

The Trust will face currency exchange rate risk, page 13

 6. Comment: We note your disclosure on page 13 that “[a]s of May 10, 2023, the exchange rate was 1.0982 Euro/U.S.
dollar,” and we note that your graph on page 27 stops at December 28, 2021. Please revise to update your disclosure here and throughout
to the most recent practicable date.

Response: The Registration
Statement has been revised accordingly.

Risks Related to the Trust’s Structure

The service providers engaged by the Trust may not carry adequate
insurance, page 18

 7. Comment: Please revise to disclose whether any of the service providers engaged by the Trust, including the Union Registry,
carry insurance, and, if so, the degree to which such insurance covers the assets of the Trust.

Response: The Registration
Statement has been revised accordingly.

EUAs and the EUA Industry

Pricing of Allowances and Trading Volume, page 26

 8. Comment: Please disclose here when the EEX calculates and publishes the EUA End of Day Index. In addition, please disclose
what constitutes a qualifying trade, including quantitative information regarding requirements for the quantity of traded contracts, the
quantity of contracts per order, the minimum duration of the cumulated valid best bid and best ask and the maximum spread per contract.
Also revise to disclose the sources of the data used for calculating the EUA End of Day Index. In this regard, we note your disclosure
that “[t]he data used for calculating the EUA End of Day Index can also come from fair values collected in a price committee or
from other price sources.” Revise to disclose the methodology for determining “fair values,” disclose what you mean
by a “price committee” and identify the “other price sources.” Further, please revise to describe the situations
in which the EEX will use these alternative sources of data.

Response: The Registration
Statement has been revised to more completely describe the methodology for determining the daily value of the EUA End of Day Index. This
description addresses the requests in the comment.

 9. Comment: We note your disclosure that, after the EUA End of Day Index price is calculated, it is then validated against
actual market prices. Please revise to describe the validation methodology used by the EEX, and the policies regarding whether adjustments
will be made to the EUA End of Day Index published. In addition, please disclose the impact that such adjustments could have on the NAV
of the Trust. Also disclose how the EEX evaluates its methodology and how the Sponsor will notify Shareholders of any material changes
to the EEX’s methodology. Further, disclose here whether the Sponsor may, in its sole discretion change the index and, if so, its
criteria for choosing to do so, its criteria for selecting a new index and how the Sponsor will notify Shareholders of such a change.

Response: The Registration
Statement has been revised to more completely describe the methodology for determining the daily value of the EUA End of Day Index. This
description addresses the requests in the comment.

Page 5

April 4, 2024

Regulation, page 28

 10. Comment: Please expand the disclosure in this section to provide a brief explanation of the MAR, MiFID II and MiFIR.

Response: The Registration
Statement has been revised accordingly.

Activities of the Trust

Trust Objective, page 29

 11. Comment: Please revise to disclose the material terms of the agreement with the Union Registry.

Response: The Registrant
notes that there is no agreement with the Union Registry. A user simply opens an account with the Union Registry, similar to how a customer
opens a bank account. In opening an account, a user must agree to certain User Terms and Conditions; the Registration Statement has been
revised to describe the material elements of the User Terms and Conditions.

Creation and Redemption of Shares, page 29

 12. Comment: Please revise to expand your disclosure to discuss whether the Sponsor may direct the Administrator to use
a different methodology, and, if so, the criteria the Sponsor will consider to determine whether to direct the Administrator to use a
different valuation methodology. Please include a description of the different methodology the Sponsor may direct the Administrator to
use.

Response: In response to
Comment #9, above, the “Pricing of Allowances and Trading Volume” has been revised to disclose when the Sponsor may direct
the Administrator to value the Trust’s assets using a reference other than the EUA End of Day Index. The Sponsor would not direct
the Administrator to make any other changes to the methodology for valuing the Trust’s assets. The Registrant notes that there is
no similar disclosure about the methodology for valuing the Trust’s assets in the “Creation and Redemption of Shares”
section, so it respectfully believes that it has effectively addressed this comment with the disclosure changes in the “Pricing
of Allowances and Trading Volume” section.

Page 6

April 4, 2024

 13. Comment: Please revise to disclose whether there is any cost associated with transferring EUAs from the Trust to Authorized
Participants and from the Authorized Participants to the Trust. If so, please disclose whether the Trust or the Authorized Participants
pay such fees. In addition, we note your revised disclosure on page 31 that “[t]here may be circumstances where an Authorized Participant
can only deliver whole lots of EUAs, consisting of 1,000 EUAs, in exchange for Baskets of Shares.” Please explain why this may be
the case and revise to provide examples of such circumstances. You also disclose that “[t]herefore, to facilitate the creation of
Baskets, an Authorized Participant who must provide a fraction of a lot of EUAs may credit the Trust’s Union Registry account with
a whole lot of EUAs and the books and records of the Trust and the Authorized Participant will reflect a liability of the Trust for the
pro rata portion of EUA lot that is not owned by the Trust.” Please revise to disclose how the liability is settled.

Response: There will be
no fees associated with the transfer of EUAs in connection with in-kind creation or redemption orders. The Registration Statement has
been revised to state that transaction costs associated with the purchase or sale of EUAs for cash creation and redemption orders will
be borne by the Authorized Participant. The Registration Statement has also been revised to explain why creation and redemption orders
may have to occur through transactions in whole lots of EUAs and to provide examples. Lastly, the Registration Statements has been revised
to permit cash creations and redemptions of Baskets; therefore, the last statement referenced in the comment has been removed and replaced
with a more detailed explanation of the creation and redemption order process associated with transactions in only round lots of EUAs.

Trust Expenses, page 37

 14. Comment: Please expand your disclosure here to describe the mechanics of how EUAs are sold by the Trust to pay the Sponsor’s
Management Fee, including a discussion of costs associated with transfers and sales of EUAs, and, if there are such costs, disclose whether
the Trust pays the transfer fees. In this regard, we note your disclosure that the Trust may sell EUAs through dealers in OTC transactions
or directly on the EEX, ICE Endex and Nasdaq Oslo exchanges. Please revise to disclose whether the Trust has agreements with any dealers,
and, if so, please disclose the material terms of such agreements and identify the dealers. In addition, please revise to disclose how
the Trust will liquidate its assets in connection with a termination of the Trust.

Response: The
Registration Statement has been revised accordingly. The Sponsor will assume any transaction costs related to the sale of EUAs to
pay Trust expenses, and such costs are expected be de minimis relative to the amount of EUAs sold in any transaction. Neither the
Trust nor the Sponsor on behalf of the Trust have entered into any agreements with dealers as of the date of this letter.

Page 7

April 4, 2024

Index to Financial Statements, page F-1

 15. Comment: We note your auditor’s report and statement of assets and liabilities is as of December 7, 2023. Please revise
to clarify in your disclosure on page 40 that the fiscal year of the Trust initially will be October 1 to September 30.

Response: The Registration
Statement has been revised to state that the initial fiscal year of the Trust will end on September 30, 2024.

Note 1. Organization, page F-4

 16. Comment: Please revise to disclose, if true, that as the Trust has not commenced operations, a separate statement of
income, changes in equity, and cash flows have not yet been presented in the financial statements.

Response: The Registration
Statement has been revised accordingly.

Note 2. Significant Accounting Policies

2.2 Valuation of EUAs, page F-4

 17. Comment: We note your fo

United States securities and exchange commission logo
February 23, 2024
Ronald Gutstein
Chief Executive Officer
COtwo Advisors Physical European Carbon Allowance Trust
140 Elm Street, Suite 6
New Canaan, CT 06840
Re:COtwo Advisors Physical European Carbon Allowance Trust
Amendment No. 1 to Registration Statement on Form S-1
Filed January 16, 2024
File No. 333-271910
Dear Ronald Gutstein:
            We have reviewed your amended registration statement and have the following
comments.
            Please respond to this letter by amending your registration statement and providing the
requested information. If you do not believe a comment applies to your facts and circumstances
or do not believe an amendment is appropriate, please tell us why in your response.
            After reviewing any amendment to your registration statement and the information you
provide in response to this letter, we may have additional comments. Unless we note otherwise,
any references to prior comments are to comments in our June 28, 2023 letter.
Amendment No. 1 to Registration Statement on Form S-1
Cover Page
1.Please revise your cover page to disclose the termination date of the offering, if
any, disclose that you are registering an indeterminate number of Shares and disclose here
that the Trust will not utilize leverage, derivatives or any similar arrangements in seeking
to meet its investment objective. In addition, we note your disclosure that Goldman Sachs
& Co. LLC is "expected to be" the Initial Purchaser. Please revise to clarify what you
mean by "expected to be." You also disclose that the initial amount of EUAs required for
deposit with the Trust will be 10,000 EUAs per basket and that the Initial Purchaser will
receive 50,000 Shares such that the initial Basket will be created at a per basket price of
10,000 EUAs and a per Share price equal to 1/5 the value of a single EUA on the purchase
date. Please revise to disclose how the value of the EUAs will be calculated on the
purchase date. Further, your disclosure that the Initial Purchaser will receive 50,000

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 23, 2024 Page 2
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 23, 2024
Page 2
Shares appears to be inconsistent with your disclosure on page F-6 that "[t]he initial
Authorized Participant will make a minimum initial purchase of at least two Baskets of
50,000 Shares at a per Share price equal to the value of 10,000 EUAs on the initial
offering date." Please revise for clarity and consistency.
Prospectus Summary
The Trust, page 1
2.We note your disclosure on page 2 that the Trust is not involved in or responsible for the
calculation or dissemination of the indicative intra-day value per Share. Please revise to
disclose who calculates the intra-day value per Share. In addition, your disclosure on
pages 2 and 38 that indicates that the IVF is calculated using the most recently reported
EUA End of Day Index value seems inconsistent with your disclosure on page 38 that
describes the IVF as using the most recently reported mid-point of the bid/ask spread of
spot EUAs traded on the EEX. Please revise for consistency and clarity.
3.We note your disclosure on pages 2 and 18 that "the Sponsor and Trustee may agree to
amend the Trust Agreement, including to increase the Sponsor’s Management Fee,
without shareholder consent."  Please revise to disclose when and how Shareholders will
be notified of a material change to the Trust Agreement.
The Offering
Trust Fees and Expenses, page 7
4.Please revise to disclose whether any of the Trust’s expenses payable by the Sponsor from
the Management Fee are capped.
Suspension of Issuance, Transfers and Redemptions, page 8
5.We note your disclosure that the Administrator will determine the NAV and the NAV per
Share based on the value of the EUA End of Day Index that is published daily on the EEX
website. Please clarify why the ICE Endex and Nasdaq Oslo are material to the valuation
or operation of the Fund, and please disclose any other exchanges that are material to the
valuation or operation of the Fund. In addition, please disclose how you will inform
Shareholders that creations and/or redemptions have been suspended.
Risk Factors
Risks Related to the Trust's Investments
The Trust will face currency exchange rate risk, page 13
6.We note your disclosure on page 13 that “[a]s of May 10, 2023, the exchange rate was
1.0982 Euro/U.S. dollar,” and we note that your graph on page 27 stops at December 28,
2021. Please revise to update your disclosure here and throughout to the most recent
practicable date.

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 23, 2024 Page 3
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 23, 2024
Page 3
Risks Related to the Trust's Structure
The service providers engaged by the Trust may not carry adequate insurance, page 18
7.Please revise to disclose whether any of the service providers engaged by the Trust,
including the Union Registry, carry insurance, and, if so, the degree to which such
insurance covers the assets of the Trust.
EUAs and the EUA Industry
Pricing of Allowances and Trading Volume, page 26
8.Please disclose here when the EEX calculates and publishes the EUA End of Day
Index. In addition, please disclose what constitutes a qualifying trade, including
quantitative information regarding requirements for the quantity of traded contracts, the
quantity of contracts per order, the minimum duration of the cumulated valid best bid and
best ask and the maximum spread per contract. Also revise to disclose the sources of the
data used for calculating the EUA End of Day Index. In this regard, we note your
disclosure that “[t]he data used for calculating the EUA End of Day Index can also come
from fair values collected in a price committee or from other price sources.” Revise to
disclose the methodology for determining “fair values,” disclose what you mean by a
“price committee” and identify the “other price sources.” Further, please revise to describe
the situations in which the EEX will use these alternative sources of data.
9.We note your disclosure that, after the EUA End of Day Index price is calculated, it is
then validated against actual market prices. Please revise to describe the validation
methodology used by the EEX, and the policies regarding whether adjustments will be
made to the EUA End of Day Index published. In addition, please disclose the impact that
such adjustments could have on the NAV of the Trust.  Also disclose how the EEX
evaluates its methodology and how the Sponsor will notify Shareholders of any material
changes to the EEX’s methodology.  Further, disclose here whether the Sponsor may, in
its sole discretion change the index and, if so, its criteria for choosing to do so, its criteria
for selecting a new index and how the Sponsor will notify Shareholders of such a change.
Regulation, page 28
10.Please expand the disclosure in this section to provide a brief explanation of the MAR,
MiFID II and MiFIR.
Activities of the Trust
Trust Objective, page 29
11.Please revise to disclose the material terms of the agreement with the Union Registry.
Creation and Redemption of Shares, page 29
12.Please revise to expand your disclosure to discuss whether the Sponsor may direct the
Administrator to use a different methodology, and, if so, the criteria the Sponsor will

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 23, 2024 Page 4
 FirstName LastNameRonald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 23, 2024
Page 4
consider to determine whether to direct the Administrator to use a different valuation
methodology. Please include a description of the different methodology the Sponsor may
direct the Administrator to use.
13.Please revise to disclose whether there is any cost associated with transferring EUAs from
the Trust to Authorized Participants and from the Authorized Participants to the Trust. If
so, please disclose whether the Trust or the Authorized Participants pay such fees. In
addition, we note your revised disclosure on page 31 that "[t]here may be circumstances
where an Authorized Participant can only deliver whole lots of EUAs, consisting of 1,000
EUAs, in exchange for Baskets of Shares." Please explain why this may be the case and
revise to provide examples of such circumstances. You also disclose that "[t]herefore, to
facilitate the creation of Baskets, an Authorized Participant who must provide a fraction of
a lot of EUAs may credit the Trust’s Union Registry account with a whole lot of EUAs
and the books and records of the Trust and the Authorized Participant will reflect a
liability of the Trust for the pro rata portion of EUA lot that is not owned by the
Trust." Please revise to disclose how the liability is settled.
Trust Expenses, page 37
14.Please expand your disclosure here to describe the mechanics of how EUAs are sold by
the Trust to pay the Sponsor’s Management Fee, including a discussion of costs associated
with transfers and sales of EUAs, and, if there are such costs, disclose whether the Trust
pays the transfer fees. In this regard, we note your disclosure that the Trust may sell EUAs
through dealers in OTC transactions or directly on the EEX, ICE Endex and Nasdaq Oslo
exchanges. Please revise to disclose whether the Trust has agreements with any dealers,
and, if so, please disclose the material terms of such agreements and identify the dealers.
In addition, please revise to disclose how the Trust will liquidate its assets in connection
with a termination of the Trust.
Index to Financial Statements, page F-1
15.We note your auditor's report and statement of assets and liabilities is as of December 7,
2023.  Please revise to clarify in your disclosure on page 40 that the fiscal year of the
Trust initially will be October 1 to September 30.
Note 1. Organization, page F-4
16.Please revise to disclose, if true, that as the Trust has not commenced operations,
a separate statement of income, changes in equity, and cash flows have not yet been
presented in the financial statements.
Note 2. Significant Accounting Policies
2.2 Valuation of EUAs, page F-4
17.We note your footnote disclosure that you will value your EUA holdings under ASC 820,
Fair Value Measurements.  Please revise the notes to your financial statements to also

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 23, 2024 Page 5
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 23, 2024
Page 5
include a materially complete description of the methodology to be used to calculate NAV
for GAAP purposes.
Note 5. Risks, page F-7
18.Please tell us, and revise to disclose as appropriate, how you considered concentration risk
given that your only investment is in EUAs that have price volatility concerns.
Note 7. Subsequent Events, page F-7
19.Please revise to disclose the date the financial statements were issued.
Exhibit 8.1, page II-2
20.We note you have filed a short-form tax opinion as Exhibit 8.1. Please revise your tax
discussion to clarify that the discussion in the prospectus constitutes counsel’s opinion and
name counsel in the prospectus discussion that constitutes counsel’s opinion. In addition,
please have tax counsel revise its opinion in Exhibit 8.1 to remove the bracket on the date
of the representation letter and to clarify that the discussion in the prospectus constitutes
counsel's opinion rather than that the discussion therein is a fair and accurate summary
under current law of the material United States federal income tax consequences of the
ownership and disposition of a unit of the Trust. For guidance, refer to Sections III.B.2
and III.C.2 of Staff Legal Bulletin 19.
            Please contact Bonnie Baynes at 202-551-4924 or Michelle Miller at 202-551-3368 if
you have questions regarding comments on the financial statements and related matters. Please
contact Jessica Livingston at 202-551-3448 or Sonia Bednarowski at 202-551-3666 with any
other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets
cc:       Eric D. Simanek

CORRESP
1
filename1.htm

    Eversheds
    Sutherland (US) LLP

    700
    Sixth Street, NW, Suite 700

    Washington, DC 20001-3980

    D:
    +1 202. 220.8412

    ericsimanek@eversheds-sutherland.us

January 16, 2024

VIA EDGAR

Bonnie Baynes

Michelle Miller

Jessica Livingston

Sonia Bednarowski

Division of Corporation
Finance

Securities and
Exchange Commission

100 F. Street
N.E.

Washington, D.C.
20549

    Re:
    COtwo Advisors Physical European Carbon Allowance
    Trust

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

    File No. 333-271910

Dear Mss. Baynes,
Miller, Livingston and Bednarowski:

This
letter sets forth responses to the written comments received in a letter dated June 28, 2023, regarding Amendment No. 1 to the Registration
Statement on Form S-1 (the “Registration Statement”) filed by COtwo Advisors Physical European Carbon Allowance Trust (the
“Registrant”) on May 12, 2023 for the purpose of registering shares of the Registrant. Unless otherwise noted, capitalized
terms have the same meanings as used in the Registration Statement.

Set
forth below are the comments and the Registrant’s response thereto.

Form S-1
filed May 12, 2023

Risk Factors,
page 28

 1. Comment:
                                            Refer to your response to comment 4 that the fragmented nature of data regarding the EU carbon
                                            market and the lack of a centralized market monitoring of the EU carbon market may make it
                                            more difficult to identify potential market manipulation and abuse practices. Please add
                                            a risk factor that addresses the risk to the Trust and its investors due to potential market
                                            manipulation and abuse practices in the EU carbon market.

Response:
The Registration Statement has been revised accordingly.

Page 2

January 16, 2024

Determination
of Required Deposits, page 30

 2. Comment:
                                            Refer to your response to comment 8. Please revise to clearly show the impact to the Trust’s
                                            NAV and the NAV per share of selling multiple Creation Baskets at a discount over time. In
                                            this regard, it appears that your table is showing the discount to an Authorized Participant
                                            per EUA basket deposit and does not show the cumulative impact to the Trust's NAV and the
                                            NAV per share. In your analysis, please revise to remove the assumption that the Trust's
                                            NAV per share remains constant, and revise the assumptions such that the Trust's NAV, the
                                            NAV per Share and the price per EUA result in EUA basket deposits that would have resulted
                                            in a fractional EUA but for your policy of disregarding fractional EUAs.

Response:
The Registration statement has been revised accordingly.

Plan of
Distribution, page 35

 3. Comment:
                                            Please revise to identify your Authorized Participants.

Response:
The Registration Statement has been revised accordingly.

Description
of the Trust

Calculating
NAV, page 37

 4. Comment:
                                            Refer to your response to comment 9. Please revise your table on page 38 to clarify that
                                            the Daily EUA Futures are traded on the ICE ENDEX with one contract representing 1,000 EUAs.

Response:
Registrant notes that it has determined to use the EUA End of Day Index value as opposed to the settlement price of Daily EUA Futures
to calculate its NAV. The EUA End of Day Index is a measure of the end of day price of spot EUAs, so it reflects the prices of the asset
held by the Trust and a comparison to the settlement prices of the Daily EUA Future, or any other measurement of the price of EUAs, would
serve no purpose. Therefore the referenced chart has been deleted.

 5. Comment:
                                            Refer to your response to comments 1 and 9. Please tell us why you consider the Daily EUA
                                            Future price as a more accurate measure of the price of EUAs than the spot market when “the
                                            price of the spot EUA is substantially identical to the settlement price for the Daily EUA
                                            Future.”

Response:
As noted in response 4 above, Registrant has determined to calculate the NAV using the EUA End of Day Index value as published by the
EEX instead of the settlement price of Daily EUA Futures.

Page 3

January 16, 2024

Performance,
Financials and Other Information, page 55

 6. Comment:
                                            We note your response to prior comment 11. In order to help us further evaluate the applicability
                                            of ASC 946, please address the following:

 ● Confirm
for us that the Trust has appropriately concluded that it is not a 1940 Act Investment Company.

 ● More
fully evaluate whether you meet the fundamental characteristics of an investment company as defined by ASC 946 by referencing disclosure
supporting your exit strategy (e.g., ASC 946-10-55-7) and telling us whether you provide investments services, and if so, whether they
are substantive (e.g., ASC 946-10-55-5).

 ● More
fully evaluate the ASC 946-10-55-16 guidance related to the more than one investor typical characteristic.

Response:
Registrant confirms that it has appropriately concluded that it is not an “investment company,” as defined in the Investment
Company Act of 1940, as amended (the “1940 Act”), because the Registrant holds itself out as being and will be primarily
engaged in the business of investing in EUAs, which are not securities within the meaning of Section 2(a)(36) of the 1940 Act.

As
discussed in prior response 11, the Trust possesses all of the fundamental characteristics of an investment company as defined by ASC
946. The investment objective of the Trust is for the Shares to reflect the performance of the price of EUAs, less the expenses of the
Trust’s operations. The Trust intends to achieve this objective by investing substantially all of its assets in EUAs. Barring the
forced liquidation of the Trust, the Trust will not purchase or sell EUAs directly, although the Sponsor may sell EUAs to pay certain
expenses. Instead, when it sells or redeems its Shares, it will do so in “in-kind” transactions. Authorized Participants
will deliver EUAs to the Trust in exchange for Shares when they purchase Shares, and the Trust will deliver EUAs to such Authorized Participants
when they redeem Shares from the Trust. See “Prospectus Summary – Trust Objective” in the Registration Statement. ASC
946-10-55-7 states that “an investment company whose business purpose and substantive activities include realizing capital appreciation
should have an exit strategy for how it plans to realize the capital appreciation of its investments.” While the investment strategy
of the Trust is to acquire and hold EUAs, any disposition of EUAs by the Trust will be done by selling EUAs on the EEX or other exchange
where the trading of spot EUAs takes place. Any appreciation in the value of the EUAs held by the Trust will be reflected in the sale
price of the EUAs on the applicable exchange. Additionally, the Trust provides no investment-related services (as described in ASC 946-10-55-5)
to other entities. It simply holds the EUAs that it receives through the sale of Creation Units.

Registrant
notes that it will operate as an exchange-traded fund with its Shares offered to the public upon the effectiveness of the Registration
Statement and the listing of its Shares on the NYSE Arca. The Trust expects its Shares to be widely held by retail and institutional
investors that acquire Shares in the secondary market. As such, the Trust clearly will have more than one investor and will pool the
funds from those investors to invest in EUAs. Hence, the Registrant fully meets the typical characteristic of an investment company of
having more than one investor.

 7. Comment:
                                            Please provide your ASC 820 principal market accounting analysis that supports the belief
                                            you expressed in your response to prior comment 11 that the Daily EUA Futures price as established
                                            by ICE ENDEX represents the fair value of an EUA in accordance with ASC 820. That analysis
                                            should address, but not be limited to, the following:

 ● Explain
why you believe the Daily EUA Futures market is the principal market for the EUAs the trust will hold. In this regard, we note that ASC
820-10-35-6 requires use of the price in the principal market for the asset or liability being fair valued and that the asset you are
measuring, EUAs, does not appear to be a futures contract.

 ● Tell
us if the Trust has access to the EEX spot market and if not, why. See ASC 820-10-35-6A.

Page 4

January 16, 2024

 ● By
reference to the four types of markets defined in ASC 820, clarify for us to what type of market “OTC” refers and how it
operates.

 ● Explain
how your principal market determination contemplates your disclosure on page 36 that the Trust will cause EUAs to be sold through dealers
in OTC transactions or directly on the EEX, ICE Endex, and Nasdaq Oslo exchanges. See ASC 820-10-35-5A. As part of this explanation,
clarify how you considered the fact that the Trust only transacts with Authorized Participants and what you mean when you state “the
Trust will cause EUAs to be sold” in certain markets.

Response:
Registrant notes that the EUAs held by the Trust will be valued at fair value under ASC 820 using the EUA End of Day Index value as published
by the EEX. The EUA End of Day Index is published by the EEX and is based on the prices at which EUAs traded in the EEX spot market over
the prior day. The EEX is the primary market for EUAs, based on the following factors:

 ● The
                                            EEX is the sole auction platform on which auctions for new EUAs are conducted; and

 ● The
                                            EEX is the sole market that has contracted with the European Union to run a secondary market
                                            in spot EUAs.

The
Trust also has access to the EEX spot market through brokers that buy and sell EUAs on the EEX, like any other U.S. ETF that can buy
and sell securities on a U.S. national securities exchange through a broker. Therefore, the EUA End of Day Index is the appropriate price
to use to value the Trust’s holdings because EEX is the principal market for EUAs, as required by ASC 820-10-35-6.

As
noted in the Registration Statement, the Trust may sell EUAs in OTC transactions. The OTC market is a “dealer market,” as
described in ASC 820, where dealers that transact in EUAs for their own accounts publish bids throughout the trading day to acquire EUAs.
The Trust will be able to sell EUAs to a participating dealers at the current bid price at any time during the EUA trading day. In this
case, the Trust will deliver the required number of EUAs to the Union Registry account of the purchasing dealer.

According
to ASC 820-10-35-5A, “[i]n the absence of evidence to the contrary, the market in which the reporting entity normally would enter
into a transaction to sell the asset or to transfer the liability is presumed to be the principal market.” The Trust may sell EUAs
(the phrase “cause EUAs to be sold” is synonymous with “sell EUAs”) to raise any cash necessary to pay Trust
expenses. In that case, the Trust will either sell EUAs in OTC transactions or on an exchange that serves as a venue for spot EUA transactions.
Currently, the only exchange on which spot EUA transactions are executed is the EEX. Therefore, the EEX should be considered the principal
market for EUAs and the EUA End of Day Index disseminated by the EEX should be considered the fair value of an EUA.

The
sale of EUAs by the Trust to pay Trust expenses does not relate in any way to the sale and redemption transactions in Trust Shares with
Authorized Participants. The Trust does not sell EUAs to Authorized Participants; rather, the Trust sells its Shares to Authorized Participants.
The fact that the Trust sells and redeems Creation Units in exchange for in-kind deposits of EUAs does not mean that a market other than
EEX is the principal market for EUAs, just as the sale and redemption of shares of equity ETFs in exchange for in-kind deposits of stocks
does not mean that a market other than the exchange on which the stocks trade is a primary market for those stocks.

Best regards,

    /s/ Eric Simanek

    Eric Simanek

    202-383-0262

    ericsimanek@eversheds-sutherland.us

United States securities and exchange commission logo
June 28, 2023
Ronald Gutstein
Chief Executive Officer
COtwo Advisors Physical European Carbon Allowance Trust
15 Woodcock Lane
Ridgefield, CT 06877
Re:COtwo Advisors Physical European Carbon Allowance Trust
Registration Statement on Form S-1
Filed May 12, 2023
File No. 333-271910
Dear Ronald Gutstein:
            We have reviewed your registration statement and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.
            Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
            After reviewing any amendment to your registration statement and the information you
provide in response to these comments, we may have additional comments.
Form S-1 filed May 12, 2023
Risk Factors, page 28
1.Refer to your response to comment 4 that the fragmented nature of data regarding the EU
carbon market and the lack of a centralized market monitoring of the EU carbon market
may make it more difficult to identify potential market manipulation and abuse practices.
Please add a risk factor that addresses the risk to the Trust and its investors due to
potential market manipulation and abuse practices in the EU carbon market.
Determination of Required Deposits, page 30
2.Refer to your response to comment 8. Please revise to clearly show the impact to the
Trust's NAV and the NAV per share of selling multiple Creation Baskets at a discount
over time. In this regard, it appears that your table is showing the discount to an

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 June 28, 2023 Page 2
 FirstName LastNameRonald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
June 28, 2023
Page 2
Authorized Participant per EUA basket deposit and does not show the cumulative impact
to the Trust's NAV and the NAV per share. In your analysis, please revise to remove the
assumption that the Trust's NAV per share remains constant, and revise the assumptions
such that the Trust's NAV, the NAV per Share and the price per EUA result in EUA
basket deposits that would have resulted in a fractional EUA but for your policy of
disregarding fractional EUAs.
Plan of Distribution, page 35
3.Please revise to identify your Authorized Participants.
Description of the Trust
Calculating NAV, page 37
4.Refer to your response to comment 9.  Please revise your table on page 38 to clarify that
the Daily EUA Futures are traded on the ICE ENDEX with one contract representing
1,000 EUAs.
5.Refer to your response to comments 1 and 9.  Please tell us why you consider the Daily
EUA Future price as a more accurate measure of the price of EUAs than the spot market
when “the price of the spot EUA is substantially identical to the settlement price for the
Daily EUA Future.”
Performance, Financials and Other Information, page 59
6.We note your response to prior comment 11.  In order to help us further evaluate the
applicability of ASC 946, please address the following:
•Confirm for us that the Trust has appropriately concluded that it is not a 1940 Act
Investment Company.
•More fully evaluate whether you meet the fundamental characteristics of an
investment company as defined by ASC 946 by referencing disclosure supporting
your exit strategy (e.g., ASC 946-10-55-7) and telling us whether you provide
investments services, and if so, whether they are substantive (e.g., ASC 946-10-55-5).
•More fully evaluate the ASC 946-10-55-16 guidance related to the more than one
investor typical characteristic.
7.Please provide your ASC 820 principal market accounting analysis that supports the belief
you expressed in your response to prior comment 11 that the Daily EUA Futures price as
established by ICE ENDEX represents the fair value of an EUA in accordance with ASC
820. That analysis should address, but not be limited to, the following:
•Explain why you believe the Daily EUA Futures market is the principal market for
the EUAs the trust will hold.  In this regard, we note that ASC 820-10-35-6 requires
use of the price in the principal market for the asset or liability being fair valued and
that the asset you are measuring, EUAs, does not appear to be a futures contract.
•Tell us if the Trust has access to the EEX spot market and if not, why. See ASC 820-
10-35-6A.

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 June 28, 2023 Page 3
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
June 28, 2023
Page 3
•By reference to the four types of markets defined in ASC 820, clarify for us to what
type of market “OTC” refers and how it operates.
•Explain how your principal market determination contemplates your disclosure on
page 36 that the Trust will cause EUAs to be sold through dealers in OTC
transactions or directly on the EEX, ICE Endex, and Nasdaq Oslo exchanges. See
ASC 820-10-35-5A. As part of this explanation, clarify how you considered the fact
that the Trust only transacts with Authorized Participants and what you mean when
you state “the Trust will cause EUAs to be sold” in certain markets.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Refer to Rules 460 and 461 regarding requests for acceleration.  Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.
            You may contact Bonnie Baynes at 202-551-4924 or Michelle Miller at 202-551-3368 if
you have questions regarding comments on the financial statements and related matters. Please
contact Jessica Livingston at 202-551-3448 or Sonia Bednarowski at 202-551-3666 with any
other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets
cc:       Eric D. Simanek

CORRESP
1
filename1.htm

    Eversheds
    Sutherland (US) LLP

    700
    Sixth Street, NW, Suite 700

    Washington, DC 20001-3980

    D:
    +1 202. 220.8412

    ericsimanek@eversheds-sutherland.us

May
12, 2023

VIA
EDGAR

Bonnie
Baynes

Michelle
Miller

Jessica
Livingston

Sonia
Bednarowski

Division
of Corporation Finance

Securities
and Exchange Commission

100
F. Street N.E.

Washington,
D.C. 20549

    Re:
    COtwo Advisors Physical European
    Carbon Allowance Trust

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

    File No. 377-06546

Dear
Mss. Baynes, Miller, Livingston and Bednarowski:

This
letter sets forth responses to the written comments received in a letter dated March 30, 2023, regarding Amendment No. 1 to the Draft
Registration Statement on Form S-1 (the “Registration Statement”) confidentially submitted by COtwo Advisors Physical European
Carbon Allowance Trust (the “Registrant”) on March 13, 2023 for the purpose of registering shares of the Registrant. Unless
otherwise noted, capitalized terms have the same meanings as used in the Registration Statement.

Set
forth below are the comments and the Registrant’s response thereto.

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

General

 1. Comment:
                                            Please tell us, and revise your disclosure to disclose, why you have chosen to structure
                                            the product to hold physical carbon allowances in light of your disclosure that the futures
                                            market is more liquid and active than the spot market.

 Response:
Our disclosure in regards to the futures market being more liquid than the spot market was in the context of describing the same day
futures market versus the spot market.  It is important to note that functionally, a same day futures contract acts like a spot
market.  The contract that trades will settle for the physical underlying EUA after the close of business each day.  In this
manner, the settlement, functionality and economic outcome for a spot purchase on the EEX and a same day futures purchase on the ICE
are identical. Whether the Trust acquires an EUA through a transaction on the EEX or through the acquisition of a Daily EUA Future on
the ICE, at the end of the day the Trust will acquire the same instrument. The acquisition of the EUA through a Daily EUA Future or through
the spot market is merely a different means of acquiring an EUA – it is not the acquisition of a different instrument. It is worth
noting that the EU contracted with the EEX to run a spot and auction market.  The same day futures contract gives the ICE the ability
to compete for this trading business because it is functionally identical to the spot EUA.

Page 2

May 12, 2023

It
would be impossible to structure an ETF to hold a same day futures contract, as each day it would expire and the ETF would end up holding
physical EUAs. It is not possible to roll a futures position to a later dated contract when it expires each day.

The
only option would be structure an ETF around later dater futures products which have several drawbacks as compared to a physical ownership
structure.  The following is a partial list of the advantages of a physical EUA fund over a structure that would rely on long dated
futures (Please note the list is not exhaustive):

 ● A
                                            longer dated futures contract has both volatility and time value for the contract built in,
                                            which will decay over time causing a loss of investment.  Owning the physical EUA would
                                            incur no such impairment.  Consequently, owning a physical EUA will always outperform
                                            owning a long dated futures contract.

 ● No
                                            matter how long dated the contract is, eventually it must be rolled into another futures
                                            contract.  This will incur brokerage fees on a recurring basis that an ETF that owns
                                            the underlying physical will never have.

 ● The
                                            process of rolling out the expiration of a futures contract is a taxable event.  This
                                            will require a distribution to the ETF shareholders that could result in material tax obligations.
                                            The only transactions that a physical ETF will incur is when EUAs are sold to cover fund
                                            expenses

Registrant
notes that its disclosure regarding the more liquid and active Daily EUA Futures market was only in response to prior comment 3 to explain
why the Trust’s EUAs will be valued based off the settlement price of Daily EUA Futures instead of a calculation based off the
spot price, and that structuring the product around Daily EUA Futures is impossible and was never contemplated. Accordingly, Registrant
respectfully declines to add further explanation, since the alternative is impossible.

Page 3

May 12, 2023

Risk
Factors

Risks
Related to the Trust’s Investments

The
Trust will face currency exchange rate risk, page 13

 2. Comment:
                                            Refer to your response to comment 17. Please disclose the currency exchange rate as of the
                                            most recent practicable date.

Response:
The Registration statement has been revised accordingly.

Risks
Related to the Trust’s Structure

If
this offering of Shares does not raise sufficient funds, page 15

 3. Comment:
                                            Refer to your response to comment 18. On page 15, you disclose that “[i]f the Sponsor
                                            and the Trust are unable to raise sufficient funds so that the Trust’s expenses are
                                            reasonable in relation to its NAV, the Trust may be forced to terminate and investors may
                                            lose all or part of their investment.” Please revise here and in the prospectus summary
                                            to provide quantitative disclosure regarding what you believe are “sufficient funds”
                                            and what you believe are reasonable expenses in relation to the Trust's NAV.

Response:
Registrant respectfully advises that there’s no specific amount of “sufficient funds” that the Trust must raise in
order to continue operations. Revenue received from management of the Trust, including the ability of the revenue to cover fund expenses
that the Sponsor has assumed, will be one of many factors that the Sponsor will consider on an ongoing basis in connection with the decision
to continue the operation of the Trust. The Prospectus has been revised to include an example to illustrate the level of assets that
the Trust will have to raise in order to cover various levels of hypothetical operating expenses. In addition, the Trust’s expenses
will remain constant in relation to NAV, due to the unitary Sponsor’s Management Fee, so the statement about the Trust’s
expenses being “reasonable in relation to [the Trust’s] NAV” has been deleted.

EUAs
and the EUA Industry, page 21

 4. Comment:
                                            Refer to your response to comment 8. Please expand your disclosure here to highlight the
                                            fragmented nature of data regarding the EU carbon market and the lack of centralized market
                                            monitoring of the EU carbon market. In addition, please disclose here the potential that
                                            a lack of centralized market monitoring of the EU carbon market may make it more difficult
                                            to identify potential market manipulation and abuse practices.

Response:
The Registration Statement has been revised accordingly.

Page 4

May 12, 2023

 5. Comment:
                                            Refer to your response to comment 21. Your revised disclosure explains that because the Covered
                                            Entities may require fewer EUAs as they reduce their emissions, the Covered Entities will
                                            be able to sell more EUAs in the secondary market, which will offset the reduction in the
                                            EUAs sold in auction. Please further expand your disclosure here to address the MSR’s
                                            role in the reduction of surplus EUAs and the potential impact of the control of the total
                                            number of allowances in circulation on the Authorized Participants and the Trust’s
                                            investors. In this regard, we note your disclosure on page 27 that “the EU use of the
                                            MSR and the linear reduction factor have great influence regarding the overall supply of
                                            EUAs available to the market.”

Response: The
Registration Statement has been revised to explain the MSR's role in the reduction of surplus EUAs. In addition, in any year, if the
total number of allowances in circulation is less than 400 million, 100 million allowances shall be released from the reserve and
added to the volume of allowances to be auctioned. The Registrant respectfully believes that, due to the high number of EUAs that
will remain in circulation at all times, the limited decrease in supply due to the annual linear reduction and the reduction of
surplus EUAs via the MSR will have no impact on liquidity or availability of EUAs. Therefore, this annual reduction of EUAs will
have no impact on the creation/redemption process or the bid/ask spreads of the Trust’s Shares.

 6. Comment:
                                            Please update your disclosure on page 23 to describe the reform to the MSR that was expected
                                            to be completed by the end of December 2022.

Response:
Registrant notes that the referenced MSR reforms were adopted and has updated the Registration Statement accordingly.

Pricing
of Allowances and Trading Volume, page 25

 7. Comment:
                                            Please revise to clarify that the chart on page 26 shows the spot prices in continuous trading
                                            on the EEX and the prices on the ICE Endex in Euro/tCO2 from January 2018 to January 2022,
                                            and revise your disclosure to clarify what you intend to highlight by use of the chart. In
                                            addition, we note that you have included the same chart on page 36 and state that “[t]he
                                            chart below shows the mid-point of the bid/ask spread for EUAs traded on EEX and the Daily
                                            EUA Future throughout the trading days for the month of January 2023.” Please revise
                                            for clarity and consistency.

Response:
Registrant notes that the above referenced chart shows the spot prices in continuous trading on the EEX and the intra-day prices (mid-point
of the bid/ask spread) of Daily EUA Futures on ICE ENDEX. See ESMA, Final Report, Emission allowances and associated derivatives,
footnote 41 (March 28, 2022) (stating that “[i]n this section ‘spot’ refers to both spot contracts traded on EEX and
daily futures traded on ICE ENDEX”) (“ESMA Report”). Registrant has removed the chart on page 26 of the Registration
Statement and revised the disclosure on page 36 to state: “[t]he chart below shows the spot prices in continuous trading on the
EEX and the intra-day prices of Daily EUA Futures on ICE ENDEX, in EUR/tCO2 from January 2018 to January 2022.”

Page 5

May 12,
2023

Determination
of Required Deposits, page 29

 8. Comment:
                                            Refer to your response to comment 25. Please revise your disclosure to include your explanation
                                            and materiality analysis of disregarding fractional EUAs for purposes of computing the Basket
                                            Deposit on each day that the Exchange is open for regular trading. Clearly illustrate the
                                            impact to investors at different levels and over time, including the aggregate effect of
                                            selling multiple Creation Baskets at a discount over time.

Response:
Registrant has added the requested disclosure.

Description
of the Trust

Calculating
NAV, page 36

 9. Comment:
                                            Refer to your response to comment 3. Please revise here to include the table you included
                                            in your response letter that shows a comparison between the trading volumes of spot EUAs
                                            and daily EUA futures as well as the settlement prices. In addition, we note that it appears
                                            the settlement prices of the spot EUAs differ from the daily EUA futures. Please provide
                                            an analysis that shows the impact of using the daily EUA futures price as compared to the
                                            spot price to calculate NAV per share for basket creations and redemptions as well as the
                                            potential impact on the price per share in the secondary market. Please provide illustrative
                                            examples of how creations and redemptions will be conducted based on market prices in relation
                                            to various spot and futures prices.

Response:
Registrant has added the requested table. Registrant notes that, as discussed above, the settlement, functionality and economic outcome
for Daily EUA Futures on ICE ENDEX and spot purchases on the EEX are identical, as the Daily EUA Futures settle for the physical underlying
EUAs at the close of business on each day. The differences observed in the table provided are due to the differences in timing between
the last sale price in the EUA spot market and the settlement price for the Daily EUA Future. EUA spot trading is done on the EEX, which
has a much more limited membership than the ICE, on which the Daily EUA Future is traded. Therefore, the last sale price on the EUA spot
market is often several hours before the close of trading, while the settlement price always reflects the price of the EUA at the end
of the trading day.

A
more accurate measure of the extent to which the spot EUA price reflects the Daily EUA Future price is the graph shown on page 36. This
graph compares the intraday spot EUA price with the median bid-ask spread of the Daily EUA Future throughout the trading day, and it
shows an average absolute difference from January 2018 to January 2022 between spot prices on the EEX and Daily EUA Futures on the ICE
Endex of €0.015. See ESMA Report, par. 157 (“Comparing daily settlement prices from EEX and ICE Endex, where most of
the trading takes place… no major differences can be observed with an average absolute difference of 0.015 EUR – suggesting
the absence of clear arbitrage opportunities between the two main venues.”).

The EEX now publishes daily the end of day market price (which is different
from the last sale price) of spot EUAs on the EEX. This is a more relevant comparison of how closely the settlement price of the Daily
EUA Future tracks the

United States securities and exchange commission logo
March 30, 2023
Ronald Gutstein
Chief Executive Officer
COtwo Advisors Physical European Carbon Allowance Trust
15 Woodcock Lane
Ridgefield, CT 06877
Re:COtwo Advisors Physical European Carbon Allowance Trust
Amendment No. 1 to
Draft Registration Statement on Form S-1
Submitted March 13, 2023
CIK 0001958928
Dear Ronald Gutstein:
            We have reviewed your amended draft registration statement and have the following
comments.  In some of our comments, we may ask you to provide us with information so we
may better understand your disclosure.
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to these comments and your
amended draft registration statement or filed registration statement, we may have additional
comments.
Amendment No. 1 to Draft Registration Statement on Form S-1
General
1.Please tell us, and revise your disclosure to disclose, why you have chosen to structure the
product to hold physical carbon allowances in light of your disclosure that the futures
market is more liquid and active than the spot market.

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 March 30, 2023 Page 2
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
March 30, 2023
Page 2
Risk Factors
Risks Related to the Trust's Investments
The Trust will face currency exchange rate risk, page 13
2.Refer to your response to comment 17.  Please disclose the currency exchange rate as of
the most recent practicable date.
Risks Related to the Trust's Structure
If this offering of Shares does not raise sufficient funds, page 15
3.Refer to your response to comment 18.  On page 15, you disclose that "[i]f the Sponsor
and the Trust are unable to raise sufficient funds so that the Trust's expenses are
reasonable in relation to its NAV, the Trust may be forced to terminate and investors may
lose all or part of their investment."  Please revise here and in the prospectus summary to
provide quantitative disclosure regarding what you believe are "sufficient funds" and what
you believe are reasonable expenses in relation to the Trust's NAV.
EUAs and the EUA Industry, page 21
4.Refer to your response to comment 8.  Please expand your disclosure here to highlight the
fragmented nature of data regarding the EU carbon market and the lack of centralized
market monitoring of the EU carbon market.  In addition, please disclose here
the potential that a lack of centralized market monitoring of the EU carbon market may
make it more difficult to identify potential market manipulation and abuse practices.
5.Refer to your response to comment 21.  Your revised disclosure explains that because the
Covered Entities may require fewer EUAs as they reduce their emissions, the Covered
Entities will be able to sell more EUAs in the secondary market, which will offset the
reduction in the EUAs sold in auction.  Please further expand your disclosure here to
address the MSR's role in the reduction of surplus EUAs and the potential impact of the
control of the total number of allowances in circulation on the Authorized Participants and
the Trust's investors.  In this regard, we note your disclosure on page 27 that "the EU use
of the MSR and the linear reduction factor have great influence regarding the overall
supply of EUAs available to the market."
6.Please update your disclosure on page 23 to describe the reform to the MSR that was
expected to be completed by the end of December 2022.
Pricing of Allowances and Trading Volume, page 25
7.Please revise to clarify that the chart on page 26 shows the spot prices in continuous
trading on the EEX and the prices on the ICE Endex in Euro/tCO2 from January 2018 to
January 2022, and revise your disclosure to clarify what you intend to highlight by use of
the chart.  In addition, we note that you have included the same chart on page 36 and state
that "[t]he chart below shows the mid-point of the bid/ask spread for EUAs traded on EEX

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 March 30, 2023 Page 3
 FirstName LastNameRonald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
March 30, 2023
Page 3
and the Daily EUA Future throughout the trading days for the month of January 2023."
Please revise for clarity and consistency.
Determination of Required Deposits, page 29
8.Refer to your response to comment 25.  Please revise your disclosure to include your
explanation and materiality analysis of disregarding fractional EUAs for purposes
of computing the Basket Deposit on each day that the Exchange is open for regular
trading.  Clearly illustrate the impact to investors at different levels and over time,
including the aggregate effect of selling multiple Creation Baskets at a discount over time.
Description of the Trust
Calculating NAV, page 36
9.Refer to your response to comment 3.  Please revise here to include the table you included
in your response letter that shows a comparison between the trading volumes of spot
EUAs and daily EUA futures as well as the settlement prices.  In addition, we note that it
appears the settlement prices of the spot EUAs differ from the daily EUA futures.  Please
provide an analysis that shows the impact of using the daily EUA futures price as
compared to the spot price to calculate NAV per share for basket creations and
redemptions as well as the potential impact on the price per share in the secondary
market.  Please provide illustrative examples of how creations and redemptions will be
conducted based on market prices in relation to various spot and futures prices.
U.S. Federal Income Tax Consequences
Taxation of U.S. Shareholders, page 54
10.Refer to your response to comment 6.  Please revise your disclosure on page 54 that refers
to a holder of shares acquiring its shares "principally" in exchange for EUAs so that it is
consistent with your disclosure on page 1 that the Trust will not hold any assets other than
EUAs or cash.  Similarly, revise your disclosure in the first risk factor on page 12 to
clarify that the Trust holds only EUAs and cash.
Performance, Financials and Other Information, page 55
11.Refer to your responses to comments 28 and 29.  We re-issue prior comments 28 and 29
in full, including that you either provide a substantive response or an explanation of when
you will be able to respond and why you are unable to respond at this time.  Substantive
responses to issued comments are integral to the review of future filings.

•We note your disclosure on page 5 that your NAV is determined on the basis of
generally accepted accounting principles, and on page 33 that your NAV calculation
includes determining the current market value of the Trust’s total assets. Please
enhance your disclosures to specifically discuss how you determine NAV, fair value
and current market value, and cite the specific paragraph references in authoritative

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 March 30, 2023 Page 4
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
March 30, 2023
Page 4
accounting literature that you use to support your determination. Also disclose the
basis, if and for, differences between the valuations.
•As the Trust's assets will be comprised primarily of EUAs, please revise to disclose
how you plan to account for the EUAs, including upon deposit and issuance of
Baskets and disposition for the settlement of fund expenses and redemption of
Baskets by the Trust. Cite specific paragraph references in authoritative accounting
literature to support your position, where applicable.
            You may contact Bonnie Baynes at 202-551-4924 or Michelle Miller at 202-551-3368 if
you have questions regarding comments on the financial statements and related matters.  Please
contact Jessica Livingston at 202-551-3448 or Sonia Bednarowski at 202-551-3666 with any
other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets

United States securities and exchange commission logo
February 3, 2023
Ronald Gutstein
Chief Executive Officer
COtwo Advisors Physical European Carbon Allowance Trust
15 Woodcock Lane
Ridgefield, CT 06877
Re:COtwo Advisors Physical European Carbon Allowance Trust
Draft Registration Statement on Form S-1
Filed January 9, 2023
File No. 377-06546
Dear Ronald Gutstein:
            We have reviewed your draft registration statement and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to these comments and your
amended draft registration statement or filed registration statement, we may have additional
comments.
Draft Registration Statement on Form S-1 filed January 9, 2023
General
1.You state that the shares of the Trust will trade on the NYSE Arca. Please tell us the status
of the application for listing the Trust's shares on the exchange.  Please also tell us the
status of the exchange's listing standard application under Rule 19b-4 of the Exchange
Act.
2.To the extent that you intend to use a fact sheet, please provide us a copy for our review.
3.We note that the Administrator values the European Union Carbon Emission Allowances
(“EUAs”) held by the Trust based on the settlement price for the daily EUA futures
contract as established by the ICE ENDEX exchange.  Please explain the reasons for

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 3, 2023 Page 2
 FirstName LastNameRonald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 3, 2023
Page 2
using the settlement prices for daily futures contracts rather than a calculation based upon
the spot price.  Disclose the effect that using the settlement price for daily futures
contracts may have upon the valuation of the Trust's NAV and the NAV per Share.  In
addition, please show a comparison of the spot price and the daily settlement price for
daily EUA futures contracts.
Cover Page
4.Please identify the initial purchaser, and disclose here that the Initial Purchaser is a
statutory underwriter.
5.Please disclose here and in your prospectus summary that Shareholders have no voting
rights with respect to the Trust except as expressly provided in the Trust Agreement.
Prospectus Summary
The Trust, page 1
6.Please reconcile your disclosure on page 1 that the Shares are issued "principally" in
exchange for EUAs from Authorized Participants and that the Shares will be redeemed by
the Trust "principally" in exchange for the amount of EUAs corresponding to their
redemption value with your disclosure that "[t]he Trust will not hold any assets other than
EUAs or cash."
7.We note your disclosure on page 1 that "[t]he Trust issues and redeems Baskets on an
ongoing basis at net asset value ("NAV") to Authorized Participants who have entered
into a contract with the Sponsor and Transfer Agent."  Please revise to clarify here and
throughout, if true, that the Baskets are issued and redeemed at NAV per Share for 50,000
Shares.
8.Please discuss here and in your risk factors section the fragmented nature of data
regarding the EU carbon market, the lack of centralized market monitoring of the EU
carbon market, and the impact this may have on an investors' ability to make an informed
investment decision regarding your Shares.
9.Please disclose here that the amount of EUAs represented by each Share will decrease
over the life of the Trust because of (i) the sale of EUAs necessary to pay the Sponsor’s
Management Fee and the Trust's expenses and (ii) the disregarding of fractions of an EUA
smaller than one EUA for purposes of computing the Basket Deposit.  Also disclose that
these reductions in the Trust's EUAs will cause the Share price to decrease causing
investment losses unless the price of EUAs increases, and include an analysis showing the
potential effect upon the net asset value per share of these EUA reductions.

10.Please revise your disclosure in the first paragraph on page 2 to provide a summary of
how the updated indicative fund value (IFV) is calculated and the sources used to obtain
the most recently reported trade prices of EUAs.  In addition, please revise your disclosure
on page 33 to discuss the exchange or exchanges used to calculate the IVF, and provide an

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 3, 2023 Page 3
 FirstName LastNameRonald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 3, 2023
Page 3
example of how the IVF is calculated during the customary trading hours for EUAs and
how the IVF is calculated when real-time trading prices for EUAs are not available.
The Trust's Service Providers, page 2
11.Please provide a brief summary of the Sponsor's conflicts of interests related to
its officers, directors and employees also being directors, officers or employees of other
entities that may compete with the Trust for their services and the conflict between their
responsibilities to the Trust and to those other entities.  In addition, please disclose here
that the Sponsor and the Trustee may agree to amend the Trust Agreement, including to
increase the Sponsor's Fee, without Shareholder consent.
Summary Risk Factors, page 3
12.Please revise your summary of the risks of cap and trade regimes to state clearly that the
Trust relies on the existence of cap and trade regimes.
The Offering, page 5
13.Please disclose here how the Administrator determines the conversion rate of Euros to US
Dollars in calculating the NAV and the NAV per Share, and please revise your disclosure
on page 33 to disclose what you mean by an "approved vendor."
14.We note your disclosure on page 6 that the Sponsor may suspend issuances and
redemptions of Shares "for such  . . . period as the Sponsor determines to be necessary for
the protection of shareholders" and your disclosure on page 28 that the Sponsor may reject
any purchase order or Basket Deposit if the Sponsor determines that the "investments
available to the Trust at that time will not enable it to meet its investment objective."
Please disclose examples of when the Sponsor may determine that suspension of creations
and redemptions are necessary for the protection of investors and when the investments
available will not enable the Trust to meet its investment objective.  Discuss why you
believe that such suspensions of creations and redemptions are consistent with your
statement that the Trust is a passive investment vehicle.
Risk Factors
Risks Related to the Trust's Investments, page 8
15.Please disclose whether there are any current position limits regarding financial
institutions with buy-and-hold strategies, and add a new risk factor addressing the risk to
investors if there are or are not position limits.
Abandonment of a Cap and Trade Program, page 10
16. Please revise the heading of this risk factor to state the actual risk that abandonment,
termination or non-renewal of an EUA trading scheme may cause the price of EUAs to
fall (potentially to zero).

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 3, 2023 Page 4
 FirstName LastNameRonald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 3, 2023
Page 4
The Trust will face currency exchange rate risk, page 12
17.Please expand this risk factor to provide quantitative disclosure regarding the historical
deprecation of the Euro against the U.S. dollar.
Risks Related to the Trust's Structure
If this offering of Shares does not raise sufficient funds, page 14
18.We note your disclosure on page 14 that "[i]f the Sponsor and the Trust are unable to raise
sufficient funds so that the Trust’s expenses are reasonable in relation to its NAV, the
Trust may be forced to terminate and investors may lose all or part of their investment."
Please revise here and in the prospectus summary to include quantitative disclosure
regarding the amount of funds "reasonable in relation to [the] Trust's NAV."  In addition,
reconcile your disclosure in this risk factor that "[a]s of the date of this prospectus, the
Trust pays the fees, costs and expenses of its operations" with your disclosure that the
Trust pays the Sponsor a Management Fee based upon the percentage of the daily NAV of
the Trust and that the Sponsor pays the routine operational, administrative and other
ordinary expenses of the Trust.
The Trust may amend the Trust Agreement, page 16
19.We note your disclosure on page 16 that refers to the "'negative consent' procedure
described above."  We were unable to locate this disclosure.  Please describe the negative
consent procedure.
The Trust does not expect to make cash distributions, page 17
20.Please reconcile your disclosure on page 17 regarding "income earned from [the
Trust's] investments held directly or posted as margin" with your disclosure that the Trust
will hold only EUAs that it receives from Authorized Participants in exchange for Shares.
Similarly reconcile your disclosure in the second risk factor on page 17 regarding the
possibility of "liquidat[ing] positions in the Trust's trading positions before the time that
the trading strategies would otherwise dictate liquidation" with your disclosure of the
Trust's policies and strategies related to when and how to liquidate its EUAs.
EUAs and the EUA Industry
Description of EU Emissions Trading Scheme, page 19
21.Please expand your disclosures on the annual reduction in EUAs to discuss the impact
such reductions may have on the ability of the Authorized Participants to obtain
EUAs and the potential consequences of the reduction of EUAs for investors.
Creation and Redemption of Shares, page 26
22.We note your disclosure on page 26 that the transaction fee may be waived, reduced,
increased or otherwise changed by the Sponsor.  Please disclose the factors the Sponsor

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 3, 2023 Page 5
 FirstName LastNameRonald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 3, 2023
Page 5
will consider when deciding to waive, reduce, increase or otherwise change the
transaction fees paid by the Authorized Participants.  In addition, please revise to include
quantitative disclosure regarding the transaction fee.
23.We note your disclosure that "[c]ertain Authorized Participants are expected to be capable
of participating directly in the spot EUAs and EUAs future markets."  Please clarify why
it is necessary that the Authorized Participants be capable of participating in the futures
markets as the Trust holds only EUAs and cash.  In addition, please disclose whether the
Trust's Authorized Participants are able to participate directly in the EEX's auctions of
EUAs.
Determination of Required Deposits, page 27
24.Refer to your disclosure on page 27 that "[o]n each day that the Exchange is open for
regular trading, the Administrator adjusts the quantity of EUAs constituting the Basket
Deposit as appropriate to reflect accrued expenses and any loss of EUAs that may occur."
Please clarify the types of, and reasons for, the potential losses of EUAs you reference.
25.Refer to your disclosure that "[f]ractions of an EUA less than one EUA are disregarded
for purposes of the computation of the Basket Deposit" and your risk factor disclosure on
page 12 that the "Trust’s policy is to disregard such fractional amounts because they are
deemed to represent de minimis amounts relative to the value of a Basket."  Please clarify
how it was determined that these fractional amounts will always be de minimus amounts,
and provide an explanation and materiality analysis of the loss of these fractions of EUAs
that includes hypotheticals on the impact to investors at different levels.
Description of the Trust
The Trust, page 32
26.Please disclose in the first paragraph that the Trust is not a proxy for investing in EUAs.
Performance, Financials and Other Information, page 55
27.We note your disclosure on page 55 that the Sponsor will cause the audited financial
statements to be prepared after the fiscal year end, and disclosures on pages F-1 and F-2
that these audited financial statements will be added by amendment. Please confirm you
will file these financial statements as soon as they are available, in order to allow the staff
sufficient time to complete its review.
28.We note your disclosure on page 5 that your NAV is determined on the basis of generally
accepted accounting principles, and on page 33 that your NAV calculation includes
determining the current market value of the Trust’s total assets.  Please enhance your
disclosures to specifically discuss how you determine NAV, fair value and current market
value, and cite the specific paragraph references in authoritative accounting literature that
you use to support your determination.  Also disclose the basis, if and for, differences
between the valuations.

 FirstName LastNameRonald  Gutstein
 Comapany NameCOtwo Advisors Physical European Carbon Allowance Trust
 February 3, 2023 Page 6
 FirstName LastName
Ronald  Gutstein
COtwo Advisors Physical European Carbon Allowance Trust
February 3, 2023
Page 6
29.As the Trust's assets will be comprised primarily of EUAs, please revise to disclose how
you plan to account for the EUAs, including upon deposit and issuance of Baskets and
disposition for the settlement of fund expenses and redemption of Baskets by the
Trust.  Cite specific paragraph references in authoritative accounting literature to support
your position, where applicable.
            You may contact Bonnie Baynes at 202-551-4924 or Michelle Miller at 202-551-3368 if
you have questions regarding comments on the financial statements and related matters.  Please
contact Jessica Livingston at 202-551-3448 or Sonia Bednarowski at 202-551-3666 with any
other questions.
Sincerely,
Division of Corporation Finance
Office of Crypto Assets