Bitwise Bitcoin ETF

Previous wording

Decentralized governance of the Bitcoin network and potential amendments to the Bitcoin network’s protocols and software could, if accepted and authorized by the Bitcoin network community, could have a negative impact on the performance of the Trust.

Current wording

Decentralized governance of the Bitcoin network and potential amendments to the Bitcoin network’s protocols and software could, if accepted and authorized by the Bitcoin network community, have a negative impact on the performance of the Trust.

Previous wording

A “fork” of the Bitcoin blockchain or an airdrop could result in Shareholders incurring a tax liability.

Current wording

A “fork” of the Bitcoin blockchain or an airdrop (as defined below) could result in Shareholders incurring a tax liability.

Previous wording

Blockchain participants, including miners, maintain the record of ownership of digital assets. If these entities suffer from cyberattacks or other security incidents (whether from hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or the loss or corruption of data, software, hardware, or other computer equipment, or from the inadvertent transmission of computer viruses or other malware, other forms of malicious attacks, malfeasance, or negligent acts of their personnel, or via other means, including phishing attacks and other forms of social engineering), or if for financial or other reasons they cease to perform these functions, the functioning of the blockchains on which the ownership of digital assets is recorded and their valuation based may be jeopardized. Any such interruption could result in impermissible transfers of digital assets and/or the loss of digital assets and/or their value.

Current wording

Blockchain participants, including miners, maintain the record of ownership of digital assets. If these entities suffer from cyberattacks or other security incidents (whether from hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or the loss or corruption of data, software, hardware, or other computer equipment, or from the inadvertent transmission of computer viruses or other malware, other forms of malicious attacks, malfeasance, or negligent acts of their personnel, or via other means, including phishing attacks and other forms of social engineering), or if for financial or other reasons they cease to perform these functions, the functioning of the blockchains on which the ownership of digital assets is recorded and the basis of their valuation may be jeopardized. Any such interruption could result in impermissible transfers of digital assets and/or the loss of digital assets and/or their value.

Previous wording

Digital asset exchanges and other trading venues on which digital assets trade are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure than established, regulated exchanges for securities, derivatives, and other currencies. Much of the daily trading volume of digital assets is conducted on poorly capitalized, unregulated, unaudited, and unaccountable exchanges located outside of the United States, where there is little to no regulation governing trading. Such exchanges may engage in unethical practices that may have a significant impact on digital asset pricing, such as front-running, wash trading, and trading with insufficient funds. To the extent that digital asset exchanges or other digital asset trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in digital asset market prices and adversely affect an investment in the Shares. The SEC, in March 2017, stated that digital asset exchanges currently lack the ability to enter into surveillance-sharing agreements with significant, regulated markets for trading in digital assets thereby lacking the ability to detect and deter price manipulation. Although there has been improvement on this front with the self-certification of certain bitcoin futures contracts resulting in information sharing agreements between certain futures markets and several digital asset exchanges, regulators still lack the ability to surveil many digital asset exchanges. In addition, users transacting on digital asset trading platforms do not receive many of the market protections that they would when transacting through broker-dealers on registered securities exchanges or alternative trading systems, such as best execution, prohibitions on front running, short sale restrictions, and custody and capital requirements.

Current wording

Digital asset exchanges and other trading venues on which digital assets trade are relatively new and, in most cases, largely unregulated and may therefore be more exposed to fraud and failure than established, regulated exchanges for securities, derivatives, and other currencies. Much of the daily trading volume of digital assets is conducted on poorly capitalized, unregulated, unaudited, and unaccountable exchanges located outside of the U.S., where there is little to no regulation governing trading. Such exchanges may engage in unethical practices that may have a significant impact on digital asset pricing, such as front-running, wash trading, and trading with insufficient funds. To the extent that digital asset exchanges or other digital asset trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in digital asset market prices and adversely affect an investment in the Shares. The SEC, in March 2017, stated that digital asset exchanges currently lack the ability to enter into surveillance-sharing agreements with significant, regulated markets for trading in digital assets thereby lacking the ability to detect and deter price manipulation. Although there has been improvement on this front with the self-certification of certain bitcoin futures contracts resulting in information sharing agreements between certain futures markets and several digital asset exchanges, regulators still lack the ability to surveil many digital asset exchanges. In addition, users transacting on digital asset trading platforms do not receive many of the market protections that they would when transacting through broker-dealers on registered securities exchanges or alternative trading systems, such as best execution, prohibitions on front running, short sale restrictions, and custody and capital requirements.

Previous wording

On large digital asset exchanges, users may buy or sell digital assets for fiat currency or transfer digital assets to other wallets. Operational limits (including regulatory, exchange policy or technical or operational limits) on the size or settlement speed of fiat currency deposits by users into digital asset exchanges may (1) reduce demand on such exchanges, resulting in a reduction in the digital asset price on such exchanges, or (2) reduce supply on such exchanges, potentially resulting in a temporary increase in the digital asset price on such exchanges during the existence of such operational limits. To the extent that fees for the transfer of digital assets either directly or indirectly apply between digital asset exchanges, the impact on digital asset prices due to operational limits on fiat currency deposits and withdrawals may be reduced by “exchange shopping” among digital asset exchange users. For example, a delay in U.S. dollar withdrawals on one site may temporarily increase the price on such site by reducing supply (i.e., sellers transferring digital assets to another exchange without operational limits in order to settle sales more rapidly). However, the resulting increase in price will also reduce demand because bidders on digital assets will follow increased supply on other digital asset exchanges not experiencing operational limits. To the extent that users are able or willing to utilize or arbitrage prices between more than one digital asset exchange, exchange shopping may mitigate the short-term impact of and volatility in digital asset prices due to operational limits on the deposit or withdrawal of fiat currency into or out of larger digital asset exchanges. These risks also apply to other digital asset trading venues, including over-the-counter markets and derivatives platforms, which may be used by public digital asset exchanges and therefore by the Sponsor in calculating the net asset value of the Trust.

Current wording

On large digital asset exchanges, users may buy or sell digital assets for fiat currency or transfer digital assets to other wallets. Operational limits (including regulatory, exchange policy or technical or operational limits) on the size or settlement speed of fiat currency deposits by users into digital asset exchanges may (1) reduce demand on such exchanges, resulting in a reduction in the digital asset price on such exchanges, or (2) reduce supply on such exchanges, potentially resulting in a temporary increase in the digital asset price on such exchanges during the existence of such operational limits. To the extent that fees for the transfer of digital assets either directly or indirectly apply between digital asset exchanges, the impact on digital asset prices due to operational limits on fiat currency deposits and withdrawals may be reduced by “exchange shopping” among digital asset exchange users. For example, a delay in U.S. dollar withdrawals on one site may temporarily increase the price on such site by reducing supply (i.e., sellers transferring digital assets to another exchange without operational limits in order to settle sales more rapidly). However, the resulting increase in price will also reduce demand because bidders on digital assets will follow increased supply on other digital asset exchanges not experiencing operational limits. To the extent that users are able or willing to utilize or arbitrage prices between more than one digital asset exchange, exchange shopping may mitigate the short-term impact of and volatility in digital asset prices due to operational limits on the deposit or withdrawal of fiat currency into or out of larger digital asset exchanges. These risks also apply to other digital asset trading venues, including over-the-counter markets and derivatives platforms, which may be used by public digital asset exchanges and therefore by the Sponsor in calculating the NAV of the Trust.

Previous wording

Despite efforts to ensure accurate pricing, the Trust, and the price of bitcoin generally, remain subject to volatility experienced by digital asset exchanges and other digital asset trading venues. Such volatility can adversely affect an investment in the Shares. The value of bitcoin is also dependent on the availability of exchanges on which to buy and sell such assets. If exchanges for bitcoin become increasingly sparse, then there would be a material adverse impact on the value of bitcoin and an investment in the Shares.

Current wording

Shares. The value of bitcoin is also dependent on the availability of exchanges on which to buy and sell such assets. If exchanges for bitcoin become increasingly sparse, then there would be a material adverse impact on the value of bitcoin and an investment in the Shares.

Previous wording

Smart contracts, including those relating to DApps, are a new technology and their ongoing development and operation may result in problems, which could reduce the demand for digital assets, including bitcoin, or cause a wider loss of confidence in blockchain networks, either of which could have an adverse impact on the value of bitcoin and the value of the Shares.

Current wording

Smart contracts, including those relating to decentralized applications (“dApps”), are a new technology and their ongoing development and operation may result in problems, which could reduce the demand for digital assets, including bitcoin, or cause a wider loss of confidence in blockchain networks, either of which could have an adverse impact on the value of bitcoin and the value of the Shares.

Previous wording

The trading prices of bitcoin have experienced extreme volatility in recent periods and may continue to do so. For example, there were steep increases in the value of bitcoin over the course of 2021, and multiple market observers asserted that bitcoin was experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2022 in bitcoin trading prices. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout bitcoin’s history, including in 2011-2012, 2013-2015, and 2017-2018, before repeating again in 2021-2022. Over the course of 2023, bitcoin prices have continued to exhibit extreme volatility. Over the past 12 months (using data ending January 5, 2025), bitcoin has exhibited a historical annualized volatility of 81.17% and maximum annual price increase of 63.04%.

Current wording

The trading prices of bitcoin have experienced extreme volatility in recent periods and may continue to do so. For example, there were steep increases in the value of bitcoin over the course of 2021, and multiple market observers asserted that bitcoin was experiencing a “bubble.” These increases were followed by steep drawdowns throughout 2022 in bitcoin trading prices. These episodes of rapid price appreciation followed by steep drawdowns have occurred multiple times throughout bitcoin’s history, including in 2011-2012, 2013-2015, and 2017-2018, before repeating again in 2021-2022. Over the course of 2023, bitcoin prices continued to exhibit extreme volatility. Over the past 12 months ending December 31, 2025, bitcoin has exhibited a historical annualized volatility of 43.42% and maximum annual price increase of 42.52%.

Previous wording

Extreme volatility may persist, and the value of the Shares may significantly decline in the future without recovery. The digital asset markets have previously experienced bubble and may do so again in the future. The bankruptcy of major digital asset companies like Celsius Network, Voyager Digital Ltd., and Three Arrows Capital, along with the collapse of TerraUSD and FTX Trading Ltd. (“FTX”) in late 2022 severely impacted confidence in the digital asset market. These events have led to widespread negative publicity, further bankruptcies, and legal actions, highlighting the volatility and risks inherent in Bitcoin and other digital assets.

Current wording

Extreme volatility may persist, and the value of the Shares may significantly decline in the future without recovery. The digital asset markets have previously experienced bubbles and may do so again in the future. The bankruptcy of major digital asset companies like Celsius Network, Voyager Digital Ltd., and Three Arrows Capital, along with the collapse of TerraUSD and FTX Trading Ltd. (“FTX”) in late 2022 severely impacted confidence in the digital asset market. These events have led to widespread negative publicity, further bankruptcies, and legal actions, highlighting the volatility and risks inherent in Bitcoin and other digital assets.

Previous wording

In response to these events (collectively, the “2022 Events”), the digital asset markets experienced extreme price volatility and other entities in the digital asset industry were, and may continue to be, negatively affected, further undermining confidence in the digital asset markets. These events also negatively impacted the liquidity of the digital asset markets as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital asset markets is negatively impacted by these events, digital asset prices, including bitcoin, may continue to experience significant volatility or price declines and confidence in the digital asset markets may be further undermined.

Current wording

In response to these events, the digital asset markets experienced extreme price volatility and other entities in the digital asset industry were, and may continue to be, negatively affected, further undermining confidence in the digital asset markets. These events also negatively impacted the liquidity of the digital asset markets as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital asset markets is negatively impacted by these events, digital asset prices, including bitcoin, may continue to experience significant volatility or price declines and confidence in the digital asset markets may be further undermined.

Previous wording

In addition, regulatory and enforcement scrutiny of digital assets has increased, including from, among others, the Department of Justice, the SEC, the CFTC, the White House and Congress, as well as state regulators and authorities. The regulatory landscape for digital assets remains uncertain and continues to evolve. For example, in January 2024, the SEC approved the listing and trading of several bitcoin spot ETFs. This decision came after the U.S. Court of Appeals for the District of Columbia found that the SEC’s previous denial of the Grayscale Bitcoin Trust’s ETF listing was “arbitrary and capricious” due to insufficient explanation, especially given the approval of similar bitcoin futures-based ETFs. For more information about regulatory and enforcement scrutiny of digital assets, see the risk factor entitled "Regulatory changes or actions by federal or state executives or legislators may affect the value of the Shares or restrict the use of bitcoin, its mining activity or the operation of its networks or the digital asset markets in a manner that adversely affects the value of the Shares."

Current wording

In addition, regulatory and enforcement scrutiny of digital assets has increased, including from, among others, the DOJ, the SEC, the CFTC, the White House and Congress, as well as state regulators and authorities. The regulatory landscape for digital assets remains uncertain and continues to evolve. For example, in January 2024, the SEC approved the listing and trading of several bitcoin spot ETFs. This decision came after the U.S. Court of Appeals for the District of Columbia found that the SEC’s previous denial of the Grayscale Bitcoin Trust’s ETF listing was “arbitrary and capricious” due to insufficient explanation, especially given the approval of similar bitcoin futures-based ETFs. For more information about regulatory and enforcement scrutiny of digital assets, see the risk factor entitled “Regulatory changes or actions by federal or state executives or legislators may affect the value of the Shares or restrict the use of bitcoin, its mining activity or the operation of its networks or the digital asset markets in a manner that adversely affects the value of the Shares.”

Previous wording

The Bitcoin network requires significant electricity to mine. This energy-consuming process involves the use of specialized high-powered computing equipment. Estimates and data vary widely, but several surveys have compared bitcoin mining’s total energy consumption to that of several small countries. For example, in 2021, Bitcoin’s annual electricity consumption was comparable to that of Poland. In addition, bitcoin mining generates substantial electronic waste, as existing computer chips become obsolete at an increasing rage are discarded as they are replaced with faster models. Increased awareness of these issues has led some companies, notably Tesla and Greenpeace, to restrict or refuse acceptance of bitcoin in payment.

Current wording

The Bitcoin network requires significant electricity to mine. This energy-consuming process involves the use of specialized high-powered computing equipment. Estimates and data vary widely, but several surveys have compared bitcoin mining’s total energy consumption to that of several small countries. For example, in 2021, Bitcoin’s annual electricity consumption was comparable to that of Poland. In addition, bitcoin mining generates substantial electronic waste, as existing computer chips become obsolete at an increasing rate are discarded as they are replaced with faster models. Increased awareness of these issues has led some companies, notably Tesla and Greenpeace, to restrict or refuse acceptance of bitcoin in payment.

Previous wording

The Bitcoin network, like many other digital asset networks, faces significant scaling challenges due to due to inherent trade-offs between security and scalability in public blockchains.. One means through which public blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. 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 miner on a given digital asset network is responsible for securing the system by processing every transaction and every single full node is responsible for maintaining a copy of the entire ledger of the network. As a result, a digital asset network may be limited in the number of transactions it can process because all miners participate in validating each block and each fully participating node must store and validate all transactions. The Bitcoin network community has failed to achieve consensus around the scaling of the Bitcoin network to increase transaction throughput and reduce Bitcoin blockchain bloat. In 2017, the scaling debate resulted in a material, contentious “hard fork,” a major change or upgrade to the Bitcoin blockchain protocol that is not backward-compatible and often leads to a permanent split in the Bitcoin blockchain, and a variety of proposals for upgrades to the Bitcoin network protocols to allow for more efficient transaction recording. Both hard forks and software upgrades may create uncertainty or fail to achieve their intended improvements, either of which could negatively affect an investment in the Shares.

Current wording

The Bitcoin network, like many other digital asset networks, faces significant scaling challenges due to inherent trade-offs between security and scalability in public blockchains. One means through which public blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. 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 miner on a given digital asset network is responsible for securing the system by processing every transaction and every single full node is responsible for maintaining a copy of the entire ledger of the network. As a result, a digital asset network may be limited in the number of transactions it can process because all miners participate in validating each block and each fully participating node must store and validate all transactions. The Bitcoin network community has failed to achieve consensus around the scaling of the Bitcoin network to increase transaction throughput and reduce Bitcoin blockchain bloat. In 2017, the scaling debate resulted in a material, contentious “hard fork,” a major change or upgrade to the Bitcoin blockchain protocol that is not backward-compatible and often leads to a permanent split in the Bitcoin blockchain, and a variety of proposals for upgrades to the Bitcoin network protocols to allow for more efficient transaction recording. Both hard forks and software upgrades may create uncertainty or fail to achieve their intended improvements, either of which could negatively affect an investment in the Shares.

Previous wording

As of December 2024, the Bitcoin network handled approximately 3 to 9 transactions per second. In an effort to increase the volume of transactions that can be processed on a given digital asset network, many digital assets have implemented or are exploring various features to increase the speed and throughput of transactions. However, if improvements in transaction 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. In 2024, the Bitcoin network experienced notable congestion, leading to increased transaction fees and a backlog of unconfirmed transactions. Average transaction fees fluctuated throughout the year, reaching a peak of $127.97 on April 20, 2024. By December 31, 2024, the average transaction fee had decreased to $1.78. If Bitcoin's network throughput continues to lag behind rising usage, rising fees and slower settlement times could limit its practical applications (e.g., micropayments) and reduce demand for bitcoin, potentially impacting its price and the value of the Shares.

Current wording

As of December 2025, the Bitcoin network handled approximately 3 to 8 transactions per second. In an effort to increase the volume of transactions that can be processed on a given digital asset network, many digital assets have implemented or are exploring various features to increase the speed and throughput of transactions. However, if improvements in transaction 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. In 2025, the Bitcoin network experienced notable congestion, leading to increased transaction fees and a backlog of unconfirmed transactions. Average transaction fees fluctuated throughout the year, reaching a peak of $3.68 on January 20, 2025. By December 31, 2025, the average transaction fee had decreased to $0.68. If Bitcoin's network throughput continues to lag behind rising usage, rising fees and slower settlement times could limit its practical applications (e.g., micropayments) and reduce demand for bitcoin, potentially impacting its price and the value of the Shares.

Previous wording

Federal and state regulators including FinCEN and OFAC have been examining the operations of digital asset networks, digital asset users and the digital asset markets, with particular focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, evade sanctions, or fund criminal or terrorist enterprises. For example, certain privacy-enhancing features have been, or are expected to be, introduced to a number of digital asset networks, and 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. In August 2022, OFAC banned all transactions by U.S. persons or in the United States involving Tornado Cash, a digital asset protocol designed to obfuscate blockchain transactions, by adding Tornado Cash and certain Ethereum wallet addresses associated with the protocol to its Specially Designated Nationals and Blocked Persons List A large portion of validators globally, as well as notable industry participants such as Centre, the issuer of the USDC stablecoin, have reportedly complied with the sanctions and blacklisted the sanctioned addresses from interacting with their networks. In October 2023, FinCEN issued a notice of proposed rulemaking that identified convertible virtual currency (CVC) mixing as a class of transactions of primary money laundering concern and proposed requiring covered financial institutions to implement certain recordkeeping and reporting requirements on transactions that covered financial institutions know, suspect, or have reason to suspect involve CVC mixing within or involving jurisdictions outside the United States. The DOJ has also arrested and charged the developers of certain digital asset networks and digital assets for crimes related to money laundering and other offenses.

Current wording

Federal and state regulators including FinCEN and OFAC have been examining the operations of digital asset networks, digital asset users and the digital asset markets, with particular focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, evade sanctions, or fund criminal or terrorist enterprises. For example, certain privacy-enhancing features have been, or are expected to be, introduced to a number of digital asset networks, and 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. In August 2022, OFAC banned all transactions by U.S. persons or in the U.S. involving Tornado Cash, a digital asset protocol designed to obfuscate blockchain transactions, by adding Tornado Cash and certain Ethereum wallet addresses associated with the protocol to its Specially Designated Nationals and Blocked Persons List. A large portion of validators globally, as well as notable industry participants such as Centre, the issuer of the USDC stablecoin, have reportedly complied with the sanctions and blacklisted the sanctioned addresses from interacting with their networks. In October 2023, FinCEN issued a notice of proposed rulemaking that identified CVC mixing as a class of transactions of primary money laundering concern and proposed requiring covered financial institutions to implement certain recordkeeping and reporting requirements on transactions that covered financial institutions know, suspect, or have reason to suspect involve CVC mixing within or involving jurisdictions outside the U.S. The DOJ has also arrested and charged the developers of certain digital asset networks and digital assets for crimes related to money laundering and other offenses.

Previous wording

Furthermore, Authorized Participants, as broker-dealers, and the Prime Execution Agent and Bitcoin Custodian, as entities licensed to conduct virtual currency business activity by the New York Department of Financial Services and as limited-purpose trust companies subject to New York Banking Law, respectively, are “financial institutions” subject to the U.S. Bank Secrecy Act, as amended (“BSA”), and U.S. economic sanctions laws. The Trust will only accept creation and redemption requests from Authorized Participants who have represented to the Trust that they have implemented compliance programs that are designed to ensure compliance with applicable sanctions and anti-money laundering laws. The Trust will not hold any bitcoin except that which has been delivered by approved Bitcoin Trading Counterparties or by execution through the Prime Execution Agent, in connection with Authorized Participant creation requests. Moreover, the Prime Execution Agent has represented to the Trust that it has implemented and will maintain and follow compliance programs that are designed to comply with applicable sanctions and anti-money laundering laws and that it performs both initial and ongoing due diligence on each of its customers as well as ongoing transaction monitoring that is designed to identify and report suspicious activity conducted through customer accounts, including those opened by the Authorized Participants or their agents/partners for purposes of facilitating bitcoin deposits to, and withdrawals from, the Trust’s Trading Balance, as required by law.

Current wording

Furthermore, Authorized Participants, as broker-dealers, and the Prime Execution Agent and Bitcoin Custodian, as entities licensed to conduct virtual currency business activity by the New York Department of Financial Services and as limited-purpose trust companies subject to New York Banking Law, respectively, are “financial institutions” subject to the U.S. Bank Secrecy Act, as amended, and U.S. economic sanctions laws. The Trust will only accept creation and redemption requests from Authorized Participants who have represented to the Trust that they have implemented compliance programs that are designed to ensure compliance with applicable sanctions and anti-money laundering laws. The Trust will not hold any bitcoin except that which has been delivered by approved Bitcoin Trading Counterparties or by execution through the Prime Execution Agent, in connection with Authorized Participant creation requests. Moreover, the Prime Execution Agent has represented to the Trust that it has implemented and will maintain and follow compliance programs that are designed to comply with applicable sanctions and anti-money laundering laws and that it performs both initial and ongoing due diligence on each of its customers as well as ongoing transaction monitoring that is designed to identify and report suspicious activity conducted through customer accounts, including those opened by the Authorized Participants or their agents/partners for purposes of facilitating bitcoin deposits to, and withdrawals from, the Trust’s Trading Balance, as required by law.

Previous wording

Forks could occur as a response to security breaches or other critical incidents. While bitcoin itself has not undergone a major fork due to a hack or security breach, the network has been proactive in addressing vulnerabilities to prevent such situations. However, unintentional forks have occurred due to software bugs or compatibility issues between different versions of Bitcoin software. For example, in March 2013, a software bug temporarily caused the Bitcoin blockchain to split into two incompatible chains, creating confusion among users and miners. The issue was resolved quickly, but it highlights how software flaws can unintentionally lead to forks. In cases of unforeseen software flaws, a fork could cause some users and miners to abandon the flawed network, while others may adopt an incompatible version, resulting in a permanent fork. Such a scenario could fragment the network, potentially affecting the security and value of both the original and Forked Assets. A hard fork can also introduce new security risks. For example, during the split between BCH and Bitcoin Satoshi’s Vision ("BSV") in November 2018, concerns about replay attacks emerged. Replay attacks occur when transactions from one network are maliciously or fraudulently repeated on another network. Another risk associated with hard forks is a decrease in overall security, as the fracturing of the network could make it easier for a single miner to gain more than 50% control of the validating power on a smaller or less secure blockchain, making that blockchain more vulnerable to attacks.

Current wording

Forks could occur as a response to security breaches or other critical incidents. While bitcoin itself has not undergone a major fork due to a hack or security breach, the network has been proactive in addressing vulnerabilities to prevent such situations. However, unintentional forks have occurred due to software bugs or compatibility issues between different versions of Bitcoin software. For example, in March 2013, a software bug temporarily caused the Bitcoin blockchain to split into two incompatible chains, creating confusion among users and miners. The issue was resolved quickly, but it highlights how software flaws can unintentionally lead to forks. In cases of unforeseen software flaws, a fork could cause some users and miners to abandon the flawed network, while others may adopt an incompatible version, resulting in a permanent fork. Such a scenario could fragment the network, potentially affecting the security and value of both the original and Forked Assets. A hard fork can also introduce new security risks. For example, during the split between BCH and Bitcoin Satoshi’s Vision in November 2018, concerns about replay attacks emerged. Replay attacks occur when transactions from one network are maliciously or fraudulently repeated on another network. Another risk associated with hard forks is a decrease in overall security, as the fracturing of the network could make it easier for a single miner to gain more than 50% control of the validating power on a smaller or less secure blockchain, making that blockchain more vulnerable to attacks.

Previous wording

Additionally, the reward for successfully mining transactions (called the “block reward” or “coinbase”) will decrease over time. In April 2024, the block reward was further reduced from 6.25 bitcoin to 3.125 bitcoin. This halving process occurs approximately every four years and will continue until all 21 million bitcoin are mined. As the block reward continues to decrease over time, the mining incentive structure may transition to a higher reliance on transaction confirmation fees to incentivize miners to continue dedicating processing power to the blockchain. If transaction confirmation fees become too high, the marketplace may be reluctant to use bitcoin. Conversely, if the combination of the block reward and transaction fees are too low, miners may not be incentivized to expend processing power to solve blocks and confirmations of transactions on the Bitcoin blockchain could be temporarily slowed. A reduction in the processing power expended by miners on the

Current wording

Additionally, the reward for successfully mining transactions (called the “block reward” or “coinbase”) will decrease over time. In April 2024, the block reward was further reduced from 6.25 bitcoin to 3.125 bitcoin. This halving process occurs approximately every four years and will continue until all 21 million bitcoin are mined. As the block reward continues to decrease over time, the mining incentive structure may transition to a higher reliance on transaction confirmation fees to incentivize miners to continue dedicating processing power to the blockchain. If transaction confirmation fees become too high, the marketplace may be reluctant to use bitcoin. Conversely, if the combination of the block reward and transaction fees are too low, miners may not be incentivized to expend processing power to solve blocks and confirmations of transactions on the Bitcoin blockchain could be temporarily 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. Any reduction in infrastructure security may reduce confidence in the Bitcoin network or expose it to a malicious actor or botnet obtaining a majority of processing power on the network, reducing confidence in and security of the Bitcoin blockchain. Decreased demand for bitcoin or reduced security on the Bitcoin network may adversely impact an investment in the Shares.

Previous wording

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 Bitcoin 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 as long as it maintains 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 Bitcoin 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 or cause an increase in the transaction fees paid by users to confirm transactions.

Current wording

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 Bitcoin 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 (1) transaction) and prevent the confirmation of other users’ transactions for as long as it maintains 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 Bitcoin 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 or cause an increase in the transaction fees paid by users to confirm transactions.

Previous wording

The SEC has identified possible sources of fraud and manipulation in the cryptocurrency markets generally, including bitcoin, such as (i) “wash trading”; (ii) persons with a dominant position in one type of digital assets manipulating its pricing; (iii) hacking of the digital asset network and trading platforms; (iv) malicious control of the digital asset network; (v) trading based on material, non-public information (for example, plans of market participants to significantly increase or decrease their holdings in a digital asset, new sources of demand for such digital asset, etc.) or based on the dissemination of false and misleading information; (vi) manipulative activity involving purported “stablecoins,” including Tether; and (vii) fraud and manipulation at the trading platforms of such digital asset.

Current wording

hacking of the digital asset network and trading platforms; (iv) malicious control of the digital asset network; (v) trading based on material, non-public information (for example, plans of market participants to significantly increase or decrease their holdings in a digital asset, new sources of demand for such digital asset, etc.) or based on the dissemination of false and misleading information; (vi) manipulative activity involving purported “stablecoins,” including Tether; and (vii) fraud and manipulation at the trading platforms of such digital asset.

Previous wording

Digital asset trading platforms on which bitcoin trades may be susceptible to wash trading, where offsetting trades are entered for non-bona fide reasons, such as the desire to inflate reported trading volumes. This manipulation may be driven by non-economic reasons, such as a desire for increased visibility on popular websites that monitor markets for digital assets so as to improve their attractiveness to investors who look for maximum liquidity, or it may be motivated by the ability to attract listing fees from token issuers who seek the most liquid and high-volume exchanges on which to list their coins. Results of wash trading may include unexpected obstacles to trade and erroneous investment decisions based on false information. Even in the United States, there have been allegations of wash trading even on regulated trading venues. Any actual or perceived false trading in the digital asset trading venue 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.

Current wording

Digital asset trading platforms on which bitcoin trades may be susceptible to wash trading, where offsetting trades are entered for non-bona fide reasons, such as the desire to inflate reported trading volumes. This manipulation may be driven by non-economic reasons, such as a desire for increased visibility on popular websites that monitor markets for digital assets so as to improve their attractiveness to investors who look for maximum liquidity, or it may be motivated by the ability to attract listing fees from token issuers who seek the most liquid and high-volume exchanges on which to list their coins. Results of wash trading may include unexpected obstacles to trade and erroneous investment decisions based on false information. Even in the U.S., there have been allegations of wash trading even on regulated trading venues. Any actual or perceived false trading in the digital asset trading venue 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.

Previous wording

In particular, in the two weeks that followed the February 7, 2014, halt of bitcoin withdrawals from Mt. Gox, the price of bitcoin fell on other exchanges dropped 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. In August 2016, it was reported that almost 120,000 bitcoin, valued at around $72 million at the time, were stolen from Bitfinex, a large digital asset exchange. The value of bitcoin and other digital assets immediately decreased by more than 10% following reports of the theft at Bitfinex. Following the theft at Bitfinex, the value of bitcoin and other digital assets decreased by more than 10%. In July 2017, FinCEN assessed a $110 million fine against BTC-e, a now-defunct digital asset exchange, for facilitating crimes such as drug sales and ransomware attacks. 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 its 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 January 2018, the Japanese digital asset trading platform Coincheck was hacked, resulting in losses of approximately $535 million in digital assets. The following month, the Italian digital asset trading platform Bitgrail was hacked, resulting in approximately $170 million in losses. In May 2019, one of the world’s largest digital asset trading platforms, Binance, was hacked, resulting in losses of approximately $40 million worth of bitcoin. In 2021, hackers stole $613 million in various cryptocurrencies, including bitcoin, from Poly Network by exploiting a vulnerability in its smart contract used for cross-chain token transfers. In 2022, $615 million was stolen from Ronin Network which powers the mobile game Axie Infinity due to weakened security measures. The Poly Network and Ronin Network hacks remain two of the biggest cryptocurrency hacks in history.

Current wording

In particular, in the two weeks that followed the February 7, 2014, halt of bitcoin withdrawals from Mt. Gox, the price of 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. In August 2016, it was reported that almost 120,000 bitcoin, valued at around $72 million at the time, were stolen from Bitfinex, a large digital asset exchange. The value of bitcoin and other digital assets immediately decreased by more than 10% following reports of the theft at Bitfinex. Following the theft at Bitfinex, the value of bitcoin and other digital assets decreased by more than 10%. In July 2017, FinCEN assessed a $110 million fine against BTC-e, a now-defunct digital asset exchange, for facilitating crimes such as drug sales and ransomware attacks. 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 its 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 January 2018, the Japanese digital asset trading platform Coincheck was hacked, resulting in losses of approximately $535 million in digital assets. The following month, the Italian digital asset trading platform Bitgrail was hacked, resulting in approximately $170 million in losses. In May 2019, one of the world’s largest digital asset trading platforms, Binance, was hacked, resulting in losses of approximately $40 million worth of bitcoin. In 2021, hackers stole $613 million in various cryptocurrencies, including bitcoin, from Poly Network by exploiting a vulnerability in its smart contract used for cross-chain token transfers. In 2022, $615 million was stolen from Ronin Network which powers the mobile game Axie Infinity due to weakened security measures. The Poly Network and Ronin Network hacks remain two of the biggest cryptocurrency hacks in history.

Previous wording

Many of bitcoin trading platforms are vulnerable to fraud and market manipulation. The lack of regulatory oversight and transparency creates opportunities for bad actors to exploit the system through practices like insider trading, wash trading, and misappropriation of customer funds. These practices not only harm investors but also undermine confidence in the broader digital asset market, leading to price volatility and financial losses. A prime example of such vulnerability was the collapse of FTX in November 2022, one of the largest digital asset trading platforms at the time. FTX halted customer withdrawals amid growing concerns about its liquidity and impending insolvency, which were soon confirmed by its CEO. Shortly after, FTX’s CEO resigned, and the platform, along with its affiliates, filed for bankruptcy in the United States. Other affiliates initiated insolvency or liquidation proceedings globally. In addition, the DOJ, SEC, and CFTC brought fraud and securities charges against senior FTX executives, accusing them of misusing billions in customer funds and misleading investors about the company’s financial health. During this time, reports emerged that $300 to $600 million in digital assets were suspiciously removed from FTX accounts, although the full nature of these removals remains unclear, raising concerns about possible theft or insider misconduct. The misappropriation of customer funds and lack of transparency led to significant market-wide effects, including a sharp decline in bitcoin’s value.

Current wording

Many bitcoin trading platforms are vulnerable to fraud and market manipulation. The lack of regulatory oversight and transparency creates opportunities for bad actors to exploit the system through practices like insider trading, wash trading, and misappropriation of customer funds. These practices not only harm investors but also undermine confidence in the broader digital asset market, leading to price volatility and financial losses. A prime example of such vulnerability was the collapse of FTX in November 2022, one of the largest digital asset trading platforms at the time. FTX halted customer withdrawals amid growing concerns about its liquidity and impending insolvency, which were soon confirmed by its CEO. Shortly after, FTX’s CEO resigned, and the platform, along with its affiliates, filed for bankruptcy in the U.S. Other affiliates initiated insolvency or liquidation proceedings globally. In addition, the DOJ, SEC, and CFTC brought fraud and securities charges against senior FTX executives, accusing them of misusing billions in customer funds and misleading investors about the company’s financial health. During this time, reports emerged that $300 to $600 million in digital assets were suspiciously removed from FTX accounts, although the full nature of these removals remains unclear, raising concerns about possible theft or insider misconduct. The misappropriation of customer funds and lack of transparency led to significant market-wide effects, including a sharp decline in bitcoin’s value.

Previous wording

The Shareholder is solely responsible for providing the Trust or its agent with accurate information with respect to its bitcoin wallet and sending ensuring that their contributions are sent to the correct bitcoin wallet address of the Trust. If a Shareholder’s contributions are sent to the wrong wallet address or are not delivered to the Trust, the Trust will have no liability to the Shareholder. If information provided by a Shareholder proves incorrect, and as a result, bitcoin is not delivered to the Trust, the Trust will have no liability to the Shareholder for the Trust’s good faith reliance on such misinformation.

Current wording

The Shareholders are solely responsible for providing the Trust or its agent with accurate information with respect to its bitcoin wallet and sending and ensuring that their contributions are sent to the correct bitcoin wallet address of the Trust. If a Shareholder’s contributions are sent to the wrong wallet address or are not delivered to the Trust, the Trust will have no liability to the Shareholder. If information provided by a Shareholder proves incorrect, and as a result, bitcoin is not delivered to the Trust, the Trust will have no liability to the Shareholder for the Trust’s good faith reliance on such misinformation.

Previous wording

Transfers of bitcoin among users are accomplished via bitcoin transactions (i.e., sending bitcoin from one user to another). The creation of a bitcoin transaction requires the use of a unique numerical code known as a “private key.” In the absence of the correct private key corresponding to a holder’s particular bitcoin, the bitcoin is inaccessible. The custody of the Trust’s bitcoin is handled by the Bitcoin Custodian, and the transfer of bitcoin to and from Authorized Participants is directed by the Sponsor. The Sponsor has reviewed and evaluated the procedures and internal controls of the Trust’s Bitcoin Custodian to safeguard the Trust’s bitcoin holdings. If the Bitcoin Custodian’s internal procedures and controls are inadequate to safeguard the Trust’s bitcoin holdings, and the Trust’s private keys are lost, destroyed or otherwise compromised and no accessible backup, the Trust will be unable to access its bitcoin, which could result in a partial or total loss of the Trust’s bitcoin holdings, leading to adverse impact on the value of an investment in the Shares.

Current wording

Transfers of bitcoin among users are accomplished via bitcoin transactions (i.e., sending bitcoin from one user to another). The creation of a bitcoin transaction requires the use of a unique numerical code known as a “private key.” In the absence of the correct private key corresponding to a holder’s particular bitcoin, the bitcoin is inaccessible. The custody of the Trust’s bitcoin is handled by the Bitcoin Custodian, and the transfer of bitcoin to and from Authorized Participants is directed by the Sponsor. The Sponsor has reviewed and evaluated the procedures and internal controls of the Trust’s Bitcoin Custodian to safeguard the Trust’s bitcoin holdings. If the Bitcoin Custodian’s internal procedures and controls are inadequate to safeguard the Trust’s bitcoin holdings, and the Trust’s private keys are lost, destroyed or otherwise compromised and no accessible backup exists, the Trust will be unable to access its bitcoin, which could result in a partial or total loss of the Trust’s bitcoin holdings, leading to an adverse impact on the value of an investment in the Shares.

Previous wording

Digital assets are also susceptible to border gateway protocol hijacking (“BGP hijacking”). Such an attack can be a very effective way for an attacker to intercept traffic en route to a legitimate destination. BGP hijacking impacts the way different nodes and miners are connected to one another by isolating portions of them from the remainder of the network, which could lead to a risk of the network allowing double-spending and other security issues. If BGP hijacking occurs on the Bitcoin network, participants may lose faith in the security of Bitcoin, which could affect bictoin’s value and consequently the value of the Shares.

Current wording

Digital assets are also susceptible to border gateway protocol hijacking (“BGP hijacking”). Such an attack can be a very effective way for an attacker to intercept traffic en route to a legitimate destination. BGP hijacking impacts the way different nodes and miners are connected to one another by isolating portions of them from the remainder of the network, which could lead to a risk of the network allowing double-spending and other security issues. If BGP hijacking occurs on the Bitcoin network, participants may lose faith in the security of Bitcoin, which could affect bitcoin’s value and consequently the value of the Shares.

Previous wording

Decentralized governance of the Bitcoin network and potential amendments to the Bitcoin network’s protocols and software could, if accepted and authorized by the Bitcoin network community, could have a negative impact on the performance of the Trust.

Current wording

Decentralized governance of the Bitcoin network and potential amendments to the Bitcoin network’s protocols and software could, if accepted and authorized by the Bitcoin network community, have a negative impact on the performance of the Trust.

Previous wording

Membership in the community of core developers evolves over time, largely based on self-determined participation in the resource section dedicated to Bitcoin on GitHub.com. These developers gain influence through their ongoing contributions but are constrained by the decentralized nature of the network. In other words, the Bitcoin network has no central decision-making body or clear manner in which participants can come to an agreement other than through overwhelming consensus. The lack of clarity on governance may adversely affect bitcoin’s utility and ability to grow and face challenges, both of which may require solutions and directed effort to overcome problems, especially long-term problems. For example, in 2023, a vulnerability known as the “replacement cycling attack” was discovered in the Bitcoin Lightning Network, threatening the security of off-chain transactions by allowing attackers to steal funds through manipulation of transaction processing. Although patches were quickly released, concerns about the effectiveness of these solutions remain, underscoring the governance challenges in resolving security risks. To the extent lack of clarity in corporate governance of the Bitcoin network leads to ineffective decision-making that slows development and growth, the value of the Shares may be adversely affected.

Current wording

Membership in the community of core developers evolves over time, largely based on self-determined participation in the resource section dedicated to Bitcoin on GitHub.com. These developers gain influence through their ongoing contributions but are constrained by the decentralized nature of the network. In other words, the Bitcoin network has no central decision-making body or clear manner in which participants can come to an agreement other than through overwhelming consensus. The lack of clarity on governance may adversely affect bitcoin’s utility and ability to grow and face challenges, both of which may require solutions and directed effort to overcome problems, especially long-term problems. For example, in 2023, a vulnerability known as the “replacement cycling attack” was discovered in the Bitcoin Lightning Network, threatening the security of off-chain transactions by allowing attackers to steal funds through manipulation of transaction processing.

Previous wording

Bitcoin, as the first decentralized digital asset, holds a first-to-market advantage over other digital assets, which has contributed to its broad adoption and strong market position. The Bitcoin network benefits from the largest user base, and the aggregate value of existing Bitcoin exceeds that of any other digital asset. Furthermore, Bitcoin enjoys the most mining power, making its blockchain more secure compared to other digital asset networks. This security provides users with greater confidence in the network’s stability and longevity, fostering a network effect, where more users and miners enhance security, making Bitcoin more attractive to new participants. This effect potentially strengthens Bitcoin’s first-mover advantage. However, despite its advantages, Bitcoin faces risks from real or perceived shortcomings. Technological, regulatory, or other developments could reduce its popularity, causing other digital assets to overtake Bitcoin in acceptance and usage. For instance, central bank digital currencies (CBDCs) may appeal to users because of their perceived stability, trustworthiness, and available federal backing or insurance, which could reduce Bitcoin’s attractiveness. See the risk factor entitled

Current wording

Bitcoin, as the first decentralized digital asset, holds a first-to-market advantage over other digital assets, which has contributed to its broad adoption and strong market position. The Bitcoin network benefits from the largest user base, and the aggregate value of existing Bitcoin exceeds that of any other digital asset. Furthermore, Bitcoin enjoys the most mining power, making its blockchain more secure compared to other digital asset networks. This security provides users with greater confidence in the network’s stability and longevity, fostering a network effect, where more users and miners enhance security, making Bitcoin more attractive to new participants. This effect potentially strengthens Bitcoin’s first-mover advantage. However, despite its advantages, Bitcoin faces risks from real or perceived shortcomings. Technological, regulatory, or other developments could reduce its popularity, causing other digital assets to overtake Bitcoin in acceptance and usage. For instance, central bank digital currencies (CBDCs) may appeal to users because of their perceived stability, trustworthiness, and available federal backing or insurance, which could reduce Bitcoin’s attractiveness. See the risk factor entitled “Competition from CBDCs and emerging payments initiatives involving financial institutions could adversely affect the value of bitcoin and the value of an investment in the Shares” for more details.

Previous wording

While the Trust does not invest in stablecoins, it may nonetheless be exposed to risks that stablecoins pose for the bitcoin market and other digital asset markets. Stablecoins are digital assets designed to have a stable value over time compared to typically volatile digital assets, and are typically marketed as being pegged to a fiat currency, such as the U.S. dollar, at a certain value. Although the prices of stablecoins are intended to be stable, their market value may fluctuate. This volatility has in the past apparently impacted the price of bitcoin. Stablecoins are a relatively new phenomenon, and it is impossible to know all of the risks that they could pose to participants in the bitcoin market. In addition, some have argued that certain stablecoins, particularly Tether, are improperly issued without sufficient backing which, when the stablecoin is used to pay for bitcoin, could cause artificial rather than genuine demand for bitcoin, artificially inflating the price of bitcoin. There are also allegations that those associated with certain stablecoins may be involved in laundering money. On February 17, 2021, the New York Attorney General entered into an agreement with Tether’s operators, requiring them to cease any further trading activity with New York persons and pay $18.5 million in penalties for false and misleading statements made regarding the assets backing Tether. On October 15, 2021, the CFTC announced a settlement with Tether’s operators in which they agreed to pay $42.5 million in fines to settle charges that, among others, Tether’s claims of maintaining sufficient U.S. dollar reserves to back every Tether stablecoin in circulation with the “equivalent amount of corresponding fiat currency” held by Tether were untrue. As of December 31, 2024, Tether has continued to release quarterly attestation reports, providing insights into its financial status and reserves. In its Q3 2024 attestation, Tether reported a net profit of $2.5 billion for the quarter, contributing to a nine-month consolidated profit of $7.7 billion for 2024. The company also disclosed holding $102.5 billion in U.S. Treasury securities, reflecting its substantial involvement in traditional financial instruments. Despite these disclosures, concerns about the adequacy and transparency of Tether’s reserves persist, which could influence the stability and perception of digital assets, including bitcoin. In October 2024, The Wall Street Journal reported that Tether was under federal investigation for potential violations of sanctions and anti-money-laundering regulations.

Current wording

While the Trust does not invest in stablecoins, it may nonetheless be exposed to risks that stablecoins pose for the bitcoin market and other digital asset markets. Stablecoins are digital assets designed to have a stable value over time compared to typically volatile digital assets, and are typically marketed as being pegged to a fiat currency, such as the U.S. dollar, at a certain value. Although the prices of stablecoins are intended to be stable, their market value may fluctuate. This volatility has in the past apparently impacted the price of bitcoin. Stablecoins are a relatively new phenomenon, and it is impossible to know all of the risks that they could pose to participants in the bitcoin market. In addition, stablecoins are subject to evolving regulatory requirements in the U.S. For example, on July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (the “GENIUS Act”) into law, establishing a federal framework for certain “payment stablecoins,” and U.S. regulators have begun related implementation efforts (including requests for comment and other actions). The GENIUS Act includes provisions addressing the regulatory treatment of certain “payment stablecoins,” including provisions that may affect whether certain payment stablecoins are treated as “securities” under the federal securities laws. However, the scope and interpretation of these provisions and their application to particular stablecoin structures may evolve and may not cover all stablecoin products, programs, or arrangements. In addition, some regulators have argued that certain stablecoins, particularly Tether, are improperly issued without sufficient backing which, when the stablecoin is used to pay for bitcoin, could cause artificial rather than genuine demand for bitcoin, artificially inflating the price of bitcoin. There are also allegations that those associated with certain stablecoins may be involved in laundering money or evading sanctions. On February 23, 2021, the New York Attorney General announced a settlement with Tether’s operators, requiring them to cease any further trading activity with New York persons and pay $18.5 million in penalties for false and misleading statements made regarding the assets backing Tether. On October 15, 2021, the CFTC announced a settlement with Tether’s operators in which they agreed to pay $42.5 million in fines to settle charges that, among others, Tether’s claims of maintaining sufficient U.S. dollar reserves to back every Tether stablecoin in circulation with the “equivalent amount of corresponding fiat currency” held by Tether were untrue. In addition, in June 2025 the DOJ announced an action to recover approximately $225.3 million in USDT linked to alleged cryptocurrency investment scams, and in January 2026 the DOJ announced charges alleging that USDT and other crypto assets were used to launder proceeds of corruption. These and similar regulatory, supervisory, an…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

USDC is a reserve-backed stablecoin issued by Circle Internet Financial that is commonly used as a method of payment in digital asset markets, including the bitcoin market. An affiliate of the Sponsor acts as investment manager to a money market fund, the Circle Reserve Fund, which the issuer of USDC uses to hold cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury, and repurchase agreements secured by such obligations or cash, which serve as reserves backing USDC stablecoins. While USDC is designed to maintain a stable value at $1.00, on March 10, 2023, the value of USDC fell below $1.00 for multiple days after Circle Internet Financial disclosed that $3.3 billion of the USDC reserves were held at Silicon Valley Bank, which had entered FDIC receivership earlier that day. Since then, USDC has managed to restore its peg to $1.00 and has not experienced a depegging event of similar magnitude. Stablecoins are reliant on the U.S. banking system and U.S. treasuries, and the failure of either to function normally could affect stablecoin operations, and adversely affecting the value of the Shares. An affiliate of the Sponsor also has a minority equity interest in the issuer of USDC.

Current wording

USDC is a reserve-backed stablecoin issued by Circle Internet Financial that is commonly used as a method of payment in digital asset markets, including the bitcoin market. An affiliate of the Sponsor acts as investment manager to a money market fund, the Circle Reserve Fund, which the issuer of USDC uses to hold cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury Department, and repurchase agreements secured by such obligations or cash, which serve as reserves backing USDC stablecoins. While USDC is designed to maintain a stable value at $1.00, on March 10, 2023, the value of USDC fell below $1.00 for multiple days after Circle Internet Financial disclosed that $3.3 billion of the USDC reserves were held at Silicon Valley Bank, which had entered FDIC receivership earlier that day. Since then, USDC has generally traded near its intended $1.00 value. but it has experienced fluctuations. Stablecoins are reliant on the U.S. banking system and U.S. treasuries, and the failure of either to function normally could affect stablecoin operations and adversely affect the value of the Shares. In addition, implementation of the GENIUS Act and evolving U.S. stablecoin regulation could require stablecoin issuers and market participants to obtain licenses or approvals, satisfy reserve and disclosure requirements, or restrict certain activities, any of which could affect stablecoin availability and liquidity. An affiliate of the Sponsor also has a minority equity interest in the issuer of USDC.

Previous wording

Some stablecoins have been alleged to be securities under the federal securities laws. For example, on June 5, 2023, the SEC alleged in a complaint that the stablecoin BUSD, a U.S. dollar stablecoin issued by Binance, was a “crypto asset security” and that Binance “offered and sold to U.S. investors as part of a profit-earning scheme within the Binance ecosystem.” However, on June 28, 2024, a federal judge dismissed the SEC's claim that BUSD was a security, stating that the SEC failed to credibly establish that BUSD was offered or sold as such. In another example, the District Court for the Southern District of New York denied defendants’ motion to dismiss an SEC complaint asserting that the stablecoin TerraUSD (UST), a U.S. dollar stablecoin issued by Terra Labs, is a security. Further public concern about the possible security status of stablecoins manifested in November 2023, when the financial technology company PayPal disclosed in a filing that it had received a subpoena from the SEC relating to the PayPal USD stablecoin that requested the production of documents. If a widely used stablecoin were legally determined to be a security, this could trigger mass redemptions and broader instability in the digital asset market, negatively impacting the value of the Shares.

Current wording

Some stablecoins have been alleged to be securities under the federal securities laws and the regulatory status of stablecoins remains in flux. For example, on June 5, 2023, the SEC alleged in a complaint that the stablecoin BUSD, a U.S. dollar stablecoin associated with the Binance ecosystem, was a “crypto asset security” and that Binance “offered and sold to U.S. investors as part of a profit-earning scheme within the Binance ecosystem.” However, on June 28, 2024, a federal judge dismissed the SEC's claim that BUSD was a security, stating that the SEC failed to credibly establish that BUSD was offered or sold as such. On May 29, 2025, the SEC filed a joint stipulation to dismiss, with prejudice, the civil enforcement action against Binance entities and founder Changpeng Zhao, and stated that the dismissal decision did not necessarily reflect the Commission’s position on other litigation or proceedings. In another example, in November 2023, the financial technology company PayPal disclosed in a filing that it had received a subpoena from the SEC relating to the PayPal USD stablecoin that requested the production of documents. PayPal later disclosed that, in February 2025, the SEC communicated it was closing this inquiry without enforcement action.

Previous wording

Given the foundational role that stablecoins play in global digital asset markets, their fundamental liquidity and actual stability can have a significant impact on the broader digital asset market, including the market for bitcoin. Because a large portion of the digital asset market still depends on stablecoins such as Tether and USDC, there is a risk that a disorderly de-pegging or a run on Tether or USDC could lead to significant market volatility in digital assets more broadly. Volatility in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency of any reserves that support stablecoins or potential manipulative activity when unbacked stablecoins are used to pay for other digital assets (including bitcoin), or regulatory concerns about stablecoin issuers or intermediaries, such as exchanges, that support stablecoins, could impact individuals’ willingness to trade on venues that rely on stablecoins, reduce liquidity in the bitcoin market, and affect the value of bitcoin, and in turn impact an investment in the Shares.

Current wording

Given the foundational role that stablecoins play in global digital asset markets, their fundamental liquidity and actual stability can have a significant impact on the broader digital asset market, including the market for bitcoin. Because a large portion of the digital asset market still depends on stablecoins such as Tether and USDC, there is a risk that a disorderly de-pegging or a run on Tether or USDC could lead to significant market volatility in digital assets more broadly. Volatility in stablecoins, operational issues with stablecoins (for example, technical issues that prevent settlement), concerns about the sufficiency of any reserves that support stablecoins or potential manipulative activity when unbacked stablecoins are used to pay for other digital assets (including bitcoin), regulatory changes affecting stablecoin issuers or intermediaries, such as exchanges, that support stablecoins, and enforcement actions or sanctions targeting stablecoin-related activity could impact individuals’ willingness to trade on venues that rely on stablecoins, reduce liquidity in the bitcoin market, and affect the value of bitcoin, and in turn impact an investment in the Shares.

Previous wording

In addition, bitcoin mining is highly sensitive to energy prices and bitcoin market prices. To mine bitcoin, a bitcoin miner acquires specialized computers that consume significant amounts of energy. As energy prices fluctuate, the marginal cost of bitcoin mining increases and decreases. Conversely, the price of bitcoin and amount of “hashrate” being expended by other bitcoin miners will impact the profitability and likelihood of solving a block and receiving newly mined bitcoin. If the marginal cost of bitcoin mining exceeds the expected profit, miners may cease to expend energy to mine bitcoin. See the risk factor entitled “The prevailing level of transaction fees may adversely affect the usage of the Bitcoin network” for more details. If a material number of miners turn off their mining hardware, the speed of transaction processing on the Bitcoin network may experience a temporary slowdown and the overall security of the Bitcoin network against a 51% attack may be reduced. Furthermore, federal or state governments in key jurisdictions, including the United States, have are considering regulations targeting bitcoin mining’s energy consumption, which could further increase operational costs or restrict miner activity.

Current wording

In addition, bitcoin mining is highly sensitive to energy prices and bitcoin market prices. To mine bitcoin, a bitcoin miner acquires specialized computers that consume significant amounts of energy. As energy prices fluctuate, the marginal cost of bitcoin mining increases and decreases. Conversely, the price of bitcoin and amount of “hashrate” being expended by other bitcoin miners will impact the profitability and likelihood of solving a block and receiving newly mined bitcoin. If the marginal cost of bitcoin mining exceeds the expected profit, miners may cease to expend energy to mine bitcoin. See the risk factor entitled “The prevailing level of transaction fees may adversely affect the usage of the Bitcoin network” for more details. If a material number of miners turn off their mining hardware, the speed of transaction processing on the Bitcoin network may experience a temporary slowdown and the overall security of the Bitcoin network against a 51% attack may be reduced. Furthermore, federal or state governments in key jurisdictions, including the U.S., are considering regulations targeting bitcoin mining’s energy consumption, which could further increase operational costs or restrict miner activity.

Previous wording

The BRRNY, which was introduced on February 28, 2022, is based on materially the same methodology (except calculation time) as the BRR, which was first introduced on November 14, 2016, and is the rate on which bitcoin futures contracts are cash-settled in U.S. dollars at the CME. The BRRNY and the BRR have a limited history and their value is an average composite reference rate calculated using volume-weighted trading price data from the Constituent Platforms. A longer history of actual performance through various economic and market conditions would provide greater and more reliable information for an investor to assess BRRNY’s performance. The Benchmark Provider has substantial discretion at any time to change the methodology used to calculate the BRRNY, including the Constituent Platforms. The Benchmark Provider does not have any obligation to take into consideration the needs of the Trust, the Shareholders, or anyone else in connection with such changes. There is no guarantee that the methodology currently used in calculating the BRRNY will appropriately track the price of bitcoin in the future. Neither the CME Group nor the Benchmark Provider has any obligation to take into consideration the needs of the Trust or the Shareholders in determining, composing, or calculating the BRRNY or in the selection of the Constituent Platforms used. The Constituent Platforms are chosen by the Benchmark Provider, under the oversight of the CME CF Cryptocurrency Pricing Products Oversight Committee.

Current wording

The BRRNY, which was introduced on February 28, 2022, is based on materially the same methodology (except calculation time) as the BRR, which was first introduced on November 14, 2016, and is the rate on which bitcoin futures contracts are cash-settled in U.S. dollars at the CME. The BRRNY and the BRR have a limited history and their value is an average composite reference rate calculated using volume-weighted trading price data from the Constituent Platforms. A longer history of actual performance through various economic and market conditions would provide greater and more reliable information for an investor to assess BRRNY’s performance. The Benchmark Provider has substantial discretion at any time to change the methodology used to calculate the BRRNY, including the Constituent Platforms. The Benchmark Provider does not have any obligation to take into consideration the needs of the Trust, the Shareholders, or anyone else in connection with such changes. There is no guarantee that the methodology currently used in calculating the BRRNY will appropriately track the price of bitcoin in the future. Neither the CME Group nor the Benchmark Provider has any obligation to take into consideration the needs of the Trust or the Shareholders in determining, composing, or calculating the BRRNY or in the selection of the Constituent Platforms used. The Constituent Platforms are chosen by the Benchmark Provider, under the oversight of the CME CF Oversight Committee.

Previous wording

The Bridging Regulation and Innovation for Digital Global and Electronic Digital Assets Act (the "BRIDGE Digital Assets Act"), introduced in September 2024, remains under active consideration in the U.S. Congress. The BRIDGE Digital Assets Act seeks to address some of these concerns by establishing a Joint Advisory Committee on Digital Assets comprising members from both the SEC and CFTC to help shape clearer regulations for digital assets. In January 2025, President Trump issued an Executive Order, “Strengthening American Leadership in Digital Financial Technology,” signaling the administration’s intent to promote responsible innovation in the digital asset space. In February 2025, the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing titled “A Golden Age of Digital Assets: Charting a Path Forward,” emphasizing the need for clearer rules to support industry growth while ensuring consumer protection. These initiatives suggest creating a defined regulatory framework for the cryptocurrency markets, which could enhance market stability and provide greater clarity for exchanges operating within the U.S. However, until such a regulatory framework is implemented, exchanges will remain largely unregulated. For these reasons, among others, purchases and sales of bitcoin may be subject to temporary distortions or other disruptions due to various factors, including the lack of liquidity in the markets and government regulation and intervention. These circumstances could affect the price of bitcoin used in BRRNY calculations and, therefore, could adversely affect the bitcoin price as reflected by the BRRNY.

Current wording

The Constituent Platforms used by the BRRNY as pricing sources are major bitcoin trading venues that facilitate the buying and selling of bitcoin and other digital assets. Neither the CME Group nor the Benchmark Provider guarantees the validity of any of these inputs, which may be subject to technological error, manipulative activity, or fraudulent reporting from their initial source. While many pricing sources refer to themselves as “exchanges,” they are not registered with, or supervised by, the SEC or CFTC and do not meet the regulatory standards of a national securities exchange or designated contract market. The Bridging Regulation and Innovation for Digital Global and Electronic Digital Assets Act (the "BRIDGE Digital Assets Act"), introduced in September 2024, remains under active consideration in the U.S. Congress. The BRIDGE Digital Assets Act seeks to address some of these concerns by establishing a Joint Advisory Committee on Digital Assets comprising members from both the SEC and CFTC to help shape clearer regulations for digital assets. In January 2025, President Trump issued an Executive Order, “Strengthening American Leadership in Digital Financial Technology,” signaling the administration’s intent to promote responsible innovation in the digital asset space. In February 2025, the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing titled “A Golden Age of Digital Assets: Charting a Path Forward,” emphasizing the need for clearer rules to support industry growth while ensuring consumer protection. These initiatives suggest creating a defined regulatory framework for the cryptocurrency markets, which could enhance market stability and provide greater clarity for exchanges operating within the U.S. However, until such a regulatory framework is implemented, exchanges will remain largely unregulated. For these reasons, among others, purchases and sales of bitcoin may be subject to temporary distortions or other disruptions due to various factors, including the lack of liquidity in the markets and government regulation and intervention. These circumstances could affect the price of bitcoin used in BRRNY calculations and, therefore, could adversely affect the bitcoin price as reflected by the BRRNY.

Previous wording

The Constituent Platforms have changed over time. For example, effective April 2017, Bitfinex and OKcoin were removed from the BRR due to trading restrictions. On January 25, 2019, ItBit was suspended from the BRR due to data quality issues, which suspension was lifted on February 1, 2019 after the Benchmark Provider confirmed that data quality assurance measures were in place to identify the errors that the ItBit data contained through a full match of parameters. On August 30, 2019, Gemini was added to the BRR followed by LMAX Digital in April 2023. The Benchmark Provider, under the oversight of the CME CF Cryptocurrency Pricing Products Oversight Committee, may remove or add Constituent Platforms in the future at its discretion. For more information on the inclusion criteria for Constituent Platforms in the BRRNY, see the section entitled “CME CF Bitcoin Reference Rate – New York Variant (BRRNY)” under Item 1 - Business of this Annual Report.

Current wording

The Constituent Platforms have changed over time. For example, effective April 2017, Bitfinex and OKcoin were removed from the BRR due to trading restrictions. On January 25, 2019, ItBit was suspended from the BRR due to data quality issues, which suspension was lifted on February 1, 2019 after the Benchmark Provider confirmed that data quality assurance measures were in place to identify the errors that the ItBit data contained through a full match of parameters. On August 30, 2019, Gemini was added to the BRR followed by LMAX Digital in April 2023. The Benchmark Provider, under the oversight of the CME CF Oversight Committee, may remove or add Constituent Platforms in the future at its discretion. For more information on the inclusion criteria for Constituent Platforms in the BRRNY, see the section entitled “CME CF Bitcoin Reference Rate – New York Variant (BRRNY)” under Item 1 - Business of this Annual Report.

Previous wording

Trust utilizes the BRRNY to establish its NAV and NAV per Share. Any errors or delays in the BRRNY could lead to inaccuracies in the NAV and NAV per Share, resulting in a different investment outcome for the Trust and its Shareholders than if these events had not occurred. Losses or costs associated with such errors or other risks would generally be borne by the Trust and its Shareholders. Neither the Sponsor nor its affiliates or agents provide any guarantees regarding the accuracy or timeliness of the BRRNY.

Current wording

The Trust utilizes the BRRNY to establish its NAV and NAV per Share. Any errors or delays in the BRRNY could lead to inaccuracies in the NAV and NAV per Share, resulting in a different investment outcome for the Trust and its Shareholders than if these events had not occurred. Losses or costs associated with such errors or other risks would generally be borne by the Trust and its Shareholders. Neither the Sponsor nor its affiliates or agents provide any guarantees regarding the accuracy or timeliness of the BRRNY.

Previous wording

If the BRRNY is not available, or if the Sponsor determines, in its sole discretion, that the BRRNY does not reflect an accurate bitcoin price, the Trust’s holdings may be “fair valued” in accordance with the valuation policies approved by the Sponsor. Those valuation policies stipulate that when determining the fair value of bitcoin, the Sponsor may consider all relevant factors available at the time of valuation, and may be based on analytical values determined by the Sponsor using third-party valuation models. In accordance with its valuation policies, the Sponsor expects to utilize a volume-weighted average price or volume-weighted median price of bitcoin provided by a secondary pricing source (the “Secondary Source”). If a Secondary Source is not available or the Sponsor in its sole discretion determines the Secondary Sources are unreliable, the price set by the Trust’s principal market as of 4:00 p.m. ET on the valuation date would be considered for utilization. In the event the principal market price is not available or the Sponsor in its sole discretion determines the principal market valuation is unreliable, the Sponsor will use its best judgment to determine a good faith estimate of fair value based upon all available factors. The Sponsor does not anticipate that the need to “fair value” bitcoin will be a common occurrence.

Current wording

If the BRRNY is not available, or if the Sponsor determines, in its sole discretion, that the BRRNY does not reflect an accurate bitcoin price, the Trust’s holdings may be “fair valued” in accordance with the valuation policies approved by the Sponsor. Those valuation policies stipulate that when determining the fair value of bitcoin, the Sponsor may consider all relevant factors available at the time of valuation, and may be based on analytical values determined by the Sponsor using third-party valuation models. In accordance with its valuation policies, the Sponsor expects to utilize a volume-weighted average price or volume-weighted median price of bitcoin provided by a secondary pricing source (the “Secondary Source”). If a Secondary Source is not available or the Sponsor in its sole discretion determines the Secondary Sources are unreliable, the price set by the Trust’s principal market as of 4:00 p.m. EST on the valuation date would be considered for utilization. In the event the principal market price is not available or the Sponsor in its sole discretion determines the principal market valuation is unreliable, the Sponsor will use its best judgment to determine a good faith estimate of fair value based upon all available factors. The Sponsor does not anticipate that the need to “fair value” bitcoin will be a common occurrence.

Previous wording

The Trust determines the NAV of the Trust on each business day based on the value of bitcoin as reflected by the BRRNY. However, the methodology used to calculate the BRRNY price may not be consistent with GAAP. In cases where the BRRNY is deemed inconsistent with GAAP, the Trust would be required to use an alternative pricing source that aligns with GAAP for its periodic financial statements. As a result, the NAV reported in the Trust’s periodic financial statements, which is based on this GAAP-consistent pricing source, may differ—sometimes significantly—from the NAV determined using the BRRNY pricing. This discrepancy arises because the price of bitcoin in U.S. dollars or other currencies available from various data sources may not match the prices used in the BRRNY calculation. Additionally, the creation and redemption of Baskets, the Sponsor Fee, and other expenses borne by the Trust are determined using the daily NAV based on the BRRNY.

Current wording

The Trust determines the NAV of the Trust on each business day based on the value of bitcoin as reflected by the BRRNY. However, the methodology used to calculate the BRRNY price may not be consistent with GAAP. In cases where the BRRNY is deemed inconsistent with GAAP, the Trust would be required to use an alternative pricing source that aligns with GAAP for its periodic financial statements. As a result, the NAV reported in the Trust’s periodic financial statements, which is based on this GAAP-consistent pricing source, may differ—sometimes significantly—from the NAV determined using the BRRNY pricing. This discrepancy arises because the price of bitcoin in U.S. dollars or other currencies available from various data sources may not match the prices used in the BRRNY calculation. Additionally, the creation and redemption of Baskets, the Sponsor Fee, and other expenses borne by the Trust are determined using the daily NAV based on the BRRNY. Any discrepancies between the BRRNY-based NAV and the GAAP-compliant NAV reported in financial statements could impact investors’ perception of the Trust’s valuation, potentially adversely affecting the value of an investment in the Shares.