Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” with respect to the financial conditions, results of operations, plans, objectives, future performance and business of Bitwise 10 Crypto Index Fund (BITW) (the “Trust”). Statements preceded by, followed by or that include words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other similar expressions are intended to identify some of the forward-looking statements. All statements (other than statements of historical fact) included in this Annual Report on Form 10-K that address activities, events or developments that will or may occur in the future, including such matters as changes in market prices and conditions, the Trust’s operations, the plans of Bitwise Investment Advisers, LLC (the “Sponsor”) and references to the Trust’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially from such statements. These statements are based upon certain assumptions and analyses the Sponsor made based on its perception of historical trends, current conditions and expected future developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including, but not limited to, those described in “Item 1A. Risk Factors.” Forward-looking statements are made based on the Sponsor’s beliefs, estimates and opinions on the date the statements are made and neither the Trust nor the Sponsor is under a duty or undertakes an obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, other than as required by applicable laws. Investors are therefore cautioned against relying on forward-looking statements. Factors which could have a material adverse effect on the Trust's business, financial condition or results of operations and future prospects or which could cause actual results to differ materially from the Trust's expectations include, but are not limited to:
Unless otherwise stated or the context otherwise requires, the terms “we,” “our” and “us” in this Annual Report on Form 10-K refer to the Sponsor acting on behalf of the Trust.
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Glossary
This glossary highlights some of the industry and other terms used elsewhere in this Annual Report on Form 10-K but is not a complete list of all the terms used herein. Each of the following terms has the meaning set forth below:
“Airdrops” – mean a method to promote the launch and use of new digital assets by providing a small amount of such new digital assets to the private wallets or exchange accounts that support the new digital asset and that hold existing related digital assets.
“Bitcoin” or “BTC” – means a type of Crypto Asset based on an open-source cryptographic protocol existing on the Bitcoin network, comprising one type of the Crypto Assets underlying the Trusts’ Shares.
“Blockchain” – means the public transaction ledger of a Crypto Asset’s network on which transactions are recorded.
“Consensus Algorithm” – means the algorithm at the heart of the Blockchain system that enforces that all ledgers converge over time.
“Crypto Assets” – means a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger, a computerized database using cryptography to secure transaction records, to control the creation of additional coins and to verify the transfer of coin ownership.
“Crypto Asset Network” – means the online, end user to end user network hosting the public transaction ledger, known as the Blockchain, and the source code comprising the basis for the cryptographic and algorithmic protocols governing the Crypto Asset’s network.
“Crypto Asset Exchanges” – means a dealer market, a brokered market, principal to principal market or exchange market on which Crypto Assets are bought, sold, and traded.
“Custodial Account” – means a segregated custody account to store private keys, which allow for the transfer of ownership or control of the Trust’s Portfolio Crypto Assets, on the Trust’s behalf. Under the Custodian Agreement, the Custodian controls and secures the Trust’s Custodial Account.
“Custodian Fee” – means an annualized fee charged monthly that is a percentage of the Trust’s monthly assets under custody.
“Custodial Services” – means the services provided by the Custodian including, (i) allowing Portfolio Crypto Assets to be deposited from a public Blockchain address to the Trust’s Custodial Account and (ii) allowing the Trust or Sponsor to withdraw Portfolio Crypto Assets from the Trust’s Custodial Account to a public Blockchain address the Trust or Sponsor controls.
“Custodian” – means Coinbase Custody Trust Company, LLC. On behalf of the Trust, the Custodian holds the Portfolio Crypto Assets.
“DEX” – means “decentralized” exchange, where there is no central facilitator of trade and trading rules.
“Eligible Crypto Assets” – means those Crypto Assets that track the Bitwise 10 Large Cap Crypto Index.
“Emissions” – mean regular awards provided to holders of Crypto Assets in the form of Crypto Asset grants, and often in the form of the “gas” that powers transactions on the relevant Crypto Asset Network.
“Extraordinary Expenses” – means expenses outside of the Trust’s normal business operations which includes, but is not limited to, any non-customary costs and expenses including indemnification and extraordinary costs of the Administrator and Auditor, costs of any litigation or investigation involving Trust activities, and financial distress and restructuring and indemnification expenses.
“Hard Fork” – occurs when there is a change in the set of rules governing a Blockchain that makes it more restrictive than the previous set of rules in place.
“Index” – means the Bitwise 10 Large Cap Crypto Index.
“Index Components” – mean the Index is comprised of the top 10 coins selected and weighted by inflation adjusted market capitalization.
“Index Provider” – means Bitwise Index Services, LLC, an affiliate of the Trust that is controlled by the same parent entity as the Sponsor. The Index Provider administers the Index.
“Market-Capitalization Weighted” – means the top 10 cryptocurrencies in the Bitwise 10 Crypto Index are selected and held in proportion to their valuation.
“Miners” – means stakeholders that help process transactions and ensure that the distributed ledgers that make up a Blockchain network stay consistent with one another.
“Mining” – means the act of solving computational puzzles through which transactions with cryptocurrencies are verified and added to the Blockchain digital ledger in exchange for a Crypto Asset as a reward.
“NAV” – means net asset value.
"NAV of the Trust" – means the sum of the assets and liabilities of the Trust.
“NAV Per Share” – means the NAV of the Trust calculated on a per Share basis.
“Oracles” – means the reliable data source used by a Blockchain application whenever it needs to interact with external data.
“Portfolio Crypto Assets” – means the group of selected cryptocurrencies that are held by the Trust.
“PoS” – means proof-of-stake and is a scheme Miners can operate in to provide the Mining service for the Blockchain network and receive payment. PoS is a newer scheme that tries to avoid the heavy energy consumption that PoW systems typically require. PoS systems require Miners to lock up and put at risk (aka, “stake”) a certain amount of the Crypto Asset associated with a given Blockchain in order to process transactions. These staked assets are lost if a Miner processes a transaction in a way that is fraudulent or violates the rules of the underlying Blockchain.