Delaware (State or Other Jurisdiction of Incorporation or Organization) | 6221 (Primary Standard Industrial Classification Code Number) | 83-6321743 (I.R.S. Employer Identification Number) |
2 Park Avenue, 20th Floor New York, New York 10016 (917) 994-5119 | ||
(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant's Principal Executive Offices) ___________________________ |
William Joseph Herrmann Managing Partner Wilshire Phoenix Funds, LLC2 Park Avenue, 20th Floor New York, New York 10016 (917) 994-5119 (Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service) ___________________________ | ||
Copies to: Gregg Bateman Anthony Tu-Sekine Seward & Kissel LLP One Battery Park Plaza New York, NY 10004 ___________________________ |
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. | ☒ |
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | ☐ |
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | ☐ |
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. | ☐ |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ (Do not check if a smaller reporting company) | Smaller reporting company Emerging growth company | ☐ ☒ |
Title of Each Class of Securities to be Registered | Amount to be Registered (1) | Proposed Maximum Offering Price Per Share (1) | Proposed Maximum Aggregate Offering Price (1) | Amount of Registration Fee* | ||||
Common shares, par value $0.01 | [_] | $[_] | $20,100,000 | $2,437 | ||||
Total | $20,100,000 | $2,437 |
(1) * | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(d) under the Securities Act of 1933, as amended. The Registration Fee has been previously paid. |
Page | |
ABOUT THIS PROSPECTUS | 1 |
FORWARD-LOOKING STATEMENTS | 2 |
PROSPECTUS SUMMARY | 3 |
RISK FACTORS | 10 |
USE OF PROCEEDS | 29 |
TREATMENT OF EXCESS CASH | 30 |
OVERVIEW OF BITCOIN | 31 |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 39 |
DESCRIPTION OF THE TRUST | 40 |
DESCRIPTION OF THE INDEX | 43 |
CALCULATION OF THE TRUST'S NAV | 44 |
THE SPONSOR | 45 |
THE TRUSTEE | 47 |
THE TRANSFER AGENT | 48 |
THE ADMINISTRATOR | 49 |
THE BITCOIN CUSTODIAN | 50 |
THE CASH AND TREASURY CUSTODIAN | 52 |
CONFLICTS OF INTEREST | 54 |
DESCRIPTION OF THE SHARES | 55 |
CUSTODY OF THE TRUST'S ASSETS | 58 |
VALUATION OF THE TRUST'S BITCOIN | 59 |
VALUATION OF THE TRUST'S T-BILL AND CASH HOLDINGS | 60 |
EXPENSES | 61 |
BOOK-ENTRY-ONLY SHARES | 63 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 64 |
STATEMENTS, FILINGS AND REPORTS | 65 |
DESCRIPTION OF THE TRUST DOCUMENTS | 66 |
U.S. FEDERAL INCOME TAX CONSIDERATIONS | 72 |
ERISA AND RELATED CONSIDERATIONS | 75 |
PLAN OF DISTRIBUTION | 76 |
LEGAL PROCEEDINGS | 77 |
LEGAL MATTERS | 77 |
EXPERTS | 77 |
WHERE YOU CAN FIND ADDITIONAL INFORMATION | 77 |
GLOSSARY OF DEFINED TERMS | 78 |
· | the special considerations discussed in this prospectus; |
· | general economic, market and business conditions; |
· | the use of technology by the Trust and its vendors, including the Bitcoin Custodian, in conducting the Trust's business, including disruptions in the Trust's computer systems and data centers and the Trust's transition to, and quality of, new technology platforms; |
· | Bitcoin-systemic risks related to the security and safety of, the potential inability to access, or effect transactions through, the Bitcoin network during times of intended transactions or withdrawals or otherwise; |
· | changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies; |
· | the costs and effect of any litigation or regulatory investigations; |
· | the Trust's ability to maintain a positive reputation; and |
· | other world economic and political developments. |
Shares offered by the Trust | Up to $[__] million of Shares, which will represent beneficial interests in and ownership of the Trust. |
The Trust | The United States Bitcoin and Treasury Investment TrustTM (the "Trust") is a Delaware statutory trust that was formed on June 29, 2018. The Trust operates pursuant to a trust agreement (the "Trust Agreement") between Wilshire Phoenix Funds, LLC ("Wilshire Phoenix" or the "Sponsor") and [____] (the "Trustee") and will issue United States Bitcoin and Treasury Investment TrustTM Shares (the "Shares"), which will represent beneficial interests in and ownership of the Trust. The Trust will have no assets other than (a) Bitcoin and (b) T-Bills. The Trust will also hold U.S. dollars for short periods of time in connection with (i) the maturity of any T-Bill, (ii) the purchase and sale of Bitcoin and/or T-Bills, and (iii) the payment of redemptions, if any, and fees and expenses of the Trust. The Trust will seek to closely replicate the Index (as defined herein), which is calculated and published by the Index Calculation Agent (as defined herein). For more information about Bitcoin, see “Overview of Bitcoin” below, and for more information about the Index, see “Prospectus Summary—The Index” below. The investment objective of the Trust is for the Shares to closely reflect the Index, less the Trust’s liabilities and expenses. Calculated on a daily basis, the Bitcoin Price is used to determine the Index’s monthly allocation between the Bitcoin Component and the Treasury Component. The Trust dynamically rebalances its assets on a monthly basis to closely replicate the Index without the use of complex derivatives or leverage methods. Bitcoin has been a historically volatile asset, which, for many investors and/or financial institutions, may make it a difficult investment. The purpose of the Trust is to provide investors and/or financial institutions with exposure to Bitcoin in a manner that is more efficient and convenient than the purchase of a stand-alone Bitcoin, while also mitigating some of the risk by reducing the volatility typically associated with the purchase of stand-alone Bitcoin and without the uncertain and often complex requirements relating to acquiring and/or holding Bitcoin. |
The Index | The Bitcoin Treasury Index (the “BTI” or “Index”) is calculated and published by [____] (the “Index Calculation Agent”). The level of the Index is published on each Business Day at approximately 5:00 p.m. New York time and is available on [____] at [_____]. “Business Day” means any day on which the New York Stock Exchange is scheduled to be open for business. The Index only has two components: (1) a component representing Bitcoin (the “Bitcoin Component”) and (2) a component representing U.S. treasuries, cash, or cash-like instruments (the “Treasury Component”). |
Calculated on a daily basis, the Bitcoin Price (as defined herein) is used to determine the Index’s monthly allocation between the Bitcoin Component and the Treasury Component. The Trust dynamically rebalances its assets on a monthly basis to closely replicate the Index without the use of complex derivatives or leverage methods. The price of Bitcoin used to determine the Index and the value of Bitcoin held by the Trust will be based on the CME CF BRR (the “Bitcoin Reference Rate,” and the price of Bitcoin based on the Bitcoin Reference Rate, the “Bitcoin Price”). The Sponsor may determine to use a different Index or Bitcoin Reference Rate if it determines in its sole discretion that such a change is in the best interest of the Trust. See "Description of the Index" below. | |
Assets of the Trust | The Trust will have no assets other than (a) Bitcoin, and (b) T-Bills. The Trust will also hold U.S. dollars for short periods of time in connection with (i) the maturity of any T-Bill, (ii) the purchase and sale of Bitcoin and/or T-Bills, and (iii) the payment of redemptions, if any, and fees and expenses of the Trust. Bitcoin will be held by [____] (the "Bitcoin Custodian") on behalf of the Trust, and T-Bills and U.S. dollars will be held by [____] (the "Cash and Treasury Custodian") on behalf of the Trust. The amount of Bitcoin held by the Trust will be determined by the Index. However, because the Trust rebalances monthly, in the periods between such monthly rebalancing, as a result of changes in the value of Bitcoin, among other factors, the value of Bitcoin relative to the value of the other assets of the Trust may diverge from the Index. The Trust's remaining assets, other than Bitcoin, shall consist of T-Bills to be purchased by the Cash and Treasury Custodian. See "Treatment of Excess Cash" for a description of the treatment of any gains derived by the Trust as a result of its holdings of U.S Treasuries. The Trust's Bitcoin, T-Bills and U.S. dollars are carried, for financial statement purposes, at fair value, as required by the U.S. generally accepted accounting principles ("GAAP"). |
The Trust's NAV and the NAV per Share | The Trust's net asset value ("NAV") is determined daily by the Administrator at 4:00 p.m., New York time, on any Business Day and on a GAAP basis as described below. The NAV of the Trust shall equal the value of the total assets of the Trust, including Bitcoin, T-Bills and U.S. dollars, less the liabilities and expenses of the Trust. The NAV per Share is equal to the Trust's NAV divided by the number of outstanding Shares. In accordance with the Trust's valuation policy and procedures, the Administrator will determine the price of the Trust's Bitcoin by reference to the Bitcoin Reference Rate, which is published between 4:00 p.m. and 4:30 p.m., London time, on every day of the year, including weekends. Similarly, the Administrator determines the fair value of T-Bills based on the price of each T-Bill held by the Trust (including any accrued interest) plus any cash, which will be held in U.S. dollars, as of 4:00 p.m., New York time, on any Business Day. The Trust’s investment objective is for the Shares to closely reflect the Index, less the Trust’s liabilities and expenses. Accordingly, the Trust’s NAV and NAV per Share are tracked, in part, by reference to the Bitcoin Reference Rate. See “Valuation of the Trust’s Bitcoin” below. |
Treatment of Excess Cash | The Trust intends to use its Excess Cash (as defined below) to reduce some of the costs that would otherwise be borne by its Shareholders. The Trust’s assets, other than Bitcoin, shall consist of T-Bills to be purchased by the Cash and Treasury Custodian. Upon the maturity of such T-Bills, the Trust will receive U.S. dollars representing principal and interest. The portion of the cash that represents interest on the T-Bills (the “Excess Cash”) will be allocated to the Cash Account in order to satisfy redemptions, the Sponsor’s Fee, fees associated with rebalancing of the Trust’s assets each month and any additional expenses of the Trust. See “Treatment of Excess Cash” below for more details. |
The Shares | The Trust will issue Shares, which will represent beneficial interests in and ownership of the Trust. At the direction and sole discretion of the Sponsor, the Trust may issue additional Shares in the future. Shares will be issued at the then current NAV. Subject to the Trust obtaining exemptive relief from the SEC, Shareholders may redeem Shares under certain conditions in accordance with the terms set forth under "Prospectus Summary—Redemptions" below. Prior to the effective date of the registration statement of which this prospectus is a part, the registry of Shareholders will be recorded in the books and records of the Trust by the Administrator, who will also act as a transfer agent for the Shares. Shares issued will be held in electronic format through a book entry system. As of the effective date of the registration statement of which this prospectus is a part, DTC will act as securities depository for the Shares. Shares will be registered in a book entry system and held in the name of "Cede & Co." at the facilities of the Depository Trust Company ("DTC"), and one or more global certificates issued by the Trust to DTC will evidence the Shares. Shareholders may hold their Shares through DTC if they are direct participants in DTC ("DTC Participants") or indirectly through entities (such as broker-dealers) that are DTC Participants. See "Book-Entry-Only Shares" below for more details. The Shares are expected to be listed on the New York Stock Exchange and trade under the ticker symbol [____]. |
Private Offerings | The Trust has not issued any shares, but intends to issue shares through sales in private placement transactions exempt from the registration requirements of the Securities Act pursuant to Rule 506(c) thereunder. Shares registered hereby are of the same class and will have the same rights as the shares the Trust intends to issue. |
Redemptions | Subject to the Trust obtaining exemptive relief from the SEC, a Shareholder may redeem all or a portion of its Shares as of the last Business Day of each calendar month if the Shareholder provides at least five (5) Business Days' prior written notice. All redemptions will be based on the NAV of Shares submitted for redemption, determined as of the last Business Day of the applicable calendar month. In general, redemptions will be deemed to occur on a "first-in first-out" basis among Shares held by a particular Shareholder. A redemption notice is irrevocable unless otherwise agreed by the Sponsor in writing. Under certain special circumstances, which are described in detail below under "Description of the Shares—Suspension Events", the Trust can temporarily suspend redemptions. In general, and subject to the occurrence or |
continuation of a Suspension Event (as defined below), the final redemption of Shares will be paid within five (5) Business Days after the applicable redemption date. Shareholders will be entitled to receive their applicable redemption amount, which is the NAV of the Shares, determined as of the applicable redemption date. Please see "Description of the Shares—Redemption of Shares" below for more details. | |
Sponsor's Fee; Sponsor-Paid Expenses; Additional Trust Expenses; Organizational Expenses | Except for transaction costs associated with the rebalancing of the Trust's portfolio, the Trust's only ordinary recurring expense is expected to be the remuneration due to the Sponsor (the "Sponsor's Fee"). The Sponsor's Fee is paid by the Trust to the Sponsor as compensation for services performed under the Trust Agreement. The Sponsor's Fee will be determined by applying a [_]% annual rate to the Trust's NAV. The Sponsor's Fee will be payable in U.S. dollars and will be deducted on a monthly basis in advance as of the first day of each month from the amounts on deposit with the Cash and Treasury Custodian. To pay the Sponsor's Fee, the Cash and Treasury Custodian will withdraw from the cash on deposit in the Cash Account an amount of U.S. dollars equal to the Sponsor's Fee, determined as described above, and pay such amount to the Sponsor. The Sponsor, from time to time, may waive all or a portion of the Sponsor's Fee in its sole discretion. As consideration for its receipt of the Sponsor's Fee, the following ordinary and necessary fees and expenses of the Trust will be paid by the Administrator out of the Sponsor's Fee: the Administrator Fee, the Bitcoin Custodian Fee, the Cash and Treasury Custodian Fee, the Transfer Agent Fee, the Trustee Fee, applicable license fees, including the licensing fees related to the Index License Agreement, the Trust's and Sponsor's legal fees and expenses, the Trust's audit fees and expenses (including any fees and expenses associated with tax preparation), the Trust's regulatory fees and expenses (including any filings, applications or licenses), printing and mailing costs, costs of maintaining the Trust's website and insurance costs (if any) (the "Sponsor-paid Expenses"). To the extent the initial Sponsor's Fee to be paid is insufficient to pay all Organizational Expenses (as defined below) of the Trust, the Trust shall pay the Organizational Expenses (as defined below) out of proceeds received from the sale of the Shares. Organizational Expenses representing amounts that would otherwise be characterized as Sponsor-paid Expenses shall be reimbursed to the Trust on a monthly basis out of portions of subsequent Sponsor's Fees (as defined below), such portions in the Sponsor's sole discretion, until all such Organizational Expenses have been reimbursed to the Trust. The Trust's Organizational Expenses may be amortized for purposes of calculating the Trust's NAV over a period of up to sixty (60) months. "Organizational Expenses" shall include the fees and expenses related to the creation of the Trust, including but not limited to the Administrator Fee, the Bitcoin Custodian Fee, the Cash and Treasury Custodian Fee, the Transfer Agent Fee, the Trustee Fee, applicable license fees, including the licensing fees related to the Index License Agreement, and legal fees and expenses relating to the Trust. The Trust will be responsible for any fees associated with the Trust's monthly rebalancing between Bitcoin and T-Bills. These fees include, but may not be limited to any commissions and/or exchange fees associated with the buying and selling of Bitcoin and fees and expenses associated with buying and selling T-Bills for the Trust. |
The Trust may incur certain extraordinary, non-recurring expenses that are not contractually assumed by the Sponsor, including but not limited to taxes and governmental charges, fees and expenses of redemptions, expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust, indemnification expenses of the Sponsor, the Trustee, the Custodians, Administrator or other agents, service providers or counterparties of the Trust and extraordinary legal fees and expenses (collectively, "Additional Trust Expenses"). Additionally, the fees and expenses (including, without limitation, fees of counsel to the Sponsor) associated with registration of the Trust's shares with the U.S. Securities and Exchange Commission (including but not limited to the preparation of the registration statement of which this prospectus forms a part) and listing of the Trust's shares on the New York Stock Exchange will also be deemed to be an Additional Trust Expense. The Sponsor will cause the Cash and Treasury Custodian to pay such Additional Trust Expenses, and to the extent necessary, the Administrator may cause the Bitcoin Custodian and the Cash and Treasury Custodian to convert Bitcoin and T-Bills, respectively, into U.S. dollars, in either case, in such quantities as may be necessary to pay any outstanding, unpaid Additional Trust Expenses. In such circumstances, the Administrator will endeavor to minimally affect the Trust's realized volatility as a result of the sales. | |
Bitcoin Custodian | [____] will serve as the Trust's Bitcoin custodian (the "Bitcoin Custodian") under the Trust Agreement and pursuant to the terms and provisions of the custody agreement between the Trust and the Bitcoin Custodian (the "Bitcoin Custodian Agreement"). The Bitcoin Custodian has its principal office at [____] . |
The Trust's Bitcoin Account | Under the Bitcoin Custodian Agreement, the Bitcoin Custodian will be responsible for keeping the private keys in offline storage. The Bitcoin Custodian will custody the Bitcoin in accordance with the terms of the Bitcoin Custodian Agreement. From time to time, in connection with trades of Bitcoin on behalf of the Trust, the Bitcoin Custodian may hold cash of the Trust. The Bitcoin Custodian will maintain a secured and segregated custody account controlled by a third party associated with the Bitcoin Custodian who is a party to the Bitcoin Custodian Agreement (the "Bitcoin Account"). The Bitcoin will be stored in the Bitcoin Account on behalf of the Trust. It is expected that the Bitcoin Custodian will utilize certain security procedures such as passwords, encryption, Internet connectivity, two-factor authentication process, multi-signature wallets or telephone call-backs in the administration and operation of the Trust and the safekeeping of its Bitcoin and private keys. The Trust intends to obtain insurance for the Bitcoin held by the Trust, either through the Bitcoin Custodian or, if the Bitcoin Custodian cannot provide such insurance, through a third-party provider. |
Cash and Treasury Custodian | [____] will serve as the Trust's custodian of U.S. dollars and T-Bills (the "Cash and Treasury Custodian") under the Trust Agreement and pursuant to the terms and provisions of the custody agreement between the Trust and the Cash and Treasury Custodian (the "Cash and Treasury Custodian Agreement"). The Cash and Treasury Custodian has its principal office at [____]. |
The Trust's Cash Account | Under the Cash and Treasury Custodian Agreement, the Cash and Treasury Custodian will be responsible for maintaining an account that holds T-Bills and U.S. dollars (the "Cash Account"). Pursuant to a request from the Trust, the Cash and Treasury Custodian shall establish and maintain one or more Cash Accounts in the name of the Trust that will hold U.S. dollars and T-Bills securities. The Cash and Treasury Custodian deposits and withdraws U.S. dollars to and from the Trust's Cash Account at the instruction of the Administrator. Only the Administrator will have the right to direct the Cash and Treasury Custodian with respect to debiting the Cash Account and liquidating any T-Bills (prior to maturity) held in the Cash Account. The Cash and Treasury Custodian is responsible for administering the Cash Accounts. The Trust intends to require the Cash and Treasury Custodian to maintain the Trust's cash in an account insured by the Federal Deposit Insurance Corporation ("FDIC") subject to applicable FDIC insurance limits. |
Risk Factors | An investment in the Trust involves significant risks and is suitable only for persons who can bear the economic risk of the loss of their entire investment. There can be no assurances that the Trust will achieve its investment objective. An investment in the Trust carries with it the inherent risks associated with investments related to Bitcoin and T-Bills. See "Risk Factors." Each prospective Shareholder should carefully review this prospectus, the Trust Agreement and the other agreements referred to therein before deciding to invest in the Trust. Many U.S. regulators, including the Financial Crimes Enforcement Network of the U.S. Department of the Treasury ("FinCEN"), the Commodity Futures Trading Commission ("CFTC") the U.S. Internal Revenue Service ("IRS"), and state regulators, including the New York Department of Financial Services ("NYDFS"), have made official pronouncements or issued guidance or rules regarding the treatment of Bitcoin and other digital currencies. However, other U.S. and state agencies have offered little official guidance and issued no definitive rules regarding the treatment of Bitcoin. Similarly, the treatment of Bitcoin and other digital currencies is uncertain or contradictory in many other countries. The regulatory uncertainty surrounding the treatment of Bitcoin creates certain risks for the Trust and its Shares. See "Risk Factors". |
Emerging Growth Company Status | The Trust qualifies as an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company, among other things: · The Trust is exempt from the requirement to obtain an attestation and report from its auditors on the assessment of its internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); · The Trust is exempt from compliance with any requirement that the Public Company Accounting Oversight Board (the "PCAOB") may adopt regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements; · The Trust is permitted to provide less extensive disclosure about executive compensation arrangements; · The Trust is not required to give shareholders non-binding advisory votes on executive compensation or golden parachute arrangements; · The Trust is granted the ability to present more limited financial data in this registration statement, of which this prospectus is a part; and · The Trust may elect not to use an extended transition period for complying with new or revised accounting standards. |
The Trust may take advantage of these provisions for up to five years or such earlier time that the Trust is no longer an emerging growth company. The Trust will cease to be an emerging growth company by 2023 or if it has more than $1.07 billion in annual revenues, has more than $700 million in market value of its common shares held by non-affiliates or issues more than $1.0 billion of non-convertible debt securities over a three-year period. The Trust may choose to take advantage of some but not all of these reduced burdens. The Trust has elected not to opt-out of such extended transition period, which means that when a new or revised accounting standard is issued, and it has different application dates for public or private companies, the Trust, as an emerging growth company, may elect not to adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. |
Reports | After the end of each fiscal year, the Sponsor will cause to be prepared an annual report containing audited financial statements prepared in accordance with U.S. GAAP for the Trust. The annual report will be in such form and contain such information as will be required by applicable laws, rules and regulations and may contain such additional information which the Sponsor determines shall be included. The annual report shall be filed with the SEC and the Exchange and shall be distributed to such persons and in such manner, as shall be required by applicable laws, rules and regulations. The Sponsor is responsible for the registration and qualification of the Shares under the federal securities laws and any other securities and blue sky laws of the United States or any other jurisdiction as the Sponsor may select. The Sponsor will also prepare, or cause to be prepared, and file any periodic reports or updates required under the Exchange Act. The accounts of the Trust will be audited, as required by law and as may be directed by the Sponsor, by independent registered public accountants designated by the Sponsor. The accountants' report will be furnished by the Sponsor to Shareholders upon request. The Sponsor will make elections, file tax returns and prepare, disseminate and file tax reports, as advised by its counsel or accountants and/or as required by any applicable statute, rule or regulation. |
Principal Offices | The Trustee's principal office is located at [___]. Wilshire Phoenix's principal office is located at 2 Park Avenue, 20th Floor, New York, New York 10016, and its telephone number is (917) 994-5119. The Administrator's principal office is located at [___]. The Bitcoin Custodian's principal office is located at [___]. The Cash and Treasury Custodian's principal office is located at [___]. |
· | power loss, computer system failures and internet, telecommunications or data network failures; |
· | operator negligence or improper operation by, or supervision of, employees; |
· | physical and electronic loss of data or security breaches, misappropriation and similar events; |
· | computer viruses; |
· | intentional acts of vandalism, terrorism, cyber-terrorism, cyber-crime, computer hacking and similar events; and |
· | an event constituting force majeure. |
· | continued worldwide growth in the adoption and use of digital currencies, including Bitcoin; |
· | government and quasi-government regulation of the use of and access to cryptocurrencies, including Bitcoin, and the platforms they operate or otherwise interact on; |
· | changes in consumer demographics and market preferences; |
· | the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; |
· | the maintenance and development of the open-source software protocol of the Bitcoin Network; |
· | general economic conditions; and |
· | negative consumer perception or lack of public interest in digital assets. |
· | Total number of Bitcoin in existence (estimated at approximately 17.4 million as of January 1, 2019 according to www.blockchain.com); |
· | The regulation and legality of ownership under the laws of different countries around the world; |
· | Global Bitcoin demand, which may be influenced by the growth of retail merchants' and commercial businesses' acceptance of Bitcoin as payment for goods and services; |
· | The security of online Bitcoin exchanges and accounts that hold Bitcoin, the perception that the use and holding of Bitcoin is safe and secure, the lack of regulatory restrictions on their use and the reputation of Bitcoin for illicit use; |
· | Global Bitcoin supply, which is influenced by similar factors as global Bitcoin demand, in addition to fiat currency needs by validators (for example, to invest in equipment or pay electricity bills) and taxpayers who may liquidate Bitcoin holdings around tax deadlines to meet tax obligations; |
· | Changes in the rights, obligations, incentives, or rewards for the participants on the Bitcoin Network; |
· | Investors' expectations with respect to the rate of inflation and deflation of fiat currencies and Bitcoin; |
· | Interest rates in fiat currencies; |
· | Currency exchange rates, including the rates at which Bitcoin may be exchanged for fiat currencies; |
· | Fiat currency withdrawal and deposit policies of Bitcoin exchanges and liquidity of such Bitcoin exchanges; |
· | Interruptions in service from or failures of major Bitcoin exchanges; |
· | Cyber theft of bitcoin from online Bitcoin wallet providers, or news of such theft from such providers, or from individuals' Bitcoin wallets; |
· | Investment and trading activities of large investors, including private and registered Trusts, that may directly or indirectly invest in Bitcoin; |
· | Regulatory measures, if any, that restrict the use of Bitcoin as a form of payment or the purchase of Bitcoin on the Bitcoin Market, including monetary policies of governments, trade restrictions, currency devaluations and revaluations; |
· | The availability and popularity of businesses that provide Bitcoin-related services; |
· | The maintenance and development of the open-source software protocol of the Bitcoin Network; |
· | Increased competition from other forms of cryptocurrency or payments services; |
· | Global or regional political, economic or financial events and situations; |
· | Expectations among Bitcoin economy participants that the value of Bitcoin will soon change; and |
· | Fees associated with processing a Bitcoin transaction. |
· | Sponsor and its respective affiliates will be indemnified pursuant to the Trust Agreement; |
· | Allocating resources among different clients and potential future business ventures, to each of which they owe fiduciary duties, is the responsibility of the Sponsor; |
· | The Sponsor's respective staff also service affiliates of the Sponsor and its respective clients. Time or resources to the management of the business and affairs of the Trust must be shared with other clients; |
· | The Trust Agreement does not prohibit the Sponsor, its respective affiliates and their respective officers and employees from engaging in other businesses or activities that might be in direct competition with the Trust; |
· | There has been no independent due diligence conducted with respect to this offering, where applicable, and there is an absence of arm's-length negotiation with respect to certain terms of the Trust; |
· | The Sponsor decides whether to obtain third party services for the Trust. |
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Trust will be authorized to (1) issue Shares for U.S. dollars, (2) pay the Sponsor’s Fee in U.S. dollars and sell T-Bills and/or Bitcoin as necessary to pay Additional Trust Expenses (3) rebalance (which may including buying and/or selling Bitcoin and T-Bills) the Trust’s holdings in Bitcoin and T-Bills in order to replicate the Bitcoin allocation indicated by the Index, (4) (subject to the Trust obtaining exemptive relief from the SEC ), redeem Shares for U.S. dollars (and therefore sell Bitcoin and T-Bills) upon receiving a redemption request from a Shareholder, (5) cause the Sponsor to sell Bitcoin and T-Bills on the termination of the Trust and (6) engage in activities that are necessary to accomplish the foregoing activities or are incidental thereto or connected therewith. The Trust is passive and is not actively managed like a corporation or an active investment vehicle.
BTC | ETH | XRP | XMR | LTC | XLM | SPY | EEM | GLD | SHY | TLT | |
BTC | 100.0% | 74.9% | 68.0% | 81.0% | 80.8% | 57.3% | 7.4% | 14.0% | -4.5% | -11.7% | -11.8% |
ETH | 74.9% | 100.0% | 70.4% | 76.5% | 80.4% | 64.7% | 9.7% | 20.8% | 3.8% | -9.5% | -11.4% |
XRP | 68.0% | 70.4% | 100.0% | 64.4% | 68.8% | 67.8% | 10.8% | 22.5% | -1.7% | -6.4% | -7.7% |
XMR | 81.0% | 76.5% | 64.4% | 100.0% | 79.1% | 58.1% | 2.1% | 12.0% | -4.8% | -14.4% | -16.8% |
LTC | 80.8% | 80.4% | 68.8% | 79.1% | 100.0% | 56.1% | 7.6% | 19.5% | 2.2% | -8.6% | -10.0% |
XLM | 57.3% | 64.7% | 67.8% | 58.1% | 56.1% | 100.0% | 10.2% | 20.4% | 6.1% | -10.3% | -9.0% |
SPY | 7.4% | 9.7% | 10.8% | 2.1% | 7.6% | 10.2% | 100.0% | 76.2% | -2.2% | -39.7% | -27.8% |
EEM | 14.0% | 20.8% | 22.5% | 12.0% | 19.5% | 20.4% | 76.2% | 100.0% | 24.4% | -32.0% | -21.1% |
GLD | -4.5% | 3.8% | -1.7% | -4.8% | 2.2% | 6.1% | -2.2% | 24.4% | 100.0% | 11.0% | 16.4% |
SHY | -11.7% | -9.5% | -6.4% | -14.4% | -8.6% | -10.3% | -39.7% | -32.0% | 11.0% | 100.0% | 60.7% |
TLT | -11.8% | -11.4% | -7.7% | -16.8% | -10.0% | -9.0% | -27.8% | -21.1% | 16.4% | 60.7% | 100.0% |
1. | Determine the Bitcoin Price—see "Calculation of the Trust's NAV—The Bitcoin Price (i.e., the Bitcoin Reference Rate)"; and |
2. | Multiply the Bitcoin Price by the aggregate number of Bitcoin owned by the Trust as of 4:00 p.m., New York time, on the immediately preceding day. |
1. | Determine the price of each T-Bill held by the Trust; and |
2. | Add any U.S. dollars held by the Trust. |
Year | ||||||||||||
1 | 2 | 3 | ||||||||||
Hypothetical Value of Trust Assets, Beginning of Year | $ | $ | $ | |||||||||
Sponsor’s Fee | % | % | % | |||||||||
Shares of Trust, Beginning of Year | ||||||||||||
Hypothetical Value of Trust Assets per Share, Beginning of Year | $ | $ | $ | |||||||||
Value of Trust Assets to be Sold to Pay for Sponsor’s Fee | $ | $ | $ | |||||||||
Hypothetical Value of Trust Assets, ending | $ | $ | $ | |||||||||
Shares of Trust, Ending of Year | ||||||||||||
Hypothetical Value of Trust Assets per Share, Ending of Year | $ | $ | $ |
Name and address of beneficial owner(1) | Amount and nature of beneficial ownership | Percent of Voting of Shares | ||||||
[_] | [_] | [_] | % | |||||
All directors and officers as a group | [*] | [*] | % |
* | Indicates less than 1.0%. |
(1) | Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the Securities Exchange Act of 1934, as amended, and generally includes voting or investment power with respect to securities. Except as subject to community property laws, where applicable, the person named above has sole voting and investment power with respect to all common shares shown as beneficially owned by him/her. |
· | A U.S. federal or state regulator requires the Trust to shut down or forces the Trust to liquidate its Bitcoin or seizes, impounds or otherwise restricts access to Trust assets; |
· | The Trust is determined to be a "money service business" under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act and is required to comply with certain FinCEN regulations thereunder, and the Sponsor has made the determination that dissolution of the Trust is advisable; |
· | The Trust is required to obtain a license or make a registration under any state law regulating money transmitters, money services business, providers of prepaid or stored value or similar entities, or virtual currency businesses, and the Sponsor has made the determination that dissolution of the Trust is advisable; |
· | Any ongoing event exists that either prevents the Trust from making or makes impractical the Trust's reasonable efforts to make a fair determination of the Bitcoin Price; |
· | Any ongoing event exists that either prevents the Trust from converting, or makes impractical the Trust's reasonable efforts to convert Bitcoin to U.S. dollars; or |
· | Upon the withdrawal, removal, adjudication or admission of bankruptcy or insolvency of the Sponsor, or an event of withdrawal unless (i) at the time there is at least one remaining Sponsor or (ii) within 90 days of such event of withdrawal Shareholders holding at least a majority of the Shares (not including Shares held by the Sponsor and their affiliates) agree in writing to continue the Trust and to select, effective as of the date of such event, one or more successor sponsors. |
· | The SEC determines that the Trust is an investment company required to be registered under the Investment Company Act; |
· | The CFTC determines that the Trust is a commodity pool under the CEA; |
· | The Trust becomes insolvent or bankrupt; |
· | All of the Trust's Bitcoin is sold; or |
· | The Sponsor determines that the size of the Trust Estate in relation to the expenses of the Trust make it unreasonable or imprudent to continue the Trust. |
SEC registration fee | $ | [_] | ||
New York Stock Exchange listing fee | [_] | |||
Legal fees and expenses | [_] | |||
Accounting fees and expenses | [_] | |||
Printing and engraving costs | [_] | |||
Transfer agent and distribution agent fees and other | [_] | |||
Miscellaneous | [_] | |||
Total | $ |
4.1* | Form of Trust Agreement | |
4.2* | Form of Certificate of Trust (attached as Exhibit A to the Form of Trust Agreement) | |
5.1* | Form of Opinion of Seward & Kissel LLP as to legality | |
8.1* | Opinion of Seward & Kissel LLP as to tax matters | |
10.1* | Bitcoin Custodian Agreement | |
10.2* | Cash and Treasury Custodian Agreement | |
10.3* | Index License Agreement | |
10.4* | Trust Administration and Accounting Agreement | |
10.5* | Transfer Agency and Service Agreement | |
23.1* | Consent of [_____] | |
23.2* | Consent of Seward & Kissel LLP (included in Exhibit 5.1 and Exhibit 8.1) |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
(i) | If the Registrant is relying on Rule 430B (§ 230.430B of this chapter): |
(A) | Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) (§ 230.424(b)(3) of this chapter) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
(B) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§ 230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance or Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§ 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of an included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability proposes of the issuer and any person that is at that date an underwriter such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchase with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or |
(ii) | If the Registrant is subject to Rule 430C (§ 230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(5) | That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: |
(i) | The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(ii) | Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter); |
(iii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant; |
(iv) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and |
(v) | Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser. |
(6) | That insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. |
United States Bitcoin and Treasury Investment TrustTM | ||
By: Wilshire Phoenix Funds, LLC, as Sponsor of the Trust | ||
By: | /s/ William Joseph Herrmann | |
Name: | William Joseph Herrmann | |
Title: | Managing Partner | |
Signature | Title | Date | ||
/s/ William Joseph Herrmann | January 31, 2019 | |||
William Joseph Herrmann | Managing Partner of Wilshire Phoenix Funds, LLC | |||
(serving in the capacity of principal executive officer and director) | ||||
/s/ Garrette David Victory Furo | January 31, 2019 | |||
Garrette David Victory Furo | Partner of Wilshire Phoenix Funds, LLC | |||
(serving in the capacity of principal financial officer | ||||
and principal accounting officer and director) | ||||