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Bitwise Crypto Index Committee Meeting
September 30, 2020

San Francisco
October 01, 2020

Meeting called to discuss new rule regarding security status of cryptoassets.

Committee Meeting 3

Bitwise Crypto Index Committee Meeting


September 30, 2020


11:00 – 11:30 A.M. PT

Reason for Meeting:

Subsequent meeting proposed at the standard monthly meeting of September 29, 2020

In Attendance:

Matt Hougan (Chair), Hunter Horsley (Member), David Lawant (Member)

Meeting Notes

Item 1: Discussion Over a New Proposed Rule Concerning the Risk of a Cryptoasset Being Deemed a Security by US federal securities laws

Following the discussion started on September 29, 2020, the Index Committee discussed adding a new rule to the eligibility requirements that cryptoassets need to fulfill in order to become a constituent of the Bitwise crypto indexes.

The rule would be added under the section III.B.i, as the item “g”, in the Bitwise Crypto Index Methodology, moving all other rules down. It would read as follows:

Does not face undue risk of being deemed a security under US Federal Securities Law in the opinion of the Bitwise Crypto Index Committee, given present knowable facts and circumstances.

The Index Committee members agreed that this rule would contribute to make the index more investable by professional investors and investment funds, including the Bitwise 10 Crypto Index Fund. They also agreed that a cryptoasset being deemed a security would entail uncompensated risks including liquidity risks and enforcement actions.

It was agreed that the implementation of this rule would be done through a checklist conducted at a minimum on a quarterly basis that would entail: i) Internal analysis of the asset’s security status using a developed frameworks ii) Consideration of the Crypto Rating Council’s score of how likely an asset is to be considered a security; iii) The listing status of the asset on US cryptoasset trading venues that are regulated under the BitLicense from the NYSDFS; and iv) Past rulings or opinions issued on the security status of an asset by the relevant regulatory authorities. Decisions will be made based on the totality of facts and circumstances. Index Committee members can call for a one-off review of an asset intra-quarter if they believe it is merited by changes in the facts and circumstances.

The Committee voted 3-0 in favor of approving the new rule.

Item 2: Adjournment

The Chairman adjourned the meeting.

Important Disclosures

Bitwise Asset Management, Inc. and its affiliates (collectively, the “Manager”) have produced and distributes this Presentation for informational purposes only and in relation to a potential opportunity to subscribe for limited liability company interests (“Interests”) in any of several Funds offered only to certain Accredited Investors by the Manager, including the Bitwise 10 Crypto Index Fund, LLC; the Bitwise Bitcoin Fund, LLC; the Digital Asset Index Fund, LLC; the Bitwise 10 Index Offshore Fund, Ltd.; and the Bitwise Ethereum Fund, LLC. Any offer to sell or the solicitation of an offer to buy Interests in those Funds will solely and exclusively be made through definitive offering documents, identified as such, in respect of each Fund and in compliance with the terms of all applicable securities and other laws. Such definitive offering documents, if any, will describe risks related to an investment in the Funds (including loss of the entire investment) and will qualify in their entirety the information set forth in this Presentation.

Prior to making any investment decision with respect to any Fund, each investor must undertake its own independent examination and investigation of the Fund, including the merits and risks involved in an investment in the Interests, and must base its investment decision—including a determination whether Interests would be a suitable investment for the investor—on such examination and investigation, and must not rely on the Manager or the Fund in making such investment decision. Prospective investors must not construe the contents of this Presentation as legal, tax, investment, or other advice. Each prospective investor is urged to consult with his or her own advisors with respect to legal, tax, regulatory, financial, accounting, and similar consequences of investing in the Fund, the suitability of the investment for such investor, and other relevant matters concerning an investment in the Fund. The summary set forth in this Presentation does not purport to be complete and is qualified in its entirety by reference to the definitive offering documents relating to the Fund. Do not place undue reliance on this Presentation. Performance information is provided for informational purposes only. Actual performance of any Fund may vary substantially from the performance provided in this presentation. Backward-looking performance cannot predict how any investment strategy will perform in the future. The Units of the Funds (the “Interests”) have not been registered under the Securities Act of 1933, the securities laws of any state, or the securities laws of any other jurisdiction, nor is such registration contemplated. The Interests will be offered and sold under the exemption provided by Section 4(a)(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder and other exemptions of similar import in the laws of the states and jurisdictions where the offering will be made. The offer and sale of the Interests have not been registered with or approved or disapproved by the Securities and Exchange Commission (the “SEC”) or the securities commission or regulatory authority of any state or foreign jurisdiction.

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