CoinShares Bitcoin ETF

CoinShares Bitcoin ETF (the "Trust"), formerly CoinShares Valkyrie Bitcoin Fund, operates as a Delaware statutory trust, issuing common units of beneficial interest ("Shares") that represent fractional undivided beneficial ownership in the Trust. The Trust's investment objective is to reflect the performance of the value of bitcoin, as represented by the CME CF Bitcoin Reference Rate – New York Variant (the "Index"), less its liabilities and expenses. The Shares are listed on The Nasdaq Stock Market, LLC under the ticker symbol BRRR ¹. The Trust's inception of operation was January 11, 2024 ². CoinShares Co., a Delaware corporation, became the co-sponsor on March 15, 2024, and subsequently succeeded Valkyrie Digital Assets LLC as the sole sponsor on June 14, 2024 ³. The Trust's business model is passive, holding bitcoin and valuing its Shares daily based on the Index, which aggregates executed trade flow of major bitcoin spot exchanges ⁴. The Trust does not actively manage its bitcoin holdings, meaning it does not sell bitcoin at high prices or acquire at low prices to profit from market fluctuations, nor does it employ hedging techniques ⁵.

The Trust primarily generates revenue through its investment in bitcoin, with its financial performance directly tied to bitcoin's value fluctuations. The Trust's only ordinary expense is the Sponsor Fee, which accrues at a unified annual rate of 0.25% of the Trust's Bitcoin Holdings ⁶. Other operational expenses, such as Marketing, Administrator, Custodian, Cash Custodian, Prime Broker, Transfer Agent, Trustee fees, applicable license fees, Nasdaq trading fees, ordinary legal expenses, audit fees, regulatory fees, printing and mailing costs, and website maintenance costs, are contractually assumed and paid by the Sponsor ⁷. Extraordinary, non-recurring expenses, such as those related to litigation, are borne by the Trust and paid through the sale of its bitcoin holdings ⁸.

For the fiscal year ended December 31, 2025, the Trust's net asset value decreased from $826,115,990 ⁹ at December 31, 2024, to $505,380,907 ¹⁰. This change was driven by a decrease in outstanding Shares from 31,260,000 ¹¹ to 20,425,000 ¹², resulting from 3,855,000 Shares ¹³ being created and 14,690,000 Shares ¹⁴ being redeemed. Additionally, the value of bitcoin depreciated by 6.14% ¹⁵, from $93,381 ¹⁶ at December 31, 2024, to $87,650 ¹⁷ at December 31, 2025. The net asset value per Share decreased by 6.38% ¹⁸ from $26.43 ¹⁹ to $24.74 ²⁰. The decrease in net assets from operations for the year ended December 31, 2025, was $49,706,048 ²¹, primarily due to a $184,888,192 ²² decrease in unrealized gain on bitcoin investment, partially offset by $136,800,223 ²³ in realized gains on bitcoin disposition, and $1,618,079 ²⁴ in Sponsor Fees incurred.

In comparison, for the year ended December 31, 2024, the Trust's net asset value increased from $0 ²⁵ at December 31, 2023, to $826,115,990 ²⁶. This was due to an increase in outstanding Shares from 0 ²⁷ to 31,260,000 ²⁸, with 36,635,000 Shares ²⁹ created and 5,373,000 Shares ³⁰ redeemed. Bitcoin appreciated by 103.7% ³¹ from $45,853 ³² at January 10, 2024, to $93,381 ³³ at December 31, 2024. The net asset value per Share increased by 103.3% ³⁴ from $13.00 ³⁵ to $26.43 ³⁶. Net assets from operations for 2024 increased by $306,959,179 ³⁷, driven by a $262,849,955 ³⁸ increase in unrealized gain and $45,222,195 ³⁹ in realized gains, with Sponsor Fees of $1,112,971 ⁴⁰ incurred.

The Trust utilizes multiple custodians for its bitcoin holdings, including Coinbase Custody Trust Company, LLC, BitGo Trust Company, Inc., and Komainu (Jersey) Limited ⁴¹. Coinbase, Inc., an affiliate of Coinbase, serves as the prime broker ⁴². The Trust engages in cash creations and redemptions of Shares in blocks of 5,000 Shares (a "Basket") ⁴³. Authorized Participants are the only entities that can place these orders, delivering or receiving cash based on the value of bitcoin attributable to each Share ⁴⁴. The Trust then uses these cash proceeds to purchase or sell bitcoin through approved Bitcoin Trading Counterparties, which include BitGo Prime LLC, Coinbase Inc., Cumberland DRW LLC, JSCT LLC, Foris DAX, Inc., and Payward Inc. dba Kraken ⁴⁵. An affiliate of the Sponsor, CoinShares Capital Markets (Jersey) Limited, previously served as a Bitcoin Trading Counterparty, fulfilling purchase orders with an approximate value of $295 million ⁴⁶ before CoinShares Co. became the Sponsor on March 15, 2024 ⁴⁷.

The Trust does not maintain a significant cash balance, only holding cash in connection with creation and redemption of Baskets or to pay expenses not assumed by the Sponsor ⁴⁸. The Sponsor endeavors to minimize non-bitcoin asset holdings, expecting immaterial cash flow and insignificant cash balances at reporting period ends ⁴⁹. The Trust's only cash sources are proceeds from the sale of Baskets and bitcoin ⁵⁰.

The Trust's investment objective remains for the Shares to reflect the performance of the value of bitcoin as represented by the CME CF Bitcoin Reference Rate – New York Variant (the "Index"), less the Trust's liabilities and expenses ⁵¹. The Sponsor retains the authority to substitute an alternative index or valuation methodology at its sole discretion without Shareholder approval if deemed necessary for the Trust's investment objective and valuation policies ⁵². The Shares are designed to offer investors a cost-effective and convenient way to invest in bitcoin ⁵³.

The operational outlook indicates that the Sponsor has agreed to assume most of the Trust's fees and expenses, including marketing, administration, custody, prime broker, transfer agent, trustee fees, license fees, Nasdaq trading fees, ordinary legal expenses, audit fees, regulatory fees, printing and mailing costs, and website maintenance ⁵⁴. The Sponsor Fee accrues at a unified annual rate of 0.25% of the Trust's Bitcoin Holdings ⁵⁵. The Sponsor has no current intention of increasing or decreasing this Sponsor Fee or modifying the terms related to Sponsor-paid expenses ⁵⁶. The Trust does not anticipate material changes to its liquidity needs, as its cash resources are primarily tied to creation and redemption activities and payment of non-Sponsor-assumed expenses ⁵⁷.

The Trust's financial statements will continue to be prepared in accordance with U.S. GAAP, utilizing an exchange-traded price from the Trust's principal market for bitcoin, which is expected to be a Level 1 input under ASC Topic 820 ⁵⁸. The Sponsor will determine the valuation sources and policies for GAAP financial statements at its sole discretion ⁵⁹. The Trust determines its principal market quarterly based on market-based volume and trading activity in accessible Exchange Markets ⁶⁰.

The Trust's cybersecurity program is administered by the Head of IT of the Sponsor, with the objective of creating effective administrative, technical, and physical safeguards for client personal information ⁶¹. The Head of IT is responsible for initial implementation, ongoing employee education, regular testing of safeguards, evaluating third-party service provider security, and annual reviews of the program's scope ⁶². Internal threats are mitigated through employee communication, limited access to personal information, password policies, and reporting suspicious activity ⁶³. External threats are addressed by maintaining up-to-date firewall protection, operating system security patches, malware protection, and password protection for portable devices and data transmitted across public networks ⁶⁴. The Sponsor does not currently provide clients with online account access or process funds transfer requests, but would update the cybersecurity program if these business practices change ⁶⁵.

The Trust is exposed to significant risks due to its concentration in bitcoin, making it vulnerable to price fluctuations and market disruptions without diversification ⁶⁶. Bitcoin's value is highly volatile, influenced by supply and demand, macroeconomic conditions, regulatory developments, and liquidity shocks, with prices experiencing extreme volatility from 2022 through 2025, including a decline from approximately $126,000 ⁶⁷ in October 2025 to $88,000 ⁶⁸ by December 31, 2025. The digital asset market faces risks from potential 51% attacks, denial-of-service attacks, and the irreversible nature of bitcoin transactions, which could lead to irretrievable losses if private keys are lost or stolen ⁶⁹. Regulatory uncertainty is a major concern, with ongoing and future U.S. and foreign regulatory actions potentially altering the nature of the investment or restricting bitcoin's use, including the GENIUS Act and the CLARITY Act, which establish frameworks for stablecoins and digital asset classification, respectively ⁷⁰. Bitcoin mining is energy-intensive, leading to environmental concerns and potential regulatory restrictions or moratoriums on mining activities, which could reduce network security and negatively impact bitcoin's price ⁷¹. The Trust relies on third-party service providers, including custodians and the prime broker, whose insolvency, operational failures, or security breaches could result in loss of assets, as their liability is limited and insurance coverage may be insufficient (e.g., Coinbase Custodian's liability is capped at the greater of $5 million ⁷² or aggregate fees paid in the prior 12 months ⁷³, and BitGo's liability for gross negligence is limited to the value of affected digital assets ⁷⁴, with total direct damages capped at fees paid in the preceding three months ⁷⁵) ⁷⁶. The use of cash creations and redemptions, as opposed to in-kind, introduces operational complexities and potential delays that could hinder arbitrage and cause the Shares to trade at a discount or premium to NAV ⁷⁷. Furthermore, the Trust's status as a grantor trust for U.S. federal income tax purposes is uncertain, and any reclassification could lead to entity-level taxation ⁷⁸.

Management emphasizes that the Trust's investment objective is to reflect the performance of bitcoin, as represented by the CME CF Bitcoin Reference Rate – New York Variant, less liabilities and expenses ⁷⁹. The Sponsor, CoinShares Co., is responsible for the Trust's day-to-day administration and has contractually assumed most operational and periodic expenses, including marketing, administration, custody, and audit fees ⁸⁰. The Sponsor Fee is set at a unified annual rate of 0.25% of the Trust's Bitcoin Holdings ⁸¹, and management currently has no intention of altering this fee or the scope of Sponsor-paid expenses ⁸². A key strategic priority is to provide investors with a cost-effective and convenient way to invest in bitcoin ⁸³. Management also highlights its comprehensive cybersecurity program, administered by the Head of IT, designed to protect client information and mitigate internal and external threats, with regular reviews and updates based on business changes and risk factors ⁸⁴.