SecProbe.io

CORRESP
1
filename1.htm

    Richard
Coyle

Partner

    Chapman
and Cutler LLP

320
South Canal Street, 27th Floor

Chicago,
Illinois 60606

T
(312) 845-3724

rcoyle@chapman.com

January
8, 2024

Via
EDGAR Correspondence

United
States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Re: Bitwise Bitcoin ETF

       File
                                         No. 333-2260235

Dear
Mr. Brown, Ms. Berkheimer and Mr. Dobbie:

This
letter responds to your comments regarding the Amendment No. 3 to Registration Statement on Form S-1 for the Bitwise Bitcoin ETF
(the “Trust”) with the Staff of the Securities and Exchange Commission (the “Staff”) on
December 29, 2023 (the “Registration Statement”). Capitalized terms used herein, but not otherwise defined,
have the meanings ascribed to them in the Registration Statement.

Comment
1 – General

We
note that your registration statement includes a number of blanks or bracketed information, including, for example, the amount
of Sponsor Fee, the Authorized Participants with which you have an agreement with at the time of effectiveness and the party that
has indicated an interest in purchasing an aggregate of up to $200 million of Shares in this offering from Authorized Participants.
Please revise to include this information in your next amendment. Please also file your Prime Execution Agreement and Bitcoin
Custody Agreement in executed form. Further, please revise throughout to use your new name where applicable. For example purposes
only, we note the Signature Page.

Response
to Comment 1

Pursuant
to the Staff’s comment, the Registration Statement has been revised accordingly and the referenced exhibits filed.

January 8, 2024

Page 2

Comment
2 – General

Please
refer to comment 1 of our letter dated November 14, 2023.  We note your disclosure on page 113 that you expect to use a fact
sheet and that it would be provided on the Trust’s website. To the extent that you intend to use a fact sheet, please provide
us with a copy for our review.

Response
to Comment 2

The
fact sheet is attached as Exhibit A hereto.

Comment
3 – General

Please
revise throughout the prospectus to clarify, if true, that the only crypto asset to be held by the Trust will be bitcoin. In particular,
please clarify, if true, that with respect to any fork, airdrop or similar event, the Sponsor will cause the Trust to irrevocably
abandon the Incidental Rights or IR Virtual Currency, and in the event the Trust seeks to change this position, an application
would need to be filed with the SEC by your listing exchange seeking approval to amend its listing rules. In addition, and for
example purposes only, we note the following statementsdo not appear to be consistent with page 20 of the Trust Agreement which
states that the Trust has explicitly disclaimed all Incidental Rights and IR Assets:

•
“In determining whether to attempt to acquire and/or retain any Incidental Right(s) and/or IR Asset(s)” on page 21.

•
“any Incidental Rights or IR Assets that the Trust may hold” on page 108.

Response
to Comment 3

The
Sponsor, on behalf of the Trust, has revised the Registration Statement pursuant to the Staff’s comment, including the inclusion
of more explicit disclosure that the only digital asset to be held by the Trust will be bitcoin and the removal of the highlighted
disclosure on page 108. The following disclosure has been added to “The Trust’s Investment Objective and Strategies”
in the Prospectus Summary and the section entitled “The Trust and Bitcoin Prices – Overview of the Trust”:

Bitcoin
will be the only digital asset held by the Trust.

January
8, 2024

 Page 3

Additionally,
the Sponsor directs the Staff’s attention to the following disclosure regarding the abandonment of Incidental Rights and
IR Assets already set forth in the Registration Statement:

Pursuant
to the Trust Agreement and Sponsor Agreement, Forked Assets and other Incidental Rights and IR Assets (as defined and discussed
in greater detail below) do not constitute property of the Trust, as the Trust has disclaimed ownership of such assets in favor
of the Sponsor. (Principal Risks – “A temporary or permanent “fork” of the Bitcoin blockchain could
adversely affect an investment in the Trust”). . .

A
right to receive any such benefit of a fork or airdrop is referred to as an “Incidental Right” and any digital asset
acquired through an Incidental Right as “IR Assets.” Pursuant to the Trust Agreement, the Trust has explicitly disclaimed
all Incidental Rights and IR Assets. Such assets are not considered assets of the Trust at any point in time and will not be taken
into account for purposes of determining the Trust’s NAV and the NAV per Share. (Principal Risks – “Shareholders
may not receive the benefits of any forks or “airdrops.”) . . .

Pursuant
to the Trust Agreement, the Trust has explicitly disclaimed all Incidental Rights and IR Assets, including Forked Assets. Such
assets are not considered assets of the Trust at any point in time. (Principal Risks – “A “fork” of
the Bitcoin blockchain or an airdrop could result in Shareholders incurring a tax liability.”) . . .

Pursuant
to the Trust Agreement, the Trust has explicitly disclaimed all Incidental Rights and IR Assets. Such assets are not considered
assets of the Trust at any point in time and will not be taken into account for purposes of determining the Trust’s NAV
and the NAV per Share. Pursuant to the Trust Agreement, to the extent that the Trust receives such assets in a Trust wallet, it
will, as soon as practicable, and, if possible, immediately, distribute such assets to the Sponsor. (United States Federal
Income Tax Consequences – Incidental Rights and IR Assets.)

January 8, 2024

Page 4

However,
the Sponsor points out that some of the disclosure, including the disclosure highlighted by the Staff on page 21, does not pertain
to the Trust, but rather to the Sponsor, pursuant to the Trust’s abandonment of Incidental Rights and IR Assets. Even though
the Trust has abandoned all such assets in favor of the Sponsor, the Sponsor has still represented that it may try to sell such
assets on its own behalf, at which point it would distribute the cash proceeds of such sales back to the Trust. Such disclosure
is attempting to notify Shareholders that the Sponsor is not required, nor will it always be successful, in undertaking such measures.
With that context in mind, the disclosure is reproduced below:

Pursuant
to the Trust Agreement, to the extent that the Trust involuntarily receives such assets in a Trust wallet, it will, as soon as
practicable, and, if possible, immediately, distribute such assets to the Sponsor. Once acquired, the Sponsor may take any lawful
action necessary or desirable in connection with its acquisition of such assets. In the event that the Sponsor decides to sell
the Incidental Right(s) and/or IR Asset(s), it will seek to do so for cash. This may be a sale of the Incidental Right(s) and/or
IR Asset(s) directly in exchange for cash, or in exchange for another digital asset which may subsequently be exchanged for cash.
The Sponsor would then contribute that cash back to the Trust, which in turn would distribute the cash to the Depository Trust
Company (“DTC”) to be distributed to Shareholders in proportion to the number of Shares owned.

Although
the Sponsor intends, if possible, to arrange for the sale of any Incidental Right(s) and/or IR Asset(s) it receives from the Trust
and subsequently contribute such cash proceeds back to the Trust, it is under no obligation to do so. There are likely to be operational,
tax, securities law, regulatory, legal and practical issues that significantly limit, or prevent entirely, the Sponsor’s
ability to realize a benefit from any such Incidental Right(s) and/or IR Asset(s). The Sponsor may choose to evaluate any such
fork, airdrop or similar occurrence on a case-by-case basis in consultation with its legal advisors, tax consultants and custodian.
In determining whether to attempt to acquire and/or retain any Incidental Right(s) and/or IR Asset(s), the Sponsor expects
to take into consideration whatever factors it deems relevant in its discretion, including, without limitation:

Comment
4 – Cover Page

We
note the disclosure regarding the Seed Shares purchased by Bitwise Asset Management.  It is not clear why Bitwise Asset Management
is identified as a statutory underwriter in connection with such purchase.  In this regard, we note the disclosure regarding
the Seed Baskets to be purchased by Bitwise Investment Manager, which is identified as a statutory underwriter in connection with
the purchase of the Seed Baskets.

January 8, 2024

Page 5

Response
to Comment 4

Pursuant
to the Staff’s comment, the disclosure regarding Bitwise Asset Management’s status as a statutory underwriter with
regard to the Seed Shares has been deleted.

Comment
5 – Cover Page

Please
revise to disclose the number and price of the Seed Baskets that Bitwise Investment Manager intends to purchase.

Response
to Comment 5

Pursuant
to the Staff’s comment, the referenced disclosure has been revised as set forth below:

Bitwise
Investment Manager, LLC, an affiliate of the Sponsor, is expected to purchase the initial Basket of Shares for $500,000 at a per-Share
price of $50 (the “Seed Basket”).

Comment
6 – Purchases and Sales of Bitcoin

Please
revise your disclosure to identify the Bitcoin Trading Counterparties.

Response
to Comment 6

Pursuant
to the Staff’s comment, the section entitled “The Trust and Bitcoin Prices – Purchase and Sale of Bitcoin”
has been revised to identify the Bitcoin Trading Counterparties.

Comment
7 – Risk Factors

We
note your response to prior comment 6. Please tell us why the Bitcoin Custodian acting in the same capacity for several competing
products does not pose a material risk if, when you are utilizing the Agent Execution Model, your purchase and sales needs are
in conflict or competition with the purchase and sales needs of competing products that are also relying on Coinbase Inc., an
affiliate of the Bitcoin Custodian, to purchase or sell bitcoin. Please consider, for example, whether a market disruption or
other circumstance whereby no Bitcoin Trading Counterparty is able or willing to effectuate your purchase or sale of bitcoin would
cause you and also your competitors to rely on the Agent Execution Model.

January
8, 2024

Page 6

Response
to Comment 7

Pursuant
to the Staff’s comment, “Risk Factors” has been revised to include the following disclosure:

Coinbase
Custody serves as the bitcoin custodian and Coinbase Inc. serves as the prime broker for several competing exchange-traded bitcoin
products, which could adversely affect the Trust’s operations and ultimately the value of the Shares.

The
Bitcoin Custodian and Prime Execution Agent are both affiliates of Coinbase Global. As of the date hereof, Coinbase Global is
the largest publicly traded cryptoasset company in the world by market capitalization and is also the largest cryptoasset custodian
in the world by assets under custody. By virtue of its leading market position and capabilities, and the relatively limited number
of institutionally-capable providers of cryptoasset brokerage and custody services, Coinbase Custody serves as the bitcoin custodian
and Coinbase Inc. serves as prime broker for several competing exchange-traded bitcoin products. Therefore, Coinbase Global has
a critical role in supporting the U.S. spot bitcoin exchange-traded product ecosystem, and its size and market share creates the
risk that Coinbase Global may fail to properly resource its operations to adequately support all such products that use its services
that could harm the Trust, the Shareholders and the value of the Shares. If the Trust needed to utilize the Agent Execution Model
to buy or sell bitcoin because no Bitcoin Trading Counterparties were willing or able to effectuate the Trust’s transactions,
and the Prime Execution Agent were to favor the interests of certain products over others, it could result in inadequate attention
or comparatively unfavorable commercial terms to less favored products, which could adversely affect the Trust’s operations
and ultimately the value of the Shares.

Comment
8 – The amount of bitcoin represented by a Share will decline over time

We
note your response to prior comment 8 and reissue the comment. On page 37, you refer to “Shares that are issued in exchange
for additional deposits of bitcoin” and, on page 36, to the “Authorized Participants’ ability to purchase and
sell bitcoin in an efficient manner to effectuate creation and redemption orders.” Please revise here and throughout to
clarify that creations of Shares will be cash transactions. In this regard, we note your disclosure on page 8 that “[i]t
is currently anticipated that all sales and redemptions of Shares will be done in exchange for U.S. dollars and only in transactions
with Authorized Participants.” Although you state in your response letter that you deleted the referenced disclosure,
it remains.

January
8, 2024

 Page 7

Response
to Comment 8

Pursuant
to the Staff’s comment, the Registration Statement has been revised accordingly.

Comment
9 – Conducting Creations and Redemptions For Cash Has Drawbacks

We
note your revised disclosure that “[i]n the near term, the Trust will effect all of its creations and redemptions in cash,
rather than in-kind.” We have the following comment:

 ● 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.

Response
to Comment 9

The
Sponsor, on behalf of the Trust, confirms its understanding, consistent with the undertaking required by Item 512(a)(1)(iii) of
Regulation S-K, that it 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.

Comment
10 – The Trust and Bitcoin Prices; Purchase and Sale of Bitcoin

We
note your response to prior comment 21. Please disclose who pays for the transfer fee with respect to the on-chain transfer
of bitcoin from the Bitcoin Custodian to the Bitcoin Trading Counterparty in connection with redemptions.

Response
to Comment 10

Pursuant
to the Staff’s comment, the referenced disclosure has been revised to include the following:

Transfer
fees with respect to this on-chain transfer of bitcoin will be paid by the Bitcoin Custodian.

January
8, 2024

Page 8

Comment
11 – BRRNY Methodology

We
note your response to prior comment 12, and we reissue in part. Please revise to disclose how the Trust will notify Shareholders
if there is a material change to the BRRNY Methodology. Although you disclose how you will notify Shareholders of changes
to the Constituent Platforms used to calculate the BRRNY, you do not disclose how the Trust will notify Shareholders if there
are other material changes to the BRRNY Methodology.

Response
to Comment 11

Pursuant
to the Staff’s comment, the following disclosure has been added to the section of the Registration Statement entitled “The
Trust and Bitcoin Prices – The CME CF Bitcoin Reference Rate – New York Variant”:

Once
it has actual knowledge of changes to the Constituent Platforms used to calculate the BRRNY, or other material changes to the
BRRNY calculation methodology, the Trust will notify Shareholders in a prospectus supplement and a current report on Form 8-K
or in its annual or quarter