Correspondence 0001999371-24-003095 from Hashdex Commodities Trust (DEFI)
Hashdex Commodities Trust
Date: March 5, 2024 · CIK: 0001985840 · Accession: 0001999371-24-003095
AI Filing Summary & Sentiment
File numbers found in text: 333-276254
Referenced dates: February 27, 2024, February 28, 2024, March 5, 2024
Letter
Via EDGAR Division of Corporation Finance Office of Crypto Assets Washington, DC 20549 Re: Tidal Commodities Trust I (File No. 333-276254) Hashdex Bitcoin ETF Amendment No. 5 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. 5 (“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 27, 2024 (“Comment Letter”), addressing Pre-Effective Amendment No. 4 to the Registration Statement that was filed by the Registrant on February 20, 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. 4 to Registration Statement on Form S-1
Prospectus Summary
The Fund’s Current Net Assets and Year to Date Performance, page 1
1. Refer to your response to comment 1. Please revise to disclose the number of Shares outstanding as of the most recent practicable date.
RESPONSE:
The prospectus contained in the Amendment (“Prospectus”) has been revised to include updated disclosure.
The Offering
Fund Expenses, page 10
2. Refer to your response to comments 2 and 3. It appears that the Trust indemnifies the Bitcoin Custodian pursuant to the Bitgo Custodial Services Agreement. Please revise your disclosure on page 10 to clarify whether indemnification expenses owed pursuant to the Bitgo Custodial Service Agreement are allocated by the Sponsor, using its pro rata methodology, to each of the Trust's series in existence at the occurrence of any such expense.
RESPONSE:
The suggested clarifications have been added where appropriate in the Prospectus.
3. You disclose that the Fund is the successor and surviving entity from the merger (the “Merger”) into the Fund of Hashdex Bitcoin Futures ETF (the “Predecessor Fund”) that is a series of the Teucrium Commodity Trust (the “Predecessor Trust”) sponsored by Teucrium Trading, LLC (“Prior Sponsor”) that closed on January 3, 2024. Please enhance your disclosures, consistent with your merger disclosures, that because Acquired Fund shareholders will own one share of the Acquiring Fund interest for each share of the Acquired Fund they owned prior to the Merger, the Acquiring Fund unaudited pro forma equivalent data will be the same as the corresponding unaudited pro forma combined data and therefore has not been presented.
RESPONSE:
The Prospectus has been revised to include updated disclosure.
Financial Statements, page F-1
4. Please include updated audited financial statements for both Tidal Commodities Trust I and Hashdex Bitcoin Futures ETF, a series of the Teucrium Commodity Trust (“Predecessor”) as of and for the period ended December 31, 2023. Refer to Rule 8-08 of Regulation S-X.
RESPONSE:
The Prospectus has been revised to include updated disclosure.
* * * *
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 28, 2024, from the National Futures Association (“NFA”) regarding the Registration Statement (the “NFA Comment Letter”); and
● A response letter dated March 5, 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
Exhibit A
February 28, 2024
Sent via Electronic Mail
Mr. Michael Venuto
Tidal Financial Group
234 West Florida Street
Suite 203
Milwaukee, WI 53204
mvenuto@tidalfg.com
Re: Hashdex Bitcoin Futures ETF
Pool ID #170550
Tidal Commodities Trust I
Pool ID #184748
Dear Mr. Venuto:
NFA has reviewed the February 16, 2024 disclosure document (Document) that was received on February 21, 2024 and noted several items that do not comply with NFA Rules and CFTC Regulations. Before Tidal Investments, LLC uses the Document to solicit participants, you will need to make all of the corrections listed below and resubmit the Document to NFA.
1. It is still unclear from reading the Document how the estimated interest income included in the break-even calculation is derived. NFA reviewed your response to our earlier Comment Letter noting that you indicated that interest income is based, at least in part, upon the notional value of the bitcoin futures contracts held rather than the cash on deposit in the pool's account at the clearing broker. Please provide NFA with information to support that this is in fact the case. It would also be helpful to provide NFA with the calculation used to arrive at the assumed interest income included in the analysis.
2. NFA reviewed your response to NFA's previous Comment Letter in which you indicated that certain changes with respect to performance results would only be made to the final dated copy. Be advised that NFA is unable to accept the Document until all comments have been satisfactorily addressed. Tidal Investments, LLC should not file a final dated copy of the Document until an Acceptance Letter has been received.
3. Upon completion, the Document and the Statement of Additional Information must be dated.
4. Both of the Documents filed with NFA appear to be marked to identify changes made since the prior filing. Please be advised that subsequent filings must include both a clean and a marked copy of the Document.
320 South Canal, Suite 2400 | Chicago, IL 60606 | 312-781-1300 | www.nfa.futures.org
5. Upon resubmitting the Document, NFA requests that a copy of any comments received from the SEC be included. These comments will assist NFA in its effort to make the review process as efficient as possible.
Please be advised that this Document may not be used to solicit participants until the above comments have been corrected, a revised Document has been filed, and the firm has received an acceptance notification from NFA. The use of this Document without NFA's acceptance will result in violations of NFA Rules and CFTC Regulations and could subject the firm to possible disciplinary action.
To facilitate NFA's review and acceptance process, the resubmission of this Document must include two attachments, one that is a clean copy and one that is "marked" to identify the deletions and additions that have been made to this Document. NFA will reject any future filings of this Document not in this format.
If I may be of assistance to you as you make the revisions, feel free to contact me at 312-781-1457.
Sincerely,
Jane Pfeiffer
Compliance Department
320 South Canal, Suite 2400 | Chicago, IL 60606 | 312-781-1300 | www.nfa.futures.org
Exhibit B
March 5, 2024
Cheryl L. Isaac
cheryl.isaac@klgates.com
Jane Pfeiffer
Compliance Department
National Futures Association
320 South Canal, Suite 2400
Chicago, IL 60606
T +1 202 778 9089
F +1 202 778 9100
Re: Hashdex Bitcoin Futures ETF Pool ID #170550
Dear Ms. Pfeiffer:
This letter is in response to the comments received from the National Futures Association (NFA) on February 28, 2024 with respect to the Hashdex Bitcoin Futures ETF (NFA Pool ID #170550). K&L Gates LLP is outside counsel to Tidal Investments LLC (NFA ID #0526060), the commodity pool operator for the Hashdex Bitcoin Futures ETF, and we are sending these responses on Tidal’s behalf.
Below, we respond in line to each of the NFA’s comments:
1. It is still unclear from reading the Document how the estimated interest income included in the break-even calculation is derived. NFA reviewed your response to our earlier Comment Letter noting that you indicated that interest income is based, at least in part, upon the notional value of the bitcoin futures contracts held rather than the cash on deposit in the pool's account at the clearing broker. Please provide NFA with information to support that this is in fact the case. It would also be helpful to provide NFA with the calculation used to arrive at the assumed interest income included in the analysis.
Tidal’s initial break-even calculation was unclear because it was based on a projected AUM of $50,000,000 rather than the ETF’s assets as of December 31, 2023, which were $2,500,000. Based on updated calculations using AUM of $2,500,00, the correct interest income for the break-even calculation is $0.06 and is reflected in the attached amendment to the Disclosure Document. The amount of interest included in break-even analysis was derived from the 5% of the Fund’s assets (assuming assets of approximately $2.5 million) that can be invested in bitcoin futures contracts and cash and cash equivalents. The amount of interest attributed to the bitcoin futures contracts is based on the notional value of the bitcoin futures contracts after subtracting the amount of margin, which is estimated at 25 percent, required to purchase the bitcoin futures contracts.
2. NFA reviewed your response to NFA's previous Comment Letter in which you indicated that certain changes with respect to performance results would only be made to the final dated copy. Be advised that NFA is unable to accept the Document until all comments have been satisfactorily addressed. Tidal Investments, LLC should not file a final dated copy of the Document until an Acceptance Letter has been received.
K&L GATEs LLP
1601 K Street NW Washington DC 20006
T +1 202 778 9000 F +1 202 778 9100 klgates.com
Tidal acknowledges and agrees that it will not file a final dated copy of the Disclosure Document until it receives an Acceptance Letter from the NFA.
3. Upon completion, the Document and the Statement of Additional Information must be dated.
Tidal acknowledges this requirement and agrees that it will date the Disclosure Document and Statement of Additional Information once finalized.
4. Both of the Documents filed with NFA appear to be marked to identify changes made since the prior filing. Please be advised that subsequent filings must include both a clean and a marked copy of the Document.
Tidal confirms that it will include both a clean and marked copy of the Disclosure Document with this and any future filings.
5. Upon resubmitting the Document, NFA requests that a copy of any comments received from the SEC be included. These comments will assist NFA in its effort to make the review process as efficient as possible.
Along with this response letter, we have included Tidal’s latest correspondence with the SEC, reflecting comments received and Tidal’s responses thereto.
We believe our responses should address all of the NFA’s comments and concerns, but please do not hesitate to reach out with any additional comments or questions.
Sincerely,
/s/ Cheryl L. Isaac
Show Raw Text
CORRESP
1
filename1.htm
March 5, 2024
Peter J. Shea
Peter.Shea@klgates.com
T +1 212 536 3988
F +1 212 536 3901
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
Amendment No. 5 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. 5 (“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
27, 2024 (“Comment Letter”), addressing Pre-Effective Amendment No. 4 to the Registration Statement that was filed
by the Registrant on February 20, 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. 4 to Registration Statement on
Form S-1
Prospectus Summary
The Fund’s Current Net Assets and Year
to Date Performance, page 1
1. Refer to your response to comment 1. Please revise to disclose the number of Shares outstanding as
of the most recent practicable date.
RESPONSE:
The prospectus contained in
the Amendment (“Prospectus”) has been revised to include updated disclosure.
The Offering
Fund Expenses, page 10
2. Refer to your response to comments 2 and 3. It appears that the Trust indemnifies the Bitcoin Custodian
pursuant to the Bitgo Custodial Services Agreement. Please revise your disclosure on page 10 to clarify whether indemnification expenses
owed pursuant to the Bitgo Custodial Service Agreement are allocated by the Sponsor, using its pro rata methodology, to each of the Trust's
series in existence at the occurrence of any such expense.
RESPONSE:
The suggested clarifications
have been added where appropriate in the Prospectus.
3. You disclose that the Fund is the successor and surviving entity from the merger (the “Merger”)
into the Fund of Hashdex Bitcoin Futures ETF (the “Predecessor Fund”) that is a series of the Teucrium Commodity Trust (the
“Predecessor Trust”) sponsored by Teucrium Trading, LLC (“Prior Sponsor”) that closed on January 3, 2024. Please
enhance your disclosures, consistent with your merger disclosures, that because Acquired Fund shareholders will own one share of the Acquiring
Fund interest for each share of the Acquired Fund they owned prior to the Merger, the Acquiring Fund unaudited pro forma equivalent data
will be the same as the corresponding unaudited pro forma combined data and therefore has not been presented.
RESPONSE:
The Prospectus has been revised
to include updated disclosure.
Financial Statements, page F-1
4. Please include updated audited financial statements for both Tidal Commodities Trust I and Hashdex
Bitcoin Futures ETF, a series of the Teucrium Commodity Trust (“Predecessor”) as of and for the period ended December 31,
2023. Refer to Rule 8-08 of Regulation S-X.
RESPONSE:
The Prospectus has been revised
to include updated disclosure.
* * * *
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 28, 2024, from
the National Futures Association (“NFA”) regarding the Registration Statement (the “NFA Comment Letter”); and
2
● A response letter dated March 5, 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
February
28, 2024
Sent via Electronic Mail
Mr. Michael Venuto
Tidal Financial Group
234 West Florida Street
Suite 203
Milwaukee, WI 53204
mvenuto@tidalfg.com
Re: Hashdex Bitcoin Futures ETF
Pool ID #170550
Tidal Commodities Trust I
Pool ID #184748
Dear Mr. Venuto:
NFA has reviewed the February 16, 2024
disclosure document (Document) that was received on February 21, 2024 and noted several items that do not comply with NFA Rules and CFTC
Regulations. Before Tidal Investments, LLC uses the Document to solicit participants, you will need to make all of the corrections listed
below and resubmit the Document to NFA.
1. It is still unclear from reading the Document how the estimated
interest income included in the break-even calculation is derived. NFA reviewed your response to our earlier Comment Letter noting that
you indicated that interest income is based, at least in part, upon the notional value of the bitcoin futures contracts held rather than
the cash on deposit in the pool's account at the clearing broker. Please provide NFA with information to support that this is in fact
the case. It would also be helpful to provide NFA with the calculation used to arrive at the assumed interest income included in the
analysis.
2. NFA reviewed your response to NFA's previous Comment Letter in which you indicated that certain changes
with respect to performance results would only be made to the final dated copy. Be advised that NFA is unable to accept the Document until
all comments have been satisfactorily addressed. Tidal Investments, LLC should not file a final dated copy of the Document until an Acceptance
Letter has been received.
3. Upon completion, the Document and the Statement of Additional Information must be dated.
4. Both of the Documents filed with NFA appear to be marked to identify changes made since the prior filing.
Please be advised that subsequent filings must include both a clean and a marked copy of the Document.
320 South Canal, Suite 2400 | Chicago, IL 60606 | 312-781-1300
| www.nfa.futures.org
5. Upon resubmitting the Document, NFA requests that a copy of any comments received from the SEC be included. These comments will assist
NFA in its effort to make the review process as efficient as possible.
Please be advised that this Document
may not be used to solicit participants until the above comments have been corrected, a revised Document has been filed, and the firm
has received an acceptance notification from NFA. The use of this Document without NFA's acceptance will result in violations of NFA Rules
and CFTC Regulations and could subject the firm to possible disciplinary action.
To facilitate NFA's review and acceptance
process, the resubmission of this Document must include two attachments, one that is a clean copy and one that is "marked" to
identify the deletions and additions that have been made to this Document. NFA will reject any future filings of this Document not in
this format.
If I may be of assistance to you as you
make the revisions, feel free to contact me at 312-781-1457.
Sincerely,
Jane Pfeiffer
Compliance Department
320 South Canal, Suite 2400 | Chicago, IL 60606 |
312-781-1300 | www.nfa.futures.org
Exhibit B
March 5, 2024
Cheryl L. Isaac
cheryl.isaac@klgates.com
Jane Pfeiffer
Compliance Department
National Futures Association
320 South Canal, Suite 2400
Chicago, IL 60606
T +1 202 778 9089
F +1 202 778 9100
Re: Hashdex Bitcoin
Futures ETF Pool ID #170550
Dear Ms. Pfeiffer:
This letter is in response to the comments
received from the National Futures Association (NFA) on February 28, 2024 with respect to the Hashdex Bitcoin Futures ETF (NFA Pool ID
#170550). K&L Gates LLP is outside counsel to Tidal Investments LLC (NFA ID #0526060), the commodity pool operator for the Hashdex
Bitcoin Futures ETF, and we are sending these responses on Tidal’s behalf.
Below, we respond in line to each of the NFA’s
comments:
1. It is still unclear from reading the Document how the estimated interest income included in the break-even
calculation is derived. NFA reviewed your response to our earlier Comment Letter noting that you indicated that interest income is based,
at least in part, upon the notional value of the bitcoin futures contracts held rather than the cash on deposit in the pool's account
at the clearing broker. Please provide NFA with information to support that this is in fact the case. It would also be helpful to provide
NFA with the calculation used to arrive at the assumed interest income included in the analysis.
Tidal’s initial break-even
calculation was unclear because it was based on a projected AUM of $50,000,000 rather than the ETF’s assets as of December 31, 2023,
which were $2,500,000. Based on updated calculations using AUM of $2,500,00, the correct interest income for the break-even calculation
is $0.06 and is reflected in the attached amendment to the Disclosure Document. The amount of interest included in break-even analysis
was derived from the 5% of the Fund’s assets (assuming assets of approximately $2.5 million) that can be invested in bitcoin futures
contracts and cash and cash equivalents. The amount of interest attributed to the bitcoin futures contracts is based on the notional value
of the bitcoin futures contracts after subtracting the amount of margin, which is estimated at 25 percent, required to purchase the bitcoin
futures contracts.
2. NFA reviewed your response to NFA's previous Comment Letter in which you indicated that certain changes
with respect to performance results would only be made to the final dated copy. Be advised that NFA is unable to accept the Document until
all comments have been satisfactorily addressed. Tidal Investments, LLC should not file a final dated copy of the Document until an Acceptance
Letter has been received.
K&L
GATEs LLP
1601 K Street NW
Washington DC 20006
T +1 202 778 9000 F +1 202 778 9100
klgates.com
Tidal acknowledges
and agrees that it will not file a final dated copy of the Disclosure Document until it receives an Acceptance Letter from the NFA.
3. Upon completion, the Document and the Statement of Additional Information must be dated.
Tidal acknowledges this requirement
and agrees that it will date the Disclosure Document and Statement of Additional Information once finalized.
4. Both of the Documents filed with NFA appear to be marked to identify changes made since the prior filing.
Please be advised that subsequent filings must include both a clean and a marked copy of the Document.
Tidal confirms that it will
include both a clean and marked copy of the Disclosure Document with this and any future filings.
5. Upon resubmitting the Document, NFA requests that a copy of any comments received from the SEC be included.
These comments will assist NFA in its effort to make the review process as efficient as possible.
Along with this response letter, we have included
Tidal’s latest correspondence with the SEC, reflecting comments received and Tidal’s responses thereto.
We believe our responses should address all of the
NFA’s comments and concerns, but please do not hesitate to reach out with any additional comments or questions.
Sincerely,
/s/ Cheryl L. Isaac
Cheryl L. Isaac
Partner, K&L Gates LLP
K&L
GATEs LLP
1601 K Street NW
Washington DC 20006
T +1 202 778 9000 F +1 202 778 9100
klgates.com