Untitled

c o i n s h a r e s . c o m

2022 ANNUAL REPORT

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Jean-Marie Mognetti

CEO / Board Member

Meltem Demirors

Head of Strategy

Frank Spiteri

Head of Asset Management

Daniel Masters

Non-Executive Chairman

Carsten Køppen

Independent

Non-Executive Director

Johan Lundberg

Independent

Non-Executive Director

Richard Nash

Chief Financial Officer

Graeme Dickson

Group General Counsel

Board of Directors

Pierre Porthaux

Head of Capital Markets

Benoît Pellevoizin

Head of Marketing

& Communications

Viktor Fritzén

Independent

Non-Executive Director

Christine Rankin

Independent

Non-Executive Director

BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT

Management Team

Jean-Marie Mognetti

CEO / Board Member

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TA B L E O F C O N T E N T S

01 - Message from the CEO

02 - Strategy

03 - Summary of Financial Performance

04 - CoinShares Asset Management

05 - CoinShares Capital Markets

06 - Other Activities

07 - Industry & Market

08 - Corporate Governance Report

09 - Sustainability report

10 - Audited Financial Statements

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MESSAGE

FROM THE

CEO

2022 was a violently turbulent and difficult one for the entire digital asset industry. We witnessed

steep falls in the value of the main digital assets and the failure of several operators in the sector.

At the same time, it was the perfect testing ground for CoinShares and our strategy. Thanks to our

approach to risk, our transparency, and above all the professionalism and skill of our colleagues, we

weathered the storm better than almost any other firm in our space.

This report lays out our performance and strategy in more detail, which we have revised over the

course of the past tumultuous year, reaffirms our dedication to providing clients with the very best

investment solutions and focuses on the exciting opportunities that we see ahead of us.

Although we fared better than most of our peers in these conditions, we could not escape the year

unscathed; the losses incurred in Q2 and Q4 effectively wiped out the positive performance of the

underlying business, resulting in Total Comprehensive Income of £2.9 million, compared with the

£113.4 million in 2021.

2022 will be remembered as a watershed for the industry. We believe that companies that are

capable of being publicly listed and fully regulated will emerge as the winners in our industry. This is

a position we have maintained for years and believe that the events of the past 12 months have fully

vindicated that position. Having graduated to Nasdaq Stockholm’s main market regulated segment,

we are one of them.

Our Strategic Pillars

Over the course of the year we took the opportunity to refine our corporate strategy, based on five

key pillars:

• Execution

• Talent

• Risk Management and Performance

• Shareholder Value

• Asset Management Focus

Taking each of these in turn:

1. Execution

Long ago, when CoinShares was still called Global Advisors, it was an important participant in the old

NYMEX market. Trading demands discipline, patience, a capacity for continuous learning and the

ability to seize opportunities when they arise. As Marty Greenberg, former COMEX Chairman and

our first clearer at Sterling Commodities once told us, it is not about being right or wrong, it is about

changing your mind quickly enough.

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As we grow CoinShares, I realise the same is valid for a company. We need to change our style

and move from an opportunistic mindset to one based on long term conviction and vision. Whilst

remaining agile, we cannot grab every single opportunity. A company needs a clear long-term vision

that aligns its strengths and conveys a succinct message to employees, the market, shareholders,

investors, opinion leaders, and analysts. This vision infuses everything we do, and our actions should

all contribute towards this common goal.

In the past we have benefited significantly from strategic acquisitions, and market conditions today

are throwing up several interesting opportunities. Thanks to our conservative approach and strong

financial position we can consider each of these. But we will only act and acquire businesses that fit

within our long-term vision for the group and only acquire on terms that are attractive and enable us

to build long term shareholder value. That work of careful evaluation and analysis is continuing and

we are confident that it will bear fruit in time. But we will not make any opportunistic move that puts

at risk what we have achieved so far.

As we move forward, we must find new ways to build on the success of the Group. We must focus

on our strengths and preserve them while integrating them into a long-term strategy that will deliver

value to our shareholders and position us favourably in the market and secure our position as the

leading alternative asset manager in the ever-evolving digital asset industry.

2. Talent

While it is obvious that our employees are the bedrock of any strategic direction we choose, it would

be remiss of me not to acknowledge here their resilience throughout 2022. Their hard work and

unwavering commitment have made CoinShares a company that can weather market turbulence

and proactively anticipate future challenges. We have always been judicious in our management of

resources, which has allowed us to avoid (what has become an industry trend) large scale layoffs.

Instead, we have always sought to recruit intelligently and invest in training and developing our staff.

I am pleased to report that our Executive Committee has never been stronger or more cohesive. By

delegating more authority to our managers, we are fostering a culture of collaboration and cross-

functional teamwork attempting to remove silos and improve the efficiency of our operations across

all four of our global offices.

The ability to place reliance on the wider team, which is ever-evolving, allows me to concentrate less

on the day-to-day operation and dedicate more time to the long-term strategy. Consequently, I am

determined to further elevate our profile with industry players, seek profitable partnerships, and

define plans for potential acquisitions. This shift also involves being the official spokesperson for

CoinShares and conveying our vision to opinion leaders, the market, and the media.

3. Risk Management and Performance

Financial performance is the primary measure of our achievements.

In 2022, the core activities of the Group performed well despite being overshadowed by the

failures of Terra/Luna and FTX and the provisions we had to set aside for each. The resultant

losses eradicated the positive financial performance we would have otherwise achieved. We can

never eradicate risk from our business, but the events of 2022 have undoubtedly highlighted the

importance of robust and measured performance in conjunction with the ongoing strengthening of

our risk framework.

In 2023, we are continuing to experience a great deal of turbulence, namely within the banking sector

and its liquidity crisis that continues to generate significant fallout. Fortunately, we have not been

materially impacted by this, due to the range of banking relationships we have established over the

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years, including our investment in FlowBank which plays its part in the robust design of CoinShares.

These events are yet another reminder of the importance of working with solid counterparties

throughout our business and conducting exhaustive due diligence on all of them.

Robust and measured performance also includes ensuring steps are taken to maintain the fine-

tuned nature of our cost control whilst not being shy to invest to maximise shareholder value. This

approach led us to make some tough decisions, such as winding down our consumer business

acquired through Napoleon in France. We recognised that this venture was heavily influenced by

market fluctuations, and required further material investment we deemed suboptimal in the current

climate. However, our French office remains a strong constituent of our expansion strategy.

Despite the challenges of the sector, we have reasons for optimism. We plan to bolster our licences

and authorisations in Europe in anticipation of Markets in Crypto-Asset Regulation (“MiCA”) which

was approved on 20 April 2023. These developments enable us to maintain excellence in serving our

European clients.

Our strong underlying performance, overlaid with our risk management and mitigation processes

have put us in a very strong position today to take maximum advantage of the opportunities

presented to us.

4. Shareholder Value

Given the strength of CoinShares, our financial track record and our risk management, we do not

believe our current share price accurately reflects the value of our business. Since our first listing

day, we have experienced issues of low trading volumes. Over time, this has resulted in the removal

of our shares from thematic Blockchain ETFs such as the BLOCK Index and VanEck (DAPP) ETFs.

We keep assessing our options to address this lack of liquidity.

Our graduation to Nasdaq Stockholm’s main market in December, achieved amid challenging

market conditions, is a crucial milestone for improving investor access to our shares and increasing

trading activity. Being one of the few crypto companies listed on a regulated market, alongside the

likes of Coinbase, highlights our commitment to growth and success. However, our stock still faces

restrictions on most investment platforms in Europe due to the banking sector’s attitude towards

crypto in general.

We will continue to take steps to increase the profile and improve the understanding of the Group,

which we hope will in turn lead to increased interest and ultimately additional trading volumes. Our

revised strategy will enhance our ability to communicate about CoinShares to a wider audience and

secure a better appreciation of our true value.

5. Asset Management Focus

As 2022 concluded, as part of a wider review of our strategy, we recognized that our company

was neither an investment group nor a consumer or technology company. In fact, our undeniable

DNA is asset management, overlaid with a 10-year expertise in the digital asset industry. This

acknowledgement prompted us to reassess our business model, embracing a long-term vision

focused on our strengths in regulated asset management, financial product engineering and

distribution with a specialisation on digital assets.

Our 2023 strategy is designed to focus on this critical activity, clarify our objectives, and chart a new

path to consolidate our position as Europe’s leading alternative asset manager specialised in

digital assets.

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With these five pillars in place our goal is now clearer than ever: to build CoinShares into the global

leader in digital asset management.

Today’s investors seek more than passive exposure to digital assets and are demanding increasingly

sophisticated investment alternatives. To meet these needs, we aspire to become a comprehensive

solution provider, allowing investors to build portfolio allocation models around digital assets. As the

leading European alternative asset manager specialising in digital assets, CoinShares aims to expand

its product offerings. In 2023, we plan to establish an active asset management business, creating

several active investment strategies open to external allocators. This approach offers numerous

benefits, including the enrichment of our product offerings, streamlining our messaging, and

defining our strategic goals both internally and externally.

For our passive asset management franchise, our focus is on increasing our European market share

of gross inflows. Our goal is to capture a market share of more than 30% of gross inflows this year,

following our 16% share in 2022 and 8% in 2021.

For our newly established active asset management franchise, we will prioritise risk-adjusted returns

and robustness of our target operating model. External allocation will follow if our model is right.

Ultimately, this strategy simplifies our income statement by distinguishing between the revenues

produced by management fees from our passive asset management products and those derived

from our active asset management funds, which will encompass a blend of management and

performance fees. This clarity should allow us to present a clearer narrative but also a cleaner

income statement and balance sheet.

STRATEGY

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Our vision extends beyond the immediate future, anticipating the entrance of financial institutions

into the market in 2024. We understand that regulation will play a significant role in shaping the

market, and we are prepared to navigate these uncharted waters. Our strategy and positioning in

the digital asset industry align with this vision, and we are committed to being at the forefront of the

market’s evolution.

Conclusion

We believe the strategy outlined above, if executed correctly, will allow us to achieve our objective:

to become the leading global digital asset manager, the rewards will be measurable in terms of the

resultant financial performance we expect to see.

Rest assured, we remain steadfast in our commitment to enhancing shareholder value as we

embark on this exciting journey together. As ever, I’m grateful for your continued confidence in

CoinShares, and I look forward to our mutual success in the years to come.

Jean-Marie Mognetti, CEO of CoinShares

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SUMMARY OF FINANCIAL PERFORMANCE

Selected financial information derived from the audited consolidated financial statements of

the Group is disclosed below. The full-form audited financial statements, including notes and as

prepared under IFRS are included within section 10 of the annual report.

Please note that the Adjusted EBITDA calculation of the Group (which is disclosed below) is

designed to reflect the performance of the Group if gains on digital assets were taken through profit

and loss at fair value, rather than through Other Comprehensive Income, as required by accounting

standards, which can result in a profit after tax figure that does not provide an accurate view of the

Group’s performance.

The Directors believe this presentation is a useful tool for investors when evaluating the performance

of the Group, and should be viewed in conjunction with the financial prepared in accordance with

IFRS (a summary of which is also included below).

Adjusted EBITDA Calculation

Year ended

31 December 2022 £

Year ended

31 December 2021 £

Asset management revenue 50,090,889 80,395,418

Capital markets gains/income 26,293,650 61,234,942

Principal investment (losses)/gains (4,916,495) 9,920,338

Consumer platform revenue 936,684 297,312

Total revenue gains and other income 72,404,728 151,848,010

Direct costs (8,667,090) (8,615,868)

Goodwill impairment (5,473,525) -

Exceptional items (43,852,096) -

Administrative expenses (21,177,642) (22,173,363)

Adjusted EBITDA (6,765,625) 121,058,779

Adjusted EBITDA (%) n/a 80%

Depreciation/Amortisation (2,882,841) (1,270,029)

Adjusted EBIT (9,648,466) 119,788,750

Finance costs (6,330,425) (7,045,382)

Currency translation differences 19,281,832 1,756,423

Taxation (368,674) (1,056,353)

Total comprehensive income 2,934,267 113,443,438

Historical Quarterly Performance - 2020 - 2022

£(25m)

£(15m)

£(5m)

£5m

£15m

£25m

£35m

£45m

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022

Asset Management Platform Capital Markets Infrastructure

Principal Investments Consumer Platform

EBITDA

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The Adjusted EBITDA of the Group for the year ended 31 December 2022 was negative £6.8 million

(2021: positive £121.1 million). The Group experienced two loss making quarters, arising from major

events that impacted the wider industry; the de-pegging of UST

significantly impacted us during Q2,

and Q4 brought with it the collapse of FTX

which resulted in a material provision to be recognised.

These events combined to overshadow the Group’s financial performance during a turbulent year

for digital assets. Without these losses, the Adjusted EBITDA of the Group would have arrived at

approximately positive £37.1 million for the year, representing an Adjusted EBITDA margin of 51%.

Despite these events, the Group’s Total Comprehensive Income for the year has finished positive

at a figure of £2.9 million (FY 2021: £113.4 million), assisted significantly by the strengthening of

USD, which is the operational and presentational currency of our core wholly-owned subsidiary

CoinShares Capital Markets (Jersey) Limited.

Despite extremely turbulent market conditions, Asset Management fees generated across the

various products within the Group’s Asset Management platform totalled £50.1 million (FY 2021:

£80.4 million). This figure continues to be comprised of an ever-diversifying mix of products; XBT

as our legacy product, CoinShares Physical leading the market in terms of inflows, and the BLOCK

index providing exposure to a range of digital asset equities. It is noted that 2022 management fees

alone are in excess of the administrative expenses of the Group.

The Group’s Capital Markets activities were impacted heavily by the events of Q2 and Q4 mentioned

above. That being said, income and gains generated exclusive of these events stands at £26.3 million.

The Group’s Principal Investment portfolio has shown a loss of £4.9 million, largely reflecting the

wider market conditions that were experienced over the year, as these investments predominantly

comprise equities of companies operating within the digital asset space.

The difficult decision was taken at the end of the year to cease the Group’s Consumer Platform.

While positive steps were being taken throughout the year, it has become clear following the collapse

of FTX that the landscape had changed significantly. The level of ongoing investment required to

support Consumer Platform initiatives would be better directed into supporting the core business

units of the Group. Moving forward into 2023, we will therefore no longer be reporting on this as a

business unit, as any remaining resources will be serving other parts of the Group. As a result of this

cessation, we have also incurred a sizeable impairment charge against the goodwill held in respect of

the Napoleon acquisition which marked the start of the Group’s Consumer Platform activities.

Direct costs of the Group comprise custody fees, trading fees and issuer expenses incurred by the

issuing entities of the Group’s ETPs. These have shown a quarter-on-quarter decrease in 2022, in

line with a reduction in Capital Markets activities, and reduced custody fees arising from decreased

AUM following digital asset price declines over the year.

Admin expenses of the Group have been relatively consistent throughout the year at an average of

approximately £1.8 million per month, and £21.2 million for full year (excluding goodwill impairment

charge of £5.5 million), with the key expenses for the year being salaries, marketing, professional

fees, IT related expenditure & legal fees.

1. As included within the Group’s Q2 2022 earnings report, released on 2 August 2022, a loss of £17.9 million was incurred on

disposal of the Group’s UST holdings following the Terra Luna collapse.

2. As announced on 10 November 2022, the Group provided in full against balances held on FTX, totalling £26.0 million due

to its collapse and doubts around the recovery of any assets held with the exchange.

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As at

31 December 2022 £

As at

31 December 2021 £

Assets

Investments 45,011,850 23,689,517

Other non-current assets 16,814,023 22,799,714

Total non-current assets 61,825,873 46,489,231

Digital assets 868,922,517 2,761,629,509

Trade receivables and other assets 422,610,194 1,182,391,016

Cash at bank 26,567,599 10,775,650

Total current assets 1,318,100,310 3,954,796,175

Total assets 1,379,926,183 4,001,285,406

Liabilities

Trade payables and other liabilities (1,019,101,526) (3,505,885,786)

Amounts due to brokers (135,384,786) (292,706,977)

Current tax liabilities (235,814) (2,578,333)

Total current liabilities (1,154,722,126) (3,801,171,096)

Lease liabilities (28,980) (101,157)

Borrowings (21,433,967) -

Total non-current liabilities (21,462,947) (101,157)

Net assets 203,741,110 200,013,153

Summary Balance Sheet

Year ended

31 December 2022 £

Year ended

31 December 2021 £

Revenue 51,336,682 80,754,813

Administrative expenses (38,201,098) (32,059,260)

Net gain/(loss) on financial instruments/digital assets 489,185,745 (2,483,773,256)

Other operating income 16,626,978 14,665,375

Operating profit/(loss) 518,948,307 (2,420,412,328)

(Loss)/gain on investments/JVs (4,950,035) 5,287,123

Net finance income 6,586,466 3,859,852

Taxation (368,674) (1,056,353)

Profit/(loss) after taxation 520,216,064 (2,412,321,706)

Other comprehensive (loss)/income (517,281,797) 2,525,765,144

Total comprehensive income for the year 2,934,267 113,443,438

Summary Statement of Comprehensive Income

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The net asset position of the Group has remained largely static when compared to the previous year,

with the gains made and currency translation uplift being offset by the events of Q2 and Q4.

Total AUM of the Group as at 31 December 2022 held on the balance sheet stands at £1.00 billion.

These assets are held in relation to the Group’s ETPs issued by XBT Provider and CoinShares

Digital Securities Limited. This has seen a significant reduction when compared to 2021 due to

declining digital asset prices.

The composition of the balance sheet has remained largely consistent throughout 2022, with the

majority of assets represented by digital asset holdings and exposure, and liabilities represented by

amounts owing to holders of the Group’s ETPs.

The key difference when compared to 2021 is the decrease in amounts due to brokers as we have

significantly reduced trading activities due to market conditions and have returned the vast majority

of our digital asset holdings to regulated digital asset custodians.

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COINSHARES ASSET MANAGEMENT

2022 OVERVIEW

2022 has been an eventful, if not entirely positive, year for crypto investors. In price terms, coming

off the highs achieved in autumn 2021, 2022 has often been referred to as starting another ‘crypto

winter’.

In market events, the collapse of Luna in May provided a new round of headlines, trader losses and

general apprehensiveness towards developing ecosystems as a whole. As the year matured and

industry participants came to terms with the oversights and mistakes in the Luna ecosystem, the

fraud and mismanagement of FTX brought a primary player in crypto markets tumbling down.

Both have been sobering reminders of how systems, and people, can be flawed in a variety of

unexpected ways and emphasised the importance of understanding both opportunities and

risks with a growing and developing industry & ecosystem. With that background, European net

investment into crypto ETPs was mildly negative. But the market did continue to develop with certain

trends continuing in 2022 that have been underway for a while.

Flows into the European Crypto ETP Segment

$1,344.0M

$405.4M

$81.0M

-$90.3M

$252.5M

$12.0M

$4.9M

$109.7M

-$76.7M

Notional Flow

20192015 2023

(Q1)

2020 2021 20222016 2017 2018

2022 ETP PERFORMANCE

XBT Provider

One trend that we continue to see is a regular turnover in the client base of all issuers, leading to net

redemptions for more established issuers in both bull and bear markets.

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XBT Provider, the most established of all crypto asset issuers, led in this regard with continued

disposal from all client segments, while new assets and customers come primarily from continued

strength in core retail markets where the ratio of buyers/sellers has remained steady from 2021

through 2022.

While 2021 saw net buying from retail investors in core markets and European intermediaries

represented over 75% of disposals, in 2022, outflows were broadly equivalent for both professionals

and retail investors, with new retail investment substantially offsetting outflows.

We credit both the loss of professional investors and the relative strength of private client investors

to three factors:

1. preference for fund size amongst private client investors;

2. strength of XBT Provider/CoinShares brand in our core markets; and

3. more immediate consideration to competitors given by professional clients.

Gross revenue generated from XBT Provider totalled £78.3 million 2021 and dropped to £46.0 million

in 2022. 15% of this drop is attributed to outflows, while price drove 85% of the decrease.

Flows into the European Crypto ETP Segment - 2022

-$800.0M -$600.0M -$400.0M -$200.0M $0.0M $200.0M $400.0M $600.0M

21Shares AG

CoinShares Digital Securities

VanEck

WisdomTree Europe

Hashdex AG

Iconic

Global X Digital Assets Issuer Limited

SEBA A1 Issuer

Bitpanda

Invesco Digital Assets

Fidelity

Eqonex

Helveteq AG

Valour Structured Products

ETC Issuance GmbH

XBT Provider

-$399.8M $583.7M

$241.8M

$211.9M

$90.2M

$522.3M

-$644.0M

-$512.5M

-$96.5M

Notional FlowIssuer

Outflow

Inflow

-$100.7M

-$58.6M

$65.1M

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CoinShares Physical

While issuers with a more established client base faced the headwinds of redemptions, 2022 was a

key period of growth for our physically-backed platform CoinShares Physical. Overall gross revenue

for the platform rose to £2.3 million with inflows roughly offsetting the negative revenue impact of

price over the year.

We remain committed to CoinShares Physical and providing both professional and retail investors

across Europe with:

• the best in investor protection;

• high liquidity;

• competitive pricing; and

• innovative product features.

Our line of ETPs offering staking rewards to investors reached a total of 7 products in 2022 and has

quickly become competitive in the overall landscape, with CSDS being second overall in flows for

products tracking these 7 protocols.

Meanwhile, our strategy of positioning CoinShares Physical Bitcoin and CoinShares Physical

Ethereum as the best compromise between investor protection, liquidity and price gave us particular

success in 2022 as we led net flows into these exposures.

BTC & ETH Net Flows - 2022

-$447.4M

-$127.1M

-$3.8M

$0.0M

$0.3M

$0.8M

$0.9M

$1.6M

$2.0M

$2.8M

$3.1M

$22.2M

$29.1M

$61.2M

$104.7M

CoinShares Digital Securities

21Shares AG

WisdomTree Europe

VanEck

Iconic

Global X Digital Assets Issuer Limited

SEBA A1 Issuer

Bitpanda

Invesco Digital Assets

Fidelity

Eqonex

Helveteq AG

Valour Structured Products

ETC Issuance GmbH

XBT Provider

Notional FlowIssuer

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2023 OUTLOOK

2022 saw how market events can overtake any expectations that we may have for the year ahead. In

our 2021 annual report, we saw the potential for overall flows into the European crypto ETP segment

to double from circa $2 billion to over $4 billion. Instead, net flows were mildly negative. Regardless,

2022 has been a year of maturing markets and maturing offerings. A majority of new entrants into the

market in 2021 saw negligible client interest in 2022 and we see the ongoing importance of expertise,

compelling features and appropriate positioning to overall success.

Throughout 2022 and despite adverse events, we believe the investment case for crypto has only

improved as technology and adoption have moved forward and continues to be more global in

scope. We believe that large amounts of latent demand remain across investor segments and that

crypto ETPs in Europe will continue to grow from their current $4bn mark.

Private clients continue to be the primary beneficiaries of securities like our crypto ETPs, however

we believe that European regulatory clarity around both ETPs and underlying crypto assets, will help

a larger proportion of professional investors to participate in the opportunity which strengthening

fundamentals and lower prices present investors in the months and years ahead.

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COINSHARES CAPITAL MARKETS

2022 OVERVIEW

After a record year in 2021, the cryptocurrency market cooled significantly in line with what we have

typically observed as a 4-year cycle, despite being cognisant of the infancy of digital assets vis a vis

legacy financial markets. Bitcoin’s price started around $48,000 and closed the year down more than

66% at approximately $16,000.

Ethereum, the second largest cryptocurrency, suffered a similar trajectory, declining from $3,700 to

$1,200 amidst what arguably represents crypto’s most severe annus horribilis.

Whilst the mainstays of BTC and ETH were suffering, the crypto winter has been especially harsh

for the rising stars of the previous year like Solana and Avalanche that shed 95% and 90% of their

respective market values.

It would be remiss to view cryptocurrencies in isolation: US Stock markets fell more than 15% over

the course of the year, with bond markets taking a 20% decline following a steep rise in interest

rates. The tightening of monetary policies to fight inflation slowed down the risk appetite of investors

leading to a readjustment away from growth stocks, particularly in the tech sector, as well as

cryptocurrencies.

Amidst a bleak macroeconomic backdrop and a flight for safety, the sell-off was steepened by

the collapse of Luna/Terra in May and the implosion in June of CeFi apps such as BlockFi, Babel

Finance, Celsius, Genesis and Voyager Digital.

Losses were further exacerbated by the bankruptcy of Three Arrows Capital, who had significant

loans drawn down from several counterparties and concerns shifted towards the impact this will

have from a contagion perspective. Whilst CoinShares Capital Markets successfully managed the

risk of our loan book, suffering no credit events from a carefully curated book of counterparties, we

were not immune from incurring losses on our UST position (the value of which fell drastically in

conjunction with the Terra Luna incident in Q2), which risk management determined that we cut to

prevent further detriment to our shareholders.

The immediate days and weeks post the events surrounding UST presented significant market

dislocations which we were able to capitalise upon as we sought to recover losses under an

appropriately controlled risk framework. Naturally, such a seismic event saw a number of our

competitors withdraw from the market, either partially or entirely. As such, we saw significant market

opportunity, however, we re-entered the market cautiously in line with our approach of revising our

risk framework from the bottom up after such a market event occurs.

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

10,000

20,000

30,000

0,000

50,000

60,000

January February March April May June July August September October November December

Bitcoin (left axis)

Ethereum (right axis)

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As the summer neared an end, and the market seemed to be healing, the implosion of both Alameda

and FTX placed significant pressure on prices. Prima Facie, both companies appeared as the great

winners of the aftermath of the Terra/Luna meltdown but recent news would instead suggest that

both parties were complicit in a systematic defrauding of investors and trading counterparties,

exhibiting zero risk management principles and a wilful disregard for investors, both institutional and

retail alike.

The massive failures and scandals of 2022 have unsurprisingly led to increasing scrutiny from

regulators and lawmakers across the world who will help to shape and guide the direction of digital

assets for the forthcoming years and the traditional finance and digital asset markets becoming

increasingly interlinked.

To paint cryptocurrencies as solely an asset adopted by those with a libertarian philosophy of finance

seems no longer appropriate. As testament to this, the vast majority of Ethereum transactions are

now Office of Foreign Assets (“OFAC”) compliant, which demonstrates both the willingness of

market participants to engage with appropriate regulation, whilst simultaneously raising the question

of the network’s true degree of ‘decentralisation’ .

These failures have, unfortunately, overshadowed some of the major successes exhibited by

cryptocurrencies, such as Ethereum’s finalisation of the transition from Proof of Work to Proof of

Stake or the exponential growth of the Bitcoin Lightning network.

Volume

The total notional traded by CoinShares Capital Markets in 2022 reduced to $15.0 billion as market

participants withdrew from the market and black swan events quelled investor appetites, amidst the

backdrop of a rising rate and risk-off environment. (2021: $32.0 billion, 2020: $7.8 billion and 2019:

$2.3 Billion).

Trading activity was continuously high except for the summer months and December due to

uncertainties concerning the viability of a number of trading counterparties and the outright

evaporation of a number of market makers following unbearable losses sustained by them.

Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22

Billions

ETN Ph

ical Derivatives

CSCM Trading Volumes - 2022

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2022 PERFORMANCE

The market conditions of 2022, coupled with the turbulence of Q2 and Q4, have resulted in a

landscape which is vastly different from that seen in 2021. Q2 and Q4 Capital Markets performance

was overshadowed by the significant exceptional items incurred on disposal of the Group’s US Terra

holding and collateral posted on FTX for our arbitrage activity, which stood at £17.9 million and £26.0

million respectively.

Year ended

31 December 2022 £

Year ended

31 December 2021 £

Liquidity provisioning 4,451,317 13,819,969

Delta neutral trading strategies 2,587,091 27,166,837

Fixed income activities 4,955,180 10,904,601

DeFi 13,857,006 3,587,052

Other 443,056 5,756,483

Total 26,293,650 61,234,942

Exceptional items (43,852,096) -

Total (17,558,446) 61,234,942

Capital Markets

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2023 OUTLOOK

The Capital Market team started this new year with a focus on risk management and preparation

for future regulatory change, which has likely been accelerated by market events.

We are scrutinising each existing counterparty through enhanced risk review and due diligence,

including deeper compliance, legal, regulatory, financial and cyber-security scrutiny. This new risk

framework seeks to further ascertain and map out the risks faced by contagion events which came

to bear significantly upon 2022.

We are experiencing a flight to quality and continue to harvest the fruits of our efforts towards

greater transparency and adherence to regulatory frameworks. Our trading efforts have largely been

concentrated onshore, with our trading on the Chicago Mercantile Exchange being a significant

driver of our revenue since August 2022.

Concomitant to this trend, an increasing number of crypto exchanges are moving to a model

whereby tokens are held with an independent custodian, extending a credit line to trade on

exchange with an end of day or batch settlement process, akin to a swap reset model. This model

closely mimics the architecture of traditional capital markets and shows the growing maturity of

the crypto sector. This evolution will be extremely beneficial for us as it reduces our overall risk,

with assets being housed at our trusted custodians, Komainu and Zodia, which ought to give our

investors further comfort.

We continue to support the asset management arm of CoinShares by providing liquidity on our

growing suite of Exchange Traded Products. CoinShares is the first crypto company being accepted

as a member on the Euronext stock exchange.

We also continue to invest in our technological infrastructure in order to keep our competitive

advantage. An important new release of our platform Galata is scheduled in 2023 that will improve

speed, safety and regulatory compliance, whilst we continue to grow our prospective service lines.

In accordance with our strong asset management background we will be looking to launch a

number of structured products which we look forward to sharing with the market in due course.

Whilst 2022 was certainly a year to forget for market participants, we continue to honour our

commitments to trading partners with a trading uptime of over 99% and remain confident that the

hard work we continue to put in each day will bear fruit in 2023. Whilst drawdowns are never easy,

we are a very tight team of seasoned finance professionals who have seen many permutations of

markets and their cycles. Our commitment to our fundamental belief in the inevitable success of

digital assets remains unwavering.

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OTHER ACTIVITIES

CONSUMER PLATFORM

FTX’s bankruptcy was a setback and had a significant impact on our capacity to deploy HAL.trading

in Europe. Consequently, in consultation with CoinShares France’s senior management, it was

decided to terminate CoinShares’ consumer activity.

It is time to refocus and build upon the skills we already possess. The team of quants who developed

HAL’s strategies will join the Capital Markets team. The team of engineers who developed the

platform will be redeployed to our Galata trading platform, and the design and marketing team will

refocus their expertise on our corporate and ETP marketing strategies.

PRINCIPAL INVESTMENTS

Given the nature of the investments we hold, our Principal Investments portfolio has also

experienced the turbulence of 2022. We have experienced several write-downs and unfortunately

seen certain invested companies cease trading altogether, including Viridi Funds, which liquidated

the Viridi Bitcoin Miners ETF during December 2022. The decreases seen in other holdings largely

mirror the market decline we saw over the year.

We believe that, following the events of 2022, institutional focused, regulated players will potentially

be those who will benefit the most moving into 2023. This view aligns with what we have seen with

Komainu, the regulated custodian in which we have a stake. Komainu completed part of a funding

round which commenced in the latter stages of 2022 closing a significant tranche in early 2023. We

believe this is a very positive step in Komainu’s journey, who have been a valuable partner to the

Group since their inception, and this stride forward has been reflected accordingly in our year end

valuation.

FlowBank, in which we hold a material stake (valued using the equity method due to the quantum of

our shareholding) has made a number of positive steps. They have experienced a consistent 30-40%

growth rate in new clients per quarter since Q1 2021. Additionally, results from trading activities, prior

to costs, reached CHF 27.7 million for 2022, an increase of 73% on 2021. We hope to see FlowBank

continue to progress moving into 2023 and start to see consecutive months of profitability to bring it

to a rolling breakeven position as it continues to evidence growth.

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INDUSTRY & MARKET

2023 Crypto Market Outlook

2022 was a year of tightening monetary policy which initiated the unwinding of valuations in

the crypto world after a period of exuberance. Like in most bear markets, this then led to the

unravelling of crypto malinvestment and the exposure of bad actors. These events have distracted

investors from the key reasons why digital assets were created: to mitigate monetary debasement,

decentralise computation and to protect from censorship. 2023 will be a year of coming back

down to earth, with many tokens likely being shunned for larger, more viable ones.

As monetary policy may reverse in the second half of the year, it is likely that we see much greater

support for digital assets by investors. It will also be the point at which the momentary higher

correlation between risk assets such as equities and digital assets will degrade.

We expect much tougher regulation, more in-line with existing banking regulations, to begin

to be formulated and in-part implemented this year, particularly for the on- and off-ramps for

crypto. This is particularly relevant following the events of March 2023 which saw the downfall of

several crypto friendly banks and the fallout that followed. Although this is likely to be a long-term

consultation process for the industry, MiCA from Europe is the most advanced piece of crypto

regulation globally and is likely to be used as the blueprint by other regulators.

The Bitcoin mining market in 2023 is likely to be a more steady and sustainable year for industry

participants. After rapid growth in 2021 and a devastating downturn in 2022, the mining market

seems poised for a less dramatic 2023. We note the particular importance of the 2024 supply

halving, given that it will have a direct impact on mining revenues across the industry and is only

roughly 14 months away.

2023 is shaping up to be the year of Layer-2s, for years Ethereum has been struggling to scale

effectively while preserving decentralisation and security and Layer-2s have seemingly solved

this trilemma. With cheap and fast transactions, and improved economics, the differentiators of

competing Layer-1s arguably diminish.

We see further integration between real-world assets and crypto exchanges. This is evidenced by

JP Morgan forking AAVE to trade Singapore Dollars, the sale of real estate through NFTs and the

lending of stablecoins to SMEs in emerging markets. Smaller, less proven DeFi protocols will have

to build both their products and reputation in a more orderly manner as risky behaviours aren’t

being rewarded to the same extent anymore. So, for now, while we do expect innovation among

newer protocols, we see a clear deviation between the two groups and expect them to further

diverge as the year progresses.

While the noise may quieten, especially amongst the lower market cap tokens, developer

communities are likely to stay thin while adoption struggles, a lingering buzz may continue

amongst the larger Layer-1s as innovation will not cease to occur. The signal shows, however, that

consolidation and convergence towards the Ethereum ecosystem are the lines of direction for the

rest of 2023.

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The Bitcoin Mining Market Will Rebalance in 2023

The growth of the Bitcoin mining industry is expected to continue over the next several years as

entrepreneurs take increasing advantage of the abundance of opportunities to monetise stranded

and waste energy sources. However, there are several factors that will likely lead to a rebalancing of

the mining market in 2023. This rebalance will likely be driven by the exit of unprofitable companies, a

potential decrease in Bitcoin price volatility, and the delivery of new, more efficient mining machines.

Overall, we find that the Bitcoin mining market in 2023 is likely to be a more steady and sustainable

year for industry participants. After rapid growth in 2021 and a devastating downturn in 2022, the

mining market seems poised for a less dramatic 2023. This would be positive news for both miners

and investors alike, as it will create a more predictable market for all involved.

We note the particular importance of the 2024 supply halving, given that it will have a direct impact

on mining revenues across the industry and is only roughly 14 months away. In anticipation, a

potential strategy by mining companies may be to focus on reducing operating expenses above their

cash-costs (including overhead, debt, hosting, etc.). This would strengthen miner balance sheets and

in turn extend their cash runway.

Bitcoin Mining Revenue Weakened Throughout 2022

Source: Coinmetrics, Hashrate Index, CoinShares, data available as of close 11 January 2023

Revenue ($/TH/s/day, RHS) Difficulty (∆%, LHS) Price USD (∆%, LHS)

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

-8

60%

40%

-20%

20%

40%

60%

Jan-22 Apr-22 Jul-22 Oct-22 Jan-23

Revenue ($/TH/s/day, RHS)

Difficulty (

∆

%, LHS)

Price USD (

∆

%, LHS)

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The Shift from Layer-1s to Layer-2s

2022 marked the 5th year in a row that blockchains dubbed “Ethereum Killers” failed to kill

Ethereum. Yet, despite its innovation and reliability, during periods of high demand, Ethereum

is slow and expensive and as a result, has seen its market share eaten away by its competitors.

However, in response to its deficiencies, the Ethereum vision has shifted from being the

blockchain that does it all to one that lets the free markets handle the load for it. This is

where Layer-2s enter the picture, which can essentially be thought of as data compression

solutions. Users interact with a Layer-2 blockchain, and their transactions are bundled into one

transaction, then posted on the Ethereum Layer-1 for verification.

The advantages of Layer-2s are why we see an upcoming shift towards them in 2023. The design

space for Layer-2s is large and growing with some offering fast transactions, some that offer

free transactions, and others that use the entire chain just for one app. Currently, Layer-2s have

caught up to Ethereum and handle around 1 million transactions per day, however, we expect

Layer-2s to continue their climb and handle more than double Ethereum’s transactions by the

end of the year.

2023 is shaping up to be the year of Layer-2s, for years Ethereum has been struggling to scale

effectively while preserving decentralisation and security and Layer-2s have seemingly solved

this trilemma. With cheap and fast transactions, and improved economics, the differentiators

of competing Layer-1s arguably diminish. There are still innovations in Layer-1s such as app-

chains and zero-knowledge Layer-1s but keep an eye out for the releases of StarkNet, zkSync,

Fuel labs, and Aztec as these Layer-2s have been in the works for years and are nearing their

mainnet launches. Expect leaders like Optimism and Arbitrum also to continue their growth

and for competition among these Layer-2s to really heat up. Unsurprisingly, there are “Layer-

2s” being built on other networks as well, such as Bitcoin’s Lightning network, Nitro on Solana,

as well as other efforts on the Tezos, Cardano and Near blockchains. However, with a first-

mover advantage and the most social capital, these advancements in scaling should help the

Ethereum ecosystem prepare for the next wave of adoption and regain some of its lost market

share.

Blockchain equities: Soft landing vs hard landing

We see 2023 as a year of digesting the record interest rate hikes from 2022 and whether the

global economy, in particular the US, can remain resilient in the face of deteriorating leading

economic indicators. As the rate of US inflation is appearing to decelerate based on the past six

months, the question remains: Will we have a soft or hard landing in 2023?

In our view, a soft landing scenario in the US would constitute moderately lower inflation

and tepid rises in unemployment, possibly in the ranges of 3-4% and 4-5% respectively. Fed

fund rates are likely to remain higher for longer in a soft landing, near the terminal rate of 5%,

with the economy extending GDP growth for longer. This is likely to have a diverging impact

on blockchain equities with the more value-oriented and growth-at-a-reasonable price

companies outperforming the higher beta growth sector. In this environment, we would expect

cryptocurrency prices to remain stable (assuming no exogenous risk) and therefore, pure-play

companies might be better positioned to predict the path of their revenue generation going

forward. In retrospect, companies with weaker balance sheets are unlikely to be able to access

debt markets for financing or capex spending and may underperform businesses that are

capital light, have earnings predictability and benefit from higher interest rates.

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We believe that it is increasingly likely that a delayed deterioration in lagging indicators, such as the

unemployment rate, may disguise a hard landing scenario that is postponed to 2024. Therefore,

we consider that 2023 could spell more absorption of restrictive monetary policy in the US, with

corporate profitability starting to decline in the latter half of the year. Value-oriented equities may

outperform growth, with cyclical industries such as semiconductors and high growth technology

not faring as well due to persistently high interest rates and declining consumer and business

fundamentals.

Dramatic Changes in the Exchange World

Spot and futures volumes are notoriously difficult to get right in the cryptocurrency world for

several reasons. The data is very fragmented, with few providers providing a full picture of what’s

being traded, and there is often an element of wash trading, which we estimate could be up to

60% of total volumes. Quantifying volume is essential though, as it highlights to some extent how

much a cryptocurrency is being used on exchange, being relatively agnostic as to what its use is.

Cryptocurrencies can also be traded OTC, but this is difficult to reconcile accurately, and it can also

be traded in marketplaces that are hosted directly within a cryptocurrency platform itself, often called

decentralised exchanges.

Our analysis is focussed on the spot markets using a select group of trusted exchanges on both the

centralised and decentralised markets. We are also focussing on just Bitcoin and Ethereum, which

we estimate to comprise ~65% of total spot volumes on trusted exchanges, excluding stablecoins.

We have followed similar criteria to Coinmetrics in selecting trusted exchanges which are based on

a combination of volume correlation, web traffic analytics and qualitative factors. The list comprises

~45% of total market spot volumes while it adopts a conservative approach, so it is probable that we

are understating volumes to some extent.

Trading Volumes on trusted exchanges (7d DMA US$bn)

Source: Compass, Bloomberg, CoinShares, data available as of close 05 March 2023

Nasdaq 100 Bitcoin Ethereum FTSE 100

2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023

Bitcoin

Ethereum

Nasdaq 100

FTSE 100

Q1Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

$ Billion

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The results highlight that spot Bitcoin averaged a daily US$11 billion and spot Ethereum US$6

billion in 2022, having fallen 23% and 34% respectively relative to 2021. Regardless, these

trading volumes are substantial when compared to the FTSE 100 and the Nasdaq 100, which

both traded a daily US$4.4 billion and US$38 billion respectively in 2022.

2022 was a year of seismic shifts in trading patterns, with stablecoins usage growing by 3.5%

relative to 2021, averaging US$7.8 billion per day. Meanwhile, fiat and Cryptocurrency Bitcoin

trading pairs fell 40% and 73% respectively over the same period, leading to a dramatic rise in

stablecoin market share to 70% of all Bitcoin trades. The same phenomenon was not seen in

Ethereum, with market share remaining relatively stable over the course of 2022.

Despite the recent crisis, crypto trading volumes remain deeply liquid, and continue to trade

in greater volumes than most equity exchanges around the world. Measuring trading volumes,

while use-agnostic, is a good measure of the use of crypto assets, particularly when we have

seen much of the speculative froth leave the market.

As the exchange market continues to mature in 2023, we are likely to see a continued

move away from centralised exchanges due to their inherent vulnerability to human

error. Decentralised exchanges and sophisticated OTC solutions are likely to be the main

beneficiaries of this change in user behaviour.

2023 Banking Collapses

We have seen over Q1 2023, hard evidence of accounting principles for US banks being

problematic in their treatment of unrealised fair value losses. They do not need to be reported

in the income statement, partially obscuring their vulnerabilities to investors. This is fine until

there is a liquidity crisis, where the bank is forced to sell those assets on the open market,

such as when deposit withdrawals force their hand. This wasn’t an issue in 2008 when the

dissemination of news was far slower, today banks have to meet the immediate and substantial

demands of depositors that are looking to liquidate positions.

The challenges in the banking sector are also exacerbated by unprecedented 12 years of

quantitative easing, followed by one of the fastest rate hike periods increase in history. It was

inevitable that things in the economy could start to break. The early signs of this have been a

liquidity crisis in the banking system, with bond losses not covering depositor withdrawals, and

signs of a cascade of bankruptcies have since emerged. Silvergate, Silicon Valley Bank (SVB)

and Signature Bank are beginning the liquidation process and there is potential for more to

follow despite the US Federal Reserve creating a bailout programme to assuage depositors.

Consequently, there has been a sharp divergence between the US bank equities and Bitcoin

prices, this, we believe is highlighting investors’ concerns over custody in the traditional

banking system and preference for a more transparent and liquid monetary system.

Regulatory Outlook

2022 was the veritable annus horribilis for the digital asset industry: a single-point failure in an

ill-conceived “stablecoin” led to a contagion that put numerous digital asset intermediaries

into bankruptcy, causing client losses in the tens of billions of dollars. In addition, in the United

States, both the SEC and the CFTC took fairly aggressive action against some of the digital

asset industry levying some fairly serious fines. And finally, (although one might see this as the

silver lining), the EU has now approved the Markets in Crypto Assets Directive (MiCA), which

promises to introduce a comprehensive digital asset regulatory regime across one of the

largest trading blocs in the world.

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2023 will very likely bring the backlash, at least from a regulatory perspective. We expect heightened

scrutiny for the entire industry, driven by increasingly emboldened regulators keen to ensure

governance over an industry that has largely escaped regulatory scrutiny for over a decade.

At CoinShares we continuously track the regulatory and political landscape, both in the countries

where we have a business presence, where our clients are based and other countries which are

developing a legislative framework for digital assets. What we are seeing is that different countries

are moving at different speeds.

The EU is expected to formally adopt MiCA sometime in Q2 2023 with an eye towards establishing

a comprehensive and transparent regulatory regime for digital assets throughout the European

Union. Once finalised expect steady implementation from both Member States as they pass MiCA

into their domestic law and for firms that will find themselves subject to a wide range of regulatory

obligations.

We also expect the EU to monitor market developments with an eye to ensuring that MiCA

addresses any possible eventualities (i.e., loopholes). We think Member States will focus on retail

intermediaries, especially those who may try to access the market from unregulated third countries

via reverse solicitation. Retail marketing efforts are likely to be heavily scrutinised and held to a

standard similar to the marketing of financial instruments.

As the implementation period progresses, it is very likely that innovation will overtake some of

the regulations, so we would expect continued engagement from the EU and Member State

regulators on the market. Furthermore, the EU has promised to look more closely at decentralised

finance (DeFi), which was initially excluded from MiCA, which in turn is likely to lead to further

amendments to MiCA.

In anticipation of the introduction of MiCA’s comprehensive legal framework harmonizing

regulatory requirements for crypto-asset related services across Europe, CoinShares is already

familiarising itself with MiCA’s provisions and assessing the impact on its current and future

products, services and business models.

A significant aspect of MiCA is the harmonized regulatory regime for crypto-asset service providers

(CASPs), which encompasses a total of ten services defined as “crypto-asset services”, similar to

the list of investment services under the Markets in Financial Instruments Directive. Moreover, in

cases where an EU member state has already established a bespoke registration/licensing regime

for virtual asset service providers (VASPs), regulators will apply a simplified authorization process

to facilitate the transition from a national registration/license to a MiCA CASP license that is valid

throughout the EU. This is an important consideration for CoinShares, especially in relation to its

French entities.

In March 2022, President Biden issued an executive order titled “Ensuring Responsible

Development of Digital Assets” requesting various reports be provided addressing “policy

recommendations, including potential regulatory and legislative actions, as appropriate, to protect

United States consumers, investors, and businesses, and support expanding access to safe and

affordable financial services”. The executive order specified a number of dates for government

departments to deliver reports on various topics. Departments such as the Treasury Department,

the Department of Commerce, the Justice Department and the White House Office of Science and

Technology Policy, dutifully filed their reports.

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The executive order can be seen as a meaningful step in the long and winding road towards

regulatory transparency in the United States. However, to keep up the momentum, 2023 will need

to be the year that a coherent roadmap for digital assets in the United States develops. Also,

the question of who, between the Securities and Exchange Commission and the Commodities

Futures Trading Commission, has jurisdiction over cryptocurrency needs to be resolved.

While in the UK, on 4 April 2022, the UK Treasury released proposals to make the UK a global

cryptoasset technology hub. These proposals included:

1. stablecoins being regulated;

2. the introduction of a financial market infrastructure “sandbox”;

3. establishing a Cryptoasset Engagement Group to work more closely with the industry; and

4. exploring ways of enhancing the competitiveness of the UK tax system to encourage further

development of the cryptoasset market.

While some of these proposals have been advanced, the consultation on the Future Financial

Services Regulatory Regime for Cryptoassets was released in February 2023. CoinShares is

looking forward to responding to this consultation using its knowledge and experience from

operating in the global digital asset ecosystem to help form UK regulations.

Jersey

Finally in Jersey, where the headquarters of the Group are based, where there is a focus on

compliance with the Financial Action Taskforce (“FATF”) guidance on a Risk Based Approach to

Virtual Assets and Virtual Asset Service Providers (October 2021). To ensure that Jersey is able to

demonstrate compliance with FATF’s Recommendation 15 and the 2021 guidance, the Proceeds

of Crime (Amendment No. 6) (Jersey) Order 2022 (Amendment No. 6) came into force on 30

January 2023. The Amendment No. 6 has introduced the following definitions:

“Virtual Asset” means a digital representation of value that can be digitally traded or transferred

and can be used for payment or investment purposes.

“Virtual Asset Service Provider” includes a natural or legal person or arrangement that carries on

the business of conducting one or more of the following activities or operations to, for or on behalf

of another natural or legal person or arrangement:

1. Exchange between virtual assets and fiat currencies,

2. Exchange between one or more forms of virtual assets,

3. Transfer of virtual assets,

4. Safekeeping or administration of virtual assets or instruments enabling control over virtual

assets,

5. Participation in and provision of financial services related to an issuer’s offer and/or sale of a

virtual asset.

This revised legislation will impact any CoinShares entity that is administered/or managed in

Jersey and will require the appointment of a Money Laundering Compliance Officer and a Money

Laundering Reporting Officer for each entity, the maintenance of an Anti-Money Laundering

Business Risk Assessment and a detailed Compliance Monitoring Programme.

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CORPORATE GOVERNANCE

This Corporate Governance Report has been prepared in accordance with the Swedish Corporate

Governance Code (the “Code”).

The Board of Directors is responsible for the Corporate Governance report. The Corporate

Governance report for the financial year has been reviewed by the company’s auditor, as described

in the “Auditor’s report on the corporate governance statement”.

CoinShares International Limited is 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 Code, Nasdaq’s Nordic Main Market Rulebook for Issuers of Shares (the

“Main Market Rulebook”), 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.

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 principals and provide guidance in the company’s operations and for its employees. The

above-mentioned 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

and the company has chosen to adhere to the Code. The guidelines of the Code are available on

the Swedish Corporate Governance Board’s website (www.bolagsstyrning.se). The Code is based

on the “comply or explain” principle, entailing that companies that apply the Code may depart

from individual rules as long as they provide an explanation for the departure. As at the date of this

Corporate Governance Report, the Company has complied with the Code.

The Group’s statutory auditor is elected by the AGM to audit the Group’s annual report and

accounting practices.

The Nomination Committee proposes resolutions ahead of the AGM regarding issues concerning

election of directors and fees and drafts a proposal for resolution that is presented to the AGM. The

AGM resolves on principles for the appointment of the Nomination Committee.

The Board establishes its committees and determines which of its members are to serve on the

respective committees. The Audit Committee and the Remuneration Committee report to the Board

of Directors.

NOMINATION

COMMITTEE

REMUNERATION

COMMITTEE

EXTERNAL

AUDITOR

AUDIT & RISK

COMMITTEE

ANNUAL GENERAL

MEETING

BOARD OF

DIRECTORS

GROUP

MANAGEMENT

EXECUTIVE

COMMITTEE

OPERATING

SEGMENTS

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Shareholders Shares Ownership

Daniel Masters 15,289,388 22.41%

Mognetti Partners Limited 11,881,609 17.42%

Russell Paul Newton 8,314,452 12.19%

Alan Howard 7,933,540 11.63%

Adam Levinson 3,896,618 5.71%

Paul Davidson 3,240,000 4.75%

Meltem Ebru Bahar Demirors 2,778,020 4.07%

Vitruvius Limited 2,566,213 3.76%

Dwight Anderson 2,543,502 3.73%

Horseferry Trading Pte Limited 1,700,506 2.49%

Sum 10 largest owners 60,143,848 88.17%

Sum other 8,069,973 11.83%

Total number of shares 68,213,821 100%

Number of share options in issue 3,996,457 5.53%

Total diluted share capital 72,210,278 100%

CORPORATE GOVERNANCE

The figure above describes how corporate governance is organised. CoinShares International

Limited is a Jersey limited liability company whose shareholders ultimately decide on the company’s

governance by electing the company’s board of directors at the Annual General Meeting. The Board,

in turn, has continuing responsibility for ensuring that corporate governance of the company is in

compliance with laws and other external and internal rules and regulations.

INTERNAL GUIDELINES

Mission and goals, Articles of Association, the Board’s Rules of Procedure, the CEO’s instructions,

the Financial Manual, Group Policies, and general processes for internal control and governance.

EXTERNAL GOVERNANCE INSTRUMENTS

Companies (Jersey) Law 1991, the Swedish Annual Accounts Act, the Main Market Rulebook, the

Code and other relevant laws.

SHAREHOLDERS

As of 31 December 2022, CoinShares International Limited had 2,755 shareholders. The ten largest

shareholders as of 31 December 2022 had ownership corresponding to 88.17% of the votes and share

capital. The number of unique shareholders with a holding of 5% or more in the company was five (5).

SHARE CAPITAL AND VOTING RIGHTS

According to the Articles of Association in effect at the end of the financial year, the share capital of

the company shall be no more than GBP 99,000 divided into 200,000,000 Ordinary Shares in a single

share class. The company’s registered share capital as of 31 December 2022 was GBP 33,765.84,

divided among 68,213,821 Ordinary Shares. The shares, which are denominated in British pounds

(GBP), had a share price of GBP 0.000495. Each share carries entitlement to 1 vote. Every person

entitled to vote at general meetings of the shareholders may vote for the full number of shares

owned and represented by him or her without restriction in voting rights.

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GENERAL MEETINGS

The general meeting is the ultimate decision-making body of the company. At the general meeting, the

shareholders exercise their voting rights on key issues, such as the adoption of income statements and

statements of financial position, appropriation of the company’s results, election of members of the

Board of Directors and auditors and remuneration to the Board of Directors and the auditors.

The annual general meeting (“AGM”) must be held within six months from the end of the financial

year. In addition to the AGM, extraordinary general meetings may be convened. As permitted under

article 38. Notices of the Articles of Association, general meetings are convened by publication of the

notice convening the meeting on the company’s website and via a press release.

Notice of general meetings

According to the current Articles of Association, notice of general meetings shall be made:

• through a relevant system, where the notice or document relates to uncertificated shares;

• by giving it by electronic communication to an address for the time being notified to the

Company by the Shareholder concerned for that purpose; and

• by making it available on the Company’s website and publishing a press release.

Notice of the annual general meeting and extraordinary general meeting where an amendment of

the articles of association will be considered shall be given no earlier than six weeks and no later

than four weeks prior to the general meeting. Notice of other extraordinary general meetings shall be

issued no earlier than six weeks and no later than three weeks before the general meeting.

Right to participate in a general meeting

Those shareholders who wish to participate in a general meeting must:

1. be recorded in the share register kept by Euroclear Sweden AB on the record date, being ten

clear days prior to the general meeting; and

2. notify the Company of their intention to participate no later than on the date set out in the notice

of the general meeting.

In addition to notifying the company, shareholders whose shares are registered under a nominee

through a bank or other nominee must request that their shares be temporarily registered in their

own names in the share register ten clear days prior to the general meeting in order to be entitled to

participate in the general meeting. Shareholders should inform their nominees well in advance of the

record date. Shareholders may attend general meetings in person or by proxy.

Shareholder initiatives

Every shareholder has the right to have a matter taken up for consideration at a general meeting.

A shareholder who wishes to have a matter taken up for consideration at a general meeting must

submit a written request about such to the Board of Directors. Such a request must normally be

received by the Board not later than seven weeks prior to the general meeting in question.

Annual General Meeting – 2021 Financial Year

The Annual General Meeting (AGM) for the 2021 financial year was held on 20 June 2022 in the form

of a virtual event without the physical presence of the shareholders or their proxies.

The AGM resolved the following:

• that the consolidated income statement and consolidated balance sheet be adopted by the

company;

• to re-elect Daniel Masters, Jean-Marie Mognetti, Carsten Køppen, Johan Lundberg, Christine

Rankin and Viktor Fritzén as members of the Board;

• to re-elect Daniel Masters as the Board Chairman;

• to re-elect Baker Tilly Channel Islands Limited as the company’s auditors;

• that the remuneration of the auditor shall be set at the discretion of the Board;

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• that the guidelines for remuneration to senior executives be adopted;

• that the principals for the nomination committee be adopted;

• that the board be authorised to repurchase and transfer the Company’s own shares in

accordance with the proposal presented to the AGM; and

• that the Company’s articles of association be altered by the deletion of the existing articles

of association in their entirety and the adoption and substitution in their place of the

amended articles of association in the form presented to the AGM.

GENERAL MEETING – 2022 FINANCIAL YEAR

CoinShares International Limited’s Annual General Meeting for the 2022 financial year will be

held virtually on 31 May 2023. Further information is provided at www.coinshares.com under the

section for Investor Relations.

NOMINATION COMMITTEE

According to the Code, companies that adhere to the Code shall appoint a nomination

committee. CoinShares International Limited’s Nomination Committee, which is made up

of representatives of the largest shareholders, has been formed in accordance with the

guidelines approved by the 2021 AGM. The Nomination Committee is tasked with submitting

recommendations for the Chairman of the Board and other board members, directors’ fees

and other fees for directors’ work on the Board, the election of the auditor and the auditor’s

fees, and with evaluating the Board’s work. In the course of its work, the Nomination Committee

applied Rule 4.1 of the Code as the Board’s diversity policy. Diversity is an important factor in the

Nomination Committee’s nomination work and the Nomination Committee shall continuously

strive for an even gender balance and diversity regarding the competence, experience and

background of the Board’s members.

The Nomination Committee’s recommendations are reported in the AGM notice. CoinShares

International Limited’s Nomination Committee shall be composed of four members, of

whom three shall represent the Company’s largest shareholders, and the fourth shall be a

representative of the Board. Regardless of how the Nomination Committee members are

appointed, they shall safeguard the shareholders’ interests.

The members of the Nomination Committee are appointed in a procedure whereby the

Chairman of the Board – as soon as possible after the end of the third quarter – contacts the

three largest shareholders as at the end of August. The Chairman of the Board shall never serve

as the chair of the Nomination Committee. The composition of the Nomination Committee is

publicly announced through a press release as soon as the members have been appointed, but

not later than six months prior to the AGM.

Based on the above, the Nomination Committee ahead of the 2022 AGM was appointed and

consists of the following persons, who together represent approximately 52.02% of the number of

votes and shares in the Company as per 31 August 2022:

• Michael Carlton, appointed by Daniel Masters

• Gunther Thumann, appointed by Mognetti Partners Limited

• Paul Davidson, appointed by Russell Newton

• Johan Lundberg, representative of the Board

BOARD COMPOSITION AND DIRECTORS’ INDEPENDENCE

According to the Articles of Association, the Board shall be composed of three to ten members.

The Articles of Association state that the shareholders may, by Ordinary Resolution, appoint any

person or remove any Director from office. The Board is comprised of six directors, each of whom

were elected at the AGM on 20 June 2022 for the terms until the end of the 2022 AGM. Jean-Marie

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Mognetti, CEO, is a member of the Board. Other CoinShares executives participate at board meetings

in a reporting role on specific matters. According to the Code, a majority of the directors shall be

independent in relation to the Group and its management, which the company meets.

RESPONSIBILITIES AND WORK OF THE BOARD

The Board’s duties are regulated by Companies (Jersey) Law 1991, CoinShares International

Limited’s Articles of Association, other laws and statutes, and the Code. In addition, the Board’s

work is regulated by the Rules of Procedure adopted by the Board. The Rules of Procedure regulate,

among other things, the division of duties and responsibilities between the board members, the

Chairman of the Board and the CEO, and lay out routines for financial reporting by the CEO. The

Board also adopts instructions for the Board’s committees. The Board’s duties include adoption

of strategies, business plans, budgets and forecasts, interim reports, the year-end book-closing,

and policies and guidelines. The Board is also responsible for monitoring the company’s financial

performance, ensuring the quality of financial reporting and internal controls, and evaluating the

business against the objectives and guidelines established by the Board. Finally the Board decides

on substantial investments and changes in the Group’s organisation and operations. The Chairman

of the Board and CEO shall monitor the company’s performance, and conduct preparatory work for

and lead board meetings. The Chairman of the Board is also responsible for ensuring that the board

members evaluate their work every year and that they continuously receive the information required

for them to perform their work effectively. The Chairman of the Board represents CoinShares vis-à-

vis its shareholders.

During the year, the Board held 8 meetings. The Board’s work during the year was focused

particularly on the company’s strategy, including the integration of acquired operations, positioning,

financing, culture, and the company’s development and expansion.

Committees

The Board of CoinShares International Limited has established two committees – an audit & risk

committee and a remuneration committee.

Audit & Risk Committee (“ARC”)

The ARC was formally established on 29 November 2021. On its establishment it was solely an Audit

Committee. On 31 October 2022 it was amended to encompass risk matters pertaining to the Group

and renamed the Audit and Risk Committee. The ARC is tasked with providing a special forum for

the work with financial reporting, internal control, risk management and auditing, and advises the

Board of Directors in these areas. The members of the ARC are Carsten Køppen, Viktor Fritzén

and Christine Rankin, who is also the committee chair. The main duties of the ARC are to monitor

the Group’s financial reporting and to oversee the effectiveness of the company’s internal controls

and risk management. In addition, the ARC is tasked with staying informed about the audit of the

annual report and consolidated accounts, reviewing and overseeing the auditor’s impartiality and

independence, and in this context paying particular attention to whether the auditor provides other

services to the Group than auditing services.

The ARC maintains contact with the Group’s auditor in order to establish an ongoing exchange of

information and understanding between the Board and the auditor on auditing issues.

The ARC held 8 meetings in 2022.

Remuneration Committee

The Remuneration Committee was formally established on 29 November 2021. The members

of the Remuneration Committee are Carsten Køppen, Christine Rankin and Daniel Masters,

who is also the committee chair. The Remuneration Committee has an advisory and a drafting

function. Its main duties are to conduct preparatory work for the Board’s decisions on matters

concerning remuneration principles, remuneration and other terms of employment for members

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of the Executive Management Committee, monitoring and evaluating application of the guidelines

for remuneration of senior executives approved by the AGM as well as applicable remuneration

structures and remuneration levels in CoinShares.

The Remuneration Committee held 3 meetings in 2022.

Evaluation of the Board’s work

The Board’s work is evaluated yearly through a systematic, structured process that aims among

other things to produce constructive documentation for improvements in the Board’s own work. The

evaluation is conducted both individually and through discussions at board meetings. The evaluation

aims to give the Chairman of the Board information on how the board members perceive the Board’s

effectiveness and collective competence as well as on whether there are any needs for changes

on the Board. Chairman of the Board informs the Nomination Committee about the results of the

evaluations.

Directors’ fees

Total remuneration paid to the directors for 2022 was £557,931, including remuneration for committee

work. This figure excludes amounts paid to the CEO as an employee of the Group. Such remuneration

is disclosed separately in the Group’s remuneration report.

INTERNAL CONTROL AND RISK MANAGEMENT

Due to the nature of the industry within which the Group operates, coupled with the nature of the

services and products provided, a robust control environment is paramount in order to protect the

Group’s stakeholders, ensure compliance with regulatory requirements of the Group, and allow for

accurate and timely dissemination of information throughout the Group.

The control environment is focused on the areas described below:

Risk Management

The risk management of the Group is split into four key areas, each of which are discussed at the

risk & compliance committee meetings, and formally presented to the ARC on an ongoing basis

throughout the year.

(i) Trading Risk

The trading activities of the Group which, amongst other things, support the products issued by XBT

Provider and CoinShares Physical are a key risk area given the potential impact of trading issues on

the overall performance and financial health of the Group.

The Group has a variety of systems and controls in place that allow for the ongoing monitoring of all of

its digital asset holdings and positions with each of its counterparties. Internal reports are generated

automatically every 10 minutes (increased to every minute during periods of significant volatility)

and provided to the relevant members of CoinShares Asset Management and CoinShares Capital

Markets responsible for hedging and trading activities of the Group.

This is further enhanced by a daily reconciliation and examination of the composition of digital assets to

ensure the activities of the Group remain in accordance with the terms of the Collateral Management

Agreement between CoinShares Capital Markets (Jersey) Limited and XBT Provider AB (publ).

All counterparties with which the Group interacts for the purpose of either digital assets storage

or trading are subject to robust due diligence procedures and are integrated fully with the Group’s

internal systems prior to engaging in any kind of active relationship.

The counterparty risk of the Group is further mitigated by the fact that the majority of the Group’s

physical asset holdings are in custody with Komainu and Zodia Custody, regulated custodians and

depositaries specialising in digital assets.

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(ii) Cyber-Security Risk

Cyber-security remains a critical focus for the Group. Significant investment in and ongoing

improvement of the Group’s security posture is essential to align the infrastructure of the Group

with its growth. From a completely new physical networking layer to the optimised, secure cloud

environment, these improvements have been validated by the Group’s external information security

audits and accreditations.

Maintaining the integrity of its technical architecture is an ongoing priority and focus of the Group’s

executive leadership tests, and, in this regard, the Group ensures the undertaking of regular external

reviews and penetration tests whilst also ensuring that its infrastructure is monitored in real-time

by state-of-the-art security monitoring systems. Furthermore, the Group’s cloud-based network

is segregated and tied back to physical premises and remote workstations using best-in-class

encryption technology. All data stored on the Group servers and file stores are fully encrypted at rest

and in transit.

The Group’s latest annual independent cyber-security review described the Group’s security

profile as “very strong” and “highly secure”. At the same time, the Group has maintained ISO/IEC

27001 certification since 2019 (the auditable, international standard for Cyber Security), evidencing

adherence to a “best-practice” approach to managing information security by addressing people and

processes as well as technology.

Ad-hoc security tests and attack simulations are regularly undertaken to allow the Group to ensure

buy-in and understanding from all employees. The Group’s endpoint, mobile and perimeter

protections are monitored continuously to adapt to emerging threats and ensure that the Group

remains protected in the ever-changing cyber-security landscape. Furthermore, the Group’s

cybersecurity controls are routinely tested as part of the Group’s Compliance Monitoring Plan.

(iii) Financial Statement Risk

The accuracy and timeliness of the dissemination of financial information is integral to the Group.

This is both internal (to inform decision making at the Executive Committee level), and external (to

provide stakeholders with a clear view of performance on a regular basis).

Internal financial statement risk – Internal reliance is placed upon the regular management accounts

prepared monthly for each of the Group’s subsidiaries and at a consolidated, Group level. Such

information is subject to a number of sign-offs within the finance department prior to dissemination

to ensure accuracy. The procedures in place for preparation of such information are designed to

evolve alongside the complexity of the business and its activities. Key areas of potential misstatement

include digital asset holdings and valuations. The same infrastructure that is in place to help monitor

trading risk (as mentioned above) also allows for mitigation against such risks.

External financial statement risk - In addition to the consolidated financial statements being subject

to annual audit (in accordance with both legal and listing requirements) a number of the Group’s

subsidiaries are also subject to such procedures. Furthermore, the Group releases earnings reports

on a quarterly basis. Each financial report is subject to review by the CFO, CEO, ARC, and the Board

itself. Key areas of potential misstatement are identified, and these areas are discussed regularly at

the appropriate levels throughout the Group. As with the internal financial reporting on which the

Group is reliant, the risk areas for potential misstatement in the external reporting comprise digital

asset holdings and valuations. Additionally, more judgemental areas such as principal investment

valuations and goodwill carry with them a higher risk of misstatement. As such these areas are

standing items within the agenda of the ARC.

(iv) Regulatory and Compliance Risk

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

practice and comprises the following:

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The First Line of Defence – the client facing operations teams in each of the Group’s jurisdictions;

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 Second Line of Defence – the Group’s Compliance and Risk team;

The Group’s Compliance Team and the recently recruited Group Risk Consultant have a number of

key responsibilities, including but not limited to:

• the anti-money laundering, countering of terrorism financing and proliferation financing control

framework and associated staff training;

• regular testing of the Group’s control framework;

• liaising with the Group’s various external regulatory bodies;

• undertaking the role of Money Laundering Reporting Officer, Money Laundering Compliance

Officer and Compliance Officer as required; and

• regular reporting/communication of Compliance and risk matters to the monthly Risk &

Compliance Committee and to the relevant Boards.

The Group also benefits from a network of external advisors relied upon as required for guidance on a

range of specialised topics.

The Third Line of Defence – external financial audit and other specialist audit work;

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.

Information Dissemination and Transparency

Due to various jurisdictions within which the Group operates, and the variety of activities undertaken

across the Group it is essential that information is disseminated in a timely and consistent manner. To

facilitate this, various committees are in place with meetings held on a regular basis to encourage the

information generated by the Group’s control environment to be disseminated accordingly.

The dissemination of information is not only a focus for the Group internally, but also externally to the

Group’s stakeholders, such as regulators, auditors, existing clients or prospective clients.

CEO AND SENIOR EXECUTIVES

The CEO is responsible for the day-to-day administration of the Group in accordance with applicable

laws and regulations, and the instructions and strategies established by the Board of Directors. The

CEO ensures that the Board receives the information required for the Board to be able to make

well-grounded decisions, and monitors compliance with the goals, policies and strategy plans

for CoinShares that are set by the Board of Directors. The CEO is also responsible for ensuring

that the Board is provided with satisfactory information about the Group’s development between

regular board meetings. The CEO leads the work of the Executive Management Committee, which

is responsible for the overarching business development. In addition to the CEO, the Executive

Management Committee included six senior executives as of 31 December 2022: the Chief Financial

Officer, the Group General Counsel, Head of Strategy, Head of Asset Management, Head of Capital

Markets and Head of Marketing and Communications.

Remuneration of the CEO and senior executives

Remuneration of the CEO and other senior executives may consist of a fixed cash salary, discretionary

bonus, other customary benefits and pension. The combined yearly cash remuneration shall be in line

with the going rate in the market and geographic area in which the executive is stationed, and shall be

commensurate with the individual’s qualifications and experience. By other senior executives is meant

the six persons who together with the CEO make up the Executive Management Committee. The

Company has drawn up recommendations for guidelines for remuneration of the senior executives

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to be put to the 2022 AGM for approval (the “Remuneration Procedure”). The Remuneration

Procedure includes, among other things, principles for the relationship between fixed salary, pension

benefits, and limitations regarding severance pay and fixed salary during notice periods. Individual

remuneration of the CEO and the individual remuneration of other senior executives are approved

by the Board of Directors after approval by the Remuneration Committee. Remuneration paid to the

CEO and Executive Management is disclosed within the Group’s remuneration report.

AUDITOR

The Annual General Meeting on 20 June 2022 resolved to elect the chartered accounting firm Baker

Tilly Channel Islands Limited as auditor of the company for a term until the end of the 2022 AGM.

Authorised Public Accountant Ewan Spraggon was appointed auditor-in-charge. Ewan Spraggon

is a member of the Institute of Chartered Accountants of Scotland and Fellow of the Institute of

Chartered Accountants of England and Wales.

EXTERNAL AUDIT

The external audit of the accounts of CoinShares International Limited and certain subsidiaries,

including the Board of Directors’ and Group Management’s administration, is performed in

accordance with International Standards on Auditing. The external auditor will attend all meetings of

the Audit Committee and at least one board meeting each year, at which the auditors report on their

observations from the audit.

BOARD OF DIRECTORS

Daniel Masters

Assignments and year elected

Born 1963, Chairman of the Board since 2008. Chair of the Remuneration Committee.

Education, professional experience and previous assignments

Daniel holds a Bachelor of Science (Honours) in Physics from Exeter University and a Master’s

degree in Management Science and Operational Research from Imperial College, London.

Daniel has more than 30 years of experience in energy trading. He was, among other things, the

Head of Global Energy Trading for Morgan Guaranty Trust Company (MGT), oversaw several of the

trading and risk management functions at the Energy Division of Salomon, Inc., was involved in

the establishment of the natural gas and electricity markets in the UK, completed some of the first

forward contracts for electricity and was one of the first and most active participants in the market

for Contracts for Difference in Europe.

Other current assignments

Director and Shareholder of GABI Ventures Limited; Director of CB Limited; Director

of CommerceBlock Limited; Director of CommerceBlock Holding Limited; Director of

CommerceBlock Limited; Director and Shareholder of Crypto Composite Limited; Director and

Shareholder of Satoshipay Limited; Council Member of Tezos Foundation; Consultant to Pendulum;

indirect Director of Globacap Limited (GABI Ventures Limited is a Corporate Director); indirect

Director of Aventures Holdings Limited (GABI Ventures Limited is a Corporate Director)

Non-Executive Director’s fee (yearly)

Salary - £125,000

Bonus - £Nil

Buy-out payment - £225,000

Benefits in kind - £7,931

Fee for committee work

Included within Director’s fee.

Independent in relation to the company and Group management

No. Daniel Masters was employed by the Company until 29 November 2021.

Independent in relation to major shareholders

No.

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Own and related parties’ shareholdings as per 31 December 2022

15,289,388 ordinary shares.

Attendance at board meetings

8 of 8 possible.

Attendance at Remuneration Committee meetings

3 of 3 possible.

-----

Jean-Marie Mognetti

Assignments and year elected

Born in 1984, Board member since 2014. Member of the Executive Management Committee.

Education, professional experience and previous assignments

Jean-Marie holds a Master’s degree in Mathematical Trading and Finance from Sir John Cass

Business School.

Jean-Marie is an experienced commodities trader with a background and expertise in quantitative

analysis, risk management and alpha-generation through macro commodity-oriented programs,

including cryptocurrencies. Prior to joining CoinShares, Jean-Marie was a quantitative strategist with

Hermès Commodities Fund Managers.

Other current assignments

Council Member of the Aventus Protocol Foundation; Director of FlowB Holding Switzerland SA;

Director of FlowBank SA; Director of JFM & FK Management Services; Director and Shareholder of

Mognetti Partners Limited; Director of Komainu Holdings Limited; Director of Tactiques D’avant-

Garde (Jersey) Limited.

Director’s fee (yearly)

Nil, paid as an employee for role on Executive Committee, as disclosed in the remuneration report.

Fee for committee work

Not applicable.

Independent in relation to the company and Group management

No.

Independent in relation to major shareholders

No.

Own and related parties’ shareholdings as per 31 December 2022

11,881,609 ordinary shares and 618,356 share options.

Attendance at board meetings

8 of 8 possible.

-----

Carsten Køppen

Assignments and year elected

Born in 1964, non-executive Board member since 2020. Member of the ARC and Remuneration

Committee.

Education, professional experience and previous assignments

Carsten holds a Diploma in Banking from the Danish School of Banking.

Carsten has 40 years of experience in financial services, including stock exchange equity trading,

investment advisory, capital market debt and fixed income, alternative asset management and

asset servicing. He is a specialist in corporate governance and best practices within the alternative

investment fund industry, and is also, among other things, independent, regulated non-executive

director and Member of the Board to various alternative investment structures and managers.

Other current assignments

Director of Triton Managers Limited; Director of Triton Managers II Limited; Director of Triton

Managers III Limited; Director of Triton Managers IV Limited; Director of Triton Managers V limited;

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Director of Triton Smaller Mid Cap General Partner Limited; Director of Triton Debt Opportunities

Managers Limited; Director of Triton Debt Opportunities Managers II Limited; Director of Triton

Managed Account General Partner Limited; Director of Alpenhof Limited; Director of Octopus

Aternative Investment Fund Management Limited; Director of GSG Ethereum Enhanced Master

Fund Limited; Director of GSG Digital Frontier Master Fund Limited; Council Member of the Aventus

Protocol Foundation.

Director’s fee (yearly)

£50,000

Fee for committee work

Included within Director’s fee.

Independent in relation to the company and Group management

Carsten held a non-executive directorship position on the Board of CoinShares (Jersey) Limited, a

Group Company, until the end of November 2021.

Independent in relation to major shareholders

Yes.

Own and related parties’ shareholdings as per 31 December 2022

9,750 ordinary shares.

Attendance at board meetings

8 of 8 possible.

Attendance at Audit Committee meetings

4 of 4 possible.

Attendance at Remuneration Committee meetings

3 of 3 possible.

-----

Johan Lundberg

Assignments and year elected

Born in 1977, non-executive Board member since 2020. Member of the Nomination Committee.

Education, professional experience and previous assignments

Johan holds an MBA in Finance from Stockholm School of Economics; MBA in International Strategy

from Stockholm University.

Johan is a founding partner of NFT Ventures, an early- and growth-stage fund founded in 2014 to

capture the opportunity in transformation of banking and financial services.

Other current assignments

Director of MR Cake AB; Director of MR Cake Göteborg AB; Director of MR Cake Retail AB;

Director of MR Cake Holding AB; Director of Swiftcourt AB; Director of Fastighets AB Stentulpanen

Stockholm; Director of Nordic Collection AB; Director of Svolder AB; Director of NFT Ventures AB;

Director of NFT Ventures 1 AB; Director of NFT Ventures 2 AB; Director of NFT Ventures CV 1 AB;

Director of NFT Ventures Invest AB; Director of Ölands Bank AB; Director of Roy Fares AB; Director

of Betsson AB; Director of Loomis AB; Director of Stentulpanen Fastigheter i Kalmar & Öland AB;

Director of Stentulpanen Fastigheter Smedby AB; Director of Fastighets AB Stentulpanen; Director of

Kapitalförvaltnings AB Stentulpanen; Director of Barcelona Development Corporation AB; Director of

Barcelona Opportunity AB (publ); Director of SoliFast Holding AB; Director of SoliFast Sagacity AB;

Director of Nft Growth 1 AB; Chairman and Director of Investment AB Stentulpanen; Director of AB

Stentulpanen Försäkringar; Director of SoliFast Sverige AB; Director of Global Fintech Industries AB;

Director of Investment AB Vildtulpanen.

Director’s fee (yearly)

£50,000

Fee for committee work

Included within Director’s fee.

Independent in relation to the company and Group management

Yes.

Independent in relation to major shareholders

Yes.

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Own and related parties’ shareholdings as per 31 December 2022

2,500 ordinary shares.

Attendance at board meetings

7 of 8 possible.

-----

Christine Rankin

Assignments and year elected

Born in 1964, non-executive Board member since 2021. Member of the Remuneration Committee;

member of the ARC.

Education, professional experience and previous assignments

Christine holds a Bachelor in Business Administration and Economics from Stockholm University.

Christine is a former Partner at PWC and has held positions of trust at several organisations

including Spotify, Veoneer Inc., NASDAQ and Cherry AB.

Other current assignments

Director and audit committee chair of 4C Group AB; Director and audit committee member of Orexo

AB; Director and audit committee chair of Bonesupport AB.

Director’s fee (yearly)

£50,000

Fee for committee work

Included within Director’s fee.

Independent in relation to the company and Group management

Yes.

Independent in relation to major shareholders

Yes.

Own and related parties’ shareholdings as per 31 December 2022

N/A.

Attendance at board meetings

6 of 8 possible.

Attendance at Audit Committee meetings

8 of 8 possible.

Attendance at Remuneration Committee meetings

3 of 3 possible.

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Viktor Fritzén

Assignments and year elected

Born in 1985, non-executive Board member since 2021. Member of the ARC.

Education, professional experience and previous assignments

Viktor holds a Master’s in finance from the Stockholm School of Economics. Viktor previously held

the positions of Global Investment Research Analyst and Corporate Finance Analyst at Goldman

Sachs and GP Bullhound respectively. He was CFO of the online gaming group LeoVegas which he

was part of building from a start-up to a Stockholm Nasdaq listed company.

Other current assignments

Director of StickerApp Holding AB; Director of Appjobs Sweden AB; Director of Beyond Zebra; non-

executive Director of Cithara BidCo; non-executive Director of Cithara HoldCo.

Director’s fee (yearly)

£50,000

Fee for committee work

Included within Director’s fee.

Independent in relation to the company and Group management

Yes.

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Independent in relation to major shareholders

Yes.

Own and related parties’ shareholdings as per 31 December 2022

40,100 ordinary shares.

Attendance at board meetings

8 of 8 possible.

Attendance at Audit Committee meetings

8 of 8 possible.

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GROUP MANAGEMENT

Jean-Marie Mognetti

Group Chief Executive Officer

Education, professional experience and previous assignments

As disclosed above

Other current assignments

As disclosed above

Own and related parties’ shareholdings as per 31 December 2022

As disclosed above

Attendance at Executive Management Committee meetings

16 of 16 possible.

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Richard Nash

Chief Financial Officer

Education, professional experience and previous assignments

Richard holds a Master’s degree in Sinology from School of Oriental and African Studies,

University of London.

Richard has 12 years of experience in chartered accounting. Richard joined CoinShares from

Cairn Financial Advisers where he acted as Nominated Adviser to a number of listed companies,

holding the status of Qualified Executive (as granted by the London Stock Exchange). Richard was

formerly part of the RSM UK Capital Markets Team, where he acted as reporting accountant to a

number of listings.

Other current assignments

N/A.

Own and related parties’ shareholdings as per 31 December 2022

900 ordinary shares and 174,423 share options.

Attendance at Executive Management Committee meetings

16 of 16 possible.

-----

Graeme Dickson

Group General Counsel

Education, professional experience and previous assignments

Graeme holds a Master’s degree (Honours) in International Relations from University of St.

Andrews and Post Graduate Diploma in Law from the University of Law.

Graeme has 14 years of experience as an English qualified solicitor. He joined CoinShares from

Aviva Plc. where he held the position of Senior Legal Counsel. Prior to that he held positions at

Linklaters, White & Case, Bank of America and Standard Bank.

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Other current assignments

N/A.

Own and related parties’ shareholdings as per 31 December 2022

12,427 ordinary shares and 149,114 share options.

Attendance at Executive Management Committee meetings

16 of 16 possible.

-----

Meltem Demirors

Head of Strategy

Education, professional experience and previous assignments

Meltem holds a Bachelor’s degree in Mathematical Economics from Rice University and an MBA

with a focus on Finance and Innovation from Sloan School of Management, Massachussetts Institute

of Technology (MIT).

Meltem has prior experience in the oil and gas industry in trading, corporate treasury and M&A roles.

She helped build and grow the Digital Currency Group, managing a portfolio of 120 companies and 4

subsidiaries, is a founding member of the World Economic Forum Blockchain Council, and teaches

at MIT as well as Oxford.

Other current assignments

Advisor to Shyft Network; Advisor to Metaplex Foundation; Director of Stacks Foundation; Director

of Compass Mining Inc (Representing CoinShares Group); Director of Mintgreen Blockchain

Innovation Corporation (Representing CoinShares Group); Director of Choice FinTech Holdings

(previously Kingdom Trust)(Representing CoinShares Group); Director of Ejara (Representing

CoinShares Group); Director of 3iQ Corp (Representing CoinShares Group); Director of The Topps

Company, Inc.; Advisor to Blockdaemon; Advisor to Casa; Managing Member of Shiny Pony LLC;

Programme Director at Oxford Saïd Business School.

Own and related parties’ shareholdings as per 31 December 2022

2,778,020 ordinary shares and 422,125 share options.

Attendance at Executive Management Committee meetings

7 of 16 possible.

-----

Frank Spiteri

Head of Asset Management

Education, professional experience and previous assignments

Frank has over 10 years of experience as an ETP specialist, joining CoinShares after previously

working as the former Head of Distribution and Capital Markets at WisdomTree. Prior to specializing

in ETPs, he spent 11 years working as a trader with KBC Financial Products.

Other current assignments

30% shareholder of Clapham Incubators; 30% shareholder of Rever Kitchens; minority shareholder

of Mayahuel Limited; minority shareholder of Garton Jones Real Estate.

Own and related parties’ shareholdings as per 31 December 2022

592,763 ordinary shares and 1,773,600 share options.

Attendance at Executive Management Committee meetings

16 of 16 possible.

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Pierre Porthaux

Head of Capital Markets

Education, professional experience and previous assignments

Pierre has close to 20 years’ experience in finance in both traditional markets and cryptocurrencies.

Prior to CoinShares, Pierre co-founded Blockchain Solutions, a technology and strategy consulting

company, and Emergence Labs, specialized in Bitcoin trading technology, both located in Paris.

Previously, Pierre was a trader undertaking statistical and index arbitrage strategies for banks and

hedge funds such as Nomura, Millennium Partners, Dresdner Kleinwort and Natixis.

Other current assignments

50% shareholder of SCI Repo; 27% shareholder of Cranmer Court Ltd.

Own and related parties’ shareholdings as per 31 December 2022

0 ordinary shares and 170,030 share options.

Attendance at Executive Management Committee meetings

15 of 16 possible.

-----

Benoît Pellevoizin

Head of Marketing & Communications

Education, professional experience and previous assignments

Benoît graduated from the Celsa Sorbonne Université (Grande Ecole of Communications &

Journalism) and the Hasso Plattner Institute School of Design Thinking. Benoît has over 15 years

of experience in developing marketing, communications, advertising and branding. He joined

CoinShares from the leading crypto hardware firm Ledger. Prior to that he has held positions

involving strategy, branding and innovation with Ogilvy Consulting, SID LEE, M&C Saatchi, Fred &

Farid and Digitas.

Other current assignments

Owner of 560 BPSCE of Ledger; Advisor to Source Ineractie.

Own and related parties’ shareholdings as per 31 December 2022

N/A

Attendance at Executive Management Committee meetings

16 of 16 possible.

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SHARES, SHAREHOLDERS AND SHARE CAPITAL

GENERAL INFORMATION

CoinShares International Limited was listed on Nasdaq Stockholm in December 2022. According

to the company’s Articles of Association, the share capital of the company shall be no more than

£99,000 divided into 200,000,000 Ordinary Shares in a single share class. The company’s registered

share capital as of 31 December 2022 was £33,765.84, divided among 68,213,821 Ordinary Shares.

The shares, which are denominated in British pounds (GBP), had a share price of £0.000495. The

company’s shares have been issued in accordance with Jersey law. All issued shares are fully paid

for and freely transferable. The company’s shares are listed on the regulated multilateral trading

facility, Nasdaq Stockholm, and the ISIN code for CoinShares International Limited’s shares is

JE00BLD8Y945. The company’s shares are not the subject of any offer that has been made as a

result of a mandatory bid, redemption right or redemption obligation. Nor has any public takeover

offer been made for the shares during the current or preceding financial years.

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Certain rights associate with the shares

The company’s shares are of the same class. The rights associated with shares issued by the

company, including those pursuant to the Articles of Association, may only be amended in

accordance with the procedures set out in Companies (Jersey) Law 1991.

Voting rights

Each share entitles the holder to vote at general meetings, and each shareholder is entitled to a

number of votes corresponding to the shareholder’s total holding of shares in the company.

Preferential rights to new shares

In accordance with Article 3 of the Articles of Association (the “Articles”), the company shall not

allot and issue ordinary shares, or rights to subscribe for, or to convert securities into, ordinary

shares (“Equity Securities”), to any person on any terms unless it has made an offer to each

Shareholder on the same or more favourable terms (the “Preferential Rights”). These Preferential

Rights shall not apply to:

1. any ordinary shares issued pursuant to the exercise of warrants;

2. in one or more tranches of ordinary shares as does not in the aggregate exceed ten percent

(10%) of the total number of ordinary shares in issue at 9am on 1 January of such year; and

3. any Equity Securities allotted and issued by the Directors in the three years following

adoption of the Articles pursuant to any employee incentive or bonus plan or scheme. Such

Equity Securities not to exceed fifteen percent (15%) of the total number of ordinary shares

in issue at the date of the adoption of the Articles.

DIVIDEND AND DIVIDEND POLICY

General

All shares carry equal entitlement to a share in the company’s profits and to the company’s assets

and any surpluses in the event of liquidation. Resolutions regarding dividends in limited liability

companies are made by a general meeting of shareholders.

Entitlement to dividends accrues to those who, on the record date resolved by a general meeting

of shareholders, are registered in the shareholder register maintained by Euroclear Sweden as

holders of shares. Dividends are normally paid to the shareholders as a cash amount per share

through Euroclear Sweden, although they may also be paid in a form other than cash (in-kind

dividend). If a shareholder cannot be reached through Euroclear Sweden, the shareholder will

continue to have a claim against the company for the dividend amount for a period that is limited

by rules concerning a ten-year statute of limitation. After expiration of this limitation period, the

dividend amount accrues to the company. There are no restrictions on dividend rights in respect

of shareholders who reside outside Sweden. Shareholders who are not tax resident in Sweden are

usually required to pay Swedish withholding tax.

Dividend policy

The dividend policy of the company, in line with its ambitions as a growth company, is not to

distribute to its shareholders any surplus funds from its distributable profits and/or general

reserves. The approach to paying a dividend whether special or regular will be reviewed by the

Board on an annual basis and any changes will be communicated to the market in the disclosure

section in the annual report and company website.

CENTRAL SECURITIES DEPOSITORY

CoinShares International Limited’s shares are registered in an electronic VPC register in

accordance with the Central Securities Depositories and Swedish Financial Instruments

Accounts Act (Lagen (1998:1479) om värdepapperscentraler och kontoföring av finansiella

instrument). No share certificates have been issued for the company’s shares registered in the

VPC register. The account operator is Euroclear Sweden.

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CONVERTIBLES, WARRANTS, AUTHORISATIONS TO ISSUE SECURITIES, ETC.

Incentive programs

In accordance with the Articles of Association, the Board of Directors is authorised, in three years

from the date of adoption of the Articles of Association (20 June 2020), to issue share options that

do not, in aggregate, exceed 15% of the total number of outstanding ordinary shares. The employee

incentive program (“EIP”) is governed by general terms and conditions and individual share option

agreements with the holders of share options.

The aim of the EIP is to create conditions to retain and increase motivation of senior executives,

other employees and other key persons in the company and Group. The Board of Directors believes

that it is in the interests of all shareholders that senior executives, other employees and key persons

have a long-term interest in good growth in the value of the company’s shares. A long-term owner

engagement is expected to stimulate greater interest in the business and its earnings performance

overall and enhance motivation among the participants and aims to achieve a greater foundation for

shared interests between the program’s participants and the company’s shareholders.

Share Options issued under the EIP - November 2020

On 25 October 2019 the Board of CoinShares (Holdings) Limited, a Group Company, resolved on

an incentive program that was approved by its shareholders on 29 October 2019. During March

2020, warrants were issued based on the terms for the incentive program for employees. The Share

Options issued under the incentive program for employees in CoinShares (Holdings) Limited were

transferred to CoinShares International Limited on 24 November 2020 on the same terms as Share

Options granted at CoinShares (Holdings) Limited level. The number of share options issued were

adjusted in connection with the transfer in order to ensure the recipient received share options

corresponding to the number which were initially issued. The strike price was adjusted accordingly.

Following the transfer of the share options from CoinShares (Holdings) Limited to CoinShares

International Limited, no options exist in CoinShares (Holdings) Limited.

A total of 2,955,920 share options were issued and held by key employees in Jersey, the UK and the

US. Of these share options, 1,011,320 were issued with 13 March 2023 as the vesting date.

The remaining 1,944,600 share options, held by the Group’s Head of Asset Management Frank

Spiteri, are subject to certain vesting criteria that need to be fulfilled; (i) double the Group’s AUM, (ii)

double the customer count and (iii) drive team performance (determined by the Board). The vesting

terms are outlined in a separate share option agreement between the company and Frank Spiteri.

The following terms apply to all 2,995,920 share options:

• each share option gives the share option holder the right to subscribe for one ordinary share in

the company;

• the share options were issued free of charge; and

• the subscription price (strike price) for each ordinary share amounts to £1.43, equivalent to the

fair market value of one ordinary share at issuance (adjusted accordingly following the transfer

to the company) and as determined by a third party valuation specialist.

Share Options issued under the EIP – March 2021

On 22 February 2021, the Board resolved to grant key employees a total of 183,489 share options. The

following terms apply to all 183,489 share options:

• the share options would vest in eight equal tranches over the 24 months from the date of issue,

being 11 March 2021;

• each share option gives the share option holder the right to subscribe for one ordinary share in

the company;

• the share options were issued free of charge; and

• the subscription price (strike price) for each ordinary share amounts to SEK 44.9, equivalent to

the subscription price in Prospectus dated 22 February 2021.

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Share Options issued under the EIP – April 2021

On 26 March 2021, the Board resolved to grant key employees a total of 373,944 share options. The

following terms apply to all 373,944 share options:

• vesting date of 19 April 2024;

• each share option gives the share option holder the right to subscribe for one ordinary share in

the company;

• the share options were issued free of charge; and

• the subscription price (strike price) for each ordinary share amounts to SEK 94.4.

Share Options issued under the EIP – March 2022

On 21 January 2022, the Board resolved to grant key employees a total of 670,002 share options. The

following terms apply to all 670,002 share options:

• vesting date of 18 March 2025;

• each share option gives the share option holder the right to subscribe for one ordinary share in

the company;

• the share options were issued free of charge; and

• the subscription price (strike price) for each ordinary share amounts to SEK 82.3.

Share Options issued under the EIP – March 2023

On 20 February 2023, the Board resolved to grant key employees a total of 448,000 share options.

The following terms apply to all 448,000 share options:

• vesting date of 20 March 2026;

• each share option gives the share option holder the right to subscribe for one ordinary share in

the company;

• the share options were issued free of charge; and

• the subscription price (strike price) for each ordinary share amounts to SEK 31.0.

As of 31 March 2023, 870,695 share options had either lapsed or been cancelled.

If all 3,769,268 outstanding share options in the company were to be exercised for subscription of

ordinary shares, the maximum dilution amounts to approximately 5.24 percent of the number of

outstanding ordinary shares as at 31 March 2023.

GROWTH IN SHARE CAPITAL

Since the company’s shares were listed for trading on Nasdaq First North Growth Market on 11

March 2021, the company has decided on new share issues on two occasions.

The below is a table of the number of shares and registered share capital shows registrations

related to the historical development of these new share issues and other events pertaining to the

company’s share capital.

Number of Shares

Registration date Event Change Total

11 March 2021 IPO - 66,551,863

6 July 2021 Consideration for acquisition 1,298,322 67,850,185

16 December 2021 Consideration for acquisition 363,636 68,213,821

31 December 2022 - 68,213,821

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Shareholder agreements

To the best of the knowledge of CoinShares International Limited’s board of directors, there are

no shareholder agreements or other agreements between the company’s shareholders that are

intended to influence the company. Nor is the company’s board aware of any agreements or similar

undertakings that could lead to a change in control over the company.

SHARE PRICE DEVELOPMENT

The table below shows movements in the company’s share price during the year. CoinShares

International Limited’s shares are traded under the ticker code “CS”. The initial listing was on

Nasdaq First North Growth Market in March 2021 and the Company’s shares were listed for trading

on Nasdaq Stockholm on 19 December 2022. The initial listing price was SEK 44.9. The lowest price

paid for the shares in 2022 was SEK 19.0 and the highest price paid during the year was SEK 87.0. The

price of the shares was SEK 19.8 at year-end.

Shareholders No. Shares Share of Ownership (%)

Daniel Masters 15,289,388 22.41%

Mognetti Partners Limited 11,881,609 17.42%

Russell Newton 8,314,452 12.19%

Alan Howard 7,933,540 11.63%

Adam Levinson 3,896,618 5.71%

Paul Davidson 3,240,000 4.75%

Meltem Demirors 2,778,020 4.07%

Vitruvius Limited 2,566,213 3.76%

Dwight Anderson 2,543,502 3.73%

Horseferry Trading Ptd Limited 1,700,506 2.49%

Total, 10 largest shareholders 60,143,848 88.17%

Other existing shareholders 8,069,973 11.83%

Total 68,213,821 100%

OWNERSHIP STRUCTURE

The table below shows CoinShares International Limited’s largest shareholders as per 31 December

2022. The company had 2,755 shareholders on 31 December 2022.

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SUSTAINABILITY REPORT

INTRODUCTION

CoinShares’ Sustainability Report aims to be transparent and relevant, to ensure that

stakeholders can easily learn about our sustainability efforts and gain an understanding of

our performance and progress over time in relation to Environmental, Social and Governance

(“ESG”) initiatives. This report presents the events and outcomes for 2022.

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 & Current Position

2. Sustainability

3. Environmental Initiatives

4. Social Initiatives

The governance of the Group, which forms a key part of the ESG initiatives is presented

separately within section 8 of the Annual Report.

1. STRATEGY & CURRENT POSITION

Strategy

In 2022 we put forward an ESG Strategy as a core pillar of our business initiatives and company

culture for a sustainable future. We monitored our ESG framework that sets clear objectives

and can be transparently measured to demonstrate our commitment to ESG. Our ESG Strategy

was formalised through a company-wide ESG Policy which was adopted in conjunction with our

admission to trading on Nasdaq Stockholm.

The three pillars of our strategy are:

• Sustainability: adopting climate change friendly standards and working towards reducing

our CO

footprint.

• Education: market leading information provider in the crypto ecosystem from novices to

industry experts.

• Investing in the future: promoting and developing next generation talent from universities

and nurturing existing personnel within the CoinShares Group.

We aim to consider each of these in all our ESG initiatives, and also to promote them within the

company wide culture of the CoinShares Group.

These core pillars are critical to our ability to be responsible and effective stewards of the digital

ecosystem as cryptocurrencies are inherently political, social, and economic in nature. As a

company we have always therefore been interested and invested in the development of initiatives

in relation to digital assets and digital asset investing, particularly through the output our research

arm.

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Current Position

For the nascent cryptocurrency industry, CoinShares is considered in its early stages of its ESG

journey. We have therefore taken steps in 2022 (and in 2021) to peer assess our ESG credentials

against other leading financial institutions. It is important to quantify where we are in our ESG

journey, allowing us to quantify the progress made as we move forward and the industry around

us evolves.

CoinShares completed the S&P Global Corporate Sustainability Assessment (“CSA”) that tested

a wide range of ESG criteria, benchmarked scoring against other financial institutions such as

banks and financial technology (FinTech) participants. The submission process provided useful

insights into specific improvement areas for CoinShares in the future. Our new score, which is

comparable to industry peers, was an improvement on our 2021 assessment. However, there are

further efforts and investments required to support our ongoing ESG efforts.

A ring-fenced portion of the 2022 Budget was therefore allocated to ESG initiatives as part of

the Change Management budget. Such an allocation is to be made on an annual basis moving

forward as we continue to grow.

2. SUSTAINABILITY

Sustainability & Output of Research Team

The digital asset industry is at the forefront of the technology to ensure a more efficient energy

usage environment for financial services in the future, and we see an active role for ourselves in

ensuring the potential of these advancements are widely known.

Following on from 2021 when published a number of articles on the environmental impact of

Bitcoin mining (https://coinshares.com/research/closer-look-environmental-impact-of-bitcoin-

mining) and hosted an industry first ESG webinar with hundreds of participants, we continued

our research efforts into 2022, publishing a detailed report on the Bitcoin mining network and

the energy and carbon impact (https://coinshares.com/research/bitcoin-mining-network-2022).

The industry continues to make a number of material strides in respect of sustainability, with

changes in the Ethereum protocol from proof of work to proof of stake (reducing energy usage

by 99%).

Cyber Security Risks and Hacking Risks

The further development of digital asset networks could lead to increased security risks. Many

digital assets and their underlying networks have historically experienced security issues, hacks,

and software errors. Such risks must be efficiently and successfully addressed so that bugs

and security risks are mitigated to the greatest extent possible. Even if a high level of security is

achieved, malicious actors could still successfully target digital asset networks and/or exchanges

which may lead to financial losses to holders, as seen historically.

Malicious actors have in the past targeted platforms and exchanges to exploit them and are now

also targeting the infrastructure for decentralised finance (“DeFI”) and various smart contracts.

To address this risk we are continuing to invest in our state of the art cyber-security processes

and controls. These include but are not limited to a dedicated incident response team, 24/7/365

altering, estate monitoring and threat intelligence.

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The Group’s ability to attract and retain customers and grow the business depends on the provision

of products and services in a reliable, secure and transparent manner. This in turn improves upon

the Group’s reputation as Europe’s largest digital assets investment firm.

As an industry leader in our sector, it is important for us to protect ourselves and our clients against

financial crime. We have strong financial crime processes and procedures that provide protection,

but also identify bad actors and organisations. Due to the nature of the industry within which the

Group operates, coupled with the nature of the services and products provided, a robust control

environment is paramount to protect the Group’s stakeholders, ensure compliance with regulatory

requirements of the Group, and allow for accurate and timely dissemination of information

throughout the Group.

Cyber-security remains a critical focus for the Group. Significant investment in and ongoing

improvement of the Group’s security posture is essential to align the infrastructure of the Group

with its growth. From a completely new physical networking layer to the optimised secure cloud

environment, these improvements have been validated by the Group’s external information security

audits and accreditations.

Since 2021 the Group has maintained its ISO27001 certification (international standard for

information security management), evidencing adherence to a “best-practice” approach to the

management of information security by addressing people and processes as well as technology. In

2022, there was a mandatory rollout to Company Personnel of Cyber Security training so that they

are well equipped to identify and take appropriate action for high-risk Cyber Security scenarios.

100% of Company Personnel completed the Cyber Security training and this will be monitored on a

going forward basis.

Ad-hoc security tests and attack simulations are regularly undertaken allowing the Group to ensure

buy-in and understanding from all employees. The Group’s endpoint, mobile and perimeter

protections are monitored on an ongoing basis to adapt to emerging threats and to ensure the Group

remains protected in the ever-changing landscape of cybersecurity. Furthermore, the Group’s cyber-

security controls are routinely tested as part of the Group’s Compliance Monitoring Plan.

Growth & Development of Personnel & Company Culture

The Group’s growth journey has and will continue to take place in a sector which places further

demands on the Group and its management, further accentuated by the prevalence of new

technically advanced products and services offered by market participants in a macro environment

where laws and regulations frequently change and emerge at a rapid pace. In this context an inability

to handle growth effectively can create a variety of risks for the Group.

We aim to invest in a sensible manner to scale and preserve the company culture without adversely

impacting future prospects adversely, including the Group’s ability to retain and recruit personnel

and to effectively focus on and pursue the Group’s short term and long-term objectives.

Anti-Money Laundering and Terrorist Financing

The Group has a variety of systems and controls in place that allow for the ongoing monitoring of all

its digital asset holdings and positions with each of the exchanges and custodians it uses.

All exchanges and custodians with which the Group interacts for the purpose of either digital asset

storage or trading are subject to client onboarding and due diligence checks. These are integrated

fully with the Group’s internal systems prior to engaging in any kind of active relationship.

This risk of the Group is further mitigated by the fact that most of the Group’s physical asset holdings

are in custody with regulated custodians specialising in digital assets.

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3. ENVIRONMENT

The environment within which CoinShares operates is wide-ranging and there are both

direct and indirect impacts from company activities. CoinShares aims to minimise its carbon

footprint as much as possible and employs effective company stewardship to enable positive

climate change action. CoinShares’ activities have limited direct environmental impact;

however, we prioritise the issue because we know it is important to run the business in a way

that minimises our ecological footprint.

There has been significant negative press coverage in regard to the environmental impact of

Bitcoin mining due to its high energy usage. It is important to highlight that CoinShares is not

directly engaged in Bitcoin mining and the vast majority of our transactions in Bitcoin are off-

chain.

MintGreen Investment

In 2021 CoinShares invested in the company MintGreen, which is a clean tech company that

uses Bitcoin mining to monetise heat generation. MintGreen is focused on addressing two of

the primary concerns related to cryptocurrency mining - sustainability and power costs.

MintGreen builds, manages, and maintains industrial Bitcoin mining systems co-located

with utilities and industrial plants to produce guaranteed income from two revenue streams

- cryptocurrency and the sale of heat. MintGreen has built a proprietary solution to capture

heat emitted from Bitcoin mining and sell it to buyers of heat. Our Head of Strategy Meltem

Demirors holds a Director role in MintGreen and CoinShares is determined to back more

innovative solutions in the Bitcoin mining space.

Crypto Climate Accord

In April 2021, CoinShares joined the Crypto Climate Accord, a private sector-led initiative

committed to making the cryptocurrency industry 100% renewable. One of the objectives

includes achieving net-zero emissions from electricity consumption by 2030. Inspired by

the Paris Climate Agreement, the Accord brings together the crypto and FinTech industry to

build a sustainable future for global finance with support from the United Nations Framework

Convention on Climate Change (“UNFCCC”) Climate Champions.

Global Blockchain Business Council Digital Finance ESG Working Group

In 2022, CoinShares joined the Global Blockchain Business Council (“GBBC”) Digital Finance

ESG Working Group with other prominent participants across the cryptocurrency industry

to educate the White House on the decarbonization considerations for the cryptocurrency

industry. This helped frame the conversation with regulators as to how the digital assets

industry is preparing itself to reduce its environmental impact considering the negative press

news around Bitcoin and its Proof of Work energy consumption.

CoinShares provided commentary and input on the “GBBC Digital Finance: Guidance on

ESG Reporting for Digital Assets”. This was led by the GBBC team with valued inputs from the

upstream and downstream stakeholders of the cryptocurrency value chain. Existing Science

Based Target initiative (“SBTi”) guidance was used from both the Financial Services and ICT

sectors.

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Jersey Trees For Life

In 2022, we supported the Jersey Trees for Life organisation by allowing CoinShares employees

time away from work to clear paths and plant trees with the local Jersey community. This

initiative assisted our local community in reducing our carbon footprint as well as preserving

wildlife living in their habitats.

CoinShares also donated £26,500 to this local organisation. CoinShares partnered with Jersey-

based environmental charity and agreed to fund the charity’s newest restoration project, the

Alder Collection Restoration. The Alder Collection Restoration Project, an extension of the Alder

Collection, which has been planted and maintained by Jersey Trees for Life since the early 1990s,

is designed to protect and restore the trees, habitats of endangered species, and improve the

livelihoods of thousands of people who will be able to enjoy the site in the near future.

Office Environment

CoinShares does not generate any hazardous waste with only non-hazardous waste being

produced, e.g. paper waste. CoinShares has recycling areas in local office kitchens and there are

several local initiatives to reduce our environmental footprint such as using recycled paper for

printers, using recycled or reused packages for deliveries, and reducing the number of plastic

bottles used by installing water dispensers.

As a technology driven company a crucial part of our success is providing our people with

an optimal set of IT equipment. Having the right tools is a necessity to keep developing and

maintaining the innovative products and services we offer customers and partners. That said,

CoinShares endeavours as much as possible to maintain a sustainable consumption of physical

electronic goods. CoinShares reuses as much of the IT equipment necessary for business

operations as possible and ensures that every device gets used for its full product life before it

is recycled. When recycling we work with different partners around the globe to refurbish and

recycle used equipment most of which is repaired and resold.

CoinShares aims to ensure that printers are only used when necessary. Several IT tools ensure

that the need for printouts is kept to a minimum and to make sure no printouts are made

unintentionally as all personnel must physically confirm printouts with their ID badge. All staff

use portable laptops, and each meeting room is equipped with a screen that all participants can

use and view to reduce the need to share information on paper.

Post the COVID-19 pandemic way of working, printing and its environmental impact was much

reduced compared to previous years as digital solutions took precedence as employees use

a hybrid model of returning to the office and working from home. As staff have returned to the

office our goal remains to keep our impact from printouts to the bare minimum. We intend to

retain the most efficient ways of working which have been beneficial to the environment that

resulted from the shift to home-based working.

As a global organisation we aim to minimise air travel where possible and host meetings virtually

to minimise the carbon footprint of Company Personnel.

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4. SOCIAL

Confidence and the highest reputational standards for CoinShares are crucial parts of our

business and critical to our success. Trust and confidence are earned by acting responsibly and

by meeting or exceeding expectations. Our Social impacts relate to the relationships held with our

impacted stakeholders, including employees, clients, and the local community.

Our focus is on ensuring that we have the right people working in the most effective organisation

structure to support the strategy of the Group - committed employees are the foundation of

CoinShares’ success. Creating a stimulating, rewarding work environment where employees want

to stay, and nurturing the next generation’s talents is critical to longevity and retaining the role of

digital asset management market leader. CoinShares strives to be an attractive and responsible

employer. Being responsible requires a long-term perspective. Skills development, diversity,

compensation, and health are high-priority issues. Our work is governed by the applicable laws

and regulations in the markets where CoinShares operates, as well as several policies such as

guidelines for health and safety management, conduct, ethics, and human resources policies.

Wider Cryptocurrency Adoption

In lieu of the current traditional finance model, cryptocurrencies and digital assets are designed

and developed for the entire mass market to adopt. The current traditional finance model caters

for the developed nations who have stable economies that can manage low inflation risk (until

recently) whereas developing nations have high inflation risk leading to the devaluation of their

citizens’ savings and incomes. Over half of the world lives in an economy of authoritarianism

and/or recurring double-digit inflation. CoinShares is a staunch supporter of including billions of

people in the global economy and giving them sovereignty over their money. Hence, we are proud

to offer CoinShares developed ETPs to clients to cater for this type of financial inclusion.

According to World Bank data, 24% of the adult world population do not have a bank account

and this percentage is of course higher among the adult population in developing nations.

This unbanked population do not have access to banking and bank fees for remittances to

send money cross-border are exorbitant (i.e. range between 5-30% per transaction). The cross

border remittance of money is a real use case for developing nations due to people working in

developed nations to send money home to families in developing nations. Cryptocurrencies such

as Bitcoin remove the intermediary such as banks and other financial institutions to allow the

unbanked population to keep more of their hard-earned income and gives them more financial

freedom over their money.

In 2022, CoinShares continued its contribution to the Massachusetts Institute of Technology

(MIT) Digital Currency Initiative (DCI). CoinShares committed to gift $500,000 over the course

of 4 years from 2021 to support Bitcoin open-source software development and advance the

security of the Bitcoin protocol. This contribution to the initiative supports a growing team

of senior, specialised open-source developers focused on systemic threat mitigation and

rigorous improvements to Bitcoin’s underlying infrastructure, including code audits, increasing

automation, and novel research into Bitcoin’s long-term economic security. CoinShares

joined other industry leaders as part of a new DCI Guardian’s Circle committed to long-term

foundational funding of open-source development and systemic security improvements to the

Bitcoin protocol.

The CEO stated, “As a beneficiary of the work of hundreds of developers who secure, upgrade,

and maintain the open-source protocols that underlie the Bitcoin network and the applications

built on top of it, we believe for-profit firms in the digital asset industry have an obligation to fund

independent, neutral development efforts and research that advances the mutual interest of all

ecosystem participants.”

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Employee Benefits

CoinShares strives to provide a competitive salary and benefits package to all eligible employees

according to job requirements, jurisdiction and individual performance. Our employees have the

opportunity to participate in CoinShares’ success through our incentive programs such as the

Employee Incentive Program (“EIP”), of which all levels of employees are qualified to receive

EIP. Employees are also eligible for consideration for a discretionary bonus annually, the sum of

which is determined by overall company performance. CoinShares actively monitors the attrition

rate of staff (15% voluntary resignations in 2022) to identify any functional areas of improvement.

Exit interviews are conducted to gain further insights and to improve retention rates. We have in

place paid leave and flexibility schedules where our employees are eligible for paid leave and are

able to benefit from flexible working given the 24/7 nature of the digital assets industry.

The benefits package that CoinShares offers our employees varies from one operating

jurisdiction to another to reflect local market conditions and legislation. Typically this includes

benefits such as a defined contribution pension plan, medical insurance, income protection/

disability insurance and life insurance provided either via private insurance schemes or social

security contributions. In some locations, there are fitness and wellbeing benefits offered with

regular health assessments made available.

Health and Safety

For our global footprint, the safety and wellbeing of our staff is of paramount importance. During

the COVID-19 pandemic, we put forward and enacted work from home protocols so that our

staff could minimise the risk of infection for themselves and their families. Effective COVID-19

testing measures were put in place for key staff who had to attend the offices in person. The

offices followed the relevant government guidance at the time by instilling social distancing

requirements. Employees were continuously kept up to date with changes to work arrangements

via internal communications platforms on a regular basis.

Ensuring the health and safety of employees is also one of CoinShares’ prime responsibilities

and it endeavours to provide a safe and healthy working environment for employees and

protects them from work-related accidents or injuries. The Group also maintained a healthy

and safe working environment record with no occurrences of work-related deaths. As the

Group is principally engaged in digital assets’ investments, the Group believes that the potential

occupational hazards are considered low.

Wellbeing

Employees who utilise a good work-life balance are better equipped for high performance in the

work environment. CoinShares regularly reviews employee benefits against market benchmarks

to ensure they are fit and proper to support staff wellbeing. The Group embraces workforce

diversity and promotes productivity, irrespective of physical and geographical locations. The

Group allows colleagues to work from home and provides other forms of flexible working

arrangements designed to protect health and safety. To consider and accommodate employee

requests in an equitable, consistent, and sustainable manner, the Group also rolled out a flexible

working application (“FWA”) to allow employees to work from home depending on the nature of

their job, the requirements of the business, and their own circumstances.

Diversity and Inclusion

CoinShares is committed to promoting a diverse, equal, and inclusive working environment,

where all employees feel valued and respected for who they are and for the work they contribute.

The Group’s Employee handbook outlines the responsibilities of staff in relation to equal

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opportunities, diversity and inclusion. We instil the principle of an inclusive workplace culture

with zero tolerance for discrimination or harassment. All harassment is strictly prohibited, and

a reporting channel is provided to employees as a forum where the Group can handle and

investigate any potential reports of harassment. The Group’s HR policies strictly comply with all

applicable employee local laws and regulations. As an equal opportunity employer, the Group is

committed to providing equal opportunities to all employees and applicants. We create a safe

working environment of mutual respect for employees that values individual contribution and

recognises diversity. CoinShares upholds local laws on protecting staff from discrimination.

We pride ourselves on being a meritocracy where each person is evaluated based on personal

skill and merit. Moreover, the Group prohibits the use of child labour and forced or compulsory

labour at all its units and suppliers. The Group has zero tolerance to employment of child labour

and forced labour by the suppliers. The Group is not aware of any non-compliance with relevant

rules and regulations on preventing child or forced labour.

Learning and Development

CoinShares seeks to establish a workplace that provides continuous learning to employees to

equip them with effective skills, knowledge, and training to meet their full potential. The Group

provides new joiners with a comprehensive induction training to ensure new employees clearly

understand the Group’s values and culture and efficiently integrate into the working culture.

The induction program provides information on the Group’s structure, an introduction to the

different departments of the Group, an overview of company policies and procedures and other

important HR-related activities.

CoinShares also provides annual training as part of the Continuing Professional Development

(“CPD”) scheme to employees on financial industry ethics, compliance, anti-money laundering,

insider trading, conflicts of interest, information security and cyber risk awareness. The courses

are administered and tracked by the Compliance and Human Resources teams. Additional

courses are also provided by an online learning tool to Company Personnel and professional

development courses are also provided to staff looking to further develop their skills.

CoinShares supported our Company Personnel when external courses were held. For instance,

one of our CoinShares colleagues enrolled in the Harvard Business School MBA course in 2022

and was given time off to attend the course in person in the USA. Also, CoinShares supported

a number of employees to obtain their Chartered Financial Analyst (CFA) qualifications across

Levels 1, 2 and 3, Investment Management Certificates, ACCA and CGI IFA qualifications. All

personnel were given time off to attend the examinations, additional study days and financial

support to access extra study materials. Our most recent successes were individual employees

completing their CFA Level 2 and their Level 5 CGI International Finance and Administration

respectively. In addition to the professional qualification support, CoinShares is currently

running a trial with Coursera which is an online learning platform offering access to courses,

certificates, guided projects and clips.

Industry Leadership

We provide deep and thought-provoking research into the digital assets industry utilising our

subject matter experts in the Research department. Our research is aimed at a wide spectrum

of cryptocurrency amateurs, enthusiasts, and institutional investors. We have published

research on the impact of crypto mining, promoting the usage of efficient and renewable energy

in crypto mining technology. CoinShares have explored opportunities to invest in renewable

power generation in underutilised globally distributed locations for optimisation of energy usage

in the crypto ecosystem.

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External Community

We look for opportunities where CoinShares can have a meaningful impact, with a focus on

preserving local culture. We collaborate with community non-profit organisations, neighbourhood

groups, and other special initiatives for local residents.

In view of the Ukraine war that commenced in 2022, CoinShares donated €19,200 worth of

Bitcoin assets to the Ukrainian relief effort. The funds helped to transport hundreds of pallets

of items donated by Jersey residents from St. Malo (France) to Poland. The donation was seen

as a demonstration of the potency of cryptocurrency as a fast, secure way of funding relief

efforts, which can be harnessed without the need for centralised banks’ involvement. The CEO

commented the following: “It’s only right that individuals and companies do what they can to

alleviate the impact of the events in Ukraine. The team at CoinShares was very keen to play a

part.”

We are proud to fund a three-year title sponsorship of the Jersey Race Club, the club which dates

back to 1832, and where horse racing has continued in one form or another with the exception of

the two world wars and the 2020 season. Since 2008, CoinShares founders and employees have

been part of island life in Jersey, and fantastic memories have been created at Les Landes by

generations of locals and visitors alike. The sponsorship provides the financial support required

for the Club to continue to host local horse racing events, affecting both local and off-Island jobs

amongst jockeys, trainers, stable personnel and catering. The Jersey Race Club caters for both

corporate events as well as for families for the racing events, providing a welcome outlet for these

visitors. As horse racing is a regulated sport, the welfare of its human and equine participants

is considered integral to the Club. The Club meticulously treats and cares for its horses by

employing its team of expert stablemen, the provision of vets and other welfare professionals.

In the London office, office desk usage was given at no cost to charity workers from the

Horseferry Foundation. The foundation’s activities include the advancement of education, and

the protection and conservation of the environment for the benefit of children and young people.

We intend to continue contributing to the global crypto community via research, events, and

advocacy throughout 2023 and beyond and look forward to reporting on these efforts.

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AUDITED FINANCIAL

STATEMENTS

CONTENTS

COMPANY INFORMATION

CoinShares International Limited

Jersey

102185

2nd Floor

2 Hill Street

St Helier

Jersey

JE2 4UA

Daniel Masters

Jean-Marie Mognetti

Carsten Køppen

Johan Lundburg

Viktor Fritzén

Christine Rankin

CoinShares Corporate Services (Jersey) Limited

Baker Tilly Channel Islands Limited

PO Box 437

1st Floor, Kensington Chambers

46/50 Kensington Place

St Helier

Jersey

JE4 OZE

Silvergate Bank (closed March 2023)

4250 Executive Square

Suite 300

La Jolla

CA 92037

Deltec

Deltec House

Lyford Cay

PO Box N-3229

Nassau

The Bahamas

Signature Bank

565 Fifth Avenue

New York

NY 10017

DBS Bank Ltd

12 Marina Boulevard

Singapore

018982

Barclays Bank

13 Library Place

Jersey

JE4 8NE

The Company

Jurisdiction

Registered Number

Registered Office

Directors

Company Secretary

Independent Auditor

Bankers

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Handelsbanken

Kungsträdgårdsgatan 2

106 70 Stockholm

Silicon Valley Bank

3003 Tasman Dr

Santa Clara

CA 95054

Banque Populaire

76 Avenue France

75013 Paris

France

Flowbank (from January 2022)

Esplanade de Pont-Rouge 6,

1211 Geneva 26

Switzerland

Komainu Digital

3rd Floor

2 Hill Street

St Helier

Jersey

JE2 4UA

Zodia Custody Limited (from January 2022)

Thomas House

84 Eccleston Squares

London

SW1V 1PX

Carey Olsen Jersey LLP

47 Esplanade

St Helier

Jersey

JE1 0BD

Cowen International Limited

11th Floor

1 Snowden Street

London

EC2A 2DQ

Interactive Brokers LLC

110 Bishopsgate

London

LEC2N 4AY

Mangold Fondkommission AB

Engelbrektsplan 2

114 34 Stockholm

Marex Capital Markets Inc. (from June 2022)

425 S Financial Place, Suite 1850

Chicago

IL 60605

Custodians

Legal Advisor

Brokers

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DIRECTORS’ REPORT

The directors present their annual report and the consolidated financial statements (the ‘financial

statements’) of CoinShares International Limited (the ‘Company’), together with its subsidiaries listed in

note 15(ii) of the financial statements (collectively the ‘Group’), for the year ended 31 December 2022.

Incorporation

The Company is incorporated and domiciled in Jersey. The Company is registered as a public

company with the Jersey Financial Services Commission and listed on Nasdaq Stockholm.

Principal activity

The principal activity of the Group is to engage in creating financial products associated with digital

assets and blockchain technology.

Results and dividends

The total comprehensive income for the year amounted to £2,934,267 (2021: £113,443,438).

The profit for the year, after taxation and excluding movements on digital assets recognised through

other comprehensive income, amounted to £520,216,064 (2021: loss of £2,412,321,706) as per page 69.

Dividends of £nil (2021: £nil) were declared or payable in the year. A share buy-back program

undertaken during the year resulted in the buy-back of 78,396 shares (2021: nil) for consideration of

£228,383 (2021: £nil).

Statement of directors’ responsibilities

The directors are responsible for preparing the Directors’ Report and financial statements in

accordance with applicable laws and regulations.

The Companies (Jersey) Law 1991 requires the directors to prepare financial statements for each

financial year. Under that law the directors have elected to prepare the Group financial statements in

accordance with UK-adopted International Financial Reporting Standards. 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 Group and Company and of the profit or loss of the Group for

that period. In preparing the financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable UK-adopted International Financial Reporting Standards have

been followed, subject to any material departures disclosed and explained in the financial

statements;

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to

presume that the Group and company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show

and explain the Group and Company’s transactions and disclose with reasonable accuracy at any

time the financial position of the Group and Company, and which enable them to ensure that the

financial statements comply with the Companies (Jersey) Law 1991. They are also responsible for

safeguarding the assets of the Group and Company and hence for taking reasonable steps for the

prevention and detection of fraud and other irregularities.

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The directors are responsible for the maintenance and integrity of the corporate and financial

information included on the Company’s website. Legislation in Jersey governing the preparation and

dissemination of financial statements may differ from legislation in other jurisdictions.

Directors

The directors who held office during the year and subsequently are set out on page 58.

Company Secretary

The Company Secretary who held office during the year and subsequently is set out on page 58.

Going concern

The Group had net assets of £203,741,110 (2021: £200,013,153), an operating profit of £518,948,307

(2021: loss of £2,420,412,328), and total comprehensive income of £2,934,267 (2021: £113,443,438).

The directors have prepared these financial statements on a going concern basis on the

understanding that they have satisfied themselves that sufficient working capital will be available for

12 months from the date of issue of these financial statements.

The Group has an obligation to settle amounts due to investors for Exchange Traded Products

(‘ETP’) that reference the performance of specific digital assets issued. As the Group holds hedging

assets in excess of this liability, the directors consider that they will be able to convert digital assets to

fiat currency so as to settle the obligations in the event that certificates are redeemed and so deem

the going concern risk associated with these certificates to not be material. In addition, delays in the

settlement of the certificates may be imposed or certain modifications be made in the occurrence of

market illiquidity or other disruptions.

Furthermore, the directors deem the cyber-security of the Group to be sufficient to mitigate cyber

risk and the risk of theft of digital assets that could potentially leave the Group unhedged and

exposed in its obligation to certificate holders.

Accordingly, the directors have prepared the financial statements on a going concern basis.

Post balance sheet events

Events subsequent to the year end have been disclosed in note 30.

Independent auditor

In accordance with the Company’s articles, a resolution proposing that Baker Tilly Channel Islands

Limited be reappointed as auditor of the Group will be put at the Annual General Meeting on 31 May

2023.

The report was approved by the board on 28 April 2023 and signed on its behalf.

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

Jean-Marie Mognetti

Director

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INDEPENDENT AUDITOR’S REPORT

To the Members of CoinShares International Limited

Opinion

We have audited the consolidated financial statements of CoinShares International Limited (the

“Company” and, together with its subsidiaries, the “Group”), which comprise the consolidated

statement of financial position as at 31 December 2022, and the consolidated statement

of comprehensive income, consolidated statement of changes in equity and consolidated

statement of cash flows for the year then ended, and notes to the consolidated financial

statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements:

• give a true and fair view of the consolidated financial position of the Group as at 31

December 2022, and of its consolidated financial performance and its consolidated

cash flows for the year then ended in accordance with International Financial Reporting

Standards as adopted by the United Kingdom (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 Consolidated Financial Statements section of our report. We

are independent of the Group and Company in accordance with the ethical requirements that

are relevant to our audit of the Consolidated 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 consolidated 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 consolidated 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 maer How our audit addressed

the maer

Key observaons

communicated to those

charged with governance

Valuaon of investments

There is a risk that

investments could be

materially misstated and

incorrectly disclosed in

the consolidated financial

statements.

• Total value:

£45,011,850 (2021:

£23,689,517)

• As disclosed in note 15.

We understood and evaluated the valuaon

methodology applied with reference to the

Internaonal Private Equity and Venture

Capital Valuaon guidelines (IPEV), and

tested the techniques used by the Directors

in determining the fair value of material

unquoted investments. To test the value we

undertook the following:

• Assessed the appropriateness of the

valuaon methodology used and tested

the inputs either through validaon

to appropriate third party sources,

or where relevant, assessed the

reasonableness of significant esmates

and judgements used;

• Compared valuaons of investments

in funds to the most recent audited

financial statements, where available;

• Compared valuaons to recent

transacons, where relevant; and

• Compared valuaons to recent

investments made in investee

companies where there was a

significant new investor.

No issues were idenfied

that were required to be

communicated to those

charged with governance.

Existence and rights and

obligaons in respect of

investments

There is a risk that

investments do not exist

or the group does not hold

tle to the investment.

• Total value:

£45,011,850 (2021:

£23,689,517)

• As disclosed in note 15.

For each material investment held by

the Group we have obtained third party

confirmaon of ownership.

No issues were idenfied

that were required to be

communicated to those

charged with governance.

Digital asset: Existence,

Rights and Obligaons

There is a risk that the

Group does not own or

control the assets which

would result in a material

misstatement in the

consolidated financial

statements.

• Total value:

£869,034,495 (2021:

£2,764,318,368)

• As disclosed in note 13.

Our substanve procedures included

performing the following:

• Obtained confirmaons from the

custodian and centralised exchanges,

where available;

• Performed a stocktake of digital assets

held on decentralised wallets; and

• We have also understood and evaluated

the procedures relang to the process

to assess the reliability of the custodian

both at take on and throughout the

relaonship.

No issues were idenfied

that were required to be

communicated to those

charged with governance.

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Key audit maer How our audit addressed

the maer

Key observaons

communicated to those

charged with governance

Digital assets – Valuaon

There is a risk that the

value aached to the

digital assets is materially

misstated.

• Total value:

£869,034,495 (2021:

£2,764,318,368)

• As disclosed in note 13.

We have obtained prices used in the

valuaon and compared to a third-party

source to determine the reasonableness

of the price and the level which has been

applied.

No issues were idenfied

that were required to be

communicated to those

charged with governance.

ETP liabilies:

Completeness, Rights

and Obligaons

There is a risk that the

ETP liability is not fully

recognised which would

materially misstate the

consolidated financial

statements.

• Total value:

£986,707,490 (2021:

£3,308,728,916)

• As disclosed in note 18.

We have obtained confirmaons from the

relevant third pares who issue the ETP

liability cerficates and compared this to

the financial records to ensure the liabilies

exist.

No issues were idenfied

that were required to be

communicated to those

charged with governance.

ETP liability – Valuaon

There is a risk that the

value aached to the

ETP liability is materially

misstated.

• Total value:

£986,707,490 (2021:

£3,308,728,916)

• As disclosed in note 18.

The valuaon of the cerficates has been

tested by:

• Recompung the underlying digital

asset allocaon as per the prospectus;

and

• Comparing prices used in the valuaon

of underlying digital assets to third party

sources to determine reasonableness.

No issues were idenfied

that were required to be

communicated to those

charged with governance.

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Our Application of Materiality

Materiality for the consolidated financial statements as a whole was set at £6,112,000 (2021:

£6,015,000), determined with reference to a benchmark of net assets, of which it represents 3%

(2021: 3%).

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 consolidated financial statements as a whole.

Performance materiality was set at 60% (2021: 60%) of materiality for the consolidated financial

statements as a whole, which equates to £3,667,200 (2021: £3,609,000). We applied this percentage

in our determination of performance materiality because we deem the cryptocurrency activities

undertaken by the Group to be high risk.

We reported to the Audit Committee any uncorrected omissions or misstatements exceeding

£305,600 (2021: £300,000), in addition to those that warranted reporting on qualitative grounds.

Of the Group’s 19 (2021: 18) reporting components, including the Company, we subjected 4 (2021:

4) to full scope audits. The work on all the components was performed by the Group audit team.

The components within the scope of our audit accounted for 94% (2021: 96%) of the Group’s net

assets.

Conclusions relating to Going Concern

In auditing the consolidated financial statements, we have concluded that the Directors’ use of the

going concern basis of accounting in the preparation of the consolidated 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 Group and

Company’s ability to continue as a going concern for a period of at least twelve months from when

the consolidated 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

consolidated 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 consolidated

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 consolidated 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 consolidated 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.

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Matters on which we are required to Report by Exception

In the light of the knowledge and understanding of the Group 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 consolidated financial statements are not in agreement with the accounting records and

returns; or

• 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 60, the Directors

are responsible for the preparation of consolidated 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 consolidated financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the

Group and 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 Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 consolidated 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;

• Obtained the revenue calculation and recalculated revenue for the year based on underlying

support;

• 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.

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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.

Report on the examination of the ESEF report

Opinion

In addition to our audit of the annual report, we have also examined that the Board of Directors have

prepared the annual report in a format that enables uniform electronic reporting (the ESEF report)

pursuant to Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528) for CoinShares

International Limited for the year ended 31 December 2022.

Our examination and our opinion relate only to the statutory requirements.

In our opinion, the ESEF report has been prepared in a format that, in all material respects, enables

uniform electronic reporting.

Basis for opinion

We conducted our examination in accordance with International Standard on Assurance

Engagements (UK) 3000 Assurance Engagements Other Than Audits Or Reviews of Historical

Financial Information. Our responsibilities under those standards are further described in the

Auditor’s responsibilities section of our report. We are independent of the Company in accordance

with the ethical requirements that are relevant 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 evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of the Board of Directors

The Board of Directors is responsible for the preparation and fair representation of the ESEF report

in accordance with Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), and

for such internal control as the Board of Directors determines is necessary to enable the preparation

of the ESEF report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the ESEF report is in all material

respects prepared in a format that meets the requirements of Chapter 16, Section 4(a) of the Swedish

Securities Market Act (2007:528), based on the procedures performed. Reasonable assurance is a

high level of assurance, but it is not a guarantee that an engagement carried out in accordance with

ISAE (UK) 3000 will always detect a material misstatement when it exists. Misstatements can arise

from fraud or error and are considered material if, individually or in aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of the ESEF report.

We apply ISQM (UK) 1 Quality Management for Firms that Perform Audits or Reviews of Financial

Statements, Or Other Assurance Or Related Services Engagements and accordingly we maintain

a comprehensive system of quality management, including documented policies and procedures

regarding compliance with professional ethical requirements, professional standards and legal and

regulatory requirements.

The examination involves obtaining evidence, through various procedures selected using our

judgement, that the ESEF report has been prepared in a format that enables uniform electronic

reporting of the annual report.

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The examination included:

• Consideration of those elements of internal control that are relevant to the preparation of the

ESEF report by the Board of Directors;

• Evaluating that the ESEF report has been prepared in a valid format; and

• Reconciling the ESEF report with the audited annual report.

Auditor’s report on the Board of Directors Report, Corporate Governance Report and

Sustainability Report

Based on our audit of the consolidated financial statements as described above, it is our opinion

that the information presented in the Board of Directors Report, Corporate Governance Report

and Sustainability Report concerning the financial statements and the going concern assumption

is consistent with the consolidated financial statements and complies with the applicable laws and

regulations.

Other Matters which we are Required to Address

We were appointed by the Board of Directors on 22 November 2021 to audit the consolidated

financial statements. Our total uninterrupted period of engagement is 4 years.

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

we remain independent of the Group 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.

Ewan John Spraggon

For and on behalf of Baker Tilly Channel Islands Limited

Chartered Accountants

St Helier, Jersey

Date: 28 April 2023

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COINSHARES 2022 ANNUAL REPORT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2022

Note 2022 £ 2021 £

Revenue

51,336,682

80,754,813

Gross profit 51,336,682

80,754,813

Administrative expenses 6

(38,201,098)

(32,059,260)

Fair value loss on digital assets 5

(1,226,595,255)

Impairment loss on amounts held at exchange 5, 14

(25,492,017)

Gain/(loss) on financial instruments 5, 14

1,741,273,017

(2,483,773,256)

Other operating income 4

16,626,978

14,665,375

Operating profit/(loss) 518,948,307

(2,420,412,328)

(Loss)/gain on investments 15(i)

(2,800,424)

5,577,984

Share of associate and joint ventures losses 15(i)

(2,149,611)

(290,861)

Profit/(loss) before interest and income tax expense 513,998,272

(2,415,125,205)

Finance income 9

12,916,891

10,905,234

Finance costs 10

(6,330,425)

(7,045,382)

Profit/(loss) before income tax expense 520,584,738

(2,411,265,353)

Income tax expense 11

(368,674)

(1,056,353)

Profit/(loss) after income tax expense 520,216,064

(2,412,321,706)

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

Exchange differences on translation of foreign operations 22

19,281,832

1,756,423

19,281,832

1,756,423

Items that will not be reclassified subsequently to profit or loss

Fair value (loss)/gain on digital assets 5

(539,108,506)

2,521,823,193

Fair value (loss)/gain on financial instruments 5

(609,445)

106,288

Fair value gain on investments 15(i)

3,154,322

2,079,240

(536,563,629)

2,524,008,721

Total other comprehensive (loss)/income (517,281,797)

2,525,765,144

Total comprehensive income 2,934,267

113,443,438

Earnings per share

Basic 23

7.63

(36.24)

Diluted 23

7.21

(36.24)

The notes on pages 75 to 136 are an integral part of these financial statements.

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COINSHARES 2022 ANNUAL REPORT

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2022

Note 2022 £ 2021 £

ASSETS

Non-current assets

Property, plant and equipment 12

1,935,862

836,299

Digital assets 13(i)

111,978

2,688,859

Goodwill 13(ii)

943,484

6,412,800

Other intangible assets 13(iii)

11,048,448

11,685,861

Investments 15(i)

45,011,850

23,689,517

Trade receivables and other assets 17

2,774,251

1,175,895

61,825,873

46,489,231

Current assets

Trade receivables and other assets

260,643,117

1,063,415,358

Digital assets

13(i)

868,922,517

2,761,629,509

Amounts due from brokers

161,967,077

118,975,658

Cash at bank

26,567,599

10,775,650

1,318,100,310

3,954,796,175

Total assets 1,379,926,183

4,001,285,406

LIABILITIES

Current liabilities

Trade payables and other liabilities 18, 19

(1,017,794,019)

(3,505,675,430)

Amounts due to brokers 16

(135,384,786)

(292,706,977)

Lease liabilities 20

(1,307,507)

(210,356)

Current tax liabilities

(235,814)

(2,578,333)

(1,154,722,126)

(3,801,171,096)

Net current assets 163,378,184

153,625,079

Non-current liabilities

Lease liabilities 20

(28,980)

(101,157)

Trade payables and other liabilities 18, 19

(21,433,967)

(21,462,947)

(101,157)

Total liabilities (1,176,185,073)

(3,801,272,253)

Net assets 203,741,110

200,013,153

EQUITY

Share capital 21

33,766

Share premium 21

30,781,210

Other reserves 22

22,136,272

(2,797,090,363)

Retained earnings

150,789,862

2,966,288,540

Total equity 203,741,110

200,013,153

The notes on pages 75 to 136 are an integral part of these financial statements.

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

Jean-Marie Mognetti

Director

Date: 28 April 2023

The financial statements on pages 69 to 136 were approved and authorised for issue by the board of directors and signed on its behalf by:

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COINSHARES 2022 ANNUAL REPORT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

Note Share

capital £

premium £

Other

reserves £

Retained

earnings £

Total

equity £

At 31 December 2020 31,278 2,387,070 1,209,832,600 (1,155,726,994) 56,523,954

Loss for the year - - - (2,412,321,706)

(2,412,321,706)

Other comprehensive income for the

year

- - 2,523,579,616 2,185,528

2,525,765,144

Total comprehensive income - - 2,523,579,616 (2,410,136,178) 113,443,438

Share based payments 7, 8, 24 - - 1,649,133 -

1,649,133

Shares issued 21 2,488 28,394,140 - -

28,396,628

Total transactions with owners

recognised in equity

2,488 28,394,140 1,649,133 - 30,045,761

Transfer of revaluation reserve upon

disposal of digital assets

- - (6,532,151,712) 6,532,151,712

Total other changes in equity - - (6,532,151,712) 6,532,151,712 -

At 31 December 2021 33,766 30,781,210 (2,797,090,363) 2,966,288,540 200,013,153

Profit for the year - - - 520,216,064

520,216,064

Other comprehensive loss for the year - - (519,826,674) 2,544,877

(517,281,797)

Total comprehensive income - - (519,826,674) 522,760,941 2,934,267

Share based payments 7, 8, 24 - - 1,229,617 -

1,229,617

Share buybacks 21, 22 - - (228,383) -

(228,383)

Share option liquidations 22 - - (153,900) (53,644)

(207,544)

Total transactions with owners

recognised in equity

- - 847,334 (53,644) 793,690

Transfer of revaluation reserve upon

disposal of digital assets

22 - - 3,338,205,975 (3,338,205,975)

Total other changes in equity - - 3,338,205,975 (3,338,205,975) -

At 31 December 2022 33,766 30,781,210 22,136,272 150,789,862 203,741,110

The notes on pages 75 to 136 are an integral part of these financial statements.

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COINSHARES 2022 ANNUAL REPORT

CONSOLIDATED STATEMENT OF CASH FLOWS (1/2)

FOR THE YEAR ENDED 31 DECEMBER 2022

Note 2022 £ 2021 £

Cash flows from operating activities

Profit/(loss) after income tax expense 520,216,064

(2,412,321,706)

Adjustments for:

- Depreciation of property, plant and equipment

240,683

176,560

- Depreciation of right-of-use assets

872,526

219,289

- Impairment of goodwill

13(ii)

5,473,525

- Amortisation of other intangible assets

13(iii)

1,769,632

874,180

- Share-based payment expense

7, 8

1,229,617

1,649,133

- Finance income

(12,916,891)

(10,905,234)

- Finance costs

6,330,425

7,045,382

- Income tax expense

368,674

1,056,353

- Gain on financial instruments settled through digital assets

(20,619,173)

(22,061,763)

- (Gain)/loss on ETP liabilities

(2,349,122,865)

2,527,462,402

- Fair value loss on digital assets

1,230,310,948

- Loss/(gain) on investments

15(i)

2,800,424

(5,577,984)

- Share of joint venture losses

15(i)

230,910

290,861

- Share of associate losses

15(i)

1,918,701

(610,896,800)

87,907,473

Changes in working capital:

- Trade receivables and other assets

1,257,429,319

(979,727,142)

- Trade payables and other liabilities

(502,361,951)

156,962,245

Cash generated from/(used in) operations

144,170,568

(734,857,424)

Finance costs paid

(6,329,290)

(7,042,292)

Income taxes paid

(3,457,543)

(387,978)

Net cash flow generated from/(used in) operating activities 134,383,735

(742,287,694)

Cash flows from investing activities

Net sales of digital assets

13(i)

381,400,078

1,632,502,984

Net purchases of ETP liabilities

(295,834,379)

(1,015,848,687)

Purchases of other intangible assets

13(iii)

(703,461)

(182,364)

Disposals of other intangible assets 13(iii)

6,828

Purchases of property, plant and equipment

(327,508)

(216,544)

Disposals of property, plant and equipment

196,187

7,796

Acquisition of subsidiaries

15(ii)

(2,064,753)

Acquisition of investments in joint ventures

15(i)

(755,902)

Acquisition of investments in associates

15(i)

(20,266,689)

Acquisition of other investments

15(i)

(28,520)

(11,760,563)

Net disposals/(purchases) of listed equities

15(i)

98,578

(212,846)

Finance income 9

12,957,913

10,905,233

Net cash generated from investing activities 77,499,027

612,374,354

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COINSHARES 2022 ANNUAL REPORT

CONSOLIDATED STATEMENT OF CASH FLOWS (2/2)

FOR THE YEAR ENDED 31 DECEMBER 2022

Note 2022 £ 2021 £

Cash flows from financing activities

Issue of shares 21

12,766,244

Issue of long term loan

21,573,387

Repayment of lease liabilities

(1,079,297)

(211,876)

Share option liquidations

(207,544)

Share buybacks

21, 22

(228,383)

Net cash generated from financing activities 20,058,163

12,554,368

Net increase/(decrease) in cash and cash equivalents 231,940,925

(117,358,972)

Cash and cash equivalents

At the beginning of the year

(162,955,669)

(43,337,185)

Effects of currency translation on cash and cash equivalents

(15,835,366)

(2,259,512)

At the end of the year

53,149,890

(162,955,669)

Cash and cash equivalents comprise

Cash at bank

26,567,599

10,775,650

Amounts due from brokers

161,967,077

118,975,658

Amounts due to brokers

(135,384,786)

(292,706,977)

At the end of the year

53,149,890

(162,955,669)

Non-cash analysis

Cash flows from investing activities

Acquisition of subsidiaries

15(ii)

(15,630,384)

Cash flows from financing activities

Issue of shares

15,630,384

- -

The notes on pages 75 to 136 are an integral part of these financial statements.

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COINSHARES 2022 ANNUAL REPORT

ALTERNATIVE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2022

Note 2022 £ 2021 £

Revenue

51,336,682

80,754,813

Gross profit 51,336,682

80,754,813

Administrative expenses 6

(38,201,098)

(32,059,260)

Fair value (loss)/gain on digital assets 5

(1,765,703,761)

2,521,823,193

Impairment loss on amounts held at exchange 5, 14

(25,492,017)

Gain/(loss) on financial instruments 5

1,741,273,017

(2,483,773,256)

Other operating income 4

16,626,978

14,665,375

Operating (loss)/profit (20,160,199)

101,410,865

(Loss)/gain on investments 15(i)

(2,800,424)

5,577,984

Share of joint ventures losses 15(i)

(2,149,611)

(290,861)

(Loss)/profit before interest and income tax expense (25,110,234)

106,697,988

Finance income 9

12,916,891

10,905,234

Finance costs 10

(6,330,425)

(7,045,382)

(Loss)/profit before income tax expense (18,523,768)

110,557,840

Income tax expense 11

(368,674)

(1,056,353)

(Loss)/profit after income tax expense (18,892,442)

109,501,487

Other comprehensive income

Items that may be reclassified subsequently to profit or loss

Exchange differences on translation of foreign operations 22

19,281,832

1,756,423

19,281,832

1,756,423

Items that will not be reclassified subsequently to profit or loss

Fair value (loss)/gain on financial instruments 5

(609,445)

106,288

Fair value gain on investments 15(i)

3,154,322

2,079,240

2,544,877

2,185,528

Total other comprehensive income 21,826,709

3,941,951

Total comprehensive income 2,934,267

113,443,438

Adjusted earnings per share

Basic 23

0.04

1.70

Diluted 23

0.04

1.62

The alternative presentation of the SOCI is designed to reflect the performance of the Group if gains and losses on digital assets were

taken through profit and loss, rather than through other comprehensive income as required by accounting standards. Due to the treatment

of digital assets as intangible assets under the revaluation model, and the gains and losses recognised as a result, it is the opinion of

management that the total comprehensive income figure, inclusive of digital asset gains and losses, is the most representative measure of

the Group’s overall performance. No other adjustments have been made.

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These notes form an integral part of and should be read in conjunction with the accompanying

consolidated financial statements (the ‘financial statements’).

1. General information

CoinShares International Limited (the ‘Company’) and its subsidiaries (together the ‘Group’) primarily

operates in Jersey, Channel Islands (see note 15(ii) for other jurisdictions in which the Group operates).

The principal activity of the Group is providing exposure to the digital asset ecosystem via a range of

financial products and services, supported by its technology stack and team.

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.

2. Significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial

statements are set out below. These policies have been consistently applied to all the years

presented, unless otherwise stated.

2.1 Basis of preparation

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

specified within these accounting policies and in accordance with UK-adopted International Financial

Reporting Standards (‘IFRS’) and the Companies (Jersey) Law 1991.

The financial statements are presented in Pound Sterling, which is also the functional currency.

Monetary amounts in these financial statements are rounded to the nearest pound, except when

otherwise indicated.

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 Group

accounting policies, see note 2.25 for further details.

The following principal accounting policies have been applied:

2.2 Separate financial statements

Under Article 105(11) of the Companies (Jersey) Law 1991, the directors of a holding company need

not prepare separate financial statements. Accordingly, these financial statements present the results

of the Group headed by the Company.

2.3 Going concern basis

The Group had net assets of £203,741,110 (2021: £200,013,153), an operating profit of £518,948,307

(2021: loss of £2,420,412,328), and total comprehensive income of £2,934,267 (2021: £113,443,438).

The directors have prepared these financial statements on a going concern basis on the

understanding that they have satisfied themselves that sufficient working capital will be available for

12 months from the date of issue of these financial statements.

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

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The Group has an obligation to settle amounts due to investors for ETPs that reference the

performance of specific digital assets issued. As the Group holds hedging assets in excess of this

liability, the directors consider that they will be able to convert digital assets to fiat currency so as to

settle the obligations in the event that certificates are redeemed and so deem a going concern risk

to not be material. In addition, delays in the settlement of the certificates may be imposed or certain

modifications be made in the occurrence of market illiquidity or other disruptions.

Furthermore, the directors deem the cyber-security of the Group to be sufficient to mitigate cyber

risk and the risk of theft of digital assets that could potentially leave the Group unhedged and

exposed in its obligation to certificate holders.

Accordingly, the directors have prepared the financial statements on a going concern basis.

2.4 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and

entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is

achieved when the Group:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affects its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that

there are changes to one or more of the three elements of control listed above.

When the Group has less than a majority of the voting rights of an investee, it considers that it

has power over the investee when the voting rights are sufficient to give it the practical ability to

direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and

circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to

give it power, including:

• the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of

the other vote rights;

• potential voting rights held by the Group, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Group has, or does not have,

the current ability to direct the relevant activities at the time that decisions need to be made,

including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases

when the Group loses control of the subsidiary. Specifically, the results of subsidiaries acquired or

disposed of during the year are included in profit or loss from the date the Group gains control until

the date when the Group ceases to control the subsidiary.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the

accounting policies used into line with the Group’s accounting policies. All intragroup assets and

liabilities, equity, income, expenses and cash flows relating to transactions between the members of

the Group are eliminated on consolidation.

Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted

for as equity transactions. The carrying amount of the Group’s interests are adjusted to reflect the

changes in their relative interests in the subsidiaries.

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When the Group loses control of a subsidiary, the gain or loss on disposal recognised in profit or

loss is calculated as the difference between (i) the aggregate of the fair value of the consideration

received and the fair value of any retained interest and (ii) the previous carrying amount of the

assets (including goodwill), less liabilities of the subsidiary. All amounts previously recognised in

other comprehensive income in relation to that subsidiary are accounted for as if the Group had

directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or

transferred to another category of equity as required/permitted by applicable IFRS Standards).

2.5 Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration

transferred in a business combination is measured at fair value, which is calculated as the sum of the

acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the

former owners of the acquiree and the equity interest issued by the Group in exchange for control of

the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at

their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and assets or liabilities related to employee benefit

arrangements are recognised and measured in accordance with IAS 12 and IAS 19 respectively;

• liabilities or equity instruments related to share-based payment arrangements of the acquiree,

or share-based payment arrangements of the Group entered into to replace share-based

payment arrangements of the acquiree are measured in accordance with IFRS 2 at the

acquisition date; and

• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 are

measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any

non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity

interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets

acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts

of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration

transferred, the amount of any non-controlling interests in the acquiree and the fair value of the

acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in

profit or loss as a bargain purchase gain.

If the initial accounting for a business combination is incomplete by the end of the reporting period

in which the combination occurs, the Group reports provisional amounts for the items for which the

accounting is incomplete. Those provisional amounts are adjusted during the measurement period

(see above), or additional assets or liabilities are recognised, to reflect new information obtained

about facts and circumstances that existed as of the acquisition date that, if known, would have

affected the amounts recognised as of that date.

2.6 Goodwill

Goodwill is initially recognised and measured as set out in note 2.5.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of

impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of

cash-generating units) expected to benefit from the synergies of the combination. Cash-generating

units to which goodwill has been allocated are tested for impairment annually, or more frequently

when there is an indication that the unit may be impaired. If the recoverable amount of the cash-

generating unit is less than the carrying amount of the unit, the impairment loss is allocated first

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to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of

the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss

recognised for goodwill is not reversed in a subsequent period.

On disposal of a cash-generating unit, the attributable amount of goodwill is included in the

determination of the profit or loss on disposal.

2.7 Investments in associates and joint ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement

have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing

of control of an arrangement, which exists only when decisions about the relevant activities require

unanimous consent of the parties sharing control.

An associate is an entity over which the Group has significant influence and that is neither a

subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the

financial and operating policy decisions of the investee but is not control or joint control over those

policies.

In the Group consolidated financial statements the results and assets and liabilities of associates or

joint ventures are incorporated using the equity method of accounting, unless the investee is held

indirectly through a venture capitalist organisation in which case the investment is measured at fair

value through profit or loss.

Under the equity method, an investment in an associate or a joint venture is recognised initially in the

consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s

share of the profit or loss and other comprehensive income of the associate or joint venture. When

the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that

associate or joint venture, the Group discontinues recognising its share of further losses. Additional

losses are recognised only to the extent that the Group has incurred legal or constructive obligations

or made payments on behalf of the associate or joint venture.

The requirements of IAS 36 are applied to determine whether it is necessary to recognise any

impairment loss with respect to the Group’s investment in an associate or a joint venture accounted

for under the equity method. When necessary, the entire carrying amount of the investment

(including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by

comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with

its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill

that forms part of the carrying amount of the investment. Any reversal of that impairment loss is

recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment

subsequently increases.

2.8 Other investments

In the financial statements of the Group, investments in listed equities and other investments are

held at fair value through profit or loss except where the directors have made an irrevocable claim to

designate fair value movements through other comprehensive income.

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2.9 Fair value measurement

The Group measures financial instruments such as ETPs, and non-financial assets such as digital

assets, at fair value at each balance sheet date.

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 measurement is

based on the presumption that the transaction to sell the asset or transfer the liability takes place

either in the principal market for the asset or liability or, in the absence of a principal market, in the

most advantageous market for the asset or liability accessible by the Group.

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

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

the Group can access at the measurement date.

• 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.

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

liability.

For assets and liabilities that are recognised in the financial statements at fair value on a recurring

basis, the Group determines whether transfers have occurred between levels in the hierarchy

by re-assessing categorisation (based on the lowest level input that is significant to the fair value

measurement as a whole) at the end of each reporting period.

On a quarterly basis, the board of directors analyses the movements in the values of assets and

liabilities which are required to be remeasured or re-assessed as per the Group’s accounting

policies.

Investment valuations are subject to several key judgements and reflect both local and external

economic factors. In selecting the investment valuation criteria, the directors evaluate the key drivers

relevant to each investment in conjunction with local partners, supported, wherever practicable, by

local market data. As such, fair value measurements for investment valuations have been classified

as Level 2 or Level 3 depending on the information available. More information is given in notes 2.19,

2.21 and 15.

Refer to accounting policies 2.19 and 2.21 for the fair value policies as they apply respectively to the

Group’s digital assets and to certain of the Group’s financial instruments, including ETPs. For all

other assets and liabilities measured at fair value, the directors perform an internal valuation exercise

to determine fair value using methodologies disclosed in the Group Investment Valuation Policy.

Fair value disclosures are summarised in the following notes:

Digital assets Note 13

Investments Note 15

Financial instruments Note 26

2.10 Revenue recognition

The Group earns revenue by issuing ETPs which synthetically track the performance of digital assets

under various note programmes. The Group earns fee income, which may vary depending on the

note programme, based on the market value of the ETP. The Group recognises the fee income as

revenue because it arises on a daily basis over the period that the ETP is outstanding.

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The XBT Provider AB (publ) (‘XBTP’) note program fee revenue is recognised on a daily basis,

denominated in fiat, by means of a reduction in the liability owing to the ETP holder. Due to the

structure of the XBTP ETPs, and the way in which the Group elects to hedge the liability arising

from the issuance of these ETPs, the revenue remains held as part of the overall hedging asset

balance until such a time that notes are redeemed, at which point the cash is realised. There is no

digital asset exposure risk attached to the revenue that remains held within the hedging assets

between recognition and redemption.

The CoinShares Digital Securities Limited (‘CSDSL’) management fee note program fee revenue

is recognised on a daily basis, denominated in digital assets, by means of a reduction in the coin

entitlement owing to the ETP holder. For the staking products with no fee, revenue arising from

staking is also denominated in digital assets, with a portion of such proceeds owing to noteholders

through increasing the coin entitlement. These revenues are converted on a regular basis into fiat

in order to ensure the Group’s revenues arising from CSDSL are not exposed to digital asset price

fluctuations. There is no digital asset exposure risk attached to the revenue that remains held within

the hedging assets between recognition and redemption.

Digital assets received as a result of staking activities and airdrops are initially recognised

within other operating income. Following initial recognition, such digital assets are valued in

accordance with the Group’s policy on digital assets, with unrealised gains being recognised in

other comprehensive income, and losses recognised through profit and loss, unless such a loss is

reversing a gain previously recognised through other comprehensive income.

The Group also earns revenue from the provision of investment management and advisory

services. Revenue is recognised when the performance obligation has been satisfied by

transferring the promised services to the customer on a straight line basis over the period during

which the service is provided.

2.11 Leases

The Group as lessee

On commencement of a contract (or part of a contract) which gives the right to use an asset for a

period of time in exchange for consideration, the group recognises a right-of-use asset and a lease

liability unless the lease qualifies as a ‘short-term’ lease or a ‘low-value’ lease.

Short-term leases

Where the lease term is twelve months or less and the lease does not contain an option to

purchase the leased asset, lease payments are recognised as an expense on a straight-line basis

over the lease term.

Leases of low-value assets

Where the underlying asset in a lease is ‘low-value’, lease payments are recognised as an expense

on a straight-line basis over the lease term. Low-value leases are deemed to be leases under

£50,000.

Initial measurement of the lease liability

The lease liability is initially measured at the present value of the lease payments during the lease

term discounted using the incremental borrowing rate because the interest rate implicit in the

lease cannot be readily determined.

The lease term is the non-cancellable period of the lease plus extension periods that are

reasonably certain to exercise and termination periods that are reasonably certain not to exercise.

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Lease payments include fixed payments, less any lease incentives receivable, variable lease

payments dependent on an index or a rate and any residual value guarantees. Variable lease

payments are initially measured using the index or rate when the leased asset is available for use.

Subsequent measurement of the lease liability

The lease liability is subsequently increased for a constant periodic rate of interest on the

remaining balance of the lease liability and reduced for lease payments. Interest on the lease

liability is recognised in profit or loss.

Re-measurement of the lease liability

The lease liability is adjusted for changes arising from the original terms and conditions of the

lease that change the lease term, the assessment of options to purchase the leased asset,

the amount expected to be payable under a residual value guarantee and/or changes in lease

payments due to a change in an index or rate. The adjustment to the lease liability is recognised

when the change takes effect and is adjusted against the right-of-use asset, unless the carrying

amount of the right-of-use asset is reduced to nil, when any further adjustment is recognised in

profit or loss.

Adjustments to the lease payments arising from a change in the lease term or the assessment of

its option to purchase the leased asset are discounted using a revised discount rate. The revised

discount rate is calculated as the incremental borrowing rate at the date of the reassessment

because the interest rate implicit in the lease cannot be readily determined.

Lease modifications

A lease modification is a change that was not part of the original terms and conditions of the lease

and is accounted for as a separate lease if it increases the scope of the lease by adding the right

to use one or more additional assets with a commensurate adjustment to the payments under the

lease.

For a lease modification not accounted for as a separate lease, the lease liability is adjusted for

the revised lease payments, discounted using a revised discount rate.

Where the lease modification decreases the scope of the lease, the carrying amount of the

right-of-use asset is reduced to reflect the partial or full termination of the lease. Any difference

between the adjustment to the lease liability and the adjustment to the right-of-use asset is

recognised in profit or loss.

For all other lease modifications, the adjustment to the lease liability is recognised as an

adjustment to the right-of-use asset.

The Group as lessor

Leases are classified as finance or operating leases. Whenever the terms of the lease transfer

substantially all the risks and rewards of ownership to the lessee, the contract is classified as a

finance lease. All other leases are classified as operating leases.

When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease as two

separate contracts. The sub-lease is classified as a finance or operating lease by reference to the

right-of-use asset arising from the head lease.

Rental income from operating leases is recognised on a straight-line basis over the term of the

relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are

added to the carrying amount of the leased asset and recognised on a straight-line basis over the

lease term.

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2.12 Foreign currency translation

Transactions and balances

Foreign currency transactions are translated into the functional currency of the relevant Group

entity using the exchange rates prevailing at the dates of the transactions.

At each reporting date, monetary assets and liabilities denominated in a foreign currency are

translated into the functional currency of the relevant Group entity at the closing exchange rate.

Non-monetary assets and liabilities denominated in a foreign currency, and measured at historical

cost, are initially translated into the functional currency of the relevant Group entity at the date

of the transaction, and are not subsequently re-translated. Non-monetary assets and liabilities

denominated in a foreign currency, and measured at fair value, are measured using the exchange

rate at each date the fair value is determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the

translation at period-end exchange rates of monetary assets and liabilities denominated in foreign

currencies are recognised in profit and loss.

Foreign exchange gains and losses from the translation of assets and liabilities measured at fair

value are recognised as part of the fair value gain or loss.

Translation

For the purpose of presenting consolidated financial statements, the assets and liabilities of the

Group’s overseas subsidiaries are translated at exchange rates prevailing on the reporting date.

Income and expense items are translated at the average exchange rates for the period, unless

exchange rates fluctuate significantly during that period, in which case the exchange rates at

the date of transactions are used. Exchange differences arising, if any, are recognised in other

comprehensive income and accumulated in a foreign currency translation reserve (attributed to

non-controlling interests as appropriate).

On the disposal of an overseas subsidiary all of the exchange differences accumulated in a

foreign currency translation reserve in respect of that subsidiary attributable to the owners of the

Group are reclassified to profit or loss.

2.13 Retirement benefits

The Group operates a defined contribution scheme for the benefit of its employees. Contributions

payable are charged to profit or loss in the year they are payable. The assets of the scheme are

held separately from those of the Group in an independently administered fund.

2.14 Employee benefits

Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an

asset.

Short term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are

expensed as the related service is provided. A liability is recognised for the amount expected to

be paid if the Group has a present legal or constructive obligation to pay this amount as a result of

past service provided by the employee, and the obligation can be estimated reliably.

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The Group may compensate employees for absence for various reasons including vacation,

sickness and parental leave. There is non-accumulating compensation of absence and this does

not carry forward; it will lapse if the current period’s entitlement is not used in full, therefore the

Group does not recognise a liability or expense until the time of absence.

Annual bonus plan

The Group operates a bonus plan for employees. An expense is recognised in profit and loss

when the Group has a legal or constructive obligation to make payments under the plan as a

result of past events and a reliable estimate of the obligation can be made.

2.15 Share based payments

Employee incentive share plan

Equity-settled arrangements are measured at fair value at the date of the grant.

The fair value determined at grant date is expensed on a straight-line basis over the vesting

period, based on the Group’s estimate of the number of equity instruments that will eventually

vest. At each reporting date, the Group revises its estimate of the number of equity instruments

expected to vest as a result of the effect of non-market-based vesting conditions. The impact

of the revision of the original estimates, if any, is recognised in profit or loss such that the

cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.

Where equity-settled arrangements are modified, and are of some benefit to the employee, the

incremental fair value is recognised over the period from the date of modification to date of

vesting. Where a modification is not beneficial to the employee there is no change to the charge

for share-based payments. Settlements and cancellations are treated as an acceleration of

vesting and the unvested amount is recognised immediately in profit and loss.

The Group has no cash-settled share-based payment arrangements.

2.16 Taxation

The tax currently payable is based on taxable profit for the year. Taxable profit differs from

net profit as reported in profit and loss because it excludes items of income or expense that

are taxable or deductible in other years and it further excludes items that are never taxable

or deductible. The Group’s liability for current tax is calculated using tax rates that have been

enacted or substantively enacted by the end of the reporting period.

Deferred tax is the tax expected to be payable or recoverable on differences between the

carrying amounts of assets and liabilities in the financial statements and the corresponding

tax bases used in the computation of taxable profit and is accounted for using the liability

method. Deferred tax liabilities are generally recognised for all taxable temporary differences

and deferred tax assets are recognised to the extent that it is probable that taxable profits will

be available against which deductible temporary differences can be utilised. Such assets and

liabilities are not recognised if the temporary difference arises from the initial recognition (other

than in a business combination) of other assets and liabilities in a transaction that affects neither

the taxable profit nor the accounting profit. In addition, a deferred tax liability is not recognised if

the temporary difference arises from the initial recognition of goodwill.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the

liability is settled, or the asset is realised based on tax laws and rates that have been enacted or

substantively enacted at the reporting date.

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The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the

extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of

the asset to be recovered.

Current and deferred tax are recognised in profit and loss, except when they relate to items that

are recognised in other comprehensive income or directly in equity, in which case, the current and

deferred tax are also recognised in other comprehensive income or directly in equity respectively.

Where current tax or deferred tax arises from the initial accounting for a business combination, the

tax effect is included in the accounting for the business combination.

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. Entities within the Group pay tax at various rates

throughout the jurisdictions, as described in note 11.

2.17 Property, plant and equipment

Assets are initially recognised at cost and subsequently measured at cost, net of depreciation and

any impairment losses. Cost includes the original purchase price plus costs directly attributable to

bringing the asset to its working condition for its intended use.

Subsequent expenditure relating to an item of property, plant and equipment that has already

been recognised is added to the carrying amount of the asset only when it is probable that future

economic benefits associated with the item will flow to the Group and the cost of the item can be

measured reliably. All other repair and maintenance expenses are recognised in profit and loss as

incurred.

Depreciation is calculated using the straight-line method to allocate their depreciable amounts over

their estimated useful lives as follows:

Furniture and fittings 3 years

Office equipment 3 years

The residual values, estimated useful lives and depreciation method of property, plant and

equipment are reviewed, and adjusted as appropriate, at each year end. The effects of any revision

are recognised in profit and loss when the changes arise.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount

and are recognised in profit and loss in the period of disposal.

2.18 Right-of-use assets

A right-of-use asset is recognised at commencement of the lease and initially measured at the

amount of the lease liability, plus any incremental costs of obtaining the lease and any lease

payments made at or before the leased asset is available for use by the Group.

The right-of-use asset is subsequently measured at cost less accumulated depreciation and any

accumulated impairment losses. Right-of-use assets are depreciated straight line over the following

useful economic periods:

Right-of-use property assets shorter period of the remaining lease term

and the useful economic life

The right-of-use asset is adjusted for any re-measurement of the lease liability and lease

modifications, as set out in the lease accounting policy.

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2.19 Intangible assets

Digital assets

Digital assets are accounted for as intangible assets under the revaluation model.

Under IFRS, most intangible assets other than goodwill are presumed to have a finite life. However,

in the case of the majority of digital assets held by the Group, the residual value is equal to the

carrying value, because (i) there is an active market, (ii) it is probable that the market will exist and

(iii) the residual value can be determined by reference to the market. As such digital assets are not

amortised.

The overarching accounting policy that is adopted in respect of valuing the Group’s digital assets is

as follows:

• Digital assets which are freely tradeable and for which there is an active market 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;

• Digital assets that are subject to lock-up and not freely tradeable are valued using quoted prices

discounted for a lack of liquidity. As such these digital assets have been classified as Level 2

in the fair value hierarchy. At the point when such digital assets become freely tradeable, they

are reclassified as Level 1 in the fair value hierarchy and accounted for in line with other digital

assets;

• In certain cases, the inputs used to measure fair value may fall into different levels of the fair

value hierarchy. In such cases, an asset’s level within the fair value hierarchy is based on the

lowest level of input that is significant to the fair value measurement. The directors’ assessment

of the significance of a particular input to the fair value measurement in its entirety requires

judgement and it considers factors specific to the asset;

• Increases in the fair value of digital assets are recognised in other comprehensive income,

unless the increase reverses a revaluation loss previously recognised in profit and loss, in which

case such an amount is recognised in profit and loss;

• A decrease in the carrying value of a digital asset as a result of a revaluation loss is recognised

in other comprehensive income to the extent that it reverses gains previously recognised in

other comprehensive income. If a revaluation loss exceeds the accumulated gains recognised

in equity in respect of digital assets, the excess is recognised in profit and loss; and

• Digital assets are derecognised when the Group has transferred substantially all the risks and

rewards of ownership on disposal. On disposal of digital assets, any cumulative gain previously

recognised in other comprehensive income and accumulated in the revaluation reserve, is

transferred to retained earnings.

The Group holds digital assets for different purposes, namely (i) to collateralise the exchange

traded products issued by its wholly owned subsidiary CSDSL, (ii) to hedge the liability arising

from the issuance of exchange traded products by its wholly owned subsidiary XBTP, and (iii) as

investments.

Within CSDSL the digital assets are held in order to collateralise a number of exchange traded

products. The exchange traded products are re-measured using reference indices as defined in the

relevant prospectus for such products. The digital assets are valued using the same methodology,

relying on an unadjusted index price. This prevents an accounting mismatch between the valuation

of the digital assets and the certificates held.

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Within CoinShares Capital Markets (Jersey) Limited (‘CSCMJL’), Bitcoin and Ethereum are valued by

the Company based on the average price of the three most liquid exchanges as defined in the XBTP

prospectus at the date of valuation. Although these valuations are ultimately derived from a number

of sources, the sources themselves are unadjusted and would each represent a Level 1 classification

within the fair value hierarchy. As such, these holdings have been classified as Level 1. Should the

average price of the three exchanges utilised show a material difference to any of the prices from an

individual exchange, the classification of these assets as Level 1 would be reassessed.

All other digital asset holdings within CSCMJL and held by other Group entities are valued by the

Company based on an unadjusted price derived from a global cryptocurrency market data provider.

On consolidation, no adjustments are made to these valuation approaches to create an alignment

at the Group level. The directors consider that the assets held by each subsidiary are sufficiently

different (and are therefore separate classes) insofar as they are being held for different purposes,

and in the case of those held to hedge/collateralise exchange traded products, have a corresponding

liability. This approach ensures the prevention of an accounting mismatch between the valuation of

the digital assets and certificates held.

This approach also reflects the prices that represent the most advantageous market available to

sell each class of asset. The CSDSL digital assets are restricted to only being tradeable for a defined

financial instrument (the ETP liability), the fair values of which are defined by the CSDSL prospectus.

The XBTP assets are tradeable on any exchange, therefore the average price of three exchanges

(as defined in the prospectus) represents management’s best estimate of the most advantageous

market price.

Separately acquired intangible assets

Separately acquired intangible assets have finite useful lives and are measured at cost less

accumulated amortisation and accumulated impairment losses. Amortisation of the depreciable

amount is allocated systematically on the basis of the consumption of economic benefits over their

estimated useful lives.

Amortisation is provided on the following basis:

Website domains and trademarks 10 years

The estimated useful life and amortisation method are reviewed at the end of each year, with the

effect of any changes in estimate being accounted for on a prospective basis.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are

recognised initially at their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported

at cost less accumulated amortisation and accumulated impairment losses, on the same basis as

intangible assets that are acquired separately.

Amortisation is provided on the following basis:

Fee generating contracts 10 years

The estimated useful life and amortisation method are reviewed at the end of each year, with the

effect of any changes in estimate being accounted for on a prospective basis.

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Internally developed software

Expenditure on the research phase of projects to develop new customised software is recognised as

an expense as incurred.

Costs that are directly attributable to a project’s development phase are recognised as intangible

assets, provided they meet all of the following recognition requirements:

• the development costs can be measured reliably;

• the project is technically and commercially feasible;

• the Group intends to and has sufficient resources to complete the project;

• the Group has the ability to use or sell the software; and

• the software will generate probable future economic benefits.

Development costs not meeting these criteria for capitalisation are expensed as incurred.

Directly attributable costs include employee costs incurred on software development along with an

appropriate portion of relevant overheads and borrowing costs.

Subsequent measurement

All finite-life intangible assets, including capitalised internally developed software, are accounted for

using the cost model whereby the depreciable amount is amortised systematically on the basis of

the consumption of economic benefits over their estimated useful lives. Residual values and useful

lives are reviewed at each reporting date. In addition, they are subject to impairment testing. The

following useful lives are applied:

Software 3-5 years

Any capitalised internally developed software that is not yet complete is not amortised but is subject

to impairment testing.

Amortisation has been included within administrative expenses.

Subsequent expenditures on the maintenance of these assets are expensed as incurred.

When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference

between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within

other gains or losses.

Impairment of non-financial assets

Goodwill impairment is covered in the goodwill accounting policy. All other non-financial assets are

tested for impairment whenever there is any objective evidence or indication that these assets may

be impaired.

If such an indicator exists, the recoverable amount of the asset is estimated in order to determine

the extent of the impairment loss (if any). Where the asset does not generate cash flows that are

independent from other assets, the Group estimates the recoverable amount of the cash-generating

unit to which the asset belongs.

The recoverable amount is the higher of value in use and fair value less costs of disposal. If the

recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying

amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable

amount. An impairment loss is recognised immediately in profit and loss.

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When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-

generating unit) is increased to the revised estimate of the recoverable amount, but so that

the increased carrying amount does not exceed the carrying amount that would have been

determined if no impairment loss had been recognised for the asset (or cash-generating unit)

in prior years. A reversal of an impairment loss is recognised immediately as a credit to profit

and loss.

2.20 Cash and cash equivalents

Cash at bank

Cash at bank consists of balances with banks and are classified as basic financial assets with a

maturity of three months or less.

Cash deposits with financial institutions are repayable without penalty on notice of not more

than 24 hours.

Amounts due from/to brokers

Amounts due from/to brokers represent cash receivable from/payable to brokerage

firms, arising due to the ongoing trading activities of the Group, and are classified as cash

equivalents.

Other cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to

known amounts of cash and that are subject to an insignificant risk of changes in value.

2.21 Financial instruments

Certain of the Group’s ETPs, and other derivative contracts, are settled in digital assets and

therefore do not meet the definition of a financial instrument set out in IFRS 9. In all other

respects they operate in the same way as an equivalent contract settled in cash. The Group

has determined that the accounting policies for these contracts are the same as they would be

for an equivalent contract settled in cash and meeting the definition of a financial instrument.

These contracts are referred to as ‘financial instruments’ in the financial statements and are

analysed as such in the financial instruments disclosure note (note 26).

Financial assets

The accounting policy for non-current asset investments where the Group does not have

control or significant influence, which are financial assets accounted for under IFRS 9, is

included in accounting policies 2.8 and 2.9.

Initial recognition and measurement

The classification of financial assets at initial recognition depends on the financial asset’s

contractual cash flow characteristics and the Group’s business model for managing them.

With the exception of trade receivables, the Group initially measures a financial asset at its

fair value plus, in the case of a financial asset not measured at fair value through profit or loss,

transaction costs. Trade receivables are initially measured at the transaction price.

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Subsequent measurement

Subsequently the Group’s financial assets are classified into several categories:

• Financial assets measured at amortised cost;

• Financial assets measured at fair value through profit or loss; and

• Financial assets measured at fair value through other comprehensive income.

Financial assets at amortised cost and effective interest model

The effective interest method is a method of calculating the amortised cost of a debt instrument

and allocating interest income over the relevant period.

For financial assets, the effective interest rate is the rate that exactly discounts estimated future

cash receipts (including all fees and points paid or received that form an integral part of the

effective interest rate, transaction costs and other premiums or discounts) excluding expected

credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter

period, to the gross carrying amount of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at

initial recognition minus the principal repayments, plus the cumulative amortisation using the

effective interest method of any difference between that initial amount and the maturity amount,

adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised

cost of a financial asset before adjusting for any loss allowance.

Financial assets at amortised cost held by the Group include right-of-use lease assets.

Financial assets at fair value through profit or loss

Financial assets classified as current assets are measured at fair value through profit or loss. The

fair value basis is measured using the fair value hierarchy.

Financial assets at fair value through other comprehensive income

Financial assets measured at fair value through other comprehensive income fall into three

categories.

Simple Agreements for Future Tokens (‘SAFTs’)

Such agreements stipulate the delivery of digital assets to the Group on a specified date or

following the occurrence of a defined event. SAFTs are classified as digital asset receivables.

SAFTs which represent future ownership over tokens that do not have an active market, or have

not yet been launched, are held at cost until such a time when the tokens over which rights exist

are delivered, at which point they are classified as digital assets and valued in accordance with the

Group’s policy for digital assets. SAFTs which represent future ownership over tokens that do have

an active market are carried at fair value through other comprehensive income until such a time

when the tokens over which rights exist are delivered, at which point they are classified as digital

assets and valued in accordance with the Group’s policy for digital assets.

SAFTs are monitored on an ongoing basis. In the event that the ultimate delivery of the tokens is

called into question, or the likely value of the token holding is deemed to be lower than initial cost,

the receivable will be impaired with such charge being taken through profit and loss.

Simple Agreements for Future Equity (‘SAFEs’)

Such agreements stipulate the delivery of equity to the Group on a specified date or following the

occurrence of a defined event. SAFEs are classified as receivables and held at cost until such a

time when the equity is delivered, at which point they are classified as investments and are valued

in accordance with the Group’s investment valuation policy.

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SAFEs are monitored on an ongoing basis. In the event that the ultimate delivery of the equity is

called into question, or the likely value of the equity holding is deemed to be lower than initial cost,

the receivable will be impaired with such charge being taken through profit and loss.

Simple Agreements for Future Tokens/Equity (‘SAFTEs’)

Such agreements stipulate the delivery of digital assets and/or equity to the Group on a specified

date or following the occurrence of a defined event. SAFTEs are classified as receivables and held at

cost until such a time when the equity is delivered, at which point they are classified as investments

and are valued in accordance with the Group’s investment valuation policy.

SAFTEs are monitored on an ongoing basis. In the event that the ultimate delivery of the digital asset/

equity is called into question, or the likely value of the holding is deemed to be lower than initial cost,

the receivable will be impaired with such charge being taken through profit and loss.

Investments valued through Other Comprehensive Income

Certain balances which are classified as investments held by the Group represent carried interest

receivables on funds. Due to the lack of clarity around the timing of ultimate receipt of these

amounts, these investments are revalued through other comprehensive income until such a time

when the receivable is realised.

Impairment of financial assets measured at amortised cost

An impairment loss is recognised for the expected credit losses on financial assets when there is an

increased probability that the counterparty will be unable to settle an instrument’s contractual cash

flows on the contractual due dates, a reduction in the amounts expected to be recovered, or both.

The probability of default and expected amounts recoverable are assessed using reasonable and

supportable past and forward-looking information that is available without undue cost or effort. The

expected credit loss is a probability-weighted amount determined from a range of outcomes and

takes into account the time value of money.

The measurement of impairment losses depends on whether the financial asset is ‘performing’,

‘underperforming’ or ‘non-performing’ based on the Group’s assessment of increases in the credit

risk of the financial asset since its initial recognition and any events that have occurred before

the year-end which have a detrimental impact on cash flows. The financial asset moves from

‘performing’ to ‘underperforming’ when the increase in credit risk since initial recognition becomes

significant.

In assessing whether credit risk has increased significantly, the Group compares the risk of default

at the year-end with the risk of a default when the financial asset was originally recognised using

reasonable and supportable past and forward-looking information that is available without undue

cost. The risk of a default occurring takes into consideration default events that are possible within

12 months of the year-end (‘the 12-month expected credit losses’) for ‘performing’ financial assets,

and all possible default events over the expected life of those debtors (‘the lifetime expected credit

losses’) for ‘underperforming’ financial assets.

Impairment losses and any subsequent reversals of impairment losses are adjusted against the

carrying amount of the financial asset and are recognised in profit and loss.

For trade receivables, expected credit losses are measured by applying an expected loss rate to

the gross carrying amount. The expected loss rate comprises the risk of a default occurring and the

expected cash flows on a default based on the ageing of the debtor. The risk of a default occurring

always takes into consideration all possible default events over the expected life of those debtors.

Different provision rates and periods are used based on groupings of historic credit loss experience

by product type, customer type and location.

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Derecognition of financial assets

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 Group 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 profit and loss.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified according to the substance of the contractual arrangements

entered into. An equity instrument is any contract that evidences a residual interest in the assets of

the company after deduction of all its liabilities.

Financial liabilities are initially recognised at fair value, which is normally equivalent to transaction

price, less transaction costs.

Subsequent measurement

Subsequently the Group’s financial liabilities are classified into two categories:

• Financial liabilities measured at amortised cost; and

• Financial liabilities measured at fair value through profit or loss (‘FVTPL’).

Financial liabilities at amortised cost

Financial liabilities that are not (i) held for trading, or (ii) designated as at FVTPL, are measured

subsequently at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability

and of allocating interest expense over the relevant period. The effective interest rate is the rate that

exactly discounts estimated future cash payments (including all fees and points paid or received

that form an integral part of the effective interest rate, transaction costs and other premiums or

discounts) through the expected life of the financial liability, or (where appropriate) a shorter period,

to the amortised cost of a financial liability.

Financial liabilities at amortised cost held by the Group include loans payable with contractual

cashflows and lease liabilities.

Financial liabilities at fair value through profit or loss

Financial liabilities not held at amortised cost and whose business objectives are not achieved

through trading or contractual cashflows are measured at fair value through profit or loss.

Financial liabilities at fair value through profit or loss held by the Group include amounts due to the

holders of Group issued ETPs.

Liabilities arising in connection with ETPs issued by the Group referencing the performance of

digital assets are measured at fair value through profit or loss. Their fair value is a function of the

unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management

fees, measured as described in note 2.19.

The fair value basis is consistent with the measurement of the underlying digital assets which are

considered Level 1 under the fair value hierarchy.

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Derecognition of financial liabilities

Financial liabilities (or part thereof) are derecognised when, and only when, the Group’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.

2.22 Equity instruments

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

shares are shown in equity as a deduction from the proceeds.

During the year, the Company undertook a purchase of its own shares already in issue. The

consideration paid, including any directly attributable incremental costs, is deducted from equity

attributable to the owners as treasury shares until the shares are cancelled or reissued.

2.23 Related party transactions

The Group discloses transactions with related parties which are not wholly owned within the same

Group. Where appropriate, transactions of a similar nature are aggregated unless, in the opinion of

the directors, separate disclosure is necessary to understand the effect of the transactions on the

Group financial statements.

2.24 Adoption of new and revised Standards

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

From 1 January 2022, the Group has applied the below amendments to IFRS Standards and

Interpretations issued by the IASB that are effective for annual periods beginning from 1 January 2022:

• Annual Improvements to IFRSs 2018-2020 Cycle: Amendments to IFRS 1, IFRS 9, IFRS 16 and

IAS 41 – effective 1 January 2022

• Reference to the Conceptual Framework (Amendments to IFRS 3) – effective 1 January 2022

• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) –

effective 1 January 2022

• Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) – effective 1 January

2022

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

amounts reported in these financial statements.

New and revised IFRS Standards in issue but not yet effective

At the date of authorisation of these financial statements, the Group has not applied the following

new and revised IFRS Standards that have been issued and adopted by the UK Endorsement Board

but are not yet effective:

• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to

IAS 12) – effective 1 January 2023

• Definition of Accounting Estimates (Amendments to IAS 8) – effective 1 January 2023

• Disclosure of Accounting policies and Classification of Liabilities as Current or Non-current

(Amendments to IAS 1) – effective 1 January 2023

• Amendments to IFRS 17 Insurance Contracts – effective 1 January 2023

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The directors do not expect that the adoption of the Standards listed above will have a material

impact on the financial statements of the Group in future periods.

2.25 Judgements and sources of estimation uncertainty

The preparation of the Group financial statements requires management to make judgements,

estimates and assumptions in applying 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 significantly from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Critical Judgements

Accounting treatment of digital assets

In the absence of any specific accounting standard dealing with digital assets, the directors have

exercised critical judgement in classifying the Group’s digital assets, comprising principally of

cryptocurrency, as intangible assets. IFRS contains no explicit definition of the terms ‘cash’ or

‘currency’ but it is currently accepted practice under IFRS that cryptocurrency should not be

considered as such, this is on the basis that it lacks some of the common properties of cash and

currency. Digital assets do not meet the definition of a financial instrument because there is no right

to receive cash (or another financial asset), and classification as inventory is not appropriate because

the Group’s digital assets are not held for sale in the ordinary course of business. The Group holds

digital assets for the purpose of hedging and the directors have determined that the assets meet the

definition of an intangible asset under IAS 38 ‘Intangible Assets’. Refer to note 2.19 for further details

on the Group’s accounting policy.

Accounting treatment of ETPs

Certain of the Group’s ETPs, and other derivative contracts, are settled in digital assets and therefore

do not meet the definition of a financial instrument set out in IFRS 9. In all other respects they

operate in the same way as an equivalent contract settled in cash. The Group has determined that

the accounting policies for these contracts are the same as they would be for an equivalent contract

settled in cash and meeting the definition of a financial instrument.

Measurement of IFRS 16 lease liabilities and right-of-use assets

The directors have exercised a number of judgements in order to measure lease liabilities and right-

of-use assets under IFRS 16, including the determination of the lease term and discount rate. Note

20 provides further detail on these judgements. The carrying value of the lease liabilities and right-

of-use assets at the reporting date are shown on the face of the Statement of Financial Position and

note 12 respectively.

Provision for assets held at FTX

Due to the high degree of uncertainty around the recoverability of assets held on exchange at FTX,

the directors have judged that such amounts are to be provided against in full. This situation is

monitored regularly.

Key accounting estimates and assumptions

Valuation of investments

The fair value of financial instruments, including investments, that are not traded in an active market

is determined using valuation techniques. The Group uses its judgement to select a variety of

methods and make assumptions that are mainly based on market conditions existing at the end of

each reporting period. See note 15 for further information on how valuation has been applied.

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Share based payment costs

The fair value of share options under the employee incentive plan are estimated using the fair value

at the grant date. The fair value of share options is calculated using the Black-Scholes method and

incorporates a number of key estimations and assumptions. The share based payment expense

charged to profit or loss during the year and key inputs entered into the Black-Scholes model are

disclosed in note 24.

Useful life of intangible assets

The Group has intangible assets that are amortised over their useful lives. The useful life has been

estimated based on expected obsolescence of the assets that are amortised.

3. Operating segments

The Group comprises four core operating segments from which it earns both revenues/gains and

incurs expenses, being:

• Asset Management

• Capital Markets

• Principal Investments

• Consumer Solutions

The identification of operating segments is performed by management, who have identified that

such information needs to be reported separately on an ongoing basis to inform decision making

and assessment of performance. Each operating segment has its own segment head and identifiable

team/resources.

The accounting policies of the operating segments differ from those adopted by the Group as per

note 2, with fair value gains generated from digital assets classified as profit and loss movements

rather than movements through other comprehensive income. This treatment is consistent with that

of the Alternative Statement of Comprehensive Income.

Additionally, administrative expenses as per the Statement of Comprehensive Income are split within

the operating segments note between direct costs and other administrative expenses.

The Group does not monitor its assets and liabilities split by operating segment, but rather on a

consolidated basis.

This is the measure reported to the Group’s Chief Executive, being the Group’s chief operating

decision maker, for the assessment of segment performance.

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The following is an analysis of the Group’s revenue and results by reportable segment in the year ended 31 December 2022.

Asset

Management £

Capital

Markets £

Principal

Investments £

Consumer

Platform £

Other

Total

Revenue 50,090,889 309,109 - 936,684 -

51,336,682

Gain/(loss) on financial instruments 2,349,122,865 (630,235,617) - - -

1,718,887,248

(Loss)/gain on digital assets (2,349,122,865) 582,986,520 (3,283,109) - -

(1,769,419,454)

Investment losses - - (1,795,713) - -

(1,795,713)

Finance income - 12,916,891 - - -

12,916,891

Other operating income - 16,464,651 162,327 - -

16,626,978

Total revenue, gains

& other income

50,090,889 (17,558,446) (4,916,495) 936,684 - 28,552,632

Finance costs (16,807) (5,550,377) (718,517) (44,724) -

(6,330,425)

Direct costs (4,596,313) (2,975,042) (281,377) (814,358) -

(8,667,090)

Gross profit/(loss) 45,477,769 (26,083,865) (5,916,389) 77,602 - 13,555,117

Other admin expenses (4,029,522) (1,774,189) - (4,091,014) (19,639,283)

(29,534,008)

Operating profit/(loss) 41,448,247 (27,858,054) (5,916,389) (4,013,412) (19,639,283) (15,978,891)

Income tax expense

(368,674)

Exchange differences on translation of foreign operations

19,281,832

Total comprehensive income 2,934,267

Asset

Management £

Capital

Markets £

Principal

Investments £

Consumer

Platform £

Other

Total

Revenue 80,395,418 62,083 - 297,312 -

80,754,813

(Loss)/gain on financial instruments (2,527,462,402) 43,795,434 - - -

(2,483,666,968)

Gain/(loss) on digital assets 2,527,462,402 (7,906,148) 2,266,939 - -

2,521,823,193

Investment gains - - 7,366,363 - -

7,366,363

Finance income - 10,905,234 - - -

10,905,234

Other operating income - 14,378,339 287,036 - -

14,665,375

Total revenue, gains

& other income

80,395,418 61,234,942 9,920,338 297,312 - 151,848,010

Finance costs (16) (7,038,180) - (7,186) -

(7,045,382)

Direct costs (4,941,693) (3,459,103) (8,184) (206,888) -

(8,615,868)

Gross profit 75,453,709 50,737,659 9,912,154 83,238 - 136,186,760

Other admin expenses (7,524,946) (1,242,761) - (489,049) (14,186,636)

(23,443,392)

Operating profit/(loss) 67,928,763 49,494,898 9,912,154 (405,811) (14,186,636) 112,743,368

Income tax expense

(1,056,353)

Exchange differences on translation of foreign operations

1,756,423

Total comprehensive income 113,443,438

The following is an analysis of the Group’s revenue and results by reportable segment in the year ended 31 December 2021.

There is no geographical split of revenues, gains or other income required in assessing the operating segments of the Group. All operations

undertaken by the Group which generate such items are ultimately based in Jersey, with the exception of the Consumer Platform, which is

based in France. This analysis is already presented by means of the existing split provided within this note.

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4. Revenue and other income

The majority of the Group’s revenue is from management fees on ETPs issued by XBTP and CSDSL

and on the Block index.

The Group’s subsidiary, CoinShares France (‘CSF’), operates a range of consumer based programs

offering cryptocurrency trading technology and resources.

Revenue is also derived from the General Partner’s share for services provided to CoinShares Fund

II LP (‘CSF2LP’) (for which CoinShares GP II Limited (‘CSGP2L’), a subsidiary in the Group, acts as

General Partner), which in accordance with the Limited Partnership Agreement is one quarter of two

percent of the capital deployed per quarter.

Included within other operating income is a fee rebate on 1.75% management fee on the Group’s

position in 3iQ ETFs of £5,459,170 (2021: £6,568,922), rewards received from staking of tokens on

exchanges and DeFi activities of £8,041,736 (2021: £3,321,184) and airdrop income received in relation

to Ethereum PoW and Ethereum Fair as a result of the Merge event on the Ethereum blockchain, plus

Maple tokens and Luna 2.0 of £3,131,456 (2021: £3,886,068).

2022 £ 2021 £

Management fees

50,090,889

80,395,418

Consumer revenue

936,684

297,312

General Partner's Share

97,041

47,724

Other revenue

212,068

14,359

51,336,682

80,754,813

Other operating income

16,626,978

14,665,375

67,963,660

95,420,188

2022 £ 2021 £

Gain/(loss) on ETP liabilities

2,349,122,865

(2,527,462,402)

Gain on financial instruments settled through digital assets

20,619,173

22,061,763

(Loss)/gain on other financial instruments through profit

and loss

(650,245,345)

21,627,383

1,719,496,693

(2,483,773,256)

(Loss)/gain on other financial instruments through OCI

(609,445)

106,288

1,718,887,248

(2,483,666,968)

Fair value (loss)/gain on digital assets

(1,769,419,454)

2,521,823,193

(50,532,206)

38,156,225

5. Net (loss)/gain on digital assets and related financial instruments

2022 £ 2021 £

Fair value loss on digital assets through profit and loss

(1,226,595,255)

Impairment loss on digital assets

(3,715,693)

Fair value (loss)/gain on digital assets through OCI

(539,108,506)

2,521,823,193

(1,769,419,454)

2,521,823,193

Fair value (loss)/gain on digital assets comprises:

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The gain/(loss) on ETP liabilities represents the fair value movement in the intercompany collateral

obligation of the tracker certificates issued by XBTP and is recognised through profit and loss.

Gain on financial instruments settled through digital assets represents the proceeds received from

financial instruments that are settled in the underlying digital asset and is recognised through profit

and loss. See note 26 for further details.

(Loss)/gain on other financial instruments represents the proceeds received from financial

instruments settled in cash and is recognised through profit and loss.

Fair value (loss)/gain on digital assets represents the fair value movement in digital assets, held

principally as collateral for the Group’s financial obligations and is recognised through other

comprehensive income.

Included within administrative expenses of £38,201,098 (2021: £32,059,260), (see page 137) are

the following:

2022 £ 2021 £

Amortisation of intangible assets (see note 13)

1,769,632

874,180

Bad debt write off

99,009

523,833

Depreciation of property, plant and equipment

- owned assets (see note 12)

240,683

176,560

- right-of-use assets (see note 12)

872,526

219,289

Loss/(gain) on foreign exchange

128,522

(329,692)

Rent charged under operating leases

800,601

649,320

Low-value assets lease expense

6,674

4,145

Wages and salaries

12,565,471

14,927,892

Fees payable to the Company’s auditor for the audit of the

Group’s current year financial statements*

336,150

334,500

Additional fees payable to the Company’s auditor for the

audit of the Group’s prior year financial statements

23,500

50,000

6. Administrative expenses

2022 £ 2021 £

Short-term employee benefits

8,851,504

8,226,056

Share-based payments

968,237

1,329,738

9,819,741

9,555,794

7. Staff costs

2022 £ 2021 £

Short-term employee benefits

2,484,350

5,052,703

Share-based payments

261,380

319,395

2,745,730

5,372,098

8. Directors’ remuneration

*This figure also includes fees of £65,000 in relation to an independent review performed during the

year.

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The Group is subject to various corporation taxes as noted below. The parent company is subject to

tax at the rate of 0%.

2022 £ 2021 £

Financial instruments measured at amortised cost:

Interest on bank and broker deposits

227,381

Interest on other borrowings

3,306,828

4,305,523

Interest on amounts owed to brokers

3,009,380

2,509,388

Interest on lease liabilities

14,217

3,090

6,330,425

7,045,382

2022 £ 2021 £

Corporation tax

Current tax on results for the year

368,674

1,056,353

Taxation on ordinary activities 368,674

1,056,353

2022 £ 2021 £

Profit/(loss) on ordinary activities before income tax expense 520,584,738

(2,411,265,353)

Tax calculated at Jersey tax rate of 0% (2021: 0%)

Effects of:

Tax calculated at Jersey tax rate for regulated financial

service companies of 10% (incurred by CoinShares (Jersey)

Limited (‘CSJL’))

(23,796)

800,279

Tax calculated at Swedish tax rate of 22% (incurred by XBTP)

3,417

2,813

Tax calculated at UK tax rate of 19% (incurred by CoinShares

(UK) Limited (‘CSUK’), Elwood Asset Management Services

Limited (‘EASML’) and CoinShares Capital Markets (UK)

Limited (‘CSCMUKL’))

484,609

428,353

Tax calculated at French tax rate of 26.5% (incurred by CSF)

(95,556)

(175,092)

Total tax charge for the year 368,674

1,056,353

10. Finance costs

11. Taxation

2022 £ 2021 £

Financial instruments measured at amortised cost:

Interest from bank and broker deposits

1,615,666

Interest from other financial assets measured at amortised

cost (see note 26)

11,301,225

10,905,234

12,916,891

10,905,234

The Group earns interest income on fixed income lending activities undertaken by CSCMJL,

in addition to interest through bank deposits.

9. Finance income

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

There has been no change in applicable tax rates from the prior year.

The current tax liability at the year end is £235,814 (2021: £2,578,333).

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Right-of-use

property

assets £

Furniture and

Fittings

Office

Equipment

Total

Cost

At 31 December 2021 767,513 501,588 586,029

1,855,130

Additions - acquired separately 1,854,712 163,629 163,879

2,182,220

Additions - acquisition of subsidiary* 274,584 - -

274,584

Disposals - (19,464) (208,007)

(227,471)

Exchange differences 23,027 - 9,288

32,315

At 31 December 2022 2,919,836 645,753 551,189 4,116,778

Accumulated depreciation

At 31 December 2021 438,578 413,928 166,325

1,018,831

Charge for the year 872,526 97,532 143,151

1,113,209

Additions - acquisition of subsidiary* 66,791 - -

66,791

Disposals - (14,598) (16,686)

(31,284)

Exchange differences 10,718 - 2,651

13,369

At 31 December 2022 1,388,613 496,862 295,441 2,180,916

Net book value

At 31 December 2022 1,531,223 148,891 255,748 1,935,862

At 31 December 2021 328,935 87,660 419,704 836,299

12. Property, plant and equipment

All right-of-use assets for the periods reported relate to property rights obtained as part of lease

arrangements (see note 20).

* Additions disclosed are in relation to the acquisition of CSF during the prior year, but not

separately recognised until the current period.

2022

2021

Non-current digital assets

111,978

2,688,859

Current digital assets

868,922,517

2,761,629,509

(i) Total digital assets

869,034,495

2,764,318,368

(ii) Goodwill

943,484

6,412,800

(iii) Other intangible assets

11,048,448

11,685,861

881,026,427

2,782,417,029

13. Intangible assets

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Revaluation

Reserve £

Carrying

Amount £

Reconciliation of Digital Assets

At 31 December 2021 (2,799,097,469) 2,764,318,368

Net purchases/(sales) of digital assets 3,338,205,975 (401,409,806)

Fair value loss on digital assets (See note 5) (539,108,506) (1,765,703,761)

Gain on financial instruments settled through

digital assets (See note 26)

- 20,009,728

Exchange differences - 251,819,966

At 31 December 2022 - 869,034,495

(i) Digital assets

2022

Units

2021

Units

2022

2021

By Currency

Bitcoin

28,308

32,112

387,768,139

1,141,472,252

Ethereum

451,734

519,272

447,248,857

1,451,213,511

Litecoin

44,696

30,972

2,606,945

3,436,376

XRP

16,967,768

4,285,883

4,846,966

2,668,535

Other digital assets

26,563,588

165,527,694

869,034,495

2,764,318,368

2022

2021

By Venue

Custodian

772,807,015

1,736,849,348

Custody Platform

74,704,515

131,736,719

Exchange

20,368,749

711,679,760

Ledger

393,806

9,527,965

Other

760,410

31,713,718

Lending

142,810,858

869,034,495

2,764,318,368

Amounts accumulated in the revaluation reserve have no restrictions on being distributed to

shareholders. In practice however, this is unlikely because the majority of accumulated reserves

relate to assets held in order to hedge the liability which arises from the issuance of the Group’s

exchange traded products.

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(ii) Goodwill £

Cost

At 31 December 2021 6,412,800

Exchange differences 4,209

At 31 December 2022 6,417,009

Accumulated impairment losses

Impairment losses 5,473,525

At 31 December 2022 5,473,525

Net book value

At 31 December 2022 943,484

At 31 December 2021 6,412,800

2022 £ 2021 £

Level 1 digital assets

868,777,452

2,752,692,494

Level 2 digital assets

257,043

11,625,874

869,034,495

2,764,318,368

There have been no transfers of digital assets between fair value hierarchy levels.

The Group has classed digital assets under the fair value hierarchy as follows.

Goodwill impairment charges and reversal of impairment charges are recognised in administrative

expenses in the statement of comprehensive income.

An impairment loss of £5,473,524 has been recognised in relation to the goodwill generated upon

acquisition of CSF. Inclusive of its subsidiaries CSF is considered to be a single cash-generating unit

(‘CGU’).

Following the announcement on 10 December 2022 that HAL.trading (formerly Napbots) would

cease activity on 11 January 2023, it became probable that projected inflows from the CGU could be

affected.

The impairment loss was determined by comparing the recoverable amount to the carrying amount

of the CGU. Where the recoverable amount is deemed to be the higher of the value-in-use and fair

value, less costs required to dispose of the assets. It is not possible to calculate a reliable estimate for

fair value because the CGU is bespoke, and operating in volatile market conditions. The recoverable

amount of CSF is therefore considered to be its value-in-use of £230,145, which was estimated using

a discount rate of 7%.

Impairment losses are included in administrative expenses in the statement of profit and loss, and

relate to the consumer platform operating segment.

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(iii) Other intangible assets

2022 £ 2021 £

Business to Consumer

903,573

6,377,097

Broker Dealer

39,911

35,703

943,484

6,412,800

The carrying value of goodwill has been allocated to CGUs as follows:

The Group tests goodwill annually for impairment, or more frequently if there are indications that

goodwill might be impaired. Goodwill is impaired if the recoverable amount falls below the carrying

amount of the CGU in question.

The recoverable amount for a CGU is defined as the higher of fair value less costs of disposal or

value in use.

For the Business to Consumer CGU, the goodwill amount held as at 31 December 2021 was based

upon the consideration paid. During 2022, following the decision to cease our Business to Consumer

offering moving into 2023, an impairment review was undertaken and the carrying amount of

goodwill reduced by £5,473,524. The residual value of £903,573 relates to the value of the regulatory

licenses held by CoinShares France.

For the Broker Dealer CGU, the recoverable amount is considered to be reasonable due to the value

in use of relevant licenses being justifiable, and should the license be relinquished the costs involved

in replacing this would be in excess of this amount.

Fee Generating

Contracts £

Software £ Website

Domains and

Trademarks £

Total £

Cost

At 31 December 2021

12,180,776

307,485 74,153

12,562,414

Additions - acquired separately

558,447 143,035

701,482

Disposals

- (7,419)

(7,419)

Exchange differences

14,366 -

14,366

At 31 December 2022 12,180,776 880,298 209,769 13,270,843

Net book value

At 31 December 2022 10,055,049 794,114 199,285 11,048,448

At 31 December 2021 11,310,129 306,364 69,368 11,685,861

At 31 December 2021 870,647 1,121 4,785

876,553

Charge for the year 1,680,593 80,770 8,269

1,769,632

Disposals - - (2,570)

(2,570)

Exchange differences (425,513) 4,293 -

(421,220)

At 31 December 2022 2,125,727 86,184 10,484 2,222,395

Accumulated amortisation

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(i) Digital assets

2022

Units

2022

Bitcoin*

190 2,573,557

Ethereum*

1,000 1,012,776

Other digital assets

129,360

Total digital assets 3,715,693

14. Impairment loss on amounts held at exchanges

On 11 November 2022, the world’s largest cryptocurrency exchange, FTX, filed for Chapter 11

bankruptcy protection in the United States. The Group held digital assets and US Dollars with FTX

amounting to a total exposure of £25.5 million (US$31.4 million). As a result of significant uncertainty

surrounding the recoverability of these assets, an impairment loss has been recognised in other

comprehensive income in respect of the Group’s exposure.

The following table shows the amount of assets held and their valuation.

Amounts due from exchange

USDC

23,000,118 18,654,997

USD

3,121,327

Total amounts due from exchange 21,776,324

Total impairment loss 25,492,017

*The Bitcoin and Ethereum relate to pending withdrawals which were submitted prior to the halting

of withdrawals by FTX.

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31 December

2021

Additions/

(Disposals)

Investment

Gain/(Loss)

Transfers

between

levels £

31 December

2022

Level 1 Investments 131,068 (98,578) (32,254) -

236

Level 2 Investments 2,125,563 - 3,154,322 -

5,279,885

Level 3 Investments 20,783,729 28,520 (2,758,964) (8,725,450)

9,327,835

Total investments

held at fair value

23,040,360 (70,058) 363,104 (8,725,450)

14,607,956

Associates - 20,266,689 993,508 9,143,697

30,403,894

Joint ventures 649,157 - (230,910) (418,247)

Total investments

valued using the

equity method

649,157 20,266,689 762,598 8,725,450

30,403,894

Total investments 23,689,517 20,196,631 1,125,702 - 45,011,850

Investments

in Joint

Ventures

& Associates

Investments

in Listed

Equities

Other

Investments

Through

P&L £

Other

Investments

Through

OCI £

Total

At 31 December 2021 649,157 131,068 20,783,729 2,125,563

23,689,517

Additions 20,266,689 - 28,520 -

20,295,209

Disposals - (98,578) - -

(98,578)

Transfers 8,725,450 - (8,725,450) -

Fair value loss through

profit and loss

- (32,254) (2,768,170) -

(2,800,424)

Fair value gain through

other comprehensive

income

- - - 3,154,322

3,154,322

Share of associate and

joint venture losses

(2,149,611) - - -

(2,149,611)

Exchange differences 2,912,209 - 9,206 -

2,921,415

At 31 December 2022 30,403,894 236 9,327,835 5,279,885 45,011,850

15. Investments

(i) Third party investments

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Name Investee

Relationship

Fair Value

Hierarchy

Level

Ownership Jurisdiction Date of

Initial

Investment

CoinShares Fund II LP -

Carried Interest

Investment 2

Carried

interest

Jersey 09/02/2018

Gold Token SA

Associate N/A 22.54% Switzerland 08/08/2018

Komainu Holdings

Limited

Investment 3 14.24% Jersey 16/08/2019

SBG 1320, LLC

(Kingdom Trust)

Investment 3 16.00% USA 22/12/2020

3iQ Digital Asset

Management

Investment 3 9.85% Canada 31/12/2020

New Gen Minting LLC

(Viridi)

Investment 3 11.05% USA 09/05/2021

Choice Fintech Group

LLC

Investment 3 0.13% USA 07/06/2021

FlowB Holding

Switzerland SA

Associate N/A 28.31% Switzerland 02/10/2021

PlayDough

Technologies Limited

Investment 3 2.00% UK 22/10/2021

Syndica Inc.

Investment 3 SAFE USA 26/10/2021

RSS3

Investment 3 SAFTE Grand Cayman 15/12/2021

The Group has investments in the following entities:

All investments are held at fair value through profit or loss, with the exception of CoinShares Fund

II LP which is, by election at recognition, valued through other comprehensive income due to the

deferred and uncertain nature of the ultimate return.

During the period, Kingdom Services Holdings, LLC changed its name to Choice Fintech Group LLC.

There were no other investee name changes in the year.

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Associates

The Group had its position in Gold Token SA (‘GTSA’) diluted from 50% to 23% during the year. As

a result, the investment was reclassified from a joint venture to an associate and continues to be

valued under the equity method. GTSA was reclassified at a valuation of £418,245. Following the

Group’s recognition of GTSA’s performance for the year under the equity method, the carrying value

as at 31 December 2022 stands at £274,997.

During the year the Group contributed £20,268,153 to FlowB Holding Switzerland SA (‘FlowBank’)

and increased its stake to 29.3% of the issued share capital. As such, the investment was reclassified

as an associate and removed from level 1 in the fair value hierarchy, having previously been

categorised as an other investment held at fair value through profit and loss, to being valued using

the equity method. FlowBank was reclassified at a valuation of £8,725,450, following which the Group

increased its stake to 29.30% due to a further investment of £20,257,103 on 9 March 2023. Following

the recognition of FlowBank’s performance for the year under the equity method, the carrying

value as at 31 December 2022 stands at £30,128,896. The equity method of accounting was applied

consistently throughout the year.

For the period from 1 January 2022 to 9 March 2022, the company held 9.52% of the issued share

capital.

For the period from 9 March 2022 to 30 September 2022, the company held 29.30% of the issued

share capital.

For the period from 30 September 2022 to 31 December 2022, the company held 28.31% of the

issued share capital.

The fair value of FlowBank’s identifiable assets and liabilities on 1 January 2022 were:

1 January 2022 £

Cash and cash equivalents

46,131,395

Intangible assets

237,617

Other assets

63,725,072

Property, plant and equipment

5,383,107

Total assets 115,477,191

Trade payables and other liabilities

(90,693,888)

Total liabilities (90,693,888)

Total identifiable net assets 24,783,303

Our share of Flowbank's identifiable assets on 1 January 2022

2,360,315

Our additional share of net assets following increased stake

4,498,649

Our share of net assets 6,858,964

Fair value of investment on 1 January 2022

8,725,450

Cost of additional share purchases

20,277,646

Deemed consideration 29,003,096

Deemed goodwill 22,144,132

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The fair value of the investment as at 1 January 2022 is deemed to be the cost of initial investment.

The additional acquisition made during March 2022 increased the Group’s share of net assets to

£4,498,649, resulting in deemed goodwill of £22,144,132. There are no differences in asset valuation

or items held off balance sheet that would require any amendment to the share of net asset

calculation.

Flowbank’s statement of comprehensive income for the year from 1 January 2022 to 31 December

2022.

31 December 2022 £

Cash and cash equivalents

60,047,441

Intangible assets

162,331

Other assets

79,600,867

Property, plant and equipment

7,146,958

Total assets 146,957,597

Trade payables and other liabilities

(122,727,107)

Total liabilities (122,727,107)

Net assets 24,230,490

31 December 2022 £

Revenue

835,604

Loss after tax

(10,455,626)

Total comprehensive loss

(10,455,626)

Our share of total comprehensive loss (1,786,409)

Flowbank’s statement of financial position as at 31 December 2022.

31 December 2022 £

Flowbank’s net assets

24,230,490

Our share of Flowbank’s net assets (28.31%) 6,858,964

Deemed goodwill

22,144,132

Our share of Flowbank's loss for the period

(1,786,409)

Foreign exchange differences

2,912,209

Interest in associate 30,128,896

Reconciliation of Flowbank’s carrying value:

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Description Fair value

Unobservable

inputs

Input

amount

Input

range

Unlisted equities not

held at cost

9,312,422

Discount/premium

to NAV

0% -20% to 20%

AUM multiple 8% 5% to 10%

Discount factor on price

of recent investment

-37% -50% to 0%

Level 1 and 2 valuations and inputs

The finance department performs monthly valuations of the Group’s investments that are classified

as Level 1 and 2 within the fair value hierarchy, utilising market data (investments in listed equities)

and observable inputs (CoinShares Fund II LP – carried interest and investments held at cost or

price of recent investment that may subsequently be reclassified to Level 3). Discussions of valuation

processes and results are held between the Chief Financial Officer, Audit and Risk Committee and

the Board once every quarter, in line with the Group’s reporting periods.

Level 3 valuations and inputs

The finance department performs quarterly valuations of the Group’s investments that are classified

as Level 3, within the fair value hierarchy, utilising a range of observable and unobservable inputs.

Discussions of valuation processes and results are held between the Chief Financial Officer, Audit

and Risk Committee and the Board once every quarter, in line with the Group’s reporting periods.

The main Level 3 inputs used by the Group are derived and evaluated as follows:

• price of recent investment;

• earnings multiples, estimated based on market information for similar types of companies;

• AUM multiples, estimated based on market information for similar types of companies; and

• percentage ownership of net asset value of the investee company.

For the balance of £9,327,835 the following table summarises the quantitative information about the

significant unobservable inputs used in the Level 3 measurements.

Relationship between unobservable inputs and fair value

Decreasing all inputs to the lowest points of the given ranges would decrease fair value as at

31 December 2022 by £2,161,611.

Increasing all inputs to the highest point of the given ranges would increase fair value as at

31 December 2022 by £4,933,817.

Description Fair value £

Unlisted equities held at cost 15,413

Unlisted equities not held at cost 9,312,422

9,327,835

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The Company’s direct subsidiaries which make up the Group as at 31 December 2022 are as

follows:

Name Defined

Investee

Relationship

CSIL’s

Ownership %

Jurisdiction Date of

Acquisition

CoinShares (UK) Limited CSUKL Subsidiary 100% UK 19/04/2017

CoinShares (Holdings)

Limited

CSHL Subsidiary 100% Jersey 25/04/2017

XBT Provider AB (publ) XBTP Subsidiary 100% Sweden 25/09/2017

CoinShares GP II

Limited

CSGP2L Subsidiary 100% Jersey 09/02/2018

CoinShares Corporate

Services (Jersey) Limited

CSCSJL Subsidiary 100% Jersey 25/06/2018

CoinShares Co CSCo Subsidiary 100% USA 01/07/2018

CoinShares

Employment Services

(Jersey) Limited

CSESJL Subsidiary 100% Jersey 09/08/2018

CoinShares (Jersey)

Limited

CSJL Subsidiary 100% Jersey 26/09/2018

GABI Trading Limited

(Asia)

GTLA Subsidiary 100% Hong Kong 12/02/2019

CoinShares

Technologies Limited

CSTL Subsidiary 100% Jersey 30/06/2019

CoinShares Capital

Markets (Jersey) Limited

CSCMJL Subsidiary 100% Jersey 30/06/2019

CoinShares Capital

Markets (UK) Limited

CSCMUKL Subsidiary 100% UK 30/06/2019

CoinShares Capital, LLC CS Cap Subsidiary 100% USA 18/09/2019

CoinShares GP I LLC CSGPI Subsidiary 100% USA 20/03/2020

CoinShares Digital

Securities Limited

CSDSL Subsidiary 100% Jersey 30/06/2020

Elwood Asset

Management Services

Limited

EAMSL Subsidiary 100% UK 20/07/2021

Elwood Asset

Management LLP

EAMLLP Subsidiary 100% UK 20/07/2021

CoinShares France CSF Subsidiary 100% France 17/12/2021

CoinShares Asset

Management

CSAM Subsidiary 100% France 04/07/2022

(ii) Investments in subsidiaries

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2022

2021

Cash at bank

26,567,599

10,775,650

Amounts due from broker

161,967,077

118,975,658

188,534,676

129,751,308

Amounts due to broker

(135,384,786)

(292,706,977)

Total cash and cash equivalents 53,149,890

(162,955,669)

Lease liabilities

Balance at 31 December 2021

311,513

Net cash used in financing activities (1,079,297)

Additions 1,906,200

Effect of changes in foreign exchange rates 198,071

Balance at 31 December 2022 1,336,487

Changes in liabilities arising from financing activities

16. Cash and cash equivalents

Following an internal restructuring, Napoleon Asset Management SAS was acquired on 4 July 2022

as a component of the CoinShares France acquisition that occurred at the end of 2021. It was

subsequently renamed CoinShares Asset Management on 7 August 2022.

CoinShares (Holdings) Limited (‘CSHL’) was dissolved on 10 January 2023.

CoinShares Technologies Limited (‘CSTL’) (formerly GABI Capital Limited) was dissolved on 11

January 2023.

Elwood Asset Management Services Limited and Elwood Asset Management LLP were dissolved on

28 March 2023.

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2022

2021

Current

Accounts receivable

390,349

1,416,181

Amounts due from exchanges

10,072,308

15,419,993

Amounts owed by related parties (i)

32,450

500,591

Deposits paid

124,667

199,589

Other assets (ii)

249,112,630

1,045,550,562

Prepayments

473,964

255,724

VAT receivable

436,749

72,718

Total current 260,643,117

1,063,415,358

Non-current

Deposits paid

52,969

Deferred tax

753,083

Loans receivable (iii)

1,968,199

1,122,926

Total non-current 2,774,251

1,175,895

Total trade receivables and other assets 263,417,368

1,064,591,253

17. Trade receivables and other assets

(i) Amounts owed by related parties are unsecured, interest free, have no fixed date of repayment

and are repayable on demand. See note 29 for related party transaction disclosures.

(ii) Included in other assets are certificates in ETPs, valued at £168,334,836 (2021: £994,012,707),

used to provide exposure to digital assets and are held as a part of the Group’s collateral

management obligations. Also included is a receivable loan balance from Coinbase in the sum of

500 BTC plus accrued interest of 2.39 BTC. The loan bears interest at a rate of 5% and is repayable

on demand with no specified repayment date. The Group also has accrued interest receivable from

Virtu of 0.42 BTC in relation to a loan closed in November 2022.

The prior year other asset balance also included an amount issued by CSCMJL, being a loan to

Genesis Capital in the sum of US$50,000,000 (£36,963,384) plus accrued interest of US$297,260

(£219,755). The principal loan balance and accrued interest receivable from Genesis capital were

repaid on 13 June 2022 and 1 July 2022 respectively. Also included were OTC trade receivables of

£11,180,570 however these have been cleared to £nil at the year end.

(iii) A convertible loan note was issued to Finrate AG on 14 October 2021 for a principal amount of

CHF750,000 for a term of 24 months.

Expected credit losses

Credit risk is considered as part of the risk disclosures in note 27b). Management has undertaken

a review of the credit loss and calculated that the risk of credit loss to be minimal. When calculating

the value of this, the amount was below £100,000 and considered clearly trivial to the Group.

Management regularly reviews this position to ensure that this is reasonable for the Group.

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2022

2021

Current

Amounts due to exchanges

27,332,894

Amounts owed to related parties (i)

224,724

Accounts payable

1,081,702

1,187,268

Accrued liabilities

2,888,081

6,820,150

Certificate liability (ii)

986,707,490

3,308,728,916

Borrowings (refer to note 19)

27,116,746

161,381,478

Total current 1,017,794,019

3,505,675,430

18. Trade payables and other liabilities

Non-current

Borrowings (refer to note 19)

21,433,967

Total non-current 21,433,967

Total trade payables and other liabilities 1,039,227,986

3,505,675,430

(i) Amounts owed to related parties are unsecured, interest free, have no fixed date of repayment

and are repayable on demand.

The Group holds 265,951 (2021: 952,407) certificates in the Grayscale Ethereum Trust on behalf of

Aventus Protocol Foundation.

The Group does not receive any economic benefit for holding these certificates and the risks

associated with holding the certificates remain with Aventus Protocol Foundation. The directors of

the Group have elected to offset these transactions as they judge the inclusion in the statement of

financial position would misrepresent the position of the Group.

Off-balance sheet arrangement 31 December 2022

31 December 2021

Grayscale Ethereum Trust

1,046,208

22,784,149

Assets due to third parties

(1,046,208)

(22,784,149)

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2022

Number

2021

Number

2022

2021

Certificate type

Bitcoin Tracker One

3,623,578

4,061,699

212,792,525

693,740,612

Bitcoin Tracker Euro

459,701

548,341

266,534,307

936,292,807

Ether Tracker One

16,649,235

20,606,836

146,946,227

561,828,061

Ether Tracker Euro

2,774,973

3,546,603

242,649,103

966,612,832

CoinShares Physical Bitcoin

4,948,800

2,778,800

66,880,637

97,567,239

CoinShares Physical Ethereum

1,212,286

586,600

35,727,952

48,592,824

CoinShares Physical Litecoin

212,500

96,500

2,416,053

2,117,670

CoinShares Physical XRP

434,800

80,300

4,840,826

1,976,871

CoinShares Physical Staked

Polkadot

257,500

980,519

CoinShares Physical Staked

Tezos

453,000

1,402,567

CoinShares FTX Physical

Staked Solana

758,100

650,566

CoinShares Physical Chainlink

715,000

329,077

CoinShares Physical Uniswap

910,000

384,530

CoinShares Physical Staked

Cardano

8,265,000

1,764,189

CoinShares Physical Staked

Cosmos

193,000

774,317

CoinShares Physical Staked

Polygon

195,000

1,277,325

CoinShares Physical Staked

Algorand

245,000

356,770

986,707,490

3,308,728,916

During the year, the Group launched a CoinShares FTX Physical FTX Token (‘CFTT’) Digital Security

offering investor exposure to FTX Token (‘FTT’), the native token to the FTX digital asset exchange. As

a result of FTX entering Chapter 11 bankruptcy in November 2022 and resultant volatility surrounding

FTT, the Group suspended creations in CFTT on 14 November 2022 and suspended all redemptions

in CFTT on 18 November 2022. On 19 December 2022 all outstanding CFTT were compulsorily

redeemed for approximately $0.10 each, and distributed to ETP holders. Additionally, the CFTT seed

provided by Alameda Research was redeemed and the resulting FTT is being held by the Group.

(ii) Certificate liability

The certificates are held at fair value through profit or loss. The fair value of the certificates are

calculated with reference to market prices as defined in the relevant prospectus.

Reconciliation of certificates

At 31 December 2021 3,308,728,916

Creations of certificates 186,324,904

Redemptions of certificates (482,178,379)

Fair value movement on certificates through profit or loss (2,349,103,769)

Exchange differences 322,935,818

At 31 December 2022 986,707,490

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2022

2021

Reyl loan (i)

22,152,484

Kingdom Trust (ii)

9,572,412

25,136,053

Alameda Research (iii)

9,588,974

OTC Trades (iv)

4,307,428

20,819,392

Algorand Foundation (v)

2,039,791

STX Loan (vi)

357,467

3,383,258

FlowBank SA (vii)

273,312

Other borrowings

258,845

230,368

GAMA (viii)

110,890,152

GABI Ventures Limited (ix)

700,527

MKS (x)

221,728

48,550,713

161,381,478

Payable within one year 27,116,746

161,381,478

Payable in more than one year 21,433,967

19. Borrowings

(i) Following a loan arrangement made during the period by the Group for the further acquisition of

equity in FlowB Holding Switzerland SA, the Group has a loan balance to Reyl & Cle Ltd (Reyl Bank)

in the sum of CHF24,740,000 (£22,119,272) plus accrued interest of CHF41,914 (£33,212) (2021: £nil).

The loan bears interest at a rate equal to the interest base rate SARON 1 to 3 months, that cannot

fall below 0% per annum, plus a credit margin of 2.25% and internal costs of the Bank for making

the liquidity available to the Company during the entire loan duration with a minimum of 0.20% per

annum. The initial period of the loan is 12 months from the Disbursement Date, with the option to

renew for further 12 month periods until the ultimate maturity date of 10 March 2027.

The Group deposited collateral with Reyl Bank in the form of ETP certificates that amounted to a

market value as at 31 December 2022 of £124,585,188 (2021: £nil). The collateral according to the

terms and conditions of the loan will stay with Reyl Bank until the loan balance has been fully settled.

Custodial fees of 0.08% on the average value of the portfolio during the period are charged by Reyl

Bank on a quarterly basis on the ETP certificates provided.

(ii) The Group manages digital assets loaned from Kingdom Trust. The balance represents the

liability due to Kingdom Trust at the balance sheet date. This balance is hedged by digital assets held.

(iii) The balance represents the value of 10,000,000 certificates in CoinShares FTX Physical Staked

Solana which are held by the Group on behalf of Alameda Research, who contributed 1,000,000 SOL

of seed capital to the product and 1,000,000 FTX Token which was seeded into the CoinShares FTX

Physical FTX Token product. As described in note 18 all certificates were compulsorily redeemed,

resulting in the seed amount being payable to Alameda Research. This balance is hedged by digital

assets held.

(iv) The balance represents the sterling equivalent value of OTC liabilities in the course of settlement

at the balance sheet date. This balance is hedged by digital assets held.

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(v) The balance represents the value of 1,500,000 certificates in CoinShares Physical Staked

Algorand which are held by the Group on behalf of the Algorand Foundation, who contributed

15,000,000 ALGO of seed capital to the product. This balance is hedged by digital assets held.

(vi) The balance represents a loan with Stacks Open Internet Foundation of 2,000,000 STX tokens

(‘STX’) plus accrued interest of 59,795 STX (2021: 16,333 STX). The loan accrues interest at 2.5% per

annum. During 2022 the terms of the loan were automatically renewed for a further one year to 21

April 2023. This balance is hedged by digital assets held.

(vii) The balance represents digital assets held on behalf of FlowBank SA.

(viii) The loan balance with GAMA was repaid on 10 May 2022.

(ix) The balance represented the amount held in Bare Trust for the benefit of GABI Ventures Limited,

which was returned by 29 November 2022.

(x) The loan balance with MKS was repaid on 15 December 2022.

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Less than

1 year

1 to 5

years

Over

5 years

Total at 31 December

2022 £

Jersey property leases 101,157 - -

101,157

London property leases 885,132 - -

885,132

Paris property leases 326,846 29,044 -

355,890

1,313,135 29,044

1,342,179

20. Leases

Lease commitments for short-term leases at 31 December were as follows:

2022

2021

Serviced office lease

41,320

The group entered into a short-term lease contract for an office in New York on 1 May 2022 for

six months. This lease was extended by a further six months until 30 April 2023. The total expense

relating to short-term leases for the year was £81,108 (2021: £nil).

The maturity of gross contractual undiscounted cash flows due on the Group’s lease liabilities is

set out below based on the period between 31 December 2022 and the lease maturity date.

The Group leased the second and third floors of a property for its operations in Jersey, a property

for its operations in London and two properties for its operations in Paris during the period. The

movements in right-of-use assets obtained as a result of lease arrangements and their associated

depreciation charges are disclosed in note 12.

The lease for the second floor of the property in Jersey commenced on 1 January 2019 and has a

contractual end date of 23 June 2023. The lease for the third floor commenced on 1 December

2017 and has a contractual end date of 1 June 2023. The directors had the option to shorten the

lease term for both floors to an end date of 1 January 2021 which was not exercised. The directors

had no intention of exercising this break clause option on the transition date. The IFRS 16 lease

accounting for both leases was therefore on the basis of future cash flows on rental payments up

to the respective contractual lease end dates of 23 June 2023 and 1 June 2023.

On 18 January 2022 the Group entered into an agreement with Brevan Howard Asset Management

LLP for the underlease of 82 Baker Street, London, W1U 6TE. The lease term is two years,

commencing on 1 January 2022 to 31 December 2023. Total rent per annum of £788,647 comprises

rent of £705,525 and rentalised works of £83,122.

CSF leased an office in Paris, 11 rue Paul Lelong, at the point of acquisition in 2021 and continued

to do so throughout 2022. The lease was separately recognised in the current period and has a

contractual end date of 4 April 2023. CSF also entered into a lease agreement for a property in

Paris at 25 rue du 4 Septembre on 1 August 2022, with a contractual end date of 31 August 2023.

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Jersey

property

leases £

London

property

leases £

Paris

property

leases £

Total

At 31 December 2021

311,513

- -

311,513

Additions - 1,508,262 569,183

2,077,445

Repayments (211,876) (633,013) (234,408)

(1,079,297)

Interest expense 1,425 7,521 5,271

14,217

Exchange differences - - 12,609

12,609

At 31 December 2022 101,062 882,770 352,655 1,336,487

Reconciliation of lease liabilities

The Group has an operating lease arrangement in which it acts as a lessor in relation to office

space sub-leased to a related party. The lease agreement includes a 2 month break clause option

which is exercisable by either party.

2022

2021

Within one year

22,000

Maturity analysis of operating lease payments:

2022

2021

Operating lease rental income

132,000

During the year, the Group received lease income on operating leases amounting to:

Allotted, called-up and fully paid

2022

Number

2021

Number

2022

2021

Shares classified as equity

Ordinary shares of £0.000495 each

68,213,821

33,766

68,213,821

33,766

21. Share capital

2022 £ 2021 £

Share premium 30,781,210

30,781,210

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All share premium balances relate to the issue of ordinary shares. There has been no movement in

the share premium during the year.

Ordinary shares issued and allotted are accounted for as equity. These shares confer on the

holders the right to vote and 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. The

Company is authorised to issue 200,000,000 shares.

Movements in share capital during the year

There has been no movement in the value of share capital in issue during the year.

During the year the Group purchased 78,396 shares on the public market for a total consideration

of £228,383. The shares are held in the Treasury Share Reserve, included within other reserves

(See note 22), until they are cancelled or sold back to the market.

There were no other movements in share capital during the year.

Movements in share capital during the prior year

On 11 March 2021 the Company issued 3,364,403 ordinary shares in an initial public offering for a

consideration of £12,766,244, generating share premium of £12,764,579.

On 5 July 2021 1,298,322 additional shares were issued as consideration for the purchase of Elwood

Asset Management Services Limited. The value of these shares was deemed to be £12,278,979,

generating additional share premium of £12,278,336.

On 17 December 2021 363,636 additional shares were issued as consideration for the purchase

of Napoleon. The value of these shares was deemed to be £3,351,405, generating additional share

premium of £3,351,225.

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22. Reserves

Included within other reserves in the Group are the following:

Revaluation

Reserve

Foreign

Exchange

Translation

Reserve £

Option

Reserve

Treasury

Reserve

Total

At 31 December 2021 (2,799,097,469) 49,527 1,957,579

(2,797,090,363)

Exchange differences

on translation of

foreign operations

- 19,281,832 - -

19,281,832

Fair value losses on

digital assets

(539,108,506) - - -

(539,108,506)

Share based payments - - 1,229,617 -

1,229,617

Share buybacks - - - (228,383)

(228,383)

Share option

liquidations

- - (153,900) -

(153,900)

Transfers to

retained earnings

3,338,205,975 - - -

3,338,205,975

At 31 December 2022 - 19,331,359 3,033,296 (228,383) 22,136,272

The nature and purpose of each reserve in equity is described as follows:

Share premium

The share premium account represents the premium paid on the issue of ordinary shares in excess

of their nominal value.

Retained earnings

The retained earnings reserve contains the Group’s cumulative profit or loss, net of distributions to

owners. Net cumulative gains on financial instruments and investments held at fair value through

other comprehensive income are shown in retained earnings.

Revaluation reserve

Net cumulative gains on digital assets held at fair value through other comprehensive income are

shown in the revaluation reserve. When digital assets are disposed of, the gains associated with those

assets in the revaluation reserve are transferred to retained earnings.

Foreign exchange translation reserve

Foreign exchange gains and losses on translation of the results and net assets of the Group’s foreign

operations accumulate in the foreign exchange translation reserve. On disposal of foreign operations, the

cumulative translation gains and losses in respect of those operations are recycled through profit or loss.

Share option reserve

The share option reserve represents the cost of the Group’s cumulative unexercised share options.

Once options are exercised, the cumulative expense in relation to those options is transferred to

retained earnings.

Treasury share reserve

The treasury share reserve represents the considerations paid by the Group to repurchase its own

shares until such a time that the shares are cancelled or sold back to the market.

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23. Earnings per share

As more fully disclosed in note 24, share options were issued during previous years, which had a

dilutive effect. The Group made a loss in the prior year, therefore the share options are antidilutive

and have not been included in the calculation of diluted earnings per share.

The directors have also chosen to present the earnings per share calculated using total

comprehensive income in the place of loss after income tax expense. It is the opinion of the directors

that this is more representative of the Group’s financial performance due to the inclusion of the fair

value gains on digital assets recognised through other comprehensive income.

The calculation of the basic and diluted earnings per share is based on the following data:

2022 £ 2021 £

Basic earnings per share 7.63

(36.24)

Diluted earnings per share 7.21

(36.24)

2022 Number 2021 Number

Number of shares

Weighted average number of ordinary shares for the

purposes of basic earnings per share

68,184,833

66,557,294

Weighted effect of dilutive potential ordinary shares:

Share options

3,955,200

3,365,468

Weighted average number of ordinary shares for the

purposes of diluted earnings per share

72,140,033

69,922,762

2022 £ 2021 £

Adjusted earnings

Earnings for the purposes of basic earnings per share

being total comprehensive income attributable to

owners of the Company

2,934,267

113,443,438

Earnings for the purposes of diluted earnings per share

2,934,267

113,443,438

2022 £ 2021 £

Adjusted basic earnings per share 0.04

1.70

Adjusted diluted earnings per share 0.04

1.62

2022 £ 2021 £

Earnings

Earnings for the purposes of basic earnings per share

being net profit/(loss) attributable to owners of the

Company

520,216,064

(2,412,321,706)

Earnings for the purposes of diluted earnings per share 520,216,064

(2,412,321,706)

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24. Share-based payments

Equity-settled share option plan

The establishment of the employee incentive share plan was approved by the board on 16 October

2020. The employee incentive share plan is designed to provide long-term incentives for employees

and managers to deliver long-term shareholder returns. Under the plan, participants are granted

options which only vest if certain performance criteria are met. Participation in the plan is at the

board’s discretion, and no individual has a contractual right to participate in the plan or to receive

any guaranteed benefits.

Performance based options:

The performance based options in issue by the Group vest when indicators of Group performance

meet criteria defined in the options certificate. External indicators include growing firmwide AUM,

increasing the number of ETP certificates in issue and the customer count. Internal metrics such as

measures of team performance are also used to track if the vesting criteria are being met.

The options have an exercisable period of 10 years from the vest date.

Time based options:

There are two separate options in issue. Some of the time based options in issue by the Group have

a vesting period of between 2-3 years from the issue date and expire 10 years from the vesting date.

Other options issued in March 2021 vest in 8 equal tranches, on a quarterly basis, over a two year

period.

Share option liquidation scheme

Share options were repurchased from employees during the year under a scheme operated to allow

the voluntary early liquidation of share options. 171,000 options were liquidated during the period for

a total consideration of £207,544 (See note 29).

Details of the share options outstanding during the year are as follows:

Performance Based Options

2022 2021

Number

of share

options

Weighted

average

exercise price £

Number

of share

options

Weighted

average

exercise price £

Outstanding at beginning of year 1,944,600 1.43 1,944,600 1.43

Liquidated during the year (171,000) 1.43 - -

Outstanding at the end of the year 1,773,600 1.43 1,944,600 1.43

Exercisable at the end of the year 1,773,600 1,156,198

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2022 2021

Number

of share

options

Weighted

average

exercise price £

Number

of share

options

Weighted

average

exercise price £

Outstanding at beginning of year 1,546,977 1.43 1,011,320 1.43

Granted during the year 690,402 6.73 557,433 8.33

Forfeited during the year (34,522) 6.35 (21,776) 1.43

Outstanding at the end of the year 2,202,857 4.33 1,546,977 3.88

Exercisable at the end of the year 160,552 68,808

Time Based Options

No options were exercised during the current or prior year.

In 2022, time based share options were granted on 18 March and 8 June. The aggregate of the

estimated fair values of the options granted on those dates is £1,749,735.

The options outstanding at 31 December 2022 had a weighted average exercise price of £4.33 and a

weighted average remaining contractual life of 1.0 years.

In 2021, share options were granted on 11 March and 20 April. The aggregate of the estimated fair

values of the options granted on those dates is £1,767,589.

Grant date Exercise price £

November 2020 1.43

March 2021 3.82

April 2021 8.02

March 2022 6.58

June 2022 9.12

The fair value of the options issued during the year at the grant date was calculated using the Black-

Scholes methodology. The method takes into account the exercise price, the term of the option, the

share price at the grant date, the expected volatility of the underlying share, the expected dividend

yield, the risk-free interest rate for the term of the option and the correlations and volatilities of peer

group companies.

Expected volatility was estimated by taking the average value from comparable companies also

operating around digital assets.

The total share-based payment expenses for the year are £1,229,617 (2021: £1,649,133). All amounts

are equity settled and there are no liabilities in relation to share-based payment transactions

outstanding at the reporting date (2021: £nil).

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Defined contribution plans

The Group operates defined contribution retirement benefit plans for all qualifying employees. The

assets of the plans are held separately from those of the Group in an independently administered

fund.

The total expense recognised in profit or loss of £39,231 (2021: £6,103) represents contributions

payable to these plans by the Group at rates specified in the rules of the plans. As at 31 December

2022, contributions of £nil (2021: £nil) due in respect of the year were outstanding and included in

accrued liabilities.

25. Retirement benefit plans

The table below sets out the classifications of the carrying amounts of the Group’s financial

assets and financial liabilities. Non-current asset investments classified and accounted for as

financial instruments are disclosed separately in note 15.

26. Financial instruments

2022 £ 2021 £

Financial assets measured at amortised cost

Accounts receivable

390,349

1,416,181

Amounts due from brokers

161,967,077

118,975,658

Amounts due from exchanges

10,072,308

15,419,993

Amounts owed by related parties

32,450

500,591

Cash at bank

26,567,599

10,775,650

Deposits paid

177,636

252,558

Other assets

26,243,371

26,613,331

Loans receivable

1,968,199

1,122,926

227,418,989

175,076,888

2022 £ 2021 £

Financial assets measured at fair value

through profit or loss

Exchange traded products

239,881,541

994,012,707

Loans receivable

7,614,923

11,181,336

247,496,464

1,005,194,043

2022 £ 2021 £

Financial assets measured at fair value

through other comprehensive income

Digital asset receivables

21,845

444,537

21,845

444,537

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2022 £ 2021 £

Financial liabilities measured at amortised cost

Accounts payable

1,081,702

1,187,268

Amounts due to brokers

135,384,786

292,706,977

Amounts due to exchanges

27,332,894

Amounts owed to related parties

224,724

Loans payable

17,371,578

125,810,226

Lease liabilities

1,336,487

311,513

155,174,553

447,573,602

2022 £ 2021 £

Realised gain on financial instruments

Loss on perpetual contracts settled through digital

assets (i)

(14,851,565)

(15,292,128)

Gain on other financial instruments settled

through digital assets (i)

34,861,293

37,460,179

Total gain on financial instruments settled

through digital assets

20,009,728

22,168,051

Gain/(loss) on other financial instruments (ii)

1,720,653,844

(2,505,835,019)

Total gain/(loss) on financial instruments

1,740,663,572

(2,483,666,968)

2022 £ 2021 £

Financial liabilities measured at fair value

through profit or loss

Certificate liability

986,707,490

3,308,728,916

Loans payable

20,655,417

35,571,252

1,007,362,907

3,344,300,168

The carrying value of the Group’s financial assets and financial liabilities measured at amortised

cost is not materially different to their fair value.

The table below sets out the individual components of the Group’s realised gain on financial

instruments.

(i) Gain/(loss) on financial instruments through perpetual and other contracts are settled in the

underlying digital asset in which the contract is denominated.

(ii) Gain/(loss) on other financial instruments are cash settled and do not impact the Group’s digital

asset balance.

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Financial instruments settled through digital assets

The Group has entered into perpetual and futures contracts with digital asset exchanges. These

contracts offer synthetic exposure to digital assets while reducing working capital requirements.

A perpetual futures contract is a derivative product that is similar to a traditional futures contract, but

has a few differing specifications:

1. There is no expiry or settlement; and

2. Perpetual contracts mimic a spot market and hence trade close to the underlying digital asset

price. This is in contrast to a traditional futures contract which usually trades at a different price

due to the time basis or time until maturity of the contract. The primary mechanism to tether

the perpetual futures contract to the spot price is an interest funding mechanism.

The following table shows the exposure at the year end for financial instruments settled through

digital assets, taking into account the underlying digital asset price and number of contracts held at

the year end.

2022

Number

2021

Number

2022

2021

Perpetual Contracts

BTC exposure

(2,722)

(96,798,762)

ETH exposure

(29,513)

(82,493,333)

Other digital asset exposure*

(13,835,734)

Futures Contracts

BTC exposure

(211)

(7,478,012)

ETH exposure

(39)

(108,367)

(200,714,208)

* Refers to the exposure in relation to a mixed basket of other digital asset perpetual contracts.

27. Financial risk management objectives and policies and capital

management

The Group invests in a portfolio of digital assets and derivatives on a non-directional risk basis

to generate a return, which matches its financial obligations to certificate holders. In pursuing

its investment objective, the Group invests in digital assets and has a liability exposure towards

certificate holders linked to digital assets, as well as the specific operational risks to trading and

holding digital assets.

The following sets out a description of the principal risks inherent in the activities of the Group along

with the action taken to manage these risks.

a) Market risk

i) Currency risk

The Group seeks to mitigate currency risk primarily experienced within its subsidiary CSCMJL.

CSCMJL automatically converts amounts received in EUR and SEK from the sale of certificates by

investors to US$. US$ is the functional currency of CSCMJL which automatically converts US$ to

EUR and SEK as required to facilitate the redemption of notes. From time to time CSCMJL may

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hold small currency balances in currencies other than US$ to facilitate operational expenses and

occasionally holds EUR on a temporary basis for the purchase of digital assets. On the basis of

the above information, the Group believes currency risk is not material. Currency risk in CSCMJL

represents the most significant area of risk for the Group as a whole. However, given the functional

and presentational currency of the Group is Pound Sterling, additional foreign currency movements

arise on consolidation and with equity accounting of its foreign operations (as defined under IAS21)

which result in movements through other comprehensive income.

ii) Interest rate risk

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

prevailing levels of market interest rates.

The Group has entered into a loan arrangement with a variable interest rate based on the base rate

SARON 1 to 3 months. The directors have determined that as there is one loan, that this risk of the

interest rate moving against the Group is acceptable. The loan renews for periods of 12 months at

a time, so if the risk were determined to be too great, the Group could exit the arrangement, using

other assets to pay the loan if necessary.

The majority of the Group’s other financial assets and liabilities are either non-interest bearing, or

at a fixed interest rate and as a result, the Group is not subject to significant amounts of risk due to

fluctuations in the prevailing levels of market interest rates.

The directors have considered the impact of an adverse movement in the SARON 1 to 3 months

interest base rate. A 1% increase in the base rate would increase the Group’s annual interest cost in

relation to the Reyl Loan to £913,780 (CHF 1,041,554) and does not create any going concern issues.

iii) 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

Group and the fair value of the liabilities of the Group towards certificate 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.

The Group does hold some strategic digital asset balances for its own account over and above

the amounts required to hedge its obligations. Movement in digital asset prices is illustrated in the

sensitivity analysis presented in note 27e.

Reports are circulated every ten minutes showing the net digital asset exposure. In addition, the net

exposure is constantly monitored, being the number of digital assets held versus the number of

currencies required to cover the exposure towards certificate holders.

iv) Risk of access to banking services

The banking landscape and availability of banking partners for participants within the digital asset

industry is ever evolving, as has been evidenced by events following the financial year end. The

Group has a variety of banking partners and is continually seeking additional, suitable partners to

further mitigate the risk of over-reliance on a single or limited number of counterparties.

The operations of the Group are reliant on the availability of efficient payment rails, particularly

in the requirement to perform the hedging activities associated with the Group’s XBTP ETPs. No

issues have arisen to date arising from banking capabilities that have proven to have a significant

operational impact on the Group, and the continued expansion of our banking relationships is

designed to ensure that this remains the case as we continue to grow.

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b) Credit risk

Credit risk is the risk that an issuer, counterparty or exchange will be unable or unwilling to meet a

commitment, obligation under a financial instrument or contract that it has entered into with the

Group, leading to a financial loss, or lack of liquidity and restriction of access to the Group’s assets.

The Group is exposed to credit risk due to the range of counterparties with which it is required to

interact.

Certain transactions that the Group may enter into exposes it to the risk that the counterparty will not

deliver the asset (purchase) or cash (sale) after the Group has fulfilled its responsibilities. The Group

only transacts with brokers which have been approved by the Group as acceptable counterparties.

Digital assets and exchanges

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. Following

the Terra de-pegging and FTX collapse the Group has actively reduced its level of exposure to

all counterparties and is implementing a range of new controls, policies and procedures around

the trading and holding of digital assets on exchange. The reduction of this exposure has led to a

significant increase in the assets held in cold storage to 85% (2021: over 56%). Additional measures

undertaken by the Group include enhanced on-boarding, compliance and risk reviews and/or

utilising exchanges which are audited and report sufficient liquid positions (LMAX and Coinbase).

This is designed to ensure only reputable, long-standing and mature exchanges are used.

It is necessary for operational reasons to keep a balance with exchanges in order to purchase,

transfer and swapdigital assets, as required to match the asset/liability exposure. The Group

ensures that the only cash balances held on exchange are those required for the immediate trading

associated with the XBTP products.

For the CSDSL products, digital assets are held securely with a custodian until redemptions are

requested. Exchanges are used only when a creation or redemption has been requested.

The total credit risk exposure to the Group arising from balances held with exchanges is as follows:

Financial instruments and cash deposits

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

controlled by the finance department in accordance with Group policy. Transactions that involve

surplus cash inflows and outflows are only with approved counterparties and brokers within credit

limits that have been agreed between the parties. The credit limits are reviewed by the compliance

team and agreed upon by the Board of Directors on an annual basis. The limits are set to minimise

the concentration of risks and therefore mitigate financial loss. Furthermore, regular risk reviews are

performed over the use of the banks and brokers to manage credit risk.

2022 £ 2021 £

Digital assets

20,368,749

711,679,760

Cash and cash equivalents

10,072,308

15,419,993

30,441,057

727,099,753

Current asset exposure

18%

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Transactions that expose the Group to the risk that the counterparty will not deliver the asset

(purchase) or cash (sale) after the Group has fulfilled its responsibilities, is managed through

brokers which have been approved by the Group as acceptable counterparties. Low credit risk

counterparties include Signature Bank and Interactive Brokers LLC. Interactive Brokers LLC’s credit

rating is A- with a stable outlook and Signature Bank is Baa2 with a stable outlook.

The Group also has receivables as a result of loans. Developments in the digital asset industry in

2022 have resulted in an elevated level of counterparty risk. The Company only enters into loans with

reputable counterparties and in the case of digital asset loans these are all recallable on demand.

The Company therefore does not expect to incur material losses with these loans.

Certain transactions that the Group may enter into exposes it to the risk that the counterparty will not

deliver the asset (purchase) or cash (sale) after the Group has fulfilled its responsibilities. The Group

only transacts with brokers which have been approved by the Group as acceptable counterparties.

The carrying amount of the financial assets best represents the maximum exposure to credit risk.

The carrying amount is £227,418,989 (31 December 2021: £175,076,888).

The Group also has receivables as a result of loans (see note 17). In the case of loans, the Group

has been provided with collateral such as digital assets against the loans, meaning that should the

counterparty be unable to meet its commitment, the Group has assets which it would then have

available to use. The Group therefore does not expect to incur material losses with these loans.

Included in other assets disclosed in note 17 are shares in ETPs, valued at £168,334,836 (2021:

£994,012,707) used to provide exposure to digital assets and are held as a part of the Group’s

collateral management obligations. These ETPs are fully collateralised and management maintains

regular communications with their operators. The ETPs are regulated and audited.

c) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations associated

with financial liabilities, in particular towards certificate holders.

The following maturity analysis shows that liquidity risks are dealt with through matching the maturity

of the assets and liabilities.

Carrying amount as at

31 December 2022 £

On demand

Less than

3 months £

Current assets

Accounts receivable 390,349 - 390,349

Amounts due from brokers 161,967,077 161,967,077 -

Amounts due from exchanges 10,072,308 10,072,308 -

Amounts owed by related parties 32,450 32,450 -

Cash at bank 26,567,599 26,567,599 -

Digital assets* 868,922,517 868,922,517 -

Other assets 250,148,010 127,751,961 121,556,502

Total current assets

1,318,100,310 1,195,313,912 121,946,851

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Carrying amount as at

31 December 2022 £

On demand

Less than

3 months £

Current liabilities

Accounts payable 1,081,702 1,081,702 -

Accrued liabilities 2,888,081 - 2,888,081

Amounts due to brokers 135,384,786 135,384,786 -

Amounts due to exchanges - - -

Amounts owed to related parties - - -

Certificate liability 986,707,490 986,707,490 -

Current tax liability 235,814 - -

Lease liabilities 1,307,507 - 373,835

Loans payable 27,116,746 27,116,746 -

Total current liabilities

1,154,722,126 1,150,290,724 3,261,916

Net current assets 163,378,184 45,023,188 118,684,935

Carrying amount as at

31 December 2021 £

On demand

Less than

3 months £

Current assets

Accounts receivable 1,416,181 - 1,416,181

Amounts due from brokers 118,975,658 118,975,658 -

Amounts due from exchanges 15,419,993 15,419,993 -

Amounts owed by related parties 500,591 500,591 -

Cash at bank 10,775,650 10,775,650 -

Digital assets* 2,761,629,509 2,761,629,509 -

Other assets 1,046,078,593 846,193,614 198,148,410

Total current assets

3,954,796,175 3,753,495,015 199,564,591

Carrying amount as at

31 December 2021 £

On demand

Less than

3 months £

Current liabilities

Accounts payable 1,187,268 1,187,268 -

Accrued liabilities 6,820,150 - 6,820,150

Amounts due to brokers 292,706,977 292,706,977 -

Amounts due to exchanges 27,332,894 27,332,894 -

Amounts owed to related parties 224,724 224,724 -

Certificate liability 3,308,728,916 3,308,728,916 -

Current tax liability 2,578,333 - -

Lease liabilities 210,356 - 52,969

Loans payable 161,381,478 161,381,478 -

Total current liabilities

3,801,171,096 3,791,562,257 6,873,119

Net current assets 153,625,079 (38,067,242) 192,691,472

*As disclosed in note 2 digital assets are not financial instruments however there is an active market

and they are readily realisable on demand.

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Pursuant to contractual agreements between certificate holders and the Group, the Group is

providing hedging services to certificate holders by buying digital assets to match the liabilities of the

Group.

Liquidity issues could arise as a result of the redemption of certificates. In this case, the Group would

be required to have sufficient liquidity to finance the redemption of the certificates. The prospectus

and final terms for each series of notes issued by XBTP define the formula at which the certificates

can be redeemed based on an average of the price of the reference digital assets on three different

exchanges to provide the contractual exposure defined in the final terms.

The terms and conditions of the certificates include provisions under which, upon the occurrence

of certain market disruptions, delays in the settlement of the certificates may be incurred or certain

modifications be made. Each certificate holder may exercise the holder put option and have their

certificates redeemed on the tenth business day following the end of the calendar month after the

month of the exercise of the notice, in case the calculation agent determines that an asset disruption

event has occurred, the certificates’ redemption will be postponed until the asset disruption event

ceases. These contractual provisions would also act as liquidity risk mitigating factor for the Group.

In the first instance, the cash held at brokers, and then the cash at bank would be used, while the

proceeds from the sale of the digital assets would be transferred to pay the noteholders.

Liquidity would thereafter be generated by trading the digital assets already held at the exchanges.

The float of digital assets held at the exchanges is monitored in real time by the trading team to

make sure that the float is sufficient to deal with possible redemption requests. When the trading

team believes that more digital assets are required, digital assets held in cold storage with Komainu

and Zodia (2021: Komainu) are transferred within 48 hours to the exchanges. Conversely, when

the amount of digital assets held at exchange is in excess of the liquidity requirements, then digital

assets are transferred to cold storage with Komainu and Zodia (2021: Komainu).

The liquidity risk is further mitigated by only holding the most liquid digital assets, Bitcoin and

Ethereum, for the purpose of hedging the notes.

For the securities held by CSDSL, liquidity issues could arise as a result of the redemption of

securities, however only if these were to be redeemed in cash rather than in digital asset. The

prospectus defines when this could occur, but is the exception rather than the rule. In this case,

the Group 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 Group ensures that it holds the relevant digital asset at all

times to be able to meet these redemptions.

d) Capital risk management

The capital of the Group is represented by the net assets attributable to ordinary shareholders. The

Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going

concern in order to provide returns for shareholders and benefits for other stakeholders and to

maintain a strong capital base to support the development of the investment activities of the Group.

This is achieved through actively managing the Group’s Bitcoin, Ethereum and related products.

For the purpose of the Group’s capital management, capital includes issued share capital, share

premium and all other equity reserves attributable to the equity holders of the parent. The primary

objective of the Group’s capital management is to maximise the shareholder value.

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The Group manages its capital structure and makes adjustments in light of changes in economic

conditions and the requirements of the financial covenants. To maintain or adjust the capital

structure, the Group may adjust the dividend payment to shareholders, return capital to

shareholders or issue new shares.

The Group monitors capital using a gearing ratio, which is ‘net debt’ divided by total capital plus net

debt. The Group has minimal debt and has a policy of keeping the gearing ratio as low as possible.

No changes were made in the objectives, policies or processes for managing capital during the

years ended 31 December 2022 and 2021.

e) Operational risk

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 Group would be the inability to provide the contractual hedge

through either systems failures or continuity planning issues. The risk is mitigated through the use

of a highly secure algorithmic trading platform hosted in the cloudto mitigate the risk of human

error. The business continuity plan was tested, and demonstrated that the traders can perform their

work from anywhere.

The Group has controls designed to monitor transactions, and flag any possible inconsistencies in

trading, acting as further mitigating factors for human error.

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

and Zodia (2021: Komainu), providing a cold storage vault. Komainu has a SOC 1 Type 2 report, the

latest covering the period from 1 January 2021 to 30 November 2021, which was independently

reviewed by PricewaterhouseCoopers CI LLP and authorised for issue on 19 August 2022. A SOC

1 Type 2 Report covering Komainu’s control framework in 2022 is in progress. Zodia currently has

a SOC 1 Type 1 report and a SOC 1 Type 2 report is in progress and expected to be completed in

Q2 2023. Both Komainu and Zodia are also ISO27001 certified. In addition to limiting the exposure

to fraud for the Group, cold storage of digital assets with Komainu and Zodia also reduces the

exposure to hacking of the exchanges. The exchanges are constantly monitored and the Group has

built a net asset buffer which reduces operational risk.

The cyber risks are mitigated through the use of systems to prevent external attacks (firewalls,

detection of possible phishing emails, encryption using secure keys and strong physical security for

example).

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Carrying amount as at

31 December 2022 £

Price change

-50% £

Price change

100% £

Assets

Bitcoin 387,768,139 160,237,716 842,828,986

Ethereum 447,248,857 208,786,198 924,174,176

Litecoin 2,606,945 1,303,473 5,213,890

XRP 4,846,966 2,423,483 9,693,932

Other digital assets 26,563,588 13,281,794 53,127,176

Other assets 510,891,688 386,335,373 760,004,318

Total assets

1,379,926,183 772,368,037 2,595,042,478

Liabilities

Certificate liability 986,707,490 427,140,705 2,105,841,060

Other liabilities 189,477,583 178,740,339 210,952,072

Total liabilities

1,176,185,073 605,881,044 2,316,793,132

Net assets 203,741,110 166,486,993 278,249,346

Carrying amount as at

31 December 2021 £

Price change

-50% £

Price change

100% £

Assets

Bitcoin 1,141,472,252 622,366,174 2,179,684,408

Ethereum 1,451,213,511 766,946,866 2,819,746,802

Litecoin 3,436,376 2,389,231 5,530,664

XRP 2,668,535 1,674,317 4,656,971

Other digital assets 165,527,694 123,656,010 249,271,064

Other assets 1,236,967,038 739,960,684 2,230,979,744

Total assets

4,001,285,406 2,256,993,282 7,489,869,653

Liabilities

Certificate liability 3,308,728,916 1,588,632,296 6,748,922,156

Other liabilities 492,543,337 489,105,173 499,419,666

Total liabilities

3,801,272,253 2,077,737,469 7,248,341,822

Net assets 200,013,153 179,255,813 241,527,831

The above analysis shows the impact of both a fifty percent decline and a one hundred percent

increase in digital assets prices. A 50% decline in digital asset prices would reduce the Group’s net

asset position to £166.5 million (2021: £179.3 million) and does not create any going concern issues.

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28. Guarantee

The Group has issued a guarantee in respect of tracker certificates issued by XBTP.

The obligations arising on XBTP from the certificates are managed by CSCMJL, which hedges the

exposure of these liabilities.

CSCMJL has procured a hedge to cover the obligations of XBTP to the certificate holders by having

an identical exposure in digital assets under the terms of the collateral management agreement.

At 31 December 2022, CSCMJL recorded a net equity position of £155.6 million (US$188.3 million)

(2021: £139.3 million (US$188.4 million)).

The guarantee could be called in the case of extreme events, such as an operational error, hacking

or fraud impacting the hedging provided by CSCMJL which results in CSCMJL’s net equity being

insufficient to settle XBTP’s obligations. In the opinion of the directors, there are sufficient controls

and processes in place to mitigate such a risk by; (i) holding a float of digital assets at the exchanges

which is monitored by the trading team to ensure there is a sufficient balance to deal with any

redemption requests, (ii) using controls designed to monitor unusual transactions to mitigate factors

for human error, (iii) CSCMJL’s automatic trading system is designed so that exposure to changes in

prices of digital assets are matched by changes in value of the obligations towards XBTP, (iv) limiting

exposure to currency risk by using US$ as the functional currency and hedging foreign currency

exposures by regularly monitoring all foreign currency denominated assets and liabilities, (v) storing

the majority of digital assets offline with an institutional custody service and (vi) using a secure

algorithmic trading platform hosted on the cloud.

As a result of the controls and processes in place, the directors consider that the risk of the

guarantee being called on is very remote, and accordingly there is no provision or liability recorded

within these financial statements.

29. Related party transactions

The entities which make up the Group and investments held by the Group are listed in note 15(ii).

On 10 January 2022, CoinShares entered into a service agreement with FlowBank, an associate of

the Group. Under the terms of the service agreement, CoinShares shall provide to FlowBank support

resource of one individual for a maximum of 6 days per calendar month to provide input into the

recruitment of technical resources and guidance on the development of software projects and

associated infrastructure, at a cost of £3,600 per calendar month. A total of £18,000 (2021: £nil) has

been charged, of which £7,200 (2021: £nil) remains outstanding at year end. This agreement ceased

during the course of Q2.

As part of a commercial relationship under which CoinShares facilitates trading activities for

FlowBank SA (‘Flowbank SA’) as a client, gains of £58,529 (2021: £nil) were generated in respect

of trading related fees. Additionally, bank charges and FX trading commissions of £2,535 (2021:

£nil) were paid to FlowBank SA in respect of banking services provided to CoinShares as a client of

FlowBank SA. As at year end the Group held a cash receivable balance of £1,123,191 (2021: £nil) and

was holding assets on behalf of FlowBank SA with a value of £273,312 (2021: £nil).

CSGP2L is the General Partner to CoinShares Fund II LP (‘CS2LP’). The Group has recognised

carried interest as at the year end of £5,279,885 (2021: £2,125,563 which is held as an investment. The

Group also settled expenditure on behalf of CS2LP of £7,019 (2021: £nil) of which £1,477 (2021: £nil) is

outstanding at the year end.

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The Group has an investment in GTSA. The Group had provided a fixed term loan of CHF100,000

that was repayable on 28 February 2021 and is interest free. The outstanding amount of CHF100,000

(£90,684) (2021: CHF100,000 (£81,048)) was written off during the year, as was an equivalent

amount due from GTSA to the other former Joint Venture partner. Following completion of a dilutive

fundraise, GTSA is now held as an associate.

The Group has an investment in Komainu Holdings Limited (‘KHL’) of which Mr Jean-Marie Mognetti

is a director and shareholder. The Group has settled expenditure on behalf of KHL in the year of

£19,727 (2021: £57,978) of which £9,967 (2021: £2,360) remains outstanding at period end. The Group

has a recharge agreement with KHL which allows for use of office facilities. £165,460 (2021: £212,760)

has been charged for the year of which £11,000 (2021: £17,730) is outstanding at the year end.

Komainu (Jersey) Limited (‘KJL’), a wholly owned subsidiary of KHL provides custodial services to the

Group. During the year, the Group paid fees to KJL of £1,208,854 (2021: £3,352,248) of which £67,495

(2021: £219,867) was outstanding at the year end. The Group has settled expenditure on behalf

of KJL of £68,251 (2021: £13,976) of which £nil (2021: £nil) is outstanding at the year end. KJL also

settled expenditure on behalf of the Group of £5,369 (2021: £11,854) of which £nil (2021: £1,526) was

outstanding at the year end. The Group has a service agreement with KJL which allows for support

regarding staking and operations. £11,000 (2021: £nil) has been charged for the year of which £11,000

(2021: £nil) is outstanding at the year end.

Mr Frank Spiteri is a person discharging managerial responsibility and a shareholder of the Group.

During the year, the Group agreed to a buyback of share options over 171,000 ordinary shares

granted to him through the employee incentive plan, at a price of SEK 15 per share on 12 August

2022. This buyback comprised 10% of Mr Spiteri’s total share options. Mr Spiteri received £207,544

(US$250,991) (2021: £nil) for the buyback of the options.

3iQ Corp (‘3iQ’) is an investee company of the Group where Ms Meltem Demirors, Head of Strategy

of CoinShares holds a board seat. As at 31 December 2022 the Group held 56,623,841 (2021:

107,537,844) units of the 3iQ CoinShares Bitcoin ETF and nil (2021: 18,125,000) units of the 3iQ

CoinShares Ethereum ETF which were valued at £127,751,962 (2021: £639,899,742) and £nil (2021:

£206,293,873) respectively.

During the year, the Group received a management fee rebate from 3iQ of £5,459,170 (2021:

£6,568,922) of which £194,703 (2021: £945,175) is receivable at the year end.

The Group has an investment in SBG 1320, LLC and Choice Fintech Group, LLC (formerly Kingdom

Services Holdings LLC) (together, ‘Kingdom Trust’). The Group manages digital assets loan

arrangements with the Kingdom Trust. As at 31 December 2022, fiat of £6,131,079 (US$7,418,974)

(2021: £5,516,109 (US$7,502,166)) and digital assets worth £3,441,333 (2021: £19,589,944) are due to

the Kingdom Trust by the Group. Digital assets worth £541,713 (2021: £nil) were also due to the Group

from the Kingdom Trust.

CSGP2L, a subsidiary of the Group, acts as General Partner of CSF2LP. In this capacity, it receives

quarterly an amount of one quarter of two percent of the net asset value of CSF2LP. During the year

£97,041 (2021: £47,724) has accrued for this fee, of which £30,604 (2021: £14,102) was outstanding at

the year end.

On 7 December 2022, the Group entered into an over the counter (‘OTC’) trade with Ms Meltem

Demirors, Head of Strategy for the Group, whereby 150,000 USDC was provided to the Group. At the

year end, £nil remained outstanding from the Group.

Mr Richard Nash is a person discharging managerial responsibility and a shareholder of the Group.

During the year, the Group undertook trades on his behalf of £nil (2021: 0.52 BTC and 0.84 ETH equating

to £35,216). As at the year end, the Group held 0.3 BTC (£4,103) (2021: 0.3 BTC (£10,671) on his behalf.

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Mr Daniel Masters is the Group’s Chairman and a shareholder of the Group. During the year, the

Group undertook trades on his behalf of 31.27 BTC, 29.91 ETH, 22,153.12 AVT, 508,864.31 USDT and

2,000,000.00 USDC, equating to £3,110,834 (2021: 2.00 BTC, 13.72 ETH, 9,489.83 FTT, 0.59 WBTC,

267.35 DGLD, 2,900,010 USDT and 2,809,000 USDC, equating to £4,454,403). As at the year end the

Group held a balance of 206,486.33 AVT (US$237,459, £196,237) and US$69,606 (£57,523) (2021:

£nil) owed to Mr Masters. The Group also holds a receivable from Mr Masters and one other person

jointly of US$37,183 (£30,728) (2021: US$37,183 (£27,488)) in relation to an investment that was

transferred using the Group as a broker.

Mr Jean-Marie Mognetti is the Group’s Chief Executive Officer and a shareholder of the Group.

During the year the Group undertook a trade of 30,000 AVT, which was not completed at year end

(2021: 24.69 BTC and 827 ETH equating to £1,294,692). As at the year end the Group held a balance of

30,000 AVT (£28,511) (2021: £nil) owed to Mr Mognetti.

The only other transactions with key management personnel are in relation to remuneration which has

been disclosed in note 8. As at the year end no amounts remained payable.

30. Post balance sheet events

On 11 January 2023, the Company cancelled 78,396 of its treasury shares which had been bought

back as part of a share buy-back program which was undertaken during 2022.

Since the year-end there has been a series of further share buy backs undertaken by the Company.

As at the date of signing a total of 119,521 shares have bought back at an average purchase price

of SEK 30.74 in the period since 31 December 2022 to the date of this report. This equates to total

consideration of SEK 3,674,341 (£281,991).

Following the announcement made on 10 December 2022, the HAL.trading platform closed on 11

January 2023.

On 10 January 2023 the Group agreed to enter into block transactions with two shareholders to acquire

196,654 ordinary shares in the capital of the Company, at a price per share equal to SEK 24 resulting in

total consideration of SEK 4,719,696 (£372,856). The transaction was completed on 13 January 2023.

On 28 February 2023 the Group agreed to enter into a block transaction with a shareholder to acquire

50,000 ordinary shares in the capital of the Company, at a price per share equal to SEK 33 resulting in

total consideration of SEK 1,650,000 (£130,984). The transaction was completed on 10 March 2023.

On 24 March 2023 the Group agreed to enter into a block transaction with a shareholder to acquire

160,000 ordinary shares in the capital of the Company, at a price per share equal to SEK 29 resulting in

total consideration of SEK 4,640,000 (£356,101). The transaction was completed on 31 March 2023.

On 1 February 2023, CSDSL (a subsidiary in the Group) announced that a fee holiday had been

agreed for the CoinShares Physical Ethereum product, reducing the management fees from 1.25%

per annum to 0% per annum.

In March 2023, there were several high-profile collapses of banks in the United States. At the time of

the collapses, the Group only had exposure of $20,000 at Silicon Valley Bank, which has subsequently

been recovered. The Group had no exposure to Silvergate, Signature or First Republic Bank.

On 27 March 2023, CSDSL launched two new index ETPs CoinShares Physical Top 10 Crypto Market

ETP & CoinShares Physical Smart Contract Platform ETP. These two products are listed on German’s

main market Xetra. These products have both had their management fees reduced to 0.0% per annum.

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In the period since 31 December 2022, several wholly owned entities within the Group were dissolved

as were no longer serving a purpose, commercial or otherwise, within the Group:

• On 10 January 2023 CSHL was dissolved.

• On 11 January 2023 CSTL was dissolved.

• On 28 March 2023 Elwood Asset Management Services Limited and Elwood Asset

Management LLP were dissolved.

On 27 February 2023 the Group acquired 100% of the share capital of Larks Leaf Asset Management

(Jersey) Limited, plus its associated entities of Larks Leaf Master Fund Limited, Larks Leaf Feeder

Fund Limited and Larks Leaf Data Analytics (UK) Limited.

On 30 March 2023 the Larks Leaf Master Fund Limited and Larks Leaf Feeder Fund Limited were

renamed to CoinShares Bitcoin Call Overwrite Master Fund Limited and CoinShares Bitcoin Call

Overwrite Feeder Fund Limited respectively.

On 6 April 2023 four new entities were incorporated, being

• CoinShares Ethereum Call Overwrite Master Fund Limited

• CoinShares Ethereum Call Overwrite Feeder Fund Limited

• CoinShares Relative Value Opportunities Master Fund Limited

• CoinShares Relative Value Opportunities Feed Fund Limited

On 20 March 2023, the Group issued new share options to employees as part of an employee

incentive plan. A total of 448,000 options were issued at an exercise price of SEK 31 and a vesting

date of 20 March 2026.

On 15 March 2023 the 3iQ CoinShares Bitcoin certificates held were all redeemed by the Group.

In period following the financial year end, digital asset prices have shown strong price recovery. As at

27 April 2023 Bitcoin stands at $29,246, and Ethereum at $1,905, having increased 76.7% and 59.2%

respectively since 31 December 2022.

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UNAUDITED

2022

UNAUDITED

2021

Administration expenses

Amortisation of intangible assets

1,769,632

874,180

Auditor's remuneration

336,150

334,500

Audit and accountancy fees

131,626

159,739

Bad debt write off

99,009

523,833

Consultants and contractors

10,253

Depreciation

1,113,209

395,849

Directors' salaries and national insurance

2,745,730

5,372,098

Entertainment

181,256

59,820

General expenses

1,432,341

1,128,187

HR related

239,028

173,055

Impairment of goodwill

5,473,525

IT Expenses

1,198,150

662,695

Legal fees

560,228

799,788

Long term consultants

253,151

176,622

Marketing

2,437,449

1,897,349

Office expenses

146,806

93,610

Professional fees

3,484,387

2,172,880

Rent charged

800,601

649,320

Loss/(gain) on foreign exchange

128,522

(329,692)

Staff salaries

9,819,741

9,555,794

Trading expenses

5,252,804

7,138,096

Travel and hotel accommodation

597,753

211,284

38,201,098

32,059,260

SUPPLEMENTARY STATEMENT (UNAUDITED)

FOR THE YEAR ENDED 31 DECEMBER 2022

This page is unaudited and does not form part of the statutory financial statements.

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CONTACT

CoinShares International Limited

2nd Floor

2 Hill Street

St Helier

Jersey, JE2 4UA

Channel Islands

Website: coinshares.com

Email: enquiries@coinshares.com

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