S-1/A: Bitwise Bitcoin ETF to Acquire Osprey Bitcoin Trust in Strategic Move

Bitwise Bitcoin ETF is set to acquire all bitcoin assets of Osprey Bitcoin Trust, distributing Bitwise shares to Osprey unitholders as part of a liquidation plan.

Summary

• Bitwise Bitcoin ETF will acquire all bitcoin assets of the Osprey Bitcoin Trust.
• Osprey unitholders will receive shares of the Bitwise Bitcoin ETF as part of the liquidation and dissolution of the Osprey Fund.
• The transaction is structured as an asset purchase, with the Bitwise ETF issuing shares in exchange for Osprey's bitcoin holdings.
• The distribution of Bitwise shares to Osprey unitholders will occur after the registration statement becomes effective.
• The Osprey Fund will then wind up its affairs and liquidate, distributing any remaining assets to its unitholders.
• The Bitwise Bitcoin ETF trades on the NYSE Arca under the ticker symbol BITB.
• The Bitwise ETF aims to provide exposure to the value of bitcoin, less expenses, using the CME CF Bitcoin Reference Rate New York Variant (BRRNY) for valuation.
• The management fee for the Bitwise ETF is 0.20% per annum of the Trusts bitcoin holdings, while the Osprey Fund had a management fee of 0.49%.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting the benefits of the acquisition for Osprey unitholders and Bitwise. However, it also includes detailed risk factors, which temper the overall sentiment.

Positives

• The transaction is expected to be tax-free for Osprey unitholders.
• Osprey unitholders will gain access to a more liquid exchange-traded product on the NYSE Arca.
• The Bitwise ETF has a lower management fee than the Osprey Fund.
• The Bitwise ETF has a more robust redemption program than the Osprey Fund.
• The Bitwise ETF has a history of trading at a narrow premium or discount to NAV.

Negatives

• Osprey unitholders will lose the ability to sell their units on the OTCQX.
• The transaction may take some time to complete.
• The value of the Shares may not always correspond to the market price of bitcoin.
• The Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of volatility in the price of bitcoin.

Risks

• The transaction may be delayed or not occur at all.
• Osprey unitholders have no voting rights on the transaction.
• The value of the Shares is directly related to the value of bitcoin, which is highly volatile.
• The digital asset markets are largely unregulated and subject to fraud and security breaches.
• The loss or destruction of private keys could prevent the Trust from accessing its bitcoin.
• The Trust may not realize the expected benefits of the Covered Transaction.
• The Trust is not actively managed and will not take any actions to take advantage, or mitigate the impacts, of volatility in the price of bitcoin.
• The Trust is subject to market risk, including the possible loss of the entire principal of the investment.
• The Trust is subject to risks due to its concentration of investments in a single asset class.
• The Sponsor and its management have a limited history of operating an investment vehicle like the Trust.
• Security threats and cyber-attacks could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust.
• The Trust is subject to market risk, including the possible loss of the entire principal of the investment.
• The Trust is a passive investment vehicle.
• The NAV may not always correspond to the market price of bitcoin and, as a result, Baskets may be created or redeemed at a value that is different from the market price of the Shares.
• The Shares may trade at a discount or premium in the trading price relative to the NAV as a result of non-concurrent trading hours between the Exchange and digital asset trading platforms.
• Buying and selling activity associated with the purchase and redemption of Baskets may adversely affect an investment in the Shares.
• The inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect the liquidity of Shares and the value of an investment in the Shares.
• Arbitrage transactions intended to keep the price of Shares closely linked to the price of bitcoin may be problematic if the process for the purchase and redemption of Baskets encounters difficulties, which may adversely affect an investment in the Shares.
• Investors may be adversely affected by purchase or redemption orders that are subject to postponement, suspension or rejection under certain circumstances.
• Investors may be adversely affected by an overstatement or understatement of the NAV calculation of the Trust due to the valuation method employed on the date of the NAV calculation.
• As an owner of Shares, you will not have the rights normally associated with ownership of other types of shares.
• The Sponsor and the Trustee may agree to amend the Trust Agreement or Sponsor Agreement without the consent of the Shareholders.
• The Trust is subject to risks due to its concentration of investments in a single asset class.
• A possible short squeeze due to a sudden increase in demand for the Shares that largely exceeds supply may lead to price volatility in the Shares.
• As the Sponsor and its management have a limited history of operating an investment vehicle like the Trust, their experience may be inadequate or unsuitable to manage the Trust.
• Security threats and cyber-attacks could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.
• The development and commercialization of the Trust is subject to competitive pressures.
• The lack of active trading markets for the Shares may result in losses on investors investments at the time of disposition of Shares.
• Possible illiquid markets may exacerbate losses or increase the variability between the Trusts NAV and its market price.
• The Trusts bitcoin may be subject to loss, damage, theft or restriction on access.
• Several factors may affect the Trusts ability to achieve its investment objective on a consistent basis.
• The amount of bitcoin represented by a Share will decline over time.
• Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares.
• The value of the Shares will be adversely affected if the Trust is required to indemnify the Trustee, the Administrator, the Transfer Agent, the Bitcoin Custodian, Prime Execution Agent or the Cash Custodian.
• The Trust is subject to market risk.
• The Trust is a passive investment vehicle.
• The NAV may not always correspond to the market price of bitcoin and, as a result, Baskets may be created or redeemed at a value that is different from the market price of the Shares.
• The Shares may trade at a discount or premium in the trading price relative to the NAV as a result of non-concurrent trading hours between the Exchange and digital asset trading platforms.
• Buying and selling activity associated with the purchase and redemption of Baskets may adversely affect an investment in the Shares.
• The inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect the liquidity of Shares and the value of an investment in the Shares.
• Arbitrage transactions intended to keep the price of Shares closely linked to the price of bitcoin may be problematic if the process for the purchase and redemption of Baskets encounters difficulties, which may adversely affect an investment in the Shares.
• Investors may be adversely affected by purchase or redemption orders that are subject to postponement, suspension or rejection under certain circumstances.
• Investors may be adversely affected by an overstatement or understatement of the NAV calculation of the Trust due to the valuation method employed on the date of the NAV calculation.
• As an owner of Shares, you will not have the rights normally associated with ownership of other types of shares.
• The Sponsor and the Trustee may agree to amend the Trust Agreement or Sponsor Agreement without the consent of the Shareholders.
• The Trust is subject to risks due to its concentration of investments in a single asset class.
• A possible short squeeze due to a sudden increase in demand for the Shares that largely exceeds supply may lead to price volatility in the Shares.
• As the Sponsor and its management have a limited history of operating an investment vehicle like the Trust, their experience may be inadequate or unsuitable to manage the Trust.
• Security threats and cyber-attacks could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.
• The development and commercialization of the Trust is subject to competitive pressures.
• The lack of active trading markets for the Shares may result in losses on investors investments at the time of disposition of Shares.
• Possible illiquid markets may exacerbate losses or increase the variability between the Trusts NAV and its market price.
• The Trusts bitcoin may be subject to loss, damage, theft or restriction on access.
• Several factors may affect the Trusts ability to achieve its investment objective on a consistent basis.
• The amount of bitcoin represented by a Share will decline over time.
• Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares.
• The value of the Shares will be adversely affected if the Trust is required to indemnify the Trustee, the Administrator, the Transfer Agent, the Bitcoin Custodian, Prime Execution Agent or the Cash Custodian.
• The Trust is not a registered investment company and is not subject to the Commodity Exchange Act.
• Trading on digital asset trading platforms outside the U.S. is not subject to U.S. regulation and may be less reliable than U.S. trading platforms.
• Future and current regulations by a U.S. or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust.
• The IRS may disagree with or seek to challenge the Trusts treatment as a grantor trust.
• The tax treatment of bitcoin and transactions involving bitcoin for U.S. federal income tax purposes may change.
• A temporary or permanent fork of the Bitcoin blockchain could adversely affect an investment in the Trust.
• In the event of a hard fork of the Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trusts purposes, and in doing so may adversely affect the value of the Shares.
• In the event of a hard fork of the Bitcoin network, the Bitcoin Custodians operations may be interrupted or subject to additional security risks that could disrupt the Trusts ability to process creations and redemptions of Shares or otherwise threaten the security of the Trusts bitcoin holdings.
• Shareholders may not receive the benefits of any forks or airdrops.
• The prevailing level of transaction fees may adversely affect the usage of the Bitcoin network.
• If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin network, or otherwise obtains control over the Bitcoin network through its influence over core developers or otherwise, such actor or botnet could manipulate how data is recorded the Bitcoin blockchain to adversely affect the value of the Shares or the ability of the Trust to operate.
• The platforms on which users trade bitcoin are relatively new and, in some cases, largely unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust.
• A decline in the adoption of bitcoin and the Bitcoin network could negatively impact the performance of the Trust.
• The open-source and decentralized nature of Bitcoin network development reduces certainty in the development of Bitcoin network protocols and software.
• A disruption of the Internet may affect the operation of the Bitcoin network, which may adversely affect the digital asset industry and an investment in the Trust.
• The scheduled creation of newly mined bitcoin and their subsequent sale may cause the price of bitcoin to decline, which could negatively affect an investment in the Trust.
• The loss or destruction of a private key required to access bitcoin may be irreversible.
• New competing digital assets may pose a challenge to bitcoins current market dominance, resulting in a reduction in demand for bitcoin, which could have a negative impact on the price of bitcoin and may have a negative impact on the performance of the Trust.
• Competition from central bank digital currencies (CBDCs) and emerging payments initiatives involving financial institutions could adversely affect the value of bitcoins and other digital assets.
• Prices of bitcoin may be affected due to stablecoins (including Tether and USDC), the activities of stablecoin issuers and their regulatory treatment.
• Anonymity and illicit financing risk.
• Environmental concerns could slow or curtail the supply of bitcoin or the acceptance of bitcoin in payment.
• A temporary or permanent fork of the Bitcoin blockchain could adversely affect an investment in the Trust.
• In the event of a hard fork of the Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trusts purposes, and in doing so may adversely affect the value of the Shares.
• In the event of a hard fork of the Bitcoin network, the Bitcoin Custodians operations may be interrupted or subject to additional security risks that could disrupt the Trusts ability to process creations and redemptions of Shares or otherwise threaten the security of the Trusts bitcoin holdings.
• Shareholders may not receive the benefits of any forks or airdrops.
• The prevailing level of transaction fees may adversely affect the usage of the Bitcoin network.
• If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin network, or otherwise obtains control over the Bitcoin network through its influence over core developers or otherwise, such actor or botnet could manipulate how data is recorded the Bitcoin blockchain to adversely affect the value of the Shares or the ability of the Trust to operate.
• The digital asset trading platforms on which bitcoin trades are relatively new and largely unregulated.
• Digital asset trading platforms may be exposed to security breaches.
• Digital asset trading platforms may be exposed to fraud and market manipulation.
• Digital asset trading platforms may be exposed to wash trading.
• Digital asset trading platforms may be exposed to front-running.
• Momentum pricing.
• Political or economic crises may motivate large-scale sales of bitcoin, which could result in a reduction in the prices of bitcoin and adversely affect an investment in the Shares.
• Ownership of bitcoin is pseudonymous, and the supply of accessible bitcoin is unknown.
• The BRRNY, BRR and CME Bitcoin Real Time Price each have a limited history.
• The Benchmark Provider has substantial discretion at any time to change the methodology used to calculate the BRRNY, including the Constituent Platforms that contribute prices to the Trusts NAV.
• The pricing sources (Constituent Platforms) used by the BRRNY are digital asset trading venues that facilitate the buying and selling of bitcoin and other digital assets.
• The BRRNY is based on various inputs which may include price data from various third-party digital asset trading platforms.
• If the BRRNY is not available, the Trusts holdings may be fair valued in accordance with the policy approved by the Sponsor.
• The BRRNY could fail to track the global bitcoin price and a failure of the BRRNY could adversely affect the value of the Shares.
• The Sponsor can discontinue using the BRRNY and use a different pricing or valuation methodology instead.
• The BRRNY price used to calculate the value of the Trusts bitcoin may be volatile, adversely affecting the value of the Shares.
• The BRRNY price being used to determine the NAV of the Trust may not be consistent with GAAP.
• The Trusts portfolio will be priced, including for purposes of determining the NAV, based upon the BRRNY.
• The Trust is subject to market risk.
• The Trust is a passive investment vehicle.
• The NAV may not always correspond to the market price of bitcoin and, as a result, Baskets may be created or redeemed at a value that is different from the market price of the Shares.
• The Shares may trade at a discount or premium in the trading price relative to the NAV as a result of non-concurrent trading hours between the Exchange and digital asset trading platforms.
• Buying and selling activity associated with the purchase and redemption of Baskets may adversely affect an investment in the Shares.
• The inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect the liquidity of Shares and the value of an investment in the Shares.
• Arbitrage transactions intended to keep the price of Shares closely linked to the price of bitcoin may be problematic if the process for the purchase and redemption of Baskets encounters difficulties, which may adversely affect an investment in the Shares.
• Investors may be adversely affected by purchase or redemption orders that are subject to postponement, suspension or rejection under certain circumstances.
• Investors may be adversely affected by an overstatement or understatement of the NAV calculation of the Trust due to the valuation method employed on the date of the NAV calculation.
• As an owner of Shares, you will not have the rights normally associated with ownership of other types of shares.
• The Sponsor and the Trustee may agree to amend the Trust Agreement or Sponsor Agreement without the consent of the Shareholders.
• The Trust is subject to risks due to its concentration of investments in a single asset class.
• A possible short squeeze due to a sudden increase in demand for the Shares that largely exceeds supply may lead to price volatility in the Shares.
• As the Sponsor and its management have a limited history of operating an investment vehicle like the Trust, their experience may be inadequate or unsuitable to manage the Trust.
• Security threats and cyber-attacks could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.
• The development and commercialization of the Trust is subject to competitive pressures.
• The lack of active trading markets for the Shares may result in losses on investors investments at the time of disposition of Shares.
• Possible illiquid markets may exacerbate losses or increase the variability between the Trusts NAV and its market price.
• The Trusts bitcoin may be subject to loss, damage, theft or restriction on access.
• Several factors may affect the Trusts ability to achieve its investment objective on a consistent basis.
• The amount of bitcoin represented by a Share will decline over time.
• Extraordinary expenses resulting from unanticipated events may become payable by the Trust, adversely affecting an investment in the Shares.
• The value of the Shares will be adversely affected if the Trust is required to indemnify the Trustee, the Administrator, the Transfer Agent, the Bitcoin Custodian, Prime Execution Agent or the Cash Custodian.
• The Trust is not a registered investment company and is not subject to the Commodity Exchange Act.
• Trading on digital asset trading platforms outside the U.S. is not subject to U.S. regulation and may be less reliable than U.S. trading platforms.
• Future and current regulations by a U.S. or foreign government or quasi-governmental agency could have an adverse effect on an investment in the Trust.
• The IRS may disagree with or seek to challenge the Trusts treatment as a grantor trust.
• The tax treatment of bitcoin and transactions involving bitcoin for U.S. federal income tax purposes may change.
• A temporary or permanent fork of the Bitcoin blockchain could adversely affect an investment in the Trust.
• In the event of a hard fork of the Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trusts purposes, and in doing so may adversely affect the value of the Shares.
• In the event of a hard fork of the Bitcoin network, the Bitcoin Custodians operations may be interrupted or subject to additional security risks that could disrupt the Trusts ability to process creations and redemptions of Shares or otherwise threaten the security of the Trusts bitcoin holdings.
• Shareholders may not receive the benefits of any forks or airdrops.
• The prevailing level of transaction fees may adversely affect the usage of the Bitcoin network.
• If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin network, or otherwise obtains control over the Bitcoin network through its influence over core developers or otherwise, such actor or botnet could manipulate how data is recorded the Bitcoin blockchain to adversely affect the value of the Shares or the ability of the Trust to operate.
• The platforms on which users trade bitcoin are relatively new and, in some cases, largely unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust.
• A decline in the adoption of bitcoin and the Bitcoin network could negatively impact the performance of the Trust.
• The open-source and decentralized nature of Bitcoin network development reduces certainty in the development of Bitcoin network protocols and software.
• A disruption of the Internet may affect the operation of the Bitcoin network, which may adversely affect the digital asset industry and an investment in the Trust.
• The scheduled creation of newly mined bitcoin and their subsequent sale may cause the price of bitcoin to decline, which could negatively affect an investment in the Trust.
• The loss or destruction of a private key required to access bitcoin may be irreversible.
• New competing digital assets may pose a challenge to bitcoins current market dominance, resulting in a reduction in demand for bitcoin, which could have a negative impact on the price of bitcoin and may have a negative impact on the performance of the Trust.
• Competition from central bank digital currencies (CBDCs) and emerging payments initiatives involving financial institutions could adversely affect the value of bitcoins and other digital assets.
• Prices of bitcoin may be affected due to stablecoins (including Tether and USDC), the activities of stablecoin issuers and their regulatory treatment.
• Anonymity and illicit financing risk.
• Environmental concerns could slow or curtail the supply of bitcoin or the acceptance of bitcoin in payment.
• A temporary or permanent fork of the Bitcoin blockchain could adversely affect an investment in the Trust.
• In the event of a hard fork of the Bitcoin network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine which network should be considered the appropriate network for the Trusts purposes, and in doing so may adversely affect the value of the Shares.
• In the event of a hard fork of the Bitcoin network, the Bitcoin Custodians operations may be interrupted or subject to additional security risks that could disrupt the Trusts ability to process creations and redemptions of Shares or otherwise threaten the security of the Trusts bitcoin holdings.
• Shareholders may not receive the benefits of any forks or airdrops.
• The prevailing level of transaction fees may adversely affect the usage of the Bitcoin network.
• If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin network, or otherwise obtains control over the Bitcoin network through its influence over core developers or otherwise, such actor or botnet could manipulate how data is recorded the Bitcoin blockchain to adversely affect the value of the Shares or the ability of the Trust to operate.
• The platforms on which users trade bitcoin are relatively new and, in some cases, largely unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust.
• Digital asset trading platforms may be exposed to security breaches.
• Digital asset trading platforms may be exposed to fraud and market manipulation.
• Digital asset trading platforms may be exposed to wash trading.
• Digital asset trading platforms may be exposed to front-running.
• Momentum pricing.
• Political or economic crises may motivate large-scale sales of bitcoin, which could result in a reduction in the prices of bitcoin and adversely affect an investment in the Shares.
• Ownership of bitcoin is pseudonymous, and the supply of accessible bitcoin is unknown.
• The BRRNY, BRR and CME Bitcoin Real Time Price each have a limited history.
• The Benchmark Provider has substantial discretion at any time to change the methodology used to calculate the BRRNY, including the Constituent Platforms that contribute prices to the Trusts NAV.
• The pricing sources (Constituent Platforms) used by the BRRNY are digital asset trading venues that facilitate the buying and selling of bitcoin and other digital assets.
• The BRRNY is based on various inputs which may include price data from various third-party digital asset trading platforms.
• If the BRRNY is not available, the Trusts holdings may be fair valued in accordance with the policy approved by the Sponsor.
• The BRRNY could fail to track the global bitcoin price and a failure of the BRRNY could adversely affect the value of the Shares.
• The Sponsor can discontinue using the BRRNY and use a different pricing or valuation methodology instead.
• The BRRNY price used to calculate the value of the Trusts bitcoin may be volatile, adversely affecting the value of the Shares.
• The BRRNY price being used to determine the NAV of the Trust may not be consistent with GAAP.
• The Trusts portfolio will be priced, including for purposes of determining the NAV, based upon the BRRNY.
• The Trust is subject to market risk.
• The Trust is a passive investment vehicle.
• The NAV may not always correspond to the market price of bitcoin and, as a result, Baskets may be created or redeemed at a value that is different from the market price of the Shares.
• The Shares may trade at a discount or premium in the trading price relative to the NAV as a result of non-concurrent trading hours between the Exchange and digital asset trading platforms.
• Buying and selling activity associated with the purchase and redemption of Baskets may adversely affect an investment in the Shares.
• The inability of Authorized Participants and market makers to hedge their bitcoin exposure may adversely affect the liquidity of Shares and the value of an investment in the Shares.
• Arbitrage transactions intended to keep the price of Shares closely linked to the price of bitcoin may be problematic if the process for the purchase and redemption of Baskets encounters difficulties, which may adversely affect an investment in the Shares.
• Investors may be adversely affected by purchase or redemption orders that are subject to postponement, suspension or rejection under certain circumstances.
• Investors may be adversely affected by an overstatement or understatement of the NAV calculation of the Trust due to the valuation method employed on the date of the NAV calculation.
• As an owner of Shares, you will not have the rights normally associated with ownership of other types of shares.
• The Sponsor and the Trustee may agree to amend the Trust Agreement or Sponsor Agreement without the consent of the Shareholders.
• The Trust is subject to risks due to its concentration of investments in a single asset class.
• A possible short squeeze due to a sudden increase in demand for the Shares that largely exceeds supply may lead to price volatility in the Shares.
• As the Sponsor and its management have a limited history of operating an investment vehicle like the Trust, their experience may be inadequate or unsuitable to manage the Trust.
• Security threats and cyber-attacks could result in the halting of Trust operations and a loss of Trust assets or damage to the reputation of the Trust, each of which could result in a reduction in the price of the Shares.

Future Outlook

The Trust aims to provide investors with a cost-effective way to gain exposure to bitcoin through a traditional brokerage account. The Sponsor believes that the design of the Trust will enable certain investors to more effectively and efficiently implement strategic and tactical asset allocation strategies that use bitcoin by investing in the Shares rather than purchasing, holding and trading bitcoin directly.

Management Comments

• Osprey Funds announced that it is aware that the Osprey Funds Units were trading at a discount to the value of the underlying bitcoin held by Osprey Fund, and as such was exploring strategic alternatives to maximize Unitholder value, including the potential sale to or merger with an existing bitcoin ETF.
• Bitwise indicated its preliminary interest in causing the Trust to enter into such a transaction, subject to the negotiation and execution of a definitive agreement satisfactory to all parties.
• For Bitwise, the proposed transaction would expand its position as a premier crypto asset manager, while the Trust would benefit from additional economies of scale from the additional bitcoin assets received in the transaction.

Industry Context

This announcement reflects a trend of consolidation in the cryptocurrency ETF market, as smaller funds seek to merge with larger, more established players to improve liquidity and reduce costs. The acquisition of Osprey by Bitwise is a strategic move to expand Bitwise's market share and provide Osprey unitholders with a more liquid and cost-effective investment vehicle.

Comparison to Industry Standards

• The Bitwise Bitcoin ETF's management fee of 0.20% is competitive with other bitcoin ETFs in the market, such as the Grayscale Bitcoin Trust (GBTC) which has a management fee of 1.5%.
• The Osprey Bitcoin Trust's management fee of 0.49% is higher than many other bitcoin investment products.
• The Bitwise ETF's use of the BRRNY as a benchmark is consistent with other bitcoin ETFs that aim to track the price of bitcoin.
• The Osprey Fund's use of the Coin Metrics CMBI Bitcoin Index is less common among bitcoin ETFs.
• The Bitwise ETF's listing on the NYSE Arca provides greater liquidity and accessibility compared to the Osprey Fund's listing on the OTCQX.
• The Bitwise ETF's creation and redemption process is more efficient than the Osprey Fund's, which had suspended creations of new Units and did not provide for redemptions.

Stakeholder Impact

• Osprey unitholders will become shareholders of the Bitwise Bitcoin ETF.
• Osprey unitholders will gain access to a more liquid and cost-effective investment vehicle.
• The transaction is expected to be tax-free for Osprey unitholders.
• The Bitwise ETF will benefit from additional economies of scale from the additional bitcoin assets received in the transaction.

Next Steps

• The registration statement must become effective under the Securities Act of 1933.
• The Asset Purchase is expected to close on or about [ ], 2024.
• Osprey will contact Unitholders to obtain information about their brokerage accounts.
• Osprey will cause the Osprey Fund to transfer each Unitholders pro rata portion of the Consideration Shares to the identified brokerage account.
• The Osprey Fund will wind-up its affairs and liquidate.
• The Osprey Fund will distribute to each Unitholder their pro rata portion of the remaining assets, if any, held by the Osprey Fund.

Key Dates

Keywords

Bitcoin ETF, Bitwise, Osprey Bitcoin Trust, Cryptocurrency, Digital Assets, Exchange Traded Product, BRRNY, Asset Purchase, Liquidation, Grantor Trust