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Grayscale Bitcoin Trust ETF (formerly known as Grayscale Bitcoin Trust (BTC)) (the “Trust”) is a Delaware Statutory Trust that was formed on September 13, 2013 by the filing of the Certificate of Trust with the Delaware Secretary of State in accordance with the provisions of the Delaware Statutory Trust Act.
−Removed: The Trust’s purpose is to hold Bitcoin, which are digital assets that are created and transmitted through the operations of the peer-to-peer Bitcoin Network, a decentralized network of computers that operates on cryptographic protocols.
−Removed: There are several key features of the Bitcoin Network, including the maximum block size used by the network.
−Removed: Bitcoin uses the SHA-256 algorithm, which is preferred for parallel processing, but is also easily used to build application-specific integrated circuits (ASICs) to mine the network more efficiently.
−Removed: Bitcoin has a current maximum block size of approximately 4MB and, on average blocks are generated every ten minutes.
−Removed: Bitcoin’s halvings take place approximately every four years, occurring every 210,000 blocks.
−Removed: Additionally, Bitcoin has a maximum supply of 21 million.
−Removed: As of December 31, 2024, Bitcoin’s circulating supply was 19.8 million coins.
−Removed: As of December 31, 2024, the 24-hour trading volume of Bitcoin was approximately $17.7 billion.
−Removed: As of December 31, 2024, the aggregate market value of Bitcoin was $1.85 trillion.
−Removed: As of December 31, 2024, Bitcoin was the largest digital asset by market capitalization, as tracked by CoinMarketCap.com.
+Added: The Trust’s purpose is to hold Bitcoin tokens (“Bitcoin”), which are digital assets that are created and transmitted through the operations of the peer-to-peer Bitcoin Network, a decentralized network of computers that operates on cryptographic protocols.
As of December 31, 2025, the Trust holds approximately 0.8% of the Bitcoin in circulation.
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The Shares are listed on NYSE Arca under the ticker symbol “GBTC.”
−Removed: As a passive investment vehicle, the Trust’s investment objective is for the value of the Shares (based on Bitcoin per Share) to reflect the value of the Bitcoin held by the Trust, determined by reference to the Index Price, less the Trust’s expenses and other liabilities.
+Added: As a passive investment vehicle, the Trust’s investment objective is for the value of the Shares (based on Bitcoin per Share) to reflect the value of Bitcoin held by the Trust, determined by reference to the Index Price, less the Trust’s expenses and other liabilities.
The Trust does not seek to generate returns beyond tracking the price of Bitcoin.
There can be no assurance that the Trust will be able to achieve its investment objective.
−Removed: Historically, the Trust has not met its investment objective and, prior to their uplisting to NYSE Arca on January 11, 2024, the Shares quoted on the OTCQX Best Market ® (“OTCQX”) of OTC Markets Group Inc.
−Removed: did not reflect the value of Bitcoin held by the Trust, less the Trust’s expenses and other liabilities, but instead traded at both premiums and discounts to such value, which at times were substantial, although the Sponsor has observed that the Trust has begun to meet its investment objective more closely following the uplisting of the Shares to NYSE Arca.
The Trust will not utilize leverage, derivatives or any similar arrangements in seeking to meet its investment objective.
−Removed: Until December 31, 2024, Grayscale Investments, LLC was the sponsor (the “Sponsor”) of the Trust.
−Removed: As a result of the Reorganization (as defined herein) on January 1, 2025, Grayscale Investments Sponsors, LLC (“GSIS”) and Grayscale Operating, LLC (“GSO”), indirect wholly owned subsidiaries of Digital Currency Group, Inc.
+Added: Until December 31, 2024, Grayscale Investments, LLC was the sponsor and administrator of the Trust.
+Added: As a result of the Reorganization (as defined herein) on January 1, 2025, Grayscale Investments Sponsors, LLC (“GSIS”) and Grayscale Operating, LLC (“GSO”), indirect consolidated subsidiaries of Digital Currency Group, Inc.
(“DCG”), became Co-Sponsors of the Trust.
−Removed: On January 3, 2025 GSO voluntarily withdrew as a Sponsor of the Trust, and effective May 3, 2025 GSIS shall be the sole remaining Sponsor.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments” for more information.
−Removed: CSC Delaware Trust Company is the trustee (the “Trustee”) of the Trust, The Bank of New York Mellon is the transfer agent (in such capacity, the “Transfer Agent”) and the administrator (in such capacity, the “Administrator”) of the Trust, Continental Stock Transfer & Trust Company is the co-transfer agent of the Trust (the “Co-Transfer Agent”), Coinbase, Inc.
−Removed: is the prime broker (the “Prime Broker”) of the Trust and Coinbase Custody Trust Company, LLC is the custodian (the “Custodian”) of the Trust.
+Added: On January 3, 2025, GSO voluntarily withdrew as a Sponsor of the Trust, and effective May 3, 2025, GSIS is the sole remaining Sponsor.
+Added: Prior to May 3, 2025, all references herein to the “Sponsor” shall be deemed to include both GSIS and GSO as Sponsors unless the context otherwise requires, and on or after May 3, 2025, all references herein to the “Sponsor” shall refer only to GSIS.
+Added: CSC Delaware Trust Company is the trustee of the Trust (the “Trustee”), The Bank of New York Mellon is the transfer agent (in such capacity, the “Transfer Agent”) and the administrator (in such capacity, the “Administrator”) of the Trust, Continental Stock Transfer & Trust Company is the co-transfer agent of the Trust (the “Co-Transfer Agent”), Coinbase, Inc.
+Added: is the prime broker (the “Prime Broker”) of the Trust, Coinbase Custody Trust Company, LLC is the custodian of the Trust (the “Custodian”), and Anchorage Digital Bank N.A.
+Added: (the “Additional Custodian”) is an available alternative custodian of the Trust.
The Trust issues Shares only in one or more blocks of 10,000 Shares (a block of 10,000 Shares is called a “Basket”) to certain authorized participants (“Authorized Participants”) from time to time.
−Removed: Baskets are offered in exchange for Bitcoin.
−Removed: dollar value of a Basket of Shares at 4:00 p.m., New York time, on the trade date of a creation or redemption order is equal to the Basket Amount, which is the amount of Bitcoin required to create or redeem a Basket of Shares, multiplied by the “Index Price,” which is the price of a Bitcoin calculated by applying a weighting algorithm to the price and trading volume data for the
−Removed: immediately preceding 24-hour period as of 4:00 p.m., New York time, derived from the selected Digital Asset Trading Platforms that are reflected in the CoinDesk Bitcoin Price Index (XBX) (the “Index”) on each business day.
−Removed: The Index Price is calculated using non-GAAP methodology and is not used in the Trust’s financial statements, unless otherwise disclosed.
−Removed: See “—Overview of the Bitcoin Industry and Market—Bitcoin Value—The Index and the Index Price.”
−Removed: The Basket Amount is determined by dividing (x) the amount of Bitcoin owned by the Trust at 4:00 p.m., New York time, on such trade date, after deducting the amount of Bitcoin representing the U.S.
−Removed: dollar value of accrued but unpaid fees and expenses of the Trust (converted using the Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one Bitcoin (i.e., carried to the eighth decimal place)), and multiplying such quotient by 10,000.
The Trust creates Baskets of Shares only upon receipt of Bitcoin and redeems Shares only by distributing Bitcoin or proceeds from the disposition of Bitcoin.
At this time, Authorized Participants may only submit orders to create or redeem Shares through transactions that are referred to as “Cash Orders” in this Annual Report.
−Removed: Cash Orders are made through the participation of a Liquidity Provider (as defined herein) and facilitated by the Transfer Agent, as described in “—Description of Creation and Redemption of Shares.” Authorized Participants must pay a Variable Fee (as defined herein) in connection with Cash Orders.
+Added: The value of a Basket is based on the amount of Bitcoin represented by the Basket, determined by reference to the Index Price.
+Added: For a more detailed description of the Index and the Index Price, see “—The Index and the Index Price.” For a more detailed description of the creation and redemption procedures, see “—Description of Creation and Redemption of Shares.”
The Shares are neither interests in nor obligations of the Sponsor or the Trustee.
As provided under the Trust Agreement, the Trust’s assets will not be loaned or pledged, or serve as collateral for any loan, margin, rehypothecation, or other similar activity to which the Sponsor, the Trust or any of their respective affiliates are a party.
−Removed: The Sponsor maintains an internet website at www.etfs.grayscale.com/gbtc, through which the registrant’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge after they have been filed or furnished to the SEC.
+Added: The Sponsor maintains an internet website at etfs.grayscale.com/gbtc, through which the registrant’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section
+Added: 13(a) or 15(d) of the Exchange Act, as amended, are made available free of charge after they have been filed or furnished to the SEC.
Additional information regarding the Trust may also be found on the SEC’s EDGAR database at www.sec.gov.
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The Trust’s investment objective is for the value of the Shares (based on Bitcoin per Share) to reflect the value of Bitcoin held by the Trust, determined by reference to the Index Price, less the Trust’s expenses and other liabilities.
−Removed: Historically, the Trust has not met its investment objective and, prior to their uplisting to NYSE Arca on January 11, 2024, the Shares quoted on OTCQX did not reflect the value of Bitcoin held by the Trust, less the Trust’s expenses and other liabilities, but instead traded at both premiums and discounts to such value, which at times were substantial.
−Removed: However, the Sponsor has observed that the Trust has met its investment objective more closely following the uplisting of the Shares to NYSE Arca on January 11, 2024.
In the event the Shares trade at a substantial premium, investors who purchase Shares on NYSE Arca will pay substantially more for their Shares than investors who purchase Shares directly from Authorized Participants.
−Removed: The value of the Shares may not reflect the value of the Trust’s Bitcoin, less the Trust’s expenses and other liabilities, for a variety of reasons, including any halting of creations or redemptions by the Trust, Bitcoin price volatility, trading volumes on, or closures of, trading platforms where digital assets trade due to fraud, failure, security breaches or otherwise, and the non-current trading hours between NYSE Arca and the global trading platform market for trading Bitcoin.
+Added: The value of the Shares may not reflect the value of the Trust’s Bitcoin, less the Trust’s expenses and other liabilities, for a variety of reasons, including any halting of creations or redemptions by the Trust, Bitcoin price volatility, trading volumes on, or closures of, trading platforms where digital assets trade due to fraud, failure, security breaches or otherwise, and the non-concurrent trading hours between NYSE Arca and the global trading platform market for trading Bitcoin.
As a result, the Shares may trade at a premium over, or a discount to, the value of the Trust’s Bitcoin, less the Trust’s expenses and other liabilities, and the Trust may be unable to meet its investment objective from time to time.
−Removed: From the Uplisting Date to December 31, 2024, the maximum premium of the closing price of the Shares listed on NYSE Arca over the value of the Trust’s NAV per Share was 1.68%, the average premium was 0.08%, and the maximum discount of the closing price of the Shares listed on NYSE Arca below the value of the Trust’s NAV per Share was 1.56% and the average discount was 0.10%.
+Added: From January 11, 2024, the Uplisting Date, to December 31, 2025, the maximum premium of the closing price of the Shares listed on NYSE Arca over the value of the Trust’s NAV per Share was 1.68%, the average premium was 0.06%, the maximum discount of the closing price of the Shares listed on NYSE Arca below the value of the Trust’s NAV per Share was 1.56%, and the average discount was 0.08%.
As of December 31, 2025, the Trust’s Shares were listed on NYSE Arca at a discount of 0.07% to the Trust’s NAV per Share.
−Removed: Prior to December 26, 2023, NAV was referred to as Digital Asset Holdings and NAV per Share was referred to as Digital Asset Holdings per Share.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Secondary Market Trading.”
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generally accepted accounting principles (“U.S.
−Removed: The Trust determines the fair value of Bitcoin based on the price provided by the Digital Asset
−Removed: Market that the Trust considers its principal market as of 4:00 p.m., New York time, on the valuation date.
+Added: The Trust determines the fair value of Bitcoin based on the price provided by the Digital Asset Market that the Trust considers its principal market as of 4:00 p.m., New York time, on the valuation date.
The net asset value of the Trust determined on a U.S.
−Removed: GAAP basis is referred to in this Annual Report as “Principal Market NAV.” Prior to December 26, 2023, Principal Market NAV was referred to as NAV.
+Added: GAAP basis is referred to in this Annual Report as “Principal Market NAV.” See “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Principal Market and Fair Value Determination” for more information on the Trust’s principal market selection.
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GAAP, and NAV per Share is not intended to be a substitute for the Trust’s Principal Market NAV per Share calculated in accordance with U.S.
−Removed: Prior to December 26, 2023, NAV was referred to as Digital Asset Holdings and Principal Market NAV was referred to as NAV.
Pursuant to the terms of the Trust Agreement, the Trust is required to dissolve under certain circumstances.
In addition, the Sponsor may, in its sole discretion, dissolve the Trust for a number of reasons, including if the Sponsor determines, in its sole discretion, that it is desirable or advisable for any reason to discontinue the affairs of the Trust.
−Removed: For example, if the Sponsor determines that Bitcoin is a security under the federal securities laws, whether that determination is initially made by the Sponsor itself, or because a federal court upholds an allegation that Bitcoin is a security, the Sponsor does not intend to permit the Trust to continue holding Bitcoin in a way that would violate the federal securities laws (and therefore would either dissolve the Trust or potentially seek to operate the Trust in a manner that complies with the federal securities laws, including the Investment Company Act of 1940 (the “Investment Company Act”)).
+Added: For example, if the Sponsor determines that Bitcoin is a security under the federal securities laws, whether that determination is initially made by the Sponsor itself, or because a federal court upholds an allegation that Bitcoin is a security, the Sponsor does not intend to permit the Trust to continue holding Bitcoin in a way that would violate the federal securities laws (and therefore would either dissolve the Trust or potentially seek to operate the Trust in a manner that complies with the federal securities laws, including the Investment Company Act of 1940, as amended (the “Investment Company Act”)).
See “—Description of the Trust Agreement—Termination of the Trust” for additional discussion of the circumstances under which the Trust could be dissolved.
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The Trust will not hold or employ any derivative securities.
−Removed: Furthermore, the value of the Trust’s assets will be reported each day on www.etfs.grayscale.com/gbtc.
+Added: Furthermore, the value of the Trust’s assets will be reported each day on etfs.grayscale.com/gbtc.
• Minimal Credit Risk .
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Incidental Rights and IR Virtual Currency
−Removed: The Sponsor has notified the Prime Broker, the Custodian and Coinbase Credit, on behalf of the Trust (such notice, the “Pre-Creation/Redemption Abandonment Notices”) that the Trust will abandon, irrevocably and for no direct or indirect consideration, effective immediately prior to each time at which the Trust creates or redeems Shares (each such time, a “Creation Time” or “Redemption Time”, respectively), all Incidental Rights and IR Virtual Currency to which it would otherwise be entitled as of such time.
+Added: The Sponsor has notified the Prime Broker, the Custodian and Coinbase Credit Inc.
+Added: (“Coinbase Credit”), on behalf of the Trust (such notice, the “Pre-Creation/Redemption Abandonment Notices”) that the Trust will abandon, irrevocably and for no direct or indirect consideration, effective immediately prior to each time at which the Trust creates or redeems Shares (each such time, a “Creation Time” or “Redemption Time”, respectively), all Incidental Rights and IR Virtual Currency to which it would otherwise be entitled as of such time.
An abandonment made pursuant to the Pre-Creation/Redemption Abandonment Notices is referred to herein as a “Pre-Creation/Redemption Abandonment.” Pursuant to the Pre-Creation/Redemption Abandonment Notices, a Pre-Creation/Redemption Abandonment would not apply to any Incidental Right or IR Virtual Currency if (i) the Trust has taken, or is taking at such time, an “Affirmative Action” to acquire or abandon such Incidental Right or IR Virtual Currency at any time prior to the relevant Creation Time or Redemption Time or (ii) such Incidental Right or IR Virtual Currency has been subject to a previous Pre-Creation/Redemption Abandonment.
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See “Item 1A.
−Removed: Risk Factors—Risk Factors Related to the Trust and the Shares—Shareholders will not receive the benefits of any forks or airdrops.”
−Removed: The Sponsor has controls in place to monitor for material hard forks or airdrops.
+Added: Risk Factors—Risk Factors Related to the Trust and the Shares—Shareholders will not receive the benefits of any forks or airdrops.” The Sponsor has controls in place to monitor for material hard forks or airdrops.
The Sponsor will notify investors of any material change to its policy with respect to Incidental Rights and IR Virtual Currency by filing a current report on Form 8-K.
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While the Shares are listed and trade on NYSE Arca from 4:00 a.m.
−Removed: until 8:00 p.m., New York time, liquidity in the Digital Asset Markets may fluctuate depending upon the volume and availability of larger Digital Asset Trading Platforms.
+Added: until 8:00 p.m., New York time, liquidity in the Digital Asset Markets may fluctuate depending upon the
+Added: volume and availability of larger Digital Asset Trading Platforms.
As a result, during periods in which Digital Asset Market liquidity is limited or a major Digital Asset Trading Platform is off-line, trading spreads, and the resulting premium or discount, on the Shares may widen.
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The amount of Bitcoin to be sent will typically be agreed upon between the two parties based on a set amount of Bitcoin or an agreed upon conversion of the value of fiat currency to Bitcoin.
−Removed: Since every computation on the Bitcoin Network requires the payment of Bitcoin, including verification and memorialization of Bitcoin
−Removed: transfers, there is a transaction fee involved with the transfer, which is based on computation complexity and not on the value of the transfer and is paid by the payor with a fractional amount of Bitcoin.
+Added: Since every computation on the Bitcoin Network requires the payment of Bitcoin, including verification and memorialization of Bitcoin transfers, there is a transaction fee involved with the transfer, which is based on computation complexity and not on the value of the transfer and is paid by the payor with a fractional amount of Bitcoin.
After the entry of the Bitcoin Network address, the amount of Bitcoin to be sent and the transaction fees, if any, to be paid, will be transmitted by the spending party.
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In addition to using Bitcoin to engage in transactions, investors may purchase and sell Bitcoin to speculate as to the value of Bitcoin in the Bitcoin market, or as a long-term investment to diversify their portfolio.
−Removed: The value of Bitcoin within the market is determined, in part, by the supply of and demand for Bitcoin in the global Bitcoin market, market expectations for the adoption of Bitcoin as a store of value, the number of merchants that accept Bitcoin as a form of payment, and the volume of peer-to-peer transactions, among other factors.
+Added: The value of Bitcoin within the market is determined, in part, by the supply of and demand for Bitcoin in the global Bitcoin market, market expectations for the adoption of Bitcoin as a store of value or reserve-style asset, the number of merchants that accept Bitcoin as a form of payment, and the volume of peer-to-peer transactions, among other factors.
Centralized spot Bitcoin markets typically permit investors to open accounts with the trading platform and then purchase and sell Bitcoin via websites or through mobile applications.
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The centralized spot market typically records the investor’s ownership of Bitcoin in its internal books and records, rather than on the Blockchain.
−Removed: The centralized spot market ordinarily does not transfer Bitcoin to the investor on the Blockchain unless the investor makes a request to the Digital Asset Trading Platform to withdraw the Bitcoin in their account to an off-exchange Bitcoin wallet.
+Added: The centralized spot market ordinarily does not transfer Bitcoin to the investor on the
+Added: Blockchain unless the investor makes a request to the Digital Asset Trading Platform to withdraw the Bitcoin in their account to an off-exchange Bitcoin wallet.
See “—Bitcoin Value” below for a discussion of historical spot Bitcoin prices on Digital Asset Trading Platforms and how such prices may differ from the Index Price.
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NYSE Arca has also implemented surveillance procedures to monitor the trading of the Shares on NYSE Arca during all trading sessions and to deter and detect violations of NYSE Arca rules and the applicable federal securities laws.
−Removed: Creation of New Bitcoin
+Added: Creation of New Bitcoin and Limits on Bitcoin Supply
New Bitcoin are created through the mining process as discussed below.
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Over time, rewards are expected to be proportionate to the computational power of each machine.
+Added: This deliberately controlled rate of Bitcoin creation means that the amount of Bitcoin in existence will increase at a controlled rate until the amount of Bitcoin in existence reaches the pre-determined 21 million Bitcoin.
+Added: As of December 31, 2025, approximately 20.0 million Bitcoin were outstanding and the date when the 21 million Bitcoin limitation will be reached is estimated to be the year 2140.
The process by which Bitcoin is “mined” results in new blocks being added to the Blockchain and new Bitcoin tokens being issued to the miners.
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As more miners join the Bitcoin Network and its processing power increases, the Bitcoin Network adjusts the complexity of the block-solving equation to maintain a predetermined pace of adding a new block to the Blockchain approximately every ten minutes.
−Removed: A miner’s proposed block is added to the Blockchain once a majority of the nodes on the Bitcoin Network confirms the miner’s work.
+Added: A miner’s proposed block is added to the Blockchain once other nodes on the Bitcoin Network confirm the block meets consensus rules and it is subsequently extended by later blocks.
Miners that are successful in adding a block to the Blockchain are automatically awarded Bitcoin for their effort and may also receive transaction fees paid by transferors whose transactions are recorded in the block.
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The Bitcoin Network is designed in such a way that the reward for adding new blocks to the Blockchain decreases over time.
−Removed: Once new Bitcoin tokens are no longer awarded for adding a new block, miners will only have transaction fees to incentivize them, and as a result, it is expected that miners will need to be better compensated with higher transaction fees to ensure that there is adequate incentive for them to continue mining.
−Removed: Limits on Bitcoin Supply
−Removed: The supply of new Bitcoin is mathematically controlled so that the amount of Bitcoin grows at a limited rate pursuant to a pre-set schedule.
−Removed: The amount of Bitcoin awarded for solving a new block is automatically halved after every 210,000 blocks are added to the Blockchain.
−Removed: Currently, the fixed reward for solving a new block is 3.125 Bitcoin per block and this is expected to decrease by half to become 1.5625 Bitcoin after the next 210,000 blocks have entered the Bitcoin Network, which is expected to be mid-2028.
−Removed: This deliberately controlled rate of Bitcoin creation means that the amount of Bitcoin in existence will increase at a controlled rate until the amount of Bitcoin in existence reaches the pre-determined 21 million Bitcoin.
−Removed: As of December 31, 2024, approximately 19.8 million Bitcoin were outstanding and the date when the 21 million Bitcoin limitation will be reached is estimated to be the year 2140.
+Added: Once new Bitcoin tokens are no longer awarded for adding a new block, miners will only have transaction fees to incentivize them, and
+Added: as a result, it is expected that miners will need to be better compensated with higher transaction fees to ensure that there is adequate incentive for them to continue mining.
Modifications to the Bitcoin Protocol
−Removed: Bitcoin is an open-source project with no official developer or group of developers that controls the Bitcoin Network.
+Added: The Bitcoin Network is an open-source project with no official developer or group of developers that controls the Bitcoin Network.
However, the Bitcoin Network’s development is overseen by a core group of developers.
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In the past, there have been several forks in the Bitcoin Network, including, but not limited to, forks resulting in the creation of Bitcoin Cash (August 1, 2017), Bitcoin Gold (October 24, 2017) and Bitcoin SegWit2X (December 28, 2017), among others.
−Removed: Core development of the Bitcoin Network source code has increasingly focused on modifications of the Bitcoin Network protocol to increase speed and scalability and also allow for non-financial, next generation uses.
−Removed: For example, following the recent activation of Segregated Witness on the Bitcoin Network, an alpha version of the Lightning Network was released.
+Added: Core development of the Bitcoin Network source code has increasingly focused on modifications of the Bitcoin Network protocol to increase safety, robustness, and incremental improvements.
+Added: For example, following the activation of Segregated Witness on the Bitcoin Network, an alpha version of the Lightning Network was released.
The Lightning Network is an open-source decentralized network that enables instant off-Blockchain transfers of the ownership of Bitcoin without the need of a trusted third party.
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Other efforts include increased use of smart contracts and distributed registers built into, built atop or pegged alongside the Blockchain.
−Removed: For example, the white paper for Blockstream, an organization that includes core developer Pieter Wuille, calls for the use of “pegged sidechains” to develop programming environments that are built within Blockchain ledgers that can interact with and rely on the security of the Bitcoin Network and Blockchain, while remaining independent from them.
−Removed: Open-source projects such as RSK are a manifestation of this concept and seek to create the first open-source, smart contract platform built on the Blockchain to enable automated, condition-based payments with increased speed and scalability.
−Removed: The Trust’s activities will not directly relate to such projects, though such projects may utilize Bitcoin as tokens for the facilitation of their non-financial uses, thereby potentially increasing demand for Bitcoin and the utility of the Bitcoin Network as a whole.
−Removed: Conversely, projects that operate and are built within the Blockchain may increase the data flow on the Bitcoin Network and could either “bloat” the size of the Blockchain or slow confirmation times.
For example, in 2021, the Bitcoin protocol implemented the Taproot upgrade to add enhanced support for complex transactions on the network such as multi-signature transactions, which require two or more parties to execute a transaction on the Bitcoin Network.
Prior to the upgrade, multi-signature transactions were historically slow, expensive, and easily identifiable.
−Removed: Taproot was intended to reduce the amount of data written to a block, enhance the ability to implement and use smart contracts on the Bitcoin Network, and makes multi-signature transactions indistinguishable from regular transactions, adding an enhanced layer of privacy.
+Added: Taproot was intended to improve efficiency for certain complex transactions, enhance the ability to implement and use smart contracts on the Bitcoin Network, and makes multi-signature transactions indistinguishable from regular transactions, adding an enhanced layer of privacy.
However, Taproot also relaxed certain types of data requirements enforced by the Bitcoin Blockchain to facilitate these changes which led to the launch of the “ordinal protocol.” The ordinal protocol takes advantage of Taproot’s relaxed data requirements to allow users to add graphic images and other data files to Bitcoin transactions (“Ordinals”).
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The advent of Ordinals has led to notable increases in the amount of data submitted to the blockchain, which has contributed to Bitcoin Blockchain bloat and has resulted in fewer transactions fitting in a block, and thus higher transaction fees and confirmation times.
+Added: Some reports indicate that Ordinals have at times been the dominant driver of data usage on the Bitcoin Blockchain.
+Added: The Trust’s activities will not directly relate to such projects, though such projects may utilize Bitcoin as tokens for the facilitation of their non-financial uses, thereby potentially increasing demand for Bitcoin and the utility of the Bitcoin Network as a whole.
+Added: Conversely, projects that operate and are built within the Blockchain may increase the data flow on the Bitcoin Network and could “bloat” the size of the Blockchain or slow confirmation times.
Forms of Attack Against the Bitcoin Network
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Any similar attacks on the Bitcoin Network that impact the ability to transfer Bitcoin could have a material adverse effect on the price of Bitcoin and the value of the Shares.
+Added: This is not intended as an exhaustive list of all forms of attack against the Bitcoin Network.
+Added: For additional information, see “Risk Factors—Risk Factors Related to Digital Assets.”
Market Participants
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The retail sector includes users transacting in direct peer-to-peer Bitcoin transactions through the direct sending of Bitcoin over the Bitcoin Network.
−Removed: The retail sector also includes transactions in which consumers purchase goods and services from commercial or service businesses through direct transactions or third-party service providers.
+Added: The retail sector also includes transactions in which consumers purchase goods and services from commercial or service businesses through direct transactions or third-party service providers such as BitPay, Coinbase and GoCoin.
Service Sector
This sector includes companies that provide a variety of services including the buying, selling, payment processing and storing of Bitcoin.
−Removed: For example, Bitstamp, Coinbase, Kraken, LMAX Digital, Crypto.com and Bullish are some of the largest Digital Asset Trading Platforms by volume traded.
−Removed: Coinbase Custody Trust Company, LLC, the Custodian for the Trust, is a digital asset custodian that provides custodial accounts that store Bitcoin for users.
+Added: For example, Bitfinex, Bitstamp by Robinhood, Bullish, Coinbase, Crypto.com, Kraken, and LMAX Digital are some of the largest Digital Asset Trading Platforms by volume traded.
+Added: For storing Bitcoin, Coinbase Custody Trust Company, LLC, the Custodian for the Trust, is a digital asset custodian that provides custodial accounts that store Bitcoin for users.
As the Bitcoin Network continues to grow in acceptance, it is anticipated that service providers will expand the currently available range of services and that additional parties will enter the service sector for the Bitcoin Network.
Thousands of digital assets have been developed since the inception of Bitcoin, which is currently the most developed digital asset because of the length of time it has been in existence, the investment in the infrastructure that supports it, and the network of individuals and entities that are using Bitcoin in transactions.
−Removed: Some industry groups are also creating private, permissioned blockchain versions of digital assets.
+Added: Some industry groups are also creating private, permissioned blockchain versions of digital asset technologies.
For example, J.P.
−Removed: Morgan has developed a platform called Kinexys (formerly known as Onyx), which is described as a version of Ethereum designed for use by the financial services industry.
−Removed: Similar events may occur with Bitcoin.
+Added: Morgan has developed a platform called Kinexys (formerly known as Onyx), which is described as a blockchain-based platform designed for use by the financial services industry.
+Added: In addition to competition from other digital assets and blockchain-based platforms, Bitcoin also competes with certain traditional assets that market participants use for store-of-value, macro-hedging, or portfolio-diversification purposes, such as gold, fiat currencies, sovereign debt, certain commodities, and equities.
+Added: Gold—and, in some cases, sovereign debt—are viewed by some investors and institutions as reserve-style assets, and these traditional assets may compete with Bitcoin for demand from individuals and institutions seeking scarce, non-sovereign, or inflation-hedging assets.
Bitcoin Value
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Over-the-counter dealers or market makers do not typically disclose their trade data.
−Removed: As of December 31, 2024, the Digital Asset Trading Platforms included in the Index were Coinbase, Bitstamp, Bullish, Kraken, LMAX Digital and Crypto.com.
−Removed: As further described below, the Sponsor and the Trust reasonably believe each of these Digital Asset Trading Platforms are in material compliance with applicable licensing requirements based on the Trading Platform Category and Jurisdiction, as detailed below, and maintain practices and policies designed to comply with anti-money laundering (“AML”) and know-your-customer (“KYC”) regulations.
−Removed: A U.S.-based trading platform registered as a money services business (“MSB”) with the Financial Crimes Enforcement Network (“FinCEN”) and licensed as a virtual currency business under the New York State Department of Financial Services (“NYDFS”) BitLicense as well as a money transmitter in various U.S.
−Removed: A U.K.-based trading platform registered as an MSB with FinCEN and licensed as a virtual currency business under the NYDFS BitLicense as well as a money transmitter in various U.S.
−Removed: A U.S.-based trading platform registered as an MSB with FinCEN and licensed as a money transmitter in various U.S.
+Added: As of December 31, 2025, the Digital Asset Trading Platforms included in the Index were Bitfinex, Bitstamp by Robinhood, Bullish, Coinbase, Crypto.com, Kraken, and LMAX Digital.
+Added: The Sponsor and the Trust reasonably believe each of these Digital Asset Trading Platforms are in material compliance with applicable licensing requirements based on the inclusion criteria and jurisdiction, as
+Added: detailed below, and maintain practices and policies designed to comply with anti-money laundering (“AML”) and know-your-customer (“KYC”) regulations.
+Added: A U.S.-based trading platform that has entities registered as money service businesses (“MSBs”) with the U.S.
+Added: Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”), and that is licensed as a virtual currency business under the New York State Department of Financial Services’ (“NYDFS”) BitLicense, licensed as a money transmitter in various U.S.
+Added: states, and chartered as a limited purpose trust company under New York Banking Law.
+Added: Bitstamp by Robinhood :
+Added: A U.K.-based trading platform that has U.S.
+Added: operations and entities registered as MSBs with FinCEN, holds a BitLicense, and that is licensed as a money transmitter in various U.S.
+Added: A U.S.-based trading platform that has entities registered as MSBs with FinCEN, and that is licensed as a money transmitter in various U.S.
+Added: states, and chartered as a Special Purpose Depository Institution by the Wyoming Division of Banking.
Kraken does not hold a BitLicense.
LMAX Digital :
−Removed: A U.K.-based trading platform registered as a broker with the Financial Conduct Authority.
−Removed: LMAX Digital does not hold a BitLicense.
−Removed: A Singapore-based trading platform registered as an MSB with FinCEN and licensed as a money transmitter in various U.S.
+Added: A U.K.-based trading platform that has entities registered as a broker with the U.K.
+Added: Financial Conduct Authority, and that is licensed as an MSB with FinCEN and regulated by the Gibraltar Financial Services Commission.
+Added: A Singapore-based trading platform that has entities registered as MSBs with FinCEN, and that is licensed as a money transmitter in various U.S.
+Added: states and chartered as a non-depository trust company by the New Hampshire Banking Department.
Crypto.com does not hold a BitLicense.
−Removed: A Gibraltar-based trading platform registered as an MSB with FinCEN.
−Removed: Bullish is not available to U.S.
−Removed: based customers.
−Removed: Bullish is categorized by the Index Provider as a “Category 2” trading platform which meets the Inclusion Criteria outlined below but is non-U.S.
+Added: A Gibraltar-based trading platform that has entities registered as MSBs with FinCEN and as a virtual currency business under NYDFS BitLicense.
+Added: A British Virgin Islands based trading platform.
+Added: Bitfinex does not hold any licenses or registrations in the U.S.
+Added: and is not available to U.S.-based customers.
+Added: Bitfinex is categorized by the Index Provider as a “Category 2” trading platform that meets the Inclusion Criteria but is non-U.S.
Currently, there are several Digital Asset Trading Platforms operating worldwide and online Digital Asset Trading Platforms represent a substantial percentage of Bitcoin buying and selling activity and provide the most data with respect to prevailing valuations of Bitcoin.
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Market Share (1)
+Added: Bitstamp by Robinhood
Total Bitcoin-U.S.
Dollar trading pair
−Removed: (1) On October 28, 2024, the Index Provider added Bullish to the Index due to the trading platform meeting the minimum liquidity requirement, and did not remove any Constituent Trading Platforms as part of its scheduled quarterly review.
−Removed: (2) Market share is calculated using trading volume (in Bitcoin) for certain Digital Asset Trading Platforms, including Coinbase, Bitstamp, Kraken, LMAX Digital, Crypto.com and Bullish, as well as certain other large U.S.-dollar denominated Digital Asset Trading Platforms that were not included in the Index as of December 31, 2024, including Binance.US (data included from April 1, 2020 to July 13, 2023), Bitfinex, Bitflyer (data included from December 24, 2018), Bittrex (data included from July 31, 2018 to December 3, 2023), Bullish (data included from March 31, 2024), Cboe Digital (data included from October 1, 2020 to December 31, 2023), CEX.IO (data included from January 1, 2024), FTX.US (data included from April 1, 2022 to November 12, 2022), Gemini (data included from October 7, 2015), itBit, LakeBTC (data included from January 27, 2019 to May 6, 2021), HitBTC (data included from April 1, 2019 to March 31, 2020), and OKCoin (data included from inception to December 31, 2022).
+Added: (1) Market share is calculated using trading volume (in Bitcoin) for certain Digital Asset Trading Platforms, including Coinbase, Bitstamp by Robinhood, Kraken, LMAX Digital, Crypto.com, Bullish, and Bitfinex, as well as certain other large U.S.-dollar denominated Digital Asset Trading Platforms that were not included in the Index as of December 31, 2025, including Binance.US (data included from April 1, 2020 to July 13, 2023 and from February 18, 2025), Bitflyer (data included from December 24, 2018), Bittrex (data included from July 31, 2018 to December 3, 2023), Cboe Digital (data included from October 1, 2020 to December 31, 2023), CEX.IO (data included from January 1, 2024 to February 25, 2025), FTX.US (data included from April 1, 2022 to November 12, 2022), Gemini (data included from October 7, 2015), itBit, LakeBTC (data included from January 27, 2019 to May 6, 2021), HitBTC (data included from April 1, 2019 to March 31, 2020), OKCoin (data included from inception to December 31, 2022), and OKX (data included from January 1, 2025).
The domicile, regulation and legal compliance of the Digital Asset Trading Platforms included in the Index varies.
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Although the Index is designed to accurately capture the market price of Bitcoin, third parties may be able to purchase and sell Bitcoin on public or private markets not included among the Constituent Trading Platforms of the Index, and such transactions may take place at prices materially higher or lower than the Index Price.
−Removed: Moreover, there may be variances in the prices of Bitcoin on the various Digital Asset Trading Platforms, including as a result of differences in fee structures or administrative procedures on different Digital Asset Trading Platforms.
+Added: Moreover, there may be variances in the prices of Bitcoin on the various
+Added: Digital Asset Trading Platforms, including as a result of differences in fee structures or administrative procedures on different Digital Asset Trading Platforms.
For example, based on data provided by the Index Provider, on any given day during the year ended December 31, 2025, the maximum differential between the 4:00 p.m., New York time spot price of any single Digital Asset Trading Platform included in the Index and the Index Price was 0.44% and the average of the maximum differentials of the 4:00 p.m., New York time, spot price of each Digital Asset Trading Platform included in the Index and the Index Price was 0.25%.
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This is accomplished by adjusting the weight of each data input based on price deviation relative to the observable set, as well as recent and long-term trading volume at each venue relative to the observable set.
−Removed: The Index Price is calculated using non-GAAP methodology and is not used in the Trust’s financial statements, unless otherwise disclosed.
+Added: The Index Price is calculated using non-GAAP methodology and is not used in the Trust’s financial statements.
All references to the NAV and NAV per Share of the Trust in this report have been calculated using the Index Price unless indicated otherwise.
−Removed: Prior to December 26, 2023, NAV was referred to as Digital Asset Holdings and NAV per Share was referred to as Digital Asset Holdings per Share.
Constituent Trading Platform Selection
−Removed: The Digital Asset Trading Platforms that are included in the Index are selected by the Index Provider utilizing a methodology that is guided by the International Organization of Securities Commissions (“IOSCO”) principles for financial benchmarks.
−Removed: For a trading platform to become a Constituent Trading Platform, it must satisfy the criteria listed below (the “Inclusion Criteria”):
−Removed: • No evidence in the past 12 months of trading restrictions on individuals or entities that would otherwise meet the trading platform’s eligibility requirements to trade;
−Removed: • No evidence in the past 12 months of undisclosed restrictions on deposits or withdrawals from user accounts;
−Removed: • Real-time price discovery;
−Removed: • Limited or no capital controls;
−Removed: • Transparent ownership including a publicly-known ownership entity;
−Removed: • Publicly available language and policies addressing legal and regulatory compliance, including KYC (Know Your Customer), AML (Anti-Money Laundering) and other policies designed to comply with relevant regulations that might apply to it;
−Removed: • Offer programmatic spot trading of the trading pair and reliably publish trade prices and volumes on a real-time basis through Rest and Websocket APIs.
−Removed: All trading platforms that meet these Inclusion Criteria will be assigned to one trading platform Category as defined by the additional criteria below:
−Removed: o Licensed and/or able to serve investors, retail or professional, in the U.S.;
−Removed: o Maintain sufficient USD or USDC liquidity relative to the size of the listed assets.
−Removed: o Licensed (including in-principal licensure) and/or able to serve investors, retail or professional, in one or more of the following jurisdictions:
−Removed: • United Kingdom
−Removed: • European Union
−Removed: • In the event a trading platform is only licensed or able to serve investors in select European Union countries and none of the other listed jurisdictions, the Index Provider reserves the right to evaluate its eligibility on a case-by-case basis.
−Removed: o Maintain sufficient USD or USDC liquidity relative to the size of the listed assets.
+Added: Digital Asset Trading Platforms are selected for inclusion in the Index based on a methodology developed by the Index Provider in alignment with the International Organization of Securities Commissions (“IOSCO”) Principles for Financial Benchmarks.
+Added: To qualify as a Constituent Trading Platform, a platform is evaluated across the following core criteria listed below (the “Inclusion Criteria”):
+Added: • Market Quality:
+Added: Overall liquidity, trading activity, price reliability, and market stability.
+Added: Cybersecurity safeguards, custody practices, and operational risk controls.
+Added: • Legal and Regulatory:
+Added: Licensing status, regulatory compliance, and legal transparency.
+Added: Assessment of anti-money laundering (“AML”) and know-your-customer (“KYC”) frameworks, transaction monitoring capabilities, and market oversight.
+Added: • Data Provision:
+Added: Quality, accessibility, and reliability of trading data and technical infrastructure.
+Added: • Transparency:
+Added: Financial and operational disclosures, including reserve and governance transparency.
+Added: Assessment of executive leadership, relevant experience, organizational structure, and service offerings across institutional and retail markets.
+Added: • Negative Events:
+Added: The Index Provider may apply a downward adjustment for material adverse events, including data breaches, regulatory penalties, withdrawal freezes, or other significant incidents.
+Added: Trading platforms that meet these Inclusion Criteria are also required to be licensed and able to serve customers in one or more of the following jurisdictions:
+Added: • United States (FinCEN, state regulatory authorities)
+Added: • United Kingdom (FCA)
+Added: • European Union (MiCA passport)
+Added: • Hong Kong (SFC)
+Added: • Singapore (MAS)
+Added: • United Arab Emirates, including the emirates of Dubai and Abu Dhabi (VARA, ADGM)
+Added: • Gibraltar (GFSC)
A Digital Asset Trading Platform is removed from the Constituent Trading Platforms when it no longer satisfies the Inclusion Criteria.
+Added: The Index Provider may also exclude certain exchanges that require additional support from contributing exchanges at its discretion.
The Index Provider does not currently include data from over-the-counter markets or derivatives platforms among the Constituent Trading Platforms.
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The Index Provider may change the trading venues that are used to calculate the Index or otherwise change the way in which the Index is calculated at any time.
−Removed: For example, the Index Provider has scheduled quarterly reviews in which it may add or remove Constituent Trading Platforms that satisfy or fail the Inclusion Criteria.
+Added: For example, the Index Provider has scheduled quarterly reviews in which it may add or remove Constituent Trading Platforms that satisfy or fail the Inclusion Criteria as well as other requirements detailed in the Index Methodology.
The Index Provider does not have any obligation to consider the interests of the Sponsor, the Trust, the shareholders, or anyone else in connection with such changes.
−Removed: While the Index Provider is not required to publicize or explain the changes or to alert the Sponsor to such changes, it has historically notified the Trust of any material changes to the Constituent Trading Platforms, including any additions or removals of the Constituent Trading Platforms, in addition to issuing press releases in connection with the same.
−Removed: The Sponsor will notify investors of any such material event by filing a current report on Form 8-K.
+Added: While the Index Provider is not required to publicize or explain the changes or to alert the Sponsor to such changes, it has historically notified the Trust of certain changes to the Constituent Trading Platforms, including any additions or removals of the Constituent Trading Platforms, in addition to issuing press releases in connection with the same.
+Added: The Sponsor will provide updates of such changes in the Trust’s quarterly reports on Form 10-Q.
Although the Index methodology is designed to operate without any manual intervention, rare events would justify manual intervention.
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By referencing multiple trading venues and weighting them based on trade activity, the Sponsor believes that the impact of any potential fraud, manipulation or anomalous trading activity occurring on any single venue is reduced.
−Removed: If the Index Price becomes unavailable, or if the Sponsor determines in good faith that such Index Price does not reflect an accurate price for Bitcoin, then the Sponsor will, on a best efforts basis, contact the Index Provider to obtain the Index Price directly from the Index Provider.
+Added: If the Index Price becomes unavailable, or if the Sponsor determines in good faith that such Index Price does not reflect an accurate price for Bitcoin, then the Sponsor will contact the Index Provider to obtain the Index Price directly from the Index Provider.
If after such contact such Index Price remains unavailable or the Sponsor continues to believe in good faith that such Index Price does not reflect an accurate price for Bitcoin, then the Sponsor will employ a cascading set of rules to determine the Index Price, as described below in “—Determination of the Index Price When Index Price is Unavailable.”
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For the purposes of illustration, outlined below are examples of how the attributes that impact weighting and adjustments in the aforementioned methodology may be utilized to generate the Index Price for a digital asset.
−Removed: For example, Constituent Trading Platforms used to calculate the Index Price of the digital asset may include trading platforms such as Coinbase, Kraken, LMAX Digital and Bitstamp.
+Added: For example, the Constituent Trading Platforms used to calculate the Index Price of the digital asset may include trading platforms such as Coinbase, Kraken, LMAX Digital and Crypto.com.
• Volume Weighting:
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Determination of the Index Price When Index Price is Unavailable
−Removed: On January 11, 2022, the Sponsor changed the cascading set of rules used to determine the Index Price.
The Sponsor uses the following cascading set of rules to calculate the Index Price.
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The Secondary Index Price is calculated by applying weighted-median techniques to such trade data where half the weight is derived from the trading volume on each constituent market and half is derived from inverse price variance, where a constituent market with high price variance as a result of outliers or market anomalies compared to other constituent markets is assigned a smaller weight.
−Removed: The Secondary Index Provider and the Sponsor have entered into the master services agreement, dated as of August 4, 2020, and order forms thereunder, pursuant to which the Sponsor may obtain and use the Secondary Index and the Secondary Index Price from the Secondary Index Provider.
+Added: The Secondary Index Provider and the Sponsor have entered into the master services agreement, dated as of August 4, 2020, and order forms thereunder, pursuant to which the Sponsor may obtain and use the Secondary Index and the
+Added: Secondary Index Price from the Secondary Index Provider.
If the Secondary Index becomes unavailable, or if the Sponsor determines in good faith that the Secondary Index does not reflect an accurate price, then the Sponsor will, on a best efforts basis, contact the Secondary Index Provider to obtain the Secondary Index Price directly from the Secondary Index Provider.
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If the Tertiary Pricing Option becomes unavailable, or if the Sponsor determines in good faith that the Tertiary Pricing Option does not reflect an accurate price, then the Sponsor will, on a best efforts basis, contact the Tertiary Pricing Provider to obtain the Tertiary Pricing Option directly from the Tertiary Pricing Provider.
−Removed: If after such contact the Tertiary Pricing Option remains unavailable after such contact or the Sponsor continues to believe in good faith that the Tertiary Pricing Option does not reflect an accurate price, then the Sponsor will employ the next rule to determine the Index Price.
+Added: If after such contact the Tertiary Pricing Option remains unavailable or the Sponsor continues to believe in good faith that the Tertiary Pricing Option does not reflect an accurate price, then the Sponsor will employ the next rule to determine the Index Price.
There are no predefined criteria to make a good faith assessment and it will be made by the Sponsor in its sole discretion.
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Moreover, the failure of FTX Trading Ltd.
−Removed: (“FTX”) in November 2022 and the resulting market turmoil substantially increased regulatory scrutiny in the United States and globally and led to SEC and criminal investigations, enforcement actions and other regulatory activity across the digital asset ecosystem.
−Removed: On January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology” aimed at supporting “the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.”
+Added: (“FTX”) in November 2022 and the resulting market turmoil substantially increased regulatory scrutiny in the United States and globally and led to SEC enforcement actions, criminal investigations, and other regulatory activity across the digital asset ecosystem.
+Added: On January 23, 2025, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology” aimed at supporting “the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy.” The executive order established an interagency working group tasked with “proposing a Federal regulatory framework governing the issuance and operation of digital assets” in the United States.
+Added: Pursuant to this executive order, the working group released a report in July 2025 outlining the administration's recommendations to Congress and various agencies reflecting the administration's “pro-innovation mindset toward digital assets and blockchain technologies.”
In addition, the SEC, U.S.
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For example, in June 2023, the SEC brought charges against Binance Holdings Ltd.
−Removed: (“Binance”) and Coinbase, Inc.
−Removed: (“Coinbase”), and in November 2023, the SEC brought charges against Kraken, alleging that they operated unregistered securities exchanges, brokerages and clearing agencies.
+Added: (the “Binance Complaint”) and Coinbase, Inc.
+Added: (the “Coinbase Complaint”), and in November 2023, the SEC brought charges against Kraken (the “Kraken Complaint”), alleging that they operated unregistered securities exchanges, brokerages and clearing agencies.
In its complaints, the SEC asserted that several digital assets are securities under the federal securities laws.
−Removed: The outcomes of these proceedings, as well as ongoing and future regulatory actions, have had a material adverse effect on the digital asset industry as a whole and on the price of Bitcoin, and may alter, perhaps to a materially adverse extent, the nature of an investment in the Shares and/or the ability of the Trust to continue to operate.
+Added: Between February 2025 and May 2025, the SEC entered into court-approved joint stipulations to dismiss each of the Binance Complaint, Coinbase Complaint and the Kraken Complaint.
+Added: The SEC has terminated its investigation or enforcement action into many other digital asset market participants as well.
Additionally, U.S.
−Removed: state and federal, and 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.
−Removed: In August 2021, the former chair of the SEC stated that he believed investors using Digital Asset Trading Platforms are not adequately protected, and that activities on the platforms can implicate the securities laws, commodities laws and banking laws, raising a number of issues related to protecting investors and consumers, guarding against illicit activity, and ensuring financial stability.
−Removed: The former chair expressed a need for the SEC to have additional authorities to prevent transactions, products, and platforms from “falling between regulatory cracks,” as well as for more resources to protect investors in “this growing and volatile sector.” The former chair called for federal legislation centering on digital asset trading, lending, and decentralized finance platforms, seeking “additional plenary authority” to write rules for digital asset trading and lending.
−Removed: However, the former chair has subsequently stated that the SEC already has explicit authority under existing laws to regulate the digital asset sector and several enforcement actions were filed against Digital Asset Trading Platforms during the first half of 2023.
−Removed: In particular, in June 2023, the SEC brought enforcement actions against Binance and Coinbase, two of the largest Digital Asset Trading Platforms, alleging that they operated unregistered securities exchanges, brokerages, and clearing agencies.
−Removed: The SEC has taken steps to interpret its existing authorities as covering various digital asset activities.
−Removed: For example, the SEC has also previously proposed amendments to the custody rules under Rule 206(4)-2 of the Investment Advisers Act.
−Removed: The proposed rule changes would amend the definition of a “qualified custodian” under Rule 206(4)-2(d)(6) and expand the current custody rule under Rule 206(4)-2 to cover digital assets and related advisory activities.
−Removed: If enacted as proposed, these rules would likely impose additional regulatory requirements with respect to the custody and storage of digital assets and could lead to additional regulatory oversight of the digital asset ecosystem more broadly.
−Removed: It is also possible that a new Administration and a new Congress in the United States propose new laws and regulations related to digital assets.
+Added: state and federal, and foreign regulators and
+Added: 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.
+Added: There have been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset markets.
+Added: Certain of these bills passed out of relevant committees and were passed in the House of Representatives in the last Congress, though not the Senate.
+Added: Some of these bills have since been reintroduced with changes, and continue to be contemplated in the relevant committees, as well as the full House of Representatives and Senate.
+Added: For example, in July 2025, the GENIUS Act was signed into law and the House of Representatives passed the Digital Asset Market Clarity Act of 2025 (“CLARITY Act”) in an effort to pass laws relating to digital asset market structure.
+Added: It is difficult to predict whether, or when, any of these developments will lead to Congress granting additional authorities to the SEC or other regulators, what the nature of such additional authorities might be, how additional legislation and/or regulatory oversight might impact the ability of digital asset markets to function or how any new regulations or changes to existing regulations might impact the value of digital assets.
See “Item 1A.
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Congress or any U.S.
−Removed: federal or state agencies may affect the value of the Shares or restrict the use of Bitcoin, mining activity or the operation of the Bitcoin Network or the Digital Asset Trading Platform Market in a manner that adversely affects the value of the Shares,” and, “Item 1A.
+Added: federal or state agencies may affect the value of the Shares or restrict the use of Bitcoin, mining activity or the operation of the Bitcoin Network or the Digital Asset Markets in a manner that adversely affects the value of the Shares,” and “Item 1A.
Risk Factors—Risk Factors Related to the Regulation of Digital Assets, the Trust and the Shares—A determination that Bitcoin or any other digital asset is a “security” may adversely affect the value of Bitcoin and the value of the Shares, and result in potentially extraordinary, nonrecurring expenses to, or termination of, the Trust.”
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The effect of any future regulatory change on the Trust or the Bitcoin held by the Trust is impossible to predict, but such change could be substantial and adverse to the Trust and the value of the Shares.
−Removed: The CFTC has regulatory jurisdiction over the Bitcoin futures markets.
−Removed: In addition, because the CFTC has determined that Bitcoin is a non-security “commodity” under the Commodity Exchange Act of 1936, as amended (the “CEA”) and the rules thereunder, it has jurisdiction to prosecute fraud and manipulation in the cash, or spot, market for Bitcoin.
+Added: The CFTC has regulatory jurisdiction over the Bitcoin futures markets because the CFTC believes that Bitcoin is a non-security “commodity” under the Commodity Exchange Act of 1936, as amended (the “CEA”) and the rules thereunder, such that it takes the position that it has jurisdiction to prosecute fraud and manipulation in the cash, or spot, market for Bitcoin.
Beyond instances of fraud or manipulation, the CFTC generally does not oversee cash or spot market exchanges, spot Digital Asset Trading Platforms or retail transactions involving spot Bitcoin that do not utilize collateral, leverage, or financing.
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and agree to regular coordination with CFTC surveillance staff on trade activities, including providing the CFTC surveillance team with trade settlement data upon request.
+Added: In December 2025, the CFTC announced that spot digital assets could begin being traded on CFTC-registered futures exchanges.
+Added: Soon after, spot digital assets began trading on Bitnomial, a CFTC-registered futures exchange and member of the Intermarket Surveillance Group, a global body of exchanges sharing surveillance information with member exchanges.
See “Item 1A.
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In addition, investors in the Trust will not benefit from the protections afforded to investors in Bitcoin futures contracts on regulated futures exchanges.
−Removed: The Trust creates Shares from time to time but only in Baskets.
+Added: The Trust creates and redeems Shares from time to time but only in Baskets.
A Basket equals a block of 10,000 Shares.
−Removed: The number of outstanding Shares is expected to increase from time to time as a result of the creation of Baskets.
−Removed: The creation of Baskets will require the delivery to the Trust of the amount of Bitcoin (or cash to acquire the amount of Bitcoin) represented by the Baskets being created.
−Removed: The creation of a Basket will be made only in exchange for the delivery to the Trust of the amount of whole and fractional Bitcoin represented by each Basket being created, the amount of which is determined by dividing (x) the amount of Bitcoin owned by the Trust at 4:00 p.m., New York time, on the relevant trade date, after deducting the amount of Bitcoin representing the U.S.
−Removed: dollar value of accrued but unpaid fees and expenses of the Trust (converted using the Index Price at such time, and carried to the eighth decimal place) by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one Bitcoin ( i.e.
−Removed: , carried to the eighth decimal place)), and multiplying such quotient by 10,000.
−Removed: Following the listing of Shares on NYSE Arca, Authorized Participants can engage with the Sponsor and the Trust to create and redeem Baskets.
−Removed: Authorized Participants are able to take advantage of arbitrage opportunities created when the market value of the Shares deviates from the value of the Trust’s Bitcoin, less the Trust’s expenses and other liabilities, which may have the effect of reducing any premium at which the Shares trade on NYSE Arca over such value or cause the Shares to trade at a discount to such value, which historically has been substantial.
−Removed: Each Share represented approximately 0.0008 of one Bitcoin as of December 31, 2024.
−Removed: Each Share in the initial Baskets represented approximately one-tenth (0.1) of a Bitcoin.
−Removed: The decrease in the amount of Bitcoin represented by each Share since inception is primarily a result of the Share Split and Initial Distribution and, to a lesser degree, the periodic withdrawal of Bitcoin to pay the Sponsor’s Fee and any Additional Trust Expenses.
−Removed: The amount of Bitcoin required to create a Basket is expected to continue to gradually decrease over time due to the transfer or sale of the Trust’s Bitcoin to pay the Sponsor’s Fee and any Additional Trust Expenses.
−Removed: The Sponsor will determine the Trust’s NAV on each business day as of 4:00 p.m., New York time, or as soon thereafter as practicable.
+Added: See “—Description of Creation and Redemption of Shares.” The Sponsor will determine the Trust’s NAV on each business day as of 4:00 p.m., New York time, or as soon thereafter as practicable.
The Sponsor will also determine the NAV per Share, which equals the NAV divided by the number of outstanding Shares.
−Removed: Each business day, the Sponsor will publish the Trust’s NAV and NAV per Share on the Trust’s website, www.etfs.grayscale.com/gbtc, as soon as practicable after the Trust’s NAV and NAV per Share have been determined by the Sponsor.
+Added: Each business day, the Sponsor will publish the Trust’s NAV and NAV per Share on the Trust’s website, etfs.grayscale.com/gbtc, as soon as practicable after the Trust’s NAV and NAV per Share have been determined by the Sponsor.
See “—Valuation of Bitcoin and Determination of NAV.”
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The spot price and bid/ask spreads may also be available directly from Digital Asset Trading Platforms.
−Removed: As of December 31, 2024, the Constituent Trading Platforms of the Index were Coinbase, Bitstamp, Kraken, LMAX Digital, Crypto.com and Bullish.
+Added: As of December 31, 2025, the Constituent Trading Platforms of the Index were Bitfinex, Bitstamp by Robinhood, Bullish, Coinbase, Crypto.com, Kraken, and LMAX Digital.
The Index Provider may remove or add Digital Asset Trading Platforms to the Index in the future at its discretion.
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Service Providers of the Trust
−Removed: Until December 31, 2024, the Trust’s Sponsor was Grayscale Investments, LLC, a Delaware limited liability company formed on May 29, 2013 and a wholly owned subsidiary of DCG.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments” for more information regarding the Reorganization on January 1, 2025.
+Added: As of the date of this Annual Report, the Trust’s Sponsor is Grayscale Investments Sponsors, LLC.
+Added: Until December 31, 2024, the Trust’s Sponsor was Grayscale Investments, LLC, a Delaware limited liability company formed on May 29, 2013 and a consolidated subsidiary of DCG.
+Added: See “—Overview of the Trust and the Shares” for more information regarding the Reorganization on January 1, 2025.
The Sponsor’s principal place of business is 290 Harbor Drive, 4th Floor, Stamford, Connecticut 06902, and its telephone number is (212) 668-1427.
−Removed: Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor, DCG, the sole equity holder of the Sponsor, is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason of being the sole equity holder of the Sponsor.
+Added: Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor, DCG, the indirect parent company of the Sponsor, is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason of being the indirect parent company of the Sponsor.
The Sponsor is neither an investment adviser registered with the SEC nor a commodity pool operator registered with the CFTC, and will not be acting in either such capacity with respect to the Trust, and the Sponsor’s provision of services to the Trust will not be governed by the Investment Advisers Act or the CEA.
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Marketing Agent Agreement
−Removed: The Sponsor, on behalf of the Trust, is party to a marketing agent agreement dated August 18, 2022 (the “Marketing Agent Agreement”) with Foreside Fund Services, LLC (the “Marketing Agent”).
+Added: The Sponsor, on behalf of the Trust, is party to a marketing agent agreement dated August 18, 2022 (the “Marketing Agent Agreement”) with Foreside Fund Services, LLC (the “Marketing Agent” or “Foreside”).
Under the Marketing Agent Agreement, the Marketing Agent will provide the following services to the Sponsor:
−Removed: (i) assist the Sponsor in facilitating Participation Agreements between and among Authorized Participants, the Sponsor, on behalf of the Trust, and the Transfer Agent;
+Added: (i) assist the Sponsor in facilitating Participant Agreements between and among Authorized Participants, the Sponsor, on behalf of the Trust, and the Transfer Agent;
(ii) provide prospectuses to Authorized Participants;
14 unchanged sentences
Further, either party may terminate the Index License Agreement immediately upon notice under certain circumstances, including with respect to the other party’s (i) insolvency, bankruptcy or analogous event or (ii) violation of money transmission, taxation or trading regulations that materially adversely affect either party’s ability to perform under the Index License Agreement.
+Added: COINDESK® and COINDESK BITCOIN PRICE INDEX (the “Index”) are trade or service marks of CoinDesk Indices, Inc.
+Added: (with its affiliates, including CC Data Limited, “CDI”) and/or its licensors.
+Added: CDI or CDI’s licensors own all proprietary rights in the Data.
+Added: CDI is not the issuer or producer of the Trust and has no responsibilities, obligations, or duties to investors in or holders of the Trust.
+Added: The Index is licensed for use by the Sponsor as the sponsor of the Trust.
+Added: The only relationship that CDI has with the Sponsor in respect of the Trust is the licensing of the Index, which is administered and published by CDI, or any successor thereto, without regard to the Sponsor or the owners or holders of Shares of the Trust.
+Added: Investors or holders acquire shares of the Trust offered by the Sponsor and investors and holders neither acquire any interest in the Index nor enter into any relationship of any kind whatsoever with CDI upon making an investment in or acquisition of the Trust.
+Added: The Trust is not sponsored, endorsed, sold, or promoted by CDI.
+Added: CDI makes no representation or warranty, express or implied, regarding the advisability of investing in or otherwise acquiring the Trust or the advisability of investing in securities or digital assets generally or the ability of the Index to track corresponding or relative market performance.
+Added: CDI has not passed on the legality or suitability of the Trust with respect to any person or entity.
+Added: CDI is not responsible for, nor has participated in, the determination of the timing of, prices at, or quantities of the Trust to be issued.
+Added: CDI has no obligation to take the needs of the Sponsor or the owners or holders of the Trust or any other third party into consideration in administering, composing, calculating, or publishing the Index.
+Added: CDI has no obligation or liability in connection with administration, marketing, or trading of the Trust.
+Added: The licensing agreement between the Sponsor and CDI is solely for the benefit of the Sponsor and CDI and not for the benefit of the owners or holders of Shares of the Trust or any other third parties.
+Added: CDI shall have no liability to the Sponsor, the Trust, investors, holders or other third parties for the quality, accuracy and/or completeness of the index or any data included therein or for interruptions in the delivery of the data.
+Added: CDI hereby expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to the Index or any other data included therein.
+Added: CDI reserves the right to change the methods of calculation or publication, or to cease the calculation or publication of the Index and
+Added: shall not be liable for any miscalculation of or any incorrect, delayed, or interrupted publication with respect to the Index.
+Added: CDI shall not be liable for any damages, including, without limitation, any special, indirect or consequential damages, or any lost profits, even if advised of the possibility of such, resulting from the use of the Index or any other data included therein or with respect to the Trust.
Administration and Accounting Agreement
−Removed: The Sponsor has entered into a Fund Administration and Accounting Agreement with BNY Mellon Asset Servicing, a division of The Bank of New York Mellon, to provide administration and accounting services to the Trust.
−Removed: Pursuant to the terms of the Agreement and under the supervision and direction of the Sponsor and the Trust, BNY Mellon Asset Servicing keeps the operational records of the Trust and prepares and files certain regulatory filings on behalf of the Trust.
−Removed: BNY Mellon Asset Servicing may also perform other services for the Trust pursuant to the Agreement as mutually agreed upon by the Sponsor, the Trust and BNY Mellon Asset Servicing from time to time.
+Added: The Sponsor has entered into a Fund Administration and Accounting Agreement with BNY Mellon Asset Servicing, a division of The Bank of New York Mellon (the “Fund Administration and Accounting Agreement”), to provide administration and accounting services to the Trust.
+Added: Pursuant to the terms of the Fund Administration and Accounting Agreement and under the supervision and direction of the Sponsor and the Trust, BNY Mellon Asset Servicing keeps the operational records of the Trust and prepares and files certain regulatory filings on behalf of the Trust.
+Added: BNY Mellon Asset Servicing may also perform other services for the Trust pursuant to the Fund Administration and Accounting Agreement as mutually agreed upon by the Sponsor, the Trust and BNY Mellon Asset Servicing from time to time.
The Administrator’s fees are paid on behalf of the Trust by the Sponsor.
37 unchanged sentences
A copy of the form of Participant Agreement is available for inspection at the Sponsor’s principal office identified herein.
−Removed: Each Authorized Participant (i) is a registered broker-dealer and (ii) has entered into a Participant Agreement with the Sponsor and the Transfer Agent.
−Removed: Subject to In-Kind Regulatory Approval (as defined below), in the future any Authorized Participants creating and redeeming Shares through In-Kind Orders (as defined below) must also own, or their designee in connection with In-Kind Orders (“AP Designee”), must own, a Bitcoin wallet address that is known to the Custodian as belonging to the Authorized Participant or its AP Designee and maintain an account with the Custodian.
+Added: Each Authorized Participant (i) is a registered broker-dealer and (ii) has entered into a Participant Agreement with the Sponsor and the Transfer Agent and (iii) in the case of any creation or redemption pursuant to In-Kind Orders (as defined below), own, or their designee in connection with In-Kind Orders (“AP Designee”), must own, a Bitcoin wallet address that is known to the Custodian as belonging to the Authorized Participant or its AP Designee and maintain an account with the Custodian.
The Trust issues Shares to, and redeems Shares from, Authorized Participants on an ongoing basis, but only in one or more Baskets (with a “Basket” being a block of 10,000 Shares).
−Removed: The Participant Agreements set forth the procedures for the creation and redemption of Baskets by the Authorized Participants.
−Removed: Although the Trust creates Baskets only upon the receipt of Bitcoin, and redeems Baskets only by distributing Bitcoin or proceeds from the disposition of Bitcoin, at this time an Authorized Participant can only submit “Cash Orders,” pursuant to which the Authorized Participant will deposit cash into, or accept cash from, the Cash Account (as defined herein) in connection with the creation and redemption of Baskets.
−Removed: Cash Orders will be facilitated by the Transfer Agent and Grayscale Investments Sponsors, LLC (in such capacity, the “Liquidity Engager”), which will engage one or more eligible companies (each, a “Liquidity Provider”) that is not an agent of, or otherwise acting on behalf of, any Authorized Participant to obtain or receive Bitcoin in connection with such orders.
−Removed: The Sponsor may in its sole discretion limit the number of Shares created pursuant to Cash Orders on any specified day without notice to the Authorized Participants and may direct the Marketing Agent to reject any Cash Orders in excess of such capped amount.
−Removed: The redemption of Shares pursuant to Cash Orders will only take place if approved by the Sponsor in writing, in its sole discretion and on a case-by-case basis.
−Removed: The Trust is currently able to accept Cash Orders.
−Removed: However, and in common with other spot Bitcoin exchange-traded products, the Trust is not at this time able to create and redeem shares via in-kind transactions with Authorized Participants, and there has yet to be definitive regulatory guidance on whether and how registered broker-dealers can hold and deal in Bitcoin in compliance with the federal securities laws.
−Removed: If NYSE Arca were to seek and obtain necessary regulatory approval from the SEC to amend its listing rules to allow “In-Kind Orders” (the “In-Kind Regulatory Approval”), in the future the Trust may also create and redeem Baskets via In-Kind Orders, pursuant to which an Authorized Participant or its AP Designee would deposit Bitcoin directly with the Trust or receive Bitcoin directly from the Trust.
−Removed: However, because In-Kind Regulatory Approval has not been obtained, Baskets cannot be created or redeemed through In-Kind Orders and can only be created or redeemed through Cash Orders.
−Removed: There can be no assurance as to when such regulatory clarity will emerge, or when NYSE Arca will seek or obtain such regulatory approval, if at all.
−Removed: See “Item 1A.
−Removed: Risk Factors—Risk Factors Related to the Trust and the Shares—The lack of ability to facilitate in-kind creations and redemptions of Shares could have adverse consequences for the Trust” for more information.
+Added: See “—Description of Creation and Redemption of Shares.”
As of the date of this Annual Report, the Sponsor, on behalf of the Trust, and the Transfer Agent entered into Participant Agreements with Jane Street Capital, LLC, Virtu Americas LLC, Macquarie Capital (USA) Inc., ABN AMRO Clearing USA LLC and Goldman Sachs & Co.
1 unchanged sentence
The Sponsor may engage additional Authorized Participants who are unaffiliated with the Trust in the future.
−Removed: In connection with the entry into the Participant Agreements referred to above, as of January 10, 2024, the Sponsor amended, solely, with respect to the Trust, the Participant Agreement, dated as of October 3, 2022, between the Sponsor and Grayscale Securities, an affiliate of the Sponsor and an affiliate and related party of the Trust, to remove the Trust as an entity covered by the Participant Agreement.
−Removed: As a result, since January 10, 2024, Grayscale Securities ceased acting as an Authorized Participant of the Trust.
No Authorized Participant has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares.
1 unchanged sentence
Liquidity Providers facilitate the purchase and sale of Bitcoin in connection with Cash Orders for creations or redemptions of Baskets.
−Removed: The Liquidity Providers with which Grayscale Investments Sponsors, LLC, acting in its capacity as the Liquidity Engager, will engage in Bitcoin transactions are third parties that are not affiliated with the Sponsor or the Trust and are not acting as agents of the Trust, the Sponsor, or any Authorized Participant, and all transactions will be done on an arms-length basis.
+Added: The Liquidity Providers with which Grayscale Investments Sponsors, LLC (in such capacity, the “Liquidity Engager”), will engage in Bitcoin transactions are third parties that are not affiliated with the Sponsor or the Trust and are not acting as agents of the Trust, the Sponsor, or any Authorized Participant.
Except for the contractual relationships between each Liquidity Provider and Grayscale Investments Sponsors, LLC in its capacity as the Liquidity Engager, there is no contractual relationship between each Liquidity Provider and the Trust, the Sponsor, or any Authorized Participant.
7 unchanged sentences
The Custodian is authorized to serve as the Trust’s custodian under the Trust Agreement and pursuant to the terms and provisions of the Prime Broker Agreement.
−Removed: The Custodian has its principal office at 200 Park Avenue South, Suite 1208, New York, New York 10003.
+Added: The Custodian has its principal office at 200 Park Avenue South, Suite 1208, New York, NY 10003.
A copy of the Prime Broker Agreement is available for inspection at the Sponsor’s principal office identified herein.
5 unchanged sentences
Fees paid to the Custodian are a Sponsor-paid Expense.
−Removed: Under the Prime Broker Agreement, each of the Custodian and the Trust has agreed to indemnify and hold harmless the other party from any third-party claim or third-party demand (including reasonable and documented attorneys’ fees and any fines, fees or penalties imposed by any regulatory authority) arising out of or related to the Custodian’s or the Trust’s, as the case may be, breach of the Prime Broker Agreement, inaccuracy in any of the Custodian’s or the Trust’s, as the case may be, representations or warranties in the Prime Broker Agreement, or the Trust’s violation, or the Custodian’s knowing violation, of any law, rule or regulation, or the rights of any third party, except where such claim directly results from the negligence, fraud or willful misconduct of the other such party.
−Removed: addition, the Trust has agreed to indemnify the Custodian with respect to any Incidental Rights or IR Virtual Currency abandoned by the Trust and any tax liability relating thereto or arising therefrom.
+Added: Under the Prime Broker Agreement, each of the Custodian and the Trust has agreed to indemnify and hold harmless the other party from any third-party claim or third-party demand (including reasonable and documented attorneys’ fees and any fines, fees or penalties imposed by any regulatory authority) arising out of or related to the Custodian’s or the Trust’s, as the case may be, breach of the Prime Broker Agreement, inaccuracy in any of the Custodian’s or the Trust’s, as the case may be, representations or warranties in
+Added: the Prime Broker Agreement, or the Trust’s violation, or the Custodian’s knowing violation, of any law, rule or regulation, or the rights of any third party, except where such claim directly results from the negligence, fraud or willful misconduct of the other such party.
+Added: In addition, the Trust has agreed to indemnify the Custodian with respect to any Incidental Rights or IR Virtual Currency abandoned by the Trust and any tax liability relating thereto or arising therefrom.
The Custodian and its affiliates may from time to time purchase or sell Bitcoin for their own accounts and as agent for their customers or Shares for their own accounts.
5 unchanged sentences
Furthermore, the Sponsor and the Trust may use Bitcoin custody services or similar services provided by entities other than Coinbase Custody Trust Company, LLC at any time without prior notice to Coinbase Custody Trust Company, LLC.
+Added: The Additional Custodian
+Added: In addition, Anchorage Digital Bank N.A.
+Added: (“Anchorage Digital” or the “Additional Custodian”), a national trust bank chartered by the Office of the Comptroller of the Currency, provides services related to custody and safekeeping of the Trust’s Bitcoin holdings, pursuant to a Master Custody Services Agreement, dated as of August 8, 2025 (the “Anchorage Digital Custodian Agreement”).
+Added: The Sponsor currently utilizes Anchorage Digital’s services to custody a portion of the Trust’s Bitcoin.
+Added: The Trust’s existing custody arrangement with Coinbase Custody Trust Company, LLC is unaffected by the Trust’s entry into the Anchorage Digital Custodian Agreement, and Coinbase remains the Trust’s primary custodian.
+Added: The Sponsor shall, in its sole discretion, determine the amounts held at either custodian as permitted by the Trust Agreement.
+Added: At the current time, the Sponsor has not determined the total amount of the Trust’s Bitcoin it will move to Anchorage Digital.
+Added: The addition of Anchorage Digital reflects the Sponsor’s ongoing risk management approach as part of the Trust’s growing size.
+Added: References to the “Custodian” in this Annual Report refer to Coinbase Custody Trust Company, LLC, Anchorage Digital and/or other custodians, collectively or in their individual capacities, as the context may require.
+Added: Under the Anchorage Digital Custodian Agreement, Anchorage Digital is required to keep all of the private keys associated with the Trust’s Bitcoin held at Anchorage Digital in cold storage.
+Added: In the event of a fork of the Blockchain, the Anchorage Digital Custodian Agreement provides that Anchorage Digital may temporarily suspend services, and may, in its sole discretion, determine whether or not to support (or cease supporting) either branch of the forked protocol entirely, provided that Anchorage shall use commercially reasonable efforts to avoid ceasing to support both branches of such forked protocol.
+Added: The Anchorage Digital Custodian Agreement requires the Trust to indemnify Anchorage Digital, its affiliates and their respective officers, directors, agents, employees and representatives against certain losses arising from or related to the Trust’s material breach of the Anchorage Digital Custodian Agreement, among other things, except where a claim was caused by certain acts of Anchorage Digital.
+Added: The Anchorage Digital Custodian Agreement also requires Anchorage Digital to maintain insurance policies and coverage.
+Added: The foregoing description of the Anchorage Digital Custodian Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Anchorage Digital Custodian Agreement filed as an exhibit to the Trust’s Current Report on Form 8-K filed on August 8, 2025, which is incorporated by reference herein.
Custody of the Trust’s Bitcoin
27 unchanged sentences
These security procedures are intended to remove single points of failure in the protection of the Trust’s assets.
−Removed: Transfers of Bitcoin to the Vault Balance from the Settlement Balance will be available to the Trust once processed on the Bitcoin Blockchain, subject to the availability of the Prime Broker’s online platform.
+Added: Transfers of Bitcoin to the Vault Balance from the Settlement Balance will be available to the Trust once processed on the Blockchain, subject to the availability of the Prime Broker’s online platform.
When Bitcoin is credited to the Settlement Balance, certain movements to allocate the balance among (i) omnibus cold storage wallets and omnibus hot storage wallets on the Prime Broker’s platform;
6 unchanged sentences
Since January 10, 2024, Foreside Fund Services, LLC (“Foreside”) is the marketing agent of the Shares, and Grayscale Securities ceased acting as the distributor and marketer of the Shares of the Trust.
−Removed: Foreside Fund Services, LLC is a registered broker-dealer with the SEC and is a member of FINRA.
+Added: Foreside is a registered broker-dealer with the SEC and is a member of FINRA.
In its capacity as marketing agent, Foreside provides the following services to the Sponsor:
−Removed: (i) assist the Sponsor in facilitating Participation Agreements between and among Authorized Participants, the Sponsor, on behalf of the Trust, and the Transfer Agent;
+Added: (i) assist the Sponsor in facilitating Participant Agreements between and among Authorized Participants, the Sponsor, on behalf of the Trust, and the Transfer Agent;
(ii) provide prospectuses to Authorized Participants;
−Removed: (iii) work with the Transfer Agent to review and approve orders placed by the Authorized Participants and transmitted to the Transfer Agent;
+Added: (iii) work with the Transfer Agent to review and approve orders placed by the
+Added: Authorized Participants and transmitted to the Transfer Agent;
(iv) review and file applicable marketing materials with FINRA and (v) maintain, reproduce and store applicable books and records related to the services provided under the Marketing Agent Agreement.
6 unchanged sentences
The Shares are listed on NYSE Arca under the ticker symbol “GBTC”.
−Removed: On January 26, 2018, the Trust completed a 91-for-1 Share Split of the Trust’s issued and outstanding Shares.
−Removed: In connection with the Share Split, shareholders of record on January 22, 2018 received ninety additional Shares of the Trust for each Share held.
−Removed: The number of outstanding Shares and per-Share amounts disclosed for periods prior to January 26, 2018 have been retroactively adjusted to reflect the effects of the Share Split, as applicable.
Description of Limited Rights
11 unchanged sentences
Additionally, subject to certain limitations, the Sponsor may make any other amendments to the Trust Agreement which do not materially adversely affect the interests of the shareholders in its sole discretion without shareholder consent.
−Removed: Redemptions and Distributions
−Removed: Through its redemption program, the Trust may redeem Shares from Authorized Participants on an ongoing basis.
−Removed: Although the Trust redeems Baskets only by distributing Bitcoin or proceeds from the disposition of Bitcoin, at this time an Authorized Participant can only submit Cash Orders, pursuant to which the Authorized Participant will accept cash from the Cash Account in connection with the redemption of Baskets.
−Removed: Cash Orders will be facilitated by the Transfer Agent and Grayscale Investments Sponsors, LLC, which will engage one or more Liquidity Providers that is not an agent of, or otherwise acting on behalf of, any Authorized Participant receiving Bitcoin in connection with such orders.
−Removed: Subject to In-Kind Regulatory Approval, in the future the Trust may also redeem Baskets via In-Kind Orders, pursuant to which an Authorized Participant or its AP Designee would receive Bitcoin directly from the Trust.
−Removed: However, because In-Kind Regulatory Approval has not been obtained, at this time Baskets will not be redeemed through In-Kind Orders and will only be redeemed through Cash Orders.
+Added: Distributions
Pursuant to the terms of the Trust Agreement, the Trust may make distributions on the Shares in-cash or in-kind.
4 unchanged sentences
A Basket equals 10,000 Shares.
−Removed: As of December 31, 2024, each Share represented approximately 0.0008 of one Bitcoin.
−Removed: See “—Description of Creation and Redemption of Shares.” The creation of a Basket requires the delivery to the Trust of the amount of Bitcoin (or cash to acquire such amount of Bitcoin) represented by one Share immediately prior to such creation multiplied by 10,000.
+Added: See “—Description of Creation and Redemption of Shares.” The creation of a Basket requires the delivery to the Trust of the amount of Bitcoin (or cash to acquire the amount of Bitcoin) represented by one Share immediately prior to such creation multiplied by 10,000.
The Trust may from time to time halt creations, including for extended periods of time, for a variety of reasons, including in connection with forks, airdrops and other similar occurrences.
Redemption of Shares
−Removed: On January 10, 2024, the SEC approved an application under Rule 19b-4 of the Securities Exchange Act of 1934, as amended, by NYSE Arca to list the Shares of the Trust.
−Removed: Shares of the Trust began trading on NYSE Arca under the symbol “GBTC” on January 11, 2024.
−Removed: In connection with the uplisting of the Shares, the Sponsor authorized the commencement of the Trust’s redemption program in reliance on Regulation M exemptive relief available to similarly situated commodity-based exchange-traded products.
−Removed: The Trust redeems Shares at such times and for such periods as determined by the Sponsor, but only in one or more whole Baskets.
−Removed: A Basket equals 10,000 Shares.
−Removed: See “—Description of Creation and Redemption of Shares.” The procedures by which an Authorized Participant can redeem one or more Baskets mirror the procedures for the creation of Baskets.
−Removed: The redemption of a Basket requires the delivery to the Authorized Participant of the amount of Bitcoin represented by one Share immediately prior to such redemption multiplied by 10,000.
−Removed: The Trust may from time to time halt redemptions, including for extended periods of time, for a variety of reasons, including in connection with forks, airdrops and other similar occurrences.
+Added: Shares are redeemable only in accordance with the provisions of the Trust Agreement and the relevant Participant Agreement.
+Added: Through its redemption program, the Trust redeems Shares from Authorized Participants on an ongoing basis.
+Added: Although the Trust redeems Baskets by distributing Bitcoin or proceeds from the disposition of Bitcoin, at this time an Authorized Participant can only submit Cash Orders, pursuant to which an Authorized Participant will accept cash from the Cash Account (as defined herein) in connection with the redemption of Baskets.
+Added: In an In-Kind Order, the Authorized Participant or its AP Designee will receive Bitcoin directly from the Trust in connection with the redemption of Baskets.
+Added: Cash Orders are facilitated by the Transfer Agent and Grayscale Investments Sponsors, LLC, which acts on behalf of the Trust in its capacity as Liquidity Engager and will engage one or more Liquidity Providers that is not an agent of, or otherwise acting on behalf of, any Authorized Participant receiving Bitcoin in connection with such orders.
+Added: See “Description of Creation and Redemption of Shares.”
The Sponsor may suspend the Trust’s redemption program in its sole discretion, or the redemption program may otherwise become unavailable, which could cause the Shares to trade at a discount to the NAV per Share.
See “Item 1A.
−Removed: Risk Factors—Risk Factors Related to the Trust and the Shares—Any suspension or other unavailability of the Trust’s redemption program may cause the Shares to trade at a discount to the NAV per Share.”
+Added: Risk Factors—Risk Factors Related to the Trust and the Shares—Any suspension or other unavailability of the Trust’s redemption program may cause the Shares to trade at a discount to the NAV per hare.”
Book-Entry Form
Shares are held primarily in book-entry form by the Transfer Agent.
−Removed: The Sponsor or its delegate will direct the Transfer Agent to credit the number of Creation Baskets to the applicable Authorized Participant.
−Removed: The Transfer Agent will issue Creation Baskets.
+Added: The Sponsor or its delegate will direct the Transfer Agent to credit or debit, as applicable, the number of Baskets to the applicable Authorized Participant.
+Added: The Transfer Agent will issue or cancel Baskets, as applicable.
Transfers will be made in accordance with standard securities industry practice.
7 unchanged sentences
However, the Sponsor may in the future adjust the creation and redemption order size in order to improve the effectiveness of the activities of Authorized Participants in the secondary market for the Shares if the Sponsor determines it to be necessary or advisable.
−Removed: As of December 31, 2024, 7.9319 Bitcoin are required to create a Basket, or 10,000 Shares, representing less than 0.01% of the amount of Bitcoin traded each day on average.
As such, the Sponsor does not expect that the size of the Baskets will have an impact on the arbitrage mechanism.
8 unchanged sentences
The amount of Bitcoin represented by a Share will gradually decrease over time as the Trust’s Bitcoin are used to pay the Trust’s expenses.
−Removed: As of December 31, 2024, each Share represented approximately 0.0008 of one Bitcoin.
Authorized Participants are the only persons that may place orders to create and redeem Baskets.
−Removed: Each Authorized Participant must (i) be a registered broker-dealer and (ii) enter into a Participant Agreement with the Sponsor and the Transfer Agent.
−Removed: Subject to In-Kind Regulatory Approval, in the future any Authorized Participants or their AP Designees creating and redeeming Shares through In-Kind Orders must also own a Bitcoin wallet address that is known to the Custodian as belonging to the Authorized Participant (or its AP Designee) and maintain an account with the Custodian.
+Added: Each Authorized Participant must (i) be a registered broker-dealer and (ii) enter into a Participant Agreement with the Sponsor and the Transfer Agent and (iii) in the case of any creation or redemption pursuant to In-Kind Orders, own a Bitcoin wallet address that is known to the Custodian as belonging to the Authorized Participant and maintain an account with the Custodian (or if the Authorized Participant does not itself trade in Bitcoin, a designee of such Authorized Participant (each, an “AP Designee”) must own a Bitcoin wallet address that is known to the Custodian as belonging to such AP Designee and maintain an account with the Custodian.
An Authorized Participant may act for its own account or as agent for broker-dealers, custodians and other securities market participants that wish to create or redeem Baskets.
1 unchanged sentence
The creation of Baskets requires the delivery to the Trust of the Total Basket Amount (or cash to acquire the Total Basket Amount) and the redemption of Baskets requires the distribution or other disposition by the Trust of the Total Basket Amount.
−Removed: Although the Trust creates Baskets only upon the receipt of Bitcoin, and redeems Baskets only by distributing Bitcoin or proceeds from the disposition of Bitcoin, at this time an Authorized Participant can only submit Cash Orders, pursuant to which the Authorized Participant will deposit cash into, or accept cash from, a segregated account maintained by the Transfer Agent in the name of the Trust for purposes of receiving and distributing cash in connection with the creation and redemption of Baskets (such account, the “Cash Account”).
−Removed: Cash Orders will be facilitated by the Transfer Agent and the Liquidity Engager.
−Removed: On an order-by-order basis, the Liquidity Engager will engage one or more Liquidity Providers to obtain or receive Bitcoin in exchange for cash in connection with such order, as described in more detail below.
+Added: Although the Trust creates Baskets only upon the receipt of Bitcoin, and redeems Baskets only by distributing Bitcoin or proceeds from the disposition of Bitcoin, at this time an Authorized Participant can only submit Cash Orders, pursuant to which the Authorized Participant will deposit
+Added: cash into, or accept cash from, a segregated account maintained by the Transfer Agent in the name of the Trust for purposes of receiving and distributing cash in connection with the creation and redemption of Baskets (such account, the “Cash Account”).
+Added: Cash Orders will be facilitated by the Transfer Agent and Grayscale Investments Sponsors, LLC.
+Added: On an order-by-order basis, Grayscale Investments Sponsors, LLC, acting in its capacity as Liquidity Engager, will engage one or more Liquidity Providers to obtain or receive Bitcoin in exchange for cash in connection with such order, as described in more detail below.
Each Liquidity Provider must enter into a Liquidity Provider Agreement with the Liquidity Engager and the Sponsor (on behalf of the Trust), which will obligate it to obtain or receive Bitcoin in connection with creations and redemptions pursuant to Cash Orders.
2 unchanged sentences
The amount may be changed by the Sponsor in its sole discretion at any time, and Liquidity Providers will communicate to the Sponsor in advance the Variable Fee they would be willing to accept in connection with a Variable Fee Cash Order, based on market conditions and other factors existing at the time of such Variable Fee Cash Order.
−Removed: Alternatively, the Sponsor may require that a Cash Order be effected as an Actual Execution Cash Order, in its sole discretion based on market conditions and other factors existing at the time of such Cash Order, and under such circumstances, any price differential between (x) the Total Basket NAV on the trade date and (y) the price realized in acquiring or disposing of the corresponding Total Basket Amount, as the case may be, will be borne solely by the Authorized Participant until such Bitcoin have been received or liquidated by the Trust.
+Added: Alternatively, the Sponsor may require that a Cash Order be effected as an Actual Execution Cash Order, in its sole discretion based on market conditions and other factors existing at the time of such Cash Order, and under such circumstances, any price differential between (x) the Total Basket NAV on the trade date and (y) the price realized in acquiring or disposing of the corresponding Total Basket Amount, as the case may be, will be borne solely by such Authorized Participant until such Bitcoin have been received or liquidated by the Trust.
See “—Creation Procedures—Actual Execution Cash Orders” and “—Redemption Procedures—Actual Execution Cash Orders.”
5 unchanged sentences
As a result, any incorrectly executed Bitcoin transactions could adversely affect the value of the Shares.”
−Removed: In common with other spot digital asset exchange-traded products, the Trust is not at this time able to create and redeem shares via in-kind transactions with Authorized Participants, and there has yet to be definitive regulatory guidance on whether and how registered broker-dealers can hold and deal in Bitcoin in compliance with the federal securities laws.
−Removed: Subject to In-Kind Regulatory Approval, in the future the Trust may also create and redeem Baskets via In-Kind Orders, pursuant to which an Authorized Participant or its AP Designee would deposit Bitcoin directly with the Trust or receive Bitcoin directly from the Trust.
−Removed: However, because In-Kind Regulatory Approval has not been obtained, at this time Baskets will not be created or redeemed through In-Kind Orders and will only be created or redeemed through Cash Orders.
−Removed: There can be no assurance as to when such regulatory clarity will emerge, or when NYSE Arca will seek or obtain such regulatory approval, if at all.
+Added: The Trust is not at this time able to create and redeem shares via in-kind transactions with Authorized Participants.
+Added: Subject to the Sponsor causing the Trust to create and redeem Shares via in-kind transactions with Authorized Participants, in the future the Trust may also create and redeem Baskets via In-Kind Orders, pursuant to which an Authorized Participant or its AP Designee would deposit Bitcoin directly with the Trust or receive Bitcoin directly from the Trust.
+Added: However, at this time Baskets will not be created or redeemed through In-Kind Orders and will only be created or redeemed through Cash Orders.
+Added: There can be no assurance as to when the Trust will be permitted to create and redeem Shares via in-kind transactions with Authorized Participants.
See “Item 1A.
Risk Factors—Risk Factors Related to the Trust and the Shares—The lack of ability to facilitate in-kind creations and redemptions of Shares could have adverse consequences for the Trust.”
−Removed: Authorized Participants do not pay a transaction fee to the Trust in connection with the creation or redemption of Baskets, but there may be transaction fees associated with the validation of the transfer of Bitcoin by the Bitcoin Network, which will be paid by the Custodian in the case of redemptions and the Authorized Participant, its AP Designee or the Liquidity Provider in the case of creations.
+Added: Authorized Participants do not pay a transaction fee to the Trust in connection with the creation or redemption of Baskets, but there may be transaction fees associated with the validation of the transfer of Bitcoin by the Bitcoin Network, which will be paid by the Custodian in the case of redemptions and an Authorized Participant, its AP Designee or the Liquidity Provider in the case of creations.
Service providers may charge Authorized Participants or AP Designees administrative fees for order placement and other services related to the creation or redemption of Baskets.
7 unchanged sentences
On any business day, an Authorized Participant may place an order with the Transfer Agent to create one or more Baskets.
−Removed: Cash Orders for creation must be placed with the Transfer Agent no later than 1:59:59 p.m., New York time.
+Added: Cash Orders for creation must be placed with the Transfer Agent no later than 1:59:59 p.m., New York time (the “Order Cutoff Time”).
The Sponsor may in its sole discretion limit the number of Shares created pursuant to Cash Orders on any specified day without notice to the Authorized Participants and may direct the Marketing Agent to reject any Cash Orders in excess of such capped amount.
−Removed: In exercising its discretion to limit the number of Shares created pursuant to Cash Orders, the Sponsor takes into consideration a number of factors, including (i) the availability of Liquidity Providers to facilitate Cash Orders and (ii) to the extent In-Kind Regulatory Approval has been obtained, the cost of processing Cash Orders relative to the cost of processing In-Kind Orders.
−Removed: If the Sponsor decides to limit Cash Orders and the Trust is otherwise unable to satisfy creation orders made in cash, the Trust’s ability to create new Shares could be negatively impacted or, if In-Kind Regulatory Approval has not been obtained as of such time, would be unavailable, which could impact the Shares’ liquidity and/or cause the Shares to trade at premiums to the NAV per Share, and otherwise have a negative impact on the value of the Shares.
−Removed: In addition, if the Sponsor decides to limit Cash Orders at a time when the Shares are trading at a premium to the NAV per Share, and In-Kind Regulatory Approval has not been obtained as of such time or the in-kind creation is otherwise unavailable for any reason, the arbitrage mechanism may fail to effectively function, which could impact the Shares’ liquidity and/or cause the Shares to trade at premiums to the NAV per Share, or otherwise have a negative impact on the value of the Shares.
+Added: In exercising its discretion to limit the number of Shares created pursuant to Cash Orders, the Sponsor expects to take into consideration a number of factors, including (i) the availability of Liquidity Providers to facilitate Cash Orders and (ii) to the extent the Trust is permitted to create and redeem Shares via in-kind transactions with Authorized Participants, the cost of processing Cash Orders relative to the cost of processing In-Kind Orders.
+Added: If the Sponsor decides to limit Cash Orders and the Trust is otherwise unable to satisfy creation orders made in cash, the Trust’s ability to create new Shares could be negatively impacted or, if the Trust is not permitted to create and redeem Shares via in-kind transactions with Authorized Participants as of such time, would be unavailable, which could impact the Shares’ liquidity and/or cause the Shares to trade at premiums to the NAV per Share, and otherwise have a negative impact on the value of the Shares.
+Added: In addition, if the Sponsor decides to limit Cash Orders at a time when the Shares are trading at a premium to the NAV per Share, and the Trust is not permitted to create and redeem Shares via in-kind transactions with Authorized Participants as of such time or the in-kind creation is otherwise unavailable for any reason, the arbitrage mechanism may fail to effectively function, which could impact the Shares’ liquidity and/or cause the Shares to trade at premiums to the NAV per Share, or otherwise have a negative impact on the value of the Shares.
See “Item 1A.
1 unchanged sentence
Creations pursuant to Cash Orders will take place as follows, where “T” is the trade date and each day in the sequence must be a business day.
−Removed: Before a creation order is placed, the Sponsor determines if such creation order will be a Variable Fee Cash Order or an Actual Execution Cash Order, which determination is communicated to the Authorized Participant.
+Added: Before a creation order is placed, the Sponsor determines if such creation order will be a Variable Fee Cash Order or an Actual Execution Cash Order, which determination is communicated to an Authorized Participant.
Trade Date (T)
27 unchanged sentences
The redemption of Shares pursuant to Cash Orders will only take place if approved by the Sponsor in writing, in its sole discretion and on a case-by-case basis.
−Removed: In exercising its discretion to approve the redemption of Shares pursuant to Cash Orders, the Sponsor takes into consideration a number of factors, including (i) the availability of Liquidity Providers to facilitate Cash Orders and (ii) to the extent In-Kind Regulatory Approval has been obtained, the cost of processing Cash Orders relative to the cost of processing In-Kind Orders.
−Removed: If the Sponsor decides to limit Cash Orders and the Trust is unable to satisfy redemption orders made in cash, the Trust’s ability to redeem new Shares could be negatively impacted or, if In-Kind Regulatory Approval has not been obtained as of such time, would be unavailable, which could impact the Shares’ liquidity and/or cause the Shares to trade at discounts, and could have a negative impact on the value of the Shares.
−Removed: In addition, if the Sponsor decides to limit Cash Orders at a time when the Shares are trading at a discount to the NAV per Share, and In-Kind Regulatory Approval has not been obtained as of such time or the in-kind redemption of Shares is otherwise unavailable, the arbitrage mechanism may fail to effectively function, which could impact the Shares’ liquidity and/or cause the Shares to trade at discounts to the NAV per Share, and otherwise have a negative impact on the value of the Shares.
+Added: In exercising its discretion to approve the redemption of Shares pursuant to Cash Orders, the Sponsor takes into consideration a number of factors, including (i) the availability of Liquidity Providers to facilitate Cash Orders and (ii) to the extent the Trust is permitted to create and redeem Shares via in-kind transactions with Authorized Participants, the cost of processing Cash Orders relative to the cost of processing In-Kind Orders.
+Added: If the Sponsor decides to limit Cash Orders and the Trust is unable to satisfy redemption orders made in cash, the Trust’s ability to redeem new Shares could be negatively impacted or, if the Trust is not permitted to create and redeem Shares via in-kind transactions with Authorized Participants as of such time, would be unavailable, which could impact the Shares’ liquidity and/or cause the Shares to trade at discounts, and could have a negative impact on the value of the Shares.
+Added: In addition, if the Sponsor decides to limit Cash Orders at a time when the Shares are trading at a discount to the NAV per Share, and the Trust is not permitted to create and redeem Shares via in-kind transactions with Authorized Participants as of such time or the in-kind redemption of Shares is otherwise unavailable, the arbitrage mechanism may fail to effectively function, which could impact the Shares’ liquidity and/or cause the Shares to trade at discounts to the NAV per Share, and otherwise have a negative impact on the value of the Shares.
See “Item 1A.
34 unchanged sentences
The Marketing Agent may reject an order or, after accepting an order, may cancel such order, if:
−Removed: (i) such order is not presented in proper form as described in the Participant Agreement, (ii) to the extent In-Kind Regulatory Approval has been obtained, in the case of In-Kind Orders, the transfer of the Total Basket Amount comes from an account other than a Bitcoin wallet address that is known to the Custodian as belonging to the Authorized Participant or its AP Designee or (iii) the fulfillment of the order, in the opinion of counsel, might be unlawful, among other reasons.
+Added: (i) such order is not presented in proper form as described in the Participant Agreement, (ii) to the extent the Trust is permitted to create and redeem Shares via in-kind transactions with Authorized Participants, in the case of In-Kind Orders, the transfer of the Total Basket Amount comes from an account other than a Bitcoin wallet address that is known to the Custodian as belonging to the Authorized Participant or its AP Designee or (iii) the fulfillment of the order, in the opinion of counsel, might be unlawful, among other reasons.
None of the Sponsor or its delegates will be liable for the suspension, rejection or acceptance of any creation order or redemption order.
2 unchanged sentences
Tax Responsibility
−Removed: Authorized Participants are responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value-added tax or similar tax or governmental charge applicable to the creation and redemption of Baskets, regardless of whether such tax or charge is imposed directly on the Authorized Participant, and agree to indemnify the Sponsor and the Trust if the Sponsor or the Trust is required by law to pay any such tax, together with any applicable penalties, additions to tax or interest thereon.
+Added: Authorized Participants are responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value-added tax or similar tax or governmental charge applicable to the creation and redemption of Baskets, regardless of whether such tax or charge is imposed directly on the Authorized Participants, and agree to indemnify the Sponsor and the Trust if the Sponsor or the Trust is required by law to pay any such tax, together with any applicable penalties, additions to tax or interest thereon.
Valuation of Bitcoin and Determination of NAV
The Sponsor will evaluate the Bitcoin held by the Trust and determine the NAV of the Trust in accordance with the relevant provisions of the Trust Documents.
−Removed: The following is a description of the material terms of the Trust Documents as they relate to valuation of the Trust’s Bitcoin and the NAV calculations, which is calculated using non-GAAP methodology and is not used in the Trust’s financial statements, unless otherwise disclosed.
+Added: The following is a description of the material terms of the Trust Documents as they relate to valuation of the Trust’s Bitcoin and the NAV calculations, which is calculated using non-GAAP methodology and is not used in the Trust’s financial statements.
On each business day at 4:00 p.m., New York time, or as soon thereafter as practicable (the “Evaluation Time”), the Sponsor will evaluate the Bitcoin held by the Trust and calculate and publish the NAV of the Trust.
2 unchanged sentences
• Multiply the Index Price by the Trust’s aggregate amount of Bitcoin owned by the Trust as of 4:00 p.m., New York time, on the immediately preceding day, less the aggregate amount of Bitcoin payable as the accrued and unpaid Sponsor’s Fee as of 4:00 p.m., New York time, on the immediately preceding day.
+Added: • Add the U.S.
dollar value of Bitcoin, calculated using the Index Price, receivable under pending creation orders, if any, determined by multiplying the number of the Creation Baskets represented by such creation orders by the Basket Amount and then multiplying such product by the Index Price.
17 unchanged sentences
The Trust’s only ordinary recurring expense is expected to be the Sponsor’s Fee.
−Removed: From inception to January 10, 2024, the Sponsor’s Fee was 2.0%.
−Removed: Effective January 11, 2024, the Sponsor’s Fee was lowered to 1.5%.
The Sponsor’s Fee will accrue daily in U.S.
20 unchanged sentences
Presently, the Sponsor does not intend to waive any of the Sponsor’s Fee for the Trust and there are no circumstances under which the Sponsor has determined it will definitely waive the fee.
+Added: The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver.
The Sponsor’s Fee will generally be paid in Bitcoin.
10 unchanged sentences
and extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters (collectively, “Additional Trust Expenses”).
−Removed: If Additional Trust Expenses are incurred, the Trust will be required to pay these Additional Trust Expenses by selling or delivering Bitcoin.
+Added: Additional Trust Expenses are incurred, the Trust will be required to pay these Additional Trust Expenses by selling or delivering Bitcoin.
Generally, the Sponsor will cover such expenses on behalf of the Trust and the Trust will reimburse the Sponsor by delivering to the Sponsor Bitcoin in an amount equal to such expenses.
−Removed: When the Trust and the Sponsor, acting on behalf of the Trust, sell or deliver, as applicable, Bitcoin, they generally do not transact directly with counterparties other than the Authorized Participant, a Liquidity Provider or other similarly eligible financial institutions that are subject to federal and state licensing requirements and maintain practices and policies designed to comply with AML and KYC regulations.
+Added: When the Trust and the Sponsor, acting on behalf of the Trust, sell or deliver, as applicable, Bitcoin, they generally do not transact directly with counterparties other than the Authorized Participants, a Liquidity Provider or other similarly eligible financial institutions that are subject to federal and state licensing requirements and maintain practices and policies designed to comply with AML and KYC regulations.
The Sponsor or any of its affiliates may be reimbursed only for the actual cost to the Sponsor or such affiliate of any expenses that it advances on behalf of the Trust for payment of which the Trust is responsible.
23 unchanged sentences
Federal Income Tax Consequences—Tax Consequences to U.S.
−Removed: Hypothetical Expense Example
−Removed: The following table illustrates the anticipated impact of the payment of the Trust’s expenses on the amount of Bitcoin represented by each outstanding Share for three years.
−Removed: It assumes that the only transfers of Bitcoin will be those needed to pay the Sponsor’s Fee and that the price of Bitcoin and the number of Shares remain constant during the three-year period covered.
−Removed: The table does not show the impact of any Additional Trust Expenses.
−Removed: Any Additional Trust Expenses, if and when incurred, will accelerate the decrease in the fractional amount of Bitcoin represented by each Share.
−Removed: In addition, the table does not show the effect of any waivers of the Sponsor’s Fee that may be in effect from time to time.
−Removed: Hypothetical price per Bitcoin
−Removed: Sponsor’s Fee (1)
−Removed: Shares of Trust, beginning
−Removed: Bitcoin in Trust, beginning
−Removed: Hypothetical value of Bitcoin in Trust
−Removed: Beginning NAV of the Trust
−Removed: Bitcoin to be delivered to cover the Sponsor’s Fee
−Removed: Bitcoin in Trust, ending
−Removed: Ending NAV of the Trust
−Removed: Ending NAV per share
−Removed: Hypothetical price per Bitcoin
−Removed: (1) From inception to January 10, 2024, the Sponsor’s Fee was 2.0%.
−Removed: Effective January 11, 2024, the Sponsor’s Fee was lowered to 1.5%.
Discretion of the Index Provider
13 unchanged sentences
Under Delaware law, a shareholder may bring a derivative action if the shareholder is a shareholder at the time the action is brought and either (i) was a shareholder at the time of the transaction at issue or (ii) acquired the status of shareholder by operation of law or the Trust’s governing instrument from a person who was a shareholder at the time of the transaction at issue.
−Removed: Additionally, Section 3816(e) of the Delaware Statutory Trust Act specifically provides that “a beneficial owner’s right to bring a derivative action may be subject to such additional standards and restrictions, if any, as are set forth in the governing instrument of the statutory trust, including, without limitation, the requirement that beneficial owners owning a specified beneficial interest in the statutory trust join in the bringing
−Removed: of the derivative action.” In addition to the requirements of applicable law, the Trust Agreement provides that no shareholder will have the right, power or authority to bring or maintain a derivative action, suit or other proceeding on behalf of the Trust unless two or more shareholders who (i) are not “Affiliates” (as defined in the Trust Agreement and below) of one another and (ii) collectively hold at least 10.0% of the outstanding Shares join in the bringing or maintaining of such action, suit or other proceeding.
+Added: Additionally, Section 3816(e) of the Delaware Statutory Trust Act specifically provides that “a beneficial owner’s right to bring a derivative action may be subject to such additional standards and restrictions, if any, as are set forth in the governing instrument of the statutory trust, including, without limitation, the requirement that beneficial owners owning a specified beneficial interest in the statutory trust join in the bringing of the derivative action.” In addition to the requirements of applicable law, Section 7.4 of the Trust Agreement provides that no shareholder will have the right, power or authority to bring or maintain a derivative action, suit or other proceeding on behalf of the Trust unless two or more shareholders who (i) are not “Affiliates” (as defined in the Trust Agreement and below) of one another and (ii) collectively hold at least 10.0% of the outstanding Shares join in the bringing or maintaining of such action, suit or other proceeding.
The Trust selected the 10.0% ownership threshold because the Trust believed that this was a threshold that investors would be comfortable with based on market precedent.
2 unchanged sentences
“Affiliate” is defined in the Trust Agreement to mean any natural person, partnership, limited liability company, statutory trust, corporation, association or other legal entity (each, a “Person”) directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities of such Person, (ii) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote by such Person, (iii) any Person, directly or indirectly, controlling, controlled by or under common control of such Person, (iv) any employee, officer, director, member, manager or partner of such Person, or (v) if such Person is an employee, officer, director, member, manager or partner, any Person for which such Person acts in any such capacity.
−Removed: Any shareholders seeking to bring a derivative action may determine whether the 10.0% ownership threshold required to bring a derivative action has been met by dividing the number Shares owned by such shareholders by the total number of Shares outstanding.
−Removed: Shareholders may determine the total number of Shares outstanding by reviewing the Trust’s annual filings on Form 10-K, quarterly filings on Form 10-Q and current reports on Form 8-K reporting sales of unregistered securities pursuant to Item 3.02 thereof, or by requesting the number of Shares outstanding at any time from the Sponsor pursuant to Sections 7.2 and 8.1 of the Trust Agreement and Section 3819(a) of the DSTA.
−Removed: Because the Trust is a grantor trust, it may only issue one class of securities, the Shares.
+Added: Any shareholders seeking to bring a derivative action may determine whether the 10.0% ownership threshold required to bring a derivative action has been met by dividing the number of Shares owned by such shareholders by the total number of Shares outstanding.
The Trust offers Shares on a periodic basis at such times and for such periods as the Sponsor determines in its sole discretion.
4 unchanged sentences
Shareholders have the opportunity at any time to increase their holdings or locate other shareholders to maintain the 10.0% threshold throughout the duration of a derivative claim.
−Removed: Shareholders may do so by contacting shareholders that are required to file Schedule 13Ds or Schedule 13Gs with the SEC or by requesting from the Sponsor the list of the names and last known address of all shareholders pursuant to Sections 7.2 and 8.1 of the Trust Agreement and Section 3819(a) of the DSTA.
+Added: Shareholders may do so by requesting from the Sponsor the list of the names and last known address of all shareholders pursuant to Sections 7.2 and 8.1 of the Trust Agreement and Section 3819(a) of the DSTA.
+Added: Because the Trust is a grantor trust, it may only issue one class of securities, the Shares.
The Sponsor is not aware of any reason to believe that Section 7.4 of the Trust Agreement is not enforceable under state or federal law.
4 unchanged sentences
Beneficial owners may have the right, subject to certain legal requirements, to bring class actions in federal court to enforce their rights under the federal securities laws and the rules and regulations promulgated thereunder by the SEC.
−Removed: Beneficial owners who have suffered losses in connection with the purchase or sale of their beneficial interests may be able to recover such losses from the Sponsor where the losses result from a violation by the Sponsor of the anti-fraud provisions of the federal securities laws.
+Added: Beneficial owners who have
+Added: suffered losses in connection with the purchase or sale of their beneficial interests may be able to recover such losses from the Sponsor where the losses result from a violation by the Sponsor of the anti-fraud provisions of the federal securities laws.
Actions Taken to Protect the Trust
6 unchanged sentences
However, if a certificate of dissolution or revocation of the Sponsor’s charter is filed (and ninety (90) days have passed after the date of notice to the Sponsor of revocation without a reinstatement of the Sponsor’s charter) or the withdrawal, removal, adjudication or admission of bankruptcy or insolvency of the Sponsor has occurred, shareholders holding at least a majority (over 50%) of the Shares may agree in writing to continue the affairs of the Trust and to select, effective as of the date of such event, one or more successor sponsors within ninety (90) days of any such event.
−Removed: The Trustee is a fiduciary under the Trust Agreement and must satisfy the requirements of Section 3807 of the Delaware Trust Statute.
+Added: The Trustee is a fiduciary under the Trust Agreement and must satisfy the requirements of Section 3807 of the Delaware Statutory Trust Act.
However, the fiduciary duties, responsibilities and liabilities of the Trustee are limited by, and are only those specifically set forth in, the Trust Agreement.
46 unchanged sentences
Termination of the Trust
−Removed: The Trust will dissolve if any of the following events occur:
−Removed: federal or state regulator requires the Trust to shut down or forces the Trust to liquidate its Bitcoin or seizes, impounds or otherwise restricts access to Trust assets;
−Removed: • any ongoing event exists that either prevents the Trust from making or makes impractical the Trust’s reasonable efforts to make a fair determination of the Index Price;
−Removed: • any ongoing event exists that either prevents the Trust from converting or makes impractical the Trust’s reasonable efforts to convert Bitcoin to U.S.
−Removed: • a certificate of dissolution or revocation of the Sponsor’s charter is filed (and 90 days have passed since the date of notice to the Sponsor of revocation without a reinstatement of its charter) or the withdrawal, removal, adjudication or admission of bankruptcy or insolvency of the Sponsor has occurred, unless (i) at the time there is at least one remaining Sponsor and that remaining Sponsor carries on the Trust or (ii) within 90 days of any such event shareholders holding at least a majority (over 50%) of Shares, not including Shares held by the Sponsor and its affiliates, agree in writing to continue the activities of the Trust and to select, effective as of the date of such event, one or more successor Sponsors.
−Removed: The Sponsor may, in its sole discretion, dissolve the Trust if any of the following events occur:
−Removed: • the SEC determines that the Trust is an investment company required to be registered under the Investment Company Act;
−Removed: • the CFTC determines that the Trust is a commodity pool under the CEA;
−Removed: • the Trust is determined to be a “money service business” under the regulations promulgated by FinCEN under the authority of the U.S.
−Removed: Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder;
−Removed: • the Trust is required to obtain a license or make a registration under any state law regulating money transmitters, money services businesses, providers of prepaid or stored value or similar entities, or virtual currency businesses;
−Removed: • the Trust becomes insolvent or bankrupt;
−Removed: • the Custodian resigns or is removed without replacement;
−Removed: • all of the Trust’s assets are sold;
−Removed: • the Sponsor determines that the aggregate net assets of the Trust in relation to the expenses of the Trust make it unreasonable or imprudent to continue the affairs of the Trust;
−Removed: • the Sponsor receives notice from the IRS or from counsel for the Trust or the Sponsor that the Trust fails to qualify for treatment, or will not be treated, as a grantor trust under the Code;
−Removed: • if the Trustee notifies the Sponsor of the Trustee’s election to resign and the Sponsor does not appoint a successor trustee within 180 days;
−Removed: • the Sponsor determines, in its sole discretion, that it is desirable or advisable for any reason to discontinue the affairs of the Trust.
−Removed: The Sponsor may determine that it is desirable or advisable to discontinue the affairs of the Trust for a variety of reasons.
−Removed: For example, the Sponsor may terminate the Trust if a federal court upholds an allegation that Bitcoin is a security under the federal securities laws.
−Removed: The death, legal disability, bankruptcy, insolvency, dissolution, or withdrawal of any shareholder (as long as such shareholder is not the sole shareholder of the Trust) will not result in the termination of the Trust, and such shareholder, his or her estate, custodian or personal representative will have no right to a redemption or value such shareholder’s Shares.
−Removed: Each shareholder (and any assignee thereof) expressly agrees that in the event of his or her death, he or she waives on behalf of himself or herself and his or her estate, and he or she directs the legal representative of his or her estate and any person interested therein to waive the furnishing of any inventory, accounting or appraisal of the assets of the Trust and any right to an audit or examination of the books of account for the Trust, except for such rights as are set forth in Article VIII of the Trust Agreement relating to the books of account and reports of the Trust.
+Added: Pursuant to the terms of the Trust Agreement, the Trust is required to dissolve under certain circumstances.
+Added: In addition, the Sponsor may, in its sole discretion, dissolve the Trust for a number of reasons, including if the Sponsor determines, in its sole discretion, that it is desirable or advisable for any reason to discontinue the affairs of the Trust.
Upon dissolution of the Trust and surrender of Shares by the shareholders, shareholders will receive a distribution in U.S.
3 unchanged sentences
The proceeds therefrom will be applied and distributed in the following order of priority:
−Removed: (a) to the expenses of liquidation and termination and to creditors, including shareholders who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Trust other than liabilities for distributions to shareholders and (b) to the holders of Shares pro rata in accordance with the respective percentage of percentages of Shares that they hold.
+Added: (a) to the expenses of liquidation
+Added: and termination and to creditors, including shareholders who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Trust other than liabilities for distributions to shareholders and (b) to the holders of Shares pro rata in accordance with the respective percentages of Shares that they hold.
It is expected that the Sponsor would be subject to the same regulatory requirements as the Trust, and therefore, the markets available to the Sponsor will be the same markets available to the Trust.
29 unchanged sentences
See “Item 1A.
−Removed: Risk Factors—Risk Factors Related to the Trust and the Shares—The Trust relies on third-party service providers to perform certain functions essential to the affairs of the Trust and the replacement of such service providers could pose challenges to the safekeeping of the Trust’s Bitcoin and to the operations of the Trust.”
+Added: Risk Factors—Risk Factors Related to the Trust and the Shares—The
+Added: Trust relies on third-party service providers to perform certain functions essential to the affairs of the Trust and the replacement of such service providers could pose challenges to the safekeeping of the Trust’s Bitcoin and to the operations of the Trust.”
Safekeeping of Bitcoin
5 unchanged sentences
and (v) not without the prior written consent of the Trust be deposited or held with any third-party depositary, custodian, clearance system or wallet.
−Removed: Additionally, the Custodian will use commercially reasonable efforts to
−Removed: keep the private key or keys for the Vault Balance secure, and will not disclose such keys to the Trust, the Sponsor or to any other individual or entity except to the extent that any keys are disclosed consistent with a standard of commercially reasonable efforts and as part of a multiple signature solution that would not result in the Trust or the Sponsor “storing, holding, or maintaining custody or control of” the Bitcoin “on behalf of others” within the meaning of the New York BitLicense Rule (23 NYCRR Part 200) as in effect as of June 24, 2015 such that it would require the Trust or the Sponsor to become licensed under such law.
+Added: Additionally, the Custodian will use commercially reasonable efforts to keep the private key or keys for the Vault Balance secure, and will not disclose such keys to the Trust, the Sponsor or to any other individual or entity except to the extent that any keys are disclosed consistent with a standard of commercially reasonable efforts and as part of a multiple signature solution that would not result in the Trust or the Sponsor “storing, holding, or maintaining custody or control of” the Bitcoin “on behalf of others” within the meaning of the New York BitLicense Rule (23 NYCRR Part 200) as in effect as of June 24, 2015 such that it would require the Trust or the Sponsor to become licensed under such law.
Bitcoin credited to the Trust’s Settlement Balance may be held in omnibus wallets maintained by the Prime Broker and/or at Coinbase Connected Venues.
19 unchanged sentences
The Custodian will ensure that initiated deposits are processed in a timely manner but the Custodian makes no representations or warranties regarding the amount of time needed to complete processing which is dependent upon many factors outside of the Custodian’s control.
−Removed: Transactions relating to Bitcoin held in the Settlement Balance occur on the Bitcoin Blockchain.
+Added: Transactions relating to Bitcoin held in the Settlement Balance occur on the Blockchain.
The Custodial Entities make no other representations or warranties with respect to the availability and/or accessibility of Bitcoin or the availability and/or accessibility of the Vault Balance, the Settlement Balance or the Custodial and Prime Broker Services.
26 unchanged sentences
The Custodial Entities’ or Trust’s total liability under the Prime Broker Agreement will not exceed the greater of:
−Removed: (i) the value of the Bitcoin or cash involved in the event, including but not limited to transaction(s) or deliveries(s), giving rise to such liability at the time of the event giving rise to such liability;
−Removed: (ii) the aggregate amount of fees paid by the Trust to the Custodial Entities in respect of the Custody and Prime Broker Services in the 12-month period prior to the event giving rise to such liability;
+Added: (i) the value of the Bitcoin or cash involved in the event, including but not limited to transaction(s) or deliveries(s), giving rise to such liability at the
+Added: time of the event giving rise to such liability;
+Added: (ii) the aggregate amount of fees paid by the Trust to the Custodial Entities in respect of the Custodial and Prime Broker Services in the 12-month period prior to the event giving rise to such liability;
or (iii) five million U.S.
3 unchanged sentences
In addition, the Custodian’s maximum liability in respect of each cold storage address that holds Bitcoin shall be limited to $100 million (the “Cold Storage Threshold”).
−Removed: The Sponsor monitors the value of Bitcoin deposited in cold storage addresses for whether the Cold Storage Threshold has been met by determining
+Added: The Sponsor monitors the value of Bitcoin deposited in cold storage addresses for whether the Cold Storage Threshold has been met by determining the U.S.
dollar value of Bitcoin deposited in each cold storage address on business days.
41 unchanged sentences
federal income tax consequences of owning Shares.
−Removed: This discussion is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, changes to any of which subsequent to the date hereof may affect the tax consequences described herein.
+Added: This discussion is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations (“Treasury Regulations”) as of the date hereof, changes to any of which subsequent to the date hereof may affect the tax consequences described herein.
For the avoidance of doubt, this summary does not discuss any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
6 unchanged sentences
federal income tax.
−Removed: Rather, if the Trust is a grantor trust, each beneficial owner of Shares will be treated as directly owning its pro rata share of the Trust’s assets and a pro rata portion of the Trust’s income, gain, losses and deductions will “flow through” to each beneficial owner of Shares.
+Added: Rather, if the Trust is a grantor trust, each beneficial owner of Shares will be treated as directly owning its pro rata share of the Trust’s assets and a pro rata portion of the Trust’s income, gains, losses and deductions will “flow through” to each beneficial owner of Shares.
The Trust has taken certain positions with respect to the tax consequences of Incidental Rights and its receipt of IR Virtual Currency.
If the IRS were to disagree with, and successfully challenge, any of these positions the Trust might not qualify as a grantor trust.
−Removed: In addition, the Sponsor has delivered the Pre-Creation/Redemption Abandonment Notices providing that the Trust will abandon irrevocably, for no direct or indirect consideration, effective immediately prior to each Creation Time and Redemption Time, all Incidental Rights or IR Virtual Currency to which it would otherwise be entitled as of such time and with respect to which it has not taken any Affirmative Action at or prior to such time.
−Removed: The Trust has also abandoned Incidental Rights and IR Virtual Currency through Affirmative Actions.
−Removed: Prospectively, the Sponsor has committed to causing the Trust to irrevocably abandon all Incidental Rights and IR Virtual Currency to which the Trust might otherwise become entitled.
+Added: In addition, the Pre-Creation/Redemption Abandonment Notices (as defined herein) provide that the Trust will irrevocably abandon, effective immediately prior to each Creation Time or Redemption Time, all Incidental Rights or IR Virtual Currency to which it would otherwise be entitled as of such time and with respect to which it has not taken any Affirmative Action at or prior to such time.
+Added: The Sponsor has committed to cause the Trust to irrevocably abandon any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future, and in the past the Trust has also abandoned Incidental Rights and IR Virtual Currency through Affirmative Actions.
There can be no complete assurance that these abandonments will be treated as effective for U.S.
federal income tax purposes.
−Removed: If the Trust were treated as owning any asset other than Bitcoin as of any date on which it creates or redeems Shares, it would likely cease to qualify as a grantor trust for U.S.
+Added: If the Trust were treated as owning any asset other than Bitcoin as of any date on which it creates or redeems Shares, it might cease to qualify as a grantor trust for U.S.
federal income tax purposes.
−Removed: In addition, and in common with other spot digital asset exchange-traded products, at this time the Trust is not permitted to create or redeem Shares via in-kind transactions with Authorized Participants.
−Removed: Unless and until In-Kind Regulatory Approval is obtained, Baskets will be created or redeemed only through Cash Orders.
+Added: In addition, at this time the Trust is not permitted to create or redeem Shares via in-kind transactions with Authorized Participants.
+Added: Unless and until the Trust is permitted to create and redeem Shares via in-kind transactions with Authorized Participants, Baskets will be created or redeemed only through Cash Orders.
In general, investment vehicles intended to be treated as grantor trusts for U.S.
32 unchanged sentences
federal income tax purposes, such digital assets (i) are “property,” (ii) are not “currency” for purposes of the provisions of the Code relating to foreign currency gain or loss and (iii) may be held as a capital asset.
−Removed: In 2019, the IRS released a revenue ruling and a set of “Frequently Asked Questions” (the “Ruling & FAQs”) that provide some additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital assets are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of digital assets.
+Added: In 2019, the IRS released a revenue ruling and a set of “Frequently Asked Questions” that has been updated from time to time since (the “Ruling & FAQs”).
+Added: The Ruling & FAQs provide some additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital assets are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of digital assets.
However, the Notice and the Ruling & FAQs do not address other significant aspects of the U.S.
federal income tax treatment of digital assets.
−Removed: Moreover, although the Ruling & FAQs address the treatment of hard forks, there continues to be significant uncertainty with respect to the timing and amount of the income inclusions.
+Added: Moreover, although the Ruling & FAQs address the treatment of hard forks, there continues to be uncertainty with respect to the timing and amount of the income inclusions.
While the Ruling & FAQs do not address most situations in which airdrops occur, it is clear from the reasoning of the Ruling & FAQs that the IRS generally would treat an airdrop as a taxable event giving rise to ordinary income.
5 unchanged sentences
federal income tax purposes.
−Removed: For example, the Notice addresses only digital assets that are “convertible virtual currency,” and it is conceivable that, as a result of a fork, airdrop or similar occurrence, a Trust will hold certain types of digital assets that are not within the scope of the Notice.
+Added: For example, the Notice addresses only digital assets that are “convertible virtual currency,” and it is conceivable that, as a result of a fork, airdrop or similar occurrence, the Trust could hold certain types of digital assets that are not within the scope of the Notice, in the event the Sponsor seeks to change the Trust’s policy with respect to Incidental Rights or IR Virtual Currency, subject to NYSE Arca obtaining regulatory approval from the SEC.
The remainder of this discussion assumes that Bitcoin, and any Incidental Rights or IR Virtual Currency that the Trust may hold, is properly treated for U.S.
1 unchanged sentence
Shareholders are urged to consult their tax advisers regarding the tax consequences of an investment in the Trust and in digital assets in general, including, in the case of shareholders that are generally exempt from U.S.
−Removed: federal income taxation, whether such shareholders may recognize “unrelated business taxable income” (“UBTI”) as a consequence of a fork, airdrop or similar occurrence.
+Added: federal income taxation, whether such shareholders may recognize “unrelated business taxable income” (“UBTI”) as a consequence of a fork, airdrop or similar event.
Tax Consequences to U.S.
9 unchanged sentences
Except as specifically noted, the discussion below assumes that each U.S.
−Removed: Holder will acquire all of its Shares on the same date for the same price per Share and solely for cash (or, if In-Kind Regulatory Approval is obtained in the future, solely for Bitcoin that were originally acquired by the U.S.
+Added: Holder will acquire all of its Shares on the same date for the same price per Share and solely for cash or solely for Bitcoin that were originally acquired by the U.S.
Holder for cash on the same date.
−Removed: As discussed in the section entitled “Description of Creation and Redemption of Shares,” if In-Kind Regulatory Approval is obtained in the future, a U.S.
+Added: As discussed in the section entitled “Description of Creation and Redemption of Shares,” a U.S.
Holder may be able to acquire Shares of the Trust by contributing Bitcoin in kind to the Trust (either directly or through an Authorized Participant acting as agent of the U.S.
6 unchanged sentences
Holder’s holding period for its pro rata share of such Bitcoin will begin on the date of such purchase.
−Removed: If, in the future, In-Kind Regulatory Approval is obtained and a U.S.
Holder acquires Shares in exchange for Bitcoin, (i) the U.S.
−Removed: Holder’s initial tax basis in its pro rata share of the Bitcoin held in the Trust would be equal to the U.S.
+Added: Holder’s initial tax basis in its pro rata share of the Bitcoin held in the Trust will be equal to the U.S.
Holder’s tax basis in the Bitcoin that the U.S.
Holder transferred to the Trust and (ii) the U.S.
−Removed: Holder’s holding period for its pro rata share of such Bitcoin generally would include the period during which the U.S.
+Added: Holder’s holding period for its pro rata share of such Bitcoin generally will include the period during which the U.S.
Holder held the Bitcoin that the U.S.
1 unchanged sentence
The Ruling & FAQs confirm that if a taxpayer acquires tokens of a digital asset at different times and for different prices, the taxpayer has a separate tax basis in each lot of such tokens.
−Removed: Under the Ruling & FAQs, if, in the future, In-Kind Regulatory Approval is obtained and a U.S.
+Added: Under the Ruling & FAQs, if a U.S.
Holder that owns more than one lot of Bitcoin contributes a portion of its Bitcoin to the Trust in exchange for Shares, the U.S.
Holder could designate the lot(s) from which such contribution will be made, provided that the U.S.
−Removed: Holder is able to identify specifically which Bitcoin it is contributing and to substantiate its tax basis in those Bitcoin.
+Added: Holder is able to identify specifically which Bitcoin it is contributing and to substantiate its tax basis in that Bitcoin.
In general, if a U.S.
−Removed: Holder acquires Shares solely for cash at different prices, the U.S.
+Added: Holder acquires Shares (i) solely for cash at different prices, (ii) partly for cash and partly in exchange for a contribution of Bitcoin or (iii) in exchange for a contribution of Bitcoin with different tax bases, the U.S.
Holder’s share of the Trust’s Bitcoin will consist of separate lots with separate tax bases.
3 unchanged sentences
However, when the Trust transfers Bitcoin to the Sponsor as payment of the Sponsor’s Fee, or sells Bitcoin to fund payment of any Additional Trust Expenses, each U.S.
−Removed: Holder will be treated as having sold its pro rata share of those Bitcoin for their fair market value at that time (which, in the case of Bitcoin sold by the Trust, generally will be equal to the cash proceeds received by the Trust in respect thereof).
+Added: Holder will be treated as having sold its pro rata share of that Bitcoin for their fair market value at that time (which, in the case of Bitcoin sold by the Trust, generally will be equal to the cash proceeds received by the Trust in respect thereof).
As a result, each U.S.
17 unchanged sentences
federal income tax purposes.
−Removed: As a result, for taxable years beginning after December 31, 2017 and before January 1, 2026, a non-corporate U.S.
+Added: As a result, a non-corporate U.S.
Holder’s share of these expenses will not be deductible for U.S.
federal income tax purposes.
−Removed: For taxable years beginning on or after January 1, 2026, a non-corporate U.S.
−Removed: Holder’s share of these expenses will be deductible for regular U.S.
−Removed: federal income tax purposes only to the extent that the U.S.
−Removed: Holder’s share of the expenses, when combined with other “miscellaneous itemized
−Removed: deductions,” exceeds 2% of the U.S.
−Removed: Holder’s adjusted gross income for the particular year, will not be deductible for U.S.
−Removed: federal alternative minimum tax purposes and will be subject to certain other limitations on deductibility.
On a sale or other disposition of Shares, a U.S.
13 unchanged sentences
The deductibility of capital losses is subject to significant limitations.
−Removed: If, in the future, In-Kind Regulatory Approval is obtained and the Trust redeems all or portion of a U.S.
−Removed: Holder’s Shares in exchange for the underlying Bitcoin represented by the redeemed Shares, such redemption generally would not be a taxable event to the U.S.
−Removed: Holder’s tax basis in the Bitcoin received in the redemption generally would be the same as the U.S.
+Added: If the Trust redeems all or a portion of a U.S.
+Added: Holder’s Shares in exchange for the underlying Bitcoin represented by the redeemed Shares, such redemption generally will not be a taxable event to the U.S.
+Added: Holder’s tax basis in the Bitcoin received in the redemption generally will be the same as the U.S.
Holder’s tax basis for the portion of its pro rata share of the Bitcoin held in the Trust immediately prior to the redemption that was attributable to the Shares redeemed, determined as described above, and the U.S.
−Removed: Holder’s tax basis in its remaining pro rata portion, if any, of the Bitcoin held in the Trust after the redemption would be equal to the tax basis of its pro rata share of the total amount of the Bitcoin held in the Trust immediately prior to the redemption, less the U.S.
+Added: Holder’s tax basis in its remaining pro rata portion, if any, of the Bitcoin held in the Trust after the redemption will be equal to the tax basis of its pro rata share of the total amount of the Bitcoin held in the Trust immediately prior to the redemption, less the U.S.
Holder’s tax basis in the Bitcoin received in the redemption.
−Removed: Holder’s holding period with respect to the Bitcoin received would generally include the period during which the U.S.
+Added: Holder’s holding period with respect to the Bitcoin received will generally include the period during which the U.S.
Holder held the Shares so redeemed.
−Removed: A subsequent sale of the Bitcoin received in such redemption would generally be a taxable event.
+Added: A subsequent sale of the Bitcoin received in such redemption will generally be a taxable event.
After any sale or other disposition of fewer than all of a U.S.
1 unchanged sentence
Holder’s tax basis in its pro rata share of the Bitcoin held in the Trust immediately after the disposition will equal the tax basis in its pro rata share of the total amount of the Bitcoin held in the Trust immediately prior to the disposition, less the portion of that tax basis that is taken into account in determining the amount of gain or loss recognized by the U.S.
−Removed: Holder on the disposition (or, in the case of a redemption pursuant to an In-Kind Order, if In-Kind Regulatory Approval is obtained, the portion of tax basis that is treated as the basis of the Bitcoin received by the U.S.
+Added: Holder on the disposition (or, in the case of a redemption pursuant to an In-Kind Order, the portion of tax basis that is treated as the basis of the Bitcoin received by the U.S.
Holder in the redemption).
6 unchanged sentences
In the absence of guidance to the contrary, it is possible that any income recognized by a U.S.
−Removed: tax-exempt shareholder as a consequence of a hard fork, airdrop or similar occurrence would constitute UBTI.
+Added: tax-exempt shareholder as a consequence of a hard fork, airdrop or similar event would constitute UBTI.
A tax-exempt shareholder should consult its tax adviser regarding whether such shareholder may recognize some UBTI as a consequence of an investment in Shares.
25 unchanged sentences
It is unclear, however, whether any such FDAP income would be properly treated as U.S.-source or foreign-source FDAP income.
−Removed: Holders should assume that, in the absence of guidance, a withholding agent (including the Sponsor) is likely to withhold 30% from a non-U.S.
+Added: Holders should be aware that, in the absence of guidance, a withholding agent (including a broker through which the Shares are held) may withhold 30% from a non-U.S.
Holder’s pro rata share of any such income.
Holder that is a resident of a country that maintains an income tax treaty with the United States may be eligible to claim the benefits of that treaty to reduce or eliminate, or to obtain a partial or full refund of, the 30% U.S.
−Removed: withholding tax on its share of any such income, but only if the non-U.S.
+Added: withholding tax on its share of any U.S.-source FDAP income, but only if the non-U.S.
Holder’s home country treats the Trust as “fiscally transparent,” as defined in applicable Treasury Regulations.
13 unchanged sentences
Holder as a result of a fork, airdrop or similar occurrence would constitute U.S.-source FDAP income.
−Removed: Provisions of the Code commonly referred to as “FATCA” require withholding of 30% on payments of U.S.-source FDAP income and, subject to the discussion of proposed U.S.
−Removed: Treasury regulations below, of gross proceeds of dispositions of certain types of property that produce U.S.-source FDAP income to, “foreign financial institutions” (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S.
+Added: Provisions of the Code commonly referred to as “FATCA” require withholding of 30% on payments of U.S.-source FDAP income and, subject to the discussion of proposed Treasury Regulations below, of gross proceeds of dispositions of certain types of property that produce U.S.-source FDAP income to, “foreign financial institutions” (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S.
entities unless various U.S.
3 unchanged sentences
In addition, regulations proposed by the U.S.
−Removed: Treasury Department (the preamble to which indicates that taxpayers may rely on the regulations pending their finalization) would eliminate the requirement under FATCA of withholding on gross proceeds.
+Added: Department of the Treasury (the preamble to which indicates that taxpayers may rely on the regulations pending their finalization) would eliminate the requirement under FATCA of withholding on gross proceeds.
If FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally may obtain a refund of any amounts withheld by filing a U.S.
1 unchanged sentence
Shareholders should consult their tax advisers regarding the effects of FATCA on an investment in the Trust.
−Removed: ERISA AND RELATED CONSIDERATIONS
−Removed: ERISA and Section 4975 of the Code impose certain requirements on employee benefit plans and certain other plans and arrangements, including individual retirement accounts (“IRAs”) and annuities, Keogh plans, and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to ERISA and/or the Section 4975 of the Code (collectively, “Plans”), and on persons who are fiduciaries with respect to the investment of Plan assets.
−Removed: Government plans, non-U.S.
−Removed: plans and certain church plans (collectively, “Non-ERISA Arrangements”) are not subject to the fiduciary responsibility or prohibited transaction provisions of ERISA or Section 4975 of the Code, but may be subject to similar rules under other federal, state, local, non-U.S.
−Removed: or other applicable laws (“Similar Laws”).
−Removed: General Fiduciary Matters
−Removed: In contemplating an investment of a portion of Plan assets in Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and circumstances of the Plan, the risks discussed in this Annual Report, and whether such investment is consistent with its fiduciary responsibilities, including, but not limited to (i) whether the fiduciary has the authority to make the investment under the appropriate governing plan instrument, (ii) whether the investment would constitute a direct or indirect non-exempt prohibited transaction under ERISA or the Code, (iii) the Plan’s funding objectives, and (iv) whether under the general fiduciary standards of investment prudence and diversification such investment is appropriate for the Plan, taking into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the Plan’s need for sufficient liquidity to pay benefits when due.
−Removed: Fiduciaries of Non-ERISA Arrangements should carefully consider whether an investment in Shares would violate any applicable Similar Laws.
−Removed: Plan Asset Issues
−Removed: Under the Department of Labor’s regulations at section 2510.3-101, as amended by Section 3(42) of ERISA (the “Plan Asset Regulations”), if a Plan invests in an equity interest of an entity that is “a publicly-offered security,” the entity will not be deemed to hold “plan assets” subject to ERISA, and a party managing the assets of such entity will not be subject to the fiduciary responsibility and prohibited transaction rules of ERISA and Section 4975 of the Code.
−Removed: A “publicly-offered security” is a security that is freely transferable, part of a class of securities that is widely held, and is either (i) part of a class of securities registered under section 12(b) or 12(g) of the Exchange Act or (ii) sold to the plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and the class of securities of which such security is a part is registered under the Exchange Act within 120 days (or such later time as may be allowed by the SEC) after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred.
−Removed: Whether a security is “freely transferable” is a factual question determined on the basis of facts and circumstances.
−Removed: A class of securities is “widely-held” if it is a class of securities that is owned by 100 or more investors independent of the issuer and of one another.
−Removed: It is anticipated that the Shares will constitute “publicly-offered securities” as defined in the Plan Asset Regulations.
−Removed: Accordingly, Shares held by a Plan, and not the underlying Bitcoin held in the Trust represented by the Shares, should be treated as assets of the Plan, for purposes of applying the fiduciary responsibility and prohibited transaction rules of ERISA and the Code.
−Removed: Investment by Certain Retirement Plans
−Removed: IRAs and participant-directed accounts under tax-qualified retirement plans are limited in the types of investments they may make under the Code.
−Removed: Potential purchasers of Shares that are IRAs or participant-directed accounts under a Code Section 401(a) plan should consult with their own advisors as to the consequences of an investment in Shares.
−Removed: Ineligible Purchasers
−Removed: In general, Shares may not be purchased with the assets of a Plan if the Trustee, the Sponsor, the distributor or any of their respective affiliates or employees either:
−Removed: (i) has investment discretion with respect to the investment of such Plan assets;
−Removed: (ii) has authority or responsibility to give or regularly gives investment advice with respect to such Plan assets, for a fee, and pursuant to an agreement or understanding that such advice will serve as a primary basis for investment decisions with respect to such Plan assets and that such advice will be based on the particular investment needs of the Plan;
−Removed: or (iii) is an employer maintaining or contributing to such Plan.
−Removed: A party that is described in clause (i) or (ii) of the preceding sentence is a fiduciary under ERISA and the Code with respect to the Plan, and any such purchase might result in a prohibited transaction under ERISA and/or the Code.
−Removed: Representation
−Removed: Accordingly, by acceptance of Shares, each purchaser and subsequent transferee of Shares will be deemed to have represented and warranted that either (i) no portion of the assets used by such purchaser or transferee to acquire or hold the Shares constitutes assets of any Plan or Non-ERISA Arrangement or (ii) the acquisition, holding and subsequent disposition of the Shares by such purchaser or transferee will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or violate any applicable Similar Law.
−Removed: Except as otherwise set forth, the foregoing statements regarding the consequences under ERISA and the Code of an investment in the Trust are based on the provisions of the Code and ERISA as currently in effect, and the existing administrative and judicial interpretations thereunder.
−Removed: No assurance can be given that administrative, judicial or legislative changes will not occur that may make the foregoing statements incorrect or incomplete.
−Removed: ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF PLANS OR NON-ERISA ARRANGEMENTS IS IN NO RESPECT A REPRESENTATION BY THE SPONSOR OR ANY OTHER PARTY RELATED TO THE TRUST THAT THIS INVESTMENT MEETS THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR PLAN OR NON-ERISA ARRANGEMENT OR PLANS OR NON-ERISA ARRANGEMENTS GENERALLY OR THAT THIS INVESTMENT IS APPROPRIATE FOR ANY PARTICULAR PLAN OR NON-ERISA ARRANGEMENT OR PLANS OR NON-ERISA ARRANGEMENTS GENERALLY.
−Removed: THE PERSON WITH INVESTMENT DISCRETION WITH RESPECT FOR ANY PLAN OR NON-ERISA ARRANGEMENT SHOULD CONSULT WITH ITS OWN COUNSEL AND ADVISERS AS TO THE PROPRIETY OF AN INVESTMENT IN THE TRUST, IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR PLAN OR NON-ERISA ARRANGEMENT BEFORE PURCHASING SHARES.
−Removed: NEITHER THIS DISCUSSION NOR ANYTHING IN THIS ANNUAL REPORT IS OR IS INTENDED TO BE INVESTMENT ADVICE DIRECTED AT ANY POTENTIAL PURCHASER THAT IS A PLAN OR NON-ERISA ARRANGEMENT, OR AT SUCH PURCHASERS GENERALLY.
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.