Osprey Bitcoin Trust 10-K

ITEM 1. BUSINESS Summary Osprey Bitcoin Trust (the “Trust”) is an exchange-traded fund that issues shares of beneficial interest (“Shares”) that are listed on The Nasdaq Stock Market LLC (the “Listing Exchange”) and which began trading under the ticker symbol “OBTC” on December 19, 2025. The investment objective of the Trust is for the Shares to reflect the performance of Bitcoin as measured by reference to the CME CF Bitcoin Reference Rate - New York Variant (the “Index”), less the Trust’s expenses and other liabilities. Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. The assets of the Trust consist primarily of Bitcoin held by the Bitcoin Custodian (as defined below) on behalf of the Trust. The Trust was formed as a Delaware statutory trust on January 3, 2019, pursuant to the Delaware Statutory Trust Act. The Trust is governed by the provisions of the Trust Agreement, dated as of November 1, 2020, as amended on April 15, 2022, January 18, 2024, December 18, 2025, and January 9, 2026. Osprey Funds, LLC (the “Sponsor”) is the sponsor of the Trust; CSC Delaware Trust Company (the “Trustee”) is the trustee of the Trust; Coinbase Custody Trust Company, LLC (the “Bitcoin Custodian”) is the custodian for the Trust’s Bitcoin holdings; and U.S. Bank National Association (the “Cash Custodian” and, together with the Bitcoin Custodian, the “Custodians”) is the custodian for the Trust’s cash holdings and U.S. Bancorp Fund Services, LLC (d/b/a U.S. Bank Global Fund Services) (the “Trust Administrator” and the “Transfer Agent”) is the administrator of, and the transfer agent for, the Trust. Continental Stock Transfer & Trust Company serves as the sub-transfer agent of the Trust. Prior to listing the Shares for trading on the Listing Exchange, the Trust issued Shares pursuant to Regulation D under the Securities Act. The Shares were quoted on OTC Markets and OTC Markets Group, Inc.’s OTCQX® Best Marketplace (“OTCQX”) under the ticker symbol “OBTC.” The Trust’s Shares were quoted on OTC Markets since February 12, 2021, and on OTCQX under the symbol OBTC since February 26, 2021. The fiscal year of the Trust is the calendar year and the Trust has no fixed termination date. The Sponsor may select an alternate fiscal year. The Trust does not have any directors, officers or employees. The Trust is managed by the Sponsor and pays the Sponsor a management fee (the “Management Fee”). The Trust is not registered as an investment company under the 1940 Act and the Sponsor is not registered as an investment adviser under the Investment Advisers Act of 1940. The Trust does not hold or trade in commodity futures contracts regulated by the CEA, as administered by the CFTC. The Trust is not a commodity pool for purposes of the CEA and neither the Sponsor, nor the Trustee is subject to regulation as a commodity pool operator or a commodity trading adviser in connection with the Shares. The number of outstanding Shares is expected to increase and decrease from time to time as a result of the creation and redemption of Baskets. The Trust issues and redeems Shares only in Baskets, based on the quantity of Bitcoin attributable to each Share (net of any accrued but unpaid Management Fees, expenses and liabilities). Baskets may be redeemed by the Trust in exchange for the amount of Bitcoin corresponding to their redemption value or the cash proceeds from selling the amount of Bitcoin corresponding to their redemption value. Further information about the Trust or the Shares can be obtained from the website at https://www.rexshares.com/OBTC. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K (including any amendments thereto) filed with, or furnished to, the Securities and Exchange Commission (the “SEC”), are made available, free of charge, at that website as soon as reasonably practicable after such documents are so filed or furnished. Additional information regarding the Trust may also be found on the SEC’s EDGAR database at www.sec.gov. The contents of the websites referred to above and any websites referred to herein are not incorporated into this filing. Further, any reference to the URLs of a website is intended to be inactive textual references only. The Trust’s Investment Objective and Strategies The investment objective of the Trust, which is a passive investment vehicle, is for the Shares to reflect the performance of Bitcoin as measured by reference to the Index, less the Trust’s expenses and other liabilities. Historically, the Trust measured the performance of Bitcoin by reference to the CMBI Bitcoin Index. Upon effectiveness of the Trust’s registration statement on Form S-1, as amended (File No. 333-289334), effective as of December 18, 2025, the performance of Bitcoin was measured by reference to the Index. Prior to trading on the Listing Exchange, the Shares were quoted on OTC Markets since February 12, 2021, and on OTCQX under the symbol “OBTC” since February 26, 2021, and did not meet their investment objective. Since trading on the Listing Exchange, the Shares have met their investment objective. 1 While an investment in the Shares is not a direct investment in Bitcoin, the Shares are intended to constitute a cost-effective and convenient means of gaining investment exposure to Bitcoin. The logistics of accepting, transferring and safekeeping of Bitcoin are dealt with by the Sponsor and the Bitcoin Custodian, and the related expenses are built into the price of the Shares. Therefore, Shareholders do not have additional tasks or costs over and above those generally associated with investing in any other publicly listed security. However, an investment in the Shares may operate and perform differently over time, or at any specific point in time, than an investment directly in Bitcoin due to such factors as Trust fees and expenses, the quantity of Shares available for trading, the relative liquidity of the Shares and differences in the markets trading Bitcoin and Shares (e.g., hours of operation, marketplace rules, clearance and settlement and market participants). The Index is an independently calculated value based on an aggregation of executed trade flow of major Bitcoin spot platforms. The administrator of the Index is CF Benchmarks Ltd. (the “Index Administrator”). The Index currently uses substantially the same methodology as the CME CF Bitcoin Reference Rate (“BRR”), including utilizing the same eight Bitcoin platforms, which is the underlying rate to determine settlement of CME Bitcoin futures contracts, except that the Index is calculated as of 4:00 p.m. New York time, whereas the BRR is calculated as of 4:00 p.m. London time. There can be no assurance that the Trust will achieve its investment objective. The Sponsor believes that the use of the Index is reflective of a reasonable valuation of the average spot price of Bitcoin and that resistance to manipulation is a priority aim of its design methodology. The methodology: (i) takes an observation period and divides it into equal partitions of time; (ii) then calculates the volume-weighted median of all transactions within each partition; and (iii) the value is determined from the equally weighted average of the volume-weighted medians. By employing the foregoing steps, the Index thereby seeks to ensure that transactions in Bitcoin conducted at outlying prices do not have an undue effect on the value of a specific partition, large trades or clusters of trades transacted over a short period of time will not have an undue influence on the index level, and the effect of large trades at prices that deviate from the prevailing price are mitigated from having an undue influence on the benchmark level. In addition, the Sponsor notes that an oversight function is implemented by the Index Administrator in seeking to ensure that the Index is administered through codified policies for Index integrity. Bitcoin, Bitcoin Market, Bitcoin Platforms and Regulation of Bitcoin Bitcoin Bitcoin is a digital asset that is created and transmitted through the operations of the peer-to-peer Bitcoin network, a decentralized network of computers that operates on cryptographic protocols. No single entity owns or operates the Bitcoin network, the infrastructure of which is collectively maintained by its user base. The Bitcoin network allows people to exchange tokens of value, called Bitcoin, which are recorded on a public transaction ledger (the “Bitcoin blockchain”). Bitcoin can be used to pay for goods and services, or it can be converted to fiat currencies, such as the U.S. dollar, at rates determined on Bitcoin platforms that enable trading in Bitcoin or in individual end-user-to-end-user transactions under a barter system. The Bitcoin network is commonly understood to be decentralized and does not require governmental authorities or financial institution intermediaries to create, transmit or determine the value of Bitcoin. Rather, Bitcoin is created and allocated by the Bitcoin network protocol through a “mining” process. The value of Bitcoin is determined by the supply of and demand for Bitcoin-on-Bitcoin platforms or in private end-user-to-end-user transactions. New Bitcoin are created and rewarded to the miners of a block in the Bitcoin blockchain for verifying transactions. The Bitcoin blockchain is a shared database that includes all blocks that have been solved by miners and it is updated to include new blocks as they are solved. Each Bitcoin transaction is broadcast to the Bitcoin network and, when included in a block, recorded in the Bitcoin blockchain. As each new block records outstanding Bitcoin transactions, and outstanding transactions are settled and validated through such recording, the Bitcoin blockchain represents a complete, transparent and unbroken history of all transactions of the Bitcoin network. History of Bitcoin The Bitcoin network was initially contemplated in a white paper that also described Bitcoin and the operating software to govern the Bitcoin network. The white paper was purportedly authored by Satoshi Nakamoto. However, no individual with that name has been reliably identified as Bitcoin’s creator, and the general consensus is that the name is a pseudonym for the actual inventor or inventors. The first Bitcoin was created in 2009 after Nakamoto released the Bitcoin network source code (the software and protocol that created and launched the Bitcoin network). The Bitcoin network has been under active development since that time by a loose group of software developers who have come to be known as core developers. 2 Overview of Bitcoin Network Operations In order to own, transfer or use Bitcoin directly on the Bitcoin network (as opposed to through an intermediary, such as a platform), a person generally must have internet access to connect to the Bitcoin network. Bitcoin transactions may be made directly between end-users without the need for a third-party intermediary. To prevent the possibility of double-spending Bitcoin, a user must notify the Bitcoin network of the transaction by broadcasting the transaction data to its network peers. The Bitcoin network provides confirmation against double-spending by memorializing every transaction in the Bitcoin blockchain, which is publicly accessible and transparent. This memorialization and verification against double-spending is accomplished through the Bitcoin network mining process, which adds “blocks” of data, including recent transaction information, to the Bitcoin blockchain. Overview of Bitcoin Transfers Prior to engaging in Bitcoin transactions directly on the Bitcoin network, a user generally must first install on its computer or mobile device a Bitcoin network software program that will allow the user to generate a private and public key pair associated with a Bitcoin address commonly referred to as a “wallet.” The Bitcoin network software program and the Bitcoin address also enable the user to connect to the Bitcoin network and transfer Bitcoin to, and receive Bitcoin from, other users. Each Bitcoin network address, or wallet, is associated with a unique “public key” and “private key” pair. To receive Bitcoin, the Bitcoin recipient must provide its public key to the party initiating the transfer. This activity is analogous to a recipient for a transaction in U.S. dollars providing a routing address in wire instructions to the payor so that cash may be wired to the recipient’s account. The payor approves the transfer to the address provided by the recipient by “signing” a transaction that consists of the recipient’s public key with the private key of the address from where the payor is transferring the Bitcoin. The recipient, however, does not make public or provide to the sender its related private key. Neither the recipient nor the sender reveals their private keys in a transaction because the private key authorizes transfer of the funds in that address to other users. Therefore, if a user loses his private key, the user may permanently lose access to the Bitcoin contained in the associated address. Likewise, Bitcoin is irretrievably lost if the private key associated with them is deleted and no backup has been made. When sending Bitcoin, a user’s Bitcoin network software program must validate the transaction with the associated private key. The resulting digitally validated transaction is sent by the user’s Bitcoin network software program to the Bitcoin network to allow transaction confirmation. Some Bitcoin transactions are conducted “off-blockchain” and are therefore not recorded in the Bitcoin blockchain. Some “off-blockchain transactions” involve the transfer of control over, or ownership of, a specific digital wallet holding Bitcoin or the reallocation of ownership of certain Bitcoin in a digital wallet containing assets owned by multiple persons, such as a digital wallet maintained by a digital assets platform. In contrast to on-blockchain transactions, which are publicly recorded on the Bitcoin blockchain, information and data regarding off-blockchain transactions are generally not publicly available. Therefore, off-blockchain transactions are not truly Bitcoin transactions in that they do not involve the transfer of transaction data on the Bitcoin network and do not reflect a movement of Bitcoin between addresses recorded in the Bitcoin blockchain. For these reasons, off-blockchain transactions are subject to risks as any such transfer of Bitcoin ownership is not protected by the protocol behind the Bitcoin network or recorded in, and validated through, the blockchain mechanism. Summary of a Bitcoin Transaction In a Bitcoin transaction directly on the Bitcoin network between two parties (as opposed to through an intermediary, such as a platform or a custodian), the following circumstances must initially be in place: (i) the party seeking to send Bitcoin must have a Bitcoin network public key, and the Bitcoin network must recognize that public key as having sufficient Bitcoin for the transaction; (ii) the receiving party must have a Bitcoin network public key; and (iii) the spending party must have internet access with which to send its spending transaction. The receiving party must provide the spending party with its public key and allow the Bitcoin blockchain to record the sending of Bitcoin to that public key. After the provision of a recipient’s Bitcoin network public key, the spending party must enter the address into its Bitcoin network software program along with the number of Bitcoin to be sent. The number of Bitcoin to be sent will typically be agreed upon between the two parties based on a set number of Bitcoin or an agreed upon conversion of the value of fiat currency to Bitcoin. Since every computation on the Bitcoin network requires the payment of Bitcoin, including verification and memorialization of Bitcoin transfers, there is a transaction fee involved with the transfer, which is based on computation complexity and not on the value of the transfer, and is paid by the payor with a fractional number of Bitcoin. After the entry of the Bitcoin network address, the number of Bitcoin to be sent and the transaction fees, if any, to be paid, will be transmitted by the spending party. The transmission of the spending transaction results in the creation of a data packet by the spending party’s Bitcoin network software program, which is transmitted onto the decentralized Bitcoin network, resulting in the distribution of the information among the software programs of users across the Bitcoin network for eventual inclusion in the Bitcoin blockchain. 3 As discussed in greater detail below in “Creation of New Bitcoin,” Bitcoin network miners record transactions when they solve for and add blocks of information to the Bitcoin blockchain. When a miner solves for a block, it creates that block, which includes data relating to (i) the solution to the block; (ii) a reference to the prior block in the Bitcoin blockchain to which the new block is being added; and (iii) transactions that have occurred but have not yet been added to the Bitcoin blockchain. The miner becomes aware of outstanding, unrecorded transactions through the data packet transmission and distribution discussed above. Upon the addition of a block included in the Bitcoin blockchain, the Bitcoin network software program of both the spending party and the receiving party will show confirmation of the transaction on the Bitcoin blockchain and reflect an adjustment to the Bitcoin balance in each party’s Bitcoin network public key, completing the Bitcoin transaction. Once a transaction is confirmed on the Bitcoin blockchain, it is irreversible. Bitcoin Markets In addition to using Bitcoin to engage in transactions, investors may purchase and sell Bitcoin to speculate as to the value of Bitcoin in the Bitcoin market, or as a long-term investment to diversify their portfolio. The value of Bitcoin within the market is determined, in part, by the supply of and demand for Bitcoin in the global Bitcoin market, market expectations for the adoption of Bitcoin as a store of value, the number of merchants that accept Bitcoin as a form of payment, and the volume of peer-to-peer transactions, among other factors. Centralized spot Bitcoin markets typically permit investors to open accounts with the trading platform and then purchase and sell Bitcoin via websites or through mobile applications. Prices for trades on centralized spot Bitcoin markets are typically reported publicly. An investor opening a trading account must deposit an accepted government-issued currency into their account with the spot market, or a previously acquired digital asset, before they can purchase or sell assets on the spot market. The process of establishing an account with a centralized Bitcoin market and trading Bitcoin is different from, and should not be confused with, the process of users sending Bitcoin from one Bitcoin address to another Bitcoin address on the Blockchain or decentralized on-chain trading platforms. This latter process is an activity that occurs on the Bitcoin network, while the former is an activity that occurs entirely within the order book operated by the centralized spot market. The centralized spot market typically records the investor’s ownership of Bitcoin in its internal books and records, rather than on the Blockchain. The centralized spot market ordinarily does not transfer Bitcoin to the investor on the Blockchain unless the investor makes a request to the digital asset trading platform to withdraw the Bitcoin in their account to an off-exchange Bitcoin wallet. In addition, Bitcoin futures and options trading occurs on exchanges in the U.S. regulated by the CFTC. The market for CFTC regulated trading of Bitcoin derivatives has developed substantially. Through the common membership of the Listing Exchange and the CME Bitcoin Futures market in the Intermarket Surveillance Group (“ISG”), the Listing Exchange may obtain information regarding trading in the Shares and listed Bitcoin derivatives from the CME Bitcoin Futures market via the ISG and from other exchanges who are members or affiliates of the ISG. Such an arrangement with the ISG and the CME Bitcoin Futures market allows for the surveillance of Bitcoin futures market conditions and price movements on a real-time and ongoing basis in order to detect and prevent price distortions, including price distortions caused by manipulative efforts. The sharing of surveillance information between the Listing Exchange and the CME Bitcoin Futures market regarding market trading activity, clearing activity and customer identity assists in detecting, investigating and deterring fraudulent and manipulative misconduct, as well as violations of the Listing Exchange’s rules and the applicable federal securities laws and rules. The Listing Exchange has also implemented surveillance procedures to monitor the trading of the Shares on the Listing Exchange during all trading sessions and to deter and detect violations of The Listing Exchange rules and the applicable federal securities laws. Creation of New Bitcoin New Bitcoin are created through the mining process as discussed below. The Bitcoin network is kept running by computers all over the world. In order to incentivize those who incur the computational costs of securing the network by validating transactions, there is a reward that is given to the computer that was able to create the latest block on the chain. Every ten minutes, on average, a new block is added to the Bitcoin blockchain with the latest transactions processed by the network, and the computer that generated this block is currently awarded 3.125 Bitcoin. Due to the nature of the algorithm for block generation, this process (generating a “proof-of-work”) is random. Over time, rewards are expected to be proportionate to the computational power of each machine. 4 The process by which Bitcoin is “mined” results in new blocks being added to the Bitcoin blockchain and new Bitcoin tokens being issued to the miners. Computers on the Bitcoin network engage in a set of prescribed complex mathematical calculations in order to add a block to the Bitcoin blockchain and thereby confirm Bitcoin transactions included in that block’s data. To begin mining, a user can download and run Bitcoin network mining software, which turns the user’s computer into a “node” on the Bitcoin network that validates blocks. Each block contains the details of some or all of the most recent transactions that are not memorialized in prior blocks, as well as a record of the award of Bitcoin to the miner who added the new block. Each unique block can be solved and added to the Bitcoin blockchain by only one miner. Therefore, all individual miners and mining pools on the Bitcoin network are engaged in a competitive process of constantly increasing their computing power to improve their likelihood of solving for new blocks. As more miners join the Bitcoin network and its processing power increases, the Bitcoin network adjusts the complexity of the block-solving equation to maintain a predetermined pace of adding a new block to the Bitcoin blockchain approximately every ten minutes. A miner’s proposed block is added to the Bitcoin blockchain once a majority of the nodes on the Bitcoin network confirm the miner’s work. Miners that are successful in adding a block to the Bitcoin blockchain are automatically awarded Bitcoin for their effort and may also receive transaction fees paid by transferors whose transactions are recorded in the block. This reward system is the method by which new Bitcoin enter into circulation to the public. The Bitcoin network is designed in such a way that the reward for adding new blocks to the Bitcoin blockchain decreases over time. Once new Bitcoin tokens are no longer awarded for adding a new block, miners will only have transaction fees to incentivize them, and as a result, it is expected that miners will need to be better compensated with higher transaction fees to ensure that there is adequate incentive for them to continue mining. Limits on Bitcoin Supply Under the source code that governs the Bitcoin network, the supply of new Bitcoin is mathematically controlled so that the number of Bitcoin grows at a limited rate pursuant to a pre-set schedule. The number of Bitcoin awarded for solving a new block is automatically halved after every 210,000 blocks are added to the Bitcoin blockchain, approximately every four years. Currently, the fixed reward for solving a new block is 3.125 Bitcoin per block and this is expected to decrease by half to become 1.5625 Bitcoin in approximately mid-2028. This deliberately controlled rate of Bitcoin creation means that the number of Bitcoin in existence will increase at a controlled rate until the number of Bitcoin in existence reaches the pre-determined twenty-one million Bitcoin. However, the twenty-one million supply cap could be changed in a hard fork. In the past, there have been several forks in the Bitcoin network, including, but not limited to, forks resulting in the creation of Bitcoin Cash (August 1, 2017), Bitcoin Gold (October 24, 2017) and Bitcoin SegWit2X (December 28, 2017), among others. For further information, see “Risk Factors —Risk Factors Related to Digital Assets—A hard fork could change the source code to the Bitcoin network, including the twenty-one million Bitcoin supply cap.” As of December 31, 2025, approximately 19.970 million Bitcoin were outstanding and the date when the twenty-one million Bitcoin limitation will be reached is estimated to be the year 2140. Modifications to the Bitcoin Protocol Bitcoin is an open-source project with no official developer or group of developers that controls the Bitcoin network. However, the Bitcoin network’s development is overseen by a core group of developers. The core developers are able to access, and can alter, the Bitcoin network source code and, as a result, they are responsible for quasi-official releases of updates and other changes to the Bitcoin network’s source code. The release of updates to the Bitcoin network’s source code does not guarantee that the updates will be automatically adopted. Users and miners must accept any changes made to the Bitcoin source code by downloading the proposed modification of the Bitcoin network’s source code. A modification of the Bitcoin network’s source code is effective only with respect to the Bitcoin users and miners that download it. If a modification is accepted by only a percentage of users and miners, a division in the Bitcoin network will occur such that one network will run the pre-modification source code and the other network will run the modified source code. Such a division is known as a “fork.” See “Risk Factors—Risk Factors Related to Digital Assets—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 or any IR Virtual Currency, including any forked or airdropped assets. Consequently, as a practical matter, a modification to the source code becomes part of the Bitcoin network only if accepted by participants collectively having most of the processing power on the Bitcoin network. There have been several forks in the Bitcoin network, including, but not limited to, forks resulting in the creation of Bitcoin Cash (August 1, 2017), Bitcoin Gold (October 24, 2017) and Bitcoin SegWit2X (December 28, 2017), among others. Core development of the Bitcoin network source code has increasingly focused on modifications of the Bitcoin network protocol to increase speed and scalability and also allow for non-financial, next generation uses. For example, following the activation of Segregated Witness on the Bitcoin network, an alpha version of the Lightning Network was released. The Lightning Network is an open-source decentralized network that enables instant off-Bitcoin blockchain transfers of the ownership of Bitcoin without the need of a trusted third-party. The system utilizes bidirectional payment channels that consist of multi-signature addresses. One on-blockchain transaction is needed to open a channel and another on-blockchain transaction can close the channel. Once a channel is open, value can be transferred instantly between counterparties, who are engaging in real Bitcoin transactions without broadcasting them to the Bitcoin network. New transactions will replace previous transactions and the counterparties will store everything locally as long as the channel stays open to increase transaction throughput and reduce computational burden on the Bitcoin network. Other efforts include increased use of smart contracts and distributed registers built into, built atop or pegged alongside the Bitcoin blockchain. The Trust’s activities will not directly relate to such projects, though such projects may utilize Bitcoin as tokens for the facilitation of their non-financial uses, thereby potentially increasing demand for Bitcoin and the utility of the Bitcoin network as a whole. Conversely, projects that operate and are built within the Bitcoin blockchain may increase the data flow on the Bitcoin network and could either “bloat” the size of the Bitcoin blockchain or slow confirmation times. At this time, such projects remain in early stages and have not been materially integrated into the Bitcoin blockchain or the Bitcoin network. 5 Forms of Attack Against the Bitcoin Network All networked systems are vulnerable to various kinds of attacks. As with any computer network, the Bitcoin network contains certain flaws. For example, the Bitcoin network is currently vulnerable to a “51% attack” where, if a mining pool were to gain control of more than 50% of the hash rate for a digital asset, a malicious actor would be able to prevent new transactions from confirmation, and reverse new transactions that are completed while they are in control of the network, effectively enabling them to double-spend their Bitcoin. In addition, many digital asset networks have been subjected to a number of denial of service attacks, which has led to temporary delays in block creation and in the transfer of Bitcoin. Any similar attacks on the Bitcoin network that impact the ability to transfer Bitcoin could have a material adverse effect on the price of Bitcoin and the value of the Shares. Market Participants Miners Miners are primarily professional mining operations that design and build dedicated machines and data centers, including mining pools, which are groups of miners that act cohesively and combine their processing to solve blocks. When a pool solves a new block, the pool operator receives the Bitcoin and, after taking a nominal fee, splits the resulting reward among the pool participants based on the processing power each of them contributed to solve for such block. Mining pools provide participants with access to smaller, but steadier and more frequent, Bitcoin payouts. Investment and Speculative Sector This sector includes the investment and trading activities of both private and professional investors and speculators. Historically, larger financial services institutions are publicly reported to have limited involvement in investment and trading in digital assets, although the participation landscape is beginning to change. Retail Sector The retail sector includes users transacting in direct peer-to-peer Bitcoin transactions through the direct sending of Bitcoin over the Bitcoin network, as well as users accessing Bitcoin through digital asset platforms. The retail sector also includes transactions in which consumers pay for goods or services from commercial or service businesses through direct transactions or third-party service providers. Service Sector This sector includes companies that provide a variety of services including the buying, selling, payment processing and storing of Bitcoin. Bitstamp, Coinbase, Kraken and LMAX Digital are some of the larger Bitcoin trading platforms by volume traded. Coinbase Custody Trust Company, LLC, the Bitcoin Custodian for the Trust, is a digital asset custodian that provides custodial accounts that store Bitcoin for users. If the Bitcoin network grows in adoption, it is anticipated that service providers may expand the currently available range of services and that additional parties will enter the service sector for the Bitcoin network. Competition More than 10,000 other digital assets have been developed since the inception of Bitcoin, currently the most developed digital asset because of the length of time it has been in existence, the investment in the infrastructure that supports it, and the network of individuals and entities that are using Bitcoin in transactions. Some industry groups are also creating private, permissioned blockchain versions of digital assets. See “Risk Factors—Risk Factors Related to the Digital Asset Markets—Competition from the emergence or growth of other digital assets or methods of investing in Bitcoin could have a negative impact on the price of Bitcoin and adversely affect the value of the Shares.” 6 Government Oversight, Though Increasing, Remains Limited As digital assets have grown in both popularity and market size, the U.S. Congress and a number of U.S. federal and state agencies (including the U.S. Department of the Treasury Financial Crimes Enforcement Network (“FinCEN”), SEC, the Office of the Comptroller of the Currency (“OCC”), the Commodity Futures Trading Commission (“CFTC”), The Financial Industry Regulatory Authority (“FINRA”), the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the IRS and state financial institution regulators) have been examining the operations of digital asset networks, digital asset users and the digital asset platform markets, with particular focus on the extent to which digital assets can be used to launder the proceeds of illegal activities or fund criminal or terrorist enterprises and the safety and soundness of exchanges or other service-providers that hold digital assets for users. Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors. In addition, federal and state agencies, and other countries have issued rules or guidance about the treatment of digital asset transactions or requirements for businesses engaged in digital asset activity. However, no U.S. federal or state agency exercises comprehensive supervisory jurisdiction over global or domestic markets for Bitcoin. In addition, the SEC, U.S. state securities regulators and several foreign governments have issued warnings that certain digital assets or activities involving them, including, without limitation, those sold in ICOs, may be classified as securities and that both those digital assets and ICOs may be subject to securities regulations. On-going and future regulatory actions may alter, perhaps to a materially adverse extent, the nature of an investment in the Shares or the ability of the Trust to continue to operate. Additionally, U.S. state and federal, and foreign regulators and legislatures have taken action against virtual currency businesses or enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from virtual currency activity. The U.S. Treasury Department has expressed concern regarding digital assets’ potential to be used to fund illicit activities and may seek to implement new regulations governing digital asset activities to address these concerns. See “Risk Factors—Risk Factors Related to the Regulation of the Trust and the Shares—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 Bitcoin, 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.” Various foreign jurisdictions have, and may continue to, in the near future, adopt laws, regulations or directives that may affect the Bitcoin network, digital asset platforms, and their users, particularly digital asset platforms and service providers that fall within such jurisdictions’ regulatory scope. There remains significant uncertainty regarding foreign governments’ future actions with respect to the regulation of digital assets and digital asset platforms. Such laws, regulations or directives may conflict with those of the United States and may negatively impact the acceptance of Bitcoin by users, merchants and service providers outside the United States and may therefore impede the growth or sustainability of the Bitcoin economy in their jurisdictions or globally, or otherwise negatively affect the value of Bitcoin. The effect of any future regulatory change on the Trust or Bitcoin is impossible to predict, but such change could be substantial and adverse to the Trust and the value of the Shares. The Index The Index is a once-a-day benchmark index price for Bitcoin denominated in U.S. Dollars that synchronizes with the traditional close of U.S. financial markets. The Index is calculated and published once a day at 4:00 p.m. New York time and has been since its launch on February 28, 2022. The Index is provided by CF Benchmarks Ltd., a Registered Benchmark under the UK Benchmarks Regulation overseen by the UK Financial Conduct Authority (“UK FCA”). The Index was created to facilitate financial products based on Bitcoin. Specifically, the Index is calculated based on the “Relevant Transactions” (as defined below) of all of its constituent Bitcoin platforms (the “Constituent Bitcoin Platforms” or “Constituent Platforms”), as follows: ● All Relevant Transactions that are executed between 3:00 p.m. and 4:00 p.m. New York time are added to a joint list, recording the trade price and size for each transaction. ● The list is partitioned into a number of equally sized, twelve individual time intervals of five-minute length. ● For each of the twelve partitions separately, the volume-weighted median trade price is calculated from the trade prices and sizes of all Relevant Transactions, i.e., across all Constituent Bitcoin Platforms. 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 Index is then given by the equally-weighted average of the volume-weighted medians of all partitions. 7 The Index does not include any futures prices in its methodology. A “Relevant Transaction” is any cryptocurrency versus U.S. dollar spot trade (the “Relevant Pair”) that occurs during the “TWAP Period” on a Constituent Bitcoin Platform in the BTC/USD pair that is reported and disseminated by a Constituent Bitcoin Platform through its publicly available application programming interface and observed by the Index Administrator. “TWAP” refers to the Time Weighted Average Price period for which trade data is observed, or the 60-minute observation window between 3:00 p.m. and 4:00 p.m., New York time. An oversight function is implemented by the Index Administrator in seeking to ensure that the Index is administered through the Index Administrator’s codified policies for Index integrity. The Index Administrator’s codified policies have been developed to ensure compliance with the UK BMR regulations, which the Index Administrator is subject to as a Registered Benchmark. The codified policies include the following: ● Input Data Policy : The Input Data Policy governs the data that the Index Administrator uses in benchmark determinations. ● Surveillance Policy: The Surveillance Policy governs Benchmark Surveillance, which is accomplished through a series of measures that are the product of an analysis of the Benchmark Administrator’s methodologies and their susceptibility to manipulation. ● Conflicts of Interest Policy : The Conflicts of Interest Policy governs the measures by which the Index Administrator identifies, records, mitigates, and escalates potential and actual conflicts of interest that might impact the integrity of the benchmarks. ● Governance & Oversight Framework : This framework sets forth the measures by which the Index Administrator manages the benchmark life cycle including the relevant junctures where Oversight Committee notification, escalation, review and resolution is relevant and required including the manner in which the Benchmark Administrator identifies risks to benchmark integrity and the processes and procedures it follows to mitigate and eliminate such risks. The Index Administrator’s compliance with such regulations has been subject to a Reasonable Assurance Audit under the ISAE 3000 standard as of September 12, 2024, which is publicly available. The Index is also subject to oversight by the Oversight Committee. The Oversight Committee was jointly established by the Index Administrator and the Chicago Mercantile Exchange (“CME”) and is comprised of five members, including two who are representatives of CME, one who is a representative of the Index Administrator, and two others, who bring expertise and industry knowledge relating to benchmark determination, issuance, and operations. The Oversight Committee’s Founding Charter and quarterly meeting minutes are publicly available. The Oversight Committee meets on at least a quarterly basis, and more frequently as needed, to review and make determinations of cryptocurrency pricing products, including the Index, and attend to all other matters relating to such determination, including their definition, setting, scope, methodology, and distribution. A platform must meet a set of predefined criteria to be approved by the Oversight Committee, and the operation of existing Constituent Platforms are also monitored against the same criteria: 1. The platform’s spot trading volume of the Relevant Pair for an index must meet the minimum thresholds as detailed below for it to be admitted as a constituent platform: a. The average daily volume the venue would have contributed during the observation window for the Index of the Relevant Pair exceeds 3% for two consecutive calendar quarters. 2. The platform has policies to ensure fair and transparent market conditions at all times and has processes in place to identify and impede illegal, unfair or manipulative trading practices. 3. The platform does not impose undue barriers to entry or restrictions on market participants, and utilizing the platform does not expose market participants to undue credit risk, operational risk, legal risk or other risks. 4. The platform complies with applicable law and regulations, including, but not limited to, capital markets regulations, money transmission regulations, client money custody regulations, KYC regulations and anti-money laundering regulations. 5. The platform cooperates with inquiries and investigations of regulators and the Index Administrator upon request and must execute data sharing agreements with CME Group. 8 Following admittance, a Constituent Platform must demonstrate that it continues to fulfill criteria two through five. In cases where a Constituent Platform’s average daily contribution falls below three percent for the Index, then the continued inclusion of the platform as a Constituent Platform to the Relevant Pair shall be assessed by the Oversight Committee. The Constituent Platforms have changed over time. For example, the BRR previously included OKCoin.com (HK) and Bitfinex, both of which were removed in April 2017 due to trading restrictions. As of December 31, 2025, the Constituent Platforms include: ● Crypto.com Exchange : Crypto.com Exchange is the product name of FORIS DAX, a Singapore based company that is licensed as a Major Payment Institution by the Monetary Authority of Singapore. ● Bitstamp : A U.K.-based platform registered as a money services business with FinCEN and licensed as a virtual currency business under the NYDFS BitLicense as well as money transmitter in various U.S. states. It is also regulated as a Payments Institution within the European Union and is registered as a Crypto Asset business with the UK FCA. ● Bullish : A Gibraltar-based platform regulated by the Gibraltar Financial Services Commission (‟GFSCˮ) operated by Bullish (GI) Limited as a DLT. ● Coinbase : A U.S.-based platform registered as a money services business with FinCEN and licensed as a virtual currency business under the NYDFS BitLicense as well as a money transmitter in various U.S. states. Subsidiaries operating internationally are further regulated as an e-money provider (Republic of Ireland, Central Bank of Ireland) and Major Payment Institution (Singapore, Monetary Authority of Singapore). ● Kraken : A U.S.-based platform that is registered as a money services business with FinCEN in various U.S. states, Kraken is registered with the FCA as a Crypto Asset Business and is authorized by the Central Bank of Ireland as a virtual asset service provider. Kraken also holds a variety of other licenses and regulatory approvals, including from the Canadian Securities Administrators. ● itBit : A U.S.-based platform that is licensed as a virtual currency business under the NYDFS BitLicense. It is also registered with FinCEN as a money services business and is licensed as a money transmitter in various U.S. states. ● LMAX Digital : A Gibraltar based platform regulated by the GFSC as a DLT provider for execution and custody services. LMAX Digital does not hold a BitLicense and is part of LMAX Group, a U.K-based operator of a FCA regulated Multilateral Trading Facility and Broker-Dealer. ● Gemini : A U.S.-based platform that is licensed as a virtual currency business under the NYDFS BitLicense. It is also registered with FinCEN as a money services business and is licensed as a money transmitter in various U.S. states. It is also registered with the FCA as a Crypto Asset Business. Once the Sponsor has actual knowledge of material changes to the Constituent Bitcoin Platforms used to calculate the Index, the Sponsor will post an announcement with respect to such change on its website. The eight Constituent Platforms that contribute transaction data to the Index with the aggregate volumes traded on their respective BTC-USD markets over the preceding four calendar quarters are listed in the table below: Aggregate Trading Volume of BTC-USD Markets of Constituent Platforms Period Bitstamp Bullish Global Coinbase Crypto.com* Gemini itBit Kraken LMAX Digital 2025 Q1 14,477,591,026 15,621,692,912 94,635,582,496 437,288,895 7,306,366,610 1,101,275,922 17,525,260,799 9,804,590,131 2025 Q2 10,585,362,523 9,065,766,963 62,097,548,243 60,060,401,437 4,607,793,882 908,793,981 12,383,175,403 7,867,820,828 2025 Q3 15,577,871,806 3,993,245,940 82,586,972,012 62,328,764,021 4,709,972,379 890,513,833 12,265,610,700 9,758,238,679 2025 Q4 23,272,669,351 9,557,076,628 78,293,912,816 105,086,222,287 3,964,106,275 1,037,472,441 18,126,225,065 10,668,812,131 9 The market share for BTC-USD trading of the eight Constituent Platforms over the past four calendar quarters is shown in the table below: Bitcoin Trading Platform Market Share of BTC-USD Trading Period Bitstamp Bullish Global Coinbase Crypto.com Gemini itBit Kraken LMAX Digital 2025 Q1 9.00 % 9.71 % 58.81 % 0.27 % 4.54 % 0.68 % 10.89 % 6.09 % 2025 Q2 6.32 % 5.41 % 37.06 % 35.84 % 2.75 % 0.54 % 7.39 % 4.70 % 2025 Q3 8.11 % 2.08 % 42.99 % 32.44 % 2.45 % 0.46 % 6.38 % 5.08 % 2025 Q4 9.31 % 3.82 % 31.32 % 42.03 % 1.59 % 0.41 % 7.25 % 4.27 % CF BENCHMARKS LTD. DATA IS USED UNDER LICENSE AS A SOURCE OF INFORMATION FOR THE TRUST’S PRODUCTS. CF BENCHMARKS LTD., ITS AGENTS AND LICENSORS HAVE NO OTHER CONNECTION TO THE TRUST’S PRODUCTS AND SERVICES AND DO NOT SPONSOR, ENDORSE, RECOMMEND OR PROMOTE ANY OF THE TRUST’S PRODUCTS OR SERVICES. CF BENCHMARKS LTD., ITS AGENTS AND LICENSORS HAVE NO OBLIGATION OR LIABILITY IN CONNECTION WITH THE TRUST’S PRODUCTS AND SERVICES. CF BENCHMARKS LTD., ITS AGENTS AND LICENSORS DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY INDEX LICENSED TO THE TRUST AND SHALL NOT HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. Calculation of NAV The Trust’s NAV per Share is calculated by multiplying the number of Bitcoin held by the Trust by the Index for such day, adding any additional receivables and subtracting the accrued but unpaid expenses and liabilities of the Trust. The Trust’s NAV per Share is calculated by dividing the Trust’s NAV by the number of Shares then outstanding. The Trust Administrator determines the price of the Trust’s Bitcoin by reference to the Index, which is published between 4:00 p.m. and 4:30 p.m., New York time, on every calendar day. The methodology used to calculate the Index price to value Bitcoin in determining the NAV of the Trust may not be deemed consistent with GAAP. As of December 31, 2025, the Trust’s NAV per Share was $28.12 based on the Index. The Trust’s financial statements are prepared in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820-10”). ASC 820-10 determines fair value to be the price that would be received for Bitcoin in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Trust to assume that Bitcoin is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Trust purchases Bitcoin directly from various counterparties, such as Coinbase and Anchorage, and does not itself transact in any Bitcoin markets. The purchase price of Bitcoin from our counterparties may vary significantly. The Trust looks to these counterparties when assessing entity-specific and market-based volume and the level of activity in the Bitcoin markets. The Trust determines the current value of Bitcoin by reference to the Bitcoin Market Price. The Bitcoin Market Price is determined based on the estimated fair market value price for Bitcoin, reflecting the execution price of Bitcoin on its principal market as determined by the Trust. Fair value pricing may require subjective determinations about the value of an asset or liability. Fair values determined as described herein may differ from quoted or published prices, or from prices that are used by others, for Bitcoin. It is possible that the fair value determined for an investment may be materially different than the value that could be realized upon the sale of such investment. Information that becomes known to the Trust or its agents after the NAV has been calculated on a particular day is not used to retroactively adjust the price of an investment or the NAV determined earlier that day. Additional Information About the Trust The Trust’s Fees and Expenses The Trust’s only ordinary recurring expense is the Management Fee. The Management Fee is accrued daily and paid monthly in arrears in U.S. dollars only and is calculated by the Trust Administrator. The Trust Administrator calculates the Management Fee on a daily basis by applying the 0.49% annualized rate to the Trust’s NAV, as determined by reference to the Index. To cover the Management Fee, on the last day of each month, the Sponsor or its delegate causes the Trust (or its delegate) to instruct the Prime Execution Agent to convert an amount of Bitcoin held by the Trust into U.S. dollars. The NAV of the Trust and the number of Bitcoin represented by a Share declines each time the Trust accrues the Management Fee or any Trust expenses not assumed by the Sponsor. The Trust is not responsible for paying any costs associated with the transfer of Bitcoin, to or from the Trust, in connection with paying the Management Fee or in connection with creation and redemption transactions. 10 As partial consideration for its receipt of the Management Fee, the Sponsor bears the routine operational, administrative and other ordinary fees and expenses of the Trust, including the fees of the Trustee, Trust Administrator, Fund Accountant, Transfer Agent, Custodians and, Listing Exchange fees, SEC registration fees, printing and mailing costs, tax reporting fees, audit fees, license fees and ordinary legal fees and expenses (the “Assumed Expenses”); provided, however, that the Trust shall remain responsible for any certain extraordinary expenses of the Trust, including, but not limited to, taxes and governmental charges, expenses and costs, expenses and indemnities related to any extraordinary services performed by the Sponsor (or any other service provider, including the Trustee) on behalf of the Trust to protect the Trust or the interests of Shareholders, and indemnification expenses (the “Extraordinary Expenses”). If the Trust incurs any Extraordinary Expenses, the Sponsor or its delegate (i) will instruct the Bitcoin Custodian to withdraw from the Bitcoin account, on a monthly basis as needed, Bitcoin in such quantity as necessary to permit payment of such Extraordinary Expenses; and (ii) cause the Trust (or its delegate) to convert such Bitcoin into U.S. dollars or other fiat currencies at the exchange rate at the time of conversion. Intraday Indicative Value In order to provide updated information relating to the Trust for use by Shareholders, the Trust publishes an intraday indicative value (“IIV”) using the CME CF Bitcoin Real Time Index (“BRTI”). One or more major market data vendors provide an IIV updated every 15 seconds, as calculated by the Exchange or a third-party financial data provider during the Exchange’s Regular Market Session. The IIV is calculated by using the prior day’s closing NAV as a base and updating that value during the Regular Market Session to reflect changes in the value of the Trust’s NAV during the trading day. The IIV’s dissemination during the Regular Market Session should not be viewed as an actual real time update of the NAV, which is calculated only once at the end of each trading day. The IIV is widely disseminated every 15 seconds during the Regular Market Session by one or more major market data vendors. In addition, the IIV is available through online information services. From time to time, there may be intra-day price fluctuations across Bitcoin platforms. However, they are generally relatively immaterial. These variances usually stem from small changes in the fee structures on different Bitcoin platforms or differences in administrative procedures required to deposit and withdraw fiat currency in exchange for Bitcoin and vice versa. The greatest variances are found at (i) smaller platforms with relatively low transaction volumes where even small trades can be large relative to a Bitcoin platform’s transaction volume and as a result impact the trading price on those platforms; and (ii) Bitcoin platforms that are inaccessible to the Trust. All aspects of the BRTI methodology are publicly available at the website of the provider CF Benchmarks (www.cfbenchmarks.com). The BRTI is calculated once per second, in real time by utilizing the order books of Bitcoin - U.S. dollar trading pairs operated by all Constituent Platforms. An “order bookˮ is a list of buy and sell orders with associated limit prices and sizes that have not yet been matched, that is reported and disseminated by CF Benchmarks Ltd., as the BRTI calculation agent. The order books are aggregated into one consolidated order book by the BRTI calculation agent. The mid-price volume curve, which is the average of the bid price-volume curve (which maps transaction volume to the marginal price per cryptocurrency unit a seller is required to accept in order to sell this volume to the consolidated order book) and the ask price-volume curve (which maps a transaction volume to the marginal price per cryptocurrency unit a buyer is required to pay in order to purchase this volume from the consolidated order book). The mid-price-volume curve is weighted by the normalized probability density of the exponential distribution up to the utilized depth (utilized depth being calculated as the maximum cumulative volume for which the mid spread-volume curve does not exceed a certain percentage deviation from the mid-price). The BRTI is then given by the sum of the weighted mid-price-volume curve obtained in the previous step. Termination of the Trust The Trust will dissolve if any of the following events occur: ● a U.S. federal or state regulator requires the Trust to shut down or forces the Trust to liquidate its Bitcoin or seizes, impounds or otherwise restricts access to Trust assets; ● the Trust is determined to be a “money services business” under the regulations promulgated by FinCEN under the authority of the BSA and is required to comply with certain FinCEN regulations thereunder, and the Sponsor has made the determination that dissolution of the Trust is advisable; ● the Trust is required to obtain a license or make a registration under any state law regulating money transmitters, money services businesses, providers of prepaid or stored value, virtual currency businesses or similar entities, and the Sponsor has made the determination that dissolution of the Trust is advisable; 11 ● any ongoing event exists that either prevents the Trust from making or makes impractical the Trust’s reasonable efforts to make a fair determination of the Bitcoin Market Price; ● any ongoing event exists that either prevents the Trust from converting or makes impractical the Trust’s reasonable efforts to convert Bitcoin to U.S. dollars; ● the filing of a certificate of dissolution or revocation of the Sponsor’s charter (and the expiration of 90 days after the date of notice to the Sponsor of revocation without a reinstatement of its charter) or upon an Event of Withdrawal unless at the time there is at least one remaining Sponsor; or ● the Bitcoin Custodian resigns or is removed without replacement. The Sponsor may, in its sole discretion, dissolve the Trust if any of the following events occur: ● the SEC determines that the Trust is an investment company required to be registered under the Investment Company Act; ● the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act; ● the Trust becomes insolvent or bankrupt; ● all of the Trust’s assets are sold; ● the determination of the Sponsor that the aggregate net assets of the Trust in relation to the operating expenses of the Trust make it unreasonable or imprudent to continue the activities of the Trust; ● the Sponsor receives notice from the IRS or from counsel for the Trust or the Sponsor that the Trust fails to qualify for treatment, or will not be treated, as a grantor trust under the Internal Revenue Code of 1986, as amended; or ● if the Trustee notifies the Sponsor of the Trustee’s election to resign and the Sponsor does not appoint a successor trustee within 60 days, the Trust will dissolve. The death, legal disability, bankruptcy, insolvency, dissolution, or withdrawal of any Shareholder (as long as such Shareholder is not the sole Shareholder of the Trust) shall not result in the termination of the Trust, and such Shareholder, his/her estate, custodian or personal representative shall have no right to withdraw or value such Shareholder’s Shares. Each Shareholder (and any assignee thereof) expressly agrees that in the event of his death, he waives on behalf of himself and his estate, and he/she directs the legal representative of his estate and any person interested therein to waive the furnishing of any inventory, accounting or appraisal of the assets of the Trust and any right to an audit or examination of the books of the Trust, except for such rights as are set forth in Article VIII of the Trust Agreement relating to the books of account and reports of the Trust. Upon dissolution of the Trust and surrender of Shares by the Shareholders, Shareholders will receive a distribution in U.S. dollars after the Sponsor has paid or made provision for the Trust’s obligations. Amendments The Sponsor may amend the Trust Agreement without the consent of any Shareholder if the amendment does not adversely affect the interests of the Shareholders or affect the allocation of profits and losses among the Shareholders or between the Shareholders and the Sponsor. Any amendment that adversely affects the rights of Shareholders, dissolves the Trust or makes any material change to the Trust’s basic investment policies or structure must be approved by the affirmative vote of Shareholders owning at least 50% of the outstanding Shares. The Trust’s Service Providers The Sponsor The Trust’s Sponsor is Osprey Funds, LLC, a Delaware limited liability company formed on October 31, 2018. The Sponsor’s principal place of business is 777 Brickell Ave., Suite 500, Miami, FL 33131, and its telephone number is (914) 214-4174. 12 The Sponsor is neither an investment adviser registered with the SEC, nor a commodity pool operator registered with the CFTC, and does not act in either such capacity with respect to the Trust, and the Sponsor’s provision of services to the Trust is not governed by the Advisers Act or the Commodity Exchange Act. The Sponsor’s experience in crypto asset markets is evidenced by its history managing private and OTC-traded crypto funds since 2019. The executive officers of the Sponsor also serve as officers of the Sponsor’s affiliate, REX Financial, LLC (together with its subsidiaries, “REX Financial”), which has been sponsoring and managing ETFs and ETNs since 2016. REX Financial also manages the REX-Osprey suite of crypto ETFs and sponsors certain T-REX leveraged ETFs that focus on crypto assets. The Sponsor arranged for the creation of the Trust and the registration of the Shares for their public offering in the United States and the listing of the Shares on the Listing Exchange. As partial consideration for its receipt of the 0.49% Management Fee from the Trust, the Sponsor is obligated to pay the Assumed Expenses. The Sponsor is generally responsible for the day-to-day administration of the Trust under the provisions of the Trust Agreement. The Sponsor’s responsibilities include: (i) preparing and providing periodic reports and financial statements on behalf of the Trust for investors; (ii) selecting and monitoring the Trust’s service providers and from time to time engaging additional, successor or replacement service providers (including without limitation the Trust Administrator, the Custodians, Transfer Agent and Index Administrator); (iii) instructing the Bitcoin Custodian to withdraw the Trust’s Bitcoin as needed to pay the Management Fee; (iv) upon dissolution of the Trust, distributing the Trust’s cash proceeds from the sale of the remaining Bitcoin to the owners of record of the Shares; and (v) when applicable, establishing the principal market for GAAP valuation. In addition, if there is a fork in the Bitcoin network after which there is a dispute as to which network resulting from the fork is the Bitcoin network, the Sponsor has the authority to select the network that it believes in good faith is the Bitcoin network, unless such selection or authority would otherwise conflict with the Trust Agreement. The Sponsor does not store, hold, or maintain custody or control of the Trust’s Bitcoin but instead has entered into the Custodial Services Agreement with the Bitcoin Custodian to facilitate the security of the Trust’s Bitcoin. The Sponsor may transfer all or substantially all of its assets to an entity that carries on the business of the Sponsor if at the time of the transfer the successor assumes all of the obligations of the Sponsor under the Trust Agreement. In such an event, the Sponsor will be relieved of all further liability under the Trust Agreement. The Management Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement and as partial consideration for the Sponsor’s agreement to pay the specified Sponsor-paid Expenses of the Trust. The Trustee CSC Delaware Trust Company serves as trustee of the Trust under the Trust Agreement. The Trustee has its principal office at 251 Little Falls Drive, Wilmington, Delaware 19808. The Trustee is unaffiliated with the Sponsor. A copy of the Trust Agreement is available for inspection at the Sponsor’s principal office, identified above. The Trustee is appointed to serve as the trustee of the Trust in the State of Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the DSTA that the Trust have at least one trustee with a principal place of business in the State of Delaware. The duties of the Trustee are limited to (i) accepting legal process served on the Trust in the State of Delaware; and (ii) the execution of any certificates required to be filed with the Delaware Secretary of State which the Trustee is required to execute under the DSTA. To the extent that, at law or in equity, the Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or the Shareholders, such duties and liabilities will be replaced by the duties and liabilities of the Trustee expressly set forth in the Trust Agreement. The Trustee has no obligation to supervise, nor is it liable for, the acts or omissions of the Sponsor, Transfer Agent, Custodian or any other person. Neither the Trustee, either in its capacity as trustee or in its individual capacity, nor any director, officer or controlling person of the Trustee is, or has any liability as, the issuer, director, officer or controlling person of the issuer of Shares. The Trustee’s liability in connection with the issuance and sale of Shares is limited solely to the express obligations of the Trustee as set forth in the Trust Agreement. The Trustee has not prepared or verified, and will not be responsible or liable for, any information, disclosure or other statement in this Annual Report or in any other document issued or delivered in connection with the sale or transfer of the Shares. The Trustee is permitted to resign upon at least 60 days’ notice to the Trust. The Trustee is compensated by the Sponsor and indemnified by the Sponsor and the Trust against any expenses it incurs relating to or arising out of the formation, operation or termination of the Trust, or the performance of its duties pursuant to the Trust Agreement except to the extent that such expenses result from gross negligence, willful misconduct or bad faith of the Trustee. The Sponsor has the discretion to replace the Trustee. 13 Fees paid to the Trustee are an Assumed Expense. The Sponsor and its affiliates may from time-to-time purchase or sell Shares for their own account, as an agent for their customers and for accounts over which they exercise investment discretion. The Trust Administrator U.S. Bank Global Fund Services serves as the Trust Administrator. The Trust Administrator has offices at 615 E. Michigan Street, Milwaukee, WI 53202. The Trust Administrator is generally responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records. The Trust Administrator’s principal responsibilities include: (1) valuing the Trust’s Bitcoin and calculating the NAV per Share; (2) supplying pricing information to the Sponsor for the Trust’s website; (3) receiving and reviewing reports on the custody of and transactions in cash and Bitcoin from the Cash Custodian and Trust, respectively, and taking such other actions in connection with the custody of cash as the Sponsor instructs; and (4) accounting and other fund administrative services. The Trust Administrator also provides know your customer, anti-money laundering, and OFAC compliance check services to the Trust and Sponsor. The Trust Administrator is also responsible for various accounting services such as portfolio accounting, expense accrual and payment, trust valuation and financial reporting, tax accounting, and compliance control services pursuant to the Fund Accountant Agreement. The Trust Administrator liaises with the Trust’s legal, accounting and other professional service providers as needed. The Trust Administrator keeps proper books of registration and transfer of Shares at its office located in Milwaukee or such office as it may subsequently designate. These books and records are open to inspection by any person who establishes to the Sponsor’s satisfaction that such person is a Shareholder at all reasonable times during the usual business hours of the Sponsor. The Sponsor keeps a copy of the Trust Agreement on file in its office, which is available for inspection on reasonable advance notice at all reasonable times during its usual business hours by any Shareholder. The Transfer Agent U.S. Global Fund Services serves as the Transfer Agent of the Trust pursuant to the terms and provisions of the Transfer Agent Servicing Agreement (as defined below). The Transfer Agent has its principal office at 615 E. Michigan Street, Milwaukee, WI 53202. A copy of the agreement between the Trust and the Transfer Agent is available for inspection at the Sponsor’s principal office identified herein. Continental Stock Transfer & Trust Company serves as the sub-transfer agent. The Transfer Agent holds the Shares primarily in book-entry form. The Sponsor directs the Transfer Agent to credit the number of Shares to the investor in response to a creation order and the Transfer Agent issues the Shares. The Transfer Agent also assists with the preparation of Shareholders’ account and tax statements. The Sponsor indemnifies and holds harmless the Transfer Agent, and the Transfer Agent will incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. Fees paid to the Transfer Agent are an Assumed Expense. The Marketing Agent Foreside Fund Services, LLC serves as the Marketing Agent for the Trust. The Marketing Agent provides the following services to the Sponsor: (i) assists the Trust in facilitating Participant Agreements between and among Authorized Participants, the Trust, and the Transfer Agent; (ii) provides prospectuses to Authorized Participants; (iii) works with the Transfer Agent to review and approve orders placed by the Authorized Participants and transmitted to the Transfer Agent; (iv) reviews and files applicable marketing materials with FINRA and (v) maintains, reproduces and stores applicable books and records related to the services provided under the Marketing Agent Agreement. 14 Custody of the Trust’s Assets and Certain Other Operational Matters Bitcoin Custodian Coinbase Custody serves as our qualified digital asset custodian for purposes of Section 206(4)-2(d)(6) under the Advisers Act. On November 26, 2025, the Trust entered into a Custodial Services Agreement by and among Coinbase Custody and the Trust, which replaced the Trust’s prior Custodial Services Agreement, dated as of February 4, 2022, between the Trust and Coinbase Custody, and which is a part of the Prime Execution Agreement. Coinbase Custody is a wholly-owned subsidiary of Coinbase Global, Inc. (“Coinbase Global”). Coinbase Global and its subsidiaries provide end-to-end financial infrastructure and technology for the crypto-economy. Coinbase Custody is an independently capitalized New York State limited purpose trust company that was chartered in October 2018. Coinbase Custody is a fiduciary under Section 100 of the New York Banking Law and a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the Investment Advisers Act, and is licensed to custody Digital Assets on behalf of the Trust. As a New York State limited purpose trust company, Coinbase Custody is subject to regulation, examination and supervision by the NYDFS. The NYDFS’ regulations impose various compliance requirements, including operational limitations related to the nature of digital assets held under custody, capital requirements, BSA and anti-money laundering program requirements, and notice and reporting requirements. Coinbase Custody offers its clients access to secure, institutional-grade offline digital asset storage. As of December 31, 2025, Coinbase Global held approximately $376 billion in fiat and digital assets on its platform, the majority of which were comprised of Bitcoin, Ethereum and other digital assets. According to publicly available information, Bitcoin represented approximately 67%, 58% and 47% of the assets held or managed in digital wallets on Coinbase’s Global platform, including its custody services, for the years ended December 31, 2025, 2024 and 2023, respectively. The offline (cold) storage technology that Coinbase Custody uses to custody digital assets, such as Bitcoin, shares the same framework of the technology that Coinbase Global, and its predecessor, Coinbase, Inc., have used since 2012, which is continuously improved to meet cyber and physical security best practices. Coinbase Custody is authorized to serve as the Trust’s custodian under the Trust Agreement and pursuant to the terms and provisions of the Custodial Services Agreement. The Trust’s digital assets are held in segregated offline (cold) storage accounts with the Bitcoin Custodian, and as a result, the digital assets are segregated from both (i) the proprietary property of Coinbase Custody and its affiliates; and (ii) the assets of any other Coinbase Custody client. Information provided about Coinbase Custody and its parent company is primarily derived from Coinbase Global’s publicly available information, including filings it makes with the SEC. Although the Trust believes this information is reliable, the Trust has not independently verified the accuracy of this information. Cash Custodian U.S. Bank National Association serves as the Cash Custodian pursuant to the Cash Custody Agreement. The Cash Custodian is the custodian for the Trust’s cash holdings. The Trust may retain additional cash custodians from time to time pursuant to a cash custodian agreement to perform certain services that are typical of a cash custodian. The Sponsor may, in its sole discretion, add or terminate cash custodians at any time. Additional Custodial Matters The Trust may engage third-party custodians or vendors besides the Bitcoin Custodian and the Cash Custodian to provide custody and security services for all or a portion of its Bitcoin and/or cash, and the Sponsor will pay the custody fees and any other expenses associated with any such third-party custodian or vendor. The Sponsor may, in its sole discretion, add or terminate custodians at any time. The Sponsor may, in its sole discretion, change the custodian for the Trust’s 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 Prime Execution Agent The Prime Execution Agent, Coinbase Inc., an affiliate of the Bitcoin Custodian, provides prime execution agent services, including Bitcoin trade execution, from time to time as requested by the Sponsor, although the Sponsor may also trade directly with other third parties and/or market makers. The Trust may engage in purchases of Bitcoin (creation of Baskets) or sales of Bitcoin (redemptions of Baskets, Trust expenses, or the Management Fee, as necessary) by placing orders with the Prime Execution Agent. The Prime Execution Agent routes orders placed by the Trust through the Prime Execution Agent’s execution platform, where the order is executed. Each order placed by the Trust is sent, processed and settled at each Connected Trading Venue to which it is routed. Subject to the foregoing, the Prime Execution Agent (as well as the Trust and the Sponsor) shall have no liability, obligation, or responsibility whatsoever for the selection or performance of any trading venue, and that other trading venues not used for the specific execution and/or trading venues not used by Coinbase may offer better prices and/or lower costs than the trading venue used to execute the Trust’s orders. 15 Trade Credit Lender To avoid having to pre-fund purchases or sales of Bitcoin in connection with cash creations and redemptions and sales of Bitcoin to pay the Management Fee and any other Trust expenses not assumed by the Sponsor, to the extent applicable, pursuant to that certain Trade Financing Agreement, dated as of November 26, 2025, which is part of the Prime Execution Agreement (the “Trade Financing Agreement”), the Trust may borrow Bitcoin or cash as Trade Credit from Coinbase Credit, Inc. (the “Lender”) on a short-term basis, allowing the Trust to avoid having to pre-fund purchases or sales of Bitcoin. Other Matters 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. 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. Consequently, a loss may be suffered with respect to the Trust’s Bitcoin that is not covered by the 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. Creation and Redemption of Shares The Trust creates and redeems Shares on a continuous basis but only in Baskets based on the quantity of Bitcoin attributable to each Share of the Trust (net of accrued but unpaid expenses and liabilities) multiplied by the number of Shares comprising a Basket (10,000) (the “Basket Amount”). Fractions of a Bitcoin smaller than .00000001 (known as a “satoshi”) are disregarded for purposes of the computation of the Basket Amount. Only Authorized Participants, which are registered broker-dealers who have entered into written agreements with the Sponsor and the Trust, can place orders to receive or redeem Baskets. In connection with cash creations and redemptions, an Authorized Participant shall deliver to the Transfer Agent the amount of U.S. dollars needed to purchase the Basket Amount of Bitcoin, and the Trust engages in Bitcoin transactions for converting cash into Bitcoin (in association with purchase orders) and Bitcoin into cash (in association with redemption orders). The Trust conducts its Bitcoin purchase and sale transactions by purchasing Bitcoin directly from third parties (each, a “Bitcoin Trading Counterparty”), pursuant to written agreements between such Bitcoin Trading Counterparties and the Trust, or through purchases from the Prime Execution Agent through its Coinbase Prime service pursuant to the Prime Execution Agreement. The Trust’s criteria for engaging one or more Bitcoin Trading Counterparties includes the completion of due diligence that considers each such Bitcoin Trading Counterparty’s Bitcoin trading capabilities, organizational structure, operating history, lines of business, controls, and other details necessary to evaluate their ability to facilitate cash creations. The Bitcoin Trading Counterparties are Coinbase, Anchorage and JSCT, LLC. Bitcoin Trading Counterparties may be added at any time, subject to the discretion of the Sponsor. The Sponsor will notify investors whether and when it has engaged additional Bitcoin Trading Counterparties by filing a current report on Form 8-K or via a posting on the Trust’s website. Jane Street Capital, LLC, an Authorized Participant, is an affiliate of JSCT, LLC, a Bitcoin Trading Counterparty. Aside from JSCT, LLC, 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. Current or future Bitcoin Trading Counterparties may be affiliates of, or have material relationships with, the Trust’s current or future Authorized Participants. In connection with cash creations and redemptions, each Bitcoin Trading Counterparty represents to the Trust that it is acting for itself and not for another person and is not acting as an 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 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, it becomes a trade that is binding on both the Trust and the Bitcoin Trading Counterparty. 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 AML and KYC regulations or similar laws in non-U.S. jurisdictions. The Prime Execution Agent may facilitate the purchase and sale or settlement of the Trust’s Bitcoin transactions. Bitcoin Trading Counterparties may settle trades with the Trust using their own accounts at the Prime Execution Agent or directly with the Trust when trading with the Trust. 16 Issuance of Baskets - Transaction Fees To compensate for expenses incurred in connection with the creation and redemption of Baskets, an Authorized Participant is required to pay a standard transaction fee in cash to create or redeem Baskets, which is not expected to vary in accordance with the number of Baskets in such order. The total transaction fee also includes applicable taxes, brokerage and any other commissions, transaction fees (including financing), trade slippage and market impact costs, as applicable, and may be reduced, increased or otherwise changed by the Sponsor and the Trust based on changes to the costs or inputs associated with the total transaction fee. The Sponsor will notify Authorized Participants of any change in the transaction fee and will not implement any change in the fee until after the date of notice. Issuance of Baskets - In-Kind Creations In connection with an in-kind creation, an Authorized Participant is required to submit the creation order by an order cutoff time (the “In-Kind Order Cutoff Time”). The In-Kind Order Cutoff Time is 3:59 p.m. ET on the trade date. The Authorized Participant must submit an in-kind purchase order to the Transfer Agent indicating the number of Baskets it intends to acquire. The date the Transfer Agent receives the in-kind purchase order determines the amount of Bitcoin that the Authorized Participant or its designated agent or client needs to deposit. However, orders received by the Transfer Agent after the In-Kind Order Cutoff Time will not be accepted and should be resubmitted on the following Business Day. If the Trust and the Marketing Agent accept the in-kind purchase order, the Transfer Agent transmits to the Authorized Participant, via electronic mail message or other electronic communication, no later than 8:00 p.m. ET on the date such purchase order is received, or deemed received, a copy of the purchase order endorsed “Accepted” by the Trust and indicating the Basket Amount that the Authorized Participant or its designated agent or client must deliver to the Prime Execution Agent in exchange for each Basket. Prior to the Trust’s acceptance, a purchase order only represents the Authorized Participant’s unilateral offer to deposit Bitcoin in exchange for Baskets and has no binding effect upon the Trust, the Trustee, the Trust Administrator, the Transfer Agent, the Marketing Agent, the Bitcoin Custodian, the Prime Execution Agent or any other party. The amount of Bitcoin necessary for the creation of a Basket changes from day to day. As of December 31, 2025, a Basket required delivery of 3.22083471 Bitcoin. On each day that the Listing Exchange is open for regular trading, the Trust Administrator adjusts the quantity of Bitcoin constituting the Basket Amount as appropriate to reflect sales of Bitcoin, any loss of Bitcoin that may occur, and accrued expenses. The computation is made by the Trust as promptly as practicable after 4:00 p.m. ET. The Trust Administrator determines the amount of Bitcoin necessary for the creation of a Basket for a given day by multiplying the NAV per Share by the number of Shares in each Basket (10,000) and dividing the resulting product by that day’s Index. The Basket Amount so determined is made available to all Authorized Participants and is made available on the Sponsor’s website for the Shares. The Authorized Participant or its designated agent or client deposit Bitcoin related to the Authorized Participant’s purchase order to the Trust’s Trading Account. This transfer is an “off-chain” transaction that is represented in the books and records of the Prime Execution Agent. In the event that the Authorized Participant, its designated agent or client, has not deposited the Bitcoin to the Trust’s Trading Account at the Prime Execution Agent by the applicable time on the settlement date of the in-kind creation order, the Authorized Participant is given the option to (1) cancel the in-kind creation order; (2) delay settlement of the order to enable delivery of Bitcoin at a later date approved by the Trust Administrator; or (3) accept that the Trust will execute a Bitcoin transaction required for the creation and the Authorized Participant will deliver the U.S. dollars required for this purchase. The Authorized Participant is liable to the Trust for and shall bear all slippage costs as well as all other costs, expenses, liabilities, and losses, suffered or incurred by the Trust in connection with the events described in the foregoing sentence, including, without limitation, the dollar cost of the difference between the Bitcoin price utilized in calculating NAV per Share on the trade date and the price at which the Trust receives the Bitcoin to the extent the price realized in buying the Bitcoin is higher than the Bitcoin price utilized in the NAV, if applicable. To the extent the price realized in buying the Bitcoin is lower than the price utilized in the NAV, the Authorized Participant shall get to keep the dollar impact of any such difference. Issuance of Baskets - Cash Creations In connection with a cash creation, the Authorized Participant is required to submit the purchase order by an early order cutoff time (the “Cash Order Cutoff Time”). The Cash Order Cutoff Time is 5:30 p.m. ET on the Business Day prior to the trade date. The Authorized Participant may submit a purchase order to the Transfer Agent, indicating the number of Baskets it intends to acquire. In connection with a cash creation, the date the Transfer Agent receives that order determines the estimated cash amount the Authorized Participant needs to deposit and the amount of Bitcoin the Trust needs to purchase from the Bitcoin Trading Counterparty or through the Prime Execution Agent for the Basket Amount. The final cash amounts are determined after the NAV of the Trust is struck and the Trust’s Bitcoin transactions have settled. However, orders received by the Transfer Agent after the Cash Order Cutoff Time will not be accepted and should be resubmitted on the following Business Day. 17 If the Trust and the Marketing Agent accept the cash purchase order, the Transfer Agent transmits to the Authorized Participant, via electronic mail message or other electronic communication, no later than 8:00 p.m. ET on the date such purchase order is received, or deemed received, a copy of the purchase order endorsed “Accepted” by the Trust and indicating the amount of U.S. dollars that the Authorized Participant must deliver to the Custodians or Prime Execution Agent in exchange for each Basket. Prior to the Trust’s acceptance as specified above, a purchase order only represents the Authorized Participant’s unilateral offer to deposit cash in exchange for Baskets and has no binding effect upon the Trust, the Trustee, the Trust Administrator, the Transfer Agent, the Marketing Agent, the Bitcoin Custodian or any other party. The amount of cash necessary for the creation of a Basket changes from day to day based on the Basket Amount. As of December 31, 2025, a Basket required delivery of $ 281,228.89. On each day that the Listing Exchange is open for regular trading, the Trust Administrator adjusts the amount of U.S. dollars needed to purchase the Basket Amount. The Trust Administrator determines the amount of Bitcoin necessary for the creation of a Basket for a given day by multiplying the NAV per Share by the number of Shares in each Basket (10,000) and dividing the resulting product by that day’s Index. The Trust Administrator then determines the amount of U.S. dollars equal to the required amount of Bitcoin as described above on each date the Transfer Agent receives the cash creation order. The final cash amounts are determined after the NAV of the Trust is struck and the Trust’s Bitcoin transactions have settled. The amount of U.S. dollars needed to purchase the Basket Amount so determined is made available to all Authorized Participants and Bitcoin Trading Counterparties and is made available on the Sponsor’s website for the Shares. On the date of the Cash Order Cutoff Time, the Trust enters 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. For settlement of a cash creation, the Trust delivers Shares to the Authorized Participant in exchange for cash received from the Authorized Participant. Meanwhile, the Bitcoin Trading Counterparty or Prime Execution Agent, as applicable, delivers the required Bitcoin pursuant to its trade with the Trust into the Trust’s Trading Account with the Prime Execution Agent in exchange for cash. In the event that 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 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. Whether the purchase of Bitcoin was entered into with a Bitcoin Trading Counterparty or via the Prime Execution Agent, such party shall deliver Bitcoin related to such transaction to the Trust’s Trading Account. 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 Account may not be funded with cash on the trade date for the purchase of Bitcoin associated with the cash purchase order, the Trust may borrow Trade Credits in the form of cash from the Lender (as defined herein) pursuant to the Trade Financing Agreement or may require the Authorized Participant to deliver the required cash for the cash 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 Account. For settlement of a cash creation, 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 Lender. Issuance of Baskets - Settlement and Bitcoin Vault Transfers Upon the deposit by the Authorized Participant or its designated agent or client in connection with an in-kind purchase order or the Bitcoin Trading Counterparty or the Prime Execution Agent in connection with a cash purchase order of the corresponding amount of Bitcoin with the Trust’s Trading Account, 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 delivers the appropriate number of Baskets to the DTC account of the depositing Authorized Participant. As of the date of this Annual Report, the Authorized Participants are Macquarie and Jane Street. Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor. In connection with the paragraph above, the deposit of Bitcoin is initially credited to the Trust’s Trading Account with the Prime Execution Agent before being swept to the Trust’s Vault Account with the Bitcoin Custodian pursuant to a regular end-of-day sweep process. Transfers of Bitcoin into the Trust’s Trading Account are off-chain transactions and transfers from the Trust’s Trading Account to the Trust’s Vault Account are “on-chain” transactions represented on the Bitcoin blockchain. Any costs related to transactions and transfers from the Trust’s Trading Account to the Trust’s Vault Account are borne by the Prime Execution Agent (and not the Trust or its Shareholders). 18 Because the Sponsor has assumed what are expected to be most of the Trust’s expenses, and the Management Fee accrues daily at the same rate, in the absence of any Extraordinary Expenses or liabilities, the amount of Bitcoin by which the Basket Amount will decrease each day is predictable. In connection with a cash purchase order, the Trust intends to have the Trust Administrator make available on each Business Day an indicative Basket Amount for the next Business Day. Authorized Participants may use that indicative Basket Amount as guidance regarding the amount of cash that they may expect to have to deposit with the Trust Administrator in respect of cash purchase orders placed by them on such next Business Day and accepted by the Trust. The agreement entered into with each Authorized Participant provides, however, that once a purchase order has been accepted by the Trust, the Authorized Participant is required to deposit with the Trust Administrator the amount of U.S. dollars necessary to purchase the Basket Amount of Bitcoin in connection with a cash purchase order, as determined by the Trust on the effective date of the purchase order. No Shares can be issued unless and until the Prime Execution Agent has informed the Trust that it has allocated to the Trust’s account the corresponding amount of Bitcoin. Disruption of services at the Prime Execution Agent or Bitcoin Custodian would have the potential to delay settlement of the Bitcoin related to Share creations. Bitcoin transactions that occur on the blockchain are susceptible to delays due to Bitcoin network outage, congestion, spikes in transaction fees demanded by miners, or other problems or disruptions. To the extent that Bitcoin transfers from the Trust’s Trading Account to the Trust’s Vault Account are delayed due to congestion or other issues with the Bitcoin network, such Bitcoin will not be held in offline (cold) storage in the Vault Account until such transfers can occur. Redemption of Baskets - In-Kind Redemptions In connection with an in-kind redemption, an Authorized Participant is required to submit a redemption order by the In-Kind Order Cutoff Time. An Authorized Participant must submit an in-kind redemption order to the Transfer Agent indicating the number of Baskets it intends to redeem. The date the Transfer Agent receives that order determines the Basket Amount in connection with an in-kind redemption to be received in exchange. However, orders received by the Transfer Agent after the In-Kind Order Cutoff Time on a Business Day will not be accepted and should be resubmitted on the following Business Day. On the order date the Trust instructs the Bitcoin Custodian to prepare to move the associated Bitcoin from the Trust’s Vault Account with the Bitcoin Custodian to the Trust’s Trading Account with the Prime Execution Agent. For settlement of a redemption, the Authorized Participant delivers the necessary Shares to the Trust, the Trust instructs the Prime Execution Agent to deliver Bitcoin to the account of the Authorized Participant or its designated agent or client’s account at the Prime Execution Agent. Transfers of Bitcoin from the Trust’s Vault Account to the Trust’s Trading Account are “on-chain” transactions represented on the Bitcoin blockchain. Bitcoin transactions that occur on the blockchain are susceptible to delays due to Bitcoin network outages, congestion, spikes in transaction fees demanded by miners, or other problems or disruptions. To the extent that Bitcoin transfers from the Trust’s Vault Account to the Trust’s Trading Account are delayed due to congestion or other issues with the Bitcoin network or the Trust’s operations, redemptions in the Trust could be delayed. Disruption of services at the Prime Execution Agent or Bitcoin Custodian would have the potential to delay settlement of the Bitcoin related to Share redemptions. Redemption of Baskets - Cash Redemptions In connection with a cash redemption, an Authorized Participant is required to submit a cash redemption order by the Cash Order Cutoff Time. An Authorized Participant must submit a redemption order to the Transfer Agent indicating the number of Baskets it intends to redeem. The date the Transfer Agent receives that order determines the Basket Amount in connection with a cash redemption to be received in exchange. However, orders received by the Transfer Agent after the Cash Order Cutoff Time on a Business Day will not be accepted and should be resubmitted on the following Business Day. On the date of the Cash 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. Also, on the date of the Cash Order Cutoff Time, the Trust instructs the Bitcoin Custodian to prepare to move the associated Bitcoin from the Trust’s Vault Account with the Bitcoin Custodian to the Trust’s Trading Account with the Prime Execution Agent. For settlement of a redemption, the Authorized Participant delivers the necessary Shares to the Trust, a Bitcoin Trading Counterparty or the Prime Execution Agent, as applicable, delivers the cash to the Trust associated with the Trust’s sale of Bitcoin, the Trust delivers Bitcoin to the Bitcoin Trading Counterparty’s account at the Prime Execution Agent or directly to the Prime Execution Agent, as applicable, and the Trust delivers cash to the Authorized Participant. In the event that 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 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 in 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. 19 The transfers of Bitcoin from the Trust’s Trading Account 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 Account 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 Account 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 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 Account 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. In the event Trade Credits were used, the Trust will use the Bitcoin moved from the Trust’s Vault Account with the Bitcoin Custodian to the Trading Account with the Prime Execution Agent to repay the Trade Credits borrowed from the Lender. Transfers of Bitcoin from the Trust’s Vault Account to the Trust’s Trading Account are “on-chain” transactions represented on the Bitcoin blockchain. Bitcoin transactions that occur on the blockchain are susceptible to delays due to Bitcoin network outages, congestion, spikes in transaction fees demanded by miners, or other problems or disruptions. To the extent that Bitcoin transfers from the Trust’s Vault Account to the Trust’s Trading Account are delayed due to congestion or other issues with the Bitcoin network or the Trust’s operations, redemptions in the Trust could be delayed. Disruption of services at the Prime Execution Agent, Bitcoin Custodian, Cash Custodian or the Authorized Participant’s banks would have the potential to delay settlement of the Bitcoin related to Share redemptions. Redemption of Baskets - Settlement Upon the surrender of Shares and the payment of the applicable transaction fee 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 in exchange for cash by the Trust in connection with a cash redemption order, the Trust (1) instructs the Prime Execution Agent to deliver from the Trust’s Trading Account to the account of the Authorized Participant or its agent or client, the amount of Bitcoin corresponding to the redeemed Baskets in connection with an in-kind redemption order; or (2) instructs the delivery of cash to the Authorized Participant in connection with a cash redemption order. Shares can only be surrendered for redemption in Baskets. Suspension or Rejection of Creation or Redemption Orders The Sponsor may, in its discretion, suspend the right of creation or redemption, or postpone the redemption settlement date, (1) for any period during which the Listing Exchange is closed other than customary weekend or holiday closings, or trading on the Listing Exchange is suspended or restricted; (2) for any period during which an emergency (for example, an interruption in services or availability of the Bitcoin Custodian, Cash Custodian, Trust Administrator, or other service providers to the Trust, act of God, catastrophe, civil disturbance, government prohibition, war, terrorism, strike or other labor dispute, fire, force majeure, interruption in telecommunications, order entry systems, internet services, or network provider services, unavailability of Fedwire, SWIFT or banks’ payment processes, significant technical failure, bug, error, disruption or fork of the Bitcoin network, hacking, cybersecurity breach, or power, internet, or Bitcoin network outage, or similar event) exists as a result of which delivery, disposal or evaluation of Bitcoin is not reasonably practicable; or (3) for such other period as the Sponsor determines to be necessary for the protection of the Shareholders. For example, the Sponsor may determine that it is necessary to suspend redemptions to allow for the orderly liquidation of the Trust’s assets. If the Sponsor has difficulty liquidating the Trust’s positions (e.g., because of a market disruption event or an unanticipated delay in the liquidation of a position in an over-the-counter contract), it may be appropriate to suspend redemptions until such time as such circumstances are rectified. None of the Sponsor, the person authorized to take redemption orders in the manner provided in the Authorized Participant Agreement, or the Custodians are liable to any person or in any way for any loss or damages that may result from any such suspension or postponement. 20 The Sponsor acting by itself or through the person authorized to take creation or redemption orders in the manner provided in the Authorized Participant Agreement may, in its sole discretion, reject any creation redemption order (1) the Sponsor determines not to be in proper form; (2) the fulfillment of which its 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 creation or redemption orders in the manner provided in the Authorized Participant Agreement or the Bitcoin Custodian make it for all practical purposes not feasible for the Shares to be delivered under the creation or redemption order. The Sponsor may also reject a redemption order if the number of Shares being redeemed would reduce the remaining outstanding Shares to 10,000 Shares (i.e., 1 Basket) or less. None of the Trust, the Sponsor, the Transfer Agent, or the Custodians are liable for the rejection of any purchase order or Basket. In the event that the Sponsor intends to suspend or postpone creations or redemptions, it will provide Shareholders with notice in a prospectus supplement and/or through a current report on Form 8-K or in the Trust’s annual or quarterly reports. Creation and Redemption Transaction Fee To compensate for expenses incurred in connection with the creation and redemption of Baskets, an Authorized Participant is required to pay a standard transaction fee to create or redeem Baskets, which is not expected to vary in accordance with the number of Baskets in such order. The total transaction fee also includes applicable taxes, brokerage and any other commissions, transaction fees (including financing), trade slippage and market impact costs, as applicable, and may be reduced, increased or otherwise changed by the Sponsor and the Trust based on changes to the costs or inputs associated with the total transaction fee. The Sponsor will notify Authorized Participants of any change in the transaction fee and will not implement any change in the fee until after the date of notice. Tax Responsibility Authorized Participants are responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax or governmental charge applicable to the creation or redemption of Baskets, regardless of whether or not such tax or charge is imposed directly on the Authorized Participant, and agree to indemnify the Sponsor and the Trust if they are required by law to pay any such tax, together with any applicable penalties, additions to tax and interest thereon. Secondary Market Transactions As discussed above, Authorized Participants are the only persons that may place orders to create and redeem Baskets. Authorized Participants must be registered broker-dealers or other securities market participants, such as banks and other financial institutions that are not required to register as broker-dealers to engage in securities transactions. An Authorized Participant is under no obligation to create or redeem Baskets, and an Authorized Participant is under no obligation to offer to the public Shares of any Baskets it does create. Authorized Participants that do offer to the public Shares from the Baskets they create do so at per-Share offering prices that are expected to reflect, among other factors, the trading price of the Shares on the Listing Exchange, the NAV of the Trust at the time the Authorized Participant purchased the Baskets, the NAV of the Shares at the time of the offer of the Shares to the public, the supply of and demand for Shares at the time of sale, and the liquidity of Bitcoin or other portfolio investments. Baskets are generally redeemed when the price per Share is at a discount to the NAV per Share. Shares initially comprising the same Basket but offered by Authorized Participants to the public at different times may have different offering prices. An order for one or more Baskets may be placed by an Authorized Participant on behalf of multiple clients. Authorized Participants who make deposits with the Trust in exchange for Baskets receive no fees, commissions or other forms of compensation or inducement of any kind from either the Trust or the Sponsor and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares. Shares trade in the secondary market on the Listing Exchange. Description of the Shares and the Trust Agreement General The Trust is authorized under the Trust Agreement to create and issue an unlimited number of Shares. Shares are issued only in Baskets and only upon the order of an Authorized Participant. The Shares represent common units of fractional undivided beneficial interest in and ownership of the Trust and have no par value. Description of Limited Rights The Shares do not represent a traditional investment and should not be viewed as similar to “shares” of a corporation operating a business enterprise with management and a board of directors. A Shareholder does not have the statutory rights normally associated with the ownership of Shares of a corporation. Each Share is transferable (except to the extent restricted under the Securities Act), is fully paid and non-assessable and entitles the holder to vote on the limited matters upon which Shareholders may vote under the Trust Agreement. For example, Shareholders do not have the right to elect directors and are not entitled to receive dividends. The Shares do not entitle their holders to any conversion or preemptive rights or, except as discussed below, any redemption rights or rights to distributions. 21 Voting and Approvals The Shareholders take no part in the management or control of the Trust. Under the Trust Agreement, Shareholders have limited voting rights. However, no amendments to the Trust Agreement that materially adversely affect the interests of Shareholders may be made without the vote of at least a majority (over 50%) of the Shares (not including any Shares held by the Sponsor or its affiliates). The Sponsor may generally make any other amendments to the Trust Agreement in its sole discretion without Shareholders’ consent. Distributions Pursuant to the terms of the Trust Agreement, the Trust may make distributions on its Shares in cash or in Shares, with such frequency as the Sponsor may determine. In addition, if the Trust is terminated and liquidated, the Sponsor will distribute to the Shareholders any amounts of the cash proceeds (or Bitcoin) of the liquidation remaining after the satisfaction of all outstanding liabilities of the Trust and the establishment of reserves for applicable taxes, other governmental charges and contingent or future liabilities as the Sponsor will determine. Shareholders of record on the record date fixed by the Transfer Agent for a distribution will be entitled to receive their pro rata portions of any distribution. Book-Entry Form Shares of the Trust are held in book-entry form by the Transfer Agent. Transfers are made in accordance with standard securities industry practice. The Sponsor or its delegate shall (i) direct the Transfer Agent to credit or debit the number of creation Baskets or redemption Baskets to the account of the applicable purchaser; and (ii) issue or cancel creation Baskets or redemption Baskets, as applicable, at the direction of the Sponsor or its delegate. The Transfer Agent shall issue or cancel each purchaser’s Shares, as applicable. Share Splits In its discretion, the Sponsor may direct the Transfer Agent to declare a split or reverse split in the number of Shares outstanding and to make a corresponding change in the number of Shares constituting a Basket. For example, if the Sponsor believes that the per Share price in the secondary market for Shares has risen or fallen outside a desirable trading price range, it may declare such a split or reverse split. Description of the Trust Agreement The following is a description of the material terms of the Trust Agreement. The Trust Agreement establishes the roles, rights and duties of the Sponsor and the Trustee. The Sponsor Liability of the Sponsor and Indemnification Each Covered Person is not liable to the Trust or any Shareholder for any action taken, or for refraining from taking any action in good faith, having determined that such course of conduct was in the best interests of the Trust. However, the preceding liability exclusion does not protect the Sponsor against any liability resulting from its own willful misconduct, bad faith or gross negligence in the performance of its duties. Each Covered Person is indemnified by the Trust and held harmless against any loss, judgment, liability, expense incurred or amount paid in settlement of any claim sustained by it in connection with the Covered Person’s activities for the Trust, without fraud, gross negligence, bad faith, willful misconduct or a material breach of the Trust Agreement on the part of such indemnified party arising out of or in connection with the performance of its obligations under the Trust Agreement and under each other agreement entered into by the Sponsor in furtherance of the administration of the Trust (including, without limiting the scope of the foregoing, any subscription agreement) or any actions taken in accordance with the provisions of the Trust Agreement. Such indemnity shall include payment from the Trust of the costs and expenses incurred by such indemnified party in defending itself against any claim or liability in its capacity as Sponsor. Any amounts payable to an indemnified party may be payable in advance or shall be secured by a lien on the Trust. The Sponsor may, in its discretion, undertake any action that it may deem necessary or desirable in respect of the Trust Agreement and the interests of the Shareholders and, in such event, the legal expenses and costs of any such actions shall be expenses and costs of the Trust and the Sponsor shall be entitled to be reimbursed therefor by the Trust. 22 Fiduciary and Regulatory Duties of the Sponsor The Sponsor is not effectively subject to the duties and restrictions imposed on “fiduciaries” under both statutory and common law. Rather, the general fiduciary duties that would apply to the Sponsor are defined and limited in scope by the Trust Agreement. 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.” The Trust Agreement provides that in addition to any other requirements of applicable law, no Shareholder shall 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 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 does not apply to derivative actions brought in the name of the Trust under the federal securities laws and the rules and regulations thereunder. The Sponsor is not aware of any reason to believe that Section 7.4 of the Trust Agreement is not enforceable under state or federal law. Although the Court of Chancery of Delaware has stated that “[t]he DSTA is enabling in nature and, as such, permits a trust through its declarations of trust to delineate additional standards and requirements with which a stockholder-plaintiff must comply to proceed derivatively in the name of the trust.” Hartsel v. Vanguard Group., Inc. , Del. Ch. June 15, 2011, there is limited case law addressing the enforceability of provisions similar to Section 7.4. As such, it is possible that this provision would not be enforced by a court in another jurisdiction or under other circumstances. Beneficial owners may have the right, subject to certain legal requirements, to bring class actions in federal court to enforce their rights under the federal securities laws and the rules and regulations promulgated thereunder by the SEC. Beneficial owners who have suffered losses in connection with the purchase or sale of their beneficial interests may be able to recover such losses from the Sponsor where the losses result from a violation by the Sponsor of the anti-fraud provisions of the federal securities laws. Actions Taken to Protect the Trust The Sponsor may, in its own discretion, prosecute, defend, settle or compromise actions or claims at law or in equity that it considers necessary or proper to protect the Trust or the interests of the Shareholders. The expenses incurred by the Sponsor in connection therewith (including the fees and disbursements of legal counsel) are expenses of the Trust and are deemed to be Extraordinary Expenses. The Sponsor is entitled to be reimbursed for the Extraordinary Expenses. Successor Sponsors If the Sponsor is adjudged bankrupt or insolvent, the Sponsor may terminate and liquidate the Trust and distribute its remaining assets in the Sponsor’s capacity as liquidating trustee. The Trustee The Trustee is a fiduciary under the Trust Agreement and must satisfy the requirements of Section 3807 of the DSTA. However, the fiduciary duties, responsibilities and liabilities of the Trustee are limited by, and are only those specifically set forth in, the Trust Agreement. Limitation on Trustee’s Liability Under the Trust Agreement, the Sponsor has exclusive control of the management of all aspects of the activities of the Trust and the Trustee has only nominal duties and liabilities to the Trust. The Trustee is appointed to serve as the trustee for the sole purpose of satisfying Section 3807(a) of the DSTA, which requires that the Trust have at least one trustee with a principal place of business in the State of Delaware. The duties of the Trustee are limited to (i) accepting legal process served on the Trust in the State of Delaware; and (ii) the execution of any certificates required to be filed with the Delaware Secretary of State which the Trustee is required to execute under the DSTA. 23 To the extent the Trustee has duties (including fiduciary duties) and liabilities to the Trust or the Shareholders under the DSTA, such duties and liabilities are replaced by the duties and liabilities of the Trustee expressly set forth in the Trust Agreement. The Trustee has no obligation to supervise, nor will it be liable for, the acts or omissions of the Sponsor, Custodian or any other person. Neither the Trustee, either in its capacity as trustee or in its individual capacity, nor any director, officer or controlling person of the Trustee is, or has any liability as, the issuer, director, officer or controlling person of the issuer of Shares. The Trustee’s liability is limited solely to the express obligations of the Trustee as set forth in the Trust Agreement. Under the Trust Agreement, the Sponsor has the exclusive management, authority and control of all aspects of the activities of the Trust. The Trustee has no duty or liability to supervise or monitor the performance of the Sponsor, nor does the Trustee have any liability for the acts or omissions of the Sponsor. The existence of a trustee should not be taken as an indication of any additional level of management or supervision over the Trust. The Trust Agreement provides that the management authority with respect to the Trust is vested directly in the Sponsor. The Trust Agreement provides that the Trustee is not responsible or liable for the genuineness, enforceability, collectability, value, sufficiency, location or existence of any of the Bitcoin or other assets of the Trust. Possible Repayment of Distributions Received by Shareholders; Indemnification by Shareholders The Shares are limited liability investments. Investors may not lose more than the amount that they invest plus any profits recognized on their investment. Although it is unlikely, the Sponsor may, from time to time, make distributions to the Shareholders. However, Shareholders could be required, as a matter of bankruptcy law, to return to the estate of the Trust any distribution they received at a time when the Trust was in fact insolvent or in violation of its Trust Agreement. In addition, the Trust Agreement provides that Shareholders will indemnify the Trust for any harm suffered by it as a result of Shareholders’ actions unrelated to the activities of the Trust. The foregoing repayment of distributions and indemnity provisions (other than the provision for Shareholders indemnifying the Trust for taxes imposed upon it by a state, local or foreign taxing authority, which is included only as a formality due to the fact that many states do not have statutory trust statutes, and therefore the tax status of the Trust in such states might, theoretically, be challenged) are commonplace in statutory trusts and limited partnerships. Indemnification of the Trustee The Trustee and any of the officers, directors, employees and agents of the Trustee shall be indemnified by the Trust as primary obligor and held harmless against any loss, damage, liability, claim, action, suit, cost, expense, disbursement (including the reasonable fees and expenses of counsel), tax or penalty of any kind and nature whatsoever, arising out of, imposed upon or asserted at any time against such indemnified person in connection with the performance of its obligations under the Trust Agreement, the creation, operation or termination of the Trust or the transactions contemplated therein; provided, however, that neither shall the Trust be required to indemnify any such indemnified person for any such expenses which are a result of the willful misconduct, bad faith or gross negligence of such indemnified person. Holding of Trust Property The Trust holds and records the ownership of the Trust’s assets in a manner such that it is owned for the benefit of the Shareholders for the purposes of, and subject to and limited by the terms and conditions set forth in, the Trust Agreement. Other than issuance of the Shares, the Trust does not create, incur or assume any indebtedness or borrow money from or loan money to any person. The Trustee may not commingle its assets with those of any other person. Neither the Trust, the Sponsor, nor any other entity is permitted to lend, pledge, hypothecate or rehypothecate any of the Trust’s assets. The Trustee may employ agents, attorneys, accountants, auditors and nominees and will not be answerable for the conduct or misconduct of any such custodians, agents, attorneys or nominees if such custodians, agents, attorneys and nominees have been selected with reasonable care. Resignation, Discharge or Removal of Trustee; Successor Trustees The Trustee may resign as Trustee by written notice of its election to do so, delivered to the Sponsor with at least 60 days’ notice. The Sponsor may remove the Trustee in its discretion. If the Trustee resigns or is removed, the Sponsor, acting on behalf of the Shareholders, shall appoint a successor trustee. The successor Trustee will become fully vested with all of the rights, powers, duties and obligations of the outgoing Trustee. Governing Law The Trust Agreement and the rights of the Sponsor, Trustee, and Shareholders under the Trust Agreement are governed by the laws of the State of Delaware. 24 Federal Income Tax Considerations The following is a discussion of certain U.S. federal income tax consequences that generally apply to the purchase, ownership and disposition of Shares for Shareholders. The discussion below is based on the Code, Treasury Regulations promulgated thereunder and judicial and administrative interpretations of the Code, all as in effect on the date of this Annual Report and all of which are subject to change either prospectively or retroactively. The tax treatment of Shareholders may vary depending upon their own particular circumstances. Certain Shareholders (including, but not limited to, banks, financial institutions, insurance companies, regulated investment companies, real estate investment trusts, U.S. Tax-Exempt Shareholders (as defined below) who acquire their Shares with acquisition indebtedness tax-exempt or tax-advantaged retirement plans or accounts, brokers or dealers, traders, partnerships or S corporations for U.S. federal income tax purposes, persons holding Shares as a position in a “hedging,” “straddle,” “conversion,” “constructive sale” or other integrated transaction for U.S. federal income tax purposes, persons whose “functional currency” is not the U.S. dollar, persons required for U.S. federal income tax purposes to accelerate the recognition of any item of gross income with respect to the Shares as a result of such income being recognized on an applicable financial statement, or other investors with special circumstances) may be subject to special rules not discussed below. In addition, the following discussion applies only to investors who 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. 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. Purchasers of Shares are urged to consult their own tax advisers with respect to all U.S. federal, state, local and foreign tax law considerations potentially applicable to their investment in Shares. For purposes of this discussion, a “U.S. Shareholder” is a Shareholder that is (or is treated as), for U.S. federal income tax purposes: ● an individual who is a citizen or resident of the United States; ● a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia; ● an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or ● a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust. For purposes of this discussion, a “U.S. Tax-Exempt Shareholder” is a U.S. Shareholder that is exempt from tax under Section 501(a) of the Code. For purposes of this discussion, a “Non-U.S. Shareholder” is a Shareholder that is (or is treated as), for U.S. federal income tax purposes: ● a non-resident alien individual; ● a foreign corporation; or ● an estate or trust whose income is not subject to U.S. federal income tax on a net income basis. If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Shares, the tax treatment of a partner generally depends upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Shares, the discussion below may not be applicable and we urge you to consult your own tax adviser for the U.S. federal income tax implications of the purchase, ownership and disposition of such Shares. Taxation of the Trust The Sponsor treats the Trust as a “grantor trust” for U.S. federal income tax purposes. Although not free from doubt, due to the lack of directly governing authority, the Trust should be classified as a “grantor trust” for U.S. federal income tax purposes (and the following discussion assumes such classification). If the Trust is properly treated as a grantor trust for U.S. federal income tax purposes, the Trust itself should not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses should “flow through” to the Shareholders, and the Trustee reports the Trust’s income, gains, losses and deductions to the IRS on that basis. It is possible that the IRS or another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position. Neither the Sponsor nor the Trustee intends to request a ruling from the IRS with respect to the classification of the Trust for U.S. federal income tax purposes or with respect to any other matter. If the IRS were to assert successfully that the Trust is not classified as a “grantor trust,” the Trust would likely be classified as either a partnership for U.S. federal income tax purposes, in which case there might be different timing or other tax consequences to the Shareholders, or as a publicly traded partnership that would be taxable as a corporation for U.S. 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. federal income tax purposes, there can be no assurance in this regard. Except as otherwise indicated, the remainder of this discussion assumes that the Trust is classified as a grantor trust for U.S. federal income tax purposes. 25 Uncertainty Regarding the U.S. Federal Income Tax Treatment of Digital Currency As stated above, in 2014, the IRS released the Notice discussing certain aspects of the treatment 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. The IRS stated in the Notice that such digital currency (i) is “property” (ii) is “not treated as currency” for purposes of the Code rules relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released 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 U.S. federal income tax treatment of digital currencies. 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. The IRS and Treasury department have also released the Regulations. The Regulations provide guidance with respect to the calculation of gain or loss and the basis of digital assets under Section 1001 and 1012 of the Code. The Existing IRS Guidance, however, does not address other significant aspects of the U.S. federal income tax treatment of digital currencies, including: (i) whether convertible virtual currencies are properly treated as “commodities” for U.S. federal income tax purposes; (ii) whether convertible virtual currencies are properly treated as “collectibles” for U.S. federal income tax purposes; and (iii) the proper method of determining a holder’s holding period for convertible virtual currencies acquired at different times or at varying prices. The uncertainty surrounding the U.S. federal income tax treatment of digital currencies and other digital assets could affect the performance of the Trust. Moreover, there continues to be uncertainty with respect to the timing and amount of the income inclusions from the receipt of digital assets. There can be no assurance that the IRS will not alter its position with respect to digital currencies in the future or that a court would uphold the treatment set forth in the Existing IRS Guidance. It is also unclear what additional guidance on the treatment of digital currencies for U.S. federal income tax purposes may be issued in the future. Any such alteration of the current IRS positions or additional guidance could result in adverse tax consequences for Shareholders and could have an adverse effect on the prices of digital currencies, including the price of Bitcoin in the Bitcoin markets, and therefore could have an adverse effect on the value of Shares. 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. federal income tax purposes. Taxation of U.S. Shareholders Shareholders are treated, for U.S. federal income tax purposes, as if they directly owned a pro rata share of the underlying assets held in the Trust. Except with respect to redemptions discussed below, Shareholders also are treated as if they directly received their respective pro rata shares of the Trust’s income, if any, and as if they directly incurred their respective pro rata shares of the Trust’s expenses. For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder’s Shares are acquired on the same date and at the same price per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their own tax advisers as to the determination of the tax basis and holding period for the underlying Bitcoin related to such Shares. Current IRS guidance on the treatment of convertible virtual currencies classifies Bitcoin as “property” that is not currency for U.S. federal income tax purposes and clarifies that Bitcoin could be held as a capital asset, but it does not address several other aspects of the U.S. federal income tax treatment of Bitcoin. Because Bitcoin is a recent technological innovation, the U.S. 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. 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. federal income tax purposes. This discussion assumes that any Bitcoin the Trust may hold is properly treated for U.S. federal income tax purposes as property that may be held as a capital asset and is not currency for purposes of the provisions of the Code relating to foreign currency gain and loss. 26 The Trust sells or uses Bitcoin to pay certain expenses of the Trust or to fund cash redemptions, though the Trust does not intend to sell Bitcoin for other purposes. If the Trust sells Bitcoin (for example to generate cash to pay fees or expenses) or is treated as selling Bitcoin (for example by using Bitcoin to pay fees or expenses), a Shareholder generally recognizes gain or loss in an amount equal to the difference between (a) the Shareholder’s pro rata share of the amount realized by the Trust upon the sale and (b) the Shareholder’s tax basis for its pro rata share of the Bitcoin that was sold. A Shareholder’s tax basis for its share of any Bitcoin sold by the Trust should generally be determined by multiplying the Shareholder’s total basis for its share of all of the Bitcoin held in the Trust immediately prior to the sale, by a fraction the numerator of which is the amount of Bitcoin sold, and the denominator of which is the total amount of the Bitcoin held in the Trust immediately prior to the sale. After any such sale, a Shareholder’s tax basis for its pro rata share of the Bitcoin remaining in the Trust should be equal to its tax basis for its share of the total amount of the Bitcoin held in the Trust immediately prior to the sale, less the portion of such basis allocable to its share of the Bitcoin that was sold. Upon a Shareholder’s sale of some or all of its Shares (other than a redemption), the Shareholder is treated as having sold the portion or all, respectively, of its pro rata share of the Bitcoin held in the Trust at the time of the sale that is attributable to the Shares sold. Accordingly, the Shareholder generally recognizes gain or loss on the sale in an amount equal to the difference between (a) the amount realized pursuant to the sale of the Shares, and (b) the Shareholder’s tax basis for the portion of its pro rata share of the Bitcoin held in the Trust at the time of sale that is attributable to the Shares sold, as determined in the manner described in the preceding paragraph. Based on current IRS guidance, such gain or loss (as well as any gain or loss realized by a Shareholder on account of the Trust selling Bitcoin) is generally a long-term or short-term capital gain or loss, depending upon whether the Shareholder has a holding period of greater than one year in its pro rata share of the Bitcoin that was sold. Gains or losses from the sale of Bitcoin to fund cash redemptions are treated as incurred by the Shareholder that is being redeemed, and the amount of such gain or loss generally equals the difference between (a) the amount realized pursuant to the sale of the Bitcoin, and (b) the Shareholder’s tax basis for the portion of its pro rata share of the Bitcoin held in the Trust that is sold to fund the redemption, as determined in the manner described in the paragraph that is two paragraphs above this one. A redemption of some or all of a Shareholder’s Shares in exchange for the cash received from such sale is not treated as a separate taxable event to the Shareholder. An in-kind redemption of some or all of a Shareholder’s Shares in exchange for the underlying Bitcoin represented by the Shares redeemed is generally not a taxable event to the Shareholder. The Shareholder’s tax basis for the Bitcoin received in the in-kind redemption is generally the same as the Shareholder’s tax basis for the portion of its pro rata share of the Bitcoin held in the Trust immediately prior to the in-kind redemption that is attributable to the Shares redeemed. The Shareholder’s holding period with respect to the Bitcoin received generally should include the period during which the Shareholder held the Shares redeemed in kind. A subsequent sale of the Bitcoin received by the Shareholder is generally a taxable event, unless a nonrecognition provision of the Code or Treasury Regulations applies to such sale. After any sale or redemption of less than all of a Shareholder’s Shares, the Shareholder’s tax basis for its pro rata share of the Bitcoin held in the Trust immediately after such sale or redemption is generally equal to its tax basis for its share of the total amount of the Bitcoin held in the Trust immediately prior to the sale or redemption, less the portion of such basis which is taken into account in determining the amount of gain or loss recognized by the Shareholder upon such sale or redemption for money or, in the case of an in-kind redemption, that is treated as the basis of the Bitcoin received by the Shareholder in the redemption. 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 receipt, distribution and/or sale of the new alternative asset may cause Shareholders to incur a U.S. federal income tax liability. 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. If in consultation with legal advisors and tax consultants, the Trust determines that the IR Virtual Currency is, or is likely to be deemed, a security under federal or state securities laws or cause the Trust to lose its status as an investment trust classified as a grantor trust for federal income tax purposes, the Sponsor will 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. 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. 27 Brokerage Fees and Trust Expenses Any brokerage, financing or other transaction fee incurred by a Shareholder in purchasing Shares is treated as part of the Shareholder’s tax basis in the underlying assets of the Trust. Similarly, any brokerage fee incurred by a Shareholder in selling Shares reduces the amount realized by the Shareholder with respect to the sale. It is also possible that, based on the mechanics associated with redemptions, a Shareholder may recognize some amount of income, expense, gain or loss in connection with redemptions of other Shareholders, based on differences between the prices at which Shares generally are redeemed and the actual prices at which the Trust sells Bitcoin. Shareholders are required to recognize the full amount of gain or loss upon a sale or deemed sale of Bitcoin by the Trust (as discussed above), even though some or all of the proceeds of such sale are used by the Sponsor to pay Trust expenses. Shareholders may deduct their respective pro rata shares of each expense incurred by the Trust to the same extent as if they directly incurred the expense. Shareholders who are individuals, estates or trusts, however, may be required to treat some or all of the expenses of the Trust as miscellaneous itemized deductions. An individual may not deduct miscellaneous itemized deductions. Investment by U.S. Tax-Exempt Shareholders Individual retirement accounts (“IRAs”) and participant-directed accounts under tax-qualified retirement plans are limited in the types of investments they may make under the Code. Potential purchasers of Shares that are IRAs or participant-directed accounts under a Code Section 401(a) plan should consult with their own tax advisors as to the ability to purchase Shares and the tax consequences of a purchase of Shares. Taxation of U.S. Tax-Exempt Shareholders Income recognized by U.S. Tax-Exempt Shareholders is generally exempt from U.S. federal income tax except to the extent of such Shareholders’ UBTI. UBTI is defined generally as income from a trade or business regularly carried on by a tax-exempt entity that is unrelated to the entity’s exempt purpose. Dividends, interest and, with certain exceptions, gains or losses from the sale, exchange or other disposition of property are generally excluded from UBTI (so long as not derived from debt-financed property). When a U.S. Tax-Exempt Shareholder owns an interest in a grantor trust, such as the Trust, the activities of the Trust (and any pass-through entities or disregarded entities in which the Trust owns an interest) are attributed to the U.S. Tax-Exempt Shareholder for purposes of determining whether such Shareholder’s share of income is of the grantor trust UBTI. The Trust’s investments and activities relating thereto may cause a U.S. Tax-Exempt Shareholder to realize UBTI. In the absence of any guidance on the matter, a U.S. Tax-Exempt Shareholder’s share of income from a fork, airdrop, or similar event may be treated as UBTI. If the Trust were to incur liabilities, and thus, be treated as holding property constituting debt-financed property (generally, assets purchased with borrowed funds), income attributable to such property generally would constitute UBTI. UBTI generally is separately calculated for each trade or business of a U.S. Tax-Exempt Shareholder. Thus, a U.S. Tax Exempt Shareholder generally cannot use deductions relating to one trade or business to offset income from another trade or business. A U.S. private foundation considering an investment should be aware that, if such a foundation acquires a sufficiently large number of Shares, such Shares could become an “excess business holding” that could subject the foundation to a U.S. excise tax. A private foundation should consult its tax advisors regarding the excess business holdings provisions of the Code and other respects in which the provisions of Chapter 42 of the Code could affect the consequences to such foundation of acquiring and holding Shares. Prospective investors who are U.S. Tax Exempt Shareholders should consult their tax advisors with respect to the U.S. federal income tax consequences of an investment in Shares. Taxation of Non-U.S. Shareholders The Trust does not expect (though no assurance can be given) to 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”). However, while it is unlikely that any income that the Trust might recognize as a result of a fork, airdrop or similar event would give rise to effectively connected income, there has been no guidance as to how such events may be treated. Therefore, there can be no assurance that the Trust will not be treated as engaged in a U.S. trade or business or will not otherwise generate income treated as effectively connected with a U.S. trade or business for U.S. federal income tax purposes. Provided that the Trust is not engaged in the conduct of a U.S. trade or business, and that it does not otherwise generate income treated as effectively connected with a U.S. trade or business, the U.S. federal income tax liability of a Non-U.S. Shareholder with respect to that Shareholder’s Shares are generally limited to withholding tax on certain gross income from U.S. sources (if any) generated by the Trust. 28 A Non-U.S. Shareholder’s allocable share of U.S. source dividend, interest, rental and other “fixed or determinable annual or periodical gains, profits and income” (“FDAP”) that is not ECI is generally subject to U.S. federal withholding tax at a rate of 30% (unless reduced or eliminated by an applicable income tax treaty or statutory exemption). There is currently no guidance as to whether income recognized by the Trust as a result of a fork, airdrop or similar event would constitute U.S. source FDAP. A Non-U.S. Shareholder resident in a jurisdiction with which the U.S. has an income tax treaty may be entitled to the benefits of that treaty in order to reduce or eliminate the 30% U.S. withholding tax with respect to that Shareholder’s distributive share of income that the Trust treats as U.S.-source FDAP if under the laws of that non-U.S. jurisdiction, the Trust is treated as tax-transparent and certain other conditions are met. In order to secure the benefits of an applicable income tax treaty through a reduction or elimination of withholding, Non-U.S. Shareholders are generally required to certify their non-U.S. status by providing the Trust with an executed IRS Form W-8BEN or W-8BEN-E. However, if a Non-U.S. Shareholder fails to provide such IRS Forms, the Trust intends to withhold at a full 30% rate on any Non-U.S. Shareholder’s share of U.S.-source FDAP, in which case the Non-U.S. Shareholder must file a refund claim with the IRS in order to obtain the benefit of a reduced rate or exemption. If the proper amounts are withheld and remitted to the U.S. government and the Trust does not recognize ECI, Non-U.S. Shareholders that are individuals or corporations are generally not required to file U.S. federal income tax returns or pay additional U.S. federal income taxes solely as a result of their investments in the Trust (though Non-U.S. Shareholders treated as trusts for U.S. federal income purposes are subject to special rules). If the Trust is treated as a partnership (for U.S. federal income tax purposes), a Non-U.S. Shareholder is treated as disposing of Shares, and any portion of the gain realized on the disposition would be treated as ECI, such Shares may be subject to a withholding tax equal to 10% of the amount realized on the disposition (subject to reduction or elimination in certain circumstances). Non-U.S. Shareholders are urged to consult with their tax advisers regarding the application of this withholding tax. If the Trust is treated as having any ECI (or any portion of the gain realized on a Non-U.S. Shareholder’s disposition of Shares is treated as ECI), then if such Non-U.S. Shareholder is treated as a corporation, it may also be subject to U.S. federal branch profits tax on its effectively connected earnings and profits (which, with respect to the Shares, would generally be such Non-U.S. Shareholder’s share of ECI from such Shares, reduced by deductions taken into account by the Shareholder in computing its ECI, and further reduced by the U.S. federal income taxes imposed on such ECI). U.S. 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. United States Information Reporting and Backup Withholding The Trustee files certain information returns with the IRS, and provides certain tax-related information to Shareholders, in connection with the Trust. To the extent required by applicable regulations, each Shareholder is provided with information regarding its allocable portion of the Trust’s annual income, expenses, gains and losses (if any). U.S. Shareholders generally may comply with these identification procedures by providing the Trust with a duly completed and executed IRS Form W-9 (Request for Taxpayer Identification Number and Certification). Non-U.S. Shareholders generally may comply with these identification procedures by providing the Trust with the relevant IRS Form W-8, duly completed and executed. Shareholders may be required to satisfy certain information reporting or certification requirements, e.g., those imposed by the “Foreign Account Tax Compliance Act” or “FATCA,” to avoid certain information reporting and withholding tax requirements. The amount of any backup withholding is allowed as a credit against a Shareholder’s U.S. 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. FATCA As discussed above, it is unclear whether any ordinary income recognized by a non-U.S. Holder as a result of a fork, airdrop or similar occurrence or staking would constitute U.S.-source FDAP income. Provisions of the Code commonly referred to as “FATCA” require withholding of 30% on payments of U.S.-source FDAP income and, subject to the discussion of proposed U.S. Treasury regulations below, of gross proceeds of dispositions of certain types of property that produce U.S.-source FDAP income to, “foreign financial institutions” (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied, or an exemption applies. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. In addition, regulations proposed by the U.S. Treasury Department (the preamble to which indicates that taxpayers may rely on the regulations pending their finalization) would eliminate the requirement under FATCA of withholding on gross proceeds. If FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally may obtain a refund of any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden). Shareholders should consult their tax advisers regarding the effects of FATCA on an investment in the Trust. 29 PROSPECTIVE 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 ERISA and Section 4975 of the Code impose certain requirements on 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 ERISA and/or Section 4975 of the Code (collectively, “Plans”), and on persons who are fiduciaries with respect to the investment of Plan assets. Governmental plans, non-U.S. plans and certain church plans (collectively, “Non-ERISA Arrangements”) are not subject to the fiduciary responsibility or prohibited transaction provisions of ERISA or Section 4975 of the Code, but may be subject to similar rules under other federal, state, local, non-U.S. or other applicable laws (“Similar Laws”). General Fiduciary Matters In contemplating an investment of a portion of Plan assets in Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and circumstances of the Plan, the risks discussed in this Annual Report, and whether such investment is consistent with its fiduciary responsibilities, including, but not limited to (i) whether the fiduciary has the authority to make the investment under the appropriate governing plan instrument, (ii) whether the investment would constitute a direct or indirect non-exempt prohibited transaction under ERISA or the Code, (iii) the Plan’s funding objectives, and (iv) whether under the general fiduciary standards of investment prudence and diversification such investment is appropriate for the Plan, taking into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the Plan’s need for sufficient liquidity to pay benefits when due. Fiduciaries of Non-ERISA Arrangements should carefully consider whether an investment in Shares would violate any applicable Similar Laws. Plan Asset Issues Under the U.S. Department of Labor’s regulations in Section 2510.3-101, as amended by Section 3(42) of ERISA (the “Plan Asset Regulations”), if a Plan invests in an equity interest of an entity that is “a publicly-offered security,” the entity will not be deemed to hold “plan assets” subject to ERISA, and a party managing the assets of such entity will not be subject to the fiduciary responsibility and prohibited transaction rules of ERISA and Section 4975 of the Code. A “publicly-offered security” is a security that is freely transferable, part of a class of securities that is widely held, and is either (i) part of a class of securities registered under Section 12(b) or 12(g) of the Exchange Act or (ii) sold to the plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and the class of securities of which such security is a part is registered under the Exchange Act within 120 days (or such later time as may be allowed by the SEC) after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred. Whether a security is “freely transferable” is a factual question determined on the basis of facts and circumstances. A class of securities is “widely-held” if it is a class of securities that is owned by 100 or more investors independent of the issuer and of one another. It is anticipated that the Shares constitute “publicly-offered securities” as defined in the Plan Asset Regulations, because the Shares (i) are being timely registered under the Exchange Act, (ii) should be considered “freely transferable” because they may be freely bought and sold on the Listing Exchange, and (iii) should be considered “widely held” because they are owned by at least 100 investors independent of the Trust and of each other. Accordingly, only Shares held by a Plan, and not the underlying Bitcoin held in the Trust represented by the Shares, should be treated as assets of the Plan, for purposes of applying the fiduciary responsibility and prohibited transaction rules of ERISA and the Code. Investment by Certain Retirement Plans IRAs and participant-directed accounts under tax-qualified retirement plans are limited in the types of investments they may make under the Code. Potential purchasers of Shares that are IRAs or participant-directed accounts under a Code Section 401(a) plan should consult with their own advisors as to the consequences of an investment in Shares. Ineligible Purchasers In general, Shares may not be purchased with the assets of a Plan if the Trustee, the Sponsor, the distributor or any of their respective affiliates or employees either: (i) has investment discretion with respect to the investment of such Plan assets; (ii) has authority or responsibility to give or regularly gives investment advice with respect to such Plan assets, for a fee, and pursuant to an agreement or understanding that such advice will serve as a primary basis for investment decisions with respect to such Plan assets and that such advice will be based on the particular investment needs of the Plan; or (iii) is an employer maintaining or contributing to such Plan. A party that is described in clause (i) or (ii) of the preceding sentence is a fiduciary under ERISA and the Code with respect to the Plan, and any such purchase might result in a prohibited transaction under ERISA and/or the Code, unless an exemption is available. 30 Representation Accordingly, by acceptance of Shares, each purchaser and subsequent transferee of Shares is deemed to represent and warrant that either (i) no portion of the assets used by such purchaser or transferee to acquire or hold the Shares constitutes assets of any Plan or Non-ERISA Arrangement or (ii) the acquisition, holding and subsequent disposition of the Shares by such purchaser or transferee does not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or violate any applicable Similar Law. Certain ERISA Plans may be required to report certain compensation paid by the Trust to the Trust’s service providers on Schedule C to the ERISA Plan’s annual Form 5500. To the extent applicable, any descriptions of such compensation herein are intended to satisfy the disclosure requirements for “eligible indirect compensation” for purposes of the alternative reporting option on Schedule C. Except as otherwise set forth, the foregoing statements regarding the consequences under ERISA and the Code of an investment in the Trust are based on the provisions of ERISA and the Code as currently in effect, and the existing administrative and judicial interpretations thereunder. No assurance can be given that administrative, judicial or legislative changes will not occur that may make the foregoing statements incorrect or incomplete.