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Item 1A. Risk Factors

2025-03-26 compared with 2024-03-26 · 691 added, 531 removed, 2115 unchanged (37% of the section changed)

Summary of Risk Factors

Below is a summary

of the principal factors that make an investment in the Shares speculative or risky.

This summary does not address all the risks that

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below,

and should be read in conjunction with the other information included in this Annual Report on Form 10-K, including the Trust’s

financial statements and related notes thereto, and our other filings with the SEC, before making an investment decision regarding the

See “Glossary of Defined Terms” for the definition of certain capitalized terms used in this Annual Report.

capitalized terms used, but not defined, herein have the meanings given to them in the Trust Agreement.

Below is a summary of the

principal factors that make an investment in the Shares speculative or risky.

This summary does not address all the risks that we face.

Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below, and should

be read in conjunction with the other information included in this Annual Report on Form 10-K, including the Trust’s financial statements

and related notes thereto, and our other filings with the SEC, before making an investment decision regarding the Shares.

See “Glossary

of Defined Terms” for the definition of certain capitalized terms used in this Annual Report.

All other capitalized terms used,

but not defined, herein have the meanings given to them in the Trust Agreement.

Risks Associated with Bitcoin and the Bitcoin Network

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As a result, any incorrectly executed bitcoin transactions could adversely affect an investment in the Trust.

Security threats to the Trust’s account with the Bitcoin Custodian could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.

Security threats to the Trust’s account with the Bitcoin Custodians could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.

Potential amendments to the Bitcoin network’s protocols and software could, if accepted and authorized by the Bitcoin network community, adversely affect an investment in the Trust.

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For example, between November 2021 and November 2022, the price of bitcoin fell from an all-time high of $68,789 to $15,460.

As of December 31, 2023, the price of bitcoin was $42,288.58.

As of December 31, 2024, the price of bitcoin was $93,390.22 (source:

Bitcoin exchanges on which bitcoin trades are relatively new and, in some cases, unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust.

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Risks Associated with Investing in the Trust

value of the Shares may be influenced by a variety of factors unrelated to the value of bitcoin.

NAV or Principal Market NAV may not always correspond to the market price of bitcoin and, as a result, Creation Baskets may be created

or redeemed at a value that is different from the market price of the Shares.

inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect the liquidity of Shares and

the value of an investment in the Shares.

Trust is subject to risks due to its concentration of investments in a single asset.

illiquid markets may exacerbate losses or increase the variability between the Trust’s NAV or the Principal Market NAV and its

market price.

amount of bitcoin represented by the Shares will decline over tim e.

Administrator is solely responsible for determining the value of the bitcoin holdings and bitcoin holdings per Share, and any errors,

discontinuance or changes in such valuation calculations may have an adverse effect on the value of the Shares.

The value of the Shares may be influenced by a variety of factors unrelated to the value of bitcoin.

The NAV or Principal Market NAV may not always correspond to the market price of bitcoin and, as a result, Creation Baskets may be created or redeemed at a value that is different from the market price of the Shares.

The inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect the liquidity of Shares and the value of an investment in the Shares.

The Trust is subject to risks due to its concentration of investments in a single asset.

Possible illiquid markets may exacerbate losses or increase the variability between the Trust’s NAV or the Principal Market NAV and its market price.

The amount of bitcoin represented by the Shares will decline over tim e.

The Administrator is solely responsible for determining the value of the bitcoin holdings and bitcoin holdings per Share, and any errors, discontinuance or changes in such valuation calculations may have an adverse effect on the value of the Shares.

Risks Associated with the Regulatory Environment

Future and current regulations by a United States or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust.

Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the Investment Company Act of 1940 (“1940 Act”) or the protections afforded by the Commodity Exchange Act (the “CEA”) .

Future legal or regulatory developments may negatively affect the value of bitcoin or require the Trust or the Sponsor to become registered with the Securities and Exchange Commission (“SEC”) or Commodity Futures Trading Commission (“CFTC”), which may cause the Trust to incur unforeseen expenses or liquidate.

Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the 1940 Act or the protections afforded by the CEA .

Future legal or regulatory developments may negatively affect the value of bitcoin or require the Trust or the Sponsor to become registered with the SEC or CFTC, which may cause the Trust to incur unforeseen expenses or liquidate.

If regulatory changes or interpretations of an Authorized Participant’s, the Trust’s or the Sponsor’s activities require the regulation of an Authorized Participant, the Trust or the Sponsor as a money service business under the regulations promulgated by the Financial Crimes Enforcement Network (“FinCEN”), an Authorized Participant, the Trust or the Sponsor may be required to register and comply with such regulations, which could result in extraordinary, recurring and/or nonrecurring expenses.

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Shareholders do not have the rights enjoyed by investors in certain other vehicles and may be adversely affected by a lack of statutory rights and by limited voting and distribution rights.

In certain circumstances, Shareholders may vote to appoint a successor Sponsor following the Voluntary Withdrawal of the Sponsor, or to continue the Trust in certain instances of dissolution of the Trust.

Shareholders shall otherwise have no voting rights with respect to the Trust.

The liability of the Sponsor, Sub-Adviser and the Trustee is limited, and the value of the Shares will be adversely affected if the Trust is required to indemnify the Trustee, the Sponsor or the Sub-Adviser.

Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks, the occurrence of which can negatively impact an investment in the Trust.

The following risks,

some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business or financial

performance, which in turn can affect the price of the Shares.

The following risks, some

of which have occurred and any of which may occur in the future, can have a material adverse effect on our business or financial performance,

which in turn can affect the price of the Shares.

These are not the only risks we face.

There may be other risks we are not

currently aware of or that we currently deem not to be material but may become material in the future.

Risks Associated with Bitcoin and the Bitcoin

There may be other risks we are not currently

aware of or that we currently deem not to be material but may become material in the future.

Risks Associated

with Bitcoin and the Bitcoin Network

Bitcoin is a relatively

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The issuance of bitcoin is determined by a computer code, not by a central bank, and prices can be extremely volatile.

For instance, during the period from December 17, 2017, to December 14, 2018, bitcoin experienced a decline of roughly 84%,

and experienced a similar decline in value from November 2021 to June 2022.

For instance, during the period from December 17, 2017, to December 14, 2018, bitcoin experienced a decline of roughly 84% and

experienced a similar decline in value from November 2021 to June 2022.

There is no assurance that bitcoin will maintain its long-term

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Currently, the fixed reward for solving a new block is 3.125 bitcoin

per block and this is expected to decrease by half to become 3.125 bitcoin in in or around April 2024.

This deliberately controlled rate

of bitcoin creation means that the number of bitcoin in existence will increase at a controlled rate until the number of bitcoin in existence

reaches the pre-determined 21 million bitcoin.

per block and this is expected to halve once roughly every four years.

This deliberately controlled rate of bitcoin creation means that

the number of bitcoin in existence will increase at a controlled rate until the number of bitcoin in existence reaches the pre-determined

21 million bitcoin.

However, the 21 million supply cap could be changed in a hard fork.

It is currently estimated

that the 21 million Bitcoin limitation will be reached in the year 2140.

It is currently estimated that the 21 million

Bitcoin limitation will be reached in the year 2140.

The trading prices of

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multiple times throughout bitcoin’s history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022.

the course of 2023 and 2024, bitcoin prices have continued to exhibit extreme volatility.

the course of 2024, bitcoin prices have continued to exhibit extreme volatility.

Extreme volatility may persist,

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(“FTX”), one of the largest

digital asset exchanges by volume at the time, halted customer withdrawals amid rumours of the company’s liquidity issues and likely

digital asset exchanges by volume at the time, halted customer withdrawals amid rumors of the company’s liquidity issues and likely

insolvency, which were subsequently corroborated by its CEO.

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and confidence in the digital asset markets may be further undermined.

In addition, regulatory and enforcement scrutiny has increased,

In addition, regulatory and enforcement scrutiny may increase,

including from, among others, the U.S.

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securities and

commodities markets and may reflect behaviour that would be prohibited in regulated U.S.

commodities markets and may reflect behavior that would be prohibited in regulated U.S.

trading venues.

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arising from implementing a cash creation and redemption model, which involves greater operational steps (and therefore execution risk)

than the originally contemplated in-kind creation and redemption model, or the potential unavailability or exhaustion of the Trade Credits,

which the Trust would not be able to use in connection with in-kind creations and redemptions.

Such delays could cause the execution price

associated with such trades to materially deviate from the Index price used to determine the NAV.

Even though the Authorized Participant

is responsible for the dollar cost of such difference in prices, Authorized Participants could default on their obligations to the Trust,

or such potential risks and costs could lead to Authorized Participants, who would otherwise be willing to purchase or redeem Baskets

to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying

bitcoin, to elect to not participate in the Trust’s Share creation and redemption processes.

This may adversely affect the arbitrage

mechanism intended to keep the price of the Shares closely linked to the price of bitcoin, and as a result, the price of the Shares may

fall or otherwise diverge from NAV.

If the arbitrage mechanism is not effective, purchases or sales of Shares on the secondary market

could occur at a premium or discount to NAV, which could harm Shareholders by causing them buy Shares at a price higher than the value

of the underlying bitcoin held by the Trust or sell Shares at a price lower than the value of the underlying bitcoin held by the Trust,

causing Shareholders to suffer losses.

than the originally contemplated in-kind creation and redemption model, or the potential unavailability or exhaustion of the Trust’s

ability to borrow bitcoin or cash as trade credit (the “Trade Credits”), which the Trust would not be able to use in connection

with in-kind creations and redemptions.

Such delays could cause the execution price associated with such trades to materially deviate

from the Index price used to determine the NAV.

Even though the Authorized Participant is responsible for the dollar cost of such difference

in prices, Authorized Participants could default on their obligations to the Trust, or such potential risks and costs could lead to Authorized

Participants, who would otherwise be willing to purchase or redeem Baskets to take advantage of any arbitrage opportunity arising from

discrepancies between the price of the Shares and the price of the underlying bitcoin, to elect to not participate in the Trust’s

Share creation and redemption processes.

This may adversely affect the arbitrage mechanism intended to keep the price of the Shares closely

linked to the price of bitcoin, and as a result, the price of the Shares may fall or otherwise diverge from NAV.

If the arbitrage mechanism

is not effective, purchases or sales of Shares on the secondary market could occur at a premium or discount to NAV, which could harm Shareholders

by causing them buy Shares at a price higher than the value of the underlying bitcoin held by the Trust or sell Shares at a price lower

than the value of the underlying bitcoin held by the Trust, causing Shareholders to suffer losses.

To the knowledge of the Sponsor,

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has not been tested, and could be impacted by any resulting operational inefficiencies.

If the process of creation

and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions by Authorized Participants

intended to keep the price of the Shares closely linked to the price of bitcoin may not exist and, as a result, the price of the Shares

may fall or otherwise diverge from NAV.

If the processes of creation

and redemption of Shares (which depend on timely transfers of bitcoin to and by the Bitcoin Custodian) encounter any unanticipated difficulties

due to, for example, the price volatility of bitcoin, the insolvency, business failure or interruption, default, failure to perform, security

breach, or other problems affecting the Bitcoin Custodian, any operational issues that may arise from creating and redeeming Shares via

cash transactions, the closing of bitcoin trading platforms due to fraud, failures, security breaches or otherwise, or network outages

or congestion, spikes in transaction fees demanded by miners, or other problems or disruptions affecting the Bitcoin network, then potential

market participants, such as the Authorized Participants and their customers, who would otherwise be willing to purchase or redeem Baskets

to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying

bitcoin may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect.

such cases, the Sponsor may suspend the process of creation and redemption of Baskets.

During such times, trading spreads, and the resulting

premium or discount, on Shares may widen.

Alternatively, in the case of a network outage or other problems affecting the Bitcoin network,

the processing of transactions on the Bitcoin network may be disrupted, which in turn could affect the creation or redemption of Baskets.

If this is the case, the liquidity of the Shares may decline and the price of the Shares may fluctuate independently of the price of bitcoin

and may fall or otherwise diverge from NAV.

Furthermore, in the event that the market for bitcoin should become relatively illiquid and

thereby materially restrict opportunities for arbitraging by delivering bitcoin in return for Baskets, the price of Shares may diverge

from the value of bitcoin.

Authorized Participants

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of approximately $40 million.

On February 21, 2025, Bybit, a digital asset exchange, experienced a significant security breach resulting

in the loss of nearly $1.5 billion worth of ether.

Spot markets may be

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The SEC has identified possible

sources of fraud and manipulation in the bitcoin market generally, including, among others (1) “wash trading”;

sources of fraud and manipulation in the bitcoin market generally, including, among others:

(1) “wash trading”;

with a dominant position in bitcoin manipulating bitcoin pricing;

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Gox security breach, to identify

and analyse the impact of “suspicious trading activity” on Mt.

and analyze the impact of “suspicious trading activity” on Mt.

Gox between February and November 2013, which, according to

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In November 2022, FTX, one

of the largest digital asset exchanges by volume at the time, halted customer withdrawals amid rumours of the company’s liquidity

of the largest digital asset exchanges by volume at the time, halted customer withdrawals amid rumors of the company’s liquidity

issues and likely insolvency, which were subsequently corroborated by its CEO.

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from FTX, and the full facts remain unknown, including whether such removal was the result of a hack, theft, insider activity, or other

improper behaviour.

improper behavior.

The potential consequences

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The slowing, stopping

or reversing of the development or acceptance of the Bitcoin network may adversely affect the price of bitcoin and therefore an investment

in the Shares.

or reversing of the development or acceptance or usage of the Bitcoin network may adversely affect the price of bitcoin and therefore

an investment in the Shares.

The further adoption of bitcoin will require growth in its usage and in the Bitcoin network.

Adoption of bitcoin will also

require an accommodating regulatory environment.

bitcoin will also require an accommodating regulatory environment.

The use of bitcoin to, among

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This could result in decreasing usage of the network, to the extent that bitcoin does not otherwise

become a store of value asset or meet the needs of another commercial use.

become a store of asset value or meet the needs of another commercial use.

Today, there is limited use

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if the Trust’s private keys are misappropriated and the Trust’s bitcoin holdings are stolen, including from or by the Bitcoin

Custodian, the Trust could lose some or all of its bitcoin holdings, which would adversely impact an investment in the Shares of the Trust.

Custodians, the Trust could lose some or all of its bitcoin holdings, which would adversely impact an investment in Shares of the Trust.

Any loss of private keys relating to digital wallets used to store the Trust’s Bitcoin would adversely affect the value of the Shares.

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Shareholders’ limited rights of legal recourse against the Trust, Trustee, Sponsor,

Administrator, Prime Broker and Bitcoin Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s bitcoin

Administrator, Prime Broker and Bitcoin Custodians expose the Trust and its Shareholders to the risk of loss of the Trust’s bitcoin

for which no person or entity is liable.

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by depositors with FDIC or SIPC member institutions.

In addition, neither the Trust nor the Sponsor insure the Trust’s bitcoin.

While the Bitcoin Custodian

has advised the Sponsor that it has insurance coverage of up to $320 million that covers losses of the digital assets it custodies on

behalf of its clients, including the Trust’s bitcoin, resulting from theft, Shareholders cannot be assured that the Bitcoin Custodian

will maintain adequate insurance, that such coverage will cover losses with respect to the Trust’s bitcoin, or that sufficient insurance

proceeds will be available to cover the Trust’s losses in full.

The Bitcoin Custodian’s insurance may not cover the type of

losses experienced by the Trust.

Alternatively, the Trust may be forced to share such insurance proceeds with other clients or customers

of the Bitcoin Custodian, which could reduce the amount of such proceeds that are available to the Trust.

In addition, the bitcoin insurance

market is limited, and the level of insurance maintained by the Bitcoin Custodian may be substantially lower than the assets of the Trust.

While the Bitcoin Custodian maintains certain capital reserve requirements depending on the assets under custody, and such capital reserves

may provide additional means to cover client asset losses, the Trust cannot be assured that the Bitcoin Custodian will maintain capital

reserves sufficient to cover actual or potential losses with respect to the Trust’s digital assets.

Furthermore, under the Custodial

Services Agreement, the Bitcoin Custodian’s liability is limited as follows, among others:

(i) other than with respect to claims

and losses arising from spot trading of bitcoin, or fraud or wilful misconduct, the Mutually Capped Liabilities (defined below), the Bitcoin

Custodian’s aggregate liability under the Custodial Services Agreement shall not exceed the greater of (A) the greater of (x) $5

million and (y) the aggregate fees paid by the Trust to the Bitcoin Custodian in the 12 months prior to the event giving rise to the Bitcoin

Custodian’s liability, and (B) the value of the affected bitcoin or cash giving rise to the Bitcoin Custodian’s liability;

(ii) the Bitcoin Custodian’s aggregate liability in respect of each cold storage address shall not exceed $100 million;

respect of the Bitcoin Custodian’s obligations to indemnify the Trust and its affiliates against third-party claims and losses to

the extent arising out of or relating to, among others, the Bitcoin Custodian’s gross negligence, violation of its confidentiality,

data protection and/or information security obligations, or violation of any law, rule or regulation with respect to the provision of

its services (the “Mutually Capped Liabilities”), the Bitcoin Custodian’s liability shall not exceed the greater of

(A) $5 million and (B) the aggregate fees paid by the Trust to the Bitcoin Custodian in the 12 months prior to the event giving rise to

the Bitcoin Custodian’s liability;

and (iv) in respect of any incidental, indirect, special, punitive, consequential or similar

losses, the Bitcoin Custodian is not liable, even if the Bitcoin Custodian has been advised of or knew or should have known of the possibility

In general, the Bitcoin Custodian is not liable under the Custodial Services Agreement unless in the event of its negligence,

fraud, material violation of applicable law or wilful misconduct.

The Bitcoin Custodian is not liable for delays, suspension of operations,

failure in performance, or interruption of service to the extent it is directly due to a cause or condition beyond the reasonable control

of the Bitcoin Custodian.

In the event of potential losses incurred by the Trust as a result of the Bitcoin Custodian losing control of

the Trust’s bitcoin or failing to properly execute instructions on behalf of the Trust, the Bitcoin Custodian’s liability

with respect to the Trust will be subject to certain limitations which may allow it to avoid liability for potential losses or may be

insufficient to cover the value of such potential losses, even if the Bitcoin Custodian directly caused such losses.

Furthermore, the

insurance maintained by the Bitcoin Custodian may be insufficient to cover its liabilities to the Trust.

In addition, neither the Trust nor the Sponsor insures the Trust’s bitcoin.

On September 11, 2024, the

Trust entered into separate custodial services agreements (each, a “Custodial Services Agreement” and, collectively, including

the agreement with Coinbase Custodian entered into between the Trust and Coinbase Custodian on May 8, 2024 (the “Coinbase Custody

Agreement”), the “Custodial Services Agreements”) with each of (i) BitGo (the “BitGo Custody Agreement”)

and (ii) Anchorage (the “Anchorage Custody Agreement”).

While the Bitcoin Custodians have advised the Sponsor that they have

insurance coverage that covers certain losses of the digital assets it custodies on behalf of its clients, including the Trust’s

bitcoin, resulting from theft, Shareholders cannot be assured that the Bitcoin Custodians will maintain adequate insurance, that such

coverage will cover losses with respect to the Trust’s bitcoin, or that sufficient insurance proceeds will be available to cover

the Trust’s losses in full.

The Bitcoin Custodians’ insurance may not cover the type of losses experienced by the Trust.

Alternatively,

the Trust may be forced to share such insurance proceeds with other clients or customers of the Bitcoin Custodians, which could reduce

the amount of such proceeds that are available to the Trust.

In addition, the bitcoin insurance market is limited, and the level of insurance

maintained by the Bitcoin Custodians may be substantially lower than the assets of the Trust.

While the Bitcoin Custodians maintain certain

capital reserve requirements depending on the assets under custody, and such capital reserves may provide additional means to cover client

asset losses, the Trust cannot be assured that the Bitcoin Custodians will maintain capital reserves sufficient to cover actual or potential

losses with respect to the Trust’s digital assets.

The insurance maintained by the Bitcoin Custodians is shared among all of the

Bitcoin Custodians’ customers, is not specific to the Trust or to customers holding ether with the Bitcoin Custodians, and may not

be available or sufficient to protect the Trust from all possible losses or sources of losses.

Furthermore, under each of

the Custodial Services Agreements, the respective Bitcoin Custodian’s liability is limited.

With respect to the Coinbase Custody

Agreement, Coinbase Custody’s liability is as follows, among others:

(i) other than with respect to claims and losses arising from

spot trading of bitcoin, fraud or willful misconduct, or the Mutually Capped Liabilities (defined below), the Coinbase Custodian’s

aggregate liability under the Custodial Services Agreement shall not exceed the greater of (A) the greater of (x) $5 million and (y) the

aggregate fees paid by the Trust to the Coinbase Custodian in the 12 months prior to the event giving rise to the Coinbase Custodian’s

liability, and (B) the value of the affected bitcoin or cash giving rise to the Coinbase Custodian’s liability;

(ii) the Coinbase

Custodian’s aggregate liability in respect of each cold storage address shall not exceed $100 million;

(iii) in respect of the Coinbase

Custodian’s obligations to indemnify the Trust and its affiliates against third-party claims and losses to the extent arising out

of or relating to, among others, the Coinbase Custodian’s gross negligence, violation of its confidentiality, data protection and/or

information security obligations, or violation of any law, rule or regulation with respect to the provision of its services (the “Mutually

Capped Liabilities”), the Coinbase Custodian’s liability shall not exceed the greater of (A) $5 million and (B) the aggregate

fees paid by the Trust to the Coinbase Custodian in the 12 months prior to the event giving rise to the Coinbase Custodian’s liability;

and (iv) in respect of any incidental, indirect, special, punitive, consequential or similar losses, the Coinbase Custodian is not liable,

even if the Coinbase Custodian has been advised of or knew or should have known of the possibility thereof.

In general, the Coinbase Custodian

is not liable under the Custodial Services Agreement unless in the event of its negligence, fraud, material violation of applicable law

or willful misconduct.

The Coinbase Custodian is not liable for delays, suspension of operations, failure in performance, or interruption

of service to the extent it is directly due to a cause or condition beyond the reasonable control of the Coinbase Custodian.

of potential losses incurred by the Trust as a result of the Coinbase Custodian losing control of the Trust’s bitcoin or failing

to properly execute instructions on behalf of the Trust, the Coinbase Custodian’s liability with respect to the Trust will be subject

to certain limitations which may allow it to avoid liability for potential losses or may be insufficient to cover the value of such potential

losses, even if the Coinbase Custodian directly caused such losses.

Furthermore, the insurance maintained by the Coinbase Custodian may

be insufficient to cover its liabilities to the Trust.

With respect to the BitGo

Custody Agreement, BitGo and its affiliates, including their officers, directors, agents, and employees, are not liable for any lost profits,

special, incidental, indirect, intangible, or consequential damages resulting from authorized or unauthorized use of the Trust or Sponsor’s

site or services.

This includes damages arising from any contract, tort, negligence, strict liability, or other legal grounds, even if

BitGo was previously advised of, knew, or should have known about the possibility of such damages.

However, this exclusion of liability

does not extend to cases of BitGo’s fraud, willful misconduct, or gross negligence.

In situations of gross negligence, BitGo’s

liability is specifically limited to the value of the digital assets or fiat currency that were affected by the negligence.

Additionally,

the total liability of BitGo for direct damages is capped at the fees paid or payable to them under the relevant agreement during the

twelve-month period immediately preceding the first incident that caused the liability.

With respect to the Anchorage

Custody Agreement, except for Anchorage’s bad acts, confidentiality obligations under the Anchorage Custody Agreement, indemnification

obligations under Anchorage Custody Agreement, or obligations with respect to rights to or limits on use under the Anchorage Custody Agreement,

Anchorage is not liable for any losses, whether in contract, tort or otherwise, for any amount in excess of fees paid by the Trust in

the twelve (12) months prior to when the liability arises.

Moreover, Anchorage is not liable for (i) losses which arise from its compliance

with applicable laws, including sanctions laws administered by the Office of Foreign Assets Control (“OFAC”) of the U.S.

of the Treasury (the “U.S.

Treasury Department”);

or (ii) special, indirect or consequential damages, or lost profits or loss

of business arising in connection with the Anchorage Custody Agreement.

In addition, Anchorage is not liable for any losses which arise

as a result of the non-return of digital assets that the Trust has delegated to Anchorage or a third party for on-chain services, such

as staking, voting, vesting, and signaling, unless such losses occur as a result of Anchorage’s fraud or intentional misconduct.

Similarly, under the Prime

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(i) other than with respect to claims and losses

arising from spot trading of bitcoin, or fraud or wilful misconduct, or the PB Mutually Capped Liabilities (defined below), the Prime

Broker’s aggregate liability shall not exceed the greater of (A) the greater of (x) $5 million and (y) the aggregate fees paid by

the Trust to the Prime Broker in the 12 months prior to the event giving rise to the Prime Broker’s liability, and (B) the value

of the cash or affected bitcoin giving rise to the Prime Broker’s liability;

(ii) in respect of the Prime Broker’s obligations

to indemnify the Trust and its affiliates against third-party claims and losses to the extent arising out of or relating to, among others,

the Prime Broker’s gross negligence, violation of its confidentiality, data protection and/or information security obligations,

violation of any law, rule or regulation with respect to the provision of its services, or the full amount of the Trust’s assets

lost due to the insolvency of or security event at a Connected Trading Venue (as defined below) (the “PB Mutually Capped Liabilities”),

the Prime Broker’s liability shall not exceed the greater of (A) $5 million and (B) the aggregate fees paid by the Trust to the

Prime Broker in the 12 months prior to the event giving rise to the Prime Broker’s liability;

and (iii) in respect of any incidental,

indirect, special, punitive, consequential or similar losses, the Prime Broker is not liable, even if the Prime Broker has been advised

of or knew or should have known of the possibility thereof.

In general, with limited exceptions (such as for failing to execute an order),

the Prime Broker is not liable under the Prime Broker Agreement unless in the event of its gross negligence, fraud, material violation

of applicable law or wilful misconduct.

The Prime Broker is not liable for delays, suspension of operations, failure in performance, or

interruption of service to the extent it is directly due to a cause or condition beyond the reasonable control of the Prime Broker.

and the other limitations on the Prime Broker’s liability may allow it to avoid liability for potential losses or may be insufficient

to cover the value of such potential losses, even if the Prime Broker directly caused such losses.

Both the Trust and the Prime Broker

and its affiliates (including the Bitcoin Custodian) are required to indemnify each other under certain circumstances.

arising from spot trading of bitcoin, fraud or willful misconduct, or the PB Mutually Capped Liabilities (defined below), the Prime Broker’s

aggregate liability shall not exceed the greater of (A) the greater of (x) $5 million and (y) the aggregate fees paid by the Trust to

the Prime Broker in the 12 months prior to the event giving rise to the Prime Broker’s liability, and (B) the value of the cash

or affected bitcoin giving rise to the Prime Broker’s liability;

(ii) in respect of the Prime Broker’s obligations to indemnify

the Trust and its affiliates against third-party claims and losses to the extent arising out of or relating to, among others, the Prime

Broker’s gross negligence, violation of its confidentiality, data protection and/or information security obligations, violation

of any law, rule or regulation with respect to the provision of its services, or the full amount of the Trust’s assets lost due

to the insolvency of or security event at a Connected Trading Venue (the “PB Mutually Capped Liabilities”), the Prime Broker’s

liability shall not exceed the greater of (A) $5 million and (B) the aggregate fees paid by the Trust to the Prime Broker in the 12 months

prior to the event giving rise to the Prime Broker’s liability;

and (iii) in respect of any incidental, indirect, special, punitive,

consequential or similar losses, the Prime Broker is not liable, even if the Prime Broker has been advised of or knew or should have known

of the possibility thereof.

In general, with limited exceptions (such as for failing to execute an order), the Prime Broker is not liable

under the Prime Broker Agreement unless in the event of its gross negligence, fraud, material violation of applicable law or willful misconduct.

The Prime Broker is not liable for delays, suspension of operations, failure in performance, or interruption of service to the extent

it is directly due to a cause or condition beyond the reasonable control of the Prime Broker.

These and the other limitations on the Prime

Broker’s liability may allow it to avoid liability for potential losses or may be insufficient to cover the value of such potential

losses, even if the Prime Broker directly caused such losses.

Both the Trust and the Prime Broker and its affiliates (including the Bitcoin

Custodians) are required to indemnify each other under certain circumstances.

Moreover, in the event of

an insolvency or bankruptcy of the Prime Broker (in the case of the Trading Balance) or the Bitcoin Custodian (in the case of the Vault

Balance) in the future, given that the contractual protections and legal rights of customers with respect to digital assets held on their

behalf by third parties are relatively untested in a bankruptcy of an entity such as the Bitcoin Custodian or Prime Broker in the virtual

currency industry, there is a risk that customers’ assets – including the Trust’s assets – may be considered the

property of the bankruptcy estate of the Prime Broker (in the case of the Trading Balance) or the Bitcoin Custodian (in the case of the

Vault Balance), and customers – including the Trust – may be at risk of being treated as general unsecured creditors of such

entities and subject to the risk of total loss or markdowns on value of such assets.

The Custodial Services Agreement

contains an agreement by the parties to treat the bitcoin credited to the Trust’s Vault Balance as financial assets under Article

8 of the New York Uniform Commercial Code (“Article 8”), in addition to stating that the Bitcoin Custodian will serve as fiduciary

and custodian on the Trust’s behalf.

The Bitcoin Custodian’s parent, Coinbase Global Inc., has stated in its most recent public

securities filings that in light of the inclusion in its custody agreements of provisions relating to Article 8 it believes that a court

would not treat custodied digital assets as part of its general estate in the event the Custodian were to experience insolvency.

due to the novelty of digital asset custodial arrangements courts have not yet considered this type of treatment for custodied digital

assets and it is not possible to predict with certainty how they would rule in such a scenario.

If the Bitcoin Custodian became subject

to insolvency proceedings and a court were to rule that the custodied bitcoin were part of the Bitcoin Custodian’s general estate

and not the property of the Trust, then the Trust would be treated as a general unsecured creditor in the Bitcoin Custodian’s insolvency

proceedings and the Trust could be subject to the loss of all or a significant portion of its assets.

Moreover, in the event of the bankruptcy

of the Bitcoin Custodian, an automatic stay could go into effect and protracted litigation could be required in order to recover the assets

held with the Bitcoin Custodian, all of which could significantly and negatively impact the Trust’s operations and the value of

an insolvency or bankruptcy of the Prime Broker (in the case of the Trading Balance) or the Bitcoin Custodians (in the case of the Cold

Vault Balance) in the future, given that the contractual protections and legal rights of customers with respect to digital assets held

on their behalf by third parties are relatively untested in a bankruptcy of an entity such as the Bitcoin Custodians or Prime Broker in

the virtual currency industry, there is a risk that customers’ assets – including the Trust’s assets – may be

considered the property of the bankruptcy estate of the Prime Broker (in the case of the Trading Balance) or the Bitcoin Custodians (in

the case of the Cold Vault Balance), and customers – including the Trust – may be at risk of being treated as general unsecured

creditors of such entities and subject to the risk of total loss or markdowns on value of such assets.

The Coinbase Custody Agreement

contains an agreement by the parties to treat the bitcoin credited to the Cold Vault Balance as financial assets under Article 8 of the

New York Uniform Commercial Code (“Article 8”), in addition to stating that the Bitcoin Custodians will serve as fiduciaries

and custodians on the Trust’s behalf.

One of the Bitcoin Custodian’s parent, Coinbase Global Inc., has stated in its most

recent public securities filings that in light of the inclusion in its custody agreements of provisions relating to Article 8 it believes

that a court would not treat custodied digital assets as part of its general estate in the event the Bitcoin Custodian were to experience

However, due to the novelty of digital asset custodial arrangements courts have not yet considered this type of treatment

for custodied digital assets and it is not possible to predict with certainty how they would rule in such a scenario.

If a Bitcoin Custodian

became subject to insolvency proceedings and a court were to rule that the custodied bitcoin were part of such Bitcoin Custodian’s

general estate and not the property of the Trust, then the Trust would be treated as a general unsecured creditor in the Bitcoin Custodian’s

insolvency proceedings and the Trust could be subject to the loss of all or a significant portion of its assets.

Moreover, in the event

of the bankruptcy of a Bitcoin Custodian, an automatic stay could go into effect and protracted litigation could be required in order

to recover the assets held with such Bitcoin Custodian, all of which could significantly and negatively impact the Trust’s operations

and the value of the Shares.

With respect to the Prime

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represents an entitlement to a pro rata share of the bitcoin (and cash) the Prime Broker has allocated to the omnibus wallets the Prime

Broker holds, as well as the accounts in the Prime Broker’s name that the Prime Broker maintains at Connected Trading Venues (the

“Connected Trading Venue”) (which are typically held on an omnibus, rather than segregated, basis).

If the Prime Broker suffers

an insolvency event, there is a risk that the Trust’s assets held in the Trading Balance could be considered part of the Prime Broker’s

bankruptcy estate and the Trust could be treated as a general unsecured creditor of the Prime Broker, which could result in losses for

the Trust and Shareholders.

Moreover, in the event of the bankruptcy of the Prime Broker, an automatic stay could go into effect and protracted

litigation could be required in order to recover the assets held with the Prime Broker, all of which could significantly and negatively

impact the Trust’s operations and the value of the Shares.

Broker holds, as well as the accounts in the Prime Broker’s name that the Prime Broker maintains at Connected Trading Venues (which

are typically held on an omnibus, rather than segregated, basis).

If the Prime Broker suffers an insolvency event, there is a risk that

the Trust’s assets held in the Trading Balance could be considered part of the Prime Broker’s bankruptcy estate and the Trust

could be treated as a general unsecured creditor of the Prime Broker, which could result in losses for the Trust and Shareholders.

in the event of the bankruptcy of the Prime Broker, an automatic stay could go into effect and protracted litigation could be required

in order to recover the assets held with the Prime Broker, all of which could significantly and negatively impact the Trust’s operations

and the value of the Shares.

Under the Trust Agreement,

the Trustee and the Sponsor will not be liable for any liability or expense incurred, including, without limitation, as a result of any

loss of bitcoin by the Bitcoin Custodian or Prime Broker, absent wilful misconduct, gross negligence, reckless disregard or bad faith

loss of bitcoin by the Bitcoin Custodians or Prime Broker, absent willful misconduct, gross negligence, reckless disregard or bad faith

on the part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as the case may be.

As a result, the recourse

of the Trust or the Shareholders to the Trustee or the Sponsor, including in the event of a loss of bitcoin by the Bitcoin Custodian or

Prime Broker, is limited.

of the Trust or the Shareholders to the Trustee or the Sponsor, including in the event of a loss of bitcoin by the Bitcoin Custodians

or Prime Broker, is limited.

The Shareholders’ recourse

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the assets or liabilities, or otherwise assumed the liabilities, of the Trust, or the obligations or liabilities of any service provider

to the Trust, including, without limitation, the Bitcoin Custodian and Prime Broker.

to the Trust, including, without limitation, the Bitcoin Custodians and Prime Broker.

The Prime Broker Agreement and Custodial Services

Agreement provide that neither the Sponsor, the Trustee, nor their affiliates shall have any obligation of any kind or nature whatsoever,

Agreements provide that neither the Sponsor, the Trustee, nor their affiliates shall have any obligation of any kind or nature whatsoever,

by guaranty, enforcement or otherwise, with respect to the performance of any the Trust’s obligations, agreements, representations

or warranties under the Prime Broker Agreement or Custodial Services Agreement or any transaction thereunder.

or warranties under the Prime Broker Agreement or Custodial Services Agreements or any transaction thereunder.

Consequently, a loss may

be suffered with respect to the Trust’s bitcoin that is not covered by the Bitcoin Custodian’s insurance and for which no

be suffered with respect to the Trust’s bitcoin that is not covered by the Bitcoin Custodians’ insurance and for which no

person is liable in damages.

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Loss of a critical banking

relationship for, or the failure of a bank used by, the Prime Broker could adversely impact the Trust’s ability to create or redeem

Baskets, or could cause losses to the Trust.

relationship for, or the failure of a bank used by, the Trust or the Prime Broker could adversely impact the Trust’s ability to

create or redeem Baskets, or could cause losses to the Trust.

To the extent that the Trust

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took possession of Signature Bank and appointed the FDIC as receiver.

A joint statement by the Department of the Treasury, the Federal

Reserve and the FDIC on March 12, 2023, stated that depositors in Signature and SVB will have access to all of their funds, including

funds held in deposit accounts, in excess of the insured amount.

On May 1, 2023, First Republic Bank was closed by the California Department

of Financial Protection and Innovation, which appointed the FDIC as receiver.

Following a bidding process, the FDIC entered into a purchase

and assumption agreement with JPMorgan Chase Bank, National Association, to acquire the substantial majority of the assets and assume

certain liabilities of First Republic Bank from the FDIC.

A joint statement by the U.S.

Treasury Department, the Federal Reserve

and the FDIC on March 12, 2023, stated that depositors in Signature and SVB will have access to all of their funds, including funds held

in deposit accounts, in excess of the insured amount.

On May 1, 2023, First Republic Bank was closed by the DFPI.

Following a bidding

process, the FDIC entered into a purchase and assumption agreement with JPMorgan Chase Bank, National Association, to acquire the substantial

majority of the assets and assume certain liabilities of First Republic Bank from the FDIC.

The Prime Broker has historically

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potential protections.

The Bitcoin Custodian

If any of the Custodial

Services Agreements or Prime Broker Agreement is terminated or any of the Bitcoin Custodians or Prime Broker fails to provide services

as required, the Trustee may need to find and appoint a replacement Bitcoin Custodian or Prime Broker, which could pose a challenge to

the safekeeping of the Trust’s bitcoin, and the Trust’s ability to continue to operate may be adversely affected.

The Trust is dependent on

the Bitcoin Custodians and the Prime Broker to operate.

The Bitcoin Custodians perform essential functions in terms of safekeeping the

Trust’s bitcoin in the Cold Vault Balance, and the Prime Broker facilitates the selling of bitcoin by the Trust to pay the Sponsor’s

Fee and, to the extent applicable, other Trust expenses, and in extraordinary circumstances, to liquidate the Trust.

If any of the Bitcoin

Custodians or Coinbase Inc.

fails to perform the functions they perform for the Trust, the Trust may be unable to operate or create or

redeem Baskets, which could force the Trust to liquidate or adversely affect the price of the Shares.

On March 22, 2023, the Prime

Broker and its parent, Coinbase Global, Inc.

(such parent, “Coinbase Global” and together with Coinbase Inc., the “Relevant

Coinbase Entities”) received a “Wells Notice” from the SEC staff stating that the SEC staff made a “preliminary

determination” to recommend that the SEC file an enforcement action against the Relevant Coinbase Entities alleging violations of

the federal securities laws, including the Exchange Act and the Securities Act.

According to Coinbase Global’s public reporting

company disclosure, based on discussions with the SEC staff, the Relevant Coinbase Entities believe these potential enforcement actions

would relate to aspects of the Relevant Coinbase Entities’ Coinbase Prime service, spot market, staking service Coinbase Earn, and

Coinbase Wallet, and the potential civil action may seek injunctive relief, disgorgement, and civil penalties.

On June 6, 2023, the SEC

filed a complaint against the Relevant Coinbase Entities in federal district court in the Southern District of New York, alleging, inter

(i) that Coinbase Inc.

has violated the Exchange Act by failing to register with the SEC as a national securities exchange, broker-dealer,

and clearing agency, in connection with activities involving certain identified digital assets that the SEC’s complaint alleges

are securities, (ii) that Coinbase Inc.

has violated the Securities Act by failing to register with the SEC the offer and sale of its

staking program, and (iii) that Coinbase Global is jointly and severally liable as a control person under the Exchange Act for Coinbase

Inc.’s violations of the Exchange Act to the same extent as Coinbase Inc.

On February 27, 2025, the SEC announced that it had filed

a joint stipulation with Coinbase Inc.

and Coinbase Global Inc.

to dismiss the ongoing civil enforcement action against the two entities.

The SEC’s complaint against the Relevant Coinbase Entities does not allege that bitcoin is a security nor does it allege that Coinbase

Inc’s activities involving bitcoin caused the alleged registration violations, and Coinbase Custodian was not named as a defendant.

In the event of any future SEC or other governmental, regulatory or other enforcement action or litigation, Coinbase Inc., as Prime Broker,

could be required, as a result of a judicial determination, or could choose, to restrict or curtail the services it offers, or its financial

condition and ability to provide services to the Trust could be affected.

If the Prime Broker were to be required or choose, as a result

of a regulatory action or litigation, to restrict or curtail the services it offers, it could negatively affect the Trust’s ability

to operate or process creations or redemptions of Baskets, which could force the Trust to liquidate or adversely affect the price of the

While Coinbase Custodian was not named in the complaint, if Coinbase Global, as the parent of Coinbase Custody, is required, as

a result of a judicial determination, or could choose, to restrict or curtail the services its subsidiaries provide to the Trust, or its

financial condition is negatively affected, it could negatively affect the Trust’s ability to operate.

Alternatively, the Trust could

replace Coinbase Custodian as a custodian with custody of the Trust’s bitcoin, pursuant to the Coinbase Custody Agreement.

Coinbase Custodian or Coinbase Inc.

could terminate services under the Prime Broker Agreement respectively upon providing the applicable

notice to the Trust for any reason, or immediately for Cause (as defined below).

Transferring maintenance responsibilities of the Trust’s

account at Coinbase Custodian to another custodian will likely be complex and could subject the Trust’s bitcoin to the risk of loss

during the transfer, which could have a negative impact on the performance of the Shares or result in loss of the Trust’s assets.

As Prime Broker, Coinbase Inc.

does not guarantee uninterrupted access to the Trading Platform or the services it provides to the Trust

as Prime Broker.

Under certain circumstances, Coinbase Inc.

is permitted to halt or suspend trading on its trading platform, or impose

limits on the amount or size of, or reject, the Trust’s orders, including in the event of, among others, (a) delays, suspension

of operations, failure in performance, or interruption of service that are directly due to a cause or condition beyond the reasonable

control of Coinbase Inc, (b) the Trust has engaged in unlawful or abusive activities or fraud, (c) the acceptance of the Trust’s

order would cause the amount of Trade Credits extended to exceed the maximum amount of Trade Credit that the Trust’s agreement with

the Trade Credit Lender permits to be outstanding at any one time, or (d) a security or technology issue occurred and is continuing that

results in Coinbase Inc.

being unable to provide trading services or accept the Trust’s order, in each case, subject to certain

protections for the Trust.

Also, if Coinbase Custodian or Coinbase Inc.

become insolvent, suffer business failure, cease business operations,

default on or fail to perform their obligations under their contractual agreements with the Trust, or abruptly discontinue the services

they provide to the Trust for any reason, the Trust’s operations would be adversely affected.

The Trustee may not be able

to find a party willing to serve as a bitcoin custodian of the Trust’s bitcoin or as the Trust’s prime broker under the same

terms as the current Custodial Service Agreements or Prime Broker Agreement or at all.

To the extent that Trustee is not able to find

a suitable party willing to serve as the custodian or prime broker, the Trustee may be required to terminate the Trust and liquidate the

Trust’s bitcoin.

In addition, to the extent that the Trustee finds a suitable party but must enter into a new custodian agreement

or prime broker agreement that is less favorable for the Trust or Trustee, the value of the Shares could be adversely affected.

Trust is unable to find a replacement prime broker, its operations could be adversely affected.

The Bitcoin Custodians

and Prime Broker may act in the same or similar capacity for other competing products.

Currently, the number of digital

assets intermediaries with the reputation and operational capability to serve as Bitcoin Custodian and/or Prime Broker to the Trust or

other competing products is limited.

The Bitcoin Custodian and Prime Broker may act in the same or similar capacity for other competing

products, including exchange-traded products offering exposure to the spot bitcoin market or other digital assets.

The Trust is therefore

subject to risks associated with these competing products utilizing the same service providers for bitcoin custodial and prime brokerage

assets intermediaries with the reputation and operational capability to serve as custodian and/or prime broker to the Trust or other competing

products is limited.

The Bitcoin Custodians and Prime Broker may act in the same or similar capacity for other competing products, including

exchange-traded products offering exposure to the spot bitcoin market or other digital assets.

The Trust is therefore subject to risks

associated with these competing products utilizing the same service providers for bitcoin custodial and prime brokerage services.

To the extent that exchange-traded

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with the reputation and operational capability to provide bitcoin custodial and prime brokerage services to the Trust or other competing

This, in turn, could make it difficult for the Trust to find and appoint a replacement bitcoin custodian or prime broker, to

the extent the Sponsor deems such action necessary.

This, in turn, could make it difficult for the Trust to find and appoint a replacement custodian or prime broker, to the extent

the Sponsor deems such action necessary.

This industry concentration

also may have the effect of magnifying the risks associated with the Bitcoin Custodian and Prime Broker, as operational disruptions or

adverse developments impacting the Bitcoin Custodian or the Prime Broker may be felt on an industry-wide basis.

A loss of confidence or

breach of the Bitcoin Custodian or Prime Broker may adversely affect not only the Trust and the value of an investment in the Shares,

also may have the effect of magnifying the risks associated with the Bitcoin Custodians and Prime Broker, as operational disruptions or

adverse developments impacting the Bitcoin Custodians or the Prime Broker may be felt on an industry-wide basis.

A loss of confidence

or breach of the Bitcoin Custodians or Prime Broker may adversely affect not only the Trust and the value of an investment in the Shares,

but also these competing products utilizing the same service providers for bitcoin custodial and prime brokerage services and, more generally,

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third party service providers with respect to whom it has engaged in a due diligence process to ensure a thorough KYC process, such as

the Authorized Participants and the Bitcoin Custodian.

Authorized Participants, as broker-dealers, and the Bitcoin Custodian, as a limited

the Authorized Participants and the Bitcoin Custodians.

Authorized Participants, as broker-dealers, and the Bitcoin Custodians, as a limited

purpose trust company subject to New York Banking Law, are subject to the U.S.

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with creation requests.

The Bitcoin Custodian has

adopted and implemented an anti-money laundering and sanctions compliance program, which provides additional protections to ensure that

the Sponsor and the Trust do not transact with a sanctioned party.

Notably, the Bitcoin Custodian performs Know-Your-Transaction (“KYT”)

The Bitcoin Custodians have

adopted and implemented anti-money laundering and sanctions compliance programs, which provide additional protections to ensure that the

Sponsor and the Trust do not transact with a sanctioned party.

Notably, the Bitcoin Custodians performs Know-Your-Transaction (“KYT”)

screening using blockchain analytics to identify, detect, and mitigate the risk of transacting with a sanctioned or other unlawful actor.

Pursuant to the Bitcoin Custodian’s KYT program, any bitcoin that is delivered to the Trust’s custody account will undergo

Pursuant to the Bitcoin Custodians’ KYT program, any bitcoin that is delivered to the Trust’s custody account will undergo

screening to ensure that the origins of that bitcoin are not illicit.

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under such laws, including governmental fines, penalties, and other punishments, as well as potential liability to or cessation of services

by the Prime Broker and its affiliates, including the Bitcoin Custodian.

by the Prime Broker and its affiliates, including the Bitcoin Custodians.

Any of the foregoing could result in losses to the Shareholders

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of users and miners consent to the modification, the change is implemented and the Bitcoin network remains uninterrupted.

“hard fork” occurs if less than a substantial majority of users and miners consent to the proposed modification, and the modification

However, a “hard

fork” occurs if less than a substantial majority of users and miners consent to the proposed modification, and the modification

is not compatible with the software prior to its modification.

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bitcoin as of June 26, 2017, could claim, until August 27, 2017, a certain amount of Stellar Lumens.

Airdrops are not included in the

Index under its current methodology.

The Index does not include airdrops

under its current methodology or track airdrops involving bitcoin.

Accordingly, the Trust will not participate in airdrops.

The Index currently does not

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be indirectly exposed to the risk and potential impact of a cyber-attack.

A loss associated with cyberattack, including a total loss,

While the Sponsor and the Bitcoin Custodian have taken reasonable measures to prevent a theft or hacking of the Trust’s

A loss associated with a cyber-attack, including a total loss,

While the Sponsor and the Bitcoin Custodians have taken reasonable measures to prevent a theft or hacking of the Trust’s

bitcoin holdings, such an event cannot be fully excluded from the Trust’s overall market exposure, and the losses associated with

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about the electricity required to secure and maintain digital asset networks.

For example, as of December 31, 2023, approximately 558

million tera hashes are performed every second in connection with mining on the Bitcoin network.

Although measuring the electricity consumed

by this process is difficult because these operations are performed by various machines with varying levels of efficiency, the process

consumes a significant amount of energy.

The operations of the Bitcoin network and other digital asset networks may also consume significant

amounts of energy.

Further, in addition to the direct energy costs of performing calculations on any given digital asset network, there

are indirect costs that impact a network’s total energy consumption, including the costs of cooling the machines that perform these

calculations.

For example, as of December 31, 2024, approximately - million

tera hashes are performed every second in connection with mining on the Bitcoin network.

Although measuring the electricity consumed by

this process is difficult because these operations are performed by various machines with varying levels of efficiency, the process consumes

a significant amount of energy.

The operations of the Bitcoin network and other digital asset networks may also consume significant amounts

Further, in addition to the direct energy costs of performing calculations on any given digital asset network, there are indirect

costs that impact a network’s total energy consumption, including the costs of cooling the machines that perform these calculations.

Driven by concerns around

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would be adversely affected.

Risks Associated with Investing in the Trust

Risks Associated with

Investing in the Trust

Investment Related Risks.

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However, for financial statement purposes, the Trust’s bitcoin is carried at fair value as

required by U.S.

generally accepted accounting principles (“GAAP”), which requires a determination based on the price of bitcoin

on principal market as identified by the Trust as set for in Financial Accounting Standards Board (“FASB”) Accounting Standards

Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”).

See “Net Asset Value

Determinations” below.

The Trust expects the applicable NAV and NAV per Share and corresponding Principal Market NAV and Principal

Market NAV to accurately reflect the price of bitcoin.

However, deviations can occur between the prices from the principal market chosen

by the GAAP fair value methodology and Index, which takes into consideration prices from all of the markets used to calculate the Index.

Different from directly

owning bitcoin.

required by GAAP, which requires a determination based on the price of bitcoin on principal market as identified by the Trust as set for

in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820-10, Fair Value

Measurements and Disclosures (“ASC 820-10”).

See “Net Asset Value Determinations” below.

The Trust expects the

applicable NAV and NAV per Share and corresponding Principal Market NAV and Principal Market NAV to accurately reflect the price of bitcoin.

However, deviations can occur between the prices from the principal market chosen by the GAAP fair value methodology and Index, which

takes into consideration prices from all of the markets used to calculate the Index.

If the process of creation

and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions by Authorized Participants

intended to keep the price of the Shares closely linked to the price of bitcoin may not exist and, as a result, the price of the Shares

may fall or otherwise diverge from NAV.

If the processes of creation

and redemption of Shares (which depend on timely transfers of bitcoin to and by the Bitcoin Custodians) encounter any unanticipated difficulties

due to, for example, the price volatility of bitcoin, the insolvency, business failure or interruption, default, failure to perform, security

breach, or other problems affecting the Bitcoin Custodians, any operational issues that may arise from creating and redeeming Shares via

cash transactions, the closing of bitcoin trading platforms due to fraud, failures, security breaches or otherwise, or network outages

or congestion, spikes in transaction fees demanded by miners, or other problems or disruptions affecting the Bitcoin network, then potential

market participants, such as the Authorized Participants and their customers, who would otherwise be willing to purchase or redeem Baskets

to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying

bitcoin may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect.

such cases, the Sponsor may suspend the process of creation and redemption of Baskets.

During such times, trading spreads, and the resulting

premium or discount, on Shares may widen.

Alternatively, in the case of a network outage or other problems affecting the Bitcoin network,

the processing of transactions on the Bitcoin network may be disrupted, which in turn could affect the creation or redemption of Baskets.

If this is the case, the liquidity of the Shares may decline and the price of the Shares may fluctuate independently of the price of bitcoin

and may fall or otherwise diverge from NAV.

Furthermore, in the event that the market for bitcoin should become relatively illiquid and

thereby materially restrict opportunities for arbitraging by delivering bitcoin in return for Baskets, the price of Shares may diverge

from the value of bitcoin.

Owning Shares is different

than directly owning bitcoin.

Investors should be aware

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A Bitcoin Counterparty may fail to deliver to the Trust’s

account at the Bitcoin Custodian the amount of bitcoin associated with a creation order, a Bitcoin Counterparty may fail to deliver to

the Trust’s account at the Cash Custodian the amount of cash associated with a redemption order, or the Cash Custodian may fail

to deliver to the Authorized Participant at settlement the cash proceeds from the sale of bitcoin associated with a redemption order.

account at a Bitcoin Custodian the amount of bitcoin associated with a creation order, a Bitcoin Counterparty may fail to deliver to the

Trust’s account at the Cash Custodian the amount of cash associated with a redemption order, or the Cash Custodian may fail to deliver

to the Authorized Participant at settlement the cash proceeds from the sale of bitcoin associated with a redemption order.

The value of the Shares

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These factors include, but are not limited to, the following factors:

● Unanticipated problems or issues with respect to the mechanics

of the Trust’s operations and the trading of the Shares may arise, in particular due to the fact that the mechanisms and procedures

governing the creation and offering of the Shares and storage of bitcoin have been developed specifically for this product;

● The Trust could experience difficulties in operating and maintaining its technical infrastructure, including

in connection with expansions or updates to such infrastructure, which are likely to be complex and could lead to unanticipated delays,

unforeseen expenses and security vulnerabilities;

● The Trust could experience unforeseen issues relating to the performance and effectiveness of the security

procedures used to protect the Trust’s account with the Bitcoin Custodian, or the security procedures may not protect against all

errors, software flaws or other vulnerabilities in the Trust’s technical infrastructure, which could result in theft, loss or damage

of its assets;

● Service providers may decide to terminate their relationships with the Trust due to concerns that the

introduction of privacy enhancing features to the Bitcoin network may increase the potential for bitcoin to be used to facilitate crime,

exposing such service providers to potential reputational harm.

Unanticipated problems or issues with respect to the mechanics of the Trust’s operations and the trading of the Shares may arise, in particular due to the fact that the mechanisms and procedures governing the creation and offering of the Shares and storage of bitcoin have been developed specifically for this product;

The Trust could experience difficulties in operating and maintaining its technical infrastructure, including in connection with expansions or updates to such infrastructure, which are likely to be complex and could lead to unanticipated delays, unforeseen expenses and security vulnerabilities;

The Trust could experience unforeseen issues relating to the performance and effectiveness of the security procedures used to protect the Trust’s account with a Bitcoin Custodian, or the security procedures may not protect against all errors, software flaws or other vulnerabilities in the Trust’s technical infrastructure, which could result in theft, loss or damage of its assets;

Service providers may decide to terminate their relationships with the Trust due to concerns that the introduction of privacy enhancing features to the Bitcoin network may increase the potential for bitcoin to be used to facilitate crime, exposing such service providers to potential reputational harm.

Any of these factors could

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The Administrator’s determination is made utilizing data from

the Bitcoin Custodian’s operations and the Index (in the case of the NAV) and the principal market for bitcoin as determined by

the Bitcoin Custodians’ operations and the Index (in the case of the NAV) and the principal market for bitcoin as determined by

the Trust (in the case of the Principal Market NAV).

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thefts can be difficult to trace, which may make bitcoin a particularly attractive target for theft.

Cyber security failures or breaches

Cybersecurity failures or breaches

of one or more of the Trust’s service providers (including but not limited to, the Index Provider, the Transfer Agent, the Administrator,

or the Bitcoin Custodian) have the ability to cause disruptions and impact business operations, potentially resulting in financial losses,

or the Bitcoin Custodians) have the ability to cause disruptions and impact business operations, potentially resulting in financial losses,

violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation

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providers’ use of internet, technology and information systems (including mobile devices and cloud-based service offerings) may

expose the Trust to potential risks linked to cyber-security breaches of those technological or information systems.

expose the Trust to potential risks linked to cybersecurity breaches of those technological or information systems.

Security breaches,

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The Sponsor believes

that the Trust’s bitcoin held in the Trust’s account with the Bitcoin Custodian will be an appealing target to hackers or

that the Trust’s bitcoin held in the Trust’s account with the Bitcoin Custodians will be an appealing target to hackers or

malware distributors seeking to destroy, damage or steal the Trust’s bitcoin or private keys and will only become more appealing

as the Trust’s assets grow.

To the extent that the Trust, the Sponsor or the Bitcoin Custodian is unable to identify and mitigate

To the extent that the Trust, the Sponsor or the Bitcoin Custodians are unable to identify and mitigate

or stop new security threats or otherwise adapt to technological changes in the digital asset industry, the Trust’s bitcoin may

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operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of the Sponsor,

the Sub-Adviser, the Bitcoin Custodian, or otherwise, and, as a result, an unauthorized party may obtain access to the Trust’s account

with the Bitcoin Custodian, the private keys (and therefore bitcoin) or other data of the Trust.

Additionally, outside parties may attempt

to fraudulently induce employees of the Sponsor, the Sub-Adviser, the Bitcoin Custodian, or the Trust’s other service providers

to disclose sensitive information in order to gain access to the Trust’s infrastructure.

As the techniques used to obtain unauthorized

access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined

event and often are not recognized until launched against a target, the Sponsor and the Bitcoin Custodian may be unable to anticipate

the Sub-Adviser, the Bitcoin Custodians, or otherwise, and, as a result, an unauthorized party may obtain access to the Trust’s

account with the Bitcoin Custodians, the private keys (and therefore bitcoin) or other data of the Trust.

Additionally, outside parties

may attempt to fraudulently induce employees of the Sponsor, the Sub-Adviser, the Bitcoin Custodians, or the Trust’s other service

providers to disclose sensitive information in order to gain access to the Trust’s infrastructure.

As the techniques used to obtain

unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined

event and often are not recognized until launched against a target, the Sponsor and the Bitcoin Custodians may be unable to anticipate

these techniques or implement adequate preventative measures.

An actual or perceived breach

of the Trust’s account with the Bitcoin Custodian could harm the Trust’s operations, result in partial or total loss of the

of the Trust’s account with the Bitcoin Custodians could harm the Trust’s operations, result in partial or total loss of the

Trust’s assets, damage the Trust’s reputation and negatively affect the market perception of the effectiveness of the Trust,

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insurance coverage) to satisfy a valid claim of the Trust.

Similarly, as noted below, the Trust’s Bitcoin Custodian has extraordinarily

limited liability to the Trust, which will adversely affect the Trust’s ability to seek recovery from them, even when they are at

Similarly, as noted below, the Bitcoin Custodians have extraordinarily limited

liability to the Trust, which will adversely affect the Trust’s ability to seek recovery from them, even when they are at fault.

It may not be possible, either

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If an uninsured loss occurs or a loss exceeds policy limits, the Trust could lose all of its assets.

The Trust’s Bitcoin

Custodian could become insolvent.

The Trust’s assets will

be held in one or more accounts maintained for the Trust by the Bitcoin Custodian or at other custodian banks which may be located in

other jurisdictions.

The Bitcoin Custodian is not a depository institution as it not insured by the FDIC.

The insolvency of the Bitcoin

Custodian or of any broker, custodian bank or clearing corporation used by the Bitcoin Custodian, may result in the loss of all or a substantial

portion of the Trust’s assets or in a significant delay in the Trust having access to those assets.

Additionally, custody of digital

assets presents inherent and unique risks relating to access loss, theft and means of recourse in such scenarios.

These risks are applicable

to the Trust’s use of Coinbase Custody.

The Bitcoin Custodians

could become insolvent.

The Trust’s assets are

held in accounts maintained for the Trust by the Bitcoin Custodians and may in the future be held at other custodian banks which may be

located in other jurisdictions.

The Bitcoin Custodians are not depository institutions as they are not insured by the FDIC.

The insolvency

of the Bitcoin Custodians or of any broker, custodian bank or clearing corporation used by the Bitcoin Custodians, may result in the loss

of all or a substantial portion of the Trust’s assets or in a significant delay in the Trust having access to those assets.

Additionally,

custody of digital assets presents inherent and unique risks relating to access loss, theft and means of recourse in such scenarios.

risks are applicable to the Trust’s use of Coinbase Custody.

The Trust may change the custodial

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assets that were diversified.

The lack of active trading

A lack of active trading

markets for the Shares may result in losses on Shareholders’ investments at the time of disposition of Shares.

Although Shares of the Trust

are expected to be publicly listed and traded on an exchange, there can be no guarantee that an active trading market for the Shares will

develop or be maintained.

If Shareholders need to sell their Shares at a time when no active market for them exists, the price Shareholders

receive for their Shares, assuming that Shareholders are able to sell them, may be lower than the price that Shareholders would receive

if an active market did exist and, accordingly, a Shareholder may suffer losses.

are listed and traded on an exchange, there can be no guarantee that an active trading market for the Shares will be maintained.

If Shareholders

need to sell their Shares at a time when no active market for them exists, the price Shareholders receive for their Shares, assuming that

Shareholders are able to sell them, may be lower than the price that Shareholders would receive if an active market did exist and, accordingly,

a Shareholder may suffer losses.

Several factors may

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Factors that may affect the Trust’s ability to meet its investment objective

(1) The Trust’s or a Bitcoin Counterparty’s ability to purchase and sell bitcoin in an efficient manner to effectuate

(1) The Trust’s or the Bitcoin Counterparties’ ability to purchase and sell bitcoin in an efficient manner to effectuate

creation and redemption orders;

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This is also true with respect to Shares that are issued in exchange for additional bitcoin over time, as the amount of bitcoin required

to create Shares proportionally reflects the amount of bitcoin represented by the Shares outstanding at the time of such creation unit

to create Shares proportionally reflects the amount of bitcoin represented by the Shares outstanding at the time of such Creation Basket

being created.

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A loss of confidence

or breach of the Bitcoin Custodian may adversely affect the Trust and the value of an investment in the Shares.

or breach of the Bitcoin Custodians may adversely affect the Trust and the value of an investment in the Shares.

Custody and security services

for the Trust’s bitcoin are provided by Coinbase Custody, although the Trust may retain one or more additional custodians at a later

Bitcoin held by the Trust may be custodied or secured in different ways (for example, a portion of the Trust’s bitcoin holdings

may be custodied by Coinbase Custody and another portion by another third-party custodian).

Over time, the Trust may change the custody

or security arrangement for all or a portion of its holdings.

The Sponsor will decide the appropriate custody and arrangements based on,

among other factors, the availability of experienced custodians and the Trust’s ability to securely safeguard the bitcoin.

The Trust expects Coinbase

Custody will custody most or all of its bitcoin holdings.

A loss of confidence or breach of the Bitcoin Custodian may adversely affect

the Trust and the value of an investment in the Shares.

for the Trust’s bitcoin are provided by the Bitcoin Custodians, although the Trust may retain other custodians at a later date.

Bitcoin held by the Trust may be custodied or secured in different ways.

Over time, the Trust may change the custody or security arrangement

for all or a portion of its holdings.

The Sponsor will decide the appropriate custody and arrangements based on, among other factors,

the availability of experienced bitcoin custodians and the Trust’s ability to securely safeguard the bitcoin.

The Trust expects that the

Bitcoin Custodians will custody most or all of the Trust’s bitcoin holdings.

A loss of confidence or breach of the Bitcoin Custodians

may adversely affect the Trust and the value of an investment in the Shares.

The Sponsor may need

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The Sponsor could decide to

replace the Bitcoin Custodian as the Bitcoin Custodian of the Trust’s bitcoin or the Prime Broker as the provider of prime brokerages

to the Trust.

Transferring maintenance responsibilities of the Trust’s accounts with the Bitcoin Custodian and the Prime Broker

to another party will likely be complex and could subject the Trust’s bitcoin to the risk of loss during the transfer, which could

have a negative impact on the performance of the Shares or result in loss of the Trust’s assets.

replace one or more of the Bitcoin Custodians as a custodian of the Trust’s bitcoin or the Prime Broker as the provider of prime

brokerages to the Trust.

Transferring maintenance responsibilities of the Trust’s accounts with the Bitcoin Custodians and the Prime

Broker to another party will likely be complex and could subject the Trust’s bitcoin to the risk of loss during the transfer, which

could have a negative impact on the performance of the Shares or result in loss of the Trust’s assets.

The Sponsor may not be able

to find a party willing to serve as the Bitcoin Custodian under the same terms as the current Custodial Services Agreement, or as the

Prime Broker under the same terms as the current Prime Broker Agreement.

To the extent that Sponsor is not able to find a suitable party

willing to serve as the Bitcoin Custodian or Prime Broker, as applicable, the Sponsor may be required to terminate the Trust and liquidate

the Trust’s bitcoin.

In addition, to the extent that the Sponsor finds a suitable party but must enter into a modified custodial

services agreement or prime broker agreement that costs more, the value of the Shares could be adversely affected.

to find a party willing to serve as a bitcoin custodian under the same terms as the current Custodial Services Agreements, or as a prime

broker under the same terms as the current Prime Broker Agreement.

To the extent that Sponsor is not able to find a suitable party willing

to serve as a bitcoin custodian or a prime broker, as applicable, the Sponsor may be required to terminate the Trust and liquidate the

Trust’s bitcoin.

In addition, to the extent that the Sponsor finds a suitable party but must enter into a modified custodial services

agreement or prime broker agreement that costs more, the value of the Shares could be adversely affected.

Lack of recourse.

The Bitcoin Custodian has

The Bitcoin Custodians have

limited liability, impairing the ability of the Trust to recover losses relating to its bitcoin and any recovery may be limited, even

in the event of fraud.

In addition, the Bitcoin Custodian may not be liable for any delay in performance of any of its custodial obligations

by reason of any cause beyond its reasonable control, including force majeure events, war or terrorism, and may not be liable for any

system failure or third-party penetration of its systems.

As a result, the recourse of the Trust to the Bitcoin Custodian may be limited.

Under the Custodial Services

Agreement, the Bitcoin Custodian’s liability is limited to the greater of (i) the market value of the Trust’s bitcoin held

In addition, the Bitcoin Custodians may not be liable for any delay in performance of any of its custodial obligations

by reason of any cause beyond their reasonable control, including force majeure events, war or terrorism, and may not be liable for any

system failure or third-party penetration of their systems.

As a result, the recourse of the Trust to the Bitcoin Custodians may be limited.

Under the Coinbase Custody

Agreement, the Coinbase Custodian’s liability is limited to the greater of (i) the market value of the Trust’s bitcoin held

by the Bitcoin Custodian at the time the events giving rise to the liability occurred and (ii) the fair market value of the Trust’s

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or the Trustee otherwise has actual knowledge of the events giving rise to the liability.

Under the BitGo Custody Agreement,

BitGo and its affiliates, including their officers, directors, agents, and employees, are not liable for any lost profits, special, incidental,

indirect, intangible, or consequential damages resulting from authorized or unauthorized use of the Trust or Sponsor’s site or services.

This includes damages arising from any contract, tort, negligence, strict liability, or other legal grounds, even if BitGo was previously

advised of, knew, or should have known about the possibility of such damages.

However, this exclusion of liability does not extend to

cases of BitGo’s fraud, willful misconduct, or gross negligence.

In situations of gross negligence, BitGo’s liability is specifically

limited to the value of the digital assets or fiat currency that were affected by the negligence.

Additionally, the total liability of

BitGo for direct damages is capped at the fees paid or payable to them under the relevant agreement during the twelve-month period immediately

preceding the first incident that caused the liability.

In addition, BitGo shall not

be liable for delays, suspension of operations, whether temporary or permanent, failure in performance, or interruption of service which

results directly or indirectly from any cause or condition beyond the reasonable control of BitGo, including, but not limited to, any

delay or failure due to an act of God, natural disasters, act of civil or military authorities, act of terrorists, including, but not

limited to, cyber-related terrorist acts, hacking, government restrictions, exchange or market rulings, civil disturbance, war, strike

or other labor dispute, fire, interruption in telecommunications or Internet services or network provider services, failure of equipment

and/or software, other catastrophe or any other occurrence which is beyond the reasonable control of BitGo.

Under the Anchorage Custody

Agreement, except for Anchorage’s bad acts, confidentiality obligations under the Anchorage Custody Agreement, indemnification obligations

under Anchorage Custody Agreement, or obligations with respect to rights to or limits on use under the Anchorage Custody Agreement, Anchorage

is not liable for any losses, whether in contract, tort or otherwise, for any amount in excess of fees paid by the Trust in the twelve

(12) months prior to when the liability arises.

Moreover, Anchorage is not liable for (i) losses which arise from its compliance with

applicable laws, including sanctions laws administered by OFAC;

or (ii) special, indirect or consequential damages, or lost profits or

loss of business arising in connection with the Anchorage Custody Agreement.

In addition, Anchorage is not liable for any losses which

arise as a result of the non-return of digital assets that the Trust has delegated to Anchorage or a third party for on-chain services,

such as staking, voting, vesting, and signaling, unless such losses occur as a result of Anchorage’s fraud or intentional misconduct.

In addition, Anchorage shall

not be liable for the failure to perform or any delay in the performance of its obligations under the Anchorage Custody Agreement to the

extent such failure or delay is caused by or results from a circumstance beyond its reasonable control and that could not have been prevented

or avoided by the exercise of due diligence, as long as the fact of the occurrence of such event is duly proven or is reasonably provable,

including, but not limited to natural catastrophes, fire, explosions, pandemic or local epidemic, war or other action by a state actor,

public power outages, civil unrests and conflicts, labor strikes or extreme shortages, acts of terrorism or espionage, Domain Name System

server issues outside Anchorage’s direct control, technology attacks (e.g., DoS, DDoS, MitM), cyber-attack or malfunction on the

blockchain network or protocol, or governmental action rendering performance illegal or impossible.

Anchorage shall not be held liable

by the Trust for such non-performance or delay.

Under the Trust Agreement,

the Trustee and the Sponsor will not be liable for any liability or expense incurred absent gross negligence or wilful misconduct on the

part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as they case may be.

As a result, the recourse of

the Trust or the Shareholder to Trustee or the Sponsor may be limited.

the Trustee and the Sponsor will not be liable for any liability or expense incurred absent gross negligence or willful misconduct on

the part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as they case may be.

As a result, the recourse

of the Trust or the Shareholder to Trustee or the Sponsor may be limited.

The Index Provider has limited

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will be adversely affected if the Trust is required to indemnify the Sponsor, the Sub-Adviser, the Trustee, the Administrator, the Transfer

Agent, the Bitcoin Custodian, or the Prime Broker.

Agent, the Bitcoin Custodians, or the Prime Broker.

Each of the Sponsor, the Sub-Adviser,

the Trustee, the Administrator, the Transfer Agent, the Bitcoin Custodian, and the Prime Broker has a right to be indemnified by the Trust

for certain liabilities or expenses that it incurs without gross negligence, bad faith or wilful misconduct on its part.

for certain liabilities or expenses that it incurs without gross negligence, bad faith or willful misconduct on its part.

Therefore, the

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changes to bitcoin may expose investors in the Trust to additional risks which are impossible to predict.

Risks Associated with the Index and Index

Risks Associated with

the Index and Index Pricing

The Index has a limited

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itself has only been in operation since February 2022, and the Index has only featured its current roster of Constituent Exchanges since

A longer history of actual performance through various economic and market conditions would provide greater and more reliable

information for an investor to assess the Index’s performance.

The Index Provider has substantial discretion at any time to change

the methodology used to calculate the Index, including the spot markets that contribute prices to the Trust’s NAV.

The Index Provider

does not have any obligation to take the needs of the Trust, the Trust’s Shareholders, or anyone else into consideration in connection

with such changes.

There is no guarantee that the methodology currently used in calculating the Index will appropriately track the price

of bitcoin in the future.

The Index Provider has no obligation to take the needs of the Trust or the Shareholders into consideration in

determining, composing, or calculating the Index.

A trading venue is eligible as a “Constituent Exchange” in any of the CME CF Cryptocurrency Pricing Products if

it offers a market that facilitates the spot trading of the relevant base digital asset against the corresponding quote asset, including

markets where the quote asset is made fungible with the accepted digital asset and makes trade data and order data available through an

application programming interface with sufficient reliability, detail and timeliness.

A longer history of actual performance through various

economic and market conditions would provide greater and more reliable information for an investor to assess the Index’s performance.

The Index Provider has substantial discretion at any time to change the methodology used to calculate the Index, including the spot markets

that contribute prices to the Trust’s NAV.

The Index Provider does not have any obligation to take the needs of the Trust, the Trust’s

Shareholders, or anyone else into consideration in connection with such changes.

There is no guarantee that the methodology currently

used in calculating the Index will appropriately track the price of bitcoin in the future.

The Index Provider has no obligation to take

the needs of the Trust or the Shareholders into consideration in determining, composing, or calculating the Index.

Pricing sources used by the

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Right to change index.

● The Sponsor, in its sole discretion, may cause the Trust to track (or price its portfolio based upon)

an index or standard other than the Index at any time, with prior notice to the Shareholders, if investment conditions change or the Sponsor

believes that another index or standard better aligns with the Trust’s investment objective and strategy.

The Sponsor may make this

decision for a number of reasons, including, but not limited to the following:

● Third parties may be able to purchase

and sell bitcoin on public or private markets not included among the Constituent Exchanges, and such transactions may take place at prices

materially higher or lower than the Index price.

● There may be variances in the

prices of bitcoin on the various Constituent Exchanges, including as a result of differences in fee structures or administrative procedures

on different Constituent Exchanges.

prices on each Constituent Exchange or pricing source may not be equal to the value of a

bitcoin as represented by the Index.

● To the extent the Index price

differs materially from the actual prices available on a Constituent Exchange, or the global market price of bitcoin, the price of the

Shares may no longer track, whether temporarily or over time, the global market price of bitcoin, which could adversely affect an investment

in the Trust by reducing investors’ confidence in the Shares’ ability to track the market price of bitcoin.

the extent market prices differ materially from the Index price, investors may lose confidence

in the Shares’ ability to track the market price of bitcoin, which could adversely

affect the value of the Shares.

The Sponsor, in its sole discretion, may cause the Trust to track (or price its portfolio based upon) an index or standard other than the Index at any time, with prior notice to the Shareholders, if investment conditions change or the Sponsor believes that another index or standard better aligns with the Trust’s investment objective and strategy.

The Sponsor may make this decision for a number of reasons, including, but not limited to the following:

Third parties may be able to purchase and sell bitcoin on public or private markets not included among the Constituent Exchanges, and such transactions may take place at prices materially higher or lower than the Index price.

There may be variances in the prices of bitcoin on the various Constituent Exchanges, including as a result of differences in fee structures or administrative procedures on different Constituent Exchanges.

The prices on each Constituent Exchange or pricing source may not be equal to the value of a bitcoin as represented by the Index.

To the extent the Index price differs materially from the actual prices available on a Constituent Exchange, or the global market price of bitcoin, the price of the Shares may no longer track, whether temporarily or over time, the global market price of bitcoin, which could adversely affect an investment in the Trust by reducing investors’ confidence in the Shares’ ability to track the market price of bitcoin.

To the extent market prices differ materially from the Index price, investors may lose confidence in the Shares’ ability to track the market price of bitcoin, which could adversely affect the value of the Shares.

The Sponsor, however, is under

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Risks related to pricing.

As set forth under “Net

Asset Value Determinations” below, the Trust’s portfolio will be priced, including for purposes of determining the

NAV, based upon the Index.

The Trust’s portfolio

will be priced, including for purposes of determining the NAV, based upon the Index.

The price of bitcoin in U.S.

Dollars or in other currencies available from other data sources may not be equal

to the prices used to calculate the NAV.

Dollars or in other

currencies available from other data sources may not be equal to the prices used to calculate the NAV.

The NAV or the Principal Market

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Congress and a number of U.S.

federal and state agencies have been examining

the operations of digital asset networks, digital asset users and the digital asset spot market.

Many of these state and federal agencies

have brought enforcement actions and issued advisories and rules relating to digital asset markets.

Ongoing and future regulatory actions

with respect to digital assets generally or any single digital asset in particular may alter, perhaps to a materially adverse extent,

the nature of an investment in the Shares and/or the ability of the Trust to continue to operate.

Recent events, including among

others the bankruptcy filings of FTX and its subsidiaries, Three Arrows Capital, Celsius Network, Voyager Digital, Genesis, BlockFi and

others, and other developments in the digital asset markets, have resulted in calls for heightened scrutiny and regulation of the digital

asset industry, with a specific focus on intermediaries such as digital asset exchanges, platforms, and custodians.

Federal and state

legislatures and regulatory agencies may introduce and enact new laws and regulations to regulate crypto asset intermediaries, such as

digital asset exchanges and custodians.

The March 2023 collapses of Silicon Valley Bank, Silvergate Bank, and Signature Bank, which in

some cases provided services to the digital assets industry, may amplify and/or accelerate these trends.

On January 3, 2023, the federal

banking agencies issued a joint statement on crypto-asset risks to banking organizations following events which exposed vulnerabilities

in the crypto-asset sector, including the risk of fraud and scams, legal uncertainties, significant volatility, and contagion risk.

banking organizations are not prohibited from crypto-asset related activities, the agencies have expressed significant safety and soundness

concerns with business models that are concentrated in crypto-asset related activities or have concentrated exposures to the crypto-asset

federal and state agencies (including FinCEN,

SEC, OCC, CFTC, FINRA, the Consumer Financial Protection Bureau, the Department of Justice, the Department of Homeland Security, the Federal

Bureau of Investigation, the IRS, state financial institution regulators, and others) have been examining the operations of digital asset

networks, digital asset users and the digital asset spot market.

Many of these state and federal agencies have brought enforcement actions

and issued advisories and rules relating to digital asset markets.

Ongoing and future regulatory actions with respect to digital assets

generally or any single digital asset in particular may alter, perhaps to a materially adverse extent, the nature of an investment in

the Shares and/or the ability of the Trust to continue to operate.

For example, certain events

in 2022, including among others the bankruptcy filings of FTX and its subsidiaries, Three Arrows Capital, Celsius Network, Voyager Digital,

Genesis, BlockFi and others, and other developments in the digital asset markets, have resulted in calls for heightened scrutiny and regulation

of the digital asset industry, with a specific focus on intermediaries such as digital asset exchanges, platforms, and custodians.

and state legislatures and regulatory agencies may introduce and enact new laws and regulations to regulate crypto asset intermediaries,

such as digital asset exchanges and custodians.

The March 2023 collapses of Silicon Valley Bank, Silvergate Bank, and Signature Bank,

which in some cases provided services to the digital assets industry, or similar future events, may amplify and/or accelerate these trends.

On January 3, 2023, the federal banking agencies issued a joint statement on crypto-asset risks to banking organizations following events

which exposed vulnerabilities in the crypto-asset sector, including the risk of fraud and scams, legal uncertainties, significant volatility,

and contagion risk.

Although banking organizations are not prohibited from crypto-asset related activities, the agencies have expressed

significant safety and soundness concerns with business models that are concentrated in crypto-asset related activities or have concentrated

exposures to the crypto-asset sector.

federal and state regulators

as well as the White House, have issued reports and releases concerning crypto assets, including Bitcoin and crypto asset markets.

in 2023 the House of Representatives formed two new subcommittees:

the Digital Assets, Financial Technology and Inclusion Subcommittee

and the Commodity Markets, Digital Assets, and Rural Development Subcommittee, each of which were formed in part to analyse issues concerning

crypto assets and demonstrate a legislative intent to develop and consider the adoption of federal legislation designed to address the

perceived need for regulation of and concerns surrounding the crypto industry.

However, the extent and content of any forthcoming laws

and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near future.

A divided Congress makes

any prediction difficult.

We cannot predict how these, and other related events, will affect us or the crypto asset business.

have issued reports and releases concerning crypto assets, including Bitcoin and crypto asset markets.

Further, in 2023 the House of Representatives

formed two new subcommittees:

the Digital Assets, Financial Technology and Inclusion Subcommittee and the Commodity Markets, Digital Assets,

and Rural Development Subcommittee, each of which were formed in part to analyze issues concerning crypto assets and demonstrate a legislative

intent to develop and consider the adoption of federal legislation designed to address the perceived need for regulation of and concerns

surrounding the crypto industry.

However, the extent and content of any forthcoming laws and regulations are not yet ascertainable with

certainty, and it may not be ascertainable in the near future.

It is difficult to predict how these and other related events will affect

us or the crypto asset business.

In August 2021, the chair

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could have a material adverse effect on the Trust and the Shares.

The Financial Crimes Enforcement

Network (“FinCEN”) requires any administrator or exchanger of convertible digital assets to register with FinCEN as a money

transmitter and comply with the anti-money laundering regulations applicable to money transmitters.

In 2015, FinCEN assessed a $700,000

fine against a sponsor of a digital asset for violating several requirements of the BSA by acting as a money services business and selling

the digital asset without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering program.

In 2017, FinCEN assessed a $110 million fine against BTC-e, a now defunct digital asset exchange, for similar violations.

The requirement

that exchangers that do business in the U.S.

of buying and selling bitcoin and therefore may adversely affect the price of bitcoin and an investment in the Shares.

In a March 2018

letter from FinCEN’s assistant secretary for legislative affairs to U.S.

Senator Ron Wyden, the assistant secretary indicated that

under current law both the developers and the exchanges involved in the sale of tokens in an initial coin offering (“ICO”)

may be required to register with FinCEN as money transmitters and comply with the anti-money laundering regulations applicable to money

transmitters.

The Office of Foreign Assets

Control (“OFAC”) of the U.S.

Department of the Treasury (the “U.S.

Treasury Department”) has added digital currency

FinCEN requires any administrator

or exchanger of convertible digital assets to register with FinCEN as a money transmitter and comply with the anti-money laundering regulations

applicable to money transmitters.

In 2015, FinCEN assessed a $700,000 fine against a sponsor of a digital asset for violating several

requirements of the BSA by acting as a money services business and selling the digital asset without registering with FinCEN, and by failing

to implement and maintain an adequate anti-money laundering program.

In 2017, FinCEN assessed a $110 million fine against BTC-e, a now

defunct digital asset exchange, for similar violations.

The requirement that exchangers that do business in the U.S.

and comply with anti-money laundering regulations may increase the cost of buying and selling bitcoin and therefore may adversely affect

the price of bitcoin and an investment in the Shares.

In a March 2018 letter from FinCEN’s assistant secretary for legislative affairs

Senator Ron Wyden, the assistant secretary indicated that under current law both the developers and the exchanges involved in

the sale of tokens in an initial coin offering may be required to register with FinCEN as money transmitters and comply with the anti-money

laundering regulations applicable to money transmitters.

OFAC has added digital currency

addresses to the list of Specially Designated Nationals whose assets are blocked, and with whom U.S.

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which is intended to define “qualified stablecoins” to differentiate them from “more volatile cryptocurrencies.”

On March 17, 2022, Senators

Elizabeth Warren, Jack Reed, Mark Warner, and Jon Tester introduced the Digital Asset Sanctions Compliance Enhancement Act in an attempt

to ensure blacklisted Russian individuals and businesses do not use cryptocurrency to evade economic sanctions.

On March 9, 2022, President

On March 9, 2022, former President

Biden signed an Executive Order on Ensuring Responsible Development of Digital Assets (the “Executive Order”), which outlined

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of increased federal regulation of digital assets and digital asset activities could have a material adverse effect on the Trust and the

On January 23, 2025, President Trump issued an executive order titled “Executive Order on Strengthening American Leadership

in Digital Financial Technology” that outlined the administration’s commitment to strengthening U.S.

leadership in the digital

asset space and established an inter-agency working group for artificial intelligence and crypto that is tasked with proposing a regulatory

framework governing the issuance and operation of digital assets, including stablecoins, in the United States.

On March 17, 2022, Senators

Elizabeth Warren, Jack Reed, Mark Warner, and Jon Tester introduced the Digital Asset Sanctions Compliance Enhancement Act in an attempt

to ensure blacklisted Russian individuals and businesses do not use cryptocurrency to evade economic sanctions.

On March 28, 2022, Representative

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Additionally, payment stablecoins would be exempt from

the federal securities requirements, including the Securities Act of 1933 (“1933 Act”), the Securities Exchange Act of 1934

(“Exchange Act”), and the Investment Company Act of 1940 (“1940 Act”).

the federal securities requirements, including the Securities Act, the Exchange Act, and the 1940 Act.

On June 7, 2022, Senators

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ether, would be regulated by the CFTC.

In 2023, Congress continued

to consider several stand-alone digital asset bills, including a formal process to determine when digital assets will be treated as either

securities to be regulated by the SEC or commodities under the purview of the CFTC, what type of federal/state regulatory regime will

exist for payment stablecoins and the how the BSA will apply to cryptocurrency providers.

The Financial Innovation and Technology for

the 21st Century Act (“FIT for the 21st Century Act”) advanced through the United States House of Representatives in a vote

along bipartisan lines.

In 2023 and 2024, Congress

continued to consider several stand-alone digital asset bills, including a formal process to determine when digital assets will be treated

as either securities to be regulated by the SEC or commodities under the purview of the CFTC, what type of federal/state regulatory regime

will exist for payment stablecoins and the how the BSA will apply to cryptocurrency providers.

In May 2024, the Financial Innovation and

Technology for the 21st Century Act (“FIT for the 21st Century Act”) advanced through the United States House of Representatives

in a vote along bipartisan lines.

The FIT for the 21st Century

Act would require the SEC and the CFTC to jointly issue rules or guidance that would outline their process in delisting a digital asset

that they deem inconsistent with the Commodity Exchange Act (the “CEA”), federal securities laws and the FIT for the 21st

The bill, in part, would also provide a certification process for blockchains to be recognized as decentralized, which would

allow the SEC to challenge claims made by token issuers about meeting the outlined standards.

Act would require the SEC and the CFTC to jointly issue rules or guidance that would outline their process for removing from the SEC’s

regulatory jurisdiction a digital asset that they deem inconsistent with the CEA and federal securities laws.

The bill, in part, would

also provide a certification process for blockchains to be recognized as decentralized, which would allow the SEC to challenge claims

made by token issuers about meeting the outlined standards.

Legislative efforts have also

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The McHenry bill would also amend the Investment Advisers Act of 1940 (the “Advisers Act”),

the 1940 Act, the 1933 Act, the Exchange Act and the Securities Investor Protection Act of 1970 to specify that payment stablecoins are

not securities for purposes of those federal securities laws.

the 1940 Act, the Securities Act, the Exchange Act and the Securities Investor Protection Act of 1970 to specify that payment stablecoins

are not securities for purposes of those federal securities laws.

On February 4, 2025, Sen.

Bill Hagerty introduced the Guiding and Establishing National Innovation for U.S.

Stablecoins of 2025 Act – the GENIUS

Act – cosponsored by Senate Banking Chair Tim Scott and Sens.

Kirsten Gillibrand and Cynthia Lummis, which would establish a U.S.

regulatory framework for payment stablecoins.

Like the McHenry bill, the GENIUS Act contemplates a regulatory framework where payment

stablecoin issuers may be either a subsidiary of an insured bank, an uninsured depository institution or trust bank, or a nonbank, and

primarily regulated at either the federal or state level.

It would also prescribe stablecoin reserve requirements and require bank-like

regulation for both bank and nonbank stablecoin issuers.

Several other bills have advanced

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parties in or involving New York, excluding merchants and consumers, must apply for a license, commonly known as a BitLicense, from the

NYDFS and must comply with anti-money laundering, cyber security, consumer protection, and financial and reporting requirements, among

NYDFS and must comply with anti-money laundering, cybersecurity, consumer protection, and financial and reporting requirements, among

As an alternative to a BitLicense, a firm can apply for a charter to become a limited purpose trust company under New York law

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in the future.

In addition, a determination

that bitcoin is offered and sold as a security under U.S.

or foreign law could adversely affect an investment in the Trust.

Shareholders do not

have the protections associated with ownership of shares in an investment company registered under the 1940 Act or commodity pools under

the Commodity Exchange Act.

The 1940 Act establishes a

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could result in the liquidation of the Trust’s bitcoin at a time that is disadvantageous to Shareholders.

The SEC has not asserted regulatory

authority over bitcoin or trading or ownership of bitcoin and has not expressed the view that bitcoin should be classified or treated

as a security for purposes of U.S.

federal securities laws.

In fact, senior members of the staff of the SEC have expressed the view that

bitcoin is not a security under the federal securities laws.

However, the SEC has commented on bitcoin and bitcoin-related market developments

and has taken action against investment schemes involving bitcoin.

For example, in a recent letter regarding the SEC’s review of

proposed rule changes to list and trade shares of certain bitcoin-related investment vehicles on public markets, the SEC staff stated

that it has significant investor protection concerns regarding the markets for digital assets, including the potential for market manipulation

In March 2018, it was reported that the SEC was examining as many as 100 investment funds with strategies focused on digital

The reported focus of the examinations is on the accuracy of risk disclosures to investors in these funds, digital asset pricing

practices, and compliance with rules meant to prevent the theft of investor funds, as well as on information gathering so that the SEC

can better understand new technologies and investment products.

It has further been reported that some of these funds have received subpoenas

from the SEC’s Enforcement Division.

The SEC also recently determined that certain digital assets are securities under the U.S.

securities laws.

In these determinations, the SEC reasoned that the unregistered offer and sale of digital assets can, in certain circumstances,

including ICOs, be considered illegal public offering of securities.

A significant amount of funding for digital asset startups has come

from ICOs, and if ICOs are halted or face obstacles, or companies that rely on them face legal action or investigation, it could have

a negative impact on the value of digital assets, including bitcoin.

Finally, the SEC’s Division of Examinations (then the Office

of Compliance Inspections and Examinations (“OCIE”)) stated that digital assets were an examination priority for 2020.

particular, OCIE intended to focus its examination on portfolio management of digital assets, safety of client funds and assets, pricing

and valuation of client portfolios, compliance and internal controls, and supervision of employee outside business activities.

The SEC has recently proposed

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significant modifications to existing arrangements, which could cause the Trust to bear potentially significant increased costs.

Sponsor is unable to make such modifications or appoint successor service providers to fill the roles that the Bitcoin Custodian currently

plays, the Trust’s operations (including in relation to creations and redemptions of Baskets and the holding of bitcoin) could be

Sponsor is unable to make such modifications or appoint successor service providers to fill the roles that the Bitcoin Custodians currently

play, the Trust’s operations (including in relation to creations and redemptions of Baskets and the holding of bitcoin) could be

negatively affected, the Trust could dissolve (including at a time that is potentially disadvantageous to Shareholders), and the value

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of the Trust may generate tax liabilities for Shareholders.

As described above under “TAXATION

OF THE TRUST,” it is expected that each Shareholder will include in the computation of their taxable income their proportionate

share of the taxable income and expenses of the Trust, including gains and losses realized in connection with the use of bitcoin to pay

Trust expenses.

The Trust does not anticipate making distributions to Shareholders, so any tax liability that a Shareholder incurs as

a result of holding Shares will need to be satisfied from some other source of funds.

If a Shareholder sells Shares in order to raise

funds to satisfy such a tax liability, the sale itself may generate additional taxable gain or loss.

It is expected that each Shareholder

will include in the computation of their taxable income their proportionate share of the taxable income and expenses of the Trust, including

gains and losses realized in connection with the use of bitcoin to pay Trust expenses.

The Trust does not anticipate making distributions

to Shareholders, so any tax liability that a Shareholder incurs as a result of holding Shares will need to be satisfied from some other

source of funds.

If a Shareholder sells Shares in order to raise funds to satisfy such a tax liability, the sale itself may generate additional

taxable gain or loss.

The tax treatment of

bitcoin and transactions involving bitcoin for United States federal income tax purposes may change.

Under current IRS guidance,

bitcoin is treated as property, not as currency, for U.S.

federal income tax purposes and transactions involving payment in bitcoin in

return for goods and services are treated as barter exchanges.

Such exchanges result in capital gain or loss measured by the difference

between the price at which bitcoin is exchanged and the taxpayer’s basis in the bitcoin.

However, because bitcoin is a new technological

innovation, because IRS guidance has taken the form of administrative pronouncements that may be modified without prior notice and comment,

and because there is as yet little case law on the subject, the U.S.

federal income tax treatment of an investment in bitcoin or in transactions

relating to investments in bitcoin may change from that described in this report, possibly with retroactive effect.

Any such change in

federal income tax treatment of bitcoin may have a negative effect on prices of bitcoin and may adversely affect the value of

In this regard, the IRS has indicated that it has made it a priority to issue additional guidance related to the taxation

of virtual currency transactions, such as transactions involving bitcoin.

Under current Internal Revenue

Service (the “IRS”) guidance, bitcoin is treated as property, not as currency, for U.S.

federal income tax purposes and transactions

involving payment in bitcoin in return for goods and services are treated as barter exchanges.

Such exchanges result in capital gain or

loss measured by the difference between the price at which bitcoin is exchanged and the taxpayer’s basis in the bitcoin.

because bitcoin is a new technological innovation, because IRS guidance has taken the form of administrative pronouncements that may be

modified without prior notice and comment, and because there is as yet little case law on the subject, the U.S.

federal income tax treatment

of an investment in bitcoin or in transactions relating to investments in bitcoin may change from that described in this report, possibly

with retroactive effect.

Any such change in the U.S.

federal income tax treatment of bitcoin may have a negative effect on prices of bitcoin

and may adversely affect the value of the Shares.

In this regard, the IRS has indicated that it has made it a priority to issue additional

guidance related to the taxation of virtual currency transactions, such as transactions involving bitcoin.

In addition, the IRS and U.S.

Department of Treasury have proposed

regulations regarding the tax information reporting rules for crypto currency transactions.

While it has started to issue such additional

guidance, whether any future guidance will adversely affect the U.S.

federal income tax treatment of an investment in bitcoin or in transactions

relating to investments in bitcoin is unknown.

Moreover, future developments that may arise with respect to digital currencies may increase

the uncertainty with respect to the treatment of digital currencies for U.S.

Treasury Department have promulgated final Treasury regulations regarding the tax information reporting rules for crypto currency transactions.

While the U.S.

Treasury Department and the IRS have started to issue such additional guidance, whether any future guidance will adversely

affect the U.S.

federal income tax treatment of an investment in bitcoin or in transactions relating to investments in bitcoin is unknown.

Moreover, future developments that may arise with respect to digital currencies may increase the uncertainty with respect to the treatment

of digital currencies for U.S.

federal income tax purposes.

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The Trust Agreement will require that, if such a transaction occurs,

the Trust will as soon as possible direct the Bitcoin Custodian to distribute the new forked asset in-kind to the Sponsor, as

agent for the Shareholders, and the Sponsor will arrange to sell the new forked asset and for the proceeds to be distributed to the Shareholders.

the Trust will as soon as possible direct the Bitcoin Custodians to distribute the new forked asset in-kind to the Sponsor,

as agent for the Shareholders, and the Sponsor will arrange to sell the new forked asset and for the proceeds to be distributed to the

Shareholders.

Such a sale will give rise to gain or loss, for U.S.

federal income tax purposes, if the amount realized on the sale differs from the

value of the new forked asset at the time it was received by the Trust.

A hard fork may therefore give rise to additional tax liabilities

for Shareholders.

federal income tax purposes, if the amount realized on the sale differs

from the value of the new forked asset at the time it was received by the Trust.

A hard fork may therefore give rise to additional tax

liabilities for Shareholders.

The Exchange on which

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The Trust’s Shares are

listed for trading on the Exchange under the market symbol, “ARKB.” Trading in Shares may be halted due to market conditions

listed for trading on the Exchange under the market symbol “ARKB”.

Trading in Shares may be halted due to market conditions

or, in light of the Exchange rules and procedures, for reasons that, in the view of the Exchange, make trading in Shares inadvisable.

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the discretion of the Sponsor.

The exclusive jurisdiction

for certain types of actions and proceedings and waiver of trial by jury clauses set forth in the Trust Agreement may have the effect

of limiting a Shareholder’s rights to bring legal action against the Trust and could limit a purchaser’s ability to obtain

a favorable judicial forum for disputes with the Trust.

The Trust Agreement provides

that the courts of the state of Delaware and any federal courts located in Wilmington, Delaware will be the exclusive jurisdiction for

any claims, suits, actions or proceedings, provided that causes of actions for violations of the Exchange Act or the Securities Act will

not be governed by the exclusive jurisdiction provision of the Trust Agreement.

By purchasing Shares in the Trust, Shareholders waive

certain claims that the courts of the state of Delaware and any federal courts located in Wilmington, Delaware is an inconvenient venue

or is otherwise inappropriate.

As such, Shareholder could be required to litigate a matter relating to the Trust in a Delaware court,

even if that court may otherwise be inconvenient for the Shareholder.

The Trust Agreement also waives

the right to trial by jury in any such claim, suit, action or proceeding, provided that causes of actions for violations of the Exchange

Act or the Securities Act will not be governed by the waiver of the right to trial by jury provision of the Trust Agreement.

is brought against the Trust, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according

to different civil procedures and may result in different outcomes than a trial by jury would have, including results that could be less

favorable to the plaintiffs in any such action.

By purchasing Shares in the Trust, Shareholders waive a right to a trial by jury which

may limit a Shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Trust.

Section 22 of the Securities

Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the

Securities Act or the rules and regulations thereunder.

Investors cannot waive compliance with the federal securities laws and the rules

and regulations thereunder.

Further, there is uncertainty as to whether a court would enforce the exclusive forum jurisdiction for actions

arising under the Securities Act or Exchange Act.

Shareholders may be

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determines to be necessary for the protection of the Shareholders of the Trust (for example, where acceptance of the total deposit required

to create each Basket (“Creation Basket Deposit”) would have certain adverse tax consequences to the Trust or its Shareholders).

In addition, the Trust may reject a redemption order if the order is not in proper form as described in the Authorized Participant Agreement

or if the fulfilment of the order might be unlawful.

Any such postponement, suspension or rejection could adversely affect a redeeming

Authorized Participant.

Suspension of creation privileges may adversely impact how the Shares are traded and arbitraged on the secondary

market, which could cause them to trade at levels materially different (premiums and discounts) from the fair value of their underlying

to create each Basket would have certain adverse tax consequences to the Trust or its Shareholders).

In addition, the Trust may reject

a redemption order if the order is not in proper form as described in the Authorized Participant Agreement or if the fulfilment of the

order might be unlawful.

Any such postponement, suspension or rejection could adversely affect a redeeming Authorized Participant.

of creation privileges may adversely impact how the Shares are traded and arbitraged on the secondary market, which could cause them to

trade at levels materially different (premiums and discounts) from the fair value of their underlying holdings.

Shareholders may be

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors