[Federal Register Volume 88, Number 245 (Friday, December 22, 2023)]
[Notices]
[Pages 88668-88683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28194]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99197; File No. SR-CboeBZX-2023-101]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To List and Trade Shares of the Pando 
Asset Spot Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based 
Trust Shares

December 18, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 5, 2023, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change to list and trade shares of the Pando Asset Spot 
Bitcoin Trust (the ``Trust''),\3\ under BZX Rule 14.11(e)(4), 
Commodity-Based Trust Shares.
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    \3\ The Trust was formed as a Delaware statutory trust on 
November 16, 2023, and is operated as a grantor trust for U.S. 
federal tax purposes. The Trust has no fixed termination date.
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    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary,

[[Page 88669]]

and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares under BZX Rule 
14.11(e)(4),\4\ which governs the listing and trading of Commodity-
Based Trust Shares on the Exchange.\5\ Pando Asset AG (``Sponsor''). 
The Shares will be registered with the Commission by means of the 
Trust's registration statement on Form S-1 (the ``Registration 
Statement'').\6\ Coinbase Custody Trust Company, LLC (the ``Bitcoin 
Custodian''), which is a third-party U.S.-based trust company and 
qualified custodian, will be responsible for custody of the Trust's 
bitcoin holdings.
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    \4\ The Commission approved BZX Rule 14.11(e)(4) in Securities 
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 
(September 6, 2011) (SR-BATS-2011-018).
    \5\ Any of the statements or representations regarding the index 
composition, the description of the portfolio or reference assets, 
limitations on portfolio holdings or reference assets, dissemination 
and availability of index, reference asset, intraday indicative 
values, and Verified Intraday Indicative Values (as applicable), or 
the applicability of Exchange listing rules specified in any filing 
to list a series of Other Securities (collectively, ``Continued 
Listing Representations'') shall constitute continued listing 
requirements for the securities listed on the Exchange.
    \6\ See Form S-1 Registration Statement filed on November 29, 
2023 (Registration No. 333-275781). The Registration Statement is 
not yet effective, and the Shares will not trade on the Exchange 
until such time that the Registration Statement is effective.
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    As further discussed below, the Commission has historically 
approved or disapproved exchange filings to list and trade series of 
Trust Issued Receipts,\7\ including spot-based Commodity-Based Trust 
Shares, on the basis of whether the listing exchange has in place a 
comprehensive surveillance sharing agreement with a regulated market of 
significant size related to the underlying commodity to be held.\8\ 
Prior orders from the Commission have pointed out that in every prior 
approval order for Commodity-Based Trust Shares, there has been a 
derivatives market that represents the regulated market of significant 
size, generally a Commodity Futures Trading Commission (the ``CFTC'') 
regulated futures market.\9\

[[Page 88670]]

Further to this point, the Commission's prior orders have noted that 
the spot commodities and currency markets for which it has previously 
approved spot exchange-traded products (``ETPs'') are generally 
unregulated and that the Commission relied on the underlying futures 
market as the regulated market of significant size that formed the 
basis for approving the series of Currency \10\ and Commodity-Based 
Trust Shares, including gold, silver, platinum, palladium, copper, and 
other commodities and currencies. The Commission specifically noted in 
the Winklevoss Order that the First Gold Approval Order ``was based on 
an assumption that the currency market and the spot gold market were 
largely unregulated.'' \11\
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    \7\ See Exchange Rule 14.11(f)(1).
    \8\ See Securities Exchange Act Release No. 83723 (July 26, 
2018), 83 FR 37579 (August 1, 2018). This proposal was subsequently 
disapproved by the Commission. See Securities Exchange Act Release 
No. 83723 (July 26, 2018), 83 FR 37579 (August 1, 2018) (the 
``Winklevoss Order'').
    \9\ See streetTRACKS Gold Shares, Exchange Act Release No. 50603 
(Oct. 28, 2004), 69 FR 64614, 64618-19 (Nov. 5, 2004) (SR-NYSE-2004-
22) (the ``First Gold Approval Order''); iShares COMEX Gold Trust, 
Exchange Act Release No. 51058 (Jan. 19, 2005), 70 FR 3749, 3751, 
3754-55 (Jan. 26, 2005) (SR-Amex-2004-38); iShares Silver Trust, 
Exchange Act Release No. 53521 (Mar. 20, 2006), 71 FR 14967, 14968, 
14973-74 (Mar. 24, 2006) (SR-Amex-2005-072); ETFS Gold Trust, 
Exchange Act Release No. 59895 (May 8, 2009), 74 FR 22993, 22994-95, 
22998, 23000 (May 15, 2009) (SR-NYSEArca-2009-40); ETFS Silver 
Trust, Exchange Act Release No. 59781 (Apr. 17, 2009), 74 FR 18771, 
18772, 18775-77 (Apr. 24, 2009) (SR-NYSEArca-2009-28); ETFS 
Palladium Trust, Exchange Act Release No. 61220 (Dec. 22, 2009), 74 
FR 68895, 68896 (Dec. 29, 2009) (SR-NYSEArca-2009-94) (notice of 
proposed rule change included NYSE Arca's representation that 
``[t]he most significant palladium futures exchanges are the NYMEX 
and the Tokyo Commodity Exchange,'' that ``NYMEX is the largest 
exchange in the world for trading precious metals futures and 
options,'' and that NYSE Arca ``may obtain trading information via 
the Intermarket Surveillance Group,'' of which NYMEX is a member, 
Exchange Act Release No. 60971 (Nov. 9, 2009), 74 FR 59283, 59285-
86, 59291 (Nov. 17, 2009)); ETFS Platinum Trust, Exchange Act 
Release No. 61219 (Dec. 22, 2009), 74 FR 68886, 68887-88 (Dec. 29, 
2009) (SR-NYSEArca-2009-95) (notice of proposed rule change included 
NYSE Arca's representation that ``[t]he most significant platinum 
futures exchanges are the NYMEX and the Tokyo Commodity Exchange,'' 
that ``NYMEX is the largest exchange in the world for trading 
precious metals futures and options,'' and that NYSE Arca ``may 
obtain trading information via the Intermarket Surveillance Group,'' 
of which NYMEX is a member, Exchange Act Release No. 60970 (Nov. 9, 
2009), 74 FR 59319, 59321, 59327 (Nov. 17, 2009)); Sprott Physical 
Gold Trust, Exchange Act Release No. 61496 (Feb. 4, 2010), 75 FR 
6758, 6760 (Feb. 10, 2010) (SR-NYSEArca-2009-113) (notice of 
proposed rule change included NYSE Arca's representation that the 
COMEX is one of the ``major world gold markets,'' that NYSE Arca 
``may obtain trading information via the Intermarket Surveillance 
Group,'' and that NYMEX, of which COMEX is a division, is a member 
of the Intermarket Surveillance Group, Exchange Act Release No. 
61236 (Dec. 23, 2009), 75 FR 170, 171, 174 (Jan. 4, 2010)); Sprott 
Physical Silver Trust, Exchange Act Release No. 63043 (Oct. 5, 
2010), 75 FR 62615, 62616, 62619, 62621 (Oct. 12, 2010) (SR-
NYSEArca-2010-84); ETFS Precious Metals Basket Trust, Exchange Act 
Release No. 62692 (Aug. 11, 2010), 75 FR 50789, 50790 (Aug. 17, 
2010) (SR-NYSEArca-2010-56) (notice of proposed rule change included 
NYSE Arca's representation that ``the most significant gold, silver, 
platinum and palladium futures exchanges are the COMEX and the 
TOCOM'' and that NYSE Arca ``may obtain trading information via the 
Intermarket Surveillance Group,'' of which COMEX is a member, 
Exchange Act Release No. 62402 (Jun. 29, 2010), 75 FR 39292, 39295, 
39298 (July 8, 2010)); ETFS White Metals Basket Trust, Exchange Act 
Release No. 62875 (Sept. 9, 2010), 75 FR 56156, 56158 (Sept. 15, 
2010) (SR-NYSEArca-2010-71) (notice of proposed rule change included 
NYSE Arca's representation that ``the most significant silver, 
platinum and palladium futures exchanges are the COMEX and the 
TOCOM'' and that NYSE Arca ``may obtain trading information via the 
Intermarket Surveillance Group,'' of which COMEX is a member, 
Exchange Act Release No. 62620 (July 30, 2010), 75 FR 47655, 47657, 
47660 (Aug. 6, 2010)); ETFS Asian Gold Trust, Exchange Act Release 
No. 63464 (Dec. 8, 2010), 75 FR 77926, 77928 (Dec. 14, 2010) (SR-
NYSEArca-2010-95) (notice of proposed rule change included NYSE 
Arca's representation that ``the most significant gold futures 
exchanges are the COMEX and the Tokyo Commodity Exchange,'' that 
``COMEX is the largest exchange in the world for trading precious 
metals futures and options,'' and that NYSE Arca ``may obtain 
trading information via the Intermarket Surveillance Group,'' of 
which COMEX is a member, Exchange Act Release No. 63267 (Nov. 8, 
2010), 75 FR 69494, 69496, 69500-01 (Nov. 12, 2010)); Sprott 
Physical Platinum and Palladium Trust, Exchange Act Release No. 
68430 (Dec. 13, 2012), 77 FR 75239, 75240-41 (Dec. 19, 2012) (SR-
NYSEArca-2012–111) (notice of proposed rule change included 
NYSE Arca's representation that ``[f]utures on platinum and 
palladium are traded on two major exchanges: The New York Mercantile 
Exchange . . . and Tokyo Commodities Exchange'' and that NYSE Arca 
``may obtain trading information via the Intermarket Surveillance 
Group,'' of which COMEX is a member, Exchange Act Release No. 68101 
(Oct. 24, 2012), 77 FR 65732, 65733, 65739 (Oct. 30, 2012)); APMEX 
Physical--1 oz. Gold Redeemable Trust, Exchange Act Release No. 
66930 (May 7, 2012), 77 FR 27817, 27818 (May 11, 2012) (SR-NYSEArca-
2012-18) (notice of proposed rule change included NYSE Arca's 
representation that NYSE Arca ``may obtain trading information via 
the Intermarket Surveillance Group,'' of which COMEX is a member, 
and that gold futures are traded on COMEX and the Tokyo Commodity 
Exchange, with a cross-reference to the proposed rule change to list 
and trade shares of the ETFS Gold Trust, in which NYSE Arca 
represented that COMEX is one of the ``major world gold markets,'' 
Exchange Act Release No. 66627 (Mar. 20, 2012), 77 FR 17539, 17542-
43, 17547 (Mar. 26, 2012)); JPM XF Physical Copper Trust, Exchange 
Act Release No. 68440 (Dec. 14, 2012), 77 FR 75468, 75469-70, 75472, 
75485-86 (Dec. 20, 2012) (SR-NYSEArca-2012-28); iShares Copper 
Trust, Exchange Act Release No. 68973 (Feb. 22, 2013), 78 FR 13726, 
13727, 13729-30, 13739-40 (Feb. 28, 2013) (SR-NYSEArca-2012-66); 
First Trust Gold Trust, Exchange Act Release No. 70195 (Aug. 14, 
2013), 78 FR 51239, 51240 (Aug. 20, 2013) (SR-NYSEArca-2013-61) 
(notice of proposed rule change included NYSE Arca's representation 
that FINRA, on behalf of the exchange, may obtain trading 
information regarding gold futures and options on gold futures from 
members of the Intermarket Surveillance Group, including COMEX, or 
from markets ``with which [NYSE Arca] has in place a comprehensive 
surveillance sharing agreement,'' and that gold futures are traded 
on COMEX and the Tokyo Commodity Exchange, with a cross-reference to 
the proposed rule change to list and trade shares of the ETFS Gold 
Trust, in which NYSE Arca represented that COMEX is one of the 
``major world gold markets,'' Exchange Act Release No. 69847 (June 
25, 2013), 78 FR 39399, 39400, 39405 (July 1, 2013)); Merk Gold 
Trust, Exchange Act Release No. 71378 (Jan. 23, 2014), 79 FR 4786, 
4786-87 (Jan. 29, 2014) (SR-NYSEArca-2013-137) (notice of proposed 
rule change included NYSE Arca's representation that ``COMEX is the 
largest gold futures and options exchange'' and that NYSE Arca ``may 
obtain trading information via the Intermarket Surveillance Group,'' 
including with respect to transactions occurring on COMEX pursuant 
to CME and NYMEX's membership, or from exchanges ``with which [NYSE 
Arca] has in place a comprehensive surveillance sharing agreement,'' 
Exchange Act Release No. 71038 (Dec. 11, 2013), 78 FR 76367, 76369, 
76374 (Dec. 17, 2013)); Long Dollar Gold Trust, Exchange Act Release 
No. 79518 (Dec. 9, 2016), 81 FR 90876, 90881, 90886, 90888 (Dec. 15, 
2016) (SR-NYSEArca-2016-84).
    \10\ See Exchange Rule 14.11(e)(5).
    \11\ See Winklevoss Order at 37592.
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    As such, the regulated market of significant size test does not 
require that the spot bitcoin market be regulated in order for the 
Commission to approve this proposal, and precedent makes clear that an 
underlying market for a spot commodity or currency being a regulated 
market would actually be an exception to the norm. These largely 
unregulated currency and commodity markets do not provide the same 
protections as the markets that are subject to the Commission's 
oversight, but the Commission has consistently looked to surveillance 
sharing agreements with the underlying futures market in order to 
determine whether such products were consistent with the Act. With this 
in mind, the Chicago Mercantile Exchange (``CME'') bitcoin futures 
(``Bitcoin Futures'') market is the proper market to consider in 
determining whether there is a related regulated market of significant 
size.
    Further to this point, the Exchange notes that the Commission has 
approved proposals related to the listing and trading of funds that 
would primarily hold CME Bitcoin Futures that are registered under the 
Securities Act of 1933.\12\ In the Teucrium Approval, the Commission 
found the CME Bitcoin Futures market to be a regulated market of 
significant size as it relates to CME Bitcoin Futures; a position that 
represents a departure from prior disapproval orders for ETPs that 
would hold actual bitcoin instead of derivatives contracts (``Spot 
Bitcoin ETPs'') that use the exact same pricing methodology as the CME 
Bitcoin Futures. In the recently decided Grayscale Investments, LLC v 
Securities and Exchange Commission,\13\ however, the court addressed 
this conflict by finding that the SEC had failed to provide a coherent 
explanation as to why it had approved the Bitcoin Futures ETPs while 
disapproving the proposal to list and trade shares of the Grayscale 
Bitcoin Trust and vacating the disapproval order.\14\ As further 
discussed below, both the Exchange and the Sponsor believe that this 
proposal and the included analysis are sufficient to establish that the 
CME Bitcoin Futures market represents a regulated market of significant 
size as it relates both to the CME Bitcoin Futures market and to the 
spot bitcoin market and that this proposal should be approved, 
consistent with the Teucrium precedent and in view of the court's 
findings relating to the Grayscale Order.
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    \12\ See Exchange Act Release No. 94620 (April 6, 2022), 87 FR 
21676 (April 12, 2022) (the ``Teucrium Approval'') and 94853 (May 5, 
2022) (collectively, with the Teucrium Approval, the ``Bitcoin 
Futures Approvals'').
    \13\ Grayscale Investments, LLC v. Securities and Exchange 
Commission, et al., Case No. 22-1142 (the ``Grayscale Order'').
    \14\ Id.
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    Finally, as discussed in greater detail below, by using 
professional custodians and other service providers, the Trust provides 
investors interested in exposure to bitcoin via the securities markets 
with important protections that are not always available to investors 
that invest directly in bitcoin, including protection against 
counterparty insolvency, cyber attacks, and other risks. For example, 
an exchange-traded vehicle such as the Trust, which will be subject to 
the registration and periodic reporting requirements of the 1933 Act 
and the Exchange Act, would offer U.S. investors an alternative to 
directing their bitcoin investments into loosely regulated offshore 
vehicles (including loosely regulated centralized exchanges that have 
since faced bankruptcy proceedings or other insolvencies).
Background
    Bitcoin is a digital asset based on the decentralized, open source 
protocol of the peer-to-peer computer network launched in 2009 that 
governs the creation, movement, and ownership of bitcoin and hosts the 
public ledger, or ``blockchain,'' on which all bitcoin transactions are 
recorded (the ``Bitcoin Network'' or ``Bitcoin''). The decentralized 
nature of the Bitcoin Network allows parties to transact directly with 
one another based on cryptographic proof instead of relying on a 
trusted third party. The protocol also lays out the rate of issuance of 
new bitcoin within the Bitcoin Network, a rate that is reduced by half 
approximately every four years with an eventual hard cap of 21 million. 
It's generally understood that the combination of these two features--a 
systemic hard cap of 21 million bitcoin and the ability to transact 
trustlessly with anyone connected to the Bitcoin Network--gives bitcoin 
its value. The first rule filing proposing to list an ETP to provide 
exposure to bitcoin in the U.S. was submitted by the Exchange on June 
30, 2016.\15\ At that time, blockchain technology, and digital assets 
that utilized it, were relatively new to the broader public. The market 
capitalization of all bitcoin in existence at that time was 
approximately $10 billion. No registered offering of digital asset 
securities or shares in an investment vehicle with exposure to bitcoin 
or any other cryptocurrency had yet been conducted, and the regulated 
infrastructure for conducting a digital asset securities offering had 
not begun to develop.\16\ Similarly, regulated U.S. Bitcoin Futures 
contracts did not exist. The CFTC had determined that bitcoin is a 
commodity,\17\ but had not engaged in significant enforcement actions 
in the space. The New York Department of Financial Services (``NYDFS'') 
adopted its final BitLicense regulatory framework in 2015, but had only 
approved four entities to engage in activities relating to virtual 
currencies (whether through granting a BitLicense or a limited-purpose 
trust charter) as of June 30, 2016.\18\ While the first over-the-

[[Page 88671]]

counter bitcoin fund launched in 2013, public trading was limited and 
the fund had only $60 million in assets.\19\ There were very few, if 
any, traditional financial institutions engaged in the space, whether 
through investment or providing services to digital asset companies. In 
January 2018, the staff of the Commission noted in a letter to the 
Investment Company Institute (``ICI'') and Securities Industry and 
Financial Markets Association (``SIFMA'') that it was not aware, at 
that time, of a single custodian providing fund custodial services for 
digital assets.\20\ The digital assets financial ecosystem, including 
bitcoin, has progressed significantly in the intervening years. The 
development of a regulated market for digital asset securities has 
significantly evolved, with market participants having conducted 
registered public offerings of both digital asset securities \21\ and 
shares in investment vehicles holding Bitcoin Futures.\22\ 
Additionally, licensed and regulated service providers have emerged to 
provide fund custodial services for digital assets, among other 
services, including the bitcoin Custodian. For example, in February 
2023, the Commission proposed to amend Rule 206(4)-2 under the Advisers 
Act of 1940 (the ``custody rule'') to expand the scope beyond client 
funds and securities to include all crypto assets, among other assets; 
\23\ in May 2021, the staff of the Commission released a statement 
permitting open-end mutual funds to invest in cash-settled Bitcoin 
Futures; in December 2020, the Commission adopted a conditional no-
action position permitting certain special purpose broker-dealers to 
custody digital asset securities under Rule 15c3-3 under the Exchange 
Act (the ``Custody Statement''); \24\ in September 2020, the staff of 
the Commission released a no-action letter permitting certain broker-
dealers to operate a non-custodial Alternative Trading System (``ATS'') 
for digital asset securities, subject to specified conditions; \25\ in 
October 2019, the staff of the Commission granted temporary relief from 
the clearing agency registration requirement to an entity seeking to 
establish a securities clearance and settlement system based on 
distributed ledger technology,\26\ and multiple transfer agents who 
provide services for digital asset securities registered with the 
Commission.\27\
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    \15\ See Winklevoss Order.
    \16\ Digital assets that are securities under U.S. law are 
referred to throughout this proposal as ``digital asset 
securities.'' All other digital assets, including bitcoin, are 
referred to interchangeably as ``cryptocurrencies'' or ``virtual 
currencies.'' The term ``digital assets'' refers to all digital 
assets, including both digital asset securities and 
cryptocurrencies, together.
    \17\ See ``In the Matter of Coinflip, Inc.'' (``Coinflip'') 
(CFTC Docket 15-29 (September 17, 2015)) (order instituting 
proceedings pursuant to Sections 6(c) and 6(d) of the CEA, making 
findings and imposing remedial sanctions), in which the CFTC stated: 
``Section 1a(9) of the CEA defines `commodity' to include, among 
other things, `all services, rights, and interests in which 
contracts for future delivery are presently or in the future dealt 
in.' 7 U.S.C. 1a(9). The definition of a `commodity' is broad. See, 
e.g., Board of Trade of City of Chicago v. SEC, 677 F. 2d 1137, 1142 
(7th Cir. 1982). Bitcoin and other virtual currencies are 
encompassed in the definition and properly defined as commodities.''
    \18\ A list of virtual currency businesses that are entities 
regulated by the NYDFS is available on the NYDFS website. See 
https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_businesses/regulated_entities.
    \19\ Data as of March 31, 2016 according to publicly available 
filings. See Bitcoin Investment Trust Form S-1, dated May 27, 2016, 
available: https://www.sec.gov/Archives/edgar/data/1588489/000095012316017801/filename1.htm.
    \20\ See letter from Dalia Blass, Director, Division of 
Investment Management, U.S. Securities and Exchange Commission to 
Paul Schott Stevens, President & CEO, Investment Company Institute 
and Timothy W. Cameron, Asset Management Group--Head, Securities 
Industry and Financial Markets Association (January 18, 2018), 
available at https://www.sec.gov/divisions/investment/noaction/2018/cryptocurrency-011818.htm.
    \21\ See Prospectus supplement filed pursuant to Rule 424(b)(1) 
for INX Tokens (Registration No. 333-233363), available at: https://www.sec.gov/Archives/edgar/data/1725882/000121390020023202/ea125858-424b1_inxlimited.htm.
    \22\ See Prospectus filed by Stone Ridge Trust VI on behalf of 
NYDIG Bitcoin Strategy Trust Registration, available at: https://www.sec.gov/Archives/edgar/data/1764894/000119312519309942/d693146d497.htm.
    \23\ See Investment Advisers Act Release No. 6240 88 FR 14672 
(March 9, 2023) (Safeguarding Advisory Client Assets).
    \24\ See Securities Exchange Act Release No. 90788, 86 FR 11627 
(February 26, 2021) (File Number S7-25-20) (Custody of Digital Asset 
Securities by Special Purpose Broker-Dealers).
    \25\ See letter from Elizabeth Baird, Deputy Director, Division 
of Trading and Markets, U.S. Securities and Exchange Commission to 
Kris Dailey, Vice President, Risk Oversight & Operational 
Regulation, Financial Industry Regulatory Authority (September 25, 
2020), available at: https://www.sec.gov/divisions/marketreg/mr-noaction/2020/finra-ats-role-in-settlement-of-digital-asset-security-trades-09252020.pdf.
    \26\ See letter from Jeffrey S. Mooney, Associate Director, 
Division of Trading and Markets, U.S. Securities and Exchange 
Commission to Charles G. Cascarilla & Daniel M. Burstein, Paxos 
Trust Company, LLC (October 28, 2019), available at: https://www.sec.gov/divisions/marketreg/mr-noaction/2019/paxos-trust-company-102819-17a.pdf.
    \27\ See, e.g., Form TA-1/A filed by Tokensoft Transfer Agent 
LLC (CIK: 0001794142) on January 8, 2021, available at: https://www.sec.gov/Archives/edgar/data/1794142/000179414219000001/xslFTA1X01/primary_doc.xml.
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    Outside the Commission's purview, the regulatory landscape has also 
changed significantly since 2016, and cryptocurrency markets have grown 
and evolved as well. The market for bitcoin is approximately 100 times 
larger, having at one point reached a market capitalization of over $1 
trillion.\28\ According to the CME Bitcoin Futures Report, from 
February 13, 2023 through March 27, 2023, CFTC regulated Bitcoin 
Futures represented between $750 million and $3.2 billion in notional 
trading volume on CME Bitcoin Futures on a daily basis.\29\ Open 
interest was over $1.4 billion for the entirety of the period and at 
one point was over $2 billion.\30\ ETPs that primarily hold CME Bitcoin 
Futures have raised over $1 billion dollars in assets. The CFTC has 
exercised its regulatory jurisdiction in bringing a number of 
enforcement actions related to bitcoin and against trading platforms 
that offer cryptocurrency trading.\31\ As of February 14, 2023, the 
NYDFS has granted no fewer than thirty-four BitLicenses,\32\ including 
to established public payment companies like PayPal Holdings, Inc. and 
Square, Inc., and limited purpose trust charters to entities providing 
cryptocurrency custody services. In addition, the Treasury's Office of 
Foreign Assets Control (``OFAC'') has brought enforcement actions over 
apparent violations of applicable sanctions laws in connection with the 
provision of wallet management services for digital assets.\33\
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    \28\ As of December 1, 2021, the total market capitalization of 
all bitcoin in circulation was approximately $1.08 trillion.
    \29\ Data sourced from the CME Bitcoin Futures Report: 30 March 
2023, available at: https://www.cmegroup.com/markets/cryptocurrencies/bitcoin/bitcoin.volume.htm.
    \30\ See, e.g., Id.
    \31\ The CFTC's annual report for Fiscal Year 2022 (which ended 
on September 30, 2022) noted that the CFTC completed the fiscal year 
with 18 enforcement filings related to digital assets. ``Digital 
asset actions included manipulation, a $1.7 billion fraudulent 
scheme, and a decentralized autonomous organization (DAO) failing to 
register as a SEF or FCM or to seek DCM designation.'' See CFTC FY 
2022 Agency Financial Report, available at: https://www.cftc.gov/media/7941/2022afr/download. Additionally, the CFTC filed on March 
27, 2023, a civil enforcement action against the owner/operators of 
the Binance centralized digital asset trading platform, which is one 
of the largest bitcoin derivative exchanges. See CFTC Release No. 
8680-23 (March 27, 2023), available at: https://www.cftc.gov/PressRoom/PressReleases/8680-23.
    \32\ See https://www.dfs.ny.gov/virtual_currency_businesses.
    \33\ See U.S. Department of the Treasury Enforcement Release: 
``OFAC Enters Into $98,830 Settlement with BitGo, Inc. for Apparent 
Violations of Multiple Sanctions Programs Related to Digital 
Currency Transactions'' (December 30, 2020) available at: https://home.treasury.gov/system/files/126/20201230_bitgo.pdf. See also U.S. 
Department of the Treasury Enforcement Release: ``Treasury Announces 
Two Enforcement Actions for over $24M and $29M Against Virtual 
Currency Exchange, Bittrex, Inc.'' (October 11, 2022) available at: 
https://home.treasury.gov/news/press-releases/jy1006. See also U.S. 
Department of Treasure Enforcement Release ``OFAC Settles with 
Virtual Currency Exchange Kraken for $362,158.70 Related to Apparent 
Violations of the Iranian Transactions and Sanctions Regulations'' 
(November 28, 2022) available at: https://home.treasury.gov/system/files/126/20221128_kraken.pdf.
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    In addition to the regulatory developments laid out above, more 
traditional financial market participants have become more active in 
cryptocurrency trading and investment activity: large insurance 
companies, asset managers, university endowments, pension funds, and 
even historically bitcoin skeptical fund managers have allocated to 
bitcoin investments. As noted in the Financial Stability Oversight 
Council (``FSOC'') report on Digital Asset Financial Stability Risks 
and Regulation, ``[i]ndustry surveys suggest that the scale of these 
investments grew quickly during the

[[Page 88672]]

boom in crypto-asset markets through late 2021. In June 2022, PwC 
estimated that the number of crypto-specialist hedge funds was more 
than 300 globally, with $4.1 billion in assets under management. In 
addition, in a survey PwC found that 38 percent of surveyed traditional 
hedge funds were currently investing in `digital assets,' compared to 
21 percent the year prior.'' \34\ The largest over-the-counter bitcoin 
fund previously filed a Form 10 registration statement, which the staff 
of the Commission reviewed and which took effect automatically, and is 
now a reporting company.\35\ Established U.S. exchange-traded companies 
like Tesla, Inc., MicroStrategy Incorporated, and Square, Inc., among 
others, have announced substantial investments in bitcoin in amounts as 
large as $1.5 billion (Tesla) and $425 million (MicroStrategy). The 
foregoing examples demonstrate that bitcoin has gained mainstream usage 
and recognition across the U.S. market.
---------------------------------------------------------------------------

    \34\ See the FSOC ``Report on Digital Asset Financial Stability 
Risks and Regulation 2022'' (October 3, 2022) (at footnote 26) at 
https://home.treasury.gov/system/files/261/FSOC-Digital-Assets-Report-2022.pdf.
    \35\ See Letter from Division of Corporation Finance, Office of 
Real Estate & Construction to Barry E. Silbert, Chief Executive 
Officer, Grayscale Bitcoin Trust (January 31, 2020) https://www.sec.gov/Archives/edgar/data/1588489/000000000020000953/filename1.pdf.
---------------------------------------------------------------------------

    Despite these developments, access for U.S. retail investors to 
gain exposure to bitcoin via a transparent and U.S. regulated, U.S. 
exchange-traded vehicle remains limited. Instead current options 
include: (i) facing the counter-party risk, legal uncertainty, 
technical risk, and complexity associated with accessing spot bitcoin; 
(ii) over-the-counter bitcoin funds (``OTC Bitcoin Trusts'') with high 
management fees and potentially volatile premiums and discounts; \36\ 
(iii) purchasing shares of operating companies that they believe will 
provide proxy exposure to bitcoin with limited disclosure about the 
associated risks; \37\ or (iv) purchasing Bitcoin Futures exchange-
traded funds (``ETFs''), as defined below, which represent a sub-
optimal structure for long-term investors that will cost them 
significant amounts of money every year compared to Spot Bitcoin ETPs, 
as further discussed below. Meanwhile, investors in many other 
countries, including Canada and Brazil, are able to use more 
traditional exchange listed and traded products (including ETFs holding 
physical bitcoin) to gain exposure to bitcoin. Similarly, investors in 
Switzerland and across Europe have access to ETPs which trade on 
regulated exchanges and provide exposure to a broad array of spot 
crypto assets. U.S. investors, by contrast, are left with fewer and 
more risky means of getting bitcoin exposure, as described above.\38\
---------------------------------------------------------------------------

    \36\ The premium and discount for OTC Bitcoin Trusts is known to 
move rapidly. For example, over the period of 12/21/20 to 1/21/21, 
the premium for the largest OTC Bitcoin Trust went from 40.18% to 
2.79%. While the price of bitcoin appreciated significantly during 
this period and NAV per share increased by 41.25%, the price per 
share increased by only 3.58%. This means that investors are buying 
shares of a fund that experiences significant volatility in its 
premium and discount outside of the fluctuations in price of the 
underlying asset. Even operating within the normal premium and 
discount range, it's possible for an investor to buy shares of an 
OTC Bitcoin Trust only to have those shares quickly lose 10% or more 
in dollar value excluding any movement of the price of bitcoin. That 
is to say--the price of bitcoin could have stayed exactly the same 
from market close on one day to market open the next, yet the value 
of the shares held by the investor decreased only because of the 
fluctuation of the premium. As more investment vehicles, including 
mutual funds and ETFs, seek to gain exposure to bitcoin, the easiest 
option for a buy and hold strategy for such vehicles is often an OTC 
Bitcoin Trust, meaning that even investors that do not directly buy 
OTC Bitcoin Trusts can be disadvantaged by extreme premiums (or 
discounts) and premium/discount volatility.
    \37\ A number of operating companies engaged in unrelated 
businesses--such as Tesla (a car manufacturer) and MicroStrategy (an 
enterprise software company)--have announced investments as large as 
$5.3 billion in bitcoin. Without access to bitcoin exchange-traded 
products, retail investors seeking investment exposure to bitcoin 
may end up purchasing shares in these companies in order to gain the 
exposure to bitcoin that they seek. In fact, mainstream financial 
news networks have written a number of articles providing investors 
with guidance for obtaining bitcoin exposure through publicly traded 
companies (such as MicroStrategy, Tesla, and bitcoin mining 
companies, among others) instead of dealing with the complications 
associated with buying spot bitcoin in the absence of a Bitcoin ETP. 
See e.g., ``7 public companies with exposure to bitcoin'' (February 
8, 2021) available at: https://finance.yahoo.com/news/7-public-companies-with-exposure-to-bitcoin-154201525.html; and ``Want to get 
in the crypto trade without holding bitcoin yourself? Here are some 
investing ideas'' (February 19, 2021) available at: https://www.cnbc.com/2021/02/19/ways-to-invest-in-bitcoin-without-holding-the-cryptocurrency-yourself-.html.
    \38\ The Exchange notes that the list of countries above is not 
exhaustive and that securities regulators in a number of additional 
countries have either approved or otherwise allowed the listing and 
trading of Spot Bitcoin ETPs.
---------------------------------------------------------------------------

    To this point, the lack of a Spot Bitcoin ETP exposes U.S. investor 
assets to significant risk because investors that would otherwise seek 
crypto asset exposure through a Spot Bitcoin ETP are forced to find 
alternative exposure through generally riskier means. For instance, 
many U.S. investors that held their digital assets in accounts at 
FTX,\39\ Celsius Network LLC,\40\ BlockFi Inc.\41\ and Voyager Digital 
Holdings, Inc.\42\ have become unsecured creditors in the insolvencies 
of those entities. If a Spot Bitcoin ETP was available, it is likely 
that at least a portion of the billions of dollars tied up in those 
proceedings would still reside in the brokerage accounts of U.S. 
investors, having instead been invested in a transparent, regulated, 
and well-understood structure--a Spot Bitcoin ETP. To this point, 
approval of a Spot Bitcoin ETP would represent a major win for the 
protection of U.S. investors in the crypto asset space. As further 
described below, the Trust, like all other series of Commodity-Based 
Trust Shares, is designed to protect investors against the risk of 
losses through fraud and insolvency that arise by holding bitcoin, on 
centralized platforms.
---------------------------------------------------------------------------

    \39\ See FTX Trading Ltd., et al., Case No. 22-11068.
    \40\ See Celsius Network LLC, et al., Case No. 22-10964.
    \41\ See BlockFi Inc., Case No. 22-19361.
    \42\ See Voyager Digital Holdings, Inc., et al., Case No. 22-
10943.
---------------------------------------------------------------------------

    Additionally, investors in other countries, specifically Canada, 
generally pay lower fees than U.S. retail investors that invest in OTC 
Bitcoin Trusts due to the fee pressure that results from increased 
competition among available bitcoin investment options. Without an 
approved and regulated Spot Bitcoin ETP in the U.S. as a viable 
alternative, U.S. investors could seek to purchase shares of non-U.S. 
bitcoin vehicles in order to get access to bitcoin exposure. Given the 
separate regulatory regime and the potential difficulties associated 
with any international litigation, such an arrangement would create 
more risk exposure for U.S. investors than they would otherwise have 
with a U.S. exchange listed ETP. In addition to the benefits to U.S. 
investors articulated throughout this proposal, approving this proposal 
(and others like it) would provide U.S. ETFs and mutual funds with a 
U.S.-listed and regulated product to provide such access rather than 
relying on either more expensive, riskier U.S. based products or 
products listed and primarily regulated in other countries.
Bitcoin Futures ETFs
    The Exchange and Sponsor applaud the Commission for allowing the 
launch of ETFs registered under the Investment Company Act of 1940, as 
amended (the ``1940 Act'') and the Bitcoin Futures Approvals that 
provide exposure to bitcoin primarily through CME Bitcoin Futures 
(``Bitcoin Futures ETFs''). Allowing such products to list and trade is 
a productive first step in providing U.S. investors and traders with 
transparent, exchange-listed tools for expressing an investment view on 
bitcoin. The Bitcoin Futures Approvals,

[[Page 88673]]

however, have created a logical inconsistency in the application of the 
standard the Commission applies when considering Bitcoin ETP proposals.
    As discussed further below, the standard applicable to Bitcoin ETPs 
is whether the listing exchange has in place a comprehensive 
surveillance sharing agreement with a regulated market of significant 
size in the underlying asset. Previous disapproval orders have made 
clear that a market that constitutes a regulated market of significant 
size is generally a futures and/or options market based on the 
underlying reference asset rather than the spot commodity markets, 
which are often unregulated.\43\ Leaving aside the analysis of that 
standard until later in this proposal,\44\ the Exchange believes that 
the following rationale the Commission applied to a Bitcoin Futures ETF 
should result in the Commission approving this and other Spot Bitcoin 
ETP proposals:
---------------------------------------------------------------------------

    \43\ See Winklevoss Order at 37593, specifically footnote 202, 
which includes the language from numerous approval orders for which 
the underlying futures markets formed the basis for approving series 
of ETPs that hold physical metals, including gold, silver, 
palladium, platinum, and precious metals more broadly; and 37600, 
specifically where the Commission provides that ``when the spot 
market is unregulated--the requirement of preventing fraudulent and 
manipulative acts may possibly be satisfied by showing that the ETP 
listing market has entered into a surveillance-sharing agreement 
with a regulated market of significant size in derivatives related 
to the underlying asset.'' As noted above, the Exchange believes 
that these citations are particularly helpful in making clear that 
the spot market for a spot commodity ETP need not be ``regulated'' 
in order for a spot commodity ETP to be approved by the Commission, 
and in fact that it's been the common historical practice of the 
Commission to rely on such derivatives markets as the regulated 
market of significant size because such spot commodities markets are 
largely unregulated.
    \44\ As further outlined below, both the Exchange and the 
Sponsor believe that the Bitcoin Futures market represents a 
regulated market of significant size and that this proposal and 
others like it should be approved on this basis.

    The CME ``comprehensively surveils futures market conditions and 
price movements on a real-time and ongoing basis in order to detect 
and prevent price distortions, including price distortions caused by 
manipulative efforts.'' Thus, 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. As such, when the CME shares its 
surveillance information with Arca, the information would assist in 
detecting and deterring fraudulent or manipulative misconduct 
related to the non-cash assets held by the proposed ETP.\45\
---------------------------------------------------------------------------

    \45\ See Teucrium Approval at 21679.

    CME Bitcoin Futures pricing is based on pricing from spot bitcoin 
markets. The statement from the Teucrium Approval that ``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 . . . indirectly by trading outside of the 
CME Bitcoin Futures market,'' makes clear that the Commission believes 
that CME's surveillance can capture the effects of trading on the 
relevant spot markets on the pricing of CME Bitcoin Futures.
    This was further acknowledged in the ``Grayscale lawsuit'' \46\ 
when Judge Rao stated ``. . . the Commission in the Teucrium order 
recognizes that the futures prices are influenced by the spot prices, 
and the Commission concludes in approving futures ETPs that any fraud 
on the spot market can be adequately addressed by the fact that the 
futures market is a regulated one . . .''. The Exchange agrees with the 
Commission on this point and notes that the pricing mechanism 
applicable to the Shares is similar to that of the CME Bitcoin Futures.
---------------------------------------------------------------------------

    \46\ Grayscale Investments, LLC v. Securities and Exchange 
Commission, et al., Case No. 22-1142.
---------------------------------------------------------------------------

    In addition to potentially being more susceptible to manipulation 
than a Spot Bitcoin ETP, the structure of Bitcoin Futures ETFs provides 
negative outcomes for buy and hold investors as compared to a Spot 
Bitcoin ETP.\47\ Specifically, the cost of rolling CME Bitcoin Futures 
contracts will cause the Bitcoin Futures ETFs to lag the performance of 
bitcoin itself and would cost U.S. investors significant amounts of 
money on an annual basis compared to Spot Bitcoin ETPs. Such rolling 
costs would not be required for Spot Bitcoin ETPs that hold bitcoin. 
Further, Bitcoin Futures ETFs could potentially hit CME position 
limits, which would force a Bitcoin Futures ETF to invest in non-
futures assets for bitcoin exposure and cause potential investor 
confusion and lack of certainty about what such Bitcoin Futures ETFs 
are actually holding to try to get exposure to bitcoin, which would 
also materially change the risk profile associated with such an ETF. 
While Bitcoin Futures ETFs represent a useful trading tool, they are 
clearly sub-optimal as the sole exchange traded vehicle structure for 
U.S. investors that are looking for long-term exposure to bitcoin and 
could, based on the calculations above, unnecessarily cost U.S. 
investors significant amounts of money every year compared to Spot 
Bitcoin ETPs. The Exchange believes that any proposal to list and trade 
a Spot Bitcoin ETP should be reviewed by the Commission with this 
important investor protection context in mind.
---------------------------------------------------------------------------

    \47\ See e.g., ``Bitcoin ETF's Success Could Come at 
Trustholders' Expense,'' Wall Street Journal (October 24, 2021), 
available at: https://www.wsj.com/articles/bitcoin-etfs-success-could-come-at-fundholders-expense-11635080580; ``Physical Bitcoin 
ETF Prospects Accelerate,'' ETF.com (October 25, 2021), available 
at: https://www.etf.com/sections/blog/physical-bitcoin-etf-prospects-shine?nopaging=1&__cf_chl_jschl_tk__=pmd_JsK.fjXz9eAQW9zol0qpzhXDrrlpIVdoCloLXbLjl44-1635476946-0-gqNtZGzNApCjcnBszQql.
---------------------------------------------------------------------------

    Based on the foregoing, the Exchange and Sponsor believe that an 
objective review of the proposals to list Spot Bitcoin ETPs compared to 
and in view of the Bitcoin Futures ETFs and the Bitcoin Futures 
Approvals as well as limitations of existing approved product 
structures, would lead to the conclusion that Spot Bitcoin ETPs would 
benefit U.S. investors and should be available to U.S. investors. As 
such, this proposal and other comparable proposals to list and trade 
Spot Bitcoin ETPs should be approved by the Commission. In summary, 
U.S. investors lose significant amounts of money from holding Bitcoin 
Futures ETFs as compared to Spot Bitcoin ETPs, losses which could be 
prevented by the Commission approving Spot Bitcoin ETPs. Additionally, 
any concerns related to preventing fraudulent and manipulative acts and 
practices related to Spot Bitcoin ETPs would apply equally to the spot 
markets underlying the futures contracts held by a Bitcoin Futures ETF. 
Both the Exchange and Sponsor believe that the CME Bitcoin Futures 
market is a regulated market of significant size and that such 
manipulation concerns are mitigated, as described extensively below. 
After allowing and approving the listing and trading of Bitcoin Futures 
ETFs that hold primarily CME Bitcoin Futures, however, the only 
consistent outcome would be approving Spot Bitcoin ETPs on the basis 
that the CME Bitcoin Futures market is a regulated market of 
significant size.
    Given the current landscape, approving this proposal (and others 
like it) and allowing Spot Bitcoin ETPs to be listed and traded 
alongside Bitcoin Futures ETFs would establish a consistent regulatory 
approach, provide U.S. investors with choice in product structures for 
bitcoin exposure, and offer flexibility in the means of gaining 
exposure to bitcoin through transparent, regulated, U.S. exchange-
listed vehicles.

[[Page 88674]]

Bitcoin Futures
    CME began offering trading in Bitcoin Futures in 2017. Each 
contract represents five bitcoin and is based on the CME CF Bitcoin 
Reference Rate.\48\ The contracts trade and settle like other cash-
settled commodity futures contracts. Nearly every measurable metric 
related to Bitcoin Futures has generally trended up since launch, 
although certain notional volume calculations have decreased roughly in 
line with the decrease in the price of bitcoin. For example, there were 
143,215 Bitcoin Futures contracts traded in April 2023 (approximately 
$20.7 billion) compared to 193,182 ($5 billion), 104,713 ($3.9 
billion), 118,714 ($42.7 billion), and 111,964 ($23.2 billion) 
contracts traded in April 2019, April 2020, April 2021, and April 2022, 
respectively.\49\
---------------------------------------------------------------------------

    \48\ According to CME, the CME CF Bitcoin Reference Rate 
aggregates the trade flow of major bitcoin spot exchanges during a 
specific calculation window into a once-a-day reference rate of the 
U.S. dollar price of bitcoin. Calculation rules are geared toward 
maximum transparency and real-time replicability in underlying spot 
markets, including Bitstamp, Coinbase, Gemini, itBit, and Kraken. 
For additional information, refer to https://www.cmegroup.com/trading/cryptocurrency-indices/cf-bitcoin-reference-rate.html?redirect=/trading/cf-bitcoin-reference-rate.html.
    \49\ Source: CME, Yahoo Finance 4/30/23.
    [GRAPHIC] [TIFF OMITTED] TN22DE23.015
    
    The number of large open interest holders \50\ and unique accounts 
trading Bitcoin Futures have both increased, even in the face of 
heightened bitcoin price volatility.
---------------------------------------------------------------------------

    \50\ A large open interest holder in Bitcoin Futures is an 
entity that holds at least 25 contracts, which is the equivalent of 
125 bitcoin. At a price of approximately $29,268.81 per bitcoin on 
4/30/2023, more than 100 firms had outstanding positions of greater 
than $3.65 million in Bitcoin Futures.
[GRAPHIC] [TIFF OMITTED] TN22DE23.016


[[Page 88675]]


[GRAPHIC] [TIFF OMITTED] TN22DE23.017

    The Sponsor further believes that publicly available research, 
including research done as part of rule filings proposing to list and 
trade shares of Spot Bitcoin ETPs, corroborates the overall trend 
outlined above and supports the thesis that the Bitcoin Futures pricing 
leads the spot market and, thus, a person attempting to manipulate the 
Shares would also have to trade on that market to manipulate the ETP. 
Specifically, the Sponsor believes that such research indicates that 
Bitcoin Futures lead the bitcoin spot market in price formation.\51\
---------------------------------------------------------------------------

    \51\ See Exchange Act Releases No. 94080 (January 27, 2022), 87 
FR 5527 (April 12, 2022) (specifically ``Amendment No. 1 to the 
Proposed Rule Change To List and Trade Shares of the Wise Origin 
Bitcoin Trust Under BZX Rule 14.11(3)(4), Commodity-Based Trust 
Shares''); 94982 (May 25, 2022), 87 FR 33250 (June 1, 2022); 94844 
(May 4, 2022), 87 FR 28043 (May 10, 2022); and 93445 (October 28, 
2021), 86 FR 60695 (November 3, 2021). See also Hu, Y., Hou, Y. and 
Oxley, L. (2019). ``What role do futures markets play in Bitcoin 
pricing? Causality, cointegration and price discovery from a time-
varying perspective'' (available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7481826/). This academic research paper concludes 
that ``There exist no episodes where the Bitcoin spot markets 
dominates the price discovery processes with regard to Bitcoin 
futures. This points to a conclusion that the price formation 
originates solely in the Bitcoin futures market. We can, therefore, 
conclude that the Bitcoin futures markets dominate the dynamic price 
discovery process based upon time-varying information share 
measures. Overall, price discovery seems to occur in the Bitcoin 
futures markets rather than the underlying spot market based upon a 
time-varying perspective.''
---------------------------------------------------------------------------

Section 6(b)(5) and the Applicable Standards
    The Commission has approved numerous series of Trust Issued 
Receipts,\52\ including Commodity-Based Trust Shares,\53\ to be listed 
on U.S. national securities exchanges. In order for any proposed rule 
change from an exchange to be approved, the Commission must determine 
that, among other things, the proposal is consistent with the 
requirements of Section 6(b)(5) of the Act, specifically including: (i) 
the requirement that a national securities exchange's rules are 
designed to prevent fraudulent and manipulative acts and practices; 
\54\ and (ii) the requirement that an exchange proposal be designed, in 
general, to protect investors and the public interest. The Exchange 
believes that this proposal is consistent with the requirements of 
Section 6(b)(5) of the Act and that this filing sufficiently 
demonstrates that the CME Bitcoin Futures market represents a regulated 
market of significant size and that, on the whole, the manipulation 
concerns previously articulated by the Commission are sufficiently 
mitigated to the point that they are outweighed by quantifiable 
investor protection issues that would be resolved by approving this 
proposal.
---------------------------------------------------------------------------

    \52\ See Exchange Rule 14.11(f).
    \53\ Commodity-Based Trust Shares, as described in Exchange Rule 
14.11(e)(4), are a type of Trust Issued Receipt.
    \54\ As the Exchange has stated in a number of other public 
documents, it continues to believe 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. The geographically 
diverse and continuous nature of bitcoin trading render it difficult 
and prohibitively costly to manipulate the price of bitcoin. 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. To the 
extent that there are bitcoin exchanges engaged in or allowing wash 
trading or other activity intended to manipulate the price of 
bitcoin on other markets, such pricing does not normally impact 
prices on other exchange because participants will generally ignore 
markets with quotes that they deem non-executable. Moreover, the 
linkage between the bitcoin markets and the presence of arbitrageurs 
in those markets means that the manipulation of the price of bitcoin 
price on any single venue would require manipulation of the global 
bitcoin price in order to be effective. Arbitrageurs must have funds 
distributed across multiple trading platforms in order to take 
advantage of temporary price dislocations, thereby making it 
unlikely that there will be strong concentration of funds on any 
particular bitcoin exchange or OTC platform. As a result, the 
potential for manipulation on a trading platform would require 
overcoming the liquidity supply of such arbitrageurs who are 
effectively eliminating any cross-market pricing differences.
---------------------------------------------------------------------------

(i) Designed To Prevent Fraudulent and Manipulative Acts and Practices
    In order to meet this standard in a proposal to list and trade a 
series of Commodity-Based Trust Shares, the Commission requires that an 
exchange demonstrate that there is a comprehensive surveillance-sharing 
agreement in place \55\ with a regulated

[[Page 88676]]

market of significant size. Both the Exchange and CME are members of 
the intermarket surveillance group (``ISG'').\56\ The only remaining 
issue to be addressed is whether the Bitcoin Futures market constitutes 
a market of significant size, which both the Exchange and the Sponsor 
believe that it does. The terms ``significant market'' and ``market of 
significant size'' include a market (or group of markets) as to which: 
(a) there is a reasonable likelihood that a person attempting to 
manipulate the ETP would also have to trade on that market to 
manipulate the ETP, so that a surveillance-sharing agreement would 
assist the listing exchange in detecting and deterring misconduct; and 
(b) it is unlikely that trading in the ETP would be the predominant 
influence on prices in that market.\57\
---------------------------------------------------------------------------

    \55\ As previously articulated by the Commission, ``The standard 
requires such surveillance-sharing agreements since ``they provide a 
necessary deterrent to manipulation because they facilitate the 
availability of information needed to fully investigate a 
manipulation if it were to occur.'' 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 underlying securities 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. 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 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.'' The 
Commission has historically held that joint membership in the ISG 
constitutes such a surveillance-sharing agreement. See Securities 
Exchange Act Release No. 88284 (February 26, 2020), 85 FR 12595 
(March 3, 2020) (SR-NYSEArca-2019-39) (the ``Wilshire Phoenix 
Disapproval'').
    \56\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.
    \57\ See Wilshire Phoenix Disapproval.
---------------------------------------------------------------------------

    The Commission has also recognized that the ``regulated market of 
significant size'' standard is not the only means for satisfying 
Section 6(b)(5) of the act, specifically providing that a listing 
exchange could demonstrate that ``other means to prevent fraudulent and 
manipulative acts and practices'' are sufficient to justify dispensing 
with the requisite surveillance-sharing agreement.\58\
---------------------------------------------------------------------------

    \58\ See Winklevoss Order at 37580. The Commission has also 
specifically noted that it ``is not applying a `cannot be 
manipulated' standard; instead, the Commission is examining whether 
the proposal meets the requirements of the Exchange Act and, 
pursuant to its Rules of Practice, places the burden on the listing 
exchange to demonstrate the validity of its contentions and to 
establish that the requirements of the Exchange Act have been met.'' 
Id. at 37582.
---------------------------------------------------------------------------

(a) Manipulation of the ETP
    According to the research and analysis presented above, the Bitcoin 
Futures market is the leading market for bitcoin price formation. Where 
Bitcoin Futures lead the price in the spot market such that a potential 
manipulator of the bitcoin spot market (beyond just the constituents of 
the Reference Rate) \59\ would have to participate in the Bitcoin 
Futures market, it follows that a potential manipulator of the Shares 
would similarly have to transact in the Bitcoin Futures market because 
the Index is based on spot prices. As such, the Exchange believes that 
part (a) of the significant market test outlined above is satisfied and 
that common membership in ISG between the Exchange and CME would assist 
the listing exchange in detecting and deterring misconduct in the 
trading of the Shares.
---------------------------------------------------------------------------

    \59\ As further described below, the ``Index'' for the Trust is 
the CME CF Bitcoin Reference Rate.
---------------------------------------------------------------------------

(b) Predominant Influence on Prices in Spot and Bitcoin Futures
    The Exchange and Sponsor also believe that trading in the Shares 
would not be the predominant force influencing prices in the Bitcoin 
Futures market or spot market for a number of reasons, including the 
significant daily trading volume in the Bitcoin Futures market, the 
size of bitcoin's market capitalization, and the significant liquidity 
available in the spot market. In addition to the Bitcoin Futures market 
data points cited above, the spot market for bitcoin is also very 
liquid. As the court found in the Grayscale Order, the Exchange and the 
Sponsor submit that ``[b]ecause the spot market is deeper and more 
liquid than the futures market, manipulation should be more difficult, 
not less.''
(c) Other Means To Prevent Fraudulent and Manipulative Acts and 
Practices
    The Commission also permits a listing exchange to demonstrate that 
``other means to prevent fraudulent and manipulative acts and 
practices'' are sufficient to justify dispensing with the requisite 
surveillance-sharing agreement. The Exchange and Sponsor believe that 
such conditions are present.
(ii) Designed To Protect Investors and the Public Interest
    The Exchange believes that the proposal is designed to protect 
investors and the public interest. Over the past several years, U.S. 
investor exposure to bitcoin through OTC Bitcoin Trusts has grown into 
the tens of billions of dollars, including through Bitcoin Futures 
ETFs. With that growth, so too has grown the quantifiable investor 
protection issues to U.S. investors including in connection with roll 
costs for Bitcoin Futures ETFs and premium/discount volatility and 
management fees for OTC Bitcoin Trusts. The Exchange believes that the 
concerns related to the prevention of fraudulent and manipulative acts 
and practices have been sufficiently addressed for this proposal to be 
consistent with the Act and, to the extent that the Commission 
disagrees with that assertion, such concerns are now outweighed by 
investor protection concerns. As such, the Exchange believes that 
approving this proposal (and comparable proposals) provides the 
Commission with the opportunity to allow U.S. investors to access 
bitcoin in a regulated and transparent exchange-traded vehicle that 
would act to limit risk and benefit U.S. investors by: (i) reducing 
premium and discount volatility as compared to OTC investment vehicles; 
(ii) increasing competitive pressure on management fees resulting in 
fee compression/reductions; (iii) reducing risks and costs as compared 
to those associated with investing in Bitcoin Futures ETFs and 
operating companies that represent imperfect proxies for bitcoin 
exposure; and (iv) providing an alternative to custodying spot bitcoin.
Pando Asset Spot Bitcoin Trust
    Donald J. Puglisi is the trustee (``Trustee''). The Bitcoin 
Custodian will be responsible for safekeeping of the Trust's bitcoin.
    According to the Registration Statement, each Share will represent 
a fractional undivided beneficial interest and ownership in the Trust. 
The Trust's assets will consist of bitcoin held by the Bitcoin 
Custodian on behalf of the Trust and cash holdings, if any.
    According to the Registration Statement, the Trust is neither an 
investment company registered under the Investment Company Act of 1940, 
as amended,\60\ nor a commodity pool for purposes of the Commodity 
Exchange Act (``CEA''), and none of the Trust, the Trust or the Sponsor 
is subject to regulation as a commodity pool operator or a commodity 
trading adviser in connection with the Shares.
---------------------------------------------------------------------------

    \60\ 15 U.S.C. 80a-1.
---------------------------------------------------------------------------

    When the Trust sells or redeems its Shares, it will do so in cash 
or ``in-kind'' transactions in blocks of 5,000 Shares (a ``Creation 
Basket'') at the Trust's NAV. Authorized participants will deliver, or 
facilitate the delivery of, cash or bitcoin to the Trust's account with 
the Bitcoin Custodian in exchange for Shares when they purchase Shares, 
and the Trust, through the Bitcoin Custodian, will deliver cash or 
bitcoin to such authorized participants when they redeem Shares. 
Authorized participants may then offer Shares to the public at prices 
that depend on various factors, including the supply and demand for 
Shares, the value of the Trust's assets, and market conditions at the 
time of a transaction. Shareholders who buy or sell Shares during the 
day from their broker may do so at a premium or discount relative to 
the NAV of the Shares of the Trust.
Investment Objective
    According to the Registration Statement and as further described

[[Page 88677]]

below, the investment objective of the Trust is to generally reflect 
the performance of the price of bitcoin before payment of the Trust's 
expenses. In seeking to achieve its investment objective, the Trust 
will only hold bitcoin, cash and cash equivalents. The Trust will value 
its Shares daily based on the value of bitcoin as reflected by the CME 
CF Bitcoin Reference Rate (the ``Index''), which is an independently 
calculated value based on an aggregation of executed trade flow of 
major bitcoin spot exchanges. Specifically, the Index is calculated 
based on certain transactions of all of its constituent bitcoin 
exchanges, which are currently Bitstamp, Coinbase, itBit, Kraken, 
Gemini, and LMAX Digital, and which may change from time to time. If 
the Index is not available or the Sponsor determines, in its sole 
discretion, that the Index should not be used, the Trust's holdings may 
be fair valued in accordance with the policy approved by the Sponsor.
The Index
    As described in the Registration Statement, the Trust will 
determine the bitcoin Index price and value its Shares daily based on 
the value of bitcoin as reflected by the Index. The Index is calculated 
daily and aggregates the notional value of bitcoin trading activity 
across major bitcoin spot exchanges. The Index uses the same 
methodology as the CME CF Bitcoin Reference Rate (``BRR''), including 
utilizing the same constituent bitcoin exchanges, which is the 
underlying rate to determine settlement of CME Bitcoin Futures 
contracts, except that the Index is calculated as of 4 p.m. ET, whereas 
the BRR is calculated as of 4 p.m. London time. The Index is designed 
based on the International Organization of Securities Commissions 
(``IOSCO'') Principals for Financial Benchmarks. The administrator of 
the Index is CF Benchmarks Ltd. (the ``Index Provider'').
    The Index was created to facilitate financial products based on 
bitcoin. It serves as a once-a-day benchmark rate of the U.S. dollar 
price of bitcoin (USD/BTC), calculated as of 4:00 p.m. ET. The Index 
aggregates the trade flow of several bitcoin exchanges, during an 
observation window between 3:00 p.m. and 4:00 p.m. ET into the U.S. 
dollar price of one bitcoin at 4:00 p.m. ET. Specifically, the Index is 
calculated based on the ``Relevant Transactions'' (as defined below) of 
all of its constituent bitcoin exchanges, which are currently Coinbase, 
Bitstamp, Kraken, itBit, LMAX Digital and Gemini (the ``Constituent 
Platforms''), as follows:
    <bullet> All Relevant Transactions are added to a joint list, 
recording the time of execution, trade price and size for each 
transaction.
    <bullet> The list is partitioned by timestamp into 12 equally-sized 
time intervals of 5 (five) minute length.
    <bullet> For each partition separately, the volume-weighted median 
trade price is calculated from the trade prices and sizes of all 
Relevant Transactions, i.e., across all Constituent Platforms. A 
volume-weighted median differs from a standard median in that a 
weighting factor, in this case trade size, is factored into the 
calculation.
    <bullet> The Index is then determined by the equally-weighted 
average of the volume medians of all partitions.
    The Index does not include any futures prices in its methodology. A 
``Relevant Transaction'' is any cryptocurrency versus U.S. dollar spot 
trade that occurs during the observation window between 3:00 p.m. and 
4:00 p.m. ET on a Constituent Platform in the BTC/USD pair that is 
reported and disseminated by a Constituent Platform through its 
publicly available Application Programming Interface (``API'') and 
observed by the Index Provider.
    The Sponsor believes that the use of the Index is reflective of a 
reasonable valuation of the average spot price of bitcoin and that 
resistance to manipulation is a priority aim of its design methodology. 
The methodology: (i) takes an observation period and divides it into 
equal partitions of time; (ii) then calculates the volume-weighted 
median of all transactions within each partition; and (iii) the value 
is determined from the arithmetic mean of the volume-weighted medians, 
equally weighted. By employing the foregoing steps, the Index thereby 
seeks to ensure that transactions in bitcoin conducted at outlying 
prices do not have an undue effect on the value of the Index, large 
trades or clusters of trades transacted over a short period of time 
will not have an undue influence on the Index value, and the effect of 
large trades at prices that deviate from the prevailing price are 
mitigated from having an undue influence on the Index value.
    In addition, the Sponsor notes that an oversight function is 
implemented by the Index Provider in seeking to ensure that the Index 
is administered through codified policies for Index integrity.
    Index data and the description of the Index are based on 
information made publicly available by the Index Provider on its 
website at https://www.cfbenchmarks.com.
Net Asset Value
    NAV means the total assets of the Trust (which includes bitcoin and 
cash holdings) less total liabilities of the Trust. The Administrator 
will determine the NAV of the Trust on each day that the Exchange is 
open for regular trading, as promptly as practical after 4:00 p.m. EST. 
The NAV of the Trust is the aggregate value of the Trust's assets less 
its estimated accrued but unpaid liabilities (which include accrued 
expenses). In determining the Trust's NAV, the Administrator values the 
bitcoin held by the Trust based on the price set by the Index as of 
4:00 p.m. EST. The Administrator also determines the NAV per Share.
    The NAV for the Trust will be calculated by the Administrator once 
a day and will be disseminated daily to all market participants at the 
same time. Quotation and last-sale information regarding the Shares 
will be disseminated through the facilities of the Consolidated Tape 
Association (``CTA'').
    If the Index is not available or the Sponsor determines, in its 
sole discretion, that the Index should not be used, the Trust's 
holdings may be fair valued in accordance with the policy approved by 
the Sponsor.
Intraday Indicative Value
    The Trust will provide an Intraday Indicative Value (``IIV'') per 
Share updated every 15 seconds, as calculated by the Exchange or a 
third-party financial data provider during the Exchange's Regular 
Trading Hours (9:30 a.m. to 4:00 p.m. E.T.). The IIV will be calculated 
by using the prior day's closing NAV per Share as a base and updating 
that value during Regular Trading Hours to reflect changes in the value 
of the Trust's bitcoin holdings during the trading day.
    The IIV disseminated during Regular Trading Hours should not be 
viewed as an actual real-time update of the NAV, which will be 
calculated only once at the end of each trading day. The IIV will be 
widely disseminated on a per Share basis every 15 seconds during the 
Exchange's Regular Trading Hours by one or more major market data 
vendors. In addition, the IIV will be available through on-line 
information services.
Availability of Information
    In addition to the price transparency of the Index, the Trust will 
provide information regarding the Trust's bitcoin holdings as well as 
additional data regarding the Trust. The Trust will provide an Intraday 
Indicative Value (``IIV'') per Share updated every 15

[[Page 88678]]

seconds, as calculated by the Exchange or a third-party financial data 
provider during the Exchange's Regular Trading Hours (9:30 a.m. to 4:00 
p.m. E.T.). The IIV will be calculated by using the prior day's closing 
NAV per Share as a base and updating that value during Regular Trading 
Hours to reflect changes in the value of the Trust's bitcoin holdings 
during the trading day.
    The IIV disseminated during Regular Trading Hours should not be 
viewed as an actual real-time update of the NAV, which will be 
calculated only once at the end of each trading day. The IIV will be 
widely disseminated on a per Share basis every 15 seconds during the 
Exchange's Regular Trading Hours by one or more major market data 
vendors. In addition, the IIV will be available through on-line 
information services.
    The website for the Trust, which will be publicly accessible at no 
charge, will contain the following information: (a) the current NAV per 
Share daily and the prior business day's NAV and the reported closing 
price; (b) the BZX Official Closing Price \61\ in relation to the NAV 
as of the time the NAV is calculated and a calculation of the premium 
or discount of such price against such NAV; (c) data in chart form 
displaying the frequency distribution of discounts and premiums of the 
Official Closing Price against the NAV, within appropriate ranges for 
each of the four previous calendar quarters (or for the life of the 
Trust, if shorter); (d) the prospectus; and (e) other applicable 
quantitative information. The Trust will also disseminate the Trust's 
holdings on a daily basis on the Trust's website. The price of bitcoin 
will be made available by one or more major market data vendors, 
updated at least every 15 seconds during Regular Trading Hours. 
Information about the Index, including key elements of how the Index is 
calculated, will be publicly available at https://www.cfbenchmarks.com.
---------------------------------------------------------------------------

    \61\ As defined in Rule 11.23(a)(3), the term ``BZX Official 
Closing Price'' shall mean the price disseminated to the 
consolidated tape as the market center closing trade.
---------------------------------------------------------------------------

    The NAV for the Trust will be calculated by the Administrator once 
a day and will be disseminated daily to all market participants at the 
same time. Quotation and last-sale information regarding the Shares 
will be disseminated through the facilities of the Consolidated Tape 
Association (``CTA'').
    Quotation and last sale information for bitcoin is widely 
disseminated through a variety of major market data vendors, including 
Bloomberg and Reuters, as well as the Index. Information relating to 
trading, including price and volume information, in bitcoin is 
available from major market data vendors and from the exchanges on 
which bitcoin are traded. Depth of book information is also available 
from bitcoin exchanges. The normal trading hours for bitcoin exchanges 
are 24 hours per day, 365 days per year.
    Complete real-time data for the Bitcoin Futures Contracts will be 
available by subscription through on-line information services. ICE 
Futures U.S. and CME also provide delayed futures and options on 
futures information on current and past trading sessions and market 
news free of charge on their respective websites. The specific contract 
specifications for Bitcoin Futures Contracts will also be available on 
such websites, as well as other financial informational sources.
    Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. Information 
regarding the previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers.
The Bitcoin Custodian
    The Bitcoin Custodian carefully considers the design of the 
physical, operational and cryptographic systems for secure storage of 
the Trust's private keys in an effort to lower the risk of loss or 
theft. The Bitcoin Custodian utilizes a variety of security measures to 
ensure that private keys necessary to transfer digital assets remain 
uncompromised and that the Trust maintains exclusive ownership of its 
assets. The Bitcoin Custodian will keep a substantial portion of the 
private keys associated with the Trust's bitcoin in ``cold storage'' 
\62\ or similarly secure technology (the ``Cold Vault Balance'') The 
hardware, software, systems, and procedures of the Bitcoin Custodian 
may not be available or cost-effective for many investors to access 
directly Only specific individuals are authorized to participate in the 
custody process, and no individual acting alone will be able to access 
or use any of the private keys. In addition, no combination of the 
executive officers of the Sponsor, acting alone or together, will be 
able to access or use any of the private keys that hold the Trust's 
bitcoin.
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    \62\ The term ``cold storage'' refers to a safeguarding method 
by which the private keys corresponding to bitcoins stored on a 
digital wallet are removed from any computers actively connected to 
the internet. Cold storage of private keys may involve keeping such 
wallet on a non-networked computer or electronic device or storing 
the public key and private keys relating to the digital wallet on a 
storage device (for example, a USB thumb drive) or printed medium 
(for example, papyrus or paper) and deleting the digital wallet from 
all computers.
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Creation and Redemption of Shares
    When the Trust sells or redeems its Shares, it will do so in cash 
or in-kind transactions in blocks of 5,000 Shares that are based on the 
quantity of bitcoin attributable to each Share of the Trust (e.g., a 
Creation Basket) at the NAV. According to the Registration Statement, 
on any business day, an authorized participant may place an order to 
create one or more baskets. Purchase orders must be placed by 4:00 p.m. 
Eastern Time, or the close of regular trading on the Exchange, 
whichever is earlier. The day on which an order is received is 
considered the purchase order date. The total deposit of bitcoin 
required is an amount of bitcoin that is in the same proportion to the 
total assets of the Trust, net of accrued expenses and other 
liabilities, on the date the order to purchase is properly received, as 
the number of Shares to be created under the purchase order is in 
proportion to the total number of Shares outstanding on the date the 
order is received. Each night, the Sponsor will publish the amount of 
bitcoin that will be required in exchange for each creation order. The 
Administrator determines the required deposit for a given day by 
dividing the number of bitcoin held by the Trust as of the opening of 
business on that business day, adjusted for the amount of bitcoin 
constituting estimated accrued but unpaid fees and expenses of the 
Trust as of the opening of business on that business day, by the 
quotient of the number of Shares outstanding at the opening of business 
divided by the number of Shares in a Creation Basket. The procedures by 
which an authorized participant can redeem one or more Creation Baskets 
mirror the procedures for the creation of Creation Baskets.
Rule 14.11(e)(4)--Commodity-Based Trust Shares
    The Shares will be subject to BZX Rule 14.11(e)(4), which sets 
forth the initial and continued listing criteria applicable to 
Commodity-Based Trust Shares. The Exchange represents that, for initial 
and continued listing, the Trust must be in compliance with Rule 10A-3 
under the Act. A minimum of 100,000 Shares will be outstanding at the 
commencement of listing on the Exchange. The Exchange will obtain a 
representation that the NAV will be calculated daily and that these 
values and information about the assets of the Trust will be made 
available to all

[[Page 88679]]

market participants at the same time. The Exchange notes that, as 
defined in Rule 14.11(e)(4)(C)(i), the Shares will be: (a) issued by a 
trust that holds a specified commodity \63\ deposited with the trust; 
(b) issued by such trust in a specified aggregate minimum number in 
return for a deposit of a quantity of the underlying commodity; and (c) 
when aggregated in the same specified minimum number, may be redeemed 
at a holder's request by such trust which will deliver to the redeeming 
holder the quantity of the underlying commodity.
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    \63\ For purposes of Rule 14.11(e)(4), the term commodity takes 
on the definition of the term as provided in the Commodity Exchange 
Act. As noted above, the CFTC has opined that Bitcoin is a commodity 
as defined in Section 1a(9) of the Commodity Exchange Act. See 
Coinflip.
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    Upon termination of the Trust, the Shares will be removed from 
listing. The Trustee, Delaware Trust Company, is a trust company having 
substantial capital and surplus and the experience and facilities for 
handling corporate trust business, as required under Rule 
14.11(e)(4)(E)(iv)(a) and that no change will be made to the trustee 
without prior notice to and approval of the Exchange. The Exchange also 
notes that, pursuant to Rule 14.11(e)(4)(F), neither the Exchange nor 
any agent of the Exchange shall have any liability for damages, claims, 
losses or expenses caused by any errors, omissions or delays in 
calculating or disseminating any underlying commodity value, the 
current value of the underlying commodity required to be deposited to 
the Trust in connection with issuance of Commodity-Based Trust Shares; 
resulting from any negligent act or omission by the Exchange, or any 
agent of the Exchange, or any act, condition or cause beyond the 
reasonable control of the Exchange, its agent, including, but not 
limited to, an act of God; fire; flood; extraordinary weather 
conditions; war; insurrection; riot; strike; accident; action of 
government; communications or power failure; equipment or software 
malfunction; or any error, omission or delay in the reports of 
transactions in an underlying commodity. Finally, as required in Rule 
14.11(e)(4)(G), the Exchange notes that any registered market maker 
(``Market Maker'') in the Shares must file with the Exchange in a 
manner prescribed by the Exchange and keep current a list identifying 
all accounts for trading in an underlying commodity, related commodity 
futures or options on commodity futures, or any other related commodity 
derivatives, which the registered Market Maker may have or over which 
it may exercise investment discretion. No registered Market Maker shall 
trade in an underlying commodity, related commodity futures or options 
on commodity futures, or any other related commodity derivatives, in an 
account in which a registered Market Maker, directly or indirectly, 
controls trading activities, or has a direct interest in the profits or 
losses thereof, which has not been reported to the Exchange as required 
by this Rule. In addition to the existing obligations under Exchange 
rules regarding the production of books and records (see, e.g., Rule 
4.2), the registered Market Maker in Commodity-Based Trust Shares shall 
make available to the Exchange such books, records or other information 
pertaining to transactions by such entity or registered or non-
registered employee affiliated with such entity for its or their own 
accounts for trading the underlying physical commodity, related 
commodity futures or options on commodity futures, or any other related 
commodity derivatives, as may be requested by the Exchange.
    The Exchange is able to obtain information regarding trading in the 
Shares and the underlying bitcoin, Bitcoin Futures contracts, options 
on Bitcoin Futures, or any other bitcoin derivative through members 
acting as registered Market Makers, in connection with their 
proprietary or customer trades.
    As a general matter, the Exchange has regulatory jurisdiction over 
its members, and their associated persons. The Exchange also has 
regulatory jurisdiction over any person or entity controlling a member, 
as well as a subsidiary or affiliate of a member that is in the 
securities business. A subsidiary or affiliate of a member organization 
that does business only in commodities would not be subject to Exchange 
jurisdiction, but the Exchange could obtain information regarding the 
activities of such subsidiary or affiliate through surveillance sharing 
agreements with regulatory organizations of which such subsidiary or 
affiliate is a member.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares. The Exchange will halt trading in the Shares 
under the conditions specified in BZX Rule 11.18. Trading may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the Shares inadvisable. These may include: 
(1) the extent to which trading is not occurring in the bitcoin 
underlying the Shares; or (2) whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present. Trading in the Shares also will be subject to Rule 
14.11(e)(4)(E)(ii), which sets forth circumstances under which trading 
in the Shares may be halted.
    If the IIV or the value of the Index is not being disseminated as 
required, the Exchange may halt trading during the day in which the 
interruption to the dissemination of the IIV or the value of the Index 
occurs. If the interruption to the dissemination of the IIV or the 
value of the Index 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.
    In addition, 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.
Trading Rules
    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. BZX will allow 
trading in the Shares during all trading sessions on the Exchange. The 
Exchange has appropriate rules to facilitate transactions in the Shares 
during all trading sessions. As provided in BZX Rule 11.11(a) the 
minimum price variation for quoting and entry of orders in securities 
traded on the Exchange is $0.01 where the price is greater than $1.00 
per share or $0.0001 where the price is less than $1.00 per share. The 
Shares of the Trust will conform to the initial and continued listing 
criteria set forth in BZX Rule 14.11(e)(4).
Surveillance
    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 the Shares 
through the Exchange will be subject to the Exchange's surveillance 
procedures for derivative products, including Commodity-Based Trust 
Shares.
    The Exchange will communicate as needed regarding trading in the 
Shares and Bitcoin Futures with other markets and other entities that 
are members of the ISG, and the Exchange, or FINRA, on behalf of the 
Exchange, may obtain trading information regarding trading in

[[Page 88680]]

the Shares and Bitcoin Futures from such markets and other 
entities.\64\
---------------------------------------------------------------------------

    \64\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.
---------------------------------------------------------------------------

    The Exchange is able to obtain information regarding trading in the 
Shares and the underlying bitcoin, Bitcoin Futures contracts, options 
on Bitcoin Futures, or any other bitcoin derivative through members 
acting as registered Market Makers, in connection with their 
proprietary or customer trades. As a general matter, the Exchange has 
regulatory jurisdiction over its members, and their associated persons. 
The Exchange also has regulatory jurisdiction over any person or entity 
controlling a member, as well as a subsidiary or affiliate of a member 
that is in the securities business. A subsidiary or affiliate of a 
member organization that does business only in commodities would not be 
subject to Exchange jurisdiction, but the Exchange could obtain 
information regarding the activities of such subsidiary or affiliate 
through surveillance sharing agreements with regulatory organizations 
of which such subsidiary or affiliate is a member.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    The issuer has represented to the Exchange that it will advise the 
Exchange of any failure by the Trust or the Shares 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 or the 
Shares are not in compliance with the applicable listing requirements, 
the Exchange will commence delisting procedures under Exchange Rule 
14.12.
Information Circular
    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 the Shares. Specifically, the Information 
Circular will discuss the following: (i) the procedures for the 
creation and redemption of Creation Baskets (and that the Shares are 
not individually redeemable); (ii) BZX Rule 3.7, which imposes 
suitability obligations on Exchange members with respect to 
recommending transactions in the Shares to customers; (iii) how 
information regarding the IIV and the Trust's NAV are disseminated; 
(iv) the risks involved in trading the Shares outside of Regular 
Trading Hours \65\ when an updated IIV will not be calculated or 
publicly disseminated; (v) the requirement that members deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; and (vi) trading 
information. The Information Circular will also reference the fact that 
there is no regulated source of last sale information regarding 
bitcoin, that the Commission has no jurisdiction over the trading of 
bitcoin as a commodity, and that the CFTC has regulatory jurisdiction 
over the trading of Bitcoin Futures contracts and options on Bitcoin 
Futures contracts.
---------------------------------------------------------------------------

    \65\ Regular Trading Hours is the time between 9:30 a.m. and 
4:00 p.m. Eastern time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Shares. Members purchasing the Shares for resale to 
investors will deliver a prospectus to such investors. The Information 
Circular will also discuss any exemptive, no-action and interpretive 
relief granted by the Commission from any rules under the Act.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \66\ in general and Section 6(b)(5) of the Act \67\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, 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.
---------------------------------------------------------------------------

    \66\ 15 U.S.C. 78f.
    \67\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission has approved numerous series of Trust Issued 
Receipts, including Commodity-Based Trust Shares, to be listed on U.S. 
national securities exchanges. In order for any proposed rule change 
from an exchange to be approved, the Commission must determine that, 
among other things, the proposal is consistent with the requirements of 
Section 6(b)(5) of the Act, specifically including: (i) the requirement 
that a national securities exchange's rules are designed to prevent 
fraudulent and manipulative acts and practices; \68\ and (ii) the 
requirement that an exchange proposal be designed, in general, to 
protect investors and the public interest. The Exchange believes that 
this proposal is consistent with the requirements of Section 6(b)(5) of 
the Act and that this filing, in conjunction with precedent filings, 
sufficiently demonstrates that the CME Bitcoin Futures market 
represents a regulated market of significant size and that, on the 
whole, the manipulation concerns previously articulated by the 
Commission are sufficiently mitigated to the point that they are 
outweighed by quantifiable investor protection issues that would be 
resolved by approving this proposal.
---------------------------------------------------------------------------

    \68\ As the Exchange has stated in a number of other public 
documents, it continues to believe 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. The geographically 
diverse and continuous nature of bitcoin trading render it difficult 
and prohibitively costly to manipulate the price of bitcoin. 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 and 
impractical. To the extent that there are bitcoin exchanges engaged 
in or allowing wash trading or other activity intended to manipulate 
the price of bitcoin on other markets, such pricing does not 
normally impact prices on other exchange because participants will 
generally ignore markets with quotes that they deem non-executable. 
Moreover, the linkage between the bitcoin markets and the presence 
of arbitrageurs in those markets means that the manipulation of the 
price of bitcoin price on any single venue would require 
manipulation of the global bitcoin price in order to be effective. 
Arbitrageurs must have funds distributed across multiple trading 
platforms in order to take advantage of temporary price 
dislocations, thereby making it unlikely that there will be strong 
concentration of funds on any particular bitcoin exchange or OTC 
platform. As a result, the potential for manipulation on a trading 
platform would require overcoming the liquidity supply of such 
arbitrageurs who are effectively eliminating any cross-market 
pricing differences.
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(i) Designed To Prevent Fraudulent and Manipulative Acts and Practices
    In order to meet this standard in a proposal to list and trade a 
series of Commodity-Based Trust Shares, the Commission requires that an 
exchange demonstrate that there is a comprehensive surveillance-sharing 
agreement in place \69\ with a regulated

[[Page 88681]]

market of significant size. Both the Exchange and CME are members of 
ISG. The only remaining issue to be addressed is whether the Bitcoin 
Futures market constitutes a market of significant size, which both the 
Exchange and the Sponsor believe that it does. The terms ``significant 
market'' and ``market of significant size'' include a market (or group 
of markets) as to which: (a) there is a reasonable likelihood that a 
person attempting to manipulate the ETP would also have to trade on 
that market to manipulate the ETP, so that a surveillance-sharing 
agreement would assist the listing exchange in detecting and deterring 
misconduct; and (b) it is unlikely that trading in the ETP would be the 
predominant influence on prices in that market.\70\
---------------------------------------------------------------------------

    \69\ As previously articulated by the Commission, ``The standard 
requires such surveillance-sharing agreements since ``they provide a 
necessary deterrent to manipulation because they facilitate the 
availability of information needed to fully investigate a 
manipulation if it were to occur.'' 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 underlying securities 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. 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 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.'' The 
Commission has historically held that joint membership in the ISG 
constitutes such a surveillance sharing agreement. See Wilshire 
Phoenix Disapproval).
    \70\ Id.
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    The Commission has also recognized that the ``regulated market of 
significant size'' standard is not the only means for satisfying 
Section 6(b)(5) of the act, specifically providing that a listing 
exchange could demonstrate that ``other means to prevent fraudulent and 
manipulative acts and practices'' are sufficient to justify dispensing 
with the requisite surveillance-sharing agreement.\71\
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    \71\ See Winklevoss Order at 37580. The Commission has also 
specifically noted that it ``is not applying a `cannot be 
manipulated' standard; instead, the Commission is examining whether 
the proposal meets the requirements of the Exchange Act and, 
pursuant to its Rules of Practice, places the burden on the listing 
exchange to demonstrate the validity of its contentions and to 
establish that the requirements of the Exchange Act have been met.'' 
Id. at 37582.
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(a) Manipulation of the ETP
    According to the research and analysis presented above, the Bitcoin 
Futures market is the leading market for bitcoin price formation. Where 
Bitcoin Futures lead the price in the spot market such that a potential 
manipulator of the bitcoin spot market (beyond just the constituents of 
the Index) would have to participate in the Bitcoin Futures market, it 
follows that a potential manipulator of the Shares would similarly have 
to transact in the Bitcoin Futures market because the Index is based on 
spot prices. As such, the Exchange believes that part (a) of the 
significant market test outlined above is satisfied and that common 
membership in ISG between the Exchange and CME would assist the listing 
exchange in detecting and deterring misconduct in the Shares.
(b) Predominant Influence on Prices in Spot and Bitcoin Futures
    The Exchange and Sponsor also believe that trading in the Shares 
would not be the predominant influence on prices in the Bitcoin Futures 
market or spot market for a number of reasons, including the 
significant daily trading volume in the Bitcoin Futures market, the 
size of bitcoin's market capitalization, and the significant liquidity 
available in the spot market. In addition to the Bitcoin Futures market 
data points cited above, the spot market for bitcoin is also very 
liquid. As the court found in the Grayscale Order, the Exchange and the 
Sponsor submit that ``[b]ecause the spot market is deeper and more 
liquid than the futures market, manipulation should be more difficult, 
not less.''
(c) Other Means To Prevent Fraudulent and Manipulative Acts and 
Practices
    As noted above, the Commission also permits a listing exchange to 
demonstrate that ``other means to prevent fraudulent and manipulative 
acts and practices'' are sufficient to justify dispensing with the 
requisite surveillance-sharing agreement. The Exchange and Sponsor 
believe that such conditions are present in this case, in addition to 
the existence of a surveillance sharing agreement that meets the 
Commission's previously articulated standards.
(ii) Designed To Protect Investors and the Public Interest
    The Exchange believes that the proposal is designed to protect 
investors and the public interest. Over the past several years, U.S. 
investor exposure to bitcoin through OTC Bitcoin Trusts has grown into 
the tens of billions of dollars, including through Bitcoin Futures 
ETFs. With that growth, so too has grown the quantifiable investor 
protection issues to U.S. investors including in connection with roll 
costs for Bitcoin Futures ETFs and premium/discount volatility and 
management fees for OTC Bitcoin Trusts. The Exchange believes that the 
concerns related to the prevention of fraudulent and manipulative acts 
and practices have been sufficiently addressed for this proposal to be 
consistent with the Act and, to the extent that the Commission 
disagrees with that assertion, such concerns are now outweighed by 
investor protection concerns. As such, the Exchange believes that 
approving this proposal (and comparable proposals) provides the 
Commission with the opportunity to allow U.S. investors to access 
bitcoin in a regulated and transparent exchange-traded vehicle that 
would act to limit risk and benefit U.S. investors by: (i) reducing 
premium and discount volatility as compared to OTC investment vehicles; 
(ii) increasing competitive pressure on management fees resulting in 
fee compression/reductions; (iii) reducing risks and costs as compared 
to those associated with investing in Bitcoin Futures ETFs and 
operating companies that represent imperfect proxies for bitcoin 
exposure; and (iv) providing an alternative to custodying spot bitcoin.
Commodity-Based Trust Shares
    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed on the Exchange pursuant to the initial and 
continued listing criteria in Exchange Rule 14.11(e)(4). 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 the Shares through the 
Exchange will be subject to the Exchange's surveillance procedures for 
derivative products, including Commodity-Based Trust Shares. The issuer 
has represented to the Exchange that it will advise the Exchange of any 
failure by the Trust or the Shares 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 or the Shares are not in 
compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures under Exchange Rule 14.12. The Exchange 
may obtain information regarding trading in the Shares and listed 
bitcoin derivatives via the ISG, from other exchanges who are members 
or affiliates of the ISG, or with which the Exchange has entered into a 
comprehensive surveillance sharing agreement.
Availability of Information
    The Exchange also believes that the proposal promotes market 
transparency in that a large amount of information is currently 
available about bitcoin and will be available regarding the Trust and 
the Shares. In addition to the price transparency of the Index, the 
Trust will

[[Page 88682]]

provide information regarding the Trust's bitcoin holdings as well as 
additional data regarding the Trust.
    The website for the Trust, which will be publicly accessible at no 
charge, will contain the following information: (a) the current NAV per 
Share daily and the prior business day's NAV and the reported closing 
price; (b) the BZX Official Closing Price in relation to the NAV as of 
the time the NAV is calculated and a calculation of the premium or 
discount of such price against such NAV; (c) data in chart form 
displaying the frequency distribution of discounts and premiums of the 
Official Closing Price against the NAV, within appropriate ranges for 
each of the four previous calendar quarters (or for the life of the 
Trust, if shorter); (d) the prospectus; and (e) other applicable 
quantitative information. The Trust will also disseminate the Trust's 
holdings on a daily basis on the Trust's website. The price of bitcoin 
will be made available by one or more major market data vendors, 
updated at least every 15 seconds during Regular Trading Hours. The 
aforementioned information will be published as of the close of 
business available on the Trust's website www.pandoasset.com.
    The price of bitcoin will be made available by one or more major 
market data vendors, updated at least every 15 seconds during Regular 
Trading Hours.
    The NAV for the Trust will be calculated by the Administrator once 
a day and will be disseminated daily to all market participants at the 
same time. Quotation and last-sale information regarding the Shares 
will be disseminated through the facilities of the Consolidated Tape 
Association (``CTA'').
    As noted above, the Index is calculated daily and aggregates the 
notional value of bitcoin trading activity across major bitcoin spot 
exchanges. Index data and the description of the Index are based on 
information made publicly available by the Index Provider on its 
website at https://www.cfbenchmarks.com.
    Quotation and last sale information for bitcoin is widely 
disseminated through a variety of major market data vendors, including 
Bloomberg and Reuters, as well as the Index. Information relating to 
trading, including price and volume information, in bitcoin is 
available from major market data vendors and from the exchanges on 
which bitcoin are traded. Depth of book information is also available 
from bitcoin exchanges. The normal trading hours for bitcoin exchanges 
are 24 hours per day, 365 days per year.
    Complete real-time data for the Bitcoin Futures Contracts will be 
available by subscription through on-line information services. ICE 
Futures U.S. and CME also provide delayed futures and options on 
futures information on current and past trading sessions and market 
news free of charge on their respective websites. The specific contract 
specifications for Bitcoin Futures Contracts will also be available on 
such websites, as well as other financial informational sources.
    Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. Information 
regarding the previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers.
    In sum, the Exchange believes that this proposal is consistent with 
the requirements of Section 6(b)(5) of the Act, that this filing 
sufficiently demonstrates that the CME Bitcoin Futures market 
represents a regulated market of significant size, and that on the 
whole the manipulation concerns previously articulated by the 
Commission are sufficiently mitigated to the point that they are 
outweighed by investor protection issues that would be resolved by 
approving this proposal.
    The Exchange believes that the proposal is, in particular, designed 
to protect investors and the public interest. The investor protection 
issues for U.S. investors has grown significantly over the last several 
years, through roll costs for Bitcoin Futures ETFs and premium/discount 
volatility and management fees for OTC Bitcoin Trusts. As discussed 
herein, this growth investor protection concerns need to be reevaluated 
and rebalanced with the prevention of fraudulent and manipulative acts 
and practices concerns that previous disapproval orders have relied 
upon. Finally, the Exchange notes that in addition to all of the 
arguments herein which it believes sufficiently establish the CME 
Bitcoin Futures market as a regulated market of significant size, it is 
logically inconsistent to find that the CME Bitcoin Futures market is a 
significant market as it relates to the CME Bitcoin Futures market, but 
not a significant market as it relates to the bitcoin spot market for 
the numerous reasons laid out above.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change, rather will facilitate the listing and trading of 
an additional exchange-traded product that will enhance competition 
among both market participants and listing venues, to the benefit of 
investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#7b090e171e56181416161e150f083b081e18551c140d"><span class="__cf_email__" data-cfemail="d0a2a5bcb5fdb3bfbdbdb5bea4a390a3b5b3feb7bfa6">[email protected]</span></a>. Please include 
file number SR-CboeBZX-2023-101 on the subject line.

Paper Comments

    <bullet> 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-2023-101. 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

[[Page 88683]]

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 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-2023-101 and should be submitted 
on or before January 12, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\72\
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    \72\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-28194 Filed 12-21-23; 8:45 am]
 BILLING CODE 8011-01-P


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