CoinShares Bitcoin ETF (NASDAQ: BRRR)

CoinShares Bitcoin ETF is an exchange-traded fund that issues common units of beneficial interest representing fractional undivided ownership in the Trust. The Trust’s primary activity is to hold bitcoin and provide investors with exposure to the cryptocurrency through Shares traded on Nasdaq. It seeks to reflect the performance of bitcoin as measured by the CME CF Bitcoin Reference Rate – New York Variant, net of expenses and liabilities. The Trust began operations on January 11, 2024, and is sponsored by CoinShares Co., with custody of its bitcoin held by Coinbase Custody Trust Company, LLC, BitGo Trust Company, Inc., and Komainu (Jersey) Limited.

The Trust generates revenue through the appreciation of its bitcoin holdings relative to the Index, as the value of its Shares is designed to track the daily price of bitcoin net of fees and expenses. It does not generate traditional operating revenue but instead provides investment returns based on bitcoin’s market performance. The Sponsor assumes responsibility for certain fees and expenses, including marketing, administration, custodial, and administrative costs, which are deducted from the Trust’s assets. Authorized Participants create and redeem Shares in Baskets of 5,000 Shares by delivering or receiving cash, which the Trust uses to acquire or dispose of bitcoin through approved Bitcoin Trading Counterparties.

The company operates through the following segments:

• Investment Operations: This segment manages the Trust’s core function of acquiring, holding, and valuing bitcoin in accordance with the Index methodology. It oversees the daily valuation of Shares based on the CME CF Bitcoin Reference Rate – New York Variant and ensures alignment with the Trust’s investment objective. The Sponsor may substitute an alternative index or valuation method at its sole discretion without Shareholder approval. This segment also monitors Fair Value Events and determines appropriate valuation procedures when the Index is deemed unreliable.

• Creation and Redemption Services: This segment facilitates the issuance and redemption of Shares through Authorized Participants in Baskets of 5,000 Shares. It manages cash settlements via the Transfer Agent and DTC, and coordinates bitcoin purchases and sales with approved Bitcoin Trading Counterparties such as Coinbase Inc., Cumberland DRW LLC, JSCT LLC, Foris DAX, Inc., Payward Inc. dba Kraken, and BitGo Prime LLC. The Trust does not hold identifiable bitcoin in Trading Accounts but maintains an omnibus claim on assets held by Counterparties on behalf of their customers.

• Custody and Asset Safeguarding: This segment oversees the secure storage of the Trust’s bitcoin through designated Custodians including Coinbase, BitGo, and Komainu. The Sponsor allocates bitcoin among Vault Accounts based on safety, security, insurance, fees, and transfer considerations, though allocation details are not disclosed to Shareholders. On-chain transfers between Vault Accounts are conducted over the Bitcoin Network and bear risks such as erroneous or irreversible transactions. The Sponsor bears the fees and expenses associated with these transfers.

CoinShares Bitcoin ETF operates in the competitive landscape of spot bitcoin exchange-traded products, aiming to provide a cost-effective and convenient avenue for bitcoin exposure. It competes with other bitcoin ETFs and trusts that seek to track bitcoin’s price through similar structures, differentiating itself through its Sponsor’s expertise in digital assets and its use of the CME CF Bitcoin Reference Rate – New York Variant for valuation. The Trust benefits from the Sponsor’s institutional experience and its relationships with major custodians and trading counterparties in the digital asset ecosystem.

The Trust serves investors seeking regulated exposure to bitcoin through traditional brokerage accounts, including retail investors, financial advisors, and institutional participants who prefer exchange-traded products over direct cryptocurrency ownership. Specific customer names are not disclosed in the filing, but the Shares are listed on Nasdaq and accessible to any investor with a brokerage account capable of trading exchange-traded funds. Authorized Participants, which include registered broker-dealers, banks, and financial institutions that are direct participants in the Depository Trust Company, play a key role in the creation and redemption process.