What changed in this filing

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Item 1. Business

2025-03-05 compared with 2024-03-04 · 93 added, 62 removed, 580 unchanged (21% of the section changed)

The iShares Bitcoin Trust (the “Trust”) was formed as a Delaware statutory trust on June 8, 2023.

The Trust is governed by the Second Amended and Restated Trust Agreement dated as of December 28, 2023 (the “Trust Agreement”).

The purpose of the Trust is to own bitcoin purchased by the Trust in exchange for shares issued by the Trust (“Shares”).

The iShares Bitcoin Trust ETF (the “Trust”) was formed as a Delaware statutory trust on June 8, 2023.

The Trust is governed by the Second Amended and Restated Trust Agreement dated as of December 28, 2023 (the “Trust Agreement”), as amended by Amendment No.

1 thereto, with effect from August 8, 2024.

The purpose of the Trust is to own bitcoin purchased by the Trust in exchange for the shares issued by the Trust (the “Shares”).

Each Share represents a fractional undivided beneficial interest in the net assets of the Trust.

The owners of the beneficial interests of Shares are the “Shareholders.” The assets of the Trust consist primarily of bitcoin held by a custodian on behalf of the Trust.

The owners of the beneficial interests of Shares are the “Shareholders.” The assets of the Trust consist primarily of bitcoin held by a custodian on behalf of the Trust, pursuant to the Custodial Services Agreement (the “Custodian Agreement”).

The sponsor of the Trust is iShares Delaware Trust Sponsor LLC (the “Sponsor”), a Delaware limited liability company and an indirect subsidiary of BlackRock, Inc.

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Wilmington Trust Company, a Delaware trust company, serves as the Delaware trustee of the Trust (the “Delaware Trustee”).

The Trust’s net asset value was $100,000 at December 31, 2023, the Trust’s fiscal year end.

Outstanding Shares of the Trust was 4,000 at December 31, 2023.

The Trust’s net asset value grew from $100,000 at December 31, 2023 to $51,519,566,547 at December 31, 2024, the Trust’s fiscal year end.

Outstanding Shares of the Trust rose from 4,000 Shares at December 31, 2023 to 970,440,000 Shares outstanding at December 31, 2024.

The activities of the Trust are limited to (1) issuing blocks of 40,000 Shares (a “Basket”) in exchange for the cash deposited with the Cash Custodian as consideration, (2) selling or delivering bitcoin, as necessary to cover the renumeration due to the Sponsor (the “Sponsor’s Fee”), Trust expenses not assumed by the Sponsor and other liabilities and (3) buying and selling bitcoin through the designated third parties who are not registered broker-dealers and transact in bitcoin pursuant to written agreements with the Trust (each, a “Bitcoin Trading Counterparty” and each written agreement, a “Bitcoin Trading Counterparty Agreement”) or Prime Execution Agent, as applicable, in exchange for Baskets in connection with creation and redemption.

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The Shares are backed by the assets of the Trust.

The Bitcoin Custodian will keep custody of all of the Trust’s bitcoin, other than that which is maintained in a trading account (the “Trading Balance”) with the Prime Execution Agent, in accounts that are required to be segregated from the assets held by the Bitcoin Custodian as principal and the assets of its other customers (the“Vault Balance”).

The Bitcoin Custodian will keep all of the private keys associated with the Trust’s bitcoin in the Vault Balance.

The Bitcoin Custodian keeps custody of all of the Trust’s bitcoin, other than that which is maintained in a trading account (the “Trading Balance”) with the Prime Execution Agent, in accounts that are required to be segregated from the assets held by the Bitcoin Custodian as principal and the assets of its other customers (the “Vault Balance”).

The Bitcoin Custodian keeps all of the private keys associated with the Trust’s bitcoin in the Vault Balance.

The hardware, software, systems, and procedures of the Bitcoin Custodian may not be available or cost-effective for many investors to access directly.

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Investors may purchase and sell Shares through traditional securities brokerage accounts, and can avoid the complexities of handling bitcoin directly (e.g., managing wallets and public and private keys themselves, or interfacing with a trading platform), which some investors may not prefer or may find unfamiliar.

The Shares are listed and trade on Nasdaq Stock Market LLC (“NASDAQ”) under the ticker symbol “IBIT.”

The Shares are listed and traded on Nasdaq Stock Market LLC (“NASDAQ”) under the ticker symbol “IBIT.”

The Trust and the Sponsor face competition with respect to the creation of competing exchange-traded bitcoin products.

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The Bitcoin Custodian

The Bitcoin Custodian for the Trust’s bitcoin holdings is Coinbase Custody Trust Company, LLC, and the Trust has entered into the custodial services agreement (the “Custodian Agreement”) with the Bitcoin Custodian.

The Bitcoin Custodian for the Trust’s bitcoin holdings is Coinbase Custody Trust Company, LLC, and the Trust has entered into the Custodian Agreement with the Bitcoin Custodian.

The Sponsor may, in its sole discretion, add or terminate bitcoin custodians.

The Sponsor may, in its sole discretion, change the custodian for the Trust’s bitcoin holdings, but it will have no obligation whatsoever to do so or to seek any particular terms for the Trust from other such custodians.

The Bitcoin Custodian will keep custody of all of the Trust’s bitcoin held by the Bitcoin Custodian in segregated accounts in the Vault Balance, other than the Trust’s bitcoin which is temporarily maintained in the Trading Balance with the Prime Execution Agent as described below in “The Prime Execution Agent and The Trade Credit Lender—The Prime Execution Agent.” Trust assets held in the Vault Balance are held in segregated wallets, and are not commingled with the Bitcoin Custodian’s or its affiliates’ assets, or the assets of the Bitcoin Custodian’s other customers.

The Bitcoin Custodian keeps custody of all of the Trust’s bitcoin held by the Bitcoin Custodian in segregated accounts in the Vault Balance, other than the Trust’s bitcoin which is temporarily maintained in the Trading Balance with the Prime Execution Agent as described below in “The Prime Execution Agent and The Trade Credit Lender—The Prime Execution Agent.” Trust assets held in the Vault Balance are held in segregated wallets, and are not commingled with the Bitcoin Custodian’s or its affiliates’ assets, or the assets of the Bitcoin Custodian’s other customers.

The Vault Balance is held at the blockchain ledger for bitcoin (the “Bitcoin blockchain”) addresses at which only the Trust’s assets are held.

The Bitcoin Custodian will keep all of the private keys associated with the Trust’s bitcoin held at the Bitcoin Custodian in the Vault Balance in cold storage.

The Bitcoin Custodian keeps all of the private keys associated with the Trust’s bitcoin held at the Bitcoin Custodian in the Vault Balance in cold storage.

Cold storage is a safeguarding method by which the private key(s) corresponding to bitcoin is (are) generated and stored in an offline manner.

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The Bitcoin Custodian’s internal audit team performs periodic internal audits over custody operations, and the Bitcoin Custodian has represented that Systems and Organizational Control (“SOC”) attestations covering private key management controls are also performed on the Bitcoin Custodian by an external provider.

Coinbase Global Inc., the parent company of the Bitcoin Custodian, the Prime Broker and the Trade Credit Lender (“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 its subsidiaries, 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.

Coinbase Global Inc.

(“Coinbase Global”), the parent company of the Bitcoin Custodian, the Prime Broker and the Trade Credit Lender (“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 its subsidiaries, 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 holding bitcoin with the Bitcoin Custodian or Prime Execution Agent and may not be available or sufficient to protect the Trust from all possible losses or sources of losses.

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The Custodian Agreement further provides that, unless specifically communicated by the Bitcoin Custodian and its affiliates through a written public statement on the Coinbase website, the Bitcoin Custodian does not support airdrops, metacoins, colored coins, side chains, or other derivative, enhanced or forked protocols, tokens or coins, which supplement or interact with bitcoin.

The Sponsor has committed to cause the Trust to permanently and irrevocably abandon any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future.

The Trust has no right to receive any Incidental Right or IR Virtual Currency.

Furthermore, the Custodian has no authority, pursuant to the Custodian Agreement or otherwise, to exercise, obtain or hold, as the case may be, any such abandoned Incidental Right or IR Virtual Currency on behalf of the Trust or to transfer any such abandoned Incidental Right or IR Virtual Currency to the Trust if the Trust terminates its custodial arrangement with the Custodian.

The Sponsor has committed to cause the Trust to permanently and irrevocably abandon any Incidental Rights and IR Digital Asset to which the Trust may become entitled in the future.

The Trust has no right to receive any Incidental Right or IR Digital Asset.

Furthermore, the Custodian has no authority, pursuant to the Custodian Agreement or otherwise, to exercise, obtain or hold, as the case may be, any such abandoned Incidental Right or IR Digital Asset on behalf of the Trust or to transfer any such abandoned Incidental Right or IR Digital Asset to the Trust if the Trust terminates its custodial arrangement with the Custodian.

For more information on the Trust’s and Sponsor’s policies on forked or airdropped assets, see Item 1A.

“Risk Factors—A temporary or permanent “fork” could adversely affect the value of the Shares.

In addition, Shareholders will not receive the benefits of any Incidental Rights and any IR Virtual Currency, including any forked or airdropped assets.” Neither the Bitcoin Custodian nor any other Coinbase entity is permitted to withdraw the Trust’s bitcoin from the Trust’s Vault Balance, or loan, hypothecate, pledge or otherwise encumber the Trust’s bitcoin, without the consent of the Trust.

In addition, Shareholders will not receive the benefits of any Incidental Rights and any IR Digital Asset, including any forked or airdropped assets.” Neither the Bitcoin Custodian nor any other Coinbase entity is permitted to withdraw the Trust’s bitcoin from the Trust’s Vault Balance, or loan, hypothecate, pledge or otherwise encumber the Trust’s bitcoin, without the consent of the Trust.

The Vault Balance is subject to the lien to secure outstanding trade credits (“Trade Credits”) in favor of Coinbase Credit, Inc.

(the “Trade Credit Lender”) on a short-term basis pursuant to the Coinbase Credit Committed Trade Financing Agreement (the “Trade Financing Agreement”) the Trade Credit Lender discussed below.

(the “Trade Credit Lender”) on a short-term basis pursuant to the Coinbase Credit Committed Trade Financing Agreement (the “Trade Financing Agreement”).

Under the Custodian Agreement, the Bitcoin Custodian’s liability is limited as follows, among others:

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and (iv) in respect of any incidental, indirect, special, punitive, consequential or similar losses, the Bitcoin Custodian is not liable, even if the Bitcoin Custodian has been advised of or knew or should have known of the possibility thereof.

In managing the Vault Balance of the Trust, the Bitcoin Custodian has processes in place to create and utilize new cold storage wallets in order to limit the dollar value of bitcoin in any specific cold storage wallet in accordance with the Bitcoin Custodian’s insurance limit.

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.

Under the Custodian Agreement, except in the case of its negligence, fraud, material violation of applicable law or willful misconduct, the Bitcoin Custodian shall not have any liability, obligation, or responsibility for any damage or interruptions caused by any computer viruses, spyware, scareware, Trojan horses, worms or other malware that may affect the Trust’s computer or other equipment, or any phishing, spoofing or other attack, unless the Bitcoin Custodian fails to have commercially reasonable policies, procedures and technical controls in place to prevent such damages or interruptions.

The Bitcoin Custodian may terminate the Custodian Agreement for any reason upon providing the applicable notice to the Trust, or immediately for Cause (as defined in the Custodian Agreement), including, among others, if the Trust:

The Bitcoin Custodian may terminate the Custodian Agreement for any reason upon providing the applicable notice to the Trust, or immediately for Cause (as defined below), including, among others, if the Trust:

materially breaches the Prime Execution Agent Agreement and such breach remains uncured, undergoes a bankruptcy event, or fails to repay Trade Credits.

The Bitcoin Custodian may terminate the Custodian Agreement for any reason upon providing 180 days’ notice to the Trust, or immediately for Cause (as defined below).

The Custodian Agreement forms a part of the Amended and Restated Coinbase Prime Broker Agreement (the “Prime Execution Agent Agreement”), and is subject to the termination provisions in the Prime Execution Agent Agreement.

The Custodian Agreement forms a part of the Amended and Restated Coinbase Prime Broker Agreement (the “Prime Execution Agent Agreement”), and the Prime Execution Agent and the Trade Credit Lender are subject to the termination provisions in the Prime Execution Agent Agreement.

These termination provisions are described in more detail in “The Prime Execution Agent and The Trade Credit Lender—The Prime Execution Agent” below.

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The Prime Execution Agent is permitted to suspend or terminate the Prime Execution Agent Agreement under certain circumstances.

The Prime Execution Agent, for itself or as agent for the Bitcoin Custodian and Trade Credit Lender, may not terminate the Prime Execution Agent Agreement (including the Custodian Agreement) or suspend, restrict terminate or modify the Prime Execution Agent Services (as defined below) on less than 180 days’ notice, except in the event of (i) a Change in Law (defined below) or (ii) a Cause event (as defined below).

The Prime Execution Agent Agreement defines “Prime Execution Agent Services” as (i) the custody of the Trust’s bitcoin in its Vault Balance, the processing of deposits and withdrawals and other custody transactions, (ii) access to the Prime Execution Agent’s trading platform and the execution and settlement of all orders for the sale of bitcoin submitted by the Trust, and (iii) the extension of credit to the Trust by the Trade Credit Lender pursuant to the Trade Financing Agreement.

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If the Trust fails to repay a Trade Credit within the required deadline, the Trade Credit Lender is permitted to take control of bitcoin or cash credited to the Trust’s Trading Balance and Vault Balance (though it is required to exhaust the Trading Balance prior to taking control of assets in the Vault Balance) and liquidate them to repay the outstanding Trade Credit.

Trade Credits bear interest.

Interest rates on Trade Credits (“financing fee”) are calculated as follows:

where settlement of Trade Credits is to occur on the business day following the execution date, a financing fee of 11% + Fed Funds Target rate divided by 365 ((11% + Fed Funds Target)/365) is to be paid on the aggregate Trade Credit amount borrowed by the Trust.

As a hypothetical example to illustrate how the financing fee is calculated, on November 20, 2023, the Fed Funds Target rate was 5.50%, so the hypothetical financing fee as of that date.

would be 11% + 5.5% divided by 365 on the borrowed funds.

Trade Credits do not bear any interest.

The Trust pays a variable rate for each executed order based on the Trust’s prior month’s trading volume as determined by the Prime Execution Agent.

The Trust’s bitcoin holdings are maintained with the Bitcoin Custodian rather than the Prime Execution Agent, except in the limited circumstances of bitcoin that is held temporarily in the Trading Balance for purchases and sales of bitcoin in connection with cash creation and cash redemption Basket settlement, or the payment of Sponsor’s Fee and any other Trust expenses not assumed by the Sponsor, to the extent applicable.

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In addition, to the extent that the execution price for purchases and sales of bitcoin related to creations and redemptions and sales of bitcoin in connection with paying the Sponsor’s Fee and any other Trust expenses, to the extent applicable, deviate significantly from the Index price used to determine the NAV of the Trust, the Shareholders may be negatively impacted.

Valuation of Bitcoin ; The CF Benchmark Index

Valuation of Bitcoin ; The CF Benchmarks Index

On each day other than a Saturday or a Sunday, or a day on which NASDAQ is closed for regular trading (a “Business Day”), as soon as practicable after 4:00 p.m.

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dollar price of one bitcoin at 4:00 p.m.

Specifically, the CF Benchmarks Index is calculated based on the “Relevant Transactions” (as defined below) of all of its constituent bitcoin platforms, which are currently Bitstamp, Coinbase, itBit, Kraken, Gemini, and LMAX Digital (the “Constituent Platforms”), as follows:

Specifically, the CF Benchmarks Index is calculated based on the “Relevant Transactions” (as defined below) of all of its constituent bitcoin platforms, which are currently Bitstamp, Coinbase, itBit, Kraken, Gemini, LMAX Digital, and Bullish (the “Constituent Platforms”), as follows:

All Relevant Transactions are added to a joint list, recording the time of execution, and trade price for each transaction.

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A volume-weighted median differs from a standard median in that a weighting factor, in this case trade size, is factored into the calculation.

The BRR is then determined by the equally-weighted average of the volume medians of all partition.

The Index Administrator’s Bitcoin Reference Rate (“BRR”) is then determined by the equally-weighted average of the volume medians of all partitions.

The CF Benchmarks Index is solely calculated from spot Bitcoin-USD transactions conducted on Constituent Platforms within the observation window of 3:00 p.m.

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The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver.

Effective on the day the Shares were initially listed on NASDAQ through January 10, 2025, the Sponsor will waive a portion of the Sponsor’s Fee so that the Sponsor’s Fee after the fee waiver will be equal to 0.12% of the net asset value of the Trust for the first $5.0 billion of the Trust’s assets.

Effective on the day the Shares were initially listed on NASDAQ through January 10, 2025, the Sponsor waived a portion of the Sponsor’s Fee so that the Sponsor’s Fee after the fee waiver would be equal to 0.12% of the net asset value of the Trust for the first $5.0 billion of the Trust’s assets.

In the future, if the Sponsor decides to waive all or a portion of the Sponsor’s Fee, Shareholders will be notified in a prospectus supplement, in its periodic Exchange Act reports and/or on the Trust’s website.

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The Trust will conduct its bitcoin purchase and sale transactions by, in its sole discretion, choosing to trade directly with Bitcoin Trading Counterparties or choosing to trade through the Prime Execution Agent through its Coinbase Prime service pursuant to the Prime Execution Agent Agreement.

Initially, the Trust expects to conduct its bitcoin purchase and sale transactions solely through the Prime Execution Agent through its Coinbase Prime service.

Over time, the Trust also expects to conduct these transactions by trading directly with Bitcoin Trading Counterparties.

As of the date of this report, the Bitcoin Trading Counterparties are Cumberland DRW LLC, Flow Traders B.V., JSCT, LLC and Virtu Financial Singapore Pte.

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

is an affiliate of Virtu Americas LLC.

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

Bitcoin Trading Counterparties may be added at any time, subject to the discretion of the Sponsor.

The Trust is not aware of any other affiliation or material relationship between a Bitcoin Trading Counterparty and the Authorized Participants or other service providers of the Trust in executing a transaction in bitcoin with the Trust.

Each Bitcoin Trading Counterparty represents to the Trust that it is acting for itself and not for another person, and is not acting as agent or at the direction of any Authorized Participant.

Upon receipt of an order from an Authorized Participant to create or redeem Baskets, the Trust may obtain quotes for a price to purchase or sell bitcoin from one or more a Bitcoin Trading Counterparties.

A Bitcoin Trading Counterparty may respond to the Trust’s request with an offer of a quote at which it is willing to sell the specified quantity of bitcoin, or a portion thereof, in the case of a creation, or a quote at which it is willing to buy the specified quantity of bitcoin, or a portion thereof, in the case of a redemption, as indicated in such offer.

The Bitcoin Trading Counterparties are not contractually obligated to participate in cash orders for creations or redemptions by placing any offers to buy or sell bitcoin with the Trust.

The Trust then determines, in its sole discretion, whether to utilize one of the Bitcoin Trading Counterparties that provided a quote or to trade through the Prime Execution Agent to execute a bitcoin trade.

Once an offer is accepted and it becomes a trade that is binding on both the Trust and the Bitcoin Trading Counterparty, subject to customary exceptions.

Each Bitcoin Trading Counterparty is required to comply with U.S.

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

jurisdictions and maintain practices and policies designed to comply with anti-money laundering laws and know your customer regulations or similar laws in non-U.S.

jurisdictions.

The Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares.

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Under an ETF Services Agreement (the “ETF Services Agreement”), the Trust has retained BlackRock Investments, LLC (“BRIL”), an affiliate of the Trustee, to perform certain order processing, Authorized Participant communications and related services in connection with the issuance and redemption of Baskets (“ETF Services”).

BRIL will receive from an Authorized Participant a standard transaction fee on each purchase order, which consists of (1) a transaction fee for each order to create or redeem Baskets (the “ETF Servicing Fee”) and (2) transfer, processing and other transaction costs charged by the Bitcoin Custodian in connection with the issuance of Baskets for such purchase order (“Custody Transaction Costs”) BRIL is entitled to retain the ETF Servicing Fee pursuant to the ETF Services Agreement, but BRIL will reimburse any Custody Transaction Costs to the Bitcoin Custodian according to the amounts invoiced by the Bitcoin Custodian.

BRIL is entitled to retain the ETF Servicing Fee pursuant to the ETF Services Agreement, but BRIL will reimburse any Custody Transaction Costs to the Bitcoin Custodian according to the amounts invoiced by the Bitcoin Custodian.

The ETF Servicing Fee is a flat fee per order regardless of the number of Baskets being purchased.

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The Creation Early Order Cutoff Time is 6:00 p.m.

ET on the business day prior to trade date.

ET on the business day prior to the trade date.

The Authorized Participant must submit a purchase order through BRIL’s electronic order entry system, indicating the number of Baskets it intends to acquire.

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BRIL will determine the Basket Amount for a given day by multiplying the NAV by the number of Shares in each Basket (40,000) and determine the Basket Bitcoin Amount for a given day by dividing the Basket Amount for that day by that day’s CF Benchmarks Index.

The Basket Amount and the Basket Bitcoin Amount so determined will be made available to all Authorized Participants and Bitcoin Transaction Counterparties, and will be made available on the Sponsor’s website for the Shares.

The Basket Amount and the Basket Bitcoin Amount so determined will be made available to all Authorized Participants and Bitcoin Trading Counterparties, and will be made available on the Sponsor’s website for the Shares.

On the date of the Creation Early Order Cutoff Time, the Trust will choose, in its sole discretion, to enter into a transaction with a Bitcoin Trading Counterparty or the Prime Execution Agent to buy bitcoin in exchange for the cash proceeds from such purchase order.

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In the event the Trust has not been able to successfully execute and complete settlement of a bitcoin transaction by the settlement date of the purchase order, the Authorized Participant will be given the option to (1) cancel the purchase order, or (2) accept that the Trust will continue to attempt to complete the execution, which will delay the settlement date of the purchase order.

With respect to a purchase order, as between the Trust and the Authorized Participant, the Authorized Participant is responsible for the dollar cost of the difference between the bitcoin price utilized in calculating NAV on trade date and the price at which the Trust acquires the bitcoin to the extent the price realized in buying the bitcoin is higher than the bitcoin price utilized in the NAV.

With respect to a purchase order, as between the Trust and the Authorized Participant, the Authorized Participant is responsible for the dollar cost of the difference between the bitcoin price utilized in calculating NAV on the trade date and the price at which the Trust acquires the bitcoin to the extent the price realized in buying the bitcoin is higher than the bitcoin price utilized in the NAV.

To the extent the price realized in buying the bitcoin is lower than the price utilized in the NAV, the Authorized Participant shall keep the dollar impact of any such difference.

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This transfer is an “off-chain” transaction that is recorded in the books and records of the Prime Execution Agent.

Because the Trust’s Trading Balance may not be funded with cash on trade date for the purchase of bitcoin associated with the purchase order, the Trust may borrow Trade Credits in the form of cash from the Trade Credit Lender pursuant to the Trade Financing Agreement or may require the Authorized Participant to deliver the required cash for the purchase order on trade date.

The extension of Trade Credits on trade date allows the Trust to purchase bitcoin through the Prime Execution Agent on trade date, with such bitcoin being deposited in the Trust’s Trading Balance.

Because the Trust’s Trading Balance may not be funded with cash on the trade date for the purchase of bitcoin associated with the purchase order, the Trust may borrow Trade Credits in the form of cash from the Trade Credit Lender pursuant to the Trade Financing Agreement or may require the Authorized Participant to deliver the required cash for the purchase order on the trade date.

The extension of Trade Credits on the trade date allows the Trust to purchase bitcoin through the Prime Execution Agent on the trade date, with such bitcoin being deposited in the Trust’s Trading Balance.

For settlement of a redemption, the Trust delivers Shares to the Authorized Participant in exchange for cash received from the Authorized Participant.

To the extent Trade Credits were utilized, the Trust uses the cash to repay the Trade Credits borrowed from the Trade Credit Lender.

Any financing fee owed to the Trade Credit Lender is deemed part of trade execution costs and embedded in the trade price for each transaction.

Upon the deposit by the Bitcoin Trading Counterparty or the Prime Execution Agent of the corresponding amount of bitcoin with the Trust’s Trading Balance, and the payment of the applicable ETF Servicing Fee, and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Cash Custodian will deliver the appropriate number of Baskets to the DTC account of the depositing Authorized Participant.

As of the date of this report, the Authorized Participants are ABN AMRO Clearing USA LLC, Citigroup Global Markets, Inc., Goldman Sachs & Co.

LLC, Jane Street Capital, LLC, JP Morgan Securities LLC, Macquarie Capital (USA) Inc., UBS Securities LLC and Virtu Americas LLC.

Upon the deposit by the Bitcoin Trading Counterparty or the Prime Execution Agent of the corresponding amount of bitcoin with the Trust’s Trading Balance, and the payment of the applicable ETF Servicing Fee, and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Cash Custodian will deliver the appropriate number of Baskets to the Depository Trust Company (“DTC”) account of the depositing Authorized Participant.

As of the date of this report, the Authorized Participants are ABN AMRO Clearing USA LLC, BMO Capital Markets Corp., BofA Securities, Inc., Citadel Securities LLC, Citigroup Global Markets, Inc., Goldman Sachs & Co.

LLC, Jane Street Capital, LLC, Jefferies LLC, JP Morgan Securities LLC, Macquarie Capital (USA) Inc., UBS Securities LLC and Virtu Americas LLC.

Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor.

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The Redemption Early Order Cutoff Time is 6:00 p.m.

ET on the Business Day prior to trade date.

ET on the Business Day prior to the trade date.

On the date of the Redemption Early Order Cutoff Time, the Trust may choose, in its sole discretion, to enter into a transaction with a Bitcoin Trading Counterparty or the Prime Execution Agent, to sell bitcoin in exchange for cash.

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In the event the Trust has not been able to successfully execute and complete settlement of a bitcoin transaction by the settlement date, the Authorized Participant will be given the option to (1) cancel the redemption order, or (2) accept that the Trust will continue to attempt to complete the execution, which will delay the settlement date.

With respect to a redemption order, between the Trust and the Authorized Participant, the Authorized Participant will be responsible for the dollar cost of the difference between the bitcoin price utilized in calculating the NAV on trade date and the price realized in selling the bitcoin to raise the cash needed for the cash redemption order to the extent the price realized in selling the bitcoin is lower than the bitcoin price utilized in the NAV.

With respect to a redemption order, between the Trust and the Authorized Participant, the Authorized Participant will be responsible for the dollar cost of the difference between the bitcoin price utilized in calculating the NAV on the trade date and the price realized in selling the bitcoin to raise the cash needed for the cash redemption order to the extent the price realized in selling the bitcoin is lower than the bitcoin price utilized in the NAV.

To the extent the price realized is selling the bitcoin is higher than the price utilized in the NAV, the Authorized Participant shall get to keep the dollar impact of any such difference.

The transfers of bitcoin from the Trust’s Trading Balance to the Bitcoin Trading Counterparty’s account at the Prime Execution Agent or to the Prime Execution Agent is an “off-chain” transaction that is recorded in the books and records of the Prime Execution Agent.

The Trust’s Trading Balance with the Prime Execution Agent may not be funded with bitcoin on trade date for the sale of bitcoin in connection with the redemption order, when bitcoin remains in the Trust’s Vault Balance with the Bitcoin Custodian at the point of intended execution of a sale of bitcoin.

In those circumstances the Trust may borrow Trade Credits in the form of bitcoin from the Trade Credit Lender, which allows the Trust to sell bitcoin through the Prime Execution Agent on trade date, and the cash proceeds are deposited in the Trust’s Trading Balance with the Prime Execution Agent.

The Trust’s Trading Balance with the Prime Execution Agent may not be funded with bitcoin on the trade date for the sale of bitcoin in connection with the redemption order, when bitcoin remains in the Trust’s Vault Balance with the Bitcoin Custodian at the point of intended execution of a sale of bitcoin.

In those circumstances the Trust may borrow Trade Credits in the form of bitcoin from the Trade Credit Lender, which allows the Trust to sell bitcoin through the Prime Execution Agent on the trade date, and the cash proceeds are deposited in the Trust’s Trading Balance with the Prime Execution Agent.

For settlement of a redemption where Trade Credits were utilized, the Trust delivers cash to the Authorized Participant in exchange for Shares received from the Authorized Participant.

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Upon the surrender of such Shares and the payment of the applicable ETF Servicing Fee, Custody Transaction Costs and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees) by the redeeming Authorized Participant, and the completion of the sale of bitcoin for cash by the Trust, the Trustee will instruct the delivery of cash to the Authorized Participant.

The Authorized Participant is responsible for the dollar cost of the difference between the value of bitcoin calculated by the Trust Administrator for the applicable NAV of the Trust and the price at which the Trust sells bitcoin to raise the cash needed for the cash redemption order to the extent the price realized in selling the bitcoin is lower than the bitcoin price utilized in the NAV.

The Authorized Participant is responsible for the dollar cost of the difference between the value of bitcoin calculated by the Trust Administrator for the applicable NAV and the price at which the Trust sells bitcoin to raise the cash needed for the cash redemption order to the extent the price realized in selling the bitcoin is lower than the bitcoin price utilized in the NAV.

To the extent the price realized is selling the bitcoin is higher than the price utilized in the NAV, the Authorized Participant shall get to keep the dollar impact of any such difference.

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any expenses of any extraordinary services performed by the Trustee or the Sponsor on behalf of the Trust or expenses of any action taken by the Trustee or the Sponsor to protect the Trust or the rights and interests of holders of Shares;

any indemnification of the Sponsor as described below;

any indemnification of the Sponsor and its shareholders, directors, officers, employees, affiliates (as such term is defined under the Securities Act of 1933, as amended) and subsidiaries and agents, Cash Custodian, Bitcoin Custodian, Prime Execution Agent, Trust Administrator, or other agents, service providers or counterparties of the Trust as described below;

extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.

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In addition, the following discussion applies only to investors who will hold Shares as “capital assets” (generally, property held for investment).

Moreover, the discussion below does not address the effect of any state, local or foreign tax, or any U.S.

Moreover, the discussion below does not address the effect of any state, local or foreign tax, or, except as otherwise indicated, any U.S.

federal non-income tax law consequences that may apply to an investment in Shares, or the Medicare contribution tax imposed on certain net investment income.

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federal income tax purposes, in which case the Trust would be taxed in the same manner as a regular corporation on its taxable income and distributions to Shareholders out of the earnings and profits of the Trust generally would be taxed to Shareholders as ordinary dividend income (which may be eligible for preferential rates, in the case of non-corporate taxpayers, or a dividends received deduction, in the case of corporate taxpayers).

However, due to the uncertain treatment of digital currency for U.S.

However, due to the uncertain treatment of digital assets for U.S.

federal income tax purposes, there can be no assurance in this regard.

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federal income tax treatment of bitcoin or transactions relating to investments in bitcoin may evolve and change from those discussed below, possibly with retroactive effect.

In this regard, the IRS indicated that it has made it a priority to issue additional guidance related to the taxation of virtual currency transactions, such as transactions involving bitcoin.

In this regard, the IRS indicated that it has made it a priority to issue additional guidance related to the taxation of digital asset transactions, such as transactions involving bitcoin.

While it has started to issue such additional guidance, whether any future guidance will adversely affect the U.S.

federal income tax treatment of an investment in bitcoin or in transactions relating to investments in bitcoin is unknown.

Moreover, future developments that may arise with respect to digital currencies may increase the uncertainty with respect to the treatment of digital currencies for U.S.

Moreover, 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.

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If a hard fork occurs in the Bitcoin blockchain, the Trust could temporarily hold both the original bitcoin and the alternative new asset as the Sponsor determines, in its sole discretion, which asset it believes is generally accepted as bitcoin.

The other asset will be treated as an Incidental Right and/or IR Virtual Currency, in accordance with the procedures specified herein.

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.

The other asset will be treated as an Incidental Right and/or IR Digital Asset, in accordance with the procedures specified herein.

The IRS has held that a hard fork resulting in the creation of new units of crypto assets is a taxable event giving rise to ordinary income.

The receipt, distribution and/or sale of the new alternative asset may cause Shareholders to incur a U.S.

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While the IRS has not addressed all situations in which airdrops occur, it is clear from the reasoning of the IRS’s current guidance that it generally would treat an airdrop as a taxable event giving rise to ordinary income, and it is anticipated that any gain or loss from disposition of any assets received in the airdrop would generally be treated as giving rise to capital gain or loss that generally would be short-term capital gain or loss, unless the holding period of those assets were treated as being greater than one year as of the time they are sold.

The Sponsor has committed to cause the Trust to permanently and irrevocably abandon any Incidental Rights and IR Virtual Currency to which the Trust may become entitled in the future.

The Sponsor has committed to cause the Trust to permanently and irrevocably abandon any Incidental Rights and IR Digital Asset 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 permanently and 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.

federal income tax purposes, or that the Sponsor will continue to cause the Trust to permanently and 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.

Brokerage Fees and Trust Expenses

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federal income tax consequences of an investment in Shares.

Taxation of Non-U.S.

Income Taxation of Non-U.S.

Shareholder that (1) in the case of an individual is not present in the United States for 183 days or more during the taxable year of the sale or other disposition of Shares, or upon the sale of bitcoin by the Trust, and (2) is not engaged in the conduct of a trade or business in the United States, generally will not be subject to U.S.

federal income tax with respect to gain recognized upon the sale or other disposition of Shares, or upon the sale of bitcoin by the Trust.

The Trust does not expect (though no assurance can be given) that it will be treated as engaged in a trade or business within the United States or recognize income that is treated as “effectively connected” with the conduct of a trade or business in the United States (“ECI”).

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federal branch profits tax is generally imposed at a 30% rate, though it may be reduced under the Code or pursuant to an applicable income tax treaty.

Estate Tax Considerations for Non-U.S.

Individuals who are neither citizens nor residents of the United States, as determined for U.S.

federal estate tax purposes, (collectively, “Non-U.S.

Residents”) may be subject to estate tax on “U.S.

situs” property they own or are treated as owning at the time of death.

There is currently no specific guidance as to whether Shares or the bitcoin held by the Trust are treated as having U.S.

situs for U.S.

federal estate tax purposes.

If Shares are considered to have U.S.

situs, they would be includible in the U.S.

gross estate of a Non-U.S.

Resident investor, unless an applicable tax treaty provides otherwise.

Residents considering an investment in Shares are urged to consult with their tax advisers regarding the potential application of U.S.

federal estate taxes to their shares in their particular circumstances.

Information Reporting and Backup Withholding

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federal income tax liability and may entitle the Shareholder to a refund, provided that the required information is furnished to the IRS in a timely manner.

Individual U.S.

Shareholders will generally be required to report on their federal income tax return the receipt, acquisition, sale, or exchange of any financial interest in digital assets, which includes a Shareholder’s interest in bitcoin held by the Trust.

SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS TO DISCUSS ALL TAX CONSIDERATIONS THAT MAY BE RELEVANT TO THEM ASSOCIATED WITH ANY PURCHASE, HOLDING, SALE, REDEMPTION OR OTHER DEALING IN THE SHARES BEFORE DECIDING WHETHER TO INVEST IN THE SHARES.

ERISA and Related Considerations

The Employee Retirement Income Security Act of 1974 (“ERISA”) and/or Section 4975 of the Code impose certain requirements on:

(i) employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh plans and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to Title I of ERISA and/or Section 4975 of the Code (collectively, “Plans”); and (ii) persons who are fiduciaries with respect to the investment of assets treated as “plan assets” within the meaning of U.S.

The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and/or Section 4975 of the Code impose certain requirements on:

(i) employee benefit plans and certain other plans and arrangements, including IRAs and annuities, Keogh plans and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to Part 4 of Subtitle B of Title I of ERISA and/or Section 4975 of the Code (collectively, “Plans”); and (ii) persons who are fiduciaries with respect to the investment of assets treated as “plan assets” within the meaning of U.S.

Department of Labor (“DOL”) regulation 29 C.F.R.

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“Governmental plans” within the meaning of Section 3(32) of ERISA, certain “church plans” within the meaning of Section 3(33) of ERISA and non-U.S.

plans” described in Section 4(b)(4) of ERISA, while not subject to the fiduciary responsibility and prohibited transaction provisions of Title I of ERISA or Section 4975 of the Code, may be subject to any federal, state, local, non-U.S.

or other law or regulation that is substantially similar to the foregoing provisions of ERISA and the Code.

plans described in Section 4(b)(4) of ERISA, while not subject to the fiduciary responsibility and prohibited transaction provisions of Title I of ERISA or Section 4975 of the Code, may be subject to any federal, state, local, or non-U.S.

law or regulation that is substantially similar to the foregoing provisions of ERISA and the Code.

Fiduciaries of any such plans are advised to consult with their counsel prior to an investment in the Shares.

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The Plan fiduciary should consider, among other issues, whether:

(1) the fiduciary has the authority to make the investment under the appropriate governing plan instrument; (2) the investment would constitute a direct or indirect non-exempt prohibited transaction with a “party in interest” or a “disqualified person” within the meaning of ERISA and Section 4975 of the Code respectively; (3) the investment is in accordance with the Plan’s funding objectives; and (4) such investment is appropriate for the Plan under the general fiduciary standards of investment prudence and diversification, taking into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the Plan’s need for sufficient liquidity to pay benefits when due.

(1) the fiduciary has the authority to make the investment under the appropriate governing plan instrument; (2) the investment would constitute a direct or indirect non-exempt prohibited transaction with a “party in interest” or a “disqualified person” within the meaning of Section 3(14) of ERISA and Section 4975(e)(2) of the Code respectively; (3) the investment is in accordance with the Plan’s funding objectives; and (4) such investment is appropriate for the Plan under the general fiduciary standards of investment prudence and diversification, taking into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the Plan’s need for sufficient liquidity to pay benefits when due.

When evaluating the prudence of an investment in the Shares, the Plan fiduciary should consider the DOL’s regulation on investment duties, which can be found at 29 C.F.R.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business