Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2263 

12See 15 U.S.C. 78f(b)(8). 13 15 U.S.C. 78s(b)(3)(A). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

accordingly, the fees collected for such 

use should, as proposed by the 

Exchange, mirror the fees assessed to 

FINRA members. In addition, as FINRA 

noted in amending its fees, it believes 

that its proposed pricing structure is 

reasonable and correlates fees with the 

components that drive its regulatory 

costs to the extent feasible. The 

Exchange further believes that the 

change is reasonable because it will 

provide greater specificity regarding the 

CRD system fees that are applicable to 

Non-FINRA Member Organizations. All 

similarly situated member organizations 

are subject to the same fee structure, and 

every member organization must use the 

CRD system for registration and 

disclosure. Accordingly, the Exchange 

believes that the fees collected for such 

use should likewise increase in lockstep 

with the fees assessed to FINRA 

members, as proposed by the Exchange. 

The Exchange further believes that the 

proposed fee change provides for the 

equitable allocation of reasonable fees 

and other charges, and does not unfairly 

discriminate between customers, 

issuers, brokers, and dealers. The fee 

applies equally to all individuals and 

firms required to report information the 

CRD system, and the proposed change 

will result in the same regulatory fees 

being charged to all member 

organizations required to report 

information to CRD and for services 

performed by FINRA regardless of 

whether such member organizations are 

FINRA members. Accordingly, the 

Exchange believes that the fee collected 

for such use should increase in lockstep 

with the fee adopted by FINRA as of 

January 2024, as proposed by the 

Exchange. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with section 6(b)(8) of 

the Act,12 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

the Exchange believes that the proposed 

change will reflect a fee that will be 

assessed by FINRA as of January 2024 

and will thus result in the same 

regulatory fee being charged to all 

member organizations required to report 

information to the CRD system and for 

services performed by FINRA, 

regardless of whether or not such 

member organizations are FINRA 

members. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective upon filing pursuant to section 

19(b)(3)(A) 13 of the Act and paragraph 

(f) thereunder. At any time within 60 

days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. 

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 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

NYSEAMER–2023–67 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–NYSEAMER–2023–67. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

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–NYSEAMER–2023–67 and should 

be submitted on or before February 2, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00500 Filed 1–11–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99283; File No. SR– 

CboeBZX–2023–038] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

Amendment No. 2 to a Proposed Rule 

Change To List and Trade Shares of 

the Invesco Galaxy Bitcoin ETF Under 

BZX Rule 14.11(e)(4), CommodityBased Trust Shares 

January 8, 2024. 

On June 30, 2023, Cboe BZX 

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

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

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

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the Invesco Galaxy Bitcoin 

ETF (‘‘Trust’’) under BZX Rule 

14.11(e)(4), Commodity-Based Trust 

Shares. On July 11, 2023, the Exchange 

filed Amendment No. 1 to the proposed 

rule change, which amended and 

replaced the proposed rule change in its 

entirety. The proposed rule change, as 

modified by Amendment No. 1, was 

published for comment in the Federal 


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2264 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

3See Securities Exchange Act Release No. 97900 

(July 13, 2023), 88 FR 46235. Comments on the 

proposed rule change are available at: https://

www.sec.gov/comments/sr-cboebzx-2023-038/ 

srcboebzx2023038.htm. 4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 98266, 

88 FR 61658 (Sept. 7, 2023). 6See Securities Exchange Act Release No. 98613, 

88 FR 68849 (Oct. 4, 2023). 

7The Trust was formed as a Delaware statutory 

trust on December 17, 2020 and is operated as a 

grantor trust for U.S. federal tax purposes. The 

Trust has no fixed termination date. 

8The 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). 

9Any 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, or the applicability of 

Exchange listing rules specified in this filing to list 

a series of Other Securities (collectively, 

‘‘Continued Listing Representations’’) shall 

constitute continued listing requirements for the 

Shares listed on the Exchange. 

10See Pre-Effective Amendment No. 4 to Form S– 

1 Registration Statement filed on December 29, 

2023 (Registration No. 333–255175). 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. 

Register on July 19, 2023.3 On August 

31, 2023, pursuant to section 19(b)(2) of 

the Act,4 the Commission designated a 

longer period within which to approve 

the proposed rule change, disapprove 

the proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change, as 

modified by Amendment No. 1.5 On 

September 18, 2003, the Commission 

instituted proceedings to determine 

whether to disapprove the proposed 

rule change, as modified by Amendment 

No. 1.6 On January 5, 2024, the 

Exchange filed Amendment No. 2 to the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. 

Amendment No. 2 amended and 

replaced the proposed rule change, as 

modified by Amendment No. 1, in its 

entirety. The Commission is publishing 

this notice to solicit comments on the 

proposed rule change, as modified by 

Amendment No. 2, from interested 

persons. 

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 Invesco Galaxy Bitcoin ETF (the 

‘‘Trust’’),7 under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. 

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, 

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 

This Amendment No. 2 to SR– 

CboeBZX–2023–038 amends and 

replaces in its entirety the proposal as 

originally submitted on June 30, 2023, 

and as amended by Amendment No. 1 

on July 11, 2023. The Exchange submits 

this Amendment No. 2 in order to 

clarify certain points and add additional 

details to the proposal. 

The Exchange proposes to list and 

trade the Shares under BZX Rule 

14.11(e)(4),8 which governs the listing 

and trading of Commodity-Based Trust 

Shares on the Exchange.9 Invesco 

Capital Management LLC is the sponsor 

of the Trust (‘‘Sponsor’’). The Shares 

will be registered with the Commission 

by means of the Trust’s registration 

statement on Form S–1 (the 

‘‘Registration Statement’’).10


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11See 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’’). 

12See Exchange Rule 14.11(f)(1). 

13See 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). 

14See Exchange Rule 14.11(e)(5). 

15See Winklevoss Order at 37592. 

As further discussed below, the 

Commission has historically approved 

or disapproved exchange filings to list 

and trade series of Trust Issued 

Receipts, 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.11 Prior orders from the 

Commission have pointed out that in 

every prior approval order for 

Commodity-Based Trust Shares,12 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.13

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 14

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.’’ 15

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 


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16See 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’’). 

17See Winklevoss Order. 18 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. 

19See ‘‘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.’’ 

20A 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. 

21 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. 

22See 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. 

23See 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. 

24See Prospectus filed by Stone Ridge Trust VI 

on behalf of NYDIG bitcoin Strategy Fund 

Registration, available at: https://www.sec.gov/ 

Archives/edgar/data/1764894/ 

000119312519309942/d693146d497.htm. 

25The ‘‘Custodian’’ is Coinbase Trust Company, 

LLC. 

26See Investment Advisers Act Release No. 6240 

88 FR 14672 (March 9, 2023) (Safeguarding 

Advisory Client Assets). 

27See 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). 

trading of funds that would primarily 

hold CME Bitcoin Futures that are 

registered under the Securities Act of 

1933.16 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, an odd tautological 

truth that is also inconsistent with 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. 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. 

Finally, as discussed in greater detail 

below, by using professional custodians 

and other service providers, the Trust 

provides investors interested in 

exposure to bitcoin with important 

protections that are not always available 

to investors that invest directly in 

bitcoin, including protection against 

insolvency, cyber attacks, and other 

risks. If U.S. investors had access to 

vehicles such as the Trust for their 

bitcoin investments, instead of directing 

their bitcoin investments into loosely 

regulated offshore vehicles (such as 

loosely regulated centralized trading 

platforms that have since faced 

bankruptcy proceedings or other 

insolvencies), then countless investors 

would have protected their principal 

investments in bitcoin and thus 

benefited. 

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, 2016.17 At that time, 

blockchain technology, and digital 

assets that utilized it, were relatively 

new to the broader public. The market 

cap 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.18 Similarly, regulated U.S. 

Bitcoin Futures contracts did not exist. 

The CFTC had determined that bitcoin 

is a commodity,19 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, 2016.20 While the first over-thecounter bitcoin fund launched in 2013, 

public trading was limited and the fund 

had only $60 million in assets.21 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.22 Fast forward 

to today and the digital assets financial 

ecosystem, including bitcoin, has 

progressed significantly. 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 23 and shares in investment 

vehicles holding Bitcoin Futures.24

Additionally, licensed and regulated 

service providers have emerged to 

provide fund custodial services for 

digital assets, among other services, 

including the Custodian.25 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; 26 in 

May 2021, the staff of the Commission 

released a statement permitting openend mutual funds to invest in cashsettled 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’’); 27 in September 2020, the 


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28See 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-insettlement-of-digital-asset-security-trades09252020.pdf. 

29See 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/mrnoaction/2019/paxos-trust-company-102819- 

17a.pdf. 

30See, 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. 

31As of December 1, 2021, the total market cap 

of all bitcoin in circulation was approximately 

$1.08 trillion. 

32 Data sourced from the CME Bitcoin Futures 

Report: 30 March, 2023, available at: https://

www.cmegroup.com/markets/cryptocurrencies/ 

bitcoin/bitcoin.volume.htm. 

33The 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. 

34See https://www.dfs.ny.gov/virtual_currency_

businesses. 

35See 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/pressreleases/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. 

36See 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-AssetsReport-2022.pdf. 

37See 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. 

38The premium and discount for OTC Bitcoin 

Funds 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 Fund 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 Fund 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 Fund, meaning that even 

investors that do not directly buy OTC Bitcoin 

Funds can be disadvantaged by extreme premiums 

(or discounts) and premium volatility. 

39A number of operating companies engaged in 

unrelated businesses—such as Tesla (a car 

manufacturer) and MicroStrategy (an enterprise 

software company)—have announced investments 

Continued 

staff of the Commission released a noaction letter permitting certain brokerdealers to operate a non-custodial 

Alternative Trading System (‘‘ATS’’) for 

digital asset securities, subject to 

specified conditions; 28 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,29 and 

multiple transfer agents who provide 

services for digital asset securities 

registered with the Commission.30

Outside the Commission’s purview, 

the regulatory landscape has 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 

cap of over $1 trillion.31 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 the CME Bitcoin Futures market on 

a daily basis.32 Open interest was over 

$1.4 billion for the entirety of the period 

and at one point was over $2 billion. 

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.33 As of 

February 14, 2023 the NYDFS has 

granted no fewer than thirty-four 

BitLicenses,34 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 the 

sanctions laws in connection with the 

provision of wallet management 

services for digital assets.35

In addition to the regulatory 

developments laid out above, more 

traditional financial market participants 

become more active in cryptocurrency: 

large insurance companies, asset 

managers, university endowments, 

pension funds, and even historically 

bitcoin skeptical fund managers have 

allocated to bitcoin. 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 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.’’ 36 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.37 Established 

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. 

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 Funds’’) 

with high management fees and 

potentially volatile premiums and 

discounts; 38 (iii) purchasing shares of 

operating companies that they believe 

will provide proxy exposure to bitcoin 

with limited disclosure about the 

associated risks; 39 or (iv) purchasing 


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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-publiccompanies-with-exposure-to-bitcoin154201525.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-toinvest-in-bitcoin-without-holding-thecryptocurrency-yourself-.html. 

40The 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. 

41See FTX Trading Ltd., et al., Case No. 22– 

11068. 

42See Celsius Network LLC, et al., Case No. 22– 

10964. 

43See BlockFi Inc., Case No. 22–19361. 

44See Voyager Digital Holdings, Inc., et al., Case 

No. 22–10943. 

45See 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. 

46As 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. 

47See Teucrium Approval at 21679. 

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 Exchange Traded Products 

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.40

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,41

Celsius Network LLC,42 BlockFi Inc.43

and Voyager Digital Holdings, Inc.44

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 digital 

assets, including bitcoin, on centralized 

platforms. 

Additionally, investors in other 

countries, specifically Canada, generally 

pay lower fees than U.S. retail investors 

that invest in OTC Bitcoin Funds 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 flawed 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 a view on bitcoin. The 

Bitcoin Futures Approvals, 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.45 Leaving aside the 

analysis of that standard until later in 

this proposal,46 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: 

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.47

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 


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51Source: CME, Yahoo Finance 4/30/23. 52A 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. 

53See Exchange Act Releases No. 94080 (January 

27, 2022), 87 FR 5527 (April 12, 2022) (specifically 

‘‘Amendment No. 1 to the Proposed Rule Change 

50The CME CF Bitcoin Reference Rate is based on 

a publicly available calculation methodology based 

on pricing sourced from several crypto trading 

platforms, including Bitstamp, Coinbase, Gemini, 

itBit, Kraken, and LMAX Digital. 

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’’ 48 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. 

The structure of Bitcoin Futures ETFs 

provides negative outcomes for buy and 

hold investors as compared to a Spot 

Bitcoin ETP.49 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, not to mention 

completely changing the risk profile 

associated with such an ETF. While 

Bitcoin Futures ETFs represent a useful 

trading tool, they are clearly a suboptimal structure for U.S. investors that 

are looking for long-term exposure to 

bitcoin that will, based on the 

calculations above, unnecessarily cost 

U.S. investors significant amounts of 

money every year compared to Spot 

Bitcoin ETPs and 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. 

Based on the foregoing, the Exchange 

and Sponsor believe that any objective 

review of the proposals to list Spot 

Bitcoin ETPs compared to the Bitcoin 

Futures ETFs and the Bitcoin Futures 

Approvals would lead to the conclusion 

that Spot Bitcoin ETPs should be 

available to U.S. investors and, as such, 

this proposal and other comparable 

proposals to list and trade Spot Bitcoin 

ETPs should be approved by the 

Commission. Stated simply, U.S. 

investors will continue to 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. 

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.50

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.51

BILLING CODE 8011–01–P 


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51Source: CME, Yahoo Finance 4/30/23. 52A 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. 

The number of large open interest 

holders 52 and unique accounts trading 

Bitcoin Futures have both increased, 

even in the face of heightened bitcoin 

price volatility. 


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Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2271 

53See 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), CommodityBased 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.’’ 

54See Exchange Rule 14.11(f). 

55Commodity-Based Trust Shares, as described in 

Exchange Rule 14.11(e)(4), are a type of Trust 

Issued Receipt. 

56As 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 trading platforms 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 trading platforms 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 

trading platform 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. 

57As 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 surveillancesharing 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 

Continued 

BILLING CODE 8011–01–C 

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.53

Section 6(b)(5) and the Applicable 

Standards 

The Commission has approved 

numerous series of Trust Issued 

Receipts,54 including Commodity-Based 

Trust Shares,55 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; 56 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. 

(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 57 with a regulated 


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2272 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

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 

Intermarket Surveillance Group (‘‘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’’). 

58For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

59See Wilshire Phoenix Disapproval. 

60See 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. 

61As further described below, the ‘‘Index’’ for the 

Fund is the Bloomberg Galaxy Bitcoin Index. 

62Cash equivalents are short-term instruments 

with maturities of less than 3 months. 

63 15 U.S.C. 80a–1. 

market of significant size. Both the 

Exchange and CME are members of the 

Intermarket Surveillance Group 

(‘‘ISG’’).58 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.59

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.60

(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 61) 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 force on prices 

in the Bitcoin Futures market or spot 

market for a number of reasons, 

including the significant volume in the 

Bitcoin Futures market, the size of 

bitcoin’s market cap, 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. 

(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. 

(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 Funds 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 

through roll costs for Bitcoin Futures 

ETFs and premium/discount volatility 

and management fees for OTC Bitcoin 

Funds. The Exchange believes that the 

concerns related to the prevention of 

fraudulent and manipulative acts and 

practices have been sufficiently 

addressed 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 with access to bitcoin in a 

regulated and transparent exchangetraded vehicle that would act to limit 

risk to U.S. investors by: (i) reducing 

premium and discount volatility; (ii) 

reducing management fees through 

meaningful competition; (iii) reducing 

risks and costs associated with investing 

in Bitcoin Futures ETFs and operating 

companies that are imperfect proxies for 

bitcoin exposure; and (iv) providing an 

alternative to custodying spot bitcoin. 

Invesco Galaxy Bitcoin ETF 

Delaware Trust Company is the 

trustee (‘‘Trustee’’). The Bank of New 

York Mellon will be the administrator 

(‘‘Administrator’’) and transfer agent 

(‘‘Transfer Agent’’). As noted above, 

Coinbase Custody Trust Company, LLC, 

is the Custodian and will be responsible 

for custody of the Trust’s bitcoin. The 

Bank of New York Mellon (the ‘‘Cash 

Custodian’’) will act as custodian of the 

Trust’s cash and cash equivalents.62

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 only of bitcoin, cash, 

and cash equivalents. 

According to the Registration 

Statement, the Trust is neither an 

investment company registered under 

the Investment Company Act of 1940, as 

amended,63 nor a commodity pool for 

purposes of the Commodity Exchange 

Act (‘‘CEA’’), and neither the Trust nor 

the Sponsor is subject to regulation as 

a commodity pool operator or a 

commodity trading adviser in 

connection with the Shares. 

When the Trust sells or redeems its 

Shares, it will do so in cash transactions 

in blocks of 5,000 Shares (a ‘‘Creation 

Basket’’) at the Trust’s net asset value 

(‘‘NAV’’). Authorized participants will 

deliver, or facilitate the delivery of, cash 

to the Trust’s account with the Cash 

Custodian (which will then be used to 

purchase bitcoin for the Trust) in 

exchange for Shares when they 

purchase Shares, and the Trust, through 

the Cash Custodian, will deliver cash to 

such authorized participants when they 

redeem Shares with the Trust. A third 

party will use cash to buy and deliver 

bitcoin to create Shares or withdraw and 

sell bitcoin for cash to redeem Shares, 

on behalf of the Trust. 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 


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Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2273 

64Such alternative method will only be employed 

on an ad hoc basis. Any permanent change to the 

calculation of the NAV would require a proposed 

rule change under Rule 19b–4. 

65As 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. 

premium or discount relative to the 

NAV of the Shares of the Trust. 

Investment Objective 

According to the Registration 

Statement and as further described 

below, the investment objective of the 

Trust is to reflect the performance as 

measured using Lukka Prime Bitcoin 

Reference Rate (the ‘‘Index’’), less the 

Trust’s expenses and other liabilities. In 

seeking to achieve its investment 

objective, the Trust will hold only 

bitcoin, cash, and cash equivalents. The 

Trust will value its Shares daily based 

on the value of the Index as of 4:00 p.m. 

ET, which is calculated based on the fair 

market value price for bitcoin, reflecting 

the execution price of bitcoin on its 

principal market as determined by 

Lukka Inc., an independent third-party 

digital asset company (the ‘‘Index 

Provider’’). The Trust will process all 

creations and redemptions in cash 

transactions with authorized 

participants. The Trust is not actively 

managed. 

The Index 

As described in the Registration 

Statement, the Fund will use the Index 

to calculate the Trust’s NAV. The Index 

is designed to provide an estimated fair 

market value for bitcoin. In determining 

the value of bitcoin, the Index Provider 

applies a five-step weighting process for 

identifying the principal trading 

platform for bitcoin and the last price on 

that trading platform. Currently, the 

Index includes the following trading 

platforms: Binance, Bitfinex, Bitflyer, 

Bitstamp, Coinbase Pro, Crypto.com, 

Gemini, HitBTC, Huobi, Kraken, 

KuCoin, OKEx and Poloniex. In 

identifying the principal trading 

platform for bitcoin, the Index Provider 

considers a variety of different criteria, 

including the trading platforms’ 

oversight and governance frameworks, 

microstructure efficiency (i.e., effective 

bid-ask spread), trading volume, data 

transparency and data integrity. A ‘‘base 

exchange score’’ (‘‘BES’’) that takes into 

account this criteria is assigned to each 

Index pricing source in order to select 

the most appropriate primary trading 

platform and then an executed trading 

platform price is determined at 4:00 

p.m. ET., although the Index Provider 

performs this calculation every second 

each day. 

Step 1: Assign each trading platform 

for bitcoin and U.S. Dollars a BES 

reflecting static trading platform 

characteristics such as oversight, 

microstructure and technology. 

Step 2: Adjust the BES based on the 

relative monthly volume each trading 

platform services. This new score is the 

Volume Adjusted Score (‘‘VAS’’). 

Step 3: Decay the adjusted score based 

on the time passed since last trade on 

trading platform, assessing the level of 

activity in the market by considering the 

frequency (volume) of trades. The decay 

factor reflects the time since the last 

trade on the trading platform. This is the 

final Decayed Volume Adjusted Score 

(‘‘DVAS’’), which reflects the freshness 

of data by tracking most recent trades. 

Step 4: Rank the trading platforms by 

the DVAS score and designate the 

highest-ranking trading platform as the 

principal market for that point in time— 

the principal market is the trading 

platform with highest DVAS. 

Step 5: An executed trading platform 

price is used to represent the fair market 

value at 4:00 p.m. ET. 

Index data and the description of the 

Index are based on information made 

publicly available by the Index Provider 

on its website at https://lukka.tech. 

Net Asset Value 

The Trust’s NAV is calculated by (1) 

taking the current market value of its 

bitcoin (calculated by the Index 

Provider) and any other assets; (2) 

subtracting any liabilities (including 

accrued by unpaid expenses); and (3) 

dividing that total by the total number 

of outstanding Shares. The 

Administrator calculates the NAV of the 

Trust on each day that the Exchange is 

open for regular trading, using the 

execution price of bitcoin on the 

principal market selected by the Index 

Provider as of 4:00 p.m. ET. However, 

NAVs are not officially struck until later 

in the day (often by 5:30 p.m. ET and 

almost always by 8:00 p.m. ET). 

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. 

In the event that the Index is 

unavailable or if the Sponsor or 

Administrator determines that the price 

provided by the Index does not reflect 

an accurate bitcoin price, the Sponsor’s 

pricing team will evaluate the prices of 

other similar benchmarks in an effort to 

ensure that the Trust’s NAV is 

determined based on consistent, 

accurate pricing that the Sponsor 

believes is reflective of the value of the 

Trust’s bitcoin, and also a transparent 

index methodology and process. The 

pricing team will recommend the price 

to be used to the Sponsor’s valuation 

committee who will then review the 

recommendation and approve it for use 

by the Trust if found appropriate.64

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 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 65 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 its holdings on a daily 

basis on its website. The 

aforementioned information will be 

published as of the close of business 

available on the Sponsor’s website at 

www.invesco.com/etfs, or any successor 

thereto. 

The Intraday Indicative Value (‘‘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 

most recently reported price of bitcoin 

as reported by the Index Provider or 

another reporting service. 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 may differ 

from the NAV due to the differences in 

the time window of trades used to 

calculate each price. 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 the facilities of the consolidated 

tape association (CTA) and 

Consolidated Quotation System (CQS) 

high speed lines. In addition, the IIV 

will be available through on-line 

information services such as Bloomberg 

and Reuters. 

The price of bitcoin will be made 

available by one or more major market 


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2274 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

66For 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. 

data vendors, updated at least every 15 

seconds during Regular Trading Hours. 

As noted above, the Index is designed 

to provide an estimated fair market 

value for bitcoin. Information about the 

Index and Index value, including key 

elements of how the Index is calculated, 

will be publicly available at https://

lukka.tech. 

Quotation and last sale information 

for bitcoin is widely disseminated 

through a variety of major market data 

vendors, including Bloomberg and 

Reuters. Information relating to trading, 

including price and volume 

information, in bitcoin is available from 

major market data vendors and from the 

trading platforms on which bitcoin are 

traded. Depth of book information is 

also available from bitcoin trading 

platforms. The normal trading hours for 

bitcoin trading platforms are 24 hours 

per day, 365 days per year. 

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. Quotation and 

last-sale information regarding the 

Shares will be disseminated through the 

facilities of the Consolidated Tape 

Association (‘‘CTA’’). 

The Bitcoin Custodian 

The 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 

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 operational procedures of 

the Custodian are reviewed by thirdparty advisors with specific expertise in 

physical security. The devices that store 

the keys will never be connected to the 

internet or any other public or private 

distributed network—this is colloquially 

known as ‘‘cold storage.’’ 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 or the 

investment professionals managing the 

Trust, acting alone or together, will be 

able to access or use any of the private 

keys that hold the Trust’s bitcoin. 

Creation and Redemption of Shares 

When the Trust sells or redeems its 

Shares, it will do so in cash 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 Trust’s NAV. According to 

the Registration Statement, on any 

business day, an authorized participant 

may place an order to create one or 

more Creation 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 cash required is an 

amount of cash sufficient to purchase 

such amount of bitcoin, the amount of 

which is equal to the combined NAV of 

the number of Shares included in the 

Creation Baskets being created 

determined as of 4:00 ET on the date the 

order to purchase is properly received. 

The Administrator determines the 

required deposit for a given day by 

multiplying the NAV per share by the 

number of Shares in each Creation 

Basket (5,000) and dividing the product 

by that day’s bitcoin price as 

determined by the Index. The 

procedures by which an authorized 

participant can redeem one or more 

Creation Baskets mirror the procedures 

for the creation of Creation Baskets. 

The authorized participants will 

deliver only cash to create shares and 

will receive only cash when redeeming 

shares. Further, authorized participants 

will not directly or indirectly purchase, 

hold, deliver, or receive bitcoin as part 

of the creation or redemption process or 

otherwise direct the Trust or a third 

party with respect to purchasing, 

holding, delivering, or receiving bitcoin 

as part of the creation or redemption 

process. 

The Trust will create shares by 

receiving bitcoin from a third party that 

is not the authorized participant and the 

Trust (through an execution agent that 

is acting in an agency capacity)—not the 

authorized participant—is responsible 

for selecting the third party to deliver 

the bitcoin. Further, the third party will 

not be acting as an agent of the 

authorized participant with respect to 

the delivery of the bitcoin to the Trust 

or acting at the direction of the 

authorized participant with respect to 

the delivery of the bitcoin to the Trust. 

The Trust will redeem shares by 

delivering bitcoin to a third party that 

is not the authorized participant and the 

Trust—not the authorized participant— 

is responsible for selecting the third 

party to receive the bitcoin. Further, the 

third party will not be acting as an agent 

of the authorized participant with 

respect to the receipt of the bitcoin from 

the Trust or acting at the direction of the 

authorized participant with respect to 

the receipt of the bitcoin from the Trust. 

A third party, that is unaffiliated with 

the Trust and the Sponsor, will use cash 

to buy and deliver bitcoin to create 

Shares or withdraw and sell bitcoin for 

cash to redeem Shares, on behalf of the 

Trust. 

The Sponsor will maintain ownership 

and control of bitcoin in a manner 

consistent with good delivery 

requirements for spot commodity 

transactions. 

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 Trust’s NAV will 

be calculated daily and the NAV and 

information about the assets of the Trust 

will be made available to all 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 (1) a 

specified commodity 66 deposited with 

the trust, or (2) a specified commodity 

and, in addition to such specified 

commodity, cash; (b) issued by such 

trust in a specified aggregate minimum 

number in return for a deposit of a 

quantity of the underlying commodity 

and/or cash; 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 and/or cash. 

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 


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67For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

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 CommodityBased 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 represents 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. FINRA 

conducts certain cross-market 

surveillances on behalf of the Exchange 

pursuant to a regulatory services 

agreement. The Exchange is responsible 

for FINRA’s performance under this 

regulatory services agreement. 

The Exchange, or FINRA, on behalf of 

the Exchange, or both, 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, or both, may obtain 

trading information regarding trading in 

the Shares and Bitcoin Futures from 

such markets and other entities.67 The 

Exchange may obtain information 

regarding trading in the Shares and 

Bitcoin Futures via 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. 

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. 


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68Regular Trading Hours is the time between 9:30 

a.m. and 4:00 p.m. Eastern Time. 

69 15 U.S.C. 78f. 

70 15 U.S.C. 78f(b)(5). 

71As 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 trading platforms 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 trading platform 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 

trading platform 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. 

72As 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 surveillancesharing 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). 

73 Id. 

74See Winklevoss Order at 37580. The 

Commission has also specifically noted that it ‘‘is 

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 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 68 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. 

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, noaction 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 69 in general and section 

6(b)(5) of the Act 70 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. 

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; 71 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. 

(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 72 with a regulated 

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.73

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.74


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Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2277 

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. 

75As 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. 

(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 force on prices 

in the Bitcoin Futures market or spot 

market for a number of reasons, 

including the significant volume in the 

Bitcoin Futures market, the size of 

bitcoin’s market cap, 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. 

(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. 

(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 Funds 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 

through roll costs for Bitcoin Futures 

ETFs and premium/discount volatility 

and management fees for OTC Bitcoin 

Funds. The Exchange believes that the 

concerns related to the prevention of 

fraudulent and manipulative acts and 

practices have been sufficiently 

addressed 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 with access to bitcoin in a 

regulated and transparent exchangetraded vehicle that would act to limit 

risk to U.S. investors by: (i) reducing 

premium and discount volatility; (ii) 

reducing management fees through 

meaningful competition; (iii) reducing 

risks and costs associated with investing 

in Bitcoin Futures ETFs and operating 

companies that are 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 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 75 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 its holdings on a daily 

basis on its website. The 

aforementioned information will be 

published as of the close of business 

available on the Sponsor’s website at 

www.invesco.com/etfs, or any successor 

thereto. 

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 most recently reported 

price of bitcoin as reported by the Index 

Provider or another reporting service. 

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 

may differ from the NAV due to the 

differences in the time window of trades 

used to calculate each price. 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 the facilities of the consolidated 

tape association (CTA) and 

Consolidated Quotation System (CQS) 


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76 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

high speed lines. In addition, the IIV 

will be available through on-line 

information services such as Bloomberg 

and Reuters. 

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. 

As noted above, the Index is designed 

to provide an estimated fair market 

value for bitcoin. Information about the 

Index and Index value, including key 

elements of how the Index is calculated, 

will be publicly available at https://

lukka.tech. 

Quotation and last sale information 

for bitcoin is widely disseminated 

through a variety of major market data 

vendors, including Bloomberg and 

Reuters. Information relating to trading, 

including price and volume 

information, in bitcoin is available from 

major market data vendors and from the 

trading platforms on which bitcoin are 

traded. Depth of book information is 

also available from bitcoin trading 

platforms. The normal trading hours for 

bitcoin trading platforms are 24 hours 

per day, 365 days per year. 

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. Quotation and 

last-sale information regarding the 

Shares will be disseminated through the 

facilities of the CTA. 

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 Funds. As discussed 

throughout, 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. 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 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include file number SR– 

CboeBZX–2023–038 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CboeBZX–2023–038. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

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–2023–038 and should be 

submitted on or before February 2, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.76

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00501 Filed 1–11–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99297; File No. SR– 

NASDAQ–2023–057] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Add the 

User Specific Routing Option 

January 8, 2024. 

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 

26, 2023, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I and 


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