United States securities and exchange commission logo
December 18, 2023
Cynthia Lo Bessette
President
Fidelity Wise Origin Bitcoin Trust
c/o FD Funds Management LLC
245 Summer Street V13E
Boston, MA 02210
Re: Fidelity Wise
Origin Bitcoin Trust
Amendment No. 2 to
Registration Statement on Form S-1
Filed December 8,
2023
File No. 333-254652
Dear Cynthia Lo Bessette:
We have reviewed your amended registration statement and have the
following
comments.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe a comment applies to your
facts and circumstances
or do not believe an amendment is appropriate, please tell us why in
your response.
After reviewing any amendment to your registration statement and
the information you
provide in response to this letter, we may have additional comments.
Unless we note otherwise,
any references to prior comments are to comments in our November 6, 2023
letter.
Amendment No. 2 to Registration Statement on Form S-1
General
1. Refer to your response
to comment 2. Please describe the AML, KYC and any other
procedures conducted by
the Trust and the Sponsor in connection with purchasing bitcoin
with the cash received
from cash creations and in connection with selling bitcoin either for
cash redemptions or to
pay the expenses of the Trust. In this regard, we note your
disclosure on page 28.
Cover Page
2. Refer to your response
to comment 3. Please revise to identify the initial Authorized
Participant as an
underwriter, disclose that you are offering an indeterminate number of
shares and disclose the
termination date of the offering, if any.
Cynthia Lo Bessette
Fidelity Wise Origin Bitcoin Trust
December 18, 2023
Page 2
Prospectus Summary
Overview of the Trust, page 1
3. Please revise your Prospectus Summary to disclose, if true, that:
The Trust, the Sponsor and the service providers will not loan or
pledge the Trust's
assets, nor will the Trust's assets serve as collateral for any
loan or similar
arrangement; and
The Trust will not utilize leverage, derivatives or any similar
arrangements in seeking
to meet its investment objective.
Risk Factors
Risks Associated with Investing in the Trust
The Trust's Custodian could become insolvent or become subject to a
receivership, page 32
4. Please revise this risk factor to address the risks associated with
having to replace the
Custodian. Please also revise to address the risks associated with
business failure or
interruption, default, failure to perform, security breach or other
problems affecting the
Custodian.
The Trust and Bitcoin Prices
Description of the Index Construction and Maintenance, page 54
5. Refer to your response to comment 19. You state on page 56 that "[t]he
Index market
value is the volume-weighted median price of bitcoin in U.S. dollars
over the previous
sixty minutes, which is calculated by (1) ordering all individual
transactions on eligible
spot markets over the previous sixty minutes by price, and then (2)
selecting the price
associated with the 50th percentile of total volume." Please revise to
disclose the pricing
window used to determine NAV in connection with redemptions and
creations by
disclosing the "previous sixty minutes" used in the calculation of
NAV. For example,
disclose whether the "previous sixty minutes" refers to 3:00 p.m. ET
to 4:00 p.m. ET.
Calculation of NAV, page 57
6. We continue to evaluate your response to prior comment 22 and may have
further
comment.
7. We note your revised disclosure on page 58 regarding the calculation of
the intraday
indicative value. Please revise to disclose how the Blockstream Crypto
Data Feed
Streaming Level I is calculated.
FirstName LastNameCynthia Lo Bessette
8. Refer to your response to comment 21. Please revise your disclosure on
page 58 to
Comapany NameFidelity
describe Wise
the policies andOrigin
criteriaBitcoin
that theTrust
Sponsor's Valuation
Committee has in place to
select
December 18,an2023
alternative
Page 2 valuation method to calculate the net asset value
of the Trust.
FirstName LastName
Cynthia Lo Bessette
FirstName LastNameCynthia Lo Bessette
Fidelity Wise Origin Bitcoin Trust
Comapany18,
December NameFidelity
2023 Wise Origin Bitcoin Trust
December
Page 3 18, 2023 Page 3
FirstName LastName
Additional Information About the Trust
The Trust's Fees and Expenses, page 59
9. We note your revised disclosure on page 59 regarding the sale of
bitcoin to pay for the
Trust's expenses and liabilities and the Trust's purchase of bitcoin.
Please revise to
disclose the methodology of the Trust's sales and purchases of
bitcoin, including whether
the Trust will pay the transaction cost of the sale when sold to pay
for the Trust's expenses
and liabilities, such as the Sponsor fee. In addition, please revise
to clarify whether the
Trust will use a liquidity provider, such as a prime broker. If so,
please disclose whether a
portion of the Trust's bitcoin may be held with the liquidity provider
and, if so, what
portion.
The Trust's Service Providers
The Sponsor, page 62
10. Refer to your response to comment 25. Please revise to clarify the
Sponsor's
experience related to crypto assets by clarifying what you mean by
"significant
experience."
Custody of the Trust's Assets
Key Storage, page 64
11. Refer to your response to comments 11 and 26. Please revise here and
on page 7 to
disclose the percentage of private keys held in cold storage. In
addition, please revise
your disclosure on page 65 to describe any instructions the Sponsor
has given to the
Custodian regarding air drops and forks.
Plan of Distribution
Authorized Participants, page 67
12. Refer to your response to comment 27. Please revise to identify by
name all of the
Authorized Participants with which you have an agreement at the time
of effectiveness of
the registration statement.
Creation and Redemption of Shares, page 68
13. Refer to your response to comment 29. We note your disclosure on page
69 that
"[t]he Authorized Participant or its designee will normally send the
required bitcoin in an
'on chain' transaction over the Bitcoin network." Please revise to
clarify what you mean
by "normally." In addition, we note your revised disclosure on page 70
that
"[i]n circumstances where purchase orders are due before 4:00 p.m.
EST, Authorized
Participants will not know the total Basket Deposit at the time they
submit a purchase
order for the Basket." Please revise to disclose the circumstances in
which purchase
orders will not be due before 4:00 p.m. EST.
Cynthia Lo Bessette
FirstName LastNameCynthia Lo Bessette
Fidelity Wise Origin Bitcoin Trust
Comapany18,
December NameFidelity
2023 Wise Origin Bitcoin Trust
December
Page 4 18, 2023 Page 4
FirstName LastName
14. Refer to your response to comment 30. Please revise to disclose that
the Authorized
Participant's designee is required to have an account with the
Custodian in connection
with in-kind creations. In addition, please disclose whether and under
what circumstances
the Authorized Participant will utilize an affiliate or third-party to
transfer bitcoin to or
receive bitcoin from the Custodian in connection with creations and
redemptions.
15. You disclose in this section that the creation and redemption of
shares may be done in
cash or in-kind. With respect to in-kind creations and redemptions,
please revise here, in
your risk factors and in the summary to address the following:
Please describe the risk that any registered broker-dealer that
participates in the in-
kind creation or redemption of shares for bitcoin may be unable to
demonstrate
compliance with the applicable requirements of the federal
securities laws, including
the Financial Responsibility Rules; and
Please also describe the potential consequences to the
broker-dealer, its customers
and shareholders of the Trust if any such broker-dealer is unable
to comply with the
federal securities laws, including the Financial Responsibility
Rules, in connection
with in-kind creation and redemption transactions.
16. Please revise to add disclosure clarifying whether the Authorized
Participant bears the risk
of bitcoin price movements with respect cash creations and
redemptions. Please add
related risk factor disclosure as appropriate.
17. Please revise to disclose the impact of the use of cash creations and
redemptions on the
efficiency of the arbitrage mechanism and how this compares to the use
of in-kind
creations and redemptions.
18. We note that with respect to in-kind creations and redemptions, your
disclosure indicates
that deposits and withdrawals of bitcoin will be directly to/from the
Custodian without the
use of an intermediary. Please revise your disclosure to confirm the
lack of aggregation in
orders, whether that will result in higher costs, and whether there
will be any impact on
the efficiency of the creation and redemption process. Please add
related risk factor
disclosure as appropriate.
Creation Procedures, page 69
19. Refer to your response to comment 30. Please revise to disclose a
detailed description of
the mechanics of cash creations and redemptions, including what
happens in situations in
which the value of bitcoin changes between the time of the Cash
Creation Orders
and Cash Redemption Orders and how the Trust purchases and sells
bitcoin in connection
with cash creations and cash redemptions.
Suspension of Orders, page 72
20. Refer to your response to comment 32. Please disclose how you will
notify Shareholders
if the Trust has suspended creations and redemptions.
Cynthia Lo Bessette
FirstName LastNameCynthia Lo Bessette
Fidelity Wise Origin Bitcoin Trust
Comapany18,
December NameFidelity
2023 Wise Origin Bitcoin Trust
December
Page 5 18, 2023 Page 5
FirstName LastName
Governing Law; Consent to Delaware Jurisdiction, page 81
21. Refer to your response to comment 55. We note your disclosure on page
81 that "the
federal district courts of the United States of America shall be the
exclusive forum for the
resolution of any complaint asserting a cause of action arising under
the 1933 Act, or the
rules and regulations promulgated thereunder." Please revise to state
that investors cannot
waive compliance with the federal securities laws and the rules and
regulations
thereunder. In this regard, we note that Section 22 of the Securities
Act creates concurrent
jurisdiction for federal and state courts over all suits brought to
enforce any duty or
liability created by the Securities Act or the rules and regulations
thereunder.
Please contact Kate Tillan at 202-551-3604 or Michelle Miller at
202-551-3368 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Sonia Bednarowski at 202-551-3666 or Sandra Hunter Berkheimer at
202-551-3758 with
any other questions.
Sincerely,
Division of
Corporation Finance
Office of Crypto
Assets
cc: Morrison C. Warren