S-1/A: Osprey Bitcoin Trust Files S-1/A for Nasdaq ETP Listing

Osprey Bitcoin Trust files an amended registration statement to convert to an exchange-traded product, detailing recent financial performance and operational updates.

Summary

• Osprey Bitcoin Trust (the Trust) is converting to an exchange-traded product (ETP) and intends to list its shares (OBTC) on Nasdaq Stock Market LLC (the Listing Exchange).
• The Trust's investment objective is to reflect the performance of Bitcoin, as measured by the CME CF Bitcoin Reference Rate – New York Variant (the Index), less expenses and liabilities.
• Shares are issued and redeemed in Baskets (10,000 shares each) for Bitcoin or cash, primarily by Authorized Participants.
• The Management Fee is 0.49% annually of the Net Asset Value (NAV), accrued daily and paid monthly in USD. The Sponsor assumes most routine operational expenses.
• The Trust reported a net increase in net assets from operations of $12,297,834 for the three months ended September 30, 2025, and $38,893,701 for the nine months ended September 30, 2025.
• Net assets increased to $219,673,184 as of September 30, 2025, a 22% increase for the nine-month period.
• The Bitcoin Market Price appreciated from $93,393.01 per Bitcoin as of December 31, 2024, to $114,401.99 per Bitcoin as of September 30, 2025.
• Historically, the Trust's shares on OTCQX traded at significant premiums (up to 240%) and discounts (down to -46.15%) to NAV, but the Sponsor expects convergence upon listing on Nasdaq.

Sentiment

Score: 7

Explanation: The Trust is making a strategic move to convert to an ETP and list on Nasdaq, which is generally viewed positively for liquidity and arbitrage efficiency. Recent financial performance shows strong asset growth driven by Bitcoin price appreciation. However, the historical trading at significant discounts/premiums to NAV, coupled with inherent risks of digital assets and regulatory uncertainty, temper the overall sentiment.

Positives

• The conversion to an exchange-traded product (ETP) and planned listing on Nasdaq Stock Market LLC (OBTC ticker) is expected to improve liquidity and reduce NAV premiums/discounts.
• Net assets increased by 22% to $219,673,184 for the nine months ended September 30, 2025.
• Bitcoin price appreciation from $93,393.01 per Bitcoin (December 31, 2024) to $114,401.99 per Bitcoin (September 30, 2025) drove significant realized and unrealized gains.
• The Management Fee is a competitive 0.49% annually, with the Sponsor bearing most routine operational expenses.
• The Trust uses Coinbase Custody Trust Company, LLC, a New York State limited purpose trust company and qualified custodian, for Bitcoin safekeeping.
• The Trust has engaged multiple Authorized Participants (Jane Street Capital, LLC and Macquarie Capital (USA) Inc.) and Bitcoin Trading Counterparties (Coinbase, Anchorage, and JSCT, LLC) to facilitate creation and redemption.

Negatives

• Historically, the Trust's shares on OTCQX have traded at significant premiums (up to 240.16% on February 16, 2021) and discounts (as low as -46.15% on November 18, 2022) to NAV, indicating a failure to meet its investment objective.
• The Trust is a passive investment vehicle and will not actively manage Bitcoin to mitigate price volatility.
• Bitcoin transactions are irrevocable, and stolen or incorrectly transferred Bitcoin may be irretrievable, leading to potential losses.
• The lack of full insurance for Bitcoin holdings and limited legal recourse against service providers expose the Trust and shareholders to loss.
• The Trust may maintain cash balances with the Prime Execution Agent that are not fully insured or are in excess of FDIC limits, or are subject to money market fund risks.
• Shareholders have limited voting rights and restricted ability to bring derivative actions, requiring two or more unaffiliated shareholders holding at least 10% of outstanding shares.
• The Index price used for NAV calculation may not be consistent with GAAP, leading to potential differences in reported net assets.
• Extraordinary Expenses, not assumed by the Sponsor, could force the Trust to sell Bitcoin at disadvantageous times, reducing share value.
• Shareholders could incur tax liability from Bitcoin sales (to pay fees/expenses) without receiving a corresponding distribution.

Risks

• The trading prices of many digital assets, including Bitcoin, have experienced extreme volatility in recent periods and may continue to do so, potentially leading to significant loss of value for Shares.
• The value of the Shares is subject to factors relating to Bitcoin's fundamental investment characteristics, such as digital assets being bearer instruments (loss of private keys means permanent loss) and dependence on the internet and blockchain technologies.
• Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on the continued acceptance of Bitcoin.
• Changes in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network's ability to grow and respond to challenges.
• The open-source structure of the Bitcoin network protocol means core developers are generally not directly compensated, potentially leading to inadequate maintenance or development.
• Digital asset networks face significant scaling challenges, and efforts to increase transaction volume and speed may not be successful, leading to increased fees and reduced demand.
• Digital assets may have concentrated ownership, and large sales or distributions by major holders could adversely affect the market price of such digital assets.
• If the digital asset award for mining blocks and transaction fees are not sufficiently high, or if certain jurisdictions limit mining, miners may cease expanding processing power or demand high transaction fees, negatively impacting Bitcoin's value.
• A malicious actor or botnet obtaining control of more than 50% of the processing power on the Bitcoin network could manipulate the blockchain, adversely affecting the value of the Shares.
• A temporary or permanent fork in the Bitcoin network could adversely affect the value of the Shares, and shareholders may not receive the benefits of any forks or airdrops.
• Any name change and associated rebranding initiative by the Bitcoin community may not be favorably received, negatively impacting Bitcoin's value.
• Due to the unregulated nature and lack of transparency surrounding digital asset platforms, which may experience fraud, manipulation, security failures, or operational problems, the value of Bitcoin and Shares may be adversely affected.
• The CME CF Bitcoin Reference Rate – New York Variant (Index) has a limited performance history, could fail to track the global Bitcoin price, and its failure could adversely affect an investment in the Shares.
• Competition from central bank digital currencies (CBDCs) and emerging payments initiatives involving financial institutions could adversely affect the value of Bitcoin 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.
• Competition from the emergence or growth of other digital assets or methods of investing in Bitcoin could have a negative impact on the price of Bitcoin and adversely affect the value of the Shares.
• Competition from other exchange-traded Bitcoin products could adversely affect the Trust and the value of the Shares.
• The Trust may be negatively impacted by the effects of public health emergencies on the global economy and the markets and service providers relevant to the performance of the Trust.
• The amount of the Trust's assets represented by each Share will decline over time as the Trust pays the Management Fee and additional expenses, potentially decreasing the value of the Shares.
• The Trust is a passive investment vehicle and will not take actions to mitigate the impacts of Bitcoin price volatility.
• The value of the Shares may be influenced by factors unrelated to the value of Bitcoin, such as unanticipated operational problems, security vulnerabilities, or service provider defaults.
• The liquidity of the Shares may be affected by the withdrawal of Authorized Participants.
• Delays in redemption due to unanticipated difficulties could prevent arbitrage transactions, causing the price of Shares to diverge from NAV.
• The use of cash creations and redemptions, as opposed to in-kind, may adversely affect arbitrage transactions and cause price divergence from NAV.
• As an owner of Shares, investors will not have the rights normally associated with ownership of other types of shares, such as electing directors or receiving dividends.
• The Sponsor and the Trustee may amend the Trust Agreement without shareholder consent under certain conditions.
• Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act or the protections afforded by the Commodity Exchange Act.
• Security threats to the Trust's account at the Bitcoin Custodian could result in halting Trust operations, loss of assets, or damage to reputation.
• Bitcoin transactions are irrevocable, and stolen or incorrectly transferred Bitcoin may be irretrievable.
• The lack of full insurance and shareholders' limited rights of legal recourse against the Trust and its service providers expose the Trust to the risk of loss of Bitcoin.
• Loss of a critical banking relationship for, or the failure of a bank used by, the Prime Execution Agent could adversely impact the Trust's ability to create or redeem Baskets or cause losses.
• The Trust may be required, or the Sponsor may deem it appropriate, to terminate and liquidate at a time that is disadvantageous to Shareholders.
• The Trust Agreement includes provisions that limit Shareholders' voting rights and restrict their right to bring a derivative action, requiring a 10% ownership threshold by unaffiliated shareholders.
• The Index price being used to determine the NAV of the Trust may not be consistent with GAAP.
• Extraordinary Expenses resulting from unanticipated events may become payable by the Trust, adversely affecting the value of the Shares.
• The Trust's delivery or sale of Bitcoin to pay expenses could result in Shareholders incurring tax liability without an associated distribution from the Trust.
• The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor, the Trustee, the Trust Administrator, the Bitcoin Custodian, or the Cash Custodian.
• Intellectual property rights claims may adversely affect the Trust and the value of the Shares.
• Digital asset markets in the United States currently exist in a state of regulatory uncertainty, and adverse legislative or regulatory developments could significantly harm the value of Bitcoin or the Shares.
• If regulators subject the Trust, the Trustee, or the Sponsor to regulation as a money service business or money transmitter, this could result in Extraordinary Expenses and decreased liquidity for the Shares.
• If the Bitcoin network is used to facilitate illicit activities, businesses that facilitate Bitcoin transactions could be at increased risk of criminal or civil liability, which could negatively affect the price of Bitcoin and the value of the Shares.
• Regulatory changes or interpretations could obligate the Trust, the Trustee, or the Sponsor to register and comply with new regulations, resulting in potentially extraordinary, nonrecurring expenses to the Trust.
• The treatment of the Trust for U.S. federal income tax purposes is uncertain, and future developments could adversely affect the value of the Shares.
• A U.S. Tax-Exempt Shareholder may recognize unrelated business taxable income as a consequence of an investment in Shares.
• Potential conflicts of interest may arise among the Sponsor or its affiliates and the Trust, as the Sponsor's fiduciary duties are limited by the Trust Agreement.
• Shareholders cannot be assured of the Sponsor's continued services, the discontinuance of which may be detrimental to the Trust.
• Although the Bitcoin Custodian is a fiduciary, it could resign or be removed by the Sponsor, which may trigger early dissolution of the Trust.
• Coinbase serves as the Bitcoin custodian for several competing exchange-traded Bitcoin products, which could adversely affect the Trust's operations and ultimately the value of the Shares.
• The Trust's Authorized Participants act in similar or identical capacities for several competing exchange-traded Bitcoin products, which may impact their ability or willingness to participate in the creation and redemption process.
• Shareholders and Authorized Participants lack the right under the Custodial Services Agreement to assert claims directly against the Bitcoin Custodian, significantly limiting their options for recourse.
• It is possible that the underlying assets of the Trust will be deemed to include plan assets for the purposes of Title I of the Employee Retirement Income Security Act of 1974 (ERISA) or Section 4975 of the Code.

Future Outlook

The Trust intends to continuously offer Shares and expects the market price of Shares and NAV per Share to converge upon listing on Nasdaq, facilitating arbitrage. The Sponsor expects net creation of Shares if they trade at a premium and net redemption if at a discount, indicating an effective arbitrage mechanism. The Trust will continue to measure Bitcoin performance against the CME CF Bitcoin Reference Rate – New York Variant.

Management Comments

• The Sponsor believes that momentum pricing of Bitcoin has resulted, and may continue to result, in speculation regarding future appreciation in the value of Bitcoin, inflating and making the Index more volatile.
• The Sponsor believes that the security procedures in place for the Trust... are reasonably designed to safeguard the Trusts Bitcoin.
• The Sponsor believes that the use of the Index is reflective of a reasonable valuation of the average spot price of Bitcoin and that resistance to manipulation is a priority aim of its design methodology.
• The Sponsor expects the market price of the Shares and the NAV of the Trust divided by the number of outstanding Shares (the NAV per Share) to converge, thus closing the current discount to NAV per Share.
• The Sponsor expects there to be a net creation of Shares if the Shares trade at a premium to NAV per Share and a net redemption of Shares if the Shares trade at a discount to NAV per Share, representing the effective functioning of the arbitrage mechanism.

Industry Context

The digital asset industry is new and rapidly evolving, characterized by extreme price volatility and regulatory uncertainty. The filing highlights increased scrutiny and regulation following events like the 2022 bankruptcies of Celsius, Voyager, Three Arrows Capital, and FTX. The emergence of central bank digital currencies (CBDCs) and other digital assets poses competition to Bitcoin. The SEC's approval of several spot Bitcoin ETFs since January 2024 indicates a growing, but competitive, market for such products. The Trust's conversion to an ETP and Nasdaq listing aims to capitalize on this trend and improve market efficiency compared to its previous OTCQX trading.

Comparison to Industry Standards

• The Trust's Management Fee of 0.49% annually is competitive within the emerging spot Bitcoin ETP market.
• The use of Coinbase Custody, a New York State limited purpose trust company and qualified custodian, aligns with institutional-grade custody standards in the digital asset space. Coinbase Global is noted as the largest publicly traded crypto asset company and custodian by assets under custody.
• The adoption of the CME CF Bitcoin Reference Rate – New York Variant as the index aligns with benchmarks used for other regulated Bitcoin financial products, such as CME Bitcoin futures contracts.
• The historical trading of OBTC on OTCQX at significant premiums and discounts (up to 240% premium, -46.15% discount) indicates a deviation from the tight tracking expected of an ETP, which the Nasdaq listing aims to rectify through arbitrage mechanisms.
• The Trust's structure as a grantor trust for U.S. federal income tax purposes is a common approach for spot Bitcoin investment vehicles, aiming for pass-through tax treatment.

Management Changes

Corporate Governance

Related Party Transactions

• On March 27, 2024, the Trust effected a redemption of 2,400,000 Units in the amount of $54,057,318 for an affiliated investor, Anax Trading, LLC, which is under common control with the Sponsor. This represented approximately 29% of the Units of the Trust.
• The Sponsor (Osprey Funds, LLC) is a related party and receives a Management Fee of 0.49% annually from the Trust.
• The aggregate number of Units owned by related parties was 262,937, valued at $9,723,064, as of September 30, 2025.
• Coinbase Credit, an affiliate of the Prime Execution Agent (Coinbase Inc.), may lend Bitcoin or cash (Trade Credits) to the Trust on a short-term basis.
• Jane Street Capital, LLC, an Authorized Participant, is an affiliate of JSCT, LLC, a Bitcoin Trading Counterparty.

Stakeholder Impact

• Shareholders: Potential for improved liquidity and tighter tracking of Bitcoin price due to Nasdaq listing and arbitrage mechanism. However, they bear risks of Bitcoin price volatility, limited legal recourse, and potential tax liabilities without distributions. Minority shareholders face challenges in derivative actions.
• Sponsor (Osprey Funds, LLC): Continues to manage the Trust and receive the Management Fee. Bears most routine operational expenses. Benefits from the Trust's growth and potential success as an ETP.
• Service Providers (e.g., Coinbase Custody, U.S. Bank Global Fund Services): Continue to provide essential services, compensated by the Sponsor or the Trust. Their operational stability is critical to the Trust.
• Regulatory Authorities (SEC, FINRA, CFTC): Increased oversight and compliance requirements due to ETP conversion and listing on a national exchange. The Trust is subject to their evolving guidance on digital assets.

Next Steps

• The Sponsor expects to enter into the Third Amended and Restated Declaration of Trust and Trust Agreement prior to the effectiveness of the registration statement.
• The Trust intends to list the Shares on Nasdaq Stock Market LLC under the symbol OBTC.
• The Trust intends to continuously offer Shares.
• The Sponsor will notify investors of material changes to Constituent Bitcoin Platforms used for the Index on its website.
• The Trust Administrator will continue to calculate and publish the Trust's NAV daily.
• The Sponsor will file a current report on Form 8-K or update its website to remove identification of Authorized Participants upon termination of their agreements.
• The Trust will file a post-effective amendment to the Registration Statement no less frequently than once per calendar quarter.

Key Dates

Recommendation

The conversion to an exchange-traded product and listing on Nasdaq is a positive strategic move that is expected to improve liquidity and reduce the historical premium/discount to NAV, making the investment more aligned with its objective of tracking Bitcoin's price. Recent financial performance shows strong asset growth driven by Bitcoin's appreciation. However, the inherent extreme volatility of Bitcoin, coupled with significant regulatory uncertainties in the digital asset market and the Trust's passive management approach, warrant a cautious 'hold' recommendation. Investors should monitor the effectiveness of the arbitrage mechanism post-listing and the evolving regulatory landscape.

Keywords

Bitcoin, Cryptocurrency, Digital Asset, ETP, ETF, Osprey Bitcoin Trust, OBTC, Nasdaq, SEC, S-1/A, Coinbase, Custody, Arbitrage, Spot Bitcoin, Financial Services, Investment, Regulation, Blockchain, Mining, Market Volatility, Grantor Trust, Asset Management