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Item 7. Management’s Discussion and Analysis

2026-03-02 compared with 2025-03-26 · 105 added, 84 removed, 101 unchanged (65% of the section changed)

26 unchanged sentences

Organization and Trust Overview

The Trust is a Delaware statutory

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

The Trust is a Delaware statutory trust, formed on June 22, 2021, pursuant

The Trust operates pursuant to the Trust Agreement.

The Trust is not registered

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.

On January 9, 2024 (the “Seed

Capital Purchase Date”), the Seed Capital Investor purchased Seed Creation Baskets comprising 10,000 Shares (the “Initial

The Trust is not registered 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.

The Sponsor is a limited liability

company formed in the state of Delaware on June 16, 2021, and is a wholly owned subsidiary of 21co Holdings Limited (formerly known as

Amun Holdings Limited).

The ultimate parent company of 21co Holdings Limited is FalconX, a leading institutional digital asset prime brokerage.

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 common shares 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 the

ticker symbol “ARKB”.

On December 12, 2023, the Sponsor, in its capacity as Seed Capital

Investor, subject to conditions, purchased six at a per-Share price of $16.67 (the “Initial Seed Shares”).

Total proceeds

to the Trust from the sale of the Initial Seed Shares were $100.

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

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

On January 9, 2024 (the

“Seed Capital Purchase Date”), the Seed Capital Investor purchased Baskets comprising 30,000 Shares (the “Initial

Seed Creation Baskets”) at a per-share price of $15.63.

Total proceeds to the Trust from the sale of the Seed Creation Baskets were

On January 9, 2024, the Trust purchased 10 bitcoins with the proceeds of the Seed Creation Baskets by transacting with a

Bitcoin Counterparty to acquire bitcoin on behalf of the Trust in exchange for cash provided by the Sponsor in its capacity as Seed Capital

These Seed Creation Baskets were redeemed for cash on or about January 19, 2024.

Total proceeds to the Trust from the sale of the Initial Seed Creation

Baskets were $468,806.44.

On January 9, 2024, the Trust purchased 10 bitcoins with the proceeds of the Initial Seed Creation Baskets

by transacting with a Bitcoin Counterparty to acquire bitcoin on behalf of the Trust in exchange for cash provided by the Sponsor in

its capacity as Seed Capital Investor.

These Initial Seed Creation Baskets were redeemed for cash on or about

January 19, 2024.

On June 2, 2025, the Trust announced that the Sponsor had approved

a three (3)-for-one (1) share split (the “Share Split) of all of the Trust’s outstanding Shares.

In connection with the Share

Split, every one Share that was held by the Trust’s Record Holders at the close of business on June 12, 2025, automatically split

into three Shares after market close on June 13, 2025.

The Share Split became effective at market open on June 16, 2025.

Following the

Share Split, the Shares continued to trade under the ticker symbol “ARKB” under the same CUSIP, and the total NAV of the Trust

did not change as a result of the Share Split.

In addition, each Record Holder continued to hold the same percentage of the Trust’s

outstanding Shares as held immediately prior to the Share Split, and the Share Split did not modify the rights or preferences of the Shares.

The investment objective, strategy, and underlying holdings of the Trust remained unchanged.

The Trust’s investment

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

objective is to seek to track the performance of bitcoin, as measured by the performance of the Index, adjusted for the Trust’s

expenses and other liabilities.

CF Benchmarks Ltd.

is the administrator for the Index (the

“Index Provider”).

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

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 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 aggregate Sponsor

Fee paid to the Sponsor for the fiscal year ended December 31, 2024 was $[*].

The Trust is an “emerging

growth company” as that term is used in the Securities Act, and, as such, the Trust may elect to comply with certain reduced public

company reporting requirements.

is the Index Provider.

The Index is designed to reflect the performance of bitcoin

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 Baskets of 5,000 or multiples

Creation Baskets are issued and redeemed in exchange for cash or bitcoin.

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 February 2024, at which time the waiver period ended.

The Trust incurred Sponsor Fees for the fiscal years ended December

31, 2025 and 2024 of $9,767,516 and $5,832,114 (net of sponsor fee waived), respectively.

The NAV of the Trust is used

14 unchanged sentences

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

30 unchanged sentences

For the Year Ended December

The Trust’s net

asset value increased to $4,352,288 on December 31, 2024, primarily from an increase in price of bitcoin and a net increase in the number

of shares outstanding of 46,690,000 from January 1, 2024 to December 31, 2024.

The Trust’s net asset

value decreased from $4,352,288 on December 31, 2024 to $3,305,323 on December 31, 2025, primarily from a decrease in price of bitcoin

and a net decrease of 26,315,000 in the number of shares outstanding from January 1, 2025 to December 31, 2025.

realized gain and change in unrealized loss on investment in bitcoin for the year ended December 31, 2025 was $(212,537), which includes

a net change in unrealized depreciation on investment in bitcoin of $(1,449,030) and a realized gain of $1,236,493.

Net unrealized loss

on investment in bitcoin for the year was driven by bitcoin price depreciation from $93,390.22 per bitcoin on December 31, 2024 to $87,515.28

per bitcoin on December 31, 2025.

Net decrease in net assets resulting from operations was $(222,304) for the year ended December 31,

2025, mainly attributed to a net decrease in the number of shares outstanding accompanied by the aforementioned net realized gain and

change in unrealized depreciation on investment in bitcoin.

For the Year Ended December

The Trust’s net asset value increased to $4,352,288 on December

31, 2024, primarily from an increase in price of bitcoin and a net increase in the number of shares outstanding of 140,070,000 from January

1, 2024 to December 31, 2024.

On June 13, 2025, the Share Split occurred.

Historical shares outstanding and NAV per share have been adjusted

to reflect the Share Split on a retroactive basis.

Net realized and change in

5 unchanged sentences

number of shares outstanding accompanied by the aforementioned net realized and change in unrealized gain on investment in bitcoin.

* No prior year comparative

period has been provided as this is the first year of the Trust’s operations.

the Year Ended December 31, 2023

a comparison of the Trust’s results of operations for the fiscal years ended December 31, 2024 and December 31, 2023, see “Part

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Trust’s annual

report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 26, 2025.

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 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 fiscal year ended December 31, 2024 was $[*].

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.

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 NAV of the Trust.

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

The Trust assets exceeded $1 billion in February 2024, at which time the waiver period ended.

The aggregate Sponsor Fee paid

to the Sponsor for the year ended December 31, 2025 was $9,696,152.

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

12 unchanged sentences

off-balance sheet arrangements.

Quantitative and Qualitative Disclosures

about Market Risks

We are a smaller reporting

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-K

Item 7. Management’s Discussion and Analysis