SECURITIES AND EXCHANGE COMMISSION 

(Release No. 34-94853; File No. SR-NASDAQ-2021-066)

May 5, 2022

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Granting Approval of a 

Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, to List and Trade Shares of 

the Valkyrie XBTO Bitcoin Futures Fund under Nasdaq Rule 5711(g)

I. INTRODUCTION

On August 23, 2021, The Nasdaq Stock Market LLC (“Nasdaq” or “Exchange”) filed 

with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of 

the Securities Exchange Act of 1934 (“Exchange Act”)1and Rule 19b-4 thereunder,2a proposed 

rule change to list and trade shares (“Shares”) of the Valkyrie XBTO Bitcoin Futures Fund 

(“Trust”) under Nasdaq Rule 5711(g) (Commodity Futures Trust Shares). On August 25, 2021, 

the Exchange filed Amendment No. 1 to the proposed rule change. The proposed rule change, as 

modified by Amendment No. 1, was published for comment in the Federal Register on 

September 9, 2021.3

On September 29, 2021, pursuant to Section 19(b)(2) of the Exchange Act,4the 

Commission designated a longer period within which to approve the proposed rule change, 

disapprove the proposed rule change, or institute proceedings to determine whether to disapprove 

the proposed rule change.5 On December 7, 2021, the Commission instituted proceedings under 

 

1

15 U.S.C. 78s(b)(1).

2

17 CFR 240.19b-4.

3 See Securities Exchange Act Release No. 92865 (Sept. 2, 2021), 86 FR 50570 (“Notice”).

4

15 U.S.C. 78s(b)(2).

5 See Securities Exchange Act Release No. 93172, 86 FR 55071 (Oct. 5, 2021).
2

Section 19(b)(2)(B) of the Exchange Act6to determine whether to approve or disapprove the 

proposed rule change.7 On February 25, 2022, the Commission designated a longer period for 

Commission action on the proposed rule change.8 On April 12, 2022, the Exchange filed partial 

Amendment No. 2 to the proposed rule change.9 The Commission has received no comments on 

the proposed rule change.

When an exchange files a proposed rule change,10 the Commission must determine 

whether the proposed rule change is consistent with the statutory provisions, and the rules and 

regulations, that apply to national securities exchanges.11 As discussed further below, the 

Commission is approving the proposed rule change, as modified by Amendment Nos. 1 and 2. In 

approving this proposed rule change, however, the Commission emphasizes—as it has with 

previous orders regarding bitcoin-related ETPs12—that its action does not rest on an evaluation 

 

6

15 U.S.C. 78s(b)(2)(B).

7 See Securities Exchange Act Release No. 93731, 86 FR 70882 (Dec. 13, 2021).

8 See Securities Exchange Act Release No. 94316, 87 FR 12211 (Mar. 3, 2022).

9

In Amendment No. 2, the Exchange clarified, among other things, that under no 

circumstances will the Trust hold and/or invest in any assets other than bitcoin futures 

contracts traded on the Chicago Mercantile Exchange, Inc., cash, and Money Market 

Instruments (as defined below), and provided additional representations that are 

commonly made by and/or required for futures-based exchange-traded products listed 

under Nasdaq Rule 5711(g) (Commodity Futures Trust Shares). Because Amendment 

No. 2 does not materially alter the substance of the proposed rule change, Amendment 

No. 2 is not subject to notice and comment. The full text of Amendment No. 2 is 

available on the Commission’s website at: https://www.sec.gov/comments/sr-nasdaq2021-066/srnasdaq2021066-20125377-284868.pdf (“Amendment No. 2”). 

10 Such filings are made under Section 19(b)(1) of the Exchange Act, 15 U.S.C. 78s(b)(1), 

and Exchange Act Rule 19b-4, 17 CFR 240.19b-4.

11 See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 78s(b)(2)(C).

12 See, e.g., Order Disapproving a Proposed Rule Change, as Modified by Amendment No. 

1, To Amend NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares) and To List 

and Trade Shares of the United States Bitcoin and Treasury Investment Trust Under 

NYSE Arca Rule 8.201-E, Securities Exchange Act Release No. 88284 (Feb. 26, 2020), 
3

of whether bitcoin, or blockchain technology more generally, has utility or value as an 

innovation or an investment.

II. DESCRIPTION OF THE PROPOSED RULE CHANGE, AS MODIFIED BY 

AMENDMENT NOS. 1 AND 2

As described in more detail in the Notice and Amendment No. 2,

13 the Exchange 

proposes to list and trade the Shares of the Trust under Nasdaq Rule 5711(g), which governs the 

listing and trading of Commodity Futures Trust Shares on the Exchange.

The investment objective of the Trust is for the Shares to reflect the performance of 

bitcoin14 as represented by the CME CF Bitcoin Reference Rate (“CME CF BRR”), less the 

Trust’s liabilities and expenses.

15 The CME CF BRR aggregates the trade flow of major bitcoin 

spot platforms during a specific calculation window into a one-a-day reference rate of the U.S. 

 

85 FR 12595, 12597 (Mar. 3, 2020) (SR-NYSEArca-2019-39) (“USBT Order”); Order 

Disapproving a Proposed Rule Change To List and Trade Shares of the NYDIG Bitcoin 

ETF Under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares), Securities 

Exchange Act Release No. 94395 (Mar. 10, 2022), 87 FR 14932, 14934 (Mar. 16, 2022) 

(SR-NYSEArca-2021-57) (“NYDIG Order”).

13 See Notice, supra note 3; Amendment No. 2, supra note 9.

14 Bitcoins are digital assets that are issued and transferred via a decentralized, open-source 

protocol used by a peer-to-peer computer network through which transactions are 

recorded on a public transaction ledger known as the “bitcoin blockchain.” The bitcoin 

protocol governs the creation of new bitcoins and the cryptographic system that secures 

and verifies bitcoin transactions. See, e.g., Notice, 86 FR at 50571.

15 See id. at 50574. Valkyrie Funds LLC (“Sponsor”) serves as the Trust’s sponsor and 

commodity pool operator; Vident Investment Advisory, LLC (“Sub-Advisor”) serves as 

the Trust’s sub-advisor and commodity trading advisor; and XBTO Trading, LLC is the 

research provider for the Sponsor and the Sub-Advisor. Delaware Trust Company serves 

as the trustee for the Trust. The Sponsor is currently considering third-party service 

providers for the roles of administrator, transfer agent, custodian, and marketing agent. 

See id. at 50571.
4

dollar price of bitcoin.16 The Trust will pursue its investment objective by holding bitcoin futures

that are cash-settled and traded on the Chicago Mercantile Exchange, Inc. (the “CME”), which 

was self-certified with the Commodity Futures Trading Commission (the “CFTC”).

17 The Trust 

will not invest in or hold spot bitcoin.18 In addition to the Trust’s investments in CME bitcoin 

futures, the Trust expects to have significant holdings of cash and high-quality, short-term debt 

instruments that have remaining terms-to maturity of less than 397 days, and include only U.S. 

Treasury securities and repurchase agreements (“Money Market Instruments”).19

The net asset value (“NAV”) of the Trust will be determined in accordance with 

Generally Accepted Accounting Principles. The NAV per Share will be determined by dividing 

the NAV of the Trust by the number of Shares outstanding. The NAV of the Trust is typically 

determined as of 4:00 p.m. E.T. on each day the Shares trade on the Exchange (“Business Day”). 

The Trust’s daily activities are generally not reflected in the NAV determined for the Business 

Day on which the transactions are effected (the trade date), but rather on the following Business 

Day.20

The Trust will issue and redeem Shares on a continuous basis at NAV per Share in large, 

specified blocks of Shares (“Creation Units”) in transactions with broker-dealers and large 

institutional investors that have entered into participation agreements (“Authorized 

 

16 See id. at 50573 n.8. According to the Exchange, calculation rules are geared toward 

maximum transparency and real-time replicability in underlying spot markets, including 

Bitstamp, Coinbase, Gemini, itBit, and Kraken. See id.

17 See id. at 50574.

18 See Amendment No. 2, supra note 9, at 3. 

19 See id.; Notice, 86 FR at 50574.

20 See Notice, 86 FR at 50574.
5

Participants”). The Exchange currently anticipates that a Creation Unit will consist of 50,000 

Shares, although this number may change from time to time. 21 In addition, the Shares will 

generally be created and redeemed in cash.22

III. DISCUSSION AND COMMISSION FINDINGS

After careful review, the Commission finds that the proposed rule change, as modified by 

Amendment Nos. 1 and 2, is consistent with the Exchange Act and rules and regulations 

thereunder applicable to a national securities exchange.23 In particular, the Commission finds that 

the proposed rule change, as modified by Amendment Nos. 1 and 2, is consistent with Section 

6(b)(5) of the Exchange Act,24 which requires, among other things, that the Exchange’s rules be 

designed to “prevent fraudulent and manipulative acts and practices,” to “promote just and 

equitable principles of trade,” to “remove impediments to and perfect the mechanism of a free 

and open market and a national market system,” and, “in general, to protect investors and the 

public interest.” The Commission also finds, with respect to the dissemination of quotation and 

last trade information for the proposed ETP, that the proposed rule change, as modified by 

Amendment Nos. 1 and 2, is consistent with Section 11A(a)(1)(C)(iii) of the Exchange Act,25

which sets forth Congress’ finding that it is in the public interest and appropriate for the 

 

21 See id. at 50579–80. Upon the request of an Authorized Participant made at the time of a 

redemption order, the Sponsor at its sole discretion may determine, in addition to 

delivering redemption proceeds, to transfer futures contracts to the Authorized Participant 

pursuant to an exchange of a futures contract for a related position or to a block trade sale 

of futures contracts to the Authorized Participant. See id. at 50580.

22 See Amendment No. 2, supra note 9, at 4.

23 In approving this proposed rule change, as modified by Amendment Nos. 1 and 2, the 

Commission notes that it has considered the proposed rule’s impact on efficiency, 

competition, and capital formation. See 15 U.S.C. 78c(f).

24 15 U.S.C. 78f(b)(5).

25 15 U.S.C. 78k-1(a)(1)(C)(iii).
6

protection of investors and the maintenance of fair and orderly markets to assure the availability 

to brokers, dealers, and investors of information with respect to quotations for and transactions in 

securities.

When considering whether Nasdaq’s proposal to list and trade the Shares is designed to 

prevent fraudulent and manipulative acts and practices, the Commission applies the same 

standard it used in orders considering previous proposals to list bitcoin-based commodity trusts 

and bitcoin-based trust issued receipts.26 As the Commission has explained, an exchange that 

 

26 See Order Setting Aside Action by Delegated Authority and Disapproving a Proposed 

Rule Change, as Modified by Amendments No. 1 and 2, To List and Trade Shares of the 

Winklevoss Bitcoin Trust, Securities Exchange Act Release No. 83723 (July 26, 2018), 

83 FR 37579 (Aug. 1, 2018) (SR-BatsBZX-2016-30) (“Winklevoss Order”); USBT 

Order, 85 FR 12595; Order Disapproving a Proposed Rule Change To List and Trade 

Shares of the WisdomTree Bitcoin Trust Under BZX Rule 14.11(e)(4), CommodityBased Trust Shares, Securities Exchange Act Release No. 93700 (Dec. 1, 2021), 86 FR 

69322 (Dec. 7, 2021) (SR-CboeBZX-2021-024) (“WisdomTree Order”); Order 

Disapproving a Proposed Rule Change To List and Trade Shares of the Kryptoin Bitcoin 

ETF Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, Securities 

Exchange Act Release No. 93860 (Dec. 22, 2021), 86 FR 74166 (Dec. 29, 2021) (SRCboeBZX-2021-029) (“Kryptoin Order”); Order Disapproving a Proposed Rule Change 

To List and Trade Shares of the Valkyrie Bitcoin Fund Under NYSE Arca Rule 8.201-E

(Commodity-Based Trust Shares), Securities Exchange Act Release No. 93859 (Dec. 22, 

2021), 86 FR 74156 (Dec. 29, 2021) (SR-NYSEArca-2021-31) (“Valkyrie Order”); 

Order Disapproving a Proposed Rule Change To List and Trade Shares of the First Trust 

SkyBridge Bitcoin ETF Trust Under NYSE Arca Rule 8.201-E, Securities Exchange Act 

Release No. 94006 (Jan. 20, 2022), 87 FR 3869 (Jan. 25, 2022) (SR-NYSEArca-2021-37)

(“Skybridge Order”); Order Disapproving a Proposed Rule Change To List and Trade

Shares of the Wise Origin Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based 

Trust Shares, Securities Exchange Act Release No. 94080 (Jan. 27, 2022), 87 FR 5527 

(Feb. 1, 2022) (SR-CboeBZX-2021-029) (“Wise Origin Order”); NYDIG Order, 87 FR 

14932; Order Disapproving a Proposed Rule Change To List and Trade Shares of the 

Global X Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, 

Securities Exchange Act Release No. 94396 (Mar. 10, 2022), 87 FR 14912 (Mar. 16, 

2022) (SR-CboeBZX-2021-052) (“Global X Order”); Order Disapproving a Proposed 

Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the ARK 

21Shares Bitcoin ETF Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, 

Securities Exchange Act Release No. 94571 (Mar. 31, 2022), 87 FR 20014 (Apr. 6, 2022) 

(SR-CboeBZX-2021-051) (“ARK 21Shares Order”). See also Order Disapproving a 

Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Listing and 
7

lists bitcoin-based exchange-traded products (“ETPs”) can meet its obligations under Exchange 

Act Section 6(b)(5) by demonstrating that the exchange has a comprehensive surveillancesharing agreement with a regulated market of significant size related to the underlying or 

reference bitcoin assets.27 The Winklevoss Order applied this standard to a commodity-trust ETP 

 

Trading of Shares of the SolidX Bitcoin Trust Under NYSE Arca Equities Rule 8.201, 

Securities Exchange Act Release No. 80319 (Mar. 28, 2017), 82 FR 16247 (Apr. 3, 2017) 

(SR-NYSEArca-2016-101) (“SolidX Order”). The Commission also notes that orders 

were issued by delegated authority on the following matters: Order Disapproving a 

Proposed Rule Change To List and Trade the Shares of the ProShares Bitcoin ETF and 

the ProShares Short Bitcoin ETF, Securities Exchange Act Release No. 83904 (Aug. 22, 

2018), 83 FR 43934 (Aug. 28, 2018) (SR-NYSEArca-2017-139) (“ProShares Order”); 

Order Disapproving a Proposed Rule Change To List and Trade the Shares of the 

GraniteShares Bitcoin ETF and the GraniteShares Short Bitcoin ETF, Securities 

Exchange Act Release No. 83913 (Aug. 22, 2018), 83 FR 43923 (Aug. 28, 2018) (SRCboeBZX-2018-001) (“GraniteShares Order”); Order Disapproving a Proposed Rule 

Change To List and Trade Shares of the VanEck Bitcoin Trust Under BZX Rule 

14.11(e)(4), Commodity-Based Trust Shares, Securities Exchange Act Release No. 

93559 (Nov. 12, 2021), 86 FR 64539 (Nov. 18, 2021) (SR-CboeBZX-2021-019)

(“VanEck Order”); Order Granting Approval of a Proposed Rule Change, as Modified by 

Amendment No. 2, To List and Trade Shares of the Teucrium Bitcoin Futures Fund 

Under NYSE Arca Rule 8.200-E, Commentary .02 (Trust Issued Receipts), Securities 

Exchange Act Release No. 94620 (Apr. 6, 2022), 87 FR 21676 (Apr. 12, 2022) (SRNYSEArca-2021-053) (“Teucrium Order”).

27 See USBT Order, 85 FR at 12596. In the context of derivative securities products such as 

commodity-trust ETPs, the Commission has long recognized the importance of 

comprehensive surveillance-sharing agreements to detect and deter fraudulent and 

manipulative activity. See, e.g., streetTRACKS Gold Shares, Securities Exchange Act 

Release No. 50603 (Oct. 28, 2004), 69 FR 64614, 64618-19 (Nov. 5, 2004) (SR-NYSE2004-22); iShares Silver Trust, Securities Exchange Act Release No. 53521 (Mar. 20, 

2006), 71 FR 14967 , 14968, 14973-74 (Jan 26, 2005) (SR-Amex-2004-38); JPM XF 

Physical Copper Trust, Securities Exchange Act Release No. 68440 (Dec. 14, 2012), 77 

FR 75468, 75469-70, 75272, 75485-86 (Dec. 20, 2012) (SR-NYSEArca-2012-28). See

also Winklevoss Order, 83 FR at 37592 n.202 and accompanying text (discussing 

previous Commission approvals of commodity-trust ETPs). And the Commission’s 

approval orders for commodity-futures ETPs consistently note the ability of an ETP 

listing exchange to share surveillance information either through surveillance-sharing 

agreements or through membership by the listing exchange and the relevant futures 

exchange in the Intermarket Surveillance Group. See, e.g., Securities Exchange Act 

Release No. 53105 (Jan. 11 2006), 71 FR 3129, 3136 (Jan. 19, 2006) (SR-Amex-2005-

059); Securities Exchange Act Release No. 53582 (Mar. 31, 2006), 71 FR 17510, 17518 
8

based on spot bitcoin, and the Commission has found that this standard is also appropriate for, 

and has applied the standard to, proposed ETPs based on bitcoin futures.28

In the analysis below, the Commission examines whether the proposed rule change, as 

modified by Amendment Nos. 1 and 2, is consistent with Section 6(b)(5) of the Exchange Act by 

addressing: in Section III.A whether Nasdaq has entered into a comprehensive surveillancesharing agreement with a regulated market of significant size related to the underlying bitcoin 

assets (here, CME bitcoin futures contracts); in Section III.B assertions that allowing investors to 

obtain exposure to bitcoin futures contracts through a bitcoin futures-based ETP would be 

beneficial; and in Section III.C whether the proposed ETP is consistent with other standards for 

commodity-futures ETPs. Based on its analysis, the Commission concludes that the proposed 

rule change, as modified by Amendment Nos. 1 and 2, is consistent with the statutory 

requirements of Exchange Act Sections 6(b)(5) and 11A(a)(1)(C)(iii).

As discussed in more detail below, the approval is based on a finding that the CME is a 

“significant market” related to CME bitcoin futures contracts, which would be the exclusive noncash holdings of the proposed ETP. The Commission emphasizes that its approval of this 

proposal is based on the specific facts and circumstances of the proposal.29

 

(Apr. 6, 2006) (SR-Amex-2005-127); Securities Exchange Act Release No. 54013 (June 

16, 2006), 71 FR 36372, 36378-79 (June 26, 2006) (SR-NYSE-2006-17). See also

GraniteShares Order, 83 FR at 43925-27 nn.35-39 and accompanying text (discussing 

previous Commission approvals of commodity-futures ETPs).

28 See ProShares Order, 83 FR at 43936; GraniteShares Order, 83 FR at 43925; Teucrium 

Order, 87 FR at 21677.

29 The Commission is not suggesting that either the development of the CME bitcoin 

futures market or the approval of this proposal would require the Commission to approve 

a proposed rule change seeking to list and trade shares of an ETP holding spot bitcoin as 

an asset or ETPs related to other digital assets. See, e.g., GraniteShares Order, 83 FR at 

43931. Other proposed ETPs will continue to be assessed on their particular facts and 
9

A. Comprehensive Surveillance-Sharing Agreement with a Regulated Market of 

Significant Size Related to CME Bitcoin Futures Contracts

As stated above, an exchange that lists a bitcoin-based ETP can meet its obligations 

under Exchange Act Section 6(b)(5) by demonstrating that the exchange has a comprehensive 

surveillance-sharing agreement with a regulated market of significant size related to the 

underlying bitcoin assets.

30 When disapproving the earliest proposals for bitcoin-based ETPs, the 

Commission recognized that “regulated bitcoin-related markets are in the early stages of their 

development,” but that “[o]ver time, regulated bitcoin-related markets may continue to grow and 

develop” in a way that would make it possible for a bitcoin-based ETP to satisfy the 

requirements of the Exchange Act.31 The Commission previously stated that, for example, 

“existing or newly created bitcoin futures markets” that are regulated may achieve significant 

size, and an ETP listing exchange may be able to demonstrate in a proposed rule change that it 

will be able to address the risk of fraud and manipulation by entering into a surveillance-sharing 

agreement with a regulated market of significant size.32

With respect to the proposed ETP, the underlying bitcoin assets are CME bitcoin futures 

contracts. The relevant analysis, therefore, is whether Nasdaq has a comprehensive surveillancesharing agreement with a regulated market of significant size related to CME bitcoin futures 

contracts. As discussed below, taking into consideration the direct relationship between the 

regulated market with which Nasdaq has a surveillance-sharing agreement and the assets held by

the proposed ETP—including the current state of the CME bitcoin futures market and the trading

 

circumstances and on whether those proposals are consistent with the requirements of the 

Exchange Act.

30 See supra note 27. 

31 See Winklevoss Order, 83 FR at 37580.

32 See id.; USBT Order, 85 FR at 12598.
10

of exchange-traded funds registered under the Investment Company Act of 1940 (“1940 Act”) 

that hold CME bitcoin futures (“Bitcoin Futures ETFs”)—the Commission concludes that the 

Exchange has the requisite surveillance-sharing agreement. The Commission notes that in the 

Teucrium Order it recently approved NYSE Arca, Inc.’s proposal to list and trade shares of an

ETP that similarly would hold CME bitcoin futures contracts as its only non-cash holdings.

33

Comprehensive Surveillance-Sharing Agreements with the CME, a Regulated Market

The Commission has emphasized that it is essential for an exchange listing a derivative 

securities product to enter into a surveillance-sharing agreement with markets trading the 

underlying assets for the listing exchange to have the ability to obtain information necessary to 

detect, investigate, and deter fraud and market manipulation, as well as violations of exchange 

rules and applicable federal securities laws and rules.34 Comprehensive surveillance-sharing 

agreements “provide a necessary deterrent to manipulation because they facilitate the availability 

of information needed to fully investigate a manipulation if it were to occur.”35 The hallmarks of 

a surveillance-sharing agreement are that the agreement provides for the sharing of information 

about market trading activity, clearing activity, and customer identity; that the parties to the 

agreement have reasonable ability to obtain access to and produce requested information; and 

 

33 See Teucrium Order, 87 FR at 21676.

34 See Amendment to Rule Filing Requirements for Self-Regulatory Organizations 

Regarding New Derivative Securities Products, Securities Exchange Act Release No. 

40761 (Dec. 8, 1998), 63 FR 70952, 70959 (Dec. 22, 1998).

35 Id. See also Winklevoss Order, 83 FR at 37594; ProShares Order, 83 FR at 43936; 

GraniteShares Order, 83 FR at 43924; USBT Order, 85 FR at 12596.
11

that no existing rules, laws, or practices would impede one party to the agreement from obtaining 

this information from, or producing it to, the other party.36

As the Commission has stated, it considers two markets to have a comprehensive 

surveillance-sharing agreement with one another if they are both members of the Intermarket 

Surveillance Group (“ISG”), even if they do not have a separate bilateral surveillance-sharing 

agreement.37 Accordingly, based on the common membership of Nasdaq and the CME in the 

ISG,38 Nasdaq has the equivalent of a comprehensive surveillance-sharing agreement with the 

CME. Moreover, as the Commission has previously recognized, the CFTC regulates the CME 

futures market, including the CME bitcoin futures market, and thus that market is “regulated.”

39

Whether the CME is a Market of Significant Size Related to CME Bitcoin Futures 

Contracts

In the Winklevoss Order, the Commission stated that the term “significant market” or 

“market of significant size” includes a market (or group of markets) as to which (1) there is a 

reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on 

that market to successfully manipulate the ETP, so that a surveillance-sharing agreement would 

assist in detecting and deterring misconduct, and (2) it is unlikely that trading in the ETP would 

be the predominant influence on prices in that market.40 The Commission explained that this

 

36 See Winklevoss Order, 83 FR at 37592-93 (discussing Letter from Brandon Becker, 

Director, Division of Market Regulation, Commission, to Gerard D. O’Connell, 

Chairman, Intermarket Surveillance Group (June 3, 1994), available at 

http://www.sec.gov/divisions/marketreg/mr-noaction/isg060394.htm).

37 See id. at 37580 n.19.

38 See Notice, 86 FR at 50576.

39 See, e.g., WisdomTree Order, 86 FR at 69330; Wise Origin Order, 87 FR at 5534. 

40 See Winklevoss Order, 83 FR at 37594.
12

definition is illustrative and not exclusive, and that there could be other types of “significant 

markets” and “markets of significant size.”41

(1) Prong 1

The first prong of the analysis addresses whether the surveillance-sharing agreement on 

which the ETP listing exchange proposes to rely would assist in detecting and deterring

fraudulent or manipulative misconduct related to the assets held by the ETP. In the present 

proposal, the proposed ETP’s only non-cash holdings will be CME bitcoin futures contracts. 

Moreover, the proposed “significant” regulated market (i.e., the CME) with which the listing 

exchange has a surveillance-sharing agreement is the same market on which these assets trade. 

As the Commission previously recognized in the Teucrium Order, the CME’s surveillance can 

reasonably be relied upon to capture the effects on the CME bitcoin futures market caused by a 

person attempting to manipulate the proposed futures ETP by manipulating the price of CME 

bitcoin futures contracts, whether that attempt is made by directly trading on the CME bitcoin 

futures market or indirectly by trading outside of the CME bitcoin futures market, such that when 

the CME shares its surveillance information with Nasdaq, the information would assist in 

detecting and deterring fraudulent or manipulative misconduct related to the non-cash assets held 

by the proposed ETP.

42 Accordingly, for the present proposal, it is unnecessary for Nasdaq to 

 

41 See id.

42 See Teucrium Order, 87 FR at 21679. See also Notice, 86 FR at 50574 (stating that 

“[l]ike other futures products on the CME, [CME bitcoin futures] are subject to oversight 

by the CFTC, and the CME itself is empowered to enforce its own rulebook as it relates 

to the [CME bitcoin futures]” and “has a surveillance team that monitors the trading of 

[CME bitcoin futures] at all times”); 50579 (stating that as a Designated Contract Market 

(“DCM”), the CME must “certify that it has the ability to prevent manipulation, price 

distortion, and disruptions of the cash-settlement process through market surveillance, 

compliance, and enforcement practices and procedures”). This reasoning, however, does 

not extend to spot bitcoin ETPs. Spot bitcoin markets are not currently “regulated.” See,
13

establish a reasonable likelihood that a would-be manipulator would have to trade on the CME 

itself to manipulate the proposed ETP.43

Nasdaq, however, makes several arguments in support of its assertion that it is reasonably 

likely that a person attempting to manipulate the proposed ETP would have to trade on the CME 

bitcoin futures market to successfully manipulate the proposed ETP.

44 First, Nasdaq states that 

the CME bitcoin futures market has grown considerably since Commission disapprovals of a 

bitcoin futures ETP in August 2018 and a spot bitcoin ETP in January 2020, as evidenced by 

 

e.g., USBT Order, 85 FR at 12604; NYDIG Order, 87 FR at 14936 nn.65-67. If an 

exchange seeking to list a spot bitcoin ETP relies on the CME as the regulated market 

with which it has a comprehensive surveillance-sharing agreement, because the assets 

held by a spot bitcoin ETP would not be traded on the CME, that proposal would be 

significantly different from the current proposal. Because of this important difference, 

with respect to a spot bitcoin ETP, there would be reason to question whether a 

surveillance-sharing agreement with the CME would, in fact, assist in detecting and 

deterring fraudulent and manipulative misconduct affecting the price of the spot bitcoin 

held by that ETP. If, however, an exchange proposing to list and trade a spot bitcoin ETP 

identifies the CME as the regulated market with which it has a comprehensive 

surveillance-sharing agreement, the exchange could overcome the Commission’s concern 

by demonstrating that there is a reasonable likelihood that a person attempting to 

manipulate the spot bitcoin ETP would have to trade on the CME in order to manipulate 

the ETP, because such demonstration would help establish that the exchange’s 

surveillance-sharing agreement with the CME would have the intended effect of aiding in 

the detection and deterrence of fraudulent and manipulative misconduct related to the 

spot bitcoin held by the ETP. See Teucrium Order, 87 FR at 21679 n.46.

43 In addition, when considering past proposals for spot bitcoin ETPs, the Commission has 

discussed whether there is a lead-lag relationship between the regulated market (e.g., the 

CME) and the market on which the assets held by the ETP would have traded (i.e., spot 

bitcoin platforms), as part of an analysis of whether a would-be manipulator of the spot 

bitcoin ETP would need to trade on the regulated market to effect such manipulation. 

See, e.g., USBT Order, 85 FR at 12612. For the present proposal, because of the direct 

relationship between the regulated market (i.e., the CME) and the only non-cash assets 

held by the proposed ETP (i.e., CME bitcoin futures contracts) establishing a “lead-lag” 

relationship between the CME and non-CME markets is also unnecessary. See Teucrium 

Order, 87 FR at 21679 n.47.

44 See Notice, 86 FR at 50575-78.
14

empirical data on trading volume and open interest.45 Nasdaq further states that “because the 

[CME bitcoin futures] market has grown to resemble other futures markets, a lead-lag 

relationship that exists in other mature futures markets has also likely developed between the 

[CME bitcoin futures] market and the bitcoin spot market.”46 Second, Nasdaq argues that 

observations made by the Staff of the Commission’s Division of Investment Management 

regarding the maturity of the bitcoin futures market “is strong evidence that concerns previously 

raised regarding price manipulation in that market have been significantly reduced.”47 Finally, 

Nasdaq argues that the majority of academic literature concerning the lead-lag relationship 

between the bitcoin futures market and the spot bitcoin market, including studies with more 

recent data, “supports the proposition that price discovery does take place in the [CME bitcoin 

futures] market and therefore a lead-lag relationship exists between the spot and futures 

markets.”48 Nasdaq discusses two more recent studies,49 and concludes that this research 

“build[s] upon the already emerging academic consensus . . . that the [CME bitcoin futures]

 

45 See id. at 50576.

46 Id. at 50577.

47 Id. (citing Staff Statement on Funds Registered Under the Investment Company Act 

Investing in the Bitcoin Futures Market (May 11, 2021), available at: 

https://www.sec.gov/news/public-statement/staff-statement-investing-bitcoin-futuresmarket#_ftnref5) (“Staff Statement”).

48 Id.

49 See id. at 50577–78 (discussing Y. Hu, Y. Hou & L. Oxley, What role do futures markets 

play in Bitcoin pricing? Causality, cointegration and price discovery from a time-varying 

perspective, 72 Int’l Rev. of Fin. Analysis 101569 (2020) (“Hu, Hou & Oxley”); and J. 

Wu, K. Xu, X. Zheng & J. Chen, Fractional cointegration in bitcoin spot and futures 

markets, 41 J. Futures Mkts. 1478 (2021) (“Wu et al.”)).
15

market does lead the spot market such that a would-be manipulator would necessarily conclude 

that it must trade in the futures market to successfully manipulate the spot price of bitcoin.”50

The Commission disagrees with much of Nasdaq’s reasoning. Nasdaq’s assertions about 

the general upward trends in trading volume and open interest of CME bitcoin futures do not 

establish whether it is reasonably likely that a would-be manipulator would have to trade on the 

CME to successfully manipulate the proposed ETP.

51 In addition, as Nasdaq recognized, the 

Staff Statement did not reach a conclusion that the CME bitcoin futures market is a “significant 

market” or a “market of significant size” related to bitcoin in the context of the requirements of 

Section 6(b)(5) of the Exchange Act,

52 nor did it even undertake such an assessment. Moreover, 

the evidence in the record for this proposal does not support a finding that the CME leads bitcoin 

price discovery.53 As Nasdaq recognizes, studies indicate that price discovery takes place in the 

bitcoin spot market.54 Moreover, the literature discussed by Nasdaq in its filing has been 

 

50 Id. at 50578 (citing B. Kapar & J. Olmo, An analysis of price discovery between Bitcoin 

futures and spot markets, 174 Econ. Letters 62 (2019) (“Kapar & Olmo”); E. Akyildirim, 

S. Corbet, P. Katsiampa, N. Kellard & A. Sensoy, The development of Bitcoin futures: 

Exploring the interactions between cryptocurrency derivatives, 34 Fin. Res. Letters 

101234 (2020) (“Akyildirim et al.”); A. Chang, W. Herrmann & W. Cai, Efficient Price 

Discovery in the Bitcoin Markets, Wilshire Phoenix, Oct. 14, 2020, available at: 

https://www.wilshirephoenix.com/efficient-price-discovery-in-the-bitcoin-markets/

(“Wilshire Phoenix”). See also id. at 50577 (citing J. Hung, H. Liu & J. Yang, Trading 

activity and price discovery in Bitcoin futures markets, 62 J. Empirical Finance 107 

(2021) (“Hung, Liu & Yang”).

51 The Commission has previously considered and rejected similar arguments in the context 

of spot bitcoin ETPs. See, e.g., USBT Order, 85 FR at 12612; GlobalX Order, 87 FR at 

14919; NYDIG Order, 87 FR at 14938.

52 See Notice, 86 FR at 50577.

53 See also USBT Order, 85 FR at 12612; WisdomTree Order, 86 FR at 69331; Wise Origin 

Order, 87 FR at 5535; GlobalX Order, 87 FR at 14920; NYDIG Order, 87 FR at 14938; 

Teucrium Order, 87 FR at 21679.

54 See Notice, 86 FR at 50577 (citing Hung, Liu & Yang). See also C. Alexander & D. 

Heck, Price discovery in Bitcoin: The impact of unregulated markets, 50 J. Financial 
16

previously considered by the Commission.55 As discussed in past Commission orders, the 

“mixed results” of price discovery analyses, including the studies discussed by Nasdaq in its 

filing, fail to demonstrate that the CME bitcoin futures market constitutes a market of significant 

size vis-à-vis the bitcoin spot market.

56

However, none of these deficiencies in Nasdaq’s arguments concerning whether there is a 

reasonable likelihood that a would-be manipulator of the proposed ETP would have to trade on 

the CME conflicts with the Commission’s determination that, because the only non-cash assets 

held by the proposed ETP (i.e., CME bitcoin futures contracts) are traded on the CME itself,

Nasdaq’s surveillance-sharing agreement with the CME can reasonably be relied upon to assist 

in detecting and deterring fraudulent or manipulative misconduct related to those assets. Thus the 

first prong of the standard for “market of significant size” has been established.

 

Stability 100776 (2020) (finding that, in a multi-dimensional setting, including the main 

price leaders within futures, perpetuals, and spot markets, CME bitcoin futures have a 

very minor effect on price discovery; and that faster speed of adjustment and information 

absorption occurs on the unregulated spot and derivatives platforms than on CME bitcoin 

futures).

55 See supra notes 49-50 and accompanying text.

56 See, e.g., GlobalX Order, 87 FR at 14920 n.119 (concluding that papers on the lead-lag 

relationship and price discovery between bitcoin spot and futures markets, including the 

Wu et al. paper, the Hung, Liu & Yang paper, and the Akyildirim et al. paper, show that 

the academic literature is unsettled); NYDIG Order, 87 FR at 14938 (stating that Hu, Hou 

& Oxley’s Granger causality analysis had findings that are “concededly mixed” and that 

issues the Commission previously raised in the USBT Order about an unpublished 

version of that paper had not been addressed). See also USBT Order, 85 FR at 12613 

n.244 (discussing that the use of daily price data, as opposed to intraday prices, by Kapar 

& Olmo and Hu, Hou & Oxley (in an unpublished version of the paper) may not be able 

to distinguish which market incorporates new information faster); WisdomTree Order, 86 

FR at 69331 n.143 (concluding that the papers cited by a commenter, including the 

Wilshire Phoenix working paper, evidence the unsettled nature of the academic 

literature).
17

(2) Prong 2

As discussed above, in determining whether the CME bitcoin futures market constitutes a

“market of significant size” related to CME bitcoin futures contracts, the Commission has also 

considered as a second prong of the analysis whether trading in the proposed ETP would be

unlikely to be the predominant influence on prices in the CME bitcoin futures market.

57 Based on 

the facts and circumstances here, the Commission finds that this second prong has been satisfied.

Nasdaq asserts that trading in the Shares would not be the predominant force on prices in 

the CME bitcoin futures market (or spot market) because of the significant volume in the CME 

bitcoin futures market, the size of bitcoin’s market capitalization, which is approximately $1 

trillion, and the significant liquidity available in the spot market.58 Nasdaq states that, since the 

GraniteShares Order and the USBT Order were issued, there has been steady and robust growth 

observed in the CME bitcoin futures market.59 For example, according to Nasdaq, the daily 

average trading volume for CME bitcoin futures was $117 million or 3,629 contracts for the 

week including August 24, 2018, as compared to $354.75 million or 7,731 contracts for the week 

including February 26, 2020, and to $2.412 billion or 12,610 contracts for the week ending May 

28, 2021.60 Additionally, according to Nasdaq, the daily average open interest in CME bitcoin 

futures was $95.4 million or 2,956 contracts for the week including August 24, 2018, as 

compared to $250.25 million or 5,407 contracts for the week including February 26, 2020, and to 

$1.6626 billion or 8,677 contracts for the week ending May 28, 2021.

61

 

57 See Winklevoss Order, 83 FR at 37594; USBT Order, 85 FR at 12596-97.

58 See Notice, 86 FR at 50578.

59 See id. at 50576.

60 See id.

61 See id.
18

Nasdaq also states that the spot market for bitcoin is very liquid.62 According to Nasdaq, 

in February 2021, for example, the cost to buy or sell $5 million worth of bitcoin averaged 

roughly 10 basis points, with a market impact of 30 basis points.63 For a $10 million market 

order, the cost to buy or sell was roughly 20 basis points, with a market impact of 50 basis 

points.64 Stated another way, Nasdaq provides that a market participant could enter a market buy 

or sell order for $10 million and only move the market 0.5%.65 Nasdaq further asserts that more 

strategic purchases or sales (such as using limit orders and executing through OTC bitcoin desks)

would likely have a less obvious impact on the market, which Nasdaq states is consistent with 

the ability of MicroStrategy, Tesla, and Square to collectively purchase billions of dollars in 

bitcoin without resulting in significant price movements.66

Nasdaq also provides the results from a study conducted by CF Benchmarks (“CF 

Benchmarks Analysis”) to determine the extent of “slippage” (i.e., the difference between the 

expected price of a trade and the price at which the trade was actually executed), which, 

according to the Exchange, offers further evidence that trading in the Shares in unlikely to be the 

predominant influence in either the bitcoin spot or futures market.67 According to Nasdaq, the CF 

 

62 See id. at 50578.

63 See id. According to Nasdaq, these statistics are based on samples of bitcoin liquidity in 

U.S. dollars (excluding stablecoins or Euro liquidity) based on executable quotes on 

Coinbase Pro, Gemini, Bitstamp, Kraken, LMAX Exchange, Binance US, and OK Coin 

during February 2021. See id. at 50578 n.47.

64 See id. at 50578.

65 See id.

66 See id.

67 See id. (citing CF Benchmarks, “An Analysis of the Suitability of the CME CF BRR for 

the Creation of Regulated Financial Products,” December 2020 (available at: 

https://docsend.com/view/kizk7rarzaba6jxf)).
19

Benchmarks Analysis simulates the purchase of 50 bitcoins a day for 686 days (an amount 

chosen, according to the Exchange, specifically to replicate hypothetical trades by a bitcoin ETP) 

and found that the maximum amount of slippage on a particular day was 0.3%, with the 

remainder of values between 0% and 0.15%.68 According to Nasdaq, the CF Benchmarks 

Analysis demonstrates that, during the observation period, the slippage was largely negligible or, 

at most, minor.69 Nasdaq argues that, while the CF Benchmarks Analysis focuses on the impact 

of a hypothetical ETP in the bitcoin spot market, arbitrage mechanisms in the spot and futures 

market dictate that it would be unlikely for a bitcoin futures ETP such as the Trust to overrun the 

CME bitcoin futures market without also overrunning the bitcoin spot market. Accordingly, the 

Exchange explains that the CF Benchmarks Analysis further bolsters its contention that the Trust 

and other similar ETPs would be unlikely to overrun the market.70 Nasdaq finally concludes that 

the combination of CME bitcoin futures leading price discovery, the overall size of the bitcoin 

market, and the ability for market participants, including authorized participants creating and 

redeeming in-kind with the Trust, to buy or sell large amounts of bitcoin without significant 

market impact will help prevent the Shares from becoming the predominant force on pricing in 

either the bitcoin spot or CME bitcoin futures markets.71

The Commission has considered and rejected nearly identical arguments as provided 

above in past disapproval orders of spot bitcoin ETPs.

72 Moreover, as stated in the Teucrium 

 

68 See id.

69 See id.

70 See id.

71 See id.

72 See, e.g., WisdomTree Order, 86 FR at 69332; Skybridge Order, 87 FR at 3878-80; Wise 

Origin Order, 87 FR at 5536-37.
20

Order, the Commission finds arguments centered around the relationship between the bitcoin 

spot market and the CME bitcoin futures market to be inapposite where, as here, the proposed 

“significant” market (i.e., the CME bitcoin futures market) is the same as the market on which 

the proposed ETP’s only non-cash assets (i.e., CME bitcoin futures contracts) trade.73

Nonetheless, the Commission concludes that it is unlikely that trading in the proposed 

ETP would be the predominant influence on prices in the CME bitcoin futures market. In the 

Teucrium Order, the Commission stated that the CME bitcoin futures market has sufficiently 

developed to support ETPs seeking exposure to bitcoin by holding CME bitcoin futures 

contracts.74 As the order explained, the maturation of the CME bitcoin futures market since its 

inception in 2017—including, but not limited to, its overall size, volume, and liquidity, as well as 

number of years since its commencement—and evidence from the recent introduction of the 

1940 Act-registered Bitcoin Futures ETFs help support the conclusion that trading in an ETP that 

would hold CME bitcoin futures is not likely to be the predominant influence on prices in the 

CME bitcoin futures market.

75 Here, the proposed ETP also holds CME bitcoin futures contracts 

as its only non-cash holdings. The Commission, therefore, reaches the same conclusion—that 

trading in the proposed ETP is not likely to be the predominant influence on prices in the CME 

 

73 See Teucrium Order, 87 FR at 21680.

74 See id. at 21681.

75 See id. Among other things, the Commission considered that the CME bitcoin futures 

market began offering trading in bitcoin futures contracts in 2017 and, as of March 2022, 

trading in the standard-sized CME bitcoin futures contract was $38.9 billion. The 

Commission also stated that, since the launch of 1940 Act-registered Bitcoin Futures 

ETFs in October 2021, the Commission has neither observed any disruption to the CME 

bitcoin futures market, nor any evidence that the Bitcoin Futures ETFs have exerted a 

dominant influence on CME bitcoin futures prices. See id.
21

bitcoin futures market. Thus the second prong of the standard for “market of significant size” has 

been established.

The Commission, accordingly, concludes that the CME is a “significant market” related 

to CME bitcoin futures contracts, and thus that the Exchange has entered into the requisite 

surveillance-sharing agreement. Nasdaq may, therefore, rely on this surveillance-sharing 

agreement to demonstrate that its proposal to list and trade the Shares is designed to prevent 

fraudulent and manipulative acts and practices, as required by Section 6(b)(5) of the Exchange 

Act.

76

B. Exposure to Bitcoin Futures Contracts Through a Bitcoin Futures-Based 

ETP

Nasdaq states that, despite growing investor interest in bitcoin, the primary means for 

investors to gain access to bitcoin exposure remains either through CME bitcoin futures or a 

 

76 The Commission has recognized that a listing exchange could demonstrate that other 

means to prevent fraudulent and manipulative acts and practices are sufficient to justify 

dispensing with a comprehensive surveillance-sharing agreement with a regulated market 

of significant size, including by demonstrating that the bitcoin market as a whole or the 

underlying bitcoin market is uniquely and inherently resistant to fraud and manipulation. 

See USBT Order, 85 FR at 12587 n.23. Such resistance to fraud and manipulation must 

be novel and beyond those protections that exist in traditional commodities or securities 

markets. See id. at 12597. Moreover, in the context of previous spot bitcoin ETP 

proposals that have attempted to demonstrate that other means besides surveillancesharing agreements are sufficient to prevent fraudulent and manipulative acts and 

practices, the Commission has consistently rejected arguments made by the listing 

exchanges. See supra note 26. In this proposal, Nasdaq likewise asserts that, with respect 

to the proposed ETP, there are other means to prevent fraudulent and manipulative acts 

and practices sufficient to justify dispensing with the requisite surveillance-sharing 

requirement. See Notice, 86 FR at 50578-79. Because Nasdaq has the requisite 

surveillance sharing agreement, the Commission does not need to reach the separate 

question of whether Nasdaq has demonstrated that there are other means, besides the 

surveillance-sharing agreement, that would be sufficient to prevent fraudulent and 

manipulative acts and practices.
22

direct investment through bitcoin platforms or over-the-counter trading.77 Nasdaq asserts that, for 

regular investors simply wishing to express an investment view in bitcoin, investment through 

CME bitcoin futures is complex and requires active management. Moreover, direct investment in 

bitcoin brings with it significant inconvenience, complexity, expense, and risk.78 Directly 

holding bitcoin requires investors to retain and protect their private keys, which, if lost or

compromised, renders their bitcoin unavailable.79 According to Nasdaq, investment vehicles that 

invest directly in bitcoin, or investors that hold bitcoin through digital wallets or other storage 

mechanisms, must take extraordinary steps in order to protect their bitcoin, such as placing the 

bitcoin in “cold storage.”80

Nasdaq asserts that the Shares, instead, would represent a significant innovation in the 

bitcoin market by providing an inexpensive and simple vehicle for investors to gain exposure to 

bitcoin in a secure and easily accessible product that is familiar and transparent.81 As compared 

to a direct investment in bitcoin, the proposed ETP would enhance the security afforded to 

investors.82 Further, the Trust would not face risks similar to investment vehicles that hold 

bitcoin directly because the Trust’s exposure to bitcoin would be through cash-settled CME 

bitcoin futures.83

 

77 See Notice, 86 FR at 50582.

78 See id.

79 See id.

80 See id.

81 See id.

82 See id.

83 See id.
23

In essence, Nasdaq asserts that the risky nature of direct investment in spot bitcoin or a 

spot bitcoin ETP and the complex nature of direct investment in CME bitcoin futures compels 

approval of the proposed ETP. The Commission disagrees.84 Pursuant to Section 19(b)(2) of the 

Exchange Act, the Commission must approve a proposed rule change filed by a national 

securities exchange if it finds that the proposed rule change is consistent with the applicable 

requirements of the Exchange Act, and it must disapprove the filing if it does not make such a 

finding.85 Thus, even if a proposed rule change purports to protect investors from a particular 

type of investment risk—such as the susceptibility of an asset to loss or theft—the proposed rule 

change may still fail to meet the requirements under the Exchange Act.86

Regardless of Nasdaq’s assertions and for the reasons discussed herein—including that 

Nasdaq has demonstrated that it has a comprehensive surveillance-sharing agreement with a 

regulated market of significant size related to CME bitcoin futures contracts that will help 

prevent fraudulent and manipulative acts and practices,87 and that core aspects of the proposed 

ETP will be consistent with other commodity-futures ETPs that the Commission has approved, 

including with respect to the availability of pricing information, transparency of portfolio 

holdings, and types of surveillance procedures88—the Commission finds that the proposal is also 

 

84 The Commission has disagreed with similar arguments made in the context of a previous 

bitcoin futures-related ETP. See GraniteShares Order, 83 FR at 43931.

85 See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 778s(b)(2)(C).

86 See SolidX Order, 82 FR at 16259; WisdomTree Order, 86 FR at 69334; Wise Origin 

Order, 87 FR at 5538.

87 See supra Section III.A.

88 See infra Section III.C.
24

consistent with the requirement under Section 6(b)(5) that the Exchange’s rules be designed to 

protect investors and the public interest.89

C. Other Standards for Commodity-Futures ETPs

Nasdaq’s proposal sets forth aspects of the proposed ETP, including the availability of 

pricing information, transparency of portfolio holdings, and types of surveillance procedures, 

that are consistent with the other commodity-futures ETPs that the Commission has approved.90

According to Nasdaq,

91 quotation and last-sale information regarding the Shares will be 

disseminated through the facilities of the Consolidated Tape Association. Information regarding 

market price and trading of the Shares will be continually available on a real-time basis 

throughout the day on brokers’ computer screens and other electronic services. Price information 

for CME bitcoin futures can be found on the CME’s website. Intraday price quotations on 

Money Market Instruments of the type held by the Trust will be available from major brokerdealer firms and from third parties, which may provide prices free with a time delay, or “live” 

with a paid fee. For CME bitcoin futures, such intraday information will be available directly 

from the applicable listing venue. Intraday price information will also be available through 

subscription services, such as Bloomberg and Thomson Reuters, which can be accessed by 

authorized participants and other investors. Pricing information related to Money Market 

Instruments will be available through issuer websites and publicly available quotation services, 

 

89 The Commission acknowledges that, compared to trading in unregulated spot bitcoin 

markets, trading a CME bitcoin futures-based ETP on a national securities exchange may 

provide some additional protection to investors. See GraniteShares Order, 83 FR at 

43931; USBT Order, 85 FR at 12615; Teucrium Order, 87 FR at 21682 n.109.

90 See, e.g., ProShares UltraPro 3X Natural Gas ETF and ProShares UltraPro 3X Short 

Natural Gas ETF, Securities Exchange Act Release No. 86532 (July 31, 2019), 84 FR 

38312 (Aug. 6, 2019) (SR-NYSEArca-2019-02); Teucrium Order, 87 FR at 21683-84.

91 See Notice, 86 FR at 50580, 50583; Amendment No. 2, supra note 9, at 4-5.
25

such as Bloomberg, Markit, and Thomson Reuters. The CME CF BRR will be disseminated once 

daily at 4:00 p.m. London time and will be available on the CME’s website. Information 

regarding the CME CF BRR, including rules and methodologies can also be found on the CME’s 

website.

The Trust’s website will display the prior business day’s NAV. On each business day, 

before commencement of trading in the Shares during Regular Trading Hours, the Trust will 

disclose on its website the portfolio holdings of the Trust. The Trust’s website will also include a 

form of the prospectus for the Trust. The website will include the Shares’ ticker symbol and 

CUSIP information, along with additional quantitative information updated on a daily basis.92

The website will also contain pricing information for the Shares. All information disclosed on 

the Trust’s website will be publicly available at no charge.93

The Trust’s NAV will be calculated by the Sponsor once a day and will typically be

determined as of 4:00 p.m. (Eastern time) on each day the Shares trade on the Exchange. The 

Exchange or a third-party financial data provider will calculate an intra-day indicative value 

(“IIV”) by using the prior day’s closing NAV per Share as a base and updating that value during 

the Exchange’s Regular Market Session (9:30 a.m. to 4:00 p.m. (Eastern time)) to reflect changes 

in the value of the Trust’s NAV during the trading day. The IIV will be widely disseminated on a 

per Share basis every 15 seconds during the Exchange’s Regular Market Session by one or more 

 

92 The Trust’s website will include: (1) the prior business day’s NAV and the reported 

closing price; (2) the mid-point of the bid/ask price in relation to the NAV as of the time 

the NAV is calculated (“Bid/Ask Price”) and a calculation of the premium or discount of 

such price against such NAV; and (3) data in chart format displaying the frequency 

distribution of discounts and premiums of the daily Bid/Ask Price against the NAV, 

within appropriate ranges, for at least each of the four previous calendar quarters (or for 

the life of the Trust, if shorter).

93 See Notice, 86 FR at 50580; Amendment No. 2, supra note 9, at 4, 7.
26

major market data vendors. The NAV for the Trust will be disseminated daily to all market 

participants at the same time.94

The proposal also is reasonably designed to promote fair disclosure of information that 

may be necessary to price the Shares appropriately and to prevent trading in the Shares when a 

reasonable degree of transparency cannot be assured. If the Exchange becomes aware that the 

NAV with respect to the Shares is not disseminated to all market participants at the same time, it 

will halt trading in the Shares until such time as the NAV is available to all market participants. 

Further, if the IIV or the value of the underlying futures contract is not being disseminated as 

required, the Exchange may halt trading during the day in which an interruption to the 

dissemination of the IIV or the value of the underlying futures contract occurs. If the interruption 

to the dissemination of the IIV or the value of the underlying futures contract persists past the 

trading day in which it occurred, the Exchange will halt trading no later than the beginning of the 

trading day following the interruption. Trading in Shares of the Trust will be halted if conditions 

specified in Nasdaq Rule 4120(a)(9) or the circuit breaker parameters in Nasdaq Rules 

4120(a)(11) and (12) have been reached. Trading also may be halted because of market 

conditions or for reasons that, in the view of the Exchange, make trading in the Shares 

inadvisable. The Exchange states that it has a general policy prohibiting the distribution of 

material, non-public information by its employees.95 Moreover, trading of the Shares will be 

subject to Nasdaq Rule 5711(g), which sets forth certain restrictions on registered Market 

Makers in the Shares to facilitate surveillance.96

 

94 See Notice, 86 FR at 50574, 50580.

95 See id. at 50581.

96 See id. at 50580-81.
27

The Commission notes that the Exchange or the Financial Industry Regulatory Authority 

(“FINRA”), on behalf of the Exchange, or both, will communicate as needed regarding trading in 

the Shares and the underlying CME bitcoin futures with other markets and other entities that are 

members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may 

obtain information regarding trading in the Shares and the underlying CME bitcoin futures from 

such markets and entities. In addition, the Exchange may obtain information regarding trading in 

the Shares and the underlying CME bitcoin futures from other exchanges who are members or 

affiliates of the ISG or with which the Exchange has in place a comprehensive surveillancesharing agreement (“CSSA”).

97 The Exchange may also obtain information regarding trading in 

the spot bitcoin market from the exchanges with which the CME or the Exchange has entered 

into a CSSA.

98

The Exchange deems the Shares to be equity securities, thus rendering trading in the 

Shares subject to the Exchange’s existing rules governing the trading of equity securities.99 In 

support of this proposal, the Exchange represented that:100

(1) The Shares of the Trust will conform to the initial and continued listing criteria set 

forth in Nasdaq Rule 5711(g).

 

97 For a list of the current members and affiliate members of ISG, see www.isgportal.org. 

According to the Exchange, not all components of the Disclosed Portfolio for the Trust 

may trade on markets that are members of the ISG or with which the Exchange has in

place a CSSA. See Notice, 86 FR at 50581 n.68.

98 See Notice, 86 FR at 50581; Amendment No. 2, supra note 9, at 5. For additional 

discussion of the CME bitcoin futures market and how surveillance-sharing between the

Exchange and the CME via common membership in the ISG would assist in detecting 

and deterring manipulative conduct related to the Shares, see Section III.A above.

99 See Notice, 86 FR at 50581.

100 See id.; Amendment No. 2.
28

(2) The Exchange has appropriate rules to facilitate transactions in the Shares during all 

trading sessions.

(3) The Exchange believes that its surveillance procedures are adequate to properly 

monitor the trading of the Shares on the Exchange during all trading sessions and to deter and 

detect violations of Exchange rules and the applicable federal securities laws. Trading of Shares 

on the Exchange will be subject to the Exchange’s surveillance procedures for derivative 

products.

(4) Prior to the commencement of trading, the Exchange will inform its members in an 

Information Circular of the special characteristics and risks associated with trading in the Shares. 

Specifically, the Information Circular will discuss the following: (a) the procedures for purchases 

and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); 

(b) Section 10 of Nasdaq General Rule 9, which imposes suitability obligations on Nasdaq 

members with respect to recommending transactions in the Shares to customers; (c) how 

information regarding the IIV and the portfolio holdings is disseminated; (d) the risks involved in 

trading the Shares during the Pre-Market and Post-Market Sessions when an updated IIV will not 

be calculated or publicly disseminated; (e) the requirement that members deliver a prospectus to 

investors purchasing newly issued Shares prior to or concurrently with the confirmation of a 

transaction; and (f) trading information.

(5) For initial and continued listing, the Trust will be in compliance with Rule 10A-3 

under the Exchange Act.

101

 

101 17 CFR 240.10A-3.
29

(6) Under no circumstances will the Trust hold and/or invest in any assets other than 

CME bitcoin futures contracts, cash, and Money Market Instruments. The Trust will not invest in 

or hold spot bitcoin.

(7) The Trust’s investments will be consistent with the Trust’s investment objective and 

will not be used to enhance leverage. That is, the Trust’s investments will not be used to seek 

performance that is the multiple or inverse multiple (e.g., 2Xs, 3Xs, -2Xs, and -3Xs) of the 

Trust’s benchmark.

(8) A minimum of 100,000 Shares of the Trust will be outstanding at the commencement 

of trading on the Exchange.

(9) The Exchange represents that all statements and representations made in the filing 

regarding (a) the description of the reference assets or trust holdings; (b) limitations on reference 

assets, or trust holdings; (c) dissemination and availability of the reference asset or intraday 

indicative values; or (d) the applicablilty of Nasdaq listing rules specified in the filing shall

constitute continued listing standards. The Exchange will require the Trust to represent to the 

Exchange that it will advise the Exchange of any failure by the Trust to comply with the 

continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the 

Exchange Act, the Exchange will surveil for compliance with the continued listing requirements. 

If the Trust is not in compliance with the applicable listing requirements, the Exchange will 

commence delisting procedures under the Nasdaq 5800 Series.

IV. CONCLUSION

This approval order is based on all of the Exchange’s representations and description of 

the Trust, including those set forth above and in Amendment No. 2. The Commission notes that 

the Shares must comply with the requirements of Nasdaq Rule 5711(g) to be listed and traded on 

the Exchange on an initial and continuing basis.
30

For the reasons set forth above, the Commission finds, pursuant to Section 19(b)(2) of the 

Exchange Act,102 that the proposed rule change, as modified by Amendment Nos. 1 and 2, is 

consistent with the requirements of the Exchange Act and the rules and regulations thereunder 

applicable to a national securities exchange, and in particular, with Section 6(b)(5) and Section 

11A(a)(1)(C)(iii) of the Exchange Act.103

IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Exchange Act,104

that proposed rule change SR-NASDAQ-2021-066, as modified by Amendment Nos. 1 and 2,

be, and hereby is, approved.

For the Commission, by the Division of Trading and Markets, pursuant to delegated 

authority.

105

J. Matthew DeLesDernier

Assistant Secretary

 

102 15 U.S.C. 78f(b)(2).

103 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k-1(a)(1)(C)(iii).

104 15 U.S.C. 78f(b)(2).

105 17 CFR 200.30-3(a)(12).