What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-13 compared with 2024-11-12 · 135 added, 134 removed, 62 unchanged (81% of the section changed)

4 unchanged sentences

This Form 10-Q contains

“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities

Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements involve risks and

uncertainties.

All statements (other than statements of historical fact) included in this Form 10-Q that address activities, events or

developments that may occur in the future, the Trust’s operations, the Sponsor’s plans and references to the Trust’s

future success and other similar matters are forward-looking statements.

Words such as “could,” “would,” “may,”

“expect,” “intend,” “estimate,” “predict,” and variations on such words or negatives

thereof, and similar expressions that reflect our current views with respect to future events and Trust performance, are intended to

identify such forward-looking statements.

These forward-looking statements are only predictions, subject to risks and uncertainties that

are difficult to predict and many of which are outside of our control, and actual results could differ materially from those discussed.

Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes to differ materially from those

expressed therein.

We express our estimates, expectations, beliefs, and projections in good faith and believe them to have a reasonable

However, we make no assurances that management’s estimates, expectations, beliefs, or projections will be achieved or accomplished.

These forward-looking statements are based on assumptions about many important factors that could cause actual results to differ materially

from those in the forward-looking statements.

We do not intend to update any forward-looking statements even if new information becomes

available or other events occur in the future, except as required by the federal securities laws.

“forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act,

and such forward-looking statements involve risks and uncertainties.

All statements (other than statements of historical fact) included

in this Form 10-Q that address activities, events or developments that may occur in the future, the Trust’s operations, the Sponsor’s

plans and references to the Trust’s future success and other similar matters are forward-looking statements.

Words such as “could,”

“would,” “may,” “expect,” “intend,” “estimate,” “predict,” and

variations on such words or negatives thereof, and similar expressions that reflect our current views with respect to future events and

Trust performance, are intended to identify such forward-looking statements.

These forward-looking statements are only predictions, subject

to risks and uncertainties that are difficult to predict and many of which are outside of our control, and actual results could differ

materially from those discussed.

Forward-looking statements involve risks and uncertainties that could cause actual results or outcomes

to differ materially from those expressed therein.

We express our estimates, expectations, beliefs, and projections in good faith and

believe them to have a reasonable basis.

However, we make no assurances that management’s estimates, expectations, beliefs, or projections

will be achieved or accomplished.

These forward-looking statements are based on assumptions about many important factors that could cause

actual results to differ materially from those in the forward-looking statements.

We do not intend to update any forward-looking statements

even if new information becomes available or other events occur in the future, except as required by the federal securities law s.

Organization and Trust Overview

The ARK 21Shares Bitcoin ETF

(the “Trust”) is a Delaware statutory trust, formed on June 22, 2021, pursuant to the Delaware Statutory Trust Act (“DSTA”).

The Trust operates pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”).

The Trust is a Delaware statutory

trust, formed on June 22, 2021, pursuant to the DSTA.

The Trust operates pursuant to the Trust Agreement.

The Trust is not registered

as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and is not a

commodity pool for purposes of the Commodity Exchange Act (“CEA”).

The Trust is managed and controlled by 21Shares US LLC

(the “Sponsor”).

The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly

owned subsidiary of Jura Pentium Inc., whose ultimate parent company is 21co Holdings Limited (formerly known as Amun Holdings Limited).

The Sponsor is not subject to regulation by the Commodity Futures Trading Commission (“CFTC”) as a commodity pool operator

with respect to the Trust, or a commodity trading advisor with respect to the Trust.

The Trust is an exchange-traded fund (“ETF”)

that issues units of beneficial interest (the “Shares”) representing fractional undivided beneficial interests in its net

assets that trade on the Cboe BZX Exchange, Inc.

(the “Exchange”).

The Shares are listed for trading on the Exchange under

a ticker symbol “ARKB”.

as an investment company under the 1940 Act and is not a commodity pool for purposes of the CEA.

The Trust is managed and controlled by

The Sponsor is a limited liability company formed in the state of Delaware on June 16, 2021, and is a wholly owned subsidiary

of Jura Pentium Inc., whose ultimate parent company is 21co Holdings Limited (formerly known as Amun Holdings Limited).

The Sponsor is

not subject to regulation by the CFTC as a commodity pool operator with respect to the Trust, or a commodity trading advisor with respect

to the Trust.

The Trust is an exchange-traded fund that issues units of beneficial interest representing fractional undivided beneficial

interests in its net assets that trade on the Exchange.

The Shares are listed for trading on the Exchange under a ticker symbol “ARKB”.

On December 12, 2023, the

Sponsor, in its capacity as Seed Capital Investor, subject to conditions, purchased the initial Seed Creation Baskets comprising 2 Shares

at a per-Share price of $50.00, as described in “Seed Capital Investor.” Total proceeds to the Trust from the sale of these

Seed Creation Baskets were $100.

Delivery of the Seed Creation Baskets was made on December 12, 2023.

These Seed Creation Baskets were

redeemed for cash on or about January 5, 2024.

Sponsor, in its capacity as Seed Capital Investor, subject to conditions, purchased the initial Seed Shares comprising 2 Shares at a per-Share

price of $50.00, as described in “Seed Capital Investor.” Total proceeds to the Trust from the sale of these Seed Shares were

Delivery of the Seed Shares was made on December 12, 2023.

These Seed Shares were redeemed for cash on or about January 5, 2024.

On January 9, 2024 (the “Seed

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objective is to seek to track the performance of bitcoin, as measured by the performance of the CME CF Bitcoin Reference Rate—New

York Variant (the “Index”), adjusted for the Trust’s expenses and other liabilities.

York Variant, adjusted for the Trust’s expenses and other liabilities.

CF Benchmarks Ltd.

is the administrator

for the Index (the “Index Provider”).

is the administrator for the Index (the

“Index Provider”).

The Index is designed to reflect the performance of bitcoin in U.S.

to achieve its investment objective, the Trust holds bitcoin at its Custodians and values its Shares daily based on the Index.

is a passive investment vehicle and is not a leveraged product.

In seeking to achieve its

investment objective, the Trust holds bitcoin at its Custodians and values its Shares daily based on the Index.

The Trust is a passive

investment vehicle and is not a leveraged product.

The Sponsor does not actively manage the bitcoin held by the Trust.

The Trust issues Shares only

in Creation Units of 5,000 or multiples thereof.

Creation Units are issued and redeemed in exchange for cash.

Individual Shares will not

be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “ARKB.” The Trust issues Shares

in Creation Units on a continuous basis at the applicable NAV per Share on the creation order date.

The Trust pays the unitary

Sponsor Fee of 0.21% of the Trust’s bitcoin holdings.

The Sponsor Fee is paid by the Trust to the Sponsor as compensation for services

performed under the Trust Agreement.

The Sponsor agreed to waive the entire Sponsor Fee for (i) a nine-month period which commenced on

January 11, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or (ii) the first $1 billion of Trust assets,

whichever came first.

The Trust assets exceeded $1 billion prior to the end of the nine-month period, at which time the waiver period

in Creation Baskets of 5,000 or multiples thereof.

Creation Baskets are issued and redeemed in exchange for cash.

Individual Shares will

not be redeemed by the Trust but are listed and traded on the Exchange under the ticker symbol “ARKB”.

The Trust issues Shares

in Creation Baskets on a continuous basis at the applicable NAV per Share on the creation order date.

The Trust pays the

unitary Sponsor Fee of 0.21% of the Trust’s bitcoin holdings.

The Sponsor Fee is paid by the Trust to the Sponsor as

compensation for services performed under the Trust Agreement.

The Sponsor agreed to waive the entire Sponsor Fee for (i) a

nine-month period which commenced on January 11, 2024 (the day the Trust’s Shares were initially listed on the Exchange), or

(ii) the first $1 billion of Trust assets, whichever came first.

The Trust assets exceeded $1 billion in April 2024, at which time

the waiver period ended.

The Trust incurred Sponsor Fees for the quarters ended March 31, 2025 and 2024 of $2,367,167 and $627,659 net of Sponsor Fee waived of

$93,111, respectively.

The Trust is an “emerging

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company reporting requirements.

The NAV of the Trust is used

by the Trust in its day-to-day operations to measure the net value of the Trust’s assets.

The NAV is calculated on each business

day and is equal to the aggregate value of the Trust’s assets less its liabilities based on the Index price.

In determining the

NAV of the Trust on any business day, the Administrator calculates the price of the bitcoin held by the Trust as of 4:00 p.m.

The Administrator also calculates the “NAV per Share” of the Trust, which equals the NAV of the Trust divided by the

number of outstanding Shares.

For purposes of making these calculations, a business day means any day other than a day when the Exchange

is closed for regular trading.

The NAV of the Trust is

used by the Trust in its day-to-day operations to measure the net value of the Trust’s assets.

The NAV is calculated on each

Business Day and is equal to the aggregate value of the Trust’s assets less its liabilities based on the Index price.

determining the NAV of the Trust on any Business Day, the Administrator calculates the price of the bitcoin held by the Trust as of

ET on such day.

The Administrator also calculates the “NAV per Share” of the Trust, which equals the NAV of

the Trust divided by the number of outstanding Shares.

In addition to calculating

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NAV and NAV per Share are

not measures calculated in accordance with GAAP and are not intended as substitute for Principal Market and Principal Market NAV per Share,

respectively.

not measures calculated in accordance with GAAP and are not intended as substitutes for Principal Market and Principal Market NAV per

Share, respectively.

Critical Accounting Estimates

The financial statements and

accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation

of these financial statements relies on estimates and assumptions that impact the Trust’s financial position and results of operations.

These estimates and assumptions affect the Trust’s application of accounting policies.

Below is a summary of accounting policies

on cash and investment valuation.

There were no material estimates involving a significant level of estimation uncertainty that had or

are reasonably likely to have had a material impact on the Trust’s financial condition used in the preparation of the financial

In addition, please refer to Note 2 to the Financial Statements included in this report for further discussion of the Trust’s

accounting policies.

accompanying notes are prepared in accordance with GAAP.

The preparation of these financial statements relies on estimates and assumptions

that impact the Trust’s financial position and results of operations.

These estimates and assumptions affect the Trust’s application

of accounting policies.

Below is a summary of accounting policies on cash and investment valuation.

There were no material estimates involving

a significant level of estimation uncertainty that had or are reasonably likely to have had a material impact on the Trust’s financial

condition used in the preparation of the financial statements.

In addition, please refer to Note 2 to the Financial Statements included

in this report for further discussion of the Trust’s accounting policies.

Cash includes non-interest

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that bitcoin is sold in its principal market to market participants (or in the absence of a principal market, the most advantageous market).

The Trust utilizes an

exchange traded price from the Trust’s principal market for bitcoin as of 4:00 p.m.

ET on the Trust’s financial statement

measurement date.

Results of Operations (Amounts in

thousands, except Price of bitcoin and Shares outstanding)

For the Three Months ended on September 30,

The Trust’s net

asset value increased from $2,849,575 on June 30, 2024 to $3,206,095 on September 30, 2024.

The increase in the Trust’s net

asset value resulted primarily from an increase in bitcoin price of 2.48% (from $61,929.29 per bitcoin as of June 30, 2024 to

$63,464.76 per bitcoin as of September 30, 2024) and an increase of number of shares outstanding from 46,050,000 on June 30, 2024 to

50,585,000 on September 30, 2024.

The Trust’s net

increase in net assets resulting from operations for the quarter ended September 30, 2024 was $46,097.

This number is largely the

result of a realized gain of $83 on the sale of bitcoin for purposes of distributing to the Sponsor as the Sponsor’s fee and,

net realized gain on investment in bitcoin sold for redemptions of $53,132 partially offset by a change in unrealized depreciation

on investment in bitcoin of $(5,609).

The Trust expenses for the quarter were $1,509, relating to the Sponsor’s fees.

For the Nine Months Ended September 30, 2024

The Trust’s net

asset value increased from $- 1 on December 31, 2023 to $3,206,095 on September 30, 2024.

The increase in the

Trust’s net asset value resulted primarily from an increase in the price of bitcoin of 36% (from $46,666.89 per bitcoin on

January 11, 2024 to $63,464.76 per bitcoin on September 30, 2024) and a net increase in the number of shares outstanding of

50,584,998 from December 31, 2023 to September 30, 2024.

The Trust’s net increase

in net assets resulting from operations for the nine months ended September 30, 2024 was $481,493.

This was the result of a change in

unrealized appreciation on investment in bitcoin of $296,403, a net realized gain of $410, on the sale of bitcoins for purposes of distributing

to the Sponsor as the Sponsor’s fee, and net realized gain on investment in bitcoin sold for redemptions of $188,372.

expenses for the nine-month period were $3,692, relating to the Sponsor’s fees.

* No prior year comparative period has been provided as this

is the first year of the Trust’s operations.

1 Amount rounds to less than $1,000.

Trust utilizes an exchange

traded price from the Trust’s principal market for bitcoin as of 4:00 p.m.

ET on the Trust’s financial statement measurement

Results of Operations (Amounts in thousands,

except Price of bitcoin and Shares outstanding)

As of March 31, 2025, the

Trust had a net closing balance of 47,501.0671 bitcoin with a value of $3,941,769, based on the Index Price of $82,982.75 on March 31,

2025 (CME CF Bitcoin Reference Rate – New York Variant).

As of March 31, 2025, the total market value of the Trust’s bitcoin was

$3,916,212, based on the price of a bitcoin in the principal market (Coinbase) of $82,444.71 on March 31, 2025.

For the three months ended March 31, 2025

Net realized and change in

unrealized loss on investment in bitcoin for the period December 31, 2024 through March 31, 2025, was $(585,181) which includes a net

change in unrealized depreciation on investment in bitcoin of $(907,296).

Net realized and unrealized gain on investment in bitcoin for

the period was driven by bitcoin price depreciation throughout the period from $93,390.22 per bitcoin as of December 31, 2024, to $82,444.71

per bitcoin as of March 31, 2025.

Net decrease in net assets resulting from operations was $(587,548) for the period ended March 31,

2025, primarily driven by the aforementioned net realized and change in unrealized loss

on investment in bitcoin despite the net increase in the number of shares outstanding.

For the three months ended March 31, 2024

Net realized and unrealized gain on investment

in bitcoin for the three months ended March 31, 2024, was $845,238 which includes a realized loss of $(85) on the sale of bitcoins associated

with the disposition of the initial seed creation shares, a loss for the removal of bitcoin mark-to-market from the daily Sponsor’s Fee

accrual, and a net change in unrealized appreciation on investment in bitcoin of $845,323.

Net realized and unrealized gain on investment

in bitcoin for the period was driven by bitcoin price appreciation from $46,666.89 per bitcoin as of January 11, 2024, to $70,761.62 per

bitcoin as of March 31, 2024.

Net increase in net assets resulting from operations was $844,610 for the three months ended March 31, 2024,

which consisted of the net realized and unrealized gain on investment in bitcoin, less the Sponsor’s Fee of $628.

Liquidity and Capital Resources

The Trust is not aware of

any trends, demands, commitments, events, or uncertainties that are reasonably likely to result in material changes to its liquidity needs.

The Trust’s only ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.21% of the daily net asset value

of the Trust.

The Sponsor agreed to waive the entire Sponsor Fee for (i) a six-month period which commenced on January 11, 2024 (the day

the Trust’s Shares were initially listed on the Exchange), or (ii) the first $1 billion of Trust assets, whichever came first.

Trust assets exceeded $1 billion prior to the end of the six month period, at which time the waiver period ended.

In exchange for the

Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Trust, including but not limited

to the following:

fees charged by the Sub-Adviser, Administrator, the Custodians, Transfer Agent and the Trustee, the Marketing Fee, Cboe

BZX Exchange listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and mailing costs, website

fees, tax reporting fees, audit fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees and expenses.

bears expenses in connection with the Trust’s organization and initial offering costs.

The Trust is not aware of any trends, demands,

commitments, events, or uncertainties that are reasonably likely to result in material changes to its liquidity needs.

The Trust’s only

ordinary recurring expense is the fee paid to the Sponsor at an annual rate of 0.21% of the daily net asset value of the Trust.

agreed to waive the entire Sponsor Fee for (i) a nine-month period which commenced on January 11, 2024 (the day the Trust’s Shares were

initially listed on the Exchange), or (ii) the first $1 billion of Trust assets, whichever came first.

The Trust assets exceeded $1 billion

in April 2024, at which time the waiver period ended.

The aggregate Sponsor Fee paid to the Sponsor for the period ended March 31, 2025

was $(2,585,000).

In exchange for the Sponsor’s fee, the Sponsor has agreed to assume the ordinary fees and expenses incurred by the Trust,

including but not limited to the following:

fees charged by the Sub-Adviser, Administrator, the Custodians, Transfer Agent and the Trustee,

the Marketing Fee, the Exchange’s listing fees, typical maintenance and transaction fees of the DTC, SEC registration fees, printing and

mailing costs, website fees, tax reporting fees, audit fees, license fees and expenses, up to $100,000 per annum in ordinary legal fees

and expenses.

The Sponsor bears expenses in connection with the Trust’s organization and initial offering costs.

The Sponsor is not required

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The Trust will sell bitcoin on an as-needed basis to pay the Sponsor’s fee.

Off-Balance Sheet Arrangements

The Trust does not have any

off-balance sheet arrangements.

Quantitative and Qualitative Disclosures

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We are a smaller reporting

company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this

company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this

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-Q

Item 2. Management’s Discussion and Analysis