These developments are expected to not only further rally the price of Bitcoin, but also open the doors for more traditional investment opportunities based on cryptocurrencies, such as a Bitcoin exchange-traded fund (ETF). ETFs are currently very popular investment products for beginning and advanced investors because they charge low fees and usually have low volatility. Because high volatility is one of the factors preventing conventional investors from entering the crypto market, products such as these could offer them the best of both worlds.
The Trust, the Advisor and the Distributor each have adopted a consolidated code of ethics (the “COE”), under Rule 17j-1 of the 1940 Act, which is reasonably designed to ensure that all acts, practices and courses of business engaged in by personnel of the Trust, the Advisor and the Distributor reflect high standards of conduct and comply with the requirements of the federal securities laws. There can be no assurance that the COE will be effective in preventing deceptive, manipulative or fraudulent activities. The COE permits personnel subject to it to invest in securities, including securities that may be held or purchased by a Fund; however, such transactions are reported on a regular basis. The Advisor’s personnel that are Access Persons, as the term is defined in the COE, subject to the COE are also required to report transactions in registered open-end investment companies advised or sub-advised by the Advisor. The COE is on file with the SEC and is available to the public.
Unlike many commodity futures, Bitcoin futures are cash settled rather than physically settled.  Cash settlement is a relatively new development in futures trading, first introduced in 1981 for Eurodollar futures, that addresses the problem of how to settle futures contracts on things that are difficult/impossible to deliver physicially—things like interest rates, large stock indexes (e.g., S&P 500), and volatility indexes (Cboe’s VIX).  Futures physical settlement involves actual shipment/change of ownership of the underlying product to the contract holder but in practice, it’s rarely used (~2% of the time).  Instead, most organizations that are using futures to hedge prices of future production/usage will make separate arrangements with suppliers/customers for physical delivery and just use the futures to protect against contrary price changes.  In practice, the final settlement price of the contract can be used to provide the desired price protection regardless of whether the futures contract specifies physically delivery or cash-settlement.
Look, you and I are sophisticated, and we get that "bitcoin's price increase is deflationary and makes it a bad currency" is not a good argument against bitcoin, because "bitcoin is a bad currency" is not a good argument against bitcoin. (People keep making it though.) Bitcoin's value proposition -- much like that of gold -- is that it is an uncorrelated store of value, not that it is useful for buying a sandwich. But at the same time you have to watch out for business models that are based on the casual assumption that bitcoin works just like a currency. "Cryptocurrency-financed warehouse lending" has the word "cryptocurrency" in it, so it's worth billions of dollars, but I'm not sure it works as a business model.

If I held the opinion that an asset was going to go one way, but then made the research and it turned out that I started thinking it might actually be headed the other way, I should feel no obligation to hold on to my original opinion, just because I didnt want to feel I’ve been initially wrong. This seems obvious but is much tougher in practice for inexperienced investors.
The tax rules are uncertain with respect to the treatment of income or gains arising in respect of commodity-linked exchange-traded notes (“ETNs”) and certain commodity-linked structured notes; also, the timing and character of income or gains arising from ETNs can be uncertain. An adverse determination or future guidance by the IRS (which determination or guidance could be retroactive) may affect a Fund’s ability to qualify for treatment as a regulated investment company and to avoid a Fund-level tax.
A key attribute of a futures market is how its contract’s prices vary by expiration date. The succession of futures prices over time is called the “term structure”. If supply is stable (no seasonality or shortages) then typically futures prices will increase with expirations further in the future. This term structure configuration is called “contango” and it accounts for the fact that carry costs (e.g., time value of money) and profit expectations increase with time. Unless there are big changes in interest rates or the way that Bitcoin exchanges work I expect the level of contango in the Bitcoin futures term structure to be small. Bitcoins don’t cost much to hodl (once you have your hardware wallet) and there’s no apparent seasonality. The chart below from VIX Central shows a typical Bitcoin term structure (click on chart to get current data):
Any distribution of income that is attributable to (i) income received by a Fund in lieu of dividends with respect to securities on loan pursuant to a securities lending transaction or (ii) dividend income received by a Fund on securities it temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified dividend income to individual shareholders and will not be eligible for the dividends-received deduction for corporate shareholders.

The Trust and the fund have obtained an exemptive order from the SEC allowing a registered investment company to invest in the Fund’s shares beyond the limits of Section 12(d)(1) subject to certain conditions, including that a registered investment company enters into a Participation Agreement with the Trust regarding the terms of the investment. Any investment company considering purchasing shares of the Fund in amounts that would cause it to exceed the restrictions of Section 12(d)(1) should contact the Trust.
Trader A is a producer of pork bellies. In order to insure herself against a price drop in pork bellies in the future, she enters a futures contract with Trader B. Trader B uses these pork bellies to manufacture sliced breakfast bacon. Thus, he is not worried that prices might fall in the future – his worry is that prices will go up. Both traders agree that Trader A will sell a metric ton of pork bellies for 1,000 USD 3 months from now. This increases security for both of their businesses. Because a futures contract is a binding contract between two parties, neither party can drop out of the contract: Even if the price for pork bellies is 1,200 USD at the time of execution, trader A is still contractually obliged to sell for 1,000 USD.
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