United States securities and exchange commission logo
December 12, 2023
Michael Sonnenshein
Chief Executive Officer
Grayscale Bitcoin Trust (BTC)
290 Harbor Drive, 4th Floor
Stamford, Connecticut 06902
Re: Grayscale Bitcoin
Trust (BTC)
Amendment No. 1 to
Registration Statement on Form S-3
Filed November 22,
2023
File No. 333-275079
Dear Michael Sonnenshein:
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 November 16,
2023 letter.
Amendment No. 1 to Registration Statement on Form S-3
Prospectus Summary, page 1
1. Please revise your
Prospectus Summary to disclose, if true, that:
The Trust is a
passive investment vehicle that does not seek to generate returns
beyond tracking the
price of bitcoin; and
The Trust will not
utilize leverage, derivatives or any similar arrangements in seeking
to meet its
investment objective.
Trust Overview, page 1
2. We note your response
to prior comment 2. Please explain the basis upon which you
expect the market price
of the Shares and the Digital Asset Holdings per share to align
immediately prior to
listing on NYSE Arca, and to converge upon listing on NYSE Arca.
Please also revise to
clarify whether there will be an initial Creation Basket.
Michael Sonnenshein
FirstName LastNameMichael
Grayscale Bitcoin Trust (BTC)Sonnenshein
Comapany12,
December NameGrayscale
2023 Bitcoin Trust (BTC)
December
Page 2 12, 2023 Page 2
FirstName LastName
The Offering
Index Price, page 5
3. Please add a footnote to the table on page 7 with market share and
volume information for
Crypto.com.
Liquidity Providers, page 16
4. Please revise to clarify the certain circumstances under which
the Liquidity Providers
will be contractually obligated pursuant to the Liquidity Provider
Agreements to receive
Bitcoin in exchange for cash. Please also file the Liquidity Provider
Agreement as an
exhibit to the extent required by Item 601(b)(10) of Regulation S-K.
Risk Factors
Risk Factors Related to the Digital Asset Markets
Due to the unregulated nature and lack of transparency, page 18
5. We note your response to prior comment 12. Please revise to add
subheadings or divide
this risk factor into separate risk factors with headings that
describe the specific risk
highlighted.
Creation and Redemption of Shares
General, page 29
6. You disclose in this section that the creation and redemption of
shares may be done in
cash or in-kind. With respect to in-kind creations and redemptions,
please revise here, in
your risk factors and in the summary to address the following:
Please describe the risk that any registered broker-dealer that
participates in the in-
kind creation or redemption of shares for bitcoin may be unable to
demonstrate
compliance with the applicable requirements of the federal
securities laws, including
the Financial Responsibility Rules; and
Please also describe the potential consequences to the
broker-dealer, its customers
and shareholders of the Trust if any such broker-dealer is unable
to comply with the
federal securities laws, including the Financial Responsibility
Rules, in connection
with in-kind creation and redemption transactions.
7. We note your response to prior comment 19 and re-issue in part. Please
revise to confirm,
if true, that any price differential of Bitcoins between the order
date and the transfer date
will be borne solely by the Authorized Participant or Liquidity
Provider until such
Bitcoins have been received by the Trust.
Creation Procedures, page 31
8. You state here that in exercising its discretion to limit the number
of Shares created
pursuant to Cash Orders, the Sponsor expects to take into
consideration a number of
factors, including the cost of processing Cash Orders relative to the
cost of processing In-
Michael Sonnenshein
Grayscale Bitcoin Trust (BTC)
December 12, 2023
Page 3
Kind Orders. Please describe, including in your risk factor disclosure as
appropriate, the
impact that utilizing Cash Orders may have on the efficiency of the
arbitrage mechanism.
Please contact David Irving at 202-551-3321 or Robert Telewicz at
202-551-3438 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Lulu Cheng at 202-551-3811 or Justin Dobbie at 202-551-3469 with any
other questions.
Sincerely,
FirstName LastNameMichael Sonnenshein
Division of
Corporation Finance
Comapany NameGrayscale Bitcoin Trust (BTC)
Office of Crypto
Assets
December 12, 2023 Page 3
cc: Joseph Hall
FirstName LastName