Correspondence 0001839882-24-004777 from Hashdex Commodities Trust (DEFI)
Hashdex Commodities Trust
Date: Feb. 20, 2024 · CIK: 0001985840 · Accession: 0001839882-24-004777
AI Filing Summary & Sentiment
File numbers found in text: 333-276254
Referenced dates: February 13, 2024, February 20, 2024, February 9, 2024
Letter
Via EDGAR Division of Corporation Finance Office of Crypto Assets F +1 212 536 3901 Re: Tidal Commodities Trust I (File No. 333-276254) Hashdex Bitcoin ETF Amendment No. 4 to Registration Statement on Form S-1 & Comment Response
Dear Ladies and Gentlemen:
On behalf of our client, Tidal Commodities Trust I, a Delaware statutory trust (the “Registrant”), which will operate, as a separate series of the Registrant, the Hashdex Bitcoin ETF (the “Fund”), we are filing together with this correspondence Pre-Effective Amendment No. 4 (“Amendment”) to the Registrant’s registration statement on Form S-1 (“Registration Statement”) (File No. 333-276254). The Amendment and this correspondence provide the Registrant’s responses to comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) presented in the Staff’s comment letter dated February 13, 2024 (“Comment Letter”), addressing Pre-Effective Amendment No. 3 to the Registration Statement that was filed by the Registrant on January 26, 2024.
Each of the Staff’s comments from the Comment Letter is repeated below in italics and followed by the Registrant’s response. Capitalized terms used, but not defined, herein are used with the same meaning given to them in the Amendment. Any disclosure changes made in response to the Staff’s comments, as set forth below, in one place are also made in other applicable places of the prospectus contained in the Amendment.
Amendment No. 3 to Registration Statement on Form S-1
Prospectus Summary
The Fund’s Current Net Assets and Year to Date Performance, page 1
1. According to your website, the total net assets and number of shares outstanding of the Fund have increased since the end of 2023. Please revise to provide updated disclosure.
RESPONSE:
The prospectus contained in the Amendment (“Prospectus”) has been revised to include updated disclosure.
K&L Gates LLP
599 Lexington Avenue New York NY 10022-6030
T +1 212 536 3900 F +1 212 536 3901 klgates.com
The Offering
Fund Expenses, page 10
2. Refer to your response to comment 2. We note your revised disclosure on page 10 that "[t]he Trust may be required to indemnify the Sponsor, and the Trust and/or the Sponsor may be required to indemnify the Trustee, Marketing Agent or Administrator, under certain unusual or extraordinary circumstances" and that "[a]ny such indemnification paid by the Trust and/or Sponsor generally would cover losses incurred by an indemnified party for (1) expenses incurred by a party when rendering services to the Trust or the Sponsor, (2) expenses arising from a breach of obligations or non-compliance with laws, or (3) expenses arising out of the formation, operation or termination of the Trust." Please revise to clarify whether such expenses would be allocated by the Sponsor using a pro rata methodology that allocates certain Trust expenses to the Fund and each other series of the Trust in existence at the occurrence of any such expense according to the relative net asset values of the Fund and each other series of the Trust or whether these expenses would be paid by the Fund as we note that "[t]he Fund pays all of its non-recurring and unusual fees and expenses, if any, as determined by the Sponsor."
RESPONSE:
The Prospectus has been revised to clarify, as suggested, that such expenses would be allocated by the Sponsor using a pro rata methodology that allocates certain Trust expenses to the Fund and each other series of the Trust in existence at the occurrence of any such expense according to the relative net asset values of the Fund and each other series of the Trust.
3. Refer to your response to comment 3. Please expand your disclosure on page 10 to clarify that, pursuant to the Fund's agreement with the Cash Custodian, the Trust is obligated to indemnify the Cash Custodian, and that, pursuant to the Fund's Sub-Administration Agreement, the Transfer Agent Servicing Agreement and the Fund Accounting Agreement with Global Fund Services, the Trust is required to indemnify Global Fund Services. In this regard, we note that your disclosure on page 10 states that "[t]he Trust may be required to indemnify the Sponsor, and the Trust and/or the Sponsor may be required to indemnify the Trustee, Marketing Agent or Administrator, under certain unusual or extraordinary circumstances.
RESPONSE:
The suggested clarifications have been added where appropriate in the Prospectus.
Operation of the Fund
Calculating NAV
The Futures-Based Spot Price for bitcoin, page 83
4. Refer to your response to comment 4. We note your revised disclosure on pages 10 and 83 that "[i]n the event both the FBSP and the NQBTCS are unavailable, the Sponsor will fair value the Fund’s bitcoin based on the CME published settlement prices." We note that the FBSP calculation appears to utilize the CME published settlement prices. Please revise your disclosure to clarify the difference between the FBSP calculation and the use of the CME published settlement prices in the event that both the FBSP and NQBTCS are unavailable by describing how the Fund's bitcoin is calculated using the CME published settlement prices in the event that both the FBSP and NQBTCS are unavailable. In addition, please describe the criteria the Sponsor will use to determine that the FBSP calculation should not be used to value the Fund's bitcoin
RESPONSE:
The suggested revisions have been made where appropriate in the Prospectus.
* * * *
The Registrant and the Sponsor acknowledge that they are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the Staff.
Please be advised that we are also providing to the Staff the materials listed below in supplement to this correspondence:
● A comment letter dated February 9, 2024, from the National Futures Association (“NFA”) regarding the Registration Statement (the “NFA Comment Letter”).
We will be separately submitting a response letter dated February 20, 2024, from my partner, Cheryl Isaac, on behalf of the Registrant and the Sponsor responding to the NFA Comment Letter. Please be advised that in addition to the changes to the Prospectus prompted by the Staff’s comments, other changes have been made to the Prospectus in response to the NFA Comment Letter.
If you have any questions regarding the matters discussed above, please do not hesitate to contact me at (212) 536-3988, or in my absence, Brian Doyle-Wenger at (615) 780-6718.
Sincerely,
/s/
Peter J. Shea
Show Raw Text
CORRESP
1
filename1.htm
February 20, 2024
Via
EDGAR
U.S.
Securities and Exchange Commission
Division
of Corporation Finance
Office
of Crypto Assets
100
F Street, N.E.
Washington,
DC 20549
Peter J. Shea
Peter.Shea@klgates.com
T +1 212 536 3988
F +1 212 536 3901
Re:
Tidal
Commodities Trust I (File No. 333-276254)
Hashdex
Bitcoin ETF
Amendment
No. 4 to Registration Statement on Form S-1 & Comment Response
Dear
Ladies and Gentlemen:
On
behalf of our client, Tidal Commodities Trust I, a Delaware statutory trust (the “Registrant”), which will operate,
as a separate series of the Registrant, the Hashdex Bitcoin ETF (the “Fund”), we are filing together with this
correspondence Pre-Effective Amendment No. 4 (“Amendment”) to the Registrant’s registration statement on Form
S-1 (“Registration Statement”) (File No. 333-276254). The Amendment and this correspondence provide the Registrant’s
responses to comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”)
presented in the Staff’s comment letter dated February 13, 2024 (“Comment Letter”), addressing Pre-Effective
Amendment No. 3 to the Registration Statement that was filed by the Registrant on January 26, 2024.
Each
of the Staff’s comments from the Comment Letter is repeated below in italics and followed by the Registrant’s response. Capitalized
terms used, but not defined, herein are used with the same meaning given to them in the Amendment. Any disclosure changes made in response
to the Staff’s comments, as set forth below, in one place are also made in other applicable places of the prospectus contained
in the Amendment.
Amendment
No. 3 to Registration Statement on Form S-1
Prospectus
Summary
The
Fund’s Current Net Assets and Year to Date Performance, page 1
1. According
to your website, the total net assets and number of shares outstanding of the Fund have increased
since the end of 2023. Please revise to provide updated disclosure.
RESPONSE:
The
prospectus contained in the Amendment (“Prospectus”) has been revised to include updated disclosure.
K&L Gates LLP
599 Lexington Avenue New York NY 10022-6030
T +1 212 536 3900 F +1 212 536 3901 klgates.com
The
Offering
Fund
Expenses, page 10
2. Refer
to your response to comment 2. We note your revised disclosure on page 10 that "[t]he
Trust may be required to indemnify the Sponsor, and the Trust and/or the Sponsor may be required
to indemnify the Trustee, Marketing Agent or Administrator, under certain unusual or extraordinary
circumstances" and that "[a]ny such indemnification paid by the Trust and/or Sponsor
generally would cover losses incurred by an indemnified party for (1) expenses incurred by
a party when rendering services to the Trust or the Sponsor, (2) expenses arising from a
breach of obligations or non-compliance with laws, or (3) expenses arising out of the formation,
operation or termination of the Trust." Please revise to clarify whether such expenses
would be allocated by the Sponsor using a pro rata methodology that allocates certain Trust
expenses to the Fund and each other series of the Trust in existence at the occurrence of
any such expense according to the relative net asset values of the Fund and each other series
of the Trust or whether these expenses would be paid by the Fund as we note that "[t]he
Fund pays all of its non-recurring and unusual fees and expenses, if any, as determined by
the Sponsor."
RESPONSE:
The
Prospectus has been revised to clarify, as suggested, that such expenses would be allocated by the Sponsor using a pro rata methodology
that allocates certain Trust expenses to the Fund and each other series of the Trust in existence at the occurrence of any such expense
according to the relative net asset values of the Fund and each other series of the Trust.
3. Refer
to your response to comment 3. Please expand your disclosure on page 10 to clarify that,
pursuant to the Fund's agreement with the Cash Custodian, the Trust is obligated to indemnify
the Cash Custodian, and that, pursuant to the Fund's Sub-Administration Agreement, the Transfer
Agent Servicing Agreement and the Fund Accounting Agreement with Global Fund Services, the
Trust is required to indemnify Global Fund Services. In this regard, we note that your disclosure
on page 10 states that "[t]he Trust may be required to indemnify the Sponsor, and the
Trust and/or the Sponsor may be required to indemnify the Trustee, Marketing Agent or Administrator,
under certain unusual or extraordinary circumstances.
RESPONSE:
The
suggested clarifications have been added where appropriate in the Prospectus.
Operation
of the Fund
Calculating
NAV
The
Futures-Based Spot Price for bitcoin, page 83
4. Refer
to your response to comment 4. We note your revised disclosure on pages 10 and 83 that "[i]n
the event both the FBSP and the NQBTCS are unavailable, the Sponsor will fair value the Fund’s
bitcoin based on the CME published settlement prices." We note that the FBSP calculation
appears to utilize the CME published settlement prices. Please revise your disclosure to
clarify the difference between the FBSP calculation and the use of the CME published settlement
prices in the event that both the FBSP and NQBTCS are unavailable by describing how the Fund's
bitcoin is calculated using the CME published settlement prices in the event that both the
FBSP and NQBTCS are unavailable. In addition, please describe the criteria the Sponsor will use to determine that the FBSP calculation should not be used
to value the Fund's bitcoin
2
RESPONSE:
The
suggested revisions have been made where appropriate in the Prospectus.
* * * *
The
Registrant and the Sponsor acknowledge that they are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the Staff.
Please
be advised that we are also providing to the Staff the materials listed below in supplement to this correspondence:
● A
comment letter dated February 9, 2024, from the National Futures Association (“NFA”) regarding the Registration
Statement (the “NFA Comment Letter”).
We will be separately
submitting a response letter dated February 20, 2024, from my partner, Cheryl Isaac, on behalf of the Registrant and the Sponsor
responding to the NFA Comment Letter. Please be advised that in addition to the changes to the Prospectus prompted by the
Staff’s comments, other changes have been made to the Prospectus in response to the NFA Comment Letter.
If
you have any questions regarding the matters discussed above, please do not hesitate to contact me at (212) 536-3988, or in my absence,
Brian Doyle-Wenger at (615) 780-6718.
Sincerely,
/s/
Peter J. Shea
Peter
J. Shea
cc:
Ms.
Sandra Hunter Berkheimer, Division of Corporation Finance
Mr.
Justin Dobbie, Division of Corporation Finance
Ms.
Sonia Bednarowski, Division of Corporation Finance
Ms.
Michelle Miller, Division of Corporation Finance
Ms.
Kate Tillan, Division of Corporation Finance
Mr.
Guillermo Trias, Tidal Financial Group
Mr. Daniel Carlson, Tidal Financial Group
Mr. Michael Pellegrino, Tidal Financial Group
Mr. Brian Doyle-Wenger, K&L Gates LLP
3
Exhibit
A
4
5