United States securities and exchange commission logo
December 21, 2023
Anna Paglia
Chief Executive Officer
Invesco Galaxy Bitcoin ETF
c/o Invesco Capital Management LLC
3500 Lacey Road, Suite 700
Downers Grove, IL 60515
Re: Invesco Galaxy
Bitcoin ETF
Amendment No. 3 to
Registration Statement on Form S-1
Filed December 13,
2023
File No. 333-255175
Dear Anna Paglia:
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 3, 2023
letter.
Amendment No. 3 to Registration Statement on Form S-1
General
1. Please explain why you
state that the Trust "expects" that creation and redemption
transactions initially
will take place in cash. To the extent that creation and redemption
transactions will take
place in cash, please revise accordingly. In addition, to the extent
that creation and
redemption transactions will not take place in-kind when you launch the
product, please revise
throughout the prospectus to focus the disclosure on the mechanics
of cash creations and
redemptions and remove the detailed disclosure about in-kind
creations and
redemptions. Please also disclose that the timing of the regulatory approval
of an in-kind creation
model is unknown and and there is no guarantee that the exchange
will receive such
approval.
Anna Paglia
FirstName LastNameAnna
Invesco Galaxy Bitcoin ETFPaglia
Comapany21,
December NameInvesco
2023 Galaxy Bitcoin ETF
December
Page 2 21, 2023 Page 2
FirstName LastName
Prospectus Summary, page 1
2. 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.
3. We note your response to prior comment 44 and re-issue in part. Please
disclose in the
prospectus summary section the extent to which Shareholders do not
have voting rights.
Overview of the Trust, page 1
4. We note that the Trust expects that creation and redemption
transactions initially will take
place in cash, but in the future, the Trust may permit or require
creation and redemption
transactions to take place in kind. Please confirm your understanding,
consistent with the
undertaking required by Item 512(a)(1)(iii) of Regulation S-K, that
you will file a post-
effective amendment 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.
The Trust's Service Providers
The Bitcoin Custodian, page 5
5. Please revise to balance your disclosure regarding the extensive
regulation to which the
Bitcoin Custodian is subject.
Risk Factors, page 16
6. To the extent material, please include risk factor disclosure that
addresses the risks related
to your Bitcoin Custodian and Prime Broker acting in the same capacity
for several
competing products.
Cybersecurity Risk Related to Bitcoin
If the Bitcoin Custody Agreement is terminated, page 23
7. Please expand this risk factor to address the risks associated with
having to replace the
Prime Broker due to insolvency, business failure or interruption,
default, failure to
perform, security breach, or other problems affecting the Prime
Broker.
Risks Related to the Trust and the Shares
The development and commercialization of the Trust, page 42
8. We note your statement here that [i]f the Trust fails to achieve
sufficient scale due to
competition, the Sponsor may have difficulty raising sufficient
revenue to cover the costs
associated with launching and maintaining the Trust. Please revise
to quantify or
Anna Paglia
FirstName LastNameAnna
Invesco Galaxy Bitcoin ETFPaglia
Comapany21,
December NameInvesco
2023 Galaxy Bitcoin ETF
December
Page 3 21, 2023 Page 3
FirstName LastName
otherwise describe what sufficient scale means.
Shareholders that are not Authorized Participants, page 46
9. Please revise to discuss the risks that you may not be able to
implement in-kind creation
and redemption transactions in the future. Please also include
separate risk factor
disclosure to discuss 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.
Bitcoin and the Bitcoin Market
The Bitcoin Market
Forks and Air Drops, page 57
10. We note your response to prior comment 13 and re-issue in part. Please
revise your
disclosure to indicate how you will inform investors of any changes to
the Trust s policy
with respect to forks and airdrops. Please also clarify what you mean
by the statement that
the Trust will generally accept any new digital asset if the Bitcoin
Custodian is able to
hold such assets. In particular, please clarify whether the Trust will
hold assets other than
bitcoin and cash, and if so, how that is consistent with the
investment objective of the
Trust and your exchange listing standard.
Calculation of NAV, page 67
11. We continue to evaluate your response to prior comment 25 and may have
further
comment.
The Trust's Service Providers, page 73
12. Please provide a separately captioned section to describe and identify
the Prime Broker,
including without limitation any affiliation and relationship with the
other transaction
parties, the material provisions of any material agreement between any
transaction party
and the Prime Broker, the Prime Broker s experience and operating
history, the Prime
Broker s policies and procedures with respect to any assets held by
it on behalf of the
Trust, how the Prime Broker will be compensated, who will be
responsible for any fees
associated with services provided by the Prime Broker, and any
potential or existing
conflicts of interest involving the Prime Broker. Please also describe
the amount of bitcoin
that could be held by the Prime Broker at any time and disclose
whether or not there are
any limits or policies that would limit the amount of bitcoin that can
be held temporarily
in the Trading Balance maintained by the Prime Broker.
Custody of the Trust's Bitcoin, page 76
13. Please reconcile your statement here that the Bitcoin Custodian
will generally keep a
substantial portion of the Trust s bitcoin in cold storage on an
ongoing basis (emphasis
added), with your response to prior comment 34 and statement on
page 6 that [a]ll of
Anna Paglia
FirstName LastNameAnna
Invesco Galaxy Bitcoin ETFPaglia
Comapany21,
December NameInvesco
2023 Galaxy Bitcoin ETF
December
Page 4 21, 2023 Page 4
FirstName LastName
the Trust s bitcoin will be held in cold storage unless it is being
processed in connection
with creation or redemption transactions or is being sold (emphasis
added).
14. We note your response to prior comment 38 and re-issue in part. Please
revise to disclose
any risks or conflicts of interest that may exist in connection with
how Coinbase or the
Execution Agent arranges for the sale of the Trust s bitcoin.
Insurance of the Bitcoin Custodian, page 78
15. We note your response to prior comment 37 and re-issue. Please revise
your disclosure to
state, if true, that the Bitcoin Custodian limits the size of each
storage address to $100
million from an operational perspective.
Creation and Redemption of Shares, page 83
16. We note your disclosure that when purchasing Creation Baskets,
Authorized Participants
will deliver cash to Market Makers or their agents, who will deliver
the requisite amount
of bitcoin to the Trust s account with the Bitcoin Custodian in
exchange for Creation
Baskets. We also note that you define Market Makers as Authorized
Participants or
designated third parties, which may be affiliates of Authorized
Participants, that will
deliver bitcoin related to the Authorized Participant s purchase
order. Please clarify
whether the Authorized Participant or the Trust is the party who
identifies and directs the
Market Maker to deliver the bitcoin to the Bitcoin Custodian.
17. Please disclose who will be responsible for the on-chain transaction
fees for creation and
redemption transactions and any transactions with the Prime Broker.
Cash Creation Procedures, page 86
18. We note that the Sponsor causes to be published each night the amount
of bitcoin that will
be acquired in exchange for each Purchase Order, from which can be
computed the
estimated amount of cash required to create each cash Creation Unit,
prior to accounting
for any additional cash required to acquire the requisite amount of
bitcoin if the price paid
by the trust is in excess of the Benchmark on each Purchase Order
Date. We also note
disclosures throughout the Prospectus that the Administrator will
calculate the amount of
cash needed to purchase the amount of bitcoin represented by each
Creation Basket being
created. Please revise to clarify how the amount of cash required will
be calculated,
including how the Administrator determines the market price of
bitcoin.
19. The disclosure in the last paragraph in bold on page 87 includes
defined terms and a
description of cash creation transactions that differs from the
disclosure elsewhere in the
prospectus. Please revise for consistency.
Use of Proceeds, page 91
20. Please revise the inconsistencies in your statement [t]he Cash
Custodian then initiates the
transfer of bitcoin to the counterparty in exchange for cash which is
deposited directly
Anna Paglia
Invesco Galaxy Bitcoin ETF
December 21, 2023
Page 5
with the Bitcoin Custodian (emphasis added).
Please contact David Irving at 202-551-3321 or Robert Telewicz at
202-551-3438 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Lulu Cheng at 202-551-3811 or Justin Dobbie at 202-551-3469 with any
other questions.
Sincerely,
FirstName LastNameAnna Paglia
Division of
Corporation Finance
Comapany NameInvesco Galaxy Bitcoin ETF
Office of Crypto
Assets
December 21, 2023 Page 5
cc: Paulita Pike
FirstName LastName