SecProbe.io

United States securities and exchange commission logo
November 2, 2023
Hany Rashwan
Chief Executive Officer
Ark 21Shares Bitcoin ETF
c/o 21Shares US LLC
477 Madison Avenue
New York, NY 10022
Re:Ark 21Shares Bitcoin ETF
Amendment No. 2 to Registration Statement on Form S-1
Filed October 11, 2023
File No. 333-257474
Dear Hany Rashwan:
            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 September 29, 2023 letter.
Amendment No. 2 to Registration Statement on Form S-1
General
1.Please revise throughout your prospectus so that it includes updated information regarding
bitcoin, the Bitcoin network, the crypto asset market, enacted and pending crypto asset
legislation and regulation.  By way of example only, we note that you disclose that the
Lightning Network does not yet have material adoption as of April 2021, you disclose the
trading volume of bitcoin futures that the CFTC regulated as of April 29, 2021, you
discuss the "proposed" Taproot upgrade, and you do not include updated disclosure
regarding enacted and pending legislation and regulation that may impact the Bitcoin
network and the crypto asset market generally such as the March 9, 2022 Executive Order
on Ensuring Responsible Development of Digital Assets and the resulting reports. We
may have additional comments after reviewing your revised disclosure.

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2.To the extent that you intend to use a fact sheet, please provide us a copy for our review.
3.Please describe the AML, KYC and any other procedures conducted by the Trust, the
Sponsor, the Authorized Participant and the Custodian to determine, among other things,
whether the counter-party in any transactions is not a sanctioned entity.  To the extent that
the Trust, Sponsor, Authorized Participant or Custodian may not know the counter-party,
please add risk factor disclosure regarding the potential risk of transactions with a
sanctioned entity and the impact if such a transaction occurs.
Cover Page
4.Please revise your disclosure here to identify the initial Authorized Purchaser as an
underwriter, and disclose the initial price per Share.
Bitcoin and the Bitcoin Network, page 2
5.Please revise here or in the second bullet point on page 10 to provide quantitative
information that demonstrates the volatility of the price of bitcoin.
Prospectus Summary
Overview of the Trust, page 2
6.We note your disclosure on page 2 that the Trust provides direct exposure to bitcoin.  This
disclosure is inconsistent with disclosure later in the same paragraph and elsewhere in the
prospectus that an investment in the Shares of the Trust is not a direct investment in
bitcoin.  Please revise accordingly.
The Trust's Investment Objective, page 3
7.We note your disclosure on page 3 that "[b]arring the liquidation of the Trust or
extraordinary circumstances, the Trust will not purchase or sell bitcoin, although the
Sponsor may sell bitcoin to pay certain expenses, which may be facilitated by the
Custodian."  Please revise to clarify what you mean by "extraordinary circumstances" by
providing examples of such circumstances.
Pricing Information Available on the Exchange and Other Services, page 4
8.Refer to your response to comment 5.  On page 4, you disclose that "any adjustments
made to the Index will be published on the Index Provider's website."  Please revise to
briefly describe here the adjustments that may be made to the Index and describe in
greater detail in The Trust and Bitcoin Prices section that begins on page 52 the
adjustments and the impact that such adjustments could have on the NAV of the Trust.  In
addition, please disclose here and on page 53 how you will notify investors of any
material adjustments to the Index such as a change in methodology or a change in
Constituent Exchanges or the Sponsor's decision to change the Index or the Index
Provider.  Also disclose here that the Sponsor may, in its sole discretion, change either the

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Index or Index Provider without Shareholder approval.
The Sub-Adviser, page 5
9.We note your disclosure on page 5 that the "Sub-Adviser is primarily responsible for the
day-to-day supervision and investment strategy of, and making investment decisions for,
the Trust."  Please revise to clarify here what you mean by the "investment strategy of" the
Trust and the "investment decisions for" the Trust by summarizing the type of strategies
and investment decisions that the Sub-Adviser and Sponsor may make.  In addition,
clarify whether the Trust is a passive or active investment vehicle.
Custody of the Trust's Assets, page 6
10.Refer to your response to comment 8.  Please revise your disclosure here to provide a brief
definition of a "multi-party" cold storage platform.  In addition, clarify here what portion
of the Trust's assets and private keys are held in cold storage, and revise your disclosure
on page 64 to include a more detailed description of the Custodian's procedures for
holding the Trust's assets and private keys.  In this regard, we note your disclosure on
page 64 that "[t]he Custodian will keep a substantial portion of the private keys associated
with the Trust's bitcoin in 'cold storage' or similarly secure technology."  Please revise to
describe the "similarly secure technology."  In addition, we note your disclosure on the
cover page that "[t]he Custodian may be directed to transfer or sell bitcoin to pay certain
expenses," and we note that the Custodian receives bitcoin from and transfers bitcoin to
Authorized Participants in connection with creations and redemptions.  Please disclose on
page 64 how and when the Custodian transfers the bitcoin for such purposes, including
whether and when it moves bitcoin to a hot wallet and when it transfers the bitcoin it
receives from Authorized Participants to cold storage.  In addition, describe the
Custodian's whitelisting procedures on page 64, and provide a brief definition of "SOC 1
Type 2" and "SOC 2 Type 2" reports.
The Trust's Fees and Expenses, page 6
11.We note your disclosure on page 6 that "[t]he Administrator will calculate the Sponsor
Fee in respect of each day by reference to the Trust’s NAV as of that day" but that "[t]he
amount of bitcoin transferred or sold may vary from time to time depending on the market
price of bitcoin relative to the Trust's expenses and liabilities."  Please revise to disclose
how you calculate the "market price of bitcoin."  In addition, please disclose whether the
Trust is responsible for paying any costs associated with the transfer of bitcoin to the
Sponsor or the sale of the bitcoin or if these expenses are included in the Sponsor Fee.  In
addition, we note your disclosure that "the Sponsor has agreed to pay all operating
expenses (except for litigation expenses and other extraordinary expenses) out of the
Sponsor Fee."  Please revise to clarify what you mean by "other extraordinary expenses"
by providing examples of such expenses, and disclose whether any of the Trust's expenses
payable by the Sponsor from the Sponsor Fee are capped.

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Principal Investment Risks of an Investment in the Trust, page 9
12.Refer to your response to comment 7.  Please revise to briefly address here the risks
associated with the competition you will face in launching and sustaining your product,
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.
Risk Factors
Risks Associated with Bitcoin and the Bitcoin Network
Spot markets on which bitcoin trades are relatively new, page 12
13.Please revise to divide this risk factor into separate risk factors with headings that describe
the specific risk highlighted.  In this regard, we note, for example, that this risk factor
currently addresses the risks related to the lack of regulation of crypto asset exchanges, the
risk of fraud and security breaches on crypto asset exchanges, the risk of business failures
of crypto asset exchanges and the risks related to reputational harm regarding Bitcoin
markets.  In addition, please add separate risk factors that highlight the risks related to
manipulation, front-running and wash trading.
The inability to recognize the economic benefit of a "fork", page 19
14.We note your disclosure on page 19 that the "[t]he Sponsor or the Sub-Adviser . . . may
elect to support a fork based on predetermined criteria, but is under no obligation to do so"
and your disclosure on the same page that "[u]nless otherwise announced, the Sponsor and
the Sub-Adviser, as applicable on behalf of the Trust, will not support the inclusion of any
forked assets" and that "[o]nly forks deemed material by the Sponsor or Sub-Adviser, as
applicable, will be considered for evaluation."  Please revise to clarify whether you
currently have criteria for determining whether to support the inclusion of forked assets,
and, if so, please describe the criteria in the Activities of the Trust section or elsewhere,
including how you determine whether a fork is material, and describe the situations in
which the Custodian may not agree to provide the Trust with access to the new asset.  If
you do not yet have criteria for determining whether to accept forked assets, so state, and
if you have only a policy that you do not support the inclusion of any forked assets,
disclose how you will inform investors if this policy changes.  Similarly, please disclose
in the Activities of the Trust section or elsewhere how you will inform investors if the
Trust's policy of not participating in air drops changes.
15.Please revise to provide an example of the impact that hard forks have had on crypto
assets, including quantitative information regarding the price of the impacted crypto asset
immediately before and after the fork.
Operational cost may exceed, page 25
16.Refer to your response to comment 4.  Please expand your disclosure on page 26 to

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describe how the "[i]ncentives for miners to contribute processing power is set to decrease
over time."  Also address the risks related to transaction fees once new bitcoin is no longer
awarded for adding a new block, and revise your disclosure in the Bitcoin, Bitcoin
Markets and Regulation of Bitcoin section to address halving, the maximum number of
bitcoins that may be released into circulation and the number of bitcoins currently
in circulation.
Electricity usage, page 26
17.Refer to your response to comment 4.  Please expand this risk factor to address the reasons
why bitcoin mining may implicate different risks than other crypto asset mining such as
the differences in proof-of-work and proof-of-stake, and revise to discuss in greater detail
the regulations that states have passed or are currently considering that impact crypto asset
mining.
Risks Associated with Investing in the Trust
Custodian's limited operating history, page 34
18.Please expand this risk factor to address your custodian's limited operating history or
revise the heading to summarize the risks being described.
Risks Associated with the Index and Index Pricing
The Index has a limited history, page 35
19.Please expand this risk factor to describe the Index's limited performance history.
Right to change index, page 36
20.Refer to your response to comment 5.  We note your disclosure on page 36 that "[t]he
Sponsor, in its sole discretion, may cause the Trust to track (or price its portfolio based
upon) an index or standard other than the Index at any time, with prior notice to the
Shareholders, if investment conditions change or the Sponsor believes that another index
or standard better aligns with the Trust’s investment objective and strategy."  In the Net
Asset Value Determinations section or elsewhere, please revise to disclose the criteria the
Sponsor will use to determine that another index or standard better aligns with the Trust's
investment objective and strategy.
Other Risks
The Trust is new, and if it is not profitable, the Trust may terminate and liquidate, page 45
21.We note your disclosure that "[i]f the Trust does not attract sufficient assets to remain
open, then the Trust could be terminated and liquidated at the direction of the Sponsor (or
required to do so because it is delisted by the Exchange)."  Please revise to quantify or
otherwise describe what "sufficient assets to remain open" means.

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November 2, 2023
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Shareholders may be adversely affected by an overstatement, page 45
22.Refer to your response to comment 5.  On page 45, you disclose that "[i]n certain
circumstances, the Trust’s bitcoin investments may be valued using techniques other than
reliance on the price established by the Index (in the case of a determination of NAV) or
the principal market (in the case of a determination of the Principal Market NAV)."
Please revise your disclosure in the Trust and Bitcoin Prices section on page 52 to
describe the circumstances that the Trust's bitcoin investments may be valued using
techniques other than reliance on the price established by the Index or the principal market
and which of the Trust's service providers may make this determination.
Shareholders may be adversely affected by creation or redemption orders, page 45
23.Please expand this risk factor to describe what is deemed as an "emergency" such that the
fulfillment of a creation or redemption is not reasonably practicable, and disclose the
factors the Sponsor will consider to determine whether the suspension of creations
and redemptions or the postponement of settlement dates are necessary for the protection
of the Trust's Shareholders.
The Trust and Bitcoin Prices
Use of the CME CF Bitcoin Reference Rate - New York Variant, page 52
24.Refer to your response to comment 5.  Please revise to describe the Index Provider's
oversight procedures to ensure that the Index is administered through codified policies for
Index integrity, and provide a brief description of the material codified policies for Index
integrity.
25.Please describe the CME CF Oversight Committee, including how many members are on
the committee, how the committee members are selected, how often the committee meets
to consider changes to the Index Methodology and the Constituent Exchanges, any
changes that have been made to the Index or the Constituent Exchanges since the creation
of the Index and what the committee considers to be "sufficient reliability, detail and
timeliness."
26.Please include a brief description of each of the Constituent Exchanges, including where
they are located and how they are licensed or regulated.
Net Asset Value Determinations
Calculation of