What changed in this filing

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Item 1. Business

2026-02-25 compared with 2025-03-14 · 91 added, 46 removed, 468 unchanged (23% of the section changed)

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The Shares of the Trust are listed on the Cboe BZX Exchange, Inc.

(“Cboe BZX”).

FD Funds Management LLC (the “Sponsor”) is the sponsor of the Trust, CSC Delaware Trust Company (the “Trustee”) is the trustee of the Trust, State Street Bank and Trust Company (“State Street” or the “Transfer Agent”) is the Trust’s transfer agent (in such capacity, the “Transfer Agent”) and cash custodian (in such capacity, the “Cash Custodian”), and Fidelity Digital Asset Services, LLC (“FDAS” or the “Custodian”) is the custodian for the Trust, and holds all of the Trust’s bitcoin on the Trust’s behalf.

The operations of the Trust are governed by an Amended and Restated Trust Agreement of the Trust, among the Trustee, the Sponsor, and the shareholders from time to time thereunder (the “Shareholders”), as may be amended from time to time (the “Trust Agreement”).

(“Cboe BZX” or the “Exchange”).

(formerly Fidelity Digital Asset Services, LLC) (“FDA” or the “Custodian”) is the custodian for the Trust, and holds all of the Trust’s bitcoin on the Trust’s behalf.

The operations of the Trust are governed by an Amended and Restated Trust Agreement of the Trust, among the Trustee, the Sponsor, and the shareholders from time to time there under (the “Shareholders”), as may be amended from time to time (the “Trust Agreement”).

The Trust is an exchange-traded product.

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The Index is constructed using bitcoin price feeds from eligible bitcoin spot markets and a volume-weighted median price (“VWMP”) methodology, calculated every 15 seconds based on VWMP spot market data over rolling sixty-minute increments to develop a bitcoin price composite.

The Index methodology was developed by Fidelity Product Services LLC (the “Index Provider”) and is monitored by the Fidelity Index Committee (the “Committee”) with the assistance of the Fidelity Digital Asset Indices Advisory Committee.

Coin Metrics, Inc.

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The Trust is passively managed and does not pursue active management investment strategies.

The Trust keeps custody of its bitcoin at an affiliate of the Sponsor, Fidelity Digital Asset Services, LLC (“FDAS” or the “Custodian”), a New York state limited purpose trust company that provides custody and trade execution services for digital assets.

The Trust keeps custody of its bitcoin at an affiliate of the Sponsor, Fidelity Digital Assets, N.A.

(formerly Fidelity Digital Asset Services, LLC) (“FDA” or the “Custodian”), a national trust bank that provides custody and trade execution services for digital assets.

The Trust will not invest in derivatives.

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Bitcoin is not issued by governments, banks or any other centralized authority.

The infrastructure of the Bitcoin network is collectively maintained on a distributed basis by the network’s participants, consisting of “miners”, who run special software to validate transactions, developers, who maintain and contribute updates to the Bitcoin network’s source code, and users, who download and maintain on their individual computer a full or partial copy of the Bitcoin Blockchain and related software.

Anyone can be a user, developer, or miner.

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Miners authenticate and bundle bitcoin transactions sequentially into files called “blocks”, which requires performing computational work to solve a cryptographic puzzle set by the Bitcoin network’s software protocol.

Because each solved block contains a reference to the previous block, they form a chronological “chain” back to the first bitcoin transaction.

Because each solved block contains a reference to the previous block, they form a chronological “chain” back to the first bitcoin transaction (“Bitcoin Blockchain”).

Copies of the Bitcoin Blockchain are stored in a decentralized manner on the computers of each individual Bitcoin network full node, i.e., any user who chooses to maintain on their computer a full copy of the Bitcoin Blockchain as well as related software.

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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 amount of 21 million bitcoin.

As of December 2024, just over 19.8 million bitcoin has been mined, and estimates of when the 21 million bitcoin limitation will be reached range up to the year 2140.

As of December 31, 2025, approximately 19.9 million bitcoin has been mined, and estimates of when the 21 million bitcoin limitation will be reached range up to the year 2140.

There are websites that keep track of the bitcoin supply and continuously update key information related to bitcoin mining and monitoring, such as the total number of bitcoin in circulation and total bitcoin left to mine before the next blockhalf.

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Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors.

In addition, federal and state agencies have issued rules or guidance about the treatment of digital asset transactions or requirements for businesses engaged in digital asset activity.

As noted previously, 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.

President Trump’s January 23, 2025 Executive Order, titled “Strengthening American Leadership in Digital Financial Technology, aimed to reorient the federal government’s approach to digital assets.

The Executive Order emphasized the importance of the digital asset industry in innovation and economic development, and outlined policies to support the growth and use of digital assets, blockchain technology and related technologies.

President Trump’s order also revoked former President Biden’s March 9, 2022 Executive Order, titled, “Responsible Development of Digital Assets” and the U.S.

Department of Treasury’s July 7, 2022 “Framework for International Engagement of Digital Assets” and all policies, directives and guidance issued pursuant to those items produced by the previous administration .

On January 21, 2025, the SEC’s acting Chairman Mark T.

Uyeda announced the SEC Crypto Task Force.

The task force has an objective of developing a comprehensive and clear regulatory framework for crypto assets.

The task force also seeks to establish a practical and achievable process for registration of digital assets and design clearly defined disclosure requirements and frameworks.

In addition, the previous chair of the SEC has stated that the SEC has authority under existing laws to regulate the digital asset sector, and the SEC, U.S.

state securities regulators and several foreign governments have issued warnings and instituted legal proceedings in which they argue that certain digital assets may be classified as securities and that both those digital assets and any related initial coin offerings are subject to securities regulations.

The outcomes of these proceedings, as well as ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the nature of an investment in the Shares or the ability of the Trust to continue to operate.

Additionally, U.S.

state and federal as well as foreign regulators and legislatures have taken action against virtual currency businesses or enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from virtual currency activity.

The CFTC has regulatory jurisdiction over the bitcoin futures markets.

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It also allows the Administrator to calculate the NAV in a manner that significantly deters manipulation.

The Sponsor believes the fact that there are multiple bitcoin spot markets contributing prices to the NAV makes manipulation more difficult in a well-arbitraged and fractured market, as a malicious actor would need to manipulate multiple spot markets simultaneously to impact the NAV, or dramatically skew the historical distribution of volume between the various markets.

The Sponsor believes that the fact that there are multiple bitcoin spot markets contributing prices to the NAV makes manipulation more difficult in a well-arbitraged and fractured market, as a malicious actor would need to manipulate multiple spot markets simultaneously to impact the NAV, or dramatically skew the historical distribution of volume between the various markets.

Since the Index is intended to represent the U.S.

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EST provides an opportunity for the Sponsor to algorithmically detect, flag, investigate, and correct unusual pricing should it occur.

The Sponsor has established a Valuation Committee to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Valuation Committee.

If the Valuation Committee determines in good faith that the Index does not reflect an accurate bitcoin price, then the Valuation Committee will instruct the Administrator to employ an alternative method to determine the fair value of the Trust’s assets.

In determining an alternative fair value method, the Valuation Committee generally considers such criteria as observable market-based inputs, including market quotations and last sale information from third-party pricing services and/or trading platforms on which bitcoin are traded.

The Valuation Committee’s selection of third-party pricing services used considers the qualifications, experience, and history of the pricing services and whether their valuation methodologies and procedures are reasonably designed to produce prices that reflect fair value under the prevailing market conditions.

The Sponsor has established a Fair Value and Liquidity Risk Management Committee (“Valuation and Liquidity Committee”) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Valuation and Liquidity Committee.

If the Valuation and Liquidity Committee determines in good faith that the Index does not reflect an accurate bitcoin price, then the Valuation and Liquidity Committee will instruct the Administrator to employ an alternative method to determine the fair value of the Trust’s assets.

In determining an alternative fair value method, the Valuation and Liquidity Committee generally considers such criteria as observable market-based inputs, including market quotations and last sale information from third-party pricing services and/or trading platforms on which bitcoin are traded.

The Valuation and Liquidity Committee’s selection of third-party pricing services used considers the qualifications, experience, and history of the pricing services and whether their valuation methodologies and procedures are reasonably designed to produce prices that reflect fair value under the prevailing market conditions.

Moreover, the terms of the Trust Agreement do not prohibit the Sponsor from changing the Index or other valuation method used to calculate the net asset value of the Trust.

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The Trust creates and redeems Shares from time to time, but only in one or more Baskets.

Baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of cash represented by the Baskets being created or redeemed (the “Basket Deposit”).

The amount of cash required in a Basket Deposit (the “Basket Cash Deposit”) is based on the value of the quantity of bitcoin and cash attributable to each Share of the Trust (net of accrued but unpaid Sponsor Fees and any accrued but unpaid Extraordinary Expenses) being created or redeemed determined as of 4:00 p.m.

Baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of bitcoin or cash represented by the Baskets being created or redeemed (the “Basket Deposit”).

The amount of bitcoin required in a Basket Deposit (the “Basket Bitcoin Deposit”) and the amount of cash required in a Basket Deposit (the “Basket Cash Deposit”) are based on the quantity or value of the quantity, as applicable, of bitcoin or cash attributable to each Share of the Trust (net of accrued but unpaid Sponsor Fees and any accrued but unpaid Extraordinary Expenses) being created or redeemed determined as of 4:00 p.m.

EST on the day the order to create or redeem Baskets is properly received.

Authorized Participants are the only persons that may place orders to create and redeem Baskets.

Authorized Participants must be (1) registered broker-dealers or other securities market participants, such as banks and other financial institutions, that are not required to register as broker-dealers to engage in securities transactions described below and (2) DTC Participants.

To become an Authorized Participant, a person must enter into an Authorized Participant Agreement with the Distributor.

As of the Trust’s commencement of operations, Baskets may only be purchased or redeemed by Authorized Participants for cash.

As of the Trust’s commencement of operations, Baskets may only be purchased or redeemed by Authorized Participants for bitcoin or cash.

In connection with a Cash Creation Order (as defined below) or Cash Redemption Order (as defined below), an Authorized Participant is responsible for any operational processing and brokerage costs, transfers fees, network fees and stamp taxes (the “Transaction Fee”).

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Some Authorized Participants or their agents and affiliates may from time to time buy or sell bitcoin and may profit in these instances.

To the extent that the activities of Authorized Participants or their agents and affiliates have a meaningful effect on the bitcoin market, it could affect the price of bitcoin and impact the ability of the Authorized Participants to effectively arbitrage the difference between the price at which the shares trade and the net asset value of the Trust.

While the Sponsor currently expects that Authorized Participants’ and their agents’ and affiliates’ direct activities in the bitcoin or securities markets in connection with the creation and redemption activities of the Trust will not significantly affect the price of bitcoin or the Shares, the impact of the activities of the Trust and its Authorized Participants and their agents and affiliates on bitcoin or securities markets is unknown and beyond the control of the Sponsor.

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The manner by which creations are made is dictated by the terms of the Authorized Participant Agreement.

Creation orders are denominated and settled in cash (“Cash Creation Order”).

Creation orders may be denominated and settled in an amount of bitcoin (“In-Kind Creation Order”) or cash (“Cash Creation Order”).

By placing an In-Kind Creation Order, an Authorized Participant, agrees to facilitate the deposit of bitcoin with the Custodian, either directly or indirectly through an Authorized Participant Designee.

By placing a Cash Creation Order, an Authorized Participant agrees to facilitate the deposit of cash with the Cash Custodian.

If an Authorized Participant fails to consummate the foregoing, the order will be cancelled or delayed until the full cash deposit has been received.

An Authorized Participant may not withdraw a creation order without the prior consent of the Sponsor in its discretion.

Following an Authorized Participant’s Cash Creation Order, the Trust’s account at the Cash Custodian must be credited with the Basket Cash Deposit amount by the end of the following business day or such earlier or later time as may be agreed upon by the Authorized Participant and the Sponsor following the Purchase Order Date.

Following an In-Kind Creation Order from an Authorized Participant, the Trust’s account at the Custodian must be credited with the required bitcoin by 11:00 a.m.

EST on the following business day or such other time designated by the Sponsor.

The Authorized Participant or its Authorized Participant Designee, will normally send the required bitcoin in an “on chain” transaction over the Bitcoin network.

Such on chain transactions are subject to the risks associated with Bitcoin network transactions, including the irreversibility of transactions made in error or unavoidable delays due to Bitcoin network congestion.

Upon receipt of the Basket Bitcoin Deposit amount in the Trust’s account at the Custodian, the Administrator will notify the Transfer Agent.

The Transfer Agent will then direct DTC to credit the number of Shares created to the Authorized Participant’s DTC account.

Following an Authorized Participant’s Cash Creation Order, the Trust’s account at the Cash Custodian must be credited with the Basket Cash Deposit amount by 11:00 a.m.

EST on the following business day or such other time designated by the Sponsor.

Upon receipt of the Basket Cash Deposit amount in the Trust’s account at the Cash Custodian, the Transfer Agent will notify the Distributor, the Authorized Participant, and the Sponsor that the Basket Cash Amount has been deposited.

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The Transfer Agent will then direct DTC to credit the number of Shares created to the Authorized Participant’s DTC account.

The Trust has entered into agreements with each of A1, Ltd., Cumberland DRW LLC, Flow Traders B.V., Galaxy Digital Trading Cayman LLC, JSCT, LLC, Virtu Financial Singapore Pte.

Ltd., and Wintermute Trading Ltd to serve as a bitcoin trading counterparty to the Trust.

JSCT, LLC is an affiliate of Jane Street Capital LLC and Virtu Financial Singapore Pte.

is an affiliate of Virtu Americas LLC.

Each of Jane Street Capital LLC and Virtu Americas LLC is an Authorized Participant.

The Sponsor is not aware of, nor has it requested any information relating to, any other affiliation or material relationship between such bitcoin trading counterparties and the Authorized Participants or other service providers of the Trust in executing a transaction in bitcoin with the Trust.

The agreements with the bitcoin trading counterparties provide that once the Sponsor determines based on its execution procedures which counterparty to execute a trade with and the Sponsor has placed a trade with a specific counterparty, that counterparty is contractually obligated to settle that trade.

Each of these third parties are, and any other trading counterparty the Trust places orders with will be, subject to U.S.

federal and/or state licensing requirements or similar laws in non-U.S.

jurisdictions and maintain practices and policies designed to comply with AML and KYC regulations or similar laws in non-U.S.

jurisdictions.

Determination of Required Deposits

The amount of the Basket Deposit changes from day to day.

On each day that the Exchange is open for regular trading, the Administrator adjusts the quantity of cash constituting the Basket Deposit as appropriate to reflect the value of the Trust’s bitcoin and cash less accrued expenses.

On each day that the Exchange is open for regular trading, the Administrator adjusts the quantity of bitcoin or cash constituting the Basket Deposit as appropriate to reflect the value of the Trust’s bitcoin and cash less accrued expenses.

The computation is made by the Administrator as promptly as practicable after 4:00 p.m.

EST or at an earlier time set forth in the Authorized Participant Agreement or otherwise provided to all Authorized Participants on the date such order is placed in order for the creation of Baskets to be effected based on the NAV of Shares as next determined on such date after receipt of the order in proper form.

The Basket Bitcoin Deposit for a given day is determined by dividing the number of bitcoin held by the Trust as of the opening of business on that business day, adjusted for the amount of bitcoin constituting accrued expenses and other liabilities of the Trust as of the opening of business on that business day, by the number of Shares outstanding at the opening of business and multiplying such amount by the number of Shares constituting a Basket.

Fractions of bitcoin smaller than .00000001 are disregarded for purposes of the computation of the Basket Bitcoin Deposit.

The Basket Cash Deposit is an amount of cash that is in the same proportion to the total assets of the Trust, net of accrued expenses and other liabilities, on the Purchase Order Date, as the number of Shares constituting a Basket is in proportion to the total number of Shares outstanding on the Purchase Order Date, plus the amount of any Transaction Fee.

For a discussion of how the Trust determines the value of bitcoin, see “ Calculation of Net Asset Value ” above.

The Basket Cash Deposit so determined is communicated via electronic mail message to all Authorized Participants.

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Delivery of Required Deposits

An Authorized Participant who places a purchase order must follow the procedures outlined in the “Creation Procedures” as summarized below and further described in the Trust’s registration statement.

Upon receipt of the deposit amount by the Cash Custodian the Transfer Agent will direct DTC to credit the number of Shares ordered to the Authorized Participant’s DTC account on the following business day or such later time as may be agreed upon by the Authorized Participant and the Sponsor, following the Purchase Order Date.

An Authorized Participant who places a purchase order must follow the procedures outlined in the “Creation Procedures” as summarized above and further described in the Trust’s registration statement.

Upon receipt of the deposit amount by the Custodian or Cash Custodian, as applicable, the Transfer Agent will direct DTC to credit the number of Shares ordered to the Authorized Participant’s DTC account on the following business day or such later time as may be agreed upon by the Authorized Participant and the Sponsor, following the Purchase Order Date.

The Sponsor has the authority to set or modify the cut-off time for purchase orders in order for the creation of Baskets to be effected based on the Index price at 4:00 p.m.

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The Trust’s NAV and the price of a Basket Deposit could rise or fall substantially between the time a purchase order is submitted and the time the amount of the purchase price in respect thereof is determined, and the risk of such price movements will be borne solely by the Authorized Participant.

In the event an Authorized Participant or its Authorized Participant Designee fails to deliver a Basket Bitcoin Deposit pursuant to an In-Kind Creation Order, such In-Kind Creation Order may, in the Sponsor’s sole discretion, be converted to a Cash Creation Order and subject to the procedures applicable to Cash Creation Orders described herein.

If an Authorized Participant fails to consummate a Cash Creation Order, such order will be cancelled or delayed until the full deposit has been received.

Rejection of Purchase Orders

The Sponsor or its designee has the absolute right, but does not have any obligation, to reject any purchase order or Basket Deposit if the Sponsor determines that:

the purchase order is not in proper form;

the Basket Deposit delivered is not as specified by the Trust through the Sponsor and/or Transfer Agent, and the Sponsor has not consented to acceptance of a deposit that varies from the designated portfolio;

the acceptance of the Basket Deposit would have certain adverse tax consequences to the Trust;

the acceptance of the Basket Deposit would, in the opinion of counsel, be unlawful;

the acceptance of the Basket Deposit would otherwise, in the discretion of the Trust or the Sponsor, have an adverse effect on the Trust or the rights of beneficial owners of the Trust;

there exist circumstances outside the control of the Trust, the Transfer Agent, or the Sponsor that make it impossible to process purchase orders for all practical purposes.

The Sponsor or its designee has the absolute right, but does not have any obligation, to reject any purchase order or Basket Deposit for any reason, including if the Sponsor determines that:

a) the purchase order is not in proper form;

b) the Basket Deposit delivered is not as specified by the Trust through the Sponsor and/or Transfer Agent, and the Sponsor has not consented to acceptance of an in-kind deposit that varies from the designated portfolio;

c) the acceptance of the Basket Deposit would have certain adverse tax consequences to the Trust;

d) the acceptance of the Basket Deposit would, in the opinion of counsel, be unlawful;

e) the acceptance of the Basket Deposit would otherwise, in the discretion of the Trust or the Sponsor, have an adverse effect on the Trust or the rights of beneficial owners of the Trust;

f) the value of Baskets to be created exceeds a purchase authorization limit afforded to the Authorized Participant by the Trust, and the Authorized Participant has not deposited an amount in excess of such purchase authorization with the Custodian prior to the designated cut-off time;

g) there exist circumstances outside the control of the Trust, the Transfer Agent, or the Sponsor that make it impossible to process purchase orders for all practical purposes.

The Sponsor may in its sole discretion limit the number of Shares created pursuant to purchase orders on any specified day without notice to the Authorized Participants and may direct the Distributor to reject any purchase orders in excess of such capped amount.

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Redemption Procedures

The procedures by which an Authorized Participant can redeem one or more Baskets mirror the procedures for the creation of Baskets.

The procedures by which an Authorized Participant can redeem one or more Baskets mirror the procedures for the creation of Baskets with an additional safeguard on bitcoin being removed from the Bitcoin Account at the Custodian.

On any business day, an Authorized Participant may place an order with the Transfer Agent to redeem one or more Baskets.

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The manner by which redemptions are made is dictated by the terms of the Authorized Participant Agreement.

Redemption orders are denominated and settled in cash (“Cash Redemption Order”).

By placing a Cash Redemption Order, an Authorized Participant agrees to facilitate the deposit of Shares with the Transfer Agent.

Redemption orders are denominated and settled either in kind (“In-Kind Redemption Order”) or in cash (“Cash Redemption Order”).

By placing a redemption order, an Authorized Participant agrees to facilitate the deposit of Shares with the Transfer Agent.

If an Authorized Participant fails to consummate the foregoing, the order will be cancelled or delayed until the required Shares have been received.

An Authorized Participant may not withdraw a redemption order without the prior consent of the Sponsor in its discretion.

In the case of an In-Kind Redemption Order, the redemption distribution from the Trust consists of a movement of bitcoin to the Authorized Participant, or its Authorized Participant Designee, representing the amount of bitcoin held by the Trust, net of accrued expenses and other liabilities, evidenced by the Shares being redeemed on the Redemption Order Date.

In the case of a Cash Redemption Order, the redemption distribution from the Trust consists of a transfer to the Authorized Participant of an amount of cash that is in the same proportion to the total assets of the Trust, net of accrued expenses and other liabilities, on the Redemption Order Date, as the number of Shares to be redeemed under the purchase order is in proportion to the total number of Shares outstanding on the Redemption Order Date.

The redemption distribution due from the Trust will be delivered once the Transfer Agent notifies the Cash Custodian, the Distributor and the Sponsor that the Authorized Participant has delivered the Shares represented by the Baskets to be redeemed to the Transfer Agent’s DTC account.

With respect to either an In-Kind Redemption Order or Cash Redemption Order, the redemption distribution due from the Trust will be delivered once the Transfer Agent notifies the Cash Custodian, the Administrator, the Distributor and the Sponsor that the Authorized Participant has delivered the Shares represented by the Baskets to be redeemed to the Transfer Agent’s DTC account.

If the Transfer Agent’s DTC account has not been credited with all of the Shares of the Baskets to be redeemed, the redemption distribution will be cancelled or delayed until such time as the Transfer Agent confirms receipt of all such Shares.

By placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be redeemed through DTC’s book-entry system to the Trust by the end of the following business day or such later time as may be agreed upon by the Authorized Participant and the Sponsor following the Redemption Order Date.

By placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be redeemed through DTC’s book-entry system to the Trust by the end of the following business day or such time as may be agreed upon by the Authorized Participant and the Sponsor following the Redemption Order Date.

An Authorized Participant may not withdraw a redemption order without the prior consent of the Sponsor in its discretion.

Determination of Redemption Distribution

The redemption distribution from the Trust will consist of a transfer to the redeeming Authorized Participant of an amount of cash that is determined in the same manner as the determination of Basket Deposits discussed above.

The redemption distribution from the Trust will consist of a transfer to the redeeming Authorized Participant, or its Authorized Participant Designee, of an amount of either bitcoin (in the case of an In-Kind Redemption Order) or cash (in the case of a Cash Redemption Order) that is determined in the same manner as the determination of Basket Deposits discussed above.

Delivery of Redemption Distribution

Once the Transfer Agent notifies the Custodian, the Cash Custodian, the Distributor and the Sponsor that the Shares have been received in the Transfer Agent’s DTC account, the Administrator instructs the Custodian to transfer the cash amount from the Trust’s Cash Custodian account to the Authorized Participant.

For a Cash Redemption Order, the redemption distribution due from the Trust will be sent by the Custodian or Cash Custodian, as applicable, to the Authorized Participant on the following business day or such later time as may be agreed upon by the Authorized Participant and the Sponsor, following the Redemption Order Date if, by 4:00 p.m.

Transfer Agent notifies the Administrator, the Cash Custodian, the Distributor and the Sponsor that the Shares have been received in the Transfer Agent’s DTC account.

For an In-Kind Redemption Order, the Sponsor will transfer the redemption bitcoin amount from the Custodian to the designated wallet address of the Authorized Participant or its Authorized Participant Designee.

For a Cash Redemption Order, the redemption distribution due from the Trust will be sent by the Cash Custodian to the Authorized Participant on the following business day or such time as may be agreed upon by the Authorized Participant and the Sponsor, following the Redemption Order Date if, by 4:00 p.m.

EST, on such business day, the Transfer Agent’s DTC account has been credited with the Baskets to be redeemed.

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Creation and Redemption Transaction Fees

In connection with a Cash Creation Order or Cash Redemption Order, an Authorized Participant is responsible for the Transaction Fee, which consist of the operational processing and brokerage costs, transfers fees, network fees and stamp taxes.

In connection with a Creation Order or Redemption Order, an Authorized Participant is responsible for the Transaction Fee, which consists of the operational processing and brokerage costs, transfers fees, network fees and stamp taxes .

The Transaction Fee may be reduced, increased or otherwise changed by the Sponsor.

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As noted, the Trust will create and redeem Shares from time to time, but only in one or more Baskets.

The creation and redemption of baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of cash equal to the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.

The creation and redemption of baskets are only made in exchange for delivery to the Trust or the distribution by the Trust of the amount of bitcoin or cash equal to the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem Baskets is properly received.

As discussed above, Authorized Participants are the only persons that may place orders to create and redeem Baskets.

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In the case of a Shareholder that acquires Shares as part of the creation of a Basket in cash, the delivery of cash to the Trust in exchange for a pro rata share of the underlying bitcoin represented by the Shares and the additional bitcoin purchased with the cash will not be a taxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the Shareholder’s pro rata share of the bitcoin held in the Trust will be based upon the amount of cash contributed and the date that the Trust purchased the bitcoin with the cash.

In the case of a Shareholder that acquires Shares as part of the creation of a Basket in kind, the delivery of bitcoin to the Trust in exchange for a pro rata share of the underlying bitcoin represented by the Shares will not be a taxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the Shareholder’s pro rata share of the bitcoin held in the Trust will be the same as its tax basis and holding period for the bitcoin delivered in exchange therefor.

For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder’s Shares are acquired on the same date and at the same price per Share.

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A redemption of some or all of a Shareholder’s Shares in exchange for the cash received from such sale is not expected to be treated as a separate taxable event for the Shareholder.

If permitted, Authorized Participants may request an in-kind distribution of Trust assets when an Authorized Participant redeems its Shares at any time prior to 30 business days before the Trust’s termination date.

An Authorized Participant will not recognize gain or loss if the Authorized Participant only receives whole Trust assets in exchange for the identical amount of the Authorized Participant’s pro rata portion of the same Trust assets held by the Trust.

However, if the Authorized Participant is acting on its own behalf and also receives cash in exchange for a Trust asset or a fractional portion of a Trust asset, the Authorized Participant will generally recognize gain or loss based on the difference between the amount of cash received and the Authorized Participant’s tax basis in such Trust asset or fractional portion.

A redemption of some or all of a Shareholder’s Shares in exchange for the underlying bitcoin represented by the Shares redeemed generally will not be a taxable event to the Shareholder.

The Shareholder’s tax basis and holding period for the bitcoin received in the redemption generally will be the same as the Shareholder’s tax basis and holding period for the pro rata share of the bitcoin held in the Trust immediately prior to the redemption that is attributable to the Shares redeemed.

A Shareholder’s tax basis for bitcoin received in a redemption generally will be the same as the Shareholder’s tax basis for the portion of the Shareholder’s pro rata share of the bitcoin held in the Trust immediately prior to the redemption that is attributable to the Shares redeemed.

The Shareholder’s holding period for the bitcoin received generally will include the period during which the Shareholder held the Shares being redeemed.

A subsequent sale of the bitcoin received the Shareholder generally will be a taxable event.

After any sale or redemption of less than all of a Shareholder’s Shares, the Shareholder’s tax basis for its pro rata share of the bitcoin held in the Trust immediately after such sale or redemption generally will be equal to its tax basis in its share of the total amount of the bitcoin held in the Trust immediately prior to the sale or redemption, less the portion of such basis which is taken into account in determining the amount of gain or loss recognized by the Shareholder upon such sale or cash redemption or, in the case of an in-kind redemption for bitcoin, that is treated as the basis of the bitcoin received by the Shareholder in the redemption.

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§ 2550.404a-1.

Risk Factors.

As a smaller reporting company, the Trust is not required to provide the information required by this item.

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 1. Business