Fidelity Advantage Bitcoin ETF et al.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Relief granted from subsection 6.1(1) and section 6.2 of NI 81-102 to permit Fidelity Clearing Canada ULC (FCC), a registered investment dealer, to act as custodian or sub-custodian of the crypto assets and related cash of a representative fund and other existing or future investment funds that invest primarily in crypto assets -- Relief granted from subsection 6.1(1) to permit funds to appoint more than one custodian -- Relief granted from paragraph 6.1(3)(b) and section 6.3 to permit FCC to appoint Fidelity Digital Asset Services, LLC (FDAS), a limited liability trust company organized under New York law, to act as sub-custodian of the funds' crypto assets outside of Canada -- FCC does not qualify to act as a custodian or a sub-custodian of the funds under section 6.2 of NI 81-102 because it is not an affiliate of a bank or trust company -- FDAS is not qualified to act as sub-custodian under section 6.3 of NI 81-102 because it does not satisfy the equity requirement -- Funds may appoint both FCC to custody crypto assets and another custodian to custody portfolio assets that FCC is not permitted to custody -- Relief granted subject to certain conditions, including that FCC provide annually to the principal regulator a current list of the funds that are relying on the decision -- Decision expires in two years -- National Instrument 81-102 Investment Funds.

Applicable Legislative Provisions

National Instrument 81-102 Investment Funds, ss. 6.1(1), 6.2, 6.1(3)(b), 6.3 and 19.1.

November 16, 2021

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF THE FUNDS (as defined below) AND IN THE MATTER OF FIDELITY ADVANTAGE BITCOIN ETF (the Representative Fund) AND IN THE MATTER OF FIDELITY INVESTMENTS CANADA ULC (the Representative Manager) AND IN THE MATTER OF FIDELITY CLEARING CANADA ULC (FCC) (collectively, the Filers)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for an exemption pursuant to section 19.1 of National Instrument 81-102 Investment Funds (NI 81-102) from:

(a) subsection 6.1(1) of NI 81-102 to permit (i) the Crypto Assets (as defined below) and the Related Cash (as defined below) of the Funds to be held under the custodianship of FCC and (ii) the Funds to appoint more than one custodian;

(b) clause 6.1(3)(b) of NI 81-102, to permit FDAS (as defined below), which is not a person or company described in sections 6.2 or 6.3 of NI 81-102, to be appointed as a sub-custodian of the Funds to hold the Funds' Crypto Assets;

(c) section 6.2 of NI 81-102 to permit FCC to be appointed as custodian or a sub-custodian of the Funds to hold the Funds' Crypto Assets and Related Cash in Canada; and

(d) section 6.3 of NI 81-102 to permit FDAS to be appointed as a sub-custodian of the Funds to hold the Funds' Crypto Assets outside of Canada.

(collectively, the Requested Relief).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each other province and territory in Canada (together with Ontario, the Jurisdictions).

Interpretation

Terms defined in NI 81-102, National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Bank means a bank listed in Schedule I, II or III of the Bank Act (Canada).

Crypto Assets means bitcoin, ether and anything commonly considered a crypto asset, digital or virtual currency, or digital or virtual token that itself is not a security or derivative.

Crypto Contract means a contract or instrument for the purchase, sale or delivery of a Crypto Asset.

FCC Digital Assets Custody Account means the portion of FDAS' books and records system that records the amount of Crypto Assets held by FDAS in the name of FCC on behalf of its clients.

FDAS means Fidelity Digital Asset Services, LLC.

FDAS Service means the service provided by FDAS comprised of the custody of Crypto Assets and facilitating the purchase, sale and settlement of trades involving Crypto Assets for its clients.

FDAS Wallets means the FDAS omnibus digital wallets holding FDAS clients' Crypto Assets.

Funds means the Representative Fund and each of the other public investment funds now, or in the future, that has appointed, or will appoint, FCC to act as custodian or a sub-custodian under NI 81-102 that holds, or intends to hold, primarily Crypto Assets in its investment portfolio and that is, or will be, managed by a Manager.

IIROC means the Investment Industry Regulatory Organization of Canada.

Managers means the Representative Manager and each of the investment fund managers of the Funds.

Related Cash means the Fund's cash that is required to purchase Crypto Assets or that is received from the sale of Crypto Assets.

Trust Company means a trust company that is incorporated under the laws of Canada or a Jurisdiction, that is licensed or registered under the laws of Canada or a Jurisdiction, and that has equity, as reported in its most recent audited financial statements, of not less than $10,000,000.

Representations

This decision is based on the following facts represented by the Filers, as indicated:

The Managers

1. The Representative Manager is a corporation amalgamated under the laws of the Province of Alberta with its head office located in Toronto, Ontario.

2. The Representative Manager is registered as an investment fund manager in Ontario, Québec and Newfoundland and Labrador, as a portfolio manager in each of the Jurisdictions, as a commodity trading manager in Ontario and as a mutual fund dealer in each of the Jurisdictions.

3. The Representative Manager will be the trustee, manager and portfolio adviser of the Representative Fund.

4. The Representative Manager is part of the Fidelity group of companies known globally as Fidelity Investments.

5. Each Manager has been, or will be, formed and organized under the laws of Canada or a Jurisdiction. Each Manager is, or will be, registered under the securities legislation of one or more of the Jurisdictions in such registration categories as are necessary to carry on its business. Each Manager is, or will be, the investment fund manager of one or more of the Funds.

The Funds

6. The Representative Fund will be an exchange-traded mutual fund established under the laws of Ontario. The units of the Representative Fund will be qualified for distribution pursuant to a long form prospectus that will be filed in accordance with the securities legislation of each Jurisdiction.

7. The investment objective of the Representative Fund is to aim to invest in bitcoin.

8. Each Fund is, or will be, an investment fund established under the laws of Canada or a Jurisdiction. The securities of each Fund are, or will be, qualified pursuant to a prospectus or a simplified prospectus, as applicable, that has been prepared and filed under the securities legislation of one or more Jurisdictions such that the Fund will be a reporting issuer under the securities legislation in one or more of the Jurisdictions.

9. The investment objective and/or strategies of each Fund specifies, or will specify, that the Fund invests, or will invest, primarily in one or more Crypto Assets. The investment by each Fund in each Crypto Asset is, or will be, made in accordance with the securities legislation of each applicable Jurisdiction or in accordance with an exemption granted by Canadian securities regulatory authorities. Each Fund's investments in one or more Crypto Assets are, or will be, as described in the prospectus or simplified prospectus of the Fund.

FCC

10. FCC is registered as an investment dealer in each of the Jurisdictions, a futures commission merchant in Ontario, a dealer (futures commission merchant) in Manitoba and a derivatives dealer in Québec. As an investment dealer, FCC is a member of IIROC. FCC is also approved by IIROC to act as a carrying broker.

11. The head office of FCC is located in Toronto, Ontario.

12. FCC is part of the Fidelity group of companies known globally as Fidelity Investments.

13. Each of FCC, the Representative Manager and the Representative Fund is not in default of securities legislation in any Jurisdiction.

FDAS

14. FDAS is a limited liability trust company organized under New York law authorized pursuant to Section 102-a of the New York Banking Law to engage in all activities described in Sections 96 and 100 of the New York Banking Law, with the exception of accepting deposits and making loans (other than pursuant to the exercise of its fiduciary powers). FDAS provides custody and trade execution services for digital assets. As a New York State-chartered trust company, FDAS is regulated by the New York State Department of Financial Services. In addition, FDAS is registered as a "money services business" with Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. FDAS is not registered in any capacity in Canada.

15. FDAS does not have an office in Canada.

16. FDAS is also part of the Fidelity group of companies known globally as Fidelity Investments.

Appointment of FCC as Custodian or Sub-Custodian

17. FCC does not qualify to act as a custodian or a sub-custodian of the Funds under section 6.2 of NI 81-102 because it is not an affiliate of a Bank or a Trust Company.

18. FCC has equity, as reported in its most recent audited financial statements, well in excess of $10,000,000.

19. FCC is offering the Fund two new services: the custody of Crypto Assets and the ability to enter into Crypto Contracts with FCC, which services include the delivery by FCC to the Fund of Crypto Asset account statements and trade confirmations in compliance with IIROC rules.

20. FCC has entered, or will enter, into a strategic relationship with FDAS to sub-custody the Crypto Assets of its clients, including the Funds, and to permit FCC to fulfill its obligations to its clients including the Funds, by permitting FCC to purchase and sell Crypto Assets through FDAS.

21. In order to permit purchases of Crypto Assets by a Fund to be implemented immediately following receipt of purchase instructions, FCC requires that each purchase of Crypto Assets be prefunded, with the cash held by FCC in accordance with applicable IIROC rules.

22. Given FCC's requirements, including the need to prefund the purchase of Crypto Assets by a Fund, FCC, as custodian or sub-custodian needs to have access to the Fund's cash. If FCC cannot custody or sub-custody the cash held by a Fund, then a Fund will not be able to purchase Crypto Assets from FCC.

23. The Representative Manager would like the Representative Fund to be able to access fully the services offered by FCC and, therefore, would like to appoint FCC to act as the custodian or a sub-custodian of the Crypto Assets and the Related Cash for the Representative Fund. Each Manager would, or will, also like to appoint FCC to act as the custodian or a sub-custodian of the Crypto Assets and the Related Cash for the applicable Fund.

24. FCC will act as the custodian or sub-custodian of the Crypto Assets and the Related Cash for the Funds pursuant to agreements (collectively, the Fund Custodian Agreements) that comply with all of the requirements in Part 6 of NI 81-102, other than the matters covered in the Requested Relief.

25. FCC is required to retain FDAS as its sub-custodian for a Fund's Crypto Assets because FCC does not currently operate a cryptoasset custody solution.

Appointment of FDAS as Sub-Custodian

26. FCC will appoint FDAS to be a sub-custodian to FCC and to hold each Fund's Crypto Assets pursuant to a custodial services agreement entered into between FCC and FDAS (the Custodial Services Agreement). Each Manager, on behalf of each Fund, will provide written consent to such appointment. The Custodial Services Agreement will comply with the requirements of Part 6 of NI 81-102, other than the matters covered in the Requested Relief.

27. Other than the equity requirement of section 6.3 of NI 81-102, FDAS satisfies the criteria of a sub-custodian under NI 81-102.

28. FCC and FDAS operate independently of each other and have different directors, officers and employees. The sub-custody services are performed by FDAS's personnel, who are not employees, contractors, agents or officers of FCC.

29. While FDAS will provide sub-custody services for Crypto Assets to FCC on behalf of the Funds, FDAS will not have a contractual relationship with the Funds and the only direct interaction that FDAS will have with the Funds will relate solely to the actual transfer of Crypto Assets for custody purposes, as described below.

30. FDAS operates one or more custody accounts, or FDAS Wallets, for the purpose of holding FDAS clients' Crypto Assets. Pursuant to the Custodial Services Agreement, FDAS will not be permitted to pledge, re-hypothecate or otherwise use any Crypto Assets held as sub-custodian for FCC in the course of its business.

31. FDAS has established and applies policies and procedures that manage and mitigate the custodial risks, including, but not limited to, an effective system of controls and supervision to safeguard the Crypto Assets for which it acts as sub-custodian.

32. If a Fund decides to deposit Crypto Assets for custody, the Fund will contact FCC in order to request, and receive, deposit instructions. FCC will then request the applicable deposit instruction from FDAS. FDAS will generate the deposit instruction and will communicate this instruction to FCC, which FCC then makes available to the Fund. The Fund will then transfer the Crypto Assets to the FDAS Wallets in accordance with the FDAS deposit instruction provided to the Fund by FCC. Upon appropriate confirmation of the deposit by FDAS, FDAS will notify FCC of the updated balance in the FCC Digital Assets Custody Account, and FCC will record the Fund's deposit transaction in its books and records, for display back to the Fund.

33. If a Fund decides to withdraw Crypto Assets from custody, the Fund will contact FCC to initiate a withdrawal transaction by indicating the type, quantity and destination instruction for the Crypto Assets. FCC will relay that information to FDAS to initiate a withdrawal transaction. FDAS will promptly debit the Crypto Asset balance in the FCC Digital Assets Custody Account and will process the withdrawal transaction pursuant to the terms agreed to between FDAS and FCC and in accordance with the instructions provided to FCC by the Fund and to FDAS by FCC. FDAS will provide transaction confirmation to FCC and, in turn, FCC will reflect the Fund's transaction on its books and records, for display back to the Fund.

34. FCC will maintain books and records that will show, among other things, as at the end of each business day, the allocation to each Fund of the Crypto Assets recorded in the FCC Digital Assets Custody Account. FCC and FDAS will perform reconciliations of all relevant accounts on each business day.

35. In order to meet the Crypto Assets custody needs of the Funds and in considering the options available to the Funds for the custody of their Crypto Assets, the appointment by FCC of FDAS as its sub-custodian in respect of the Crypto Assets owned by the Funds is the most efficient and cost-effective means of custodying the Funds' Crypto Assets and represents an operational and custodial solution for the Funds that minimizes risk.

36. Each of the Representative Manager, each Manager and FCC believes that FDAS has the resources and experience required, and is the appropriate sub-custodian for, the applicable Fund's Crypto Assets because FDAS is experienced in providing custodial services for Crypto Assets to investment funds and other investors, is a regulated trust company in New York and is part of the global Fidelity group of companies.

37. FCC has obtained exemptive relief that allows it to retain FDAS as custodian in connection with the custody of the Crypto Assets held by FCC's clients that are not investment funds subject to NI 81-102.

Custodial Arrangements

38. The Crypto Assets sub-custodied by FDAS for a Fund will be held by FDAS in the FDAS Wallets and treated as fungible with the Crypto Assets owned by other custody clients of FDAS. FDAS' books and records system will record the amount of Crypto Assets held by FDAS in the name of FCC on behalf of FCC's clients, including each Fund, which record is referred to as the "FCC Digital Assets Custody Account".

39. FDAS manages all private keys associated with the Crypto Assets held by a Fund through the FDAS Service.

40. A portion of the Crypto Assets custodied by FDAS in the FDAS Wallets are held in an offline storage system used by FDAS in connection with the storage or maintenance of Crypto Assets.

41. Under the Custodial Services Agreement, all instructions (Instructions) regarding the transfer or withdrawal of any Crypto Asset of a Fund custodied by FDAS will originate only from FCC and will be made through FDAS' electronic or other communications platform or infrastructure that forms part of the FDAS Service.

42. FCC will not issue an Instruction to FDAS unless it is directed by the Manager and the Fund, in the form specified in the applicable Fund Custodian Agreement.

43. Each of the Representative Manager, each Manager and FCC believes that the Fund Custodian Agreement that it will enter into is consistent with industry practice. FCC believes that the Custodial Services Agreement and the custodial arrangements between FCC and FDAS in connection with a Fund's Crypto Assets are consistent with industry practice.

Supervision of FCC and FDAS

44. The applicable Manager is responsible for oversight of the work performed by FCC relating to the custody of the Crypto Assets and Related Cash of a Fund. In this regard, each Manager will oversee FCC, including, through FCC, the custodial functions that are performed by FDAS as sub-custodian, and will conduct ongoing reviews of the quality of FCC's services. Each Manager will have the same access to the records of FCC as it would if the Manager itself performed the activities and maintained the records.

45. FCC is responsible for oversight of FDAS, in accordance with its standard of care, relating to the custody of the Crypto Assets of each Fund. FCC will have the same access to the records of FDAS as it would if FCC itself performed the activities and maintained the records.

46. The relationship between FCC and FDAS will be primarily one whereby FCC (a) is responsible for oversight of the work performed by FDAS and (b) accesses FDAS' platform for the purposes of custodying a Fund's Crypto Assets. FDAS will be appointed the sub-custodian of each Fund, pursuant to a written agreement between FCC and FDAS that complies with the requirements of Part 6 of NI 81-102, other than the matters covered in the Requested Relief. FCC will be responsible for ensuring that, with regard to FDAS, adequate safeguards are in place, including, in the experience and judgment of FCC, satisfactory insurance arrangements.

47. Under the relevant Fund Custodian Agreement, FCC is required to use reasonable care in the selection and monitoring of sub-custodians. Pursuant to this obligation, FCC has engaged in, and on a periodic basis (at least every two years) thereafter, will engage in a due diligence review of FDAS to satisfy itself as to the continuing appropriateness of using FDAS as sub-custodian of the Funds' Crypto Assets. This due diligence exercise will include a review of the operational aspects of FDAS' custody platform and any change to those operations since FCC's last review, including a review of the electronic platform, procedures, and records, an analysis of FDAS' most recent financial statements to determine its creditworthiness, confirmation of FDAS' insurance coverage and any change to either the coverage or the deductibles, a review of any regulatory filings, audits or investigations, and a review of any litigation, any incident report, and any change to its business continuity plan. Each Fund will rely upon FCC to satisfy itself as to the appropriateness of the use or continued use of FDAS as a sub-custodian of each Fund's Crypto Assets.

48. FDAS has obtained a SOC 1 Type 2 examination report of its internal controls, and that includes relevant technology general controls, logistical and physical security controls, and cryptographic key management controls that are commonly included in a SOC 2 report. FCC has conducted due diligence on FDAS, including a review of the SOC 1 Type 2 examination report, and has not identified any material concern. FDAS is currently working towards obtaining a SOC 2 Type 1 examination report and a SOC 2 Type 2 examination report before the expiry of this decision.

Audit Rights

49. In relation to each Fund, the sub-custodial activities of FDAS will be limited to holding the Fund's Crypto Assets.

50. Under the Custodial Services Agreement, FCC and FDAS will perform reconciliations on each business day regarding the Crypto Assets held by FDAS for FCC on behalf of its clients.

51. Each Fund will have the right to have its auditor subject the Fund's Crypto Assets to audit procedures through FCC and FDAS.

Insurance

52. FCC's ability to recover from FDAS is not contingent upon FDAS' ability to claim on its own insurance.

53. Each Manager believes that the insurance carried by FCC and the insurance carried by FDAS provides each Fund with such protection in the event of loss or theft of the Fund's Crypto Assets custodied at FDAS that is consistent with the protection afforded by other custodians that store Crypto Assets commercially and is sufficient.

54. FDAS has confirmed that it has arranged for insurance coverage in respect of any Crypto Assets held by FDAS in amounts that FDAS deems appropriate in its experience and judgment, acting reasonably. FCC has discussed with FDAS the level of insurance coverage obtained by FDAS, and the risks insured against by FDAS, and believes that the level of insurance is appropriate under current market conditions.

55. Each of FCC and FDAS is required to ensure that its own insurance coverage is in an amount that it deems appropriate.

Liability and Standard of Care

56. Where FCC acts as custodian, it shall indemnify and hold harmless each Fund in respect of all direct loss, damage or expense (a Loss) arising out of any negligence, willful misconduct, fraud, lack of good faith or breach of the standard of care by FCC in respect of the services contemplated under the Fund Custodian Agreement. Where FCC acts as sub-custodian, it shall indemnify and hold harmless the custodian of the Fund in accordance with the terms of the Fund Custodian Agreement between such custodian and FCC. FCC has the right under the Custodial Services Agreement to seek recourse against FDAS in the event such Loss is as a result of a failure by FDAS to comply with its standard of care, subject to the limitations of liability set out in the Custodial Services Agreement.

57. Pursuant to each Fund Custodian Agreement, FCC has agreed to exercise (i) the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances or (ii) at least the same degree of care as it exercises with respect to its own property of a similar kind if this is a higher degree of care than the degree of care described in (i) hereto.

58. Pursuant to the Custodial Services Agreement, FDAS has agreed to exercise (i) the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances or (ii) at least the same degree of care as it exercises with respect to its own property of a similar kind if this is a higher degree of care than the degree of care described in (i) hereto. FCC has satisfied itself that the degree of care to which FDAS is subject under the Custodial Services Agreement is no less than the degree of care to which FCC is subject under each Fund Custodian Agreement.

59. Upon FDAS sending a confirmation of deposit to FCC, which confirmation of deposit will be sent as soon as commercially reasonable following receipt, FDAS's liability to FCC will commence with respect to the applicable Crypto Assets deposited for custody, and FDAS will bear all risk of loss to the Crypto Assets owned by a Fund in FDAS's custody, subject to certain limitations, including losses based on events beyond FDAS' control, losses resulting from actions taken by FDAS acting on instructions that it believed to have been authorized, and losses caused by another service provider of FDAS provided that the appointment of such service provider was made in accordance with FDAS' standard of care.

60. Each Fund will not be responsible for any loss or damage to the Fund arising out of any breach of standard of care by FCC or FDAS.

61. Neither FCC nor FDAS is entitled to an indemnity from a Fund in the event that either FCC or FDAS breaches its standard of care.

Termination and Changes to the Custodial Arrangements

62. FCC or FDAS, as the case may be, may terminate the Custodial Services Agreement by giving sixty days' prior written notice to the other party, or such greater period of time as may be reasonably necessary for FCC to find a suitable sub-custodian using its best efforts. In addition, either party may terminate the agreement immediately if the other party (a) commits a material breach that is not remedied within a specified period of time or (b) is dissolved, becomes insolvent, enters into liquidation, is declared bankrupt, a receiver or administrator is appointed over all or a substantial part of its assets or enters into an arrangement with its creditors.

63. FDAS may immediately terminate the Custodial Services Agreement if continuing to provide the services under the agreement would result in the violation of any law, if any of FCC's representations cease to be true or if FCC has acted in a manner that could have a material adverse impact or reflection on FDAS' reputation.

64. FCC believes that the obligation of FDAS to hold a Fund's Crypto Assets in accordance with the terms of the Custodial Services Agreement is material and anticipates that it would terminate FDAS as sub-custodian if FDAS breaches this obligation and does not cure such breach within seven days of FCC giving written notice to FDAS of such breach. Prior to terminating the sub-custodial relationship with FDAS, FCC or the Fund will appoint a replacement sub-custodian for Crypto Assets that complies with the requirements under NI 81-102.

Appointment of Two Custodians

65. The Funds may hold portfolio assets that FCC is not permitted to custody. While FCC may be appointed as sub-custodian of a Fund, that Fund's custodian may not want to engage in a business line that involves Crypto Assets. In addition, it may be operationally challenging for a custodian to appoint sub-custodians that are not part of that custodian's existing custodial network.

66. Each Manager would like the flexibility for each Fund to engage both FCC and another custodian as custodian, provided that the other custodian is qualified to act as a custodian under section 6.2 of NI 81-102. This will provide flexibility for each Manager to appoint custodians for the Funds based on the custodian's experience and operational capabilities.

67. FCC's and the other custodian's responsibility for the custody of an applicable Fund's assets will apply only to the assets held by each such custodian on behalf of the Fund (the Relevant Assets). The custodial arrangements between the applicable Fund and each such custodian will comply with the requirements of Part 6 of NI 81-102, subject to this decision and any other applicable exemptive relief.

68. Any appointment of two custodians should have no impact on the safety of the portfolio assets of the applicable Funds while enhancing the ability of the Funds to use experienced custodians for the Relevant Assets and for operational efficiency.

69. Disclosure regarding any appointment of two custodians by a Fund with respect to the Relevant Assets will be included in the prospectus of the Fund that is filed at the next annual renewal.

70. For purposes of complying with condition (k) of this decision, a single service provider, which provides a consolidated service offering to each applicable Fund, together with or directly or indirectly through its affiliates and/or other delegates, shall reconcile all the portfolio assets of the Fund and provide the Fund with valuation services and complete daily reconciliations between the custodians before striking a daily net asset value for the Fund.

71. Each Manager has determined that it would be in the best interests of each Fund to receive the Requested Relief.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Requested Relief is granted provided that:

(a) FCC provides to the principal regulator for the Funds on an annual basis beginning 60 days after the date upon which this decision is first relied upon by a Fund, either (i) a current list of all Funds that are relying on this decision, or (ii) an update to the list of Funds or confirmation that there has been no change to such list;

(b) The Funds use FDAS as sub-custodian only for the Funds' Crypto Assets;

(c) FCC remains registered as a dealer in the category of investment dealer with the principal regulator and the securities regulators or securities regulatory authority in each of the other Jurisdictions and a member of IIROC;

(d) FCC takes reasonable steps to verify that FDAS:

(i) has appropriate insurance to cover the loss of Crypto Assets held by it;

(ii) has established and applies policies and procedures that manage and mitigate the custodial risks, including, but not limited to, an effective system of controls and supervision to safeguard the Crypto Assets for which it acts as sub-custodian; and

(iii) on or before December 31, 2021, has obtained a SOC 2 Type 1 report and on or before December 31, 2022, has obtained a SOC 2 Type 2 report;

(e) FCC will promptly cease using FDAS as the sub-custodian for a Fund's Crypto Assets at any time that FDAS ceases to be regulated by the New York State Department of Financial Services as a New York State chartered trust company, in which case:

(i) FCC will hold the Crypto Assets with a custodian that meets the sub-custodian requirements of NI 81-102;

(ii) before FCC holds a Fund's Crypto Assets with a sub-custodian referred to in (i) above, FCC will take reasonable steps to verify that the sub-custodian:

(1) has appropriate insurance to cover the loss of Crypto Assets at the sub-custodian;

(2) has established and applies written policies and procedures that manage and mitigate the custodial risks, including but not limited to, an effective system of controls and supervision to safeguard the Crypto Assets for which it acts as sub-custodian; and

(3) has obtained a SOC 2 Type 2 report within the last 12 months, unless FCC has obtained the prior written approval of the principal regulator to alternatively verify that the sub-custodian has obtained a SOC 1 Type 1 or Type 2 report or a SOC 2 Type 1 report within the last 12 months;

(f) FCC maintains equity of not less than $100 million during any period when FDAS' most recent audited financial statements indicate that FDAS does not have equity of at least CAD$100 million;

(g) FCC promptly notifies the principal regulator

(i) if the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, the Financial Industry Regulatory Authority, the National Futures Association, or the New York State Department of Financial Services makes a determination that FCC's sub-custodian for the Funds' Crypto Assets is not permitted by that regulatory authority to hold Crypto Assets; and

(ii) of any material cybersecurity breach of FDAS's or other sub-custodian's systems of controls or supervision that impact the Crypto Assets of a Fund held by the sub-custodian, and what steps have been taken by FCC to address each such breach;

(h) In respect of the periodic compliance reports to be prepared by FCC pursuant to paragraphs 6.7(1)(b), 6.7(1)(c)(ii) and 6.7(2)(c) of NI 81-102, as such paragraphs are not applicable given the nature of the Requested Relief, FCC will include a statement in such reports regarding the completion of its review process for FDAS and that FCC is of the view that FDAS continue to be an appropriate sub-custodian to hold the Funds' Crypto Assets;

(i) Prior to a Fund relying on this decision, FCC provides to the Fund:

(i) a copy of this decision;

(ii) a disclosure statement informing the Fund of the implications of this decision; and

(iii) a form of acknowledgment of the matters referred to in paragraph (j) below, to be signed and returned by the Fund to FCC;

(j) A Fund and its Manager seeking to rely on this decision will, prior to doing so:

(i) acknowledge receipt of a copy of this decision providing the Requested Relief;

(ii) appoint FCC as its custodian, or agree to the appointment of FCC as its sub-custodian, in either case under NI 81-102;

(iii) consent to FCC providing to staff of the principal regulator for the Fund on an annual basis the name of the Fund so long as it relies on this decision; and

(iv) deliver to FCC a signed acknowledgement and agreement binding the Fund to the foregoing.

(k) If a Fund appoints both FCC and another custodian as its custodians, then:

(i) a single entity will reconcile all the portfolio assets of the Fund and will provide the Fund with valuation services and will complete daily reconciliations between the two custodians before striking a daily net asset value for the Fund;

(ii) the applicable Manager will maintain such operational systems and processes, as between the two custodians and the single entity referred to in condition (i) above, in order to keep a proper reconciliation of all the portfolio assets that will move between the custodians, as appropriate; and

(iii) each of FCC and the other custodian will act as custodian only for the portion of the portfolio assets of the Fund transferred to it.

(l) This decision expires two years from the date of this decision.

"Darren McKall"

Manager, Investment Funds and Structured Products Branch

Ontario Securities Commission

Application File #: 2020/0375

Sedar File #: 3302906