SecProbe.io

United States securities and exchange commission logo
September 29, 2023
Leah Wald
Chief Executive Officer
Valkyrie Bitcoin Fund
c/o Valkyrie Digital Assets LLC
320 Seven Springs Way, Suite 250
Brentwood, TN 37027
Re:Valkyrie Bitcoin Fund
Amendment No. 2 to
Registration Statement on Form S-1
File No. 333-252344
Filed June 21, 2023
Dear Leah Wald:
            We have reviewed your registration statement and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.
            Please respond to this letter by amending your registration statement and providing the
requested information.  If you do not believe our comments apply 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 these comments, we may have additional comments.
Amendment No. 2 to Registration Statement on Form S-1
General
1.Based on our preliminary review of your registration statement, we have the following
initial set of comments.  Once you have amended your registration statement and
responded to each of these comments, we will provide you with more detailed comments
relating to your registration statement, as appropriate.
2.We note that your registration statement includes a number of blanks or omitted
information, including, for example, identification of the Custodian, the initial Authorized
Participant and Authorized Participants, the Marketing Agent, and a description of the

 FirstName LastNameLeah Wald
 Comapany NameValkyrie Bitcoin Fund
 September 29, 2023 Page 2
 FirstName LastNameLeah Wald
Valkyrie Bitcoin Fund
September 29, 2023
Page 2
material agreements as well as the inclusion of the material agreements as exhibits.  Please
revise to include this information in your next amendment, or tell us when you intend to
do so.  Please also confirm your understanding that the staff will need sufficient time to
review this information, and we may have additional comments at that time.
3.We refer you to our December 2022 Sample Letter to Companies Regarding Recent
Developments in Crypto Asset Markets, located on our website at the following
address: https://www.sec.gov/corpfin/sample-letter-companies-regarding-crypto-asset-
markets.  Please consider the issues identified in the sample letter as applicable to your
facts and circumstances, and revise your disclosure accordingly.
Risk Factors, page 6
4.Provide a materially complete description of the risks related to bitcoin and the bitcoin
network, including, for example, the risks presented by the environmental risks from
bitcoin mining, the existence of bitcoin “whales” and the concentration in bitcoin
ownership.
5.Please revise your disclosure to address the competition you will face in launching and
sustaining your product.  Please also revise your risk factors to address the risks associated
with this competition, including the risk that your timing in reaching the market and your
fee structure relative to other bitcoin ETPs could have a detrimental effect on the scale and
sustainability of your product.
6.Please revise your disclosure to discuss the risks of manipulation and front-running.
Use of the CME CF Bitcoin Reference Rate - New York Variant, page 39
7.Please revise your disclosure to provide a materially complete description of the
index methodology.  Please also address the following in your disclosure regarding the
index:
•Include a table with market share for each constituent trading platform comprising
the index used to calculate the CME CF Bitcoin Reference Rate;
•Explain how the identified trading platforms are selected and describe how the CME
CF Bitcoin Reference Rate is calculated by showing an example of the calculation;
•Disclose the extent to which the Sponsor has discretion to select a different index;
and
•Disclose whether the Sponsor will notify investors of changes to the constituent
trading platforms used to calculate the index, and, if so, how the Sponsor will notify
the investor of such changes.
Calculation of NAV, page 40
8.Please include a materially complete description of the methodology to be used to
calculate NAV and disclose how you will value your bitcoin holdings for GAAP
purposes.  Please also tell us how you intend to develop accounting and valuation policies

 FirstName LastNameLeah Wald
 Comapany NameValkyrie Bitcoin Fund
 September 29, 2023 Page 3
 FirstName LastNameLeah Wald
Valkyrie Bitcoin Fund
September 29, 2023
Page 3
to address significant events related to crypto assets.  For example, explain to us how your
valuation policies will address the potential for a blockchain for a crypto asset to diverge
into different paths (i.e., a “fork”) and airdrops.
Conflicts of Interest, page 45
9.Please revise to disclose all existing and potential conflicts of interest between your
Sponsor and its affiliates and the Trust.  Please also clarify whether the Sponsor or any
insiders have bitcoin or bitcoin-related exposure that could create conflicts of interest and
disclose whether you have a code of conduct or other requirements for pre-clearance of
bitcoin-related transactions that apply to your employees, the Sponsor, or any of its
affiliates.
Custody of the Trust's Bitcoin, page 47
10.Please revise to provide a materially complete discussion of your bitcoin custody
arrangements.  For example, please consider addressing the following:
•Describe the material terms of your agreement with the Custodian;
•Describe how the Custodian will store the private keys, including whether the
Custodian will utilize cold or hot storage;
•Identify who will have access to the private key information and disclose whether any
entity will be responsible for verifying the existence of the bitcoins; and
•Disclose whether and to what extent the Custodian carries insurance for any losses of
the bitcoin that it custodies for you.
Description of Creation and Redemption of Shares, page 48
11.Please include a materially complete discussion of the creation and redemption process.
As appropriate, please also address the following:
•Discuss the potential impact on the arbitrage mechanism of the price volatility,
trading volume, price differentials across bitcoin trading platforms, and the closing of
bitcoin trading platforms due to fraud, failures, security breaches or otherwise;
•Clarify the circumstances under which the Sponsor may suspend creations; and
•Describe the mechanics of how the creation and redemption process will work
between the Trust, the Authorized Participants and the Custodian, including a
discussion of whether and to what extent creation and redemption transactions will be
settled on-chain or off-chain, and any risks associated with the settlement process.
12.Please discuss whether and to what extent the size of your creation and redemption
baskets could have an impact on the arbitrage mechanism in light of the market for
bitcoin.
Experts, page 66
13.Please revise to include this information in your next amendment, or tell us when you
intend to do so.

 FirstName LastNameLeah Wald
 Comapany NameValkyrie Bitcoin Fund
 September 29, 2023 Page 4
 FirstName LastName
Leah Wald
Valkyrie Bitcoin Fund
September 29, 2023
Page 4
Financial Statements, page 67
14.We note your disclosure that your audited financial statements will be provided by
amendment.  Please confirm you will file these audited financial statements in a pre-
effective amendment as soon as they are available in order to allow the staff sufficient
time to complete its review.  Please also confirm your understanding that the staff will
need sufficient time to review the audited financial statements and related information,
and we may have additional comments at that time.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Refer to Rules 460 and 461 regarding requests for acceleration.  Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.
            You may 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