10-12G/A

As filed with the Securities and Exchange Commission on September 10, 2021

File no. 000-56307

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10/A

Amendment No. 1

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g) OF

THE SECURITIES EXCHANGE ACT OF 1934

Osprey Bitcoin Trust

(Exact Name of Registrant as Specified in Its Charter)

Delaware	83-2424407
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
520 White Plains Road, Suite 500	10591
Tarrytown, New York
(Address of Principal Executive Offices)	(Zip Code)
(914) 214-4174 (Registrant’s telephone number, including area code)

Copies to:

David A. Sirignano

Emily Drazan Chapman

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue NW

Washington, DC 20004

Securities to be registered pursuant to Section 12(b) of the Act: None

Securities to be registered pursuant to Section 12(g) of the Act: Osprey Bitcoin Trust Units

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

EXPLANATORY NOTE

Osprey Bitcoin Trust (the “Trust”) is voluntarily filing this amendment to the Registration Statement on Form 10 (this “Amendment No. 1”) to register its common units of fractional undivided beneficial interest (“Units”) pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Once this Registration Statement is deemed effective, the Trust will be subject to the requirements of Regulation 13A under the Exchange Act, which will require it to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and to comply with all other obligations of the Exchange Act applicable to issuers filing Registration Statements pursuant to Section 12(g) of the Exchange Act.

INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

We have filed our Information Statement as Exhibit 99.1 to this Amendment No.1. For your convenience, we have provided below a cross-reference sheet identifying where the items required by Form 10 can be found in our Information Statement. None of the information contained in the Information Statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.

Item No.	Item Caption	Location in Information Statement
1.	Business.	The following sections of our Information Statement are hereby incorporated by reference: “Statement Regarding Forward-Looking Statements,” “Key Operating Metrics,” “Summary,” “Risk Factors,” “Overview of the Bitcoin Industry and Market,” “Activities of the Trust,” “Description of the Trust,” “The Sponsor,” “The Trustee,” “The Transfer Agent,” “The Custodian,” “Custody of the Trust’s Bitcoins,” “Description of Issuance of Units,” “Valuation of Bitcoin and Determination of Bitcoin Holdings,” “Expenses; Sales of Bitcoins,” “Statements, Filings and Reports,” and “Description of the Trust Documents.”
1A.	Risk Factors.	The following sections of our Information Statement are hereby incorporated by reference: “Statement Regarding Forward-Looking Statements” and “Risk Factors.”
2.	Financial Information.	The following sections of our Information Statement are hereby incorporated by reference: “Key Operating Metrics,” “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Valuation of Bitcoin and Determination of Bitcoin Holdings,” and “Index to Financial Statements” and the statements referenced therein.
3.	Properties.	None.
4..	Security Ownership of Certain Beneficial Owners and Management.	The following section of our Information Statement is hereby incorporated by reference: “Conflicts of Interest.”
5.	Directors and Executive Officers.	The following sections of our Information Statement are hereby incorporated by reference; “The Sponsor.”
6.	Executive Compensation.	The following sections of our Information Statement are hereby incorporated by reference: “Expenses; Sales of Bitcoins.”
7.	Certain Relationships and Related Transactions, and Director Independence.	The following sections of our Information Statement are hereby incorporated by reference: “The Sponsor” and “Conflicts of Interest.”
8.	Legal Proceedings.	None.
9.	Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.	The following sections of our Information Statement are hereby incorporated by reference: “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
10.	Recent Sales of Unregistered Securities.	The following sections of our Information Statement are hereby incorporated by reference: “Description of the Units.”
11.	Description of Registrant’s Securities to be Registered.	The following sections of our Information Statement are hereby incorporated by reference: “Description of the Units,” “Description of Issuance of Units” and “Description of the Trust Documents.”

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12.	Indemnification of Directors and Officers.	The following section of our Information Statement is hereby incorporated by reference: “Description of the Trust Documents.”
13.	Financial Statements and Supplementary Data.	The following section of our Information Statement is hereby incorporated by reference: “Index to Financial Statements” and the statements referenced therein.
14.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	Not Applicable.
15.	Financial Statements and Exhibits.	The following sections of our Information Statement are hereby incorporated by reference: “Index to Financial Statements” and the statements referenced therein.

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(a) List of Financial Statements and Schedules. The following Financial statements are included om the information Statement and filed as part of this Registration Statement on Form 10:

Osprey Bitcoin Trust Unaudited Interim Financial Statements

Statements of Assets and Liabilities at June 30, 2021 and December 31, 2020

Schedules of Investment at June 30, 2021 and December 31, 2020

Statements of Operations for the three months and six months ended June 30, 2021 and 2020

Statements of Changes in Net Assets for the three months and six months ended June 30, 2021 and 2020

Notes to Unaudited Financial Statements

Osprey Bitcoin Trust Annual Financial Statements

Report of Independent Registered Public Accounting Firm

Statements of Assets and Liabilities at December 31, 2020 and 2019

Schedules of Investment at December 31, 2020 and 2019

Statements of Operations for the period from January 22, 2019 (commencement of operations) to December 31, 2019 and for the year ended December 31, 2020

Statements of changes in Net Assets for the period from January 22, 2019 (commencement of operations) to December 31, 2019 and for the year ended December 31, 2020

Notes to Financial Statements

(b) Exhibits. The following documents are filed as exhibits hereto:

Number Exhibit	Exhibit Description
4.1*	Second Amended and Restated Declaration of Trust and Trust Agreement
10.1*†	Custodian Agreement
10.2	Index Provider Agreement
10.3†	Transfer Agency and Registrar Service Agreement
10.4	Form of Subscription Agreement
10.5†	Administration Agreement
99.1	Information Statement

*	Previously filed.
†	Certain schedules or similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Trust agrees to furnish supplemental copies of any of the omitted schedules or attachments upon request by the Securities and Exchange Commission.

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SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

Osprey Fund, LLC
as Sponsor of Osprey Bitcoin Trust
By:	/s/ Gregory D. King
	Name: Gregory D. King
	Title: Chief Executive Officer

Date: September 10, 2021

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EX-10.2

Exhibit 10.2

MASTER SERVICES AGREEMENT

THIS MASTER SERVICES AGREEMENT (“Agreement”) is made as of the latest date set forth on the signature page hereto (the “Effective Date”) by and between Coin Metrics Inc., a Delaware corporation (“CM”) and Osprey Funds, LLC (“Customer”). Customer and CM are individually hereinafter referred to as a “Party” and collectively as the “Parties”. This Agreement incorporates by reference the Order Forms issued hereunder.

1.         SCOPE OF AGREEMENT

1.1         Scope of Services. In accordance with the terms of the applicable Order Form, CM will provide to Customer the services described on such Order Form (collectively, the “Services”). This Agreement sets forth the terms and conditions that will govern CM’s provision of the Services, as specified on the applicable Order Form. “Order Form” means a written document signed by both Parties, that is substantially in the form attached hereto as Exhibit A, referencing this Agreement and detailing the specific Services to be provided, the compensation as well as any other information needed to perform the Services. All Services are subject to this Agreement.

1.2         Rights to Use. Subject to the terms and conditions of this Agreement, CM hereby grants to Customer a non-exclusive, non-sublicensable, non-transferable, limited, revocable license (solely through Customer’s Designated Users) to access and use the Services identified in the applicable Order Form solely for the duration of the applicable Order Term (as defined in such Order Form).

1.3         Ownership and Reservation of Rights. Nothing in this Agreement shall constitute a transfer of any proprietary right by CM to Customer. The Services may be protected by patent, copyright, trade secret and/or other intellectual property laws. As between the Parties, CM owns and retains all right, title and interest in and to the intellectual property rights in and to the Services (including any data and/or analytics made available through the Services) and any enhancements, modifications or derivative works thereof. As between the Parties, (i) each Party retains ownership in and to its Confidential Information (as hereinafter defined) and (ii) CM exclusively owns all right, title and interest in and to the Services and any derivative works and work product conceived, originated, or prepared in connection with the Services. All rights not specifically granted to Customer in this Agreement are retained by CM. Customer acknowledges the proprietary rights of CM and its licensors in the Services and that CM retains all right, title and interest in and to the Services.

1.4         Third-Party Sites. The Services may link, interface and integrate with third party software applications and websites that are not operated or controlled by CM (“Third-Party Sites”). All such Third-Party Sites shall remain the property of their third-party providers. Customer hereby acknowledges and agrees that CM is not responsible for the content or practices of the Third-Party Sites. Any links to or content from Third-Party Sites in the Services are provided for Customer’s convenience only. CM reserves the right to update or remove any functionality available through the Services at any time for any reason.

1.5         Feedback. Notwithstanding any provision in this Agreement to the contrary, CM may use, develop and implement any information, suggestions, comments or other feedback provided by Customer or any of its Representatives (collectively, “Feedback”) in connection with the development, operation, marketing and sale of the Services, in its discretion and with no compensation to any person providing Feedback, irrespective of any intellectual property or proprietary rights claimed by Customer in such Feedback. Customer represents that it has not, and will not, knowingly provide Feedback that is subject to any third-party intellectual property rights.

1.6         Changes to Services. CM reserves the right at any time to alter any features, functionality and other characteristics of the Services; provided, however, that in the event that any such alterations materially limit the features or functionality of the Services, CM shall use commercially reasonable efforts to provide Customer with advanced notice thereof. Any subsequent upgrade, enhancement or other change to the Services shall be owned by CM and subject to the terms of this Agreement.

1.7         Affiliate Usage. Subject to the terms of this Agreement and the applicable Order Form, Customer Affiliates may also use the Services solely in connection with the business of Customer and its Customer Affiliates. “Customer Affiliate” means any person or entity which directly or indirectly controls, is controlled by or is under common control with Customer, whether by ownership or otherwise; and “control” means possessing, directly or indirectly, the

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power to direct or cause the direction of the management, policies or operations of an entity, whether through ownership of fifty percent (50%) or more of the voting securities, by contract or otherwise. Where this Agreement uses phrases like “Customer agrees”, “Customer acknowledges”, “Customer represents, warrants, and covenants “, or the like, including where Customer is bound by restrictions or limitations (including but not limited to limitations of liability and indemnifications), Customer agrees that it has the authority to cause, and will before their access and use of the Services cause, each of its Customer Affiliates to be bound to such restrictions or limitations to the same extent as Customer. Customer shall be liable to CM for the acts and omissions of its Customer Affiliates. Customer Affiliates are not third party beneficiaries of the Agreement and Customer alone shall have the right to bring any claim that might otherwise have been brought against CM by Customer or any of its Customer Affiliates.

2.         CONFIDENTIAL INFORMATION

2.1         Definition of Confidential Information. “Confidential Information” means all information, in whatever form, that is disclosed by a Party to the other Party, which, given the totality of the circumstances, a reasonable recipient should have reason to believe is proprietary, confidential, or competitively sensitive, regardless of whether such information is labeled as confidential or not, including without limitation personally identifiable information, creative works, business activities, trade secrets, analysis, software, data, algorithms, know-how, techniques, research, developments, inventions, discoveries, processes, designs, technical data and information, financial information, pricing, vendors, customers, prospects, marketing plans and any other information of a similar nature. For the avoidance of doubt, CM’s Confidential Information includes the Services (including the design, features, functions and architecture thereof) as well as any API keys associated with the Services.

2.2         Access and Use. Each Party receiving Confidential Information from the other Party shall: (i) use and reproduce the Confidential Information only for the purposes specified in this Agreement, (ii) restrict disclosure of Confidential Information to its Representatives with a need to know the Confidential Information to enable the receiving Party to perform its obligations and exercise its rights under this Agreement, provided that such Representatives are bound by confidentiality obligations broaden enough to encompass Confidential Information that are at least as protective as those contained in this Agreement, and (iii) use reasonable care to protect the other Party’s Confidential Information and to prevent unauthorized disclosure of such Confidential Information. Additionally, to the extent that any Confidential Information disclosed or otherwise made available by one Party includes personally identifiable information, the other Party agrees to use such personally identifiable information solely in accordance with applicable Law and in compliance with such other Party’ policies governing the dissemination and use of such personally identifiable information.

2.3         Exclusions. Except as expressly provided herein, and except with respect to any information relating to any identified or identifiable natural person, household or device, nothing in this Agreement will be construed to restrict or impair in any way the right of a receiving Party to disclose any information which: (i) is at the time of its disclosure hereunder generally available to the public; (ii) becomes generally available to the public through no fault of the receiving Party; (iii) can be reasonably demonstrated to be in the possession of a receiving Party prior to its initial disclosure hereunder; (iv) was independently developed by the receiving Party without reference or access to the disclosing Party’s Confidential Information; or (v) is acquired from a third party having a right to disclose the same to a receiving Party without breach of any confidentiality obligation. A receiving Party may disclose Confidential Information in accordance with a legally binding judicial or other governmental order, provided that, to the extent permitted by applicable Law, such Party provides the disclosing Party with prompt notice of the same and cooperates with the disclosing Party with any actions taken by the disclosing Party to protect such Confidential Information, including without limitation the seeking of an appropriate protective order or other remedy. Notwithstanding any other provision in this Agreement to the contrary, CM may collect, analyze and anonymize data, statistics or other information obtained through the provision, use and performance of various aspects of the Services (collectively, “Analytics”) and aggregate such Analytics with data, statistics or other information obtained from other sources, and may use such Analytics for lawful business purposes, including improvement of the Services, as long as in doing so CM does not re-identify, or attempt to re-identify, any of the Analytics or otherwise link or associate Analytics with any information relating to (i) Customer, or (ii) an identified or identifiable natural person. CM owns all right, title and interest in and to all Analytics and no compensation will be paid by CM to any person with respect to its use of Analytics.

2.4         Customer Data. During the Term, certain data may be made available to CM (either through the Services or otherwise) by or on behalf of Customer (“Customer Data”). Customer shall be responsible for all changes to and/or

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deletions of Customer Data and the security of all passwords and other access protocols required in order to access the Services. Customer will be solely responsible for the accuracy and completeness of the Customer Data. Notwithstanding any other provision of this Agreement, Customer acknowledges and agrees that CM’s obligation to maintain any Customer Data obtained in the course of performance of the Services shall not extend beyond the Term of this Agreement. Customer represents, warrants, and covenants that: (i) it has (and will have) Processed, collected and disclosed all Customer Data in compliance with applicable Law and provided any notice and obtained all consents and rights required by applicable Law to enable CM to lawfully Process Customer Data as permitted by this Agreement; (ii) it has full right and authority to make the Customer Data available to CM under this Agreement; and (iii) CM’s Processing of the Customer Data in accordance with this Agreement will not infringe upon or violate any applicable Law or any rights of any third party. “Process” (including any grammatically inflected forms thereof) means any operation or set of operations which is performed on data or on sets of data, whether or not by automated means, including without limitation collection, recording, organization, structuring, storage, adaptation or alteration, access, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction.

2.5         Remedies. The Parties expressly acknowledge and agree that any breach or threatened breach of this Section 2 by the receiving Party may cause immediate and irreparable harm to the disclosing Party that may not be adequately compensated by damages. Each Party therefore agrees that in the event of such breach or threatened breach by the receiving Party, and in addition to any remedies available at law, the disclosing Party shall have the right to seek equitable and injunctive relief, without the need to post bond, in any court of competent jurisdiction, with respect to such a breach or threatened breach.

3.         TERM AND TERMINATION

3.1         Term. The term of the Agreement will commence on the Effective Date and will continue until terminated in accordance with this Agreement (the “Term”).

3.2         Termination in the Absence of Order Form. From and after the first anniversary of the Effective Date only, and solely in the event that there are no Order Forms then in effect, either Party may terminate this Agreement for any reason upon 30 days’ prior written notice to the other Party.

3.3         Termination for Cause. Either Party may immediately terminate this Agreement or any Order Form under this Agreement for cause, in the event of any of the following by the other Party: (i) a material breach of this Agreement by the other Party which is not cured within thirty (30) days after receipt of written notice in reasonable detail of the breach; (ii) the filing of a petition in bankruptcy or for reorganization or for an arrangement pursuant to any federal or state bankruptcy laws by or on behalf of the other Party or an adjudication of bankruptcy of such Party; or (iii) the filing of a petition proposing the adjudication of the other Party pursuant to any federal or state bankruptcy law and such Party consents to such filing or such petition is not dismissed within ninety (90) days after the filing thereof.

3.4         Discontinuance of Business; Regulatory Changes. If CM determines to cease to conduct any of its Services in the normal course of business, CM shall have the right to terminate this Agreement or the applicable Order Form upon thirty (30) days’ prior written notice. CM may terminate this Agreement or any Order Form upon thirty (30) days’ prior written notice to Customer if: (i) CM becomes aware of the final adoption of any legislation or regulation or the issuance of any interpretation that in CM’s reasonable judgment materially impairs CM’s ability to perform this Agreement or such Order Form in accordance with applicable law; or (ii) any litigation or regulatory proceeding is commenced and CM reasonably believes that such litigation or proceeding would have a material adverse effect upon the ability of CM to perform under this Agreement or such Order Form.

3.5         Effect of Termination. Immediately upon termination or expiration of this Agreement or the applicable Order Form, CM’s obligation to provide the applicable Services will immediately cease, any and all license grants with respect to such Services will immediately terminate, and all unpaid fees and other amounts due from Customer for Services previously provided by CM will immediately become due and payable. Each Party shall, within thirty (30) days of termination or expiration of this Agreement, return or destroy, at the option of the other Party, all copies of such other Party’s Confidential Information that are in its possession or control.

3.6         Suspension of Services. Notwithstanding any provision herein to the contrary, CM may suspend the Services in the event (i) of any activity by Customer or any of Customer’s Designated Users, if such activity has, or in CM’s

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reasonable assessment is likely to have, an adverse effect on the Services, or (ii) Customer fails to pay an undisputed amount within ten (10) days after CM gives Customer written notice of such failure.

4.         FEES

4.1         Payments. Customer shall timely pay the fees set forth on the applicable Order Form in United States dollars. In addition to the fees specified in the applicable Order Form, CM reserves the right to pass through to Customer, and Customer shall pay to CM, any and all crypto/digital asset exchange (e.g. trading platform) fees, third party platform’s fees, third-party supplier’s fees, and/or any related taxes, arising from a change in such costs imposed upon CM that may impact provision of its Services, provided that CM shall use commercially reasonable efforts to give Customer as much advanced written notice of such change in cost as is reasonably practicable. Unless otherwise specified on the applicable Order Form, all fees shall be due and payable in advance within thirty (30) days of the date of Customer’s receipt of CM’s invoice. All payments not made when due shall be subject to late charges on a pro-rated daily basis equal to the lesser of: (i) one and one-half percent (1.5%) per month of the overdue amount, or (ii) the maximum amount permitted under applicable Law. Customer shall reimburse CM for all fees and expenses, including reasonable attorneys’ fees, incurred to collect amounts owed by Customer. If Customer provides recurring payment information for automatic debit of the fees under this Agreement, Customer hereby authorizes CM to debit Customer’s credit card, checking or savings account designated by Customer at the time of payment of such fees (or as updated from time to time by Customer thereafter) on a recurring basis for the fees.

4.2         Taxes. The fees under this Agreement do not include, and Customer shall be responsible for paying all, local, state, federal or foreign sales, use, excise, VAT or other taxes, levies, duties or tariffs of any nature that may be due relating to this Agreement and the Services provided hereunder, except for taxes based on the income of CM.

4.3         Expenses. If the Parties agree to the performance of any Services on-site, Customer will pay all of CM’s reasonable travel expenses. CM will obtain prior approval of such expenses and will provide standard supporting documentation with any reimbursement request.

5.         CUSTOMER’S DUTIES AND RESTRICTIONS

5.1         Login and Password. To the extent specified in the applicable Order Form, Customer may be required to provide CM with the email addresses and names for Customer’s designated end users and administrators (collectively, the “Designated Users”), and CM may assign unique initial login credentials for such Designated Users in order to access the Services. The logins for the Designated Users may not be shared and shall only be used by the Designated User to whom the login is initially assigned. Customer is solely responsible for maintaining the confidentiality of the accounts and related passwords of Customer’s Designated Users and all use of such accounts. Each Designated User must be Customer’s employee or consultant and, in each case, under Customer’s control. Customer shall be solely responsible for all use of the Services under Customer’s account, including by Customer’s Designated Users. Customer hereby agrees that the act or omission of a current or former Representative shall be deemed the same as if performed by Customer.

5.2         Affirmative Covenants. Customer shall: (i) ensure Customer’s Designated Users, officers, directors employees, contractors, representatives, agents and affiliates (collectively, “Representatives”) comply with this Agreement; (ii) take all necessary steps to prevent unauthorized access to or use of the Services, (iii) notify CM immediately of any such unauthorized access or use; (iv) comply with applicable federal, state, local, municipal, domestic and foreign laws, rules and regulations (“Law”); (v) use the Services in compliance with all applicable industry standards; (vi) use the Services only for Customer’s own internal business purposes and solely in accordance with the terms of this Agreement; (vii) use the Services only in accordance with any additional covenants or use restrictions specified in the applicable Order Form; and (viii) use the Services solely in accordance with CM’s instructions.

5.3         Restrictive Covenants. Customer shall not, and Customer will cause Customer’s Representatives to not: (i) alter, change, modify, adapt, translate, or make derivative works of the Services; (ii) use the Services in a manner that violates any applicable Law; (iii) transmit any virus or programming routine intended to damage, surreptitiously intercept, or expropriate any system, data, or personal information; (iv) transfer, resell, license, sublicense or otherwise make the Services available to any third party, except as expressly described in this Agreement; (v) use the Services for timesharing, rental, outsourcing, or a service bureau operation; (vi) attempt to gain, or assist others with attempting to gain unauthorized access to CM’s network, systems or the Services; (vii) decipher, decompile, disassemble, or reverse engineer the Services or assist or encourage any third party to do so; (viii) engage in any activity that violates the rights of others or

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that interferes with or disrupts the Services; or (ix) upload any file containing any back door, time bomb, Trojan horse, worm, virus or similar malicious code (“Malware”).

6.         WARRANTIES, DISCLAIMERS AND LIMITATIONS

6.1         Warranties. Each Party represents and warrants to the other that: (i) it is duly organized and existing under the laws of the state of its formation; (ii) it has all requisite power and authority to enter into this Agreement; (iii) there is no outstanding contract, commitment or agreement to which it is a party that conflicts with this Agreement, and (iv) its activities relating to this Agreement will not violate any applicable Law. CM will use reasonable efforts not to transmit Malware to Customer, provided that it shall not be a breach of CM’s covenant to Customer if Customer or a Designated User uploads a file containing Malware in contravention of Customer’s obligations under Section 5.3(ix).

6.2         Services Warranty. If Customer reasonably believes CM has failed in a material respect to perform the Services in accordance with the terms of this Agreement, Customer shall notify CM within thirty (30) days after the defective Services were performed, and in the event of such defective Services, Customer’s sole and exclusive remedy, and CM’s sole and exclusive obligation, shall be for CM to correct the defects or re-perform the Services.

6.3         Warranty Disclaimer. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, CM MAKES NO WARRANTY, (EXPRESS, IMPLIED OR STATUTORY) AND HEREBY DISCLAIMS ANY AND ALL WARRANTIES, REPRESENTATIONS, OR CONDITIONS, INCLUDING THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, AND ANY WARRANTY ARISING FROM A COURSE OF DEALING, USAGE, OR TRADE PRACTICE. ALL SERVICES PROVIDED BY CM ARE PERFORMED AND PROVIDED ON AN “AS-IS”, “AS AVAILABLE” AND “WITH ALL FAULTS” BASIS. CM DOES NOT WARRANT THAT THE SERVICES OR ITS WORK PRODUCT WILL MEET CUSTOMER’S REQUIREMENTS OR THAT THE SERVICES WILL BE UNINTERRUPTED, ERROR-FREE, OR WITHOUT DELAY. CUSTOMER ACKNOWLEDGES THAT THE FUNCTIONALITY AND INTERFACES OF THE SERVICES MAY CHANGE OVER TIME.

TO THE EXTENT ANY OF THE SERVICES ENABLE CUSTOMER TO ACCESS ANY CRYPTOCURRENCY DATA SETS OF EITHER CRYPTOCURRENCY NETWORK OR MARKET DATA (“SERVICE DATA”) AND/OR ANY CORRELATIONS AND OTHER DERIVED ANALYTICS OF THE VARIOUS DATA THAT CM OR ITS LICENSORS HAVE GENERATED (“SERVICE ANALYSIS”), THEN CUSTOMER: (I) ACKNOWLEDGES AND AGREES THAT CM IS NOT RESPONSIBLE OR LIABLE FOR THE ACCURACY OR COMPLETENESS OF ANY SERVICE DATA OR SERVICE ANALYSIS, AND (II) SHALL BE RESPONSIBLE AND LIABLE FOR ITS USE OF THE SERVICE DATA AND/OR SERVICE ANALYSIS.

CM PROVIDES ACCESS TO CERTAIN DATA THROUGH ITS SERVICES TO THE EXTENT IT IS PROVIDED BY ITS SOURCES (“THIRD PARTY DATA”). CM DOES NOT MAINTAIN OR CONTROL SUCH THIRD-PARTY DATA PROVIDERS AND ACCORDINGLY IS NOT RESPONSIBLE FOR THE AVAILABILITY, COMPLETENESS, TIMELINESS, FACTUAL ACCURACY, OR NON-INFRINGEMENT OF SUCH THIRD PARTY DATA, WHICH IS PROVIDED “AS IS” AND “AS AVAILABLE.” CUSTOMER UNDERSTANDS THAT CM AND/OR THIRD-PARTY DATA PROVIDERS TO THE SERVICES MAY CHOOSE AT ANY TIME TO INHIBIT OR PROHIBIT THEIR DATA FROM BEING ACCESSED UNDER THIS AGREEMENT.

6.4         Limitation of Liability. EXCEPT FOR EITHER PARTY’S INDEMNIFICATION OBLIGATIONS, ANY BREACH OF EITHER PARTY’S OBLIGATIONS UNDER SECTION 2, VIOLATION OF CM’S INTELLECTUAL PROPERTY RIGHTS OR CUSTOMER’S BREACH OF SECTIONS 5.2 OR 5.3, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING LOST PROFITS, DAMAGES FOR LOSS OF GOODWILL, LOST SALES OR BUSINESS, WORK STOPPAGE, COMPUTER FAILURE OR MALFUNCTION, LOST DATA, EVEN IF SUCH PARTY HAS BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, EVEN IF THE APPLICABLE PARTY HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR EVEN IF SUCH DAMAGES WERE REASONABLY FORESEEABLE. EXCEPT FOR CUSTOMER’S PAYMENT OBLIGATIONS UNDER THIS AGREEMENT, EACH PARTY’S INDEMNIFICATION OBLIGATIONS, ANY BREACH BY EITHER PARTY OF ITS OBLIGATIONS UNDER SECTION 2, VIOLATION OF CM’S INTELLECTUAL PROPERTY RIGHTS OR CUSTOMER’S BREACH OF SECTIONS 5.2 OR 5.3, NEITHER PARTY’S TOTAL AGGREGATE AND CUMULATIVE LIABILITY TO THE OTHER SHALL EXCEED THE AMOUNT PAID OR PAYABLE TO CM IN THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE DATE OF THE CLAIM THAT GAVE RISE TO SUCH LIABILITY.

6.5         Prohibition of Claim. CUSTOMER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT ANY CAUSE OF ACTION ARISING OUT OF THIS AGREEMENT OR RELATING TO THE SERVICES MUST BE COMMENCED WITHIN ONE (1) YEAR AFTER THE CAUSE OF ACTION ACCRUES, OTHERWISE SUCH CAUSE OF ACTION SHALL BE PERMANENTLY BARRED.

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6.6         Application. SECTIONS 6.3, 6.4 AND 6.5 SHALL APPLY TO THE FULLEST EXTENT PERMISSIBLE UNDER LAW AND SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT AND THE PERFORMANCE OF ANY SERVICES TO BE RENDERED HEREUNDER.

7.         INDEMNIFICATION

7.1         By CM.

7.1.1         CM will defend, indemnify and hold Customer harmless against any claim, demand, suit, investigation or proceeding made or brought by any third party (each, a “Claim”) against Customer, and its officers, directors, employees, contractors, representatives, agents and affiliates alleging that the use of the Services as permitted hereunder infringes or misappropriates a third-party copyright, trade secret, trademark or United States patent. CM will pay all costs, reasonable attorneys’ fees and any settlement amounts agreed to by CM or damages awarded in connection with the Claim.

7.1.2         If Customer’s use of the Services has become, or in CM’s opinion is likely to become, the subject of any Claim, CM may at its option and expense: (i) procure for Customer the right to continue using the Services as set forth herein; (ii) modify the Services to make it non-infringing; or (iii) if the foregoing options are not reasonably practicable, terminate this Agreement and refund Customer any unused pre-paid fees.

7.1.3         CM will have no liability or obligation with respect to any Claim to the extent caused by: (i) Customer’s use of the Services that is not in accordance with this Agreement or not reasonably foreseeable by CM; or (ii) the combination, operation or use of the Services with other applications, portions of applications, products or services where the Services would not by itself be infringing.

7.1.4         This Section 7.1 states CM’s entire and exclusive obligation, and Customer’s exclusive remedy, for any claim of any nature related to the infringement or misappropriation of third-party intellectual property rights.

7.2         By Customer. Customer will defend, indemnify and hold harmless CM, and its officers, directors, employees, contractors, representatives, agents and affiliates, from and against any Claim made or brought against CM, arising from Customer’s breach, or alleged breach, of this Agreement.

7.3         Conditions. As a condition of the obligations set forth in this Section 7, a Party entitled to indemnification (the “Indemnified Party”) will: (a) provide prompt written notice of the applicable Claim to the other Party (the “Indemnifying Party”); (b) provide the Indemnifying Party with sole control of the applicable defense and settlement; and (c) cooperate as requested by the Indemnifying Party, at the Indemnifying Party’s expense. The Indemnifying Party will not agree to any settlement that admits fault or obligates the Indemnified Party to pay damages without the consent of the Indemnified Party, which consent shall not be unreasonably withheld.

8.         GENERAL TERMS

8.1         Publicity. CM shall have the right to identify Customer as a CM customer for purposes of promotion and marketing of CM’s services, subject to Customer’s prior approval which shall not be unreasonably withheld, delayed or conditioned (and will be deemed given if no written notification is received from Customer within one (1) week from the date of written request for approval).

8.2         Law; Dispute Resolution. This Agreement will be governed by and construed under the laws of the Commonwealth of Massachusetts, without reference to principles of conflict of laws. Any dispute arising between the Parties will be settled in an action commenced and maintained in any court sitting in Suffolk County, Massachusetts. The Parties irrevocably consent and submit to the exclusive personal jurisdiction of such courts if there is any dispute between them and agree not to challenge or assert any defense to the jurisdiction of such courts.

8.3         Relationship. This Agreement does not create any agency, partnership, franchise, joint venture, or any other such relationship between the Parties. Neither Party is granted any express or implied right or authority to assume or create any obligation on behalf of or in the name of the other Party or to bind the other Party in any matter whatsoever.

8.4         Severability. If any provision of this Agreement is determined by any court of competent jurisdiction to be invalid, illegal, or unenforceable, such provision will be automatically reformed and construed so as to be valid, legal, operative, and enforceable to the maximum extent permitted by applicable Law while preserving its original intent. The

6

invalidity, illegality, or unenforceability of any part of this Agreement will not render invalid the remainder of this Agreement.

8.5         Survivability. Sections 1.3, 1.5, 2, 3, 4, 5.2, 5.3, 6.3, 6.4, 6.5, 6.6, 7 and 8 shall survive and continue to bind the Parties after execution and delivery of this Agreement and its expiration or early termination to the extent and for as long as may be necessary to give effect to the rights, duties and obligations of the Parties pursuant to this Agreement, subject to any applicable statutes of limitation.

8.6         Waiver. Failure by a Party to insist upon strict performance of any provision herein by the other Party will not be deemed a waiver by the first Party of its rights or remedies or a waiver by it of any subsequent default by the other Party, and no waiver will be effective unless it is in writing and duly executed by the Party entitled to enforce the provision being waived.

8.7         Amendment. This Agreement may only be amended in a writing executed by both Parties.

8.8         Notice. All notices sent hereunder will be in writing, will be effective upon receipt (except as provided below), and may be: (i) personally delivered; or (ii) sent by a nationally recognized overnight commercial delivery service with provision for receipt, postage or delivery charges prepaid (effective upon receipt or refused delivery); and will be addressed to the Parties at the address set forth below or as updated in writing by a Party in accordance with this Section 8:

	For Notice to CM:	For Notice to Customer:
Contact:	Tim Rice	Greg King
Mailing Address:	125 High Street, Suite 220, c/o Coin Metrics, Boston, MA, 02110	520 White Plains Rd, Ste 500, Tarrytown, NY 10591
Phone:
Email:	tim@coinmetrics.io	operations@ospreyfunds.io

8.9         Force Majeure. Except with regard to payments due to CM, neither Party will be liable for any delays or failures in performance due to circumstances beyond its reasonable control. In the event any such delay continues for a period of thirty (30) or more days, then either Party may terminate this Agreement upon five (5) business days’ prior written notice, provided Customer shall remain responsible for payments due to CM prior to termination.

8.10        Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party, which consent may not be unreasonably withheld; provided, however, that either Party may assign this Agreement to an affiliate of such Party or in connection with a merger, sale of substantially all of its assets, acquisition or other change of control with respect to such Party or any division of its business without the need for such prior written consent. The Agreement is binding upon and inures to the benefit of each Party and its respective successors and permitted assigns, subject to the restrictions against assignment provided in this Section 8.10.

8.11        Construction. In this Agreement, unless a clear contrary intention appears: (i) where not inconsistent with the context, words used in the present tense include the future tense and vice versa and words in the plural number include the singular number and vice versa; (ii) reference to any person includes such person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement; (iii) reference to any gender includes each other gender; (iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and includes all addenda, exhibits and schedules thereto; (v) the titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement; (vi) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or Subsection of this Agreement; (vii) “including” (and with correlative meaning, “include”) means including without limiting the generality of any description preceding such term and (viii) any reference to “dollars” means United States Dollars.

8.12        Entire Agreement. Except as amended after the date hereof pursuant to Section 8.7, this Agreement, the applicable Order Form, Schedules and Exhibits hereto constitute the entire Agreement between the Parties and supersede

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all prior and contemporaneous undertakings and agreements between the Parties, whether written or oral, with respect to the Services. In the event of any conflict between this Agreement and any Order Form, the terms of this Agreement shall govern, except to the extent the applicable Order Form expressly references the provision of this Agreement to be overridden.

Signature Page Follows

8

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Agreement Effective Date:    01-Nov-2020   

COIN METRICS INC.

Signature:   

Name:  Tim Rice

Title:  CEO

Date:  10/30/2020

CUSTOMER

Signature:   

Name:  Greg King

Title:  CEO

Date:  10/30/2020

Entity Name:  Osprey Funds, LLC

Entity Jurisdiction:  New York

9

Exhibit A

Form of Order Form

THIS ORDER FORM (this “Order Form”) is made as of the latest date set forth below (the “Order Effective Date”) by and between Coin Metrics Inc., a Delaware corporation (“CM”) and Osprey Funds, LLC (“Customer”), and is made pursuant to that certain Master Services Agreement, dated as of 01-Nov-2020 (the “Agreement”), between Customer and CM. The terms of the Agreement are incorporated into this Order Form by reference and capitalized terms used but not defined in this Order Form have the meanings ascribed to them in the Agreement.

General Terms

Service Launch Date:	01-Nov-2020
Service Expiration Date:	NA

Services Order Form

In recognition that Osprey is early in its journey to becoming a leading US Cryptoasset Manager, Coin Metrics is proposing a scaling fee model that will only come into effect once Osprey Funds is operating with aggregate Assets Under Management (AUM) of $100M in all funds administered by Coin Metrics.

The fee schedule proposed herein will cover the cost for up to 3 Indexes (2x Single Asset Indexes and 1 x Multi Asset Index). Through this partnership with Osprey, Coin Metrics will help increase the awareness of their fund by supporting with the production of published research articles and marketing materials.

Osprey total AUM in all Funds administered by CM	Fixed Monthly Fee	Variable fee on AUM (calculated monthly and accrues daily at an annualized rate)
<$100M	$0	NA
$100M - $175M	$1,000	0 basis points on AUM under $100M 3 basis points on AUM over $175M
$175M - $250M	$2,000	0 basis points on AUM under $100M 3 bps on AUM between $100M and $175M 2 bps on AUM above $175M
>$250M	$3,000	0 basis points on AUM under $100M 3 bps on AUM between $100M and $175M 2 bps on AUM between $175M and $250M 1 bp on AUM above $250M

If by the end of 2021, Osprey have not grown to over $100M the above proposal will be renegotiated.

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Additional Provisions:

1. This Order Form shall be effective as of the Launch Date provided above and continue until the Expiration Date provided above (the “Initial Order Term”). If neither Party gives notice of its intent not to renew in accordance with this paragraph, the terms of this Order Form will renew automatically upon the expiration of the Initial Order Term or any Renewal Order Term (as defined below), at CM’s then-current fee applicable to the Services under this Order Form, from the Expiration Date (in the case of the Initial Order Term) or the effective date of expiration of such Renewal Order Term (as applicable) (each, an “Order Expiration Date”) for an additional one-year period from such Order Expiration Date (each, a “Renewal Order Term” and, collectively with the Initial Order Term, the “Order Term”). Either Party may give the other Party written notice of its intent not to renew at least sixty days prior to the applicable Order Expiration Date.

2. All payments shall be made in accordance with this Order Form and the Agreement by Customer to CM, as follows:

For ACH and wires:
Name of Account:
Account number:
ABA # for ACH:
ABA # for Wires: Silicon Valley Bank
Coin Metrics, Inc.
3302511516
121140399
121140399

Signature Page Follows

 2

IN WITNESS WHEREOF, the Parties execute this Order Form as of the Order Effective Date: 01-Nov-2020

COIN METRICS INC.

Signature:   

Name:  Tim Rice

Title:  CEO

Date:  10/30/2020

CUSTOMER

Signature:   

Name:  Greg King

Title:  CEO

Date:  10/30/2020

Entity Name:  Osprey Funds, LLC

Entity Jurisdiction:  New York

Entity Billing Address:  520 White Plains Rd, Ste 500, Tarrytown, NY 10591

Billing Contact Name:  Greg King

Billing Contact Email(s)¹:  operations@ospreyfunds.io

¹Please include any CFO, finance, general counsel, or other emails who should be copied on invoicing

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Service Schedule 1 CMBI Services

This Service Schedule (“Service Schedule”), together with the (i) Order Form to which such Service Schedule is attached and (ii) the Agreement, constitute the Parties’ agreement. Capitalized terms used but not defined herein have the meanings ascribed to them in the Agreement. For the avoidance of doubt, all references to the Order Form to which this Service Schedule is attached include the Order Form together with this Service Schedule.

1.         Description of Coin Metrics Bletchley Indexes (CMBI) Services

Benchmark Services. Coin Metrics administers and publishes single-asset index, multi-asset index, network data indexes and other index data products. Indexes are calculated and published hourly and every 15 seconds. The Coin Metrics Bletchley Indexes service is herein referred to as “CMBI”. It represents a set of index data delivered via REST API or other means.

CM Calculation Agent. Coin Metrics administers and publishes indexes that are designed and constructed to meet our customer’s specific needs. As the Calculation Agent, Coin Metrics will collate external data and utilize Coin Metrics proprietary market and network data tools as required to calculate the desired index. Indexes intraday and end of day levels are calculated to meet customer requirements. The CM Calculation Agent Index Service is herein referred to as “Calculation Agent”.

Provision of the CMBI and Calculation Agent services are conditioned on and subject to Customer’s agreement to and compliance with this Order Form and the Agreement. Customer acknowledges and agrees that the terms and conditions in this Order Form and the Agreement are in addition to any terms and conditions and any additional fees that Customer may be subject to in order to gain access to a platform.

Customer is granted permission to store the CMBI and Calculation Agent data on its own database or on a hosted server or computer application that is restricted to the Customer’s own use, provided that Customer shall be responsible for compliance with this Order Form and the Agreement by any third party that provides such hosted server or computer application as if the acts or failures to act of the third party are those of Customer. Customer may not share the CMBI and Calculation Agent data with its third-party contractors (collectively, “Contractors”) without CM’s prior written consent.

2.         Termination

(a)         During the first ninety (90) days of the Initial Order Term only, Customer may terminate this Order Form by providing CM thirty (30) days’ prior written notice of termination, provided that Customer shall remain responsible for any fees attributable to the calendar month in which the effective date of such termination occurs.

(b)         If this Order Form is terminated prior to the end of the current Order Term, all amounts that would otherwise be owing by Customer during the remainder of such term, including without limitation any fees set forth herein, shall immediately become due and payable, and Customer shall immediately pay such fees, to CM; provided however that the foregoing shall not be applicable in the event that this Order Form is terminated (i) by Customer for cause in accordance with Section 3.3 of the Agreement; (ii) by Customer in accordance with Section 2(a) of this Service Schedule; or (iii) by CM without cause.

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3.         Usage Restriction

(a)         Customer is allowed to use the CMBI and Calculation Agent services and data solely for the purposes listed in Section 3(b) unless as mutually agreed by the Parties in writing. For the avoidance of doubt, Customer shall not be allowed to create Derived Data (as such term is defined below) based on the CMBI and Calculation Agent service except as expressly set forth in Section 3(b).

(b)         Permitted uses of CMBI and Calculation Agent:

(i) For internal display including but not limited to use of the data in the following internal items: devices, widgets, gadgets, wallboards, information board, intranets, mobile applications, or analysis and visualization software or programs such as PowerBI, Tableau, Python, or Excel

(ii) For display on its external websites, social media, or computer/mobile applications in text or as fixed images of charts/graphs/tables/other data visualizations

(iii) For use in internal (i.e., for use by employees of the Customer only) research and analysis

(iv) For inclusion into publication reports, presentations, advertisements, and other informational publication materials distributed internally or externally

(v) As inputs into internal trading, arbitrage, analytical, investment, risk or portfolio management models, frameworks, processes, or strategies driven by automation or human decision-making (i.e., discretionary)

(vi) For use in internal order processing or routing

(vii) For use in internal fund administration such as portfolio valuation and accounting

(viii) For use in whole or in combination with other data to create derived ratios, algorithms, signals, or other indicators in relation to the permitted uses described across 3.b.i/ii/iii/iv/v/vi/vii above

(ix) To share with Customer’s auditors and regulators upon their request

(c)         Representation of CMBI and Calculation Agent data in dynamic tables, charts, graphs, or other data visualizations (collectively “Visualizations”) fed by a data feed such as by API or other electronic process on an external website or external mobile or computer application is not permitted unless mutually agreed by the Parties in writing.

(d)         Customer agrees that it shall not use any of the CMBI and Calculation Agent data

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as an input to process, develop, create, calculate or otherwise support a price or value used to develop, create, calculate, price, settle, maintain or support and market a financial investment product including but not limited to a financial index, exchange traded fund, exchange traded note or product, certificate, warrant, contract for difference, swap, or other structured financial product.

(e)         Customer agrees that it shall not redistribute the CMBI and Calculation Agent data to Customer’s clients or other external parties unless permitted by 3.b. above or mutually agreed by the Parties in writing.

(f)          Customer will seek approval and adhere to any requirements of CM regarding appropriate attribution (“Attribution”) when including CMBI and Calculation Agent data in external materials (such as website, social media, or publication materials) and will include in the applicable materials any disclaimer specified by CM (“Disclaimer”).

(g)         Except as necessary to identify the source of the CMBI and Calculation Agent data or to include the appropriate Disclaimer in Customer’s reports, Customer acknowledges and agrees that it has no other rights under the Agreement to use the trademarks or service marks owned or licensed by CM (including its affiliates) (collectively, the “CM Marks”).

“Derived Data” means any data created by Customer, in connection with Customer’s use of the relevant part of CMBI and Calculation Agent data as permitted under the terms of the Agreement, as a result of combining, processing, changing, converting or calculating the CMBI and Calculation Agent data or any portion thereof with other data where the resultant data (i) does not bear resemblance to the underlying CMBI and Calculation Agent service, (ii) cannot be readily reverse engineered, disassembled or decompiled such that a third party may access CMBI and Calculation Agent data via the Derived Data; (iii) cannot be used in a manner which could be a source of, or a substitute for CMBI and Calculation Agent services provided by CM and (iv) cannot be used in whole or in part in a manner which competes with CM or its affiliates.

4.         Ownership

(a)         CM reserves the right, at any time, and without prior notice, to make adjustments to the composition or calculation methodology of any CMBI and Calculation Agent services, to cease to publish certain CMBI and Calculation Agent products, or to discontinue any CMBI and Calculation Agent products or the dissemination of any or all data.

(b)         Customer shall not take any action to register any CM Marks, including the name(s) of “CMBI”, “CMBI Bitcoin”, “CMBI Bitcoin Index”, “CMBI Ethereum”, “CMBI Ethereum Index”, “CMBI 10”, “Coin Metrics Bletchley Indexes”, “CM Bletchley Index”, or any of the constituent metric (i.e., variable) names within CMBI Customer further agrees never to challenge, contest or question the validity of the CM Marks or any related trademark registrations. Customer agrees not to create a composition mark with, or use confusingly similar marks or trade dress to, the CM Marks, or dilute the distinctiveness of any CM Marks. Customer recognizes the great value of the goodwill associated with the CM Marks and will not disparage or degrade the value of the CM Marks.

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EX-10.3

Exhibit 10.3

TRANSFER AGENCY AND REGISTRAR SERVICES AGREEMENT

This Transfer Agency and Registrar Services Agreement (this “Agreement”), dated as of               May 20,                                , 2020_ is between                Osprey Funds, LLC      , a _Delaware          corporation (the “Company”) and Continental Stock Transfer & Trust Company, a New York limited purpose trust company (“CST”).

1. Appointment as Transfer Agent. The Company hereby appoints CST to act as sole transfer agent and registrar for the common stock of the Company and for any such other securities as set forth in Exhibit A hereto (which the Company shall update as necessary to keep complete and accurate) and as the Company may request in writing (the “Shares”) in accordance with the terms and conditions hereof, and CST hereby accepts such appointment. In connection with the appointment of CST as transfer agent and registrar for the Company, the Company shall provide CST: (a) Specimens of all forms of outstanding stock certificates, in the forms approved by the board of directors of the Company, with a certificate of the secretary of the Company as to such approval; (b) Specimens of the signatures of the officers of the Company authorized to sign stock certificates and specimens of the signatures of the individuals authorized to sign written instructions and requests; (c) A copy of the certificate of incorporation and by-laws of the Company and, on a continuing basis, copies of all material amendments to such certificate of incorporation or by-laws made after the date of this Agreement (such amendments to be provided promptly after such amendments are made); and (d)           A sufficient supply of blank certificates signed by (or bearing the facsimile signature of) the officers of the Company authorized to sign stock certificates and bearing the Company’s corporate seal (if required). CST may use certificates bearing the signature of a person who at the time of use is no longer an officer of the Company. Whenever the terms “shares” or stock “certificates” are used herein they shall include physical stock certificates as well book entry and/or DRS positions.

2. Additional Services. CST may provide further services to, or on behalf of, the Company as may be agreed upon between the Company and CST. Should CST so elect, CST shall be entitled to provide services to reunify shareholders with their assets, provided the Company incurs no additional charge for such services. Furthermore, CST shall provide information agent and proxy solicitation services to the Company on terms to be mutually agreed upon by the parties hereto. This agreement shall include CST’s additional authority as successor Exchange Agent on pre-existing exchanges and as Exchange Agent, Paying Agent or Dividend Disbursing Agent on any additional shares of said class or additional classes of stock which may hereafter be authorized by the Company. If CST is designated as Exchange Agent or Paying Agent in connection with a corporate action, CST’s authority will continue thereafter for escheatment and/or merger cleanup services for such transactions.

3. Company Representations and Warranties.

a. The Company represents and warrants to CST that: (i) it is a corporation duly organized and validly existing and in good standing under the laws of the state of its incorporation; (ii) it is empowered under applicable laws and governing instruments to enter into and perform this Agreement; and (iii) all corporate proceedings required by such governing instruments and applicable law have been taken to authorize it to enter into and perform this Agreement.

b. All shares issued and outstanding as of the date hereof, or to be issued during the term of this appointment, are/shall be duly authorized, validly issued, fully paid and non-assessable. All such shares are (or, in the case of shares that have not yet been issued, will be) duly registered under the Securities Act of 1933 and the Securities Exchange Act of 1934. Any shares not so registered were or shall be issued or transferred in a transaction or series of transactions exempt from the registration provisions of the relevant law, and in each such issuance or transfer, the Company was or shall be so advised by its legal counsel’s opinion and all shares issued or to be issued bear or shall bear all appropriate legends.

c. The Company shall promptly advise CST in writing of any change in the capital structure of the Company, and the Company shall promptly provide CST with board resolutions authorizing any recapitalization of the Shares or change in the number of issued or authorized Shares.

CSTT 2017

Confidential and Proprietary Information

 

d. When certificates of the Company’s stock shall be presented to it for transfer and registration, CST is hereby authorized to refuse to transfer and register the same until it is satisfied that the requested transfer is legally in order; and that the Company, shall indemnify and hold harmless CST, and CST shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized. CST may rely upon the Uniform Commercial Code and generally accepted industry practice in effecting transfers, or delaying or refusing to effect transfers. If, on a transfer of a restricted item, company counsel fails to issue an opinion or to provide adequate reasons therefore within ten business days of a request to do so, CST is authorized, but not required, to process such transfer upon receipt of an appropriate opinion of presenter’s counsel.

4. CST’s Reliance.

a. CST may act and rely on, and shall incur no liability and shall be fully indemnified by the Company from any liability whatsoever in acting in accordance with, written or oral instructions received from any person it believes in good faith to be an officer, authorized agent or employee of the Company, unless prior thereto (i) the Company shall have advised CST in writing that it is entitled to act and rely only on written instructions of designated officers of the Company; (ii) it furnishes CST with an appropriate incumbency certificate for such officers and their signatures; and (iii) the Company thereafter keeps such designation current with an annual (or more frequent, if required) re-filing. CST may also act and rely on advice, opinions or instructions received from the Company’s legal counsel. CST may, in any event, act and rely without liability on advice received from its legal counsel.

b. CST may act and rely on, and shall incur no liability and shall be fully indemnified by the Company from any liability whatsoever in acting in accordance with: (i) any writing or other instruction believed by it in good faith to have been furnished by or on behalf of the Company or a holder of one or more Shares (a “Shareholder”), including, but not limited to, any certificate, instrument, opinion, notice, letter, stock power, affidavit or other document or security; (ii) on any statement of fact contained in any such writing or instruction which CST in good faith does not believe to be inaccurate; (iii) on the apparent authority of any person to act on behalf of the Company or a Shareholder as having actual authority to the extent of such apparent authority; (iv) on the authenticity and genuineness of any signature (manual or facsimile) appearing on any writing, including, but not limited to, any certificate, instrument, opinion, notice, letter, stock power, affidavit or other document or security; and (v) on the conformity to original of any copy. CST shall further be entitled to rely on any information, records and documents provided to CST by a former transfer agent or former registrar on behalf of the Company. CST is authorized by the Company to respond to subpoenas and/or document requests from the SEC without further authorization, and may bill the Company for reasonable compliance costs.

c. When CST deems it expedient, it may apply to the Company, or the counsel for the Company, or to its own counsel for instructions and advice, that the Company will promptly furnish or will cause its counsel to furnish such instructions and advice, and, for any action taken in accordance with such instructions or advice, or in case such instructions and advice shall not be promptly furnished as required by this resolution, the Company will indemnify and hold harmless CST from any and all liability, including attorney fees and court costs. CST may, at its discretion, but shall have no duty to prosecute or defend any action or suit arising out of authorizations hereby granted unless the Company shall, when requested, furnish it with funds or the equivalent to defray the costs of such prosecution or defense. CST may, without liability to CST, refuse to perform any act in connection with this Agreement when, in good faith reliance on opinion of its counsel, it believes such act may subject it to civil or criminal liability under any statute or law of any state or of the United States and, in particular, under the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended.

5. Compensation. CST shall be entitled to reasonable compensation for all services rendered (in accordance with the Fee Agreement) and shall be reimbursed for all expenses incurred, including without limitation legal costs and costs of responding to subpoenas and SEC requests related to the Company’s records (regardless of whether CST is still an Agent for the Company) in connection with its acting as Agent. In the event that the scope of services to be provided by CST is increased substantially, the parties shall negotiate in good faith to determine reasonable compensation for such additional services. In the event that the Company, without terminating this Agreement in its entirety, retains a third-party to provide services already provided hereunder, the Company shall pay to CST a reasonable fee to compensate CST for costs associated with interfacing with such third-party as

CSTT 2017

Confidential and Proprietary Information

 

mutually agreed upon by the Company and CST. On termination of its services as Agent, CST shall be entitled to reasonable additional compensation for the service of preparing records for delivery to the successor agent or to the Company, and for forwarding and maintaining records with respect to certificates received after such termination.

6. Performance of Services. In the event that the Company commits any breach of its material obligations to CST, including non-payment of any amount owing to CST, and such breach remains uncured for more than forty-five (45) days, CST shall have the right to terminate or suspend its services upon notice to the Company. During such time as CST may suspend its services, CST shall have no obligation to act as transfer agent and/or registrar on behalf of the Company, shall have no duties to act in such capacity and shall have a lien on the Company’s records until it receives payment in full. Such suspension shall not affect CST’s rights under this Agreement. On termination of the appointment of CST for any reason, CST will perform its services in assisting with the transfer of records in a diligent and professional manner.

7. CST as Distributor of Funds. All funds received by CST for distribution on behalf of the Company will be deposited by CST in a segregated bank account.

8. Lost Certificates. CST shall be authorized to issue replacement certificates for stock certificates claimed by a Shareholder to have been lost, stolen or mutilated upon receipt of an affidavit of the Shareholder to such effect and receipt of payment from the Shareholder of a premium for CST’s services and an indemnity bond purchased through CST or, at the option of the Shareholder, any surety company reasonably acceptable to CST.

9. Overissuance. If CST receives a stock certificate not reflected in its records, CST will research records, if any, delivered to it upon its appointment as transfer agent from a prior transfer agent (or from the Company). If such records do not exist or if such certificate cannot be reconciled with such records, then CST will notify the Company. If neither the Company nor CST is able to reconcile such certificate with any records (so that the transfer of such certificate on the records maintained by CST would create an overissue), the Company shall within sixty (60) days either: (i) increase the number of its issued Shares, or (ii) acquire and cancel a sufficient number of issued Shares to correct the overissue.

10. Confidentiality. CST acknowledges that it will acquire information and data from the Company, and such information and data are confidential and proprietary information of the Company (collectively, “Confidential Information”). Confidential Information may include, but shall not be limited to, information related to clients, business plans, shareholders, business processes, and other related data, all in any form whether electronic or otherwise, that CST acquires in connection with this Agreement. Confidential Information will not include, however, any information that (i) was in the possession of CST at the commencement of the services contemplated under this Agreement, (ii) became part of the public domain through no fault of CST or (iii) became rightfully known to CST or its affiliates through a third party with no obligation of confidentiality to the Company, or (iv) is independently developed by CST. CST agrees not to disclose the Confidential Information to others (except as required by law or permitted by CST’s privacy policy then in effect) or use it in any way, commercially or otherwise, except in performing services hereunder, and shall not allow any unauthorized person access to the Confidential Information. CST further agrees to exercise at least the same degree of care as it uses with regard to its own confidential information, but in no event less than reasonable degree of care, in protecting the Confidential Information.

11. Limitations on CST’s Responsibilities. CST shall not be responsible for the validity of the issuance, presentation or transfer of stock, the genuineness of endorsements, the authority of presenters, or the collection or payment of charges or taxes incident to the issuance or transfer of stock. CST may, however, delay or decline an issuance or transfer if it deems it to be in its or the Company’s best interests to receive evidence or assurance of such validity, authority, collection or payment. CST shall not be responsible for any discrepancies in its records or between its records and those of the Company, if it is a successor transfer agent or successor registrar, caused by or arising from a difference or error in predecessor records. CST shall not be deemed to have notice of, or be required to inquire regarding, any provision of the Company’s charter or by-laws, any court or administrative order, or any other document, unless it is specifically advised of such in a writing from the

CSTT 2017

Confidential and Proprietary Information

 

Company, which writing shall set forth the manner in which it affects the Shares. In no event shall CST be responsible for any transfer or issuance not effected by it.

12. Limitations on CST’s Liability. In no event shall CST have any liability for any incidental, special, statutory, indirect or consequential damages, or for any loss of profits, revenue, data or cost of cover. CST’s liability arising out of or in connection with its acting as Agent for the Company shall not exceed the aggregate amount of all fees (excluding expenses) paid under this Agreement in the twelve (12) month period immediately preceding the date of the first event giving rise to liability.

13. Indemnities. From and at all times after the date of this Agreement, the Company covenants and agrees to defend, indemnify, reimburse and hold harmless CST and its officers, directors, employees, affiliates and agents (each, an “Indemnified Party”) against any actions, claims, losses, liability or reasonable expenses (including legal and other fees and expenses) incurred by or asserted against any Indemnified Party arising out of or in connection with entering into this Agreement, the performance of CST’s duties thereunder, or the enforcement of the indemnity hereunder, except for such losses, liabilities or expenses incurred as a result of an Indemnified Party’s gross negligence, bad faith or willful misconduct. The Company shall not be liable under this indemnity with respect to any claim against an Indemnified Party unless the Company is notified of the written assertion of such a claim, or of any action commenced against an Indemnified Party, promptly after CST shall have received any such written information as to the nature and basis of the claim; provided, however, that failure by CST to provide such notice shall not relieve the Company of any liability hereunder if no prejudice occurs. All provisions regarding indemnification, liability and limits thereon shall survive the termination of this Agreement.

14. Force Majeure. CST is not liable for failure or delay in the performance of its obligations under this Agreement if such failure or delay is due to causes beyond its reasonable control, including but not limited to Acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, cyber-attack, nationalization, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity or telephone service or any other force majeure event. The Company is not entitled to terminate this Agreement under Section 6 (Performance of Services) in such circumstances.

15. No Third Party. This Agreement, when executed by the Company, shall constitute the full agreement between it and CST and shall not be amended or modified except in writing signed by both parties. The Agent shall act solely as agent for the Company under this Agreement and owes no duties hereunder to any other person or entity. The Agent undertakes to perform the duties and only the duties that are specifically set forth herein, and no implied covenants or obligations should be read into this Agreement against it. No rights shall be granted to any other person by virtue of this Agreement, and there are no third party beneficiaries of this Agreement.

16. Governing Law. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of New York, without giving effect to the conflict of laws principles thereof.

17. Jurisdiction and Venue. In the event that any party hereto commences a lawsuit or other proceeding relating to or arising from this Agreement or services provided hereunder, the parties hereto agree that the United States District Court for the Southern District of New York shall have the sole and exclusive jurisdiction over any such proceeding. If such court lacks federal subject matter jurisdiction, the parties hereto agree that the Supreme Court of the State of New York within New York County shall have sole and exclusive jurisdiction. Any final judgment shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Any of these courts shall be proper venue for any such lawsuit or judicial proceeding and the parties hereto waive any objection to such venue and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an inconvenient forum. The parties hereto consent to and agree to submit to the jurisdiction of any of the courts specified herein and agree to accept service of process by mail to vest personal jurisdiction over them in any of these courts. Each party hereto irrevocably and unconditionally waives any right to a trial by jury.

CSTT 2017

Confidential and Proprietary Information

 

18. Assignment. CST may assign this Agreement or any rights granted thereunder, in whole or in part, either to affiliates, another division, subsidiaries or in connection with its reorganization or to successors of all or a majority of CST’s assets or business without the prior written consent of the Company.

19. Term: The initial term of this Agreement shall be three (3) years from the date hereof and the appointment shall automatically be renewed for further three (3) year successive terms with the same transaction provisions without further action of the parties, unless written notice is provided by either party at least ninety (90) days prior to the end of the initial or any subsequent three (3) year period. The term of this appointment shall be governed in accordance with this paragraph, notwithstanding the cessation of active trading in the capital stock of the Company or discontinuance of services for non-payment.

20. Company Information. The Secretary or Assistant Secretary shall provide certified documents, opinions of counsel, certificates, specimen signatures of officers and information as CST may require in connection with its duties hereunder, and immediately upon any change therein which might affect CST in its duties, to give CST written notice and to furnish such additional certified documents, certificates, specimen signatures of officers and information as CST may require, it being understood and agreed that CST shall be fully protected and held harmless for the failure of the Company to give proper and sufficient notice of any such change.

21. DTCC Fast Program. At any time that the Company shall elect to have its shares traded and processed in the DTCC FAST electronic program, it shall do so upon approval of its Board of Directors which shall agree to adhere to DTCC’s Balance Certificate Agreement (incorporated by reference herein) as it shall be amended from time to time.

22. Notices. The address of the Company to which notices may be sent is [      520 White Plains Road Suite 500 Tarrytown, NY 10591_]. The address of CST to which notices may be sent is Continental Stock Transfer & Trust Company, 1 State Street, 30^th Floor, New York, NY 10004 Attention: Account Administration.

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

By:

Its: 

Date: 

COMPANY NAME

	Osprey Funds, LLC
By:	Gregory King
Its:	CEO
Date:	May 20, 2020

CSTT 2017

Confidential and Proprietary Information

EX-10.4

Exhibit 10.4 

CONFIDENTIAL

OSPREY Bitcoin Trust

SUBSCRIPTION DOCUMENTS
AND
PRIVACY NOTICE

THESE SUBSCRIPTION DOCUMENTS
ARE TO BE COMPLETED ONLY BY
A NATURAL PERSON OR ENTITY
SUBSCRIBING FOR ITS OWN ACCOUNT

CONFIDENTIAL

SUBSCRIPTION AGREEMENT

I, the undersigned, (“Subscriber”) understand that Osprey Bitcoin Trust, a Delaware trust (the “Trust”) is making a continuous offering of units (“Units”), each representing a fractional undivided beneficial interest in the Trust. The investment objective of the Trust is for the Units to track the price of Bitcoin, as measured at 4:00 P.M. New York time using the Coin Metrics CMBI Bitcoin rate available at: https://cmbi-indexes.coinmetrics.io/cmbibtc(“CMBI Bitcoin Index Price”), on each day on which such rate is published, less liabilities and expenses of the Trust. There is a minimum investment of at least $25,000.00 (Twenty-Five Thousand Dollars). Capitalized terms used in this Subscription Agreement and not otherwise defined shall have the meanings ascribed to them in the Confidential Private Placement Memorandum Offering of Units in Osprey Bitcoin Trust dated May 18, 2021 (“Memorandum”).

In order to induce the Trust to accept my offer, I advise you as follows:

(1)    MEMORANDUM. Subscriber declares that it has carefully read, understands and agrees to abide by the terms set forth in the Memorandum, including without limitation, (a) the terms of the Trust; (b) all other terms of the offering, including all risk factors, conflicts of interest, tax considerations, transfer restrictions and other rights and obligations; and (c) the powers, duties and obligations of Osprey Funds, LLC (“Sponsor”). Subscriber represents and warrants that the Sponsor has made available to Subscriber the opportunity at a reasonable time prior to the date of this Subscription Agreement to ask questions of, and to receive answers from, the Sponsor concerning this investment, and to obtain any additional information which the Sponsor had in its possession or was able to acquire without unreasonable effort or expense that was necessary to verify the accuracy of the non-proprietary information in the Memorandum. Subscriber has carefully considered and has, to the extent it believes such discussion necessary, discussed with legal, tax, accounting and financial advisers the suitability of an investment in Units in light of its particular tax and financial situation and has determined that such investment subscribed for by it hereunder is a suitable investment for it. Subscriber agrees to be bound by the Memorandum and the Subscription Documents and has evidenced the foregoing by executing the relevant signature pages contained herein. Subscriber further represents and warrants that it understands that the investment: (a) is not guaranteed and may lose principal; and (b) is high risk and is not liquid.

(2)     RESTRICTED SECURITIES. Subscriber represents and warrants that it understands that the Units are “restricted securities” that cannot be resold without registration under the Securities Act or exemption therefrom, and that they are purchasing the Units for investment purposes only and not with a view to resale.

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(3)     ACCREDITED INVESTOR.

I represent and warrant that I am an “accredited investor” as defined in Rule 501 under the Securities Act as set forth in Exhibit A hereto:

For Individuals:

I am a natural person who:

○	Earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year or has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence); or
○	Is an investment professional (e.g., a licensed associated person of a broker-dealer or investment adviser).

For Entities:

○ I am an entity meeting the definition of “accredited investor” as set forth in Exhibit A hereto.

(4)     PLAN INVESTOR REPRESENTATIONS. Subscribers described in Statement (a), Statement (c) or Statement (d) below are referred to in this Section 3 as “Plan Investors”.

(Check each of the three boxes below that applies, and fill in any blanks in Statement (b) below if it applies.)

I (referred to hereinafter in this Section 5 as the Subscriber) represent, warrant and agree as set forth below:

(a)     The Subscriber is, or is acting on behalf of: (i) an “employee benefit plan” within the meaning of Section 3(3) of ERISA, that is subject to Part 4 of Title I of ERISA; (ii) a “plan” within the meaning of Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code; or (iii) any other entity or account that is deemed under applicable law to hold the “plan assets” described in (i) or (ii), within the meaning of ERISA and including the regulations promulgated thereunder.

(b)     If the Subscriber checked the box and thereby answered “Yes” to Statement (a) above, based on subclause (iii) of Statement (a) above (including, without limitation, insurance company general accounts), then the participation in the Subscriber (or the entity on whose behalf the Subscriber is acting) by “benefit plan investors,” within the meaning of Section 3(42) of ERISA, expressed as a percentage, is             % the (“Current Percentage”), and the maximum percentage of participation by “benefit plan investors” while the Subscriber holds an interest in the Trust, expressed as a percentage, will be             %.

The Subscriber agrees to promptly disclose any changes with respect to the Current Percentage, to promptly re-confirm such percentages at any time upon the request of the

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CONFIDENTIAL

Trust or the Sponsor (or any other person acting on behalf of the Trust or the Sponsor), and to provide such other information as may reasonably be requested by the Trust or the Sponsor (or any other person acting on behalf of the Trust or the Sponsor) for purposes of determining whether or not the Trust is holding “plan assets.”

(c)     The Subscriber is, or is acting on behalf of, a “governmental plan” within the meaning of Section 3(32) of ERISA, a “foreign plan,” or another plan or retirement arrangement that is not subject to Part 4 of Title I of ERISA and with respect to which Code Section 4975 does not apply, or a partnership, limited liability company or other entity in which such Plan Investor holds 25% or more of the value of any class of equity interest in such entity or that is deemed to hold the assets of a Plan Investor under ERISA.

(d)     The Subscriber is, or is acting on behalf of, an entity or account described under 29 C.F.R. Section 2510.3-101(h) (such as, for example, a group trust, a bank common or collective trust or certain insurance company separate accounts).

(e)     The Subscriber is not investing in funds that constitute the assets of any of the above.

(f)     If the Subscriber checked the box and thereby answered “Yes” to Statement (a), Statement (c) or Statement (d) above, then the Investor hereby represents, warrants and agrees that:

(i.)     The decision to invest assets of the Subscriber in the Trust was made by parties independent of the Sponsor and any placement agent, which parties are duly authorized to make such investment decisions and who have concluded, after consideration of their fiduciary duties under ERISA or the Code, that the investment of assets of the Subscriber in the Trust is prudent and have not relied on any advice or recommendation of the Sponsor or any placement agent or any of their respective partners, members, employees, stockholders, officers, directors, agents, representatives or affiliates;

(ii.)     None of the Sponsor, any placement agent nor any of their respective employees, representatives, agents or affiliates have exercised any discretionary authority or control with respect to the Subscriber’s investment in the Trust, nor have the Sponsor or any placement agent or any of their respective partners, members, employees, stockholders, officers, directors, agents, representatives or affiliates rendered individualized investment advice to the Subscriber based upon the Subscriber’s investment policies or strategy, overall portfolio composition or diversification;

(iii.)     The Subscriber has been informed of and understands the investment objectives and policies of the Trust; (x) the Subscriber is aware of the provisions of Section 404 of ERISA or any similar provisions of applicable law governing the Subscriber (“Similar Law”) relating to fiduciary duties, including any applicable requirement for diversifying the investments of an employee benefit plan; (y) the Subscriber has given appropriate consideration to the facts

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CONFIDENTIAL

and circumstances relevant to the investment by such Subscriber in the Trust and has determined that such investment is reasonably designed, as part of such Subscriber’s portfolio of investments, to further the purposes of the relevant plan(s); and (z) the Subscriber’s investment in the Trust is permissible under the documents governing the investment of its “plan assets” and under ERISA or Similar Law; and

(iv.)     The terms of the Trust Agreement, including all exhibits and attachments thereto, do not contravene the terms of the Subscriber’s governing instruments and applicable laws governing the Subscriber, and the Subscriber will promptly advise the Sponsor in writing of any changes in any governing law or any regulations or interpretations thereunder affecting the duties, responsibilities, liabilities or obligations of the Trust, the Sponsor or any of their respective partners, members, employees, stockholders, officers, directors, agents or affiliates.

(5)     TITLE.

(Fill in the below.)

I will hold title to my interest as follows:

○	Individual/Joint Tenancy with Right Survivorship/Tenancy in Common
○	Self-Directed IRA
○	Entity: (corporation, trust, etc. – please specify below)

Note: Subscribers should seek the advice of their attorneys in deciding in which of the above forms they should take ownership of the Units, since different forms of ownership can have varying gift tax and other consequences, depending on the state of the investor’s domicile and other particular personal circumstances. For example, in community property states, if community property assets are used to purchase Units held in individual ownership, this might have adverse gift tax consequences.

IF OWNERSHIP IS BEING TAKEN WITH A SPOUSE OR ANY OTHER PERSON, THEN THIS SUBSCRIPTION AGREEMENT AND THE POWER OF ATTORNEY MUST BE EXECUTED BY ALL SUCH PERSONS.

(6)     AGE, CITIZENSHIP/RESIDENCY.

○	I am a natural person who is at least twenty-one years old and a citizen and resident of the United States or an entity meeting the definition of “U.S. person” set forth in Exhibit B hereto. Initial here:
○	I am not a “U.S. person” as defined in Exhibit B, hereto; I am a foreign national or non-U.S. entity. I acknowledge and agree to the following. Initial here:

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CONFIDENTIAL

○	The delivery of the Memorandum and related offering documents (including this Subscription Agreement) shall not constitute an offer to sell, or the solicitation of an offer to buy, Units of the Trust in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
○	I shall be solely responsible for compliance with applicable tax obligations (other than those arising under the laws of the United States for which the Sponsor shall remain responsible).
○	The Sponsor, in its sole discretion, may refuse to accept my subscription for the Units for any reason, including without limitation, advice of counsel on legal or regulatory risks of authorizing my purchase under this Subscription Agreement. In this regard, the Sponsor or its agents may request from me such additional information as the Sponsor or its agents reasonably deem necessary or advisable to comply with applicable law and regulation.

(7)     ADDITIONAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

(a)     I understand that there may be no available public trading markets for the Units at any particular time, that an investment in the Trust may be illiquid and that I may have to bear the economic risk of the investment for an indefinite period of time.

(b)     I understand and agree this subscription is personal to me and that it may not be sold, transferred, assigned or otherwise disposed of by me to any other person, except as permitted by the Trust. If the Subscriber is a corporation, partnership, trust or other entity, I represent and warrant that the Subscriber is authorized to purchase and hold Units being subscribed for, that this Subscription Agreement is a valid and binding obligation of the Subscriber and that the execution and delivery of this Subscription Agreement and the performance of the obligations hereunder shall not contravene the organizational documents of the Subscriber or any law or court or regulatory order or proceeding to which the Subscriber is subject.

(c)     Upon acceptance by the Trust, my subscription shall be binding upon my heirs, executors, administrators, successors, and assigns, as applicable.

(d)     I may not withdraw my subscription offer. The Trust may reject my subscription offer for any reason or for no reason (including without limitation know-your-customer concerns or know-your-transaction concerns, and it may unwind my subscription due to know-your-transaction concerns arising after settlement), and my subscription shall only become effective when accepted by the Trust in writing, and when the Trust has received payment of the purchase price for the Units being purchased hereunder in form and amount acceptable to the Trust. In the event the Trust unwinds my transaction after settlement due to know-your-transaction concerns, I will bear the sole risk of loss.

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CONFIDENTIAL

(e)     My declarations, representations and warranties herein are accurate, complete and not misleading, and I will promptly notify the Trust of any changes in the information I have provided.

(f)     I have read and understand the Osprey Funds Privacy Policy set forth as Exhibit C hereto. I understand and agree that, although the Trust will use its reasonable efforts to keep the information provided herein confidential, the Trust may present any portion of this Subscription Package and any of the information provided in it to such parties as it may deem advisable if any such portion or information is or becomes relevant to any action, suit or proceeding involving the Trust or the Sponsor or to inquiry by any legal, regulatory or self-regulatory authority.

(8)     INDEMNITY. Subject to applicable law, Subscriber agrees that it will indemnify and hold harmless the Trust, the Sponsor and their respective affiliates from and against any and all direct and consequential loss, damage, liability, claim, cost or expense (including reasonable attorneys’ and accountants’ fees and disbursements, whether incurred in an action between the parties hereto or otherwise, and including any liability which results directly or indirectly from the Trust, the Sponsor or their respective affiliates becoming subject to ERISA or Section 4975 of the Code) (collectively, “Losses”) which the Trust, the Sponsor or any such affiliate may incur by reason of or in connection with the Subscription Documents, including any misrepresentation made by Subscriber or any of Subscriber’s agents (including, but not limited to, any misrepresentation of Subscriber’s status under ERISA or the Code), any breach of any declaration, representation or warranty of Subscriber, the failure by Subscriber to fulfill any covenants or agreements under the Subscription Documents, its or their reliance on email or other instructions, or the assertion of Subscriber’s lack of proper authorization to execute and perform the obligations under the Subscription Documents. Subscriber also agrees that it will indemnify and hold harmless the Trust, the Sponsor and their respective affiliates from and against any and all direct and consequential Losses that they or any one of them, may incur (a) as provided in this Section (9) and (b) by reason of, or in connection with, the failure by Subscriber to comply with any applicable law, rule or regulation having application to the Trust, the Sponsor or their respective affiliates. Subscriber shall reimburse each indemnified party for its legal and other expenses (including the cost of any investigation and preparation) as they are incurred. The reimbursement and indemnity obligations of Subscriber under this paragraph shall survive the date of admission to the Trust applicable to Subscriber and shall be in addition to any liability that Subscriber may otherwise have (including, without limitation, liabilities under the Trust Agreement), and shall be binding upon and inure to the benefit of any successors, assigns, heirs, estates, executors, administrators and personal representatives of the indemnified parties. Notwithstanding any provision of this Subscription Agreement, Subscriber does not hereby waive any rights granted to it under the Trust Agreement or applicable securities laws.

(9)     GOVERNING LAW. The Subscription Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflicts of law thereof. For the purpose of any judicial proceeding to enforce an

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CONFIDENTIAL

award incidental to arbitration or to compel arbitration, Subscriber and Sponsor hereby submit to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, or the United States District Court for the Southern District of New York, located in New York, New York, and agree that service of process in such arbitration or court proceedings shall be satisfactorily made upon it if sent by registered mail addressed to it at the applicable address set forth herein.

(10)     ANTI-MONEY LAUNDERING. Subscriber acknowledges that due to anti-money laundering requirements operating in the United States, as well as the Trust and Sponsor’s own internal anti-money laundering policies, the Trust and the Sponsor may require further identification of Subscriber and the source of its subscription amount before the Subscription Agreement can be processed, subscription amounts can be accepted or distributions made. The Trust, the Sponsor and their respective Affiliated Persons shall be held harmless and indemnified against any Loss arising as a result of a failure to process the Subscription Agreement if such information has been required by the parties referred to and has not been satisfactorily provided by Subscriber. Subscriber represents that all subscription amounts transferred to the Trust or Sponsor originated directly from a bank or brokerage account in the name of Subscriber. Subscriber represents and warrants that acceptance by the Sponsor or Trust of the Subscription Agreement, together with acceptance of the appropriate remittance, will not breach any applicable rules and regulations designed to avoid money laundering. Specifically, Subscriber represents and warrants that all evidence of identity provided is genuine and all related information furnished and to be furnished is accurate.

(11)     ARBITRATION. Except as to any claims with respect to enforcement of an arbitration award, any controversy, claim or dispute arising out of, or relating to, the Subscription Documents or the breach thereof, or regarding the interpretation thereof, shall be solely and exclusively settled by binding arbitration conducted in New York, New York in accordance with the rules of the American Arbitration Association then in effect before a single arbitrator appointed in accordance with such rules and applying the laws of the State of New York. Judgment upon any award rendered therein may be entered and enforcement obtained thereon in any court having jurisdiction. The arbitrator shall have authority to grant any form of appropriate relief (other than punitive damages), whether legal or equitable in nature, including specific performance. Subscriber agrees to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity.

(12)     COSTS. If any legal action or any arbitration or other proceeding is brought for the enforcement of the agreement represented by the Subscription Documents or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of the Subscription Documents, the successful or prevailing party or parties shall be entitled to recover

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CONFIDENTIAL

reasonable attorneys’ fees and other costs incurred in that action or proceedings, in addition to any other relief to which they may be entitled.

(13)     SEVERABILITY. If any provision of the Subscription Documents is invalid or unenforceable under any applicable law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to confirm to such applicable laws. Any provision hereof which may be held invalid or unenforceable under any applicable law shall not affect the validity or enforceability of any other provisions hereof, and to the extent the provisions hereof, shall be severable.

(14)     COUNTERPARTS. The Subscription Documents may be executed in one or more counterparts (including by facsimile and other electronic means), each of which when executed and delivered shall be an original and all of which taken together shall constitute one and the same instrument. The Subscription Documents, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, shall be treated in all manner and respects as an original agreement and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

(15)     ELECTRONIC DELIVERY OF DISCLOSURES. If Subscriber has provided an email address to the Trust (or Sponsor), Subscriber agrees that each of the Sponsor and the Trust, at its election, may send Subscriber required and non-required disclosures and other information to the Subscriber’s email address. If Subscriber changes its email address, it will promptly notify the Trust in writing of its new email address. The foregoing consent will continue unless revoked by Subscriber by notifying the Trust in writing.

(16)     NOTICES. Except as otherwise specifically provided in the Subscription Documents, all notices, required or permitted to be given pursuant to the Subscription Documents shall be in writing, given in person, by mail (postage prepaid), by overnight courier, or by confirmed email or confirmed facsimile, and any such notice shall be effective when delivered at the address or email address specified by the intended recipient below (or at such other address as such recipient may designate from time to time by written notice to the other parties), and with it being agreed that electronic signature (e.g., PDF email) shall have the same force and effect as an original signature for all notice purposes.

[Signatures follow]

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CONFIDENTIAL

OSPREY BITCOIN TRUST
SUBSCRIPTION AGREEMENT SIGNATURE

Select your method of investment:

○	CASH SUBSCRIPTION* Subscribing with U.S. Dollars	U.S. Dollar Amount $
○	IN-KIND SUBSCRIPTION* Subscribing with Tokens	Quantity of BTC Tokens

WIRING TO THE TRUST. Set forth below are the instructions for wiring cash to the Trust: Please do not send wire until authorized by the Sponsor.

Account Title:	OSPREY BITCOIN TRUST
Account Address:	520 White Plains Road Suite 500 Tarrytown, NY 10591
Bank Name:	Signature Bank
Routing Number/ABA:	026013576
Swift:	SIGNUS33XXX
Bank Address:	565 Fifth Avenue New York NY 10017
Account Number:	1503981935

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CONFIDENTIAL

FOR COMPLETION BY SUBSCRIBERS WHO ARE ANY OF THE FOLLOWING

1)	Natural Persons (i.e., individuals and revocable grantor trusts);
2)	Entities (i.e., corporations, partnerships, limited liability companies, trusts or other entities);
3)	Self-Directed IRAs

IN WITNESS WHEREOF, the parties hereto have caused this Subscription Agreement to be executed and delivered, and have caused it to become effective, as of the date of execution by or on behalf of Osprey Bitcoin Trust, below, following execution by the Subscriber hereunder, subject in all events to acceptance by the Trust and to the receipt by the Trust of payment of the purchase price for the Units being purchased hereunder in form and amount acceptable to the Trust.

All Investors:

Tax ID (SSN, TIN, or equivalent):

Street Address:

City:   State/Province:   Zip:   Country:  

Email:   Phone Number:  

Subscriber Name:

Signature:	Date:
Name of Signer:	Title:
If signing on the investor’s behalf as an authorized signatory, please attach proof of authorization.
Authorized Signature Name:	Title:
Authorized Signature:	Date:
Co-Subscriber Name:
Co-Subscriber Signature:	Date:
Read and Approved By:	Date:

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CONFIDENTIAL

Additional Contact Details

First Last Email

Accepted and agreed to as of the date written below:

OSPREY BITCOIN TRUST

By:		Date:
	Name: Gregory King Title: CEO, Osprey Funds, LLC, as Sponsor to the Osprey Bitcoin Trust

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IF OWNERSHIP IS BEING TAKEN WITH A SPOUSE OR ANY OTHER PERSON, THEN THIS POWER OF ATTORNEY AND THE SUBSCRIPTION AGREEMENT MUST BE EXECUTED BY ALL SUCH PERSONS.

POWER OF ATTORNEY

To the maximum extent permitted by applicable law, the undersigned hereby constitutes, appoints and grants each of (a) Osprey Bitcoin Trust, a Delaware Trust (the “Trust”), (b) Osprey Funds, LLC, as sponsor of the Trust, and each other person or entity who is or hereafter becomes a sponsor of the Trust, in each case only for so long as such person or entity continues to be a sponsor of the Trust (collectively, the “Sponsor”), and (c) each person or entity who is or hereafter becomes a manager of the Sponsor, in each case only for so long as such person or entity continues to be a manager of the Sponsor, with full power to act, with or without others, as the undersigned’s true and lawful representative, agent and attorney-in-fact (each, an “Attorney-in-Fact”), in the undersigned’s name, place and stead, to make, execute, sign, acknowledge, swear to, verify, deliver, record, file and/or publish) the following:

1.	Any certificate of trust or other form or filing required in connection with the formation or registration of the Trust, a trust in which the Sponsor is the sponsor and in which the undersigned is a unitholder, and any formation certificates or documents for any alternative investment vehicle (each, an “AIV”) relating to the Trust, including, without limitation, any partnership agreement, operating agreement, shareholders’ agreement or similar governing document;
2.	The Second Amended and Restated Declaration of Trust and Trust Agreement of Osprey Bitcoin Trust, dated as of November 1, 2020 (as it may be further amended, modified and/or restated from time to time in accordance with its terms, the “Trust Agreement”);
3.	Any amendment, restatement, waiver or other modification duly enacted pursuant to the terms of the Trust Agreement, and all instruments and documents that may be necessary or desirable to effectuate an amendment, restatement, waiver or other modification so approved;
4.	Any document to admit or cause the undersigned to be admitted as a unitholder of the Trust or any AIV;
5.	Any amendment to, modification to, restatement of or cancellation of the certificate of trust or AIV document described in clause 1 above;

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6.	All instruments, deeds, agreements, documents and certificates that may from time to time be required by any law to effectuate, implement and continue the valid and subsisting existence of the Trust and/or any AIV;
7.	All instruments, deeds, agreements, documents and certificates that may be necessary or advisable to effectuate the dissolution, liquidation, winding-up and termination of the Trust and/or any AIV or admit any additional partners or members thereto, except where such action requires the express approval of the unitholders under the Trust Agreement; and
8.	Such other documents, deeds, agreements or instruments as may be required under the laws of any state, the United States or any other jurisdiction in connection with the activities of the Trust.

The undersigned hereby empowers each Attorney-in-Fact acting pursuant hereto to determine in its sole discretion the time when, purpose for and manner in which any power herein conferred upon it shall be exercised, and the conditions, provisions and covenants of any instruments or documents that may be executed by it pursuant hereto; provided that the agency and powers of attorney granted herein shall only be exercised in accordance with the Trust Agreement and clauses 1 through 8 above.

The agency and powers of attorney granted herein are coupled with an interest in favor of the Sponsor and each manager of the Sponsor and as such (a) shall be irrevocable and continue in full force and effect notwithstanding the subsequent death, incompetency, incapacity, disability, insolvency or dissolution of the undersigned, regardless of whether the Trust, the Sponsor or any manager of the Sponsor has notice thereof, and (b) shall survive the delivery of an assignment by the undersigned of the whole or any portion of the undersigned’s interest in the Trust, except that if the assignee thereof has been approved for admission to the Trust as a substitute unitholder, this agency and power of attorney given by the assignor shall survive the delivery of the assignment for the sole purpose of enabling the Sponsor to execute, acknowledge and file any instrument necessary to effect the substitution. The agency and powers of attorney granted herein shall not be deemed to constitute a written consent of the undersigned for purposes of Section 10.1 of the Trust Agreement. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Trust Agreement.

This power of attorney shall be governed and construed in accordance with the laws of the State of New York.

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IF OWNERSHIP IS BEING TAKEN WITH A SPOUSE OR ANY OTHER PERSON, THEN THIS POWER OF ATTORNEY AND THE SUBSCRIPTION AGREEMENT MUST BE EXECUTED BY ALL SUCH PERSONS.

FOR COMPLETION BY SUBSCRIBERS WHO ARE ANY OF THE FOLLOWING:

1)	NATURAL PERSONS (i.e., individuals and revocable grantor trusts);
2)	NOT NATURAL PERSONS (i.e., corporations, partnerships, limited liability companies, trusts or other entities);
3)	SELF-DIRECTED IRA

IN WITNESS WHEREOF, the undersigned has executed and delivered this power of attorney on the date set forth below.

All Investors:

Tax ID (SSN, TIN, or equivalent):

Street Address:

City:   State/Province:   Zip:   Country:  

Email:   Phone Number:  

Subscriber Name:

Signature:	Date:
Name of Signer:	Title:
If signing on the investor’s behalf as an authorized signatory, please attach proof of authorization.
Authorized Signature Name:	Title:
Authorized Signature:	Date:
Co-Subscriber Name:
Co-Subscriber Signature:	Date:
Read and Approved By:	Date:

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OSPREY FUNDS INVESTMENT PRODUCT IN-KIND INFORMATION FORM

This Osprey Funds Investment Product In-Kind Information Form (this “Form”) is for a prospective subscriber (the “Subscriber”) requesting to contribute their own digital asset tokens to an Osprey Funds Investment Product (an “In-Kind Subscription”). The information in this Form will be used by Osprey Funds, LLC (“Osprey”) to populate portions of any transaction documents, including, but not limited to, performing Anti-Money Laundering (AML) and Know- Your-Customer (KYC) compliance as required by applicable law, rule or regulation, or as required by Osprey’s policies and procedures, which may also include the use of blockchain analytics tools.

Name of digital asset tokens being contributed:

Quantity of digital asset tokens being contributed:

Sending Address:

Sending Custodian:

(Name of the wallet provider or exchange)

Describe how the digital asset tokens were acquired (e.g., name of the exchange, or OTC trading desk, name of the lender or acquisition source). Please provide all applicable details:

Osprey does not permit third-party transfers. Please confirm you are the owner and will be the transferor of the digital asset tokens:

YES:    O           NO:    O

CONFIDENTIAL

IN-KIND SUBSCRIPTION REPRESENTATION LETTER

Date

Osprey Funds, LLC.

520 White Plains Road
Tarrytown, New York 10591
Attn: [        ]

Re: In-Kind Subscription for Osprey Bitcoin Trust

Ladies and Gentlemen:

On behalf of the Subscriber, this letter (this “Letter”) is provided in connection with the Subscriber requesting to contribute their own digital asset tokens to the Osprey Bitcoin Trust, a Delaware statutory trust sponsored by Osprey Funds, LLC (“Osprey”).

In connection with the foregoing, as of the date hereof, the Subscriber represents and warrants to Osprey that:

1.	The Diligence Materials are true, accurate, and complete in all respects;
2.	It has no knowledge of any past, present, or pending proceeding, investigation, or legal action against Subscriber in connection with any aspect of its business by any government agency, self-regulatory organization, department, regulatory, legal or supervisory body in any jurisdiction, except as disclosed in the Diligence Materials;
3.	The Subscriber will defend, indemnify, and hold harmless Osprey and each of its respective past, present, and future employees, officers, directors, contractors, consultants, equity holders, parent companies, subsidiaries, affiliates, attorneys, agents, representatives, predecessors, successors, and assigns (individually and collectively, the “Indemnified Parties”), from and against all actual or alleged Claims and Damages that are caused by, arise out of, or are related to: (a) the Subscriber’s breach (or alleged breach) of this Letter, including without limitation any noncompliance with, inaccuracy of or misrepresentation in any representation, warranty, or covenant of the Subscriber; (b) the Subscriber’s violation of the rights of any third party or violation of Applicable Law or (c) any negligence, intentional misconduct or act or omission of Subscriber or its employees, agents, contractors or representatives; and
4.	The Subscriber will not settle any Claim without the Indemnified Parties’ prior written consent provided also that (a) the Indemnified Parties may approve the choice of counsel (which shall not be unreasonably withheld) and (b) if there is any delay in the defense of the Claim by the Subscriber or any other reason where any of the Indemnified Parties would be materially prejudiced by control of the defense, Osprey may assume the control of the defense at Osprey’s sole cost.

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DEFINITIONS: The following words and terms shall have the following meanings:

“Applicable Law” means any applicable law or legal requirement including without limitation, any federal, state, local, municipal, provincial, or other law, statute, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any governmental body, including but not limited to applicable anti-money laundering, money service business, money transmission, data privacy and securities laws.

“Claim” means any third-party action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other governmental body or any arbitrator or arbitration panel.

“Damages” means any liabilities, damages, diminution in value, payments, obligations, losses, costs and expenses, fines, security or other remediation costs, penalties (including any regulatory investigation or third-party subpoena costs, reasonable attorneys’ fees, court costs, expert witness fees, and other expenses of litigation), and judgments (at law or in equity) of any nature.

“Diligence Materials” means all information, financial information, technical specifications, and legal analysis, and other information about the Subscriber furnished by Subscriber in connection with Osprey onboarding the Subscriber in connection with the In-Kind Subscription.

Subscriber Name:

Signature:   Date:  

Name of Signer:   Title:  

If signing on the subscriber’s behalf as an authorized signatory, please attach proof of authorization

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Additional Documents Checklist

For Individuals:

Document	Attach Documents here
Government Issued Photo ID (e.g., Driver’s license, passport, etc.)
Proof of Address (Bank statement or utility bill dated within last 12 months).
Tax Document ○    Attach W-9, W-8BEN, W-8 ECI or applicable Tax Document ○    Complete electronic W-9
Authorized Signatory: Proof of Authorization (Required if an authorized signatory is signing the subscription document on behalf of the investor)
Accreditation Verification – please complete one of the following:
Professional Certification – CRD # Current Member Firm
Net Worth – Should your net worth exceed $1,000,000, excluding your primary residence, you can satisfy this requirement by providing a statement of assets (bank/brokerage statements, tax assessments, third-party appraisals) and a credit report evidencing liabilities, both dated within the past 90 days. If you have chosen to demonstrate your accredited investor status with net worth, please select which type of document you will be attaching    ○    Third Party/Form of Individual Accreditation Verification    ○    Statement of Assets AND Credit Report which can be requested here.
Income – If your income has exceeded $200,000 individually for the past two years, or $300,000 jointly with a spouse, with a reasonable expectation of reaching the same income level for this year, you can satisfy this requirement by providing copies of any IRS form that reports income such as W-2s, 1099s, K-1s, 1040, etc. If you have chosen to demonstrate your accredited investor status with income, please select which type of document you will be attaching    ○    W2 statements for the last 2 years    ○    Any IRS (or Foreign government) form that reports income, eg,1040/K-1    ○    Third Party/Form of Individual Accreditation Verification.

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Additional Documents Checklist

For Entities:

Document	Attach Documents here
Entity Formation Documents (e.g., Articles of Incorporation, Trust Formation, Certification, etc.)
Proof of Address (Bank statement or utility bill dated within last 12 months).
Authorized Signatory: Government Issued ID
Tax Document    ○   Attach W-9, W-8BEN-E, W-8 ECI or applicable Tax Document    ○   Complete electronic W-9
Proof of Accreditation Upload supporting documents; choose from the following:    ○   Statement of Assets    ○   Current Balance Sheet    ○   Tax Form    ○   Other    ○   Third Party – Have a 3rd party licensed attorney, CPA, investment adviser, or financial representative at a broker-dealer complete a Form of Individual Accreditation Verification

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EXHIBIT A

DEFINITION OF ACCREDITED INVESTOR

Accredited investor generally means any person who comes within any of the following categories, or who the Trust reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

• A bank, insurance company, registered investment company, business development company, or small business investment company

• an employee benefit plan (within the meaning of the Employee Retirement Income Security Act) if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million

• a tax-exempt charitable organization, corporation or partnership with assets in excess of $5 million

• a director, executive officer, or general partner of the company selling the securities

• an enterprise in which all the equity owners are accredited investors

• an individual with a net worth of at least $1 million, not including the value of his or her primary residence

• an individual with income exceeding $200,000 in each of the two most recent calendar years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year;

• an individual investment professional, such as a licensed associated person of a broker-dealer or investment adviser, or a certified financial planner; or

• a trust with assets of at least $5 million, not formed only to acquire the securities offered, and whose purchases are directed by a person who meets the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment.

CONFIDENTIAL

EXHIBIT B

DEFINITION OF U.S. PERSON

U.S. person.

(1) “U.S. person” means:

(i) Any natural person resident in the United States;

(ii) Any partnership or corporation organized or incorporated under the laws of the United States;

(iii) Any estate of which any executor or administrator is a U.S. person;

(iv) Any trust of which any trustee is a U.S. person;

(v) Any agency or branch of a foreign entity located in the United States;

(vi) Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

(vii) Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and

(viii) Any partnership or corporation if:

(A) Organized or incorporated under the laws of any foreign jurisdiction; and

(B) Formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in § 230.501(a)) who are not natural persons, estates or trusts.

(2) The following are not “U.S. persons”:

(i) Any discretionary account or similar account (other than an estate or trust) held for the benefit or account of a non-U.S. person by a dealer or other professional fiduciary organized, incorporated, or (if an individual) resident in the United States;

(ii) Any estate of which any professional fiduciary acting as executor or administrator is a U.S. person if:

(A) An executor or administrator of the estate who is not a U.S. person has sole or shared investment discretion with respect to the assets of the estate; and

(B) The estate is governed by foreign law;

(iii) Any trust of which any professional fiduciary acting as trustee is a U.S. person, if a trustee who is not a U.S. person has sole or shared investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person;

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(iv) An employee benefit plan established and administered in accordance with the law of a country other than the United States and customary practices and documentation of such country;

(v) Any agency or branch of a U.S. person located outside the United States if:

(A) The agency or branch operates for valid business reasons; and

(B) The agency or branch is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located; and

(vi) The International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension plans, and any other similar international organizations, their agencies, affiliates and pension plans.

(l) United States. “United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

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EXHIBIT C

OSPREY FUNDs, LLC

(“Osprey Funds”)

PRIVACY POLICY NOTICE

As an investor in trusts sponsored by Osprey Funds (“Trusts”) we are required by United States federal law to inform you of the policies and practices of Osprey Funds regarding privacy, such as how we collect, share, and protect your personal information. These policies apply to individuals and self-direct IRAs only and may be changed at any time, provided a notice of the change is given to you. If we make certain changes, the laws in some states allow you to restrict our ability to share your personal information.

Your personal information that we have collected (and may disclose as described herein), such as name and address, social security number, date of birth, assets and income information and information about the value of your investment and transactions with the Trusts , has come from (i) the investor application (including an online application) and related documents you have submitted even if you have not completed or submitted the application, (ii) written and email correspondence and conversations you have had with our representatives, (iii) transactions that have been executed, (iv) unaffiliated third-party service providers to verify your identity, prevent fraud or other purposes permitted by law, and (v) from our website or mobile applications through the use of cookies, web beacons and other technologies (more information is available on our website at https://www.ospreyfunds.io/privacy-policy. We may combine the information gathered from these and other sources. We will treat the information we collect in accordance with this policy. If you do not wish to provide information to us, we may not be able to provide you with certain products and services.

We disclose nonpublic personal information about our clients, former clients and prospective clients to (i) affiliates of Osprey Funds to service your account, improve our services to you and/or provide you with information on our products and services and (ii) non-affiliated persons who need to know the information to enable us to provide services to you (including processing transactions in connection with providing such services and maintaining your account), such as to our attorneys, accountants, auditors and other service providers to Trusts and/or Osprey Funds, and as permitted by law. We will also release information about you if you direct us to do so or if we’re required to do so by law.

We seek to safeguard your private information and, to that end, restrict access to nonpublic personal information about you to those employees and other persons who need to know the

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information to provide services. We maintain physical, electronic and procedural safeguards which are designed to protect your nonpublic personal information that we collect from you. Although we strive to protect your non-public personal information, Osprey Funds cannot ensure or warrant the security of any information you provide or transmit to us or our or the service providers, and you do so at your own risk.

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EX-10.5

Exhibit 10.5

CONFIDENTIAL

ADMINISTRATION AGREEMENT

This ADMINISTRATION AGREEMENT (this “Agreement”) is made as of April 10, 2020 (the “Effective Date”), by and among THEOREM FUND SERVICES, LLC, an Illinois limited liability company (“Theorem”), OSPREY BITCOIN TRUST, a Delaware trust (the “Fund”) and OSPREY FUNDS, LLC, a Delaware limited liability company serving as the sponsor of the Trust (the “Management”). The Fund and Management may be referred to herein collectively as the “Client.” Theorem and Client each may be referred to herein individually as a “Party” or collectively as the “Parties.”

It is agreed as follows:

1. APPOINTMENT.

The Client hereby appoints Theorem, and Theorem accepts such appointment as an independent contractor to perform the Services (as defined below) during the term of this Agreement and on the terms set forth herein. In carrying out its Services, Theorem shall comply with all reasonable instructions of Management in connection therewith to the extent that such instructions are not inconsistent with this Agreement or any applicable law or regulation. Such instructions may be given in writing or orally, provided, however, that oral instructions shall be confirmed in writing if so requested by Theorem.

2. SERVICES.

Theorem will perform the services in connection with the Fund as set forth on Schedule A attached hereto (the “Services”) upon the launch of the Fund; provided, however, that Theorem receives all necessary information on a timely basis and subject to applicable laws and the terms and conditions set forth herein. It is recognized by the Parties that outside the terms herein, Theorem is available to provide other services upon the Client’s request. Such other services shall be provided under the same terms and conditions as those covered herein unless documented otherwise by an amendment to this Agreement or a separate agreement. Fees for such incremental services are not contemplated in the fees as set forth in Schedule B and will be billed at Theorem’s customary rates for such services (hereinafter “Incremental Services” and “Incremental Fees”).

3. DELIVERY OF DOCUMENTS.

In connection with this Agreement, the Client has delivered to Theorem copies of (i) the Fund’s organizational documents and governing agreements (collectively, as amended from time to time, the “Organizational Documents”), and (ii) the current private placement memorandum, subscription documents and other offering documents of the Fund (collectively, as currently in effect and as amended or supplemental, the “Offering Documents”). The Client hereby agrees to promptly furnish Theorem with all amendments to the Organizational Documents and the Offering Documents. The Client hereby agrees to deliver, or cause its other service providers to deliver to Theorem all information necessary (including but not limited to complete and accurate information relating to the Fund’s transactions, clearers, counterparties, and banks) to enable Theorem to perform its Services. The Client hereby agrees to instruct its clearers, counterparties, brokers and banks to provide Theorem with copies of monthly account statements, transaction confirmations, and arrange Internet access for Theorem to view such brokerage and custody accounts.

4. TERM.

(a)        The initial term of this Agreement will commence on the Effective Date and will continue for a period of one (1) year after the launch of the Fund unless terminated under the terms set

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forth herein; provided, however, that the Services shall not commence until the launch of the Fund. After the initial term of this Agreement, this Agreement will automatically renew for successive periods of one (1) year each unless terminated under the terms set forth herein.

(b)        Notwithstanding any provision to the contrary set forth herein, either Party may terminate this Agreement as of a calendar month end upon sixty (60) days’ prior written notice. In the event of the termination of this Agreement, Theorem will provide exit assistance by promptly supplying data of the Client to the Client or any other party designated by the Client in formats already prepared in the course of providing the Services; provided, however, that all fees and expenses have been paid. In the event that the Client wishes to retain Theorem to perform additional transition services, including providing data and reports in new formats, the Client and Theorem shall agree in writing to the additional services and related fees and expenses in advance.

(c)        In addition to the provisions of Section 4(b) above, a Party may, by written notice to the other Party, terminate this Agreement: (1) if the other Party breaches any material term, condition or provision of this Agreement, which breach, if capable of being cured, is not cured within thirty (30) calendar days after the non-breaching Party gives the other Party written notice of such breach; or (2) if the other Party (i) terminates or suspends its business, (ii) becomes insolvent, admits in writing its inability to pay its debts as they mature, makes an assignment for the benefit of creditors, or becomes subject to direct control of a trustee, receiver or analogous authority, (iii) becomes subject to any bankruptcy, insolvency or analogous proceeding or (iv) becomes subject to a material Action (as defined herein) or an Action that the Party providing notice reasonably determines could cause such Party reputational harm; and in each case set forth in this Section 4(c), the termination will become effective immediately or on the date stated in the written notice of termination, which date shall not be greater than sixty (60) calendar days after the event.

(d)        Termination of this Agreement shall not affect: (i) any liabilities or obligations of any Party arising before such termination (including payment of fees and expenses) or (ii) any damages or other remedies to which a Party may be entitled for breach of this Agreement or otherwise. Sections 5, 7, 9, 10, 12 and 13 of this Agreement shall survive the termination of this Agreement. To the extent any services that are Services are performed by Theorem for the Client after the termination of this Agreement all of the provisions of this Agreement except Schedule A shall survive the termination of this Agreement for so long as those services are performed.

5. FEES AND EXPENSES.

(a)        In consideration for the Services furnished hereunder, the Client agrees to pay Theorem the fees as set forth in Schedule B attached hereto promptly after receiving each invoice. The Client agrees to pay Theorem a fee upon the Parties signing this Agreement, which is equal to the amount of the fee for Services for the initial month of this Agreement (“Advance Fee”); provided, however, that such Advance Fee shall not be greater than USD $2,000. Theorem will credit the Advance Fee against the invoice for Services for the initial month of this Agreement. The Parties acknowledge that the fees for the Services furnished hereunder are based on numerous assumptions furnished by the Client and set forth in Schedule C attached hereto. Theorem reserves the right to evaluate the assumptions at any time, and will endeavor to evaluate the assumptions six (6) months after the launch of the Fund, and on an annual basis. In the event that Theorem has determined that an assumption has been materially changed, Theorem reserves the right to revise the assumption and increase the fees for the Services furnished hereunder upon providing the Client with at least thirty (30) days prior written notice of such increase. Thereafter, the Client agrees to pay Theorem the increased fees in accordance with the terms of the Agreement. Theorem will also bill the Client for out-of-pocket costs and expenses incurred at the request of Client including but not limited to travel, telephone, fax, postage, courier delivery charges and any specialized pricing services required to appropriately value the Fund’s investments subject to pre-approval by Client. Should the Client exercise its right to terminate this Agreement in whole or in part, the Client shall reimburse

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Theorem for all out-of-pocket expenses and time (which is $200 per hour as of the date hereof, and may be subject to change thereafter) associated with the copying and moving records and materials to Client or a designee.

(b)        Any additional services such as, including but not limited to, services related to reprocessing financial statements, the liquidation or winding up of the Fund, assistance with examination by taxing authorities, accounting services, transition of administration from Theorem to a successor administrator, or consultation concerning financial matters or work performed that is incidental to legal or regulatory issues of the Client performed during or after the term of this Agreement are Incremental Services and are not contemplated in the fees as set forth in Schedule B and will be billed at Theorem’s customary rates for such services which is $200 per hour as of the date hereof, and may be subject to change thereafter.

(c)        Theorem will be entitled to recover from the Client its time expended, at its regular standard rates, and expenses, including all reasonable attorney’s fees and costs in connection with any actual, threatened or potential Action, investor inquiry or regulatory investigation or proceeding that may arise out of this Agreement.

(d)        Notwithstanding any provision to the contrary set forth herein, Theorem may, by written notice to the Client, suspend or discontinue its Services or terminate this Agreement if the Client fails to pay the fees or other amounts due hereunder to Theorem within thirty (30) days of the invoice date for such fees or other amounts; and in such case, the suspension, discontinuance or termination, as determined by Theorem, will become effective ten (10) days after written notice is given. In the event that Theorem’s Services is suspended or terminated or this Agreement is terminated as a result of nonpayment, or for any other reason, the Client agrees that Theorem will not be responsible for the Client’s failure to meet investor reporting, government and other filing deadlines, or for penalties or interest that may be assessed, or other damages that may be sustained by the Client or its investors, resulting from the Client’s failure to meet said deadlines.

(e)        Theorem shall not be liable for any taxes, assessments or governmental charges that may be assessed on any basis whatsoever against the Fund, Management or any investor, limited partner or shareholder of the Fund.

6. AUTHORIZED PERSONS.

The Client shall list in writing those officers or agents of the Client who are authorized by the Client to deliver written and/or oral instructions to Theorem on behalf of the Client with respect to the subject matter of this Agreement (“Authorized Persons”). A list of the current Authorized Persons is contained in Schedule D attached hereto. Authorized Persons may be authorized to deliver instructions to Theorem relating to all or only some matters under this Agreement, provided, however, that Theorem shall not be deemed to be notified of any limit on an Authorized Person’s authority unless notified in writing. The Authorized Persons authorized to change the list of Authorized Persons and the manner of effecting any such change is also contained in Schedule D. In addition, Management may change the list of Authorized Persons at any time upon written instruction to Theorem. Theorem shall not be held to have notice of any change of authority of any Authorized Person until receipt of written notice thereof is properly executed and delivered in accordance with this Agreement.

7. CONFIDENTIALITY.

(a)        All information provided to Theorem by the Client and/or others (i.e., clearers, counterparties, brokers or banks) in connection with Theorem’s Services shall be considered confidential unless otherwise instructed. Theorem will not disclose any such confidential information without the express consent of the Client; provided, however, that nothing herein shall prevent Theorem from

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disclosing such information (i) to Management, subject to applicable legal and regulatory restrictions; (ii) to the Client’s auditors, affiliates, legal counsel or professional advisors (internal or external) in the normal course of the Fund’s or Theorem’s business, or (iii) when required to do so by a regulator or a court of competent jurisdiction or by applicable laws or regulations. Theorem will notify the Client in writing of such a request for information by a regulator or court so that the Client may seek a protective order and/or other motion to prevent or limited the production or disclosure of such information. If such motion has been denied or is pending and unresolved at the time disclosure of such information is required by law, then Theorem may disclose only such portion of such information (A) based on the advice of Theorem’s legal counsel, is required by law to be disclosed (Theorem using its best efforts to preserve the confidentiality of the remainder of such information) or (B) the Client consents in writing to having such information disclosed.

(b)        Theorem will protect and safeguard any and all information provided to Theorem connected with the Client and set forth in this Section using security technology, supervision of its employees and by other means. A security breach is material, and the Client shall be afforded the right to immediately terminate this Agreement for such a breach. If Theorem becomes aware of any unauthorized reproduction, distribution, or sale of such information, Theorem will immediately notify the Client, and will cooperate with the Client in the event that the Client elects to commence any Action or proceeding with respect to such unauthorized reproduction, distribution or sale.

(c)        The Client acknowledges that this Agreement and its terms shall be considered confidential, and that the Client and Management will not disclose this Agreement or its terms to any Person (as defined below) without the prior written consent of Theorem.

(d)        In view of the difficulties of placing a monetary value on the information set forth in this Section, the Parties agree that each Party shall be entitled to seek injunctive relief without posting any bond or undertaking to prevent any further breach of this Section, separate and apart from any other remedy that each Party may have.

(e)        Upon the prior consent of the Client, Theorem shall have the right to identify the Client in connection with its marketing-related activities, and on its website and in its marketing materials as a client of Theorem. Client shall have the right to properly identify Theorem and to describe the Services and the material terms of this Agreement in the Offering Documents.

8. RESPONSIBILITIES.

(a)        The Client hereby acknowledges that it is responsible for the accuracy and completeness of the information provided by Management to Theorem. In the event that Management fails to provide Theorem with accurate and complete information, which results in Theorem reprocessing financial reports and statements after Management confirms (by email) the delivery of all accurate and complete information, Theorem reserves the right to charge the Client reprocessing fees in an amount equal to the greater of (i) twenty-five percent (25%) of the Effective Fee for the then-applicable Full NAV Fund Administration services set forth in Schedule B (or as such Effective Fee may be modified pursuant to this Agreement) or (ii) One Thousand Dollars ($1,000). The Client agrees to pay Theorem the reprocessing fees in accordance with the terms of the Agreement. The Client has appointed an independent auditor that will be responsible for conducting an audit of the Client’s financial statements. The Client will provide Theorem with accounting data underlying the financial statements and acknowledges responsibility for the fair presentation of the financial statements and income tax returns. The Client further acknowledges responsibility for timely filing of the income tax returns and tax payments and other items required to be paid on a timely basis. The Client also acknowledges that the Services described in this Agreement are not designed and cannot be relied upon to disclose errors, fraud, or illegal acts that may exist, although their discovery may result from such Services. Additionally, the Client acknowledges that, notwithstanding the ability of the Client to delegate the maintenance of the

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anti-money laundering procedures to Theorem, the Client shall be ultimately responsible for ensuring that it is compliant with its own anti-money laundering obligations. Theorem shall have no obligation to review, monitor or otherwise ensure compliance by the Client with the investment policies, restrictions or guidelines applicable to it or any other term or condition of the Offering Document(s).

(b)        Theorem shall at all times in relation to all of its duties and obligations pursuant to this Agreement be entitled to rely upon the instructions or advice (written, oral or otherwise) of and/or information (including specifically but without limitation, reports on securities positions, balances, prices and any other information, data and advice necessary and relevant to the calculation of net asset values) provided, approved or affirmed by Management and/or any other person who Theorem reasonably believes to be acting with the actual and/or ostensible authority of the Fund or Management. Theorem shall not be liable to the Fund, its investors, Management or any third party for any loss or damage howsoever caused as a result of such reliance or in respect of the content, nature or accuracy of such instructions and/or information.

(c)        Theorem may act or rely upon the opinion or advice of or any information obtained from any clearer, counterparty, broker, bank, lawyer, valuer, accountant, auditor, other expert (including Management) of the Client or any regulator or other authority whether reporting to the Client or to Theorem or not and Theorem shall not be responsible for any loss occasioned to the Fund, its investors or any third party by its so acting or reliance.

(d)        Theorem will assist in the preparation of the Fund’s financial statements, but the responsibility for the financial statements remains with the Client. The Client is responsible for designating a qualified management-level individual to be responsible and accountable for overseeing these services.

(e)        The Client acknowledges that Theorem engages the services of various third party vendors (“Vendors”) to assist Theorem with the provision of Services, and Theorem represents to Client that it uses reasonable care to select, engage and retain such Vendors. Theorem shall not be responsible for any loss occasioned to the Client, the Fund’s investors or any third party in connection with the Vendors’ products and/or services except to the extent of losses resulting from the gross negligence, willful misconduct or fraud of Theorem in the selection, engagement or retention of such Vendors’ products and/or services. Upon the Client’s written request, Theorem will provide the Client with a list of its Vendors. Theorem does not warrant that the Vendors’ products and/or services will be uninterrupted, free from error or from unauthorized hidden programs introduced into the Vendors’ products and/or services, or that the Vendors’ products and/or services will meet the needs of the Client. The Client shall not use or continue to use the Vendors’ products and/or services if to do so would result in the breach of any applicable local laws or regulations within the Client’s jurisdiction. THEOREM EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS, STATUTORY OR IMPLIED REGARDING THE VENDORS’ SERVICES, INCLUDING BUT NOT LIMITED TO ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE, ACCURACY, TIMELINESS, COMPLETENESS, AND ORIGINALITY, NONINFRINGEMENT AND ALL WARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING AND USAGE OF TRADE OR THEIR EQUIVALENTS UNDER THE LAWS OF ANY JURISDICTION, AND THE VENDORS’ PRODUCTS AND/OR SERVICE ARE PROVIDED “AS IS.”

9. REPRESENTATIONS AND WARRANTIES.

(a)        Each Party represents and warrants to each other Party that:

(1)         It is a legal entity duly created, validly existing and in good standing under the law of the jurisdiction in which it is created, and is in good standing in each other jurisdiction where the

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failure to be in good standing would have a material adverse effect on its business or its ability to perform its obligations under this Agreement;

(2)        It has all necessary legal power and authority to own, lease and operate its assets and to carry on its business as presently conducted and as it will be conducted pursuant to this Agreement and will comply in all material respects with all law to which it may be subject;

(3)        It has all necessary legal power and authority to enter into this Agreement and to perform its obligations hereunder, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary actions on its part, and performance hereunder does not violate the terms of any contract, covenant or agreement between it and any third party;

(4)        The person signing on its behalf has the authority to contractually bind it to the terms and conditions in this Agreement and that this Agreement constitutes a legal, valid and binding obligation of it, enforceable against it in accordance with its terms;

(5)        It is not a party to, and is not bound or affected by or subject to, any instrument, agreement, charter or by-law provision, law or judgment which would be contravened or breached as a result of the execution or performance of this Agreement; and

(6)        To the best of its knowledge and belief, it is not the subject of any civil, criminal, regulatory or administrative lawsuit, allegation, demand, claim, counterclaim, action, dispute, sanction, suit, request, inquiry, investigation, arbitration, mediation or proceeding, in each case, made, asserted, commenced or threatened by any person or corporate or unincorporated entity or organization (including any government authority), regardless of the legal, equitable or other theory (“Action”) that would prevent it from performing its obligations under this Agreement.

(b)        The Client represents and warrants to Theorem that Management has actual authority to provide instructions and directions on behalf of the Client and that all such instructions and directions are consistent with the Organizational Documents of Client and other corporate actions of the Client.

(c)        The Fund represents and warrants to Theorem that (i) it is not registered or required to be registered as an investment company under the U.S. Investment Company Act of 1940, as amended, and (ii) its securities are not publicly registered or required to be publicly registered in the U.S. or the EU.

(d)        Each Party represents and warrants to the other that each will act reasonable, honestly and in good faith with respect to its dealings with the other Party, the Fund’s investors, the Fund’s prospective investors and others.

(e)        The Client represents and warrants to Theorem that it will cause the Offering Documents to include the disclosure language substantially in the form contained in Schedule E attached hereto.

10. LIMITATION OF LIABILITY AND INDEMNIFICATION.

(a)        Notwithstanding any provision to the contrary set forth herein, Theorem shall not be liable to Client for any action or inaction of Theorem except to the extent of losses resulting solely from the gross negligence, willful misconduct or fraud of Theorem in the performance of its duties or obligations under this Agreement. Under no circumstances shall Theorem be liable to Client for losses that are indirect, special, incidental, consequential, punitive, exemplary, enhanced or similar (including lost profits, opportunity costs and diminution of value).

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(b)        The Client shall indemnify and hold harmless Theorem from and against losses (including legal fees and costs to enforce this provision) that Theorem suffers, incurs, or pays as a result of any third party Action, except to the extent of losses resulting solely from the gross negligence, willful misconduct or fraud of Theorem in the performance of its duties or obligations under this Agreement. Upon the assertion of an Action for which the Client may be required to indemnify Theorem, Theorem shall notify the Client of such assertion, and shall keep the Client advised with respect to all developments concerning such Action. The Client shall have the option to participate with Theorem in the defense of such Action and Theorem shall reasonably allow such participation. Theorem shall in no case confess, compromise or settle the Action in any case in which the Client may be required to indemnify it except with the Client’s prior written consent, which consent shall not be unreasonably delayed, withheld or conditioned. Theorem’s failure or delay to inform the Client shall not limit the Client’s obligation to indemnify Theorem, but any right, duty or obligation of the Client with respect to this Section 10(b) shall be extended, in the case of a right, or postponed, in the case of a duty or obligation, until Theorem provides such notice.

(c)        The maximum amount of cumulative liability of Theorem to the Client for losses arising out of the subject matter of, or in any way related to, this Agreement, except to the extent of losses resulting solely from the gross negligence, willful misconduct or fraud of Theorem in the performance of its duties or obligations under this Agreement, shall not exceed the fees paid by Client to Theorem under this Agreement for the most recent twelve (12) months immediately preceding the date of the event giving rise to the Action.

(d)        Theorem shall indemnify and hold harmless the Client from and against losses (including legal fees and costs to enforce this provision) that the Client suffers, incurs, or pays as a result of any third party Action resulting solely from the gross negligence, willful misconduct or fraud of Theorem in the performance of its duties or obligations under this Agreement. Upon the assertion of an Action for which Theorem may be required to indemnify the Client, the Client shall notify the Theorem of such assertion, and shall keep Theorem advised with respect to all developments concerning such Action. Theorem shall have the option to participate with the Client in the defense of such Action and the Client shall reasonably allow such participation. The Client shall in no case confess, compromise or settle the Action in any case in which Theorem may be required to indemnify it except with Theorem’s prior written consent, which consent shall not be unreasonably delayed, withheld or conditioned. The Client’s failure or delay to inform Theorem shall not limit Theorem’s obligation to indemnify Theorem, but any right, duty or obligation of Theorem with respect to this Section 10(d) shall be extended, in the case of a right, or postponed, in the case of a duty or obligation, until the Client provides such notice.

(e)        The maximum amount of cumulative liability of the Client to Theorem for losses arising out of the subject matter of, or in any way related to, this Agreement, except to the extent of losses resulting solely from the gross negligence, willful misconduct or fraud of the Client in the performance of its duties or obligations under this Agreement, shall not exceed the fees paid by Client to Theorem under this Agreement for the most recent twelve (12) months immediately preceding the date of the event giving rise to the Action.

11. BOOKS AND RECORDS.

The books and records pertaining to the Fund that are in the possession of Theorem shall be the property of the Client. The Client and the Fund’s Authorized Persons shall have access to such books and records at all times during Theorem’s normal business hours. Upon the reasonable request of the Client or such Authorized Persons, copies of any such books and records shall be provided promptly by Theorem to the Client or Authorized Persons at the Fund’s expense. In the event the Fund designates a successor to assume any of Theorem’s responsibilities under this Agreement, Theorem shall, subject to payment by the Fund of any amounts due (whether or not pursuant to any outstanding invoice) and at the

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expense and direction of the Client, transfer to Client or designee all relevant books, records and other data established or maintained by Theorem under this Agreement.

12. NOTICES.

All notices and other written communications given or made pursuant to this Agreement shall be in writing (whether by means of hard copies or electronic versions, as applicable) and shall be deemed effectively given: (a) upon personal delivery to the Party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective Parties at their address as set forth below, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Section.

If to Theorem:	If to the Fund:
Theorem Fund Services, LLC 6401 Congress Avenue, Suite 210 Boca Raton, Florida 33487 Attention: Mikhail Davidvan Fax: (312) 896-9594 Email: notices@theoremfundservices.com	Osprey Bitcoin Trust c/o Osprey Funds, LLC 12544 Post Road Fairfield, Connecticut 06824 Attention: Gregory D. King Fax: N/A Email: greg@ospreyfunds.io
	If to Management:
	Osprey Funds, LLC 12544 Post Road Fairfield, Connecticut 06824 Attention: Gregory D. King Fax: N/A Email: greg@ospreyfunds.io

13. MISCELLANEOUS.

(a)        Entire Agreement. This Agreement (including any schedules, attachments, amendments, and addenda hereto) contains the entire agreement of the Parties with respect to the subject matter hereof and supersedes all previous communications, representations, understandings and agreements, either oral or written, between the Parties with respect thereto.

(b)        Amendment; Modification. This Agreement may not be amended or modified except in writing signed by an authorized representative of each Party.

(c)        Interpretation. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine, or neuter, singular or plural, as the context in which they are used may require. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement. In the event any claim is made by any Party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular Party or its counsel. Numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of this Agreement unless otherwise expressly stated.

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(d)        Independent Contractor. Theorem is retained hereunder as an independent contractor. No Party, nor any representative of another Party, shall be deemed for any purpose to be an employee or partner of another nor shall any Party be responsible to another party or to any governing or taxing body for any income or payroll-related taxes related to the employees of the other.

(e)        Severance. If any provision (or part thereof) of this Agreement is or becomes invalid, illegal or unenforceable, the provision shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not practical, the relevant provision shall be deemed deleted. Any such modification or deletion of a provision shall not affect the validity, legality and enforceability of the rest of this Agreement. If a Party gives notice to another Party of the possibility that any provision of this Agreement is invalid, illegal or unenforceable, the Parties shall negotiate to amend such provision so that, as amended, it is legal, valid and enforceable and achieves the intended commercial result of the original provision.

(f)        Waiver. No failure or delay by a Party to exercise any right or remedy provided under this Agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict the further exercise of that or any other right or remedy. No exercise (or partial exercise) of such right or remedy shall prevent or restrict the further exercise of that or any other right or remedy.

(g)        Assignment. Neither this Agreement nor any rights under this Agreement may be assigned or otherwise transferred by a Party, in whole or in part, whether directly or by operation of law, without the prior written consent of the other Party. Notwithstanding any provision to the contrary set forth herein, either Party may assign or otherwise transfer this Agreement: (i) to a successor in the event of a change in control of such Party, (ii) an Affiliate or (iii) in connection with an assignment or other transfer of a material part of such Party’s business. No assignment will be effective unless and until the assigning Party provides written notice of the assignment to the non-assigning Party and the assignee agrees in writing to be bound by the terms of this Agreement. Additionally, an assignment made by the Fund or Management will not be effective unless and until Theorem provides written consent to the Client that the assignee has satisfied Theorem’s know your client and anti-money laundering requirements, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that in the event Theorem fails to object to an assignment within five (5) business days after the Client provides written notice of such assignment to Theorem, such assignment shall be deemed approved. For purposes of this Agreement, the term “Affiliate” means, with respect to any natural person or corporate or unincorporated entity or organization and that person’s personal representatives, successors and permitted assigns (“Person”), any other Person that is controlled by, controls, or is under common control with such Person and “control” of a Person means: (i) ownership of, or possession of the right to vote, more than 25% of the outstanding voting equity of that Person or (ii) the right to control the appointment of the board of directors or analogous governing body, management or executive officers of that Person. Any attempted delegation, transfer or assignment prohibited by this Agreement shall be null and void.

(h)        Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement.

(i)        Governing Law; Venue. This Agreement and any controversy arising out of or relating to this Agreement shall be interpreted in accordance with and governed by the law of the State of Illinois. The courts of the State of Illinois and the United States District Court for the Northern District of Illinois shall have exclusive jurisdiction to settle any Action arising out of the subject matter, or in any way related to, this Agreement or the Services. Each Party submits to the exclusive jurisdiction of such courts and waives to the fullest extent permitted by law all rights to a trial by jury.

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(j)        Non-Exclusivity. The duties and obligations of Theorem hereunder shall not preclude Theorem from providing services of a comparable or different nature to any other Person. The Client understands that Theorem may have relationships with data suppliers and providers of technology, data or other services to the Client and Theorem may receive economic or other benefits in connection with Client’s activities.

(k)        No Warranties. Except as expressly listed herein, Theorem makes no warranties, whether express, implied, contractual or statutory with respect to the Services. Theorem disclaims all implied warranties of merchantability and fitness for a particular purpose with respect to the Services. All warranties, conditions and other terms implied by law are, to the fullest extent permitted by law, excluded from this Agreement.

(l)        Force Majeure. Theorem will not be responsible for any losses of the Client or the Client’s property in Theorem’s possession or for any failure to fulfill its duties or obligations hereunder if such loss or failure is caused, directly or indirectly, by war, terrorist or analogous action, the act of any government authority or other authority, riot, civil commotion, rebellion, storm, accident, fire, lockout, strike, power failure, computer error or failure, delay or breakdown in communications or electronic transmission systems, or other analogous events. Notwithstanding any provision to the contrary set forth herein, Theorem will not be relieved of its obligations hereunder solely due to governmental action or otherwise resulting from COVID-19. Theorem shall use commercially reasonable efforts to minimize the effects of any such event and to the extent Theorem cannot perform any of the Services due to an event described in this Section, the Client may, after fifteen (15) calendar days, terminate this Agreement immediately by providing written notice to Theorem without any penalty.

(m)        Testimony. If Theorem is required by a third party subpoena, regulatory inquiry or otherwise, to produce documents, testify or provide other evidence regarding the Services, this Agreement or the operations of the Fund in any Action to which the Client is a party or otherwise related to the Client, the Client shall reimburse Theorem for all costs and expenses, including the time of its professional staff at Theorem’s standard rates and the cost of legal representation, that Theorem reasonably incurs in connection therewith.

(n)        Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

[The next page is the signature page]

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In Witness Whereof, the Parties have executed this Administration Agreement as of the Effective Date.

Theorem Fund Services, LLC		Osprey Bitcoin Trust
		By: Osprey Funds, LLC, its sponsor
By:		By:
	Stephen Giannone		Gregory D. King
	Title: Managing Member		Title: Chief Executive Officer
By:
	Mikhail Davidyan
	Title: Managing Member
		Osprey Funds, LLC
		By:
			Gregory D. King
			Title: Chief Executive Officer

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SCHEDULE A
SERVICES

Theorem will perform the following Services in accordance with the terms and conditions of the attached Agreement. No optional or other services will be performed by Theorem unless and until an amendment to this Schedule A and Schedule B (Fees) have been agreed upon in writing and signed by authorized representatives of the Parties.

Inclusive Full NAV Fund Administration Services:

• Calculate the Fund-level DAILY net asset value (NAV).

• Calculate investor-level management fees and performance compensation.

• Apply valuations (in accordance with the Offering Documents).

• Record trades and track positions.

• Reconcile portfolio transactions, positions, and cash balances.

• Audit and tax support services.

• Generate Fund fact sheet.

Optional Fund Administration Services:

• Year-end financial statements preparation (GAAP).

• Master/Feeder structure services.

• Multi-broker processing.

• Side Pocket accounting.

• Daily P&L reporting.

• Special reporting.

Inclusive Banking Services:

• Assist with opening bank accounts with partner banks.

• Act as dual signer on the account to add a level of security.

• Review wire requests and prepare transactions for release by Authorized Persons.

• Reconcile cash activity.

Inclusive Investor Relations Services:

• Review subscription documents for completeness and accuracy.

• Anti-money laundering (AML)/know your client (KYC) verification of investors

• Prepare and distribute MONTHLY account statements to investors.

Optional Management Accounting Services:

• Record bank account, credit card and fund activity transactions.

• Perform bank account reconciliation

• Deliver quarterly financial statements.

EXCEPT AS OTHERWISE SET FORTH IN SCHEDULE B, THE OPTIONAL SERVICES SET FORTH IN THIS SCHEDULE A ARE NOT CONTEMPLATED IN THE FEES SET FORTH IN SCHEDULE B AND WILL BE BILLED AT THEOREM’S CUSTOMARY RATES FOR SUCH SERVICES.

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EX-99.1

Exhibit 99.1

Information Statement

OSPREY BITCOIN TRUST

Osprey Bitcoin Trust (the “Trust”) issues common units of fractional undivided beneficial interest (“Units”), which represent ownership in the Trust. The Trust’s purpose is to hold Bitcoins, which are digital assets that are created and transmitted through the operations of the peer-to-peer Bitcoin Network, a decentralized network of computers that operates on cryptographic protocols. The investment objective of the Trust, which is a passive investment vehicle, is for the Units to reflect the performance of Bitcoin as measured by reference to Coin Metrics CMBI Bitcoin Index (the “Index”) provided by Coin Metrics Inc. (the “Index Provider”), less the Aggregate Trust Expenses (defined below) and other liabilities. The Trust determines the current value of Bitcoin by reference to the market price of Bitcoin traded on Coinbase Pro, the Trust’s principal market, as determined at 4:00 p.m., New York time on each day the New York Stock Exchange is open for trading (each, a “Business Day”) (the “Bitcoin Market Price”). The Bitcoin Market Price is available at https://pro.coinbase.com/trade/BTC-USD. The Units are intended to constitute a cost-effective and convenient means of gaining investment exposure to Bitcoin. However, an investment in the Units 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 Units available for trading, the relative liquidity of the Units, and differences in the markets trading Bitcoin and Units (e.g., hours of operation, marketplace rules, clearance and settlement, and market participants). Osprey Funds, LLC is the sponsor of the Trust (the “Sponsor”), Delaware Trust Company is the trustee of the Trust (the “Trustee”), Continental Stock Transfer & Trust Company is the transfer agent of the Trust (in such capacity, the “Transfer Agent”), Theorem Fund Services is the administrator of the Trust (in such capacity, the “Administrator”), and Fidelity Digital Assets Services, LLC is the custodian for the Trust (the “Custodian”), and will custody the Trust’s Bitcoin.

The Trust issues Units only in connection with purchase orders for a minimum of $25,000.00 for initial investments and $10,000.00 for subsequent investments. The Units represent common units of fractional undivided beneficial interest in and ownership of the Trust and have no par value. The Units may be purchased from the Trust on an ongoing basis, but only by an accredited investor (“Accredited Investor”) (as defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”). At this time, the Sponsor is not operating a redemption program for the Units and therefore Units are not redeemable by the Trust. Due to the lack of an ongoing redemption program as well as price volatility, low trading volume and closings of Bitcoin exchanges due to fraud, failure, security breaches or otherwise, there can be no assurance that the market value of the Units will reflect the per Unit value of the Trust’s Bitcoin, less the Trust’s expenses and other liabilities (“NAV per Unit”), and the Units may trade at a substantial premium over, or a substantial discount to, the NAV per Unit.

Investments in the Units involves significant risks. See “Risk Factors” starting on page 7.

The Units are neither interests in nor obligations of the Sponsor or the Trustee.

Units are distributed by the Sponsor through sales in private placement transactions exempt from the registration requirements of the Securities Act pursuant to Rule 506(c) thereunder. The Units are quoted on OTC Markets Group Inc.’s OTCQX^® Best Marketplace (“OTCQX”) under the ticker symbol “OBTC.”

The Trust uses the Bitcoin Market Price to calculate its “Bitcoin Holdings,” which is the aggregate value, expressed in U.S. dollars, of the Trust’s assets (other than U.S. dollars, other fiat currency, and Additional Currency (as that term is defined herein)), less the U.S. dollar value of the Trust’s expenses and other liabilities calculated in the manner set forth under “Valuation of Bitcoin and Determination of the Trust’s Bitcoin Holdings.” “Bitcoin Holdings per Unit” is calculated by dividing Bitcoin Holdings by the number of Units currently outstanding.

The date of this Information Statement is September 10, 2021

TABLE OF CONTENTS

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	1
KEY OPERATING METRICS	1
SUMMARY	3
RISK FACTORS	7
OVERVIEW OF THE BITCOIN INDUSTRY AND MARKET	35
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	44
DESCRIPTION OF THE TRUST	51
ACTIVITIES OF THE TRUST	52
THE SPONSOR	54
THE TRUSTEE	56
THE TRANSFER AGENT	56
THE CUSTODIAN	57
CONFLICTS OF INTEREST	58
PRINCIPAL UNITHOLDERS	59
DESCRIPTION OF THE UNITS	60
CUSTODY OF THE TRUST’S BITCOINS	63
DESCRIPTION OF ISSUANCE OF UNITS	64
VALUATION OF BITCOIN AND DETERMINATION OF BITCOIN HOLDINGS	66
EXPENSES; SALES OF BITCOINS	69
STATEMENTS, FILINGS AND REPORTS	69
DESCRIPTION OF THE TRUST DOCUMENTS	70
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES	76
ERISA AND RELATED CONSIDERATIONS	82
INDEX TO FINANCIAL STATEMENTS	F-1

Neither the Sponsor nor the Trust have authorized anyone to provide you with information different from that contained in this Information Statement or any amendment or supplement to this Information Statement prepared by us or on our behalf. Neither the Sponsor nor the Trust take any responsibility for, or can provide any assurance as to the reliability of, any information other than the information in this Information Statement or any amendment or supplement to this Information Statement prepared by the Sponsor, the Trust or on the Trust’s behalf. The information in this Information Statement is accurate only as of the date of this Information Statement.

In this Information Statement, unless otherwise stated or the context otherwise requires, “we,” “our” and “us” refers to the Sponsor acting on behalf of the Trust.

Industry and Market Data

Although we are responsible for all disclosure contained in this Information Statement, in some cases we have relied on certain market and industry data obtained from third-party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications in conjunction with our assumptions regarding the Bitcoin industry and market. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings “Statement Regarding Forward-Looking Statements” and “Risk Factors” in this Information Statement.

-i-

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Information Statement contains “forward-looking statements” with respect to the Trust’s financial conditions, results of operations, plans, objectives, future performance and business. Statements preceded by, followed by or that include words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Information Statement that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. You should specifically consider the numerous risks outlined under “Risk Factors.” Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including:

● the risk factors discussed in this Information Statement, including the particular risks associated with new technologies such as Bitcoin and blockchain technology;

● the inability to redeem Units;

● the economic conditions in the Bitcoin industry and market;

● general economic, market and business conditions;

● the use of technology by us and our vendors, including the Custodian, in conducting our business, including disruptions in our computer systems and data centers and our transition to, and quality of, new technology platforms;

● changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies;

● the costs and effect of any litigation or regulatory investigations;

● our ability to maintain a positive reputation; and

● other world economic and political developments.

Consequently, all the forward-looking statements made in this Information Statement are qualified by these cautionary statements, and there can be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, that they will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of the Units. Should one or more of the risks discussed under “Risk Factors” or other uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those described in forward-looking statements. Forward-looking statements are made based on the Sponsor’s beliefs, estimates and opinions on the date the statements are made and neither the Trust nor the Sponsor is under a duty or undertakes an obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Moreover, neither the Trust, the Sponsor, nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements.

KEY OPERATING METRICS

The Trust’s Bitcoins are carried, for financial statement purposes, at fair value, as required by the U.S. generally accepted accounting principles (“GAAP”). The Trust values its Bitcoin holdings at the Bitcoin Market Price

1

as of 4:00 p.m., New York time on each Business Day. The net asset value of the Trust determined on a GAAP basis is referred to in this Information Statement as “NAV.” Prior to May 18, 2021, the Trust referenced Index as its principal market and used the Index for purposes of determining the valuation of its Bitcoin holdings. The Trust changed its principal market to Coinbase Pro on May 18, 2021 to facilitate its compliance with GAAP. The Trust selected Coinbase Pro, among other Bitcoin markets, because it provides the greatest liquidity, with approximately 45% of daily trading volume as of May 10, 2021. More information about the valuation of the Trust’s Bitcoin Holdings and the use of the Bitcoin Market Price is located herein under “Valuation of Bitcoin and Determination of Bitcoin Holdings.”

To determine which Bitcoin market will serve as the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s NAV, the Trust follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820-10, which outlines the application of fair value accounting. 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 Galaxy Digital, Jane Street, and Cumberland DRW LLC, and does not itself transact in any Bitcoin markets. Therefore, 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 utilizes the Bitcoin Market Price to determine the value of Bitcoin at any given time. The Trust evaluates its principal market selection (or in the absence of a principal market the most advantageous market) at least annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Bitcoin market’s trading volume and level of activity in the trailing twelve months, (ii) if any Bitcoin markets have developed that the Trust has access to, or (iii) if recent changes to a Bitcoin market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market. The Trust does not anticipate changing its principal market more frequently than annually, in connection with its annual evaluation of its principal market selection and annual financial audit. Each annual evaluation will take into account the findings from the Trust’s quarterly reviews.

The cost basis of a Trust investment in Bitcoin recorded by the Trust for financial reporting purposes is the fair value of the Bitcoin at the time of contribution to the Trust. The Bitcoin cost basis recorded by the Trust may differ from the value of the proceeds collected by the Sponsor from the sale of the corresponding Units to investors.

The investment objective of the Trust is for the Units to reflect the performance of the Bitcoin as measured by reference to the Index, less the Aggregate Trust Expenses (as defined below) and other liabilities. See “Valuation of Bitcoin and Determination of Bitcoin Holdings.” Units may not be redeemed from the Trust currently, and absent the granting of certain SEC relief, the Trust does not currently contemplate offering a redemption program. In addition, the Trust may from time to time halt creations. As a result, there can be no assurance that the market value of the Units will reflect the value of the Trust’s NAV per Unit. The Units may trade at a substantial premium over, or a substantial discount to, the NAV per Unit for a variety of reasons, including as a result of market price volatility, trading volume and closings of Bitcoin trading markets due to fraud, failure, security breaches or otherwise.

The Trust uses the Bitcoin Market Price to calculate its “Bitcoin Holdings,” which is the aggregate value, expressed in U.S. dollars, of the Trust’s assets (other than U.S. dollars, other fiat currency, and Additional Currency (as that term is defined herein)), less the U.S. dollar value of the Trust’s expenses and other liabilities calculated in the manner set forth under “Valuation of Bitcoin and Determination of the Trust’s Bitcoin Holdings.” “Bitcoin Holdings per Unit” is calculated by dividing Bitcoin Holdings by the number of Units currently outstanding. Bitcoin Holdings and Bitcoin Holdings per Unit are not measures calculated in accordance with GAAP. Bitcoin Holdings is not intended to be a substitute for the Trust’s NAV calculated in accordance with GAAP, and Bitcoin Holdings per Unit is not intended to be a substitute for the Trust’s NAV per Unit calculated in accordance with GAAP.

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SUMMARY

The following is a summary only and is qualified in its entirety by reference to the more detailed information set forth in the Trust Agreement and in the other agreements described herein. To the extent of any conflict between this summary and the Trust Agreement, the terms of the Trust Agreement will govern.

See “Glossary of Defined Terms” for the definition of certain capitalized terms used in this Information Statement. All other capitalized terms used, but not defined, herein have the meanings given to them in the Trust Agreement.

Overview of the Trust and the Units

The Trust is a Delaware Statutory Trust that was formed on January 3, 2019 by the filing of the Certificate of Trust with the Delaware Secretary of State in accordance with the provisions of the Delaware Statutory Trust Act. The Trust issues Units, which represent common units of fractional undivided beneficial interest in, and ownership of, the Trust, on an ongoing basis to certain “accredited investors” within the meaning of Rule 501(a) of Regulation D under the Securities Act.

The purpose of the Trust, which is passive investment vehicle, is to provide investors a cost-effective and convenient way to invest in Bitcoin. However, an investment in the Units 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 Units available for trading, and the relative liquidity of the Units, and differences in the markets trading Bitcoin and Units (e.g., hours of operation, marketplace rules, clearance and settlement, and market participants). The investment objective of the Trust is for the Units to reflect the performance of Bitcoin as measured by reference to the Index, less the Aggregate Trust Expenses (as defined below) and other liabilities. The Trust issues Units only in connection with purchase orders for a minimum of $25,000.00 for initial investments and $10,000.00 for subsequent investments. The Units represent common units of fractional undivided beneficial interest in and ownership of the Trust and have no par value. See “Description of Issuance of Units.” The Trust measure the NAV by reference to its principal market, Coinbase Pro. An internal review during the period from May 18, 2021 through August 16, 2021 showed that the difference between the Index values and the Trust’s NAV was immaterial. The Sponsor periodically compares the Trust’s daily NAV over time to the performance of the Index. Although the Trust does not currently offer redemptions of Units, the Units are quoted on the OTCQX market under the symbol “OBTC.” The market price of the Units on the OTCQX has experienced significant premiums and discounts to NAV. Each business day, the Sponsor compares the 4:00 p.m., New York time closing price of the Units to the NAV and publishes the discount or premium on the Trust’s website.

Most Units purchased directly from the Trust are restricted securities that may not be resold except in transactions exempt from registration under the Securities Act and state securities laws and any such transaction must be approved in advance by the Sponsor. In determining whether to grant approval, the Sponsor will specifically look at whether the conditions of Rule 144 under the Securities Act and any other applicable laws have been met. Any attempt to sell Units without the approval of the Sponsor in its sole discretion will be void ab initio. See “Description of the Units—Transfer Restrictions” for more information. The Units are quoted on OTCQX under the ticker symbol “OBTC.” Units quoted on the OTCQX either were sold originally to investors “unrestricted” in a limited offering pursuant to Rule 504 under the Securities Act, or have become unrestricted in accordance with Rule 144 under the Securities Act. See “Description of Units—Transfer Restrictions” for more detail. We intend to seek to list the Units on a national securities exchange (the “Listing Exchange”) under the ticker symbol “OBTC” sometime in the future. Any such listing will require the Listing Exchange to first receive approval from the SEC. To date, no Listing Exchange has received such approval for any Bitcoin trust. As a result, there can be no guarantee that we will be successful in listing the Units on the Listing Exchange. See “Risk Factors—Risk Factors Related to the Bitcoin Markets—Failure of funds that hold digital assets or that have exposure to digital assets through derivatives to receive SEC approval to list their shares on exchanges could adversely affect the value of the Units.”

At this time, the Trust is not operating a redemption program for the Units and therefore Units are not redeemable by the Trust. Because the Trust does not currently operate a redemption program and because the Trust may from time to time halt creations, there can be no assurance that the market price of the Units will reflect the value of the Trust’s NAV per Unit, and the Units may trade at a substantial premium over, or a substantial discount to, the NAV per Unit. The Units may also trade at a substantial premium over, or a substantial discount to, NAV per Unit as a result of the volatility of the market price of Bitcoin, trading volume and closings of Bitcoin trading markets due to fraud, failure, security breaches or otherwise. As a result of the foregoing, in the past, the price of the Units as quoted on OTCQX has varied significantly from the Trust’s NAV per Unit.

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The Trust is a passive investment vehicle and its assets are not actively managed. As a result, the Trust will not engage in any management activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the market prices of Bitcoin.

Valuation of Bitcoin and Bitcoin Holdings

The Trust’s Bitcoin Holdings is the aggregate U.S. dollar value of the Trust’s assets (other than U.S. dollars, other fiat currency, and Additional Currency (as that term is defined herein)), less the U.S. dollar value of its expenses and other liabilities. The Trust’s primary assets are Bitcoins and the Trust values its Bitcoins by reference to the Bitcoin Market Price, which is the market price of Bitcoin traded on Coinbase Pro, the principal trading market for the Bitcoin in which the Trust invests, as determined each Business Day at 4:00 p.m., New York time. The daily Bitcoin Market Price is available at https://pro.coinbase.com/trade/BTC-USD. See “Valuation of Bitcoin and Determination of Bitcoin Holdings.”

If the Bitcoin Market Price becomes unavailable, or if the Sponsor determines in good faith that the Bitcoin Market Price does not reflect an accurate Bitcoin price, the Sponsor will, on a best-efforts basis, contact Coinbase Global Inc., the parent company of Coinbase Pro, to obtain the price of Bitcoin at 4:00 p.m., New York time directly. If the closing price remains unavailable or the Sponsor continues to believe in good faith that such price does not reflect an accurate Bitcoin price, the Sponsor will employ a cascading set of rules to determine the Bitcoin Market Price, as described in “Valuation of Bitcoin and Determination of Bitcoin Holdings.”

As of June 30, 2021, the Bitcoin Holdings per Unit, was 0.00034.

Additional Currency

From time to time, the Trust may come into possession of rights incident to its ownership of Bitcoins, which permit the Trust to acquire, or otherwise establish dominion and control over, other virtual currencies. These rights are generally expected to arise in connection with forks in the Blockchain, airdrops offered to holders of Bitcoins and other similar events and arise without any action of the Trust or of the Sponsor or Trustee on behalf of the Trust. We refer to these rights as “Incidental Rights” and any such virtual currency acquired through Incidental Rights as “Additional Currency.” The Trust does not expect to take any Additional Currency it may hold into account for purposes of determining the Trust’s Bitcoin Holdings or the Bitcoin Holdings per Unit. See “Activities of the Trust—Additional Currency.”

With respect to any fork, airdrop or similar event, the Sponsor will, in its discretion, decide to cause the Trust to distribute the Additional Currency in kind to an agent of the Unitholders for resale by such agent, or to irrevocably abandon the Additional Currency. In the case of an in-kind distribution, the Unitholders’ agent would attempt to sell the Additional Currency, and if the agent is able to do so, remit the cash proceeds to Unitholders. There can be no assurance as to the price or prices for any Additional Currency that the agent may realize, and the value of the Additional Currency may increase or decrease after any sale by the agent. In the case of abandonment, the Trust would not receive any direct or indirect consideration for the Additional Currency and thus the value of the Units will not reflect the value of the Additional Currency.

Trust Expenses

The Trust will pay as an ordinary recurring charge the remuneration due to the Sponsor (the “Management Fee”). The Management Fee equals an annualized 0.49% of the average daily NAV of the Trust for each year. The Management Fee will accrue daily in Bitcoin and will be payable, at the Sponsor’s sole discretion, in Bitcoin or in U.S. dollars and valued at the Bitcoin Market Price in effect at the time of such payment. The Sponsor expects that the Trust will pay the Management Fee in monthly installments in arrears.

As discussed in greater detail below, if the Trust holds any Additional Currency, the Trust may pay the Management Fee, in whole or in part, with such Additional Currency by entering into an agreement with the Sponsor and transferring such Additional Currency to the Sponsor at a value to be determined in accordance with the terms of such agreement, but only if such agreement and transfer do not conflict with the terms of the Trust Agreement.

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The Sponsor will bear the routine operational, administrative and other ordinary fees and expenses of the Trust (the “Assumed Expenses”) other than audit fees, index license fees, aggregate legal fees in excess of $50,000 per annum, and the fees of the Custodian (the “Excluded Expenses”), and 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 Unitholders, indemnification expenses, fees and expenses related to public quotation on OTCQX (the “Extraordinary Expenses,” collectively with the Assumed Expenses and Excluded Expenses, the “Aggregate Trust Expenses”).

The Trust has not incurred or paid any Extraordinary Expenses to date. If the Trust incurs any Extraordinary Expenses, the Sponsor or its delegate (i) would instruct the Custodian to withdraw from the Bitcoin Account, on a monthly basis as needed, Bitcoins, Additional Currency in such quantity as necessary to permit payment of such Extraordinary Expenses, and (ii) may either (x) cause the Trust (or its delegate) to convert such Bitcoins or Additional Currency into U.S. dollars or other fiat currencies at the exchange rate at the time of conversion or (y) cause the Trust (or its delegate) to deliver such Bitcoins or Additional Currency in kind in satisfaction of such Extraordinary Expenses.

The Trust may use Additional Currency to pay the Management Fee or Extraordinary Expenses only if doing so does not conflict with the terms of the Trust Agreement. The Trust currently expects that the value of any such Additional Currency would be determined by reference to the Trust’s selected principal market. Pursuant to the Trust Agreement, the Trust, through the Sponsor, has general discretion to determine the principal market for purposes of valuing any such Additional Currency. The Sponsor will identify the principal market in accordance with GAAP. If the Trust pays the Management Fees or Extraordinary Expenses, in whole or in part, in Additional Currency, the amount of Bitcoins that would otherwise have been used to satisfy such payment will be correspondingly reduced. The number of Bitcoins represented by a Unit will decline each time the Trust pays the Management Fee or any Extraordinary Expenses by transferring or selling Bitcoins. See “Expenses; Sales of Bitcoins.”

The quantity of Bitcoins or Additional Currency to be delivered to the Sponsor or other relevant payee in payment of the Management Fee or any Extraordinary Expenses, or sold to permit payment of the Management Fee or Extraordinary Expenses, will vary from time to time depending on the level of the Trust’s expenses and the value of Bitcoins and Additional Currency held by the Trust. See “Activities of the Trust—Trust Expenses.” Assuming that the Trust is a grantor trust for U.S. federal income tax purposes, each delivery or sale of Bitcoins and Additional Currency by the Trust for the payment of expenses will be a taxable event to Unitholders. See “Certain U.S. Federal Income Tax Consequences—Tax Consequences to U.S. Holders.”

Emerging Growth Company Status

The Trust is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as the Trust is an emerging growth company, unlike other public companies, it will not be required to, among other things:

● provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002; or

● comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise.

The Trust will cease to be an “emerging growth company” upon the earliest of (i) it having $1.07 billion or more in annual revenues, (ii) it becoming a “large accelerated filer,” as defined in Rule 12b-2 of the Exchange Act, (iii) it issuing more than $1.0 billion of non-convertible debt over a three-year period or (iv) the last day of the fiscal year following the fifth anniversary of its initial public offering.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies; however, the Trust is choosing

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to “opt out” of such extended transition period, and as a result, the Trust will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

Section 107 of the JOBS Act provides that the Trust’s decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Principal Offices

The Sponsor’s principal office is located at 520 White Plains Road, Suite 500, Tarrytown, New York, New York 10591 and its telephone number is (914) 214-4174. The Trustee’s principal office is located at 251 Little Falls Drive, Wilmington, Delaware 19808. The Custodian’s principal office is located at 28 Liberty Street, New York, New York 10005.

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RISK FACTORS

An investment in the Units involves certain risks as described below. These risks should also be read in conjunction with the other information included in this Information Statement, including the Trust’s financial statements and related notes thereto. See “Glossary of Defined Terms” for the definition of certain capitalized terms used in this Information Statement.

Summary Risk Factors

The following is a summary of some of the risks and uncertainties that could materially adversely affect our business, financial condition and results of operations. You should read this summary together with the more detailed description of each risk factor contained below.

Risk Factors Related to Digital Assets

● Digital assets such as Bitcoin were only introduced within the past decade, and the medium-to-long term value of the Units is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets.

● The Bitcoin Network is part of a new and rapidly evolving industry, and the value of the Units depends on the development and acceptance of the Bitcoin Network.

● A determination that Bitcoin or any other digital asset is a “security” may adversely affect the value of Bitcoin and the value of the Units, and result in potentially extraordinary, nonrecurring expenses to, or termination of the Trust.

● Changes in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges.

● Digital asset networks face significant scaling challenges and efforts to increase the volume of transactions may not be successful.

● A temporary or permanent “fork” could adversely affect the value of the Units.

● Unitholders may not receive the benefits of any forks or “airdrops.”

● In the event of a hard fork of the Bitcoin Network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trust’s purposes, and in doing so may adversely affect the value of the Units.

● If the digital asset award for solving blocks and transaction fees for recording transactions on the Bitcoin Network are not sufficiently high to incentivize miners, miners may cease expanding processing power or demand high transaction fees, which could negatively impact the value of Bitcoin and the value of the Units.

Risk Factors Related to the Bitcoin Markets

● The value of the Units relates directly to the value of Bitcoins, the value of which may be highly volatile and subject to fluctuations due to a number of factors.

● Due to the unregulated nature and lack of transparency surrounding the operations of Bitcoin exchanges, they may experience fraud, security failures or operational problems, which may adversely affect the value of Bitcoin and, consequently, the value of the Units.

● 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 Units.

● Failure of funds that hold digital assets or that have exposure to digital assets through derivatives to receive SEC approval to list their shares on exchanges could adversely affect the value of the Units. ● NAV may not always correspond to the weighted-average market price of Bitcoin and, as a result, Units may be purchased (or redeemed, if ever permitted) at a value that differs from the secondary market price of the Units. ● Suspension or disruptions of market trading may adversely affect the value of units.

● The lack of active trading markets for the Units may result in losses on an investment in the Trust at the time of disposition of Units.

● A possible “short squeeze” due to a sudden increase in demand for the Units that largely exceeds supply may lead to price volatility in the Units.

● Difficulties or limitations in the processes of issuance and redemption (if any) of Units may interfere with opportunities for arbitrage transactions intended to keep the price of the Units closely linked to the price of Bitcoin, which may adversely affect an investment in the Units.

● Disruptions at OTC trading desks and potential consequences of an OTC trading desk’s failure could adversely affect an investment in the Units.

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● Disruptions at Bitcoin exchanges and potential consequences of a Bitcoin exchange’s failure could adversely affect an investment in the Units.

● Momentum pricing of Bitcoin may subject the Bitcoin price to greater volatility and adversely affect an investment in the Units.

Risk Factors Related to the Trust and the Units

● The Trust has only a limited performance history.

● The Units are new securities and their value could decrease if unanticipated operational or trading problems arise.

● Fees and expenses are charged regardless of profitability and may result in depletion of assets.

● The security of our Bitcoin Holdings cannot be assured, by the Trust, the Custodian or any other person.

● Possibility of termination of the Trust may adversely affect a Unitholder’s portfolio.

● Any errors, discontinuance or changes in determining the value of the Bitcoin held by the Trust may have an adverse effect on the value of the Units.

● The value of the Units will be adversely affected if the Trust is required to indemnify the Sponsor or the Custodian as contemplated in the Trust Agreement or the Custodial Services Agreement.

● The Trust’s Bitcoin trading may subject the Trust to the risk of counterparty non-performance, potentially negatively affecting the market price of the Units.

● The Trust’s Bitcoin Holdings could become illiquid, which could cause large losses to Unitholders at any time or from time to time.

● Transactions in Bitcoin are irreversible, and the Trust may be unable to recover improperly transferred Bitcoin.

● The Trust’s Bitcoin may be lost, stolen, or subject to other inaccessibility.

● Any disruptions to the computer technology used by the Trust or its service providers could adversely affect the Trust’s ability to function and an investment in the Units.

● The Sponsor’s computer infrastructure may be vulnerable to security breaches. Any such problems could cause interruptions in the Trust’s operations and adversely affect an investment in the Units.

● Technology system failures could cause interruptions in the Trust’s ability to operate.

● The lack of full insurance and Unitholders’ limited rights of legal recourse against the Trust, Trustee, Sponsor, Transfer Agent and Custodian expose the Trust and its Unitholders to the risk of loss of the Trust’s Bitcoins for which no person or entity is liable.

● Because the Units reflect the estimated accrued but unpaid expenses of the Trust, the number of Bitcoins represented by a Unit will gradually decrease over time as the Trust’s Bitcoins are used to pay the Trust’s expenses.

Risk Factors Related to the Regulation of the Trust and the Units

● Regulation of the Bitcoin industry continues to evolve and is subject to change; future regulatory developments are impossible to predict but may significantly and adversely affect the Trust.

● The sale of the Units could be subject to SEC or state securities registration.

● The Trust is not a registered investment company.

● The Trust could be, or could become, subject to the Commodity Exchange Act.

● Future U.S. and foreign regulation of the Bitcoin market may impose other regulatory burdens, which could harm the Trust or even cause the Trust to liquidate.

● Banks may not provide banking services, or may cut off banking services, to businesses that provide Bitcoin-related services or that accept Bitcoin as payment, which could directly impact the Trust’s operations, damage the public perception of Bitcoin and the utility of Bitcoin as a payment system and could decrease the price of Bitcoin and adversely affect an investment in the Units.

● It may be illegal now, or in the future, to acquire, own, hold, sell or use Bitcoin in one or more countries, and ownership of, holding or trading in Units may also be considered illegal and subject to sanctions.

● If regulatory changes or interpretations of the Trust’s or Sponsor’s activities require registration as money service businesses under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act or as money transmitters or digital currency businesses under state regimes for the licensing of such businesses, the Trust and/or Sponsor could suffer reputational harm and also extraordinary, recurring and/or nonrecurring expenses, which would adversely impact an investment in the Units.

● The treatment of the Trust for U.S. federal income tax purposes is uncertain.

● Unitholders could incur a tax liability without an associated distribution.

● The treatment of Bitcoin for U.S. federal income tax purposes is uncertain.

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● Future developments regarding the treatment of digital currency for U.S. federal income tax purposes could adversely affect the value of the Units.

● Future developments in the treatment of digital currency for tax purposes other than U.S. federal income tax purposes could adversely affect the value of the Units.

● A U.S. tax-exempt Unitholder may recognize “unrelated business taxable income” a consequence of an investment in Units.

● Non-U.S. Holders may be subject to U.S. federal withholding tax on income derived from forks, airdrops and similar occurrences.

Risk Factors Related to Potential Conflicts of Interest

● Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust. The Sponsor and its affiliates have no fiduciary duties to the Trust and its Unitholders other than as provided in the Trust Agreement, which may permit them to favor their own interests to the detriment of the Trust and its Unitholders.

● Unitholders cannot be assured of the Sponsor’s continued services, the discontinuance of which may be detrimental to the Trust.

● The Custodian could resign or be removed by the Sponsor, which would trigger early termination of the Trust.

● Unitholders may be adversely affected by the lack of independent advisers representing investors in the Trust.

Risk Factors Related to Digital Assets

Digital assets such as Bitcoin were only introduced within the past decade, and the medium-to-long term value of the Units is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets.

Digital assets such as Bitcoin were only introduced within the past decade, and the medium-to-long term value of the Units is subject to a number of factors relating to the capabilities and development of blockchain technologies, such as the infancy of their development, their dependence on the internet and other technologies, their dependence on the role played by miners and developers and the potential for malicious activity. For example, the realization of one or more of the following risks could materially adversely affect the value of the Units:

● The trading prices of many digital assets, including Bitcoin, have experienced extreme volatility in recent periods and may continue to do so. For instance, there were steep increases in the value of certain digital assets, including Bitcoin, over the course of 2017, and multiple market observers asserted that digital assets were experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2018 in digital asset trading prices, including for Bitcoin. These drawdowns notwithstanding, Bitcoin prices have increased significantly again during 2019 and the Bitcoin markets may still be experiencing a bubble or may experience a bubble again in the future. Extreme volatility in the future, including further declines in the trading prices of Bitcoin, could have a material adverse effect on the value of the Units and the Units could lose all or substantially all of their value.

● Digital asset networks and the software used to operate them are in the early stages of development. Digital assets have experienced, and we expect will experience in the future, sharp fluctuations in value. Given the infancy of the development of digital asset networks, parties may be unwilling to transact in digital assets, which would dampen the growth, if any, of digital asset networks.

● Digital asset networks are dependent upon the internet. A disruption of the internet or a digital asset network, such as the Bitcoin Network, would affect the ability to transfer digital assets, including Bitcoin, and, consequently, their value.

● The acceptance of software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in a digital asset network, such as the Bitcoin Network, could result in a “fork” in such network’s blockchain, resulting in the operation of multiple separate networks.

● Governance of the Bitcoin Network is by voluntary consensus and open competition. As a result, there may be a lack of consensus or clarity on the governance of the Bitcoin Network, which may stymie the

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Bitcoin Network’s utility and ability to grow and face challenges. In particular, it may be difficult to find solutions or martial sufficient effort to overcome any future problems on the Bitcoin Network, especially long-term problems.

● The foregoing notwithstanding, the Bitcoin Network’s protocol is informally managed by a group of core developers that propose amendments to the Bitcoin Network’s source code. The core developers evolve over time, largely based on self-determined participation. To the extent that a significant majority of users and miners adopt amendments to the Bitcoin Network, the Bitcoin Network will be subject to new protocols that may adversely affect the value of Bitcoin.

● The loss or destruction of a private key required to access a digital asset such as Bitcoin may be irreversible. If a private key is lost, destroyed or otherwise compromised and no backup of the private key is accessible, the Trust will be unable to access the Bitcoin held in the Bitcoin Account corresponding to that private key and the private key will not be capable of being restored by the Bitcoin Network.

● Bitcoins have only recently become selectively accepted as a means of payment by retail and commercial outlets, and use of Bitcoins by consumers to pay such retail and commercial outlets remains limited. Banks and other established financial institutions may refuse to process funds for Bitcoin transactions; process wire transfers to or from Bitcoin exchanges, Bitcoin-related companies or service providers; or maintain accounts for persons or entities transacting in Bitcoin. As a result, the prices of Bitcoins are largely determined by speculators and miners, thus contributing to price volatility that makes retailers less likely to accept it as a form of payment in the future.

● Miners, developers and users may switch to or adopt certain digital assets at the expense of their engagement with other digital asset networks, which may negatively impact those networks, including the Bitcoin Network.

● Over the past several years, digital asset mining operations have evolved from individual users mining with computer processors, graphics processing units and first generation application specific integrated circuit machines to “professionalized” mining operations using proprietary hardware or sophisticated machines. If the profit margins of digital asset mining operations are not sufficiently high, digital asset miners are more likely to immediately sell tokens earned by mining, resulting in an increase in liquid supply of that digital asset, which would generally tend to reduce that digital asset’s market price.

● To the extent that any miners cease to record transactions that do not include the payment of a transaction fee in solved blocks or do not record a transaction because the transaction fee is too low, such transactions will not be recorded on the Blockchain until a block is solved by a miner who does not require the payment of transaction fees or is willing to accept a lower fee. Any widespread delays in the recording of transactions could result in a loss of confidence in the digital asset network.

● Many digital asset networks face significant scaling challenges and are being upgraded with various features to increase the speed and throughput of digital asset transactions. These attempts to increase the volume of transactions may not be effective.

● The open-source structure of many digital asset network protocols, such as the protocol for the Bitcoin Network, means that developers and other contributors are generally not directly compensated for their contributions in maintaining and developing such protocols. As a result, the developers and other contributors of a particular digital asset may lack a financial incentive to maintain or develop the network, or may lack the resources to adequately address emerging issues. Alternatively, some developers may be funded by companies whose interests are at odds with other participants in a particular digital asset network. A failure to properly monitor and upgrade the protocol of the Bitcoin Network could damage that network.

● Banks may not provide banking services, or may cut off banking services, to businesses that provide digital asset-related services or that accept digital assets as payment, which could dampen liquidity in the market and damage the public perception of digital assets generally or any one digital asset in

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particular, such as Bitcoin, and their or its utility as a payment system, which could decrease the price of digital assets generally or individually.

Moreover, because digital assets, including Bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this Information Statement.

The Bitcoin Network is part of a new and rapidly evolving industry, and the value of the Units depends on the development and acceptance of the Bitcoin Network.

The Bitcoin Network was first launched in 2009 and Bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the Bitcoin Network is the most established digital asset network, the Bitcoin Network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate. For example, the realization of one or more of the following risks could materially adversely affect the value of the Units:

● As the Bitcoin Network continues to develop and grow, certain technical issues might be uncovered, and the troubleshooting and resolution of such issues requires the attention and efforts of Bitcoin’s global development community.

● In August 2017, the Bitcoin Network underwent a hard fork that resulted in the creation of a new digital asset network called Bitcoin Cash. This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward the Bitcoin Network. These users may attempt to negatively impact the use or adoption of the Bitcoin Network.

● Also in August 2017, the Bitcoin Network was upgraded with a technical feature known as “Segregated Witness” that, among other things, potentially doubles the transactions per second that can be handled on-chain and enables so-called second layer solutions, such as the Lightning Network or payment channels, that have the potential to substantially increase transaction throughput (i.e., millions of transactions per second). As of the date of this Information Statement, wallets and intermediaries that support Segregated Witness or Lightning Network-like technologies do not yet have material adoption. This upgrade may fail to work as expected leading to a decline in support and price of Bitcoin.

● As of June 27, 2021, the largest 100 Bitcoin wallets held approximately 15.59% of the Bitcoins in circulation and it is possible that some of these wallets are controlled by the same person or entity. Moreover, it is possible that other persons or entities control multiple wallets that collectively hold a significant number of Bitcoin, even if they individually only hold a small amount. As a result of this concentration of ownership, large sales by such holders could have an adverse effect on the market price of Bitcoin.

Moreover, in the past, flaws in the source code for digital assets have been exposed and exploited, including flaws that disabled some functionality for users, exposed users’ personal information and/or resulted in the theft of users’ digital assets. The cryptography underlying Bitcoin could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry and quantum computing, could result in such cryptography becoming ineffective. In any of these circumstances, a malicious actor may be able to take the Trust’s Bitcoin, which would adversely affect the value of the Units. Moreover, functionality of the Bitcoin Network may be negatively affected such that it is no longer attractive to users, thereby dampening demand for Bitcoin. Even if another digital asset other than Bitcoin were affected by similar circumstances, any reduction in confidence in the source code or cryptography underlying digital assets generally could negatively affect the demand for digital assets and therefore adversely affect the value of the Units.

The Trust is not actively managed and will not have any formal strategy relating to the development of the Bitcoin Network.

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A determination that Bitcoin or any other digital asset is a “security” may adversely affect the value of Bitcoin and the value of the Units, and result in potentially extraordinary, nonrecurring expenses to, or termination of the Trust

The SEC has stated that certain digital assets may be considered “securities” under the federal securities laws. The test for determining whether a particular digital asset is a “security” is complex and the outcome is difficult to predict. Further, if any other digital asset is determined to be a “security” under federal or state securities laws by the SEC or any other agency, or in a proceeding in a court of law or otherwise, it may have material adverse consequences for Bitcoin as a digital asset due to negative publicity or a decline in the general acceptance of digital assets. As such, any determination that Bitcoin or any other digital asset is a security under federal or state securities laws may adversely affect the value of Bitcoin and, as a result, the value of the Units.

To the extent that Bitcoin is determined to be a security, the Trust and the Sponsor may also be subject to additional regulatory requirements, including under the Investment Company Act, and the Sponsor may be required to register as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).. See “—Risks Relating to the Regulation of the Trust and the Units—Regulatory changes or interpretations could cause the Trust and the Sponsor to register and comply with new regulations, resulting in potentially extraordinary, nonrecurring expenses to the Trust.” If the Sponsor determines not to comply with such additional regulatory and registration requirements, the Sponsor will terminate the Trust. Any such termination could result in the liquidation of the Trust’s Bitcoin at a time that is disadvantageous to Unitholders.

Changes in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges.

The governance of decentralized networks, such as the Bitcoin and Ethereum networks, is by voluntary consensus and open competition. As a result, there may be a lack of consensus or clarity on the governance of any particular decentralized digital asset network, which may stymie such network’s utility and ability to grow and face challenges. The foregoing notwithstanding, the protocols for some decentralized networks, such as the Bitcoin network, are informally managed by a group of core developers that propose amendments to the relevant network’s source code. Core developers’ roles evolve over time, largely based on self-determined participation. If a significant majority of users and miners adopt amendments to a decentralized network based on the proposals of such core developers, such network will be subject to new protocols that may adversely affect the value of the relevant digital asset.

As a result of the foregoing, it may be difficult to find solutions or marshal sufficient effort to overcome any future problems, especially long-term problems, on digital asset networks.

Digital asset networks face significant scaling challenges and efforts to increase the volume of transactions may not be successful.

Many digital asset networks face significant scaling challenges due to the fact that public blockchains generally face a trade-off regarding security and scalability. One means through which public blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. For example, a greater degree of decentralization generally means a given digital asset network is less susceptible to manipulation or capture. In practice, this typically means that every single node on a given digital asset network is responsible for securing the system by processing every transaction and maintaining a copy of the entire state of the network. As a result, a digital asset network may be limited in the number of transactions it can process by the capabilities of each single fully participating node.

As corresponding increases in throughput lag behind growth in the use of digital asset networks, average fees and settlement times may increase considerably. For example, the Bitcoin Network has been, at times, at capacity, which has led to increased transaction fees. Since January 1, 2017, Bitcoin transaction fees have increased from $0.35 per Bitcoin transaction, on average, to a high of $55.16 per transaction, on average, on December 22, 2017. As of June 2021, Bitcoin transaction fees stood around $6 per transaction, on average. Increased fees and decreased settlement speeds could preclude certain uses for Bitcoin (e.g., micropayments), and could reduce demand for, and the price of, Bitcoin, which could adversely impact the value of the Units.

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Many developers are actively researching and testing scalability solutions for public blockchains that do not necessarily result in lower levels of security or decentralization (e.g., off-chain payment channels like the Lightning Network, sharding, or off-chain computations). However, there is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of the Bitcoin Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of the Units.

If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin Network, or otherwise obtains control over the Bitcoin Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Blockchain to adversely affect the value of the Units or the ability of the Trust to operate.

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter the Blockchain on which transactions in Bitcoin rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could also control, exclude or modify the ordering of transactions. Although the malicious actor or botnet would not be able to generate new tokens or transactions using such control, it could “double-spend” its own tokens (i.e., spend the same tokens in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. Further, a malicious actor or botnet could create a flood of transactions in order to slow down the Bitcoin Network.

Although there are no known reports of malicious activity on, or control of, the Bitcoin Network, it is believed that certain mining pools may have exceeded the 50% threshold on the Bitcoin Network. The possible crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of Bitcoin transactions, and this risk is heightened if over 50% of the processing power on the network falls within the jurisdiction of a single governmental authority. For example, it is believed that more than 50% of the processing power on the Bitcoin Network is located in China. Because the Chinese government has subjected digital assets to heightened levels of scrutiny recently, reportedly forcing several digital asset exchanges to shut down, there is a risk that the Chinese government could also achieve control over more than 50% of the processing power on the Bitcoin Network. If network participants, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase, which may adversely affect the value of the Units.

A malicious actor may also obtain control over the Bitcoin Network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. To the extent that the Bitcoin ecosystem does not grow, the possibility that a malicious actor may be able obtain control of the processing power on the Bitcoin Network in this manner will remain heightened.

A temporary or permanent “fork” could adversely affect the value of the Units.

The Bitcoin Network operates using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and miners of Bitcoin adopt the modification. When a modification is introduced and a substantial majority of users and miners consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “hard fork” of the Bitcoin Network, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of Bitcoin running in parallel, yet lacking interchangeability. For example, in August 2017, Bitcoin “forked” into Bitcoin and a new digital asset, Bitcoin Cash, as a result of a several-year dispute over how to increase the rate of transactions that the Bitcoin Network can process.

Forks may also occur as a network community’s response to a significant security breach. For example, in June 2016, an anonymous hacker exploited a smart contract running on the Ethereum network to syphon approximately $60 million of ETH held by The DAO, a distributed autonomous organization, into a segregated

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account. In response to the hack, most participants in the Ethereum community elected to adopt a “fork” that effectively reversed the hack. However, a minority of users continued to develop the original blockchain, now referred to as “Ethereum Classic” with the digital asset on that blockchain now referred to as Ether Classic, or ETC. ETC now trades on several digital asset exchanges. A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and miners abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and miners could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork, as in the case of Ether and Ether Classic.

In addition, many developers have previously initiated hard forks in the Blockchain to launch new digital assets, such as Bitcoin Gold and Bitcoin Diamond. To the extent such digital assets compete with Bitcoin, such competition could impact demand for Bitcoin and could adversely impact the value of the Units.

Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued Ethereum exchanges through at least October 2016. An Ethereum exchange announced in July 2016 that it had lost 40,000 Ether Classic, worth about $100,000 at that time, as a result of replay attacks. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of mining power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual miner or mining pool’s hashing power to exceed 50% of the processing power of the digital asset network that retained or attracted less mining power, thereby making digital assets that rely on proof-of-work more susceptible to attack.

A future fork in the Bitcoin Network could adversely affect the value of the Units or the ability of the Trust to operate.

Unitholders may not receive the benefits of any forks or “airdrops.”

In addition to forks, a digital asset may become subject to a similar occurrence known as an “airdrop.” In an airdrop, the promotors of a new digital asset announce to holders of another digital asset that such holders will be entitled to claim a certain amount of the new digital asset for free, based on the fact that they hold such other digital asset.

Unitholders may not receive the benefits of any forks, the Trust may not choose, or be able, to participate in an airdrop, and the timing of receiving any benefits from a fork, airdrop or similar event is uncertain. We refer to the right to receive any such benefit as an “Incidental Right” and any such virtual currency acquired through an Incidental Right as “Additional Currency.” There are likely to be operational, tax, securities law, regulatory, legal and practical issues that significantly limit, or prevent entirely, Unitholders’ ability to realize a benefit, through their interests in the Trust, from any such Additional Currency. For instance, the Custodian may not agree to provide access to the Additional Currency. In addition, the Sponsor may determine that there is no safe or practical way to custody the Additional Currency, or that trying to do so may pose an unacceptable risk to the Trust’s holdings in Bitcoin, or that the costs of taking possession and/or maintaining ownership of the Additional Currency exceed the benefits of owning the Additional Currency. Additionally, laws, regulation or other factors may prevent Unitholders from benefiting from the Additional Currency even if there is a safe and practical way to custody and secure the Additional Currency. For example, it may be illegal to sell or otherwise dispose of the Additional Currency, or there may not be a suitable market into which the Additional Currency can be sold (immediately after the fork or airdrop, or ever). The Sponsor may also determine, in consultation with its legal advisors and tax consultants, that the Additional Currency is, or is likely to be deemed, a security under federal or state securities laws. In such a case, the Sponsor would irrevocably abandon, as of any date on which the Trust creates Units, such Additional Currency if holding it would have an adverse effect on the Trust and it would not be practicable to avoid such effect by disposing of the Additional Currency in a manner that would result in Unitholders receiving more than insignificant value thereof. In making such a determination, the Sponsor expects to take into account a number of factors, including the definition of a “security” under Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act, SEC v. W.J. Howey Co., 328 U.S. 293 (1946) and the case law interpreting it, as well as reports, orders, press releases, public statements and speeches by the SEC providing guidance on when a digital asset is a “security” for purposes of the federal securities laws.

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In the event of a hard fork of the Bitcoin Network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trust’s purposes, and in doing so may adversely affect the value of the Units.

In the event of a hard fork of the Bitcoin Network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Bitcoin Network, is generally accepted as the Bitcoin Network and should therefore be considered the appropriate network for the Trust’s purposes. The Sponsor will base its determination on a variety of then relevant factors, including, but not limited to, the Sponsor’s beliefs regarding expectations of the core developers of Bitcoin, users, services, businesses, miners and other constituencies, as well as the actual continued acceptance of, mining power on, and community engagement with, the Bitcoin Network. There is no guarantee that the Sponsor will choose the digital asset that is ultimately the most valuable fork, and the Sponsor’s decision may adversely affect the value of the Units as a result. The Sponsor may also disagree with Unitholders, security vendors and the Index Provider on what is generally accepted as Bitcoin and should therefore be considered “Bitcoin” for the Trust’s purposes, which may also adversely affect the value of the Units as a result.

If the digital asset award for solving blocks and transaction fees for recording transactions on the Bitcoin Network are not sufficiently high to incentivize miners, miners may cease expanding processing power or demand high transaction fees, which could negatively impact the value of Bitcoin and the value of the Units.

If the digital asset awards for solving blocks and the transaction fees for recording transactions on the Bitcoin Network are not sufficiently high to incentivize miners, miners may cease expending processing power to solve blocks and confirmations of transactions on the Blockchain could be slowed. A reduction in the processing power expended by miners on the Bitcoin Network could increase the likelihood of a malicious actor or botnet obtaining control.

Miners have historically accepted relatively low transaction confirmation fees on most digital asset networks. If miners demand higher transaction fees for recording transactions in the Blockchain or a software upgrade automatically charges fees for all transactions on the Bitcoin Network, the cost of using Bitcoin may increase and the marketplace may be reluctant to accept Bitcoin as a means of payment. Alternatively, miners could collude in an anti-competitive manner to reject low transaction fees on the Bitcoin Network and force users to pay higher fees, thus reducing the attractiveness of the Bitcoin Network. Higher transaction confirmation fees resulting through collusion or otherwise may adversely affect the attractiveness of the Bitcoin Network, the value of Bitcoin and the value of the Units.

Risk Factors Related to the Bitcoin Markets

The value of the Units relates directly to the value of Bitcoins, the value of which may be highly volatile and subject to fluctuations due to a number of factors.

The value of the Units relates directly to the value of the Bitcoins held by the Trust and fluctuations in the price of Bitcoin could adversely affect the value of the Units. The market price of Bitcoin may be highly volatile, and subject to a number of factors, including:

● An increase in the global Bitcoin supply;

● Manipulative trading activity on Bitcoin exchanges, which are largely unregulated;

● The adoption of Bitcoin as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of the open-source software protocol of the Bitcoin Network;

● Forks in the Bitcoin Network;

● Investors’ expectations with respect to interest rates, the rates of inflation of fiat currencies or Bitcoin, and digital asset exchange rates;

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● Consumer preferences and perceptions of Bitcoin specifically and digital assets generally;

● Fiat currency withdrawal and deposit policies on Bitcoin exchanges;

● The liquidity of Bitcoin markets;

● Investment and trading activities of large investors that invest directly or indirectly in Bitcoin;

● A “short squeeze” resulting from speculation on the price of Bitcoin, if aggregate short exposure exceeds the number of Units available for purchase;

● An active derivatives market for Bitcoin or for digital assets generally;

● Monetary policies of governments, trade restrictions, currency devaluations and revaluations and regulatory measures or enforcement actions, if any, that restrict the use of Bitcoin as a form of payment or the purchase of Bitcoin on the Bitcoin markets;

● Global or regional political, economic or financial conditions, events and situations;

● Fees associated with processing a Bitcoin transaction and the speed at which Bitcoin transactions are settled;

● Interruptions in service from or failures of major Bitcoin exchanges;

● Decreased confidence in Bitcoin exchanges due to the unregulated nature and lack of transparency surrounding the operations of Bitcoin exchanges;

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

● The Trust’s own acquisitions or dispositions of Bitcoin, since there is no limit on the number of Bitcoin that the Trust may acquire.

In addition, there is no assurance that Bitcoin will maintain its value in the long or intermediate term. In the event that the price of Bitcoin declines, the Sponsor expects the value of the Units to decline proportionately.

The value of a Bitcoin as represented by the Bitcoin Market Price or by the Trust’s principal market may also be subject to momentum pricing due to speculation regarding future appreciation in value, leading to greater volatility that could adversely affect the value of the Units. Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for future appreciation in value, if any. The Sponsor believes that momentum pricing of Bitcoins has resulted, and may continue to result, in speculation regarding future appreciation in the value of Bitcoin, inflating and making the Bitcoin Market Price more volatile. As a result, Bitcoin may be more likely to fluctuate in value due to changing investor confidence, which could impact future appreciation or depreciation in the Bitcoin Market Price and could adversely affect the value of the Units.

“Volatility” of an asset may be defined as the 30-day standard deviation of historical daily log returns annualized on a 365-day basis due to the fact that Bitcoin is continuously traded. Using this definition, an asset would be considered highly volatile if the standard deviation of annualized returns is 100% or more. Medium volatility is considered between 50% and 100%, while low volatility is below 50%. Assets that have high volatility are difficult to hedge due to the lack of counterparties willing to hold the asset for purposes of providing liquidity as well as for merchant services.

As of August 16, 2021, Bitcoin’s 30-day annualized price volatility denominated in U.S. dollars was 55.3% meaning that on 20 of the 30 days prior to August 16, 2021, the one-day change in the price of Bitcoin was less than 82%. Over the past five years, Bitcoin’s rolling 30-day annualized volatility has averaged 62% with a maximum value of 134% on April 20, 2020 and a minimum value of 13.9% on October 6, 2016. In addition, over the past five years (or 1,858 trading days) Bitcoin’s volatility has been over 100% on 174 days (nine percent) and under 50% on 663

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days (36%) with Bitcoin experiencing medium volatility on the majority of days (1,021 or 55%). Bitcoin has and may continue to experience rapid changes in volatility depending on market conditions. For example, in May of 2021, Bitcoin’s volatility transitioned from a medium volatility range of 39% to over 100% by June of 2021, where it stayed for 23 consecutive days.

Due to the unregulated nature and lack of transparency surrounding the operations of Bitcoin exchanges, they may experience fraud, security failures or operational problems, which may adversely affect the value of Bitcoin and, consequently, the value of the Units.

Bitcoin exchanges are relatively new and, in some cases, unregulated. Many trading platforms for digital assets are not subject to regulation to the same extent or in the same manner as other regulated trading platforms, such as Listing Exchanges or designated contract markets that face a variety of federal standards for fair access, cybersecurity and other areas of regulation. Bitcoin is susceptible to the dissemination of false or misleading information regarding material non-public information related to: the actions of regulators with respect to Bitcoin; order flow, such as plans of market participants to significantly increase or decrease their holdings in Bitcoin; new sources of demand, such as new ETPs that would hold Bitcoin; or the decision of a Bitcoin-based ETP, a Bitcoin trading venue, or a Bitcoin wallet service provider with respect to how it would respond to a “fork” in the blockchain, which would create two different, non-interchangeable types of Bitcoin. Bitcoin trading activity is dispersed across markets and over-the-counter transactions worldwide, and there is no centralized, regulatory data source for Bitcoin trading statistics. Furthermore, while many prominent Bitcoin exchanges provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance, many Bitcoin exchanges do not provide this information. As a result, the marketplace may lose confidence in Bitcoin exchanges, including prominent exchanges that handle a significant volume of Bitcoin trading.

For example, in 2019 there were reports claiming that 80-95% of Bitcoin trading volume on Bitcoin exchanges was false or non-economic in nature, with specific focus on unregulated exchanges located outside of the U.S. Such reports may indicate that the Bitcoin exchange market is significantly smaller than expected and that the U.S. makes up a significantly larger percentage of the Bitcoin exchange market than is commonly understood. Nonetheless, any actual or perceived false trading in the Bitcoin exchange market, and any other fraudulent or manipulative acts and practices, could adversely affect the value of Bitcoin and/or negatively affect the market perception of Bitcoin.

In addition, over the past several years, some Bitcoin exchanges have been closed due to fraud and manipulative activity, business failure or security breaches. In many of these instances, the customers of such Bitcoin exchanges were not compensated or made whole for the partial or complete losses of their account balances in such Bitcoin exchanges. While smaller Bitcoin exchanges are less likely to have the infrastructure and capitalization that make larger Bitcoin exchanges more stable, larger Bitcoin exchanges are more likely to be appealing targets for hackers and malware and may be more likely to be targets of regulatory enforcement action. For example, the collapse of Mt. Gox, which filed for bankruptcy protection in Japan in late February 2014, demonstrated that even the largest Bitcoin exchanges could be subject to abrupt failure with consequences for both users of Bitcoin exchanges and the Bitcoin industry as a whole. In particular, in the two weeks that followed the February 7, 2014 halt of Bitcoin withdrawals from Mt. Gox, the value of one Bitcoin fell on other exchanges from around $795 on February 6, 2014 to $578 on February 20, 2014. Additionally, in January 2015, Bitstamp announced that approximately 19,000 Bitcoin had been stolen from its operational or “hot” wallets. Further, in August 2016, it was reported that almost 120,000 Bitcoins worth around $78 million were stolen from Bitfinex, a large Bitcoin exchange. The value of Bitcoin immediately decreased over 10% following reports of the theft at Bitfinex and the Units suffered a corresponding decrease in value. In July 2017, the Financial Crimes Enforcement Network (“FinCEN”) assessed a $110 million fine against BTC-E, a now defunct Bitcoin exchange, for facilitating crimes such as drug sales and ransomware attacks. In addition, in December 2017, Yapian, the operator of Seoul-based cryptocurrency exchange Youbit, suspended digital asset trading and filed for bankruptcy following a hack that resulted in a loss of 17% of Yapian’s assets. Following the hack, Youbit users were allowed to withdraw approximately 75% of the digital assets in their exchange accounts, with any potential further distributions to be made following Yapian’s pending bankruptcy proceedings. In addition, in January 2018, the Japanese digital asset exchange, Coincheck, was hacked, resulting in losses of approximately $535 million, and in February 2018, the Italian digital asset exchange, Bitgrail, was hacked, resulting in approximately $170 million in losses. Most recently in May 2019, one of the world’s largest Bitcoin exchanges, Binance, was hacked, resulting in losses of approximately $40 million.

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Negative perception, a lack of stability in the Bitcoin markets and the closure or temporary shutdown of Bitcoin exchanges due to fraud, business failure, hackers or malware, or government-mandated regulation may reduce confidence in the Bitcoin Network and result in greater volatility in the prices of Bitcoin. Furthermore, the closure or temporary shutdown of a Bitcoin exchange used in calculating the Bitcoin Market Price may result in a loss of confidence in the Trust’s ability to determine its Bitcoin Holdings on a daily basis. These potential consequences of such a Bitcoin exchange’s failure could adversely affect the value of the Units.

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 Units.

Bitcoin was the first digital asset to gain global adoption and critical mass, and as a result, it has a “first to market” advantage over other digital assets. As of April 19, 2021, Bitcoin was the largest digital asset by market capitalization and had the largest user base and largest combined mining power. Despite this first to market advantage, as of April 19, 2021, there were over 4,000 alternative digital assets tracked by CoinMarketCap.com, having a total market-capitalization of approximately $2.05 trillion (including the approximately $1.047 trillion market cap of Bitcoin), as calculated using market prices and total available supply of each digital asset. In addition, many consortiums and financial institutions are also researching and investing resources into private or permissioned blockchain platforms rather than open platforms like the Bitcoin Network. Competition from the emergence or growth of alternative digital assets could have a negative impact on the demand for, and price of, Bitcoin and thereby adversely affect the value of the Units.

Investors may invest in Bitcoin through means other than the Units, including through direct investments in Bitcoin and other potential financial vehicles, possibly including securities backed by or linked to Bitcoin and digital asset financial vehicles similar to the Trust. Market and financial conditions, and other conditions beyond the Sponsor’s control, may make it more attractive to invest in other financial vehicles or to invest in Bitcoin directly, which could limit the market for, and reduce the liquidity of, the Units. In addition, to the extent digital asset financial vehicles other than the Trust tracking the price of Bitcoin are formed and represent a significant proportion of the demand for Bitcoin, large purchases or redemptions of the securities of these digital asset financial vehicles, or private funds holding Bitcoin, could negatively affect the Bitcoin Market Price, the Bitcoin Holdings, the price of the Units, the NAV and the NAV per Unit.

Failure of funds that hold digital assets or that have exposure to digital assets through derivatives to receive SEC approval to list their shares on exchanges could adversely affect the value of the Units.

There have been a growing a number of attempts to list on national securities exchanges the shares of funds that hold digital assets or that have exposures to digital assets through derivatives. These investment vehicles attempt to provide institutional and retail investors exposure to markets for digital assets and related products. The SEC has repeatedly denied such requests. On January 18, 2018, the SEC’s Division of Investment Management outlined several questions that sponsors would be expected to address before the SEC will consider granting approval for funds holding “substantial amounts” of cryptocurrencies or “cryptocurrency-related products.” The questions, which focus on specific requirements of the Investment Company Act of 1940, generally fall into one of five key areas: valuation, liquidity, custody, arbitrage and potential manipulation. The SEC has not explicitly stated whether each of the questions set forth would also need to be addressed by entities with similar products and investment strategies that instead pursue registered offerings under the Securities Act, although such entities would need to comply with the registration and prospectus disclosure requirements of the Securities Act. The exchange listing of shares of digital asset funds would create more opportunities for institutional and retail investors to invest in the digital asset market. If exchange-listing requests are not approved by the SEC and the outstanding requests are ultimately denied by the SEC, increased investment interest by institutional or retail investors could fail to materialize, which could reduce the demand for digital assets generally and therefore adversely affect the value of the Units.

NAV may not always correspond to the weighted-average market price of Bitcoin and, as a result, Units may be purchased (or redeemed, if ever permitted) at a value that differs from the secondary market price of the Units.

The NAV of the Trust will change as fluctuations occur in the market price of the Trust’s Bitcoin holdings. Unitholders should be aware that the secondary market trading price of a Unit may be different from the NAV per

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Unit (i.e., Units may trade at a premium over, or a discount to, the NAV), and similarly the secondary market trading price per Unit may be different from the NAV per Unit, for a number of reasons, including price volatility, trading volume and any closings of Bitcoin trading platforms due to fraud, failure, security breaches or otherwise. Consequently, an investor may be able to purchase Units at a discount or a premium to the market trading price per Unit (if and when Units trade on a secondary trading market). This price difference may be due, in large part, but not exclusively, to the fact that supply and demand forces at work in the secondary trading market for Units are related, but not identical, to the supply and demand forces influencing the market price of Bitcoin. Unitholders also should note that the size of the Trust in terms of total Bitcoin held may change substantially over time and as Units are issued and redeemed (if ever permitted).

Suspension or disruptions of market trading may adversely affect the value of units.

On January 14, 2021, FINRA determined the Units met the criteria for quotation and trading on the OTCQX under the ticker symbol “OBTC.” Nevertheless, there can be no assurance that, the Units will trade with sufficient liquidity for the quotation to be of practical use to investors. Moreover, quotation may be halted due to market conditions, or in light of the OTCQX rules and procedures. There can be no assurance that the requirements necessary to maintain the quotation of the Units on the OTCQX will continue to be met.

The lack of active trading markets for the Units may result in losses on an investment in the Trust at the time of disposition of Units.

There can be no guarantee that an active trading market for the Units will develop or will be maintained. Even if an active trading market does develop, it may not provide significant liquidity, and the Units may not trade at prices advantageous to Unitholders. If a Unitholder wishes to sell Units at a time when no active market for such Units exists, the price received for the Units (assuming that the Unitholder is able to sell them) likely will be lower than the price a Unitholder would receive if an active market did exist and, accordingly, the Unitholder may suffer significant losses.

The Trust’s acquisition and sale of Bitcoin may impact the supply and demand of Bitcoin, which may have a negative impact on the price of the Units.

If the number of Bitcoin acquired by the Trust is large enough relative to global Bitcoin supply and demand, further issuances and redemptions (if any) of Units could have an impact on the supply of and demand for Bitcoin in a manner unrelated to other factors affecting the global market for Bitcoin. Such an impact could affect the Bitcoin Market Price, which would directly affect the price at which Units are quoted on the OTCQX or the price of future Units issued or redeemed (if permitted) by the Trust.

A possible “short squeeze” due to a sudden increase in demand for the Units that largely exceeds supply may lead to price volatility in the Units.

Bitcoin price speculation may involve long and short exposures. To the extent that aggregate short exposure exceeds the number of Units available for purchase (for example, in the event that large redemption requests by Unitholders dramatically affect Unit liquidity), Unitholders with short exposure may have to pay a premium to repurchase Units for delivery to Unit lenders. Those repurchases may, in turn, dramatically increase the price of the Units until additional Units are issued. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in the Units that are not directly correlated to the price of Bitcoin.

The Trust’s buying and selling activity associated with the issuance and redemption (if any) of Units may adversely affect an investment in the Units.

The Trust’s purchase of Bitcoin in connection with Unit issuance orders may cause the price of Bitcoin to increase, which will result in higher prices for the Units. Increases in the Bitcoin prices may also occur as a result of Bitcoin purchases by other market participants who attempt to benefit from an increase in the market price of Bitcoin when Units are issued. The market price of Bitcoin may therefore decline immediately after Units are issued. Selling activity associated with sales of Bitcoin from the Trust in connection with redemption orders may decrease the Bitcoin prices, which will result in lower prices for the Units. Decreases in Bitcoin prices may also occur as a result of selling

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activity by other market participants. In addition to the effect that purchases and sales of Bitcoin by the Trust may have on the price of Bitcoin, other exchange-traded products with similar investment objectives could represent a substantial portion of demand for Bitcoin at any given time and the sales and purchases by such investment vehicles may impact the price of Bitcoin. If the price of Bitcoin declines, the trading price of the Units will generally also decline.

Difficulties or limitations in the processes of issuance and redemption (if any) of Units may interfere with opportunities for arbitrage transactions intended to keep the price of the Units closely linked to the price of Bitcoin, which may adversely affect an investment in the Units.

If the processes of issuance and trading of the Units encounter any unanticipated difficulties, potential market participants who would otherwise be willing to purchase or redeem Units to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Units and the price of the underlying Bitcoin may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect. If this is the case, the liquidity of Units may decline and the price of the Units may fluctuate independently of the price of Bitcoin and may fall. In addition, the Sponsor may postpone, suspend or reject purchase orders, as applicable, for a variety of permitted reasons under certain circumstances. To the extent such orders are postponed, suspended or rejected, the arbitrage mechanism resulting from the process through which investors purchase Units directly from the Trust may fail to closely link the price of the Units to the value of the underlying Bitcoin, as measured using the Bitcoin Market Price. If this is the case, the liquidity of the Units may decline and the price of the Units may fluctuate independently of the Bitcoin Market Price and may fall. The Units have experienced significant premiums since their commencement of trading in the OTC Markets and on OTCQX and may continue to do so in the future. Information about the Trust’s historical trading prices, including its premiums is located on page 50 under “Secondary Market Trading.”

Disruptions at OTC trading desks and potential consequences of an OTC trading desk’s failure could adversely affect an investment in the Units.

There are a limited number of OTC trading desks with which the Trust can transact in Bitcoin to effect issuances and redemptions (if any). A disruption at or withdrawal from the market by any such OTC trading desk may adversely affect the Trust’s ability to purchase or sell Bitcoin, which may potentially negatively impact the market price of the Units. A disruption at one or more OTC trading desks will reduce liquidity in the market and may negatively impact the Trust’s ability to value its Bitcoin. Because there is currently no publicly disseminated and verifiable feed with respect to the price of Bitcoin on a regulated exchange, investors must rely on other pricing sources, such as the Bitcoin Market Price or prices obtained directly from the OTC trading desks, to obtain the price of Bitcoin.

Disruptions at Bitcoin exchanges and potential consequences of a Bitcoin exchange’s failure could adversely affect an investment in the Units.

Bitcoin exchanges operate websites on which users can trade Bitcoin for U.S. dollars, other government currencies and other cryptocurrencies. Trades on Bitcoin exchanges are unrelated to transfers of Bitcoin between users via the Bitcoin network. Bitcoin trades on exchanges are recorded on the exchange’s internal ledger only, and each internal ledger entry for a trade will correspond to an entry for an offsetting trade in U.S. dollars or other government currency. To sell Bitcoin on a Bitcoin exchange, a user will transfer Bitcoin (using the Bitcoin network) from him or herself to the Bitcoin exchange. Conversely, to buy Bitcoin on a Bitcoin exchange, a user will transfer U.S. dollars or other government currency to the Bitcoin exchange. After completing the transfer of Bitcoin or U.S. dollars, the user will execute his or her trade and withdraw either the Bitcoin (using the Bitcoin network) or the U.S. dollars back to the user. Bitcoin exchanges are an important part of the Bitcoin industry.

Bitcoin exchanges have a limited history. Since 2009, several Bitcoin exchanges have been closed or experienced disruptions due to fraud, failure, security breaches or distributed denial of service attacks, a/k/a “DDoS Attacks.” In many of these instances, the customers of such exchanges were not compensated or made whole for the partial or complete losses of their funds, Bitcoin or other cryptocurrencies held at the exchanges. In 2014, the largest Bitcoin exchange at the time, Mt. Gox, filed for bankruptcy in Japan amid reports the exchange lost up to 850,000 Bitcoin, valued then at over $450 million. Bitcoin exchanges are also appealing targets for hackers and malware. In August 2016, Bitfinex, an exchange located in Hong Kong, reported a security breach that resulted in the theft of

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approximately 120,000 Bitcoin valued at the time at approximately $72 million, a loss which was allocated to all Bitfinex account holders (rather than just specified holders whose wallets were affected directly), regardless of whether the account holder held Bitcoin or cash in their account. In February 2017 following a statement by the People’s Bank of China, China’s three largest exchanges (BTCC, Huobi and OKCoin) suspended withdrawals of users’ Bitcoin. Although withdrawals were permitted to resume in late May 2017, Chinese regulators in September 2017 issued a directive to Chinese exchanges to cease operations with respect to Chinese users by September 30, 2017. In July 2017, the Financial Crimes Enforcement Network (“FinCEN”) and the U.S. Department of Justice levied a $110 million fine and an indictment against BTC-e, another Bitcoin exchange and one of its operators for financial crimes. The Department of Justice also seized the Internet domain of the exchange. Similar to the outcome of the Bitfinex breach, losses due to assets seized by FinCEN were allocated among exchange users. In addition, it has been reported that Bitcoin exchange Coincheck lost approximately $500 million to hackers in 2018 and that Bitcoin exchange Binance lost approximately $40 million to hackers in 2019. The potential for instability of Bitcoin exchanges and the closure or temporary shutdown of exchanges due to fraud, business failure, hackers, DDoS or malware, or government-mandated regulation may reduce confidence in Bitcoin, which may result in greater volatility in the Bitcoin Market Price.

Because the Trust relies on the 4:00 p.m., New York time price of Bitcoin traded on Coinbase Pro to determine the Bitcoin Market Price, which is the basis for both the Trust’s NAV and reference for evaluating whether the Trust is achieving its investment objective, any disruption to Coinbase Pro’s operations affecting the ability to trade or the Trust’s ability to value Bitcoin could negatively affect trading in the Trust’s Units and the ability to determine the Trust’s NAV per Unit, both during the disruption and until the impact of the disruption is absorbed by the marketplace. Moreover, because Coinbase Pro is not regulated as a national securities exchange by the SEC or otherwise as an exchange by a federal regulator, there may be greater risk in relying on Coinbase Pro as the reference for the Bitcoin Market Price which used for the Trust’s NAV. For example, there may be greater risk of price fluctuations, front running and price manipulation than if Coinbase Pro were regulated as an exchange, Coinbase Pro is also a relatively new market, having started operations less than ten years ago, and it could be subject to more operational problems than more established, more highly regulated markets, such as national securities exchanges.

Despite efforts to ensure accurate pricing, the Bitcoin Market Price and the price of Bitcoin generally, remains subject to volatility. Such volatility can adversely affect an investment in the Units.

Momentum pricing of Bitcoin may subject the Bitcoin price to greater volatility and adversely affect an investment in the Units.

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. The Sponsor believes that momentum pricing of Bitcoin has resulted, and may continue to result, in speculation regarding future appreciation in the value of Bitcoin, inflating and making more volatile the value of a Bitcoin. As a result, Bitcoin may be more likely to fluctuate in value due to changing investor confidence in future appreciation in the Bitcoin price, which could adversely affect an investment in the Units.

Risk Factors Related to the Trust and the Units

As the Sponsor and its management have little history of operating the Trust, their experience may be inadequate or unsuitable to manage the Trust.

The Sponsor has only a limited history of past performance in managing the Trust. Similarly, the Sponsor’s management has only a limited history of past performance in managing the Trust. The past performances of the Sponsor and management in other positions are no indication of their ability to manage an investment vehicle such as the Trust. If the experience of the Sponsor and its management is inadequate or unsuitable to manage an investment vehicle such as the Trust, the operations of the Trust may be adversely affected.

The Trust has only a limited performance history.

The Trust has only a limited operating history. Therefore, a potential Unitholder has little performance history, aside from the historical price of Bitcoin, to serve as a factor in evaluating an investment in the Trust.

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The Units are new securities and their value could decrease if unanticipated operational or trading problems arise.

The mechanisms and procedures governing the issuance, redemption (if any) and offering of the Units have been developed specifically for the Trust. Consequently, there may be unanticipated problems or issues with respect to the mechanisms of the operations of the Trust and the trading of the Units, which could have a material adverse effect on an investment in the Units. In addition, to the extent that unanticipated operational or trading problems or issues arise, the Trust management’s past experience and qualifications may not be suitable for solving these problems or issues.

Fees and expenses are charged regardless of profitability.

Unitholders in the Trust will pay fees and expenses in connection with their investment in Units, including the Management Fee at an annualized rate of 0.49% of the average daily NAV of the Trust. The Sponsor will bear the routine operational, administrative and other ordinary fees and expenses of the Trust (the “Assumed Expenses”); provided, however, that the Trust shall be responsible for audit fees, index license fees, aggregate legal fees in excess of $50,000 per annum and the fees of the Custodian (the “Excluded Expenses”) and 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 interest of Unitholders, indemnification expenses, fees and expenses related to public quotation on OTCQX (the “Extraordinary Expenses”).

The security of our Bitcoin Holdings cannot be assured, by the Trust, the Custodian or any other person.

The Trust’s Bitcoin holdings will be held by the Custodian subject to security methods and procedures designed to ensure the Trust’s control over those holdings and keep those holdings safe from unauthorized use, theft or other misuse. See “Other Parties – Custodian – The Custodian’s Role.” However, no security measures can provide assurance that the Trust’s Bitcoin holdings will not be affected by theft, misuse, cybersecurity breaches or other harms. Moreover, the Custodian’s standard of care is limited to that of “reasonable care.” Further, the Custodian is not liable for any loss that is caused, directly or indirectly, by any non-adherence by the Trust to the Custodian’s policies and procedures, any action taken by the Custodian , which in its sole discretion, may be necessary or advisable to secure the digital assets or accounts of the Trust or enhance the ability of the Custodian’s ability to secure the Trust’s assets or other exceptions under the Custodial Services Agreement (the “Custodial Services Agreement”). Other exceptions under the Custodial Services Agreement may include force majeure events, i.e., events out of the control of the Custodian, which make compliance by the Custodian with the terms of the Custodial Services Agreement impossible) or losses resulting from the Custodian’s reasonable reliance on an instruction reasonably understood as provided by the Trust to the Custodian. In addition, although we may be entitled to indemnification for certain breaches of the Custodial Services Agreement or the loss or theft of our assets, securing recovery for any such losses may require us to devote substantial time and resources to the task, with no guarantee of success. While the Trust has taken and will continue to take steps to secure its assets, the Trust’s assets are continuously subject to risks of theft, fraud and other security breaches, and some or all of the Trust’s assets may be lost or otherwise compromised as a result of such security breaches.

The Custodian holds the Trust’s Bitcoin in an omnibus account, a portion of which is held in cold storage (i.e., offline, not connected to the Internet), and a portion of which is held in “hot” storage to facilitate transfer of the Bitcoin. The Custodian does not disclose the amount of Bitcoin it holds in cold storage versus hot storage, and the Trust has no authority to direct the amount of Bitcoin the Custodian holds in cold storage or hot storage. Amounts of Bitcoin maintained in hot storage are more vulnerable to loss and theft than Bitcoin maintained in cold storage. Thus, if the Custodian were to hold significant amounts of Bitcoin on behalf of the Trust in hot storage, the Trust’s risk of loss and theft may be greater as any such losses may not be recoverable by the Trust.

Possibility of termination of the Trust may adversely affect a Unitholder’s portfolio.

The Sponsor may terminate the Trust in its sole discretion upon the occurrence of certain events, and shall terminate the Trust upon the occurrence of certain other events. If this power is so exercised, Unitholders who may wish to continue to invest in Bitcoin through the Trust will have to find another vehicle, and may not be able to find

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another vehicle that offers the same features as the Trust. Such detrimental developments could cause a Unitholder to liquidate its investments and upset the overall maturity and timing of its investment portfolio.

Any errors, discontinuance or changes in determining the value of the Bitcoin held by the Trust may have an adverse effect on the value of the Units.

The Administrator will determine the NAV of the Trust and the NAV per Unit on a daily basis as soon as practicable after 4:00 p.m., New York time on each Business Day. The Administrator’s determination will be made based on the Bitcoin Market Price. To the extent that such NAV or NAV per Unit is incorrectly calculated, there may be no liability for any error, but such misreporting of valuation data could adversely affect an investment in the Units.

Unitholders may be adversely affected by redemption orders that are subject to postponement, suspension, or rejection under certain circumstances.

If redemptions of Units are ever permitted, the Sponsor may nevertheless, in its discretion, suspend the right of redemption or postpone the redemption settlement date if (1) the order is not in proper form as determined by the Trust or Sponsor, (2) during an emergency 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 Unitholders. Any such postponement, suspension or rejection could adversely affect a redeeming investor. For example, the resulting delay may adversely affect the value of the investor’s redemption proceeds if the NAV of the Trust declines during the period of delay. The Trust disclaims any liability for any loss or damage that may result from any such suspension or postponement.

As a Unitholder, you will not have the rights normally associated with ownership of Units of other types of investment vehicles. For example, in comparison to those of securityholders in traditional operating companies, you will have no voting rights.

The Trust is a passive investment vehicle with no management and no board of directors. Thus, the Units are not entitled to the same rights as shares issued by a corporation operating a business enterprise with management and a board of directors. By acquiring Units, you are not acquiring the right to elect directors, to vote on certain matters regarding the issuer of your Units or to take other actions normally associated with the ownership of shares, such as the right to bring “oppression” or “derivative” actions. You will only have the extremely limited rights described under “Description of the Units.”

Your right to bring derivative actions is limited and it might be difficult for minority Unitholders to locate other Unitholders to reach the ownership threshold for derivative actions.

Under section 7.4 of the Trust Agreement, no Unitholder shall have the right to bring or maintain a derivative action, suit or other proceeding on behalf of the Trust unless two or more Unitholders who (i) are not affiliates of one another and (ii) collectively hold at least 10% of the outstanding Units join in the bringing or maintaining of such action, suit or other proceeding. A minority Unitholder may have difficulties attempting to locate other Unitholders to reach the 10% threshold under this provision, further limiting investors’ right to bring derivative actions on behalf of the Trust.

The value of the Units will be adversely affected if the Trust is required to indemnify the Sponsor or the Custodian as contemplated in the Trust Agreement or the Custodial Services Agreement.

Under the Trust Agreement, each of the Sponsor and the Trustee has a right to be indemnified from the Trust for any liability or expense it incurs without gross negligence, bad faith or willful misconduct on its part. Under the Trust Agreement, the Trust’s officers, directors, employees and agents also have a right to be indemnified from the Trust for any liability or expense they incur without gross negligence, bad faith, or willful misconduct on their part. Similarly, the Custodial Services Agreement provides for indemnification of the Custodian by the Trust under certain circumstances. That means that it may be necessary to sell assets of the Trust to cover losses or liability suffered by any of the foregoing parties. Any sale of that kind would reduce the NAV of the Trust and the NAV per Unit. 

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The Trust’s Bitcoin Holdings could become illiquid, which could cause large losses to Unitholders at any time or from time to time.

The Trust may not always be able to liquidate its Bitcoin at a desired price, or at all. It may become difficult to execute a trade at a specific price when there is a relatively small volume of buy and sell orders in the marketplace, including on Bitcoin exchanges and with OTC Bitcoin participants.

A market disruption, such as a foreign government taking political actions that disrupt the market in its currency, its commodity production or exports, or in another major export, can also make it difficult to liquidate a position. In the event of a fork of the Bitcoin network, certain Bitcoin exchanges and/or OTC counterparties may halt deposits and withdrawals of Bitcoin for a set period of time thus reducing liquidity in the markets. Unexpected market illiquidity may cause major losses to Unitholders at any time. The large amount of Bitcoin the Trust may acquire increases the risk of illiquidity by both making its Bitcoin more difficult to liquidate and increasing the losses incurred while trying to do so. To the extent the Trust is unable to purchase or sell Bitcoin at a desired price as a result of illiquidity, the Trust may not be able to effect issuances and redemptions (if permitted) of Units for cash.

Transactions in Bitcoin are irreversible and the Trust may be unable to recover improperly transferred Bitcoin.

Bitcoin transactions are irreversible. An improper transfer, whether accidental or resulting from theft, can only be undone by the receiver of the Bitcoin agreeing to send the Bitcoin back to the original sender in a separate subsequent transaction. To the extent the Trust erroneously transfers, whether accidental or otherwise, Bitcoin in incorrect amounts or to the wrong recipients, the Trust may be unable to recover the Bitcoin, which could adversely affect an investment in the Units.

The Trust’s Bitcoin may be lost, stolen, or subject to other inaccessibility.

There is a risk that part or all of the Trust’s Bitcoin could be lost, stolen or destroyed. Although the Trust will secure the Trust’s Bitcoin to seek to minimize the risk of loss, the Trust cannot guarantee that such a loss will be prevented. Access to the Trust’s Bitcoin could also be restricted by natural events (such as a hurricane, earthquake or pandemic) or human actions (such as a terrorist attack). Any of these events may adversely affect the operations of the Trust and, consequently, an investment in the Units. See the section below entitled “The Bitcoin Security System” for more information relating to the Trust’s security measures.

Any disruptions to the computer technology used by the Trust or its service providers could adversely affect the Trust’s ability to function and an investment in the Units.

The Trust will monitor its technology and may develop and redesign its technology, including enhancements and alterations that may be implemented from time to time, and it expects its service providers to do the same. In doing so, there is risk that failures may occur and result in service interruptions or other negative consequences. Any technology updates that cause disruptions in the proper functioning of the Trust’s or any of its service provider’s technology systems may have an adverse impact on the Trust and an investment in the Units.

The Trust may take such steps as the Sponsor determines, in its sole judgment, to be required to maintain and upgrade its technology systems, in order to protect against failure, hacking, malware and general security threats, and it expects its service providers to take their own steps to maintain and upgrade their own technology systems with the same goals in mind. The Trust is not liable to Unitholders for the failure or penetration of technology systems absent gross negligence, willful misconduct or bad faith. To the extent technology systems fail or are penetrated, any loss of the Trust’s Bitcoin or loss of confidence in the Trust’s ability to safeguard its Bitcoin may adversely affect an investment in the Units.

The Sponsor’s computer infrastructure may be vulnerable to security breaches. Any such problems could cause interruptions in the Trust’s operations and adversely affect an investment in the Units.

The Sponsor’s computer infrastructure is potentially vulnerable to physical or electronic computer break-ins, viruses and similar disruptive problems and security breaches. Any such problems or security breaches could give rise to a halt in the Trust’s operations, and expose the Trust to a risk of financial loss, litigation and other liabilities. In the

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event of a security breach, the Trust may cease operations, suspend redemptions or suffer a loss of Bitcoin or other assets. Any of these events, particularly if they result in a loss of confidence in the Trust’s ability to operate, could have a material adverse effect on an investment in the Units.

Technology system failures could cause interruptions in the Trust’s ability to operate.

If the Sponsor’s systems fail to perform, the Trust could experience disruptions in operations and slower response times, which may cause delays in the Trust’s ability to buy or sell Bitcoin. Any such failures may also result in the theft, loss or damage of the Trust’s Bitcoin. Any such theft, loss or damage of the Trust’s Bitcoin would have a negative impact on the value of the Units and adversely affect the Trust’s ability to operate. In addition, a loss of confidence in the Trust’s ability to secure the Trust’s Bitcoin with its technology system may adversely affect the Trust and the value of an investment in the Units.

The lack of full insurance and Unitholders’ limited rights of legal recourse against the Trust, Trustee, Sponsor, Transfer Agent and Custodian expose the Trust and its Unitholders to the risk of loss of the Trust’s Bitcoins for which no person or entity is liable.

The Trust is not a banking institution or otherwise a member of the Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation (“SIPC”) and, therefore, deposits held with or assets held by the Trust are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions. In addition, neither the Trust nor the Sponsor directly insures the Trust’s Bitcoins. While the Custodian has insurance as a subsidiary under its parent company, FMR LLC, such insurance is solely for the benefit of the Custodian and does not guarantee or insure the Trust in any way.

Further, the Custodian is not liable for any loss that is caused, directly or indirectly, by any non-adherence by the Trust to the Custodian’s policies and procedures, any action taken by the Custodian, which in its sole discretion, may be necessary or advisable to secure the digital assets or accounts of the Trust or enhance the ability of the Custodian’s ability to secure the Trust’s assets or other exceptions under the Custodial Services Agreement. Other exceptions under the Custodial Services Agreement may include force majeure events i.e., events out of the control of the Custodian, which make compliance by the Custodian with the terms of the Custodial Services Agreement impossible) or losses resulting from the Custodian’s reasonable reliance on an instruction reasonably understood as provided by the Trust to the Custodian,

Pursuant to the Custodial Services Agreement, the Custodian does not warrant or guarantee the form, authenticity, value or validity of any Asset received by the Custodian. The Custodian is not responsible for the services provided by the Bitcoin Network, such as verifying and confirming transactions that are submitted to the Bitcoin Network. Furthermore, the Custodian cannot cancel or reverse a transaction that has been submitted to the Bitcoin Network, except by an instruction to halt a withdrawal of Digital Asset within three hours immediately following receipt of a confirmation provided to the Trust by the Custodian of a pending withdrawal transaction. To the extent the Custodian does not cause or contribute to a loss that the Trust or Sponsor suffers in connection with any Bitcoin transaction initiated pursuant to the Custodian’s services, the Custodian will have no liability for such loss.

The Unitholders’ recourse against the Sponsor and the Trust’s other service providers for the services they provide to the Trust, including those relating to the provision of instructions relating to the movement of Bitcoin, is limited. Consequently, a loss may be suffered with respect to the Trust’s Bitcoin that is not covered by insurance and for which no person is liable in damages. As a result, the recourse of the Trust or the Unitholders is limited.

Because the Units reflect the estimated accrued but unpaid expenses of the Trust, the number of Bitcoins represented by a Unit will gradually decrease over time as the Trust’s Bitcoins are used to pay the Trust’s expenses.

Each outstanding Unit represents a fractional, undivided interest in the Bitcoins held by the Trust. The Units reflect the estimated accrued but unpaid expenses of the Trust. Therefore, the number of Bitcoins represented by each Unit will gradually deccrease over time as the Trust’s Bitcoins are used to pay the Trust’s expenses. This is also true with respect to Units that are issued in exchange for additional deposits of Bitcoins into the Trust, as the number of Bitcoins required to create Units proportionately reflects the number of Bitcoins represented by the Units outstanding

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at the time of creation. Assuming a constant Bitcoin price, the trading price of the Units is expected to gradually decrease relative to the price of Bitcoin as the number of Bitcoins represented by the Units gradually decreases. Investors should be aware that the gradual decrease in the number of Bitcoins represented by the Units will occur regardless of whether the trading price of the Units rises or falls in response to changes in the price of Bitcoin.

Unitholders may not be able to withdraw or value his/her units upon death, legal disability, bankruptcy, insolvency, dissolution, or withdrawal from the Trust.

Under the Trust Agreement, the death, legal disability, bankruptcy, insolvency, dissolution, or withdrawal of any Unitholder (as long as such Unitholder is not the sole Unitholder of the Trust) shall not result in the termination of the Trust, and such Unitholder, his/her estate, custodian or personal representative shall have no right to withdrawal or value such Unitholder’s Units. In addition, Unitholders shall 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 as otherwise provided in the Trust Agreement.

Risks Associated with the Index

The Index has a limited history and the methodology for determining the Index established by the Index Provider is relatively new and untested. The failure of the Index methodology to measure the actual value of Bitcoin could have an adverse effect on the Trust and on the value of an investment in the Trust. In addition, the value of Bitcoin as calculated by the Index methodology may differ from the value of Bitcoin calculated by other methodologies and the price of Bitcoin on any single spot market, including the principal market used to determine NAV.

We have concluded that certain of our previously issued financial statements should not be relied upon and have restated certain of our previously issued financial statements which was time-consuming and expensive and could expose us to additional risks that could have a negative effect on our Company.

As previously announced, we have concluded that certain of our previously issued financial statements should not be relied upon. We restated our previously issued audited financial statements as of and for the year ended December 31, 2020 and the interim period ended March 31, 2021. The restatement process could continue to expose us to additional risks that could have a negative effect on the Trust. In particular, we incurred some unanticipated expenses and costs, including audit, legal and other professional fees, in connection with the restatement of our previously issued financial statements and the ongoing remediation of a material weakness in our internal control over financial reporting, including hiring new personnel and enhancing our policies and procedures. To the extent these steps are not successful, we could be forced to incur additional time and expense. Our Sponsor’s management attention was also diverted from some aspects of the operation of our business in connection with the restatement and these ongoing remediation efforts.

We have identified a material weakness in our system of internal controls and are in the process of remediation. If not remediated, this material weakness could result in additional material misstatements in our financial statements. We may be unable to develop, implement and maintain appropriate controls in future periods.

We have determined that we had a material weakness in our internal control over financial reporting as of March 31, 2021. This material weakness resulted in identified misstatements to the financial statements, and previously issued financial statements are restated in this filing. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As a public company, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for each annual report on Form 10-K to be filed with the SEC. This assessment will require disclosure of any material weaknesses identified by our management in our internal control over financial reporting. We will be required to disclose changes made in our internal control and our financial reporting procedures on a quarterly basis. To comply with the requirements of being a public company, we expect to need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, Nasdaq or other regulatory authorities, which would require additional financial and management resources.

Although we are working to remedy the ineffectiveness of our internal control over financial reporting and disclosure controls and procedures, there can be no assurance as to when the remediation plan will be fully developed and implemented. Until our remediation plan is fully implemented, we will continue to devote time, attention and financial resources to these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan is inadequate, there will continue to be an increased risk that our future financial statements could contain errors that will be undetected. Further and continued determinations that there are one or more material weaknesses in the effectiveness of our internal control over financial reporting could adversely affect

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our business, reputation, revenues, results of operations, financial condition and stock price and limit our ability to access the capital markets through equity or debt issuances.

Risk Factors Related to the Regulation of the Trust and the Units

Regulatory changes or actions may affect the value of the Units or restrict the use of Bitcoins, mining activity or the operation of the Bitcoin Network or the Bitcoin markets in a manner that adversely affects the value of the Units.

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 FinCEN, SEC, CFTC, FINRA, the Consumer Financial Protection Bureau, 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 Bitcoin networks, Bitcoin users and Bitcoin markets, with particular focus on the extent to which Bitcoin can be used to launder the proceeds of illegal activities or fund criminal or terrorist enterprises and the safety and soundness of exchanges and 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. Ongoing and future regulatory actions with respect to digital assets generally or Bitcoin in particular may alter, perhaps to a materially adverse extent, the nature of an investment in the Units or the ability of the Trust to continue to operate.

In August 2021, SEC Chair Gary Gensler asked Congress to pass a law that could give the agency the legal authority to monitor crypto exchanges. This statement follows former U.S. Treasury Secretary Steven Mnuchin’s statement that he had “very serious concerns” about digital assets in July 2019. Former Secretary Mnuchin indicated that one source of concern is digital assets’ potential to be used to fund illicit activities in July 2019. Former Secretary Mnuchin has indicated that the U.S. Financial Crimes Enforcement Network is planning to release new requirements relating to digital asset activities in the first half of 2020. As of the date of this disclosure, no such requirements have been released.

Law enforcement agencies have often relied on the transparency of blockchains to facilitate investigations. However, certain privacy-enhancing features have been, or are expected to be, introduced to a number of digital asset networks. If the Bitcoin Network were to adopt any of these features, these features may provide law enforcement agencies with less visibility into transaction-level data. Europol, the European Union’s law enforcement agency, released a report in October 2017 noting the increased use of privacy-enhancing digital assets like Zcash and Monero in criminal activity on the internet. Although no regulatory action has been taken to treat privacy-enhancing digital assets differently, this may change in the future.

Additionally, concerns have been raised about the electricity required to secure and maintain digital asset networks. As of December 31, 2020, in connection with the mining process, over 138 million tera hashing operations are performed every second, non-stop on the Bitcoin Network. Although measuring the electricity consumed by this process is difficult because these operations are performed by various machines with varying levels of efficiency, the process consumes a significant amount of energy. Further, in addition to the direct energy costs of performing these calculations, there are indirect costs that impact the digital asset network’s total energy consumption, including the costs of cooling the machines that perform these calculations. Due to these concerns around energy consumption, particularly as such concerns relate to public utilities companies, various states and cities have implemented, or are considering implementing, moratoriums on digital asset mining in their jurisdictions. A significant reduction in mining activity as a result of such actions could adversely affect the security of the Bitcoin Network by making it easier for a malicious actor or botnet to manipulate the Blockchain. See “—If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin Network, or otherwise obtains control over the Bitcoin Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Blockchain to adversely affect the value of the Units or the ability of the Trust to operate.”

To the extent that Bitcoin itself is determined to be a security, such determination may have an adverse effect on the value of your investment in the Trust.

Many blockchain startups use digital asset networks, such as the Bitcoin network, to launch their initial coin offerings, also known as ICOs. In July 2017, the SEC determined that tokens issued by The DAO, for instance, were securities under the U.S. securities laws. The SEC reasoned that the unregistered sale of digital asset tokens can, in certain circumstances, including initial coin offerings, be considered illegal public offering of securities. In November

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2018, the SEC determined that two other token issuances by companies called CarrierEQ, Inc., (d/b/a Airfox) and Paragon Coin, Inc. were unregistered securities offerings. And in September 2019, the SEC determined that the token issuance of EOS by a company called Block.one, was an unregistered securities offering and ordered Block.one to pay a $24 million civil penalty. The SEC could make a similar determination with respect to digital tokens distributed in other initial coin offerings. If the SEC were to determine that Bitcoin is a security, the Trust and the Sponsor would be subject to additional regulatory and compliance requirements under U.S. federal securities laws, including the Investment Company Act and, with respect to the Sponsor, the Advisers Act. In addition, the SEC’s determination or a market expectation of the SEC’s determination that any digital asset is a security could adversely affect the market price of Bitcoin or digital assets generally and thus the value of the Shares.

Regulatory changes or actions in foreign jurisdictions may have impacted the price of Bitcoin or may impact it in the future.

Various foreign jurisdictions may, in the near future, adopt laws, regulations or directives that affect the Bitcoin Network, the Bitcoin exchange market and their users, particularly Bitcoin exchanges and service providers that fall within such jurisdictions’ regulatory scope, which may in turn, impact the price of Bitcoin. 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 globally, or otherwise negatively affect the value of Bitcoin. The regulatory uncertainty surrounding the treatment of Bitcoin creates risks for the Trust.

In July 2019, the United Kingdom’s Financial Conduct Authority proposed rules to address harm to retail consumers deriving from the sale of derivatives and exchange traded notes (“ETNs”) that reference certain types of digital assets, contending that they are “ill-suited” to retail investors citing extreme volatility, valuation challenges and association with financial crime. In addition to ETNs, the proposed ban would affect financial products including contracts for difference, options and futures. Public consultation on the proposed restriction closed in October 2019. A determination that Bitcoin is a security under U.S. or foreign law could adversely affect an investment in the Units.

The sale of the Units could be subject to SEC or state securities registration.

The offer and sale of the Units in a Rule 506 offering is not registered with the SEC under the Securities Act or with a state regulator under the securities laws of any state. If a regulator or a court determines that the sale of the Units should have been registered, the Trust may be required to provide investors who purchased in the offering the option to rescind their investment on terms favorable to those investors. If this occurs, the Trust may lack sufficient assets to repay all purchasers seeking rescission, the secondary market for the Units, if any, may be negatively impacted, and the value of the Units held by remaining investors may decrease.

The Trust is not a registered investment company.

The Trust is not a registered investment company subject to the Investment Company Act of 1940, as amended (the “1940 Act”). Consequently, Unitholders of the Trust do not have the regulatory protections provided to shareholders in registered investment companies which, for example, require that investment companies have a certain percentage of disinterested directors and requirements as to the relationship between the investment company and certain of its affiliates.

The Trust could be, or could become, subject to the Commodity Exchange Act.

Currently, the CFTC takes the position that Bitcoin is a commodity, although it has not issued regulations to formalize this position. The Trust is not registered as a commodity pool for purposes of the Commodity Exchange Act (the “CEA”), and the Sponsor is not registered as a commodity pool operator, a commodity trading advisor or otherwise. The Trust and the Sponsor will continue to monitor and evaluate whether any such registrations may be or may become required.

Trading on Bitcoin markets outside the United States is not subject to U.S. regulation, and may be less reliable than U.S. Markets.

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To the extent any of the Trust’s assets are valued based on trading conducted on Bitcoin markets outside the U.S., trading on such markets is not regulated by any U.S. governmental agency and may involve certain risks not applicable to trading in U.S. markets. Certain foreign markets may be more susceptible to disruption than U.S. markets. These factors could adversely affect the performance of the Trust.

Future regulations may impose other regulatory burdens, which could harm the Trust or even cause the Trust to liquidate.

Current and future legislation, CFTC and SEC rulemaking and other regulatory developments may affect the manner in which Bitcoin are treated for classification and clearing purposes, and the manner in which the Units, the Trust and the Sponsor are regulated. Currently, the CFTC takes the position that Bitcoin is a commodity and has brought enforcement actions against Bitcoin operators who have not registered as futures commission merchants or commodity pool operators, although several court challenges to this position are still pending and the CFTC has not yet issued regulations to formalize its position. Although several U.S. federal district courts have recently held for certain purposes that Bitcoin is a currency or a form of money, these rulings are not definitive and the Sponsor and the Trust cannot be certain as to how future regulatory developments may affect the treatment of Bitcoin under the law. In the face of such developments, new or additional registration and compliance steps may result in extraordinary expenses to the Trust. If the Sponsor decides to terminate the Trust in response to changed regulatory circumstances, the Trust may be dissolved or liquidated at a time that is disadvantageous to Unitholders.

To the extent that Bitcoin is deemed to fall within the definition of a “commodity interest” under the CEA, the Trust and the Sponsor may be subject to additional regulation under the CEA and CFTC regulations. The Sponsor or the Trust may be required to register as a commodity pool operator or commodity trading advisor with the CFTC and become a member of the National Futures Association and may be subject to additional regulatory requirements with respect to the Trust, including disclosure and reporting requirements. These additional requirements may result in extraordinary, recurring and nonrecurring expenses. If the Sponsor or the Trust determines not to comply with such additional regulatory requirements, the Sponsor will terminate the Trust. Any such termination could result in the liquidation of the Trust’s Bitcoin at a time that is disadvantageous to Unitholders.

To the extent that Bitcoin is deemed to fall within the definition of a security under U.S. federal securities laws, the Trust and the Sponsor may be subject to additional requirements under the 1940 Act and the Advisers Act. The Sponsor or the Trust may be required to register as an investment adviser under the Advisers Act. Such additional registration may result in extraordinary, recurring and non-recurring expenses. If the Sponsor or the Trust determines not to comply with such additional regulatory requirements, the Sponsor will terminate the Trust. Any such termination could result in the liquidation of the Trust’s Bitcoin at a time that is disadvantageous to Unitholders.

Banks may not provide banking services, or may cut off banking services, to businesses that provide Bitcoin-related services or that accept Bitcoin as payment, which could directly impact the Trust’s operations, damage the public perception of Bitcoin and the utility of Bitcoin as a payment system and could decrease the price of Bitcoin and adversely affect an investment in the Units.

A number of companies that provide Bitcoin-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. This may have an adverse impact on the Trust’s operations. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to Bitcoin-related companies or companies that accept Bitcoin for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide Bitcoin-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of Bitcoin as a payment system and harming public perception of Bitcoin or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of Bitcoin as a payment system and the public perception of Bitcoin could be damaged if banks were to close the accounts of many or of a few key businesses providing Bitcoin-related services. This could decrease the price of Bitcoin and therefore adversely affect an investment in the Units.

It may be illegal now, or in the future, to acquire, own, hold, sell or use Bitcoin in one or more countries, and ownership of, holding or trading in Units may also be considered illegal and subject to sanctions.

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The United States, China, Russia, India or other jurisdictions may take additional regulatory actions in the future that further restrict the right to acquire, own, hold, sell or use Bitcoin or to exchange Bitcoin for fiat currency. Such an action may also result in the restriction of ownership, holding or trading in the Units. Such a restriction could subject the Trust or the Sponsor to investigations, civil or criminal fines and penalties, which could harm the reputation of the Trust or its Sponsor, and could result in the termination and liquidation of the Trust at a time that is disadvantageous to Unitholders, or may adversely affect an investment in the Units.

If regulatory changes or interpretations of the Trust’s or Sponsor’s activities require registration as money service businesses under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act or as money transmitters or digital currency businesses under state regimes for the licensing of such businesses, the Trust and/or Sponsor could suffer reputational harm and also extraordinary, recurring and/or nonrecurring expenses, which would adversely impact an investment in the Units.

If regulatory changes or interpretations of the Trust’s or Sponsor’s activities require the registration of the Trust or Sponsor as a money services business under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, the Trust or Sponsor may be required to register and comply with such regulations. If regulatory changes or interpretations of the Trust’s or Sponsor’s activities require the licensing or other registration as a money transmitter or business engaged in digital currency activity (e.g., under the New York BitLicense regime) (or equivalent designation) under state law in any state in which the Trust or Sponsor operates, the Trust or Sponsor may be required to seek licensure or otherwise register and comply with such state law. In the event of any such requirement, to the extent that the Sponsor decides to continue the Trust, the required registrations, licensure and regulatory compliance steps may result in extraordinary, nonrecurring expenses to the Trust. Regulatory compliance would include, among other things, implementing anti-money laundering and consumer protection programs.

To the extent the Trust or Sponsor is found to have operated without appropriate state or federal licenses, it may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties, all of which would harm the reputation of the Trust or its Sponsor, decrease the liquidity of the Trust, and have a material adverse effect on the price of the Units. If the Sponsor decides to comply with such additional federal or state regulatory obligations and continue the Trust, the required registrations, licensure and regulatory compliance steps may result in extraordinary, nonrecurring expenses to the Trust, possibly affecting an investment in the Units in a material and adverse manner. Furthermore, the Trust and its service providers may not be capable of complying with certain federal or state regulatory obligations applicable to money service businesses’ money transmitters and businesses involved in digital currency business activity. If the Sponsor and/or the Trust determines not to comply with such requirements, the Sponsor will act to dissolve and liquidate the Trust. Any such termination could result in the liquidation of the Trust’s Bitcoin at a time that is disadvantageous to Unitholders.

Digital assets are not insured or guaranteed by any government or government agency.

Governments, quasi-government and financial institutions may impose additional regulation on digital assets and blockchain technology, and the regulatory environment for digital assets is changing and unpredictable. Governments, quasi-government and financial institutions may impose additional regulation on digital assets and blockchain technology, and the regulatory environment for digital assets is changing and unpredictable.

Many governments, regulators, self-regulators and other quasi-government agencies around the world that seek to regulate the digital assets industry may lack experience in digital assets and blockchain technology generally. They may seek to use existing laws and regulations and interpret them to apply to the digital assets industry. Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, digital assets and related technologies. As a result, they do not contemplate or address unique issues associated with digital assets and are thus subject to significant uncertainty and vary widely across jurisdictions. This may result in unclear rules that are difficult or impractical to comply with, and therefore increase the Trust’s legal and regulatory compliance risks.

While interest in digital assets is increasing, digital asset regulation is also evolving and increasing. Governmental authorities and regulators have been looking to take on a more active role in regulating digital assets to ensure the assets are not used for illicit purposes and reduce financial risk by promoting better compliance, among other things. Although regulation on digital assets will increase the regulatory responsibility and costs for investors and exchanges, it may also further legitimize the industry.

The digital assets industry is relatively new and has limited access to policymakers or lobbying organizations, which may harm the Trust’s ability to effectively react to proposed laws and regulation of digital assets adverse to the Trust’s business.

Various governmental organizations, consumer agencies and public advocacy groups around the world have been examining the operations of cryptocurrency networks, customers and platforms, with a focus on how digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist enterprises, and the safety and soundness of platforms and other service providers that hold digital assets for customers. Many of these entities have called for heightened regulatory oversight and have issued consumer advisories describing the risks posed by digital assets to customers and investors.

Unlike more established industries, the digital assets industry is relatively new and has limited access to policymakers and lobbying organizations in many jurisdictions. Competitors from more established industries, including traditional financial services, may have greater access to lobbyists or governmental officials. Accordingly, legislators and regulators that are concerned about the potential for digital assets for illicit usage may affect statutory and regulatory changes with minimal or discounted inputs from the digital assets industry. As a result, new laws and regulations may be proposed and adopted, or existing laws and regulations may be interpreted in new ways that can adversely impact the digital assets industry and/or digital asset platforms.

The Trust may not be able to appropriately adapt to such sudden adverse legal and regulatory changes. Its inability to adapt to such changes in time may result in the Trust being unable to offer its product and services in certain jurisdictions or customer segments, which may adversely impact its reputation, business, operating results, financial condition and share price.

The treatment of the Trust for U.S. federal income tax purposes is uncertain.

The Sponsor intends to take the position that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes. Assuming that the Trust is a grantor trust, the Trust will not be subject to U.S. federal income tax. Rather, if the Trust is a grantor trust, each beneficial owner of Units will be treated as directly owning its pro rata share of the Trust’s assets and a pro rata portion of the Trust’s income, gain, losses and deductions will “flow through” to each beneficial owner of Units.

Because of the evolving nature of digital currencies, it is not possible to predict potential future developments that may arise with respect to digital currencies, including forks, airdrops and other similar events. Assuming that the Trust is currently a grantor trust for U.S. federal income tax purposes, certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated as a grantor trust for such purposes.

If the Trust is not properly classified as a grantor trust, the Trust might be classified as a partnership for U.S. federal income tax purposes. However, due to the uncertain treatment of digital currency for U.S. federal income tax purposes (as discussed below in “Certain U.S. Federal Income Tax Consequences—Uncertainty Regarding the U.S. Federal Income Tax Treatment of Digital Currency”), there can be no assurance in this regard. If the Trust were classified as a partnership for U.S. federal income tax purposes, the tax consequences of owning Units generally would not be materially different from the tax consequences described herein, although there might be certain differences,

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including with respect to timing of the recognition of taxable income or loss. In addition, tax information reports provided to beneficial owners of Units would be made in a different form. If the Trust were not classified as either a grantor trust or a partnership for U.S. federal income tax purposes, it would be classified as a corporation for such purposes. In that event, the Trust would be subject to entity-level U.S. federal income tax (currently at the rate of 21%) on its net taxable income and certain distributions made by the Trust to Unitholders would be treated as taxable dividends to the extent of the Trust’s current and accumulated earnings and profits. Any such dividend distributed to a beneficial owner of Units that is a non-U.S. person for U.S. federal income tax purposes would be subject to U.S. federal withholding tax at a rate of 30% (or such lower rate as provided in an applicable tax treaty).

Unitholders could incur a tax liability without an associated distribution.

In the normal course of business, it is possible that the Trust could incur a taxable gain in connection with the delivery or sale of Bitcoin (including, as a result of the Trust using Bitcoin and Additional Currency to pay its expenses) that is otherwise not associated with a distribution to Unitholders. In the event that this occurs, Unitholders may be subject to tax due to the grantor trust status of the Trust even though there is not a corresponding distribution from the Trust. See “Certain U.S. Federal Income Tax Consequences—Tax Consequences to U.S. Holders.”

The treatment of Bitcoin for U.S. federal income tax purposes is uncertain.

As discussed in the section entitled “Certain U.S. Federal Income Tax Consequences—Uncertainty Regarding the U.S. Federal Income Tax Treatment of Digital Currency” below, assuming that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes, each beneficial owner of Units will be treated for U.S. federal income tax purposes as the owner of an undivided interest in the Bitcoin (and, if applicable, any Additional Currency) held in the Trust. Due to the new and evolving nature of digital currencies and the absence of comprehensive guidance with respect to digital currencies, many significant aspects of the U.S. federal income tax treatment of digital currency are uncertain.

In 2014, the IRS released a Notice discussing certain aspects of “convertible virtual currency” (that is, digital currency that has an equivalent value in fiat currency or that acts as a substitute for fiat currency) for U.S. federal income tax purposes and, in particular, stating that such digital currency (i) is “property” (ii) is “not treated as currency” for purposes of the rules relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released a Revenue Ruling in which the IRS concluded that a hard fork on a digital currency blockchain (i) does not create taxable income if the taxpayer does not subsequently receive new units of digital currency and (ii) does create taxable ordinary income if the taxpayer receives new units of cryptocurrency by airdrop. Simultaneously with the release of the Revenue Ruling, the IRS also published the FAQs, which address, among other issues, how to determine the fair market value of digital currencies and the proper method of determining a holder’s holding period and tax basis for units of digital currency (including those acquired at different times or at varying prices. However, the Notice, Revenue Ruling and FAQs do 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; (iii) the proper method of determining a holder’s holding period and tax basis for convertible virtual currencies acquired at different times or at varying prices; and (iv) whether and how a holder of convertible virtual currencies acquired at different times or at varying prices may designate, for U.S. federal income tax purposes, which of the convertible virtual currencies is transferred in a subsequent sale, exchange or other disposition. 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, although the Revenue Ruling and FAQs address the treatment of hard forks, there continues to be uncertainty with respect to the timing and amount of the income inclusions.

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 Notice, Revenue Ruling and FAQs. 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 Unitholders and could have an adverse effect on the value of Bitcoin. 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. For example, the Notice addresses only digital currency that is “convertible virtual

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currency,” and it is conceivable that, as a result of a fork, airdrop or similar occurrence, the Trust will hold certain types of digital currency that are not within the scope of the Notice.

Unitholders are urged to consult their tax advisers regarding the tax consequences of owning and disposing of Units and digital currencies in general.

Future developments regarding the treatment of digital currency for U.S. federal income tax purposes could adversely affect the value of the Units.

As discussed above, many significant aspects of the U.S. federal income tax treatment of digital currency, such as Bitcoin, are uncertain, and it is unclear what guidance on the treatment of digital currency for U.S. federal income tax purposes may be issued in the future. It is possible that any such guidance would have an adverse effect on the prices of digital currency, including on the price of Bitcoin in the Bitcoin markets, and therefore may have an adverse effect on the value of the Units.

Because of the evolving nature of digital currencies, it is not possible to predict potential future developments that may arise with respect to digital currencies, including forks, airdrops and similar occurrences. Such developments may increase the uncertainty with respect to the treatment of digital currencies for U.S. federal income tax purposes. Moreover, certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated as a grantor trust for U.S. federal income tax purposes.

Future developments in the treatment of digital currency for tax purposes other than U.S. federal income tax purposes could adversely affect the value of the Units.

The taxing authorities of certain states, including New York, (i) have announced that they will follow the Notice with respect to the treatment of digital currencies for state income tax purposes and/or (ii) have issued guidance exempting the purchase and/or sale of digital currencies for fiat currency from state sales tax. However, it is unclear what further guidance on the treatment of digital currencies for state tax purposes may be issued in the future.

The treatment of digital currencies for tax purposes by non-U.S. jurisdictions may differ from the treatment of digital currencies for U.S. federal, state or local tax purposes. It is possible, for example, that a non-U.S. jurisdiction would impose sales tax or value-added tax on purchases and sales of digital currencies for fiat currency. If a foreign jurisdiction with a significant share of the market of Bitcoin users imposes onerous tax burdens on digital currency users, or imposes sales or value-added tax on purchases and sales of digital currency for fiat currency, such actions could result in decreased demand for Bitcoin in such jurisdiction.

Any future guidance on the treatment of digital currencies for state, local or non-U.S. tax purposes could increase the expenses of the Trust and could have an adverse effect on the prices of digital currencies, including on the price of Bitcoin in the Bitcoin markets. As a result, any such future guidance could have an adverse effect on the value of the Units.

A U.S. tax-exempt Unitholder may recognize “unrelated business taxable income” a consequence of an investment in Units.

Under the guidance provided in Revenue Ruling and FAQs, hard forks, airdrops and similar occurrences with respect to digital currencies will under certain circumstances be treated as taxable events giving rise to ordinary income. In the absence of guidance to the contrary, it is possible that any such income recognized by a U.S. tax-exempt Unitholder would constitute “unrelated business taxable income” (“UBTI”). A tax-exempt Unitholder should consult its tax advisor regarding whether such Unitholder may recognize UBTI as a consequence of an investment in Units.

Non-U.S. Unitholders may be subject to U.S. federal withholding tax on income derived from forks, airdrops and similar occurrences.

The Revenue Ruling and FAQs do not address whether income recognized by a non-U.S. person as a result of a fork, airdrop or similar occurrence could be subject to the 30% withholding tax imposed on U.S.-source “fixed or determinable annual or periodical” income. Non-U.S. Unitholders should assume that, in the absence of guidance, a

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withholding agent is likely to withhold 30% of any such income recognized by a non-U.S. Unitholder in respect of its Units, including by deducting such withheld amounts from proceeds that such non-U.S. Unitholder would otherwise be entitled to receive in connection with a distribution of Additional Currency.

Risk Factors Related to Potential Conflicts of Interest

Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust. The Sponsor and its affiliates have no fiduciary duties to the Trust and its Unitholders other than as provided in the Trust Agreement, which may permit them to favor their own interests to the detriment of the Trust and its Unitholders.

The Sponsor will manage the affairs of the Trust. Conflicts of interest may arise among the Sponsor and its affiliates, on the one hand, and the Trust and its Unitholders, on the other hand. As a result of these conflicts, the Sponsor may favor its own interests and the interests of its affiliates over the Trust and its Unitholders. These potential conflicts include, among others, the following:

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● The Sponsor has no fiduciary duties to, and is allowed to take into account the interests of parties other than, the Trust and its Unitholders in resolving conflicts of interest;

● The Trust has agreed to indemnify the Sponsor and its affiliates pursuant to the Trust Agreement;

● The Sponsor is responsible for allocating its own limited resources among different clients and potential future business ventures, to each of which it owes fiduciary duties;

● The Sponsor and its staff also service affiliates of the Sponsor, including several other digital asset investment vehicles, and their respective clients and cannot devote all of its, or their, respective time or resources to the management of the affairs of the Trust;

● The Sponsor, its affiliates and their officers and employees are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with the Trust;

● There is an absence of arm’s-length negotiation with respect to certain terms of the Trust, and, where applicable, there has been no independent due diligence conducted with respect to the Trust;

● The Sponsor decides whether to retain separate counsel, accountants or others to perform services for the Trust;

● The Sponsor may appoint an agent to act on behalf of the Unitholders, including in connection with the distribution of any Additional Currency, which agent may be the Sponsor or an affiliate of the Sponsor.

By purchasing the Units, Unitholders agree and consent to the provisions set forth in the Trust Agreement. See “Description of the Trust Documents—Description of the Trust Agreement.”

For a further discussion of the conflicts of interest among the Sponsor, the Trust and others, see “Conflicts of Interest.”

Unitholders cannot be assured of the Sponsor’s continued services, the discontinuance of which may be detrimental to the Trust.

Unitholders cannot be assured that the Sponsor will be willing or able to continue to serve as sponsor to the Trust for any length of time. If the Sponsor discontinues its activities on behalf of the Trust and a substitute sponsor is not appointed, the Trust will terminate and liquidate its Bitcoins.

Appointment of a substitute sponsor will not guarantee the Trust’s continued operation, successful or otherwise. Because a substitute sponsor may have no experience managing a digital asset financial vehicle, a substitute sponsor may not have the experience, knowledge or expertise required to ensure that the Trust will operate successfully or continue to operate at all. Therefore, the appointment of a substitute sponsor may not necessarily be beneficial to the Trust and the Trust may terminate. See “Conflicts of Interest—The Sponsor.”

The Custodian could resign or be removed by the Sponsor, which would trigger early termination of the Trust.

The Custodian may terminate the Custodial Services Agreement for cause at any time, and the Custodian can terminate the Agreement for any reason upon the notice period provided under the Custodial Services Agreement. If the Custodian resigns or is removed without replacement, the Trust will dissolve in accordance with the terms of the Trust Agreement.

Unitholders may be adversely affected by the lack of independent advisers representing investors in the Trust.

The Sponsor has consulted with counsel, accountants and other advisers regarding the formation and operation of the Trust. No counsel was appointed to represent investors in connection with the formation of the Trust or the establishment of the terms of the Trust Agreement and the Units. Moreover, no counsel has been appointed to represent Unitholders in connection with an investment in the Units. Accordingly, an investor should consult his, her or its own legal, tax and financial advisers regarding the desirability of an investment in the Units. Lack of such consultation may lead to an undesirable investment decision with respect to investment in the Units.

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OVERVIEW OF THE BITCOIN INDUSTRY AND MARKET

Introduction to Bitcoin and the Bitcoin Network

“Bitcoin” is a digital asset and the first so-called cryptocurrency. It uses peer-to-peer technology and cryptographic security features to decentralize control of the overall Bitcoin computer network (the “Bitcoin Network”), and blockchain technology to ensure the secure transfer and authenticity of each Bitcoin. Bitcoin are stored in digital wallets and can be used to pay for goods and services. They can also be purchased, sold and traded on websites that facilitate the transfer of Bitcoin in exchange for government-issued currencies or other cryptocurrencies, traded on cryptocurrency exchanges and transferred in individual end-user-to-end-user transactions under a barter system. Bitcoin benefits include security, decentralization, low transaction costs compared to many other payment systems, the potential for universal use and the ability to divide a single Bitcoin by up to eight decimal places.

A Blockchain is a decentralized, distributed ledger that records the provenance of digital assets. The ledger is public and accessible to all, and portions and copies of it are stored in a decentralized manner on the several thousand computers comprising the Bitcoin Network. Transaction data is permanently recorded in data files called “blocks,” which reflect transactions that have been recorded and authenticated by Bitcoin Network participants known as “miners.” Each newly recorded block of transactions refers back to and “connects” with the immediately preceding recorded block in the ledger. Each new block records outstanding Bitcoin transactions, and outstanding transactions are settled and validated through such recording. The Blockchain is designed to represent a complete, transparent, secure and unbroken history of all the transactions that have occurred on the Bitcoin Network. The Bitcoin Network software source code includes the protocols that govern the creation, or “mining”, of new Bitcoin and the cryptographic system that secures and verifies Bitcoin transactions. New Bitcoin are allocated by the Bitcoin Network protocol through the mining process, subject to a well-known issuance schedule contained within the protocol.

The Blockchain constitutes a record of every Bitcoin, every Bitcoin transaction (including the mining of new Bitcoin) and every Bitcoin address associated with a quantity of Bitcoin. The Bitcoin Network and Bitcoin Network software programs can interpret the Blockchain to determine the exact Bitcoin balance, if any, of any public Bitcoin address listed in the Blockchain as having taken part in a transaction on the Bitcoin Network. Bitcoin Network miners engage in a set of prescribed, complex mathematical calculations in order to add a block to the Blockchain and thereby confirm Bitcoin transactions included in that block’s data. In addition to confirming the authenticity of recent transactions and referencing the preceding block, each block also contains an answer to a mathematical problem. Miners generate potential answers to this mathematical problem at a rapid rate, effectively searching for a correct answer via computational trial-and-error. New blocks cannot be submitted to the network without a correct answer to the mathematical problem. The mathematical problem in each block is extremely difficult to solve, but once a valid solution is found, it is very easy for the rest of the network to confirm that the solution is correct. Once the mathematical problem has been solved, the miner may then transmit a copy of the newly-formed block to peers on the Bitcoin Network, which then update their respective copies of the Blockchain by appending the new block. A new block that is added to the Blockchain serves to take recent, but as yet unconfirmed, transactions and verify that none are fraudulent, and the miner that first solves such block receives a reward of a fixed number of Bitcoin for the miner’s effort. In addition to the block reward, end users pay fees as an incentive for a miner to confirm their transactions in newly created blocks.

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).

Overview of the Bitcoin Network’s Operations

In order to own, transfer or use Bitcoin directly on the Bitcoin Network (as opposed to through an intermediary, such as a custodian), a person generally must have internet access to connect to the Bitcoin Network.

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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 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 Blockchain.

Description 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 reveal 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, Bitcoins are 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 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 pooled-ownership digital wallet, such as a digital wallet owned by a Bitcoin exchange. In contrast to on-blockchain transactions, which are publicly recorded on the 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 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 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 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

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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 Blockchain.

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 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 Blockchain to which the new block is being added and (iii) transactions that have occurred but have not yet been added to the 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 Blockchain, the Bitcoin Network software program of both the spending party and the receiving party will show confirmation of the transaction on the 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 Blockchain, it is irreversible.

Creation of New Bitcoin

New Bitcoins 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 10 minutes, on average, a new block is added to the Blockchain with the latest transactions processed by the network, and the computer that generated this block is currently awarded 6.25 Bitcoin. Due to the nature of the algorithm for block generation, this process (generating a “proof-of-work”) is guaranteed to be random. Over time, rewards are expected to be proportionate to the computational power of each machine.

The process by which Bitcoin is “mined” results in new blocks being added to the Blockchain and new Bitcoin tokens being issued to the miners. Computers on the Bitcoin Network engage in a set of prescribed complex mathematical calculations in order to add a block to the 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 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 Blockchain approximately every ten minutes. A miner’s proposed block is added to the Blockchain once a majority of the nodes on the Bitcoin Network confirms the miner’s work. Miners that are successful in adding a block to the Blockchain are automatically awarded Bitcoin for their effort and may also receive transaction fees paid by transferors whose transactions are recorded in the block. 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 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.

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Limits on Bitcoin Supply

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 Blockchain. The initial block reward when the Bitcoin Network was introduced in 2009 was 50 Bitcoin per block. That number has and will continue to halve approximately every four years until approximately 2140, when it is estimated that block rewards will go to zero. The most recent halving occurred on May 11, 2020, which reduced the block reward from 12.5 to 6.25 Bitcoin. 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 21 million Bitcoin. As of the date of this information statement, 2021, approximately 18.7 million Bitcoins were outstanding and the date when the 21 million Bitcoin limitation will be reached is estimated to be the year 2140.

Modifications to the Bitcoin Protocol

Because the Bitcoin Network has no central authority, the implementation of a change in the Bitcoin Network is achieved by users and miners downloading and running updated versions of Bitcoin Network software. The Bitcoin Network protocol is built using open source software, allowing for any developer to review the underlying code and suggest changes. There is no official company or group that is responsible for making modifications to the Bitcoin Network, however, there are a number of individual developers that regularly contribute to a specific distribution of Bitcoin Network software dubbed “Bitcoin Core.” Significant changes to the Bitcoin Network protocol are typically accomplished through a so-called Bitcoin Improvement Proposal or BIP. Such proposals are generally posted on websites, and the proposals explain technical requirements for the protocol changes as well as reasons why the change should be accepted. If a significant proportion of Bitcoin Network users and miners decide to adopt a change to the Bitcoin Network that is not compatible with previous software, then this software will recognize and process transactions differently on a going- forward basis. If another significant proportion of Bitcoin Network users and miners decide not to adopt such change, then these two Bitcoin Network groups would not process transactions in the same way on a going forward basis. In this scenario, the blocks recognized as valid by one group of users will be different from the blocks recognized as valid by the other group of users, which will cause transaction records to diverge, or “fork,” on a going-forward basis. If this were to occur, two separate Bitcoin Networks could result, one running the pre-modification software program and the other running the modified version (i.e., a second “Bitcoin” network). In the event of a permanent fork with two separate and incompatible Bitcoin Networks, the price movements of different versions of Bitcoin on different Bitcoin Networks may deviate. In such a case, the Sponsor will evaluate the characteristics of each Bitcoin Network to determine in its sole discretion which Bitcoin Network will provide exposure that best comports with the Trust’s investment objective. On August 1, 2017, the Bitcoin Network was forked by a group of developers and miners accepting changes to the Bitcoin Network software intended to increase transaction capacity. On October 25, 2017, the Bitcoin Network was forked by a group of developers accepting changes to the Bitcoin Network software intended to reduce the use of specialized hardware in the Bitcoin mining process. Blocks mined on these networks now diverge from blocks mined on the Bitcoin Network, which has resulted in the creation of new blockchains whose digital assets are referred to as “Bitcoin Cash” and “Bitcoin Gold,” respectively. The Bitcoin Network, the Bitcoin Cash network, and the Bitcoin Gold network now operate as separate, independent networks. In mid-November of 2017, an additional protocol change labeled “Segwit2x,” which had substantial support from large numbers of Bitcoin users, was cancelled by its proponents shortly before it was due to be implemented. Multiple proposals for increasing the capacity of the Bitcoin Network still exist, and it is possible that one or more of these proposals could result in further network “forks,” which may become increasingly frequent.

Bitcoin Value

Bitcoin Exchange Valuation

The value of Bitcoin, as with most assets, is influenced by several factors, including the supply of and demand for Bitcoin, costs associated with mining Bitcoin, rewards issued to miners for verifying transactions, the number of competing cryptocurrencies, how Bitcoin trades, regulations governing its sale and trade, and the protocol itself. Due to the dynamic nature of these factors as well as others, the value of a Bitcoin is difficult to determine, and the price of a Bitcoin can fluctuate significantly and over short periods of time. In all events, benefits of transacting in Bitcoin typically include low transaction costs, near-zero transportation costs and low-to-zero storage costs.

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Bitcoin Exchange Public Market Data

On each online Bitcoin exchange, Bitcoin is traded with publicly disclosed valuations for each executed trade, measured by one or more fiat currencies such as the U.S. dollar or Euro. Over-the-counter dealers or market makers do not typically disclose their trade data.

Currently, there are several Bitcoin exchanges operating worldwide and online Bitcoin exchanges represent a substantial percentage of Bitcoin buying and selling activity and provide the most data with respect to prevailing valuations of Bitcoins. These exchanges include established exchanges such as Bitstamp, Coinbase Pro and itBit, which provide a number of options for buying and selling Bitcoins. The below table reflects the trading volume (in Bitcoins) and market share of the BTC-U.S. dollar trading pair of each of the Bitcoin exchanges included in the Index as of September 8, 2021 using data reported by the Index Provider from January 1, 2018 to September 8, 2021:

Major Worldwide Bitcoin Exchanges included in the Index as of September 8, 2021	Volume (BTC)		Market Share
Binance.us		626,615		1	%
Bitstamp		11,531,819		26	%
Bittrex		691,476.9		2	%
Coinbase		20,704,266		46	%
Gemini		1,985,478		4	%
itBit		755,686.2		2	%
Kraken		8,439,767		19	%
Total BTC-U.S. dollar trading pair		4,735,108		100	%

The domicile, regulation and legal compliance of the Bitcoin exchanges included in the Index varies. Information regarding each Bitcoin exchange may be found, where available, on the websites for such Bitcoin exchanges, among other places. BAM Trading Services Inc., dba “Binance U.S.,” based in San Francisco, California, is licensed as a money services business in the U.S. and as a money transmitter in the majority of U.S. States; see https://www.binance.us/en/home. BitStamp USA, Inc., based in New York, New York, is a a wholly-owned subsidiary of Bitstamp Ltd., a Luxembourg-based exchange. BitStamp USA, Inc. is regulated as a money services business in the U.S. and as a money transmitter in applicable U.S. States; see https://www.bitstamp.net/. Bittrex, Inc., based in Seattle, Washington, is licensed as a money services business in the U.S. and as a money transmitter in applicable U.S. states; see https://bittrex.com/. Coinbase Global, Inc. is a U.S-based exchange headquartered in Wilmington, Delaware, and is a money services business in the U.S. and is licensed as a money transmitter in the majority of U.S. states; see https://www.coinbase.com/. Gemini is a New York-based trust company, regulated by the New York State Department of Financial Services; see https://www.gemini.com/. itBit is a New York-based trust company, regulated by the New York State Department of Financial Services, and a wholly-owned subsidiary of Paxo, Trust Company, LLC, a New York-based trust company; see https://www.paxos.com/. Payward, Inc, dba “Kraken,” is a San Francisco, California-based exchange that is regulated a money services business in the U.S. and as a money transmitter in the majority of U.S. States.

The Index Provider relies on its Market Selection Framework (https://coinmetrics.io/reference-rates-market-selection-framework/) to select constituent markets for the Index. The Market Selection Framework consists of 36 features which represent individual measurable properties that provide an indication of the suitability for a market to serve as an input data source, which are combined to form a market rating. The Index Provider’s Oversight Committee evaluates a number of qualitative and quantitative features, including features related to the exchange's technology, legal and compliance, business model, data availability, price, and volume. For each asset, the Committee selects the highest quality markets using a selection algorithm. Detailed information about all of the 36 features is contained in the full text of the Market Selection Framework.

Since the Index Provider began calculating the index, the Index Provider has made one change to the constituent markets for the CMBI Bitcoin Index. On July 31, 2020, bitflyer’s BTC-USD market was removed and Binance’s BTC-USD market was added. The decision was made based on the results of the Index Provider’s Market Selection Framework, volume analysis and empirical testing of data. The resulting changes were deemed to improve

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the robustness, accuracy and quality of the market data that supports the determination of index levels. The Index Provider backfilled historical values for the CMBI Bitcoin Index back to July 2011.

The Trust’s principal market, and the most liquid Bitcoin exchange is Coinbase Pro. Coinbase Pro, a wholly-owned subsidiary of Coinbase Global, Inc. (“Coinbase Global”), is Coinbase Global’s market for active, professional traders. Started in 2012 (and known until 2016 as Coinbase Exchange and from 2016-2018 as Coinbase Digital Asset Exchange), Coinbase Pro is the most liquid U.S. market for Bitcoin, with approximately 46% of daily trading volume as of September 8, 2021.

Historically, a large percentage of the global Bitcoin trading volume occurred on self-reported, unregulated Bitcoin exchanges located in China. Throughout 2017, however, the Chinese government took several steps to tighten controls on Bitcoin exchanges, culminating in a ban on domestic cryptocurrency exchanges in November 2017, which forced such exchanges to cease their operations or relocate. As a result, reported Bitcoin trading volume on Chinese exchanges is now substantially lower, representing a de minimis share of the global trade volume.

From time to time, there may be intra-day price fluctuations across Bitcoin exchanges. However, they are generally relatively immaterial. For example, the variance of prices on Bitcoin exchanges with the highest transaction volumes on average is less than 2%. These variances usually stem from small changes in the fee structures on different Bitcoin exchanges or differences in administrative procedures required to deposit and withdraw fiat currency in exchange for Bitcoins and vice versa. The greatest variances are found at (i) smaller exchanges with relatively low transaction volumes where even small trades can be large relative to an exchange’s transaction volume and as a result impact the trading price on those exchanges and (ii) exchanges that are inaccessible to the Trust because they do not meet the Trust’s regulatory requirements, and as a result are accessed and used by a captured market or by parties that do not have regulatory or compliance requirements. Historically, the Trust has not needed to make any changes in the determination of its principal market due to variances in pricing, although it changed its principal market to Coinbase Pro on May 18, 2021 to facilitate its compliance with GAAP. The Trust selected Coinbase Pro, among other Bitcoin markets, because it provides the greatest liquidity, with approximately 45% of daily trading volume as of May 10, 2021.

The Index

The Index is a U.S. dollar-denominated composite reference rate for the price of Bitcoin. The Index is designed to (1) mitigate instances of fraud, manipulation and other anomalous trading activity, (2) provide a real-time, trade-weighted fair value of Bitcoin and (3) appropriately handle and adjust for non-market related events.

The Index was launched on January 1, 2020, with a first value date and base date of July 18, 2010. Below is a chart, comparing the Index prices to the constituent market closing prices, from January 1, 2019 to the present. As demonstrated by the chart, price differences between the constituent exchanges and the Index is immaterial.

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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 gain full control of the network and the ability to manipulate the Blockchain.

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 Units.

Market Participants

Miners

Miners range from Bitcoin enthusiasts to 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. See “—Creation of New Bitcoin” above.

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. 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. Bitfmex, Bitstamp, Coinbase Pro, Kraken and itBit are some of the largest Bitcoin exchanges by volume traded. Fidelity Digital Asset Services, the Custodian for the Trust, is a digital asset custodian that provides custodial accounts that store Bitcoin for users. As the Bitcoin Network continues to grow in acceptance, it is anticipated that service providers will expand the currently available range of services and that additional parties will enter the service sector for the Bitcoin Network.

Competition

Bitcoin is not the only available decentralized digital asset. Other digital assets have been developed since the inception of the Bitcoin, including, but not limited to, Ethereum, Litecoin, Monero, and Zcash. Although a competitive digital asset could displace the market share Bitcoin currently occupies, it would face significant headwinds due to the network effect and financial and intellectual investments currently enjoyed by the market leader. As of May 31, 2021, the Bitcoin network market share of the total digital market capitalization was estimated to be approximately 46%. Further, many Bitcoin exchanges use Bitcoin as the exchange comparison for other cryptocurrencies. For example, to purchase certain cryptocurrencies you first need to purchase Bitcoin on an exchange and then use the Bitcoin to purchase other cryptocurrencies.

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Government Oversight – Regulation of Bitcoin

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 FinCEN, SEC, CFTC, 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 spot 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 spot markets 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. As noted previously, the SEC has not asserted regulatory authority over Bitcoin or trading or ownership of Bitcoin and has not expressed the view that Bitcoin should be classified or treated as a security for purposes of U.S. federal securities laws. However, the SEC has asserted that certain investment activities involving Bitcoin, including offering investments related to the mining of Bitcoin or offering participation in pools lending Bitcoin may implicate the investment contract definition of security and therefore be within the jurisdiction of the SEC.

The CFTC has regulatory jurisdiction over transactions in Bitcoin futures and the Bitcoin futures markets. In addition, because the CFTC has determined that Bitcoin is a “commodity” under the CEA and the rules thereunder, it has jurisdiction to prosecute fraud and manipulation in the cash, or spot, market for Bitcoin. The CFTC has pursued enforcement actions relating to fraud and manipulation involving Bitcoin and Bitcoin markets. Beyond instances of fraud or manipulation, the CFTC generally does not oversee cash or spot market exchanges or transactions involving Bitcoin that do not use margin, leverage, or financing with respect to retail market participants.

On December 1, 2017, two designated contract markets (“DCMs”) registered with the CFTC self-certified new contracts for Bitcoin futures products. DCMs are boards of trades (or futures exchanges) that operate under the regulatory oversight of the CFTC, pursuant to Section 5 of the CEA. To obtain and maintain designation as a DCM, an exchange must comply on an initial and ongoing basis, with twenty-three Core Principles established in Section 5(d) of the CEA. Among other things, DCMs are required to establish self-regulatory programs designed to enforce the DCM’s rules, prevent market manipulation and customer and market abuses, and ensure the recording and safe storage of trade information. The CFTC engaged in a “heightened review” of the self-certification of Bitcoin futures, which required DCMs to enter direct information sharing agreements with spot market platforms to allow access to trade and trader data; monitor data from cash markets with respect to price settlements and other Bitcoin prices more broadly, and identify anomalies and disproportionate moves in the cash markets compared to the futures markets; engage in inquiries, including at the trade settlement level when necessary; and agree to regular coordination with CFTC surveillance staff on trade activities, including providing the CFTC surveillance team with trade settlement data upon request.

Various foreign jurisdictions have, and may continue to, in the near future, adopt laws, regulations or directives that affect the Bitcoin Network, the Bitcoin markets, and their users, particularly Bitcoin spot markets and service providers that fall within such jurisdictions’ regulatory scope. Foreign jurisdictions including Canada, Germany, and Sweden have also approved exchange-traded Bitcoin products.

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.

U.S. regulators, at both the state and federal level, and foreign regulators and legislatures have taken action against digital asset businesses or enacted restrictive regimes in response to adverse publicity arising from cybersecurity risks, potential consumer harm, or digital assets used in connection with criminal activity. The value of Bitcoin could be impacted by such adverse publicity.

Foreign Legal and Regulatory Treatment of Bitcoin

Various foreign jurisdictions may, in the near future, adopt laws, regulations or directives that affect the Bitcoin Network, the Bitcoin exchange market and their users, particularly Bitcoin exchanges and service providers that fall within such jurisdictions’ regulatory scope, which may in turn, impact the price of Bitcoin. 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

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sustainability of the Bitcoin economy globally, or otherwise negatively affect the value of Bitcoin. The regulatory uncertainty surrounding the treatment of Bitcoin creates risks for the Trust.

In July 2019, the United Kingdom’s Financial Conduct Authority proposed rules to address harm to retail consumers deriving from the sale of derivatives and exchange traded notes (“ETNs”) that reference certain types of digital assets, contending that they are “ill-suited” to retail investors citing extreme volatility, valuation challenges and association with financial crime. In addition to ETNs, the proposed ban would affect financial products including contracts for difference, options and futures. Public consultation on the proposed restriction closed in October 2019. A determination that Bitcoin is a security under U.S. or foreign law could adversely affect an investment in the Units.

Additionally, concerns have been raised about the electricity required to secure and maintain the Bitcoin Network. As of September 30, 2019, in connection with the mining process, over 90 million tera hashing operations are performed every second, non-stop on the Bitcoin Network. Although measuring the electricity consumed by this process is difficult because these operations are performed by various machines with varying levels of efficiency, the process consumes a significant amount of energy. Further, in addition to the direct energy costs of performing these calculations, there are indirect costs that impact the Bitcoin Network’s total energy consumption, including the costs of cooling the machines that perform these calculations. In recent months, due to these concerns around energy consumption, particularly as such concerns relate to public utilities companies, various states and cities have implemented, or are considering implementing, moratoriums on Bitcoin mining in their jurisdictions. A significant reduction in mining activity as a result of such actions could adversely affect the security of the Bitcoin Network by making it easier for a malicious actor or botnet to manipulate the Blockchain. See “—If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin Network, or otherwise obtains control over the Bitcoin Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Blockchain to adversely affect an investment in the Shares or the ability of the Trust to operate.”

Not a Regulated Commodity Pool

The Trust will not trade, buy, sell or hold Bitcoin derivatives, including Bitcoin futures contracts, swaps or options. The Trust is authorized solely to take immediate delivery of actual Bitcoin. The Sponsor does not believe the Trust’s activities are required to be regulated by the CFTC under the CEA as a “commodity pool” under current law, regulation and interpretation. The Trust will not be operated by a CFTC-regulated commodity pool operator because it will not trade, buy, sell or hold Bitcoin derivatives, including Bitcoin futures contracts, swaps or options. Unitholders of the Trust will not receive the regulatory protections afforded to investors in regulated commodity pools, nor may any futures exchange enforce its rules with respect to the Trust’s activities. In addition, Unitholders of the Trust will not benefit from the protections afforded to investors in Bitcoin futures contracts on regulated futures exchanges.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified in its entirety by reference to, our audited and unaudited financial statements and related notes included elsewhere in this Information Statement, which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Information Statement, particularly in “Risk Factors” and “Statement Regarding Forward-Looking Statements.”

Trust Overview

The activities of the Trust are limited to (i) issuing Units in exchange for cash or Bitcoin transferred to the Trust as consideration in connection with the issuance of those Units, (ii) transferring or selling Bitcoin (including forks in the Bitcoin Network) as necessary to pay the 0.49% Management Fee, audit fees, index license fees, aggregate legal fees in excess of $50,000 and the fees of the Custodian (collectively, the “Excluded Expenses”) and 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 interest of Unitholders, indemnification expenses, fees and expenses related to public quotation on OTCQX (collectively, the “Extraordinary Expenses”), (iii) transferring Bitcoin in exchange for Units surrendered for redemption (at such time as redemptions from the Trust are permitted by the SEC and subject to the approval of the Sponsor), (iv) causing the Sponsor to sell Bitcoins upon the termination of the Trust, (v) making distributions of Bitcoin (including any Additional Currency) or cash from the sale thereof, and (vi) engaging in all administrative and security procedures necessary to accomplish such activities in accordance with the provisions of the Trust Agreement and the Custodial Services Agreement.

The Trust is a passive investment vehicle and its assets will not be actively managed. As a result, it will not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the market prices of Bitcoins.

The investment objective of the Trust is for the Units to reflect the performance of Bitcoin as measured by reference to the Index, less the Aggregate Trust Expenses and other liabilities. The Units are intended to constitute a cost-effective and convenient means of gaining investment exposure to Bitcoin. However, an investment in the Units may operate and perform differently over time, and at any given time,, than an investment directly in Bitcoin due to such factors as Trust fees and expenses, the quantity of Units available for trading, and the relative liquidity and , and differences in the markets trading Bitcoin from the markets trading the Units (e.g. hours of operation, marketplace rules, clearance and settlement, market participants).. Although the Units will not be the exact equivalent of a direct investment in Bitcoin, they provide investors with an alternative that constitutes a relatively cost-effective way to participate in Bitcoin markets through the securities market.

At this time, the Trust is not operating a redemption program for Units and therefore Units are not redeemable by the Trust. In addition, the Trust may halt issuances of Units for extended periods of time. As a result, the value of the Units of the Trust may not approximate, and when traded on any secondary market, the Units may trade at a substantial premium over, or discount to, the Trust’s NAV per Unit.

Additional Currency

From time to time, the Trust may come into possession of rights incident to its ownership of Bitcoins, which permit the Trust to acquire, or otherwise establish dominion and control over, other virtual currencies. These rights are generally expected to arise in connection with forks in the Blockchain, airdrops offered to holders of Bitcoins and other similar events and arise without any action of the Trust or of the Sponsor or Trustee on behalf of the Trust. We refer to these rights as “Incidental Rights” and any such virtual currency acquired through Incidental Rights as “Additional Currency.” The Trust does not expect to take any Additional Currency it may hold into account for

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purposes of determining the Trust’s Bitcoin Holdings or the Bitcoin Holdings per Unit. See “Activities of the Trust—Additional Currency.”

With respect to any fork, airdrop or similar event, the Sponsor may, in its discretion, decide to cause the Trust to distribute the Additional Currency in-kind to an agent of the Unitholders for resale by such agent, or to irrevocably abandon the Additional Currency. In the case of a distribution in-kind, the Unitholders’ agent would attempt to sell the Additional Currency, and if the agent is able to do so, remit the cash proceeds to Unitholders. There can be no assurance as to the price or prices for any Additional Currency that the agent may realize, and the value of the Additional Currency may increase or decrease after any sale by the agent. In the case of abandonment, the Trust would not receive any direct or indirect consideration for the Additional Currency and thus the value of the Units will not reflect the value of the Additional Currency.

Trust Expenses

The Trust’s only ordinary recurring expenses are expected to be the Management Fee, index license fees and Custody Fees. The Trust is also responsible for annual legal fees in excess of $50,000, and audit fees. The Management Fee is assessed at an annual rate of 0.49% of the daily NAV of the Trust and will accrue solely in Bitcoins and will be payable at the Sponsor’s sole discretion, in Bitcoins or U.S. dollars and valued at the Bitcoin Market Price in effect for such Bitcoin at the time of such payment. The Management Fee is payable to the Sponsor monthly in arrears. If the Trust holds any Additional Currency, the Trust may pay the Management Fee, in whole or in part, with such Additional Currency by entering into an agreement with the Sponsor and transferring such Additional Currency to the Sponsor at a value to be determined in accordance with the terms of such agreement, but only if such agreement and transfer do not conflict with the terms of the Trust Agreement. The Trust’s NAV is calculated daily, by reference to the Bitcoin Market Price as measured at 4:00 p.m., New York time available at https://pro.coinbase.com/trade/BTC-USD. The Administrator, on behalf of the Trust, accrues the Custody and Management Fees on a daily basis. Expenses are accrued in Bitcoin, and the accrual balance is evaluated daily, based on the fluctuations in the Bitcoin Market Price. Custody fees are calculated based on the total Bitcoins held in the Trust as of the end of the day and according to the agreed upon fee schedule with the Custodian. Management Fees are calculated daily net of the current day-accrued Custody fees. All expenses are allocated pro rata based on the number of Units issued and outstanding.

To cause the Trust to pay Trust Expenses, the Sponsor will instruct the Custodian to (i) withdraw from the Bitcoin Account the number of Bitcoins equal to the accrued but unpaid Fees and (ii) transfer such Bitcoins to the Sponsor’s account at such times as the Sponsor determines in its absolute discretion.

As partial consideration for its receipt of the Management Fee, the Sponsor has assumed the obligation to pay the fees paid to the Trustee, the Transfer Agent, and the Custodian (“Sponsor-paid Expenses”). The Sponsor has not assumed the obligation to pay Assumed Expenses.

After payment of the Sponsor-paid Expenses for the Trust, the Sponsor may use the remaining portion of the Management Fee received from the Trust at its discretion, which may include the payment of fees from time to time for the referral of new investors in the Trust.

The number of Bitcoins represented by a Unit will decline each time the Trust pays the Management Fee or any Assumed Expenses by transferring or selling Bitcoins

Disposition of Bitcoin

Because the Trust’s Assumed Expenses are payable through the transfer of Bitcoin each month, the Sponsor, its delegates or the Custodian will withdraw Bitcoin as needed from the Bitcoin Account to pay such fees Fee. If the Trust incurs Extraordinary Expenses in U.S. dollars, Bitcoin will be converted to U.S. dollars at the exchange rate at the time of conversion to pay these Extraordinary Expenses. Unitholders do not have the option of choosing to pay their proportionate Units of Extraordinary Expenses in lieu of having their Units of Extraordinary Expenses paid by the Trust’s sale of Bitcoin. Assuming that the Trust is treated a grantor trust for U.S. federal income tax purposes, each delivery or sale of Bitcoins by the Trust for the payment of expenses by the Trust will result in a taxable event to Unitholders.

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Because the number of the Trust’s Bitcoin will decrease as a consequence of the payment of the Management Fee in Bitcoin or the sale of Bitcoin to pay Extraordinary Expenses (and the Trust will incur additional fees associated with converting Bitcoin into U.S. dollars), the number of Bitcoin represented by a Unit will decline at such time and the NAV of the Trust may also decrease. Accordingly, the Unitholders will bear the cost of the Management Fee and any Extraordinary Expenses.

The Sponsor will also cause the sale of the Trust’s Bitcoin if the Sponsor determines that sale is required by applicable law or regulation or in connection with the termination and liquidation of the Trust. The Sponsor will not be liable or responsible in any way for depreciation or loss incurred by reason of any sale of Bitcoin.

Review of Financial Results

Financial Highlights for the Six Months ended June 30, 2021 and 2020 (unaudited)

(All amounts in the following table, except Unit, per Unit, Bitcoin and price per Bitcoin amounts, are in thousands)

	Six Months Ended June 30,
	2021			2020
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investment in Bitcoin	$	(14,615	)	$	2,718
Net (decrease) increase in net assets resulting from operations	$	(15,020	)	$	2,655
Net assets	$	98,329		$	12,729

* Units have been adjusted retroactively to reflect the 4:1 stock split effective January 5, 2021.

An individual Unitholder’s return, ratios, and per Unit performance may vary from those presented above based on the timing of Unit transactions.

Total return is calculated assuming an initial investment made at the net asset value at the beginning of the year and assuming redemption on the last day of the year. Ratios have been annualized for the partial periods ended June 30, 2021 and June 30, 2020. The net asset value per unit at the beginning of the period for 2021 performance has been adjusted to reflect the stock split that occurred effective January 5, 2021.

During the first six months of 2021, net realized loss and net change in unrealized depreciation on investment in Bitcoin was $14,615,478, which include a realized loss of $60,740 on the transfer of Bitcoin to pay the Management Fee, Custody Fee, and Index License Fee, and net change in unrealized depreciation on investment in Bitcoin of $14,554,738. Net realized loss and net change in unrealized depreciation on investment in Bitcoin for the six months was driven by significant Bitcoin price depreciation in May 2021, which occurred subsequent to significant investments made at the higher price in the first quarter of 2021 and the beginning of the second quarter of 2021. Net decrease in net assets resulting from operations was $15,019,931 for the first six months of 2021, which consist of the net realized and unrealized gain on investment in Bitcoin, net the Management Fee of $264,093 and other fees of $140,360. Net assets increased to $98,329,065 at June 30, 2021.

Financial Highlights for the Years Ended December 31, 2020 and 2019

(All amounts in the following table, except per Unit, Bitcoin and price of Bitcoin amounts, are in thousands)

	For the Year Ended December 31,
	2020		2019
Net realized gain (loss) and net change in unrealized appreciation (depreciation) on investment in Bitcoin	$	32,063	$	4,959
Net (decrease) increase in net assets resulting from operations	$	31,894	$	4,862
Net assets	$	44,907	$	9,837

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The Trust launched on January 22, 2019 with seed capital of 1,388 Bitcoin with a value of $4,975,161.

Net realized gain and net change in unrealized appreciation on investment in Bitcoin for the period from January 22, 2019 (commencement of operations) to December 31, 2019 was $4,959,361 which includes a realized gain of $46,753 on the transfer of Bitcoin to pay the Management Fee, Custody Fee, and Index License Fee, and net change in unrealized appreciation on investment in Bitcoin of $4,912,608. Net realized gain and net change in unrealized appreciation on investment in Bitcoin for the year was driven by Bitcoin price appreciation from $3,584.41 per Bitcoin on January 22, 2019 to $7,153.38 per Bitcoin as of December 31, 2019. Net increase in net assets resulting from operations was $4,861,974 for the period from January 22, 2019 (commencement of operations) to December 31, 2019, which consisted of the net realized gain and net change in unrealized appreciation on investment in Bitcoin, less the Management Fee of $97,387. Net assets increased to $9,837,135 at December 31, 2019.

Net realized gain and net change in unrealized appreciation on investment in Bitcoin for the year ended December 31, 2020 was $32,062,851 which includes a realized gain of $18,466 on the transfer of Bitcoin to pay the Management Fee, Custody Fee, and Index License Fee, and net change in unrealized appreciation on investment in Bitcoin of $32,044 385. Net realized gain and net change in unrealized appreciation on investment in Bitcoin for the year was driven by Bitcoin price appreciation from $7,153.38 per Bitcoin on December 31, 2019 to $29,026.66 per Bitcoin as of December 31, 2020. Net increase in net assets resulting from operations was $31,893,722 for the year ended December 31, 2020, which consisted of the net realized gain and net change in unrealized appreciation on investment in Bitcoin, net the Management Fee of $132,210 and other fees of $36,919. Net assets increased to $44,906,682 at December 31, 2020.

Off-Balance Sheet Arrangements

The Trust is not a party to any off-balance sheet arrangements.

Cash Resources and Liquidity

When selling Bitcoins and/or Additional Currency to pay Extraordinary Expenses, the Sponsor endeavors to sell the exact number of Bitcoins and/or Additional Currency needed to pay expenses in order to minimize the Trust’s holdings of assets other than Bitcoin. As a consequence, the Sponsor expects that the Trust will not record any cash flow from its operations and that its cash balance will be zero at the end of each reporting period.

In exchange for the Management Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust. As a result, the only ordinary expense of the Trust during the periods covered by this Information Statement was the Management Fee. The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

Quantitative and Qualitative Disclosures about Market Risk

The Trust Agreement does not authorize the Trustee to borrow for payment of the Trust’s ordinary expenses. The Trust does not engage in transactions in foreign currencies which could expose the Trust or holders of Units to any foreign currency related market risk. The Trust does not invest in derivative financial instruments and has no foreign operations or long-term debt instruments.

Selected Operating Data

Six Months Ended June 30, 2021 and 2020

	Six Months Ended June 30,
	2021			2020
	(Bitcoin balances are rounded to the nearest two decimal places)
Bitcoins:
Opening balance		1,548.46			1,388.00
Creations		1,289.94			24.81
Management Fee, related party		(4.96	)		(18.53	)
Custody Fee		(3.59	)		-

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Closing balance	2,829.85		1,394.28
Accrued but unpaid Management Fee, related party	(1.14	)	(1.12	)
Accrued but unpaid Custody Fee	(0.20	)	(0.57	)
Accrued but unpaid Index Fee	(0.10	)	–
Net closing balance	2,828.41		1,392.59
Number of Units:
Opening balance	4,529,312		3,980,128
Creations	3,783,174		72,344
Closing balance	8,312,486		4,052,472

* Units have been adjusted retroactively to reflect the 4:1 stock split effective January 5. 2021.

	As of June 30,
	2021		2020
NAV per Unit	$	11.83	$	3.14
Bitcoin Market Price	$	34,764.81	$	9,140.27
Bitcoin Holdings per Unit	$	0.00034	$	0.00034

Years Ended December 31, 2020 and 2019

	For the Year Ended December 31,
	2020			2019
	(All Bitcoin balances are rounded to the nearest two decimal places)
Bitcoins:
Opening balance		1,376.48			–
Creations		187.84			1,388
Management Fee, related party		(13.41	)		(11.52	)
Custody Fee		(2.45	)		–
Closing balance		1,548.46			1,376.48
Accrued but unpaid Management Fee, related party		(0.64	)		(1.30	)
Accrued but unpaid Custody Fee		(0.74	)		–
Net closing balance		1,547.09			1,375.18
Number of Units:
Opening balance		3,980,128			3,980,128
Creations		549,184			–
Closing balance		4,529,312			3,980,128

* Units have been adjusted retroactively to reflect the 4:1 stock split effective January 5. 2021.

	December 31,
	2020		2019
NAV per Unit	$	9.91	$	2.47
Bitcoin Market Price	$	29,026.66	$	7,153.38
Bitcoin Holdings per Unit	$	0.00034	$	0.00035

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Historical Bitcoin Holdings and Bitcoin Prices

As movements in the price of Bitcoins will directly affect the price of the Units, investors should understand recent movements in the price of Bitcoin. Investors, however, should also be aware that past movements in the Bitcoin price are not indicators of future movements. Movements may be influenced by various factors, including, but not limited to, government regulation, security breaches experienced by Service Providers, as well as political and economic uncertainties around the world.

The following chart illustrates the movement in the Bitcoin Market Price from January 3, 2019 to August 13, 2021. For more information on the determination of the Bitcoin Market Price, see “Overview of the Bitcoin Industry and Market—Bitcoin Value—The Bitcoin Market Price.” 

 

The following table (and the chart above) illustrates the movements in the NAV and the Bitcoin Market Price (referred to in the chart as “Market Price”) from the beginning of the Trust’s operations on January 3, 2019 to August 13, 2021. Since the beginning of the Trust’s operations, the Bitcoin Market Price has ranged from $3,358.67 to $63,333.68, with the straight average being $17,459.99. The Sponsor has not observed a material difference between the Bitcoin Market Price and average prices from the constituent Bitcoin exchanges individually or as a group.

Period	Average		High		Date		Low		Date		End of period		Last business day
From January 3, 2019 to December 31, 2019	$	7,379.15	$	13,724.33		6/26/2019	$	3,358.67		2/7/2019	$	7,153.38	$	7,153.38
Twelve months ended December 31, 2020	$	11,131.27	$	29,026.66		12/31/2020	$	4,956.92		3/16/2020	$	29,026.66	$	29,026.66
January 3, 2019 (the inception of the Trust’s operations) to August 13, 2021	$	17,495.99	$	63,333.68		4/15/2021	$	3,358.67		2/7/2019	$	46,484.01	$	46,484.01

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Secondary Market Trading

The Trust’s Units have been quoted on OTC Markets since February 12, 2021, and on OTCQX under the symbol OBTC since February 26, 2021. The price of the Units as quoted on OTCQX (and OTC Markets) has varied significantly from the NAV per Unit. From February 12, 2021 to August 13, 2021, the maximum premium of the closing price of the Units quoted on OTCQX (and OTC Markets) over the value of the Trust’s NAV per Unit was approximately 240% and the average premium was approximately 27%. As of June 30, 2021, the Trust’s Units were quoted on OTCQX at a premium of approximately 30% to the Trust’s NAV per Unit.

The historical premium of the closing price of the Units quoted on OTCQX and OTC Markets as compared with the NAV per Unit has varied, from a high of 240% on February 16, 2021 (closing price $56.39 per Unit on OTCQX (and OTC Markets) and NAV per Unit $16.58) to a low (i.e., discount) of -7% on May 10, 2021 (closing price $17.80 per Unit on OTCQX (and OTC Markets) and NAV per Unit $19.16). The average daily premium since the Units were first traded on OTC Markets on February 12, 2021 is 27%. The historical premiums and discounts at times reflect a material deviation from the Bitcoin Market Price.

The following table sets out the range of high and low closing prices for the Units as reported by OTCQX, the Trust’s NAV per Unit and the Trust’s Bitcoin Holdings per Unit for the period from February 12, 2021 to August 13, 2021.

	High						Low
	OTCQX		NAV per Unit		Bitcoin Holdings per Unit		OTCQX		NAV per Unit		Bitcoin Holdings per Unit
2021
(through August 13, 2021)		56.39		21.58		0.00034		12.29		10.13		0.00034

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DESCRIPTION OF THE TRUST

The Trust is a Delaware Statutory Trust that was formed on January 3, 2019 by the filing of the Certificate of Trust with the Delaware Secretary of State in accordance with the provisions of the Delaware Statutory Trust Act (“DSTA”). The Trust operates pursuant to the Trust Agreement.

The investment objective of the Trust is for the Units to reflect the performance of Bitcoin as measured by reference to the Index, less the Trust’s expenses and other liabilities. The Sponsor believes that, for many investors, the Units will represent a cost-effective and convenient investment relative to a direct, outright investment in Bitcoins. Although the redemption of Units is provided for in the Trust Agreement, the redemption of Units is not currently permitted and the Trust does not currently operate a redemption program. In addition, the Trust may from time to time halt creations of Units. As a result, there can be no assurance that the market price of the Units will reflect the value of the Trust’s NAV per Unit, and the Units may trade at a substantial premium over, or a substantial discount to, the NAV per Unit.

The Units represent common units of fractional undivided beneficial interest in and ownership of the Trust and have no par value. The Trust is a passive investment vehicle and is not engaged in any business activities. The Trust’s Bitcoins are held by the Custodian on behalf of the Trust. The Trust’s Bitcoins will be transferred out of the Bitcoin Account only in the following circumstances: (i) transferred to pay the Management Fee or any Extraordinary Expenses, (ii) sold on an as-needed basis to pay Extraordinary Expenses or (iii) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation. Assuming that the Trust is treated as a grantor trust for U.S. federal income tax purposes, each delivery or sale of Bitcoins by the Trust to pay the Management Fee or any Extraordinary Expenses will be a taxable event for Unitholders. See “Certain U.S. Federal Income Tax Consequences—Tax Consequences to U.S. Holders.”

The Trust is not registered as an investment company under the Investment Company Act and the Sponsor believes that the Trust is not required to register under the Investment Company Act. The Trust will not hold or trade in commodity futures contracts or other derivative contracts regulated by the CEA, as administered by the CFTC. The Sponsor believes that the Trust is not a commodity pool for purposes of the CEA, and that neither the Sponsor nor the Trustee is subject to regulation as a commodity pool operator or a commodity trading adviser in connection with the operation of the Trust.

The Trust is authorized under the Trust Agreement to create and issue an unlimited number of Units. The Trust issues Units only in connection with purchase orders for a minimum of $25,000.00 initial investment ($10,000.00 minimum for additional investments). The Units may be purchased from the Trust on an ongoing basis, upon the order of an Accredited Investor to purchase a minimum of $25,000.00 of Units initial investment ($10,000.00 minimum for additional investments). From June 2020 until August 2020, the Trust offered up to $5,000,000 worth of Units, in minimum round lots of 100 Units, pursuant to Rule 504 of Regulation D under the Securities Act, to investors residing in Connecticut and New York. Purchasers in that offering included non-accredited investors. Initially, each Unit represented 0.00138335 of a Bitcoin. Unitholders that are not Accredited Investors may not purchase Units from the Trust upon orders. At this time, the Trust is not operating a redemption program for Units and therefore Units are not redeemable by the Trust.

The Sponsor will determine the Trust’s Bitcoin Holdings on each Business Day as of 4:00 p.m., New York time, or as soon thereafter as practicable. The Sponsor will also determine the Bitcoin Holdings per Unit, which equals the Bitcoin Holdings divided by the number of outstanding Units. Each business day, the Sponsor will publish the Trust’s Bitcoin Holdings and Bitcoin Holdings per Unit on the Sponsor’s website, https://ospreyfunds.io/products/, as soon as practicable after the Trust’s Bitcoin Holdings and Bitcoin Holdings per Unit have been determined by the Sponsor. See “Valuation of Bitcoin and Determination of the Trust’s Bitcoin Holdings.”

The Trust’s assets consist solely of Bitcoins, Additional Currency, proceeds from the sale of Bitcoins, and Additional Currency pending use of such cash for payment of Extraordinary Expenses or distribution to the Unitholders and any rights of the Trust pursuant to any agreements, other than the Trust Agreement, to which the Trust is a party. Each Unit represents a proportional interest, based on the total number of Units outstanding, in each of the Trust’s assets as determined in the case of Bitcoin by reference to the Bitcoin Market Price, less the Trust’s expenses and other liabilities (which include accrued but unpaid fees and expenses). The Sponsor expects that the

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market price of the Units will fluctuate over time in response to the market prices of Bitcoins. In addition, because the Units reflect the estimated accrued but unpaid expenses of the Trust, the number of Bitcoins represented by a Unit will gradually decrease over time as the Trust’s Bitcoins are used to pay the Trust’s expenses. The Trust does not expect to take any Additional Currency it may hold into account for purposes of determining the Trust’s Bitcoin Holdings or the Bitcoin Holdings per Unit.

Bitcoin pricing information is available on a 24-hour basis from various financial information service providers or Bitcoin Network information sites such as Tradeblock.com or Bitcoincharts.com. The spot price and bid/ask spreads may also be available directly from Bitcoin exchanges. Market prices for the Units will be available from a variety of sources, including brokerage firms, information websites and other information service providers. In addition, on each business day the Trust’s website will provide pricing information for the Units.

The Trust has no fixed termination date.

ACTIVITIES OF THE TRUST

The activities of the Trust are limited to (i) issuing Units in exchange for cash or Bitcoin transferred to the Trust as consideration in connection with the issuance of the Units, (ii) transferring or selling Bitcoin (including forks in the Bitcoin Network) as necessary to pay the 0.49% Management Fee, as well as any Excluded Expenses and any Extraordinary Expenses (as each is defined in the Trust Agreement, “Aggregate Trust Expenses”), (iii) transferring Bitcoin in exchange for Units surrendered for redemption (at such time as redemptions from the Trust are permitted by the SEC and subject the approval of the Sponsor), (iv) causing the Sponsor to sell Bitcoin upon the termination of the Trust, (v) making distributions of Bitcoin (including any Additional Currency) or cash from the sale thereof and (vi) engaging in all administrative and security procedures necessary to accomplish such activities in accordance with the provisions of the Trust Agreement and the Custodial Services Agreement.

The Trust is a passive investment vehicle and its assets will not be actively managed. As a result, it will not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the market prices of Bitcoin.

The Sponsor calculates the Trust’s NAV per Unit as of 4:00 p.m., New York time on each Business Day, and publishes the NAV per Unit on the Trust’s website (www.ospreyfunds.io) shortly thereafter.

Trust Objective

The investment objective of the Trust is for the Units to reflect the performance of Bitcoin as measured by reference to the Index, less the Aggregate Trust Expenses and other liabilities. The Units are intended to constitute a cost-effective and convenient means of gaining investment exposure to Bitcoin. Although the Units will not be the exact equivalent of a direct investment in Bitcoin, they provide investors with an alternative that constitutes a relatively cost-effective way to participate in Bitcoin markets through the securities market.

At this time, the Trust is not operating a redemption program for Units and therefore Units are not redeemable by the Trust. In addition, the Trust may halt issuances of Units for extended periods of time. As a result, the value of the Units of the Trust may not approximate, and if traded on any secondary market, the Units may trade at a substantial premium over, or discount to, the NAV per Unit, less the Trust’s expenses and other liabilities.

Strategy Behind the Units

The Units are intended to offer investors an opportunity to participate in Bitcoin markets through an investment in securities. The logistics of accepting, transferring and safekeeping of Bitcoin are dealt with by the Sponsor and the Custodian, and the related expenses are built into the price of the Units. Therefore, Unitholders do not have additional tasks or costs over and above those generally associated with investing in any other privately placed security.

The Units are intended to provide Accredited Investors with a simple and cost-effective means, with minimal credit risk, of gaining investment benefits similar to those of directly holding Bitcoin.

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Secondary Market Trading

While the Trust’s investment objective is for the Units to reflect performance of Bitcoin measured by reference to the Index, less the Aggregate Trust Expenses and other liabilities, the Units may trade in the secondary market on the OTCQX (or on another secondary market in the future) at prices that are lower or higher than the Bitcoin Holdings per Unit. The amount of the discount or premium in the trading price relative to the Bitcoin Holdings per Unit may be influenced by non-concurrent trading hours and liquidity between OTCQX and larger Bitcoin exchanges in the Bitcoin exchange market. While the Sponsor has obtained approval for listing and trading of the Units on the OTCQX, there is no guarantee that a liquid secondary market in the Units will develop or be maintained. Investors should therefore be willing to risk being unable to sell their Units in a liquid, organized secondary market, potentially leading to a reduction in Unit value.

Trust Expenses

The Trust will pay as an ordinary recurring charge the remuneration due to the Sponsor (the “Management Fee”). The Management Fee equals an annualized 0.49% of the average daily NAV of the Trust for each year. The Management Fee will accrue daily in Bitcoin and will be payable, at the Sponsor’s sole discretion, in Bitcoin or in U.S. dollars at the Bitcoin Market Price in effect at the time of such payment. The Sponsor expects that the Trust will pay the Management Fee in monthly installments in arrears.

The Sponsor will bear the routine operational, administrative and other ordinary fees and expenses of the Trust (the “Assumed Expenses”); provided, however, that the Trust shall be responsible for audit fees, index license fees, aggregate legal fees in excess of $50,000 per annum and the fees of the Custodian (the “Excluded Expenses”) and 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 interest of Unitholders, indemnification expenses, fees and expenses related to public quotation on OTCQX (the “Extraordinary Expenses”). Although the Sponsor can provide no assurance as to the frequency or magnitude of any Extraordinary Expenses, the Sponsor expects that they may occur infrequently, if at all.

Hypothetical Expense Example

The following table illustrates the anticipated impact of the payment of the Trust’s expenses on the number of Bitcoins represented by each outstanding Unit for three years, assuming that the Trust does not make any payments using any Additional Currency. It assumes that the only transfers of Bitcoins will be those needed to pay the Management Fee and that the price of Bitcoins and the number of Units remain constant during the three-year period covered. The table does not show the impact of any Extraordinary Expenses. Any Extraordinary Expenses, if and when incurred, will accelerate the decrease in the fractional number of Bitcoins represented by each Unit. In addition, the table does not show the effect of any waivers of the Management Fee that may be in effect from time to time. The Sponsor, from time to time, may waive all or a portion of its Management Fee in its sole discretion, where the Sponsor believes such wavier is appropriate and in the best interest of the Trust. The Sponsor does not currently intend to waive any of the Management Fee.

	Year
		1	2	3
Hypothetical price per Bitcoin		$100.00	$100.00	$100.00
Management Fee		0.49%	0.49%	0.49%
Units of Trust, beginning		100,000.00	100,000.00	100,000.00
Bitcoins in Trust, beginning		10,000.00	9,951.00	9,902.24
Hypothetical value of Bitcoins in Trust		$1,000,000.00	$995,100.00	$990,224.00
Beginning Bitcoin Holdings of the Trust		$1,000,000.00	$995,100.00	$990,224.00
Bitcoins to be delivered to cover the Management Fee		49.00	48.76	48.52
Bitcoins in Trust, ending		9,951.00	9,902.24	9,853.72
Ending Bitcoin Holdings of the Trust		$995,100.00	$990,224.00	$985,372.00
Ending Bitcoin Holdings per Unit		0.995	0.990	0.985
Hypothetical price per Bitcoin		$100.00	$100.00	$100.00

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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 520 White Plains Road, Suite 500, Tarrytown, New York, 10591 and its telephone number is (914) 214-4174. Under the Delaware Limited Liability Company Act and the governing documents of the Sponsor, is not responsible for the debts, obligations and liabilities of the Sponsor solely by reason of being the sole member of the Sponsor.

The Sponsor is neither an investment adviser registered with the SEC nor a commodity pool operator registered with the CFTC, and will not be acting in either such capacity with respect to the Trust, and the Sponsor’s provision of services to the Trust will not be governed by the Advisers Act or the CEA.

The Sponsor’s Role

The Sponsor arranged for the creation of the Trust and quotation of the Units on the OTCQX. 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. This includes (i) preparing and providing periodic reports and financial statements on behalf of the Trust for investors, (ii) processing orders to create (and, should the Trust commence a redemption program, redeem) Units and coordinating the processing of such orders with the Custodian and the Transfer Agent, (iii) calculating and publishing the Bitcoin Holdings and the Bitcoin Holdings per Unit of the Trust each business day as of 4:00 p.m., New York time, or as soon thereafter as practicable, (iv) selecting and monitoring the Trust’s service providers and from time to time engaging additional, successor or replacement service providers (including without limitation the Administrator, Custodian, Cash Custodian, Transfer Agent and Index Provider), (v) instructing the Custodian to withdraw the Trust’s Bitcoin as needed to pay the Management Fee and the other Aggregate Trust Expenses, (vi) upon dissolution of the Trust, distributing the Trust’s remaining Bitcoin or the cash proceeds of the sale thereof to the owners of record of the Units and (vii) 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 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.

Index Provider Agreement

The Index Provider and the Sponsor have entered into an index provider agreement (the “Index Provider Agreement”) governing the Sponsor’s use of the Index for calculation of the value of the Trust’s Bitcoin Holdings. The Index Provider may adjust the calculation methodology for the Index without notice to, or consent of, the Trust or its Unitholders. Under the Index Provider Agreement, the Sponsor pays a monthly fee and a fee based on the Bitcoin

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Holdings of the Trust to the Index Provider in consideration of its license to the Sponsor of Index-related intellectual property.

Under the Index Provider Agreement, the Index Provider generally disclaims all warranties, including non-infringement and fitness for a particular purpose. The Index is provided on an “as-is,” “as available,” and on an “with all faults” basis. The Index Provider, however, agreed to indemnify the Sponsor and the Trust against any claim, demand suit, investigation or proceeding made or brought by a third party, alleging that the use of the service permitted under the Index Provider Agreement infringes or misappropriates a third-party copyright, trade secret, trademark or United States patent. The Index Provider will pay all costs, including reasonable attorneys’ fees and any settlement amounts agreed to by the Index Provider or damages award in connection with such third-party claim.

The Trust will notify Unitholders of material changes to Index methodology or composition, upon being notified of such change by the Index Provider, through a filing on the SEC’s EDGAR system.

Pursuant to the Trust Agreement, the Sponsor has general discretion to select a different index (or otherwise change the fund’s investment objectives).

Under the Index Provider Agreement, the Sponsor may use the Index, including without limitation, for use in internal fund administration such as portfolio valuation and accounting and for display on Sponsor’s websites, social media, or mobile applications, as we as inclusion in publications, reports, advertisements and other informational materials.

The Sponsor is required to indemnify the Index Provider, including its officers, directors, employees, agents, contractors, representatives and affiliates against any claims made or brought against the Index Provider arising from Sponsor’s breach, or alleged breach, of the Index Provider Agreement.

The Index Provider Agreement is governed by the laws of the Commonwealth of Massachusetts.

Management of the Sponsor

Under the Trust Agreement, all management functions of the Trust have been delegated to and are conducted by the Sponsor, its agents and its affiliates, including without limitation, the Custodian and its agents. As officers of the Sponsor, Gregory D. King, the Chief Executive Officer of the Sponsor, Robert Rokose, the Chief Financial Officer of the Sponsor, and Matthew Mascera, as Director of Operations of the Sponsor, may take certain actions and execute certain agreements and certifications for the Trust, in their capacity as the principal officers of the Sponsor.

The following individuals are the officers of the Sponsor responsible for overseeing the business and operations of the Trust:

Gregory D. King, Chief Executive Officer

Gregory D. King is Founder and CEO of Osprey Funds, LLC and has served as CEO of the Sponsor since its inception in October 2018. Greg is the primary author of several financial industry innovations including creating the first ever exchange-traded note (“ETN”) for Barclays in 2006. In 2009, Greg co-founded VelocityShares, LLC, a provider of alternative ETPs, partnering with Credit Suisse as product issuer. VelocityShares was acquired by Janus Capital in 2014. During his career, Greg has created and launched over 100 exchange traded funds and notes for Barclays, Credit Suisse, Global X Funds, VelocityShares, Rex Shares, LLC, and Osprey Funds. Greg received a Master’s in Business Administration from the University of California, Davis, and is a CFA Charter holder. He has been an investor in Bitcoin since 2013.

Robert Rokose, Chief Financial Officer and Treasurer

Robert Rokose became Treasurer and CFO of the Sponsor in March 2020. He is also CFO of REX Shares, LLC, originally the parent company to the Sponsor. Bob has 28 years of accounting and financial services experience. His previous roles include CFO of U.S. Funds at JP Morgan Asset Management, Managing Director & CFO for PIMCO/Allianz Funds and Assistant Vice President & Assistant Controller of publicly held Lexington Global Asset

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Managers. Mr. Rokose has served as a Financial Services Consultant and has acted in that role since November 2016. From May 2014 to October 2016, Mr. Rokose was Chief Financial Officer and Treasurer of AccuShares Investment Management where he led all financial accounting and reporting for the organization. Bob is a Certified Public Accountant, licensed in the state of New York. He has an undergraduate degree from Pace University and a Master’s of Business Administration from the University of Connecticut.

Jack Drogin, General Counsel

Jack Drogin became General Counsel and Chief Compliance Officer of the Sponsor in May 2021. He has over thirty years’ experience as an attorney, including ten on the Staff of the U.S. Securities and Exchange Commission, Division of Trading and Markets. from January 1991-June 2001. Prior to joining Osprey Funds, LLC, Jack was a shareholder in the Washington, D.C. office of Murphy & McGonigle, P.C., a firm focusing on financial services law and regulation. He holds an undergraduate degree from the University of Pennsylvania and a law degree from Harvard Law School. Jack is a member of the New York and District of Columbia bars.

THE TRUSTEE

Delaware Trust Company serves as Delaware 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’s Role

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 will be 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 Delaware 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 Unitholders, such duties and liabilities will be replaced by the duties and liabilities of the Trustee expressly set forth in the Trust Agreement. The Trustee will have no obligation to supervise, nor will it be 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 on 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 Units. The Trustee’s liability in connection with the issuance and sale of Units 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 Information Statement or in any other document issued or delivered in connection with the sale or transfer of the Units. The Trust Agreement provides that the Trustee will not be responsible or liable for the genuineness, enforceability, collectability, value, sufficiency, location or existence of any of the Bitcoins or other assets of the Trust. See “Description of the Trust Documents—Description of the Trust Agreement.”

The Trustee is permitted to resign upon at least 60 days’ notice to the Trust. The Trustee will be 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.

Fees paid to the Trustee are a Sponsor-paid Expense.

THE TRANSFER AGENT

Continental Stock Transfer & Trust Company, a Delaware corporation, serves as the Transfer Agent of the Trust pursuant to the terms and provisions of the Transfer Agency and Registrar Service Agreement. The Transfer

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Agent has its principal office at 1 State Street, 30th Floor, New York, New York 10004. A copy of the Transfer Agency and Registrar Service Agreement is available for inspection at the Sponsor’s principal office identified herein.

The Transfer Agent’s Role

The Transfer Agent holds the Units primarily in book-entry form. The Sponsor directs the Transfer Agent to credit the number of Units to the investor in response to a creation order. The Transfer Agent will issue the Units. The Transfer Agent will also assist with the preparation of Unitholders’ account and tax statements.

The Sponsor will indemnify and hold 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 a Sponsor-paid Expense.

THE CUSTODIAN

Fidelity Digital Asset Services, LLC (FDAS) is a qualified custodian for purposes of Rule 206(4)-2(d)(6) under the Advisers Act. The Custodian 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 Custodian has its principal office at 245 Summer Street, Boston, MA 02210. A copy of the Custodial Services Agreement is available for inspection at the Sponsor’s principal office identified herein.

FDAS is a subsidiary of Fidelity Investments, one of the world’s largest asset managers with over seven trillion dollars in client asset under management according to its website. According to the Custodial Services Agreement, FDAS is a New York State limited liability trust company authorized pursuant to Section 102-a of the New York Banking Law to engage in all activities described in Section 96 and 100 of the New York Banking Law, with the exception of accepting deposits and making loans. It is licensed and supervised by New York State with respect to providing custody for Bitcoin. FDAS received its New York State banking charter in November 2019.

The Custodian’s Role

Under the Custodial Services Agreement, the Custodian controls and secures the Trust’s “Digital Asset Custody Accounts,” one or more custody accounts that allow for the receipt, safekeeping and maintenance of the Trust’s Digital Assets (as defined in the Custodial Services Agreement) and “Cash Custody Accounts,” one or more cash accounts to hold cash and monies received for deposit, on the Trust’s behalf. The Custodian’s services (i) allow Digital Assets to be deposited from a public blockchain address to the Trust’s Digital Asset Custody Account and (ii) allow the Trust or Sponsor to withdraw Digital Assets from the Trust’s Digital Asset Custody Account to a blockchain supporting the relevant Digital Asset (the “Custodial Services”). A portion of the Digital Assets held for the Trust will be held within an offline storage, or “cold” storage, system to secure the Trust’s private keys. The term cold storage refers to a safeguarding method by which the private keys corresponding to digital assets are disconnected and/or deleted entirely from the internet.

The Custodian may withdraw from the Trust’s Digital Assets Custody Account the amount of Digital Assets necessary to pay the Trust’s expenses. Fees paid to the Custodian are a Sponsor-paid Expense.

Under the Custodial Services Agreement, the Trust has agreed to indemnify and hold harmless the Custodian from any third-party claim or third-party demand (including all court costs and reasonable attorneys’ fees) arising out of or in connection with the Custodial Services Agreement or any action taken or not taken pursuant thereto, except where such claim directly results from the gross negligence, fraud or willful misconduct of the Custodian.

The Digital Assets in the Trust’s custody accounts will be treated as fungible with those digital assets of other clients of the Custodian that are based on the same cryptographic protocol or consensus rules of a computer network that are also held in an omnibus wallet by the Custodian on behalf of such other clients. The Custodian has no fiduciary duty to the Trust, including with respect to the assets held in the custody accounts under the Custodial Services Agreement.

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The Custodian will provide to the Trust quarterly account statements identifying the Digital Assets in the custody accounts on a quarterly basis and setting forth all transactions in the custody accounts during such quarter. Upon written request from the Sponsor, the Custodian will also provide copies of quarterly account statements to the Sponsor. In addition, the Custodian may take such steps that it determines may be necessary or advisable to inspect and protect the security of the assets and the custody accounts.

If the Custodian resigns in its capacity as custodian, the Sponsor may appoint an additional or replacement custodian and enter into a custodian agreement on behalf of the Trust with such custodian. Furthermore, the Sponsor and the Trust may use Bitcoin custody services or similar services provided by entities other than Fidelity Digital Asset Services, LLC at any time without prior notice to Fidelity Digital Asset Services, LLC.

THE ADMINISTRATOR

Theorem Fund Services serves as the Administrator. The Administrator has offices at 141 W. Jackson Blvd Suite 4120, Chicago, IL 60604.

The Administrator’s Role

The Administrator is generally responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records. The Administrator’s principal responsibilities include: (1) valuing the Trust’s Bitcoin and calculating the NAV per Unit; (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 Administrator also provides know your customer, anti-money laundering, and Office of Foreign Assets Control (“OFAC”) compliance check services to the Trust and Sponsor.

The Administrator will liaise with the Trust’s legal, accounting and other professional service providers as needed.

The Administrator will keep proper books of registration and transfer of Units at its office located in New York 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 Unitholder at all reasonable times during the usual business hours of the Sponsor. The Sponsor will keep a copy of the Trust Agreement on file in its office which will be available for inspection on reasonable advance notice at all reasonable times during its usual business hours by any Unitholder.

CONFLICTS OF INTEREST

General

The Sponsor has not established formal procedures to resolve all potential conflicts of interest. Consequently, investors may be dependent on the good faith of the respective parties subject to such conflicts to resolve them equitably. Although the Sponsor attempts to monitor these conflicts, it is extremely difficult, if not impossible, for the Sponsor to ensure that these conflicts do not, in fact, result in adverse consequences to the Trust.

Prospective investors should be aware that the Sponsor presently intends to assert that Unitholders have, by subscribing for Units of the Trust, consented to the following conflicts of interest in the event of any proceeding alleging that such conflicts violated any duty owed by the Sponsor to investors.

The Sponsor

The Sponsor has a conflict of interest in allocating its own limited resources among, when applicable, different clients and potential future business ventures, to each of which it owes fiduciary duties. Additionally, the

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professional staff of the Sponsor also services other affiliates of the Trust, including, Rex Shares, LLC, a company under common control with the Sponsor. Although the Sponsor and its professional staff cannot and will not devote all of its or their respective time or resources to the management of the affairs of the Trust, the Sponsor intends to devote, and to cause its professional staff to devote, sufficient time and resources to manage properly the affairs of the Trust consistent with its or their respective fiduciary duties to the Trust and others.

Although the Sponsor does not engage in trading Bitcoin with the Trust, the Sponsor may receive from the Trust Bitcoin to be used to pay certain Trust expenses, including without limitation, the Custodial fee. In such circumstances, the Sponsor will price the Bitcoin received from the Trust at the Bitcoin Market Price on the day it is received and convert the Bitcoin received into cash to be used to pay Trust expenses. The Sponsor typically receives its Management Fee in Bitcoin, valued at the Bitcoin Market Price on the day such Management Fee is paid.

The Sponsor owned approximately 14 Bitcoin, valued at approximately $656,782.00 as of 4:00 p.m., New York time on September 9, 2021.

The Initial Purchaser

As of December 31, 2020, the biggest investor in the Trust was the Michael D. Komaransky (the “Initial Purchaser”) The Initial Purchaser seeded the Trust with an initial in-kind contribution of 1,388 Bitcoin (valued at $4,975161) on January 22, 2019. Because the Initial Purchaser has no voting rights in the Trust or the Sponsor, and there are currently no redemption rights associated with the Trust, the Sponsor does not believe the Initial Purchaser is a control person of the Sponsor.

The Initial Purchaser, through the proprietary Bitcoin trading firm he operates, Grapefruit Trading LLC, a Delaware limited liability company, formerly engaged in Bitcoin trading with the Trust entities. However, the Trust no longer trades with Grapefruit Trading LLC.

Proprietary Trading/Other Clients

Because the officers of the Sponsor may trade Bitcoin for their own personal trading accounts (subject to certain internal trading policies and procedures) at the same time as they are managing the account of the Trust, prospective investors should be aware that the activities of the officers of the Sponsor, subject to their fiduciary duties, may, from time-to-time, result in their taking positions in their personal trading accounts which are opposite of the positions taken for the Trust. Records of the Sponsor’s officers’ personal trading accounts will not be available for inspection by Unitholders.

Certain officers of the Sponsor own Bitcoin for their own account. Officers of the Sponsor do not engage in trading Bitcoin with the Trust. 

PRINCIPAL UNITHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of the Units for:

· each person that, to the Sponsor’s knowledge based solely on the records of the Transfer Agent, owns beneficially a significant portion of the Units;

· each executive officer of the Sponsor individually; and

· all officers of the Sponsor as a group.

The number of Units beneficially owned and percentages of beneficial ownership set forth below are based on the number of Units outstanding as of June 30, 2021 and do not take into account ownership of the Units held through Cede & Co., a nominee of DTC, for which there is no publicly available information.

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In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage of Beneficial Ownership
Significant Unitholders:
Celsius Network Ltd.		2,932,321		35.3	%
Executive Officers of the Sponsor: (1)
Gregory D. King		7,980		*	%
Robert Rokose		2,056		*	%
Jack Drogin		0		*	%
Executive officers of the Sponsor as a group		10,036		*	%

(1) The Trust does not have any directors, officers or employees. Under the Trust Agreement, all management functions of the Trust have been delegated to and are conducted by the Sponsor, its agents and its affiliates.

* Represents beneficial ownership of less than 1%.

The business address for Celsius Network Ltd. is 1 Bartholomew Lane, London, EC2N 2AX UK. Alexander Mashinsky is the CEO and controlling shareholder of Celsius Network Ltd. The business address for each executive officer of the Sponsor is c/o Osprey Funds, LLC, 520 White Plains Road, Suite 500, Tarrytown, New York 10591.

DESCRIPTION OF THE UNITS

General

The Trust is authorized under the Trust Agreement to create and issue an unlimited number of Units. The Trust issues Units only in connection with purchase orders for a minimum of $25,000.00 initial investment ($10,000.00 minimum for additional investments). The Units represent common units of fractional undivided beneficial interest in and ownership of the Trust and have no par value.

Generally, the Units may be purchased from the Trust on an ongoing basis upon the order of an Accredited Investor to purchase a minimum of $25,000.00 of Units initial investment ($10,000.00 minimum for additional investments). Initially, each Unit represented 0.00138335 of a Bitcoin. Unitholders that are not Accredited Investors may not purchase Units from the Trust upon orders. At this time, the Trust is not operating a redemption program for Units and therefore Units are not redeemable by the Trust.

As of May 31, 2021, there were 8,287,077 Units issued and outstanding (after a four to one Unit split effective January 5, 2021 for Unitholders of record as of December 31, 2020 (the “Units Split”)).

Recent Sales of Unregistered Units

The Trust commenced an offering pursuant Rule 504 of Regulation D under the Securities Act (“Rule 504 Offering”) on June 1, 2020, which terminated on August 12, 2020. In the Rule 504 Offering, the Trust sold 38,546 Units to investors residing in Connecticut and New York. Purchasers in the Rule 504 Offering included non-accredited investors.

The Trust commenced a subsequent offering, which is ongoing, pursuant to Rule 506(c) of Regulation D, commencing on November 12, 2020 (the “Current Offering”), pursuant to which the Trust sold 1,215,485 restricted Units as of March 5, 2021.

Description of Limited Rights

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The Units 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 Unitholder will not have the statutory rights normally associated with the ownership of Units of a corporation. Each Unit 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 Unitholders may vote under the Trust Agreement. For example, Unitholders do not have the right to elect directors and will not receive dividends. The Units do not entitle their holders to any conversion or pre-emptive rights or, except as discussed below, any redemption rights or rights to distributions.

Voting and Approvals

The Unitholders take no part in the management or control of the Trust. Under the Trust Agreement, Unitholders have limited voting rights. However, no amendments to the Trust Agreement that materially adversely affect the interests of Unitholders may be made without the vote of at least a majority (over 50%) of the Units (not including any Units held by the Sponsor or its affiliates). The Sponsor may generally make any other amendments to the Trust Agreement in its sole discretion without Unitholders’ consent.

Distributions

Pursuant to the terms of the Trust Agreement, the Trust may make distributions on its Units in cash or in Units, with such frequency as the Sponsor may determine.

The Units are offered by the Trust and the Sponsor and its officers, in reliance upon the exemption from broker registration contained in Rule 3a4-1 of the Securities Exchange Act of 1934. Currently, the Trust does not expect to use underwriters, finders or other intermediaries to offer or sell Units, but it may choose to do so, and in any such case pay the fees of such intermediaries itself or pass some or all of such fees on to purchasers (in which case the Trust will make advanced disclosure of such fee arrangements to such purchasers).

In addition, if the Trust is terminated and liquidated, the Sponsor will distribute to the Unitholders 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. Unitholders 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.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Review of Financial Results” for further detail.

Issuance of Units

Generally, the Units may be purchased from the Trust on an ongoing basis upon the order of an Accredited Investor to purchase a minimum of $25,000.00 of Units initial investment ($10,000.00 minimum for additional investments). As of May 31, 2021, each Unit represented 0.00034 of a Bitcoin. Investors that are not Accredited Investors may not purchase Units from the Trust upon orders. See “Description of Issuance of Units.” The Trust may from time to time halt new issuances. As a result, the Units may trade at a substantial premium over, or substantial discount to, the NAV per Unit. This is because market participants would not be able to take advantage of arbitrage opportunities created when the market value of the Units deviates from the value of the Trust’s Bitcoin Holdings per Unit.

The Trust determines the number of Units to be issued in connection with each purchase order using the following method:

· Determine the U.S. dollar amount of the purchase of in-kind purchases, Bitcoin are converted into U.S. dollars using that day’s Bitcoin Market Price

· Determine the day’s Bitcoin Market Price;

· Calculate and issue to the investor the maximum number of whole Units that can be purchased by diving the U.S. dollar amount of the purchase order by the Bitcoin Market Price;

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· Calculate the total U.S. dollar value of the maximum whole Units to be issued;

· Calculate the difference between the dollar value of the Units issued by reference to the Bitcoin Market Price and the total dollar value of the purchase order (“Cash Difference”);

· Apply the Cash Difference to the Trust as “Other Earnings.”

Redemption of Units

Due to regulatory restrictions, the Trust is not currently operating a redemption program, and redemptions of Units are currently not permitted. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.

Even if such relief is sought, no assurance can be given as to the timing of such relief or that such relief will be granted. If such relief is granted and the Sponsor approves a redemption program, the Units will be redeemable only in accordance with the provisions of the Trust Agreement and ay applicable conditions imposed by the SEC or its Staff.

Transfer Restrictions

The Units are restricted securities that may not be resold except in transactions exempt from registration under the Securities Act and state securities laws and any such transaction must be approved by the Sponsor. In determining whether to grant approval, the Sponsor will specifically look at whether the conditions of Rule 144 under the Securities Act and any other applicable laws have been met. Any attempt to sell Units without the approval of the Sponsor in its sole discretion will be void ab initio. Pursuant to Rule 144, until the Trust has been subject to the reporting requirements of Section 13 under the Exchange Act for a period of 90 days, a minimum one year holding period will apply to all Units purchased from the Trust, as set forth under Rule 144. The holding period did not apply to purchases in the Rule 504 Offering.

Because of the one-year holding period and the lack of an ongoing redemption program, Units should be considered an illiquid investment. No assurances are given that after the one year holding period, there will be any market for the resale of Units, or, if there is such a market, as to the price at which such Units may be sold into such a market.

Removal of Transfer Agent Legend

On a monthly basis, the Trust will aggregate the Units that have been held for the requisite holding period under Rule 144 by non-affiliates of the Trust to assess whether the Rule 144 transfer restriction legends may be removed. Any Units that qualify for the removal of the Rule 144 transfer restriction legends are presented to outside counsel, who may instruct the Transfer Agent to remove the transfer restriction legends from the Shares, allowing the Shares to then be resold without restriction, including on OTCQX.. The outside counsel requires that certain representations be made, providing that:

• the Units subject to each sale have been held for the requisite holding period under Rule 144 by the selling Unitholder;

• the Unitholder is the sole beneficial owner of the Units;

• the Sponsor is aware of no circumstances in which the Unitholder would be considered an underwriter or engaged in the distribution of securities for the Trust;

• none of the Units are subject to any agreement granting any pledge, lien, mortgage, hypothecation, security interest, charge, option or encumbrance;

• none of the identified selling Unitholders is an affiliate of the Sponsor;

• the Sponsor consents to the transfer of the Units; and

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• outside counsel and the Transfer Agent can rely on the representations.

In addition, because the Trust Agreement prohibits the transfer or sale of Unis without the prior written consent of the Sponsor, the Sponsor must provide a written consent that explicitly states that it irrevocably consents to the transfer and resale of the Units. Once the transfer restriction legends have been removed from a Unit and the Sponsor has provided its written consent to the transfer of that Unit, no consent of the Sponsor is required for future transfers of that particular Unit.

The Sponsor believes the minimum one year holding period for Units purchased from the Trust will be shortened to six months, once the Trust has been a Securities Exchange Act Reporting Company for at least 90 days, and all other requirements for resale of securities under Rule 144 under the Securities Act are met. As a general matter, Rule 144 under the Securities Act provides safe harbor from being deemed engaged in a distribution (and therefore acting as an underwriter) to persons meeting the rule’s requirements. Section (d)(1) of the Rule 144, provides generally if the issuer of the securities is, and has been for a period of ninety days immediately before the sale, subject to the reporting requirements of Section 13 of 15(d) of the Securities Exchange Act (“Reporting Issuer”), a minimum of six months must elapse between the later of the date of the acquisition of the securities from the issuer (or an affiliate of the issuer) , and any resale of such securities in reliance on the rule (so long as the Trust is not delinquent in meeting its reporting obligations). By contrast, paragraph (d)(2) of the Rule 144 provides that if the issuer of the securities is not a Reporting Issuer, a minimum of one year must elapse between the later of the date of acquisition of the securities from the issuer (or any affiliate of the issuer) and any resale in reliance on the rule. Pursuant to paragraph (d)(1) of Rule 144, ninety days after the Trust becomes a Reporting Issuer for purposes of Rule 144, purchasers of Units from the Trust (or an affiliate, if applicable) should therefore be able to rely on the six month holding period required by the rule, provided all of other requirements of Rule 144 are met.

Book-Entry Form

Units of the Trust are held primarily in book-entry form by the Transfer Agent. Transfers will be made in accordance with standard securities industry practice. The Sponsor may cause the Trust to issue Units in certificated form in limited circumstances in its sole discretion.

Unit Splits

In its discretion, the Sponsor may direct the Transfer Agent to declare a split or reverse split in the number of Units outstanding and to make a corresponding change in the number of Units constituting a Basket. For example, if the Sponsor believes that the per Unit price in the secondary market for Units has risen or fallen outside a desirable trading price range, it may declare such a split or reverse split.

CUSTODY OF THE TRUST’S BITCOINS

Digital assets and digital asset transactions are recorded and validated on blockchains, the public transaction ledgers of a digital asset network. Each digital asset blockchain serves as a record of ownership for all of the units of such digital asset, even in the case of certain privacy-focused digital assets, where the transactions themselves are not publicly viewable. All digital assets recorded on a blockchain are associated with a public blockchain address, also referred to as a digital wallet. Digital assets held at a particular public blockchain address may be accessed and transferred using a corresponding private key.

Key Generation

Public addresses and their corresponding private keys are generated by the Custodian in secret key generation ceremonies at secure locations inside faraday cages, which are enclosures used to block electromagnetic fields and thus mitigate against attacks. The Custodian uses quantum random number generators to generate the public and private key pairs.

Once generated, private keys are encrypted, separated into “shards” and then further encrypted. After the key generation ceremony, all materials used to generate private keys, including computers, are destroyed. All key

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generation ceremonies are performed offline. No party other than the Custodian has access to the private key shards of the Trust.

Key Storage

Private key shards are distributed geographically in secure vaults around the world, including in the United States. The locations of the secure vaults may change regularly and are kept confidential by the Custodian for security purposes.

The Bitcoin Account uses offline storage, or “” storage, mechanisms to secure the Trust’s private keys. The term cold storage refers to a safeguarding method by which the private keys corresponding to digital assets are disconnected and/or deleted entirely from the internet. Cold storage of private keys may involve keeping such keys on a non-networked (or “airgapped”) computer or electronic device or storing the private keys on a storage device (for example, a USB thumb drive) or printed medium (for example, papyrus, paper or a metallic object). A digital wallet may receive deposits of digital assets but may not send digital assets without use of the digital assets’ corresponding private keys. In order to send digital assets from a digital wallet in which the private keys are kept in cold storage, either the private keys must be retrieved from cold storage and entered into an online, or “hot,” digital asset software program to sign the transaction, or the unsigned transaction must be transferred to the cold server in which the private keys are held for signature by the private keys and then transferred back to the online digital asset software program. At that point, the user of the digital wallet can transfer its digital assets.

Under the Custodial Services Agreement, the Custodian holds Bitcoin for the Trust in an omnibus account. A portion of the Bitcoin held by the Custodian is held in cold storage, but the Custodian does not disclose what amount of Bitcoin is held in cold storage, and the Trust has no discretion as to the amount of Bitcoin held by the Custodian in cold storage and what percentage are held “hot” storage, enabling such Bitcoin to be transferred.

Security Procedures

The Custodian is the custodian of the Trust’s private keys in accordance with the terms and provisions of the Custodial Services Agreement. Transfers from the Bitcoin Account requires certain security procedures, including but not limited to, multiple encrypted private key shards, usernames, passwords and 2-step verification. Multiple private key shards held by the Custodian must be combined to reconstitute the private key to sign any transaction in order to transfer the Trust’s assets. Private key shards are distributed geographically in secure vaults around the world, including in the United States.

As a result, if any one secure vault is ever compromised, this event will have no impact on the ability of the Trust to access its assets, other than a possible delay in operations, while one or more of the other secure vaults is used instead. These security procedures are intended to remove single points of failure in the protection of the Trust’s assets.

Transfers of Bitcoins to the Bitcoin Account will be available to the Trust once processed on the Blockchain.

Subject to obtaining regulatory approval to operate a redemption program and authorization of the Sponsor, the process of accessing and withdrawing Bitcoins from the Trust to redeem a Unit by a Unitholder will follow the same general procedure as transferring Bitcoins to the Trust to create a Unit by a Unitholder, only in reverse. See “Description of Issuance of Units.”

DESCRIPTION OF ISSUANCE OF UNITS

The following is a description of the material terms of the Trust Documents as they relate to the issuance of the Trust’s Units on an ongoing basis from time to time through sales in private placement transactions exempt from the registration requirements of the Securities Act.

The Units are offered by the Trust and the Sponsor and its officers, in reliance upon the exemption from broker registration contained in Rule 3a4-1 of the Securities Exchange Act of 1934. Currently, the Trust does not expect to use underwriters, finders or other intermediaries to offer or sell Units, but it may choose to do so, and in any

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such case pay the fees of such intermediaries itself or pass some or all of such fees on to purchasers (in which case the Trust will make advanced disclosure of such fee arrangements to such purchasers).

The Trust Documents also provide procedures for the redemption of Units. However, the Trust does not currently operate a redemption program and the Units are not currently redeemable. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.

The Trust is authorized under the Trust Agreement to issue an unlimited number of Units. The Trust issues Units only in connection with purchase orders for a minimum of $25,000.00 initial investment ($10,000.00 minimum for additional investments). The Units represent common units of fractional undivided beneficial interest in and ownership of the Trust and have no par value.

The Units may be purchased from the Trust on an ongoing basis, but only upon the order of an Accredited Investor to purchase a minimum of $25,000.00 of Units initial investment ($10,000.00 minimum for additional investments). As of May 31, 2021, each Unit represented 0.00034 of a Bitcoin.

Accredited Investors are the only persons that may place orders to purchase Units (the “Purchasers”). Each Purchaser must (i) enter into a Subscription Agreement with the Sponsor and the Trust, and (ii) if purchasing in-kind, has access to a Bitcoin wallet address previously known to the Custodian as belonging to the Purchaser (the “Purchaser Self-Administered Account”).

The creation of Units requires the delivery to the Trust of the Bitcoin Purchase Amount.

The Subscription Agreement provides the procedures for the creation of Units and for the delivery of the whole and fractional Bitcoins required for such creations. The Subscription Agreement and the related procedures attached thereto may be amended by the Sponsor and the relevant Purchaser. Under the Subscription Agreement, the Sponsor has agreed to indemnify each Purchaser against certain liabilities, including liabilities under the Securities Act.

Purchasers do not pay a transaction fee to the Trust in connection with the creation of Units, but there may be transaction fees associated with the validation of the transfer of Bitcoins by the Bitcoin Network. Purchasers who deposit Bitcoins with the Trust in exchange for Units will receive no fees, commissions or other form of compensation or inducement of any kind from either the Sponsor or the Trust, and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Units.

The following description of the procedures for the creation of Units is only a summary and Unitholders should refer to the relevant provisions of the Trust Agreement and the form of Subscription Agreement for more detail.

Purchase Procedures

On any business day, a Purchaser may deposit the amount of cash to purchase Units (the “Bitcoin Purchase Amount”) with Signature Bank, the Trust’s bank, and submit an order to create Units (a “Purchase Order”) from the Trust via notification to the Sponsor or its delegate in the manner provided in the Subscription Agreement. An investor’s cash for a Purchase Order must be cleared in the Trust’s account at Signature Bank by 1:00 p.m., Eastern time on a business day for the investor to obtain that day’s Bitcoin Market Price. The Sponsor or its delegate will process Purchase Orders only from Purchasers with respect to whom a Subscription Agreement is in full force and effect.

Once the Sponsor or its delegate confirms the total amount of purchase funds for a Purchase Order, it will choose a counterparty to purchase Bitcoin on agreed upon terms. The Sponsor has full discretion to determine the Trust’s counterparties for Bitcoin transactions. The Sponsor considers various counterparties for trades, including Cumberland DRW, LLC; Jane Street; Galaxy Digital; and Wintermute Trading Ltd., based on various factors including, but not limited to, price quoted, ease of liquidity, marketplace slippage(i.e., price certainty) and ease and certainty of settlement. Upon receiving a trade confirmation from the counterparty, the Sponsor will instruct Signature Bank to wire funds to the trading counterparty and confirm the wallet address for the Trust to receive Bitcoin at the Custodian.

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Completed Purchase Orders are generally accepted (or rejected) by the Sponsor within one business day of the day on which the relevant Purchase Order is placed. If a Purchase Order is accepted, the Sponsor generally will fill the Purchaser’s Purchase Order within five business days immediately following the day on which the relevant Purchase Order is placed. The expense and risk of delivery, ownership and safekeeping of Bitcoins will be borne solely by the Purchaser until such Bitcoin have been received by the Trust.

Suspension or Rejection of Purchase Orders and Bitcoin Purchase Amount

The delivery of the Units against deposit of the Bitcoin Purchase Amount may be suspended generally, or refused with respect to particular requested creations, during any period when the transfer books of the Sponsor or its delegate are closed or if any such action is deemed necessary or advisable by the Sponsor or its delegate or for any reason at any time or from time to time. None of the Sponsor, its delegates, or the Custodian shall be liable for the rejection or acceptance of any Purchase Order or Bitcoin Purchase Amount.

Tax Responsibility

Purchasers 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 of Units, regardless of whether such tax or charge is imposed directly on the Purchasers, and agree to indemnify the Sponsor and the Trust if the Sponsor or the Trust is required by law to pay any such tax, together with any applicable penalties, additions to tax or interest thereon.

VALUATION OF BITCOIN AND DETERMINATION OF BITCOIN HOLDINGS

To determine which Bitcoin market will serve as the Trust’s principal market (or in the absence of a principal market, the most advantageous market) for purposes of calculating the Trust’s NAV, the Trust follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820-10, which outlines the application of fair value accounting. 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 Galaxy Digital, Jane Street, and Cumberland DRW LLC, and does not itself transact in any Bitcoin markets. Therefore, 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 utilizes the Bitcoin Market Price to determine the value of Bitcoin at any given time. The Trust evaluates its principal market selection (or in the absence of a principal market the most advantageous market) annually and conducts a quarterly analysis to determine (i) if there have been recent changes to each Bitcoin market’s trading volume and level of activity in the trailing twelve months, (ii) if any Bitcoin markets have developed that the Trust has access to, or (iii) if recent changes to a Bitcoin market’s price stability have occurred that would materially impact the selection of the principal market and necessitate a change in the Trust’s determination of its principal market. The Trust does not anticipate changing its principal market more frequently than annually, than in connection with its annual financial audit, although it would take into account its quarterly reviews in making such determinations.

Prior to May 18, 2021, the Trust relied on the Coin Metrics Bletchley Index (CMBI) Bitcoin (the “Index”) to determine the value of its Bitcoin and to determine the Trust’s NAV. An internal review by the Sponsor determined that the difference between the Index price of Bitcoin and the Bitcoin Market Price on May 18, 2021 was immaterial, and an additional review of daily prices from May 18, 2021 through August 16, 2021 by the Sponsor also found differences in daily price between the Index and the Bitcoin market Price to be immaterial, exceeding one percent on four days, and exceeding two percent only once, with a maximum difference of 2.21% on May 24, 2021. To date, the Trust has not met its investment objective, as Units of the Trust quoted on the OTCQX market may trade at a premium or a discount to the value of the Trust’s Bitcoin holdings, as measured by the Index, less the Trust’s expenses and liabilities. Such premiums or discounts could at times be substantial.

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The Sponsor will evaluate the Bitcoins held by the Trust and determine the Bitcoin Holdings of the Trust in accordance with the relevant provisions of the Trust Documents. The following is a description of the material terms of the Trust Documents as they relate to valuation of the Trust’s Bitcoins and the Bitcoin Holdings calculations.

On each Business Day at 4:00 p.m., New York time, or as soon thereafter as practicable (the “Evaluation Time”), the Sponsor will evaluate the Bitcoins held by the Trust and calculate and publish the Bitcoin Holdings of the Trust. To calculate the Bitcoin Holdings, the Sponsor will:

1.       Determine the Bitcoin Market Price as of such business day.

2.       Multiply the Bitcoin Market Price by the Trust’s aggregate number of Bitcoins owned by the Trust as of 4:00 p.m., New York time, on the immediately preceding day, less the aggregate number of Bitcoins payable as the accrued and unpaid Management Fee as of 4:00 p.m., New York time, on the immediately preceding day.

3.       Add the U.S. dollar value of Bitcoins, calculated using the Bitcoin Market Price, receivable under pending Purchase Orders, if any, determined by multiplying the number of the Units represented by such Purchase Orders by the Bitcoin Purchase Amount and then multiplying such product by the Bitcoin Market Price.

4.       Subtract the U.S. dollar amount of accrued and unpaid Excluded Expenses, if any.

5.       Subtract the U.S. dollar amount of accrued and unpaid Extraordinary Expenses, if any.

6.       Subtract the U.S. dollar amount of the Management Fee that accrues for such business day, as calculated based on the Bitcoin Holdings Fee Basis Amount for such business day.

In the event that the Sponsor determines that the primary methodology used to determine the Bitcoin Market Price is not an appropriate basis for valuation of the Trust’s Bitcoins, the Sponsor will utilize the cascading set of rules described below to value the Trust’s Bitcoin Holdings. In addition, in the event that the Trust holds any Additional Currency, the Sponsor may, at its discretion, include the value of such Additional Currency in the determination of the Bitcoin Holdings, provided that the Sponsor has determined in good faith a method for assigning an objective value to such Additional Currency. At this time, the Trust does not expect to take any Additional Currency it may hold into account for the purposes of determining the Bitcoin Holdings or the Bitcoin Holdings per Unit.

The Sponsor will use the cascading set of rules set forth below to calculate the Bitcoin Market Price. The Sponsor will employ the below rules sequentially and in the order presented below, should one or more of the preceding rule(s) fail:

1. Theorem Fund Services (the Trust’s Administrator) receives a daily email from a third party reporting provider (CoinMetrics) which shows the 4:00 p.m., New York time Spot price of the principal market (i.e., Coinbase Pro) and secondary market (i.e., Kraken Exchange). Principal market and secondary market are generally decided based on the most liquid and reliable exchanges, including the Sponsor’s assessment of such factors as: (i) conducting U.S. dollar denominated trading in the applicable asset; appropriate licensing to conduct exchange activities (including, therefore, programs to detect, prevent, and respond to fraud); and otherwise have sufficient indicia of an active market with orderly transactions. quality of execution (overall cost of trading, accurate and timely execution, clearance and error/dispute resolution), reputation, financial strength, compliance with laws and regulations; and stability, hours of operation and willingness to transact, confidentiality of trading activity, and integrity of trade and price data.

2. Theorem Fund Services compares the principal market spot price to the secondary market spot price. If the price difference is less than 5%, Theorem proceeds with the NAV process using the Bitcoin rate provided by the principal market. If the difference is greater than 5% (Exceptional Event”), Theorem will inform, the Trust’s Pricing Committee Chair, of the difference and seek instruction. If the Pricing Committee Chair is not available, Theorem will attempt to contact, until successful, the Chief Financial Officer, the General Counsel, and last the Chief Executive Officer of the Sponsor.

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3. If there is an Exceptional Event, resulting in the inability of the Trust to rely on the Bitcoin rate provided by the principal market to determine NAV, the Trust’s Valuation Committee, comprised of the Chief Executive Officer, Chief Financial Officer, General Counsel and Director of Operations of the Sponsor will be convened.

4. Committee Chair (or alternate) will convene a meeting of the Valuation Committee (ideally the meeting will be in-person or by phone, but may be via group email).

5. Committee Chair will provide details of the Exception and open the meeting for discussion.

6. Determine a valuation in good faith pursuant to the following policies and procedures (“Fair Value Pricing”). In these circumstances, the Committee will determine fair value in a manner that seeks to reflect the market value of the investment at the time of valuation based on consideration of any information or factors the Committee deems appropriate, as further described below. For purposes of determining the fair value of the applicable assets, the Committee may consider, without limitation: (i) indications or quotes from brokers, (ii) valuations provided by a third-party pricing agent, (iii) internal models that take into consideration different factors determined to be relevant by the Committee, (iv) the price of applicable futures contracts (if any) on certain future exchanges or applicable options contracts on certain option markets, if any, or (vi) any combination of the above.

7. Based on the above procedures, the Committee will suggest a Pricing recommendation and Vote on the recommendation; if the vote ends in a tie, the Committee Chair will be the deciding vote.

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 the same digital assets.

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 will not be used to retroactively adjust the price of an investment or the NAV determined earlier that day.

In the event of a fork, the Sponsor has full discretion to calculate the Bitcoin Market Price itself using its best judgment.

The Sponsor will publish the Bitcoin Market Price, the Trust’s Bitcoin Holdings and the Bitcoin Holdings per Unit on the Trust’s website as soon as practicable after its determination. If the Bitcoin Holdings and Bitcoin Holdings per Unit have been calculated using a price per Bitcoin other than the Bitcoin Market Price for such Evaluation Time, the publication on the Trust’s website will note the valuation methodology used and the price per Bitcoin resulting from such calculation.

In the event of a hard fork of the Bitcoin Network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Bitcoin Network, is generally accepted as the network for Bitcoin and should therefore be considered the appropriate network for the Trust’s purposes. The Sponsor will base its determination on a variety of then relevant factors, including (but not limited to) the following: (i) the Sponsor’s beliefs regarding expectations of the core developers of Bitcoin, users, services, businesses, miners and other constituencies and (ii) the actual continued acceptance of, mining power on, and community engagement with the Bitcoin Network.

The Unitholders may rely on any evaluation furnished by the Sponsor. The determinations that the Sponsor makes will be made in good faith upon the basis of, and the Sponsor will not be liable for any errors contained in, information reasonably available to it. The Sponsor will not be liable to the Unitholders or any other person for errors in judgment. However, the preceding liability exclusion will not protect the Sponsor against any liability resulting from gross negligence, willful misconduct or bad faith in the performance of its duties.

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EXPENSES; SALES OF BITCOINS

Expenses

The Trust shall pay a Management Fee which accrues daily at an annual rate of 0.49% of the NAV of the Trust and is payable to the Sponsor monthly in arrears. The Management Fee is payable at the Sponsor’s sole discretion, in Bitcoin or in U.S. dollars for the Bitcoin Market Price in effect for such Bitcoin at the time of payment.

At the Sponsor’s election, the Sponsor may elect to (i) direct its delegates or the Custodian to withdraw the Bitcoin amount comprising the Management Fee, (ii) convert the Management Fee to USD and (iii) pay such dollar amount to the Sponsor, who will then pay itself as well as the relevant Assumed Expenses. Alternatively, the Sponsor may elect to (i) direct its delegates or the Custodian to withdraw the Bitcoin amount comprising the Management Fee, (ii) convert the Management Fee to USD and (iii) pay certain Assumed Expenses from the Management Fee and the remaining amount, if any, to the Sponsor.

As consideration for receipt of the Management Fee, the Sponsor shall assume and pay all routine and ordinary administrative and operating expenses of the Trust (the “Assumed Expenses”) other than audit fees, index license fees (If any), aggregate legal fees in excess of $50,000 and the fees of the Custodian (the “Excluded Expenses”) and Extraordinary Expenses (as defined below).

Extraordinary Expenses

In certain extraordinary circumstances, the Trust may pay expenses in addition to the Management Fee and the Excluded Expenses, such as, 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 Unitholders, indemnification expenses, fees and expenses related to public quotation on OTCQX (collectively, “Extraordinary Expenses”).

Disposition of Bitcoins

Because the Trust’s Assumed Expenses are payable through the transfer of Bitcoin each month, the Sponsor, its delegates or the Custodian will withdraw Bitcoin as needed from the Bitcoin Account to pay such fees. If the Trust incurs Extraordinary Expenses in U.S. dollars, Bitcoin will be converted to U.S. dollars at the exchange rate at the time of conversion to pay these Extraordinary Expenses. Unitholders do not have the option of choosing to pay their proportionate Units of Extraordinary Expenses in lieu of having their Units of Extraordinary Expenses paid by the Trust’s sale of Bitcoin. Assuming that the Trust is treated a grantor trust for U.S. federal income tax purposes, each delivery or sale of Bitcoins by the Trust for the payment of expenses by the Trust will result in a taxable event to Unitholders.

Because the number of the Trust’s Bitcoin will decrease as a consequence of the payment of the Management Fee in Bitcoin or the sale of Bitcoin to pay Extraordinary Expenses (and the Trust will incur additional fees associated with converting Bitcoin into U.S. dollars), the number of Bitcoin represented by a Unit will decline at such time and the NAV of the Trust may also decrease. Accordingly, the Unitholders will bear the cost of the Management Fee and any Extraordinary Expenses.

The Sponsor will also cause the sale of the Trust’s Bitcoin if the Sponsor determines that sale is required by applicable law or regulation or in connection with the termination and liquidation of the Trust. The Sponsor will not be liable or responsible in any way for depreciation or loss incurred by reason of any sale of Bitcoin.

STATEMENTS, FILINGS AND REPORTS

Statements, Filings and Reports

After the end of each fiscal year, the Sponsor will cause to be prepared an annual report containing audited financial statements prepared in accordance with U.S. GAAP for the Trust. The annual report will be in such form and

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contain such information as will be required by applicable laws, rules and regulations and may contain such additional information which the Sponsor determines shall be included. The annual report shall be filed with the SEC and OTCQX and shall be distributed to such persons and in such manner, as shall be required by applicable laws, rules and regulations. The Sponsor will also prepare, or cause to be prepared, and file any periodic reports or updates required under the Exchange Act.

The accounts of the Trust will be audited, as required by law and as may be directed by the Sponsor, by independent registered public accountants designated by the Sponsor. The accountants’ report will be furnished by the Sponsor to Unitholders upon request.

The Sponsor will make elections, file tax returns and prepare, disseminate and file tax reports, as advised by its counsel or accountants and/or as required by any applicable statute, rule or regulation.

Fiscal Year

The fiscal year of the Trust is the period ending December 31 of each year. The Sponsor may select an alternate fiscal year.

DESCRIPTION OF THE TRUST DOCUMENTS

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

The Sponsor and its affiliates (each a “Covered Person”) will not be liable to the Trust or any Unitholder 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 will 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 will be 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 Unitholders 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.

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.

The Trust Agreement provides that in addition to any other requirements of applicable law, no Unitholder shall have the right, power or authority to bring or maintain a derivative action, suit or other proceeding on behalf of

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the Trust unless two or more Unitholders who (i) are not affiliates of one another and (ii) collectively hold at least 10% of the outstanding Units 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. 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 Unitholders. The expenses incurred by the Sponsor in connection therewith (including the fees and disbursements of legal counsel) will be expenses of the Trust and are deemed to be Extraordinary Expenses. The Sponsor will be 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 Delaware Trust Statute. 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 Delaware Statutory Trust Act (“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.

To the extent the Trustee has duties (including fiduciary duties) and liabilities to the Trust or the Unitholders under the DSTA, such duties and liabilities will be replaced by the duties and liabilities of the Trustee expressly set forth in the Trust Agreement. The Trustee will have 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 Units. 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 Unitholders; Indemnification by Unitholders

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The Units 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 Unitholders. However, Unitholders 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 Unitholders will indemnify the Trust for any harm suffered by it as a result of Unitholders’ actions unrelated to the activities of the Trust.

The foregoing repayment of distributions and indemnity provisions (other than the provision for Unitholders 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 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 the Trust shall 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 will hold and record the ownership of the Trust’s assets in a manner such that it will be owned for the benefit of the Unitholders 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 Units, the Trust will 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.

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, attorney 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 so to do, 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 Unitholders, 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.

Amendments to the Trust Agreement

The Sponsor may amend the Trust Agreement without the consent of any Unitholder if the amendment does not adversely affect the interests of the Unitholders or affect the allocation of profits and losses among the Unitholders or between the Unitholders and the Sponsor. Any amendment that adversely affects the rights of Unitholders, 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 Unitholders owning at least 50% of the outstanding Units.

Termination of the Trust

The Trust will dissolve if any of the following events occur:

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• 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 service business” under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act 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 business, providers of prepaid or stored value, virtual currency business or similar entities, and the Sponsor has made the determination that dissolution of the Trust is advisable;

• 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 the withdrawal, removal, adjudication or admission of bankruptcy or insolvency of the Sponsor, or an event of withdrawal (each of the foregoing events an “Event of Withdrawal”) unless at the time there is at least one remaining Sponsor;

• the Custodian resigns or is removed without replacement; or

• if as of December 31, 2021, the Units are not quoted and trading on a secondary market in the United States (which may include the OTCQX Venture Market tier of the OTC Markets Group, Inc., any other market operated by the OTC Markets Group, Inc., or a national securities exchange), the Sponsor shall dissolve the Trust on or before January 31, 2022.

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 of 1940;

• the CFTC determines that the Trust is a commodity pool under the CEA;

• 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 Code; 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 Unitholder (as long as such Unitholder is not the sole Unitholder of the Trust) shall not result in the termination of the Trust, and such Unitholder, his/her estate, custodian or personal representative shall have no right to withdraw or value such Unitholder’s Units. Each Unitholder (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

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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 Units by the Unitholders, Unitholders will receive a distribution in U.S. Dollars or Bitcoin, at the sole discretion of the Sponsor, after the Sponsor has sold the Trust’s Bitcoin and has paid or made provision for the Trust’s claims and obligations.

Governing Law

The Trust Agreement and the rights of the Sponsor, Trustee, and Unitholders under the Trust Agreement are governed by the laws of the State of Delaware.

Description of the Custodial Services Agreement

The Custodial Services Agreement establishes the rights and responsibilities of the Custodian, Sponsor, and the Trust with respect to the Digital Assets (as defined therein) in the Digital Asset Custody Account and Cash Custody Account, which together with any associated subaccounts, constitute the Trust’s Custody Account, which is maintained and operated by the Custodian on behalf of the Trust.

Access to the Custody Account; Transfers and Storage

The Custodian has been engaged to keep in safe custody of the Digital Assets. The Custody Account will be controlled at all times by or on behalf of the Custodian by an affiliate of the Custodian.

The Custodian will provide the Sponsor with the information that is necessary for third parties to make deposits to the Custody Account. To support the Trust’s ordinary course deposits and withdrawals, the Custodian’s services will allow the Sponsor to receive a recipient address for deposits by a third party, and to initiate the transfer and broadcast to the blockchain supporting the relevant asset. The Custodian will credit all Digital Assets properly authorized by the Trust or the Sponsor to the Custody Account.

The Custodian will only allow withdrawals of Digital Assets from the Custody Account by at least two authorized representatives of the Sponsor or the Trust.

Standard of Care; Limitations of Liability

The Custodian agrees to exercise the reasonable care of a professional custodian for hire, with such standard of care being deemed satisfied if the Custodian exercises such care as it exercises with respect to any custody account, and assets of a similar type, owned by the Custodian or any of its affiliates. Further, the Custodian is not liable for any loss that is caused, directly or indirectly, by any non-adherence by the Trust to the Custodian’s policies and procedures, any action taken by the Custodian, which in its sole discretion, may be necessary or advisable to secure the digital assets or accounts of the Trust or enhance the ability of the Custodian’s ability to secure the Trust’s assets or other exceptions under the Custodial Services Agreement. Other exceptions under the Custodial Services Agreement may include force majeure events i.e., events out of the control of the Custodian, which make compliance by the Custodian with the terms of the Custodial Services Agreement impossible) or losses resulting from the Custodian’s reasonable reliance on an instruction reasonably understood as provided by the Trust to the Custodian,

The Custodian shall only be responsible for the performance of those duties as are expressly set forth in the Custodial Services Agreement, including the performance of any instructions given in accordance with it. The Custodian does not have implied duties or obligations and shall not be subject to, nor required to comply with, any other agreement to which the Trust is a party.

Pursuant to the Custodial Services Agreement, the Custodian does not warrant or guarantee the form, authenticity, value or validity of any Asset received by the Custodian. The Custodian is not responsible for the services provided by the Bitcoin Network, such as verifying and confirming transactions that are submitted to the Bitcoin Network. Furthermore, the Custodian cannot cancel or reverse a transaction that has been submitted to the Bitcoin

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Network, except by an instruction to halt a withdrawal of Digital Asset within three hours immediately following receipt of a confirmation provided to the Trust by the Custodian of a pending withdrawal transaction. To the extent the Custodian does not cause or contribute to a loss that the Trust or Sponsor suffers in connection with any Bitcoin transaction initiated pursuant to the Custodian’s services, the Custodian will have no liability for such loss.

Indemnity

The Sponsor and the Trust have agreed to indemnify and hold harmless the Custodian from and against any and all damages arising out of or caused by (whether directly or indirectly) a third-party claim arising under or in connection with the Custodial Services Agreement.

Insurance

Digital Assets are not subject to the protections or insurance provided by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. The Custodian has insurance as a subsidiary under its parent company, FMR LLC. Such insurance is solely for the benefit of the Custodian and does not guarantee or insure the Trust in any way. There is no third-party insurance held on behalf of the Bitcoin accounts.

Inspection and Audit Rights

The Trust does not enjoy audit or inspection rights under the Custodial Services Agreement. The Sponsor relies on the Custodian’s SOC1 audit of internal controls to validate the existence of the Trust’s Bitcoin at the Custodian.

Fees and Expenses

Custody Fees are paid by the Trust in accordance with a Fee Schedule to the Custodial Services Agreement.

Modification of Agreement

The Custodial Services Agreement may be modified only by written agreement signed by both the Trust and the Custodian.

Governing Law

The Custodial Services Agreement is governed by the laws of the Commonwealth of Massachusetts.

Description of the Administration Agreement

The Administration Agreement establishes the rights and responsibilities of the Administrator, the Sponsor and the Trust with respect to various administrative functions. Under the Administration Agreement, the Administrator is generally responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records. The Administrator’s principal responsibilities include: (1) valuing the Trust’s Bitcoin and calculating the NAV per Unit; (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 Administrator also provides know your customer, anti-money laundering, and OFAC compliance check services to the Trust and Sponsor. The Administrator will liaise with the Trust’s legal, accounting and other professional service providers as needed.

The Administrator will keep proper books of registration and transfer of Units at its office located in New York 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 Unitholder at all reasonable times during the usual business hours of the Sponsor. The Sponsor will keep a copy of the Trust Agreement on file in its office which will be available for inspection on reasonable advance notice at all reasonable times during its usual business hours by any Unitholder.

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Standard of Care; Liability

Under the Administration Agreement, the Administrator is not liable to the Trust for any action or inaction of the Administrator except to the extent of losses resulting solely from the gross negligence, willful misconduct or fraud of the Administrator in the performance of its duties or under the Administration Agreement. Under no circumstances will the Administrator be liable to the Trust for losses that are indirect, special, incidental, consequential. Punitive or exemplary, enhanced or similar (including lost profits, opportunity costs and diminution of value).

Under the Administration Agreement, the Administrator may engage the services of third-party vendors to assist the Administrator with its services. The Administrator will use reasonable care in to select, engage and retain such vendors, but is it not responsible for losses occasioned to the Trust or Unitholders or any third party in connection with such vendors’ services, except to the extent of losses resulting from the gross negligence, willful misconduct or fraud of the Administrator in the selection, engagement or retention of such vendors’ services.

The maximum cumulative liability of a party to the other under the Administration Agreement, except for losses resulting solely from a party’s fraud, gross negligence or willful misconduct in the performance of its duties or obligations under the agreement is the amount of fees paid by the Trust to the Administrator during the 12 months immediately preceding the date of the event giving rise to the action cause of action.

Indemnity

Under the Administration Agreement, the Trust is required to indemnify the Administrator from and against losses (including legal fees and costs) as a result of any third-party action that the Administrator suffers, except to the extent of losses resulting solely from the gross negligence, willful misconduct or fraud by the Administrator in the performance of its duties or obligations under the agreement. The Administrator is required to indemnify the Trust and the Sponsor (including legal fees and costs) as a result of any third party action resulting solely from the gross negligence, fraud or willful of the misconduct of the Administrator in the performance of its duties or obligations under the agreement.

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

The following discussion addresses the material U.S. federal income tax consequences of the ownership of Units. This discussion does not describe all of the tax consequences that may be relevant to a beneficial owner of Units in light of the beneficial owner’s particular circumstances, including tax consequences applicable to beneficial owners subject to special rules, such as:

· financial institutions;

· dealers in securities or commodities;

· traders in securities or commodities that have elected to apply a mark-to-market method of tax accounting in respect thereof;

· persons holding Units as part of a hedge, “straddle,” integrated transaction or similar transaction;

· Accredited Investors;

· U.S. Holders (as defined below) whose functional currency is not the U.S. dollar;

· entities or arrangements classified as partnerships for U.S. federal income tax purposes;

· S corporations;

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· persons receiving Units as compensation;

· persons that are expatriates or former citizens or long-term residents of the U.S.;

· a “controlled foreign corporation” or a person who is treated as a “United States shareholder” thereof, a “passive foreign investment company” or a shareholder thereof, or a corporation that accumulates earnings to avoid U.S. federal income tax;

· real estate investment trusts;

· regulated investment companies; and

· tax-exempt entities, including individual retirement accounts.

This discussion applies only to Units that are held as capital assets and does not address alternative minimum tax consequences or consequences of the tax on net investment income.

If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes holds Units, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding Units and partners in those partnerships are urged to consult their tax advisers about the particular U.S. federal income tax consequences of owning Units.

This discussion is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof. Changes in U.S. federal income tax law, prospective or retroactive Treasury regulations and future published rulings and administrative procedures of the IRS in response to these changes in U.S. federal income tax laws, could materially affect the tax consequences of an investor’s investment in the Units, and the tax treatment of the Trust’s investments. While some of these changes may be beneficial, others could negatively affect the after-tax returns of the Trust and its investors. Accordingly, no assurance can be given that the currently anticipated tax treatment of an investment in the Trust, or of investments made by the Trust, will not be modified by legislative, judicial, or administrative changes, possibly with retroactive effect, to the detriment of the investors. For the avoidance of doubt, this summary does not discuss any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction. Unitholders are urged to consult their tax advisers about the application of the U.S. federal income tax laws to their particular situations, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Tax Treatment of the Trust

The Sponsor intends to take the position that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes. The Trust has not obtained a ruling from the IRS or an opinion of counsel as to the status of the Trust, and there cannot be any assurances as to the federal income tax classification of the Trust. Assuming that the Trust is a grantor trust, the Trust will not be subject to U.S. federal income tax. Rather, if the Trust is a grantor trust, each beneficial owner of Units will be treated as directly owning its pro rata share of the Trust’s assets and a pro rata portion of the Trust’s income, gain, losses and deductions will “flow through” to each beneficial owner of Units.

The Trust will take certain positions with respect to the tax consequences of Incidental Rights and its receipt of Additional Currency. The Trust does not expect to take any Additional Currency it may hold into account for purposes of determining the Trust’s Bitcoin Holdings or the Bitcoin Holdings per Unit. With respect to any fork, airdrop or similar event, the Sponsor may, in its discretion, decide to cause the Trust to distribute the Additional Currency in-kind to an agent of the Unitholders for resale by such agent, or to irrevocably abandon the Additional Currency. In the case of a distribution in-kind, the Unitholders’ agent would attempt to sell the Additional Currency, and if the agent is able to do so, remit the cash proceeds to Unitholders. If the IRS were to disagree with, and successfully challenge, any of these positions, the Trust might not qualify as a grantor trust. If the Trust were treated as owning any asset other than Bitcoins as of any date on which it creates Units, it would likely cease to qualify as a grantor trust for U.S. federal income tax purposes.

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Because of the evolving nature of digital currencies, it is not possible to predict potential future developments that may arise with respect to digital currencies, including forks, airdrops and other similar occurrences. Assuming that the Trust is currently a grantor trust for U.S. federal income tax purposes, certain future developments could render it impossible, or impracticable, for the Trust to continue to be treated as a grantor trust for such purposes.

If the Trust is not properly classified as a grantor trust, the Trust might be classified as a partnership for U.S. federal income tax purposes. However, due to the uncertain treatment of digital currency for U.S. federal income tax purposes, there can be no assurance in this regard. If the Trust were classified as a partnership for U.S. federal income tax purposes, the tax consequences of owning Units generally would not be materially different from the tax consequences described herein, although there might be certain differences, including with respect to timing of the recognition of taxable income or loss. In addition, tax information reports provided to beneficial owners of Units would be made in a different form. If the Trust were not classified as either a grantor trust or a partnership for U.S. federal income tax purposes, it would be classified as a corporation for such purposes. In that event, the Trust would be subject to entity-level U.S. federal income tax (currently at the rate of 21%) on its net taxable income and certain distributions made by the Trust to Unitholders would be treated as taxable dividends to the extent of the Trust’s current and accumulated earnings and profits. Any such dividend distributed to a beneficial owner of Units that is a non-U.S. person for U.S. federal income tax purposes would be subject to U.S. federal withholding tax at a rate of 30% (or such lower rate as provided in an applicable tax treaty).

The remainder of this discussion is based on the assumption that the Trust will be treated as a grantor trust for U.S. federal income tax purposes.

Uncertainty Regarding the U.S. Federal Income Tax Treatment of Digital Currency

Each beneficial owner of Units will be treated for U.S. federal income tax purposes as the owner of an undivided interest in the Bitcoins (and any Additional Currency) held in the Trust. Due to the new and evolving nature of digital currencies and the absence of comprehensive guidance with respect to digital currencies, many significant aspects of the U.S. federal income tax treatment of digital currency are uncertain.

In 2014, the IRS released a Notice discussing certain aspects of “convertible virtual currency” (that is, digital currency that has an equivalent value in fiat currency or that acts as a substitute for fiat currency) for U.S. federal income tax purposes and, in particular, stating that such digital currency (i) is “property” (ii) is “not treated as currency” for purposes of the rules relating to foreign currency gain or loss and (iii) may be held as a capital asset. In 2019, the IRS released a Revenue Ruling in which the IRS concluded that a hard fork on a digital currency blockchain (i) does not create taxable income if the taxpayer does not subsequently receive new units of digital currency and (ii) creates taxable ordinary income if the taxpayer receives new units of cryptocurrency by airdrop. Simultaneously with the release of the Revenue Ruling, the IRS also published the FAQs, which address, among other issues, how to determine the fair market value of digital currencies and the proper method of determining a holder’s holding period and tax basis for units of digital currency (including those acquired at different times or at varying prices. However, the Notice, Revenue Ruling and FAQs do 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; (iii) the proper method of determining a holder’s holding period and tax basis for convertible virtual currencies acquired at different times or at varying prices; and (iv) whether and how a holder of convertible virtual currencies acquired at different times or at varying prices may designate, for U.S. federal income tax purposes, which of the convertible virtual currencies is transferred in a subsequent sale, exchange or other disposition. 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, although the Revenue Ruling and FAQs address the treatment of hard forks, there continues to be uncertainty with respect to the timing and amount of the income inclusions.

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 Notice, Revenue Ruling and FAQs. 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 Unitholders and could have an adverse effect on the prices of digital currencies, including the price of Bitcoin in

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the Bitcoin markets, and therefore could have an adverse effect on the value of Units. 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.

The remainder of this discussion assumes that Bitcoin, and any Additional Currency that 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 that is not currency for purposes of the provisions of the Code relating to foreign currency gain and loss.

Unitholders are urged to consult their tax advisers regarding the tax consequences of an investment in the Trust and in digital currencies in general, including, in the case of Unitholders that are generally exempt from U.S. federal income taxation, whether such Unitholders may recognize UBTI as a consequence of a fork, airdrop or similar occurrence.

Additional Currency

It is possible that, in the future, the Trust will hold Additional Currency that it receives in connection with its investment in Bitcoins. The uncertainties with respect to the treatment of digital currency for U.S. federal income tax purposes, described above, apply to Additional Currency, as well as to Bitcoins. As described above, the Notice addressed only digital currency that is “convertible virtual currency,” defined as digital currency that has an equivalent value in fiat currency or that acts as a substitute for fiat currency. It is conceivable that certain Additional Currency the Trust may receive in the future would not be within the scope of the Notice.

In general, it is expected that the Trust would receive Additional Currency as a consequence of a fork, an airdrop or a similar occurrence related to its ownership of Bitcoins. As described above, the Revenue Ruling and FAQs include guidance to the effect that, under certain circumstances, forks (and, presumably, airdrops) of digital currencies are taxable events giving rise to ordinary income, but there continues to be uncertainty with respect to the timing and amount of the income inclusions. The Trust’s receipt of Additional Currency may give rise to other tax issues. The possibility that the Trust will receive Additional Currency thus increases the uncertainties and risks with respect to the U.S. federal income tax consequences of an investment in Units.

The Trust may distribute Additional Currency, or cash from the sale of Additional Currency, to the Unitholders. Alternatively, the Trust may form a liquidating trust to which it contributes Additional Currency and distribute interests in the liquidating trust to the Unitholders. Any such distribution will not be a taxable event for a U.S. Holder (as defined below). A U.S. Holder’s tax basis in the Additional Currency distributed, whether directly or through the medium of a liquidating trust, will be the same as the U.S. Holder’s tax basis in the distributed assets immediately prior to the distribution, and the U.S. Holder’s tax basis in its pro rata share of the Trust’s remaining assets will not include the amount of such basis. Immediately after any such distribution, the U.S. Holder’s holding period with respect to the distributed Additional Currency will be the same as the U.S. Holder’s holding period with respect to the distributed assets immediately prior to the distribution. A subsequent sale of the distributed Additional Currency will generally be a taxable event for a U.S. Holder.

For simplicity of presentation, the remainder of this discussion assumes that the Trust will hold only Bitcoins. However, the principles set forth in the discussion below apply to all of the assets that the Trust may hold at any time, including Additional Currency, as well as Bitcoins. Without limiting the generality of the foregoing, each beneficial owner of Units generally will be treated for U.S. federal income tax purposes as owning an undivided interest in any Additional Currency held in the Trust, and any transfers or sales of Additional Currency by the Trust (other than distributions by the Trust, as described in the preceding paragraph) will be taxable events to Unitholders with respect to which Unitholders will generally recognize gain or loss in a manner similar to the recognition of gain or loss on a taxable disposition of Bitcoins, as described below.

Tax Consequences to U.S. Holders

As used herein, the term “U.S. Holder” means a beneficial owner of a Unit for U.S. federal income tax purposes that is:

· an individual who is a citizen or resident of the United States for U.S. federal income tax purposes;

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· a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or of any political subdivision thereof; or

· an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

· a trust if (a) a court within the U.S. is able to exercise primary supervision over the administration of the trust and one (1) or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) it has in effect a valid election to be treated as a U.S. person for U.S. federal income tax purposes.

Except as specifically noted, the discussion below assumes that each U.S. Holder will acquire all of its Units on the same date for the same price per Unit and either solely for cash or solely for Bitcoins that were originally acquired by the U.S. Holder for cash on the same date.

As discussed in the section entitled “Description of Issuance of Units,” a U.S. Holder may be able to acquire Units of the Trust by contributing Bitcoins in-kind to the Trust. Assuming that the Trust is properly treated as a grantor trust for U.S. federal income tax purposes, such a contribution should not be a taxable event to the U.S. Holder.

For U.S. federal income tax purposes, each U.S. Holder will be treated as owning an undivided interest in the Bitcoins held in the Trust and will be treated as directly realizing its pro rata share of the Trust’s income, gains, losses and deductions. When a U.S. Holder purchases Units solely for cash, (i) the U.S. Holder’s initial tax basis in its pro rata share of the Bitcoins held in the Trust will be equal to the amount paid for the Units and (ii) the U.S. Holder’s holding period for its pro rata share of such Bitcoins will begin on the date of such purchase. When a U.S. Holder acquires Units in exchange for Bitcoins, (i) the U.S. Holder’s initial tax basis in its pro rata share of the Bitcoins held in the Trust will be equal to the U.S. Holder’s tax basis in the Bitcoins that the U.S. Holder transferred to the Trust and (ii) the U.S. Holder’s holding period for its pro rata share of such Bitcoins generally will include the period during which the U.S. Holder held the Bitcoins that the U.S. Holder transferred to the Trust. The Revenue Ruling and FAQs confirm that if a taxpayer acquires tokens of a digital currency at different times and for different prices, the taxpayer has a separate tax basis in each lot of such tokens. Under the Revenue Ruling and FAQs, if a U.S. Holder that owns more than one lot of Bitcoins contributes a portion of its Bitcoins to the Trust in exchange for Units, the U.S. Holder may designate the lot(s) from which such contribution will be made, provided that the U.S. Holder is able to identify specifically which Bitcoins it is contributing and to substantiate its tax basis in those Bitcoins. In general, if a U.S. Holder acquires Units (i) solely for cash at different prices, (ii) partly for cash and partly in exchange for a contribution of Bitcoins or (iii) in exchange for a contribution of Bitcoins with different tax bases, the U.S. Holder’s share of the Trust’s Bitcoins will consist of separate lots with separate tax bases. In addition, in this situation, the U.S. Holder’s holding period for the separate lots may be different. In addition, the Additional Currency that the Trust acquires in a hard fork or airdrop that is treated as a taxable event will constitute a separate lot with a separate tax basis and holding period.

When the Trust transfers Bitcoins to the Sponsor as payment of the Management Fee, or sells Bitcoins to fund payment of any Extraordinary Expenses, each U.S. Holder will be treated as having sold its pro rata share of those Bitcoins for their fair market value at that time (which, in the case of Bitcoins sold by the Trust, generally will be equal to the cash proceeds received by the Trust in respect thereof). As a result, each U.S. Holder will recognize gain or loss in an amount equal to the difference between (i) the fair market value of the U.S. Holder’s pro rata share of the Bitcoins transferred and (ii) the U.S. Holder’s tax basis for its pro rata share of the Bitcoins transferred. Any such gain or loss will be short-term capital gain or loss if the U.S. Holder’s holding period for its pro rata share of the Bitcoins is one year or less and long-term capital gain or loss if the U.S. Holder’s holding period for its pro rata share of the Bitcoins is more than one year. Although unclear due to lack of guidance, a U.S. Holder’s tax basis in its pro rata share of any Bitcoins transferred by the Trust generally will be determined by multiplying the tax basis of the U.S. Holder’s pro rata share of all of the Bitcoins held in the Trust immediately prior to the transfer by a fraction the numerator of which is the amount of Bitcoins transferred and the denominator of which is the total amount of Bitcoins held in the Trust immediately prior to the transfer. Immediately after the transfer, the U.S. Holder’s tax basis in its pro rata share of the Bitcoins remaining in the Trust will be equal to the tax basis of its pro rata share of the Bitcoins held in the Trust immediately prior to the transfer, less the portion of that tax basis allocable to its pro rata share of the Bitcoins transferred.

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As noted above, the IRS has taken the position in the Revenue Ruling and FAQs that, under certain circumstances, a hard fork of a digital currency constitutes a taxable event giving rise to ordinary income, and it is clear from the reasoning of the Revenue Ruling and FAQs that the IRS generally would treat an airdrop as a taxable event giving rise to ordinary income. Under the Revenue Ruling and FAQs, a U.S. Holder will have a basis in any Additional Currency received in a fork or airdrop equal to the amount of income the U.S. Holder recognizes as a result of such fork or airdrop and the U.S. Holder’s holding period for such Additional Currency will begin as of the time it recognizes such income.

U.S. Holders’ pro rata shares of the expenses incurred by the Trust will be treated as “miscellaneous itemized deductions” for U.S. federal income tax purposes. As a result, for taxable years beginning before January 1, 2026, a non-corporate U.S. Holder’s share of these expenses will not be deductible for U.S. federal income tax purposes. For taxable years beginning on or after January 1, 2026, a non-corporate U.S. Holder’s share of these expenses will be deductible for regular U.S. federal income tax purposes only to the extent that the U.S. Holder’s share of the expenses, when combined with other “miscellaneous itemized deductions,” exceeds 2% of the U.S. Holder’s adjusted gross income for the particular year, will not be deductible for U.S. federal alternative minimum tax purposes and will be subject to certain other limitations on deductibility.

On a sale or other disposition of Units and although unclear due to lack of guidance, a U.S. Holder will be treated as having sold the Bitcoins underlying such Units. Accordingly, the U.S. Holder generally will recognize gain or loss in an amount equal to the difference between (i) the amount realized on the sale of the Units and (ii) the portion of the U.S. Holder’s tax basis in its pro rata share of the Bitcoins held in the Trust that is attributable to the Units that were sold or otherwise subject to a disposition. Such tax basis generally will be determined by multiplying the tax basis of the U.S. Holder’s pro rata share of all of the Bitcoins held in the Trust immediately prior to such sale or other disposition by a fraction the numerator of which is the number of Units disposed of and the denominator of which is the total number of Units held by such U.S. Holder immediately prior to such sale or other disposition (such fraction, expressed as a percentage, the “Unit Percentage”). If the U.S. Holder’s share of the Trust’s Bitcoins consists of separate lots with separate tax bases and/or holding periods, the U.S. Holder should be treated as having sold the Unit Percentage of each such lot. Gain or loss recognized by a U.S. Holder on a sale or other disposition of Units will generally be short-term capital gain or loss if the U.S. Holder’s holding period for the Bitcoins underlying such Units is one year or less and long-term capital gain or loss if the U.S. Holder’s holding period for the Bitcoins underlying such Units is more than one year. The deductibility of capital losses is subject to significant limitations.

After any sale or other disposition of fewer than all of a U.S. Holder’s Units, the U.S. Holder’s tax basis in its pro rata share of the Bitcoins held in the Trust immediately after the disposition will equal the tax basis in its pro rata share of the total amount of the Bitcoins held in the Trust immediately prior to the disposition, less the portion of that tax basis that is taken into account in determining the amount of gain or loss recognized by the U.S. Holder on the disposition.

Any brokerage or other transaction fee incurred by a U.S. Holder in purchasing Units generally will be added to the U.S. Holder’s tax basis in the underlying assets of the Trust. Similarly, any brokerage fee or other transaction fee incurred by a U.S. Holder in selling Units generally will reduce the amount realized by the U.S. Holder with respect to the sale.

In the absence of guidance to the contrary, it is possible that any income recognized by a U.S. tax-exempt Unitholder as a consequence of a hard fork, airdrop or similar occurrence would constitute UBTI. A tax-exempt Unitholder should consult its tax advisor regarding whether such Unitholder may recognize some UBTI as a consequence of an investment in Units.

Tax Consequences to Non-U.S. Holders

As used herein, the term “non-U.S. Holder” means a beneficial owner of a Unit for U.S. federal income tax purposes that is not a U.S. Holder. The term “non-U.S. Holder” does not include (i) a nonresident alien individual who is present in the United States for 183 days or more in a taxable year, (ii) a former U.S. citizen or U.S. resident or an entity that has expatriated from the United States; (iii) a person whose income in respect of Units is effectively connected with the conduct of a trade or business in the United States; or (iv) an entity that is treated as a partnership

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for U.S. federal income tax purposes. Unitholders described in the preceding sentence should consult their tax advisers regarding the U.S. federal income tax consequences of owning Units.

A non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax with respect to its share of any gain recognized on the Trust’s transfer of Bitcoins in payment of the Management Fee or any Additional Trust Expense or on the Trust’s sale or other disposition of Bitcoins, subject to compliance with certification as a non-U.S. Holder. In addition, assuming that the Trust holds no asset other than Bitcoins, a non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax with respect to any gain it recognizes on a sale or other disposition of Units. A non-U.S. Holder also will generally not be subject to U.S. federal income or withholding tax with respect to any distribution received from the Trust, whether in cash or in-kind.

Provided that it does not constitute income that is treated as “effectively connected” with the conduct of a trade or business in the United States, U.S.-source “fixed or determinable annual or periodical” (“FDAP”) income received, or treated as received, by a non-U.S. Holder will generally be subject to U.S. withholding tax at the rate of 30% (subject to possible reduction or elimination pursuant to an applicable tax treaty and to statutory exemptions such as the portfolio interest exemption). Although there is no guidance on point, it is likely that any ordinary income recognized by a non-U.S. Holder as a result of a fork, airdrop or similar occurrence may constitute FDAP income. It is unclear, however, whether any such FDAP income would be properly treated as U.S.-source or foreign-source FDAP income. Non-U.S. Holders in the Trust should assume that, in the absence of guidance, a withholding agent (including the Sponsor) is likely to withhold 30% from a non-U.S. Holder’s pro rata share of any such income, including by deducting such withheld amounts from proceeds that such non-U.S. Holder would otherwise be entitled to receive in connection with a distribution of Additional Currency or proceeds from the disposition of Additional Currency. A non-U.S. Holder that is a resident of a country that maintains an income tax treaty with the United States may be eligible to claim the benefits of that treaty to reduce or eliminate, or to obtain a partial or full refund of, the 30% U.S. withholding tax on its share of any such income, but only if the non-U.S. Holder’s home country treats the Trust as “fiscally transparent,” as defined in applicable Treasury regulations.

Although the nature of the Additional Currency that the Trust may hold in the future is uncertain, it is unlikely that any such asset would give rise to income that is treated as “effectively connected” with the conduct of a trade or business in the United States or that any income derived by a non-U.S. Holder from any such asset would otherwise be subject to U.S. income or withholding tax, except as discussed above in connection with the fork, airdrop or similar occurrence giving rise to Additional Currency. There can, however, be no complete assurance in this regard.

In order to prevent the possible imposition of U.S. “backup” withholding and (if applicable) to qualify for a reduced rate of withholding tax at source under a treaty, a non-U.S. Holder must comply with certain certification requirements (generally, by delivering a properly executed IRS Form W-8BEN or W-8BEN-E to the relevant withholding agent).

U.S. Information Reporting and Backup Withholding

The Trust or the appropriate broker will file certain information returns with the IRS and provide Unitholders with information regarding their annual income (if any) and expenses with respect to the Trust in accordance with applicable Treasury regulations.

A U.S. Holder will generally be subject to information reporting requirements and backup withholding unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. In order to avoid the information reporting and backup withholding requirements, a non-U.S. Holder may have to comply with certification procedures to establish that it is not a U.S. person. The amount of any backup withholding will be allowed as a credit against the Unitholder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is furnished to the IRS.

ERISA AND RELATED CONSIDERATIONS

General

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The following section sets forth certain consequences under ERISA and the Code which a fiduciary of an “employee benefit plan” as defined in and subject to the fiduciary responsibility provisions of ERISA, or of a “plan” as defined in and subject to Section 4975 of the Code, who has investment discretion should consider before deciding to acquire Units with plan assets (such “employee benefit plans” and “plans” being referred to herein as “Plans,” and such fiduciaries with investment discretion being referred to herein as “Plan Fiduciaries”). The following summary is not intended to be complete, but only to address certain questions under ERISA and the Code that are likely to be raised by the Plan Fiduciary’s own counsel.

* * *

In general, the terms “employee benefit plan” as defined in ERISA and “plan” as defined in Section 4975 of the Code together refer to any plan or account of various types which provides retirement benefits or welfare benefits to an individual or to an employer’s employees and their beneficiaries. Such plans and accounts include, but are not limited to, corporate pension and profit sharing plans, “simplified employee pension plans,” Keogh plans for self-employed individuals (including partners), individual retirement accounts described in Section 408 of the Code and medical benefit plans.

Each Plan Fiduciary must give appropriate consideration to the facts and circumstances that are relevant to an investment in the Trust, including the role an investment in the Trust plays in the Plan’s investment portfolio. To the extent required by applicable law, each Plan Fiduciary must be satisfied that investment in the Trust is a prudent investment for the Plan, that the investments of the Plan, including the investment in the Trust, are diversified so as to minimize the risks of large losses, that an investment in the Trust complies with the documents and instruments of the Plan and related trust and that an investment in the Trust does not give rise to a transaction prohibited by Section 406 of ERISA or Section 4975 of the Code for which no exemption is available.

EACH PLAN FIDUCIARY CONSIDERING ACQUIRING UNITS SHOULD CONSULT ITS OWN LEGAL AND TAX ADVISERS BEFORE DOING SO.

Restrictions on Investments by Benefit Plan Investors

ERISA and a regulation issued thereunder contain rules for determining when an investment by a Plan in an entity will result in the underlying assets of the entity being deemed assets of the Plan for purposes of ERISA and Section 4975 of the Code (i.e., “plan assets”). Those rules provide that assets of an entity will not be plan assets of a Plan that purchases an interest therein if the investment in the entity by all “benefit plan investors” is not “significant” or certain other exceptions apply. The term “benefit plan investors” includes all Plans (i.e., all “employee benefit plans” as defined in and subject to the fiduciary responsibility provisions of ERISA and all “plans” as defined in and subject to Section 4975 of the Code) and all entities that hold “plan assets” (each, a “Plan Assets Entity”) due to investments made in such entities by already described benefit plan investors. ERISA provides that a Plan Assets Entity is considered to hold plan assets only to the extent of the percentage of the Plan Assets Entity’s equity interests held by benefit plan investors. In addition, all or part of an investment made by an insurance company using assets from its general account may be treated as a benefit plan investor. Investments by benefit plan investors will be deemed not significant if benefit plan investors own, in the aggregate, less than 25% of the total value of each class of equity interests of the entity (determined by not including the investments of persons with discretionary authority or control over the assets of such entity, of any person who provides investment advice for a fee (direct or indirect) with respect to such assets, and “affiliates” (as defined in the regulations issued under ERISA) of such persons; provided, however, that under no circumstances are investments by benefit plan investors excluded from such calculation).

In order to avoid causing assets of the Trust to be “plan assets,” the Sponsor intends to restrict the aggregate investment by “benefit plan investors” to under 25% of the total value of the Units of the Trust (not including the investments of the Trustee, the Sponsor, any other person who provides investment advice for a fee (direct or indirect) with respect to the assets of the Trust, any other person who has discretionary authority or control over the assets of the Trust, and any entity (other than a benefit plan investor) that is directly or indirectly through one or more intermediaries controlling, controlled by or under common control with any of such entities (including a partnership or other entity for which the Sponsor is the general partner, managing member, investment adviser or provides investment advice), and each of the principals, officers, and employees of any of the foregoing entities who has the power to exercise a controlling influence over the management or policies of such entity or the Trust). Furthermore,

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because the 25% test is ongoing, it not only restricts additional investments by benefit plan investors, but also can cause the Sponsor to require that existing benefit plan investors redeem from the Trust in the event that other investors redeem their Units. If rejection of subscriptions or such compulsory redemptions are necessary, as determined by the Sponsor, to avoid causing the assets of the Trust to be “plan assets,” the Sponsor will effect such rejections or redemptions in such manner as the Sponsor, in its sole discretion, determines.

However, there is no assurance that the Sponsor will succeed in avoiding the assets of the Trust being treated as “plan assets.” If the assets of the Trust were to constitute “plan assets” for purposes of ERISA and/or Section 4975 of the Code, the fiduciary responsibility rules of ERISA and the prohibited transaction rules of ERISA and Section 4975 of the Code, as applicable, could potentially limit the investments and operations of the Trust, which could result in a lower return than might otherwise be the case. In addition, if ERISA were to apply, the fiduciary who made the decision to invest a Plan Asset Entity’s assets in the Trust could, under certain circumstances, be liable under ERISA as a co-fiduciary for actions taken by the Trustee or Sponsor on behalf of the Trust.

Ineligible Purchasers

In general, Units may not be purchased with the assets of a Plan if the Trustee, the Sponsor, any of their respective affiliates or any of their respective 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 the Code, resulting in possible liabilities and penalties for the responsible Plan fiduciaries and the parties engaging in the transaction with the Plan. A prohibited transaction involving an individual retirement account (“IRA”) and the individual who established the IRA, or his or her beneficiaries, could result in loss of the IRA’s tax-exempt status and assessment of taxes and penalties.

Reporting Requirements

Plans are required to determine the fair market value of their assets as of the close of each Plan’s fiscal year. ERISA Plans and IRAs are also required to file annual reports (Form 5500 series and Form 5498) with the U.S. Department of Labor or the Internal Revenue Service. To facilitate fair market value determinations, and to enable fiduciaries of Plans to satisfy their annual reporting requirements as they relate to an investment in the Trust, Unitholders will be furnished annually with audited financial statements as described in this Information Statement. There can be no assurance (i) that any value established on the basis of such statements could or will actually be realized by investors upon the liquidation of Units, (ii) that investors could realize such value if they were able to, and were to sell their Units, or (iii) that such value will in all circumstances satisfy the applicable ERISA or Code reporting requirements.

In addition, the fiduciaries of an ERISA Plan investing in the Trust are notified that the information in this Information Statement in relation to (i) the compensation or other amounts received by the Trustee, the Sponsor, and other parties in connection with their services rendered to the Trust or their position with the Trust; (ii) the services provided by them to the Trust for such compensation or in connection with such other amounts received, and the purpose therefor; (iii) a description of the formula or other bases used to calculate the compensation or other amounts received; and (iv) the identity of the parties paying and receiving the compensation or other amounts, is intended to satisfy the alternative reporting option with respect to payments to such parties that are reportable on Schedule C of the Plan’s Form 5500.

Non-ERISA Plans

Governmental plans, certain church plans (those that have not elected to become subject to ERISA), and non-U.S. plans, while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction rules of Section 4975 of the Code, may nevertheless be subject to state, local, or other federal laws, or foreign laws, that are substantially similar to some or all of the foregoing provisions of ERISA and the Code. Thus, while the above-

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described prohibited transaction provisions of ERISA and the Code may not apply to such plans, those responsible for the investment of the assets of such plans should consider other potentially applicable similar restrictions under other laws. Such potential restrictions may include prohibitions against certain related-party transactions under Section 503 of the Code, applicable state, local, federal, or non-U.S. laws, and the restrictions and duties of common law.

Except as otherwise set forth, the foregoing statements regarding the consequences under ERISA and the Code of an investment in the Trust are based on the provisions of the Code and ERISA as currently in effect, and the existing administrative and judicial interpretations thereunder. No assurance can be given that administrative, judicial or legislative changes will not occur that may make the foregoing statements incorrect or incomplete.

ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF PLANS IS IN NO RESPECT A REPRESENTATION BY THE SPONSOR OR ANY OTHER PARTY RELATED TO THE TRUST THAT THIS INVESTMENT MEETS THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR PLAN OR THAT THIS INVESTMENT IS APPROPRIATE FOR ANY PARTICULAR PLAN. THE PERSON WITH INVESTMENT DISCRETION SHOULD CONSULT WITH HIS OR HER ATTORNEY AND FINANCIAL ADVISERS AS TO THE PROPRIETY OF AN INVESTMENT IN THE TRUST, IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR PLAN.

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INDEX TO FINANCIAL STATEMENTS
	Page
Report of Independent Registered Public Accounting Firm	F-2
Statements of Assets and Liabilities at December 31, 2020 and 2019	F-3
Schedules of Investment at December 31, 2020 and 2019	F-4
Statements of Operations for the period from January 22, 2019 (commencement of operations) to December 31, 2019 and for the year ended December 31, 2020	F-5
Statements of changes in Net Assets for the period from January 22, 2019 (commencement of operations) to December 31, 2019 and for the year ended December 31, 2020	F-6
Notes to the Financial Statements	F-7–F-16
Statements of Assets and Liabilities at June 30, 2021 (unaudited) and December 31, 2020	F-17
Schedules of Investment at June 30, 2021 (unaudited) and December 31, 2020	F-18
Statements of Operations (unaudited) for the three months and six months ended June 30, 2021 and 2020	F-19
Statements of Changes in Net Assets (unaudited) for the three months and six months ended June 30, 2021 and 2020	F-20
Notes to the Financial Statements	F-21–F-30

F-1