Untitled

CoinShares Digital Securities Limited

Audited financial statements for the year ended 31 December 2024

Doc ID: 2b3ee7868c6a563b80d0f6a6a2afd7b2855b7248

Audited Financial Statements

For the year ended 31 December 2024

Contents

Page

Company Information

For the year ended 31 December 2024

The Company

Registered Number

Registered Office 2nd Floor

2 Hill Street

St Helier

Jersey

JE2 4UA

Directors Jeri-Lea Brown (resigned 4 March 2024)

Michael Fox (appointed 4 March 2024)

Stuart Pinnington

Kirsty Lawrence

Townsend Lansing Jr.

Company Secretary

Independent Auditor Baker Tilly Channel Islands Limited

2nd Floor

Lime Grove House

Green Street

St Helier

Jersey

JE2 4UB

Barclays Bank PLC.

13 Library Place

St Helier

Jersey

JE4 8NE

Komainu Digital

3rd Floor

2 Hill Street

St Helier

Jersey

JE2 4UA

CoinShares Digital Securities Limited

127061

Bank

Custodian

CoinShares Corporate Services (Jersey) Limited

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CoinShares Digital Securities Limited

Directors' Report

For the year ended 31 December 2024

Incorporation

The Company is incorporated, domiciled and tax resident in Jersey, Channel Islands.

Principal activity

Business review and key performance indicators

The directors present their report and the financial statements of CoinShares Digital Securities Limited (the 'Company') for

the year ended 31 December 2024.

2024 was a record year for CoinShares’ Physical ETP platform, our strongest year in terms of revenue, with the platform

generating £16.6 million in management fees over the year, representing an eightfold increase on 2023.

Company Digital Securities performance in 2024

EU Crypto-ETP Market

The principal activity of the Company is to act as an issuer of exchange traded products ('ETPs'). These ETPs, collectively

referred to as Digital Securities, are non-interest bearing, secured, undated, limited recourse debt securities that are fully

secured by the holdings of the digital assets underlying each ETP. Digital Securities are listed on several stock exchanges

and Multilateral Trading Facilities.

The Company is a Special Purpose Vehicle whose sole business is the issue of asset-backed securities. The Company

has established a programme for the issue of Digital Securities whose return is linked to the performance of underlying

Digital Assets. 2023 was a key period of growth for our physically-backed platform of ETPs, CoinShares Physical.

Digital Securities do not have a fixed maturity. A Digital Security holder can sell the product on the regulated market on

which it is listed, or in accordance with (and subject to) the terms of the Prospectus, may redeem the securities directly

with the Issuer in return for an amount of underlying digital assets equal to the aggregate Coin Entitlement of the Digital

Securities (less relevant fees and costs) or, in certain limited circumstances, for an amount in US dollars equal to the net

proceeds of sale of the aggregate Coin Entitlement (less relevant fees and costs).

2024 saw record net inflows globally, at an amount almost 5x the prior record set in 2021. The US obviously experienced

the most flows, as a direct result of the SEC approvals, at $48.1 billion. Europe, however, saw net outflows of $375 million,

mainly due to profit taking as well as large institutions switching from European ETPs to US ETPs.

In terms of flows, CoinShares Physical product range experienced a strong year, with around US$616 million of gross

inflows, offset by large outflows from institutional investors migrating to U.S.-based products in early January, as well as

higher than average redemptions due to profit taking towards the end of the year. CoinShares Physical had net positive

inflows of US$160 million in 2024.

Assets of the CoinShares’ Physical platform increased by 124% in 2024, closing the year at $2.3 billion (inclusive of seed

investment of $621 million) just after reaching its all-time high at $2.7 billion mid-December. CoinShares Physical Bitcoin

achieved the historical milestone of becoming Europe’s largest physical Bitcoin ETP in Europe in 2024. This success is the

combination of price appreciation and continuous product development and distribution efforts.

Price appreciation drove European digital asset ETP AUM to $17 billion by the end of 2024, compared to $9 billion at the

start of the year. The U.S. digital asset ETP AUM closed the year at an impressive $129 billion, having started the year at

$34 billion. In terms of asset mix, flows were once again dominated by Bitcoin, which saw $41.6 billion of inflows, while

Ethereum saw a resurgence in late 2024, bringing full year inflows to $5.3 billion.

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Business review and key performance indicators (continued)

Digital assets held for collateral purposes

2024 2023 2024

Number Number £

Bitcoin 13,766 14,564 1,045,510,155

Ethereum 118,188 84,787 321,300,667

Litecoin 114,877 77,146 9,494,786

XRP 69,350,796 33,606,739 117,284,370

Polkadot 1,978,606 615,669 10,784,508

Tezos 4,594,909 3,000,443 4,894,039

Cardano 36,964,845 23,871,818 25,591,295

Solana 1,855,100 1,499,969 291,828,271

Chainlink 771,445 304,300 12,824,166

Uniswap 595,340 226,135 6,488,083

Cosmos 397,695 201,835 2,043,374

Matic 15,802,279 6,073,837 5,923,966

A

lgorand 56,598,171 37,727,904 15,716,856

Digital asset - COIN10 Multiple Multiple 3,098,836

Digital asset - COINSMRT Multiple Multiple 2,763,735

Digital asset - CFTN Multiple Multiple 9,079,152

1,884,626,259

1,725,697

4,766,272

6,681,098

817,137,433

11,281,487

121,089,990

3,663,215

1,341,196

153,022,594

New product launches in 2024

2,427,596

4,475,987

16,425,068

346,970

151,409

Refer to note 8 Digital assets held for collateral purposes for further details.

4,105,730

-

On 24 September 2024, the Company launched a new index ETP in conjuction with Finanzen.net, the CoinShares Physical

Finanzen.net Top 10 Crypto ETP ('CFTN'). This product is listed on German's main market Xetra and Gettex and has a

management fee of 1.5% per annum.

485,633,124

£

2023

On 25 January 2024 the Company announced a reduction in the management fees for the CoinShares Physical Bitcoin

ETP product. From 1 February 2024 the fees were reduced from 0.98% per annum to 0.35% per annum. On 14 January

2025 the Company announced a further reduction in the management fees for the CoinShares Physical Bitcoin ETP

product. From 14 January 2025 the fees were reduced from 0.35% per annum to 0.25% per annum.

On 1 February 2024 the Company added a 1.25% per annum staking reward to the Ethereum ETP, also amending its

name to CoinShares Physical Staked Ethereum. The management fee remained at 0.0% however staking rewards are

earned by CoinShares Capital Markets (Jersey) Limited ('CSCMJL').

Changes in existing products in 2024

Digital Assets held

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Future developments

Future outlook

Risks and uncertainties

The Directors expect the present level of activity to be sustained for the foreseeable future and to continue issuing new

Digital Securities to meet evolving investor demands.

The Directors and the wider CoinShares Group will continue to assess the needs of the evolving market in order to design,

build and launch products to meet such needs. This will include (but is not limited to) consideration for products referencing

digital assets already included within the CoinShares Digital Securities Prospectus, in addition to ongoing assessment of

the management fees attached to existing products.

After what will be remembered as a pivotal year for the crypto asset management industry, we believe 2025 should

continue at the same pace. In the U.S., we expect that additional altcoin ETFs should receive SEC approval in 2025, albeit

likely at a slower pace than the market’s expectations.

The global market for crypto ETFs and ETPs is set for strong growth in 2025, driven by increasing institutional adoption,

regulatory clarity, and the success of spot Bitcoin ETFs in the U.S. following their 2024 approvals.

As a result, the principal risks and uncertainties to which the Company is exposed has not materially changed during the

year ended 31 December 2024. There is an inherent risk from the point of view of investors as the values of Digital Assets

and Basket of Digital Assets, and thus the value of the Digital Securities, may vary widely due to, amongst other things,

changing supply and demand for Digital Assets, government and monetary policy or intervention, interest rate levels and

global or regional political, economic or financial events.

From a commercial perspective the Company does not retain any net gains or losses or net risk exposures, as (with the

exception of the impact of the Management Fee and Staking Reward) the gains or losses on the liability represented by the

Digital Securities are matched economically by corresponding losses or gains attributable to the Digital Assets and Basket

of Digital Assets.

Any movements in the value of the Digital Assets and Basket of Digital Assets are wholly attributable to the holders of the

Digital Securities, therefore Company has no residual exposure to movements in the value of the Digital Assets and Basket

of Digital Assets.

Each class of Digital Securities is issued under limited recourse arrangements whereby the holders have recourse only to

the relevant Digital Assets and Basket of Digital Assets held to support the Digital Security and not to the Digital Assets

and Basket of Digital Assets of any other class of Digital Security or the Company.

The Digital Securities provide investors with exposure to Digital Assets or Baskets of Digital Assets. Each Digital Security is

a debt instrument whose redemption price is linked to the value of the relevant underlying.

Although the market was largely driven by U.S. related news in 2024, we still believe that Europe has a strong role to play

in accelerating crypto adoption in the coming years. The European crypto asset management market is very mature, with

nearly 200 crypto ETPs, a strong breadth of underlying exposures not available yet in any other part of the world, and

basket and staked ETPs which are still a unique way for investors to benefit from enhanced diversification and additional

source of revenue. The final implementation phase of MiCA (Markets in Crypto-Assets Regulation) should bring another

degree of regulatory stability and comfort for investors across Europe and we expect some historically reticent European

markets to open up to crypto regulated products in 2025.

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Risks and uncertainties (continued)

Political risk in the market of Digital Assets: The legal status of Digital Assets varies between different countries and is

very much in transition. There exists a lack of regulatory consensus concerning the regulation of Digital Assets in Europe.

Future regulatory or political developments could adversely affect markets for Digital Assets, their adoption and ultimately

their value.

Risk of loss of confidence in the Digital Asset exchanges and market infrastructure: Digital Assets trade on a

number of exchanges, many of which are unregulated. Disruptions to those exchanges, whether caused by hacks or fraud

or operational issues, could materially impact the ability of digital currencies to trade, which in turn would impact their price.

Risk factors relating to Digital Securities

The value of a Digital Security can change quickly and could even drop to zero: The price of Digital Assets is volatile

and may be affected by a variety of factors. Should demand for a Digital Asset decrease or should it fail to achieve

adoption among the Digital Asset community or should it suffer technological or coding failures or hacks, for example, then

its value could drop sharply and permanently, which in turn would adversely affect the price of the relevant Digital

Securities in the secondary market, as the Digital Securities are designed to track the price of the relevant Digital Asset.

Valuation: Digital Assets do not represent an underlying claim on income or profits, nor do they represent a liability that

must be repaid. Their value is a function of the perspective of the participants within the market place (or specific, given,

market place) and supply and demand. As a result, the value of Digital Assets may be more speculative and more volatile

than traditional assets representing claims on income, or profits or debts.

Risks may differ between various Digital Assets and their underlying protocols: The Company may offer Digital

Securities that reference a wide variety of Digital Assets, and some of those individual Digital Assets may have risks that

are not comparable to risks of other Digital Currencies.

Risk of Liquidity in certain Proof of Stake Protocols: The Issuer may stake coins that are subject to such liquidity

restrictions. As a result, the Issuer may hold coins subject to such restrictions, which in turn may hinder the Issuer in

satisfying redemption requests. The Issuer will agree with the Staking Agent to provide a necessary liquidity bridge to

ensure it can continue to satisfy redemption obligations while its holdings are restricted, but there can be no guarantee that

the Staking Agent can provide such alternative liquidity.

Liquidity risk in the market for Digital Assets: Exchanges for Digital Assets are not only new, but most are also

unregulated. As a result, there is a risk of delay or failure of liquidity in the markets for Digital Assets, market closures or

liquidity failures can affect both the price and tradability of underlying Digital Assets and, by extension, the Digital

Securities. In such an event, the price of Digital Assets may decline or be more volatile and price determination for a Digital

Security may become more difficult. This may in turn reduce the ability of investors to trade the Digital Securities and/or

adversely affect the price of the Digital Securities.

The market price of Digital Securities is a function of supply and demand amongst investors wishing to buy and sell Digital

Securities and the bid or offer spread that the market makers are willing to quote.

The Company has exposure to country and currency risk as the Digital Securities are mainly priced in US Dollars.

However, the Directors do not consider the Company to have a significant net exposure to country and currency risk as the

gains or losses on the liability represented by the Digital Securities are matched economically by corresponding losses or

gains attributable to the Digital Assets and Basket of Digital Assets.

The following sets out a description of the principal risks inherent in the activities of the Company and to an investment in

its products.

Risk of loss of confidence in the Digital Asset protocols and their networks: Digital Assets are dependent on

investors, users and other members of the digital asset maintaining confidence in their underlying protocols. Should Digital

Asset investors, miners or exchanges lose confidence in an underlying protocol, the liquidity and/or value of the associated

Digital Asset may decrease, which in turn would affect the liquidity and/or value of the corresponding Digital Securities.

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Risks and uncertainties (continued)

Collateral and proof of reserves: In order to ensure the Company possesses sufficient assets to cover redemptions of

Digital Securities, the Company undertakes a proof of reserves assessment. Proof of reserves is an attestation service via

LedgerLens, a real time reserves attestation solution provided by independent accounting firm, The Network Firm.

This innovative blockchain-enabled solution will offer real time attestation services for the Company's ETPs enabling

investors to independently verify the backing of digital assets through easily accessible and instant attest reports.

The LedgerLens solution, provided by The Network Firm, enhances trust in asset-backed tokens and crypto-collateralized

notes by offering high frequency reporting and insights into assets and liabilities, including historical positions.

This increased transparency facilitates compliance with both international and domestic regulatory requirements, further

solidifying the Company's standing as a reliable leader in the digital asset investment sector.

The cyber risks are mitigated through the use of systems to prevent external attacks (such as, but not limited to, firewalls,

detection of possible phishing emails, encryption using secure keys and strong physical security). Komainu, as custodian,

is subject to periodic reviews.

The risk of hacking, and losing Bitcoin/Ethereum and other digital assets in digital wallets due to fraud is reduced through

the majority of the digital assets being kept in cold storage with Komainu, who provide access to a cold storage vault.

Komainu has a SOC 1 Type 2 report, the latest covering the period from 1 December 2023 to 30 November 2024, which

was independently reviewed and authorised for issue on 21 March 2025. Komainu is also ISO27001 certified. In addition to

limiting the exposure to fraud for the Company, cold storage of digital assets with Komainu also reduces the exposure to

hacking of the exchanges.

These are risks relating to losses as a result of operational matters such as having inappropriate or insufficient routines,

human error, systems failures and legal risks. The main operational risk for the Company would be the inability to redeem

a security through either systems failures or continuity planning issues. The risk is mitigated through the use of a business

continuity plan which has been tested, and demonstrated that the traders can perform their work from anywhere.

Operational risk: Operational risk is the risk of direct or indirect loss arising from the Company’s processes and

infrastructure, and from external factors other than credit, markets and other price risk and liquidity issues such as those

arising from legal and regulatory requirements and generally accepted standards of corporate behaviour.

Interest rate risk: Interest rate risk is the risk that the value of the Company will be impacted by fluctuations in the

prevailing levels of market interest rates. The majority of the Company's financial assets and liabilities are non-interest

bearing and as a result, the Company is not subject to significant amounts of risk due to fluctuations in the prevailing levels

of market interest rates.

Risk factors relating to the Company

Market Risk: the risk of a loss of value on financial instruments arising from changes in the prevailing parameters of the

market. Digital assets are an extremely volatile asset class, which can respond unexpectedly and adversely to events

outside of the Company's control. This risk is mitigated by ensuring the value of the obligations to security holders is

matched by the value of digital assets held.

The Company consistently monitors its operational risk due to the reliance on third party service providers.

The risk of theft of the Company's custodied coins is considered minimal owing to the strong control framework built

around the storage and transfer of Digital Assets.

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Risks and uncertainties (continued)

Sustainability and Corporate Responsibility

Sustainability and corporate responsibility are embedded throughout the business of the CoinShares Group. The Group

Directors believe this benefits shareholders and employees of the Group, investors in CoinShares products and services

offered as well as wider society.

Digital asset price risk: Digital assets are an extremely volatile asset class. Digital asset price risk arises from the

uncertainty about future prices of the digital assets, impacting both the fair value of the digital assets held by the Company

and the fair value of the liabilities of the Company towards security holders. To mitigate its exposure to changes in prices of

digital assets, any exposure to changes in prices on the digital assets held is matched by the changes in value of the

obligations to security holders.

Capital risk management: The capital of the Company is nil. The Company's objective is to undertake the issuance and

redemptions of Digital Securities and performing the associated obligations for the Group, in the interest of benefitting the

shareholders of the ultimate parent company. This is achieved through frequent evaluation of the Company's products to

ensure they meet investor demands.

More information on the Group's corporate social responsibility strategy can be found on the CoinShares website.

The Annual Sustainability Report aims to be transparent and relevant, to ensure that stakeholders can easily learn about

the Group's sustainability efforts and gain an understanding of group performance and progress over time in relation to

Environmental, Social and Governance (“ESG”) initiatives.

Liquidity risk: Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with

financial liabilities. Liquidity issues could arise as a result of the redemption of securities. In this case, the Company would

be required to have sufficient liquidity to finance the redemption of the securities. The prospectus and final terms for each

security define the formula at which the securities can be redeemed based on a coin entitlement. Securities holders can

request redemption of their securities which will be settled two business days following a valid redemption notice. The

Company it is required holds the relevant digital asset at all times to be able to meet these redemptions.

Credit risk arising from the ETP creation process is mitigated by the fact that Digital Securities are issued to counterparties

only after the underlying Digital Assets have been received. Management Fees and Staking Rewards recognised by the

Programme Manager and Staking Agent respectively are deducted from amounts held in relation to the ETPs, therefore

not relying on counterparties.

Liquidity risk associated with the payment of suppliers is mitigated through the arrangement whereby expenses of the

Company are settled by CoinShares (Jersey) Limited ('CSJL') through the issuance of fees as agreed in the Service Level

Agreement dated 21 May 2021.

Credit risk: Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has

entered into with the Company. Digital asset activity has an inherent credit risk due to the nature of the industry, which is

non-regulated, extremely volatile, has low barriers to entry and is vulnerable to bad actors.

Credit risk from balances with custodians, banks, brokers and financial institutions is managed, monitored and controlled

by the finance department in accordance with the Company policy. It is the Company's policy to only enter into transactions

with reputable counterparties, as determined through appropriate due diligence.

The risk of losing Digital Assets in digital wallets due to fraud is reduced through digital assets being kept in cold storage

with Komainu, providing a cold storage vault. The Company does not expect to incur material credit losses in respect of

digital assets.

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Corporate Governance

The Group Directors acknowledge that climate change and its impact on the global economy is of increasing interest and

focus for stakeholders and that, where relevant, stakeholders will seek information from companies regarding how climate

change is expected to impact the operations of the business and how climate change risk has been considered in the

context of reported results.

Sustainability and Corporate Responsibility (continued)

The Company’s issued share capital consists of 1 fully-paid share of £0.01, which is held ultimately by CoinShares

International Limited.

No person has a significant direct or indirect holding of securities in the Company. No person has any special rights of

control over the Company’s share capital. There are no restrictions on voting rights. The Company belongs to a group of

companies, the ultimate holding entity of which is CoinShares International Limited, incorporated in Jersey, Channel

Islands.

Board of Directors

The disclosures are structured according to our key sustainability topics. The report has been written with reference to the

Swedish Annual Accounts Act (1995:1554), and is presented in four sections, as follows:

1. Strategy and Current Position

2. Sustainability

3. Environmental Initiatives

4. Social Initiatives

In acknowledging the above, the Directors have considered the Company’s exposure to climate change and determined

that due to the nature of the Company and its operations there are no directly observed impacts of climate change on the

business. As a result, the Directors concluded that there is no basis on which to provide extended information of analysis

relating to climate change, including as part of the basis of accounting or individual accounting policies adopted by the

Company.

The Directors have concluded specifically that climate change, including physical and transition risks, does not have a

material impact on the recognition and separate measurement considerations of the assets and liabilities in these financial

statements as at 31 December 2024.

The liabilities are valued using listed market prices at the period end. These observable inputs and market prices will

reflect wider market sentiment, which inherently includes market perspectives relating to the impactor climate change. The

Board recognises that government and societal responses to climate change risks are still developing and the future

impact cannot be predicted.

Future valuations of assets and liabilities may therefore differ as the market responds to these changing impacts or

assesses the impact of current requirements differently.

The Board meets regularly as required by the operations of the Company, but at least quarterly to review the overall

business of the Company and to consider matters specifically reserved for its review.

Share Capital and voting rights

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Corporate Governance (continued)

Internal Control

The Company does not intend to undertake any business other than issuing and redeeming Digital Securities and

performing the associated obligations.

During the year the Company did not have any direct employees or subsidiaries. The Company, being a special purpose

company established for the purpose of issuing Digital Securities, has not undertaken any business, save for issuing and

redeeming Digital Securities, entering into the required documents and performing the associated obligations, since

becoming an issuer of ETPs.

CoinShares International Limited is a Jersey, public limited liability company whose shares are listed for trading on Nasdaq

Stockholm and the ultimate parent company of the Company. The Corporate Governance framework for CoinShares

International Limited is grounded in the Company’s Articles of Association, Companies (Jersey) Law 1991, as amended,

the Jersey Financial Services Commission Codes of Practice, Nasdaq’s Nordic Main Market Rulebook for Issuers of

Shares and the Company’s internal rules and guidelines. The internal rules and guidelines include primarily the Board’s

rules of procedure, the CEO’s instructions, the instructions for financial reporting and internal control, and the finance

manual.

Director remuneration

The Directors of the Company who are employees within the CoinShares group do not receive separate remuneration in

their capacity as Directors of the Company. The non-executive director receives separate remuneration for their role which

is paid by CSJL as the Programme Manager however is recognised as an expense by the Company.

Third Line of Defence: The Group relies upon both the annual financial audit process in addition to more focused

specialised external work, undertaken on particular parts of the business, for example, the work undertaken by The

Network Firm, providing attestation reports on the assets held in support of the Group’s ETPs.

The Second Line of Defence: The Group’s Compliance Team has a number of key responsibilities including anti-money

laundering, countering of terrorism financing, regular testing of the Group’s control framework and liaising with the Group’s

various external regulatory bodies.

First Line of Defence: The client-facing operations teams are responsible for maintaining a strict control environment over

day-to-day operational matters. The first line has a comprehensive control framework, managed and maintained by them;

the framework spans both organisation wide controls and department specific controls.

The Group operates the Three Lines of Defence model, which is considered to be industry best practice and comprises the

following:

Integration with CoinShares Group governance

In addition, CoinShares International Limited has a number of policy documents and manuals, including the Code of

Conduct, the Corporate Governance Policy, the Insider Policy, and the Information and Communication Policy, as well as

other internal rules and recommendations that include principles and provide guidance in the Group’s operations and for its

employees. These governance documents are evaluated and adopted annually by the Board of Directors. The

requirements arising from CoinShares International Limited’s shares being listed for trading on Nasdaq Stockholm include

the compulsory adoption of a corporate governance code. The guidelines of the Code are available on the Swedish

Corporate Governance Board’s website. As at the date of this Corporate Governance Report, the Group has complied with

the Code.

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Cor

p

orate Governance

(

continued

)

Results and dividends

Statement of Directors’ responsibilities

The profit after taxation for the year emounted to £nil (2023: £nil). This figure does not take into account all of the

movements on the value of digitial assets to collateralise the ETPs in issue.

The Company and several of its service providers are subsidiaries of the CoinShares Group. Service Level Agreements

('SLAs') have been signed by the companies from the CoinShares Group. The SLAs govern the relations between the

entities as well as their respective obligations.

Audit Committee

The sole business of the Company relates to the issuing of asset-backed Digital Securities. Given the limited recourse

nature of the Digital Securities issued by the Company, the Board of Directors have concluded that there is currently no

need for the Company to have a separate audit committee in order for the Board to perform effective monitoring and

oversight of the internal control and risk management systems of the Company in relation to the financial reporting process

and the monitoring of the statutory audit and the independence of the statutory auditors.

Company law requires the directors to prepare financial statements for each financial period. Under that law, the directors

have elected to prepare the financial statements in accordance with applicable law and International Financial Reporting

Standards as adopted by the European Union ('IFRS') which comprise Standards and Interpretations approved by the

International Standards Board. Under company law the directors must not approve the financial statements unless they are

satisfied that they give a true and fair view of the state of affairs of the Company as at the end of that period, and of the

profit or loss of the Company for that period.

The directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's

transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them

to ensure that the financial statements comply with the Companies (Jersey) Law 1991, as amended. They are also

responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and

detection of fraud and other irregularities. The directors confirm the statements comply with these requirements.

The directors are responsible for preparing the Directors' Report and financial statements in accordance with applicable

laws and regulations.

• select suitable accounting policies for the Company's financial statements and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and

explained in the financial statements; and

In preparing these financial statements, the directors are required to:

The directors do not recommend the payment of a dividend for the year (2023: £nil).

Service level agreements

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will

continue in business.

The total comprehensive income for the year, which includes gains/losses on digital assets amounted to £nil (2023: £nil).

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CoinShares Digital Securities Limited

Directors' Report (continued)

For the year ended 31 December 2024

Statement of Directors’ responsibilities (continued)

Going concern

Corporate Governance Statement

Independent Auditor

In preparing the financial statements the directors made an assessment of the Company's ability to continue as a going

concern. In assessing whether the going concern assumption is appropriate the directors considered all available

information about the future, which is at least, but is not limited to, twelve months from the date when the financial

statements were authorised for issue.

When making the assessment the directors considered and disclosed all material uncertainties related to events or

conditions that cast significant doubt upon the Company's ability to continue as a going concern.

There is continuing to be increased volatility seen in the price of digital assets. The directors do not consider the price

movements to impact the going concern for the Company as the products are fully hedged.

So far as the directors are aware, there is no relevant audit information of which the Company's auditor is unaware, and

each director has taken all the steps he or she ought to have as a director in order to make himself or herself aware of any

relevant audit information and to establish that the company's auditor is aware of that information.

Directors' interest in shares

The directors holding office at the end of the reporting year had no direct interests in the share capital of the Company but

certain directors did have an interest in the ultimate parent company, CoinShares International Limited ('CSIL').

Directors and Company Secretary

The directors and company secretary who served during the year and up to the date of this report are listed on page 1.

The Company is wholly owned by CSIL, a Jersey, public limited liability company whose shares are listed for trading on

Nasdaq Stockholm. The Corporate Governance framework for CoinShares International Limited is grounded in the

Company’s Articles of Association, Companies (Jersey) Law 1991, as amended, the Jersey Financial Services

Commission Codes of Practice, Nasdaq Rulebook for Issuers of Shares (the “Main Market Rulebook”), and the Company’s

internal rules and guidelines. Further details regarding Corporate Governance applied to the Company can be found on the

CoinShares International Limited website.

Baker Tilly Channel Islands Limited has expressed its willingness to continue in office.

The report was approved by the board of directors on 31 March 2025 and signed on its behalf by:

..........................................................

CoinShares Corporate Services (Jersey) Limited

Company Secretary

The Company has net assets of £nil (2023: £nil) at the end of the reporting period. All expenses of the Company are

settled by CSJL through the issuance of fees to CSJL to cover the Company's expenses as agreed in the Service Level

Agreement dated 21 May 2021. The directors have prepared these financial statements on a going concern basis due to

the financial health of CSJL and its contractual obligation to cover the Company's expenses, and ongoing financial support

received from other Group entities, inclusive of its parent company, which will continue to be provided for at least 12

months from the date of this report.

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CoinShares Digital Securities Limited

Global Statement for the Financial Statements

For the year ended 31 December 2024

Global Statement for the Financial Statements

Townsend Lansing Jr.

Director

Date: 31 March 2025

I certify that, to the best of my knowledge, the financial statements have been prepared in accordance with the applicable

accounting standards and give a true and fair view of the assets, financial position and performance of the Company and

that the Director's report attached presents a true and fair view of the development of the business, the performance and

the financial position of the Company and that it describes the main risks and uncertainties it faces.

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Independent auditor’s report

To the Members of CoinShares Digital Securities Limited

Opinion

We have audited the financial statements of CoinShares Digital Securities Limited (the “Company”) which

comprise the statement of financial position as at 31 December 2024, and the statement of

comprehensive income, statement of changes in equity and statement of cash flows for the year then

ended, and notes to the financial statements, including material accounting policy information.

In our opinion, the accompanying financial statements:

• give a true and fair view of the financial position of the Company as at 31 December 2024, and

of its financial performance and its cash flows for the year then ended in accordance with IFRS

Accounting Standards as adopted by the European Union (IFRSs); and

• have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991,

as amended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs) and

applicable law. Our responsibilities under those standards are further described in the Auditor’s

Responsibilities for the Audit of the Financial Statements section of our report. We are independent of

the Company in accordance with the ethical requirements that are relevant to our audit of the financial

statements in Jersey, including the FRC’s Ethical Standard, and we have fulfilled our other ethical

responsibilities in accordance with these requirements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our

audit of the financial statements of the current period and include the most significant assessed risks of

material misstatement (whether or not due to fraud) identified by us, including those which had the

greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the

efforts of the engagement team. These matters were addressed in the context of our audit of the financial

statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on

these matters.

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Key audit matter

The Risk

How our audit addressed the

matter

Digital assets – Existence,

Rights and Obligations

• Total value; £1,884,626,259

(2023: £817,137,433)

• As disclosed in Note 8.

There is a risk that the financial

statements may be materially

misstated due to;

• the digital assets not being

owned by the company; and

• the rights and the rewards not

being appropriately transferred

to the company.

Our audit procedures with

respect to digital assets

included but were not limited

to:

• Walkthroughs to gain an

understanding of the

Company’s internal control

for digital assets including

additions and disposals.

• Confirmations obtained

from the custodian and

exchanges with which the

digital currency is held.

• We understood and

evaluated the procedures

relating to the process of

assessing the reliability of

the custodian both at take

on and throughout the

relationship.

• Test of detail on a sample

of additions and disposals,

which we agreed to

appropriate supporting

documents.

We have no findings to

report.

Our Application of Materiality

Materiality for the financial statements as a whole was set at £56,000 (2023: £28,000), determined with

reference to a benchmark of total expenses, of which it represents 1.5% (2023: 1.5%).

In line with our audit methodology, our procedures on individual account balances and disclosures were

performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk

that individually immaterial misstatements in individual account balances add up to a material amount

across the financial statements as a whole.

Performance materiality was set at 60% (2023: 60%) of materiality for the financial statements as a whole,

which equates to £33,600 (2023: £16,800). We applied this percentage in our determination of

performance materiality because we deem the digital asset activities undertaken by the entity to be high

risk.

We reported to the Board of Directors any uncorrected omissions or misstatements exceeding £2,000

(2023: £1,400), in addition to those that warranted reporting on qualitative grounds.

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Conclusions relating to Going Concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis

of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to

continue as a going concern for a period of at least twelve months from when the financial statements

are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described

in the relevant sections of this report.

Other Information

The other information comprises the information included in the annual report other than the financial

statements and our auditor's report thereon. The Directors are responsible for the other information

contained within the annual report. Our opinion on the financial statements does not cover the other

information and, except to the extent otherwise explicitly stated in our report, we do not express any form

of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our

knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we

identify such material inconsistencies or apparent material misstatements, we are required to determine

whether this gives rise to a material misstatement in the financial statements themselves. If, based on

the work performed, we conclude that there is a material misstatement of this other information, we are

required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to Report by Exception

In the light of the knowledge and understanding of the Company and its environment obtained in the

course of the audit, we have not identified material misstatements in the Directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies (Jersey)

Law 1991, as amended, requires us to report to you if, in our opinion:

• proper accounting records have not been kept;

• proper returns adequate for the audit have not been received from branches not visited by us;

• the financial statements are not in agreement with the accounting records and returns; and

• we have not obtained all information and explanation that, to the best of our knowledge and

belief, was necessary for the audit.

Responsibilities of the Directors

As explained more fully in the Directors’ responsibilities statement set out on page 10, the Directors are

responsible for the preparation of financial statements that give a true and fair view in accordance with

IFRSs, and for such internal control as the Directors determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability

to continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless management either intends to liquidate the Company or to

cease operations, or has no realistic alternative but to do so.

The Directors are responsible for overseeing the Company’s financial reporting process.

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Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed

below:

• Enquiry of management to identify any instances of non-compliance with laws and regulations,

including actual, suspected or alleged fraud;

• Reading minutes of meetings of the Board of Directors;

• Review of legal invoices;

• Review of management’s significant estimates and judgements for evidence of bias;

• Review for undisclosed related party transactions;

• Review the detail agreements in respect of all fees and reperform the calculations with

reference to these agreements;

• Using analytical procedures to identify any unusual or unexpected relationships; and

• Undertaking journal testing, including an analysis of manual journal entries to assess whether

there were large and/or unusual entries pointing to irregularities, including fraud.

A further description of the auditor’s responsibilities for the audit of the financial statements is located

at the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities.

This description forms part of our auditor’s report.

Other Matters which we are Required to Address

We were appointed by board of directors on 03 December 2020 to audit the financial statements. Our

total uninterrupted period of engagement is 5 years (audits of 5 financial reporting periods).

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and

we remain independent of the Company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee in accordance with ISAs.

Use of this Report

This report is made solely to the Members of the Company, as a body, in accordance with Article 113A

of the Companies (Jersey) Law 1991, as amended. Our audit work has been undertaken so that we might

state to the Members those matters we are required to state to them in an auditor's report and for no

other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to

anyone other than the Company and its Members, as a body, for our audit work, for this report, or for the

opinions we have formed.

Hafeez Azeez

For and on behalf of Baker Tilly Channel Islands Limited

Chartered Accountants

St Helier, Jersey

Date: 31 March 2025

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CoinShares Digital Securities Limited

Statement of Comprehensive Income

For the year ended 31 December 2024

Restated

2024 2023

Note

££

Revenue 5 3,783,523 1,883,311

Gross profit 3,783,523 1,883,311

Administration expenses 6 (3,751,848) (1,883,219)

Loss on foreign exchange (31,675) (92)

Operating profit - -

Profit before taxation - -

Taxation on profit 7 - -

Profit after taxation - -

Other comprehensive income - -

Total comprehensive income - -

All results are derived from continuing operations.

The above should be read in conjunction with the accompanying notes on pages 21 to 47 which form an integral part of these

financial statements.

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CoinShares Digital Securities Limited

Statement of Financial Position

As at 31 December 2024

Restated Restated

2024 2023 1 January 2023

Note

£££

ASSETS

Current assets

Digital assets held for collateral purposes 8 1,884,626,259 817,137,433 244,641,832

Trade and other receivables 9 581,644 662,066 676,922

Digital asset receivables 10 143,966 44,606 50,015

Cash and cash equivalents 11 11,991 4,910 4,940

Total assets 1,885,363,860 817,849,015 245,373,709

LIABILITIES

Current liabilities

ETP liabilities 12 1,853,618,389 807,441,130 244,043,894

Trade and other payables 13 593,635 666,976 681,862

Digital asset payables 14 31,151,836 9,740,909 647,953

Total liabilities 1,885,363,860 817,849,015 245,373,709

Net assets - - -

EQUITY

Share capital 16 - - -

Share premium - - -

Retained earnings - - -

Total equity - - -

Kirsty Lawrence

Director

Date: 31 March 2025

The financial statements on pages 17 to 47 were approved and authorised for issue by the Board of Directors of the Company

and signed on its behalf by:

The above should be read in conjunction with the accompanying notes on pages 21 to 47 which form an integral part of these

financial statements.

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Statement of Changes in Equit

y

For the year ended 31 December 2024

Ordinary Retained

Shares Earnings Total equity

£££

At 1 January 2023 (restated) - - -

Profit for the year - - -

Other comprehensive income - - -

Total comprehensive income - - -

At 31 December 2023 (restated) - - -

At 1 January 2024 (restated) - - -

Profit for the year - - -

Other comprehensive income - - -

Total comprehensive income - - -

At 31 December 2024 - - -

The above should be read in conjunction with the accompanying notes on pages 21 to 47 which form an integral part of these

financial statements.

CoinShares Digital Securities Limited

The Company has issued 1 share valued at £0.01.

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Statement of Cash Flows

For the year ended 31 December 2024

Restated

2024 2023

Note

££

Cash flows from operating activities

Profit for the year - -

Change in working capital:

- Trade and other payables 7,081 (30)

Net cash flow generated from/(used in) operating activities 7,081 (30)

Net increase/(decrease) in cash and cash equivalents 7,081 (30)

At the beginning of the year 4,910 4,940

At the end of the year

11

11,991 4,910

Reconciliation of net debt

Restated

2024 2023

Non-cash analysis

££

Cash flows from operating activities

- Trade and other receivables 80,422 14,856

- Trade and other payables (80,422) (14,856)

- Net issuance of ETP liabilities 138,442,192 171,586,010

- Net purchase of digital assets (138,442,192) (171,586,010)

The above should be read in conjunction with the accompanying notes on pages 21 to 47 which form an integral part of these

financial statements.

CoinShares Digital Securities Limited

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Notes to the Financial Statements

For the year ended 31 December 2024

1 General information

2 Significant accounting policies

2.1 Basis of preparation

2.2 Adoption of new and revised Standards

New and revised IFRS Standards in issue but not yet effective

The adoption of these amendments has not had any material impact on the disclosures or on the amounts

reported in these financial statements.

CoinShares Digital Securities Limited

The financial statements have been prepared under the historical cost convention unless otherwise specified

within these accounting policies and in accordance with International Financial Reporting Standards as

adopted by the European Union ('IFRS'), which comprise Standards and Interpretations approved by the

International Accounting Standards Board ('IASB') and the Companies (Jersey) Law 1991, as amended.

There were no material departures from IFRS.

The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting

estimates. It also requires management to exercise judgement in applying the Company's accounting policies

(see note 2.6).

The following principal accounting policies have been applied:

The Company is a public company limited by shares and is incorporated and domiciled in Jersey. The address of its registered

office is 2nd Floor, 2 Hill Street, St Helier, Jersey JE2 4UA and its company registration number is 127061.

The Company operates in Jersey, Channel Islands. The principal activity of the Company is to act as an issuer of exchange

traded products ('ETPs').

The Company has applied the below amendments to IFRS Standards and Interpretations issued by the IASB

that are effective for annual periods beginning from 1 January 2024:

New and amended IFRS Standards that are effective for the current year

Certain amendments to accounting standards have been published that are not mandatory for 31 December

2024 reporting periods and have not been early adopted by the group. These amendments are not expected

to have a material impact on the reported profit or loss, net assets or total equity of the Group in the current or

future reporting periods and on foreseeable future transactions.

- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information

- IFRS S2 Climate-related Disclosures

- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16

)

- Non-current Liabilities with Covenants (Amendments to IAS 1

)

- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7

)

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

2 Significant accounting policies (continued)

2.3 Going concern basis

2.4 Changes in accounting policies

2.5 Foreign currency translation

2.6 Judgements and sources of estimation uncertainty

The Company has net assets of £nil (2023: £nil) at the end of the reporting period. All expenses of the

Company are settled by CSJL through the issuance of fees to CSJL to cover the Company's expenses as

agreed in the Service Level Agreement dated 21 May 2021. The directors have prepared these financial

statements on a going concern basis due to the financial health of CSJL and its contractual obligation to cover

the Company's expenses, and ongoing financial support received from other Group entities, inclusive of its

parent company, which will continue to be provided for at least 12 months from the date of this report.

Foreign exchange gains and losses arising from translation are included in the Statement of Comprehensive

Income.

Transactions and balances

There is continuing to be increased volatility seen in the price of digital assets. The directors do not consider

the price movements to impact the going concern for the Company as the products are fully hedged.

The following are considered to be sources of judgement and estimate:

The preparation of the Company's financial statements requires management to make judgements, estimates

and assumptions in applying the Company's accounting policies to determine the reported amounts of assets,

liabilities, income and expenses. The estimates and associated assumptions are based on historical

experience and various factors, including expectations of future events that are believed to be reasonable

under the circumstances. Actual results may differ from these estimates. The estimates and underlying

assumptions are reviewed on an ongoing basis.

The Company's financial statements are presented in Pound Sterling, which is the functional currency. All

values are rounded to the nearest pound, except when otherwise indicated.

Functional and presentation currency

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing

at the dates of the transactions.

Foreign currency assets and liabilities are translated into the functional currency using the exchange rate

prevailing at the reporting date.

CoinShares Digital Securities Limited

Within the Financial Statements, the Company has implemented a change to its accounting policy for digital

assets, ETP liabilities and digital asset payables. This change has been detailed further in note 3.

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

2 Significant accounting policies (continued)

2.6 Judgements and sources of estimation uncertainty (continued)

Critical judgements

Estimates

2.7 Revenue

The Company charges fees to CSJL to cover costs incurred as part of issuing exchange traded products.

Accounting treatment of digital assets: the classification of digital assets held for collateral purposes are

designated as hedged items within fair value hedge accounting relationships, as defined by IFRS 9 - Financial

Instruments, used to offset the exposure to fair value changes in liabilities associated ETPs issued by CSDSL

and digital asset payables owed to counterparties.

The Company recognises revenue when (a) the amount of revenue can be measured reliably; (b) it is

probable that the Company will receive the consideration due under the contract; (c) the stage of completion

of the transaction at the end of the reporting period can be measured reliably; and (d) the costs incurred for

the transaction and the costs to complete the transaction can be measured reliably.

Any management fees and staking rewards that are due from the Digital Securities are due to CSJL and

CSCMJL as the programme manager and staking agent respectively, and therefore is not recognised as

revenue in the Company.

Sale of services

CoinShares Digital Securities Limited

Digital assets are initially recognised at their fair value as listed on exchanges, and derecognised at the value

derived in the same manner. Subsequent remeasurements are performed using the valuation as formula

defined in the prospectus and final terms. The fair value hierarchy of Digital Assets and the measurement is

disclosed under accounting policies 2.10 and 2.11 respectively.

Management have not made any significant estimates in the process of applying the Company's accounting

policies.

Accounting treatment of ETPs and digital asset payables: ETP Liabilities and digital asset payables are

designated as hedging instruments within fair value hedge accounting relationships, as defined by IFRS 9 -

Financial Instruments.The fair value changes in liabilities associated ETPs issued by CSDSL are offset by the

fair value changes on digital assets held for collateral purposes as the hedging instruments.

Revenue is measured at the fair value of the consideration received or receivable and represents the amount

receivable for services rendered, net of discounts and value added taxes.

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

2 Significant accounting policies (continued)

2.8 Expenses

2.9 Cash and cash equivalents

2.10

2.11 Digital assets held for collateral purposes

Digital assets held for collateral purposes are recognised when the Company obtains control over the assets,

typically at the point of acquisition. These assets are derecognised when the Company transfers substantially

all the risks and rewards of ownership, usually at the point of sale or disposal.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value hierarchy under IFRS is set out as follows:

Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The Company performs both prospective and retrospective effectiveness testing at each reporting date to

confirm that the hedge continues to be highly effective, ensuring that fair value changes in the hedging

instrument and hedged item remain offset. The Company maintains and requires a 100% threshold for

effectiveness testing, in accordance with requirements of the prospectus under which the Company's ETPs

are issued.

Any hedge ineffectiveness, calculated as the difference between the fair value movement in the digital assets

and the offsetting movement in the hedged liabilities, is recorded within the Statement of Comprehensive

Income.

Digital assets held for collateral purposes are designated as hedged items within fair value hedge accounting

relationships, as defined by IFRS 9 - Financial Instruments. These assets offset the exposure to fair value

changes in liabilities associated with the ETPs issued by CSDSL and digital asset payables owed to

counterparties.

Fair value for Digital assets was determined by reference to price quotations in an active market (classified as

level 1 in the fair value hierarchy).

Level 2 – Inputs other than quoted prices included in Level 1 that are observable (i.e. developed using market

data) for the asset or liability, either directly or indirectly.

All expenses of the Company are recognised on an accruals basis.

The Company has implemented a change to its accounting policy for digital assets. The change in accounting

policy has been outlined in detail in note 3. The change in accounting policy and its resultant impact on prior

periods has been outlined in note 3. The hedging note for the year ended 31 December 2024 is included

within note 15.

CoinShares Digital Securities Limited

Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity can

access at the measurement date.

Cash and cash equivalents include cash in hand, deposits held at all with banks, other short-term highly liquid

investments with original maturities of three months or less and bank overdrafts. Bank overdrafts, when

applicable, are shown within borrowings in current liabilities.

Fair value hierarchy

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

2 Significant accounting policies (continued)

2.11 Digital assets held for collateral purposes (continued)

2.12 ETP liabilities

2.13 Financial instruments

Financial Assets

The Company is an issuer of ETPs. The ETPs are described as per the prospectuses, publicly available on

coinshares.com. A liability for an ETP is recognised on the settlement date, being the date of the completion

of the trade as per the prospectuses.

For financial assets, the Company applies the simplified approach permitted by IFRS 9, which requires

expected lifetime losses to be recognised from initial recognition, using a lifetime expected loss allowance for

all financial assets. To measure expected credit losses, financial assets have been grouped based on shared

credit risk characteristics and the Company assesses at each year end whether there is objective evidence

that a financial asset or a group of financial assets is impaired and recognises an allowance for impairment

when such evidence exists. Significant financial difficulties of the debtor, probability that the debtor will enter

bankruptcy and default or significant delay in payments are objective evidence that these financial assets are

impaired.

CoinShares Digital Securities Limited

ETPs are valued using the coin entitlement calculation defined in the prospectuses. For staked Digital

Securities, the coin entitlement is increased in line with the staking rewards attributable to holders. These

liabilities have been classified as Level 1 as per note 2.10.

Digital assets held by the Company are freely tradeable with active markets and are valued using unadjusted

quoted prices, or an average of unadjusted quoted prices, taken from active markets. As such, these digital

assets are classified as Level 1 in the fair value hierarchy.

The Company has implemented a change to its accounting policy for ETP liabilities. The change in accounting

policy has been outlined in detail in note 3.

Digital assets have been classified as Level 1 as per note 2.10.

Basic financial assets including trade receivables are non interest-bearing and are recognised initially at fair

value (transaction price), and subsequently amortised using the effective interest rate method, less provision

for impairment.

Loans to related entities are initially recognised at fair value and subsequently carried at amortised cost using

the effective interest method, less accumulated impairment losses.

ETP Liabilities are designated as hedging instruments within fair value hedge accounting relationships, as

defined by IFRS 9 - Financial Instruments. These liabilities are used to offset the exposure to fair value

changes in digital assets for collateral purposes by the Company.

The Company performs both prospective and retrospective effectiveness testing at each reporting date to

confirm that the hedge continues to be highly effective, ensuring that fair value changes in the hedging

instrument and hedged item remain offset. Any hedge ineffectiveness, calculated as the difference between

the fair value movement in the digital assets and the offsetting movement in the hedged liabilities, is recorded

within the Statement of Comprehensive Income.

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

2 Significant accounting policies (continued)

2.13 Financial instruments (continued)

Financial Assets (continued)

Financial liabilities

2.14 Taxation

Current tax is recognised as income or expense in the Statement of Comprehensive Income, except to the

extent that the tax arises from a transaction which is recognised directly in equity.

Financial assets, or a part thereof, are derecognised only when the contractual rights to the cash flows from

the asset expire or are settled, or when the Company transfers the financial asset and substantially all the

risks and rewards of ownership to another entity. When there is no reasonable expectation of recovering a

financial asset it is derecognised. The gain or loss on derecognition is recognised in the profit and loss.

Trade and other payables represent liabilities for goods and services provided to the Company prior to the

end of financial year which are unpaid. They are classified as current liabilities if payment is due within one

year or less (or in the normal operating cycle of the business, if longer). Otherwise, they are presented as non

-

current liabilities.

Borrowings are presented as current liabilities unless the Company has an unconditional right to defer

settlement for at least 12 months after the reporting date, in which case they are presented as non-current

liabilities.

These assets are presented as current assets except for those that are expected to be realised later than 12

months after the year end, which are presented as non-current assets.

CoinShares Digital Securities Limited

If there is a decrease in the impairment loss arising from an event occurring after the impairment was

recognised, the impairment is reversed. The reversal is such that the current carrying amount does not

exceed what the carrying amount would have been had the impairment not previously been recognised. The

impairment reversal is recognised in profit and loss.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is

calculated as the difference between the carrying amount and the present value of estimated future cash

flows, discounted at the original effective interest rate.

Current tax is recognised as the amount expected to be paid to or recovered from the tax authorities, using

tax rates enacted or substantively enacted by the reporting date in the countries where the Company operates

and generates income.

Trade payables are non interest-bearing and are recognised initially at fair value (transaction price) and

subsequently measured at amortised cost using the effective interest method.

Borrowings are initially recognised at their fair values (net of transaction costs) and subsequently carried at

amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is

recognised in profit or loss over the year of the borrowings using the effective interest method.

Financial liabilities (or part thereof) are derecognised when, and only when, the Company's obligations are

discharged, cancelled, or they expire. Any difference between the carrying amount of a financial liability (or

part thereof) that is derecognised and the consideration paid is recognised in profit or loss.

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

2 Significant accounting policies (continued)

2.14 Taxation (continued)

2.15 Share capital

3 Changes in accounting policy - Digital assets, digital asset receivables, ETP liabilities and digital asset payables

Purpose of holdings

iii) staking reward balances due to third parties under the terms of seed agreements.

CoinShares Digital Securities Limited

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or

options are shown in equity as a deduction, net of tax, from the proceeds.

The Company holds digital assets for different purposes, namely:

- to collateralise the exchange traded products issued by the Company; and

The taxation charge is based on the profit for the year as adjusted for tax purposes. The Company pays tax at

0%, the standard Jersey tax rate.

The Group previously accounted for Digital Assets as Intangible Assets under IAS 38 and Exchange-Traded Products (ETPs)

liabilities under IFRS 9. This accounting treatment remains unchanged. However, following a reassessment of risk management

and financial reporting objectives, the Group has identified a clear hedge relationship between these two items. As a result, the

Group has adopted hedge accounting under IFRS 9, designating Digital Assets and digital asset receivables as the hedged items

and ETP liabilities and digital asset payables as the hedging instruments. Under the revised policy, digital assets are classified as

digital assets held for collateral purposes. This change provides a more accurate reflection of the economic relationship between

the assets and liabilities in the financial statements.

This change in accounting policy has been applied from 1 January 2024, and retrospectively applied to the comparative

information within these financial statements, in accordance with IAS 8, as it results in more relevant and reliable information.

The change enhances the reliability and relevance of the financial information presented, while remaining presented in

accordance with IFRS, aligning more closely to its conceptual framework.

- to collateralise digital asset payables in regard to:

i) staking reward balances due to CSCMJL in its capacity as staking agent;

ii) management fees due to CSJL as program manager; and

The value of the ETPs and digital asset payables are linked to the value of the underlying digital assets on which the ETP or

digital asset payable is denominated. The price of Digital Assets are volatile and may be affected by a variety of factors. Should

demand for a Digital Asset decrease or increase significantly then its value could fluctuate sharply and permanently which, in

turn, would directly impact the price of the ETPs or value of the digital asset payables.

In the absence of a fair value hedging arrangement, there is a risk that the Company would be directly exposed to adverse

changes in the fair value of the ETPs and digital asset payables and, by association, the underlying digital assets on which they

are denominated.

The Company holds digital assets and digital asset receivables, as hedged items, in line with the requirements of the Company's

prospectus, in order to hedge the risk of exposure to fair value changes in the ETPs and digital asset payables, as hedging

instruments. The fair value hedging relationship between the hedged items and hedging instruments is in place to mitigate the

risk of adverse exposure to digital asset price movement to the Company.

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

3

Digital assets held for collateral purposes - accounting policy

ETP Liabilities - accounting policy

The Company performs both prospective and retrospective effectiveness testing at each reporting date to confirm that the hedge

continues to be highly effective, ensuring that fair value changes in the hedging instrument and hedged item remain offset.

Any hedge ineffectiveness, calculated as the difference between the fair value movement in the digital assets and the offsetting

movement in the hedged liabilities, is recorded within the Statement of Comprehensive Income.

Digital assets held for collateral purposes are recognised when the Company obtains control over the assets, typically at the

point of acquisition. These assets are derecognised when the Company transfers substantially all the risks and rewards of

ownership, usually at the point of sale or disposal.

There has been no change to the valuation methodology of these assets following the adoption of this accounting policy (see

"Fair value measurement" below).

As a result of the changes outlined above, there has been no change to the valuation methodology of the Company's digital

assets

Digital assets held by the Company are freely tradeable with active markets and are valued using unadjusted quoted prices, or

an average of unadjusted quoted prices, taken from active markets. As such, these digital assets are classified as Level 1 in the

fair value hierarchy.

Fair value measurement - Digital assets held for collateral purposes

The Company issues securities to holders which have been recognised as liabilties in the Statement of Financial Position. A

liability for an ETP is recognised on the settlement date, being the date of the completion of the trade as per the prospectuses.

ETP Liabilities are designated as hedging instruments within fair value hedge accounting relationships, as defined by IFRS 9 -

Financial Instruments. These liabilities are used to offset the exposure to fair value changes in digital assets for collateral

purposes and digital asset receivables by the Company.

The Company is an issuer of ETPs. The ETPs are described as per the prospectuses, publicly available on

https://coinshares.com/uk/etp/all-products.

Changes in accounting policy - Digital assets, digital asset receivables, ETP liabilities and digital asset payables

(continued)

Digital assets held for collateral purposes are designated as hedged iems within fair value hedge accounting relationships, as

defined by IFRS 9 - Financial Instruments. These assets offset the exposure to fair value changes in liabilities associated with the

ETPs issued by CSDSL and digital asset payables owed to counterparties.

The Company maintains and requires a 100% threshold for effectiveness testing, in accordance with requirements of the

prospectus under which the the Company's ETPs are issued, and the counterparty agreements under which the digital asset

payables are incurred. Note 15 of the accounts provides a reconciliation of the fair value hedge effectiveness.

CoinShares Digital Securities Limited

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

3

ETP Liabilities - accounting policy (continued)

Fair value measurement - ETP Liabilities

Impact of changes in accounting policy

For the year ended 31 December 2022

Statement of Comprehensive Income - Profit and Loss

££ £

Fair value loss on digital assets (302,608,417) 302,608,417 -

Loss on digital asset receivables

(151,082) 151,082 -

Gain on ETP liabilities 429,278,798 (429,278,798) -

Gain on digital asset payables 1,285,223 (1,285,223) -

Total effect of policy change (127,804,522)

Profit after tax 127,804,522 (127,804,522) -

Statement of Comprehensive Income - Other Comprehensive Income

Profit after tax 127,804,522 (127,804,522) -

Fair value loss on digital assets through other comprehensive income (127,804,522) 127,804,522 -

Total comprehensive income - - -

Effect of policy

change

CoinShares Digital Securities Limited

Fair value changes on ETP liabilities are measured and recorded in the same way as digital assets held for collateral purposes,

outlined above. There has been no change to the valuation methodology of these liabilities following the adoption of this

accounting policy (see "Fair value measurement" below).

Changes in accounting policy - Digital assets, digital asset receivables, ETP liabilities and digital asset payables

(continued)

ETPs are valued using the coin entitlement calculation defined in the prospectuses. These liabilities have been classified as

Level 1 as per note 2.10.

The principal effect of these changes in designation as outlined above results in gains and losses on digital assets previously

recognised within Other Comprehensive Income under IAS 38 to be taken through Profit and Loss. The impact on the financial

statements of the Company for the year ended 31 December 2022 and 31 December 2023 is outlined below.

Fair value less

costs to sell

through OCI through profit

and loss

Revaluation

model

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

3

Impact of changes in accounting policy (continued)

For the year ended 31 December 2023

Statement of Comprehensive Income - Profit and Loss

££ £

Fair value gain on digital assets 302,608,417 (302,608,417) -

Loss ETP liabilities (393,428,803) 393,428,803 -

Loss on digital asset payables (7,514,658) 7,514,658 -

Total effect of policy change 98,335,044

Loss after tax (98,335,044) 98,335,044 -

Statement of Comprehensive Income - Other Comprehensive Income

Loss after tax (98,335,044) 98,335,044 -

Fair value gain on digital assets through other comprehensive income 98,335,044 (98,335,044) -

Total comprehensive income - - -

Under the IAS38 revaluation model, all digital asset gains in excess of the initial cost price are taken through other

comprehensive income. As a result of the policy change these gains are now taken at fair value through profit and loss,

designated as either gain/(loss) on digital assets held for collateral purposes.

All digital asset gains/(losses) recognised through profit and loss under the IAS38 revaluation model relate to the reversal of

previously recognised losses only.

Revaluation

model

Effect of policy

change

Fair value less

costs to sell

through OCI through profit

and loss

CoinShares Digital Securities Limited

Changes in accounting policy - Digital assets, digital asset receivables, ETP liabilities and digital asset payables

(continued)

As a result of the policy change, all movements on digital assets are now being taken at fair value through profit and loss,

designated as either gain/(loss) on digital assets held for collateral purposes. These gains and losses are offset with the

corresponding gain/(loss) on ETP liabilities or digital asset payables.

The effect of this change for the Company's results amounts to a reduction in the gain/(loss) on digital assets through OCI to £nil

in, both, the years ended 31 December 2022 and 31 December 2023 equivalent to the corresponding moves seen in profit and

loss, as above.

The effect of this change for the Company's results amounts to an additional loss of £127,804,522 being taken at fair value

through profit or loss for the year ended 31 December 2022, and an additional gain of £98,335,044 for the year ended 31

December 2023. This reduces the Company's profit after tax from £127,804,522 to nil in the year ended 31 December 2022, and

reduces the Company's loss after tax to £nil in the year ended 31 December 2023.

There is no effect on the Total Comprehensive Income of the Company as a result of the change in accounting policy for the

years ended 31 December 2022 and 31 December 2023.

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

3

Statement of Financial Position - Assets

££ £

As at 31 December 2022

Digital assets 244,641,832 (244,641,832) -

Digital assets held for collateral purposes - 244,641,832 244,641,832

Total effect of policy change -

As at 31 December 2023

Digital assets 817,137,433 (817,137,433) -

Digital assets held for collateral purposes - 817,137,433 817,137,433

Total effect of policy change -

CoinShares Digital Securities Limited

Changes in accounting policy - Digital assets, digital asset receivables, ETP liabilities and digital asset payables

(continued)

The effect of this policy change on the total assets, total liabilities and therefore net assets of the Company is nil.

The combined effect of the policy leads to improved understandability of the Company's financial statements, financial

performance and financial health.

The effect of the policy change on the Company's statement of financial position has resulted in a reclassification of digital assets

to digital assets held for collateral purposes. There is no change to the value of ETP liabilities or digital asset payables as a result

of the policy change.

Revaluation

model

Effect of policy

change

Fair value less

costs to sell

through OCI

There has been no change to equity or reserves as a result of the policy change as at 31 December 2022 and 31 December

2023.

through profit

and loss

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

4 Operating segments

Year to 31 December 2024

Digital Securities with Staked Digital Index Digital Central

a Management Fee Securities Securities Costs Total

£££££

Revenue 867,598 2,145,791 115,065 655,069 3,783,523

Gross profit 867,598 2,145,791 115,065 655,069 3,783,523

Administration expenses (867,598) (2,145,791) (115,065) (623,394) (3,751,848)

Loss on foreign exchange - - - (31,675) (31,675)

Operating profit - - - - -

Profit before taxation - - - - -

Taxation on profit -

Profit after taxation - - - - -

- - - - -

Other comprehensive income - - - - -

Total comprehensive income - - - - -

• Central costs

This is the measure reported to the Board of Directors, being the Company's chief operating decision-maker, for the purposes of

assessing performance and allocating resources.

CoinShares Digital Securities Limited

The following is an analysis of the Company's revenues and expense by reportable segment for the year ended 31 December

2024. Any management fees and staking rewards that are due from the Digital Securities are due to CSJL and CSCMJL as the

programme manager and staking agent respectively, and therefore is not recognised as revenue in the Company.

The Company monitors its assets and liabilities according to four core operating segments, defined by the primary characteristics

of ETPs. The Company deems that it has four reportable operating segments in respect of assets and liabilities, being:

• Index Digital Securities; and

• Digital Securities with a management fee;

Fair value gain on digital assets

• Staked Digital Securities;

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

4 Operating segments (continued)

Year to 31 December 2023 (restated)

Digital Securities with Staked Digital Index Digital Central

a Management Fee Securities Securities Costs Total

£££££

Revenue 839,249 507,625 129,064 407,373 1,883,311

Gross profit 839,249 507,625 129,064 407,373 1,883,311

Administration expenses (839,249) (507,625) (129,064) (407,281) (1,883,219)

Loss on foreign exchange - - - (92) (92)

Operating profit - - - - -

Profit before taxation - - - - -

Taxation on profit - - - - -

Profit after taxation - - - - -

- - - - -

Other comprehensive income - - - - -

Total comprehensive income - - - - -

The following is an analysis of the Company's revenues and expense by reportable segment for the year ended 31 December

2023.

Fair value gain on digital assets

CoinShares Digital Securities Limited

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

4 Operating segments (continued)

As at 31 December 2024

Digital Securities with Staked Digital Index Digital Central

a Management Fee Securities Securities Costs Total

£££££

Digital assets held as collateral 1,191,601,560 678,082,976 14,941,723 - 1,884,626,259

Trade and other receivables - - - 581,644 581,644

Digital asset receivables - 143,966 - - 143,966

Cash and cash equivalents - - - 11,991 11,991

Total assets 1,191,601,560 678,226,942 14,941,723 593,635 1,885,363,860

ETP Liabilities 1,191,224,830 647,505,465 14,888,094 - 1,853,618,389

Trade and other payables - - - 593,635 593,635

Digital asset payables 376,730 30,721,477 53,629 - 31,151,836

Total liabilities 1,191,601,560 678,226,942 14,941,723 593,635 1,885,363,860

Net assets - - - - -

As at 31 December 2023 (restated)

Digital Securities with Staked Digital Index Digital Central

a Management Fee Securities Securities Costs Total

£££££

Digital assets held as collateral 664,561,184 152,077,870 498,379 - 817,137,433

Trade and other receivables - - - 662,066 662,066

Digital asset receivables - 44,606 - - 44,606

Cash and cash equivalents -

- - 4,910 4,910

Total assets 664,561,184 152,122,476 498,379 666,976 817,849,015

ETP Liabilities 664,275,904 142,666,847 498,379 - 807,441,130

Trade and other payables - - - 666,976 666,976

Digital asset payables 285,280 9,455,629 - - 9,740,909

Total liabilities 664,561,184 152,122,476 498,379 666,976 817,849,015

Net assets - - - - -

The following is an analysis of the Company's assets and liabilities by reportable segment as at 31 December 2023.

The following is an analysis of the Company's assets and liabilities by reportable segment as at 31 December 2024.

CoinShares Digital Securities Limited

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

5 Revenue

2024 2023

££

Fee income 3,782,893 1,883,311

Other income 630 -

3,783,523 1,883,311

6 Administration expenses by nature

2024 2023

££

Audit fees 64,090 58,000

Director's fees 15,000 15,000

79,090 73,000

7 Taxation

The Company is subject to tax at the rate of 0% (2023: 0%).

8 Digital assets held for collateral purposes

Restated

2024 2023 2024

2023

Number Number £ £

Bitcoin 13,766 14,564 1,045,510,155 485,633,124.00

Ethereum 118,188 84,787 321,300,667 153,022,594.00

Litecoin 114,877 77,146 9,494,786 4,475,987.00

XRP 69,350,796 33,606,739 117,284,370 16,425,068.00

Polkadot 1,978,606 615,669 10,784,508 4,105,730.00

Tezos 4,594,909 3,000,443 4,894,039 2,427,596.00

Cardano 36,964,845 23,871,818

25,591,295 11,281,487.00

Solana 1,855,100 1,499,969 291,828,271 121,089,990.00

Chainlink 771,445 304,300 12,824,166 3,663,215.00

Uniswap 595,340 226,135 6,488,083 1,341,196.00

Cosmos 397,695 201,835 2,043,374 1,725,697.00

Mati

c

15,802,279 6,073,837 5,923,966 4,766,272.00

A

lgorand 56,598,171 37,727,904 15,716,856 6,681,098.00

Digital asset - COIN10 3,098,836 346,970.00

Digital asset - COINSMRT 2,763,735 151,409.00

Digital asset - CFTN 9,079,152 -

1,884,626,259 817,137,433

CoinShares Digital Securities Limited

The Company charges fees to the Programme Manager, CSJL, to cover its expenses as agreed in the Service Level Agreement

dated 21 May 2021. These costs consist primarily of professional expenses, custody fees and trading fees.

Revenue on products is recognised in CSJL and CSCMJL as programme manager and staking agent respectively.

Other Income consists solely of ETP creation and redemption fees incurred by the Company and subsequently recharged to

Authorised Participants.

Included within administration expenses of £3,751,848 (2023: £1,883,219) are the following amounts:

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

8 Digital assets held for collateral purposes (continued)

Restated Restated

2024 2023 2024

2023

Number Number £ £

COIN10

Bitcoin 13 3 975,994 112,213

Ethereum 335 62 910,769 111,791

XRP 285,661 62,692 483,103 30,640

Solana 2,156 389 339,126 31,402

Cardano 179,003 42,292 123,927 19,987

Tron 407,173 100,649 83,208 8,471

A

valanche 1,910 - 55,880 -

Chainlink 2,998 636 49,840 7,660

Polkadot 7,150 1,642 38,974 10,950

Uniswap 3,488 - 38,015 -

Litecoin - 89 - 5,186

Mati

c

- 11,048 - 8,669

3,098,836

346,970

COINSMRT

Ethereum 319 20 867,262 36,278

Solana 5,343 416 840,513 33,578

Cardano 443,808 45,220 307,255 21,370

Tron 1,008,932 107,623 206,182 9,058

A

valanche 4,733 462 138,462 14,333

Chainlink 7,429 680 123,492 8,183

Polkadot 17,770 1,756 96,858 11,708

Stellar Lumens 347,779 36,572 93,986 3,747

Near Protocol 13,269 1,331 53,972 3,883

Mati

c

95,371 11,813 35,753 9,270

2,763,735

151,409

CFTN

Bitcoin 86 - 6,506,601 -

Ethereum 535 - 1,455,651 -

XRP 263,126 - 444,992 -

Solana 2,044 - 321,514 -

Cardano 160,956 - 111,432 -

Tron 359,862 - 73,540 -

A

valanche 1,736 - 50,799 -

Chainlink 2,844 - 47,272 -

Polkadot 6,557 - 35,737 -

Bitcoin Cash 88 - 31,614 -

9,079,152

-

14,941,723 498,379

CoinShares Digital Securities Limited

Index products comprise a number of underlying Digital Assets in each product. As at year end the balance of the index ETP

products comprised the following:

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

8 Digital assets held for collateral purposes (continued)

Restated

2024

2023

££

Reconciliation of Digital Assets held for collateral purposes

Opening balance 817,137,433 244,641,832

A

dditions to digital assets 484,452,605 305,277,023

Net staking rewards 16,963,457 2,298,178

Disposals of digital assets (358,636,032) (134,196,245)

Management fees paid to CSJL (4,337,838) (1,826,816)

Fair value gain through profit and loss 929,046,634 400,943,461

Digital assets held for collateral purposes closing balance 1,884,626,259 817,137,433

9 Trade and other receivables

2024

2023

££

A

mounts owed by Group undertaking

s

527,819 660,295

Prepayments and sundry debtor

s

53,825 1,771

581,644 662,066

Expected credit losses

On 1 February 2024 the Company added a 1.25% per annum staking reward to the Ethereum ETP, also amending its name to

CoinShares Physical Staked Ethereum. The management fee remained at 0.0% however staking rewards are earned by

CSCMJL.

CoinShares Digital Securities Limited

On 25 January 2024 the Company announced a reduction in the management fees for the CoinShares Physical Bitcoin ETP

product. From 1 February 2024 the fees were reduced from 0.98% per annum to 0.35% per annum. On 14 January 2025 the

Company announced a further reduction in the management fees for the CoinShares Physical Bitcoin ETP product. From 14

January 2025 the fees were reduced from 0.35% per annum to 0.25% per annum.

Fee income of £3,782,893 (2023: £1,883,311) was earned from CSJL, as Programme Manager, to cover the Company's

expenses as per the Service Level Agreement, of which £527,819 (2023: £660,295) was outstanding at year end.

On 24 September 2024, the Company launched a new index ETP in conjunction with Finanzen.net, the CoinShares Physical

Finanzen.net Top 10 Crypto ETP. This product is listed on German's main market Xetra and Gettex and has a management fee

of 1.5% per annum.

Management has undertaken a review of the credit loss and calculated that the risk of credit loss to be clearly trivial.

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

10 Digital asset receivables

2024 2023 2024

2023

Number Number

££

Amounts owed by third parties

Staking rewards - Algorand

518,438

251,890

143,966 44,606

2024 2023

Reconciliation of digital asset receivables £ £

Opening balance 44,606 50,015

A

dditions 143,966 44,606

Disposals (44,606) (50,015)

Digital assets receivables closing balance 143,966 44,606

11 Cash and cash equivalents

2024 2023

££

Cash at bank 11,991 4,910

11,991 4,910

12 ETP liabilities

2024 2023 2024 2023

Number Number £ £

Securities type

CoinShares Physical Bitcoin

14,055,086

14,839,130

1,045,310,143

485,390,408

CoinShares Physical Ethereum

3,938,190

2,853,953

320,932,301

153,022,594

CoinShares Physical Litecoin

607,000

401,500

9,482,593

4,470,073

CoinShares Physical XRP

1,831,780

874,300

117,143,738

16,404,468

CoinShares Physical Staked Polkadot

1,698,100

557,500

10,677,276

4,084,656

CoinShares Physical Staked Tezos

839,000

564,000

4,871,644

2,415,298

CoinShares Physical Staked Cardano

34,472,500

22,705,000

25,574,702

11,272,945

CoinShares Physical Staked Solana

16,181,100

13,652,100

262,859,709

111,799,509

CoinShares Physical Chainlink

8,021,000

3,111,000

12,808,282

3,652,266

CoinShares Physical Uniswap

6,190,000

2,310,000

6,480,074

1,336,096

CoinShares Physical Staked Cosmos

694,500

374,500

2,018,473

1,724,979

CoinShares Physical Staked Mati

c

1,443,500

568,500

5,916,163

4,758,310

CoinShares Physical Staked Algorand

5,026,000

3,661,000

14,655,197

6,611,149

CoinShares Physical Top 10 Crypto Marke

t

114,000

25,000

3,088,774

346,970

CoinShares Physical Smart Contract Platform

121,000

10,000

2,741,429

151,409

CoinShares Finanzen.net Top 10 Crypto ETP

730,000

-

9,057,891

-

95,962,756 66,507,483 1,853,618,389 807,441,130

Staking rewards in respect of the CoinShares Physical Staked Algorand product are received quarterly. At the year end, the

Company had an outstanding receivable of £143,966 (2023: £44,606) in respect of accrued staking rewards.

CoinShares Digital Securities Limited

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

12 ETP liabilities (continued)

2024 2023

££

Reconciliation of ETP liabilities

Opening balance 807,441,130 244,043,894

Creations of ETPs 483,411,138 305,284,459

Redemptions of ETPs (358,428,004) (134,196,313)

Net movement on staking rewards 5,692,018 572,910

Net movement on management fee (2,437,388) (1,692,623)

Fair value loss 917,939,495 393,428,803

ETP liabilities closing balance 1,853,618,389 807,441,130

2024 2023

££

Loss on ETPs to CSCMJL and Third Parties (343,719,633) (209,778,522)

Loss on other ETP liabilities (574,219,862) (183,650,281)

Total loss on ETP liabilities (917,939,495) (393,428,803)

13 Trade and other payables

2024 2023

££

Trade payables 16,023 114,763

A

ccrued liabilities 577,612 552,213

593,635 666,976

CoinShares Digital Securities Limited

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Doc ID: 2b3ee7868c6a563b80d0f6a6a2afd7b2855b7248

Notes to the Financial Statements (continued)

For the year ended 31 December 2024

14 Digital asset payables

2024 2023 2024 2023

Number Number £ £

Amounts payable to Group undertaking

s

CSJL - Bitcoin

3

7

200,012

242,717

CSJL - Litecoin

148

102

12,193

5,914

CSJL - XRP

83,156

42,149

140,632

20,600

CSJL - Solana

1,494

1,321

235,021

106,640

CSJL - Chainlink

956

910

15,884

10,949

CSJL - Uniswap

735

860

8,009

5,100

CSJL - CFTN

-

21,261

-

CSCMJL - Ethereum

136

-

368,366

-

CSCMJL - Polkado

t

19,674

3,160

107,232

21,073

CSCMJL - Tezos

21,026

15,200

22,395

12,298

CSCMJL - Cardano

23,968

18,076

16,593

8,542

CSCMJL - Cosmos

4,846

84

24,901

718

CSCMJL - Solana

3,417

2,314

537,532

186,773

CSCMJL - Mati

c

20,816

10,146

7,803

7,962

CSCMJL - Algorand

4,341,591

205,117

1,205,625

36,324

CSCMJL - COIN10

-

10,062

-

CSCMJL - COINSMRT

-

22,306

-

2,955,827 665,610

Amounts payable to third partie

s

Third parties - Solana

179,237

111,449

28,196,009

8,997,068

Third parties - Algorand

-

441,767

-

78,231

28,196,009 9,075,299

31,151,836 9,740,909

2024 2023

££

Reconciliation of digital asset payables

Opening balance 9,740,909 647,953

A

dditions 24,313,809 4,618,278

Disposals (14,010,021) (3,039,980)

Loss on digital asset payables 11,107,139 7,514,658

Digital asset payables closing balance 31,151,836 9,740,909

CoinShares Digital Securities Limited

Amounts owed to Group undertakings relate to either digital assets which are due to be paid to CSJL for the management fee or

CSCMJL for the staking rewards as per the prospectus, assets provided by CSCMJL to test future digital asset products or

assets provided by CSMJL to satisfy redemptions in CoinShares Physical Products during asset unstaking periods. These

amounts are denominated in the relevant digital asset.

Amounts owed to third parties relate to fees where seed capital has been provided for products. These amounts are

denominated in the relevant digital asset.

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Doc ID: 2b3ee7868c6a563b80d0f6a6a2afd7b2855b7248

Notes to the Financial Statements (continued)

For the year ended 31 December 2024

15 Hedging activities

2024 2023

££

Reconciliation of hedged items

Opening carrying amount of hedged item

s

817,182,039

244,691,847

Net additions during the yea

r

138,541,552

171,546,731

Change in fair value of hedged items

929,046,634

400,943,461

Closing carrying amount of hedged digital asset holdings 1,884,770,225 817,182,039

Reconciliation of hedging instruments

Opening carrying amount of hedging instrument

s

817,182,039

244,691,847

Net additions during the yea

r

138,541,552

171,546,731

Change in fair value of hedging instruments

929,046,634

400,943,461

Closing carrying amount of hedging instruments 1,884,770,225 817,182,039

Hedge ineffectiveness recognised in Statement of Comprehensive Income - -

CoinShares Digital Securities Limited

The Company applies hedge accounting in accordance with IFRS 9 – Financial Instruments to manage its exposure to changes

in the fair value of its digital asset holdings and digital asset receivables. The Company designates ETPs referencing digital

assets, and digital asset payables as hedging instruments in a fair value hedge relationship. These hedging arrangements

mitigate fluctuations in the fair value of the hedged items, which arise from changes in digital asset prices.

The Company's hedging strategy is designed to offset fair value movements in its digital asset holdings using a 1:1 hedge ratio,

ensuring a high degree of correlation between the hedged item and hedging instrument. The ETPs issued by the Company and

digital asset payables serve as designated fair value hedges, with their value moving in direct alignment with the corresponding

digital asset and digital asset receivable holdings.

In addition to fair value changes, the hedged items and hedging instruments are subject to periodic additions, driven by new

issuances of ETPs, and changes in the Company's underlying digital asset positions. These additions are factored into the

hedge accounting framework to ensure continuous alignment and effectiveness.

Given that the hedge is governed by the terms set out in the various ETP prospectuses issued by the Company, it operates at

100% effectiveness, with no anticipated hedge ineffectiveness.

Hedge effectiveness is assessed at inception and on an ongoing basis to ensure that:

- An economic relationship exists between the digital asset holdings and the corresponding ETPs.

- The hedge remains fully effective, with no material basis risk.

- The hedge ratio is adjusted dynamically to reflect additions to both the hedged items and the hedging instruments, ensuring

continuous alignment.

The carrying amounts and fair value changes of the hedged items and hedging instruments, including additions during the year,

are as follows:

Page 41

Doc ID: 2b3ee7868c6a563b80d0f6a6a2afd7b2855b7248

Notes to the Financial Statements (continued)

For the year ended 31 December 2024

15 Hedging activities (continued)

16 Share capital

Shares classified as equit

y

2024 2023 2024 2023

Number Number £ £

Ordinary shares of £0.01 each 1 1 - -

1 1 -

17 Risk management

a) Market risk

i) Interest rate risk

ii) Digital asset price risk

Since the hedge relationship is dynamically managed to reflect additions to both the hedged items and hedging instruments, all

fair value changes and volume adjustments are fully offset, ensuring that no hedge ineffectiveness arises.

Additions to Hedging Instruments: Corresponding to the inflow of new capital, the Group issues additional ETPs, or increases

the level of digital asset payables, which relates to digital assets due to be paid to Group companies in line with the prospectus

or third parties in line with seed agreements, all of which are automatically designated as part of the hedge relationship,

Additions to Hedged Items: The Group increases its holdings of digital assets in response to new inflows into ETPs, or

recognises digital asset receivables in respect of accrued staking income. These additions are incorporated into the hedge

accounting framework at their respective fair values on the date of recognition.

CoinShares Digital Securities Limited

Allotted, called-up and paid

-

The Company is authorised to issue 10,000 ordinary shares of £0.01 each, they confer on the holder the right to receive

dividends at the Company's discretion. If, at the Company's discretion, there is a return of assets, ordinary shares confer on the

holders thereof the rights in respect of the assets of the Company available for distribution among the shareholders. Ordinary

shares issued and allotted are accounted for as equity.

Hedge Ratio Adjustments: The Group continuously monitors the hedge ratio, adjusting it to reflect new additions to ensure

perfect alignment between the hedged items and hedging instruments.

Interest rate risk is the risk that the value of the Company will be impacted by fluctuations in the prevailing levels of market

interest rates.

The majority of the Company's financial assets and liabilities are either non-interest bearing and, as a result, the Company is not

subject to significant amounts of risk due to fluctuations in the prevailing levels of market interest rates.

Digital assets are an extremely volatile asset class. Digital asset price risk arises from the uncertainty about future prices of the

digital assets, impacting both the fair value of the digital assets held by the Company and the fair value of the liabilities of the

Company towards security holders.

The Company issues securities which are 100% physically backed and therefore has a liability towards security holders linked to

digital assets, as well as the specific operational risks to holding digital assets. The following sets out a description of the

principal risks inherent in the activities of the Company along with the action taken to manage these risks.

Page 42

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

17 Risk Management (continued)

a) Market risk (continued)

iii) Currency ris

k

Price change Price change

-50% 100%

£££

Assets

Bitcoin 1,045,510,155 522,755,078 2,091,020,310

Ethereum 321,300,667 160,650,334 642,601,334

Litecoin 9,494,786 4,747,393 18,989,572

XRP 117,284,370 58,642,185 234,568,740

Polkadot 10,784,508 5,392,254 21,569,016

Tezos 4,894,039 2,447,020 9,788,078

Cardano 25,591,295 12,795,648 51,182,590

Solana 291,828,271 145,914,136 583,656,542

Chainlink 12,824,166 6,412,083 25,648,332

Uniswap 6,488,083 3,244,042 12,976,166

Cosmos 2,043,374 1,021,687 4,086,748

Mati

c

5,923,966 2,961,983 11,847,932

A

lgorand 15,716,856 7,858,428 31,433,712

COIN10 3,098,836 1,549,418 6,197,672

COINSMRT 2,763,735 1,381,868 5,527,470

CFTN 9,079,152 4,539,576 18,158,304

Other assets 737,601 665,618 881,567

Total assets 1,885,363,860 942,978,748 3,770,134,085

Liabilities

ETP liability 1,853,618,389 926,809,195 3,707,236,778

Digital assets payable 31,151,836 15,575,918 62,303,672

Other liabilities 593,635 593,635 593,635

Total liabilities 1,885,363,860 942,978,748 3,770,134,085

Net assets - - -

b) Credit risk

To mitigate its exposure to changes in prices of digital assets, any exposure to changes in prices on the digital assets held is

matched by the changes in value of the obligations to security holders.

CoinShares Digital Securities Limited

GBP is the functional currency of the Company. From time to time the Company may incur operational expenses which are

billed in foreign currencies, such as USD and EUR. All expenses of the Company are settled by CSJL through the issuance of

fees, the Company therefore has limited exposure to currency risk.

Carrying amount

as at 31

December 2024

The above analysis shows the impact of both a fifty percent decline and a one hundred percent increase in digital assets prices.

A change in price does not impact the NAV due to hedging arrangements in place.

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with

the Company. Digital asset activity has an inherent credit risk due to the nature of the industry, which is non-regulated,

extremely volatile, has low barriers to entry and is vulnerable to bad actors.

Page 43

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

17 Risk Management (continued)

b) Credit risk (continued)

c) Liquidity risk

d) Capital risk management

e) Operational risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with financial liabilities, in

particular towards security holders. Digital assets and ETP liabilities are not financial instruments however there is an active

market and they are readily realisable on demand.

In order for customers to purchase Digital Securities, Digital Assets are required to be deposited with the Company prior to the

issuance of the Digital Securities. The risk of losing Digital Assets in digital wallets due to fraud is reduced through digital assets

being kept in cold storage with Komainu, who provide a cold storage vault. The Company does not expect to incur material

credit losses in respect of digital assets. Credit risk arising from the ETP creation process is mitigated by the fact that Digital

Securities are issued to counterparties only after the underlying Digital Assets have been received. Management Fees and

Staking Rewards recognised by the Programme Manager and Staking Agent respectively are deducted from amounts held in

relation to the ETPs, therefore not relying on counterparties.

CoinShares Digital Securities Limited

Credit risk from balances with custodians, banks, brokers and financial institutions is managed, monitored and controlled by the

finance department in accordance with the Company policy. It is the Company's policy to only enter into transactions with

reputable counterparties, as determined through appropriate due diligence. The Company's primary banking relationship is with

Barclays Bank PLC, which holds a credit rating of 'A' with Fitch Ratings.

The cyber risks are mitigated through the use of systems to prevent external attacks (such as, but not limited to, firewalls,

detection of possible phishing emails, encryption using secure keys and strong physical security). Komainu, as custodian, are

subject to periodic reviews. The risk of theft of the Company's custodied coins is considered minimal owing to the strong control

framework built around the storage and transfer of Digital Assets.

Liquidity issues could arise as a result of the redemption of securities. In this case, the Company would be required to have

sufficient liquidity to finance the redemption of the securities. The prospectus and final terms for each security define the formula

at which the securities can be redeemed based on a coin entitlement. Securities holders can request redemption of their

securities which will be settled two business days following a valid redemption notice. The Company ensures that it holds the

relevant digital asset at all times to be able to meet these redemptions. The Directors believe that the risk is adequately

mitigated and therefore no sensitivity analysis is required. Liquidity risk associated with the payment of suppliers is mitigated

through the arrangement whereby expenses of the Company are settled by CSJL through the issuance of fees as agreed in the

Service Level Agreement dated 21 May 2021.

The risk of hacking, and losing Bitcoin/Ethereum and other digital assets in digital wallets due to fraud is reduced through the

majority of the digital assets being kept in cold storage with Komainu, who provide access to a cold storage vault. Komainu has

a SOC 1 Type 2 report, the latest covering the period from 1 December 2023 to 30 November 2024, which was independently

reviewed and authorised for issue on 21 March 2025. Komainu is also ISO27001 certified. In addition to limiting the exposure to

fraud for the Company, cold storage of digital assets with Komainu also reduces the exposure to hacking of the exchanges.

The capital of the Company is nil. The Company's objective is to undertake the issuance and redemptions of Digital Securities

and performing the associated obligations for the Group, in the interest of benefitting the shareholders of the ultimate parent

company. This is achieved through frequent evaluation of the Company's products to ensure they meet investor demands.

These are risks relating to losses as a result of operational matters such as having inappropriate or insufficient routines, human

error, systems failures and legal risks. The main operational risk for the Company would be the inability to redeem a security

through either systems failures or continuity planning issues. The risk is mitigated through the use of a business continuity plan

which has been tested, and demonstrated that the traders can perform their work from anywhere.

Page 44

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

18 Related party transactions

CoinShares XBT Provider AB

(publ)

XBTP 100%

CoinShares GP II Limited CSGP2L 100%

CoinShares Co CSCo 100%

CoinShares (Jersey) Limited CSJL 100%

GABI Trading Limited (Asia) GTLA 100%

CSCMUKL

CoinShares Capital, LLC CS Cap 100%

CoinShares GP I LLC CSGPI 100%

FlowB Holding Switzerland SA Flowbank 28%

CoinShares France CSF 100%

CoinShares Asset Management CSAM 100%

CoinShares Switzerland AG CSSAG 100%

The Group consists of the Company and the following entities held by the ultimate parent company, CSIL:

Investee

Relationship

CSIL's

Ownership %

Date of Acquisition

CoinShares Digital Securities Limited

30/06/2019

12/02/2019

Associate

Jurisdiction

Jersey 09/08/2018

01/07/2018

CoinShares Corporate Services

(Jersey) Limited

25/06/2018

Subsidiary USA

CSCSJL Subsidiary 100% Jersey

Subsidiary Sweden 25/09/2017

Subsidiary

Name Defined as

France

Subsidiary USA

Subsidiary Jersey 09/02/2018

20/03/2020

Switzerland 02/10/2021

Subsidiary

CoinShares Employment

Services (Jersey) Limited

CSESJL Subsidiary 100%

100%

Jersey 26/09/2018

Subsidiary France 17/12/2021

Larks Leaf Asset Management

(Jersey) Limited

LLAMJL Subsidiary 100% Jersey 27/02/2023

17/12/2021

CoinShares Capital Markets

(UK) Limited

Subsidiary Hong Kong

CoinShares Capital Markets

(Jersey) Limited

CSCMJL Subsidiary 100% Jersey

18/09/2019

Subsidiary

UK

USA

CoinShares Bitcoin Integrated

Strategies Master Fund Limited

BIS Master Subsidiary 100% Jersey 27/02/2023

CoinShares Bitcoin Integrated

Strategies Feeder Fund Limited

BIS Feeder Subsidiary 100% Jersey 27/02/2023

CoinShares Ethereum

Integrated Strategies Master

Fund Limited

EIS Master Subsidiary 100% Jersey 06/04/2023

CoinShares Ethereum

Integrated Strategies Feeder

Fund Limited

EIS Feeder Subsidiary 100% Jersey 06/04/2023

CoinShares Relative Value

Opportunities Master Fund

Limited

RVO Master Subsidiary 100% Jersey 06/04/2023

CoinShares Relative Value

Opportunities Feeder Fund

Limited

RVO

Feeder

Subsidiary 100% Jersey 06/04/2023

Subsidiary Switzerland 24/05/2023

CoinShares Bitcoin US Feeder

Fund, LP

BIS US

Feeder

Subsidiary 100% USA 05/06/2023

CoinShares Ethereum US

Feeder Fund, LP

EIS US

Feeder

Subsidiary 100% USA 05/06/2023

CoinShares Relative Value

Opportunities US Feeder Fund,

LP

RVO US

Feeder

Subsidiary 100% USA 27/07/2023

Page 45

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Notes to the Financial Statements (continued)

For the year ended 31 December 2024

18 Related party transactions (continued)

CoinShares Bitcoin GP Limited CS BGPL 100%

2024 2024 2024

Digital assets Securities issued £

Seeded by CSCMJL

Bitcoin 5,500 5,500,000 417,725,920

Ethereum 34,647 1,135,000 94,188,735

511,914,655

2023 2023 2023

Digital assets Securities issued £

Seeded by CSCMJL

Bitcoin 5,500 5,500,000 183,392,145

Ethereum 34,216 1,135,000 61,753,289

Solana 86,472 - 15,313

245,160,747

CoinShares Digital Securities Limited

CSJL is the programme manager for the programme and is also a subsidiary of CSIL. CSJL pays for the costs of the Company

through a fee. CSJL has settled expenditure directly of £597,723 (2023: £1,318,878) and has been charged fees of £3,782,893

(2023: £1,883,311). As at the year end, the Company has an outstanding receivable of £527,819 (2023: £660,295). The

Company also holds the management fee in digital assets on behalf of CSJL before it gets paid. At the year end, the Company

holds digitals assets as payables to CSJL as detailed in note 14.

CSCMJL is the provider and staking agent for the programme and earns staking rewards through staked products. CSCMJL is

also a subsidiary of CSIL. CSCMJL has seeded digital assets to the Company as detailed in the following tables. The Company

also holds the staking rewards in digital assets on behalf of CSCMJL before it gets paid. At the year end, the Company also has

payables to CSCMJL as detailed in note 14.

Name Defined as

Investee

Relationship

CSIL's

Ownership %

Jurisdiction Date of Acquisition

CoinShares Relative Value

Opportunities GP Limited

CS

RVOGPL

Subsidiary 100% Jersey 29/11/2023

Subsidiary Jersey

29/11/2023

CoinShares Ethereum GP

Limited

CS EGPL Subsidiary 100% Jersey 29/11/2023

CoinShares Valkyrie (formerly

Valkyrie Funds LLC)

VF LLC Subsidiary 100% USA 12/03/2024

Circa5000 ICAV Circa5000 Subsidiary 100% UK 03/12/2024

CSIL is the Company's ultimate parent company. CSIL has settled costs of £422,421 (2023: £216,644), and at year end, there is

an outstanding payable of £nil (2023: £nil).

On 19 March 2024 CoinShares (UK) Limited was formally dissolved.

On 10 April 2024 XBT Provider AB (publ) changed its name to CoinShares XBT Provider AB (publ).

As at 31 December 2024, Larks Leaf Asset Management (Jersey) Limited was in the process of being dissolved.

Page 46

Doc ID: 2b3ee7868c6a563b80d0f6a6a2afd7b2855b7248

Notes to the Financial Statements (continued)

For the year ended 31 December 2024

18 Related party transactions (continued)

19 Events after the reporting date

20 Ultimate controlling party

The Company's parent company is CSIL, a company incorporated in Jersey, Channel Islands at 2nd Floor, 2 Hill Street, St

Helier, Jersey, JE2 4UA. CSIL is considered to be the ultimate controlling party.

Audited annual financial statements for the ultimate controlling party are available at the Company's website:

www.coinshares.com/investor-relations

On 14 January 2025 the Company announced a reduction in the management fees for the CoinShares Physical Bitcoin ETP

product. From 14 January 2025 the fees were reduced from 0.35% per annum to 0.25% per annum.

During the year, Directors charged fees of £15,000 (2023: £15,000), of which £nil (2023: £nil) remains outstanding at the year

end.

CoinShares Digital Securities Limited

Komainu Holdings Limited is an investment of CSIL, and is the parent company to Komainu (Jersey) Limited ('KJL'). KJL

provides custody services to the Company. During the year, KJL charged custody fees of £2,206,830 (2023: £589,198), of which

£266,563 (2023: £75,788) remains outstanding at the year end.

On 27 September 2024, CSJL, acting as investment manager to CoinShares Ethereum Integrated Strategies Master Fund

Limited, CoinShares Ethereum Integrated Strategies Feeder Fund Limited CoinShares Ethereum Integrated Strategies US

Feeder Fund LP plus the general partner to the US CoinShares Ethereum GP Limited (together the “EIS entities”) resolved to

place the EIS entities into liquidation. The EIS entities ceased operations on 1 October 2024. These are expected to be wound

up in 2025.

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