Grayscale ETC Trust Sees $79.9M Net Asset Decline Amid ETC Price Drop

TL;DR

**ETCG is bleeding value, and with no redemption program, investors are stuck holding a depreciating asset.**

AI Summary

Grayscale Ethereum Classic Trust (ETCG) reported a net decrease in net assets from operations of $79.865 million for the nine months ended September 30, 2025, a significant deterioration from the $31.006 million decrease in the prior year period. The Trust's investment in Ethereum Classic (ETC) at fair value decreased to $203.190 million as of September 30, 2025, down from $283.055 million at December 31, 2024, representing a 28.15% decline. This decline was primarily driven by a net change in unrealized depreciation on investment in ETC of $78.289 million for the nine months ended September 30, 2025, compared to $29.389 million in the same period of 2024. The Principal Market NAV per Share also fell from $20.23 at December 31, 2024, to $14.52 at September 30, 2025. The Trust continues to hold 13,993,800 shares outstanding and does not currently operate a redemption program, nor does it intend to seek regulatory approval for one. Sponsor's Fees increased slightly to $1.440 million for the three months ended September 30, 2025, from $1.435 million in the prior year, but decreased for the nine-month period to $4.130 million from $5.399 million.

Why It Matters

This filing reveals a substantial decline in the value of Grayscale Ethereum Classic Trust's assets, primarily due to the depreciation of Ethereum Classic. For investors, this means a significant erosion of their investment value, with the Principal Market NAV per Share dropping over 28% in nine months. The lack of a redemption program further limits liquidity options for shareholders, trapping them in a declining asset. This performance could impact Grayscale's reputation in the competitive digital asset trust market, especially against more liquid ETF offerings from competitors. Customers holding ETCG shares face reduced portfolio value, while employees of Grayscale Investments Sponsors, LLC might see pressure to improve product performance or introduce new, more attractive offerings.

Risk Assessment

Risk Level: high — The Trust's net assets decreased by $79.865 million for the nine months ended September 30, 2025, and its investment in ETC declined by $79.865 million from December 31, 2024, to September 30, 2025. The Principal Market NAV per Share dropped from $20.23 to $14.52, a 28.15% decrease, indicating significant exposure to the volatile price of Ethereum Classic without a redemption mechanism.

Analyst Insight

Investors should re-evaluate their exposure to ETCG given the significant asset depreciation and the absence of a redemption program, which limits liquidity. Consider diversifying into other digital asset products with better liquidity mechanisms or a more favorable outlook for their underlying assets.

Financial Highlights

debt To Equity

N/A

revenue

$0

operating Margin

N/A

total Assets

$203.190M

total Debt

$0

net Income

$ -79.865M

eps

N/A

gross Margin

N/A

cash Position

$0

revenue Growth

N/A

Key Numbers

• $203.190M — Investment in ETC, at fair value (Decreased from $283.055 million at December 31, 2024, representing a 28.15% decline.)
• $14.52 — Principal Market NAV per Share (Decreased from $20.23 at December 31, 2024.)
• $79.865M — Net decrease in net assets from operations (For the nine months ended September 30, 2025, compared to $31.006 million in 2024.)
• $78.289M — Net change in unrealized depreciation on investment in ETC (For the nine months ended September 30, 2025, significantly higher than $29.389 million in 2024.)
• 13,993,800 — Shares issued and outstanding (Remained constant as of September 30, 2025, and December 31, 2024.)
• $4.130M — Sponsor's Fee (For the nine months ended September 30, 2025, down from $5.399 million in 2024.)

Key Players & Entities

• Grayscale Ethereum Classic Trust (ETC) (company) — Registrant and subject of the 10-Q filing
• Grayscale Investments Sponsors, LLC (company) — Sole remaining sponsor of the Trust since May 3, 2025
• Ethereum Classic (other) — Underlying digital asset held by the Trust
• Digital Currency Group, Inc. (company) — Parent company of the Sponsor
• Coinbase Custody Trust Company, LLC (company) — Custodian of the Trust's ETC
• Grayscale Securities, LLC (company) — Affiliated Authorized Participant of the Trust
• Continental Stock Transfer & Trust Company (company) — Transfer Agent for the Trust
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• Volatility of Ethereum Classic Price [high — market]: The Trust's net assets are primarily composed of Ethereum Classic (ETC). The fair value of the Trust's investment in ETC decreased by 28.15% from $283.055 million at December 31, 2024, to $203.190 million at September 30, 2025. This decline was largely driven by a net change in unrealized depreciation of $78.289 million for the nine months ended September 30, 2025, compared to $29.389 million in the prior year period.
• Lack of Redemption Program [medium — regulatory]: The Trust does not currently operate a redemption program and has no intention to seek regulatory approval for one. This means investors cannot redeem their shares directly with the Trust, potentially leading to a discount between the Trust's share price and its Net Asset Value (NAV). The Principal Market NAV per Share fell from $20.23 at December 31, 2024, to $14.52 at September 30, 2025.
• Sponsor's Fees Impact on Net Assets [low — operational]: While Sponsor's Fees decreased for the nine-month period to $4.130 million from $5.399 million in 2024, they still represent a cost to the Trust. For the three months ended September 30, 2025, the fee was $1.440 million, a slight increase from $1.435 million in the prior year. These fees reduce the net assets available to investors.

Industry Context

The cryptocurrency market, particularly for altcoins like Ethereum Classic (ETC), remains highly volatile. The performance of trusts holding these digital assets is directly tied to the price fluctuations of the underlying cryptocurrencies. Regulatory uncertainty and the lack of standardized redemption mechanisms for many crypto trusts continue to be significant factors influencing investor sentiment and market pricing.

Regulatory Implications

The absence of a redemption program for Grayscale Ethereum Classic Trust is a key operational and regulatory point. This structure can lead to significant premiums or discounts to NAV, impacting investor liquidity and price discovery. Ongoing scrutiny of digital asset trusts by regulatory bodies could introduce future compliance requirements or operational changes.

What Investors Should Do

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Key Dates

• 2025-09-30: Reporting Period End — Marks the end of the nine-month period for which financial results are reported, showing a significant net decrease in net assets from operations of $79.865 million.
• 2024-12-31: Prior Year End — Provides a baseline for comparison, with investment in ETC valued at $283.055 million and Principal Market NAV per Share at $20.23.
• 2025-09-30: Principal Market NAV per Share — Reported at $14.52, a substantial decrease from $20.23 at December 31, 2024, indicating a decline in the underlying value per share.

Glossary

Net Assets

The total value of a company's assets minus its liabilities. For a trust, it represents the value attributable to shareholders. (The net assets of the Grayscale Ethereum Classic Trust decreased by $79.865 million for the nine months ended September 30, 2025.)

Investment in ETC, at fair value

The current market value of the Ethereum Classic (ETC) held by the Trust. (This is the primary asset of the Trust, which saw a significant decline in fair value to $203.190 million as of September 30, 2025.)

Principal Market NAV per Share

The Net Asset Value (NAV) per share calculated based on the principal market for the underlying asset, reflecting the theoretical value of each share. (The decrease from $20.23 to $14.52 per share highlights the depreciation in the Trust's holdings.)

Unrealized Depreciation

A decrease in the value of an asset that has not yet been sold. It represents a paper loss. (The Trust experienced $78.289 million in unrealized depreciation on its ETC investment during the first nine months of 2025.)

Sponsor's Fee

Fees paid to the sponsor of the trust for managing the trust's operations and assets. (These fees are an expense that reduces the net assets of the Trust. For the nine months ended September 30, 2025, it was $4.130 million.)

Year-Over-Year Comparison

The Grayscale Ethereum Classic Trust (ETCG) has experienced a significant deterioration in its financial performance compared to the prior year. For the nine months ended September 30, 2025, the net decrease in net assets from operations was $79.865 million, a substantial increase from the $31.006 million decrease in the same period of 2024. This is primarily driven by a sharp rise in unrealized depreciation on its investment in ETC, which reached $78.289 million compared to $29.389 million in the prior year. Consequently, the Principal Market NAV per Share has fallen from $20.23 to $14.52.

Filing Documents

• etcg-20250930.htm (10-Q) — 1142KB
• etcg-ex31_1.htm (EX-31.1) — 29KB
• etcg-ex31_2.htm (EX-31.2) — 28KB
• etcg-ex32_1.htm (EX-32.1) — 9KB
• etcg-ex32_2.htm (EX-32.2) — 8KB
• img28271073_0.jpg (GRAPHIC) — 1371KB
• img28271073_1.jpg (GRAPHIC) — 797KB
• img28271073_2.jpg (GRAPHIC) — 640KB
• 0001193125-25-266911.txt ( ) — 10321KB
• etcg-20250930.xsd (EX-101.SCH) — 323KB
• etcg-20250930_htm.xml (XML) — 546KB

Forward-Looking Statements

Forward-Looking Statements 3 Industry and Market Data 3

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Statements of Assets and Liabilities at September 30, 2025 and December 31, 2024 4 Schedules of Investment at September 30, 2025 and December 31, 2024 5 Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024 6 Statements of Changes in Net Assets for the Three and Nine Months Ended September 30, 2025 and 2024 7 Notes to the Unaudited Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 24 Item 4.

Controls and Procedures

Controls and Procedures 24

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 25 Item 1A.

Risk Factors

Risk Factors 25 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26 Item 3. Defaults Upon Senior Securities 26 Item 4. Mine Safety Disclosures 26 Item 5. Other Information 26 Item 6. Exhibits 27 GLOSSARY OF DEFINED TERMS 28

SIGNATURES

SIGNATURES 32 2 Forw ard-Looking Statements This Quarterly Report on Form 10-Q contains "forward-looking statements" with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Grayscale Ethereum Classic Trust (ETC) (the "Trust"). Statements preceded by, followed by or that include words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Quarterly Report that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust's operations, the plans of Grayscale Operating, LLC ("GSO"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025, and Grayscale Investments Sponsors, LLC ("GSIS"), the co-sponsor of the Trust from January 1, 2025 to May 3, 2025 and the sole remaining sponsor thereafter (each of GSO and GSIS, the "Sponsor", as the context may require, and GSO and GSIS, together, the "Co-Sponsors"), and references to the Trust's future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor's expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those described in "Part I, Item 1A. Risk Factors" of our Annual Report on Form 10-K f

– FINANCI AL INFORMATION

PART I – FINANCI AL INFORMATION:

Financial St atements (Unaudited)

Item 1. Financial St atements (Unaudited) GRAYSCALE Ethereum Classic TRUST (ETC) STATEMENTS OF ASSET S AND LIABILITIES (UNAUDITED) ( Amounts in thousands, except Share and per Share amounts) September 30, 2025 December 31, 2024 Assets: Investment in ETC, at fair value (cost $ 83,479 and $ 85,055 as of September 30, 2025 and December 31, 2024, respectively) $ 203,190 $ 283,055 Total assets $ 203,190 $ 283,055 Liabilities: Sponsor's Fee payable, related party $ - $ - Total liabilities - - Net assets $ 203,190 $ 283,055 Shares issued and outstanding, no par value (unlimited Shares authorized) 13,993,800 13,993,800 Principal Market NAV per Share $ 14.52 $ 20.23 See accompanying notes to the unaudited financial statements. 4 GRAYSCALE Ethereum Classic TRUST (ETC) SCHEDULES OF INVESTMENT (UNAUDITED) ( Amounts in thousands, except quantity of ETC and percentages) September 30, 2025 Quantity of ETC Cost Fair Value % of Net Assets Investment in ETC 11,054,961.67837105 $ 83,479 $ 203,190 100 % Total Investment $ 83,479 $ 203,190 100 % Net assets $ 203,190 100 % December 31, 2024 Quantity of ETC Cost Fair Value % of Net Assets Investment in ETC 11,263,626.25503150 $ 85,055 $ 283,055 100 % Total Investment $ 85,055 $ 283,055 100 % Net assets $ 283,055 100 % See accompanying notes to the unaudited financial statements. 5 GRAYSCALE Ethereum Classic TRUST (ETC) STATEMENTS OF OPERATIONS (UNAUDITED) ( Amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Investment income: Investment income $ - $ - $ - $ - Expenses: Sponsor's Fee, related party 1,440 1,435 4,130 5,399 Net investment loss ( 1,440 ) ( 1,435 ) ( 4,130 ) ( 5,399 ) Net realized and unrealized gain (loss) from: N