Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68785 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 97903 

(July 13, 2023), 88 FR 46320 (‘‘Notice’’). Comments 

on the proposed rule change, as modified by 

Amendment No. 1, are available at: https://

www.sec.gov/comments/sr-cboebzx-2023-040/

srcboebzx2023040.htm. 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 98265, 

88 FR 61641 (Sept. 7, 2023). The Commission 

designated October 17, 2023, as the date by which 

the Commission shall approve or disapprove, or 

institute proceedings to determine whether to 

disapprove, the proposed rule change. 

6 15 U.S.C. 78s(b)(2)(B). 

7See Notice, supra note 3. 

8See id. at 46329. VanEck Digital Assets, LLC 

(‘‘Sponsor’’) is the sponsor of the Trust. 

9See id. The Trust generally does not intend to 

hold cash or cash equivalents; however, there may 

be situations where the Trust will unexpectedly 

hold cash on a temporary basis. See id. 

10See id. at 46331. 

11See id. 

12See id. at 46329. 

13 15 U.S.C. 78s(b)(2)(B). 

14 Id. 

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

response to prepare and is filed by 

approximately 63 companies annually. 

We estimate that 25% of the 260.56 

hours per response (65.14 hours) is 

prepared by the company for an annual 

reporting burden of 4,104 hours (65.14 

hours per response × 63 responses). 

Written comments are invited on: (a) 

whether this proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden imposed by the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication by December 4, 2023. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid 

control number. 

Please direct your written comment to 

David Bottom, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o John 

Pezzullo, 100 F Street NE, Washington, 

DC 20549 or send an email to: PRA_

Mailbox@sec.gov. 

Dated: September 28, 2023. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–21928 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98614; File No. SR– 

CboeBZX–2023–040] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove a Proposed 

Rule Change, as Modified by 

Amendment No. 1, To List and Trade 

Shares of the VanEck Bitcoin Trust 

Under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares 

September 28, 2023. 

On June 30, 2023, Cboe BZX 

Exchange, Inc. (‘‘BZX’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the VanEck Bitcoin Trust 

(‘‘Trust’’) under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. On July 

11, 2023, the Exchange filed 

Amendment No. 1 to the proposed rule 

change, which amended and replaced 

the proposed rule change in its entirety. 

The proposed rule change, as modified 

by Amendment No. 1, was published for 

comment in the Federal Register on July 

19, 2023.3

On August 31, 2023, pursuant to 

Section 19(b)(2) of the Act,4 the 

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, as modified by 

Amendment No. 1.5 This order 

institutes proceedings under Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change, as modified by 

Amendment No. 1. 

I. Summary of the Proposal, as 

Modified by Amendment No. 1 

As described in more detail in the 

Notice,7 the Exchange proposes to list 

and trade the Shares of the Trust under 

BZX Rule 14.11(e)(4), which governs the 

listing and trading of Commodity-Based 

Trust Shares on the Exchange. 

The investment objective of the Trust 

is for the Shares to reflect the 

performance of the MarketVectorTM

Bitcoin Benchmark Rate (f/k/a MVIS®

CryptoCompare Bitcoin Benchmark 

Rate) (‘‘Benchmark’’) less the expenses 

of the Trust’s operations.8 The Trust’s 

assets will consist of bitcoin held by the 

Trust’s custodian on behalf of the 

Trust.9 The administrator of the Trust 

will determine the net asset value 

(‘‘NAV’’) of the Trust on each day that 

the Exchange is open for regular trading, 

as promptly as practical after 4:00 p.m. 

ET.10 In determining the Trust’s NAV, 

the administrator will value the bitcoin 

held by the Trust based on the price set 

by the Benchmark as of 4:00 p.m. ET.11

When the Trust sells or redeems its 

Shares, it will do so in ‘‘in-kind’’ 

transactions with authorized 

participants in blocks of 50,000 

Shares.12

II. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

CboeBZX–2023–040 and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 13 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of proceedings is appropriate 

at this time in view of the legal and 

policy issues raised by the proposed 

rule change, as discussed below. 

Institution of proceedings does not 

indicate that the Commission has 

reached any conclusions with respect to 

any of the issues involved. Rather, as 

described below, the Commission seeks 

and encourages interested persons to 

provide comments on the proposed rule 

change. 

Pursuant to Section 19(b)(2)(B) of the 

Act,14 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

6(b)(5) of the Act, which requires, 

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 15

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in the 

Notice, in addition to any other 

comments they may wish to submit 

about the proposed rule change. In 

particular, the Commission seeks 

comment on the following questions 

and asks commenters to submit data 

where appropriate to support their 

views: 

1. What are commenters’ views on 

whether the proposed Trust and Shares 


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68786 Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 

16See Notice, 88 FR at 46326–28. 

17See id. at 46328. 

18See id. 

19See id. 

20See id. at 46328 n.54. 

21See id. 

22See id. at 46329. 

23See id. at 46328. 

24See id. at 46328–39. The Exchange states that 

‘‘[t]his means that the Exchange expects to receive 

market data for orders and trades from Coinbase, 

which it will utilize in surveillance of the trading 

of Commodity-Based Trust Shares.’’ Id. at 46329. 

25See id. at 46328. 

26See, e.g. Notice of Filing of Amendment No. 3 

to, and Order Instituting Proceedings to Determine 

Whether to Approve or Disapprove, a Proposed 

Rule Change 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. 98112 (Aug. 11, 2023), 

88 FR 55743 (Aug. 16, 2023) (including data from 

sponsor 21Shares US LLC that purports to show 

correlations of returns across the two-year period 

from January 20, 2021, to February 1, 2023, of no 

less than 92% among certain spot bitcoin platforms 

and between the CME bitcoin futures market and 

such spot bitcoin platforms on an hourly basis, and 

no less than 78% on a minutely basis). 

27Section 19(b)(2) of the Act, as amended by the 

Securities Acts Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants the Commission 

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Acts Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 

(1975). 

would be susceptible to manipulation? 

What are commenters’ views generally 

on whether the Exchange’s proposal is 

designed to prevent fraudulent and 

manipulative acts and practices? What 

are commenters’ views generally with 

respect to the liquidity and transparency 

of the bitcoin markets and the bitcoin 

markets’ susceptibility to manipulation? 

2. Based on data and analysis 

provided and the academic research 

cited by the Exchange,16 do commenters 

agree with the Exchange that the 

Chicago Mercantile Exchange (‘‘CME’’), 

on which CME bitcoin futures trade, 

represents a regulated market of 

significant size related to spot bitcoin? 17

What are commenters’ views on 

whether there is a reasonable likelihood 

that a person attempting to manipulate 

the Shares would also have to trade on 

the CME to manipulate the Shares? 18 Do 

commenters agree with the Exchange 

that trading in the Shares would not be 

the predominant influence on prices in 

the CME bitcoin futures market? 19

3. The Exchange states that bitcoin is 

resistant to price manipulation and that 

other means to prevent fraudulent and 

manipulative acts and practices ‘‘exist 

to justify dispensing with the requisite 

surveillance sharing agreement’’ with a 

regulated market of significant size 

related to spot bitcoin.20 In support, the 

Exchange states, among other things, 

that the geographically diverse and 

continuous nature of bitcoin trading 

make it difficult and prohibitively costly 

to manipulate the price of bitcoin, and 

that the fragmentation across bitcoin 

platforms, the relatively slow speed of 

transactions, and the capital necessary 

to maintain a significant presence on 

each trading platform make 

manipulation of bitcoin prices through 

continuous trading activity 

challenging.21 The Exchange also states 

that offering only in-kind creations and 

redemptions provides ‘‘unique 

protections against potential attempts to 

manipulate the price of the Shares’’ and 

that the price the Sponsor uses to value 

the Trust’s bitcoin ‘‘is not particularly 

important.’’ 22 Do commenters agree 

with the Exchange’s statements 

regarding the bitcoin market’s resistance 

to price manipulation? 

4. The Exchange also states that it will 

execute a surveillance-sharing 

agreement with Coinbase, Inc. 

(‘‘Coinbase’’) that is intended to 

supplement the Exchange’s market 

surveillance program.23 According to 

the Exchange, the agreement is 

‘‘expected to have the hallmarks of a 

surveillance-sharing agreement between 

two members of the [Intermarket 

Surveillance Group], which would give 

the Exchange supplemental access to 

data regarding spot [b]itcoin trades on 

Coinbase where the Exchange 

determines it is necessary as part of its 

surveillance program for the 

Commodity-Based Trust Shares.’’ 24

Based on the description of the 

surveillance-sharing agreement as 

provided by the Exchange, what are 

commenters’ views of such an 

agreement if finalized and executed? Do 

commenters agree with the Exchange 

that such an agreement with Coinbase 

would be ‘‘helpful in detecting, 

investigating, and deterring fraud and 

manipulation in the Commodity-Based 

Trust Shares’’? 25

5. Some sponsors of proposed spot 

bitcoin exchange-traded products have 

also provided data regarding the 

correlation between certain bitcoin spot 

markets and the CME bitcoin futures 

market.26 What are commenters’ views 

on the correlation between the bitcoin 

spot market and the CME bitcoin futures 

market? What are commenters’ views on 

the extent to which that correlation 

provides evidence that the CME bitcoin 

futures market is ‘‘significant’’ related to 

spot bitcoin? 

III. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

and the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval that would be 

facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.27

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change should be 

approved or disapproved by October 25, 

2023. Any person who wishes to file a 

rebuttal to any other person’s 

submission must file that rebuttal by 

November 8, 2023. 

Comments may be submitted by any 

of the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (https://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeBZX–2023–040 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CboeBZX–2023–040. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (https://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 


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Federal Register / Vol. 88, No. 191 / Wednesday, October 4, 2023 / Notices 68787 

28 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). A proposed rule change 

may take effect upon filing with the Commission if 

it is designated by the exchange as ‘‘establishing or 

changing a due, fee, or other charge imposed by the 

self-regulatory organization on any person, whether 

or not the person is a member of the self-regulatory 

organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii). 

4See Securities Exchange Act Release No. 98389 

(September 14, 2023), 88 FR 64957 (‘‘Notice’’). 

5 15 U.S.C. 78s(b)(3)(C). 

6The term ‘‘Member’’ means any registered 

broker or dealer that has been admitted to 

membership in the Exchange. See Exchange Rule 

1.5(n). 

7A physical port is utilized by a Member or nonMember to connect to the Exchange at the data 

centers where the Exchange’s servers are located. 

8 15 U.S.C. 78s(b)(3)(C). 

9 15 U.S.C. 78s(b)(1). 

10See Notice, supra note 4, at 64958. 

11See id. 

12See id. 

13See id. 

14See id. 

15See id. 

16See id. 

17See id. 

18See id. 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of the filing also 

will be available for inspection and 

copying at the principal office of the 

Exchange. Do not include personal 

identifiable information in submissions; 

you should submit only information 

that you wish to make available 

publicly. We may redact in part or 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CboeBZX–2023–040 and should be 

submitted on or before October 25, 

2023. Rebuttal comments should be 

submitted by November 8, 2023. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2023–21949 Filed 10–3–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–98650; File No. SR– 

CboeBZX–2023–068] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Suspension of 

and Order Instituting Proceedings To 

Determine Whether To Approve or 

Disapprove Proposed Rule Change To 

Amend Its Fee Schedule Related to 

Physical Port Fees 

September 29, 2023. 

I. Introduction 

On September 1, 2023, Cboe BZX 

Exchange, Inc. (the ‘‘Exchange’’ or 

‘‘BZX’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2 a 

proposed rule change (File Number SR– 

CboeBZX–2023–068) to amend its fee 

schedule to increase the monthly fee for 

10 gigabit (‘‘Gb’’) physical ports. The 

proposed rule change was immediately 

effective upon filing with the 

Commission pursuant to Section 

19(b)(3)(A) of the Act.3 The proposed 

rule change was published for comment 

in the Federal Register on September 

20, 2023.4 Pursuant to Section 

19(b)(3)(C) of the Act,5 the Commission 

is hereby: (1) temporarily suspending 

the proposed rule change; and (2) 

instituting proceedings to determine 

whether to approve or disapprove the 

proposed rule change. 

II. Background and Description of the 

Proposed Rule Change 

The Exchange proposes to amend its 

fee schedule for its equity options 

platform (‘‘BZX Options’’) relating to 

physical connectivity fees. The 

Exchange proposes to increase the 

monthly fee for 10 Gb physical ports 

from $7,500 to $8,500 per port. The 

Exchange currently assesses the 

following physical connectivity fees for 

Members 6 and non-Members on a 

monthly basis: $2,500 per physical port 

for a 1 Gb circuit and $7,500 per 

physical port for a 10 Gb circuit.7

According to the Exchange, the physical 

ports may also be used to access the 

systems for the following affiliate 

exchanges and only one monthly fee 

currently (and will continue) to apply 

per port: the Exchange’s equities 

platform (BZX Equities), Cboe EDGX 

Exchange, Inc. (options and equities 

platforms), Cboe BYX Exchange, Inc., 

Cboe EDGA Exchange, Inc., and Cboe C2 

Exchange, Inc. 

III. Suspension of the Proposed Rule 

Change 

Pursuant to Section 19(b)(3)(C) of the 

Act,8 at any time within 60 days of the 

date of filing of an immediately effective 

proposed rule change pursuant to 

Section 19(b)(1) of the Act,9 the 

Commission summarily may 

temporarily suspend the change in the 

rules of a self-regulatory organization 

(‘‘SRO’’) if it appears to the Commission 

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. The Commission believes a 

temporary suspension of the proposed 

rule change is necessary and 

appropriate to allow for additional 

analysis of the proposed rule change’s 

consistency with the Act and the rules 

thereunder. 

In support of the proposal, the 

Exchange states its belief that the 

proposed fee change is reasonable as it 

reflects a moderate increase in physical 

connectivity fees for 10 Gb physical 

ports.10 The Exchange states that the 

current 10 Gb physical port fee has 

remained unchanged since June 2018.11

The Exchange states that during this 5- 

year span there has been an average 

inflation rate of 3.9%, producing a 

cumulative price increase of 

approximately 21.1% inflation since the 

fee for the 10 Gb physical port was last 

modified.12 In support of its claim of 

reasonableness, the Exchange compares 

its proposed rate increase from the rates 

adopted five years ago of approximately 

13% to the cumulative inflation rate of 

21.1%.13

In further support of the proposal, the 

Exchange states that the proposed fee is 

reasonable, fair, and equitable, and not 

unfairly discriminatory.14 The Exchange 

believes that the proposed fee is 

reasonable as it is still in line with, or 

even lower than, amounts assessed by 

other exchanges for similar 

connections.15 The Exchange also states 

its belief that the fee is not unfairly 

discriminatory, because the fee would 

be assessed uniformly across all market 

participants that purchase the physical 

ports.16 The Exchange states that the fee 

is equitable because increasing the fee 

for 10 Gb physical ports and charging a 

higher fee as compared to the 1 Gb 

physical port as the 1 Gb physical port 

is 1⁄10 the size of the 10 Gb physical port 

and does not offer access to many of the 

products and services offered by the 

Exchange.17 The Exchange also states its 

belief the proposed fee is reasonably 

and appropriately allocated because, the 

Exchange states, market participants 

that purchase 10 Gb physical ports use 

the most bandwidth and therefore 

consume the most resources from the 

network.18

In further support of its proposed fee, 

the Exchange states that Members and 

non-Members will continue to choose 

the method of connectivity based on 

their specific needs and no brokerdealer is required to become a Member 

of, or connect directly to, the 


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