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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-07 · 67 added, 208 removed, 59 unchanged (82% of the section changed)

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The Trust holds a Portfolio of Crypto Assets, referred to as the Portfolio Crypto Assets.

In furtherance of this objective, the activities of the Trust include (i) issuing Shares in exchange for subscriptions, (ii) selling or buying Portfolio Crypto Assets in connection with monthly rebalancing, (iii) selling Portfolio Crypto Assets as necessary to cover the Management Fee (as defined below) and/or any Organizational Expenses (as defined below), (iv) causing the Sponsor to sell Portfolio Crypto Assets upon any potential future termination of the Trust, and (v) engaging in all administrative and security procedures necessary to accomplish such activities in accordance with the provisions of the Trust Agreement of Bitwise 10 Crypto Index ETF (the “ Trust Agreement ”), and the Custodian Agreement with the Custodian (the “ Custodian Agreement ”).

The Trust’s principal investment objective is to invest in a Portfolio of Crypto Assets that tracks the Index as closely as possible with certain exceptions determined by the Sponsor in its sole discretion, as described more fully in the section “Item 1.

Business—Business of the Trust.” In addition, in the event the Portfolio Crypto Assets being held by the Trust present opportunities to generate returns in excess of the Index (for example, Airdrops, Emissions, forks, or similar network events) the Sponsor may also pursue these incidental opportunities on behalf of the Trust as part of the investment objective if in its sole discretion the Sponsor deems such activities to be possible and prudent.

In furtherance of this objective, the activities of the Trust include (i) issuing Shares in exchange for subscriptions, (ii) selling or buying Portfolio Crypto Assets in connection with monthly rebalancing, (iii) selling Portfolio Crypto Assets as necessary to cover the Management Fee (as defined below) and/or any organizational expenses, (iv) causing the Sponsor to sell Portfolio Crypto Assets upon any potential future termination of the Trust, and (v) engaging in all administrative and security procedures necessary to accomplish such activities in accordance with the provisions of the Trust Agreement of Bitwise 10 Crypto Index ETF (the “ Trust Agreement ”), and the Custodian Agreements with the Custodians (the “Coinbase Custodian Agreement” and the “Anchorage Custodian Agreement”, each a “Custodian Agreement”).

In addition, in the event the Portfolio Crypto Assets being held by the Trust present opportunities to generate returns in excess of the Index (for example, Airdrops, Emissions, forks, or similar network events), the Sponsor may also pursue these incidental opportunities on behalf of the Trust as part of the investment objective if in its sole discretion the Sponsor deems such activities to be possible and prudent.

The Trust believes that it has met its principal investment objective.

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Results of Operations

For the three months ended March 31, 2026 Compared to the three months ended March 31, 2025^

For the three months ended March 31,

2026 (unaudited)

2025 (unaudited)

For the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025^

(Amounts in thousands)

For the three months ended June 30,

For the six months ended June 30,

Net investment loss

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GAAP based on the principal market price for Crypto Assets that the Trust considered its principal market, as of 4:00 p.m., New York time, on the valuation date.

March 31, 2026

During the three months ended March 31, 2026, the Trust's net assets decreased from $1,029,869 on December 31, 2025 to $678,236 on March 31, 2026.

The decrease in the Trust's net assets resulted primarily from dispositions of approximately (1,161) BTC, (7,081)

ETH, (3,455,017) XRP, (32,185) SOL, (2,091,171) ADA, (40,396) LINK, (4,372) LTC, (24,505) AVAX, (213,162) SUI and (94,028) DOT with a value of ($113,605) in connection with sales to pay the Management Fee, for redemption of Shares, and for rebalancing of Crypto Assets to the Index.

Dispositions were partially offset by additions to the Trust of approximately 185,339 XRP and 2,681 SOL, with a value of $505 in connection with Share creations during the period.

Net realized and change in unrealized loss on investment in Crypto Assets for the three months ended March 31, 2026 was $(238,601), which included a realized gain of $69,785 from the sale of Crypto Assets to pay the Management Fee, for redemption of Shares, and for rebalancing to the Index, and a change in unrealized depreciation on investment in Crypto Assets of $(308,386).

Three months ended June 30, 2026

During the three months ended June 30, 2026, the Trust's net assets decreased from $678,236 on March 31, 2026 to $532,787 on June 30, 2026.

The decrease in the Trust's net assets resulted primarily from dispositions of approximately (660) BTC, (4,083) ETH, (1,780,558) XRP, (16,602) SOL, (10,565) HYPE, (729,556) XLM, (1,069,232) ADA, (20,654) LINK, (2,235) LTC, (108,989) SUI, (165,634) AVAX, and (635,550) DOT with a value of ($59,655) in connection with sales to pay the Management Fee, for redemption of Shares, and for rebalancing of Crypto Assets to the Index.

Dispositions were partially offset by additions to the Trust of approximately 44 BTC, 270 ETH, 139,291 XRP, 1,299 SOL, 89,491 HYPE, 12,588,308 XLM, 83,667 ADA, 1,616 LINK, 175 LTC, and 8,526 SUI, with a value of $12,161 in connection with Share creations and for rebalancing of Crypto Assets to the Index during the period.

Net realized and change in unrealized loss on investment in Crypto Assets for the three months ended June 30, 2026 was $(97,977), which included a realized gain of $24,322 from the sale of Crypto Assets to pay the Management Fee, for redemption of Shares, and for rebalancing to the Index, and a change in unrealized depreciation on investment in Crypto Assets of $(122,299).

Net realized and change in unrealized loss on investment in Crypto Assets resulted primarily from price depreciation of the Trust's holdings during the period.

Net decrease in net assets resulting from operations for the three months ended March 31, 2026 was $(240,148), which consisted of the net realized and unrealized loss on investment in Crypto Assets, less the Management Fee of $(1,547).

March 31, 2025

By comparison, during the three months ended March 31, 2025, the Trust's net assets decreased from $1,365,740 on December 31, 2024 to $1,110,098 on March 31, 2025.

The decrease in the Trust's net assets resulted primarily from dispositions of approximately (144) BTC, (638) ETH, (173,121) XRP, (1,302) SOL, (15,915) ADA, (810) LINK, (1,571) AVAX, (71,048) SUI, (5,143) DOT, (10,612) BCH, (320,997) UNI and (680,675) NEAR with a value of ($28,376) in connection with sales to pay the Management Fee, for redemption of Shares, and for rebalancing of Crypto Assets to the Index.

Dispositions were partially offset by additions to the Trust of approximately 502 ETH, 512,558 XRP, 3,603 SOL, 276,520 ADA, 1,717,309 SUI, 40,873 LTC and 320,997 UNI, with a value of $20,059 in connection with Share creations during the period.

During the three months ended March 31, 2025, net realized and change in unrealized loss on investment in Crypto Assets was $(247,783), which included a realized gain of $8,866 from the sale of Crypto Assets to pay the Management Fee, for redemption of Shares, and for rebalancing to the Index, and a change in unrealized depreciation on investment in Crypto Assets of $(256,649).

Net decrease in net assets resulting from operations for the three months ended June 30, 2026 was $(99,255), which consisted of the net realized and unrealized loss on investment in Crypto Assets, less the Management Fee of $(1,278).

Three months ended June 30, 2025

By comparison, during the three months ended June 30, 2025, the Trust's net assets increased from $1,110,098 on March 31, 2025 to $1,425,390 on June 30, 2025.

The increase in the Trust's net assets resulted primarily from additions of approximately 2 BTC, 68 ETH, 62,216 ADA, 15,903 SOL, 12,730 XRP, 1,098 AVAX and 139,052 SUI with a value of $3,004 in connection with Share creations and for rebalancing of Crypto Assets to the Index.

Additions were partially offset by dispositions from the Trust of approximately (1,917) ETH, (4,575) LINK, (55) BTC, (534,293) ADA, (14,967) DOT, (445,732) XRP, (908) LTC and (71,048) SUI, with a value of $(10,835) in connection with sales to pay the Management Fee, for redemption of Shares, and for rebalancing of Crypto Assets to the Index during the period.

During the three months ended June 30, 2025, net realized and change in unrealized gain on investment in Crypto Assets was $323,782, which included a realized gain of $4,099 from the sale of Crypto Assets to pay the Management Fee, for redemption of Shares, and for rebalancing to the Index, and a change in unrealized appreciation on investment in Crypto Assets of $319,683.

Net realized and change in unrealized gain on investment in Crypto Assets resulted primarily from price appreciation of the Trust's holdings during the period.

Net increase in net assets resulting from operations for the three months ended June 30, 2025 was $315,293, which consisted of the net realized and unrealized gain on investment in Crypto Assets, less the Management Fee of $(8,490).

Six months ended June 30, 2026

During the six months ended June 30, 2026, the Trust's net assets decreased from $1,029,869 on December 31, 2025 to $532,787 on June 30, 2026.

The decrease in the Trust's net assets resulted primarily from dispositions of approximately (1,821) BTC, (11,164) ETH, (5,235,575) XRP, (48,788) SOL, (10,565) HYPE, (729,556) XLM, (3,160,403) ADA, (61,050) LINK, (6,607) LTC, (322,151) SUI, (190,139) AVAX and (729,578) DOT with a value of ($173,260) in connection with sales to pay the Management Fee, for redemption of Shares, and for rebalancing of Crypto Assets to the Index.

Dispositions were partially offset by additions to the Trust of approximately 45 BTC, 270 ETH, 324,630 XRP, 3,980 SOL, 89,491 HYPE, 12,588,308 XLM, 83,667 ADA, 1,616 LINK, 175 LTC, and 8,526 SUI with a value of $12,666 in connection with Share creations and for rebalancing of Crypto Assets to the Index during the period.

Net realized and change in unrealized loss on investment in Crypto Assets for the six months ended June 30, 2026 was $(336,578), which included a realized gain of $94,107 from the sale of Crypto Assets to pay the Management Fee, for redemption of Shares, and for rebalancing to the Index, and a change in unrealized depreciation on investment in Crypto Assets of $(430,685).

Net realized and change in unrealized loss on investment in Crypto Assets resulted primarily from price depreciation of the Trust's holdings during the period.

Net decrease in net assets resulting from operations for the three months ended March 31, 2025 was $(255,642), which consisted of the net realized and unrealized loss on investment in Crypto Assets, less the Management Fee of $(7,859).

Net decrease in net assets resulting from operations for the six months ended June 30, 2026 was $(339,403), which consisted of the net realized and unrealized loss on investment in Crypto Assets, less the Management Fee of $(2,825).

Six months ended June 30, 2025

By comparison, during the six months ended June 30, 2025, the Trust's net assets increased from $1,365,740 on December 31, 2024 to $1,425,390 on June 30, 2025.

The increase in the Trust's net assets resulted primarily from additions of approximately 2 BTC, 570 ETH, 40,873 LTC, 338,736 ADA, 19,506 SOL, 320,997 UNI, 1,098 AVAX, 525,288 XRP and 1,856,361 SUI with a value of $23,063 in connection with Share creations and for rebalancing of Crypto Assets to the Index.

Additions were partially offset by dispositions from the Trust of approximately (10,612) BCH, (2,555) ETH, (5,385) LINK, (199) BTC, (908) LTC, (550,208) ADA, (1,302) SOL, (320,997) UNI, (1,571) AVAX, (20,110) DOT, (618,853) XRP, (680,675) NEAR and (71,048) SUI, with a value of $(39,211) in connection with sales to pay the Management Fee, for redemption of Shares, and for rebalancing of Crypto Assets to the Index during the period.

During the six months ended June 30, 2025, net realized and change in unrealized gain on investment in Crypto Assets was $75,999,

which included a realized gain of $12,965 from the sale of Crypto Assets to pay the Management Fee, for redemption of Shares, and for rebalancing to the Index, and a change in unrealized appreciation on investment in Crypto Assets of $63,034.

Net realized and change in unrealized gain on investment in Crypto Assets resulted primarily from price appreciation of the Trust's holdings during the period.

Net increase in net assets resulting from operations for the six months ended June 30, 2025 was $59,650, which consisted of the net realized and unrealized gain on investment in Crypto Assets, less the Management Fee of $(16,349).

Amounts displayed are in the ‘000s, except for per-Share/coin references.

Management Fee

In consideration for the management services to be provided to the Trust, the Sponsor will receive from the Trust a management fee (the “Management Fee”) equal to 0.75% per annum of the NAV of the Trust Estate.

The “Trust Estate” means (i) all the Portfolio Crypto Assets and securities owned by or on behalf of the Trust, (ii) all other property and investments of any and all kinds held by the Trust, (iii) all proceeds from the sale of Portfolio Crypto Assets, securities, and any other property or investments held by the Trust pending use of such cash for payment of Trust Expenses or distribution to the Shareholders, and (iv) any rights of the Trust pursuant to any agreements, other than the Trust Agreement, to which the Trust is a party.

Except during periods during which all or a portion of the Management Fee is being waived, the Management Fee will accrue daily and will be payable in cash or in Crypto Assets monthly.

The Administrator calculates the Management Fee on a daily basis by applying a 0.75% annualized rate to the Trust Estate pursuant to the Trust’s valuation procedures.

The amount of cash or Crypto Assets payable in respect of each daily accrual shall be determined by reference to the Trust’s valuation procedures.

The NAV of the Trust is reduced each day by the amount of the Management Fee calculated each day.

On or about the last day of each month, either 1) an amount of Crypto Assets is transferred from the Custodial Account to the Sponsor’s account equal to the sum of all daily Management Fees accrued for the month in U.S.

dollars divided by the 4:00 p.m.

ET valuation of the Trust Estate on the last day of the month or 2) the sum of the daily Management Fee accrual for the month will be paid to the Sponsor in cash.

The Sponsor is responsible for paying any fees or costs associated with the transfer of Crypto Assets or cash to the Sponsor.

The Sponsor, from time to time, may temporarily waive all or a portion of the Management Fee in its sole discretion.

To the extent not already disclosed in the prospectus, the Sponsor may notify Shareholders of its intent to commence, or cease, waiving the Management Fee on the Trust’s website, in a prospectus supplement, through a current report on Form 8-K and/or in the Trust’s annual or quarterly reports.

The Sponsor is responsible for paying for all ordinary administrative and overhead expenses of managing the Trust, including payment of rent, custody charges or flat rate fees for holding the Trust’s assets charged by the Custodian and customary fees and expenses of the Trustee, Administrator, and Auditor (including costs incurred for appraisal or valuation expenses associated with the preparation of the Trust’s financial statements, tax returns, and other similar reports and excluding indemnification and extraordinary costs).

The Sponsor also pays for all expenses associated with the operation of the Trust, including for example, fees associated with listing of the Shares on NYSE Arca, registration with the SEC, and fees associated with retaining and maintaining the Transfer Agent.

“Trading commissions” or trading fees paid to trading venues (also known as exchanges) or intermediaries (such as trading technology or Crypto Asset brokerage

firms) that assist in trade execution for accessing Crypto Asset liquidity are charged to the Trust (and are not assumed by the Sponsor) and may either be included in the cost of the Crypto Assets acquired by or disposed of by the Trust or may appear as explicit costs in addition to the price of the Crypto Asset.

Trading fees and commissions are charged to the Trust and may appear in the financial statements as “Transaction and other fees” in the Financial Statements’ Statement of Operations in the Expenses category or may be included in the cost of the Crypto Assets acquired by the Trust.

There is no ceiling to the Trust’s expenses that the Sponsor will pay.

However, the Sponsor retains the right to cause the Trust to pay indemnification and Extraordinary Expenses, and these Trust expenses are not covered by the Management Fee.

The Trust may incur certain Extraordinary Expenses including, but not limited to, any non-customary costs and expenses including indemnification and extraordinary costs of the Administrator and Auditor, costs of any litigation or investigation involving Trust activities, any financial distress, restructuring, and indemnification expenses.

The Sponsor, from time to time, may temporarily waive all or a portion of the Management Fee in its sole discretion.

To the extent not already disclosed in the prospectus, the Sponsor may notify Shareholders of its intent to commence, or cease, waiving the Management Fee on the Trust’s website, in a prospectus supplement, through a current report on Form 8-K, and/or in the Trust’s annual or quarterly reports.

In addition, the Sponsor may, in its sole discretion, agree to rebate all or a portion of the Management Fee attributable to Shares held by certain institutional investors or entities.

Any such rebate will be subject to negotiation and written agreement between the Sponsor and the investor/entity on a case-by-case basis.

The Sponsor is under no obligation to provide any rebates of the Management Fee.

Neither the Trust nor the Trustee will be a party to any Management Fee rebate arrangements negotiated by the Sponsor.

The Administrator and/or the Sponsor will direct the Custodian to transfer Portfolio Crypto Assets from the Custodial Account to pay the Management Fee and any other Trust expenses not assumed by the Sponsor.

The costs of such transfers will be the responsibility of the Custodian.

To pay the Management Fee and expenses not assumed by the Sponsor that are denominated in U.S.

dollars, the Sponsor, on behalf of the Trust, may sell the Trust’s Portfolio Crypto Assets as necessary to pay such expenses.

Such sales will be undertaken pursuant to the Trust-Directed Trade Model unless no Trading Counterparty is willing or able to effectuate the trade.

Transfer fees with respect to this on-chain transfer of Portfolio Crypto Assets will be paid by the Custodian.

The cash proceeds of the sale will be sent to the Sponsor, which will use such proceeds to pay the expenses.

Any remaining cash will be distributed back to the Cash Custodian.

To the extent that the Trust must utilize the Agent Execution Model to undertake Portfolio Crypto Assets sales to pay for expenses not assumed by the Sponsor, the Prime Execution Agent, acting in an agency capacity, would conduct the sale on behalf of the Trust with third parties through its Coinbase Prime service pursuant to the Prime Execution Agreement.

Transfers of Portfolio Crypto Assets from the Custodial Account to the Trust’s Trading Balance in connection with such sales are “on-chain” transactions represented on the respective Crypto Asset’s blockchain.

Each delivery or sale of Portfolio Crypto Assets by the Trust to pay the Management Fee or other Trust expenses will be a taxable event to Shareholders.

See “United States Federal Income Tax Consequences.”

Capital Resources and Liquidity

Liquidity and Capital Resources

The Trust generally holds only a very small cash balance, and is otherwise fully invested in order to maintain its investment objective of tracking the Index.

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Cash may also be held in the Trust after a subscription from a Shareholder is funded (or sent to the Trust’s bank account) but not yet invested in Portfolio Crypto Assets, or after a redemption from a redeeming Shareholder has been processed (e.g., by raising cash through the sale of Portfolio Crypto Assets) but not yet paid to the redeeming Shareholder.

As described under the heading “ Management Fee ” above, in exchange for the Management Fee, the Sponsor is responsible for payment of almost all of the expenses incurred by the Trust.

The Trust pays a Management Fee of 0.75% per annum of the net asset value of the Trust Estate, which includes all Crypto Assets owned by the Trust, including its investment portfolio, cash, and any contractual rights at the end of each month.

In exchange for the Management Fee, the Sponsor is responsible for payment of almost all of the expenses incurred by the Trust.

As a result, the only material ordinary expense of the Trust during the periods covered by this Registration Statement was the Management Fee.

In exchange for the Management Fee, the Sponsor has agreed to assume and pay the normal operating expenses of the Trust, which include the Trustee’s monthly fee and out-of-pocket expenses, the fees of the Trust’s regular service providers (Cash Custodian, Crypto Asset Custodians, Prime Execution Agent, Marketing Agent, Transfer Agent and Administrator), exchange listing fees, tax reporting fees, SEC registration fees, printing and mailing costs, audit fees and up to $500,000 per annum in ordinary legal fees and expenses.

The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of $500,000 per annum.

The Sponsor also agreed to pay the costs of the Trust’s organization.

The Trust may incur certain extraordinary, non-recurring expenses that are not assumed by the Sponsor, including, but not limited to, taxes and governmental charges, any applicable brokerage commissions, financing fees, Crypto Asset network fees and similar transaction fees, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the Shareholders (including, for example, in connection with any fork of a Crypto Asset blockchain, any Incidental Rights and any IR Asset), any indemnification of the Cash Custodian, Crypto Asset Custodians, Prime Execution Agent, Transfer Agent, Administrator or other agents, service providers or counterparties of the Trust, and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.

The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

While broader economic and market conditions, including evolving trade policies and tariffs, could impact the price of Portfolio Crypto Assets and contribute to increased market volatility, the Trust does not currently anticipate these factors will materially affect its liquidity needs.

See Part I, Item 2 under the heading “ Management’s Discussion and Analysis of Financial Condition and Results of Operations-Management Fee ” for additional discussion of the Trust’s fees and expenses.

Value of Portfolio Crypto Assets

As described in the Risk Factors set out in our Form 10-K filed with the SEC on March 2, 2026, the prices of the various Portfolio Crypto Assets held by the Trust are subject to extreme volatility.

This volatility had a significant impact on the value of the Portfolio

Crypto Assets for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 and the year ended December 31, 2025.

Significant Accounting Policies

Basis of Presentation

The financial statements are expressed in U.S.

dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The Trust is an investment company and follows the specialized accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) Topic 946, Financial Services—Investment Companies.

Transactions of Crypto Assets have been accounted for by analogizing to existing accounting standards that management believes are appropriate to the circumstances.

Pursuant to the Statement of Cash Flows Topic of the Codification, the Trust qualifies for an exemption from the requirement to provide a statement of cash flows and has elected not to provide a statement of cash flows.

Use of Estimates

The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these financial statements.

Actual results could differ from those estimates.

Off-Balance Sheet Arrangements and Contractual Obligations

As of June 30, 2026, the Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off-balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services which are in the best interests of the Trust.

While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Trust’s financial position.

Management Fee payments made to the Sponsor are calculated as a fixed percentage of the Trust’s NAV.

As such, the Sponsor cannot anticipate the payment amounts that will be required under these arrangements for future periods as NAVs are not known until a future date.

No material changes have occurred during the six months ended June 30, 2026.

Critical Accounting Policies

The financial statements and accompanying notes are prepared in accordance with U.S.

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, investment valuation and investment company considerations.

There were no material estimates used in the preparation of the financial statements 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.

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 represents cash deposits held at financial institutions and Crypto Asset exchanges.

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The Trust has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risk on such bank deposits.

Investments and Valuation

The Trust’s investments in Crypto Assets are stated at fair value.

For a further discussion of the Trust’s calculations of valuation, please see “Calculation of NAV and NAV per Share” in the footnote below.

Crypto Assets are generally valued using prices as reported on reputable and liquid exchanges and may utilize an average of bid and ask quotes using closing prices provided by such exchanges as of the date and time of determination ("Investment Valuation - Principal Market Net Asset Value (NAV)" below).

Factors such as the recent stability of the exchange, current liquidity of the exchange, and recent price activity of an exchange will be considered in the determination of which exchanges to utilize.

The time used is 4:00 pm ET which corresponds to 20:00 UTC during Daylight Savings Time and 21:00 UTC during non-Daylight Savings Time.

The Sponsor’s Valuation Policy provides a listing of preferred exchanges.

While some Crypto Assets are valued based on prices reported in the public markets, other Crypto Assets may be more thinly-traded or subject to irregular trading activity.

Determinations on the value of certain Crypto Assets, and how to value such assets as to which limited prices or quotations are available, are based on the Sponsor’s recommendations or instructions.

Investment Valuation

Crypto Asset transactions are recorded on the trade date.

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Crypto Assets received from Airdrops have no cost basis and the Trust recognizes other income equal to the fair value of the new Crypto Asset received.

There were no Airdrops recognized or unrecognized during the three month period ended March 31, 2026 and the year ended December 31, 2025.

There were no Airdrops recognized or unrecognized during the six-month period ended June 30, 2026 and the year ended December 31, 2025.

Investment Valuation - Principal Market Net Asset Value (“NAV”)

To determine which market is the Trust's principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust's net asset value in accordance with U.S.

GAAP ("Principal Market NAV" and "Principal Market NAV

per Share"), the Trust follows ASC Topic 820-10, Fair Value Measurement, which outlines the application of fair value accounting.

GAAP ("Principal Market NAV" and "Principal Market NAV per Share"), the Trust follows ASC Topic 820-10, Fair Value Measurement, which outlines the application of fair value accounting.

ASC 820-10 determines fair value to be the price that would be received for Crypto Assets in a current sale, which assumes an orderly transaction between market participants on the measurement date.

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sorts these Digital Asset Markets from high to low by market-based volume and level of activity of Crypto Assets traded on each Digital Asset Market.

For the three months ended March 31, 2026, this sort was performed for Digital Asset Markets for the period mid-February through mid-March 2026.

For the six months ended June 30, 2026, this sort was performed for Digital Asset Markets for the period mid-May through mid-June 2026.

Third, Lukka, Inc.

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then selects a Digital Asset Market as its principal market based on the highest market-based volume level of activity and price stability in comparison to the other Digital Asset Markets on the list.

As of December 31, 2025, Lukka, Inc.

As of June 30, 2026, Lukka, Inc.

included Binance, Bitfinex, Bitflyer, Bitstamp, Bullish, Bybit, Coinbase, Crypto.com, Gate.io, Gemini, HitBTC, Huobi, itBit, Kraken, KuCoin, LMAX, MEXC Global, OKX and Poloniex as its primary Exchange Markets in consideration.

The Trust determines its principal market (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Digital Asset Market’s trading volume and level of activity in the trailing twelve months, (ii) if any Digital Asset Markets have developed that the Trust has access to, or (iii) if recent changes to each Digital Asset Market's price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust's determination of its principal market.

The following provides an overview of the Principal Market and the Principal Market Prices for Portfolio Crypto Assets that comprised the majority of the Trust’s assets for the three-month period ended March 31, 2026.

Principal Market Price

Bitcoin (BTC)

Ethereum (ETH)

Cardano (ADA)

Avalanche (AVAX)

Chainlink (LINK)

Polkadot (DOT)

Litecoin (LTC)

Various inputs are used to determine the fair value of assets and liabilities.

Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”).

These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes.

The level of a value determined for an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety.

The three levels of the fair value hierarchy are as follows:

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

These inputs may include (a) quoted prices for similar assets in active markets, (b) quoted prices for identical or similar assets in markets that are not active, (c) inputs other than quoted prices that are observable for the asset, or (d) inputs derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The cost basis of the investments in Crypto Assets recorded by the Trust for financial reporting purposes are the fair values of the Crypto Assets at the time of transfer.

The cost basis recorded by the Trust may differ from proceeds collected by the Authorized Participant from the sale of the corresponding Shares to investors.

The following summarizes the Trust’s assets accounted for at fair value at March 31, 2026:

Investments in crypto assets, at fair value

The following summarizes the Trust’s assets accounted for at fair value at December 31, 2025:

Investments in crypto assets , at fair value

During the periods ended March 31, 2026 and December 31, 2025, there were no significant transfers into or out of any levels of the fair value hierarchy.

The Trust generally records receipt of a new Crypto Asset created due to a Hard Fork at the time the Hard Fork is effective.

The Trust’s methodology for determining effectiveness of the fork is when two or more recognized exchanges quote prices for the forked Crypto Asset.

Some exchanges and custodians do not honor Hard Forks or may honor Hard Forks in the future.

In such cases, the Trust will record receipt of the new Crypto Asset at the time two or more recognized exchanges begin quoting prices for the asset.

Although the Trust records the asset into its books and records at the time the fork is effective, as described above, the Trust’s custodian may take an extended period of time to make the forked asset available for transfer, and it may never make the forked asset available for transfer, which could lead to either the Trust holding the asset longer than it would otherwise hold the asset (if it was freely transferable), or a complete write-down in the value of the forked asset.

The Trust does not allocate any of the original Crypto Asset’s cost to the new Crypto Asset and recognizes unrealized gains equal to the fair value of the new Crypto Asset received.

There were no Hard Forks during the period that were not initially recognized but were subsequently recognized.

Crypto Asset transactions are recorded on the trade date.

Realized gains and losses from Crypto Asset transactions are determined using the specific identification cost method.

Any change in net unrealized gain or loss is reported in the statement of operations.

Commissions and other trading fees are reflected as an adjustment to cost or proceeds at the time of the transaction.

The Trust intermittently receives Airdrops of new Crypto Assets.

The use of Airdrops is generally to promote the launch and use of new Crypto Assets by providing a small amount of such new Crypto Assets to the private wallets or exchange accounts that support the new Crypto Asset and that hold existing related Crypto Assets.

Unlike Hard Forks, airdropped Crypto Assets can have substantially different Blockchain technology that has no relation to any existing Crypto Asset, and many Airdrops may be without value.

The Trust records receipt of airdropped Crypto Assets when received if there is value to the Trust in doing so.

Crypto Assets received from Airdrops have no cost basis and the Trust recognizes unrealized gains equal to the fair value of the new Crypto Asset received.

During the period from January 1, 2023 to December 31, 2023, the Trust was eligible for a Flare (FLR) airdrop.

The Airdrop was based on the Trust’s XRP holding in its custody vault as of December 12, 2020.

The Trust elected to participate in the Airdrop on April 17, 2023.

Other income resulting from the Airdrop was booked into the ETF's assets.

At the time of the Airdrop, the result was a positive NAV increase of 0.013%, less than $0.00 NAV increase and $68,436 net asset increase to the Trust.

On April 18, 2023, the Trust sold the FLR and raised USD resulting in a minor loss to the Trust.

The USD was used to purchase other assets in the Trust’s portfolio, since FLR was not part

of the Index of the Trust.

The impact of this Airdrop can be seen within the Statement of Operations under Other income and Net realized gain (loss) from Crypto Assets.

The Trust is classified as a partnership for U.S.

federal income tax purposes.

As a result, the Trust itself is not subject to U.S.

federal income tax.

Instead, the Trust’s income and expenses “flow through” to the Shareholders, and the Administrator reports the Trust’s income, gains, losses, and deductions to the Internal Revenue Service on that basis.

The Sponsor has analyzed applicable tax laws and regulations and their application to the Trust, and does not believe that there are any uncertain tax positions that require recognition of a tax liability as of March 31, 2026.

The Trust is required to determine whether its tax positions are more likely than not to be sustained on examination by the applicable taxing authority, based on the technical merits of the position.

Tax positions not deemed to meet a more likely than not threshold would be recorded as a tax expense in the current year.

As of March 31, 2026 and December 31, 2025, the Trust has determined that no provision for income taxes is required and no liability for unrecognized tax benefits has been recorded.

The Trust does not expect that its assessment related to unrecognized tax benefits will materially change over the next 12 months.

However, the Trust’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, the nexus of income among various tax jurisdictions;

compliance with U.S.

federal, U.S.

state, and tax laws of jurisdictions in which the Trust operates and changes in the administrative practices and precedents of the relevant authorities.

The Trust is required to analyze all open tax years.

Open tax years are those years that are open for examination by the relevant income taxing authority.

As of March 31, 2026, all tax years since inception remain open for examination.

There were no examinations in progress at period end.

Risks and Uncertainties

Crypto Assets are loosely regulated and there is no central marketplace for currency exchange.

Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile.

Crypto Asset exchanges have been closed due to fraud, failure, or security breaches.

Any of the Trust’s assets that reside on an exchange that closes may be lost.

At March 31, 2026 and December 31, 2025, Crypto Assets with a value of approximately $0 and $0, respectively, resided on exchanges.

At March 31, 2026, the Trust had a $900,188 receivable from Crypto Assets sold and a payable of $389,279 from Crypto Assets purchased.

At December 31, 2025 the Trust had approximately $6,041 in cash in the Trust bank accounts.

At December 31, 2025, the Trust had an $18,910,054 receivable from Crypto Assets sold and a payable of $639,400 from Crypto Assets purchased.

At December 31, 2025 the Trust had approximately $14,700 in cash in the Trust bank accounts.

Several factors may affect the price of Crypto Assets, including, but not limited to:

supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates, or future regulatory measures (if any) that restrict the trading of Crypto Assets or the use of Crypto Assets as a form of payment.

There is no assurance that Crypto Assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of Crypto Asset payments by mainstream retail merchants and commercial businesses will continue to grow.

As Crypto Assets have grown in popularity and market size, various countries and jurisdictions have begun to develop regulations governing the Crypto Assets industry.

To the extent that future regulatory actions or policies limit the ability to exchange Crypto Assets or utilize them for payments, the demand for Crypto Assets will be reduced.

Furthermore, regulatory actions may limit the ability of end-users to convert Crypto Assets into fiat currency (e.g., U.S.

dollars) or use Crypto Assets to pay for goods and services.

Such regulatory actions or policies could result in a reduction of demand, and in turn, a decline in the underlying Crypto Asset unit prices.

The effect of any future regulatory change on the Trust or Crypto Assets in general is impossible to predict, but such change could be substantial and adverse to the Trust and the value of the Trust’s investments in Crypto Assets.

Coinbase Custody Trust Company, LLC serves as the Trust’s custodian for Crypto Assets for which qualified custody is available.

The Custodian is subject to change in the sole discretion of the Sponsor.

Crypto Assets represent a speculative investment and involve a high degree of risk.

Prices of Crypto Assets have fluctuated widely for a variety of reasons including uncertainties in government regulation and may continue to experience significant price fluctuations.

If Crypto Asset markets continue to be subject to sharp fluctuations, Shareholders may experience losses as the value of the Trust’s investments decline.

Even if Shareholders are able to hold their Shares in the Trust for the long-term, their Shares may never generate a profit, since Crypto Asset markets have historically experienced extended periods of flat or declining prices in addition to sharp fluctuations.

Some of the markets in which the Trust may execute its transactions are “over-the-counter” or “interdealer” markets.

The participants in such markets are typically not subject to credit evaluation and regulatory oversight as are members of “exchange-based” markets.

This exposes the Trust to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the Trust to suffer a loss.

Such “counterparty risk” is accentuated for Crypto Assets where the Trust has concentrated its transactions with a single or small group of counterparties.

The Trust is not restricted from dealing with any particular counterparty or from concentrating any or all of its transactions with one counterparty.

Moreover, the Trust has no internal credit function that evaluates the creditworthiness of its counterparties.

The ability of the Trust to transact business with any one or number of counterparties, the lack of any meaningful and independent evaluation of such counterparty's financial capabilities and the absence of a regulated market to facilitate settlement may increase the potential for losses by the Trust.

The Trust is not a banking institution or otherwise a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”).

Accordingly, deposits or assets held by the Trust are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions.

The Trust’s Crypto Asset custodians do however carry bespoke insurance policies related to the Crypto Assets over which they provide custody.

The Trust must adapt to technological change in order to secure and safeguard client accounts.

While management believes they have developed an appropriate proprietary security system reasonably designed to safeguard the Trust's Crypto Assets from theft, loss, destruction or other issues relating to hackers and technological attack, such assessment is based upon known technology and threats.

To the extent that the Trust is unable to identify and mitigate or stop new security threats, the Trust's Crypto Assets may be subject to theft, loss, destruction or other attack, which could have a negative impact on the performance of the Trust or result in loss of the Trust's Crypto Assets.

Since Crypto Assets are virtual and transactions in such Crypto Assets reside on distributed networks, governance of the underlying distributed network could be adversely altered should any individual or group obtain 51% control of the distributed network.

Such control could have a significant adverse effect on either the ownership or value of the Crypto Asset.

As of the date of these financial statements, the transfer of digital currency assets from one party to another typically relies on an authentication process by an outside party known as a Miner.

In exchange for compensation, the Miner will authenticate the transfer of the currency through the solving of a complex algorithm known as a proof of work, or will vouch for the transfer through other means, such as a proof of stake.

Effective transfers of and therefore realization of Crypto Assets are dependent on interactions from these Miners or forgers.

In the event that there was a shortage of Miners to perform this function, that shortage could have an adverse effect on either the fair value or realization of the Crypto Assets.

Off-Balance Sheet Arrangements and Contractual Obligations

As of March 31, 2026, the Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off-balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services which are in the best interests of the Trust.

Management Fee payments made to the Sponsor are calculated as a fixed percentage of the Trust’s NAV.

As such, the Sponsor cannot anticipate the payment amounts that will be required under these arrangements for future periods as NAVs are not known until a future date.

No material changes have occurred during the three months ended March 31, 2026.

Investment Company Considerations

The Trust is an investment company for U.S.

GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic 946, Financial Services – Investment Companies.

The Trust uses fair value as its method of accounting for Crypto Assets in accordance with its classification as an investment company for accounting purposes.

The Trust is not a registered investment company under the Investment Company Act of 1940.

GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes.

Actual results could differ from those estimates and these differences could be material.

Please refer to Note 2 to the financial statements included in this Quarterly Report for further discussion of the Trust’s Significant Accounting Policies.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis