What changed in this filing

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Item 1A. Risk Factors

2026-03-12 compared with 2025-03-26 · 2790 added, 2534 removed, 783 unchanged (87% of the section changed)

Risk Factors.

Risks Associated with Bitcoin and the Bitcoin

Risks Associated with Bitcoin and

the Bitcoin Network

The trading prices of many digital assets, including bitcoin,

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lose all or substantially all of their value.

The trading prices of many digital assets, including

bitcoin, have experienced extreme volatility in recent periods and may continue to do so.

For instance, there were steep increases

in the value of certain digital assets, including bitcoin, over the course of 2021, and multiple market observers asserted that

digital assets were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2022 in digital

asset trading prices, including for bitcoin.

These episodes of rapid price appreciation followed by steep drawdowns have occurred

multiple times throughout bitcoin’s history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022.

Over the course of 2023 and 2024, bitcoin prices continued to exhibit extreme volatility.

Extreme volatility may persist and the value

of the Shares may significantly decline in the future without recovery.

The digital asset markets may be experiencing a bubble

or may experience a bubble again in the future.

For example, in the first half of 2022, each of Celsius Network, Voyager Digital

Ltd., and Three Arrows Capital declared bankruptcy, resulting in a loss of confidence in participants of the digital asset ecosystem

and negative publicity surrounding digital assets more broadly.

The trading prices of many digital assets,

including bitcoin, have experienced extreme volatility in recent periods and may continue to do so.

The average annualized one-year

trailing volatility of bitcoin over the past ten years to date remains elevated at 65%.

Over the course of 2021, there were steep

increases in the value of certain digital assets, including bitcoin, and multiple market observers asserted that digital assets

were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2022 in digital asset trading

prices, including for bitcoin.

In the 2021-2022 cycle, the price of bitcoin peaked at $67,734 and bottomed at $15,632, representing

a 77% drawdown.

These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout

bitcoin’s history, including in 2011, 2013-2014, and 2017-2018, before repeating again in 2021-2022.

Digital asset prices

have continued to fluctuate in 2025.

For example, bitcoin lost approximately 14% of its value according to some sources in mid-October

2025 as part of wider digital asset market turmoil, widely attributed to global trade tensions, which triggered a number of dislocations

in the digital asset market (the “October 2025 Flash Crash”), including liquidations of up to $20 billion in collateral

in the form of various digital assets (including, but not limited to, bitcoin) securing trades (particularly perpetual futures

contracts and various forms of financing transactions), along with reported service interruptions, halted orders, forced unwinding

of trades, and other issues, across centralized and decentralized exchanges.

Extreme volatility may persist, and the

value of the Shares may significantly decline in the future without recovery.

The digital asset markets may still be experiencing

a bubble or may experience a bubble again in the future.

For example, in the first half of 2022, each of Celsius Network, Voyager

Digital Ltd., and Three Arrows Capital declared bankruptcy, resulting in a loss of confidence in participants of the digital asset

ecosystem and negative publicity surrounding digital assets more broadly.

In November 2022, FTX Trading Ltd.

(“FTX”), one of

the largest digital asset exchanges by volume at the time, halted customer withdrawals amid rumors of the company’s liquidity

issues and likely insolvency, which were subsequently corroborated by its CEO.

Shortly thereafter, FTX’s CEO resigned and

FTX and many of its affiliates filed for bankruptcy in the United States, while other affiliates have entered insolvency, liquidation,

one of the largest digital asset platforms by volume at the time, halted customer withdrawals amid rumors of the company’s

liquidity issues and likely insolvency, which were subsequently corroborated by its CEO.

Shortly thereafter, FTX’s CEO resigned

and FTX and many of its affiliates filed for bankruptcy in the United States, while other affiliates have entered insolvency, liquidation,

or similar proceedings around the globe, following which the U.S.

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asset industry as a whole.

The prices for some digital assets including

bitcoin have risen following the election of Donald Trump as president of the United States.

Some expect the new administration

to adopt a more constructive attitude toward the digital assets industry than prior administrations were perceived to have done

and work toward providing greater regulatory clarity and certainty for emerging technologies including blockchain technology and

digital assets, thereby fostering their development.

Certain members of Congress have also expressed similar sentiments.

extent market expectations about future activity by the administration or Congress lead digital assets prices and valuations to

increase, there can be no assurance such expectations will be fulfilled, or that digital asset prices will rise or maintain their

current levels.

Some commentators have referred to this as a bubble.

There can be no assurance that such a bubble does not currently

The failure of the administration and Congress to provide greater regulatory clarity and certainty for blockchain technology

and digital assets, such as through promulgating a regulatory framework governing the issuance and operation of digital assets

that lives up to industry expectations, could lead to a decline in prices for digital assets including bitcoin, which could cause

declines in the value of the Shares and cause Shareholders to suffer losses.

Moreover, there can be no assurance that political

winds or market perceptions of them will not shift over time.

prices of some digital assets, including bitcoin, have fluctuated significantly following the 2024 election of Donald Trump as

president of the United States.

Industry participants generally expect the administration to continue to take a constructive approach

toward the digital asset industry.

Through his executive orders, President Trump has indicated that the administration will work

toward providing greater regulatory clarity for blockchain technology and digital assets, thereby fostering their development in

the United States.

Similarly, the digital asset industry expects favorable legislation from the U.S.

Congress, as certain members

have expressed interest in advancing digital asset specific legislation.

There can be no assurance that market expectations around

future activity by the administration or Congress will be fulfilled, or that digital

asset prices will rise or maintain their current

Some commentators have referred to the digital asset market post-President Trump’s election as a bubble.

be no assurance that such a bubble does not exist.

The failure of the administration and Congress to provide the expected level

of regulatory clarity and support for blockchain technology and digital assets, could lead to a decline in digital asset prices,

including bitcoin.

Such a decline could cause a decline in the value of our Shares and cause our Shareholders to suffer losses.

Moreover, there can be no assurance that political dynamics and sentiments toward the digital asset industry, or market perceptions

of those sentiments, will not unfavorably shift over time.

volatility in the future, including further declines in the trading prices of bitcoin, could have a material adverse effect on

the value of the Shares, and could lose all or substantially all of their value.

On March 6, 2025, President Trump issued

an executive order for the “Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile”

(the “Order”).

The Order requires the Secretary of the U.S.

Department of Treasury to establish two offices to administer

and maintain a “Strategic Bitcoin Reserve” (the “Bitcoin Reserve”) and a U.S.

Digital Asset Stockpile (the

“Digital Asset Stockpile”), respectively.

The Bitcoin Reserve will be capitalized with bitcoin forfeited as part of

criminal or civil proceedings or in satisfaction of penalties imposed by executive agencies.

The Digital Asset Stockpile will

be capitalized initially with other digital assets forfeited as part of criminal or civil asset forfeiture proceedings.

This development

has led to expectations within the bitcoin market that the United States may begin acquiring and holding bitcoin.

The Order directs

the Secretaries of the U.S.

Treasury Department and the U.S.

Department of Commerce to develop budget-neutral strategies for acquiring

additional bitcoin for the Bitcoin Reserve.

Legislation has been introduced in the U.S.

Senate and the U.S.

House of Representatives,

which would direct the acquisition of one million bitcoin by the federal government over a five-year period, which would be held

in trust in secure storage by the U.S.

The bill proposes to fund the bitcoin acquisition using remittances from the Federal

Reserve, revaluations of Federal Reserve gold certificates, and other funding mechanisms.

Bills have also been introduced in several

state legislatures to authorize the acquisition of bitcoin by state governments or their instrumentalities, some of which have

failed to pass.

If now or in the future, the U.S.

federal government or any state government or any instrumentality thereof does

not announce bitcoin acquisition plans or does announce such plans, but these plans fall short of market expectations, the price

of bitcoin may decline, which may impact Share value.

Even if government acquisitions occur or if legislation requiring acquisitions

is enacted, the price of bitcoin may decline if there are implementation challenges, unexpected difficulties, policy or legal reversals,

any of which may negatively impact Share value.

Further, executive orders, such as the Order, are subject to change and can be

reversed or overturned.

The enduring existence and size of the Bitcoin Reserve and Digital Asset Stockpile, and the passage and

implementation of legislation at the federal or state level, are subject to complex challenges and uncertainty that makes it difficult

to evaluate their effect on the value of bitcoin and the Shares, now or in the future.

Extreme volatility in the future, including

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or mitigate the impacts, of volatility in the price of bitcoin.

The value of the Shares is subject to

a number of factors relating to the fundamental investment characteristics of bitcoin as a digital asset, including the fact that

digital assets are bearer instruments and loss, theft, destruction, or compromise of the associated private keys could result

in permanent loss of the asset, and the capabilities and development of blockchain technologies such as the bitcoin blockchain.

Disruptions or other problems in the

supply chain for bitcoin mining hardware and difficulties in obtaining new hardware could cause harm to the Bitcoin network.

Manufacture, assembly and delivery of

hardware and components for mining operations can be complex and protracted processes, in the course of which various problems

could arise, including disruptions or delays in the supply chain, product quality control issues, as well as other external factors.

Mining operations can ordinarily only

be profitable if the costs associated with bitcoin mining, including hardware costs, are lower than the price of bitcoin itself.

In the course of the normal operation of bitcoin mining facilities, miners and other critical equipment and materials related to

data center construction and maintenance, such as containers, switch gears, transformers and cables, will experience ordinary wear

and tear and may also face more significant malfunctions.

Declines in the condition of miners and other hardware will require bitcoin

miners, over time, to repair or replace those miners.

Additionally, as the technology evolves,

miners may be required to acquire newer models of mining hardware and machines to remain competitive in the market.

Any upgrading

process may require substantial capital investment, and miners may face challenges in doing so on a timely and cost-effective basis.

The business of bitcoin miners will be subject to limitations inherent within the supply chain of their mining hardware equipment

and components, including competitive, governmental, and legal limitations, and other events.

For example, many miners will significantly

rely on foreign imports to obtain mining hardware equipment and materials.

Any global trade disruption, introductions of tariffs,

trade barriers and bilateral trade frictions, together with any potential downturns in the global economy resulting, could adversely

affect the necessary supply chains for mining hardware.

Depending on the magnitude of such effects on the mining hardware supply

chain, shipments of parts for mining hardware, or new mining hardware and equipment, may be delayed.

There are a small number of major suppliers

of bitcoin mining hardware globally, and a significant amount of bitcoin mining hardware manufacturing is located in China.

hardware manufacturers may fail to supply the mining hardware due to

their inability to manufacture sufficient mining hardware,

whether due to shortages of components or resources such as semiconductors, or changes of laws and trade restrictions (including

export/import restrictions, quotas or tariffs), or due to insolvency, or non-performance or default on their contracts.

Trade policies

such as export/import restrictions, quotas or tariffs may reduce the ability of bitcoin mining hardware suppliers to supply miners

with bitcoin mining hardware or create a shortage or lack of components necessary for their manufacture or repair.

If bitcoin miners

are unable to source mining hardware from those suppliers (for example due to overwhelming global demand for bitcoin miners, or

due to trade restrictions, or other causes) at commercially reasonable prices, or at all, and replacement or substitute sources

of bitcoin mining hardware prove to be unavailable, there could be a negative impact on bitcoin mining globally.

These could affect

the Bitcoin network by making it more difficult for transactions to be confirmed, increase transaction costs, or affect the Bitcoin

network’s security, among other negative effects, any of which could negatively affect the value of bitcoin and consequently

the first-generation application specific integrated circuit (“ASIC”) chips and other critical components for mining

equipment may be subject to price fluctuations or shortages.

For example, the ASIC chip is the key component of a mining machine

as it determines the efficiency of the device.

The production of ASIC chips typically requires highly sophisticated silicon wafers,

which currently only a small number of fabrication facilities, or wafer foundries, in the world are capable of producing.

have been previous microchip shortages which led to price fluctuations and disruption in the supply of key bitcoin mining hardware

ASIC chips have recently been subject to supply and demand fluctuations, significant price increases and shortages.

Shortages of ASIC chips could create problems in the supply chain for bitcoin mining equipment, negatively affecting the Bitcoin

network by making it more difficult for transactions to be confirmed or increasing transaction costs, or even affecting network

security, which again could cause the value of bitcoin and the Shares to decline.

The value of the Shares is subject to a number of factors relating to

the fundamental investment characteristics of bitcoin as a digital asset, including the fact that digital assets are bearer instruments

and loss, theft, destruction, or compromise of the associated private keys could result in permanent loss of the asset, and the

capabilities and development of blockchain technologies such as the bitcoin blockchain.

Digital assets such as bitcoin were only

introduced within the past 16 years, and the value of the Shares is subject to a number of factors over time relating to the capabilities

and development of blockchain technologies, such as the recentness of their development, their dependence on the internet and

other technologies, their dependence on the role played by users, developers and miners and the potential for malicious activity.

Given the recentness of the development of digital asset networks, digital assets may not function as intended and parties may

be unwilling to use digital assets, which would dampen the growth, if any, of digital asset networks.

Because bitcoin is a digital

asset, the value of the Shares is subject to a number of factors relating to the fundamental investment characteristics of digital

assets, including the fact that digital assets are bearer instruments and loss, theft, compromise, or destruction of the associated

private keys could result in permanent loss of the asset.

and development of blockchain technologies, such as the recentness of their development, their dependence on the internet and other

technologies, their dependence on the role played by users, developers and miners and the potential for malicious activity.

the recentness of the development of digital asset networks, digital assets may not function as intended and parties may be unwilling

to use digital assets, which would dampen the growth, if any, of digital asset networks.

Because bitcoin is a digital asset, the

value of the Shares is subject to a number of factors relating to the fundamental investment characteristics of digital assets,

including the fact that digital assets are bearer instruments and loss, theft, compromise, or destruction of the associated private

keys could result in permanent loss of the asset.

The Bitcoin network, including the cryptographic

and algorithmic protocols associated with the operation of the Bitcoin Blockchain, has only been in existence since 2009, and

bitcoin markets have a limited performance record, making them part of a new and rapidly evolving industry that is subject to

a variety of factors that are difficult to evaluate.

For example, the following are some of the risks could materially adversely

affect the value of the Shares:

● Digital assets, including bitcoin, are controllable only

by the possessor of both the unique public key and private key or keys relating to the

Bitcoin network address, or “wallet,” at which the digital asset is held.

Private keys must be safeguarded and kept private in order to prevent a third party from

accessing the digital asset held in such wallet.

The loss, theft, compromise or destruction

of a private key required to access a digital asset may be irreversible.

key is lost, stolen, destroyed or otherwise compromised and no backup of the private

key is accessible, the owner would be unable to access the digital asset corresponding

to that private key and the private key will not be capable of being restored by the

digital asset network resulting in the total loss of the value of the digital asset linked

to the private key.

● Banks and other established financial institutions may

refuse to process funds for bitcoin transactions;

process wire transfers to or from bitcoin

trading platforms, bitcoin-related companies or service providers;

or maintain accounts

for persons or entities transacting in bitcoin.

This could dampen liquidity in the market

and damage the public perception of digital assets generally or any one digital asset

in particular, such as bitcoin, and their or its utility as a payment system, which could

decrease the price of digital assets generally or individually.

Further, the lack of

availability of banking services, including those provided by the Cash Custodian or the

financial institutions at which the Bitcoin Custodian maintains the cash credited to

the Trust’s Fiat Account, could inhibit or prevent the Trust from being able to

complete cash creations or redemptions, or the timely liquidation of bitcoin even if

the Sponsor determined that such liquidation were appropriate or suitable.

● Users, developers and miners may otherwise switch to

or adopt certain digital assets at the expense of their engagement with other digital

asset networks, which may negatively impact those networks, including the Bitcoin network.

● As the Bitcoin network continues to develop and grow,

certain technical issues might be uncovered and the trouble shooting and resolution of

such issues requires the attention and efforts of bitcoin’s global development

Like all software, the Bitcoin network is at risk of vulnerabilities and bugs

that can potentially be exploited by malicious actors.

For example, in 2010, the Bitcoin

network underwent a hard fork to reverse the effects of a hack in which an unknown attacker

took advantage of a software vulnerability in the early source code of the Bitcoin network

to fraudulently mint a large amount of bitcoin.

● In August 2017, the Bitcoin network underwent a hard

fork that resulted in the creation of a new digital asset network called Bitcoin Cash.

This hard fork was contentious, and as a result some users of the Bitcoin Cash network

may harbor ill will toward the Bitcoin network.

These users may attempt to negatively

impact the use or adoption of the Bitcoin network, as could constituencies adversely

impacted by any contentious hard forks that take place in the future.

● Also in August 2017, the Bitcoin network was upgraded

with a technical feature known as “Segregated Witness” with the promise of

increasing the number of transactions per second that can be handled on-chain and enabling

so-called second layer solutions, such as the Lightning Network or payment channels,

that have the potential to increase transaction throughput by processing certain transactions

outside the main Bitcoin Blockchain, but which may fail to achieve the expected benefits

or widespread adoption or lead to new or unanticipated problems, leading to a decline

in public support for, and the price of, bitcoin.

● As of the date of this Report, the largest 100 bitcoin

wallets held a substantial amount of the outstanding supply of bitcoin and it is possible

that some of these wallets are controlled by the same person or entity.

is possible that other persons or entities control multiple wallets that collectively

hold a significant number of bitcoin, even if each wallet individually only holds a small

As a result of this concentration of ownership, large sales by such holders could

have an adverse effect on the market price of bitcoin.

and algorithmic protocols associated with the operation of the Bitcoin Blockchain, has only been in existence since 2009, and bitcoin

markets have a limited performance record, making them part of a new and rapidly evolving industry that is subject to a variety

of factors that are difficult to evaluate.

For example, the following are some of the risks could materially adversely affect the

value of the Shares:

● Digital assets, including bitcoin, are controllable only by the possessor of both the unique public key and private key or

keys relating to the Bitcoin network address, or “wallet,” at which the digital asset is held.

Private keys must be

safeguarded and kept private in order to prevent a third party from accessing the digital asset held in such wallet.

theft, compromise or destruction of a private key required to access a digital asset may be irreversible.

If a private key is lost,

stolen, destroyed or otherwise compromised and no backup of the private key is accessible, the owner would be unable to access

the digital asset corresponding to that private key and the private key will not be capable of being restored by the digital asset

network resulting in the total loss of the value of the digital asset linked to the private key.

asset networks are dependent upon the internet.

A disruption of the internet, or major telecommunications and internet service

providers, or a digital asset network, such as the Bitcoin network, could affect the ability to transfer digital assets, including

bitcoin, and, consequently, could negatively impact their value.

In addition, data center hosting and cloud services providers

play a crucial role in the global Internet economy.

Many of the Trust’s service providers conduct their business operations

and processes using cloud providers and third-party data center hosting facilities, including Amazon Web Services, Google Cloud,

Microsoft Azure, and other cloud services.

In October 2025, news outlets reported that Amazon Web Services and Microsoft Azure

both suffered significant service interruptions which caused disruptions to some of their cloud services customers.

Any disruptions

or failures of the Sponsor’s systems or the third-party hosting facility or cloud services that the Sponsor uses, or may

use in the future, or of the Trust’s service providers’ systems or the third party hosting facilities or cloud services

that they use, or may use in the future, including as a result of a natural disaster, fire, cyberattack, act of terrorism, geopolitical

conflict, pandemic, the effects of climate change, or other catastrophic event, as well as power outages, service disruptions or

interruptions, scheduled or unscheduled downtime, software or hardware defects, telecommunications infrastructure outages, a decision

to close such facilities or cease providing such services, or other problems with the Sponsor’s or a Trust service provider’s

systems or third-party data center hosting or cloud providers that the Sponsor or a Trust service provider uses, or may use in

the future, such as a failure to meet service standards, could severely impact the Trust’s or Sponsor’s ability to

conduct business operations, such as creation and redemption processes or deposits or withdrawals into the Trust’s custodial

accounts, any of which could materially adversely affect the Trust’s operations or cause losses to the Trust’s Shareholders.

● Banks and other established financial institutions may refuse to process funds for bitcoin transactions;

process wire transfers

to or from bitcoin trading platforms, bitcoin-related companies or service providers;

or maintain accounts for persons or entities

transacting in bitcoin.

This could dampen liquidity in the market and damage the public perception of digital assets generally

or any one digital asset in particular, such as bitcoin, and their or its utility as a payment system, which could decrease the

price of digital assets generally or individually.

Further, the lack of availability of banking services, including those provided

by the Cash Custodian or the financial institutions at which the Bitcoin Custodian maintains the cash credited to the Trust’s

Fiat Account, could inhibit or prevent the Trust from being able to complete cash creations or redemptions, or the timely liquidation

of bitcoin even if the Sponsor determined that such liquidation were appropriate or suitable.

● Users, developers and miners may otherwise switch to or adopt certain digital assets at the expense of their engagement with

other digital asset networks, which may negatively impact those networks, including the Bitcoin network.

● As the Bitcoin network continues to develop and grow, certain technical issues might be uncovered and the trouble shooting

and resolution of such issues requires the attention and efforts of bitcoin’s global development community.

Like all software,

the Bitcoin network is at risk of vulnerabilities and bugs that can potentially be exploited by malicious actors.

in 2010, the Bitcoin network underwent a hard fork to reverse the effects of a hack in which an unknown attacker took advantage

of a software vulnerability in the early source code of the Bitcoin network to fraudulently mint a large amount of bitcoin.

acceptance of software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in a digital

asset network, such as the Bitcoin network, could result in a “fork” in such network’s blockchain, including

the Bitcoin Blockchain, resulting in the operation of multiple separate networks.

● In August 2017, the Bitcoin network underwent a hard fork that resulted in the creation of a new digital asset network called

Bitcoin Cash.

This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward

the Bitcoin network.

These users may attempt to negatively impact the use or adoption of the Bitcoin network, as could constituencies

adversely impacted by any contentious hard forks that take place in the future.

● Also in August 2017, the Bitcoin network was upgraded with a technical feature known as “Segregated Witness” with

the promise of increasing the number of transactions per second that can be handled on-chain and enabling so-called second layer

solutions, such as the Lightning Network or payment channels, that have the potential to increase transaction throughput by processing

certain transactions outside the main Bitcoin Blockchain, but which may fail to achieve the expected benefits or widespread adoption

or lead to new or unanticipated problems, leading to a decline in public support for, and the price of, bitcoin.

● As of the date of this Report, the largest 100 bitcoin wallets held a substantial amount of the outstanding supply of bitcoin

and it is possible that some of these wallets are controlled by the same person or entity.

Moreover, it is possible that other

persons or entities control multiple wallets that collectively hold a significant number of bitcoin, even if each wallet individually

only holds a small amount.

As a result of this concentration of ownership, large sales by such holders could have an adverse effect

on the market price of bitcoin.

of the Bitcoin network is by voluntary consensus and open competition.

As a result, there may be a lack of consensus or clarity

on the governance of the Bitcoin network, which may stymie the Bitcoin network’s utility and ability to grow and face challenges.

In particular, it may be difficult to find solutions or martial sufficient effort to overcome any future problems on the Bitcoin

network, especially long-term problems.

● Over the past

decade, bitcoin mining operations have evolved from individual users mining with computer processors, graphics processing units

and first-generation application specific integrated circuit (“ASIC”) machines to “professionalized” mining

operations using proprietary hardware or sophisticated machines.

If the profit margins of bitcoin mining operations are not sufficiently

high, including, but not limited to, due to an increase in electricity costs or a decline in the market price of bitcoin, or if

bitcoin mining operations are unable to arrange alternative sources of financing (e.g., if lenders refuse to make loans to such

miners), bitcoin miners are more likely to sell more bitcoins than they otherwise would, resulting in an increase in liquid supply

of bitcoin, which would generally tend to reduce bitcoin’s market price.

● To the extent

that any miners cease to record transactions that do not include the payment of a transaction fee in solved blocks or do not record

a transaction because the transaction fee is too low, such transactions will not be recorded on the Bitcoin Blockchain until a

block is mined by a miner who does not require the payment of transaction fees or is willing to accept a lower fee.

Any widespread

delays in the recording of transactions could result in a loss of confidence in a digital asset network.

● Digital asset

mining operations can consume significant amounts of electricity, which may have a negative environmental impact and give rise

to public opinion against allowing, or government regulations restricting, the use of electricity for mining operations.

Additionally,

miners may be forced to cease operations during an electricity shortage or power outage, or if electricity prices increase where

the mining activities are performed.

● There are a small

number of major suppliers of bitcoin mining hardware globally, and a significant amount of bitcoin mining hardware manufacturing

is located in China.

Mining hardware manufacturers may fail to supply the mining hardware due to their inability to manufacture

sufficient mining hardware, whether due to shortages of components or resources such as semiconductors, or due to default, insolvency,

or changes of laws and trade restrictions (including export/import restrictions, quotas or tariffs).

Trade policies such as export/import

restrictions, quotas or tariffs may reduce the ability of bitcoin mining hardware suppliers to supply miners with bitcoin mining

hardware or create a shortage or lack of components necessary for their manufacture or repair.

If bitcoin miners are unable to

source mining hardware from those suppliers (for example due to overwhelming global demand for bitcoin miners, or due to trade

restrictions, or other causes) at commercially reasonable prices, or at all, and replacement or substitute sources of bitcoin mining

hardware prove to be unavailable, there could be a negative impact on bitcoin mining globally.

These could affect the Bitcoin network

by making it more difficult for transactions to be confirmed, increasing transaction costs, or affecting the Bitcoin network’s

security, among other negative effects, any of which could negatively affect the value of bitcoin and consequently the Shares.

● Many digital asset

networks, including the Bitcoin network, face significant scaling challenges and may periodically be upgraded with various features

designed to increase the speed and throughput of digital asset transactions.

These attempts to increase the volume of transactions

may not be effective, and such upgrades may fail, resulting in potentially irreparable damage to the Bitcoin network and to the

value of bitcoin.

● The open-source

structure of many digital asset network protocols, such as the protocol for the Bitcoin network, means that developers and other

contributors are generally not directly compensated for their contributions in maintaining and developing such protocols.

result, the developers and other contributors of a particular digital asset may lack a financial incentive to maintain or develop

the network or may lack the resources to adequately address emerging issues.

Alternatively, some developers may be funded by companies

whose interests are at odds with other participants in a particular digital asset network.

A failure to properly monitor and upgrade

the protocol of the Bitcoin network could damage that network.

● In the past, flaws

in the source code for digital assets have been exposed and exploited, including flaws that disabled some functionality for users,

exposed users’ personal information and/or resulted in the theft of users’ digital assets.

The cryptography underlying

bitcoin could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital

computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective.

Quantum computing

technology is an emerging phenomenon which, because it is still developing, makes it difficult to predict its ultimate effect on

the future value of bitcoin and other digital assets.

However, if quantum computing technology is able to advance and significantly

increase its capacity relative to the capacity of today’s leading quantum computers, it could potentially undermine the viability

of many of the cryptographic algorithms used across the world’s information technology infrastructure, including the cryptographic

algorithms used for digital assets like bitcoin.

Advances in quantum computing create the risk that the cryptography underlying

the Bitcoin network could become ineffective, which, if realized, could compromise the security of the Bitcoin network, or allow

a malicious actor to compromise the wallets holding bitcoin owned by the Trust or others on the Bitcoin network, which would result

in losses to Shareholders.

While various actors in the Bitcoin community are taking steps to enable the uses of cryptographic algorithms

that would be resistant to advanced quantum computers, there is no guarantee that new quantum-proof architectures will be built

and appropriate transitions will be implemented across the network at scale in a timely manner;

any such changes could require

the achievement of broad consensus within the Bitcoin network community and a fork (or multiple forks), and there can be no assurance

that such consensus would be achieved or the changes implemented successfully.

See “-The Bitcoin network’s decentralized

governance structure may negatively affect its ability to grow and respond to challenges” and “-A temporary or permanent

“fork” could adversely affect the value of the Shares.” If any of the foregoing were to occur, it could result

in losses to Shareholders.

In any of these circumstances, a malicious actor may be able to compromise the security of the Bitcoin

network or take the Trust’s bitcoin, which would adversely affect the value of the Shares.

Moreover, the functionality of

the Bitcoin network may be negatively affected such that it is no longer attractive to users, thereby reducing or even eliminating

demand for bitcoin.

Even if another digital asset other than bitcoin were affected by similar circumstances, any reduction in confidence

in the source code or cryptography underlying digital assets generally could negatively affect the demand for digital assets and

therefore adversely affect the value of the Shares.

Moreover, because digital assets, including

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future that are impossible to predict as of the date of this Report.

Due to the nature of private keys, bitcoin

transactions are irrevocable and stolen or incorrectly transferred bitcoin may be irretrievable.

Due to the nature of private keys,

bitcoin transactions are irrevocable and stolen or incorrectly transferred bitcoin may be irretrievable.

As a result, any incorrectly

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addresses on the Bitcoin Blockchain.

Alternatively, if the Bitcoin Custodian’s and the Additional Bitcoin Custodian’s internal

procedures and controls are inadequate to safeguard the Trust’s bitcoin holdings, and the Trust’s private key(s) is

(are) lost, destroyed or otherwise compromised and no backup of the private key(s) is (are) accessible, the Trust will be unable

to access its bitcoin, which could adversely affect an investment in the Shares of the Trust.

Alternatively, if the Bitcoin Custodian’s and the Additional Bitcoin Custodian’s

internal procedures and controls are inadequate to safeguard the Trust’s bitcoin holdings, and the Trust’s private

key(s) is (are) lost, destroyed or otherwise compromised and no backup of the private key(s) is (are) accessible, the Trust will

be unable to access its bitcoin, which could adversely affect an investment in the Shares of the Trust.

In addition, if the Trust’s

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to the wrong customers.

The Federal Bureau of Investigation published an announcement that the Democratic People’s Republic of

Korea (North Korea) was responsible for the theft of approximately $1.5 billion USD in virtual assets from cryptocurrency exchange,

The Federal Bureau of Investigation published an announcement that the Democratic People’s Republic

of Korea (North Korea) was responsible for the theft of approximately $1.5 billion USD in virtual assets from cryptocurrency exchange,

Bybit, on or about February 21, 2025.

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The Bitcoin network relies on the Internet.

A significant disruption of Internet connectivity (i.e., one that affects large numbers of users or geographic regions) could disrupt

the Bitcoin network’s functionality and operations until the disruption in the Internet is resolved.

A disruption in the

Internet could adversely affect an investment in the Trust or the ability of the Trust to operate.

The Bitcoin network’s decentralized

governance structure may negatively affect its ability to grow and respond to challenges.

A significant

disruption of Internet connectivity (i.e., one that affects large numbers of users or geographic regions) could disrupt the Bitcoin

network’s functionality and operations until the disruption in the Internet is resolved.

A disruption in the Internet could

adversely affect an investment in the Trust or the ability of the Trust to operate.

The Bitcoin network’s decentralized governance structure

may negatively affect its ability to grow and respond to challenges.

The governance of decentralized networks,

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decision-making body or clear manner in which participants can come to an agreement other than through voluntary, widespread consensus.

As a result, a lack of widespread consensus in the governance of the Bitcoin network may adversely affect the network’s

utility and ability to adapt and face challenges, including technical and scaling challenges.

Historically the development of

the source code of the Bitcoin network has been overseen by the core developers.

However, the Bitcoin network would cease to operate

successfully without both miners and users, and the core developers cannot formally compel them to adopt the changes to the source

code desired by core developers, or to continue to render services or participate in the Bitcoin network.

As a general matter,

the governance of the Bitcoin network generally depends on most of the members of the Bitcoin community ultimately reaching some

form of voluntary agreement on significant changes.

As a result, a lack of widespread consensus in the governance of the Bitcoin network may adversely affect the network’s utility

and ability to adapt and face challenges, including technical and scaling challenges.

Historically the development of the source

code of the Bitcoin network has been overseen by the core developers.

However, the Bitcoin network would cease to operate successfully

without both miners and users, and the core developers cannot formally compel them to adopt the changes to the source code desired

by core developers, or to continue to render services or participate in the Bitcoin network.

As a general matter, the governance

of the Bitcoin network generally depends on most of the members of the Bitcoin community ultimately reaching some form of voluntary

agreement on significant changes.

The decentralized governance of the Bitcoin

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could cause users, miners, and developer talent to abandon the Bitcoin network or to choose competing blockchain protocols, or

lead to a drop in speculative interest, which could cause the value of bitcoin to decline.

If the Bitcoin community is unable

to reach consensus in the future, it could have adverse consequences for the network or lead to a fork, which could affect the

value of bitcoin.

lead to a drop in speculative interest, which

could cause the value of bitcoin to decline.

If the Bitcoin community is unable to

reach consensus in the future, it could have adverse consequences for the network or lead to a fork, which could affect the value

Potential amendments to the Bitcoin

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protocol to govern the interactions within the Bitcoin network.

A loose community known as the core developers has evolved to

informally manage the source code for the protocol.

Membership in the community of core developers evolve over time, largely based

on self-determined participation in the resource section dedicated to bitcoin on Github.com.

The core developers can propose amendments

to the Bitcoin network’s source code that, if accepted by miners and users, could alter the protocols and software of the

Bitcoin network and the properties of bitcoin.

These alterations would occur through software upgrades, and could potentially

include changes to the irreversibility of transactions and limitations on the mining of new bitcoin, which could undermine the

appeal and market value of bitcoin.

Alternatively, software upgrades and other changes to the protocols of the Bitcoin network

could fail to work as intended or could introduce bugs, security risks, or otherwise adversely affect, the speed, security, usability,

or value of the Bitcoin network or bitcoins.

As a result, the Bitcoin network could be subject to new protocols and software in

the future that may adversely affect an investment in the Trust.

A loose community known as the core developers has evolved to informally

manage the source code for the protocol.

Membership in the community of core developers evolve over time, largely based on self-determined

participation in the resource section dedicated to bitcoin on Github.com.

The core developers can propose amendments to the Bitcoin

network’s source code that, if accepted by miners and users, could alter the protocols and software of the Bitcoin network

and the properties of bitcoin.

These alterations would occur through software upgrades, and could potentially include changes to

the irreversibility of transactions and limitations on the mining of new bitcoin, which could undermine the appeal and market value

Alternatively, software upgrades and other changes to the protocols of the Bitcoin network could fail to work as intended

or could introduce bugs, security risks, or otherwise adversely affect, the speed, security, usability, or value of the Bitcoin

network or bitcoins.

As a result, the Bitcoin network could be subject to new protocols and software in the future that may adversely

affect an investment in the Trust.

The open-source structure of the Bitcoin

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could damage the Bitcoin network and an investment in the Trust.

The Bitcoin network operates based on an

open-source protocol maintained by the core developers and other contributors, largely on the GitHub resource section dedicated

to bitcoin development.

As the Bitcoin

network protocol is not sold or made available

subject to licensing or subscription fees and its use does not generate revenues for its development team, the core developers

are generally not compensated for maintaining and updating the source code for the Bitcoin network protocol.

Consequently, there

is a lack of financial incentive for developers to maintain or develop the Bitcoin network and the core developers may lack the

resources to adequately address emerging issues with the Bitcoin network protocol.

Although the Bitcoin network is currently supported

by the core developers, there can be no guarantee that such support will continue or be sufficient in the future.

there have been recent reports that the number of core developers who have the authority to make amendments to the Bitcoin network’s

source code in the GitHub repository is relatively small, although there are believed to be a larger number of developers who

contribute to the overall development of the source code of the Bitcoin network.

Alternatively, some developers may be funded

by entities whose interests are at odds with other participants in the Bitcoin network.

In addition, a bad actor could also attempt

to interfere with the operation of the Bitcoin network by attempting to exercise a malign influence over a core developer.

the extent that material issues arise with the Bitcoin network protocol and the core developers and open-source contributors are

unable to address the issues adequately or in a timely manner, the Bitcoin network and an investment in the Trust may be adversely

Bitcoin network operates based on an open-source protocol maintained by the core developers and other contributors, largely on

the GitHub resource section dedicated to bitcoin development.

As the Bitcoin network protocol is not sold or made available subject to licensing

or subscription fees and its use does not generate revenues for its development team, the core developers are generally not compensated

for maintaining and updating the source code for the Bitcoin network protocol.

Consequently, there is a lack of financial incentive

for developers to maintain or develop the Bitcoin network and the core developers may lack the resources to adequately address

emerging issues with the Bitcoin network protocol.

Although the Bitcoin network is currently supported by the core developers,

there can be no guarantee that such support will continue or be sufficient in the future.

For example, there have been recent reports

that the number of core developers who have the authority to make amendments to the Bitcoin network’s source code in the

GitHub repository is relatively small, although there are believed to be a larger number of developers who contribute to the overall

development of the source code of the Bitcoin network.

Alternatively, some developers may be funded by entities whose interests

are at odds with other participants in the Bitcoin network.

In addition, a bad actor could also attempt to interfere with the operation

of the Bitcoin network by attempting to exercise a malign influence over a core developer.

To the extent that material issues arise

with the Bitcoin network protocol and the core developers and open-source contributors are unable to address the issues adequately

or in a timely manner, the Bitcoin network and an investment in the Trust may be adversely affected.

A temporary or permanent “fork”

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Bitcoin software is open source.

can download the software, modify it and then propose that the core developers, users and miners adopt the modification.

user can download the software, modify it and then propose that the core developers, users and miners adopt the modification.

a modification is introduced by the core developers and a substantial majority of users and miners consent to the modification,

the change is implemented and the Bitcoin network continues to operate uninterrupted on a single blockchain.

However, if less

than a substantial majority of users and miners consent to the proposed modification, but the modification is nonetheless implemented

However, if less than

a substantial majority of users and miners consent to the proposed modification, but the modification is nonetheless implemented

by some users and miners and the modification is not compatible with the software prior to its modification, the consequence would

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Any of these events could cause bitcoin to decline in value.

Furthermore, a hard fork can lead to new

security concerns.

For example, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions

from one network were rebroadcast to nefarious effect on the other network, plagued digital assets exchanges through at least

October 2016.

A digital assets exchange announced in July 2016 that it had lost 40,000 Ether Classic, worth about $100,000 at

that time, as a result of replay attacks.

Furthermore, a hard fork can lead to

new security concerns.

For example, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which

transactions from one network were rebroadcast to nefarious effect on the other network, plagued digital assets exchanges through

at least October 2016.

A digital assets exchange announced in July 2016 that it had lost 40,000 Ether Classic, worth about $100,000

at that time, as a result of replay attacks.

Another possible result of a hard fork is an inherent decrease in the level of security

due to significant amounts of mining power remaining on one network or migrating instead to the new forked network.

fork, it may become easier for an individual miner or mining pool’s hashing power to exceed 50% of the processing power

of the network that retained or attracted less mining power, thereby making digital assets that rely on that network, which could

fork, it may become easier for an individual miner or mining pool’s hashing power to exceed 50% of the processing power of

the network that retained or attracted less mining power, thereby making digital assets that rely on that network, which could

include bitcoin, more susceptible to attack.

Any of these events could cause the Bitcoin network to be less attractive to potential users, or cause a decline in speculative

interest, and thereby cause bitcoin to decline in value.

Any of these events could cause the Bitcoin network to be less attractive to potential

users, or cause a decline in speculative interest, and thereby cause bitcoin to decline in value.

Forks have occurred already to the Bitcoin

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the new forked asset on a pro rata basis while it continues to hold the same number of bitcoin.

We refer to the right to receive any benefits

arising from a fork, airdrop (defined below), or similar event as an Incidental Right and any such virtual currency acquired through

an Incidental Right as IR Virtual Currency.

The Trust has adopted the following procedures to address situations involving any

fork, airdrop or similar event that results in the issuance of Incidental Rights or IR Virtual Currency that the Trust may receive.

The Trust Agreement stipulates that if a fork occurs, the Sponsor shall determine which asset constitutes bitcoin and which network

constitutes the Bitcoin network, and the Sponsor will as soon as possible cause the Trust to irrevocably abandon the Incidental

Rights or IR Virtual Currency.

Because the Trust will abandon any Incidental Rights and IR Virtual Currency, the Trust would not

receive any direct or indirect consideration for the Incidental Rights or IR Virtual Currency and thus the value of the Shares

will not reflect the value of the Incidental Rights or IR Virtual Currency.

In the event the Trust seeks to change this position,

an application would need to be filed with the SEC by the Exchange seeking approval to amend its listing rules to permit the Trust

to distribute the Incidental Rights or IR Virtual Currency that is not bitcoin in-kind to the Sponsor, as agent for the Shareholders,

and the Sponsor would arrange to sell or otherwise dispose of the Incidental Rights or IR Virtual Currency and for the proceeds

(if any) to be distributed to the Shareholders.

There can be no assurance as to whether or when the Sponsor would make such a

decision, or when the Exchange will seek or obtain this approval, if at all.

In addition to forks, a digital asset may

become subject to a similar occurrence known as an “airdrop.” In an airdrop, the promotors of a new digital asset

There have been other contentious disputes

over changes to the Bitcoin network’s source code, so far these have not led to hard forks.

For example, the predominant

software implementation used to access the Bitcoin network is Bitcoin Core.

The October 2025 release of the updated Bitcoin Core

client (version 30) removed a long-standing limit on the inclusion of non-transaction-related data in blocks, the effect of which

is to permit larger amounts of arbitrary data to be embedded in transactions.

This change has prompted debate within the bitcoin

community, though - because the change is backwards-compatible, rather than a hard fork - certain previous versions of the Bitcoin

Core client remain operable, and it remains interoperable with other clients, such as Bitcoin Knots.

Some participants have expressed

concerns that such changes could facilitate the inclusion of illegal or non-transaction-related content on the Bitcoin Blockchain,

or introduce new or unknown software vulnerabilities.

In response, certain miners and users have reportedly adopted alternative

client software implementations to access the Bitcoin network, such as Bitcoin Knots.

There is a risk that unresolved divisions

could lead to community fragmentation which, if they grew severe enough and were not resolved, eventually a future Bitcoin network

hard fork, which may adversely affect the security or stability of the Bitcoin network (such as if miners leave the original Bitcoin

network for the forked network), reduce or impede the adoption of bitcoin overall, or cause bitcoin or the Shares to lose value.

We refer to the right to receive any

benefits arising from a fork, airdrop (defined below), or similar event as an Incidental Right and any such virtual currency acquired

through an Incidental Right as IR Virtual Currency.

The Trust has adopted the following procedures to address situations involving

any fork, airdrop or similar event that results in the issuance of Incidental Rights or IR Virtual Currency that the Trust may

The Trust Agreement stipulates that if a fork occurs, the Sponsor shall determine which asset constitutes bitcoin and

which network constitutes the Bitcoin network, and the Sponsor will as soon as possible cause the Trust to irrevocably abandon

the Incidental Rights or IR Virtual Currency.

Because the Trust will abandon any Incidental Rights and IR Virtual Currency, the

Trust would not receive any direct or indirect consideration for the Incidental Rights or IR Virtual Currency and thus the value

of the Shares will not reflect the value of the Incidental Rights or IR Virtual Currency.

In the event the Trust seeks to change

this position, an application would need to be filed with the SEC by the Exchange seeking approval to amend its listing rules to

permit the Trust to distribute the Incidental Rights or IR Virtual Currency that is not bitcoin in-kind to the Sponsor, as agent

for the Shareholders, and the Sponsor would arrange to sell or otherwise dispose of the Incidental Rights or IR Virtual Currency

and for the proceeds (if any) to be distributed to the Shareholders.

There can be no assurance as to whether or when the Sponsor

would make such a decision, or when the Exchange will seek or obtain this approval, if at all.

In addition to forks, a digital asset

may become subject to a similar occurrence known as an “airdrop.” In an airdrop, the promotors of a new digital asset

announce to holders of another digital asset that such holders will be entitled to claim a certain amount of the new digital asset

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the Trust to irrevocably and permanently abandon, for no consideration, such Incidental Rights or IR Virtual Currency.

event the Trust seeks to change this position, an application would need to be filed with the SEC by the Exchange seeking approval

to amend its listing rules to permit the Trust to distribute the Incidental Rights or IR Virtual Currency associated with the

airdropped assets in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor would arrange to sell or otherwise dispose

of the Incidental Rights or IR Virtual Currency and for the proceeds (if any) to be distributed to the Shareholders.

With respect to any fork, airdrop or similar

event, the Sponsor will cause the Trust to irrevocably abandon the Incidental Rights and any IR Virtual Currency associated with

As such, Shareholders will not receive the benefits of any forks, and the Trust is not able to participate in any

Even if required regulatory approval is

sought and obtained, Shareholders may not receive the benefits of any forks, airdrops, or similar events, the Trust may not choose,

or be able, to participate in an airdrop, and the timing of receiving any benefits from a fork, airdrop or similar event is uncertain.

Any inability to recognize the economic benefit of a hard fork or airdrop could adversely affect the value of the Shares.

In the event of a hard fork of the Bitcoin

network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should

be considered the appropriate network for the Trust’s purposes, and in doing so may adversely affect the value of the Shares.

In the event of a hard fork of the Bitcoin

network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine, in good faith, which

peer-to-peer network, among a group of

incompatible forks of the Bitcoin network,

is generally accepted as the Bitcoin network and should therefore be considered the appropriate network for the Trust’s

The Sponsor will base its determination on a variety of then relevant factors, including, but not limited to, the Sponsor’s

beliefs regarding expectations of the core developers of bitcoin, users, service providers, businesses, miners and other constituencies,

as well as the actual continued acceptance of, mining power on, and community engagement with, the Bitcoin network.

guarantee that the Sponsor will choose the digital asset that is ultimately the most valuable fork, and the Sponsor’s decision

may adversely affect the value of the Shares as a result.

The Sponsor may also disagree with Shareholders, security vendors and

MarketVector on what is generally accepted as bitcoin and should therefore be considered “bitcoin” for the Trust’s

purposes, which may also adversely affect the value of the Shares as a result.

the Trust seeks to change this position, an application would need to be filed with the SEC by the Exchange seeking approval to

amend its listing rules to permit the Trust to distribute the Incidental Rights

or IR Virtual Currency associated with the airdropped

assets in-kind to the Sponsor, as agent for the Shareholders, and the Sponsor would arrange to sell or otherwise dispose of the

Incidental Rights or IR Virtual Currency and for the proceeds (if any) to be distributed to the Shareholders.

With respect to any fork, airdrop or

similar event, the Sponsor will cause the Trust to irrevocably abandon the Incidental Rights and any IR Virtual Currency associated

with such event.

As such, Shareholders will not receive the benefits of any forks, and the Trust is not able to participate in

Even if required regulatory approval

is sought and obtained, Shareholders may not receive the benefits of any forks, airdrops, or similar events, the Trust may not

choose, or be able, to participate in an airdrop, and the timing of receiving any benefits from a fork, airdrop or similar event

is uncertain.

Any inability to recognize the economic benefit of a hard fork or airdrop could adversely affect the value of the

In the event of a hard fork of the

Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network

should be considered the appropriate network for the Trust’s purposes, and in doing so may adversely affect the value of

the event of a hard fork of the Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion

to determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Bitcoin network, is generally accepted as

the Bitcoin network and should therefore be considered the appropriate network for the Trust’s purposes.

The Sponsor will

base its determination on a variety of then relevant factors, including, but not limited to, the Sponsor’s beliefs regarding

expectations of the core developers of bitcoin, users, service providers, businesses, miners and other constituencies, as well

as the actual continued acceptance of, mining power on, and community engagement with, the Bitcoin network.

There is no guarantee

that the Sponsor will choose the digital asset that is ultimately the most valuable fork, and the Sponsor’s decision may

adversely affect the value of the Shares as a result.

The Sponsor may also disagree with Shareholders, security vendors and MarketVector

on what is generally accepted as bitcoin and should therefore be considered “bitcoin” for the Trust’s purposes,

which may also adversely affect the value of the Shares as a result.

A hard fork could change the source

code to the bitcoin network, including the 21 million bitcoin supply cap.

In principle a hard fork could change the

source code for the Bitcoin network, including the source code which limits the supply of bitcoin to 21 million.

Although many

observers believe this is unlikely at present, there is no guarantee that the current 21 million supply cap for outstanding bitcoin,

which is estimated to be reached by approximately the year 2140, will not be changed.

If a hard fork changing the 21 million supply

cap is widely adopted, the limit on the supply of bitcoin could be lifted, which could have an adverse impact on the value of

bitcoin and the value of the Shares.

In principle a hard fork could change

the source code for the Bitcoin network, including the source code which limits the supply of bitcoin to 21 million.

many observers believe this is unlikely at present, there is no guarantee that the current 21 million supply cap for outstanding

bitcoin, which is estimated to be reached by approximately the year 2140, will not be changed.

If a hard fork changing the 21 million

supply cap is widely adopted, the limit on the supply of bitcoin could be lifted, which could have an adverse impact on the value

of bitcoin and the value of the Shares.

The Bitcoin Blockchain could be vulnerable

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If the majority of the processing power

dedicated to mining on the Bitcoin network is controlled by a bad actor (often referred to as a “51% attack”), it

may be able to alter the Bitcoin Blockchain on which the Bitcoin network and bitcoin transactions rely.

This could occur if the

bad actor were to construct fraudulent blocks or prevent certain transactions from completing in a timely manner, or at all.

could be possible for the malicious actor to control, exclude or modify the ordering of transactions.

Further, a bad actor could

“double-spend” its own bitcoin (i.e., spend the same bitcoin in more than one transaction) and prevent the confirmation

of other users’ transactions, while continuing to mine new bitcoin and confirm its own blocks, for so long as it maintained

If the bitcoin community did not reject the fraudulent blocks as malicious or to the extent that such bad actor did not

yield its control of processing power, reversing any changes made to the Bitcoin Blockchain may be impossible.

Further, a malicious

actor or botnet could create a flood of transactions in order to slow down the Bitcoin network.

dedicated to mining on the Bitcoin network is controlled by a bad actor (often referred to as a “51% attack”), it may

be able to alter the Bitcoin Blockchain on which the Bitcoin network and bitcoin transactions rely.

This could occur if the bad

actor were to construct fraudulent blocks or prevent certain transactions from completing in a timely manner, or at all.

be possible for the malicious actor to control, exclude or modify the ordering of transactions.

Further, a bad actor could “double-spend”

its own bitcoin (i.e., spend the same bitcoin in more than one transaction) and prevent the confirmation of other users’

transactions, while continuing to mine new bitcoin and confirm its own blocks, for so long as it maintained control.

If the bitcoin

community did not reject the fraudulent blocks as malicious or to the extent that such bad actor did not yield its control of processing

power, reversing any changes made to the Bitcoin Blockchain may be impossible.

Further, a malicious actor or botnet could create

a flood of transactions in order to slow down the Bitcoin network.

For example, in August 2020, the Ethereum

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The attacks resulted in reorganizations of the Ethereum Classic blockchain that allowed

the attacker or attackers to reverse previously recorded transactions in excess of $5.0 million and $1.0 million.

attacks on the Bitcoin network could negatively impact the value of bitcoin and the value of the Shares.

In addition, in May 2019, the Bitcoin Cash

network experienced a 51% attack when two large mining pools reversed a series of transactions in order to stop an unknown miner

from taking advantage of a flaw in a recent Bitcoin Cash protocol upgrade.

the attacker or attackers to reverse previously recorded transactions in excess of $5,000,000 and $1,000,000.

Any similar attacks

on the Bitcoin network could negatively impact the value of bitcoin and the value of the Shares.

In addition, in May 2019, the Bitcoin

Cash network experienced a 51% attack when two large mining pools reversed a series of transactions in order to stop an unknown

miner from taking advantage of a flaw in a recent Bitcoin Cash protocol upgrade.

Although this particular attack was arguably benevolent,

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attacks on the Bitcoin network could negatively impact the value of bitcoin and the value of the Shares.

Although there are no known reports of

malicious activity on, or control of, the Bitcoin network since its early days, it is believed that certain mining pools may have

exceeded the 50% threshold on the Bitcoin network since the Bitcoin blockchain’s genesis block was mined in 2009, and others

have come close.

The possible crossing or near-crossing of the 50% threshold indicates a greater risk that a single mining pool

could exert authority over the validation of bitcoin transactions, and this risk is heightened if over 50% of the processing power

on the network falls within the jurisdiction of a single governmental authority.

Also, there have been

reports that two mining pools recently

controlled in excess of 50% of the aggregate mining power on the Bitcoin network and may do so now or in the future.

participants, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization

of bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin

network will increase, which may adversely affect the value of the Shares.

Also, if miners experience financial or other difficulties

on a large scale and are unable to participate in mining activities, whether due to a downturn in the bitcoin market or other

factors, the risks of the Bitcoin network becoming more centralized could increase.

there are no known reports of malicious activity on, or control of, the Bitcoin network since its early days, it is believed that

certain mining pools may have exceeded the 50% threshold on the Bitcoin network since the Bitcoin blockchain’s genesis block

was mined in 2009, and others have come close.

The possible crossing or near-crossing of the 50% threshold indicates a greater

risk that a single mining pool could exert authority over the validation of bitcoin transactions, and this risk is heightened if

over 50% of the processing power on the network falls within the jurisdiction of a single governmental authority.

Also, there have

been reports that two mining pools recently controlled in excess of 50% of the aggregate mining power on the Bitcoin network and may do so now

or in the future.

If network participants, including the core developers and the administrators of mining pools, do not act to

ensure greater decentralization of bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the

processing power on the Bitcoin network will increase, which may adversely affect the value of the Shares.

Also, if miners experience

financial or other difficulties on a large scale and are unable to participate in mining activities, whether due to a downturn

in the bitcoin market or other factors, the risks of the Bitcoin network becoming more centralized could increase.

A malicious actor may also obtain control

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To the extent that users and miners accept amendments to the source code proposed by the controlled core

developer, other core developers do not counter such amendments, and such amendments enable the malicious exploitation of the

Bitcoin network, the risk that a malicious actor may be able to obtain control of the Bitcoin network in this manner exists.

developer, other core developers do not counter such amendments, and such amendments enable the malicious exploitation of the Bitcoin

network, the risk that a malicious actor may be able to obtain control of the Bitcoin network in this manner exists.

If miners expend less processing power

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process or processing power of the Bitcoin network may adversely affect an investment in the Trust.

Blockchain technologies are based on

theoretical conjectures as to the impossibility of solving certain cryptographical puzzles quickly.

Blockchain technologies are based

on theoretical conjectures as to the impossibility of solving certain cryptographical puzzles quickly.

These premises may be incorrect

or may become incorrect due to technological advances.

Blockchain technologies are premised on

theoretical conjectures as to the impossibility, in practice, of solving certain mathematical problems quickly.

Blockchain technologies are premised

on theoretical conjectures as to the impossibility, in practice, of solving certain mathematical problems quickly.

Those conjectures

remain unproven, however, and mathematical or technological advances could conceivably prove them to be incorrect.

technology companies may also be negatively affected by cryptography or other technological or mathematical advances, such as

the development of quantum computers with significantly more power than computers presently available, that undermine or vitiate

the cryptographic consensus mechanism underpinning the Bitcoin Blockchain and other distributed ledger protocols.

these events were to happen, markets that rely on blockchain technologies, such as the Bitcoin network, could quickly collapse,

and an investment in the Trust may be adversely affected.

Blockchain technology

companies may also be negatively affected by cryptography or other technological or mathematical advances, such as the development

of quantum computers with significantly more power than computers presently available, that undermine or vitiate the cryptographic

consensus mechanism underpinning the Bitcoin Blockchain and other distributed ledger protocols.

If either of these events were

to happen, markets that rely on blockchain technologies, such as the Bitcoin network, could quickly collapse, and an investment

in the Trust may be adversely affected.

Currently, there is relatively small

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Yet, market speculators and investors

seeking to profit from the short- or long-term holding of bitcoin generate a significant portion of demand for bitcoin, which

can contribute to price volatility, which in turn can make bitcoin less attractive to merchants and commercial parties as a means

seeking to profit from the short- or long-term holding of bitcoin generate a significant portion of demand for bitcoin, which can

contribute to price volatility, which in turn can make bitcoin less attractive to merchants and commercial parties as a means of

A lack of expansion by bitcoin into retail and commercial markets or a contraction of such use may result in a reduction

in the price of bitcoin, which could adversely affect an investment in the Trust.

Sales of new bitcoin may cause the price

of bitcoin to decline, which could negatively affect an investment in the Trust.

Sales of new bitcoin may cause the

price of bitcoin to decline, which could negatively affect an investment in the Trust.

Newly created bitcoin are generated through

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A bitcoin mining operation

may be more likely to sell a higher percentage of its newly created bitcoin, and more rapidly so, if it is operating at a low

profit margin, including due to an increase in electricity costs or a decline in the market price or amount of bitcoin issued

as a mining reward, or if mining operations are unable to arrange alternative sources of financing (e.g., if lenders refuse to

make loans to such miners), thus reducing the price of bitcoin.

Lower bitcoin prices may result in further tightening of profit

margins for miners and decreasing profitability, thereby potentially causing even further selling pressure.

Diminishing profit

margins and increasing sales of newly mined bitcoin could result in a reduction in the price of bitcoin, which could adversely

impact an investment in the Shares.

may be more likely to sell a higher percentage of its newly created bitcoin, and more rapidly so, if it is operating at a low profit

margin, including due to an increase in electricity costs or a decline in the market price or amount of bitcoin issued as a mining

reward, or if mining operations are unable to arrange alternative sources of financing (e.g., if lenders refuse to make loans to

such miners), thus reducing the price of bitcoin.

Lower bitcoin prices may result in further tightening of profit margins for miners

and decreasing profitability, thereby potentially causing even further selling pressure.

Diminishing profit margins and increasing

sales of newly mined bitcoin could result in a reduction in the price of bitcoin, which could adversely impact an investment in

Operational cost may exceed the award

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may be reluctant to use bitcoin.

Increased transaction fees may motivate market participants, such as merchants or commercial

institutions, to switch from bitcoin to another digital asset or back to fiat currency as their preferred medium of exchange.

Decreased demand for bitcoin may adversely affect its price, which may adversely affect an investment in the Trust.

Increased transaction fees may motivate market participants, such as merchants or commercial institutions,

to switch from bitcoin to another digital asset or back to fiat currency as their preferred medium of exchange.

Decreased demand

for bitcoin may adversely affect its price, which may adversely affect an investment in the Trust.

To the extent that any miners cease to

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who does not require the payment of transaction fees or is willing to accept a lower fee.

Also, some miners have financed the

acquisition of mining equipment or the development or construction of infrastructure to perform mining activities by borrowing.

If such miners experience financial difficulties and are unable to pay back their borrowings, their mining capacity could become

unavailable to the Bitcoin network, which could conceivably result in disruptions in recording transactions on the Bitcoin network.

Any widespread delays or disruptions in the recording of transactions could result in a loss of confidence in the Bitcoin network

and could prevent the Trustee from completing transactions associated with the day-to-day management of the Trust, including creations

and redemptions of the Shares in exchange for bitcoin with APs.

Ultimately, if the awards of new bitcoin

for solving blocks declines and transaction fees for recording transactions are not sufficiently high to exceed the costs of mining,

miners may operate at a loss or cease operations.

If the award does not exceed the costs of mining in the long-term, miners may

have to cease operations entirely.

If miners cease their operations, this could have a negative impact on the Bitcoin network

and could adversely affect the value of the bitcoin held by the Trust.

If the awards for mining blocks or the transaction fees

for recording transactions on the Bitcoin network are not sufficiently high to

incentivize miners, miners may cease expending

processing power to mine blocks and confirmations of transactions on the Bitcoin Blockchain could be slowed.

Also, some miners have financed the acquisition

of mining equipment or the development or construction of infrastructure to perform mining activities by borrowing.

If such miners

experience financial difficulties and are unable to pay back their borrowings, their mining capacity could become unavailable to

the Bitcoin network, which could conceivably result in disruptions in recording transactions on the Bitcoin network.

Any widespread

delays or disruptions in the recording of transactions could result in a loss of confidence in the Bitcoin network and could prevent

the Trustee from completing transactions associated with the day-to-day management of the Trust, including creations and redemptions

of the Shares in exchange for bitcoin with APs.

if the awards of new bitcoin for solving blocks declines and transaction fees for recording transactions are not sufficiently high

to exceed the costs of mining, miners may operate at a loss or cease operations.

If the award does not exceed the costs of mining

in the long-term, miners may have to cease operations entirely.

If miners cease their operations, this could have a negative impact

on the Bitcoin network and could adversely affect the value of the bitcoin held by the Trust.

If the awards for mining blocks or

the transaction fees for recording transactions on the Bitcoin network are not sufficiently high to incentivize miners, miners may cease expending processing power to

mine blocks and confirmations of transactions on the Bitcoin Blockchain could be slowed.

Miners could act in collusion to raise

transaction fees, which may adversely affect the usage of the Bitcoin network.

Bitcoin miners collect fees for each transaction

they confirm.

Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks in the

Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm valid

transactions as a means of collecting fees.

To the extent that any miners cease to record transactions in solved blocks, such

transactions will not be recorded on the Bitcoin Blockchain until a block is solved by a miner who does not require the payment

Bitcoin miners collect fees for each

transaction they confirm.

Miners validate unconfirmed transactions by adding the previously unconfirmed transactions to new blocks

in the blockchain.

Miners are not forced to confirm any specific transaction, but they are economically incentivized to confirm

valid transactions as a means of collecting fees.

To the extent that any miners cease to record transactions in solved blocks,

such transactions will not be recorded on the Bitcoin Blockchain until a block is solved by a miner who does not require the payment

of transaction fees.

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If miners demand higher transaction fees for recording transactions in the

Bitcoin Blockchain or a software upgrade automatically charges fees for all transactions on the Bitcoin network, the cost of using

Bitcoin Blockchain or a software

upgrade automatically charges fees for all transactions on the Bitcoin network, the cost of using

bitcoin may increase and global markets may be reluctant to accept bitcoin as a means of payment.

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of the Bitcoin network, the value of bitcoin and the value of the Shares.

As technology advances, miners may be

unable to acquire the digital asset mining hardware necessary to develop and launch their operations.

As technology advances, miners may

be unable to acquire the digital asset mining hardware necessary to develop and launch their operations.

A decline in the bitcoin

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validators, miners will need to upgrade their mining hardware periodically to keep up with their competition.

The development

of supercomputers with disproportionate computing power may threaten the integrity of the bitcoin market by concentrating mining

power, which would make it unprofitable for other miners to mine.

The expense of purchasing or upgrading new equipment may be

substantial and diminish returns to miners dramatically.

A decline in miners may result in a decrease in the value of bitcoin

and the value of the Trust.

The development of

supercomputers with disproportionate computing power may threaten the integrity of the bitcoin market by concentrating mining power,

which would make it unprofitable for other miners to mine.

The expense of purchasing or upgrading new equipment may be substantial

and diminish returns to miners dramatically.

A decline in miners may result in a decrease in the value of bitcoin and the value

of the Trust.

If profit margins of Bitcoin Mining

Operations are not high, miners may elect to immediately sell bitcoin earned by mining, resulting in a reduction in the price

of bitcoin that could adversely affect an investment in the Trust.

Bitcoin network mining operations have

rapidly evolved over the past several years from individual users mining with computer processors, graphics processing units and

first-generation ASIC (application-specific integrated circuit) machines.

New processing power is predominantly added to the Bitcoin

network currently by “professionalized” mining operations.

Such operations may use proprietary hardware or sophisticated

ASIC machines acquired from ASIC manufacturers.

Significant capital is necessary for mining operations to acquire this hardware,

lease operating space (often in data centers or warehousing facilities), afford electricity costs and employ technicians to operate

the mining farms.

As a result, professionalized mining operations are of a greater scale than prior Bitcoin network validators

and have more defined, regular expenses and liabilities.

In addition, mining operations may choose to immediately sell bitcoin

earned from their operations into the global bitcoin market.

In past years, individual miners are believed to have been more likely

to hold newly mined bitcoin for more extended periods.

The immediate selling of newly mined bitcoin would increase the supply

of bitcoin on the bitcoin market, creating downward pressure on the price of bitcoin.

A professional mining operation operating

at a low profit margin may be more likely to sell a higher percentage of its newly mined bitcoin rapidly, and it may partially

or completely cease operations if its profit margin is negative.

In a low profit margin environment, a higher percentage of the

new bitcoin mined each day will be sold into the bitcoin market more rapidly, thereby reducing bitcoin prices.

The network effect

of reduced profit margins resulting in greater sales of newly mined bitcoin could result in a reduction in the price of bitcoin

that could adversely affect an investment in the Trust.

Congestion or delay in the Bitcoin network

may delay purchases or sales of bitcoin by the Trust.

The size of each block on the Bitcoin Blockchain

is currently limited, and is significantly below the level that centralized systems can provide.

Increased transaction volume

could result in delays in the recording of transactions due to congestion in the Bitcoin network.

Operations are not high, miners may elect to immediately sell bitcoin earned by mining, resulting in a reduction in the price of

bitcoin that could adversely affect an investment in the Trust.

network mining operations have rapidly evolved over the past several years from individual users mining with computer processors,

graphics processing units and first-generation ASIC (application-specific integrated circuit) machines.

New processing power is

predominantly added to the Bitcoin network currently by “professionalized” mining operations.

Such operations may use

proprietary hardware or sophisticated ASIC machines acquired from ASIC manufacturers.

Significant capital is necessary for mining

operations to acquire this hardware, lease operating space (often in data centers or warehousing facilities), afford electricity

costs and employ technicians to operate the mining farms.

As a result, professionalized mining operations are of a greater scale

than prior Bitcoin network validators and have more defined, regular expenses and liabilities.

In addition, mining operations may

choose to immediately sell bitcoin earned from their operations into the global bitcoin market.

In past years, individual miners

are believed to have been more likely to hold newly mined bitcoin for more extended periods.

The immediate selling of newly mined

bitcoin would increase the supply of bitcoin on the bitcoin market, creating downward pressure on the price of bitcoin.

A professional mining operation operating at a low profit margin may

be more likely to sell a higher percentage of its newly mined bitcoin rapidly, and it may partially or completely cease operations

if its profit margin is negative.

In a low profit margin environment, a higher percentage of the new bitcoin mined each day will

be sold into the bitcoin market more rapidly, thereby reducing bitcoin prices.

The network effect of reduced profit margins resulting

in greater sales of newly mined bitcoin could result in a reduction in the price of bitcoin that could adversely affect an investment

in the Trust.

Congestion or delay in the Bitcoin

network may delay purchases or sales of bitcoin by the Trust.

The size of each block on the Bitcoin

Blockchain is currently limited and is significantly below the level that centralized systems can provide.

Increased transaction

volume could result in delays in the recording of transactions due to congestion in the Bitcoin network.

Moreover, unforeseen system

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operations during an electricity shortage or power outage, or if electricity prices increase where the mining activities are performed.

This could adversely affect the price of bitcoin, or the operation of the Bitcoin network, and accordingly decrease the value

of the Shares.

This could adversely affect the price of bitcoin, or the operation of the Bitcoin network, and accordingly decrease the value of

Concerns have been raised about the electricity

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amount of energy.

The operations of the Bitcoin network and other digital asset networks may also consume significant amounts

Further, in addition to the direct energy costs of performing calculations on any given digital asset network, there

are indirect costs that impact a network’s total energy consumption, including the costs of cooling the machines that perform

The operations of the Bitcoin network and other digital asset networks may also consume significant amounts of

Further, in addition to the direct energy costs of performing calculations on any given digital asset network, there are

indirect costs that impact a network’s total energy consumption, including the costs of cooling the machines that perform

these calculations.

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mechanism used by the Bitcoin Blockchain.

If users, developers, and miners adopt such competing digital asset networks rather

than the Bitcoin Blockchain due to the perceived advantages in terms of energy usage of such networks and their consensus mechanisms,

If users, developers, and miners adopt such competing digital asset networks rather than

the Bitcoin Blockchain due to the perceived advantages in terms of energy usage of such networks and their consensus mechanisms,

the value of the Shares could be adversely impacted.

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in decreased security of a digital asset network, including the Bitcoin network, and consequently adversely impact the value of

Risks Associated with the Digital Asset

Risks Associated with the Digital

Asset Markets

The value of the Shares relates directly

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The market price of bitcoin may be highly volatile, and subject to a number of factors, including:

● an increase in the global bitcoin supply or a decrease

in global bitcoin demand;

● market conditions of, and overall sentiment towards,

the digital assets and blockchain technology industry;

● trading activity on digital asset trading platforms,

which, in many cases, may be unregulated, may be subject to regulation in a relevant

jurisdiction, but may not be complying, or may be subject to manipulation;

● the adoption of bitcoin as a medium of exchange, store-of-value

or other consumptive asset and the maintenance and development of the open-source software

protocol of the Bitcoin network, and their ability to meet user demands;

● an increase in the global bitcoin supply or a decrease in global bitcoin demand;

● market conditions of, and overall sentiment towards, the digital assets and blockchain technology industry;

● trading activity on digital asset trading platforms, which, in many cases, may be unregulated, may be subject to regulation

in a relevant jurisdiction, but may not be complying, or may be subject to manipulation;

● the adoption of bitcoin as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development

of the open-source software protocol of the Bitcoin network, and their ability to meet user demands;

● forks in the Bitcoin network;

● investors’ expectations with respect to interest

rates, the rates of inflation of fiat currencies or bitcoin, and digital asset exchange

● consumer preferences and perceptions of bitcoin specifically

and digital assets generally;

● negative events, publicity, and social media coverage

relating to the digital assets and blockchain technology industry;

● fiat currency withdrawal and deposit policies on digital

asset trading platforms;

● the liquidity of digital asset markets and any increase

or decrease in trading volume or market making on digital asset markets;

● business failures, bankruptcies, hacking, fraud, crime,

government investigations, or other negative developments affecting digital asset businesses,

including digital asset trading platforms, or banks or other financial institutions and

service providers which provide services to the digital assets industry;

● the use of leverage in digital asset markets, including

the unwinding of positions, “margin calls,” collateral liquidations and similar

● investment and trading activities of large or active

consumer and institutional users, speculators, miners, and investors in bitcoin;

● an active derivatives market for bitcoin or for digital

assets generally;

● monetary policies of governments, legislation or regulation,

trade restrictions, currency devaluations and revaluations and regulatory measures or

enforcement actions, if any, that restrict the use of bitcoin as a form of payment or

the purchase of bitcoin on the digital asset markets;

● global or regional political, economic or financial conditions,

events and situations, such as the novel coronavirus outbreak;

● fees associated with processing a bitcoin transaction

and the speed at which bitcoin transactions are settled;

● the maintenance, troubleshooting, and development of

the Bitcoin network including by miners and developers worldwide;

● the ability for the Bitcoin network to attract and retain

miners to secure and confirm transactions accurately and efficiently;

● ongoing technological viability and security of the Bitcoin

network and bitcoin transactions, including vulnerabilities against hacks and scalability;

● investors’ expectations with respect to interest rates, the rates of inflation of fiat currencies or bitcoin, and digital

asset exchange rates;

● consumer preferences and perceptions of bitcoin specifically and digital assets generally;

● negative events, publicity, and social media coverage relating to the digital assets and blockchain technology industry;

● fiat currency withdrawal and deposit policies on digital asset trading platforms;

● the liquidity of digital asset markets and any increase or decrease in trading volume or market making on digital asset markets;

● business failures, bankruptcies, hacking, fraud, crime, government investigations, or other negative developments affecting

digital asset businesses, including digital asset trading platforms, or banks or other financial institutions and service providers

which provide services to the digital assets industry;

● the use of leverage in digital asset markets, including the unwinding of positions, “margin calls,” collateral

liquidations and similar events;

● investment and trading activities of large or active consumer and institutional users, speculators, miners, and investors in

● an active derivatives market for bitcoin or for digital assets generally;

● monetary policies of governments, legislation or regulation, trade restrictions, currency devaluations and revaluations and

regulatory measures or enforcement actions, if any, that restrict the use of bitcoin as a form of payment or the purchase of bitcoin

on the digital asset markets;

● global or regional political, economic or financial conditions, events and situations, such as the novel coronavirus outbreak;

● fees associated with processing a bitcoin transaction and the speed at which bitcoin transactions are settled;

● the maintenance, troubleshooting,

and development of the Bitcoin network including by miners and developers worldwide;

● the ability for the Bitcoin network to attract and retain miners to secure and confirm transactions accurately and efficiently;

● ongoing technological viability and security of the Bitcoin network and bitcoin transactions, including vulnerabilities against

hacks and scalability;

● financial strength of market participants;

● the availability and cost of funding and capital;

● the liquidity and credit risk of digital asset trading

● interruptions in service from or closures or failures

of major digital asset trading platforms or their banking partners, or outages or system

failures affecting the Bitcoin network;

● decreased confidence in digital assets and digital assets

trading platforms;

● poor risk management or fraud by entities in the digital

assets ecosystem;

● increased competition from other forms of digital assets

or payment services;

● the Trust’s own acquisitions or dispositions of

bitcoin, since there is no limit on the number of bitcoin that the Trust may acquire.

● the liquidity and credit risk of digital asset trading platforms;

● interruptions in service from or closures or failures of major digital asset trading platforms or their banking partners, or

outages or system failures affecting the Bitcoin network;

● decreased confidence in digital assets and digital assets trading platforms;

● poor risk management or fraud by entities in the digital assets ecosystem;

● increased competition from other forms of digital assets or payment services;

● the Trust’s own acquisitions or dispositions of bitcoin, since there is no limit on the number of bitcoin that the Trust

Although returns from investing in bitcoin

have at times diverged from those associated with other asset classes to a greater or lesser extent, there can be no assurance

that there will be any such divergence in the future, either generally or with respect to any particular asset class, or that

price movements will not be correlated.

that there will be any such divergence in the future, either generally or with respect to any particular asset class, or that price

movements will not be correlated.

In addition, there is no assurance that bitcoin will maintain its value in the long, intermediate,

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proportionately.

The value of the Shares of the Trust are

represented by the MarketVector TM Bitcoin Benchmark Rate that may also be subject to momentum pricing due to speculation

regarding future appreciation in value of bitcoin, leading to greater volatility that could adversely affect the value of the

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing

public, accounts for future appreciation in value, if any.

The Sponsor believes that momentum pricing of bitcoins has resulted,

and may continue to result, in speculation regarding future appreciation in the value of bitcoin, inflating and making the MarketVector TM

The value of the Shares of the Trust

are represented by the MarketVector TM Bitcoin Benchmark Rate that may also be subject to momentum pricing due to speculation

regarding future appreciation in value of bitcoin, leading to greater volatility that could adversely affect the value of the Shares.

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public,

accounts for future appreciation in value, if any.

The Sponsor believes that momentum pricing of bitcoins has resulted, and may

continue to result, in speculation regarding future appreciation in the value of bitcoin, inflating and making the MarketVector TM

Bitcoin Benchmark Rate more volatile.

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could adversely affect the value of the Trust.

The Trust is not actively managed and does

not and will not have any strategy relating to the development of the Bitcoin network, nor will the Trust seek to avoid or mitigate

losses from declines in the bitcoin price.

Furthermore, the impact of the expansion of the Trust’s bitcoin holdings on the

digital asset industry and the Bitcoin network is uncertain.

The Trust is not actively managed and

does not and will not have any strategy relating to the development of the Bitcoin network, nor will the Trust seek to avoid or

mitigate losses from declines in the bitcoin price.

Furthermore, the impact of the expansion of the Trust’s bitcoin holdings

on the digital asset industry and the Bitcoin network is uncertain.

A decline in the popularity or acceptance of the Bitcoin network,

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is less susceptible to manipulation or capture.

Achieving decentralization may mean that every single node on a given digital

asset network is responsible for securing the system by processing every transaction and maintaining a copy of the entire state

of the network.

However, this may involve tradeoffs from an efficiency perspective, and impose constraints on transaction processing

speed (“throughput”).

As of December 31, 2020, the Bitcoin network

could handle approximately three to seven transactions per second.

In an effort to increase the volume of transactions that can

be processed on a given digital asset network, many digital assets are being upgraded with various features to increase the speed

and throughput of digital asset transactions.

In August 2017, the Bitcoin network was upgraded with a technical feature known

as “Segregated Witness” with the promise of increasing the number of transactions per second that can be handled on-chain

and enabling so-called second layer solutions, such as the Lightning Network or payment channels, that have the potential to increase

transaction throughput by processing certain transactions outside the main Bitcoin Blockchain.

However, this upgrade, and second

layer solutions generally, may fail to achieve the expected benefits or widespread adoption.

An increasing number of wallets and

digital asset intermediaries, such as exchanges, have begun supporting Segregated Witness and the Lightning Network, or similar

However, the Lightning Network does not yet have material adoption as of the date of this Report, and there are open

questions about Lightning Network services, such as its cost and who will serve as intermediaries, among other questions.

Achieving decentralization may mean that every single node on a given digital asset

network is responsible for securing the system by processing every transaction and maintaining a copy of the entire state of the

However, this may involve tradeoffs from an efficiency perspective, and impose constraints on transaction processing speed

(“throughput”).

As of December 31, 2020, the Bitcoin

network could handle approximately three to seven transactions per second.

In an effort to increase the volume of transactions

that can be processed on a given digital asset network, many digital assets are being upgraded with various features to increase

the speed and throughput of digital asset transactions.

In August 2017, the Bitcoin network was upgraded with a technical feature

known as “Segregated Witness” with the promise of increasing the number of transactions per second that can be handled

on-chain and enabling so-called second layer solutions, such as the Lightning Network or payment channels, that have the potential

to increase transaction throughput by processing certain transactions outside the main Bitcoin Blockchain.

However, this upgrade,

and second layer solutions generally, may fail to achieve the expected benefits or widespread adoption.

An increasing number of

wallets and digital asset intermediaries, such as exchanges, have begun supporting Segregated Witness and the Lightning Network,

or similar technology.

However, the Lightning Network does not yet have material adoption as of the date of this Report, and there

are open questions about Lightning Network services, such as its cost and who will serve as intermediaries, among other questions.

If increases in throughput on the Bitcoin

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As of December 31, 2022, bitcoin transaction fees were $1.17 per transaction, on average.

Increased fees and decreased

settlement speeds could preclude certain uses for bitcoin (e.g., micropayments), and could reduce demand for, and the price of,

bitcoin, which could adversely impact the value of the Shares.

In May 2023, events related to the adoption of ordinals, which

are a means of inscribing digital content on the bitcoin blockchain, caused transaction fees to temporarily spike above $30 per

As of January 31, 2025, bitcoin transaction fees were averaging $1.54 per transaction.

Increased fees and decreased settlement

speeds could preclude certain uses for bitcoin (e.g., micropayments), and could reduce demand for, and the price of, bitcoin, which

could adversely impact the value of the Shares.

In May 2023, events related to the adoption of ordinals, which are a means of inscribing

digital content on the bitcoin blockchain, caused transaction fees to temporarily spike above $30 per transaction.

As of January

31, 2025, bitcoin transaction fees were averaging $1.54 per transaction.

Many developers are actively researching

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mechanisms will take to become effective, which could adversely impact the value of the Shares.

Due to the unregulated nature and lack

of transparency surrounding the operations of bitcoin trading platforms, which may be subject to regulation in a relevant jurisdiction,

but may not be complying, they may experience fraud, manipulation, security failures or operational problems, which may adversely

affect the value of bitcoin and, consequently, the value of the Shares.

Due to the unregulated nature and

lack of transparency surrounding the operations of bitcoin trading platforms, which may be subject to regulation in a relevant

jurisdiction, but may not be complying, they may experience fraud, manipulation, security failures or operational problems, which

may adversely affect the value of bitcoin and, consequently, the value of the Shares.

Digital asset trading platforms are relatively

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platforms, including prominent trading platforms that handle a significant volume of bitcoin trading.

Many digital asset trading platforms are

unlicensed, unregulated, may be subject to regulation in a relevant jurisdiction, but may not be complying, may operate without

extensive supervision by governmental authorities, and do not provide the public with significant information regarding their

ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance.

particular, those located outside the United

States may be subject to significantly less stringent regulatory and compliance requirements in their local jurisdictions, and

may take the position that they are not subject to laws and regulations that would apply to a national securities exchange or

designated contract market in the United States, or may, as a practical matter, be beyond the ambit of U.S.

trading activity on or reported by these digital asset trading platforms is generally significantly less regulated than trading

in regulated U.S.

securities and commodities markets, and may reflect behavior that would be prohibited in regulated U.S.

Many digital asset trading platforms

are unlicensed, may be unregulated, may be subject to regulation in a relevant jurisdiction, but may or may not be in compliance

therewith, may operate without extensive supervision by governmental

authorities, and do not provide the public with significant

information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance.

In particular, those located outside the United States may be subject to significantly less stringent regulatory and compliance

requirements in their local jurisdictions, and may take the position that they are not subject to laws and regulations that would

apply to a national securities exchange or designated contract market in the United States, or may, as a practical matter, be beyond

the ambit of U.S.

As a result, trading activity on or reported by these digital asset trading platforms is generally

significantly less regulated than trading in regulated U.S.

securities and commodities markets, and may reflect behavior that would

be prohibited in regulated U.S.

trading venues.

The bitcoin market globally and in the

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trading venues lack certain safeguards put in place by exchanges for more traditional assets to enhance the stability of trading

on the exchanges and prevent “flash crashes,” such as limit-down circuit breakers.

As a result, the prices of bitcoin

on trading venues may be subject to larger and/or more frequent sudden declines than assets traded on more traditional exchanges.

Tools to detect and deter fraudulent or manipulative trading activities such as market manipulation, front-running of trades,

and wash-trading may not be available to or employed by digital asset trading platforms, or may not exist at all.

on the exchanges and prevent “flash crashes,” such as limit-down circuit breakers, as demonstrated by the October 2025

As a result, the prices of bitcoin on trading venues may be subject to larger and/or more frequent sudden declines

than assets traded on more traditional exchanges.

Tools to detect and deter fraudulent or manipulative trading activities such

as market manipulation, front-running of trades, and wash-trading may not be available to or employed by digital asset trading

platforms, or may not exist at all.

Bitcoin trading platforms may be exposed

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of fraud and manipulation in the bitcoin market generally, including, among others (1) “wash trading”;

persons with a dominant position in bitcoin manipulating bitcoin pricing;

with a dominant position in bitcoin manipulating bitcoin pricing;

(3) hacking of the Bitcoin network and trading platforms;

malicious control of the Bitcoin network;

(5) trading based on material, non-public information (for example, plans of market

participants to significantly increase or decrease their holdings in bitcoin, new sources of demand for bitcoin) or based on the

dissemination of false and misleading information;

(6) manipulative activity involving purported “stablecoins,” including

Tether (for more information, “—Prices of bitcoin may be affected due to stablecoins (including Tether and US Dollar

Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment”);

and (7) fraud and manipulation

at bitcoin trading platforms.

The effect of potential market manipulation, front-running, wash-trading, and other fraudulent or

manipulative trading practices may inflate the volumes actually present in crypto market and/or cause distortions in price, which

could adversely affect the Trust or cause losses to Shareholders.

Over the past several years, some digital

asset trading platforms have been closed due to fraud and manipulative activity, business failure or security breaches.

of these instances, the customers of such digital asset trading platforms were not compensated or made whole for the partial or

complete losses of their account balances in such digital asset trading platforms.

While, generally speaking, smaller digital

asset trading platforms are less likely to have the infrastructure and capitalization that make larger digital asset trading platforms

more stable, larger digital asset trading platforms are more likely to be appealing targets for hackers and malware and may be

more likely to be targets of regulatory enforcement action.

(5) trading based on material, non-public information (for example, plans of market participants

to significantly increase or decrease their holdings in bitcoin, new sources of demand for bitcoin, or other events which could

affect the price of bitcoin) or based on the dissemination of false and misleading information;

(6) manipulative activity involving

purported “stablecoins,” including Tether (for more information, “-Prices of bitcoin may be affected due to stablecoins

(including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory treatment”);

and (7) fraud and manipulation at bitcoin trading platforms.

The effect of potential market manipulation, front-running, wash-trading,

and other fraudulent or manipulative trading practices may inflate the volumes actually present in digital asset markets and/or

cause distortions in price, which could adversely affect the Trust or cause losses to Shareholders.

the past several years, some digital asset trading platforms have been closed due to fraud and manipulative activity, business

failure or security breaches.

In many of these instances, the customers of such digital asset trading platforms were not compensated

or made whole for the partial or complete losses of their account balances in such digital asset trading platforms.

While, generally

speaking, smaller digital asset trading platforms are less likely to have the infrastructure and capitalization that make larger

digital asset trading platforms more stable, larger digital asset trading platforms are more likely to be appealing targets for

hackers and malware and may be more likely to be targets of regulatory enforcement action.

For example, the collapse of Mt.

Gox, which filed for bankruptcy protection

in Japan in late February 2014, demonstrated that even the largest digital asset trading platforms could be subject to abrupt

failure with consequences for both users of digital asset exchanges and the digital asset industry as a whole.

In particular,

in the two weeks that followed the February 7, 2014 halt of bitcoin withdrawals from Mt.

Gox, the value of one bitcoin fell on

other trading platforms from around $795 on February 6, 2014 to $578 on February 20, 2014.

Additionally, in January 2015, Bitstamp

announced that approximately 19,000 bitcoin had been stolen from its operational or “hot” wallets.

Further, in August

2016, it was reported that almost 120,000 bitcoins worth around $78 million were stolen from Bitfinex.

The value of bitcoin and

other digital assets immediately decreased over 10% following reports of the theft at Bitfinex.

In July 2017, FinCEN assessed

a $110 million fine against BTC-E, a now defunct digital asset trading platform, for facilitating crimes such as drug sales and

ransomware attacks.

In addition, in December 2017, Yapian, the operator of Seoul-based cryptocurrency trading platform Youbit,

suspended digital asset trading and filed for bankruptcy following a hack that resulted in a loss of 17% of Yapian’s assets.

which filed for bankruptcy protection in Japan in late February 2014, demonstrated that even the largest digital asset trading

platforms could be subject to abrupt failure with consequences for both users of digital asset platforms and the digital asset

industry as a whole.

In particular, in the two weeks that followed the February 7, 2014 halt of bitcoin withdrawals from Mt.

the value of one bitcoin fell on other trading platforms from around $795 on February 6, 2014 to $578 on February 20, 2014.

Additionally,

in January 2015, Bitstamp announced that approximately 19,000 bitcoin had been stolen from its operational or “hot”

Further, in August 2016, it was reported that almost 120,000 bitcoins worth around $78,000,000 were stolen from Bitfinex.

The value of bitcoin and other digital assets immediately decreased over 10% following reports of the theft at Bitfinex.

2017, FinCEN assessed a $110,000,000 fine against BTC-E, a now defunct digital asset trading platform, for facilitating crimes

such as drug sales and ransomware attacks.

In addition, in December 2017, Yapian, the operator of Seoul-based cryptocurrency trading

platform Youbit, suspended digital asset trading and filed for bankruptcy following a hack that resulted in a loss of 17% of Yapian’s

Following the hack, Youbit users were allowed to withdraw approximately 75% of the digital assets in their platform accounts,

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In addition, in January

2018, the Japanese digital asset trading platform, Coincheck, was hacked, resulting in losses of approximately $535 million, and

in February 2018, the Italian digital asset trading platform, Bitgrail, was

hacked, resulting in approximately $170

million in losses.

In May 2019, one of the world’s largest digital asset trading platform, Binance, was hacked, resulting

in losses of approximately $40 million.

In November 2022, FTX, one of the largest digital asset trading platform by volume at

the time, halted customer withdrawals and filed for bankruptcy, which revealed a shortfall of customer funds.

Shortly thereafter,

FTX’s CEO resigned and FTX and many of its affiliates filed for bankruptcy in the United States, while other affiliates

have entered insolvency, liquidation, or similar proceedings around the globe, following which the U.S.

Department of Justice

brought criminal fraud and other charges, and the SEC and CFTC brought civil securities and commodities fraud charges, against

certain of FTX’s and its affiliates’ senior executives, including its former CEO.

Around the same time, there were

reports that approximately $300-600 million of digital assets were removed from FTX and the full facts remain unknown, including

whether such removal was the result of a hack, theft, insider activity, or other improper behavior.

2018, the Japanese digital asset trading platform, Coincheck, was hacked, resulting in losses of approximately $535,000,000, and

in February 2018, the Italian digital asset trading platform, Bitgrail, was hacked, resulting in approximately $170,000,000 in

In May 2019, one of the world’s largest digital asset trading platform, Binance, was hacked, resulting in losses

of approximately $40,000,000.

In November 2022, FTX, one of the largest digital asset trading platform by volume at the time, halted

customer withdrawals and filed for bankruptcy, which revealed a shortfall of customer funds.

Shortly thereafter, FTX’s CEO

resigned and FTX and many of its affiliates filed for bankruptcy in the United States, while other affiliates have entered insolvency,

liquidation, or similar proceedings around the globe, following which the U.S.

Department of Justice brought criminal fraud and

other charges, and the SEC and CFTC brought civil securities and commodities fraud charges, against certain of FTX’s and

its affiliates’ senior executives, including its former CEO.

Around the same time, there were reports that approximately

$300-600 million of digital assets were removed from FTX and the full facts remain unknown, including whether such removal was

the result of a hack, theft, insider activity, or other improper

February 21, 2025, Bybit, a centralized platform for exchanging digital assets, announced that more than $1.4 billion in ether

had been stolen from its platform.

Hackers were able to manipulate Bybit’s transfer process to authorize and complete the

illicit transaction.

The incident has resulted in renewed concerns over the security of digital asset platforms.

In 2019 there were reports claiming that

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unregulated exchanges located outside of the United States.

Such reports alleged that certain overseas trading platforms have

displayed suspicious trading activity suggestive of a variety of manipulative or fraudulent practices, such as fake or artificial

trading volume or trading volume based on non-economic “wash trading”.

Other academics and market observers have

put forth evidence to support claims that manipulative trading activity has occurred on certain bitcoin trading platforms.

example, in a 2017 paper titled “Price Manipulation in the Bitcoin Ecosystem” sponsored by the Interdisciplinary Cyber

Research Center at Tel Aviv University, a group of researchers used publicly available trading data, as well as leaked transaction

Such reports alleged that certain overseas trading platforms have displayed

suspicious trading activity suggestive of a variety of manipulative or fraudulent practices, such as fake or artificial trading

volume or trading volume based on non-economic “wash trading” (where offsetting trades are entered into for other than

bona fide reasons, such as the desire to inflate reported trading volumes), and attributed such manipulative or fraudulent behavior

to motives like the incentive to attract listing fees from token issuers who seek the most liquid and high-volume platforms on

which to list their coins.

Other academics and market observers

have put forth evidence to support claims that manipulative trading activity has occurred on certain bitcoin trading platforms.

For example, in a 2017 paper titled “Price Manipulation in the Bitcoin Ecosystem” sponsored by the Interdisciplinary

Cyber Research Center at Tel Aviv University, a group of researchers used publicly available trading data, as well as leaked transaction

data from a 2014 Mt.

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to more than $1,000 over a two-month period.

potential consequences of a digital asset trading platform failure or failure to

prevent market manipulation could adversely affect the value of the Shares.

Manipulative trading or market abuse could create

artificial or distorted prices, cause a loss of investor confidence in bitcoin, adversely impact pricing trends in bitcoin markets

broadly, and cause losses from an investment in Shares of the Trust.

The potential consequences of a digital

asset trading platform failure or failure to prevent market manipulation could adversely affect the value of the Shares.

trading or market abuse could create artificial or distorted prices, cause a loss of investor confidence in bitcoin, adversely

impact pricing trends in bitcoin markets broadly, and cause losses from an investment in Shares of the Trust.

Bitcoin trading platforms may be exposed

to front-running.

trading platforms on which bitcoin trades may be susceptible to “front-running,” which refers to the process when

someone uses access to confidential information, or technology or market advantage to get prior knowledge of upcoming transactions.

Front-running is a frequent activity on centralized as well as decentralized exchanges.

By using bots functioning on a millisecond-scale

timeframe, bad actors are able to take advantage of the forthcoming price movement and make economic gains at the cost of those

who had introduced these transactions.

The objective of a front runner is to buy a chunk of tokens at a low price and later sell

them at a higher price while simultaneously exiting the position.

Front-running can occur via manipulation of transaction validation

and mining processes, or the theft or misappropriation of confidential information by insiders.

To extent that front-running occurs

in bitcoin markets, it may result in concerns as to the price integrity of digital asset exchanges and digital assets more generally.

Bitcoin trading platforms on which bitcoin

trades may be susceptible to “front-running,” which refers to the process when someone uses access to confidential

information, or technology or market advantage to get prior knowledge of upcoming transactions.

Front-running is a frequent activity

on centralized as well as decentralized exchanges.

By using bots functioning on a millisecond-scale timeframe, bad actors are able

to take advantage of the forthcoming price movement and make economic gains at the cost of those who had introduced these transactions.

The objective of a front runner is to buy a chunk of tokens at a low price and later sell them at a higher price while simultaneously

exiting the position.

Front-running can occur via manipulation of transaction validation and mining processes, or the theft or

misappropriation of confidential information by insiders.

To extent that front-running occurs in bitcoin markets, it may result

in concerns as to the price integrity of digital asset exchanges and digital assets more generally.

Bitcoin trading platforms may be exposed

to wash trading.

Bitcoin trading

platforms on which bitcoin trades may be susceptible to wash trading.

Wash trading occurs when offsetting trades are entered into

for other than bona fide reasons, such as the desire to inflate reported trading volumes.

Wash trading may be motivated by non-economic

reasons, such as a desire for increased visibility on popular websites that monitor markets for digital assets so as to improve

their attractiveness to investors who look for maximum liquidity, or it may be motivated by the ability to attract listing fees

from token issuers who seek the most liquid and high-volume exchanges on which to list their coins.

Results of wash trading may

include unexpected obstacles to trade and erroneous investment decisions based on false information.

Even in the United

States, there have been allegations of wash trading even on regulated venues.

Any actual or perceived false trading in the global

digital asset trading market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of

bitcoin and/or negatively affect the market perception of bitcoin.

If they were to affect trading at a trading platform which

is used to calculate the MarketVector TM Bitcoin Benchmark Rate, they could cause the Trust’s NAV to be calculated

incorrectly and cause Shareholders to suffer losses.

See “—The MarketVectorTM Bitcoin Benchmark Rate may be affected

by manipulative or fraudulent practices in the global bitcoin market or at constituent trading platforms.”

Bitcoin trading platforms on which bitcoin

trades may be susceptible to wash trading.

Wash trading occurs when offsetting trades are entered into for other than bona fide

reasons, such as the desire to inflate reported trading volumes.

Wash trading may be motivated by non-economic reasons, such as

a desire for increased visibility on popular websites that monitor markets for digital assets so as to improve their attractiveness

to investors who look for maximum liquidity, or it may be motivated by the ability to attract listing fees from token issuers who

seek the most liquid and high-volume exchanges on which to list their coins.

Results of wash trading may include unexpected obstacles

to trade and erroneous investment decisions based on false information.

Even in the United States, there have

been allegations of wash trading even on regulated venues.

Any actual or perceived false trading in the global digital asset trading

market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of bitcoin and/or negatively

affect the market perception of bitcoin.

If they were to affect trading at a trading platform which is used to calculate the MarketVector TM

Bitcoin Benchmark Rate, they could cause the Trust’s NAV to be calculated incorrectly and cause Shareholders to suffer losses.

See “—The MarketVectorTM Bitcoin Benchmark Rate may be affected by manipulative or fraudulent practices in the global

bitcoin market or at constituent trading platforms.”

To the extent that wash trading either

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Central banks and other governmental entities have also announced cooperative initiatives

and consortia with private sector entities, with the goal of leveraging blockchain and other technology to reduce friction in

cross-border and interbank payments and settlement, and commercial banks and other financial institutions have also recently announced

a number of initiatives of their own to incorporate new technologies, including blockchain and similar technologies, into their

payments and settlement activities, which could compete with, or reduce the demand for, bitcoin.

As a result of any of the foregoing

factors, the value of bitcoin could decrease, which could adversely affect an investment in the Trust.

Prices of bitcoin may be affected due

to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory

While the Trust does not invest in and

will not hold stablecoins, it may nonetheless be exposed to risks that stablecoins pose for the bitcoin market and other digital

asset markets.

Stablecoins are digital assets designed to have a stable value over time as compared to typically volatile digital

assets, and are typically marketed as being pegged to a fiat currency, such as the U.S.

and consortia with private sector entities, with the goal of leveraging blockchain and other technology to reduce friction in cross-border

and interbank payments and settlement, and commercial banks and other financial institutions have also recently announced a number

of initiatives of their own to incorporate new technologies, including blockchain and similar technologies, into their payments

and settlement activities, which could compete with, or reduce the demand for, bitcoin.

As a result of any of the foregoing factors,

the value of bitcoin could decrease, which could adversely affect an investment in the Trust.

Prices of bitcoin may be affected

due to stablecoins (including Tether and US Dollar Coin (“USDC”)), the activities of stablecoin issuers and their regulatory

While the Trust does not invest in stablecoins,

it may nonetheless be exposed to risks that stablecoins pose for the bitcoin market and other digital asset markets.

are digital assets designed to have a stable value over time as compared to typically volatile digital assets and are typically

marketed as being pegged to a fiat currency, such as the U.S.

dollar, at a certain value.

prices of stablecoins are intended to be stable, their market value may fluctuate.

This volatility has in the past apparently

impacted the price of bitcoin.

Stablecoins are a relatively new phenomenon, and it is impossible to know all of the risks that

they could pose to participants in the bitcoin market.

In addition, some have argued that some stablecoins, particularly Tether,

are improperly issued without sufficient backing in a way that, when the stablecoin is used to pay for bitcoin, could cause artificial

rather than genuine demand for bitcoin, artificially inflating the price of bitcoin, and also argue that those associated with

certain stablecoins may be involved in laundering money.

On February 17, 2021 the New York Attorney General entered into an agreement

with Tether’s operators, including Bitfinex, requiring them to cease any further trading activity with New York persons

and pay $18.5 million in penalties for false and misleading statements made regarding the assets backing Tether (the “NYAG

Settlement Order”).

The NYAG Settlement Order states that Bitfinex and Tether are under common ownership and management.

Among other things, the NYAG Settlement Order asserts that Tether’s operators made a series of loans of some of the fiat

currency reserves backing Tether stablecoins to Bitfinex, which Bitfinex used in its business, including to bridge liquidity difficulties

it faced after Bitfinex lost a substantial amount of customer cash due to the actions of a payment processor it employed.

Bitfinex gave Tether a receivable promising to pay the funds back.

The NYAG Settlement Order finds, among other things, that representations

Tether’s operators made that each Tether stablecoin was backed 1:1 by fiat currency reserves were fraudulent under New York’s

Martin Act, because some of the fiat currency reserves were replaced by a receivable issued by an affiliate (Bitfinex) without

disclosure to the market.

On October 15, 2021, the CFTC announced a settlement with Tether’s operators, Tether Holdings

Limited, Tether Operations Limited, Tether Limited, and Tether

International Limited, in which they agreed

to pay $42.5 million in fines to settle charges that, among others, Tether’s claims that it maintained sufficient U.S.

reserves to back every Tether stablecoin in circulation with the “equivalent amount of corresponding fiat currency”

held by Tether were untrue.

Bitfinex also agreed to pay the CFTC a $1.5 million fine to settle charges that Bitfinex offered off-exchange

leveraged, margined, or financed transactions involving cryptocurrencies, including bitcoin, with U.S.

customers who were not

eligible contract participants and accepted funds (including in the form of Tether stablecoins) and orders in connection with

such illegal off-exchange transactions, triggering an obligation to register with the CFTC, which the CFTC order asserts it violated.

The CFTC previously fined Bitfinex in 2016 on similar charges.

Although the prices of stablecoins are

intended to be stable, their market value may fluctuate.

This volatility has in the past apparently impacted the price of bitcoin.

Stablecoins are a relatively new phenomenon, and it is impossible to know all of the risks that they could pose to participants

in the bitcoin market.

Like CBDCs, stablecoins could compete with, or replace, bitcoin and other digital assets as a medium of

exchange or store of value.

In addition, some have argued that some stablecoins, particularly Tether, are improperly issued without

sufficient backing in a way that, when the stablecoin is used to pay for bitcoin, could cause artificial rather than genuine demand

for bitcoin, thereby artificially inflating the price of bitcoin.

On February 17, 2021, the New York Attorney General entered into

an agreement with Tether’s operators, requiring them to cease any further trading activity with New York persons and pay

$18.5 million in penalties for false and misleading statements made regarding the assets backing Tether.

On October 15, 2021, the

CFTC announced a settlement with Tether’s operators in which they agreed to pay $42.5 million in fines to settle charges

that, among others, Tether’s claims that it maintained sufficient U.S.

dollar reserves to back every Tether stablecoin in

circulation with the “equivalent amount of corresponding fiat currency” held by Tether were untrue.

USDC is a reserve-backed stablecoin issued

by Circle Internet Financial that is commonly used as a method of payment in digital asset markets, including the bitcoin market.

While USDC is designed to maintain a stable value at 1 U.S.

While USDC is designed to maintain a stable value at one U.S.

dollar at all times, on March 10, 2023, the value of USDC fell below

$1.00 for multiple days after Circle Internet Financial disclosed that US$3.3 billion of the USDC reserves were held at Silicon

Valley Bank, which had entered Federal Deposit Insurance Corporation (“FDIC”) receivership earlier that day.

are reliant on the U.S.

$1.00 for multiple days after Circle Internet Financial disclosed that $3.3 billion of the USDC reserves were held at Silicon Valley

Bank, which had entered FDIC receivership earlier that day.

Stablecoins are reliant on the U.S.

banking system and U.S.

treasuries, and the failure of either to function normally could impede the function

of stablecoins, and therefore could adversely affect the value of the Shares.

and the failure of either to function normally could impede the function of stablecoins, and therefore could adversely affect the

value of the Shares.

Given the foundational role that stablecoins

play in global digital asset markets, their fundamental liquidity can have a dramatic impact on the broader digital asset market,

including the market for bitcoin.

Because a large portion of the digital asset market still depends on stablecoins such as Tether

and USDC, there is a risk that a disorderly de-pegging or a run on Tether or USDC could lead to dramatic market volatility in

digital assets more broadly.

Volatility in stablecoins, operational issues with stablecoins (for example, technical issues that

prevent settlement), concerns about the sufficiency of any reserves that support stablecoins or potential manipulative activity

when unbacked stablecoins are used to pay for other digital assets (including bitcoin), or regulatory concerns about stablecoin

issuers or intermediaries, such as exchanges, that support stablecoins, could impact individuals’ willingness to trade on

trading venues that rely on stablecoins, reduce liquidity in the bitcoin market, and affect the value of bitcoin, and in turn

impact an investment in the Shares.

Given Bitfinex is currently a component of the MarketVector TM Bitcoin Benchmark

Rate and Bitfinex and Tether are understood to be under common ownership and management, problems with Tether specifically could

potentially affect pricing of transactions on Bitfinex or otherwise disrupt Bitfinex’s operations.

play in global digital asset markets, their liquidity can have a dramatic impact on the broader digital asset market, including

the market for bitcoin.

A significant portion of the digital asset market continues to depend on stablecoins such as Tether and

As such, any disruption in the operation or perceived stability of these stablecoins such as a disorderly de-pegging event

or a loss of market confidence resulting in a run on reserves could lead to substantial market volatility across digital assets

more broadly.

Additional risks such as operational

failures (e.g., technical issues that prevent settlement), concerns regarding the adequacy or transparency of reserve assets backing

stablecoins, the use of unbacked or undercollateralized stablecoins in potentially manipulative trading practices and regulatory

scrutiny of stablecoin issuers or intermediaries, including exchanges that facilitate stablecoin transactions, may also adversely

affect market confidence and liquidity.

Further, these risks are underscored by recent legislative developments.

On July 18, 2025,

the Guiding and Establishing National Innovation for U.S.

Stablecoins Act of 2025 (“GENIUS Act”) was enacted, establishing

a federal regulatory framework for payment stablecoins.

The GENIUS Act prohibits the issuance or use of payment stablecoins unless

the issuer obtains a qualifying license and complies with a range of regulatory requirements, including reserve backing with liquid

assets, redemption rights, governance standards, and operational transparency.

The GENIUS Act also restricts the payment of interest

on stablecoins and imposes oversight on both bank and nonbank issuers.

The enactment of the GENIUS Act, or the removal or migration

of prominent stablecoins from the Bitcoin network, could reduce the willingness of market participants to engage in digital asset

transactions that rely on stablecoins, diminish liquidity in the bitcoin market, and adversely affect the price of bitcoin.

such developments could, in turn, materially and adversely impact the value of the Shares.

Digital Asset Treasury Companies Risk

In recent times, a number of companies

engaged in businesses outside the digital assets industry have begun to hold their corporate treasuries in digital assets instead

of in fiat currency (“digital asset treasury companies”).

In some cases, these companies have raised funds through

financing or securities offerings and applied the proceeds to purchase digital assets, including bitcoin.

Digital asset treasury companies are

a relatively new phenomenon and it is impossible to predict all of the risks they could pose to the Trust.

On the one hand, digital

asset treasury companies may increase procyclical dynamics in the market because they may purchase digital assets, such as bitcoin,

when prices are rising and they may sell such assets when prices are decreasing, potentially making bitcoin more expensive in a

rising market and then causing downward pressure on bitcoin prices in a falling market (causing prices to fall faster than they

otherwise would).

Digital asset treasury companies could cause greater volatility in digital asset markets, including markets for

Negative events or sentiment surrounding digital asset treasury companies could affect the market for bitcoin.

other hand, digital asset treasury companies may compete with the Trust in the marketplace as a perceived alternative means of

achieving exposure to the price of bitcoin (to a greater or lesser extent) through investing in securities.

The foregoing or similar

events involving digital asset treasury companies could adversely affect holders of Shares in the Trust.

New competing digital assets may pose

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network provides users confidence regarding the security and long-term stability of the Bitcoin network.

This in turn creates

a domino effect that inures to the benefit of the Bitcoin network – namely, the advantage of more users and miners makes

a digital asset more secure, which potentially makes it more attractive to new users and miners, resulting in a network effect

that potentially strengthens the first-to-market advantage.

However, despite the first-mover advantage of the Bitcoin network

over other digital assets, it is possible that real or perceived shortcomings in the Bitcoin network, or technological, regulatory

or other developments, could result in a decline in popularity and acceptance of bitcoin and the Bitcoin network, and other digital

currencies and trading systems could become more widely accepted and used than the Bitcoin network, which could lead to a decline

in the value of bitcoin.

Failure of funds that hold digital assets

to receive SEC approval to list their shares on exchanges could adversely affect the value of the Shares.

This in turn creates a

domino effect that inures to the benefit of the Bitcoin network – namely, the advantage of more users and miners makes a

digital asset more secure, which potentially makes it more attractive to new users and miners, resulting in a network effect that

potentially strengthens the first-to-market advantage.

However, despite the first-mover advantage of the Bitcoin network over other

digital assets, it is possible that real or perceived shortcomings in the Bitcoin network, or technological, regulatory or other

developments, could result in a decline in popularity and acceptance of bitcoin and the Bitcoin network, and other digital currencies

and trading systems could become more widely accepted and used than the Bitcoin network, which could lead to a decline in the value

Failure of funds that hold digital

assets to receive SEC approval to list their shares on exchanges could adversely affect the value of the Shares.

There have been a growing number of attempts

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If exchange-listing requests continue to be denied by the SEC, increased

investment interest by institutional or retail investors could fail to materialize, which could reduce the demand for digital

assets generally and therefore adversely affect the value of the Shares.

investment interest by institutional or retail investors could fail to materialize, which could reduce the demand for digital assets

generally and therefore adversely affect the value of the Shares.

Risks Associated with the MarketVector TM

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Benchmark Rate has a limited history.

The MarketVector TM Bitcoin Benchmark

Rate was developed by MarketVector and has a limited history.

MarketVector has substantial discretion at any time to change the

methodology used to calculate the MarketVector TM Bitcoin Benchmark Rate, including the constituent trading platforms

that contribute prices to the Trust’s NAV.

MarketVector does not have any obligation to take the needs of the Trust, the

Trust’s Shareholders, or anyone else into consideration in connection with such changes.

The MarketVector TM Bitcoin

Benchmark Rate was developed by MarketVector and has a limited history.

MarketVector has substantial discretion at any time to

change the methodology used to calculate the MarketVector TM Bitcoin Benchmark Rate, including the constituent trading

platforms that contribute prices to the Trust’s NAV.

MarketVector does not have any obligation to take the needs of the Trust,

the Trust’s Shareholders, or anyone else into consideration in connection with such changes.

There is no guarantee that the

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of bitcoin in the future.

The MarketVector TM Bitcoin Benchmark

Rate is based on various inputs which may include price data from various third-party trading platforms and markets.

does not guarantee the validity of any of these inputs, which may be subject to technological error, manipulative activity, or

fraudulent reporting from their initial source.

The MarketVector TM Bitcoin Benchmark Rate could be calculated now or

in the future in a way that adversely affects an investment in the Trust.

The MarketVector TM Bitcoin

Benchmark Rate could fail to track the global bitcoin price, and a failure of the Marketvector TM Bitcoin Benchmark

Rate could adversely affect the value of the Shares.

Benchmark Rate is based on various inputs which may include price data from various third-party trading platforms and markets.

MarketVector does not guarantee the validity of any of these inputs, which may be subject to technological error, manipulative

activity, or fraudulent reporting from their initial source.

The MarketVector TM Bitcoin Benchmark Rate could be calculated

now or in the future in a way that adversely affects an investment in the Trust.

The Marketvector TM Bitcoin

Benchmark Rate could fail to track the global bitcoin price, and a failure of the Marketvector TM Bitcoin Benchmark Rate

could adversely affect the value of the Shares.

Although the MarketVector TM

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It is possible that

the price of bitcoins on the bitcoin trading platforms could be materially higher or lower than the MarketVector TM

Bitcoin Benchmark Rate price.

To the extent the MarketVector TM Bitcoin Benchmark Rate price differs materially from

the actual prices available on a bitcoin trading platforms used to calculate it, or the global market price of bitcoin, the price

of the Shares may no longer track, whether temporarily or over time, the global market price of bitcoin, which could adversely

affect an investment in the Trust by reducing investors’ confidence in the Shares’ ability to track the market price

To the extent such prices differ materially from the MarketVector TM Bitcoin Benchmark Rate, investors

may lose confidence in the Shares’ ability to track the market price of bitcoins, which could adversely affect the value

of the Shares.

If the MarketVector TM Bitcoin

Benchmark Rate is not available, the Trust’s holdings may be fair valued in accordance with the policy approved by the Sponsor.

To the extent the valuation determined in accordance with the policy approved by the Sponsor differs materially from the actual

market price of bitcoin, the price of the Shares may no longer track, whether temporarily or over time, the global market price

of bitcoin, which could adversely affect an investment in the Trust by reducing investors’ confidence in the Shares’

ability to track the global market price of bitcoins.

To the extent such prices differ materially from the market

price for bitcoin, investors may lose confidence

in the Shares’ ability to track the market price of bitcoins, which could adversely affect the value of the Shares.

Marketvector has analyzed bitcoin trading

platform data and developed insights that have informed Marketvector’s understanding of the bitcoin market and the design

of the Trust.

If such data or insights are inaccurate or incorrect, the value of an investment in the trust may be adversely affected.

MarketVector has relied upon bitcoin market

data in developing its analysis of the bitcoin market.

This analysis has informed MarketVector’s understanding of the bitcoin

market, the design of the Trust and the design of the MarketVector TM Bitcoin Benchmark Rate.

The continued viability

of the Trust relies upon access to accurate data, and MarketVector’s continued ability to effectively analyze such data.

If data is inaccurate or becomes unavailable, or if MarketVector’s analysis of such data is incorrect, the value of an investment

in the Trust may be adversely affected.

the price of bitcoins on the bitcoin trading platforms could be materially higher or lower than the MarketVector TM Bitcoin

Benchmark Rate price.

To the extent the MarketVector TM Bitcoin Benchmark Rate price differs materially from the actual

prices available on a bitcoin trading platforms used to calculate it, or the global market price of bitcoin, the price of the Shares

may no longer track, whether temporarily or over time, the global market price of bitcoin, which could adversely affect an investment

in the Trust by reducing investors’ confidence in the Shares’ ability to track the market price of bitcoins.

extent such prices differ materially from the MarketVector TM Bitcoin Benchmark Rate, investors may lose confidence in

the Shares’ ability to track the market price of bitcoins, which could adversely affect the value of the Shares.

the MarketVector TM Bitcoin Benchmark Rate is not available, the Trust’s holdings may be fair valued in accordance

with the policy approved by the Sponsor.

To the extent the valuation determined in accordance with the policy approved by the Sponsor

differs materially from the actual market price of bitcoin, the price of the Shares may no longer track, whether temporarily or

over time, the global market price of bitcoin, which could adversely affect an investment in the Trust by reducing investors’

confidence in the Shares’ ability to track the global market price of bitcoins.

To the extent such prices differ materially

from the market price

for bitcoin, investors may lose confidence in the Shares’ ability to track the market price of bitcoins, which could adversely

affect the value of the Shares.

Marketvector has analyzed bitcoin

trading platform data and developed insights that have informed Marketvector’s understanding of the bitcoin market and the

design of the Trust.

If such data or insights are inaccurate or incorrect, the value of an investment in the trust may be adversely

MarketVector has relied upon bitcoin

market data in developing its analysis of the bitcoin market.

This analysis has informed MarketVector’s understanding of

the bitcoin market, the design of the Trust and the design of the MarketVector TM Bitcoin Benchmark Rate.

The continued

viability of the Trust relies upon access to accurate data, and MarketVector’s continued ability to effectively analyze such

If data is inaccurate or becomes unavailable, or if MarketVector’s analysis of such data is incorrect, the value of

an investment in the Trust may be adversely affected.

The Marketvector TM Bitcoin

Benchmark Rate used to calculate the value of the Trust’s bitcoin may be volatile, adversely affecting the value of the

Benchmark Rate used to calculate the value of the Trust’s bitcoin may be volatile, adversely affecting the value of the Shares.

The price of bitcoin on public digital

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If a bitcoin trading platform were subjected to regulatory, volatility or other

pricing issues, in the case of the MarketVector TM Bitcoin Benchmark Rate, the calculation agent would have limited

ability to remove such bitcoin trading platform from the MarketVector TM Bitcoin Benchmark Rate, which could skew the

price of bitcoin as represented by the MarketVector TM Bitcoin Benchmark Rate.

Trading on a limited number of bitcoin

trading platform may result in less favorable prices and decreased liquidity of bitcoin and, therefore, could have an adverse

effect on the value of the Shares.

pricing issues, in the case of the MarketVector TM Bitcoin Benchmark Rate, the calculation agent would have limited ability

to remove such bitcoin trading platform from the MarketVector TM Bitcoin Benchmark Rate, which could skew the price of

bitcoin as represented by the MarketVector TM Bitcoin Benchmark Rate.

Trading on a limited number of bitcoin trading

platform may result in less favorable prices and decreased liquidity of bitcoin and, therefore, could have an adverse effect on

the value of the Shares.

The Marketvector TM Bitcoin

Benchmark Rate may be affected by manipulative or fraudulent practices in the global bitcoin market or at constituent trading

Benchmark Rate may be affected by manipulative or fraudulent practices in the global bitcoin market or at constituent trading platforms .

The global bitcoin market may be subject

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experience fraud, manipulation, security failures or operational problems, which may adversely affect the value of bitcoin and,

consequently, the value of the Shares,” and the MarketVector TM Bitcoin Benchmark Rate may be affected to the

extent they cause global prices of bitcoin to be subject to factors other than bona fide market forces.

Fraud or manipulation may also affect the

constituent trading platforms used to calculate the MarketVector TM Bitcoin Benchmark Rate.

For example, Coinbase paid

$6.5 million in 2021 to settle a CFTC enforcement action for reckless false, misleading, or inaccurate reporting as well as wash

trading by a former employee on Coinbase’s GDAX platform.

According to the CFTC’s order, during the relevant period

prior to the enforcement action, Coinbase operated at least two trading programs which generated orders that, at times, matched

with one another.

Coinbase included the transactional information for these transactions, such as price and volume data, on its

website and provided that information to reporting services, either directly or through access to its website, resulting in a

perceived volume and level of liquidity of digital assets, including bitcoin, on GDAX that was false, misleading or inaccurate.

Additionally, between August and September 2016, the CFTC order finds that a former Coinbase employee intentionally placed buy

and sell orders in the Litecoin/bitcoin trading pair on GDAX, which he intended to match with one another and result in no loss

or gain while creating the appearance of liquidity and trading interest in

Ultimately, the transactions

resulted in wash transactions that depicted a misleading picture of the Litecoin/bitcoin market.

In August 2017, it was reported that a

trader or group of traders nicknamed “Spoofy” was placing large orders on Bitfinex without actually executing them,

consequently, the value of the Shares,” and the MarketVector TM Bitcoin Benchmark Rate may be affected to the extent

they cause global prices of bitcoin to be subject to factors other than bona fide market forces.

or manipulation may also affect the constituent trading platforms used to calculate the MarketVector TM Bitcoin Benchmark

For example, Coinbase paid $6.5 million in 2021 to settle a CFTC enforcement action for reckless false, misleading, or inaccurate

reporting as well as wash trading by a former employee on Coinbase’s GDAX platform.

According to the CFTC’s order,

during the relevant period prior to the enforcement action, Coinbase operated at least two trading programs which generated orders

that, at times, matched with one another.

Coinbase included the transactional information for these transactions, such as price

and volume data, on its website and provided that information to reporting services, either directly or through access to its website,

resulting in a perceived volume and level of liquidity of digital assets, including bitcoin, on GDAX that was false, misleading

or inaccurate.

Additionally, between August and September 2016, the CFTC order finds that a former Coinbase employee intentionally

placed buy and sell orders in the Litecoin/bitcoin trading pair on GDAX, which he intended to match with one another and result

in no loss or gain while creating the appearance of liquidity and trading interest in Litecoin.

Ultimately, the transactions resulted in wash transactions

that depicted a misleading picture of the Litecoin/bitcoin market.

In August 2017, it was reported that

a trader or group of traders nicknamed “Spoofy” was placing large orders on Bitfinex without actually executing them,

presumably in order to influence other investors into buying or selling by creating a false appearance that greater demand existed

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the Trust’s assets and determine NAV and NAV per Share, in its sole discretion.

The Sponsor has the right to change the

pricing source used to determine NAV and NAV per Share from the MarketVector TM Bitcoin Benchmark Rate to a different

source or index.

To the extent that there are material changes to the pricing or valuation methodology or policies or the pricing

source described within this paragraph, notification will be made to Shareholders via a prospectus supplement and/or a current

report filed with the SEC.

The Sponsor has the right to change the pricing

source used to determine NAV and NAV per Share from the MarketVector TM Bitcoin Benchmark Rate to a different source

To the extent that there are material changes to the pricing or valuation methodology or policies or the pricing source

described within this paragraph, notification will be made to Shareholders via a prospectus supplement and/or a current report

filed with the SEC.

Intellectual property rights claims

may adversely affect the Trust and the value of the Shares.

The Sponsor is not aware of any intellectual

property rights claims that may prevent the Trust from operating and holding bitcoin.

However, third parties may assert intellectual

property rights claims relating to the operation of the Trust and the mechanics instituted for the investment in, holding of and

transfer of bitcoin.

Regardless of the merit of an intellectual property or other legal action, any legal expenses to defend or

payments to settle such claims would be extraordinary expenses that would be borne by the Trust through the sale or transfer of

Additionally, a meritorious intellectual property rights claim could prevent

the Trust from operating and force the

Sponsor to terminate the Trust and liquidate its bitcoin.

As a result, an intellectual property rights claim against the Trust

could adversely affect the value of the Shares.

Risk Associated with Investing in the

Sponsor is not aware of any intellectual property rights claims that may prevent the Trust from operating and holding bitcoin.

However, third parties may assert intellectual property rights claims relating to the operation of the Trust and the mechanics

instituted for the investment in, holding of and transfer of bitcoin.

Regardless of the merit of an intellectual property or other

legal action, any legal expenses to defend or payments to settle such claims would be extraordinary expenses that would be borne

by the Trust through the sale or transfer of its bitcoin.

Additionally, a meritorious intellectual property rights claim could

Trust from operating and force the Sponsor to terminate the Trust and liquidate its bitcoin.

As a result, an intellectual property

rights claim against the Trust could adversely affect the value of the Shares.

Risk Associated with Investing in

The value of the Shares may be influenced

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These factors include the following factors:

● Unanticipated problems or

issues with respect to the mechanics of the Trust’s operations and the trading

of the Shares may arise, including the Clearing Services, in particular due to the fact

that the mechanisms and procedures governing the creation and redemption of the Shares

and storage of bitcoin have been developed specifically for this product;

● The Trust could experience

difficulties in operating and maintaining its technical infrastructure, including in

connection with expansions or updates to such infrastructure, which are likely to be

complex and could lead to unanticipated delays, unforeseen expenses and security vulnerabilities;

● The Trust could experience

unforeseen issues relating to the performance and effectiveness of the security procedures

used to protect the Trust’s accounts with the Bitcoin Custodian or the Additional

Bitcoin Custodian, or the security procedures may not protect against all errors, software

flaws or other vulnerabilities in the Trust’s technical infrastructure, which could

result in theft, loss or damage of its assets;

● Service providers may default

on or fail to perform their obligations or deliver services under their contractual agreements

with the Trust, or decide to terminate their relationships with the Trust, for a variety

of reasons, which could affect the Trust’s ability to operate.

Any of these factors could affect the value

of the Shares, either directly or indirectly through their effect on the Trust’s assets.

● Unanticipated problems or issues with respect to the mechanics of the Trust’s operations

and the trading of the Shares may arise, including the Clearing Services, in particular due to the fact that the mechanisms and

procedures governing the creation and redemption of the Shares and storage of bitcoin have been developed specifically for this

● The Trust could experience difficulties in operating and maintaining its technical infrastructure,

including in connection with expansions or updates to such infrastructure, which are likely to be complex and could lead to unanticipated

delays, unforeseen expenses and security vulnerabilities;

● The Trust could experience unforeseen issues relating to the performance and effectiveness of the

security procedures used to protect the Trust’s accounts with the Bitcoin Custodian or the Additional Bitcoin Custodian,

or the security procedures may not protect against all errors, software flaws or other vulnerabilities in the Trust’s technical

infrastructure, which could result in theft, loss or damage of its assets;

● Service providers may default on or fail to perform their obligations or deliver services under

their contractual agreements with the Trust, or decide to terminate their relationships with the Trust, for a variety of reasons,

which could affect the Trust’s ability to operate.

Any of these factors could affect the

value of the Shares, either directly or indirectly through their effect on the Trust’s assets.

The Trust is subject to market risk.

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subject to market risk, including the possible loss of the entire principal of the investment.

The NAV may not always correspond to

the market price of bitcoin and, as a result, Baskets may be created or redeemed at a value that is different from the market

The NAV may not always correspond

to the market price of bitcoin and, as a result, Baskets may be created or redeemed at a value that is different from the market

price of the Shares.

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price of bitcoin.

An Authorized Participant may be able to

create or redeem a Basket at a discount or a premium to the public trading price per Share, and the Trust will therefore maintain

An Authorized Participant may be able

to create or redeem a Basket at a discount or a premium to the public trading price per Share, and the Trust will therefore maintain

its intended fractional exposure to a specific amount of bitcoin per Share.

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and selling activity associated with the creation and redemption of Baskets may adversely affect an investment in the Shares of

Liquidity Provider’s purchases of

bitcoin in connection with Basket creation orders may cause the price of bitcoin to increase, which will result in higher prices

Liquidity Provider’s purchases

of bitcoin in connection with Basket creation orders may cause the price of bitcoin to increase, which will result in higher prices

for the Shares.

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Liquidity Providers will generally want

to hedge their bitcoin exposure in connection with Basket creation and redemption orders, while Authorized Participants would

generally want to hedge their exposure to the Trust’s Shares to the extent possible.

To the extent Authorized Participants

and/or Liquidity Providers are unable to hedge their exposure to the Trust’s Shares or bitcoin respectively due to market

conditions (e.g., insufficient bitcoin liquidity in the market, inability to locate an appropriate hedge counterparty, etc.),

such conditions may make it difficult to create or redeem Baskets or cause them to not participate in creating or redeeming Baskets.

In addition, the hedging mechanisms employed by Authorized Participants and/or Liquidity Providers to hedge their exposure to

the Trust’s Shares or bitcoin, respectively, may not function as intended, which may make it more difficult for them to

enter into such transactions.

Such events could negatively impact the market price of the Trust and the spread at which the Trust

trades on the open market.

To the extent Liquidity Providers turn to the market for exchange-traded futures contracts for bitcoin

(“Bitcoin Futures”) as well as the non-exchange traded bitcoin derivatives markets for their hedging needs in connection

with their bitcoin sales to and purchases from the Trust, both the exchange-traded Bitcoin Futures market and the non-exchange

traded bitcoin derivatives markets have limited trading history and operational experience and may be less liquid, more volatile

and more vulnerable to economic, market and industry changes than more established futures and derivatives markets.

The liquidity

of the market will depend on, among other things, the adoption of bitcoin and the commercial and speculative interest in the market

for the ability to hedge against the price of bitcoin with exchange-traded Bitcoin Futures and non-exchange traded bitcoin derivatives.

There can be no assurance that such markets will be able to meet the hedging needs of Liquidity Providers, which could cause such

Liquidity Providers to refrain from participation in the Trust’s creation and redemption processes, which could have adverse

effects on Shareholders such as wider spreads, a breakdown of the arbitrage mechanism used to keep the Trust’s Shares trading

in line with NAV of the Trust’s bitcoin holdings, and potentially a disruption of the creation or redemption processes altogether.

to hedge their bitcoin exposure in connection with Basket creation and redemption orders, while Authorized Participants would generally

want to hedge their exposure to the Trust’s Shares to the extent possible.

To the extent Authorized Participants and/or Liquidity

Providers are unable to hedge their exposure to the Trust’s Shares or bitcoin respectively due to market conditions (e.g.,

insufficient bitcoin liquidity in the market, inability to locate an appropriate hedge counterparty, etc.), such conditions may

make it difficult to create or redeem Baskets or cause them to not participate in creating or redeeming Baskets.

In addition, the

hedging mechanisms employed by Authorized Participants and/or Liquidity Providers to hedge their exposure to the Trust’s

Shares or bitcoin, respectively, may not function as intended, which may make it more difficult for them to enter into such transactions.

Such events could negatively impact the market price of the Trust and the spread at which the Trust trades on the open market.

To the extent Liquidity Providers turn to the market for exchange-traded futures contracts for bitcoin (“Bitcoin Futures”)

as well as the non-exchange traded bitcoin derivatives markets for their hedging needs in connection with their bitcoin sales to

and purchases from the Trust, both the exchange-traded Bitcoin Futures market and the non-exchange traded bitcoin derivatives markets

have limited trading history and operational experience and may be less liquid, more volatile and more vulnerable to economic,

market and industry changes than more established futures and derivatives markets.

The liquidity of the market will depend on,

among other things, the adoption of bitcoin and the commercial and speculative interest in the market for the ability to hedge

against the price of bitcoin with exchange-traded Bitcoin Futures and non-exchange traded bitcoin derivatives.

There can be no

assurance that such markets will be able to meet the hedging needs of Liquidity Providers, which could cause such Liquidity Providers

to refrain from participation in the Trust’s creation and redemption processes, which could have adverse effects on Shareholders

such as wider spreads, a breakdown of the arbitrage mechanism used to keep the Trust’s Shares trading in line with NAV of

the Trust’s bitcoin holdings, and potentially a disruption of the creation or redemption processes altogether.

If the process of creation and redemption

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interruption, default, failure to perform, security breach, or other problems affecting the Bitcoin Custodian, in its capacity

Custodian under the Custody Agreement and the provider

of Clearing Services under the Clearing Agreement.

Also, the change from the Trust’s originally contemplated model of in-kind

creations and redemptions to the current model involving cash creations and redemptions, could cause potential market participants,

such as the Authorized Participants and Liquidity Providers, who would otherwise be willing to purchase or redeem Baskets or bitcoin,

as applicable, to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the

price of the underlying bitcoin, to decide not to take the risk that, as a result of those difficulties, they may not be able

to realize the profit they expect, and reduce their transactions with or even refrain entirely from transacting with the Trust,

which could disrupt the processes of creation and redemption of Shares.

If such events rise to the level of an emergency or cause

creations and redemptions of Shares to be impracticable, the Sponsor may suspend the process of creation and redemption of Baskets.

Any disruptions to the process of creating and redeeming Shares could cause trading spreads, and the resulting premium or discount,

on Shares compared to NAV to widen.

Alternatively, in the case of a Bitcoin network outage or other problems affecting the Bitcoin

network, the processing of transactions on the Bitcoin network may be disrupted, which in turn may prevent Liquidity Providers

from depositing or withdrawing bitcoin from their accounts at the Bitcoin Custodian, which in turn could affect the creation or

redemption of Baskets.

If this is the case, the liquidity of the Shares may decline and the price of the Shares may fluctuate

independently of the price of bitcoin and may fall or otherwise diverge from NAV.

Furthermore, in the event that the market for

bitcoin should become relatively illiquid and thereby materially restrict opportunities for arbitraging, the price of Shares may

diverge from the value of bitcoin.

In addition, the use of cash creations and redemptions,

as opposed to in-kind creations and redemptions, creates transaction costs of buying and selling bitcoin that are not present

in an in-kind model.

These costs include the bid-ask spread along with the operational costs from the labor and overhead involved

in calculating, executing, monitoring, and accounting for transactions in the bitcoin markets and related cash movements.

there are timing costs involved in the risk that the bitcoin price moves between the time when the NAV is established for a creation/redemption

and the time when the bitcoin is traded (“slippage”).

In addition, Liquidity Providers must settle bitcoin transactions

with the Trust within a contractually specified time period, subject to customary exceptions.

If the Liquidity Provider fails

to perform its obligations within the contractually specified time period, the Trust would seek to use an alternate Liquidity

Provider to execute the bitcoin transaction.

However, the pricing or terms of the ultimate bitcoin transaction conducted through

the alternate Liquidity Provider, if one is available, after the failure of the original Liquidity Provider to perform its obligations

could deviate, potentially significantly, from the pricing or terms of the transaction that the Trust originally entered with

the original Liquidity Provider.

Transaction costs and slippage would be reduced if the Trust were permitted to use an in-kind

creation and redemption model.

The Trust’s Authorized Participant Agreement provides that transaction costs and slippage

related to Basket creation and redemption are the responsibility of the Authorized Participant.

Whether Authorized Participants

and Liquidity Providers as market participants will find it economically viable or commercially attractive to participate in a

cash creation and redemption model for a bitcoin exchange-traded product like the Trust, including a cash creation and redemption

model where the Trust selects the Liquidity Provider with whom it executes transactions to buy or sell bitcoin and the Authorized

Participant is not permitted to designate the Liquidity Provider from whom bitcoin is purchased or sold in connection with the

Authorized Participant’s Basket subscription or redemption, is not known;

however, there is a risk they will not.

Trust is unable to attract sufficient Authorized Participants and Liquidity Providers, it will be unable to maintain an efficient

arbitrage mechanism for keeping the trading price of the Shares in line with NAV and the value of the underlying bitcoin held

by the Trust, which could negatively affect Shareholders and cause them to purchase or sell Shares at a premium or discount to

the value of the underlying bitcoin, causing losses;

alternatively, it could be unable to operate, as there would no parties who

would be able to create new Shares or redeem existing Shares, leading to the Trust being unsuccessful commercially and the Sponsor

deciding to terminate and wind up the Trust’s operations.

There can be no assurance that In-Kind Regulatory Approval will

ever be obtained or that in-kind subscription or redemption transactions will ever occur, meaning that the Trust may conduct subscriptions

and redemptions solely in cash for the foreseeable future and indefinitely if necessary.

a failure to settle bitcoin transactions with Liquidity Providers could disrupt the calculation of the Trust’s NAV or potentially

cause inaccuracies in NAV calculation, which could disrupt the Trust’s operations or cause Shareholders to suffer losses.

The lack of ability to facilitate in-kind creations

and redemptions of Shares could have adverse consequences for the Trust.

The Trust is currently only able to conduct subscriptions

and redemptions in cash, which means that an Authorized Participant will deposit cash into, or accept cash from, the Trust’s

account with the Cash Custodian in connection with the creation and redemption of Baskets, and will obtain or receive bitcoin

in exchange for cash in connection with such order.

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 in exchange for

Authorized Participants must be registered broker-dealers.

Registered broker-dealers are subject to various requirements of the federal securities laws and rules, including financial responsibility

rules such as the customer protection rule, the net capital rule and recordkeeping requirements.

There has yet to be definitive

regulatory guidance on whether and how registered broker-dealers can comply with these rules with regard to transacting in or

holding spot bitcoin.

Until further regulatory clarity emerges regarding whether registered broker-dealers can hold and deal in

bitcoin under such rules, there is a risk that registered broker-dealers participating in the in-kind creation or redemption of

Shares for bitcoin may be unable to demonstrate compliance with such requirements.

While compliance with these requirements would

be the broker-dealer’s responsibility, a national securities exchange is required to enforce compliance by its member broker-dealers

with applicable federal securities law and rules.

As a result, the SEC is unlikely to permit an exchange to adopt listing rules

for a product if it is not clear that the exchange’s members would be able to comply with applicable rules when transacting

in the product as designed.

To the extent further regulatory clarity emerges, the Sponsor expects the Exchange to seek In-Kind

Regulatory Approval to amend its listing rules to permit the Trust to create and redeem Shares in-kind for bitcoin, in which Authorized

Participants or their designees would deposit bitcoin directly with the Trust or receive bitcoin directly from the Trust.

there can be no assurance as to when such regulatory clarity will emerge, or when the Exchange will seek or obtain In-Kind Regulatory

Approval, if at all.

To the knowledge of the Sponsor, exchange-traded products

for all spot-market commodities other than bitcoin, such as gold and silver, employ in-kind creations and redemptions with the

underlying asset.

The Sponsor believes that it is generally more efficient, and therefore less costly, for spot commodity exchange-traded

products to utilize in-kind orders rather than cash orders, because there are fewer steps in the process and therefore there is

less operational risk involved when an authorized participant can manage the buying and selling of the underlying asset itself,

rather than depend on an unaffiliated party such as the issuer or sponsor of the exchange-traded product.

As such, a spot commodity

exchange-traded product that only employs cash creations and redemptions and does not permit in-kind creations and redemptions

is a novel product that has not been tested, and could be impacted by any resulting operational inefficiencies.

In particular, the Trust’s inability to facilitate

as Bitcoin Custodian under the Custody Agreement and the provider of Clearing Services under the Clearing Agreement.

Participants and Liquidity Providers, who would otherwise be willing to purchase or redeem Creation Baskets or bitcoin, as applicable,

to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the

underlying bitcoin, may decide not to take the risk that, as a result of those difficulties, they may not be able to realize the

profit they expect, and reduce their transactions with or even refrain entirely from transacting with the Trust, which could disrupt

the processes of creation and redemption of Shares.

If such events rise to the level of an emergency or cause creations and redemptions

of Shares to be impracticable, the Sponsor may suspend the process of creation and redemption of Creation Baskets.

Any disruptions

to the process of creating and redeeming Shares could cause trading spreads, and the resulting premium or discount, on Shares compared

to NAV to widen.

Alternatively, in the case of a Bitcoin network outage or other problems affecting the Bitcoin network, the processing

of transactions on the Bitcoin network may be disrupted, which in turn may prevent Liquidity

Providers, or Authorized Participants

or their designees, from depositing or withdrawing bitcoin from their accounts at the Bitcoin Custodian, which in turn could affect

the creation or redemption of Creation Baskets.

If this is the case, the liquidity of the Shares may decline and the price of the

Shares may fluctuate independently of the price of bitcoin and may fall or otherwise diverge from NAV.

Furthermore, in the event

that the market for bitcoin should become relatively illiquid and thereby materially restrict opportunities for arbitraging, the

price of the Shares may diverge from the value of bitcoin.

Creation Baskets may be created or redeemed

in exchange for bitcoin or cash.

At present, only certain Authorized Participants have the ability to support in-kind creation

and redemption activity.

The use of cash creations and redemptions, as opposed to in-kind creations and redemptions, creates transaction

costs of buying and selling bitcoin that are not present in an in-kind model.

These costs include the bid-ask spread along with

the operational costs from the labor and overhead involved in calculating, executing, monitoring, and accounting for transactions

in the bitcoin markets and related cash movements.

Furthermore, there are timing costs involved in the risk that the bitcoin price

moves between the time when the NAV is established for a creation/redemption and the time when the bitcoin is traded (“slippage”).

Transaction costs and slippage would be reduced if the Trust were able to use an in-kind creation and redemption model.

Authorized Participant Agreement provides that transaction costs and slippage related to Creation Basket creation and redemption

are the responsibility of the Authorized Participant.

Whether Authorized Participants who are unable to support in-kind creation

and redemption activity and Liquidity Providers as market participants will find it economically viable or commercially attractive

to participate in a cash creation and redemption model for a bitcoin exchange-traded product like the Trust, including a cash creation

and redemption model where the Trust selects the Liquidity Provider with whom it executes transactions to buy or sell bitcoin and

the Authorized Participant is not permitted to designate the Liquidity Provider from whom bitcoin is purchased or sold in connection

with the Authorized Participant’s Creation Basket subscription or redemption, is not known;

however, there is a risk they

If the Trust is unable to attract sufficient Authorized Participants and Liquidity Providers, it will be unable to maintain

an efficient arbitrage mechanism for keeping the trading price of the Shares in line with NAV and the value of the underlying bitcoin

held by the Trust, which could negatively affect Shareholders and cause them to purchase or sell Shares at a premium or discount

to the value of the underlying bitcoin, causing losses;

alternatively, it could be unable to operate, as there would be no parties

who would be able to create new Shares or redeem existing Shares, leading to the Trust being unsuccessful commercially and the

Sponsor deciding to terminate and wind up the Trust’s operations..

The lack of ability to facilitate

in-kind creations and redemptions of Shares could have adverse consequences for the Trust.

Authorized Participants must be registered

broker-dealers.

Registered broker-dealers are subject to various requirements of the federal securities laws and rules, including

financial responsibility rules such as the customer protection rule, the net capital rule and recordkeeping requirements.

15, 2025, the SEC’s Division of Trading and Markets and FINRA’s Office of General Counsel stated that broker-dealers

are permitted to facilitate in-kind creations and redemptions in connection with spot crypto exchange-traded products;

there has yet to be definitive regulatory guidance on the specific details of how registered broker-dealers can comply with these

rules with regard to transacting in or holding spot bitcoin.

Until further regulatory clarity emerges regarding whether registered

broker-dealers can hold and deal in bitcoin under such rules, there is a risk that registered broker-dealers participating in the

in-kind creation or redemption of Shares for bitcoin may be unable to demonstrate compliance with such requirements.

While compliance

with rules such as the customer protection rule, the net capital rule and recordkeeping requirements would be the broker-dealer’s

responsibility, a national securities exchange is required to enforce compliance by its member broker-dealers with applicable federal

securities law and rules.

Only certain Authorized Participants, at present, have the ability to also, through their affiliates,

support in-kind creation and redemption activity.

Even with the SEC staff’s recent

statement that in-kind creations and redemptions are not prohibited by SEC regulations, the Trust’s limited ability to facilitate

in-kind creations and redemptions could result in the exchange-traded product arbitrage mechanism failing to function as efficiently

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premiums or discounts could be substantial.

Furthermore, if cash orders are unavailable, either due to the Sponsor’s decision

to reject or suspend such orders or otherwise, it will not be possible for Authorized Participants to redeem or create Shares,

in which case the arbitrage mechanism would be unavailable.

This could result in impaired liquidity for the Shares, wider bid/ask

spreads in secondary trading of the Shares and greater costs to investors and other market participants.

In addition, the Trust’s

inability to facilitate in-kind creations and redemptions, and resulting reliance on cash creations and redemptions, could cause

the Sponsor to halt or suspend the creation of redemption of Shares during times of market volatility or turmoil, among other

consequences.

Even if In-Kind Regulatory Approval were obtained,

there can be no assurance that in-kind creations or redemptions of the Shares will be available in the future, or that broker-dealers

would be willing to serve as Authorized Participants with respect to the in-kind creation and redemption of Shares.

factors could adversely affect the performance of the Trust and the value of the Shares.

The Shares may trade at a price that is at, above

or below the Trust’s NAV per Share as a result of the non-current trading hours between the Exchange and the digital asset

The Trust’s NAV per Share will fluctuate with

changes in the market value of bitcoin, and the Sponsor expects the trading price of the Shares to fluctuate in accordance with

changes in the Trust’s NAV per Share, as well as market supply and demand.

However, the Shares may trade on the Exchange

at a price that is at, above or below the Trust’s NAV per Share for a variety of reasons.

For example, the Exchange is open

for trading in the Shares for a limited period each day, but the digital asset market is a 24-hour marketplace.

During periods

when the Exchange is closed but constituent trading platforms are open,

significant changes in the price of bitcoin on the

digital asset market could result in a difference in performance between the value of bitcoin as measured by the Index and the

most recent NAV per Share or closing trading price.

For example, if the price of bitcoin on the digital asset market, and the

value of bitcoin as measured by the Index, move significantly in a negative direction after the close of the Exchange, the trading

price of the Shares may “gap” down to the full extent of such negative price shift when the Exchange reopens.

price of bitcoin on the digital asset market drops significantly during hours the Exchange is closed, shareholders may not be

able to sell their Shares until after the “gap” down has been fully realized, resulting in an inability to mitigate

losses in a negative market.

Even during periods when the Exchange is open, large constituent trading platforms (or a substantial

number of smaller constituent trading platforms) may be lightly traded or closed for any number of reasons, which could increase

trading spreads and widen any premium or discount on the Shares.

The Trust is subject to risks due to its concentration

of investments in a single asset class.

Unlike other funds that may invest in diversified assets,

the Trust’s investment strategy is concentrated in a single asset class:

This concentration maximizes the degree

of the Trust’s exposure to a variety of market risks associated with bitcoin.

By concentrating its investment strategy solely

in bitcoin, any losses suffered as a result of a decrease in the value of bitcoin can be expected to reduce the value of an interest

in the Trust and will not be offset by other gains if the Trust were to invest in underlying assets that were diversified.

An investment in the Trust may be deemed speculative

and is not intended as a complete investment program.

An investment in Shares should be considered only by persons financially

able to maintain their investment and who can bear the risk of total loss associated with an investment in the Trust.

should review closely the objective and strategy of the Trust and redemption rights, as discussed herein, and familiarize themselves

with the risks associated with an investment in the Trust.

The lack of active trading markets for the Shares

of the Trust may result in losses on Shareholders’ investments at the time of disposition of Shares.

Although Shares of the Trust are publicly listed and

traded on an exchange, there can be no guarantee that an active trading market for the Trust will develop or be maintained.

Shareholders need to sell their Shares at a time when no active market for them exists, the price Shareholders receive for their

Shares, assuming that Shareholders are able to sell them, likely will be lower than the price that Shareholders would receive

if an active market did exist and, accordingly, a Shareholder may suffer losses.

Possible illiquid markets may exacerbate losses,

increase the variability between the Trust’s NAV and its market price or affect the Trust’s ability to meet cash Creation

Orders and Redemption Orders.

Bitcoin is a relatively new asset with a limited trading

Therefore, the markets for bitcoin may be less liquid and more volatile than other markets for more established products.

It may be difficult to execute a bitcoin trade at a specific price when there is a relatively small volume of buy and sell orders

in the bitcoin market.

A market disruption can also make it more difficult to liquidate a position or find a suitable counterparty

at a reasonable cost.

Market illiquidity may cause losses for the Trust.

The large size of the positions that the Trust may acquire will increase the risk of illiquidity by both making the positions

more difficult to liquidate and increasing the losses incurred while trying to do so should the Trust need to liquidate its bitcoin,

or making it more difficult for Authorized Participants to acquire or liquidate bitcoin as part of the creation and/or redemption

of Shares of the Trust.

Furthermore, if cash creations or redemptions are unavailable, either due to the Sponsor’s

decision to reject or suspend such orders, the unavailability of Liquidity Providers or otherwise, Authorized Participants will

be limited in their ability to redeem or create Shares, in which case the arbitrage mechanism may not function as efficiently.

This could result in impaired liquidity for the Shares, wider bid/ask spreads in secondary trading of the Shares and greater costs

to investors and other market participants.

In addition, the Trust’s limited ability to facilitate in-kind creations and

redemptions, and resulting relative reliance on cash creations and redemptions, could cause the Sponsor to halt or suspend the

creation or redemption of Shares during times of market volatility or turmoil, among other consequences.

Further, there can be no assurance that

broker-dealers would be willing to serve as Authorized Participants with respect to the in-kind creation and redemption of Shares.

Any of these factors could adversely affect the performance of the Trust and the value of the Shares.

The Shares may trade at a price that

is at, above or below the Trust’s NAV per Share as a result of the non-current trading hours between the Exchange and the

digital asset market.

Trust’s NAV per Share will fluctuate with changes in the market value of bitcoin, and the Sponsor expects the trading price

of the Shares to fluctuate in accordance with changes in the Trust’s NAV per Share, as well as market supply and demand.

However, the Shares may trade on the Exchange at a price that is at, above or below the Trust’s NAV per Share for a variety

For example, the Exchange is open for trading in the Shares for a limited period each day, but the digital asset market

is a 24-hour marketplace.

During periods when the Exchange is closed but constituent trading platforms are open,

significant changes in the price of bitcoin on the digital asset market

could result in a difference in performance between the value of bitcoin as measured by the Index and the most recent NAV per Share

or closing trading price.

For example, if the price of bitcoin on the digital asset market, and the value of bitcoin as measured

by the Index, move significantly in a negative direction after the close of the Exchange, the trading price of the Shares may “gap”

down to the full extent of such negative price shift when the Exchange reopens.

If the price of bitcoin on the digital asset market

drops significantly during hours the Exchange is closed, shareholders may not be able to sell their Shares until after the “gap”

down has been fully realized, resulting in an inability to mitigate losses in a negative market.

Even during periods when the Exchange

is open, large constituent trading platforms (or a substantial number of smaller constituent trading platforms) may be lightly

traded or closed for any number of reasons, which could increase trading spreads and widen any premium or discount on the Shares.

The Trust is not obligated to pay periodic

distributions or dividends to Shareholders.

Premiums or other income received with respect

to the Trust’s assets may be used to acquire additional securities or, in the sole discretion of the Sponsor, distributed

to the Shareholders.

The Trust is not obligated, however, to make any distributions to Shareholders at any time prior to the dissolution

of the Trust and will not make any distributions to Shareholders upon dissolution of the Trust unless there are assets remaining

following dissolution.

The Trust is subject to risks due to

its concentration of investments in a single asset class.

Unlike other funds that may invest in diversified

assets, the Trust’s investment strategy is concentrated in a single asset class:

This concentration maximizes the

degree of the Trust’s exposure to a variety of market risks associated with bitcoin.

By concentrating its investment strategy

solely in bitcoin, any losses suffered as a result of a decrease in the value of bitcoin can be expected to reduce the value of

an interest in the Trust and will not be offset by other gains if the Trust were to invest in underlying asset s that were diversified.

An investment in the Trust may be deemed

speculative and is not intended as a complete investment program.

An investment in Shares should be considered only by persons

financially able to maintain their investment and who can bear the risk of total loss associated with an investment in the Trust.

Investors should review closely the objective and strategy of the Trust and redemption rights, as discussed herein, and familiarize

themselves with the risks associated with an investment in the Trust.

The lack of active trading markets for

the Shares of the Trust may result in losses on Shareholders’ investments at the time of disposition of Shares.

Although Shares of the Trust are publicly

listed and traded on an exchange, there can be no guarantee that an active trading market for the Trust will develop or be maintained.

If Shareholders need to sell their Shares at a time when no active market for them exists, the price Shareholders receive for their

Shares, assuming that Shareholders are able to sell them, likely will be lower than the price that Shareholders would receive if

an active market did exist and, accordingly, a Shareholder may suffer losses.

Possible illiquid markets may exacerbate

losses, increase the variability between the Trust’s NAV and its market price or affect the Trust’s ability to meet

cash Creation Orders and Redemption Orders.

Bitcoin is a relatively new asset with a

limited trading history.

Therefore, the markets for bitcoin may be less liquid and more volatile than other markets for more established

It may be difficult to execute a bitcoin trade at a specific price when there is a relatively small volume of buy and

sell orders in the bitcoin market.

A market disruption can also make it more difficult to liquidate a position or find a suitable

counterparty at a reasonable cost.

Market illiquidity may cause losses for

The large size of the positions that the Trust may acquire will increase the risk of illiquidity by both making the

positions more difficult to liquidate and increasing the losses incurred while trying to do so should the Trust need to liquidate

its bitcoin, or making it more difficult for Authorized Participants to acquire or liquidate

bitcoin as part of the creation and/or

redemption of Shares of the Trust.

To the extent that the Trust conducts creation and redemption transactions for cash, such illiquidity

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potentially be exacerbated due to the fact that the Trust will typically invest in bitcoin, which is highly concentrated.

The Trust is an “emerging growth company”

and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Shares less

attractive to investors.

The Trust is an “emerging growth

company” and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make

the Shares less attractive to investors.

The Trust is an “emerging growth company”

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which include, among other things:

exemption from the auditor attestation requirements under Section

404(b) of the Sarbanes-Oxley Act;

reduced disclosure obligations regarding executive compensation in the Trust’s

periodic reports and audited financial statements in this Report;

exemptions from the requirements of holding advisory “say-on-pay”

votes on executive compensation and shareholder advisory votes on “golden parachute” compensation;

exemption from any rules requiring mandatory audit firm rotation and auditor discussion

and analysis and, unless otherwise determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight

The Trust could be an emerging growth

company until the last day of the fiscal year following the fifth anniversary after its initial public offering, or until the

earliest of (1) the last day of the fiscal year in which it has annual gross revenue of $1.235 billion or more, (2) the date

on which it has, during the previous three year period, issued more than $1 billion in non-convertible debt or (3) the date

on which it is deemed to be a large accelerated filer under the federal securities laws.

The Trust will qualify as a large

accelerated filer as of the first day of the first fiscal year after it has (A) more than $700 million in outstanding equity

held by nonaffiliates, (B) been public for at least 12 months and (C) filed at least one annual report on Form 10-K.

Under the JOBS Act, emerging growth companies are also permitted to elect

to delay adoption of new or revised accounting standards until companies that are not subject to periodic reporting obligations

● exemption from the auditor attestation requirements under Section 404(b) of the Sarbanes-Oxley Act;

● reduced disclosure obligations regarding executive compensation in the Trust’s periodic reports and audited financial

statements in this Report;

exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation

and shareholder advisory votes on “golden parachute” compensation;

● exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless otherwise

determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight Board.

The Trust could be an emerging growth company

until the last day of the fiscal year following the fifth anniversary after its initial public offering, or until the earliest

of (1) the last day of the fiscal year in which it has annual gross revenue of $1.235 billion or more, (2) the date on which it

has, during the previous three year period, issued more than $1 billion in non-convertible debt or (3) the date on which it is

deemed to be a large accelerated filer under the federal securities laws.

The Trust will qualify as a large accelerated filer as

of the first day of the first fiscal year after it has (A) more than $700 million in outstanding equity held by nonaffiliates,

(B) been public for at least 12 months and (C) filed at least one annual report on Form 10-K.

Under the JOBS Act, emerging growth companies are also permitted

to elect to delay adoption of new or revised accounting standards until companies that are not subject to periodic reporting obligations

are required to comply, if such accounting standards apply to non-reporting companies.

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that the decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

The Trust cannot predict if investors will find an

investment in the Trust less attractive if it relies on these exemptions.

Several factors may affect the Trust’s ability

to achieve its investment objective on a consistent basis.

There is no guarantee that the Trust will meet its

investment objective.

Factors that may affect the Trust’s ability to meet its investment objective include, without limitation:

(1) Liquidity Providers’ ability and willingness to purchase and sell bitcoin in an efficient manner to effectuate creation

and redemption orders;

The Trust cannot predict if investors will

find an investment in the Trust less attractive if it relies on these exemptions.

Several factors may affect the Trust’s

ability to achieve its investment objective on a consistent basis.

There is no guarantee that the Trust will

meet its investment objective.

Factors that may affect the Trust’s ability to meet its investment objective include, without

(1) Liquidity Providers’ ability and willingness to purchase and sell bitcoin in an efficient manner to effectuate

creation and redemption orders;

(2) transaction fees associated with the Bitcoin network;

(3) the bitcoin market becoming illiquid or disrupted;

(3) the bitcoin market becoming illiquid

or disrupted;

(4) the Trust’s Share prices being rounded to the nearest cent and/or valuation methodologies;

(5) the need to conform the

Trust’s portfolio holdings to comply with investment restrictions or policies or regulatory or tax law requirements;

early or unanticipated closings of the markets on which bitcoin trades, resulting in the inability of Liquidity Providers to execute

intended portfolio transactions;

to conform the Trust’s portfolio holdings to comply with investment restrictions or policies or regulatory or tax law requirements;

(6) early or unanticipated closings of the markets on which bitcoin trades, resulting in the inability of Liquidity Providers to

execute intended portfolio transactions;

(7) accounting standards;

(8) Authorized Participants refraining from participating in creation

and redemption of Baskets;

(8) Authorized Participants refraining from participating in

creation and redemption of Baskets;

and (9) the MarketVector TM Bitcoin Benchmark Rate becoming disrupted or unavailable.

The amount of bitcoin represented by the Shares

will decline over time.

The amount of bitcoin represented by the Shares will

continue to be reduced during the life of the Trust due to the transfer of the Trust’s bitcoin to pay for the Sponsor Fee,

and to pay for litigation expenses or other extraordinary expenses.

This dynamic will occur irrespective of whether the trading

price of the Shares rises or falls in response to changes in the price of bitcoin.

Each outstanding Share represents a fractional, undivided

interest in the bitcoin held by the Trust.

The Trust does not generate any income and transfers bitcoin to pay for the Sponsor

Fee, and to pay for litigation expenses or other extraordinary expenses.

Therefore, the amount of bitcoin represented by each

Share will gradually decline over time.

This is also true with respect to Shares that are issued in exchange for additional deposits

of bitcoin over time, as the amount of bitcoin required to create Shares proportionally reflects the amount of bitcoin represented

by the Shares outstanding at the time of such creation unit being created.

Assuming a constant bitcoin price, the trading price

of the Shares is expected to gradually decline relative to the price of bitcoin as the amount of bitcoin represented by the Shares

gradually declines.

Shareholders should be aware that the gradual decline

in the amount of bitcoin represented by the Shares will occur regardless of whether the trading price of the Shares rises or falls

in response to changes in the price of bitcoin.

The development and commercialization of the Trust

is subject to competitive pressures.

The Trust and the Sponsor face competition with respect

to the creation of competing products, including with respect to the potential creation of competing exchange-traded bitcoin products.

If the SEC were to approve many or all of the currently pending applications for such exchange-traded bitcoin products, many or

all of such products, including the Trust, could fail to acquire substantial assets, initially or at all.

Such competing products

may become available for public exchange trading before the Trust and/or have a lower expense ratio than the Trust, which could

have a detrimental effect on the scale and sustainability of the Trust.

The Sponsor’s competitors may have greater financial,

technical and human resources than the Sponsor.

These competitors may also compete with the Sponsor in recruiting and retaining

qualified personnel.

Smaller or early stage companies may also prove to be effective competitors, particularly through collaborative

arrangements with large and established companies.

Accordingly, the Sponsor’s competitors may commercialize a product involving

bitcoin more rapidly or effectively than the Sponsor is able to, which could adversely affect the Sponsor’s competitive

position, the likelihood that the Trust will achieve initial market acceptance and the Sponsor’s ability to generate meaningful

revenues from the Trust.

Security threats to the Trust’s accounts with

the Bitcoin Custodian or the Additional Bitcoin Custodian could result in the halting of Trust operations and a loss of Trust

assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.

Security breaches, computer malware and computer hacking

attacks have been a prevalent concern in relation to digital assets.

The Sponsor believes that the Trust’s bitcoins held

in the Trust’s Bitcoin Account and Clearing Account with the Bitcoin Custodian and the Additional Bitcoin Account with the

Additional Bitcoin Custodian will be an appealing target to hackers or malware distributors seeking to destroy, damage or steal

the Trust’s bitcoins and will only become more appealing as the Trust’s assets grow.

To the extent that the Trust,

the Sponsor, the Bitcoin Custodian or the Additional Bitcoin Custodian is unable to identify and mitigate or stop new security

The amount of bitcoin represented by

the Shares will decline over time.

The amount of bitcoin represented by the

Shares will continue to be reduced during the life of the Trust due to the transfer of the Trust’s bitcoin to pay for the

Sponsor Fee, and to pay for litigation expenses or other extraordinary expenses.

This dynamic will occur irrespective of whether

the trading price of the Shares rises or falls in response to changes in the price of bitcoin.

Each outstanding Share represents a fractional,

undivided interest in the bitcoin held by the Trust.

The Trust does not generate any income and transfers bitcoin to pay for the

Sponsor Fee, and to pay for litigation expenses or other extraordinary expenses.

Therefore, the amount of bitcoin represented by

each Share will gradually decline over time.

This is also true with respect to Shares that are issued in exchange for additional

deposits of bitcoin over time, as the amount of bitcoin required to create Shares proportionally reflects the amount of bitcoin

represented by the Shares outstanding at the time of such creation unit being created.

Assuming a constant bitcoin price, the trading

price of the Shares is expected to gradually decline relative to the price of bitcoin as the amount of bitcoin represented by the

Shares gradually declines.

Shareholders should be aware that the gradual

decline in the amount of bitcoin represented by the Shares will occur regardless of whether the trading price of the Shares rises

or falls in response to changes in the price of bitcoin.

The development and commercialization

of the Trust is subject to competitive pressures.

The Trust and the Sponsor face competition

with respect to the creation of competing products, including with respect to the potential creation of competing exchange-traded

bitcoin products.

If the SEC were to approve many or all of the currently pending applications for such exchange-traded bitcoin

products, many or all of such products, including the Trust, could fail to acquire substantial assets, initially or at all.

competing products may become available for public exchange trading before the Trust and/or have a lower expense ratio than the

Trust, which could have a detrimental effect on the scale and sustainability of the Trust.

The Sponsor’s competitors may

have greater financial, technical and human resources than the Sponsor.

These competitors may also compete with the Sponsor in

recruiting and retaining qualified personnel.

Smaller or early stage companies may also prove to be effective competitors, particularly

through collaborative arrangements with large and established companies.

Accordingly, the Sponsor’s competitors may commercialize

a product involving bitcoin more rapidly or effectively than the Sponsor is able to, which could adversely affect the Sponsor’s

competitive position, the likelihood that the Trust will achieve initial market acceptance and the Sponsor’s ability to generate

meaningful revenues from the Trust.

Security threats to the Trust’s

accounts with the Bitcoin Custodian or the Additional Bitcoin Custodian could result in the halting of Trust operations and a loss

of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.

Security breaches, computer malware and

computer hacking attacks have been a prevalent concern in relation to digital assets.

The Sponsor believes that the Trust’s

bitcoins held in the Trust’s Bitcoin Account and Clearing Account with the Bitcoin Custodian and the Additional Bitcoin Account

with the Additional Bitcoin Custodian will be an appealing target to hackers or malware distributors seeking to destroy, damage

or steal the Trust’s bitcoins and will only become more appealing as the Trust’s assets grow.

To the extent that the

Trust, the Sponsor, the Bitcoin Custodian or the Additional Bitcoin Custodian is unable to identify and mitigate or stop new security

threats or otherwise adapt to technological changes in the digital asset industry, the Trust’s bitcoins may be subject to

theft, loss, destruction or other attack.

The Sponsor has evaluated the security procedures in

place for safeguarding the Trust’s bitcoins.

Nevertheless, the security procedures cannot guarantee the prevention of any

loss due to a security breach, hack, software defect or act of God that may be borne by the Trust and the security procedures

The Sponsor has evaluated the security procedures

in place for safeguarding the Trust’s bitcoins.

Nevertheless, the security procedures cannot guarantee the prevention of

any loss due to a security breach, hack, software defect or act of God that may be borne by the Trust and the security procedures

may not protect against all errors, software flaws or other vulnerabilities in the Trust’s technical infrastructure, which

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sources of theft, loss or damage.

The security procedures and operational

infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of the Sponsor, the

Bitcoin Custodian, the Additional Bitcoin Custodian or otherwise, and, as a result, an unauthorized party may obtain access to

the Trust’s account with the Bitcoin Custodian, the private keys (and therefore bitcoin) or other data of the Trust.

Additionally,

outside parties may attempt to fraudulently induce employees of the Sponsor, the Bitcoin Custodian, the Additional Bitcoin Custodian

or the Trust’s other service providers to disclose sensitive information in order to gain access to the Trust’s infrastructure.

security procedures and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance

of an employee of the Sponsor, the Bitcoin Custodian, the Additional Bitcoin Custodian or otherwise, and, as a result, an unauthorized

party may obtain access to the Trust’s account with the Bitcoin Custodian, the private keys (and therefore bitcoin) or other

data of the Trust.

Additionally, outside parties may attempt to fraudulently induce employees of the Sponsor, the Bitcoin Custodian,

the Additional Bitcoin Custodian or the Trust’s other service providers to disclose sensitive information in order to gain

access to the Trust’s infrastructure.

As the techniques used

to obtain unauthorized access, disable or degrade service,

or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized

until launched against a target, the Sponsor, the Bitcoin Custodian and the Additional Bitcoin Custodian may be unable to anticipate

to obtain unauthorized access, disable or degrade service, or sabotage

systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until

launched against a target, the Sponsor, the Bitcoin Custodian and the Additional Bitcoin Custodian may be unable to anticipate

these techniques or implement adequate preventative measures.

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the occurrence of which could similarly result in a reduction in the price of the Shares.

The Clearing Account permits hot storage which is

less secure than cold storage.

Although the Custody Agreement requires the Bitcoin

Custodian to hold the Trust’s bitcoin in its Bitcoin Account in cold storage, bitcoin may be temporarily stored in an omnibus

hot storage wallet associated with the Trust’s Clearing Account in connection with both creations and redemptions, as well

as in connection with transfers of bitcoin out of the Trust to pay the Sponsor Fee and to reimburse the Sponsor in bitcoin for

payment of reimbursable extraordinary expenses paid by the Sponsor.

The Clearing Account permits hot storage

which is less secure than cold storage.

Although the Custody Agreement requires

the Bitcoin Custodian to hold the Trust’s bitcoin in its Bitcoin Account in cold storage, bitcoin may be temporarily stored

in an omnibus hot storage wallet associated with the Trust’s Clearing Account in connection with both creations and redemptions,

as well as in connection with transfers of bitcoin out of the Trust to pay the Sponsor Fee and to reimburse the Sponsor in bitcoin

for payment of reimbursable extraordinary expenses paid by the Sponsor.

Cold storage is a safeguarding method by which the private

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more vulnerable to being hacked or stolen.

If a Liquidity Provider Agreement, the Custody Agreement,

the Additional Bitcoin Custody Agreement, an Authorized Participant Agreement or Clearing Agreement is terminated or a Liquidity

Provider, an Authorized Participant, the Bitcoin Custodian or the Additional Bitcoin Custodian fails to participate in the creation

or redemption processes of the Trust or fails to provide services as required, the Sponsor may need to find and appoint a replacement

Liquidity Provider, Authorized Participant, Bitcoin Custodian or Additional Bitcoin Custodian quickly, which could pose a challenge

to the Trust’s ability to create and redeem Shares or the safekeeping of the Trust’s bitcoins, and the Trust’s

ability to continue to operate may be adversely affected.

The Trust is dependent on the Bitcoin Custodian to

operate, pursuant to the Custody Agreement and the Clearing Agreement.

The Bitcoin Custodian performs essential functions in terms

of safekeeping the Trust’s bitcoin and, via the Clearing Services, facilitates the transfer of bitcoin to the Trust by Liquidity

Providers and from the Trust in connection with creations and redemptions and to pay the Sponsor Fee and extraordinary Trust expenses,

and in extraordinary circumstances, to liquidate the Trust.

If the Bitcoin Custodian fails to perform the functions it performs

for the Trust, the Trust may be unable to operate or create or redeem Baskets, which could force the Trust to liquidate or adversely

affect the price of the Shares.

The Sponsor could decide to replace the Bitcoin Custodian

as the custodian of the Trust’s bitcoins, pursuant to the Custody Agreement.

Similarly, the Bitcoin Custodian under the

Custody Agreement and Clearing Agreement may terminate the Custody Agreement and Clearing Agreement respectively upon providing

the applicable notice to the Trust for any reason, or immediately, upon the occurrence of a Termination Event (as defined below)

that is incapable of being cured within ten business days or if it determines in its sole discretion it is necessary to take such

action to comply with applicable laws and regulations or in connection with Gemini’s fraud or other compliance program.

Under the Custody Agreement, a “Termination Event” occurs when (i) any representation, warranty, certification or

statement made by the Trust was or becomes incorrect in any material respect when made;

(ii) the Trust materially breaches, or

fails in any material respect to perform any of its obligations under the Custody Agreement;

If a Liquidity Provider Agreement, the

Custody Agreement, the Additional Bitcoin Custody Agreement, an Authorized Participant Agreement or Clearing Agreement is terminated

or a Liquidity Provider, an Authorized Participant, the Bitcoin Custodian or the Additional Bitcoin Custodian fails to participate

in the creation or redemption processes of the Trust or fails to provide services as required, the Sponsor may need to find and

appoint a replacement Liquidity Provider, Authorized Participant, Bitcoin Custodian or Additional Bitcoin Custodian quickly, which

could pose a challenge to the Trust’s ability to create and redeem Shares or the safekeeping of the Trust’s bitcoins,

and the Trust’s ability to continue to operate may be adversely affected.

The Trust is dependent on the Bitcoin Custodian

to operate, pursuant to the Custody Agreement and the Clearing Agreement.

The Bitcoin Custodian performs essential functions in

terms of safekeeping the Trust’s bitcoin and, via the Clearing Services, facilitates the transfer of bitcoin to the Trust

by Liquidity Providers and from the Trust in connection with creations and redemptions and to pay the Sponsor Fee and extraordinary

Trust expenses, and in extraordinary circumstances, to liquidate the Trust.

If the Bitcoin Custodian fails to perform the functions

it performs for the Trust, the Trust may be unable to operate or create or redeem Baskets, which could force the Trust to liquidate

or adversely affect the price of the Shares.

The Sponsor could decide to replace the

Bitcoin Custodian as the custodian of the Trust’s bitcoins, pursuant to the Custody Agreement.

Similarly, the Bitcoin Custodian

under the Custody Agreement and Clearing Agreement may terminate the Custody Agreement and Clearing Agreement respectively upon

providing the applicable notice to the Trust for any reason, or immediately, upon the occurrence of a Termination Event (as defined

below) that is incapable of being cured within ten business days or if it determines in its sole discretion it is necessary to

take such action to comply with applicable laws and regulations or in connection with Gemini’s fraud or other compliance

Under the Custody Agreement, a “Termination Event” occurs when (i) any representation, warranty, certification

or statement made by the Trust was or becomes incorrect in any material respect when made;

(ii) the Trust materially breaches,

or fails in any material respect to perform any of its obligations under the Custody Agreement;

(iii) the Trust requests a postponement

of maturity or a moratorium with respect to any indebtedness or is adjudged bankrupt or insolvent, or there is commenced against

the Trust a case under any applicable bankruptcy,

insolvency or other similar law now or hereafter in

effect, or the Trust files a petition for bankruptcy or an application for an arrangement with its creditors, seeks or consents

to the appointment of a receiver, administrator or other similar official for all or any substantial part of its property, admits

in writing its inability to pay its debts as they mature, or takes any corporate action in furtherance of any of the foregoing,

or fails to meet applicable legal minimum capital requirements;

or (iv) a change of control of the Trust, or an event, change

or development that causes or is likely to cause a material adverse effect on the Trust, or in the ability of the Trust to fulfill

its responsibilities under the Custody Agreement, occurs.

Transferring maintenance responsibilities of the Trust’s account

at the Bitcoin Custodian to another custodian may be complex and could subject the Trust’s bitcoin to the risk of loss during

the transfer, which could have a negative impact on the performance of the Shares or result in loss of the Trust’s assets.

Also, if the Bitcoin Custodian becomes insolvent, suffers business failure, ceases business operations, defaults on or fails to

perform its obligations under the Custody Agreement or Clearing Agreement with the Trust, or abruptly discontinues the services

it provides to the Trust for any reason, the Trust’s operations would be adversely affected.

On October 19, 2023, Gemini, the Bitcoin Custodian

for the Trust, was named in a complaint filed by the New York Attorney General (“NYAG Lawsuit”) against Gemini and

other entities, including Genesis and its affiliates (collectively, the “Genesis Entities”) in a New York state court,

alleging, inter alia, that Gemini had violated New York’s Martin Act by soliciting money from the public, including persons

in New York, with false assurances that an investment program called Gemini Earn, pursuant to which customers of Gemini could

deposit money in Earn accounts at Gemini that would then be loaned to the Genesis Entities and repaid with interest by them, was

a highly liquid investment and that Genesis was a creditworthy borrower based on the Bitcoin Custodian’s ongoing risk monitoring.

the Trust a case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or the Trust files

a petition for bankruptcy or an application for an arrangement with its creditors, seeks or consents to the appointment of a receiver,

administrator or other similar official for all or any substantial part of its property, admits in writing its inability to pay

its debts as they mature, or takes any corporate action in furtherance of any of the foregoing, or fails to meet applicable legal

minimum capital requirements;

or (iv) a change of control of the Trust, or an event, change or development that causes or is likely

to cause a material adverse effect on the Trust, or in the ability of the Trust to fulfill its responsibilities under the Custody

Agreement, occurs.

Transferring maintenance responsibilities of the Trust’s account at the Bitcoin Custodian to another custodian

may be complex and could subject the Trust’s bitcoin to the risk of loss during the transfer, which could have a negative

impact on the performance of the Shares or result in loss of the Trust’s assets.

Also, if the Bitcoin Custodian becomes insolvent,

suffers business failure, ceases business operations, defaults on or fails to perform its obligations under the Custody Agreement

or Clearing Agreement with the Trust, or abruptly discontinues the services it provides to the Trust for any reason, the Trust’s

operations would be adversely affected.

On October 19, 2023, Gemini, the Bitcoin

Custodian for the Trust, was named in a complaint filed by the New York Attorney General (“NYAG Lawsuit”) against Gemini

and other entities, including Genesis and its affiliates (collectively, the “Genesis Entities”) in a New York state

court, alleging, inter alia, that Gemini had violated New York’s Martin Act by soliciting money from the public, including

persons in New York, with false assurances that an investment program called Gemini Earn,

pursuant to which customers of Gemini

could deposit money in Earn accounts at Gemini that would then be loaned to the Genesis Entities and repaid with interest by them,

was a highly liquid investment and that Genesis was a creditworthy borrower based on the Bitcoin Custodian’s ongoing risk

On February 9, 2024, NYAG amended its lawsuit to add additional allegations against defendants other than Gemini.

No new allegations

were made against Gemini as part of the February 9 amendments.

On April 19, 2024, the United States Bankruptcy Court,

Southern District of New York in the Genesis bankruptcy proceedings, approved a settlement that allowed for certain payments,

new allegations were made against Gemini as part of the February 9 amendments.

On April 19, 2024, the United States Bankruptcy

Court, Southern District of New York in the Genesis bankruptcy proceedings, approved a settlement that allowed for certain payments,

on an in-kind “coin-for-coin” basis, to be made.

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claims against Gemini set out in the NYAG Lawsuit as described above (the “NYAG Settlement”).

As part of the NYAG

Settlement, Gemini will return approximately $50 million worth of digital assets to investors of the Gemini Earn program who were

entitled to receive, and did receive, distributions from Gemini on May 29, 2024.

Gemini will be required to make such full and

complete restitution on an in-kind “coin-for-coin” basis.

As part of the NYAG Settlement,

Gemini will return approximately $50 million worth of digital assets to investors of the Gemini Earn program who were entitled

to receive, and did receive, distributions from Gemini on May 29, 2024.

Gemini will be required to make such full and complete

restitution on an in-kind “coin-for-coin” basis.

Additionally, Gemini will be banned from operating any cryptocurrency

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in or from the State of New York at which point NYAG’s consent shall be required.

On February 28, 2024, Gemini and the New York State

Department of Financial Services (“NYDFS”) announced that they had entered into an administrative consent settlement

agreement (the “NYDFS Settlement”) that included findings, primarily with respect to the Gemini Earn program, that

Gemini had conducted some of its business in an unsafe and unsound manner, made false or misleading advertising statements, and

failed to maintain an effective customer due diligence program, and committed other violations of New York Banking Law and NYDFS

Pursuant to this settlement, Gemini has agreed to ensure that at least $1.1 billion is returned to Gemini Earn users

through the Genesis bankruptcy proceedings that are also creditors in the Genesis bankruptcy.

In addition, Gemini has agreed to

contribute at least $40 million for the benefit of impacted Gemini Earn users and pay a $37 million fine to NYDFS.

On February 28, 2024, Gemini and the New

York State Department of Financial Services (“NYDFS”) announced that they had entered into an administrative consent

settlement agreement (the “NYDFS Settlement”) that included findings, primarily with respect to the Gemini Earn program,

that Gemini had conducted some of its business in an unsafe and unsound manner, made false or misleading advertising statements,

and failed to maintain an effective customer due diligence program, and committed other violations of New York Banking Law and

NYDFS regulations.

Pursuant to this settlement, Gemini has agreed to ensure that at least $1.1 billion is returned to Gemini Earn

users through the Genesis bankruptcy proceedings that are also creditors in the Genesis bankruptcy.

In addition, Gemini has agreed

to contribute at least $40 million for the benefit of impacted Gemini Earn users and pay a $37 million fine to NYDFS.

In determining

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identified in the NYDFS Settlement and during the NYDFS’ most recent examination of Gemini.

Additionally, pursuant to the NYDFS Settlement, Gemini

agreed to provide an action plan to NYDFS including implementing the recommendations of an outside consultant in connection with

a governance and management assessment, continuing to strengthen its controls, policies and procedures to ensure robust compliance

Additionally, pursuant to the NYDFS Settlement,

Gemini agreed to provide an action plan to NYDFS including implementing the recommendations of an outside consultant in connection

with a governance and management assessment, continuing to strengthen its controls, policies and procedures to ensure robust compliance

programs in connection with its virtual currency business activity, and continuing its cooperation with the NYDFS to remediate

5 unchanged sentences

As a regulated entity with financial services

licenses in multiple jurisdictions, it is possible that other regulators may decide to initiate their own action with respect

to Gemini based on the findings contained in the NYDFS Settlement.

Gemini, as the Bitcoin Custodian, could be required, as a result of judicial

or regulatory determinations, or could choose, to restrict or curtail the services it offers (whether in or from New York State

or generally), its licenses could be impacted, or its financial condition and ability to provide services to the Trust could be

affected as a result of the NYDFS Settlement,

NYAG Settlement, or other litigation.

If the Bitcoin Custodian were to be

required or choose, as a result of litigation or regulatory action, to restrict, curtail, or terminate the services it offers,

it could negatively affect the Trust’s ability to operate, hold bitcoin, or process creations or redemptions of Baskets,

which could force the Trust to engage an alternate bitcoin custodian or to liquidate and could adversely affect the value of the

Similarly, the Additional Bitcoin Custodian performs

essential functions in terms of safekeeping the Trust’s bitcoin in the Additional Bitcoin Vault Balance.

If the Additional

Bitcoin Custodian fails to perform the functions they perform for the Trust, the Trust may be unable to operate or create or redeem

Baskets, which could force the Trust to liquidate or adversely affect the price of the Shares.

On March 22, 2023, Coinbase, Inc., which is an affiliate

of the Additional Bitcoin Custodian, and its parent (such parent, “Coinbase Global” and together with Coinbase Inc.,

the “Relevant Coinbase Entities”) received a “Wells Notice” from the SEC staff stating that the SEC staff

made a “preliminary determination” to recommend that the SEC file an enforcement action against the Relevant Coinbase

Entities alleging violations of the federal securities laws, including the Exchange Act and the Securities Act.

According to Coinbase

Global’s public reporting company disclosure, based on discussions with the SEC staff, the Relevant Coinbase Entities believe

these potential enforcement actions would relate to aspects of the Relevant Coinbase Entities’ Coinbase Prime service, spot

market, staking service Coinbase Earn, and Coinbase Wallet, and the potential civil action may seek injunctive relief, disgorgement,

and civil penalties.

On June 6, 2023, the SEC filed a complaint against the Relevant Coinbase Entities in federal district court

in the Southern District of New York, alleging, inter alia:

licenses in multiple jurisdictions, it is possible that other regulators may decide to initiate their own action with respect to

Gemini based on the findings contained in the NYDFS Settlement.

Gemini, as the Bitcoin Custodian, could

be required, as a result of judicial or regulatory determinations, or could choose, to restrict or curtail the services it offers

(whether in or from New York State or generally), its licenses could be impacted, or its financial condition and ability to provide

services to the Trust could be affected as a result of the NYDFS Settlement, NYAG Settlement, or other litigation.

If the Bitcoin

Custodian were to be required or choose, as a result of litigation or regulatory action, to restrict, curtail, or terminate the

services it offers, it could negatively affect the Trust’s ability to operate, hold bitcoin, or process creations or redemptions

of Baskets, which could force the Trust to engage an alternate bitcoin custodian or to liquidate and could adversely affect the

value of the Shares.

Similarly, the Additional Bitcoin Custodian

performs essential functions in terms of safekeeping the Trust’s bitcoin in the Additional Bitcoin Vault Balance.

Additional Bitcoin Custodian fails to perform the functions they perform for the Trust, the Trust may be unable to operate or create

or redeem Baskets, which could force the Trust to liquidate or adversely affect the price of the Shares.

On March 22, 2023, Coinbase, Inc., which

is an affiliate of the Additional Bitcoin Custodian, and its parent (such parent, “Coinbase Global” and together with

Coinbase Inc., the “Relevant Coinbase Entities”) received a “Wells Notice” from the SEC staff stating that

the SEC staff made a “preliminary determination” to recommend that the SEC file an enforcement action against the Relevant

Coinbase Entities alleging violations of the federal securities laws, including the Exchange Act and the Securities Act.

to Coinbase Global’s public reporting company disclosure, based on discussions with the SEC staff, the Relevant Coinbase

Entities believe these potential enforcement actions would relate to aspects of the Relevant Coinbase Entities’ Coinbase

Prime service, spot market, staking service Coinbase Earn, and Coinbase Wallet,

and the potential civil action may seek injunctive

relief, disgorgement, and civil penalties.

On June 6, 2023, the SEC filed a complaint against the Relevant Coinbase Entities in

federal district court in the Southern District of New York, alleging, inter alia:

(i) that Coinbase Inc.

has violated the Exchange Act by failing to

register with the SEC as a national securities exchange, broker-dealer, and clearing agency, in connection with activities involving

certain identified digital assets that the SEC’s complaint alleges are securities, (ii) that Coinbase Inc.

the Securities Act by failing to register with the SEC the offer and sale of its staking program, and (iii) that Coinbase Global

is jointly and severally liable as a control person under the Exchange Act for Coinbase Inc.’s violations of the Exchange

Act to the same extent as Coinbase Inc.

The SEC’s complaint seeks a permanent injunction against the Relevant Coinbase Entities

to prevent them from violations of the Exchange Act or Securities Act, disgorgement, civil monetary penalties, and such other

relief as the court deems appropriate or necessary.

While the Additional Bitcoin Custodian is not named in the complaint, if Coinbase

Global, as the parent of the Additional Bitcoin Custodian, is required, as a result of a judicial determination, or could choose,

to restrict or curtail the services its subsidiaries provide to the Trust, or its financial condition is negatively affected,

it could negatively affect the Trust’s ability to operate.

Alternatively, the Sponsor could decide to replace

the Additional Bitcoin Custodian as a custodian of the Trust’s bitcoin, pursuant to the Additional Custodial Services Agreement

(the “Additional Bitcoin Custody Agreement”).

Similarly, the Additional Bitcoin Custodian could terminate services

under the Additional Bitcoin Custody Agreement for any reason and without Cause upon providing the applicable notice to the Trust

for any reason, or immediately for Cause (“Cause” is defined in the Additional Bitcoin Custody Agreement as (i) the

Trust breaches any provision of the Additional Bitcoin Custody Agreement and such breach is not cured within three (3) business

days after notice of such breach is given to the Trust in the case of a payment-related breach or is not cured within ten (10)

business days after notice of such breach is given to the Trust;

(ii) the Trust takes any action to dissolve or liquidate (iii)

the Trust becomes insolvent, makes an assignment for the benefit of creditors, becomes subject to direct control of a trustee,

has violated the Exchange

Act by failing to register with the SEC as a national securities exchange, broker-dealer, and clearing agency, in connection with

activities involving certain identified digital assets that the SEC’s complaint alleges are securities, (ii) that Coinbase

has violated the Securities Act by failing to register with the SEC the offer and sale of its staking program, and (iii) that

Coinbase Global is jointly and severally liable as a control person under the Exchange Act for Coinbase Inc.’s violations

of the Exchange Act to the same extent as Coinbase Inc.

The SEC’s complaint seeks a permanent injunction against the Relevant

Coinbase Entities to prevent them from violations of the Exchange Act or Securities Act, disgorgement, civil monetary penalties,

and such other relief as the court deems appropriate or necessary.

On February 27, 2025, the SEC and the Relevant Coinbase Entities

filed a joint stipulation to dismiss the case with prejudice, and the case has been dismissed.

Notwithstanding the dismissal of

the SEC enforcement action, Coinbase Inc.

is currently, and it and the Additional Bitcoin Custodian from time to time may be, subject

in the future, to a variety of other litigation.

Although the Trust does not presently anticipate such an outcome, there can be

no assurance that in the future Coinbase Inc.

or Coinbase Custody, as Bitcoin Custodian, will not be required, as a result of a

judicial determination, or will not choose, to restrict or curtail the services they offer, or their financial condition and ability

to provide services to the Trust, will not be negatively affected.

Alternatively, the Sponsor could decide

to replace the Additional Bitcoin Custodian as a custodian of the Trust’s bitcoin, pursuant to the Additional Custodial Services

Agreement (the “Additional Bitcoin Custody Agreement”).

Similarly, the Additional Bitcoin Custodian could terminate

services under the Additional Bitcoin Custody Agreement for any reason and without Cause upon providing the applicable notice to

the Trust for any reason, or immediately for Cause (“Cause” is defined in the Additional Bitcoin Custody Agreement

as (i) the Trust breaches any provision of the Additional Bitcoin Custody Agreement and such breach is not cured within three (3)

business days after notice of such breach is given to the Trust in the case of a payment-related breach or is not cured within

ten (10) business days after notice of such breach is given to the Trust;

(ii) the Trust takes any action to dissolve or liquidate

(iii) the Trust becomes insolvent, makes an assignment for the benefit of creditors, becomes subject to direct control of a trustee,

receiver or similar authority;

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or (viii) the Additional

Bitcoin Custodian reasonably suspects the Trust of attempting to circumvent the Additional Bitcoin Custodian’s controls

in a manner the Additional Bitcoin Custodian otherwise deems inappropriate or potentially harmful to itself or third parties.)

Transferring maintenance responsibilities of the Trust’s account at the Additional Bitcoin Custodian to another custodian

may be complex and could subject the Trust’s bitcoin to the risk of loss during the transfer, which could have a negative

impact on the performance of the Shares or result in loss of the Trust’s assets.

Also, if the Additional Bitcoin Custodian

becomes insolvent, suffers business failure, ceases business operations, default on or fail to perform their obligations under

its contractual agreement with the Trust, or abruptly discontinue the services it provides to the Trust for any reason, the Trust’s

operations including its creation and redemption processes would be adversely affected.

The Sponsor may not be able to find a party willing

to serve as the custodian or perform clearing services under the same terms as the current Custody Agreement, Additional Bitcoin

Custody Agreement and Clearing Agreement.

To the extent that Sponsor is not able to find a suitable party willing to serve as

the custodian or to perform clearing services, the Sponsor may be required to terminate the Trust and liquidate the Trust’s

In addition, to the extent that the Sponsor finds a

suitable party but must enter into a modified Custody

Agreement, Additional Bitcoin Custody Agreement or Clearing Agreement that is less favorable for the Trust or Sponsor, the value

of the Shares could be adversely affected.

If an Authorized Participant or a Liquidity Provider

suffers insolvency, business failure or interruption, default, failure to perform, security breach, or if an Authorized Participant

or a Liquidity Provider chooses not to participate in the creation and redemption processes of the Trust due to the risks described

in “—The inability of Liquidity Providers to hedge their bitcoin exposure may adversely affect the liquidity of Shares

and the value of an investment in the Shares” and “—If the process of creation and redemption of baskets encounters

any unanticipated difficulties, the possibility for arbitrage transactions by Authorized Participants intended to keep the price

of the Shares closely linked to the price of Bitcoin may not exist and, as a result, the price of the Shares may fall or otherwise

diverge from NAV,” and the Trust is unable to engage replacement Authorized Participants or Liquidity Providers on commercially

acceptable terms or at all, then the creation and redemption processes of the Trust or the arbitrage mechanism used to keep the

Trust’s Shares trading in line with NAV could be negatively affected.

Bitcoin Custodian reasonably suspects the Trust of attempting to circumvent the Additional Bitcoin Custodian’s controls in

a manner the Additional Bitcoin Custodian otherwise deems inappropriate or potentially harmful to itself or third parties.) Transferring

maintenance responsibilities of the Trust’s account at the Additional Bitcoin Custodian to another custodian may be complex

and could subject the Trust’s bitcoin to the risk of loss during the transfer, which could have a negative impact on the

performance of the Shares or result in loss of the Trust’s assets.

Also, if the Additional Bitcoin Custodian becomes insolvent,

suffers business failure, ceases business operations, default on or fail to perform their obligations under its contractual agreement

with the Trust, or abruptly discontinue the services it provides to the Trust for any reason, the Trust’s operations including

its creation and redemption processes would be adversely affected.

The Sponsor may not be able to find a party

willing to serve as the custodian or perform clearing services under the same terms as the current Custody Agreement, Additional

Bitcoin Custody Agreement and Clearing Agreement.

To the extent that Sponsor is not able to find a suitable party willing to serve

as the custodian or to perform clearing services, the Sponsor may be required to terminate the Trust and liquidate the Trust’s

In addition, to the extent that the Sponsor finds a suitable party but must enter into a modified Custody Agreement, Additional

Bitcoin Custody Agreement or Clearing Agreement that is less favorable for the Trust or Sponsor, the value of the Shares could

be adversely affected.

If an Authorized Participant or a Liquidity

Provider suffers insolvency, business failure or interruption, default, failure to perform, security breach, or if an Authorized

Participant or a Liquidity Provider chooses not to participate in the creation and redemption processes of the Trust due to the

risks described in “-The inability of Liquidity Providers to hedge their bitcoin exposure may adversely affect the liquidity

of Shares and the value of an investment in the Shares” and “-If the process of creation and redemption of baskets

encounters any unanticipated difficulties, the possibility for arbitrage transactions by Authorized Participants intended to keep

the price of the Shares closely linked to the price of Bitcoin may not exist and, as a result, the price of the Shares may fall

or otherwise diverge from NAV,” and the Trust is unable to engage replacement Authorized Participants or Liquidity Providers

on commercially acceptable terms or at all, then the creation and redemption processes of the Trust or the arbitrage mechanism

used to keep the Trust’s Shares trading in line with NAV could be negatively affected.

The lack of full insurance and Shareholders’

limited rights of legal recourse against the Trust, Trustee, Sponsor, Administrator, Cash Custodian, Bitcoin Custodian and Additional

Bitcoin Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s bitcoins for which no person

or entity is liable.

Neither the Trust nor the Sponsor insure the Trust’s

The Trust is not a banking institution or otherwise a member of the FDIC or Securities Investor Protection Corporation

(“SIPC”) and, therefore, neither, Shareholders cannot be assured that either the Bitcoin Custodian or the Additional

Bitcoin Custodian will maintain adequate insurance in respect of the bitcoin they hold for the

Trust, that such coverage will cover losses with respect to the Trust’s bitcoins, or that sufficient insurance proceeds

will be available to cover the Trust’s losses in full.

The Bitcoin Custodian’s insurance may not cover the type of

losses experienced by the Trust.

Alternatively, the Trust may be forced to share such insurance proceeds with other clients or

customers of the Bitcoin Custodian, which could reduce the amount of such proceeds that are available to the Trust.

is not a named insured under the Bitcoin Custodian’s insurance policies, though the Bitcoin Custodian has represented to

the Sponsor that the insurance covers customer losses, including losses suffered by the Trust, arising from specified events,

including fraud, theft, and cybersecurity breaches.

In addition, the bitcoin insurance market is limited, and the level of insurance

maintained by the Bitcoin Custodian may be substantially lower than the assets of the Trust, or the amount of claims against the

Bitcoin Custodian of all of the customers whose losses are covered by the Bitcoin Custodian’s insurance coverage.

the Bitcoin Custodian maintains certain capital reserve requirements depending on the assets under custody, and such capital reserves

may provide additional means to cover client asset losses, the Trust cannot be assured that the Bitcoin Custodian will maintain

capital reserves sufficient to cover actual or potential losses with respect to the Trust’s digital assets.

Furthermore, under the Custody Agreement, the Bitcoin

Custodian’s liability is limited in various ways, including that the Bitcoin Custodian cannot be held responsible for any

failure or delay to act by the Bitcoin Custodian, its service providers, or its banks that is within the time limits permitted

by the Custody Agreement, or that is caused by the Trust’s negligence or is required to comply with applicable laws and

The Bitcoin Custodian is not liable for any System Failure or Downtime (both as defined in the Custody Agreement),

which prevents the Bitcoin Custodian from fulfilling its obligations under the Custody Agreement, provided that Bitcoin Custodian

took reasonable care and used commercially reasonable efforts to prevent or limit such System Failures or Downtime and otherwise

complied with the Custody Agreement.

The Custody Agreement provides that “Downtime” means scheduled maintenance and

a “System Failure” shall mean a failure of any computer hardware, software, computer systems, or

telecommunications lines or devices used by the Bitcoin

Custodian, or interruption, loss, or malfunction of utility, data center, Internet or network provider services used by the Bitcoin

provided, however, that a cybersecurity attack, data breach, hack, or other intrusion, or unauthorized disclosure by

a third party, the Bitcoin Custodian, a service provider to the Bitcoin Custodian, or an agent or subcontractor of the Bitcoin

Custodian, shall not be deemed a System Failure, to the extent such events or any losses arising therefrom are due to the Bitcoin

Custodian’s failure to comply with its obligations under the Custody Agreement.

The Bitcoin Custodian cannot be held responsible

for any circumstances beyond the Bitcoin Custodian’s reasonable control, provided the Bitcoin Custodian took reasonable

care and used commercially reasonable efforts in executing its responsibilities to the Trust pursuant to the Custody Agreement,

which includes exercising the degree of care, diligence and skill that a prudent and competent professional provider of services

similar to the custodial services would exercise in the circumstances, or such higher care where required by law or the Custody

Agreement (collectively, the “Standard of Care”).

The Bitcoin Custodian makes no guarantees regarding the Bitcoin

network’s security, functionality, or availability, and will not be liable for or in connection with any acts, decisions,

or omissions made by developers of the Bitcoin network.

The Bitcoin Custodian is not liable for any losses or claims arising out

of actions that are in the Trust’s control and related to the Trust’s use of the Bitcoin Custodian’s online

platform, including but not limited to, the Trust’s failure to follow security protocols, the Bitcoin Custodian’s

platform controls, improper instructions, failure to secure the Trust’s credentials from third parties, or anything else

in the Trust’s control and is also not liable for any amount greater than the value of the assets on deposit in Trust’s

account at the Bitcoin Custodian at the time of, and directly relating to, the events giving rise to the liability occurred, the

value of which shall be determined in accordance with the Chicago Mercantile Exchange Bitcoin Reference Rate or any successor

The Bitcoin Custodian is not liable to the Trust (whether under contract, tort (including negligence) or otherwise) for

any indirect, incidental, special, punitive or consequential losses suffered or incurred by the Trust (whether or not any such

losses were foreseeable).

The Bitcoin Custodian is not liable to the Trust or anyone else for any loss or injury resulting directly

or indirectly from any damage or interruptions caused by any computer viruses, spyware, scamware, trojan horses, worms, or other

malware that may affect the Trust’s computer or other equipment, provided such malware did not originate from the Bitcoin

Custodian or its agents.

The Custody Agreement’s “Force Majeure” provision provides that the Bitcoin Custodian

is not liable for delays, suspension of operations, failure in performance, or interruption of service to the extent it is directly

due to a cause or condition beyond the reasonable control of the Bitcoin Custodian including, but not limited to, any act of God,

nuclear or natural disaster, epidemic, action or inaction of civil or military authorities, act of war, terrorism, sabotage, civil

disturbance, strike or other labor dispute, accident, or state of emergency;

provided, however, that for the avoidance of doubt,

the Custody Agreement’s Force Majeure provision shall not apply in respect of System Failures or Downtime, which are subject

to other respective provisions of the Custody Agreement.

The occurrence of an event described in the Force Majeure provision shall

not affect the validity and enforceability of any remaining provisions of the Custody Agreement.

In the event of potential losses incurred by the Trust

as a result of the Bitcoin Custodian losing control of the Trust’s bitcoins or failing to properly execute instructions

Bitcoin Custodian expose the Trust and its Shareholders to the risk of loss of the Trust’s bitcoins for which no person or

entity is liable.

Neither the Trust nor the Sponsor insure

the Trust’s bitcoin.

The Trust is not a banking institution or otherwise a member of the FDIC or Securities Investor Protection

Corporation (“SIPC”) and, therefore, neither, Shareholders cannot be assured that either the Bitcoin Custodian or the

Additional Bitcoin Custodian will maintain adequate insurance in respect of the bitcoin they hold for the Trust, that such coverage

will cover losses with respect to the Trust’s bitcoins, or that sufficient insurance proceeds will be available to cover

the Trust’s losses in full.

The Bitcoin Custodian’s insurance may not cover the type of losses experienced by the Trust.

Alternatively, the Trust may be forced to share such insurance proceeds with other clients or customers of the Bitcoin Custodian,

which could reduce the amount of such proceeds that are available to the Trust.

The Trust is not a named insured under the Bitcoin

Custodian’s insurance policies, though the Bitcoin Custodian has represented to the Sponsor that the insurance covers customer

losses, including losses suffered by the Trust, arising from specified events, including fraud, theft, and cybersecurity breaches.

In addition, the bitcoin insurance market is limited, and the level of insurance maintained by the Bitcoin Custodian may be substantially

lower than the assets of the Trust, or the amount of claims against the Bitcoin Custodian of all of the customers whose losses

are covered by the Bitcoin Custodian’s insurance coverage.

While the Bitcoin Custodian maintains certain capital reserve

requirements depending on the assets under custody, and such capital reserves may provide additional means to cover client asset

losses, the Trust cannot be assured that the Bitcoin Custodian will maintain capital reserves sufficient to cover actual or potential

losses with respect to the Trust’s digital assets.

under the Custody Agreement, the Bitcoin Custodian’s liability is limited in various ways, including that the Bitcoin Custodian

cannot be held responsible for any failure or delay to act by the Bitcoin Custodian, its service providers, or its banks that is

within the time limits permitted by the Custody Agreement, or that is caused by the Trust’s negligence or is required to

comply with applicable laws and regulations.

The Bitcoin Custodian is not liable for any System Failure or Downtime (both as defined

in the Custody Agreement), which prevents the Bitcoin Custodian from fulfilling its obligations under the Custody Agreement, provided

that Bitcoin Custodian took reasonable care and used commercially reasonable efforts to prevent or limit such System Failures or

Downtime and otherwise complied with the Custody Agreement.

The Custody Agreement provides that “Downtime” means scheduled

maintenance and a “System Failure” shall mean a failure of any computer hardware, software, computer systems, or

telecommunications lines or devices used by the Bitcoin Custodian,

or interruption, loss, or malfunction of utility, data center, Internet or network provider services used by the Bitcoin Custodian;

provided, however, that a cybersecurity attack, data breach, hack, or other intrusion, or unauthorized disclosure by a third party,

the Bitcoin Custodian, a service provider to the Bitcoin Custodian, or an agent or subcontractor of the Bitcoin Custodian, shall

not be deemed a System Failure, to the extent such events or any losses arising therefrom are due to the Bitcoin Custodian’s

failure to comply with its obligations under the Custody Agreement.

The Bitcoin Custodian cannot be held responsible for any circumstances

beyond the Bitcoin Custodian’s reasonable control, provided the Bitcoin Custodian took reasonable care and used commercially

reasonable efforts in executing its responsibilities to the Trust pursuant to the Custody Agreement, which includes exercising

the degree of care, diligence and skill that a prudent and competent professional provider of services similar to the custodial

services would exercise in the circumstances, or such higher care where required by law or the Custody Agreement (collectively,

the “Standard of Care”).

The Bitcoin Custodian makes no guarantees regarding the Bitcoin network’s security,

functionality, or availability, and will not be liable for or in connection with any acts, decisions, or omissions made by developers

of the Bitcoin network.

The Bitcoin Custodian is not liable for any losses or claims arising out of actions that are in the Trust’s

control and related to the Trust’s use of the Bitcoin Custodian’s online platform, including but not limited to, the

Trust’s failure to follow security protocols, the Bitcoin Custodian’s platform controls, improper instructions, failure

to secure the Trust’s credentials from third parties, or anything else in the Trust’s control and is also not liable

for any amount greater than the value of the assets on deposit in Trust’s account at the Bitcoin Custodian at the time of,

and directly relating to, the events giving rise to the liability occurred, the value of which shall be determined in accordance

with the Chicago Mercantile Exchange Bitcoin Reference Rate or any successor thereto.

The Bitcoin Custodian is not liable to the

Trust (whether under contract, tort (including negligence) or otherwise) for any indirect, incidental, special, punitive or consequential

losses suffered or incurred by the Trust (whether or not any such losses were foreseeable).

The Bitcoin Custodian is not liable

to the Trust or anyone else for any loss or injury resulting directly or indirectly from any damage or interruptions caused by

any computer viruses, spyware, scamware, trojan horses, worms, or other malware that may affect the Trust’s computer or other

equipment, provided such malware did not originate from the Bitcoin Custodian or its agents.

The Custody Agreement’s “Force

Majeure” provision provides that the Bitcoin Custodian is not liable for delays, suspension of operations, failure in performance,

or interruption of service to the extent it is directly due to a cause or condition beyond the reasonable control of the Bitcoin

Custodian including, but not limited to, any act of God, nuclear or natural disaster, epidemic, action or inaction of civil or

military authorities, act of war, terrorism, sabotage, civil disturbance, strike or other labor dispute, accident, or state of

provided, however, that for the avoidance of doubt, the Custody Agreement’s Force Majeure provision shall not

apply in respect of System Failures or

Downtime, which are subject to other respective provisions of the Custody Agreement.

occurrence of an event described in the Force Majeure provision shall not affect the validity and enforceability of any remaining

provisions of the Custody Agreement.

In the event of potential losses incurred

by the Trust as a result of the Bitcoin Custodian losing control of the Trust’s bitcoins or failing to properly execute instructions

on behalf of the Trust, the Bitcoin Custodian’s liability with respect to the Trust will be subject to certain limitations

2 unchanged sentences

the Trust and the Bitcoin Custodian are required to indemnify each other under certain circumstances.

Subject to the Force Majeure provision and as limited

by the limitations of liability in the Custody Agreement, the Bitcoin Custodian shall be liable to the Trust for the Loss (defined

below) of any of the Trust’s bitcoin or fiat currency to the extent that such Loss was caused by the negligence, fraud,

willful or reckless misconduct of the Bitcoin Custodian or breach by the Bitcoin Custodian of its Standard of Care.

Agreement provides that “Loss” means if, at any time the Trust’s Bitcoin Account or Fiat Account, as applicable,

does not hold the bitcoin or fiat currency that had been (1) received by Bitcoin Custodian in connection with the Trust’s

Bitcoin Account or Fiat Account pursuant to the Custody Agreement, or (2) duly sent to the Bitcoin Custodian by the Trust or Authorized

Participants in connection with the Trust’s Bitcoin Account pursuant to the Custody Agreement but not received because of

a failure caused by the Bitcoin Custodian.

The Custody Agreement provides that “Loss” shall include situations where

the Bitcoin Custodian fails to execute a valid withdrawal request, bitcoin are withdrawn from the Trust’s Bitcoin Account

pursuant to a withdrawal request, or the Trust is not

able to timely withdraw bitcoin from the Bitcoin Account pursuant to a withdrawal request, in each case due to a failure caused

by the Bitcoin Custodian;

provided, however, that the Bitcoin Custodian’s failure to permit timely withdrawals because it

has determined that it cannot do so due to the requirements of applicable laws and regulations or because of the operation of

its fraud detection controls shall not be considered a Loss, provided the Bitcoin Custodian is acting reasonably and in good faith.

The Custody Agreement provides that should a Loss of the Trust’s bitcoin or fiat currency due to the negligence, fraud,

willful or reckless misconduct of the Bitcoin Custodian or a breach by the Bitcoin Custodian of its Standard of Care occur, the

Bitcoin Custodian will, as soon as practicable, return to the Trust a quantity of the same digital asset that is equal to the

quantity of digital assets involved in the Loss, or return to the Trust a quantity of the same fiat currency that is equal to

the quantity of fiat currency involved in the Loss (if the Loss involved the Fiat Account).

However, the Trust does not control

the Bitcoin Custodian and cannot guarantee that the Bitcoin Custodian will perform its obligations to the Trust under the Custody

Agreement, in a timely manner or at all.

The Custody Agreement provides that (i) the Bitcoin Custodian does not own or control

the underlying software protocols of networks which govern the operation of digital assets (including the Bitcoin Blockchain),

to the Force Majeure provision and as limited by the limitations of liability in the Custody Agreement, the Bitcoin Custodian shall

be liable to the Trust for the Loss (defined below) of any of the Trust’s bitcoin or fiat currency to the extent that such

Loss was caused by the negligence, fraud, wilful or reckless misconduct of the Bitcoin Custodian or breach by the Bitcoin Custodian

of its Standard of Care.

The Custody Agreement provides that “Loss” means if, at any time the Trust’s Bitcoin

Account or Fiat Account, as applicable, does not hold the bitcoin or fiat currency that had been (1) received by Bitcoin Custodian

in connection with the Trust’s Bitcoin Account or Fiat Account pursuant to the Custody Agreement, or (2) duly sent to the

Bitcoin Custodian by the Trust or Authorized Participants in connection with the Trust’s Bitcoin Account pursuant to the

Custody Agreement but not received because of a failure caused by the Bitcoin Custodian.

The Custody Agreement provides that “Loss”

shall include situations where the Bitcoin Custodian fails to execute a valid withdrawal request, bitcoin are withdrawn from the

Trust’s Bitcoin Account other than pursuant

to a withdrawal request, or the Trust is not able to timely withdraw bitcoin from the Bitcoin Account pursuant to a withdrawal

request, in each case due to a failure caused by the Bitcoin Custodian;

provided, however, that the Bitcoin Custodian’s failure

to permit timely withdrawals because it has determined that it cannot do so due to the requirements of applicable laws and regulations

or because of the operation of its fraud detection controls shall not be considered a Loss, provided the Bitcoin Custodian is acting

reasonably and in good faith.

The Custody Agreement provides that should a Loss of the Trust’s bitcoin or fiat currency due

to the negligence, fraud, wilful or reckless misconduct of the Bitcoin Custodian or a breach by the Bitcoin Custodian of its Standard

of Care occur, the Bitcoin Custodian will, as soon as practicable, return to the Trust a quantity of the same digital asset that

is equal to the quantity of digital assets involved in the Loss, or return to the Trust a quantity of the same fiat currency that

is equal to the quantity of fiat currency involved in the Loss (if the Loss involved the Fiat Account).

However, the Trust does

not control the Bitcoin Custodian and cannot guarantee that the Bitcoin Custodian will perform its obligations to the Trust under

the Custody Agreement, in a timely manner or at all.

The Custody Agreement provides that (i) the Bitcoin Custodian does not own

or control the underlying software protocols of networks which govern the operation of digital assets (including the Bitcoin Blockchain),

(ii) the Bitcoin Custodian makes no guarantees regarding their security, functionality, or availability, and (iii) in no event

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of digital assets, including bitcoin.

Similarly, under the Clearing Agreement, the Bitcoin

Custodian’s liability in connection with the Clearing Services is limited as follows, among others:

the Bitcoin Custodian

does not have any responsibility for any sale or purchase of bitcoin for cash to a Liquidity Provider through the Clearing Services

(such a transaction, a “Clearing Transaction”), other than as specifically identified in the Clearing Agreement.

Bitcoin Custodian may rely upon, without liability on its part, any clearing request submitted through Gemini’s platform.

Absent gross negligence, willful misconduct or fraud, the Bitcoin Custodian shall not be liable for any loss resulting from a

clearing request or the use of Clearing Services.

Validation and confirmation procedures used by Gemini are designed only to verify

the source of clearing requests and that each party has met its respective obligations in respect of a clearing request and not

to detect errors in the content of a clearing request or to prevent duplicate clearing requests.

The Trust is responsible for

losses resulting from clearing requests provided by it and for any errors made by or on behalf of the Trust, any errors resulting,

directly or indirectly, from fraud or the duplication of any clearing request by or on behalf of the Trust, or any losses resulting

from the malfunctioning of any devices used by the Trust or loss or compromise of credentials used by the Trust to deliver clearing

Similarly, under the Clearing Agreement,

the Bitcoin Custodian’s liability in connection with the Clearing Services is limited as follows, among others:

Custodian does not have any responsibility for any sale or purchase of bitcoin for cash to a Liquidity Provider through the Clearing

Services (such a transaction, a “Clearing Transaction”), other than as specifically identified in the Clearing Agreement.

The Bitcoin Custodian may rely upon, without liability on its part, any clearing request submitted through Gemini’s platform.

Absent gross negligence, wilful misconduct or fraud, the Bitcoin Custodian shall not be liable for any loss resulting from a clearing

request or the use of Clearing Services.

Validation and confirmation procedures used by Gemini are designed only to verify the

source of clearing requests and that each party has met its respective obligations in respect of a clearing request and not to

detect errors in the content of a clearing request or to prevent duplicate clearing requests.

The Trust is responsible for losses

resulting from clearing requests provided by it and for any errors made by or on behalf of the Trust, any errors resulting, directly

or indirectly, from fraud or the duplication of any clearing request by or on behalf of the Trust, or any losses resulting from

the malfunctioning of any devices used by the Trust or loss or compromise of credentials used by the Trust to deliver clearing

The Bitcoin Custodian may reject, refuse to settle or otherwise not complete any request to settle a bitcoin transaction

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fraud or other compliance controls and systems, and the Bitcoin Custodian shall have no liability whatsoever to the Trust, any

transaction counterparty or any other party in connection with or arising out of the Bitcoin Custodian rejecting, refusing or

otherwise not completing the settlement of a transaction through the Clearing Services.

The Bitcoin Custodian will not settle

transactions through the Clearing Services:

(i) if either party to a Clearing Transaction has not fully funded its accounts held

with the Bitcoin Custodian and used in connection with the Clearing Services (in the Trust’s case, the Clearing Account

and Fiat Account), as applicable, with the required fiat currency amount or bitcoin amount, as applicable, prior to the agreed

expiration time;

(ii) if either party to a Clearing Transaction has not confirmed its acceptance of the clearing request to the

Bitcoin Custodian prior to the agreed expiration time;

transaction counterparty or any other party in connection with or arising out of the Bitcoin Custodian rejecting, refusing or otherwise

not completing the settlement of a transaction through the Clearing Services.

The Bitcoin Custodian will not settle transactions

through the Clearing Services:

(i) if either party to a Clearing Transaction has not fully funded its accounts held with the Bitcoin

Custodian and used in connection with the Clearing Services (in the Trust’s case, the Clearing Account and Fiat Account),

as applicable, with the required fiat currency amount or bitcoin amount, as applicable, prior to the agreed expiration time;

if either party to a Clearing Transaction has not confirmed its acceptance of the clearing request to the Bitcoin Custodian prior

to the agreed expiration time;

(iii) if either party to a transaction is not a Gemini customer;

for any other reason as determined by the Bitcoin Custodian in its sole discretion to comply with applicable laws and regulation

or in connection with the Bitcoin Custodian’s fraud or other compliance controls and systems.

Although the Bitcoin Custodian

has represented to the Sponsor that Clearing Transactions ordinarily settle automatically within minutes once the bitcoin and

cash have been funded by both the Trust and the Liquidity Provider in their respective accounts at the Bitcoin Custodian used

in connection with the Clearing Services (in the Trust’s case, the Clearing Account and Fiat Account), the Bitcoin Custodian

is not required by the Clearing Agreement to settle the Clearing Transaction that quickly.

These and the other limitations on

the Bitcoin Custodian’s liability may allow it to avoid liability for potential losses, even if the Bitcoin Custodian directly

caused such losses.

The Clearing Agreement provides that it is subject

to Gemini’s user agreement (the “User Agreement”).

Pursuant to the User Agreement, Gemini agrees to take reasonable

care and use commercially reasonable

efforts in executing Gemini’s responsibilities

to the Trust pursuant to the User Agreement, or such higher care where required by law or as specified by the User Agreement.

Gemini uses commercially reasonable efforts to provide the Trust with a reliable and secure platform.

From time to time, interruptions,

errors or other deficiencies in service may occur due to a variety of factors, some of which are outside of our control.

factors can contribute to delays, errors in service, or system outages, creating difficulties in accessing the Trust’s account,

withdrawing fiat currency or bitcoin, depositing fiat currency or bitcoin, and/or placing and/or canceling orders.

Under the User Agreement, Gemini is not liable for

any delays, failure in performance or interruption of service which result directly or indirectly from any cause or condition,

whether or not foreseeable, beyond Gemini’s reasonable control, including, but not limited to, any act of God, nuclear or

natural disaster, epidemic, action or inaction of civil or military authorities, act of war, terrorism, sabotage, civil disturbance,

strike or other labor dispute, accident, state of emergency or interruption, loss, or malfunction of equipment or utility, communications,

computer (hardware or software), Internet or network provider services.

Except to the extent required by law, Gemini is not

liable under the User Agreement, whether in contract or tort, for any punitive, special, indirect, consequential, incidental,

or (iv) for any other reason as

determined by the Bitcoin Custodian in its sole discretion to comply with applicable laws and regulation or in connection

the Bitcoin Custodian’s fraud or other compliance controls and systems.

Although the Bitcoin Custodian has represented to

the Sponsor that Clearing Transactions ordinarily settle automatically within minutes once the bitcoin and cash have been funded

by both the Trust and the Liquidity Provider in their respective accounts at the Bitcoin Custodian used in connection with the

Clearing Services (in the Trust’s case, the Clearing Account and Fiat Account), the Bitcoin Custodian is not required by

the Clearing Agreement to settle the Clearing Transaction that quickly.

These and the other limitations on the Bitcoin Custodian’s

liability may allow it to avoid liability for potential losses, even if the Bitcoin Custodian directly caused such losses.

Clearing Agreement provides that it is subject to Gemini’s user agreement (the “User Agreement”).

the User Agreement, Gemini agrees to take reasonable care and use commercially reasonable

efforts in executing Gemini’s responsibilities to the Trust

pursuant to the User Agreement, or such higher care where required by law or as specified by the User Agreement.

Gemini uses commercially

reasonable efforts to provide the Trust with a reliable and secure platform.

From time to time, interruptions, errors or other

deficiencies in service may occur due to a variety of factors, some of which are outside of our control.

These factors can contribute

to delays, errors in service, or system outages, creating difficulties in accessing the Trust’s account, withdrawing fiat

currency or bitcoin, depositing fiat currency or bitcoin, and/or placing and/or cancelling orders.

Under the User Agreement, Gemini is not

liable for any delays, failure in performance or interruption of service which result directly or indirectly from any cause or

condition, whether or not foreseeable, beyond Gemini’s reasonable control, including, but not limited to, any act of God,

nuclear or natural disaster, epidemic, action or inaction of civil or military authorities, act of war, terrorism, sabotage, civil

disturbance, strike or other labor dispute, accident, state of emergency or interruption, loss, or malfunction of equipment or

utility, communications, computer (hardware or software), Internet or network provider services.

Except to the extent required by law, Gemini

is not liable under the User Agreement, whether in contract or tort, for any punitive, special, indirect, consequential, incidental,

or similar damages, including lost trading or other profits, diminution in asset value, or lost business opportunities (even if

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Under the User Agreement Gemini is not liable for delays

or interruptions in service caused by automated or other compliance checks or for other reasonable delays or interruptions in

service, by definition to include any delay or interruption shorter than one week, or delays or interruptions in service beyond

the control of Gemini or its service providers.

The limitation on liability under the User Agreement includes, but is not limited

to any damage or interruptions caused by any computer viruses, spyware, scamware, trojan horses, worms, or other malware that

may affect the Trust’s computer or other equipment, or any phishing, spoofing, domain typosquatting, or other attacks, failure

of mechanical or electronic equipment or communication lines, telephone or other interconnect problems (e.g., you cannot access

your internet service provider), unauthorized access, theft, operator errors, strikes or other labor problems, or any force majeure.

Gemini does not guarantee continuous, uninterrupted, or secure access to Gemini.

Gemini is not responsible for any failure or

delay to act by any Gemini service provider, including Gemini’s banks, or any other participant that is within the time

limits permitted by the User Agreement or prescribed by law, or that is caused by the Trust’s negligence.

Under the User Agreement, Gemini is not responsible

for any “System Failure” (defined as a failure of any computer hardware or software used by Gemini, a Gemini service

provider, or any telecommunications lines or devices used by Gemini or a Gemini service provider), or scheduled or unscheduled

maintenance or downtime, which prevents Gemini from fulfilling its obligations under the User Agreement, provided that Gemini

used commercially reasonable efforts to prevent or limit such System Failures, or downtime.

Gemini cannot be held responsible

for any other circumstances beyond Gemini’s reasonable control.

The Additional Bitcoin Custodian’s parent, Coinbase

Global maintains a commercial crime insurance policy of up to $320 million, which is intended to cover the loss of client assets

held by Coinbase Global and all of its subsidiaries, including the Additional Bitcoin Custodian (collectively, Coinbase Global

and its subsidiaries are referred to as the “Coinbase Insureds”), including from employee collusion or fraud, physical

loss including theft, damage of key material, security breach or hack, and fraudulent transfer.

The insurance maintained by Coinbase

Global is shared among all of Coinbase’s customers, is not specific to the Trust or to customers of the Additional Bitcoin

Custodian and may not be available or sufficient to protect the Trust from all possible losses or sources of losses.

Global’s insurance may not cover the type of losses experienced by the Trust.

Alternatively, the Trust may be forced to

share such insurance proceeds with other clients or customers of the Coinbase Insureds, which could reduce the amount of such

proceeds that are available to the Trust.

In addition, the bitcoin insurance market is limited, and the level of insurance maintained

by Coinbase Global may be substantially lower than the assets of the Trust.

While the Additional Bitcoin Custodian maintains certain

capital reserve requirements depending on the assets under custody, and such capital reserves may provide additional means to

cover Trust asset losses, the Trust cannot be assured that the Additional Bitcoin Custodian will maintain capital reserves sufficient

to cover actual or potential losses with respect to the Trust’s digital assets.

Additionally, under the Additional Bitcoin Custody

Agreement, the Additional Bitcoin Custodian’s liability is limited as follows, among others:

(i) in respect of any incidental,

indirect, special, punitive, consequential or similar losses, the Additional Bitcoin Custodian is not liable, even if the Additional

Bitcoin Custodian has been advised of or knew or should have known of the possibility thereof;

(ii) the Additional Bitcoin Custodian,

its affiliates or its respective officers, directors, agents, employees and representatives shall in no event have any liability

with respect to any breach of its obligations under the Additional Bitcoin Custody Agreement which does not result from its negligence,

fault, fraud or willful misconduct;

or interruptions in service caused by automated or other compliance checks or for other reasonable delays or interruptions in service,

by definition to include any delay or interruption shorter than one week, or delays or interruptions in service beyond the control

of Gemini or its service providers.

The limitation on liability under the User Agreement includes, but is not limited to any damage

or interruptions caused by any computer viruses, spyware, scamware, trojan horses, worms, or other malware that may affect the

Trust’s computer or other equipment, or any phishing, spoofing, domain typosquatting, or other attacks, failure of mechanical

or electronic equipment or communication lines, telephone or other interconnect problems (e.g., you cannot access your internet

service provider), unauthorized access, theft, operator errors, strikes or other labor problems, or any force majeure.

not guarantee continuous, uninterrupted, or secure access to Gemini.

Gemini is not responsible for any failure or delay to act

by any Gemini service provider, including Gemini’s banks, or any other participant that is within the time limits permitted

by the User Agreement or prescribed by law, or that is caused by the Trust’s negligence.

Under the User Agreement, Gemini is not

responsible for any “System Failure” (defined as a failure of any computer hardware or software used by Gemini, a Gemini

service provider, or any telecommunications lines or devices used by Gemini or a Gemini service provider), or scheduled or unscheduled

maintenance or downtime, which prevents Gemini from fulfilling its obligations under the User Agreement, provided that Gemini used

commercially reasonable efforts to prevent or limit such System Failures, or downtime.

Gemini cannot be held responsible for any

other circumstances beyond Gemini’s reasonable control.

The Additional Bitcoin Custodian’s

parent, Coinbase Global maintains a commercial crime insurance policy of up to $320 million, which is intended to cover the loss

of client assets held by Coinbase Global and all of its subsidiaries, including the Additional Bitcoin Custodian (collectively,

Coinbase Global and its subsidiaries are referred to as the “Coinbase Insureds”), including from employee collusion

or fraud, physical loss including theft, damage of key material, security breach or hack, and fraudulent transfer.

The insurance

maintained by Coinbase Global is shared among all of Coinbase’s customers, is not specific to the Trust or to customers of

the Additional Bitcoin Custodian and may not be available or sufficient to protect the Trust from all possible losses or sources

Coinbase Global’s insurance may not cover the type of losses experienced by the Trust.

Alternatively, the Trust

may be forced to share such insurance proceeds with other clients or customers of the Coinbase Insureds, which could reduce the

amount of such proceeds that are available to the Trust.

In addition, the bitcoin insurance market is limited, and the level of

insurance maintained by Coinbase Global may be substantially lower than the assets of the Trust.

While the Additional Bitcoin Custodian

maintains certain capital reserve requirements depending on the assets under custody, and such capital reserves may provide additional

means to cover

Trust asset losses, the Trust cannot be assured that the Additional Bitcoin Custodian will maintain capital reserves

sufficient to cover actual or potential losses with respect to the Trust’s digital assets.

Additionally,

under the Additional Bitcoin Custody Agreement, the Additional Bitcoin Custodian’s liability is limited as follows, among

(i) in respect of any incidental, indirect, special, punitive, consequential or similar losses, the Additional Bitcoin

Custodian is not liable, even if the Additional Bitcoin Custodian has been advised of or knew or should have known of the possibility

(ii) the Additional Bitcoin Custodian, its affiliates or its respective officers, directors, agents, employees and representatives

shall in no event have any liability with respect to any breach of its obligations under the Additional Bitcoin Custody Agreement

which does not result from its negligence, fault, fraud or willful misconduct;

and (iii) except for the:

(i) Excluded Liabilities;

or (iii) willful misconduct,

in no event shall any Coinbase entity’s aggregate

liability with respect to any breach of its obligations

under the Additional Bitcoin Custody Agreement exceed the greater of (a) the value of the bitcoin involved in the transaction

giving rise to such liability and (b) the aggregate amount of fees paid by the Trust to such Coinbase entity in respect of services

relating to custody, trade execution, lending or post-trade credit (if applicable) and other services in the 12-month period prior

to the event giving rise to such liability, and solely in respect of custodial services provided pursuant to the Additional Bitcoin

Custody Agreement, the liability of the Additional Bitcoin Custodian shall not exceed the greater of (i) the aggregate amount

of fees paid by the Trust to the Additional Bitcoin Custodian in respect of the custodial services in the 12-month period prior

to the event giving rise to such liability;

or (ii) the value of the bitcoin on deposit in Trust’s Additional Bitcoin Account(s)

involved in the event giving rise to such liability;

provided, that in no event shall the Additional Bitcoin Custodian’s

aggregate liability in respect of each cold storage address exceed one hundred million US dollars ($100,000,000.00 USD).

“Excluded Liabilities” means (x) with respect

to the Trust, (1) the Trust’s defense and indemnity obligations under the Additional Bitcoin Custody Agreement;

outstanding commissions or fees owed by the Trust under the Additional Bitcoin Custody Agreement and (3) the Trust’s breach

of representations and warranties under the Additional Bitcoin Custody Agreement;

and (y) with respect to the Additional Bitcoin

Custodian, its defense and indemnity obligations under the Additional Bitcoin Custody Agreement.

With respect to the Excluded Liabilities, the Additional

Bitcoin Custodian’s liability to the Trust for any losses arising out of or in connection with the Additional Bitcoin Custodian’s

defense and indemnity obligations under the Additional Bitcoin Custody Agreement will be limited, in the aggregate, to an amount

equal to five million U.S.

or (iii) willful misconduct, in no event shall any Coinbase entity’s aggregate

liability with respect to any breach of its obligations under the

Additional Bitcoin Custody Agreement exceed the greater of (a) the value of the bitcoin involved in the transaction giving rise

to such liability and (b) the aggregate amount of fees paid by the Trust to such Coinbase entity in respect of services relating

to custody, trade execution, lending or post-trade credit (if applicable) and other services in the 12-month period prior to the

event giving rise to such liability, and solely in respect of custodial services provided pursuant to the Additional Bitcoin Custody

Agreement, the liability of the Additional Bitcoin Custodian shall not exceed the greater of (i) the aggregate amount of fees paid

by the Trust to the Additional Bitcoin Custodian in respect of the custodial services in the 12-month period prior to the event

giving rise to such liability;

or (ii) the value of the bitcoin on deposit in Trust’s Additional Bitcoin Account(s) involved

in the event giving rise to such liability;

provided, that in no event shall the Additional Bitcoin Custodian’s aggregate

liability in respect of each cold storage address exceed one hundred million US dollars ($100,000,000.00 USD).

“Excluded Liabilities” means

(x) with respect to the Trust, (1) the Trust’s defense and indemnity obligations under the Additional Bitcoin Custody Agreement;

(2) any outstanding commissions or fees owed by the Trust under the Additional Bitcoin Custody Agreement and (3) the Trust’s

breach of representations and warranties under the Additional Bitcoin Custody Agreement;

and (y) with respect to the Additional

Bitcoin Custodian, its defense and indemnity obligations under the Additional Bitcoin Custody Agreement.

With respect to the Excluded Liabilities,

the Additional Bitcoin Custodian’s liability to the Trust for any losses arising out of or in connection with the Additional

Bitcoin Custodian’s defense and indemnity obligations under the Additional Bitcoin Custody Agreement will be limited, in

the aggregate, to an amount equal to five million U.S.

dollars ($5,000,000.00 USD).

In general, the Additional Bitcoin Custodian is not

liable under the Additional Bitcoin Custody Agreement unless in the event of its negligence, fraud, material violation of applicable

law or willful misconduct.

The Additional Bitcoin Custodian is not liable for delays, suspension of operations, failure in performance,

or interruption of service to the extent it is directly due to a cause or condition beyond the reasonable control of the Additional

Bitcoin Custodian.

Furthermore, the insurance maintained by the Additional Bitcoin Custodian may be insufficient to cover its

liabilities to the Trust.

The Additional Bitcoin Custodian requires up to twenty-four

(24) hours between any request to withdraw bitcoin from the Trust’s Additional Bitcoin Account and submission of the Trust’s

withdrawal to the Bitcoin network.

It may be necessary to retrieve certain information from offline storage in order to facilitate

a withdrawal in accordance with the Trust’s instructions, which may delay the initiation or crediting of such withdrawal

from the Trust’s Additional Bitcoin Account.

Bitcoin shall not be deposited or withdrawn upon less than twenty-four (24)

hours’ notice initiated from the Trust’s Additional Bitcoin Account.

The time of such request shall be the time such

notice is transmitted from the Trust’s Additional Bitcoin Account.

In the context of the foregoing and during such twenty-four

(24) hours’ notice period, the Additional Bitcoin Custodian makes no representations or warranties with respect to the availability

and/or accessibility of (1) the bitcoin, (2) a Custody Transaction (as defined in the Additional Bitcoin Custody Agreement, which

includes a deposit or withdrawal), (3) the Additional Bitcoin Account, or (4) the Custodial Services (as defined in the Additional

Bitcoin Custody Agreement).

While the Additional Bitcoin Custodian will make reasonable efforts to process client initiated deposits

in a timely manner, the Additional Bitcoin Custodian makes no representations or warranties regarding the amount of time needed

to complete processing of deposits as such processing is dependent upon many factors outside of the Additional Bitcoin Custodian’s

Moreover, in the event of an insolvency or bankruptcy

of the Bitcoin Custodian or the Additional Bitcoin Custodian in the future, given that the contractual protections and legal rights

of customers with respect to digital assets held on their behalf by third parties are relatively untested in a bankruptcy of an

entity such as the Bitcoin Custodian and the Additional Bitcoin Custodian in the virtual currency industry, there is a risk that

customers’ assets – including the Trust’s assets – may be considered the property of the bankruptcy estate

of the Bitcoin Custodian or the Additional Bitcoin Custodian, and customers – including the Trust – may be at risk

of being treated as general unsecured creditors of such entities and subject to the risk of total loss or markdowns on value of

Each of the Custody Agreement and the Additional Bitcoin

Custody Agreement contain an agreement by the parties to treat the bitcoin credited to the Trust’s Custody Account (as defined

in the Custody Agreement) and the Trust’s Custodial Account (as defined in the Additional Bitcoin Custody Agreement) as

financial assets under Article 8 of the New York Uniform Commercial Code (“Article 8”), in addition to stating that

the Bitcoin Custodian and the Additional Bitcoin Custodian will serve as fiduciary and custodian on the Trust’s behalf.

It is possible that a court would not treat custodied digital assets as part of the Bitcoin Custodian’s or the Additional

Bitcoin Custodian’s general estate in the event the Bitcoin Custodian or the Additional Bitcoin Custodian were to experience

However, due to the novelty of digital asset custodial arrangements courts have not yet considered this type of treatment

for custodied digital assets and it is not possible to predict with certainty

In general, the Additional Bitcoin Custodian

is not liable under the Additional Bitcoin Custody Agreement unless in the event of its negligence, fraud, material violation of

applicable law or willful misconduct.

The Additional Bitcoin Custodian is not liable for delays, suspension of operations, failure

in performance, or interruption of service to the extent it is directly due to a cause or condition beyond the reasonable control

of the Additional Bitcoin Custodian.

Furthermore, the insurance maintained by the Additional Bitcoin Custodian may be insufficient

to cover its liabilities to the Trust.

The Additional Bitcoin Custodian requires

up to twenty-four (24) hours between any request to withdraw bitcoin from the Trust’s Additional Bitcoin Account and submission

of the Trust’s withdrawal to the Bitcoin network.

It may be necessary to retrieve certain information from offline storage

in order to facilitate a withdrawal in accordance with the Trust’s instructions, which may delay the initiation or crediting

of such withdrawal from the Trust’s Additional Bitcoin Account.

Bitcoin shall not be deposited or withdrawn upon less than

twenty-four (24) hours’ notice initiated from the Trust’s Additional Bitcoin Account.

The time of such request shall

be the time such notice is transmitted from the Trust’s Additional Bitcoin Account.

In the context of the foregoing and during

such twenty-four (24) hours’ notice period, the Additional Bitcoin Custodian makes no representations or warranties with

respect to the availability and/or accessibility of (1) the bitcoin, (2) a Custody Transaction (as defined in the Additional Bitcoin

Custody Agreement, which includes a deposit or withdrawal), (3) the Additional Bitcoin Account, or (4) the Custodial Services (as

defined in the Additional Bitcoin Custody Agreement).

While the Additional Bitcoin Custodian will make reasonable efforts to process

client initiated deposits in a timely manner, the Additional Bitcoin Custodian makes no representations or warranties regarding

the amount of time needed to complete processing of deposits as such processing is dependent upon many factors outside of the Additional

Bitcoin Custodian’s control.

Moreover, in the event of an insolvency

or bankruptcy of the Bitcoin Custodian or the Additional Bitcoin Custodian in the future, given that the contractual protections

and legal rights of customers with respect to digital assets held on their behalf by third parties are relatively untested in a

bankruptcy of an entity such as the Bitcoin Custodian and the Additional Bitcoin Custodian in the virtual currency industry, there

is a risk that customers’ assets – including the Trust’s assets – may be considered the property of the

bankruptcy estate of the Bitcoin Custodian or the Additional Bitcoin Custodian, and customers – including the Trust –

may be at risk of being treated as general unsecured creditors of such entities and subject to the risk of total loss or markdowns

on value of such assets.

of the Custody Agreement and the Additional Bitcoin Custody Agreement contain an agreement by the parties to treat the bitcoin

credited to the Trust’s Custody Account (as defined in the Custody Agreement) and the Trust’s Custodial Account (as

defined in the Additional Bitcoin Custody Agreement) as financial assets under Article 8 of the New York Uniform Commercial Code

(“Article 8”), in addition to stating that the Bitcoin Custodian and the Additional Bitcoin Custodian will serve as

fiduciary and custodian on the Trust’s behalf.

It is possible that a court would not treat custodied digital assets as part

of the Bitcoin Custodian’s or the Additional Bitcoin Custodian’s general estate in the event the Bitcoin Custodian

or the Additional Bitcoin Custodian were to experience insolvency.

However, due to the novelty of digital asset custodial arrangements

courts have not yet considered this type of treatment for custodied digital assets and it is not possible to predict with certainty

how they would rule in such a scenario.

of the Clearing Account, because it is an omnibus account in which the assets of multiple customers – including the Trust’s

assets – are held together, it is likely the Trust would be treated as a general unsecured creditor in respect of the Clearing

Account held with the Bitcoin Custodian in the event of the Bitcoin Custodian’s insolvency.

The Clearing Agreement does

not contain an Article 8 opt-in.

If the Bitcoin Custodian or the Additional Bitcoin Custodian became subject to insolvency proceedings

and a court were to rule that the custodied bitcoin were part of the Bitcoin Custodian’s or the Additional Bitcoin Custodian’s

In the case of the Clearing

Account, because it is an omnibus account in which the assets of multiple customers – including the Trust’s assets

– are held together, it is likely the Trust would be treated as a general unsecured creditor in respect of the Clearing Account

held with the Bitcoin Custodian in the event of the Bitcoin Custodian’s insolvency.

The Clearing Agreement does not contain

an Article 8 opt-in.

If the Bitcoin Custodian or the Additional Bitcoin Custodian became subject to insolvency proceedings and

a court were to rule that the custodied bitcoin were part of the Bitcoin Custodian’s or the Additional Bitcoin Custodian’s

general estate and not the property of the Trust, then the Trust would be treated as a general unsecured creditor in the Bitcoin

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Moreover, in the event of the bankruptcy of the Bitcoin Custodian or the Additional

Bitcoin Custodian, an automatic stay could go into effect and protracted litigation could be required in order to recover the

assets held with the Bitcoin Custodian or the Additional Bitcoin Custodian, all of which could significantly and negatively impact

the Trust’s operations and the value of the Shares.

Under the Trust Agreement, the Trustee and the Sponsor

will not be liable for any liability or expense incurred, including, without limitation, as a result of any loss of bitcoin by

the Bitcoin Custodian, absent gross negligence or bad faith on the part of the Trustee or the Sponsor or breach by the Sponsor

of the Trust Agreement, as the case may be.

As a result, the recourse of the Trust or the Shareholders to the Trustee or the Sponsor,

including in the event of a loss of bitcoin by the Bitcoin Custodian, is limited.

The Shareholders’ recourse against the Sponsor,

the Trustee, and the Trust’s other service providers for the services they provide to the Trust, including, without limitation,

those relating to the holding of bitcoin or the provision of instructions relating to the movement of bitcoin, is limited.

the avoidance of doubt, neither the Sponsor, the Trustee, nor any of their affiliates, nor any other party has guaranteed the

assets or liabilities, or otherwise assumed the liabilities, of the Trust, or the obligations or liabilities of any service provider

to the Trust, including, without limitation, the Bitcoin Custodian or the Additional Bitcoin Custodian.

Consequently, a loss may

be suffered with respect to the Trust’s bitcoin that is not covered by the Bitcoin Custodian’s or the Additional Bitcoin

Custodian’s insurance and for which no person is liable in damages.

As a result, the recourse of the Trust or the Shareholders,

under applicable law, is limited.

Loss of a critical banking relationship for, or

the failure of a bank used by, the Trust could adversely impact the Trust’s ability to create or redeem Baskets, or could

cause losses to the Trust.

The Cash Custodian and Bitcoin Custodian, under the

Clearing Agreement, facilitate the creation and redemption of Baskets (in exchange for cash subscriptions by Authorized Participants,

or in exchange for redemptions of Shares by Authorized Participants), and other cash movements, including in connection with the

purchase of bitcoin by the Trust to effectuate subscriptions for cash and the selling of bitcoin by the Trust to effect redemptions

for cash or pay the Sponsor Fee and, to the extent applicable, other Trust expenses, and in extraordinary circumstances, to effect

the liquidation of the Trust’s bitcoin.

The Trust relies on the Cash Custodian and Bitcoin Custodian, in connection with

the Trust’s Fiat Account, to hold any cash related to the purchase or sale of bitcoin.

To the extent that the Trust faces

difficulty establishing or maintaining banking relationships, the loss of the Trust’s banking partners, including the Cash

Custodian or the banks at which the Bitcoin Custodian, in connection with the Trust’s Fiat Account, maintains customer cash

balances (including the cash balance of the Trust held in the Fiat Account), or the imposition of operational restrictions by

these banking partners and the inability for the Trust to utilize other financial institutions may result in a disruption of creation

and redemption activity of the Trust, or cause other operational disruptions or adverse effects for the Trust.

In the future,

it is possible that the Trust could be unable to establish accounts at new banking partners or establish new banking relationships,

Bitcoin Custodian, an automatic stay could go into effect and protracted litigation could be required in order to recover the assets

held with the Bitcoin Custodian or the Additional Bitcoin Custodian, all of which could significantly and negatively impact the

Trust’s operations and the value of the Shares.

Under the Trust Agreement, the Trustee and

the Sponsor will not be liable for any liability or expense incurred, including, without limitation, as a result of any loss of

bitcoin by the Bitcoin Custodian, absent gross negligence or bad faith on the part of the Trustee or the Sponsor or breach by the

Sponsor of the Trust Agreement, as the case may be.

As a result, the recourse of the Trust or the Shareholders to the Trustee or

the Sponsor, including in the event of a loss of bitcoin by the Bitcoin Custodian, is limited.

The Shareholders’ recourse against

the Sponsor, the Trustee, and the Trust’s other service providers for the services they provide to the Trust, including,

without limitation, those relating to the holding of bitcoin or the provision of instructions relating to the movement of bitcoin,

For the avoidance of doubt, neither the Sponsor, the Trustee, nor any of their affiliates, nor any other party has

guaranteed the assets or liabilities, or otherwise assumed the liabilities, of the Trust, or the obligations or liabilities of

any service provider to the Trust, including, without limitation, the Bitcoin Custodian or the Additional Bitcoin Custodian.

Consequently,

a loss may be suffered with respect to the Trust’s bitcoin that is not covered by the Bitcoin Custodian’s or the Additional

Bitcoin Custodian’s insurance and for which no person is liable in damages.

As a result, the recourse of the Trust or the

Shareholders, under applicable law, is limited.

Loss of a critical banking relationship

for, or the failure of a bank used by, the Trust could adversely impact the Trust’s ability to create or redeem Baskets,

or could cause losses to the Trust.

The Cash Custodian and Bitcoin Custodian,

under the Clearing Agreement, facilitate the creation and redemption of Baskets (in exchange for cash subscriptions by Authorized

Participants, or in exchange for redemptions of Shares by Authorized Participants), and other cash movements, including in connection

with the purchase of bitcoin by the Trust to effectuate subscriptions for cash and the selling of bitcoin by the Trust to effect

redemptions for cash or pay the Sponsor Fee and, to the extent applicable, other Trust expenses, and in extraordinary circumstances,

to effect the liquidation of the Trust’s bitcoin.

The Trust relies on the Cash Custodian and Bitcoin Custodian, in connection

with the Trust’s Fiat Account, to hold any cash related to the purchase or sale of bitcoin.

To the extent that the Trust

faces difficulty establishing or maintaining banking relationships, the loss of the Trust’s banking partners, including the

Cash Custodian or the banks at which the Bitcoin Custodian, in connection with the Trust’s Fiat Account, maintains customer

cash balances (including the cash balance of the Trust held in the Fiat Account), or the imposition of operational restrictions

by these banking partners and the inability for the Trust to utilize other financial institutions may result in a disruption of

creation and redemption activity of the Trust, or cause other operational disruptions or adverse effects for the Trust.

future, it is possible that the Trust could be unable to establish accounts at new banking partners or establish new banking relationships,

or that the banks with which the Trust is able to establish relationships may not be as large or well-capitalized or subject to

the same degree of prudential supervision as the existing providers.

The Trust could also suffer losses in the event that

a bank or money market fund in which the Trust holds cash, including the cash associated with the Trust’s account at the

Cash Custodian or the Trust’s Fiat Account with the Bitcoin Custodian (which is held at the Bitcoin Custodian’s banks

or money market funds for the benefit of its customers, including the Trust), fails, becomes insolvent, enters receivership, is

taken over by regulators, enters financial distress, or otherwise suffers adverse effects to its financial condition or operational

Trust could also suffer losses in the event that a bank or money market fund in which the Trust holds cash, including the cash

associated with the Trust’s account at the Cash Custodian or the Trust’s Fiat Account with the Bitcoin Custodian (which

is held at the Bitcoin Custodian’s banks or money market funds for the benefit of its customers, including the Trust), fails,

becomes insolvent, enters receivership, is taken over by regulators, enters financial distress, or otherwise suffers adverse effects

to its financial condition or operational status.

Recently, some banks have experienced financial distress.

For example, on March

2023, the California Department of Financial Protection

and Innovation (“DFPI”) announced that Silvergate Bank had entered voluntary liquidation, and on March 10, 2023, Silicon

Valley Bank, (“SVB”), was closed by the DFPI, which appointed the FDIC, as receiver.

Similarly, on March 12, 2023,

the New York Department of Financial Services took possession of Signature Bank and appointed the FDIC as receiver.

A joint statement

by the Department of the Treasury, the Federal Reserve and the FDIC on March 12, 2023, stated that depositors in Signature and

SVB will have access to all of their funds, including funds held in deposit accounts, in excess of the insured amount.

1, 2023, First Republic Bank was closed by the California Department of Financial Protection and Innovation, which appointed the

FDIC as receiver.

Following a bidding process, the FDIC entered into a purchase and assumption agreement with JPMorgan Chase Bank,

National Association, to acquire the substantial majority of the assets and assume certain liabilities of First Republic Bank

from the FDIC.

If the Cash Custodian, the Bitcoin Custodian, or the

Banks or money market funds at which the Bitcoin Custodian holds customer cash balances, including those associated with the Trust’s

Fiat Account, were to experience financial distress or its financial condition is otherwise affected, the Cash Custodian’s

or Bitcoin Custodian’s ability to provide services to the Trust could be affected.

Moreover, the future failure of a bank

or money market fund at which the Trust (including through the Fiat Account) maintains cash, could result in losses to the Trust,

to the extent the balances are not subject to deposit insurance, notwithstanding the regulatory requirements to which the Cash

Custodian is subject or other potential protections.

In addition, the Trust may maintain cash balances with the Cash Custodian

in the Fiat Account with the that are not insured or are in excess of the FDIC’s insurance limits, or which are maintained

by the Cash Custodian or Bitcoin Custodian at money market funds (in the case of the Fiat Account) and subject to the attendant

risks (e.g., “breaking the buck”).

the California Department of Financial Protection and Innovation (“DFPI”) announced that Silvergate Bank had entered

voluntary liquidation, and on March 10, 2023, Silicon Valley Bank, (“SVB”), was closed by the DFPI, which appointed

the FDIC, as receiver.

Similarly, on March 12, 2023, the New York Department of Financial Services took possession of Signature

Bank and appointed the FDIC as receiver.

A joint statement by the Department of the Treasury, the Federal Reserve and the FDIC

on March 12, 2023, stated that depositors in Signature and SVB will have access to all of their funds, including funds held in

deposit accounts, in excess of the insured amount.

On May 1, 2023, First Republic Bank was closed by the California Department

of Financial Protection and Innovation, which appointed the FDIC as receiver.

Following a bidding process, the FDIC entered into

a purchase and assumption agreement with JPMorgan Chase Bank, National Association, to acquire the substantial majority of the

assets and assume certain liabilities of First Republic Bank from the FDIC.

If the Cash Custodian, the Bitcoin Custodian,

or the Banks or money market funds at which the Bitcoin Custodian holds customer cash balances, including those associated with

the Trust’s Fiat Account, were to experience financial distress or its financial condition is otherwise affected, the Cash

Custodian’s or Bitcoin Custodian’s ability to provide services to the Trust could be affected.

Moreover, the future

failure of a bank or money market fund at which the Trust (including through the Fiat Account) maintains cash, could result in

losses to the Trust, to the extent the balances are not subject to deposit insurance, notwithstanding the regulatory requirements

to which the Cash Custodian is subject or other potential protections.

In addition, the Trust may maintain cash balances with the

Cash Custodian in the Fiat Account with the that are not insured or are in excess of the FDIC’s insurance limits, or which

are maintained by the Cash Custodian or Bitcoin Custodian at money market funds (in the case of the Fiat Account) and subject to

the attendant risks (e.g., “breaking the buck”).

As a result, the Trust could suffer losses.

The Sponsor is solely responsible for determining

the value of the bitcoin holdings and bitcoin holdings per Share, and any errors, discontinuance or changes in such valuation

calculations may have an adverse effect on the value of the Shares.

The Sponsor has the exclusive authority to determine

the Trust’s NAV and the Trust’s NAV per share, which it has delegated to the Administrator.

The Administrator will

determine the Trust’s bitcoin holdings and bitcoin holdings per Share on a daily basis as soon as practicable after 4:00

The Sponsor is solely responsible for

determining the value of the bitcoin holdings and bitcoin holdings per Share, and any errors, discontinuance or changes in such

valuation calculations may have an adverse effect on the value of the Shares.

The Sponsor has the exclusive authority

to determine the Trust’s NAV and the Trust’s NAV per share, which it has delegated to the Administrator.

The Administrator

will determine the Trust’s bitcoin holdings and bitcoin holdings per Share on a daily basis as soon as practicable after

ET on each business day.

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To the extent that the bitcoin

holdings or bitcoin holdings per Share are incorrectly calculated, the Sponsor will not be liable (absent gross negligence or

wilful misconduct) for any error and such misreporting of valuation data could adversely affect the value of the Shares.

If the Sponsor determines in good faith that the MarketVector TM

Bitcoin Benchmark Rate does not reflect an accurate bitcoin price, then the Sponsor will instruct the Administrator to employ

an alternative method to determine the fair value of the Trust’s assets.

There are no predefined criteria to make a good

faith assessment as to which of the rules the Sponsor will apply and the Sponsor may make this determination in its sole discretion.

The Administrator may calculate the NAV in a manner that ultimately inaccurately reflects the price of bitcoin.

To the extent

that the Trust’s NAV and the Trust’s NAV per Share, the MarketVector TM Bitcoin Benchmark Rate, or the Administrator’s

or the Sponsor’s other valuation methodology are incorrectly calculated, neither the Sponsor, the Administrator nor the

Trustee may be liable for any error and such misreporting of valuation data could adversely affect the value of the Shares and

holdings or bitcoin holdings per Share are incorrectly calculated, the Sponsor will not be liable (absent gross negligence or wilful

misconduct) for any error and such misreporting of valuation data could adversely affect the value of the Shares.

If the Sponsor determines in good faith

that the MarketVector TM Bitcoin Benchmark Rate does not reflect an accurate bitcoin price, then the Sponsor will instruct

the Administrator to employ an alternative method to determine the fair value of the Trust’s assets.

There are no predefined

criteria to make a good faith assessment as to which of the rules the Sponsor will apply and the Sponsor may make this determination

in its sole discretion.

The Administrator may calculate the NAV in a manner that ultimately inaccurately reflects the price of

To the extent that the Trust’s NAV and the Trust’s NAV per Share, the MarketVector TM Bitcoin Benchmark

Rate, or the Administrator’s or the Sponsor’s other valuation methodology are incorrectly calculated, neither the Sponsor,

the Administrator nor the Trustee may be liable for any error and such misreporting of valuation data could adversely affect the

value of the Shares and investors could suffer a substantial loss on their investment in the Trust.

Moreover, the terms of the

Trust Agreement do not prohibit the Sponsor from changing the index used to calculate NAV or other valuation method used to calculate

the net asset value of the Trust.

Any such change in the index or other valuation method could affect the value of the Shares and

investors could suffer a substantial loss on their investment in the Trust.

Moreover, the terms of the Trust Agreement do not

prohibit the Sponsor from changing the index used to calculate NAV or other valuation method used to calculate the net asset value

of the Trust.

Any such change in the index or other valuation method could affect the value of the Shares and investors could

suffer a substantial loss on their investment in the Trust.

To the extent the methodology used to calculate the

MarketVector TM Bitcoin Benchmark Rate is deemed not to be consistent with GAAP, the Trust’s periodic financial

statements may not utilize the Trust’s NAV or the Trust’s NAV per Share.

For purposes of the Trust’s financial

statements, the Trust will utilize a pricing source that is consistent with GAAP, as of the financial statement measurement date.

The Sponsor will

determine in its sole discretion the valuation sources

and policies used to prepare the Trust’s financial statements.

To the extent that such valuation sources and policies used

to prepare the Trust’s financial statements result in an inaccurate price, the value of the Shares could be adversely affected

and investors could suffer a substantial loss on their investment in the Trust.

Moreover, the terms of the Trust Agreement do

not prohibit the Sponsor from changing the valuation method used to calculate the net asset value to be reported in the Trust’s

financial statements.

Any such change in such valuation method could affect the value of the Shares and investors could suffer

a substantial loss on their investment in the Trust.

The value of the Shares will be adversely affected

if the Trust is required to indemnify the Sponsor, the Trustee, the Transfer Agent, the Bitcoin Custodian, the Additional Bitcoin

Custodian or the Cash Custodian under the trust documents.

Under the trust documents, each of the Sponsor, the

Trustee, the Transfer Agent, the Bitcoin Custodian, the Additional Bitcoin Custodian and the Cash Custodian has a right to be

indemnified by the Trust for certain liabilities or expenses that it incurs without gross negligence, bad faith or wilful misconduct

the extent the methodology used to calculate the MarketVector TM Bitcoin Benchmark Rate is deemed not to be consistent

with GAAP, the Trust’s periodic financial statements may not utilize the Trust’s NAV or the Trust’s NAV per Share.

For purposes of the Trust’s financial statements, the Trust will utilize a pricing source that is consistent with GAAP, as

of the financial statement measurement date.

The Sponsor will determine

in its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements.

To the extent

that such valuation sources and policies used to prepare the Trust’s financial statements result in an inaccurate price,

the value of the Shares could be adversely affected and investors could suffer a substantial loss on their investment in the Trust.

Moreover, the terms of the Trust Agreement do not prohibit the Sponsor from changing the valuation method used to calculate the

net asset value to be reported in the Trust’s financial statements.

Any such change in such valuation method could affect

the value of the Shares and investors could suffer a substantial loss on their investment in the Trust.

The value of the Shares will be adversely

affected if the Trust is required to indemnify the Sponsor, the Trustee, the Transfer Agent, the Bitcoin Custodian, the Additional

Bitcoin Custodian or the Cash Custodian under the trust documents.

Under the trust documents, each of the Sponsor,

the Trustee, the Transfer Agent, the Bitcoin Custodian, the Additional Bitcoin Custodian and the Cash Custodian has a right to

be indemnified by the Trust for certain liabilities or expenses that it incurs without gross negligence, bad faith or wilful misconduct

Therefore, the Sponsor, Trustee, Transfer Agent, the Bitcoin Custodian, the Additional Bitcoin Custodian or the Cash

Custodian may require that the assets of the Trust be used for indemnification in order to cover losses or liability suffered

Custodian may require that the assets of the Trust be used for indemnification in order to cover losses or liability suffered by

This would reduce the bitcoin holdings of the Trust and the value of the Shares.

Gemini serves as the Bitcoin Custodian for several

competing exchange-traded bitcoin products, and the Trust’s Cash Custodian and Liquidity Providers may also transact with

competing exchange-traded bitcoin products or with other companies in the digital assets industry, which could heighten interconnectedness

Gemini serves as the Bitcoin Custodian

for several competing exchange-traded bitcoin products, and the Trust’s Cash Custodian and Liquidity Providers may also transact

with competing exchange-traded bitcoin products or with other companies in the digital assets industry, which could heighten interconnectedness

and contagion risks and adversely affect creation and redemption processes of the Trust.

By virtue of its prominent market position and capabilities,

and the relatively limited number of institutionally-capable providers of cryptoasset brokerage and custody services, Gemini serves

as the bitcoin custodian for several competing exchange-traded bitcoin products.

Therefore, Gemini’s size and market share

creates the risk that Gemini may fail to properly resource its operations to support all such products that use its services,

and the broader risk that its concentrated focus on the industry could adversely affect its financial condition or disrupt its

operations if its customers in the digital assets industry experience problems or issues, which could harm the Trust, the Shareholders

By virtue of its prominent market position

and capabilities, and the relatively limited number of institutionally-capable providers of cryptoasset brokerage and custody services,

Gemini serves as the bitcoin custodian for several competing exchange-traded bitcoin products.

Therefore, Gemini’s size and

market share creates the risk that Gemini may fail to properly resource its operations to support all such products that use its

services, and the broader risk that its concentrated focus on the industry could adversely affect its financial condition or disrupt

its operations if its customers in the digital assets industry experience problems or issues, which could harm the Trust, the Shareholders

and the value of the Shares.

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customer base, if and to the extent the Cash Custodian serves other competing exchange-traded cryptocurrency products or other

similar investment vehicles, it could conceivably divert the Cash Custodian’s focus and resources away from serving the

Trust, leading to harm to the Trust and its Shareholders.

The Bitcoin Custodian is, and Liquidity Providers in

many cases are, prominent companies with active operations in the digital assets industry.

As illustrated by the 2022 Events,

many of the players in the digital assets markets are interconnected – for example, certain market participants may be active

in both borrowing and lending, or engage in a wide variety of trading relationships and transactions, with respect to many of

the same counterparties, or with respect to the same digital assets or blockchain networks – which can heighten the contagion

risks if one of them defaults on its obligations to others or a given digital blockchain network or digital asset were to stop

functioning properly or lose substantial value, as applicable, leading to correlated failures in a wider market downturn or a

disruption or market dislocation affecting that particular blockchain network or that particular digital asset.

similar investment vehicles, it could conceivably divert the Cash Custodian’s focus and resources away from serving the Trust,

leading to harm to the Trust and its Shareholders.

The Bitcoin Custodian is, and Liquidity

Providers in many cases are, prominent companies with active operations in the digital assets industry.

As illustrated by the 2022

Events, many of the players in the digital assets markets are interconnected – for example, certain market participants may

be active in both borrowing and lending, or engage in a wide variety of trading relationships and transactions, with respect to

many of the same counterparties, or with respect to the same digital assets or blockchain networks – which can heighten the

contagion risks if one of them defaults on its obligations to others or a given digital blockchain network or digital asset were

to stop functioning properly or lose substantial value, as applicable, leading to correlated failures in a wider market downturn

or a disruption or market dislocation affecting that particular blockchain network or that particular digital asset.

It is possible

1 unchanged sentence

Providers to the Trust could adversely affect the Trust or its Shareholders, for instance by disrupting creation and redemption

Coinbase serves as the Bitcoin Custodian for several

competing exchange-traded bitcoin products, which could adversely affect the Trust’s operations and ultimately the value

of the shares.

The Additional Bitcoin Custodian is an affiliate of

Coinbase Global.

Coinbase serves as the Bitcoin Custodian

for several competing exchange-traded bitcoin products, which could adversely affect the Trust’s operations and ultimately

the value of the shares.

The Additional Bitcoin Custodian is an affiliate

of Coinbase Global.

As of the date hereof, Coinbase Global is the largest publicly traded cryptoasset company in the world by market

3 unchanged sentences

custody services, Coinbase serves as the Bitcoin Custodian for several competing exchange-traded bitcoin products.

Coinbase has a critical role in supporting the U.S.

spot bitcoin exchange-traded product ecosystem, and its size and market share

creates the risk that Coinbase may fail to properly resource its operations to adequately support all such products that use its

services that could harm the Trust, the Shareholders and the value of the Shares.

If Coinbase were to favor the interests of certain

products over others, it could result in inadequate attention or comparatively unfavorable commercial terms to less favored products,

which could adversely affect the Trust’s operations and ultimately the value of the Shares.

The Trust’s Authorized Participants act in

similar or identical capacities for several competing exchange-traded bitcoin products, which may impact the ability or willingness

of one or more Authorized Participants to participate in the creation and redemption process, adversely affect the Trust’s

ability to create or redeem Baskets and adversely affect the Trust’s operations and ultimately the value of the Shares.

Therefore, Coinbase

has a critical role in supporting the U.S.

spot bitcoin exchange-traded product ecosystem, and its size and market share creates

the risk that Coinbase may fail to properly resource its operations to adequately support all such products that use its services

that could harm the Trust, the Shareholders and the value of the Shares.

If Coinbase were to favor the interests of certain products

over others, it could result in inadequate attention or comparatively unfavorable commercial terms to less favored products, which

could adversely affect the Trust’s operations and ultimately the value of the Shares.

The Trust’s Authorized Participants

act in similar or identical capacities for several competing exchange-traded bitcoin products, which may impact the ability or

willingness of one or more Authorized Participants to participate in the creation and redemption process, adversely affect the

Trust’s ability to create or redeem Baskets and adversely affect the Trust’s operations and ultimately the value of

Many of the Trust’s Authorized Participants,

4 unchanged sentences

capacities, particularly during times of heightened market trading activity or market volatility or turmoil.

The inability or

unwillingness of Authorized Participants to do so could lead to the potential for the Shares to trade at premiums or discounts

to the NAV, and such premiums or discounts could be substantial.

Furthermore, if creations or redemptions are unavailable

due the inability or unwillingness of one or more of the Trust’s Authorized Participants to submit creation or redemption

orders with the Trust (or do so in a limited capacity), the arbitrage mechanism may fail to function as efficiently as it otherwise

would or be unavailable.

This could result in impaired liquidity for the Shares, wider bid/ask spreads in the secondary trading

of the Shares and greater costs to investors and other market participants, all of which could cause the Sponsor to halt or suspend

the creation or redemption of Shares during such times, among other consequences.

The inability or unwillingness

of Authorized Participants to do so could

lead to the potential for the Shares to trade at premiums or discounts to the NAV, and

such premiums or discounts could be substantial.

Furthermore, if creations or redemptions

are unavailable due the inability or unwillingness of one or more of the Trust’s Authorized Participants to submit creation

or redemption orders with the Trust (or do so in a limited capacity), the arbitrage mechanism may fail to function as efficiently

as it otherwise would or be unavailable.

This could result in impaired liquidity for the Shares, wider bid/ask spreads in the secondary

trading of the Shares and greater costs to investors and other market participants, all of which could cause the Sponsor to halt

or suspend the creation or redemption of Shares during such times, among other consequences.

Regulatory Risk

Digital asset markets in the United States exist

in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of

bitcoin or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of bitcoins,

mining activity, digital wallets, the provision of services related to trading and custodying bitcoin, the operation of the Bitcoin

network, or the digital asset markets generally.

There is a lack of consensus regarding the regulation

of digital assets, including bitcoin, and their markets.

As a result of the growth in the size of the digital asset market, as

well as the 2022 Events, the U.S.

Digital asset markets in the United States

exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value

of bitcoin or the Shares, such as by banning, restricting or imposing onerous conditions or prohibitions on the use of bitcoins,

mining activity, digital wallets, the provision of services related to trading and providing custody services for bitcoin, the

operation of the Bitcoin network, or the digital asset markets generally.

There is a lack of consensus regarding the

regulation of digital assets, including bitcoin, and their markets.

As a result of the growth in the size of the digital asset

market, as well as the 2022 Events, the U.S.

Congress and a number of U.S.

federal and state agencies (including FinCEN, SEC, Office of the

Comptroller of the Currency (the “OCC”), U.S.

Commodity Futures Trading Commission (the “CFTC”), FINRA,

the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice, the Department of Homeland Security,

the Federal Bureau of Investigation, the IRS, state financial institution regulators, and others) have been examining the operations

of digital asset networks, digital asset users and the digital asset markets.

Many of these state and federal agencies have brought

enforcement actions or issued consumer advisories regarding the risks posed by digital assets to investors.

Ongoing and future

regulatory actions with respect to digital assets generally or bitcoin in particular may alter, perhaps to a materially adverse

extent, the nature of an investment in the Shares or the ability of the Trust to continue to operate.

The 2022 Events, including among others the bankruptcy

filings of FTX and its subsidiaries, Three Arrows Capital, Celsius Network, Voyager Digital, Genesis, BlockFi and others, and

other developments in the digital asset markets, have resulted in calls for heightened scrutiny and regulation of the digital

asset industry, with a specific focus on intermediaries such as digital asset exchanges, platforms, and custodians.

state legislatures and regulatory agencies may introduce and enact new laws and regulations to regulate crypto asset intermediaries,

such as digital asset exchanges and custodians.

federal and state agencies (including FinCEN, SEC, Office

of the Comptroller of the Currency (the “OCC”), CFTC, FINRA, the Consumer Financial Protection Bureau (“CFPB”),

the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the Internal Revenue Service

(“IRS”), state financial institution regulators, and others) have been examining the operations of digital asset networks,

digital asset users and the digital asset markets.

Many of these state and federal agencies have brought enforcement actions or

issued consumer advisories regarding the risks posed by digital assets to investors.

Ongoing and future regulatory actions with

respect to digital assets generally or bitcoin in particular may alter, perhaps to a materially adverse extent, the nature of an

investment in the Shares or the ability of the Trust to continue to operate.

The 2022 Events, including among others

the bankruptcy filings of FTX and its subsidiaries, Three Arrows Capital, Celsius Network, Voyager Digital, Genesis, BlockFi and

others, and other developments in the digital asset markets, have resulted in calls for heightened scrutiny and regulation of the

digital asset industry, with a specific focus on intermediaries such as digital asset platforms, platforms, and custodians.

and state legislatures and regulatory agencies may introduce and enact new laws and regulations to regulate crypto asset intermediaries,

such as digital asset platforms and custodians.

The March 2023 collapses of Silicon Valley Bank, Silvergate Bank, and Signature

Bank, which in some cases provided services to the digital assets industry, may amplify and/or accelerate these trends.

3, 2023, the federal banking agencies issued a joint statement on crypto-asset risks to banking organizations following events

which exposed vulnerabilities in the crypto-asset sector, including the risk of fraud and scams, legal uncertainties, significant

volatility, and contagion risk.

Although banking organizations are not prohibited from crypto-asset related activities, the agencies

have expressed significant safety and soundness concerns with business models that are concentrated in crypto-asset related activities

or have concentrated exposures to the crypto-asset sector.

US federal and state regulators, as well as the White

House, have issued reports and releases concerning crypto assets, including bitcoin and crypto asset markets.

Further, in 2023

the House of Representatives formed two new subcommittees:

Bank, which in some cases provided services to the digital asset industry, may amplify and/or accelerate these trends.

federal and state regulators, as well

as the White House, have issued reports and releases concerning crypto assets, including bitcoin and crypto asset markets.

in 2023 the House of Representatives formed two new subcommittees:

the Digital Assets, Financial Technology and Inclusion Subcommittee

and the Commodity Markets, Digital Assets, and Rural Development Subcommittee, each of which were formed in part to analyze issues

concerning crypto assets and demonstrate a legislative intent to develop and

consider the adoption of federal legislation designed

concerning crypto assets and demonstrate a legislative intent to develop and consider the adoption of federal legislation designed

to address the perceived need for regulation of and concerns surrounding the crypto industry.

However, the extent and content

of any forthcoming laws and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near

A divided Congress makes any prediction difficult.

We cannot predict how these and other related events will affect us

or the crypto asset business.

In August 2021, the 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.

However, the extent and content of

any forthcoming laws and regulations are not yet ascertainable with certainty, and it may not be ascertainable in the near future.

We cannot predict how these and other related events will affect us or the crypto asset business.

In August 2021, the 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.

The 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 chair called for federal

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 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.

It is not possible to predict whether Congress will grant

additional authorities to the SEC or other regulators, what the nature of such additional authorities might be, how they might

impact the ability of digital asset markets to function or how any new regulations that may flow from such authorities might impact

the value of digital assets generally and bitcoin held by the Trust specifically.

The consequences of increased federal regulation

of digital assets and digital asset activities could have a material adverse effect on the Trust and the Shares.

FinCEN requires any administrator or exchanger of convertible

digital assets to register with FinCEN as a money transmitter and comply with the anti-money laundering regulations applicable

to money transmitters.

Entities which fail to comply with such regulations are subject to fines, may be required to cease operations,

and could have potential criminal liability.

For example, in 2015, FinCEN assessed a $700,000 fine against a sponsor of a digital

asset for violating several requirements of the Bank Secrecy Act by acting as an MSB and selling the digital asset without registering

with FinCEN, and by failing to implement and maintain an adequate anti-money laundering program.

In 2017, FinCEN assessed a $110

million fine against BTC-e, a now defunct digital asset exchange, for similar violations.

The requirement that exchangers that

do business in the United States register with FinCEN and comply with anti-money laundering regulations may increase the cost

of buying and selling bitcoin and therefore may adversely affect the price of bitcoin and an investment in the Shares.

It is not possible to predict whether, or when, any of these

developments will lead to Congress granting additional authorities to the CFTC, 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 generally

and bitcoin held by the Trust specifically.

The consequences of increased federal regulation of digital assets and digital asset

activities could have a material adverse effect on the Trust and the Shares.

FinCEN requires any administrator or exchanger

of convertible virtual currency (“CVC”) to register with FinCEN as a money transmitter and comply with the anti- money

laundering regulations applicable to money transmitters.

Entities which fail to comply with such regulations are subject to fines,

may be required to cease operations, and could have potential criminal liability.

For example, in 2015, FinCEN assessed a $700,000

fine against a sponsor of a digital asset for violating several requirements of the Bank Secrecy Act by acting as an MSB and selling

the digital asset without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering program.

In 2017, FinCEN assessed a $110,000,000 fine against BTC-e, a now defunct digital asset exchange, for similar violations.

The requirement

that exchangers that do business in the United States register with FinCEN and comply with anti- money laundering regulations may

increase the cost of buying and selling bitcoin and therefore may adversely affect the price of bitcoin and an investment in the

The Office of Foreign Assets Control (“OFAC”)

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Treasury Department”) has added digital currency addresses, including

on the Bitcoin Blockchain, to the list of Specially Designated Nationals whose assets are blocked, and with whom U.S.

are generally prohibited from dealing.

addresses on the Bitcoin Blockchain, to the list of Specially Designated Nationals whose assets are blocked, and with whom U.S.

persons are generally prohibited from dealing.

Such actions by OFAC, or by similar organizations in other jurisdictions, may introduce

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In February 2020, then-U.S.

Treasury Secretary Steven

Mnuchin stated that digital assets were a “crucial area” on which the U.S.

Treasury Secretary

Steven Mnuchin stated that digital assets were a “crucial area” on which the U.S.

Treasury Department has spent significant

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wallets, also commonly referred to as self-hosted wallets.

In January 2021, U.S.

In January 2021, then U.S.

Treasury Secretary nominee Janet Yellen stated

her belief that regulators should “look closely at how to encourage the use of digital assets for legitimate activities

while curtailing their use for malign and illegal activities.”

Under regulations from the NYDFS, businesses involved

in digital asset business activity for third parties in or involving New York, excluding merchants and consumers, must apply for

a license, commonly known as a BitLicense, from the NYDFS and must comply

with anti-money laundering, cybersecurity, consumer

protection, and financial and reporting requirements, among others.

As an alternative to a BitLicense, a firm can apply for a

charter to become a limited purpose trust company under New York law qualified to engage in certain digital asset business activities.

Other states have considered or approved digital asset business activity statutes or rules, passing, for example, regulations

or guidance indicating that certain digital asset business activities constitute money transmission requiring licensure.

The inconsistency in applying money transmitting licensure

requirements to certain businesses may make it more difficult for these businesses to provide services, which may affect consumer

adoption of bitcoin and its price.

In an attempt to address these issues, the Uniform Law Commission passed a model law in July

2017, the Uniform Regulation of Virtual Currency Businesses Act, which has many similarities to the BitLicense and features a

multistate reciprocity licensure feature, wherein a business licensed in one state could apply for accelerated licensure procedures

her belief that regulators should “look closely at how to encourage the use of digital assets for legitimate activities while

curtailing their use for malign and illegal activities.”

Under regulations from the New York State

Department of Financial Services (“NYDFS”), businesses involved in digital asset business activity for third parties

in or involving New York, excluding merchants and consumers, must apply for a license, commonly known as a BitLicense, from the

NYDFS and must comply with anti-money laundering, cybersecurity, consumer protection, and financial and reporting requirements,

among others.

As an alternative to a BitLicense, a firm can apply for a charter to become a limited purpose trust company under

New York law qualified to engage in certain digital asset business activities.

Other states have considered or approved digital

asset business activity statutes or rules, passing, for example, regulations or guidance indicating that certain digital asset

business activities constitute money transmission requiring licensure.

The inconsistency in applying money transmitting

licensure requirements to certain businesses may make it more difficult for these businesses to provide services, which may affect

consumer adoption of bitcoin and its price.

In an attempt to address these issues, the Uniform Law Commission passed a model law

in July 2017, the Uniform Regulation of Virtual Currency Businesses Act, which has many similarities to the BitLicense and features

a multistate reciprocity licensure feature, wherein a business licensed in one state could apply for accelerated licensure procedures

in other states.

It is still unclear, however, how many states, if any, will adopt some or all of the model legislation.

Law enforcement agencies have often relied on the transparency

of blockchains to facilitate investigations.

However, certain privacy-enhancing features have been, or are expected to be, introduced

to a number of digital asset networks.

If the Bitcoin network were to adopt any of these features, these features may provide

law enforcement agencies with less visibility into transaction-level data.

Shareholders do not have the protections associated

with ownership of Shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.

The 1940 Act is designed to protect investors by preventing

insiders from managing investment companies to their benefit and to the detriment of public investors, such as:

the issuance of

securities having inequitable or discriminatory provisions;

the management of investment companies by irresponsible persons;

use of unsound or misleading methods of computing earnings and asset value;

changes in the character of investment companies without

the consent of investors;

Law enforcement agencies have often relied

on the transparency of blockchains to facilitate investigations.

However, certain privacy-enhancing features have been, or are

expected to be, introduced to a number of digital asset networks.

If the Bitcoin network were to adopt any of these privacy-enhancing

features, these features may provide law enforcement agencies with less visibility into transaction-level data.

Europol, the European

Union’s law enforcement agency, released a report in October 2017 noting the increased use of privacy-enhancing digital assets

like Zcash and Monero in criminal activity on the internet.

In May 2022, OFAC banned all U.S.

persons from using Blender.io, a

digital asset mixing application that operates on the Bitcoin Blockchain to obfuscate the origin, destination and counterparties

of blockchain transactions, by adding certain digital asset wallet addresses associated with Blender.io to its Specially Designated

Nationals list.

Blender.io receives a variety of transactions and mixes them together before transmitting them to their ultimate

destinations.

On March 23, 2022, Lazarus Group, a state-sponsored cyber hacking group associated with North Korea, carried out

a major virtual currency heist from a blockchain project linked to the online game Axie Infinity; Blender.io was used in processing

some of the illicit proceeds.

Treasury Department’s press release announcing the sanctions on Blender.io observed

that, while most virtual currency activity is licit, virtual currency can be used for illicit activity, including sanctions evasion,

through mixers, peer-to-peer exchangers, darknet markets, and exchanges.

This includes the facilitation of heists, ransomware schemes,

and other cybercrimes.

On October 19, 2023, FinCEN published proposed rulemaking to apply the authorities in

Section 311 of the

USA PATRIOT Act to impose requirements on financial institutions that engage in CVC transactions with CVC mixers.

rule, if adopted, would require covered financial institutions to report to FinCEN any CVC transactions they process that involves

CVC mixing within or involving a jurisdiction outside the United States.

The term “CVC mixing” covers more than just

transactions that involve CVC mixers like Tornado Cash, and seemingly could cover a broader range of conduct involving technologies,

services, or methods that have the effect of obfuscating the source, destination, or amount of a CVC transaction, whether or not

the obfuscation was intentional.

If the rule were to be adopted as proposed and if the Bitcoin Blockchain were to be deemed to

or were to adopt features which come within the rule’s ambit, it could cause covered financial institutions - such as many

digital asset platforms, or the Trust’s service providers, such as the Cash Custodian - to reduce support for or cease offering

services for bitcoin or to the Trust, which could impair the utility of bitcoin, the value of the Shares and the Trust’s

ability to operate in compliance with new laws and regulations.

Shareholders do not have the protections

associated with ownership of Shares in an investment company registered under the 1940 Act or the protections afforded by the CEA.

The 1940 Act is designed to protect investors

by preventing insiders from managing investment companies to their benefit and to the detriment of public investors, such as:

issuance of securities having inequitable or discriminatory provisions;

the management of investment companies by irresponsible

the use of unsound or misleading methods of computing earnings and asset value;

changes in the character of investment

companies without the consent of investors;

and investment companies from engaging in excessive leveraging.

To accomplish these ends, the 1940 Act

requires the safekeeping and proper valuation of fund assets, restricts greatly transactions with affiliates, limits leveraging,

and imposes governance requirements as a check on fund management.

The Trust is not registered as an investment company

under the 1940 Act, and the Sponsor believes that the Trust is not required to register under such act.

To accomplish these

ends, the 1940 Act requires the safekeeping and proper valuation of fund assets, restricts greatly transactions with affiliates,

limits leveraging, and imposes governance requirements as a check on fund management.

The Trust is not registered as an investment

company under the 1940 Act, and the Sponsor believes that the Trust is not required to register under such act.

Consequently, Shareholders

do not have the regulatory protections provided to investors in investment companies.

The Trust will not hold or trade in commodity interests

regulated by the CEA, as administered by the CFTC.

Furthermore, the Sponsor believes that the Trust is not a commodity pool for

purposes of the CEA, and that neither the Sponsor nor the Trustee is subject to regulation by the CFTC as a commodity pool operator

or a commodity trading advisor in connection with the operation of the Trust.

Consequently, Shareholders will not have the regulatory

protections provided to investors in CEA-regulated instruments or commodity pools.

Future legal or regulatory developments may negatively

affect the value of bitcoin or require the Trust or the Sponsor to become registered with the SEC or CFTC, which may cause the

Trust to liquidate.

Current and future legislation, SEC and CFTC rulemaking,

and other regulatory developments may impact the manner in which bitcoin are treated for classification and clearing purposes.

In particular, although bitcoin is currently understood to be a commodity when transacted on a spot basis, bitcoin itself in the

future might be classified by the CFTC as a “commodity interest” under the CEA, subjecting all transactions in bitcoin

to full CFTC regulatory jurisdiction.

The Trust will not hold or trade in commodity

interests (as currently defined) regulated by the CEA, as administered by the CFTC.

Furthermore, the Sponsor believes that the

Trust is not a commodity pool for purposes of the CEA, and that neither the Sponsor nor the Trustee is subject to regulation by

the CFTC as a commodity pool operator or a commodity trading advisor in connection with the operation of the Trust.

Consequently,

Shareholders will not have the regulatory protections provided to investors in CEA-regulated instruments or commodity pools.

Congress is currently considering legislation, such as the Digital Asset Market Clarity Act of 2025 (CLARITY Act), which could

give the CFTC greater powers to regulate the spot digital asset market.

It is possible that, if legislation is passed, it could

require the Trust or the Sponsor, or service providers to the Trust, such as the Liquidity Provider, Authorized Participant, Bitcoin

Custodian, or Additional Bitcoin Custodian among others, to register with the CFTC.

Such additional regulatory obligations may

cause the Trust, the Trustee, the Sponsor, Liquidity Provider, Authorized Participant, Bitcoin Custodian, or Additional Bitcoin

Custodian to incur extraordinary expenses.

If the Trust, the Trustee, the Sponsor, Liquidity Provider, Authorized Participant,

Bitcoin Custodian, or Additional Bitcoin Custodian decided to seek the required licenses, there is no guarantee that they will

timely receive them.

The Trustee may decide to discontinue and wind up the Trust.

A dissolution of the Trust in response to the

changed regulatory circumstances may be at a time that is disadvantageous to the Shareholders.

A Liquidity Provider may also instead

decide to terminate its role as a Liquidity Provider of the Trust, which may decrease the liquidity of the Shares.

Future legal or regulatory developments

may negatively affect the value of bitcoin or require the Trust or the Sponsor to become registered with the SEC or CFTC, which

may cause the Trust to liquidate.

Current and future legislation, SEC and

CFTC rulemaking, and other regulatory developments may impact the manner in which bitcoin are treated for classification and clearing

In particular, although bitcoin is currently understood to be a commodity when transacted on a spot basis, bitcoin itself

in the future might be classified by the CFTC as a “commodity interest” under the CEA, subjecting all transactions

in bitcoin to full CFTC regulatory jurisdiction.

Alternatively, in the future bitcoin might be classified by the SEC as a “security”

federal securities laws.

The Sponsor and the Trust cannot be certain as to how future regulatory developments will

impact the treatment of bitcoin under the law.

In the face of such developments, the required registrations and compliance steps

may result in extraordinary, nonrecurring expenses to the Trust.

If the Sponsor decides to terminate the Trust in response to

the changed regulatory circumstances, the Trust may be dissolved or liquidated at a time that is disadvantageous to Shareholders.

The SEC has stated that certain digital assets may

be considered “securities” under the federal securities laws.

The test for determining whether a particular digital

asset is a “security” is complex and the outcome is difficult to predict.

If bitcoin is in the future determined to

be a “security” under federal or state securities laws by the SEC or any other agency, or in a proceeding in a court

The Sponsor and the Trust cannot be certain as to how future regulatory developments will impact

the treatment of bitcoin under the law.

In the face of such developments, the required registrations and compliance steps may result

in extraordinary, nonrecurring expenses to the Trust.

If the Sponsor decides to terminate the Trust in response to the changed

regulatory circumstances, the Trust may be dissolved or liquidated at a time that is disadvantageous to Shareholders.

The SEC has stated that certain digital

assets may be considered “securities” under the federal securities laws.

The test for determining whether a particular

digital asset is a “security” is complex and the outcome is difficult to predict.

If bitcoin is in the future determined

to be a “security” under federal or state securities laws by the SEC or any other agency, or in a

proceeding in a court

of law or otherwise, it would likely have material adverse consequences for the value of bitcoin.

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and cause users to migrate to other digital assets.

To the extent that bitcoin is determined to be a security,

the Trust and the Sponsor may also be subject to additional regulatory requirements, including under the 1940 Act, and the Sponsor

may be required to register as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers

If the Sponsor determines not to comply with such additional regulatory and registration requirements, the Sponsor

will terminate the Trust.

Any such termination could result in the liquidation of the Trust’s bitcoin at a time that is

disadvantageous to Shareholders.

To the extent that bitcoin is deemed to fall within

the definition of a “commodity interest” under the CEA, the Trust and the Sponsor may be subject to additional regulation

under the CEA and CFTC regulations.

These additional requirements may result in extraordinary, recurring and/or nonrecurring expenses

of the Trust, thereby materially and adversely impacting the Shares.

If the Sponsor and/or the Trust determines not to comply

with such additional regulatory and registration requirements, the Sponsor may terminate the Trust.

Any such termination could

result in the liquidation of the Trust’s bitcoin at a time that is disadvantageous to Shareholders.

The SEC has recently proposed amendments to the custody

rules under Rule 406(4)-2 of the Advisers Act.

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 in 406(4)-2 to cover all digital assets, including bitcoin, and

related advisory activities.

If enacted as proposed, these rules would likely impose additional regulatory requirements with respect

to the custody and storage of digital assets, including bitcoin.

The Sponsor is studying the impact that such amendments may have

on the Trust and its arrangements with the Bitcoin Custodian and the Additional Bitcoin Custodian.

It is possible that such amendments,

if adopted, could prevent the Bitcoin Custodian and the Additional Bitcoin Custodian from serving as service providers to the

Trust, or require potentially significant modifications to existing arrangements under the Custody Agreement and the Additional

To the extent that bitcoin is determined

to be a security, the Trust and the Sponsor may also be subject to additional regulatory requirements, including under the 1940

Act, and the Sponsor may be required to register as an investment adviser under the Investment Advisers Act of 1940, as amended

(the “Advisers Act”).

If the Sponsor determines not to comply with such additional regulatory and registration requirements,

the Sponsor will terminate the Trust.

Any such termination could result in the liquidation of the Trust’s bitcoin at a time

that is disadvantageous to Shareholders.

To the extent that bitcoin is deemed to

fall within the definition of a “commodity interest” under the CEA, the Trust and the Sponsor may be subject to additional

regulation under the CEA and CFTC regulations.

These additional requirements may result in extraordinary, recurring and/or nonrecurring

expenses of the Trust, thereby materially and adversely impacting the Shares.

If the Sponsor and/or the Trust determines not to

comply with such additional regulatory and registration requirements, the Sponsor may terminate the Trust.

Any such termination

could result in the liquidation of the Trust’s bitcoin at a time that is disadvantageous to Shareholders.

Rules like those previously proposed by

the SEC, that amend the change definition of a “qualified custodian” and expand the current custody rule in 406(4)-2

to cover all digital assets, including bitcoin and related advisory activities would likely impose additional regulatory requirements

with respect to the custody and storage of digital assets, including bitcoin.

The Sponsor is studying the impact that such amendments

may have on the Trust and its arrangements with the Bitcoin Custodian and the Additional Bitcoin Custodian.

It is possible that

such amendments, if adopted, could prevent the Bitcoin Custodian and the Additional Bitcoin Custodian from serving as service providers

to the Trust, or require potentially significant modifications to existing arrangements under the Custody Agreement and the Additional

Bitcoin Custody Agreement, which could cause the Trust to bear potentially significant increased costs.

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to make such modifications or appoint successor service providers to fill the role that the Bitcoin Custodian or the Additional

Bitcoin Custodian currently play, the Trust’s operations (including in relation to creations and redemptions of Baskets

and the holding of bitcoin) could be negatively affected, the Trust could dissolve (including at a time that is potentially disadvantageous

Bitcoin Custodian currently play, the Trust’s operations (including in relation to creations and redemptions of Baskets and

the holding of bitcoin) could be negatively affected, the Trust could dissolve (including at a time that is potentially disadvantageous

to Shareholders), and the value of the Shares or an investment in the Trust could be affected.

Further, the proposed amendments could have a severe

negative impact on the price of bitcoin and therefore the value of the Shares if enacted, by, among other things, making it more

difficult for investors to gain access to bitcoin, or causing certain holders of bitcoin to sell their holdings.

If regulatory changes or interpretations of an Authorized

Participant’s, Liquidity Provider’s, the Trust’s or the Sponsor’s activities require the regulation of

an Authorized Participant, Liquidity Provider, the Trust or the Sponsor as a money service business under the regulations promulgated

by FinCEN under the authority of the U.S.

Bank Secrecy Act or as a money transmitter or digital asset business under state regimes

for the licensing of such businesses, an Authorized Participant, Liquidity Provider, the Trust or the Sponsor may be required

to register and comply with such regulations, which could result in extraordinary, recurring and/or nonrecurring expenses to the

Authorized Participant, Trust or Sponsor or increased commissions for the Authorized Participant’s clients, thereby reducing

the liquidity of the Shares.

To the extent that the activities of any Authorized

Participant, Liquidity Provider, the Trust or the Sponsor cause it to be deemed a “money services business” under

the regulations promulgated by FinCEN under the authority of the BSA, such Authorized Participant, Liquidity Provider, the Trust

Sponsor may be required to comply with FinCEN regulations,

including those that would mandate the Authorized Participant, Liquidity Provider, Trust or the Sponsor to implement anti-money

laundering programs, make certain reports to FinCEN and maintain certain records.

Similarly, the activities of an Authorized Participant,

Liquidity Provider, the Trust or the Sponsor may require it to be licensed as a money transmitter or as a digital asset business,

such as under NYDFS’ BitLicense regulation.

Such additional regulatory obligations may cause the

Authorized Participant, Liquidity Provider, the Trust or the Sponsor to incur extraordinary expenses.

If the Authorized Participant,

Liquidity Provider, the Trust or the Sponsor decide to seek the required licenses, there is no guarantee that they will timely

receive them.

The Authorized Participant or Liquidity Provider may also instead decide to terminate its role as Authorized Participant

or Liquidity Provider of the Trust, or the Sponsor may decide to terminate the Trust.

Termination by the Authorized Participant

may decrease the liquidity of the Shares, which may adversely affect the value of the Shares, and any termination of the Trust

in response to the changed regulatory circumstances may be at a time that is disadvantageous to the Shareholders.

Additionally, to the extent the Authorized Participant,

Liquidity Provider, the Trust or the Sponsor is found to have operated without appropriate state or federal licenses by any regulator

or court, it may be subject to investigation, administrative or court proceedings, operating restrictions, and civil or criminal

monetary fines and penalties, all of which would harm the reputation of the Authorized Participant, Liquidity Provider, the Trust

or the Sponsor, disrupt their operations, and have a material adverse effect on the price of the Shares.

Although Liquidity Providers

represent to the Trust that they have obtained all necessary governmental licenses in the Liquidity Provider agreements, if such

representations prove inaccurate, such Liquidity Providers may suffer adverse consequences and be unable to perform their obligations

or engage in bitcoin transactions with the Trust, or the Trust’s operations could be adversely affected and decreased liquidity for the Shares or losses for Shareholders could

Anonymity, sanctions, and illicit financing risk.

Although transaction details of peer-to-peer transactions

are recorded on the Bitcoin Blockchain, a buyer or seller of digital assets on a peer-to-peer basis directly on the Bitcoin network

may never know to whom the public key belongs or the true identity of the party with whom it is transacting.

Public key addresses

are randomized sequences of alphanumeric characters that, standing alone, do not provide sufficient information to identify users.

In addition, certain technologies, such as tumbling or mixing services, may obscure the origin or chain of custody of digital

Further, the proposed amendments could have

a severe negative impact on the price of bitcoin and therefore the value of the Shares if enacted, by, among other things, making

it more difficult for investors to gain access to bitcoin, or causing certain holders of bitcoin to sell their holdings.

If regulatory changes or interpretations

of an Authorized Participant’s, Liquidity Provider’s, the Trust’s or the Sponsor’s activities require the

regulation of an Authorized Participant, Liquidity Provider, the Trust or the Sponsor as a money service business under the regulations

promulgated by FinCEN under the authority of the U.S.

Bank Secrecy Act or as a money transmitter or digital asset business under

state regimes for the licensing of such businesses, an Authorized Participant, Liquidity Provider, the Trust or the Sponsor may

be required to register and comply with such regulations, which could result in extraordinary, recurring and/or nonrecurring expenses

to the Authorized Participant, Trust or Sponsor or increased commissions for the Authorized Participant’s clients, thereby

reducing the liquidity of the Shares.

the extent that the activities of any Authorized Participant, Liquidity Provider, the Trust or the Sponsor cause it to be deemed

a “money services business” under the regulations promulgated by FinCEN under the authority of the BSA, such Authorized

Participant, Liquidity Provider, the Trust or the Sponsor

may be required to comply with FinCEN regulations, including those that would mandate the Authorized Participant, Liquidity Provider,

Trust or the Sponsor to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.

Similarly, the activities of an Authorized Participant, Liquidity Provider, the Trust or the Sponsor may require it to be licensed

as a money transmitter or as a digital asset business, such as under NYDFS’ BitLicense regulation.

Such additional regulatory obligations may

cause the Authorized Participant, Liquidity Provider, the Trust or the Sponsor to incur extraordinary expenses.

If the Authorized

Participant, Liquidity Provider, the Trust or the Sponsor decide to seek the required licenses, there is no guarantee that they

will timely receive them.

The Authorized Participant or Liquidity Provider may also instead decide to terminate its role as Authorized

Participant or Liquidity Provider of the Trust, or the Sponsor may decide to terminate the Trust.

Termination by the Authorized

Participant may decrease the liquidity of the Shares, which may adversely affect the value of the Shares, and any termination of

the Trust in response to the changed regulatory circumstances may be at a time that is disadvantageous to the Shareholders.

Additionally, to the extent the Authorized

Participant, Liquidity Provider, the Trust or the Sponsor is found to have operated without appropriate state or federal licenses

by any regulator or court, it may be subject to investigation, administrative or court proceedings, operating restrictions, and

civil or criminal monetary fines and penalties, all of which would harm the reputation of the Authorized Participant, Liquidity

Provider, the Trust or the Sponsor, disrupt their operations, and have a material adverse effect on the price of the Shares.

Liquidity Providers represent to the Trust that they have obtained all necessary governmental licenses in the Liquidity Provider

agreements, if such representations prove inaccurate, such Liquidity Providers may suffer adverse consequences and be unable to

perform their obligations or engage in bitcoin transactions with the Trust, or the Trust’s operations could be adversely

affected and decreased liquidity for the Shares or losses for Shareholders could result.

Anonymity, sanctions, and illicit financing

Although transaction details of peer-to-peer

transactions are recorded on the Bitcoin Blockchain, a buyer or seller of digital assets on a peer-to-peer basis directly on the

Bitcoin network may never know to whom the public key belongs or the true identity of the party with whom it is transacting.

key addresses are randomized sequences of alphanumeric characters that, standing alone, do not provide sufficient information to

identify users.

In addition, certain technologies, such as tumbling or mixing services, may obscure the origin or chain of custody

of digital assets.

In August 2022, OFAC banned all U.S.

citizens from using Tornado Cash, a digital asset protocol designed to obfuscate

blockchain transactions, by adding certain Ethereum wallet addresses associated with the protocol to its Specially Designated

citizens from using Tornado Cash, a digital asset protocol designed to

obfuscate blockchain transactions, by adding certain Ethereum wallet addresses associated with the protocol to its Specially Designated

Nationals list.

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bitcoin, it is not inconceivable that bad actors, such as those subject to sanctions, could seek to do so.

The opaque nature of the market poses asset verification

challenges for market participants, regulators and auditors and gives rise to an increased risk of manipulation and fraud, including

the potential for Ponzi schemes, bucket shops and pump and dump schemes.

Digital assets have been used to facilitate illicit activities.

If a digital asset was used to facilitate illicit activities, businesses that facilitate transactions in such digital assets could

be at increased risk of potential criminal or civil lawsuits, or of having banking or other services cut off, and such digital

asset could be removed from digital asset exchanges.

Any of the aforementioned occurrences could adversely affect the price of

the relevant digital asset, the attractiveness of the respective blockchain network and an investment in the Shares.

or the Sponsor or the Trustee were to transact with a sanctioned entity, the Trust, the Sponsor or the Trustee would be at risk

of potential criminal or civil lawsuits or liability.

The Trust takes measures with the objective of reducing

illicit financing risks in connection with the Trust’s activities.

However, illicit financing risks are present in the digital

asset markets, including markets for bitcoin.

There can be no assurance that the measures employed by the Trust will prove successful

in reducing illicit financing risks, and the Trust is subject to the complex illicit financing risks and vulnerabilities present

in the digital asset markets.

If such risks eventuate, the Trust or the Sponsor or their affiliates could face civil or criminal

liability, fines, penalties, or other punishments, be subject to investigation, have their assets frozen, lose access to banking

services or services provided by other service providers, or suffer disruptions to their operations, any of which could negatively

affect the Trust’s ability to operate or cause losses in value of the Shares.

The Sponsor and the Trust have

adopted and implemented policies and procedures that are designed to comply with applicable anti-money laundering and

sanctions laws and regulations including applicable KYC laws and regulations.

The Sponsor and the Trust will only interact

with known third party service providers with respect to whom it has engaged in a due diligence process to ensure a thorough

KYC process, such as the Authorized Participants, Liquidity Providers, the Bitcoin Custodian and the Additional Bitcoin

Authorized Participants, as broker-dealers, and the Bitcoin Custodian, as a limited purpose trust company subject

to New York Banking Law, are subject to the U.S.

Bank Secrecy Act (as amended) (“BSA”) and U.S.

sanctions laws.

In addition, the Trust will only accept creations and

redemption requests from regulated Authorized Participants who themselves are subject to applicable sanctions and anti-money laundering

laws and have compliance programs that are designed to ensure compliance with those laws.In addition, the Liquidity Providers

are contractually obligated to have policies and procedures reasonably designed to comply with the money laundering and related

provisions of the BSA and implementing regulations, and applicable sanctions laws.

The Trust will not hold any bitcoin except

those that have been delivered by a Liquidity Provider in connection with creation requests.

Each of the Bitcoin Custodian and the Additional Bitcoin

Custodian have adopted and implemented an anti-money laundering and sanctions compliance program, which provides additional protections

to ensure that the Sponsor and the Trust do not transact with a sanctioned party.

Notably, the Bitcoin Custodian performs Know-Your-Transaction

(“KYT”) screening using blockchain analytics to identify, detect, and mitigate the risk of transacting with a sanctioned

or other unlawful actor.

Pursuant to the Bitcoin Custodian’s KYT program, any bitcoin that is delivered to the Trust’s

Custody Account will undergo screening to ensure that the origins of that bitcoin are not illicit.

The Additional Bitcoin Custodian’s

BSA/AML program includes robust internal policies, procedures and controls that combat the attempted use of the Additional Bitcoin

Custodian for illegal or illicit purposes, including a customer identification program, annual training of all employees and officers

in anti-money laundering obligations and requirements, filing of Suspicious Activity Reports with the U.S.

Financial Crimes Enforcement

Network and annual independent audits of the Additional Bitcoin Custodian’s anti-money laundering program.

There is no guarantee that such procedures will always

be effective.

If the Authorized Participants or Liquidity Providers have inadequate policies, procedures and controls for complying

with applicable anti-money laundering and applicable sanctions laws or the Trust’s diligence or procedures are ineffective,

violations of such laws could result, which could result in regulatory liability for the Trust, the Sponsor, the Trustee or their

affiliates under such laws, including governmental fines, penalties, and other punishments, as well as potential liability to

or cessation of services by the Bitcoin Custodian , the Additional Bitcoin Custodian, Liquidity

Providers or the Trust’s other service providers and counterparties.

Any of the foregoing could result in losses to the

Shareholders or negatively affect the Trust’s ability to operate.

Trading on bitcoin exchanges outside the United

States is not subject to U.S.

The opaque nature of the market poses asset

verification challenges for market participants, regulators and auditors and gives rise to an increased risk of manipulation and

fraud, including the potential for Ponzi schemes, bucket shops and pump and dump schemes.

Digital assets have been used to facilitate

illicit activities.

If a digital asset was used to facilitate illicit activities, businesses that facilitate transactions in such

digital assets could be at increased risk of potential criminal or civil lawsuits, or of having banking or other services cut off,

and such digital asset could be removed from digital asset exchanges.

Any of the aforementioned occurrences could adversely affect

the price of the relevant digital asset, the attractiveness of the respective blockchain network and an investment in the Shares.

If the Trust or the Sponsor or the Trustee were to transact with a sanctioned entity, the Trust, the Sponsor or the Trustee would

be at risk of potential criminal or civil lawsuits or liability.

The Trust takes measures with the objective

of reducing illicit financing risks in connection with the Trust’s activities.

However, illicit financing risks are present

in the digital asset markets, including markets for bitcoin.

There can be no assurance that the measures employed by the Trust

will prove successful in reducing illicit financing risks, and the Trust is subject to the complex illicit financing risks and

vulnerabilities present in the digital asset markets.

If such risks eventuate, the Trust or the Sponsor or their affiliates could

face civil or criminal liability, fines, penalties, or other punishments, be subject to investigation, have their assets frozen,

lose access to banking services or services provided by other service providers, or suffer disruptions to their operations, any

of which could negatively affect the Trust’s ability to operate or cause losses in value of the Shares.

The Sponsor and the Trust have adopted and

implemented policies and procedures that are designed to comply with applicable anti-money laundering and sanctions laws and regulations

including applicable KYC laws and regulations.

The Sponsor and the Trust will only interact with known third party service providers

with respect to whom it has engaged in a due diligence process to ensure a thorough KYC process, such as the Authorized Participants,

Liquidity Providers, the Bitcoin Custodian and the Additional Bitcoin Custodian.

Authorized Participants, as broker-dealers, and

the Bitcoin Custodian, as a limited purpose trust company subject to New York Banking Law, are subject to the U.S.

Act (as amended) (“BSA”) and U.S.

economic sanctions laws.

In addition, the Trust will only accept

creations and redemption requests from regulated Authorized Participants who themselves are subject to applicable sanctions and

anti-money laundering laws and have compliance programs that are designed to ensure compliance with those laws.

In addition, the

Liquidity Providers are contractually obligated to have policies and procedures reasonably designed to comply with the money laundering

and related provisions of the BSA and implementing regulations, and applicable sanctions laws.

The Trust will not hold any bitcoin

except those that have been delivered by a Liquidity Provider in connection with creation requests.

Each of the Bitcoin Custodian and the Additional

Bitcoin Custodian have adopted and implemented an anti-money laundering and sanctions compliance program, which provides additional

protections to ensure that the Sponsor and the Trust do not transact with a sanctioned party.

Notably, the Bitcoin Custodian performs

Know-Your-Transaction (“KYT”) screening using blockchain analytics to identify, detect, and mitigate the risk of transacting

with a sanctioned or other unlawful actor.

Pursuant to the Bitcoin Custodian’s KYT program, any bitcoin that is delivered

to the Trust’s Custody Account will undergo screening to ensure that the origins of that bitcoin are not illicit.

The Additional

Bitcoin Custodian’s BSA/AML program includes robust internal policies, procedures and controls that combat the attempted

use of the Additional Bitcoin Custodian for illegal or illicit purposes, including a customer identification program, annual training

of all employees and officers in anti-money laundering obligations and requirements, filing of Suspicious Activity Reports with

Financial Crimes Enforcement Network and annual independent audits of the Additional Bitcoin Custodian’s anti-money

laundering program.

There is no guarantee that such procedures

will always be effective.

If the Authorized Participants or Liquidity Providers have inadequate policies, procedures and controls

for complying with applicable anti-money laundering and applicable sanctions laws or the Trust’s diligence or procedures

are ineffective, violations of such laws could result, which could result in regulatory liability for the Trust, the Sponsor, the

Trustee or their affiliates under such laws, including governmental fines, penalties, and other punishments, as well as potential

liability to or cessation of services by the Bitcoin Custodian, the Additional Bitcoin Custodian, Liquidity Providers or the Trust’s

other service providers and counterparties.

Any of the foregoing could result in losses to the Shareholders or negatively affect

the Trust’s ability to operate.

Trading on bitcoin exchanges outside

the United States is not subject to U.S.

regulation, and may be less reliable than U.S.

Barring cash creations and redemptions, or a liquidation

of the Trust, the Trust does not purchase or sell bitcoin.

To the extent any of the Trust’s trading is conducted on bitcoin

trading platforms outside the United States, trading on such exchanges is not regulated by any U.S.

governmental agency and may

involve certain risks not applicable to trading on U.S.

Barring cash creations and redemptions,

or a liquidation of the Trust, the Trust does not purchase or sell bitcoin.

To the extent any of the Trust’s trading is conducted

on bitcoin trading platforms outside the United States, trading on such exchanges is not regulated by any U.S.

governmental agency

and may involve certain risks not applicable to trading on U.S.

Certain foreign markets may be more susceptible to disruption

These factors could adversely affect the performance of the Trust.

Regulatory changes or actions in foreign jurisdictions

may affect the value of the Shares or restrict the use of bitcoin, mining activity or the operation of their networks or the global

bitcoin markets in a manner that adversely affects the value of the Shares.

Various foreign jurisdictions have, and may continue

to adopt laws, regulations or directives that affect digital asset networks (including the Bitcoin network), the digital asset

markets (including the bitcoin market), and their users, particularly digital asset exchanges and service providers that fall

within such jurisdictions’ regulatory scope.

Regulatory changes or actions in foreign

jurisdictions may affect the value of the Shares or restrict the use of bitcoin, mining activity or the operation of their networks

or the global bitcoin markets in a manner that adversely affects the value of the Shares.

Various foreign jurisdictions have, and

may continue to adopt laws, regulations or directives that affect digital asset networks (including the Bitcoin network), the digital

asset markets (including the bitcoin market), and their users, particularly digital asset exchanges and service providers that

fall within such jurisdictions’ regulatory scope.

For example, if China or other foreign jurisdictions were to ban or otherwise

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impact the value of the Shares.

A number of foreign jurisdictions have recently taken

regulatory action aimed at digital asset activities.

China has made transacting in cryptocurrencies illegal for Chinese citizens

in mainland China, and additional restrictions may follow.

Both China and South Korea have banned initial coin offerings entirely

and regulators in other jurisdictions, including Canada, Singapore and Hong Kong, have opined that initial coin offerings may

constitute securities offerings subject to local

number of foreign jurisdictions have recently taken regulatory action aimed at digital asset activities.

China has made transacting

in cryptocurrencies illegal for Chinese citizens in mainland China, and additional restrictions may follow.

Both China and South

Korea have banned initial coin offerings entirely and regulators in other jurisdictions, including Canada, Singapore and Hong Kong,

have opined that initial coin offerings may constitute securities offerings subject to local

securities regulations.

the Chinese government announced renewed efforts to restrict cryptocurrency trading and mining activities.

Regulators in the

Inner Mongolia and other regions of China have proposed regulations that would create penalties for companies engaged in

cryptocurrency mining activities and introduce heightened energy saving requirements on industrial parks, data centers and

power plants providing electricity to cryptocurrency miners.

The United Kingdom’s Financial Conduct Authority published

final rules in October 2020 banning the sale of derivatives and exchange traded notes that reference certain types of digital

assets, contending that they are “ill-suited” to retail investors citing extreme volatility, valuation challenges

and association with financial crime.

A new bill, the Financial Services and Markets Bill (“FSMB”), became law in

The FSMB brings digital asset activities within the scope of existing laws governing financial institutions, markets

In addition, the European Council of the European Union approved the text of Markets in Crypto-Assets

(“MiCA”) in October 2022.

MiCA came into effect in 2024, establishing a regulatory framework for digital asset

services across the European Union.

MiCA is intended to serve as a comprehensive regulation of digital asset markets and

imposes various obligations on digital asset issuers and service providers.

The main aims of MiCA are industry regulation,

consumer protection, prevention of market abuse and upholding the integrity of digital asset markets.

Foreign laws, regulations or directives may conflict

with those of the United States and may negatively impact the acceptance of one or more digital assets by users, merchants and

service providers outside the United States and may therefore impede the growth or sustainability of the digital asset economy

In May 2021, the Chinese government announced

renewed efforts to restrict cryptocurrency trading and mining activities.

Regulators in the Inner Mongolia and other regions of

China have proposed regulations that would create penalties for companies engaged in cryptocurrency mining activities and introduce

heightened energy saving requirements on industrial parks, data centers and power plants providing electricity to cryptocurrency

The United Kingdom’s Financial Conduct Authority published final rules in October 2020 banning the sale of derivatives

and exchange traded notes that reference certain types of digital assets, contending that they are “ill-suited” to

retail investors citing extreme volatility, valuation challenges and association with financial crime.

A new bill, the Financial

Services and Markets Bill (“FSMB”), became law in 2023.

The FSMB brings digital asset activities within the scope of

existing laws governing financial institutions, markets and assets.

In addition, the European Council of the European Union approved

the text of Markets in Crypto-Assets (“MiCA”) in October 2022.

MiCA came into effect in 2024, establishing a regulatory

framework for digital asset services across the European Union.

MiCA is intended to serve as a comprehensive regulation of digital

asset markets and imposes various obligations on digital asset issuers and service providers.

The main aims of MiCA are industry

regulation, consumer protection, prevention of market abuse and upholding the integrity of digital asset markets.

Foreign laws, regulations or directives

may conflict with those of the United States and may negatively impact the acceptance of one or more digital assets by users, merchants

and service providers outside the United States and may therefore impede the growth or sustainability of the digital asset economy

in the European Union, China, Japan, Russia and the United States and globally, or otherwise negatively affect the value of bitcoin.

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and adverse to the Trust and the value of the Shares.

Furthermore, legal claims have been filed in the United

Kingdom by an entity associated with an individual named Craig Wright.

The entity alleges that the private keys to bitcoin purportedly

worth several billion dollars were rendered inaccessible to it in a hack, and advances a series of novel legal theories in support

of its request that the court compel certain core developers associated with the Bitcoin network to either somehow transfer the

bitcoin out of the bitcoin address to which the entity no longer can access the private keys to a new bitcoin address that it

currently does control, or alternatively amend the source code to the Bitcoin network itself to restore its access to the stranded

In 2022, the High Court dismissed the claims, finding that the entity had not established a serious issue to be tried.

However, in February 2023, the Court of Appeals unanimously overruled the High Court’s decision, holding that there was

a serious issue to be tried.

Furthermore, legal claims have been filed

in the United Kingdom by an entity associated with an individual named Craig Wright.

The entity alleges that the private keys to

bitcoin purportedly worth several billion dollars were rendered inaccessible to it in a hack, and advances a series of novel legal

theories in support of its request that the court compel certain core developers associated with the Bitcoin network to either

somehow transfer the bitcoin out of the bitcoin address to which the entity no longer can access the private keys to a new bitcoin

address that it currently does control, or alternatively amend the source code to the Bitcoin network itself to restore its access

to the stranded bitcoin.

In 2022, the High Court dismissed the claims, finding that the entity had not established a serious issue

However, in February 2023, the Court of Appeals unanimously overruled the High Court’s decision, holding that

there was a serious issue to be tried.

If a court decides to grant the relief requested, it is possible that wide-ranging and fundamental

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and a loss of public confidence in the Bitcoin network could result.

Alternatively, bitcoin could face obstacles to use or in

the United Kingdom, which could reduce adoption.

Alternatively, bitcoin could face obstacles to use or in the

United Kingdom, which could reduce adoption.

Courts in other jurisdictions could take similar positions.

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The treatment of the Trust for U.S.

federal income

tax purposes is uncertain.

The Sponsor intends to take the position that the Trust

is properly treated as a grantor trust for U.S.

income tax purposes is uncertain.

The Sponsor intends to take the position

that the Trust is properly treated as a grantor trust for U.S.

federal income tax purposes.

Assuming that the Trust is a grantor trust, the Trust

will not be subject to U.S.

Assuming that the Trust is a grantor

trust, the Trust will not be subject to U.S.

federal income tax.

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.

The Trust may take certain positions with respect to

the tax consequences of Incidental Rights and 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.

In addition, 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.

there can be no assurance that these abandonments would be treated as effective for U.S.

federal income tax purposes, or that

the Sponsor will continue to cause the Trust to irrevocably abandon any Incidental Rights and IR Virtual Currency if there are

future regulatory developments that would make it feasible for the Trust to retain those assets.

If the Trust were treated as

owning any asset other than bitcoins as of any date on which it creates or redeems Shares, it may likely cease to qualify as a

grantor trust for U.S.

federal income tax purposes.

Because of the evolving nature of digital currencies,

it is not possible to predict potential future developments that may arise with respect to digital currencies, including forks,

airdrops and other similar occurrences.

Assuming that the Trust is currently a grantor trust for U.S.

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.

The Trust may take certain positions with

respect to the tax consequences of Incidental Rights and 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.

In addition, 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.

However, there can be no assurance that these abandonments would be treated as effective for U.S.

federal income tax purposes,

certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated as a grantor

trust for such purposes.

If the Trust is not properly classified as a grantor

trust, the Trust might be classified as a partnership for U.S.

or that the Sponsor will continue to cause the Trust to irrevocably abandon any Incidental Rights and IR Virtual Currency if there

are future regulatory developments that would make it feasible for the Trust to retain those assets.

If the Trust were treated

as owning any asset other than bitcoins as of any date on which it creates or redeems Shares, it may likely cease to qualify as

a grantor trust for U.S.

federal income tax purposes.

However, due to the uncertain treatment of

digital assets for U.S.

federal income tax purposes, future developments regarding the treatment of digital assets for U.S.

federal income

tax purposes could adversely affect the value of the Shares.

If the Trust were classified as a partnership for U.S.

Because of the evolving nature of digital

currencies, it is not possible to predict potential future developments that may arise with respect to digital currencies, including

forks, airdrops and other similar occurrences.

Assuming that the Trust is currently a grantor trust for U.S.

federal income tax

purposes, the tax consequences of owning Shares generally would not be materially different from the tax consequences described herein,

although there might be certain differences, including with respect to timing of the recognition of taxable income or loss and (in certain

circumstances) withholding taxes.

In addition, tax information reports provided to beneficial owners of Shares would be made in a different

If the Trust were not classified as either a grantor trust or a partnership for U.S.

federal income tax purposes, it generally would

be classified as a corporation for such purposes.

purposes, certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated as

a grantor trust for such purposes.

If the Trust is not properly classified

as a grantor trust, the Trust might be classified as a partnership for U.S.

federal income tax purposes.

If the Trust were classified

as a partnership for U.S.

federal income tax purposes, the tax consequences of owning Shares generally would not be materially

different from the tax consequences described herein, although there might be certain differences, including with respect to timing

of the recognition of taxable income or loss and (in certain circumstances) withholding taxes.

In addition, tax information reports

provided to beneficial owners of Shares would be made in a different form.

If the Trust were not classified as either a grantor

trust or a partnership for U.S.

federal income tax purposes, it generally would be classified as a corporation for such purposes.

If it were treated as a corporation, the Trust would be subject to entity-level U.S.

federal income tax (currently at the rate of 21%), plus possible state and/or local taxes, on its net taxable income, and certain distributions

made by the Trust to Shareholders would be treated as taxable dividends to the extent of the Trust’s current and accumulated earnings

Any such dividend distributed to a beneficial owner of Shares that is a non-U.S.

federal income tax (currently at the rate

of 21%), plus possible state and/or local taxes, on its net taxable income, and certain distributions made by the Trust to Shareholders

would be treated as taxable dividends to the extent of the Trust’s current and accumulated earnings and profits.

dividend distributed to a beneficial owner of Shares that is a non-U.S.

person for U.S.

federal income tax purposes

generally would be subject to U.S.

federal income tax purposes generally would

be subject to U.S.

federal withholding tax at a rate of 30% (or such lower rate as provided in an applicable tax treaty).

The treatment of digital assets for U.S.

income tax purposes is uncertain.

Assuming that the Trust is properly treated as

a grantor trust for U.S.

federal income tax purposes is uncertain.

Assuming that the Trust is properly treated

as a grantor trust for U.S.

federal income tax purposes, each beneficial owner of Shares will be treated for U.S.

federal income tax purposes

as the owner of an undivided interest in the bitcoin held in the Trust.

Due to the new and evolving nature of digital assets and the absence

of comprehensive guidance with respect to digital assets, many significant aspects of the U.S.

federal income

tax purposes as the owner of an undivided interest in the bitcoin held in the Trust.

Due to the new and evolving nature of digital

assets and the absence of comprehensive guidance with respect to digital assets, many significant aspects of the U.S.

federal income

tax treatment of digital assets (including digital currency) are uncertain.

In 2014, the IRS released a notice (the

“Notice”) discussing certain aspects of “convertible virtual currency” (that is, digital currency that

has an equivalent value in fiat currency or that acts as a substitute for fiat currency) for U.S.

federal income tax purposes and,

in particular, stating that such digital currency (i) is “property” (ii) is not “currency” for purposes

of the rules relating to foreign currency gain or loss and (iii) may be held as a capital asset.

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 currencies are taxable events

giving rise to ordinary income and guidance with respect to the determination of the tax basis of digital currency.

Notice and the Ruling & FAQs do not address other significant aspects of the U.S.

federal income tax treatment of digital

assets (including digital currency) are uncertain.

In 2014, the IRS released a notice (the “Notice”)

discussing certain aspects of “convertible virtual currency” (that is, digital currency that has an equivalent value in fiat

currency or that acts as a substitute for fiat currency) for U.S.

federal income tax purposes and, in particular, stating that such digital

currency (i) is “property” (ii) is not “currency” for purposes of the rules relating to foreign currency gain

or loss and (iii) may be held as a capital asset.

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 currencies are taxable events giving rise to ordinary income and guidance with respect to the determination

of the tax basis of digital currency.

However, the Notice and the Ruling & FAQs do not address other significant aspects of the

federal income tax treatment of digital assets.

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.

Future developments that may arise with respect

to digital assets may increase the uncertainty with respect to the treatment of digital assets for U.S.

federal income tax purposes.

example, the Notice addresses only digital currency that is “convertible virtual currency,” and it is conceivable that, as

a result of a fork, airdrop or similar occurrence, the Trust will hold certain types of digital assets that are not within the scope of

There can be no assurance that the IRS will not

alter its position with respect to digital assets in the future or that a court would uphold the treatment set forth in the Notice and

the Ruling & FAQs.

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.

Future developments that may arise with

respect to digital assets may increase the uncertainty with respect to the treatment of digital assets for U.S.

federal income

tax purposes.

For example, the Notice addresses only digital currency that is “convertible virtual currency,” and it

is conceivable that, as a result of a fork, airdrop or similar occurrence, the Trust will hold certain types of digital assets

that are not within the scope of the Notice.

There can be no assurance that the IRS will

not alter its position with respect to digital assets in the future or that a court would uphold the treatment set forth in the

Notice and the Ruling & FAQs.

It is also unclear what additional guidance on the treatment of digital assets for U.S.

federal income tax

purposes may be issued in the future.

federal income tax purposes may be issued in the future.

Any future guidance on the treatment of digital assets for U.S.

federal income tax purposes could

increase the expenses of the Trust and could have an adverse effect on the prices of digital currencies, including on the price of bitcoin

in the digital asset markets.

As a result, any such future guidance could have an adverse effect on the value of the Shares.

Shareholders are urged to consult their tax advisers

regarding the tax consequences of owning and disposing of Shares and digital assets in general.

income tax purposes could increase the expenses of the Trust and could have an adverse effect on the prices of digital currencies,

including on the price of bitcoin in the digital asset markets.

As a result, any such future guidance could have an adverse effect

on the value of the Shares.

Shareholders are urged to consult their

tax advisers regarding the tax consequences of owning and disposing of Shares and digital assets in general.

Future developments regarding the treatment

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federal income tax purposes could adversely affect the value of the Shares.

As discussed above, many significant aspects of

federal income tax treatment of digital assets, such as bitcoin, are uncertain, and it is unclear what guidance on the treatment

of digital assets for U.S.

As discussed above, many significant aspects

federal income tax treatment of digital assets, such as bitcoin, are uncertain, and it is unclear what guidance on

the treatment of digital assets for U.S.

federal income tax purposes may be issued in the future.

It is possible that any such guidance would have an

adverse effect on the prices of digital assets, including on the price of bitcoin in digital asset exchanges, and therefore may have an

adverse effect on the value of the Shares.

Because of the evolving nature of digital assets,

it is not possible to predict potential future developments that may arise with respect to digital assets, including forks, airdrops and

similar occurrences.

Such developments may increase the uncertainty with respect to the treatment of digital assets for U.S.

federal income

tax purposes.

Moreover, certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated

as a grantor trust for U.S.

It is possible that any such

guidance would have an adverse effect on the prices of digital assets, including on the price of bitcoin in digital asset exchanges,

and therefore may have an adverse effect on the value of the Shares.

Because of the evolving nature of digital

assets, it is not possible to predict potential future developments that may arise with respect to digital assets, including forks,

airdrops and similar occurrences.

Such developments may increase the uncertainty with respect to the treatment of digital assets

federal income tax purposes.

Future developments in the treatment of digital

assets for tax purposes other than U.S.

Moreover, certain future developments could render it impossible, or impracticable, for the

Trust to continue to be treated as a grantor trust for U.S.

federal income tax purposes.

Future developments in the treatment

of digital assets for tax purposes other than U.S.

federal income tax purposes could adversely affect the value of the Shares.

The taxing authorities of certain states, including

New York, (i) have announced that they will follow the Notice with respect to the treatment of digital currencies for state income tax

purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital currencies for fiat currency from state sales

Other states have not issued any guidance on these points, and could take different positions (e.g., imposing sales taxes on purchases

and sales of digital assets for fiat currency), and states that have issued guidance on their tax treatment of digital currencies (or

other digital assets) could update or change their tax treatment of digital currencies (or other digital assets).

It is unclear what further

guidance on the treatment of digital currencies for state or local tax purposes may be issued in the future.

A state or local government

authority’s treatment of bitcoin may have negative consequences, including the imposition of a greater tax burden on investors in

bitcoin or the imposition of a greater cost on the acquisition and disposition of bitcoin generally.

The treatment of digital assets for tax purposes

The taxing authorities of certain states,

including New York, (i) have announced that they will follow the Notice with respect to the treatment of digital currencies for

state income tax purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital currencies for fiat currency

from state sales tax.

Other states have not issued any guidance on these points, and could take different positions (e.g., imposing

sales taxes on purchases and sales of digital assets for fiat currency), and states that have issued guidance on their tax treatment

of digital currencies (or other digital assets) could update or change their tax treatment of digital currencies (or other digital

It is unclear what further guidance on the treatment of digital currencies for state or local tax purposes may be issued

in the future.

A state or local government authority’s treatment of bitcoin may have negative consequences, including the

imposition of a greater tax burden on investors in bitcoin or the imposition of a greater cost on the acquisition and disposition

of bitcoin generally.

The treatment of digital assets for tax

purposes by non U.S.

jurisdictions may differ from the treatment of digital assets for U.S.

federal, state or local tax purposes.

It is possible,

for example, that a non U.S.

jurisdiction would impose sales tax or value-added tax on purchases and sales of digital assets for fiat

If a foreign jurisdiction with a significant share of the market of bitcoin users imposes onerous tax burdens on digital currency

users, or imposes sales or value-added tax on purchases and sales of digital assets for fiat currency, such actions could result in decreased

demand for bitcoin in such jurisdiction.

Any future guidance on the treatment of digital

assets for state, local or non U.S.

tax purposes could increase the expenses of the Trust and could have an adverse effect on the prices

of digital assets, including on the price of bitcoin in digital asset exchanges.

As a result, any such future guidance could have an adverse

effect on the value of the Shares.

It is possible, for example, that a non U.S.

jurisdiction would impose sales tax or value-added tax on purchases and sales of digital

assets for fiat currency.

If a foreign jurisdiction with a significant share of the market of bitcoin users imposes onerous tax

burdens on digital currency users, or imposes sales or value-added tax on purchases and sales of digital assets for fiat currency,

such actions could result in decreased demand for bitcoin in such jurisdiction.

Any future guidance on the treatment of

digital assets for state, local or non U.S.

tax purposes could increase the expenses of the Trust and could have an adverse effect

on the prices of digital assets, including on the price of bitcoin in digital asset exchanges.

As a result, any such future guidance

could have an adverse effect on the value of the Shares.

Tax-Exempt Shareholder may recognize

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Under the guidance provided in the Ruling &

FAQs, hard forks, airdrops and similar occurrences with respect to digital currencies will under certain circumstances be treated as taxable

events giving rise to ordinary income.

In the absence of guidance to the contrary, it is possible that any such income recognized by a

FAQs, hard forks, airdrops and similar occurrences with respect to digital currencies will under certain circumstances be treated

as taxable events giving rise to ordinary income.

In the absence of guidance to the contrary, it is possible that any such income

recognized by a U.S.

Tax-Exempt Shareholder would constitute “unrelated business taxable income” (“UBTI”).

Tax-exempt Shareholders

should consult their tax advisers regarding whether such Shareholder may recognize UBTI as a consequence of an investment in Shares.

Shareholders could incur a tax liability without

an associated distribution of the Trust.

In the normal course of business, it is possible

that the Trust could incur a taxable gain in connection with the sale of bitcoin (such as sales of bitcoin to obtain fiat currency with

which to pay the Sponsor Fee or

Trust expenses, and including deemed sales of bitcoin

as a result of the Trust using bitcoin to pay the Sponsor Fee or its expenses) that is otherwise not associated with a distribution to

Shareholders.

Shareholders may be subject to tax due to the grantor trust status of the Trust even though there is not a corresponding

distribution from the Trust.

A hard “fork” of the Bitcoin Blockchain

could result in Shareholders incurring a tax liability.

Tax-exempt Shareholders should consult their tax advisers regarding whether such Shareholder may recognize UBTI as a consequence

of an investment in Shares.

Shareholders could incur a tax liability

without an associated distribution of the Trust.

the normal course of business, it is possible that the Trust could incur a taxable gain in connection with the sale of bitcoin

(such as sales of bitcoin to obtain fiat currency with which to pay the Sponsor Fee or

Trust expenses, and including deemed sales of bitcoin as a result

of the Trust using bitcoin to pay the Sponsor Fee or its expenses) that is otherwise not associated with a distribution to Shareholders.

Shareholders may be subject to tax due to the grantor trust status of the Trust even though there is not a corresponding distribution

from the Trust.

A hard “fork” of the Bitcoin

Blockchain could result in Shareholders incurring a tax liability.

If a hard fork occurs in the Bitcoin Blockchain,

the Trust could hold both the original bitcoin and the alternative new bitcoin.

The IRS has held that a hard fork resulting in the creation

of new units of cryptocurrency is a taxable event giving rise to ordinary income.

Moreover, if such an event occurs, the Trust Agreement

provides that the Sponsor shall have the discretion to determine whether the original or the alternative asset shall constitute bitcoin.

The Trust shall treat whichever asset the Sponsor determines is not bitcoin as Incidental Rights or IR Virtual Currency, which it has

committed to irrevocably abandon.

The Ruling & FAQs do not address whether

income recognized by a non-U.S.

person as a result of a fork, airdrop or similar occurrence could be subject to the 30% withholding tax

imposed on U.S.-source “fixed or determinable annual or periodical” income.

Shareholders should assume that, in the

absence of guidance, a withholding agent (including the Sponsor) is likely to withhold 30% of any such income recognized by a Non-U.S.

Shareholder in respect of its Shares, including by deducting such withheld amounts from proceeds that such Non-U.S.

Shareholder would

otherwise be entitled to receive in connection with a distribution of Incidental Rights or IR Virtual Currency.

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

However, there can be no assurance that these abandonments would be treated as effective for U.S.

federal income tax purposes,

or that the Sponsor will continue to cause the Trust to irrevocably abandon any Incidental Rights and IR Digital Asset if there are future

regulatory developments that would make it feasible for the Trust to retain those assets.

The receipt, distribution and/or sale of the alternative

bitcoin may cause Shareholders to incur a United States federal, state, and/or local, or non-U.S.

The IRS has held that a hard fork resulting in

the creation of new units of cryptocurrency is a taxable event giving rise to ordinary income.

Moreover, if such an event occurs,

the Trust Agreement provides that the Sponsor shall have the discretion to determine whether the original or the alternative asset

shall constitute bitcoin.

The Trust shall treat whichever asset the Sponsor determines is not bitcoin as Incidental Rights or IR

Virtual Currency, which it has committed to irrevocably abandon.

The Ruling & FAQs do not address

whether income recognized by a non-U.S.

person as a result of a fork, airdrop or similar occurrence could be subject to the 30%

withholding tax imposed on U.S.-source “fixed or determinable annual or periodical” income.

Shareholders should

assume that, in the absence of guidance, a withholding agent (including the Sponsor) is likely to withhold 30% of any such income

recognized by a Non-U.S.

Shareholder in respect of its Shares, including by deducting such withheld amounts from proceeds that

such Non-U.S.

Shareholder would otherwise be entitled to receive in connection with a distribution of Incidental Rights or IR Virtual

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.

However, there can be no assurance that these abandonments would be treated

as effective for U.S.

federal income tax purposes, or that the Sponsor will continue to cause the Trust to irrevocably abandon

any Incidental Rights and IR Virtual Currency if there are future regulatory developments that would make it feasible for the Trust

to retain those assets.

The receipt, distribution and/or sale of

the alternative bitcoin may cause Shareholders to incur a United States federal, state, and/or local, or non-U.S.

tax liability.

Any tax liability could

adversely impact an investment in the Shares and may require Shareholders to prepare and file tax returns they would not otherwise be

required to prepare and file.]

Potential conflicts of interest may arise among

the Sponsor or its affiliates and the Trust.

The Sponsor and its affiliates have no fiduciary duties to the Trust and its Shareholders

other than as provided in the Trust Agreement, which may permit them to favor their own interests to the detriment of the Trust and its

Shareholders.

The Sponsor will manage the affairs of the Trust.

Conflicts of interest may arise among the Sponsor and its affiliates, on the one hand, and the Trust and its Shareholders, on the other

As a result of these conflicts, the Sponsor may favor its own interests and the interests of its affiliates over the Trust and its

Shareholders.

Any tax liability could adversely impact an investment in the Shares and may require Shareholders to prepare and file tax returns

they would not otherwise be required to prepare and file.

Potential conflicts of interest may arise

among the Sponsor or its affiliates and the Trust.

The Sponsor and its affiliates have no fiduciary duties to the Trust and its

Shareholders other than as provided in the Trust Agreement, which may permit them to favor their own interests to the detriment

of the Trust and its Shareholders.

The Sponsor will manage the affairs of the

Conflicts of interest may arise among the Sponsor and its affiliates, on the one hand, and the Trust and its Shareholders,

on the other hand.

As a result of these conflicts, the Sponsor may favor its own interests and the interests of its affiliates

over the Trust and its Shareholders.

These potential conflicts include, among others, the following:

● the Sponsor has no fiduciary duties to, and is allowed to take into account the interests of parties other than, the Trust and its

Shareholders in resolving conflicts of interest, provided the Sponsor does not act in bad faith;

● the Sponsor has no fiduciary duties to, and is allowed to take into account the interests of parties other than, the Trust

and its Shareholders in resolving conflicts of interest, provided the Sponsor does not act in bad faith;

● the Trust has agreed to indemnify the Sponsor, the Trustee and their respective affiliates pursuant to the Trust Agreement;

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to each of which it may owe fiduciary duties;

● the Sponsor and its staff also service affiliates of the Sponsor, and may also service other digital asset investment vehicles, and

their respective clients and cannot devote all of its, or their, respective time or resources to the management of the affairs of the

● MarketVector, which is the index administrator of the MarketVector TM Bitcoin Benchmark Rate, is an affiliate of the Sponsor;

● the Sponsor, its affiliates and their officers and employees are not prohibited from engaging in other businesses or activities, including

those that might be in direct competition with the Trust;

● affiliates of the Sponsor may start to have substantial direct investments in bitcoin, or other digital assets or companies in the

digital assets ecosystem that they are permitted to manage taking into account their own interests without regard to the interests of

the Trust or its Shareholders, and any increases, decreases or other changes in such investments could affect the Index price and, in

turn, the value of the Shares;

● the Sponsor and its staff also service affiliates of the Sponsor, and may also service other digital asset investment vehicles,

and their respective clients and cannot devote all of its, or their, respective time or resources to the management of the affairs

of the Trust;

● MarketVector, which is the index administrator of the MarketVector TM Bitcoin Benchmark Rate, is an affiliate of

● the Sponsor, its affiliates and their officers and employees are not prohibited from engaging in other businesses or activities,

including those that might be in direct competition with the Trust;

● affiliates of the Sponsor may start to have substantial direct investments in bitcoin, or other digital assets or companies

in the digital assets ecosystem that they are permitted to manage taking into account their own interests without regard to the

interests of the Trust or its Shareholders, and any increases, decreases or other changes in such investments could affect the

Index price and, in turn, the value of the Shares;

● the Sponsor decides whether to retain separate counsel, accountants or others to perform services for the Trust;

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for safeguarding the bitcoin, and holding the private keys that provide access to the bitcoin in the Trust’s Bitcoin Account.

By purchasing the Shares, Shareholders agree and

consent to the provisions set forth in the Trust Agreement.

Shareholders cannot be assured of the Sponsor’s

continued services, the discontinuance of which may be detrimental to the Trust.

Shareholders cannot be assured that the Sponsor

will be willing or able to continue to serve as sponsor to the Trust for any length of time.

If the Sponsor discontinues its activities

on behalf of the Trust and a substitute sponsor is not appointed, the Trust will terminate and liquidate its bitcoins.

Appointment of a substitute sponsor will not guarantee

the Trust’s continued operation, successful or otherwise.

Because a substitute sponsor may have no experience managing a digital

asset financial vehicle, a substitute sponsor may not have the experience, knowledge or expertise required to ensure that the Trust will

operate successfully or continue to operate at all.

Therefore, the appointment of a substitute sponsor may not necessarily be beneficial

to the Trust and the Trust may terminate.

Although the Bitcoin Custodian and the Additional

Bitcoin Custodian are fiduciaries with respect to the Trust’s assets, they could resign or be removed by the Sponsor, which may

trigger early dissolution of the Trust.

The Bitcoin Custodian and the Additional Bitcoin

Custodian are fiduciaries under § 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under

the Advisers Act and are licensed to custody the Trust’s bitcoins in trust on the Trust’s behalf.

However, the Bitcoin Custodian

or the Additional Bitcoin Custodian may terminate the Custody Agreement or the Additional Bitcoin Custody Agreement, as the case may be,

immediately or upon providing the applicable notice provided under the Custody Agreement or the Additional Bitcoin Custody Agreement.

If either the Bitcoin Custodian of the Additional Bitcoin Custodian resigns, is removed, or is prohibited by applicable law or regulation

to act as custodian, and no successor custodian has been employed, the Sponsor may dissolve the Trust in accordance with the terms of

the Trust Agreement.

Shareholders may be adversely affected by the

lack of independent advisers representing investors in the Trust.

The Sponsor has consulted with counsel, accountants

and other advisers regarding the formation and operation of the Trust.

No counsel was appointed to represent investors in connection with

the formation of

the Trust or the establishment of the terms of

the Trust Agreement and the Shares.

Moreover, no counsel has been appointed to represent an investor in connection with the offering of

Accordingly, an investor should consult his, her or its own legal, tax and financial advisers regarding the desirability of

the value of the Shares.

Lack of such consultation may lead to an undesirable investment decision with respect to investment in the Shares.

Shareholders and Authorized Participants lack

the right under the Custody Agreement to assert claims directly against the Bitcoin Custodian, which significantly limits their options

for recourse.

Neither the Shareholders nor any Authorized Participant

or Liquidity Provider have a right under the Custody Agreement to assert a claim against the Bitcoin Custodian.

Claims under the Custody

Agreement may only be asserted by the Sponsor on behalf of the Trust .

The Exchange on which the Shares are listed

may halt trading in the Trust’s Shares, which would adversely impact a Shareholder’s ability to sell Shares.

The Trust’s Shares have been approved for

listing, subject to notice of issuance, on the Exchange under the market symbol “HODL.” Trading in Shares may be halted due

to market conditions or, in light of the Exchange rules and procedures, for reasons that, in the view of the Exchange, make trading in

Shares inadvisable.

In addition, trading is subject to trading halts caused by extraordinary market volatility pursuant to “circuit

breaker” rules that require trading to be halted for a specified period based on a specified market decline.

Additionally, there

can be no assurance that the requirements necessary to maintain the listing of the Trust’s Shares will continue to be met or will

remain unchanged.

The liquidity of the Shares may also be affected

by the withdrawal from participation of Authorized Participants, which could adversely affect the market price of the Shares.

In the event that one or more Authorized Participants

or market makers that have substantial interests in the Trust’s Shares withdraw or “step away” from participation in

the purchase (creation) or sale (redemption) of the Trust’s Shares, the liquidity of the Shares will likely decrease, which could

adversely affect the market price of the Shares and result in Shareholders incurring a loss on their investment.

The market infrastructure of the bitcoin spot

market could result in the absence of active Authorized Participants able to support the trading activity of the Trust.

Bitcoin is extremely volatile, and concerns exist

about the stability, reliability and robustness of many trading platforms where bitcoin trade.

In a highly volatile market, or if one

or more exchanges supporting the bitcoin market faces an issue, it could be extremely challenging for any Authorized Participants to provide

continuous liquidity in the Shares.

There can be no guarantee that the Sponsor will be able to find an Authorized Participant to actively

and continuously support the Trust.

Bitcoin spot exchanges are not subject to same

regulatory oversight as traditional equity exchanges, which could negatively impact the ability of Authorized Participants to implement

arbitrage mechanisms .

● VanEck is a minority equity holder in Metatech Holdings, the parent company of Nonco LLC and holds approximately 6% of its

Nonco LLC is a Liquidity Provider to the Trust, and the Trust conducts its bitcoin purchase and sale transactions by trading

directly with Liquidity Providers, including Nonco LLC.

By purchasing the Shares, Shareholders agree

and consent to the provisions set forth in the Trust Agreement.

Shareholders cannot be assured of the

Sponsor’s continued services, the discontinuance of which may be detrimental to the Trust.

Shareholders cannot be assured that the

Sponsor will be willing or able to continue to serve as sponsor to the Trust for any length of time.

If the Sponsor discontinues

its activities on behalf of the Trust and a substitute sponsor is not appointed, the Trust will terminate and liquidate its bitcoins.

Appointment of a substitute sponsor will

not guarantee the Trust’s continued operation, successful or otherwise.

Because a substitute sponsor may have no experience

managing a digital asset financial vehicle, a substitute sponsor may not have the experience, knowledge or expertise required to

ensure that the Trust will operate successfully or continue to operate at all.

Therefore, the appointment of a substitute sponsor

may not necessarily be beneficial to the Trust and the Trust may terminate.

Although the Bitcoin Custodian and the

Additional Bitcoin Custodian are fiduciaries with respect to the Trust’s assets, they could resign or be removed by the Sponsor,

which may trigger early dissolution of the Trust.

The Bitcoin Custodian and the Additional

Bitcoin Custodian are fiduciaries under § 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6)

under the Advisers Act and are licensed to custody the Trust’s bitcoins in trust on the Trust’s behalf.

Bitcoin Custodian or the Additional Bitcoin Custodian may terminate the Custody Agreement or the Additional Bitcoin Custody Agreement,

as the case may be, immediately or upon providing the applicable notice provided under the Custody Agreement or the Additional

Bitcoin Custody Agreement.

If either the Bitcoin Custodian of the Additional Bitcoin Custodian resigns, is removed, or is prohibited

by applicable law or regulation to act as custodian, and no successor custodian has been employed, the Sponsor may dissolve the

Trust in accordance with the terms of the Trust Agreement.

Shareholders may be adversely affected

by the lack of independent advisers representing investors in the Trust.

Sponsor has consulted with counsel, accountants and other advisers regarding the formation and operation of the Trust.

was appointed to represent investors in connection with the formation of

the Trust or the establishment of the terms of the Trust Agreement

and the Shares.

Moreover, no counsel has been appointed to represent an investor in connection with the offering of the Shares.

Accordingly, an investor should consult his, her or its own legal, tax and financial advisers regarding the desirability of the

value of the Shares.

Lack of such consultation may lead to an undesirable investment decision with respect to investment in the

Shareholders and Authorized Participants

lack the right under the Custody Agreement to assert claims directly against the Bitcoin Custodian, which significantly limits

their options for recourse.

Neither the Shareholders nor any Authorized

Participant or Liquidity Provider have a right under the Custody Agreement to assert a claim against the Bitcoin Custodian.

under the Custody Agreement may only be asserted by the Sponsor on behalf of the Trust .

The Exchange on which the Shares are

listed may halt trading in the Trust’s Shares, which would adversely impact a Shareholder’s ability to sell Shares.

The Trust’s Shares have been approved

for listing, subject to notice of issuance, on the Exchange under the market symbol “HODL.” Trading in Shares may be

halted due to market conditions or, in light of the Exchange rules and procedures, for reasons that, in the view of the Exchange,

make trading in Shares inadvisable.

In addition, trading is subject to trading halts caused by extraordinary market volatility

pursuant to “circuit breaker” rules that require trading to be halted for a specified period based on a specified market

Additionally, there can be no assurance that the requirements necessary to maintain the listing of the Trust’s Shares

will continue to be met or will remain unchanged.

The liquidity of the Shares may also

be affected by the withdrawal from participation of Authorized Participants, which could adversely affect the market price of the

In the event that one or more Authorized

Participants or market makers that have substantial interests in the Trust’s Shares withdraw or “step away” from

participation in the purchase (creation) or sale (redemption) of the Trust’s Shares, the liquidity of the Shares will likely

decrease, which could adversely affect the market price of the Shares and result in Shareholders incurring a loss on their investment.

The market infrastructure of the bitcoin

spot market could result in the absence of active Authorized Participants able to support the trading activity of the Trust.

Bitcoin is extremely volatile, and concerns

exist about the stability, reliability and robustness of many trading platforms where bitcoin trade.

In a highly volatile market,

or if one or more exchanges supporting the bitcoin market faces an issue, it could be extremely challenging for any Authorized

Participants to provide continuous liquidity in the Shares.

There can be no guarantee that the Sponsor will be able to find an

Authorized Participant to actively and continuously support the Trust.

Bitcoin spot exchanges are not subject

to same regulatory oversight as traditional equity exchanges, which could negatively impact the ability of Authorized Participants

to implement arbitrage mechanisms .

The trading for spot bitcoin occurs on multiple

trading venues that have various levels and types of regulation, but are not regulated in the same manner as traditional stock and bond

If these exchanges do not operate smoothly or face technical, security or regulatory issues, that could impact the ability

of Authorized Participants to make markets in the Shares.

In such an event, trading in the Shares could occur at a material premium or

discount against the NAV.

Shareholders that are not Authorized Participants

may only purchase or sell their Shares in secondary trading markets, and the conditions associated with trading in secondary markets may

adversely affect Shareholders’ investment in the Shares.

Only Authorized Participants may create or redeem

All other Shareholders that desire to purchase or sell Shares must do so through the Exchange or in other markets, if any, in

which the Shares may be traded.

trading venues that have various levels and types of regulation, but are not regulated in the same manner as traditional stock

and bond exchanges.

If these exchanges do not operate smoothly or face

technical, security or regulatory issues, that could impact

the ability of Authorized Participants to make markets in the Shares.

In such an event, trading in the Shares could occur at a

material premium or discount against the NAV.

Shareholders that are not Authorized

Participants may only purchase or sell their Shares in secondary trading markets, and the conditions associated with trading in

secondary markets may adversely affect Shareholders’ investment in the Shares.

Only Authorized Participants may create

or redeem Baskets.

All other Shareholders that desire to purchase or sell Shares must do so through the Exchange or in other markets,

if any, in which the Shares may be traded.

Shares may trade at a premium or discount to the NAV per Share.

As the Sponsor and its management have limited

history of operating investment vehicles like the Trust, their experience may be inadequate or unsuitable to manage the Trust.

The past performances of the Sponsor’s management

in other investment vehicles are no indication of their ability to manage an investment vehicle such as the Trust.

If the experience of

the Sponsor and its management is inadequate or unsuitable to manage an investment vehicle such as the Trust, the operations of the Trust

may be adversely affected.

Furthermore, the Sponsor is currently engaged in

the management of other investment vehicles which could divert their attention and resources.

If the Sponsor were to experience difficulties

in the management of such other investment vehicles that damaged the Sponsor or its reputation, it could have an adverse impact on the

Sponsor’s ability to continue to serve as Sponsor for the Trust.

The Sponsor is leanly staffed and relies heavily

on key personnel.

The Sponsor is leanly staffed and relies heavily

on key personnel to manage its activities.

These key personnel intend to allocate their time managing the Trust in a manner that they

deem appropriate.

If such key personnel were to leave or be unable to carry out their present responsibilities, it may have an adverse

effect on the management of the Sponsor.

As the Sponsor and its management have

limited history of operating investment vehicles like the Trust, their experience may be inadequate or unsuitable to manage the

The past performances of the Sponsor’s

management in other investment vehicles are no indication of their ability to manage an investment vehicle such as the Trust.

the experience of the Sponsor and its management is inadequate or unsuitable to manage an investment vehicle such as the Trust,

the operations of the Trust may be adversely affected.

Furthermore, the Sponsor is currently engaged

in the management of other investment vehicles which could divert their attention and resources.

If the Sponsor were to experience

difficulties in the management of such other investment vehicles that damaged the Sponsor or its reputation, it could have an adverse

impact on the Sponsor’s ability to continue to serve as Sponsor for the Trust.

The Sponsor is leanly staffed and relies

heavily on key personnel.

The Sponsor is leanly staffed and relies

heavily on key personnel to manage its activities.

These key personnel intend to allocate their time managing the Trust in a manner

that they deem appropriate.

If such key personnel were to leave or be unable to carry out their present responsibilities, it may

have an adverse effect on the management of the Sponsor.

The Trust is new, and if it is not profitable,

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The Trust is new.

If the Trust does not attract

sufficient assets to remain open, then the Trust could be terminated and liquidated at the direction of the Sponsor.

Termination and liquidation

of the Trust could occur at a time that is disadvantageous to Shareholders.

When the Trust’s assets are sold as part of the Trust’s

liquidation, the resulting proceeds distributed to Shareholders may be less than those that may be realized in a sale outside of a liquidation

Shareholders may be adversely affected by redemption or creation orders that are subject to postponement, suspension or rejection

under certain circumstances.

If the Trust does not

attract sufficient assets to remain open, then the Trust could be terminated and liquidated at the direction of the Sponsor.

and liquidation of the Trust could occur at a time that is disadvantageous to Shareholders.

When the Trust’s assets are sold

as part of the Trust’s liquidation, the resulting proceeds distributed to Shareholders may be less than those that may be

realized in a sale outside of a liquidation context.

Shareholders may be adversely affected by redemption or creation orders that

are subject to postponement, suspension or rejection under certain circumstances.

Shareholders do not have the rights enjoyed

by investors in certain other vehicles and may be adversely affected by a lack of statutory rights and by limited voting and distribution

The Shares have limited voting rights and limited

distribution rights.

For example, Shareholders do not have the right to elect directors, the Trust may enact splits or reverse splits

without Shareholder approval and the Trust is not required to pay regular distributions, although the Trust may pay distributions at the

discretion of the Sponsor.

The Sponsor and the Trustee may agree to amend

the Trust Agreement, including to increase the Sponsor Fee, without Shareholder consent.

If an amendment imposes new fees and charges

or increases existing fees or charges, including the Sponsor’s Fee (except for taxes and other governmental charges, registration

fees or other such expenses), or prejudices a substantial existing right of Shareholders, it will become effective for outstanding Shares

30 days after notice of such amendment is given to registered owners.

Notwithstanding the foregoing, the Sponsor shall have the right

to increase or decrease the amount of the Sponsor Fee (i) upon three (3) business days’ prior notice of the increase or decrease

being posted on the website of the Trust and (ii) upon three (3) business days’ prior written notice of the increase or decrease

being given to the Trustee.

Shareholders that are not registered owners (which most shareholders will not be) may not receive specific

notice of a fee increase other than through an amendment to the prospectus.

Moreover, at the time an amendment becomes effective, by continuing

to hold Shares, Shareholders are deemed to agree to the amendment and to be bound by the Trust Agreement as amended without specific agreement

to such increase (other than through the “negative consent” procedure described above).

The Trust Agreement includes provisions that

limit Shareholders’ voting rights and restrict Shareholders’ right to bring a derivative action.

Under the Trust Agreement, Shareholders have limited

voting rights and the Trust will not have regular Shareholder meetings.

Shareholders take no part in the management or control of the

Accordingly, Shareholders do not have the right to authorize actions, appoint service providers or take other actions as may be

taken by shareholders of other trusts or companies where shares carry such rights.

The Sponsor may take actions in the operation of the

Trust that may be adverse to the interests of Shareholders and may adversely affect the value of the Shares.

Moreover, pursuant to the terms of the Trust Agreement,

Shareholders’ statutory right under Delaware law to bring a derivative action (i.e., to initiate a lawsuit in the name of the Trust

in order to assert a claim belonging to the Trust against a fiduciary of the Trust or against a third party when the Trust’s management

has refused to do so) is restricted.

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

Additionally, Section 3816(e) of the DSTA 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 and in accordance with Section

3816(e), 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) of one another and (ii) collectively hold at least 10% of the outstanding Shares join in the bringing or maintaining

of such action, suit or other proceeding.

This provision applies to any derivative actions brought in the name of the Trust other than

claims under the federal securities laws and the rules and regulations thereunder.

The Shares have limited voting rights and

limited distribution rights.

For example, Shareholders do not have the right to elect directors, the Trust may enact splits or

reverse splits without Shareholder approval and the Trust is not required to pay regular distributions, although the Trust may

pay distributions at the discretion of the Sponsor.

The Sponsor and the Trustee may agree to

amend the Trust Agreement, including to increase the Sponsor Fee, without Shareholder consent.

If an amendment imposes new fees

and charges or increases existing fees or charges, including the Sponsor’s Fee (except for taxes and other governmental charges,

registration fees or other such expenses), or prejudices a substantial existing right of Shareholders, it will become effective

for outstanding Shares 30 days after notice of such amendment is given to registered owners.

Notwithstanding the foregoing, the

Sponsor shall have the right to increase or decrease the amount of the Sponsor Fee (i) upon three (3) business days’ prior

notice of the increase or decrease being posted on the website of the Trust and (ii) upon three (3) business days’ prior

written notice of the increase or decrease being given to the Trustee.

Shareholders that are not registered owners (which most

shareholders will not be) may not receive specific notice of a fee increase other than through an amendment to the prospectus.

Moreover, at the time an amendment becomes effective, by continuing to hold Shares, Shareholders are deemed to agree to the amendment

and to be bound by the Trust Agreement as amended without specific agreement to such increase (other than through the “negative

consent” procedure described above).

The Trust Agreement includes provisions

that limit Shareholders’ voting rights and restrict Shareholders’ right to bring a derivative action.

Under the Trust Agreement, Shareholders

have limited voting rights and the Trust will not have regular Shareholder meetings.

Shareholders take no part in the management

or control of the Trust.

Accordingly, Shareholders do not have the right to authorize actions, appoint service providers or take

other actions as may be taken by shareholders of other trusts or companies where shares carry such rights.

The Sponsor may take

actions in the operation of the Trust that may be adverse to the interests of Shareholders and may adversely affect the value of

Moreover, pursuant to the terms of the Trust

Agreement, Shareholders’ statutory right under Delaware law to bring a derivative action (i.e., to initiate a lawsuit in

the name of the Trust in order to assert a claim belonging to the Trust against a fiduciary of the Trust or against a third party

when the Trust’s management has refused to do so) is restricted.

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.

Additionally, Section 3816(e) of the DSTA 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 and in accordance with Section 3816(e), 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)

of one another and (ii) collectively hold at least 10% of the outstanding Shares join in the bringing or maintaining of such action,

suit or other proceeding.

This provision applies to any derivative actions brought in the name of the Trust other than claims under

the federal securities laws and the rules and regulations thereunder.

Due to this additional requirement, a Shareholder

attempting to bring or maintain a derivative action in the name of the Trust will be required to locate other Shareholders with which

it is not affiliated and that have sufficient Shares to meet the 10% threshold based on the number of Shares outstanding on the date the

claim is brought and thereafter throughout the duration of the action, suit or proceeding.

This may be difficult and may result in increased

costs to a Shareholder attempting to seek redress in the name of the Trust in court.

Moreover, if Shareholders bringing a derivative action,

suit or proceeding pursuant to this provision of the Trust Agreement do not hold 10% of the outstanding Shares on the date such an action,

suit or proceeding is brought, or such Shareholders are unable to maintain Share ownership meeting the 10% threshold throughout the duration

of the action, suit or proceeding, such Shareholders’ derivative action may be subject to dismissal.

As a result, the Trust Agreement

limits the likelihood that a Shareholder will be able to successfully assert a derivative action in the name of the Trust, even if such

Shareholder believes that he or she has a valid derivative action, suit or other proceeding to bring on behalf of the Trust.

The non-exclusive jurisdiction for certain types

of actions and proceedings and waiver of trial by jury clauses set forth in the Trust Agreement may have the effect of limiting a Shareholder’s

rights to bring legal action against the Trust and could limit a purchaser’s ability to obtain a favorable judicial forum for disputes

with the Trust.

The Trust Agreement provides that the courts of

the state of Delaware and any federal courts located in Wilmington, Delaware will be the non-exclusive jurisdiction for any claims, suits,

actions or proceedings, provided that suits brought to enforce a duty or liability created by the 1933 Act, the Exchange Act or any other

claim for which the federal courts have exclusive jurisdiction and the federal district courts of the United States of America shall be

the exclusive forum for the resolution of any complaint asserting a cause of action arising under the 1933 Act, the Exchange Act, or the

rules and regulations promulgated thereunder.

By purchasing Shares in the Trust, Shareholders waive certain claims that the courts of

the state of Delaware and any federal courts located in Wilmington, Delaware is an inconvenient venue or is

otherwise inappropriate.

As such, Shareholder could

be required to litigate a matter relating to the Trust in a Delaware court, even if that court may otherwise be inconvenient for the Shareholder.

The Trust Agreement also waives the right to trial

by jury in any such claim, suit, action or proceeding, including any claim under the U.S.

federal securities laws, to the fullest extent

permitted by applicable law.

If a lawsuit is brought against the Trust, it may be heard only by a judge or justice of the applicable trial

court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would

have, including results that could be less favorable to the plaintiffs in any such action.

No Shareholder can waive compliance with respect

attempting to bring or maintain a derivative action in the name of the Trust will be required to locate other Shareholders with

which it is not affiliated and that have sufficient Shares to meet the 10% threshold based on the number of Shares outstanding

on the date the claim is brought and thereafter throughout the duration of the action, suit or proceeding.

This may be difficult

and may result in increased costs to a Shareholder attempting to seek redress in the name of the Trust in court.

Moreover, if Shareholders

bringing a derivative action, suit or proceeding pursuant to this provision of the Trust Agreement do not hold 10% of the outstanding

Shares on the date such an action, suit or proceeding is brought, or such Shareholders are unable to maintain Share ownership meeting

the 10% threshold throughout the duration of the action, suit or proceeding, such Shareholders’ derivative action may be

subject to dismissal.

As a result, the Trust Agreement limits the likelihood that a Shareholder will be able to successfully assert

a derivative action in the name of the Trust, even if such Shareholder believes that he or she has a valid derivative action, suit

or other proceeding to bring on behalf of the Trust.

The non-exclusive jurisdiction for certain

types of actions and proceedings and waiver of trial by jury clauses set forth in the Trust Agreement may have the effect of limiting

a Shareholder’s rights to bring legal action against the Trust and could limit a purchaser’s ability to obtain a favorable

judicial forum for disputes with the Trust.

Trust Agreement provides that the courts of the state of Delaware and any federal courts located in Wilmington, Delaware will be

the non-exclusive jurisdiction for any claims, suits, actions or proceedings, provided that suits brought to enforce a duty or

liability created by the 1933 Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction

and the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint

asserting a cause of action arising under the 1933 Act, the Exchange Act, or the rules and regulations promulgated thereunder.

By purchasing Shares in the Trust, Shareholders waive certain claims that the courts of the state of Delaware and any federal courts

located in Wilmington, Delaware is an inconvenient venue or is otherwise

inappropriate.

As such, Shareholder could be required to litigate a matter relating to the Trust in a Delaware court, even if that

court may otherwise be inconvenient for the Shareholder.

The Trust Agreement also waives the right

to trial by jury in any such claim, suit, action or proceeding, including any claim under the U.S.

federal securities laws, to

the fullest extent permitted by applicable law.

If a lawsuit is brought against the Trust, it may be heard only by a judge or justice

of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes

than a trial by jury would have, including results that could be less favorable to the plaintiffs in any such action.

No Shareholder

can waive compliance with respect to the U.S.

federal securities laws and the rules and regulations promulgated thereunder.

If a Shareholder opposed a jury trial demand based

on the waiver, the applicable court would determine whether the waiver was enforceable based on the facts and circumstances of that case

in accordance with applicable federal laws.

To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection

with claims arising under the U.S.

If a Shareholder opposed a jury trial demand

based on the waiver, the applicable court would determine whether the waiver was enforceable based on the facts and circumstances

of that case in accordance with applicable federal laws.

To our knowledge, the enforceability of a contractual pre-dispute jury

trial waiver in connection with claims arising under the U.S.

federal securities laws has not been finally adjudicated by the U.S.

Supreme Court.

However, we believe

that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of Delaware,

which govern the Trust Agreement.

By purchasing Shares in the Trust, Shareholders waive a right to a trial by jury which may limit a Shareholder’s

ability to bring a claim in a judicial forum that it finds favorable for disputes with the Trust.

However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including

under the laws of the State of Delaware, which govern the Trust Agreement.

By purchasing Shares in the Trust, Shareholders waive

a right to a trial by jury which may limit a Shareholder’s ability to bring a claim in a judicial forum that it finds favorable

for disputes with the Trust.

An investment in the Trust may be adversely affected by competition

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The Trust will compete with direct investments

in bitcoin, other cryptocurrencies, Bitcoin Futures, and other potential financial vehicles, possibly including securities backed by or

linked to cryptocurrency and other investment vehicles that focus on other digital assets.

Market and financial conditions, and other

conditions beyond the Trust’s control, may make it more attractive to invest in other vehicles, which could adversely affect the

performance of the Trust.

Shareholders cannot be assured of the Sponsor’s

continued services, the discontinuance of which may be detrimental to the Trust.

Shareholders cannot be assured that the Sponsor

will be able to continue to service the Trust for any length of time.

If the Sponsor discontinues its activities on behalf of the Trust,

the Trust may be adversely affected, as there may be no entity servicing the Trust for a period of time.

Such an event could result in

termination of the Trust.

Shareholders may be adversely affected by creation

or redemption orders that are subject to postponement, suspension or rejection under certain circumstances.

The Trust may, in its discretion, suspend the right

of creation or redemption or may postpone the redemption or purchase settlement date, for (1) any period during which the Exchange is

closed other than customary weekend or holiday closings, or trading on the Exchange is suspended or restricted, (2) any period during

which an emergency exists as a result of which the fulfillment of a purchase order or the redemption distribution is not reasonably practicable

(for example, as a result of a significant technical failure, power outage, or network error), or (3) such other period as the Sponsor

determines to be necessary for the protection of the Shareholders of the Trust (for example, where acceptance of the Basket Deposit would

have certain adverse tax consequences to the Trust or its Shareholders).

In addition, the Trust may reject a redemption order if (1) the

order is not in proper form as described in the Authorized Participant Agreement, (2) the fulfillment of the order counsel advises may

be illegal under applicable laws and regulations, or (3) if circumstances outside the control of the Sponsor, the person authorized to

take redemption orders in the manner provided in the Authorized Participant Agreement, Cash Custodian or the Bitcoin Custodian make it

for all practical purposes not feasible for the Shares to be delivered or the redemption distribution to be made.

Any such postponement,

suspension or rejection could adversely affect a redeeming Authorized Participant.

in bitcoin, other cryptocurrencies, Bitcoin Futures, and other potential financial vehicles, possibly including securities backed

by or linked to cryptocurrency and other investment vehicles that focus on other digital assets.

Market and financial conditions,

and other conditions beyond the Trust’s control, may make it more attractive to invest in other vehicles, which could adversely

affect the performance of the Trust.

Shareholders cannot be assured of the

Sponsor’s continued services, the discontinuance of which may be detrimental to the Trust.

Shareholders cannot be assured that the

Sponsor will be able to continue to service the Trust for any length of time.

If the Sponsor discontinues its activities on behalf

of the Trust, the Trust may be adversely affected, as there may be no entity servicing the Trust for a period of time.

event could result in termination of the Trust.

Shareholders may be adversely affected

by creation or redemption orders that are subject to postponement, suspension or rejection under certain circumstances.

Trust may, in its discretion, suspend the right of creation or redemption or may postpone the redemption or purchase settlement

date, for (1) any period during which the Exchange is closed other than customary weekend or holiday closings, or trading on the

Exchange is suspended or restricted, (2) any period during which an emergency exists as a result of which the fulfillment of a

purchase order or the redemption distribution is not reasonably practicable (for example, as a result of a significant technical

failure, power outage, or network error), or (3) such other period as the Sponsor determines to be necessary for the protection

of the Shareholders of the Trust (for example, where acceptance of the Basket Deposit would have certain adverse tax consequences

to the Trust or its Shareholders).

In addition, the Trust may reject a redemption order if (1) the order is not in proper form

as described in the Authorized Participant Agreement, (2) the fulfillment of the order counsel advises may be illegal under applicable

laws and regulations, or (3) if circumstances outside the control of the Sponsor, the person authorized to take redemption orders

in the manner provided in the Authorized Participant Agreement, Cash Custodian or the Bitcoin Custodian make it for all practical

purposes not feasible for the Shares to be delivered or the redemption distribution to be made.

Any such postponement, suspension

or rejection could adversely affect a redeeming Authorized Participant.

Suspension of creation privileges may adversely impact

Shares are traded and arbitraged on the secondary

market, which could cause them to trade at levels materially different (premiums and discounts) from the fair value of their underlying

If such a suspension or postponement occurs at

a time when an Authorized Participant intends to redeem Shares, and the price of bitcoin decreases before such Authorized Participant

is able again to surrender for redemption Baskets, such Authorized Participant will sustain a loss with respect to the amount that it

would have been able to obtain in exchange for the bitcoin received from the Trust upon the redemption of its Shares, had the redemption

taken place when such Authorized Participant originally intended it to occur.

As a consequence, Authorized Participants may reduce their

trading in Shares during periods of suspension, decreasing the number of potential buyers of Shares in the secondary market and, therefore,

decreasing the price a Shareholder may receive upon sale.

Shareholders may be adversely affected by an

overstatement or understatement of the NAV Calculation of the Trust due to the valuation method employed on the date of the NAV calculation.

In certain circumstances, the Trust’s bitcoin

investments may be valued using techniques other than reliance on the price established by the MarketVector TM Bitcoin Benchmark

The Sponsor will monitor for significant events related to crypto assets that may impact the value of bitcoin and will determine

in good faith, and in accordance with its valuation policies and procedures, whether to fair value the Trust’s bitcoin on a given

day based on whether certain pre-determined criteria have been met.

For example, if the MarketVector TM Bitcoin Benchmark

Rate deviates by more than a pre-determined amount from an alternate benchmark available to the Sponsor, then the Sponsor may determine

to utilize the alternate benchmark.

The Sponsor evaluates its fair value criteria and the factors in determining such criteria from time

to time and no less than quarterly.

The Sponsor may also fair value the Trust’s bitcoin using observed market transactions from

one or more exchanges.

The Sponsor may also fair value the Trust’s bitcoin using a combination of inputs in certain situations (e.g.,

using observed market transactions, OTC quotations from brokers, etc.) The value of the Shares of the Trust established by using

the MarketVector TM Bitcoin Benchmark Rate may be different from what would be produced through the use of another methodology.

Bitcoin or other digital asset investments that are valued using techniques other than those employed by the MarketVector TM

Bitcoin Benchmark Rate, including bitcoin investments that are “fair valued,” may be subject to greater fluctuation in their

value from one day to the next than would be the case if market-price valuation techniques were used.

The liability of the Sponsor and the Trustee is limited, and the

value of the Shares will be adversely affected if the Trust is required to indemnify the Trustee or the Sponsor.

Under the Trust Agreement, the Trustee and the

Sponsor are not liable, and have the right to be indemnified, for any liability or expense incurred absent gross negligence or willful

misconduct on the part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as the case may be.

the Sponsor may require the assets of the Trust to be sold in order to cover losses or liability suffered by it or by the Trustee.

sale of that kind would reduce the NAV of the Trust and the value of its Shares.

Due to the increased use of technologies, intentional

and unintentional cyber-attacks pose operational and information security risks.

With the increased use of technologies such as

the internet and the dependence on computer systems to perform necessary business functions, the Trust is susceptible to operational and

information security risks.

how the Shares

are traded and arbitraged on the secondary market, which could cause them to trade at levels materially different (premiums and

discounts) from the fair value of their underlying holdings.

If such a suspension or postponement occurs

at a time when an Authorized Participant intends to redeem Shares, and the price of bitcoin decreases before such Authorized Participant

is able again to surrender for redemption Baskets, such Authorized Participant will sustain a loss with respect to the amount that

it would have been able to obtain in exchange for the bitcoin received from the Trust upon the redemption of its Shares, had the

redemption taken place when such Authorized Participant originally intended it to occur.

As a consequence, Authorized Participants

may reduce their trading in Shares during periods of suspension, decreasing the number of potential buyers of Shares in the secondary

market and, therefore, decreasing the price a Shareholder may receive upon sale.

Shareholders may be adversely affected by an overstatement

or understatement of the NAV Calculation of the Trust due to the valuation method employed on the date of the NAV calculation.

In certain circumstances, the Trust’s

bitcoin investments may be valued using techniques other than reliance on the price established by the MarketVector TM

Bitcoin Benchmark Rate.

The Sponsor will monitor for significant events related to crypto assets that may impact the value of bitcoin

and will determine in good faith, and in accordance with its valuation policies and procedures, whether to fair value the Trust’s

bitcoin on a given day based on whether certain pre-determined criteria have been met.

For example, if the MarketVector TM Bitcoin

Benchmark Rate deviates by more than a pre-determined amount from an alternate benchmark available to the Sponsor, then the Sponsor

may determine to utilize the alternate benchmark.

The Sponsor evaluates its fair value criteria and the factors in determining

such criteria from time to time and no less than quarterly.

The Sponsor may also fair value the Trust’s bitcoin using observed

market transactions from one or more exchanges.

The Sponsor may also fair value the Trust’s bitcoin using a combination of

inputs in certain situations (e.g., using observed market transactions, OTC quotations from brokers, etc.) The value of the

Shares of the Trust

established by using the MarketVector TM Bitcoin Benchmark Rate may be different from what would

be produced through the use of another methodology.

Bitcoin or other digital asset investments that are valued using techniques

other than those employed by the MarketVector TM Bitcoin Benchmark Rate, including bitcoin investments that are “fair

valued,” may be subject to greater fluctuation in their value from one day to the next than would be the case if market-price

valuation techniques were used.

The liability of the Sponsor and the

Trustee is limited, and the value of the Shares will be adversely affected if the Trust is required to indemnify the Trustee or

Under the Trust Agreement, the Trustee and

the Sponsor are not liable, and have the right to be indemnified, for any liability or expense incurred absent gross negligence

or willful misconduct on the part of the Trustee or the Sponsor or breach by the Sponsor of the Trust Agreement, as the case may

As a result, the Sponsor may require the assets of the Trust to be sold in order to cover losses or liability suffered by it

or by the Trustee.

Any sale of that kind would reduce the NAV of the Trust and the value of its Shares.

Due to the increased use of technologies, intentional and

unintentional cyber-attacks pose operational and information security risks.

With the increased use of technologies such

as the internet and the dependence on computer systems to perform necessary business functions, the Trust is susceptible to operational

and information security risks.

In general, cyber incidents can result from deliberate attacks or unintentional events.

Cyber-attacks include,

but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information,

corrupting data, or causing operational disruption.

Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized

access, such as causing denial-of-service attacks on websites.

Cybersecurity failures or breaches of one or more of the Trust’s

service providers (including, but not limited to, MarketVector, the administrator, transfer agent, and the Bitcoin Custodian) have the

ability to cause disruptions and impact business operations, potentially resulting in financial losses, the inability of the Shareholders

to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement

or other compensation costs, and/or additional compliance costs.

Cyber-attacks

include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive

information, corrupting data, or causing operational disruption.

Cyber-attacks may also be carried out in a manner that does not

require gaining unauthorized access, such as causing denial-of-service attacks on websites.

Cybersecurity failures or breaches

of one or more of the Trust’s service providers (including, but not limited to, MarketVector, the administrator, transfer

agent, and the Bitcoin Custodian) have the ability to cause disruptions and impact business operations, potentially resulting in

financial losses, the inability of the Shareholders to transact business, violations of applicable privacy and other laws, regulatory

fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs.

In addition, substantial costs may be incurred

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The Trust and its Shareholders could be negatively impacted as a result.

the Trust has established business continuity plans, there are inherent limitations in such plans.

The Trust and its service providers are subject to certain operational

While the Trust has established business continuity plans, there are inherent limitations in such plans.

The Trust and its service providers are subject to certain

operational risks.

The Trust and its service providers, including

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or third-party errors, or technology or systems failures, any of which may have an adverse impact on the Trust.

Although the Trust and

its service providers seek to mitigate these operational risks through their internal controls and operational risk management processes,

these measures may not identify or may be inadequate to address all such risks.

Additionally, the Bitcoin Custodian and the Additional

Bitcoin Custodian, which were established in 2015 and 2012, respectively, each have a limited operating company and experience, which

could heighten certain operational risks.

Although the Trust

and its service providers seek to mitigate these operational risks through their internal controls and operational risk management

processes, these measures may not identify or may be inadequate to address all such risks.

Additionally, the Bitcoin Custodian

and the Additional Bitcoin Custodian, which were established in 2015 and 2012, respectively, each have a limited operating company

and experience, which could heighten certain operational risks.

Risk Factors Related to ERISA

Notwithstanding the commercially reasonable efforts

of the Sponsor, it is possible that the underlying assets of the Trust will be deemed to include “plan assets” for the purposes

of Title I of ERISA or Section 4975 of the Code.

If the assets of the Trust were deemed to be “plan assets,” this could result

in, among other things, (i) the application of the prudence and other fiduciary standards of ERISA to investments made by the Trust and

(ii) the possibility that certain transactions in which the Trust might otherwise seek to engage in the ordinary course of its business

and operation could constitute non-exempt “prohibited transactions” under Section 406 of ERISA and/or Section 4975 of the

Code, which could restrict the Trust from entering into an otherwise desirable investment or from entering into an otherwise favorable

In addition, fiduciaries who decide to invest in the Trust could, under certain circumstances, be liable for “prohibited

transactions” or other violations as a result of their investment in the Trust or as co-fiduciaries for actions taken by or on behalf

of the Trust or the Sponsor.

Notwithstanding the commercially reasonable

efforts of the Sponsor, it is possible that the underlying assets of the Trust will be deemed to include “plan assets”

for the purposes of Title I of ERISA or Section 4975 of the Code.

If the assets of the Trust were deemed to be “plan assets,”

this could result in, among other things, (i) the application of the prudence and other fiduciary standards of ERISA to investments

made by the Trust and (ii) the possibility that certain transactions in which the Trust might otherwise seek to engage in the ordinary

course of its business and operation could constitute non-exempt “prohibited transactions” under Section 406 of ERISA

and/or Section 4975 of the Code, which could restrict the Trust from entering into an otherwise desirable investment or from entering

into an otherwise favorable transaction.

In addition, fiduciaries who decide to invest in the Trust could, under certain circumstances,

be liable for “prohibited transactions” or other violations as a result of their investment in the Trust or as co-fiduciaries

for actions taken by or on behalf of the Trust or the Sponsor.

There may be other federal, state, local, non-U.S.

law or regulation that contains one or more provisions

that are similar to the foregoing provisions of ERISA and the Code that may also apply to an investment in the Trust.

The application of ERISA (including the corresponding

provisions of the Code and other relevant laws) may be complex and dependent upon the particular facts and circumstances of the Trust

and of each Plan, and it is the responsibility of the appropriate fiduciary of each investing Plan to ensure that any investment in the

Trust by such Plan is consistent with all applicable requirements.

Each Shareholder, whether or not subject to Title I of ERISA or Section

4975 of the Code, should consult its own legal and other advisors regarding the considerations discussed above and all other relevant

ERISA and other considerations before purchasing the Shares.

law or regulation

that contains one or more provisions that are similar to the foregoing provisions of ERISA and the Code that may also apply to

an investment in the Trust.

The application of ERISA (including the

corresponding provisions of the Code and other relevant laws) may be complex and dependent upon the particular facts and circumstances

of the Trust and of each Plan, and it is the responsibility of the

appropriate fiduciary of each investing Plan to ensure that

any investment in the Trust by such Plan is consistent with all applicable requirements.

Each Shareholder, whether or not subject

to Title I of ERISA or Section 4975 of the Code, should consult its own legal and other advisors regarding the considerations discussed

above and all other relevant ERISA and other considerations before purchasing the Shares.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors