SecProbe.io

CORRESP
1
filename1.htm

  Peter
J. Shea

Peter.Shea@klgates.com

T
+1 212 536 3988

F +1 212 536 3901

January
10, 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

    Re:
    Tidal
Commodities Trust I (File No. 333-276254)

    Hashdex
Bitcoin ETF

    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 submitting together with this
correspondence Pre-Effective Amendment No.2 (“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 January 8, 2024 (“Comment Letter”), addressing the Registration
Statement on Form S-1 that was filed by the Registrant on December 22, 2023.

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.

Registration
Statement on Form S-1

General

1. Refer
                                            to your response to comment 32. Please revise to clarify, if true, that U.S. Bank N.A. is
                                            the Cash Custodian. In this regard, we note that you define U.S. Bank N.A. as the Custodian
                                            on page A-1 and elsewhere but then refer to the Cash Custodian throughout the prospectus.
                                            In addition, please add a section that describes the material terms of your agreement with
                                            the Cash Custodian and add a risk factor that addresses the risks related to the Cash Custodian’s
                                            insolvency, if such an event were to occur, and the risks related to the termination of the
                                            agreement with the Cash Custodian

RESPONSE:

The prospectus contained in the Amendment (the “Prospectus”) has been revised to consistently use
 the term “Cash Custodian” to refer to U.S. Bank, N.A.  Further, the suggested summary of the Cash
Custodian’s agreement with the Fund and associated risk discussions have been added to the Prospectus.

K&L Gates LLP

599 Lexington Avenue
New York NY 10022-6030

T +1 212 536 3900 F +1 212 536 3901 klgates.com

2. Refer
                                            to your response to comment 19. Please revise throughout to clarify, if true, that with respect
                                            to any fork, airdrop or similar event, the Sponsor will cause the Fund to irrevocably abandon
                                            the Incidental Rights or IR Currency so that your disclosure is consistent with the listing
                                            exchange’s listing rules and that in the event the Fund 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. Please also revise to disclose that the only crypto asset to
                                            be held by the Trust will be bitcoin.

RESPONSE:

The
Prospectus has been revised where needed to include the suggested revised discussion concerning abandonment of Incidental Rights or
IR Currency and the Fund’s need to seek a listing rule amendment to reverse this abandonment policy.

 3. Please
                                            add risk factor disclosure addressing the risks related to your Authorized Participants acting
                                            in the same capacity for several competing products.

RESPONSE:

The
suggested AP risk factor has been added to the Prospectus.

Cover
Page

4. Please
                                            revise the cover page to state clearly that the Fund only conducts creation and redemption
                                            transactions for cash, and that with respect to creation transactions, the cash is used to
                                            purchase bitcoin futures contracts only.

RESPONSE:

The
cover page of the Prospectus has been revised as suggested.

Prospectus
Summary

The
Fund’s Investment Strategies, page 3

5. Refer
                                            to your response to comment 11. On page 5, you disclose that “[i]n situations where
                                            trading of Bitcoin Futures Contracts is halted and a two-sided market is not available during
                                            the closing period, the CME will derive a settlement price using the ‘Carry calculation’
                                            method based on the reference rate.” Please revise to clarify what you mean by “reference
                                            rate” in this context.

RESPONSE:

The
Prospectus has been revised to clarify that the CME CF Bitcoin Reference Rate (“BRR”) is the intended “reference rate.”

    2

6. Refer
                                            to your response to comment 14. You state on page 3 that you will acquire bitcoin through
                                            EFP transactions “on the regulated CME Bitcoin Futures Market.” On page 5, you
                                            disclose that you purchase and sell bitcoin solely through CME’s Exchange for Physical
                                            Transactions “under the regulatory oversight of the CME market.” Please revise
                                            these and any similar references to clarify, if true, that these transactions are executed
                                            off-exchange and are not subject to the same regulatory requirements and oversight as transactions
                                            that are executed on-exchange.

RESPONSE:

The
Prospectus has been revised to clarify, as suggested, that EFP transactions are off-exchange transactions and are not subject to the
same regulatory requirements and oversight as on-exchange transactions.

7. You
                                            state here that the Fund will “aim to maximize its investments in physical bitcoin such
                                            that it is expected that at least 95% of the Fund’s assets will be invested in bitcoin,
                                            and up to 5% may be invested in Bitcoin Futures Contracts and in cash and cash equivalents.”
                                            You also state in your risk factors on page 26 that the Fund is not actively managed. Please
                                            revise to clarify whether the Fund has specific policies for its holdings, or whether the
                                            Sponsor has discretion as to whether and when to meet the “aim” of at least 95%
                                            of the assets in bitcoin. Please also provide us the basis for your statement that the Fund
                                            is not actively managed.

RESPONSE:

The
suggested revisions have been made to state the Fund’s specific investment policies and to clarify that the Sponsor has no discretion
in choosing the Fund’s investments in furtherance of those policies. That is, to clarify that the Fund is not actively managed.

Further, please be advised
that the Sponsor has no discretion in the application of offering proceeds to meet the overall goal of investing up to 95% of the Fund’s
net assets in bitcoin and the remainder in Bitcoin Futures Contracts and cash and cash equivalents. Rather, the Sponsor manages the Fund’s
portfolio to seek to produce the performance of its Benchmark. The Sponsor does not manage the Fund to provide Fund performance superior
to the Benchmark. For these reasons, investors will correctly understand that the Fund is not actively managed.

8. Refer
                                            to your response to comment 12. We note your revised disclosure on page 6 that “[w]hen
                                            the Sponsor decides to increase or decrease its holdings of physical bitcoin, it will cause
                                            the Fund to execute an EFP trade with a Liquidity Provider (an ‘LP’).” Please revise
                                            to identify the LPs that the Sponsor has approved. In this regard, we note your disclosure
                                            on page 83 that the LPs must be approved by the Sponsor and that the Sponsor has identified
                                            at least seven LPs that are available to support EFP transactions for the Fund.

RESPONSE:

The
Prospectus, as suggested, discloses the names of the current LPs approved by the Sponsor.

    3

The
Offering, page 9

9. Refer
                                            to your response to comment 16. On page 9 you state that “[t]he Trust has been formed
                                            and will be operated with the goal that the Fund and any other series of the Trust will be
                                            liable only for obligations of such series, and a series will not be responsible for or affected
                                            by any liabilities or losses of or claims against any other series, except for normal operating
                                            expenses of the Trust which will be allocated as determined by the Sponsor on a pro rata
                                            allocation methodology.” Please revise to clarify what you mean by “normal operating
                                            expenses of the Trust” and describe the Sponsor’s “pro rata allocation methodology.”

RESPONSE:

Please
be advised that the Trust does not expect to have any normal operating expenses. Consequently, the Prospectus has been revised to address
non-recurring, unusual or extraordinary Trust expenses and details the allocation methodology utilized by the Sponsor for such Trust
expenses.

10. Refer
                                            to your response to comment 17. Please revise your summary of the Bitcoin Custodian to disclose
                                            the proportion or private keys that will be held in hot or cold storage.

RESPONSE:

The
suggested revision that 100% of the Fund’s private keys will be held in cold storage has been made in the Prospectus.

11. We
                                            note your revised disclosure on page 26 that “[i]f the Sponsor and the Fund are unable
                                            to raise sufficient funds so that the expenses are reasonable in relation to the Fund’s
                                            NAV, the Fund may be forced to terminate, and investors may lose all or part of their investment,”
                                            and that “[t]he Sponsor estimates that costs could be deemed unreasonable in the case
                                            where the NAV of the fund stays below USD 20 million.” Please revise to include this
                                            disclosure here.

RESPONSE:

The
revision has been made as suggested.

What
Are The Risk Factors Involved With An Investment In The Fund

Risks Related to Bitcoin and the Bitcoin Network

Rewards
for mining bitcoin are designed to decline over time, page 14

12. Refer
                                            to your response to comment 20. Please revise to include quantitative information related
                                            to the historical, current and future size of the bitcoin mining rewards and provide
                                            an estimate of when the next halving event may occur.

RESPONSE:

The
suggested revised discussion has been added to this risk factor.

    4

Environmental
risks from Bitcoin mining, page 18

13. Refer
                                            to your response to comment 21. Please expand this risk factor to address the reasons why
                                            bitcoin may implicate different risks than other crypto asset mining such as
                                            the differences in proof-of-work and proof-of-stake.

RESPONSE:

This
risk factor has been expanded as suggested.

The
Fund’s Operating Risks

Fund
assets may be depleted if investment performance does not exceed fees, page 27

14. Refer
                                            to your response to comment 27. Please revise your disclosure here to describe the situations
                                            in which the Fund may be required to pay certain fees and expenses to the service providers
                                            and other third parties, including, for example, any on-chain fees involving bitcoin transactions.

RESPONSE:

The
risk factor has been revised as suggested to describe Fund-payable expenses.

Anonymity
and illicit financing risk, page 30

15. Refer
                                            to your response to comment 1. Please revise to describe the AML and KYC procedures conducted
                                            by the Fund in relation to the Liquidity Providers here and on page
                                            74.

RESPONSE:

The
risk factor has been revised as suggested.

The
Offering

The
Fund in General, page 35

16. Refer
                                            to your response to comment 12. Please remove the one remaining reference to
                                            “Spot Bitcoin Limits” on page 35 or advise.

RESPONSE:

The
reference has been deleted.

    5

Operation
of the Fund

The
Fund’s Investment Strategy, page 62

17. We
                                            note your revised disclosure on page 62 that “[t]he Fund may also use Bitcoin Futures
                                            Contracts for the primary purpose of using such Bitcoin Futures Contracts to acquire physical
                                            bitcoin through EFP transactions on the regulated CME Bitcoin Futures Market and to offset
                                            cash and receivables for better tracking the benchmark index.” Please revise to clarify
                                            here and in the prospectus summary section, if true, that the Fund will use bitcoin to acquire
                                            Bitcoin Futures Contracts through EFP transactions so that the Fund can
                                            then sell the Bitcoin Futures Contracts for cash in order to satisfy redemption orders.

RESPONSE:

The
suggested clarifications have been added where appropriate in the Prospectus.

Custody
Agreement with BitGo, page 68

18. Refer
                                            to your response to comment 31. Please revise to disclose the portion of the private
                                            keys that are held in cold storage. In addition, please disclose whether the Sponsor
                                            has purchased addition