Company: DEFI
Filing Date: 2025-03-27
Form Type: 424B3
Source: 0001999371-25-003249
Chunk: 167

Company: Tidal Commodities Trust I
Filing Date: 2025-03-27
Form: 424B3
Chunk 167
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Creation and Redemption Transaction Fees

To compensate for expenses in connection with the creation and redemption of baskets, an Authorized Purchaser is required to pay a transaction fee of $300 per order to the Cash Custodian. The transaction fees may be reduced, increased or otherwise changed by the Sponsor. This $300 fee may not be used by the Fund to cover expenses related to creations and redemptions.

Tax Responsibility

Authorized Purchasers are responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax or governmental charge applicable to the creation or redemption of baskets, regardless of whether or not such tax or charge is imposed directly on the Authorized Purchaser, and agree to indemnify the Sponsor and the Fund if they are required by law to pay any such tax, together with any applicable penalties, additions to tax and interest thereon.

Impact on the Arbitrage Mechanism

The Authorized Purchasers typically hedge their exposure to creation and redemptions by trading Bitcoin Futures contracts on the CME Bitcoin Futures Market or by trading spot bitcoin on multiple bitcoin exchanges. Considering the size and liquidity of those markets, the Sponsor believes that the current Creation Basket and Redemption Basket size of 10,000 shares, which would equate to approximately $1,060,000 (assuming a NAV of $106.00 per share, which was the NAV per share as of December 31, 2024), enables Authorized Purchasers and Market Makers to manage inventory and facilitate an effective arbitrage mechanism for the Fund. The Sponsor recognizes, however, that the size of the baskets may adversely impact the effectiveness of the arbitrage mechanism of the Fund’s creation and redemption process, and accordingly may adjust the size of the baskets to enhance the activities of the Authorized Purchasers in the secondary market for the Fund’s Shares.

The efficiency of the arbitrage mechanism can also be impacted by the use of cash creations and redemptions. Unlike in-kind transactions, where the transfer of underlying assets can directly align the Fund’s holdings with its NAV, cash transactions may introduce timing discrepancies and additional costs, potentially leading to a less efficient arbitrage process. However, cash transactions provide liquidity and can be executed more swiftly than in-kind transactions, which could be advantageous under certain market conditions.

Secondary Market Transactions

As noted, the Fund will create and redeem Shares from time to time, but only in one or more Creation Baskets or Redemption Baskets. The creation and redemption of baskets are only made in exchange for delivery to the Fund or the distribution by the