Invesco Galaxy Bitcoin ETF (CBOE: BTCO)

Invesco Galaxy Bitcoin ETF is a Delaware statutory trust that issues common shares representing fractional undivided beneficial interest in the Trust. The Trust’s investment objective is to reflect the performance of the spot price of bitcoin as measured using the Lukka Prime Bitcoin Reference Rate, less the Trust’s expenses and other liabilities. It achieves this objective by holding bitcoin, which is custodied by Coinbase Custody Trust Company, LLC in a segregated environment. The Trust commenced trading on the Cboe BZX Exchange Inc. on January 11, 2024, and offers Shares only to certain eligible financial institutions known as Authorized Participants in blocks of 5,000 Shares.

Invesco Galaxy Bitcoin ETF generates revenue primarily through the Sponsor Fee, which is a unified fee of 0.25% per annum of the daily total net assets of the Trust. This fee compensates Invesco Capital Management LLC for services performed under the Trust Agreement, including routine operational, administrative, and other ordinary expenses. The Trust does not actively manage its bitcoin holdings or engage in hedging strategies to profit from price fluctuations. Instead, it passively tracks the benchmark index, with revenue derived solely from asset-based fees charged to shareholders.

Invesco Galaxy Bitcoin ETF operates through the following segments:

• Trust Operations: This segment encompasses the core function of holding bitcoin to track the spot price performance of the digital asset. The Trust holds bitcoin custodied by Coinbase Custody Trust Company, LLC, with a portion occasionally held in a trading account with Coinbase, Inc. for creation and redemption processing. The Lukka Prime Bitcoin Reference Rate serves as the Benchmark for determining the fair market value of bitcoin each business day. The Sponsor, Invesco Capital Management LLC, is responsible for the ongoing registration, listing, and valuation of the Trust’s bitcoin holdings.

• Service Provider Network: This segment includes the third-party agents that support the Trust’s operational and administrative functions. The Bank of New York Mellon serves as both Administrator and Transfer Agent, handling NAV calculation, Share issuance and redemption, and Shareholder account maintenance. Coinbase Custody Trust Company, LLC acts as the Bitcoin Custodian, safeguarding private keys in a cold storage environment. Galaxy Digital Funds LLC serves as the Execution Agent, responsible for selling bitcoin to cover Trust expenses and facilitating bitcoin transactions during cash creations and redemptions.

Invesco Galaxy Bitcoin ETF operates in the competitive landscape of exchange-traded products designed to provide exposure to bitcoin’s spot price. It faces competition from other sponsors offering similar bitcoin ETFs that track the same or similar benchmarks. The Trust’s competitive advantages include its passive management structure, the use of a regulated and insured Bitcoin Custodian, and the sponsorship of Invesco Capital Management LLC, a wholly-owned subsidiary of the global investment management firm Invesco Ltd. These factors support its positioning as a low-cost, transparent vehicle for institutional and retail investors seeking bitcoin exposure through a traditional brokerage account.

Invesco Galaxy Bitcoin ETF serves Authorized Participants, which are certain eligible financial institutions permitted to create and redeem Shares in blocks of 5,000. These Authorized Participants include affiliates of Jane Street Capital LLC and Virtu Americas LLC, among others. The Trust’s Shares are subsequently available for trading on the Cboe BZX Exchange Inc. by a broad range of investors, including institutional and retail participants, who gain indirect exposure to bitcoin’s price movements through the Exchange-listed product.