Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2413 

92 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 97903 

(July 13, 2023), 88 FR 46320. Comments on the 

proposed rule change, as modified by Amendment 

No. 1, are available at: https://www.sec.gov/ 

comments/sr-cboebzx-2023-040/ 

srcboebzx2023040.htm. 

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

5See Securities Exchange Act Release No. 98265, 

88 FR 61641 (Sept. 7, 2023). 

6See Securities Exchange Act Release No. 98614, 

88 FR 68785 (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. 

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 has neither solicited 

nor received written 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–2023–028 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–2023–028. 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–2023–028 and should be 

submitted on or before February 2, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.92

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00499 Filed 1–11–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99289; File No. SR– 

CboeBZX–2023–040] 

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 VanEck Bitcoin Trust Under BZX 

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

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 VanEck Bitcoin Trust 

under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. On July 

11, 2023, the Exchange filed 

Amendment No. 1 to the proposed rule 

change, which amended and replaced 

the proposed rule change in its entirety. 

The proposed rule change, as modified 

by Amendment No. 1, was published for 

comment in the Federal Register on July 

19, 2023.3 On August 31, 2023, pursuant 

to section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change, as modified by 

Amendment No. 1.5 On September 28, 

2023, 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 VanEck Bitcoin Trust (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 


khammond on DSKJM1Z7X2PROD with NOTICES
2414 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

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, and 

intraday indicative values, 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. 

10The Exchange notes that two other proposals to 

list and trade shares of the Trust were previously 

disapproved pursuant to delegated authority, one of 

which is currently pending Commission Review 

pursuant to Rule 431 of the Commission’s Rules of 

Practice, 17 CFR 201.431. See Securities Exchange 

Act Release Nos. 93559 (November 12, 2021) (SR– 

CboeBZX–2021–019), 86 FR 64539 (November 18, 

2021); 95978 (October 4, 2022) 87 FR 61418 

(October 11, 2022) (SR–CboeBZX–2022–035). See 

also Letter from Assistant Secretary J. Matthew 

DeLesDernier to Kyle Murray, Assistant General 

Counsel, Cboe Global Markets, dated November 12, 

2021. 

11See Amendment No. 6 to Registration 

Statement on Form S–1, dated December 29, 2023, 

submitted to the Commission by the Sponsor on 

behalf of the Trust (333–251808). The descriptions 

of the Trust, the Shares, and the Benchmark 

contained herein are based, in part, on information 

in the Registration Statement. 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. 

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

13See 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’’). 

14See 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 

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–2023–040 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 VanEck 

Digital Assets, LLC is the sponsor of the 

Trust (‘‘Sponsor’’).10 The Shares will be 

registered with the Commission by 

means of the Trust’s registration 

statement on Form S–1 (the 

‘‘Registration Statement’’).11 As further 

discussed below, the Commission has 

historically approved or disapproved 

exchange filings to list and trade series 

of Trust Issued Receipts,12 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.13 Prior orders 

from the Commission have pointed out 

that in every prior approval order for 

Commodity-Based Trust Shares, there 

has been a derivatives market that 

represents the regulated market of 

significant size, generally a Commodity 

Futures Trading Commission (the 

‘‘CFTC’’) regulated futures market.14


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2415 

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). 

15See Exchange Rule 14.11(e)(5). 16See Winklevoss Order at 37592. 17See 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’’). 

18See Winklevoss Order. 19 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. 

20See ‘‘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.’’ 

21A 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. 

22 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. 

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 15

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.’’ 16

As such, the regulated market of 

significant size test does not require that 

the spot bitcoin market be regulated in 

order for the Commission to approve 

this proposal, and precedent makes 

clear that an underlying market for a 

spot commodity or currency being a 

regulated market would actually be an 

exception to the norm. These largely 

unregulated currency and commodity 

markets do not provide the same 

protections as the markets that are 

subject to the Commission’s oversight, 

but the Commission has consistently 

looked to surveillance sharing 

agreements with the underlying futures 

market in order to determine whether 

such products were consistent with the 

Act. With this in mind, the Chicago 

Mercantile Exchange (‘‘CME’’) bitcoin 

futures (‘‘Bitcoin Futures’’) market is the 

proper market to consider in 

determining whether there is a related 

regulated market of significant size. 

Further to this point, the Exchange 

notes that the Commission has approved 

proposals related to the listing and 

trading of funds that would primarily 

hold CME Bitcoin Futures that are 

registered under the Securities Act of 

1933.17 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 the 

offshore regulated centralized trading 

platforms that have since faced 

bankruptcy proceedings or other 

insolvencies), then countless investors 

might 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, 2016.18 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.19 Similarly, regulated U.S. 

Bitcoin Futures contracts did not exist. 

The CFTC had determined that bitcoin 

is a commodity,20 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, 2016.21 While the first over-thecounter bitcoin fund launched in 2013, 

public trading was limited and the fund 

had only $60 million in assets.22 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 


khammond on DSKJM1Z7X2PROD with NOTICES
2416 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

23See 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. 

24See 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. 

25See 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. 

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). 

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 Bloomberg as of October 31, 

2023. 

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. 

was not aware, at that time, of a single 

custodian providing fund custodial 

services for digital assets.23 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 24 and shares in investment 

vehicles holding Bitcoin Futures.25

Additionally, licensed and regulated 

service providers have emerged to 

provide fund custodial services for 

digital assets, among other services. 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 open-end mutual funds to 

invest in cash-settled Bitcoin Futures; in 

December 2020, the Commission 

adopted a conditional no-action 

position permitting certain special 

purpose broker-dealers to custody 

digital asset securities under Rule 15c3– 

3 under the Exchange Act (the ‘‘Custody 

Statement’’); 27 in September 2020, the 

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 

October 2, 2023 through October 31, 

2023, CFTC regulated Bitcoin Futures 

represented between $633 million and 

$6.5 billion in notional trading volume 

on CME Bitcoin Futures on a daily 

basis.32 Daily average open interest was 

over $2.6 billion for the entirety of the 

period. 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 April 25, 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. 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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2417 

38See https://www.microstrategy.com/en/ 

investor-relations/press/microstrategy-acquiresadditional-19452-bitcoins-for-1-026-billion_02-24- 

2021. 

39The 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. 

40A number of operating companies engaged in 

unrelated businesses—such as Tesla (a car 

manufacturer) and MicroStrategy (an enterprise 

software company)—have announced investments 

as large as $5.3 billion in bitcoin. Without access 

to bitcoin exchange-traded products, retail investors 

seeking investment exposure to bitcoin may end up 

purchasing shares in these companies in order to 

gain the exposure to bitcoin that they seek. In fact, 

mainstream financial news networks have written 

a number of articles providing investors with 

guidance for obtaining bitcoin exposure through 

publicly traded companies (such as MicroStrategy, 

Tesla, and bitcoin mining companies, among 

others) instead of dealing with the complications 

associated with buying spot bitcoin in the absence 

of a bitcoin ETP. See e.g., ‘‘7 public companies with 

exposure to bitcoin’’ (February 8, 2021) available at: 

https://finance.yahoo.com/news/7-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. 

41The 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. 

42See FTX Trading Ltd., et al., Case No. 22– 

11068. 

43See Celsius Network LLC, et al., Case No. 22– 

10964. 

44See BlockFi Inc., Case No. 22–19361. 

45See Voyager Digital Holdings, Inc., et al., Case 

No. 22–10943. 

46See 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 

Continued 

amounts as large as $1.5 billion (Tesla) 

and $1 billion (MicroStrategy).38 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; 39 (iii) purchasing shares of 

operating companies that they believe 

will provide proxy exposure to bitcoin 

with limited disclosure about the 

associated risks; 40 or (iv) purchasing 

Bitcoin Futures exchange-traded funds 

(‘‘ETFs’’), as defined below, which 

represent a sub-optimal structure for 

long-term investors that will cost them 

significant amounts of money every year 

compared to Spot Bitcoin ETPs, as 

further discussed below. Meanwhile, 

investors in many other countries, 

including Canada and Brazil, are able to 

use more traditional exchange listed and 

traded products (including ETFs 

holding physical bitcoin) to gain 

exposure to bitcoin. Similarly, investors 

in Switzerland and across Europe have 

access to ETPs which trade on regulated 

exchanges and provide exposure to a 

broad array of spot crypto assets. U.S. 

investors, by contrast, are left with 

fewer and more risky means of getting 

bitcoin exposure, as described above.41

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,42

Celsius Network LLC,43 BlockFi Inc.44

and Voyager Digital Holdings, Inc.45

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 regulCated 

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.46 Leaving aside the 


khammond on DSKJM1Z7X2PROD with NOTICES
2418 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

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. 

47As 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. 

48See Teucrium Approval at 21679. 

49 Grayscale Investments, LLC v. Securities and 

Exchange Commission, et al., Case No. 22–1142. 

50See e.g., ‘‘Bitcoin ETF’s Success Could Come at 

Fundholders’ Expense,’’ Wall Street Journal 

(October 24, 2021), available at: https://

www.wsj.com/articles/bitcoin-etfs-success-couldcome-at-fundholders-expense-11635080580; 

‘‘Physical Bitcoin ETF Prospects Accelerate,’’ 

ETF.com (October 25, 2021), available at: https://

www.etf.com/sections/blog/physical-bitcoin-etfprospects-shine?nopaging=1&__cf_chl_jschl_tk__

=pmd_JsK.fjXz9eAQW9zol0qpzhXDrrlpIVdo

CloLXbLjl44-1635476946-0-

gqNtZGzNApCjcnBszQql. 

analysis of that standard until later in 

this proposal,47 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.48

CME Bitcoin Futures pricing is based 

on pricing from spot bitcoin markets. 

The statement from the Teucrium 

Approval that ‘‘CME’s surveillance can 

reasonably be relied upon to capture the 

effects on the CME Bitcoin Futures 

market caused by a person attempting to 

manipulate the proposed futures ETP by 

manipulating the price of CME Bitcoin 

Futures contracts . . . indirectly by 

trading outside of the CME Bitcoin 

Futures market,’’ makes clear that the 

Commission believes that CME’s 

surveillance can capture the effects of 

trading on the relevant spot markets on 

the pricing of CME Bitcoin Futures. This 

was further acknowledged in the 

‘‘Grayscale lawsuit’’ 49 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. As further discussed 

below, this view is also consistent with 

the Sponsor’s research. 

The structure of Bitcoin Futures ETFs 

provides negative outcomes for buy and 

hold investors as compared to a Spot 

Bitcoin ETP.50 Specifically, the cost of 

rolling CME Bitcoin Futures contracts 

will cause the Bitcoin Futures ETFs to 

lag the performance of bitcoin itself and, 

at over a billion dollars in assets under 

management, 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 

sub-optimal 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. 

Spot and Proxy Exposure to Bitcoin 

Exposure to bitcoin through an ETP 

also presents certain advantages for 

retail investors compared to buying spot 

bitcoin directly. The most notable 

advantage from the Sponsor’s 

perspective is the elimination of the 

need for an individual retail investor to 

either manage their own private keys or 

to hold bitcoin through a 

cryptocurrency trading platform that 

lacks sufficient protections. Typically, 

retail trading platforms hold most, if not 

all, retail investors’ bitcoin in ‘‘hot’’ 

(internet-connected) storage and do not 

make any commitments to indemnify 

retail investors or to observe any 

particular cybersecurity standard. 

Meanwhile, a retail investor holding 

spot bitcoin directly in a self-hosted 

wallet may suffer from inexperience in 

private key management (e.g., 

insufficient password protection, lost 

key, etc.), which could cause them to 

lose some or all of their bitcoin 

holdings. Thus, with respect to custody 

of the Trust’s bitcoin assets, the Trust 

presents advantages from an investment 

protection standpoint for retail investors 

compared to owning spot bitcoin 

directly. 


khammond on DSKJM1Z7X2PROD with NOTICES
51 In August 2017, the Commission’s Office of 

company’s publicly traded common stock. 

tokens in an effort to affect the price of the 

announcing events relating to digital coins or 

about situations where companies were publicly 

Investor Education and Advocacy warned investors 

See 

bulletins/ia

https://www.sec.gov/oiea/investor-alerts-and- 

_icorelatedclaims. 

52See e.g., ‘‘7 public companies with exposure to 

bitcoin’’ (February 8, 2021) available at: https://

exposure-to-bitcoin-154201525.html; 

finance.yahoo.com/news/7-public-companies-withand ‘‘Want to 

19, 2021) available at: 

yourself? Here are some investing ideas’’ (February 

get in the crypto trade without holding bitcoin 

https://www.cnbc.com/2021/ 

the-cryptocurrency-yourself-.html. 

02/19/ways-to-invest-in-bitcoin-without-holding53See, e.g., Tesla 10–K for the year ended 

nine times: 

December 31, 2020, which mentions bitcoin just 

https://www.sec.gov/ix?doc=/Archives/ 

10k

edgar/data/1318605/000156459021004599/tsla- 

_20201231.htm. 

54The CME CF Bitcoin Reference Rate is based on 

a publicly available calculation methodology based 

itBit, Kraken, and LMAX Digital. 

platforms, including Bitstamp, Coinbase, Gemini, 

on pricing sourced from several crypto trading 

55Source: Bloomberg as of October 31, 2023. 

56A large open interest holder in Bitcoin Futures 

Futures. 

positions of greater than $4.5 million in Bitcoin 

14, 2023, more than 131 firms had outstanding 

approximately $36,304.40 per bitcoin on November 

is the equivalent of 125 bitcoin. At a price of 

is an entity that holds at least 25 contracts, which 

exposure to bitcoin that they seek.

51 In 

ETP.

spot bitcoin in the absence of a bitcoin 

complications associated with buying 

others) instead of dealing with the 

bitcoin mining companies, among 

(such as MicroStrategy, Tesla, and 

through publicly traded companies 

guidance for obtaining bitcoin exposure 

articles providing investors with 

networks have written a number of 

fact, mainstream financial news 

52 Such operating companies, 

risk factors.

of narrative description and a handful of 

typically amounting to a few sentences 

including the Registration Statement, 

registration statement of a bitcoin ETP, 

53 In other words, investors 

securities registration process. 

protections that come from the 

disclosures and associated investor 

not fully benefitting from the risk 

only partial exposure to bitcoin and are 

publicly traded companies are gaining 

seeking bitcoin exposure through 

October 2022, respectively.

2019, October 2020, October 2021, and 

billion) contracts traded in October 

($79.2 billion), and 279,399 ($27.5 

billion), 162,403 ($9.9 billion), 266,975 

billion) compared to 93,611 ($3.9 

in October 2023 (approximately $43.5 

286,519 Bitcoin Futures contracts traded 

bitcoin. For example, there were 

line with the decrease in the price of 

calculations have decreased roughly in 

g

55

The number of large open interest 

holders 56 and unique accounts trading 

Bitcoin Futures have both increased. 


EN12JA24.012</GPH>khammond on DSKJM1Z7X2PROD with NOTICES

# of Contracts 

.......... II,) 

91 g g ' g 8 8 8 

Dec 2017 ; 

Mar2018 :::..1 

Jun 2018 ;:::- ' 

Sep2018 :- ! 

Dec2018 '.=l _,

Mar2019 ;=: -

Jun 2019 

Sep 2019 

Dec2019 :::,·-=:::::r 

Mar 2020 _ • 

. )> Jun 2020 

-----

--

Sep2020 

Dec 2020 

)> • 

Q 

Mar2021 

Jun 2021 

Sep 2021 

Dec 2021 

Mar 2022 J 

Jun2022 l 

Sep2022 , 

Dec2022 l 

Mar2023 i 

Jun 2023 

Sep 2023 :::-====L 

• N .i:,. O> Cl() ...,. _o_o_o_o8 

0 0 0 0 -

88888 

0 

Equivalent of Bitcoin 

0 

s:: 

m 

OJ 

ct 

Q. 

:::, 

-n 

C: 

-

C: 

Q<D 

"O CJ) 

_(D 

:::, ..., - D) (D c.o (D (D 

!a. 0 

-

~- 0« 

-.c;:: 

Q. 

C: 

3 

(D 

)> 

-

D) 

:::, 

0.. 
2420 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

57See 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.’’ 

58See Exchange Rule 14.11(f). 59Commodity-Based Trust Shares, as described in 

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

Issued Receipt. 60As 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. 

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.57

Section 6(b)(5) and the Applicable 

Standards 

The Commission has approved 

numerous series of Trust Issued 

Receipts,58 including Commodity-Based 

Trust Shares,59 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; 60 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. 


khammond on DSKJM1Z7X2PROD with NOTICESEN12JA24.013</GPH>

CME Bitcoin Futures 

Cumulative Unique Accounts Trading 
Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2421 

61As 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 

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’’). 

62For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

63See Wilshire Phoenix Disapproval. 

64See 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. 

65As further described below, the ‘‘Benchmark’’ 

for the Fund is the MarketVector Bitcoin 

Benchmark Rate. 

66Cash equivalents are short-term instruments 

with maturities of less than 3 months. 

(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 61 with a regulated 

market of significant size. Both the 

Exchange and CME are members of the 

Intermarket Surveillance Group 

(‘‘ISG’’).62 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.63

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.64

(a) Manipulation of the ETP 

According to the Sponsor’s research 

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 Benchmark 65) 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 

Benchmark is based on spot prices. 

(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. As noted above, many U.S. 

investors that held digital assets in 

accounts at FTX, Celsius Network LLC, 

BlockFi Inc, and Voyager Digital 

Holdings Inc, have become unsecured 

creditors in the insolvencies of those 

entities and, consequently, have 

suffered monetary losses. Moreover, 

most of those U.S. investors do not have 

access to any of their assets at this time 

due to such bankruptcy proceedings or 

other insolvencies. 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 

exchange-traded 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. 

VanEck Bitcoin Trust 

Delaware Trust Company is the 

trustee (‘‘Trustee’’). The State Street 

Bank and Trust Company will be the 

administrator (‘‘Administrator’’), 

transfer agent (‘‘Transfer Agent’’) and 

will be responsible for the custody of 

the Trust’s cash and cash equivalents 66

(the ‘‘Cash Custodian’’). Van Eck 

Securities Corporation will be the 

marketing agent (‘‘Marketing Agent’’) in 

connection with the creation and 

redemption of ‘‘Creation Baskets’’, as 

defined below, of Shares. Van Eck 

Securities Corporation (‘‘VanEck’’) 

provides assistance in the marketing of 

the Shares. Gemini Trust Company, LLC 

(the ‘‘Custodian’’) will be responsible 

for custody of the Trust’s bitcoin. 

According to the Registration 

Statement, each Share will represent a 

fractional undivided beneficial interest 

in the Trust’s net assets. The Trust’s 


khammond on DSKJM1Z7X2PROD with NOTICES
2422 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

67 15 U.S.C. 80a–1. 

68For redemptions, the process will occur in the 

reverse order. Upon receipt of an approved 

redemption order, the Sponsor, on behalf of the 

Trust, will submit an order to sell the amount of 

bitcoin represented by a Creation Basket and the 

cash proceeds will be remitted to the authorized 

participant when the 50,000 Shares are received by 

the Transfer Agent. 

69The CryptoCompare Exchange Benchmark 

methodology utilizes a combination of qualitative 

and quantitative metrics to analyze a 

comprehensive data set across eight categories of 

evaluation legal/regulation, KYC/transaction risk, 

data provision, security, team/trading platform, 

asset quality/diversity, market quality and negative 

events. The CryptoCompare Exchange Benchmark 

review report assigns a grade to each trading 

platform which helps identify what it believes to be 

the lowest risk trading platforms in the industry. 

Based on the CryptoCompare Exchange Benchmark, 

the Benchmark initially selects the top five trading 

platforms by rank for inclusion in the Benchmark. 

If an eligible trading platform is downgraded by two 

or more notches in a semi-annual review and is no 

longer in the top five by rank, it is replaced by the 

highest ranked non-component trading platform. 

Adjustments to trading platform coverage are 

announced four business days prior to the first 

business day of each of March and September at 

23:00 CET. The Benchmark is rebalanced at 

16:00:00 GMT/BST on the last business day of each 

of February and August. 

assets will only consist 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,67 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 50,000 Shares (a ‘‘Creation 

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

(‘‘NAV’’). 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. 

For creations, authorized participants 

will deliver cash to the Trust’s account 

with the Cash Custodian in exchange for 

Shares. Upon receipt of an approved 

creation order, the Sponsor, on behalf of 

the Trust, will submit an order to buy 

the amount of bitcoin represented by a 

Creation Basket. Based off bitcoin 

executions, the Cash Custodian will 

request the required cash from the 

authorized participant; the Transfer 

Agent will only issue ETF shares when 

the authorized participant has made 

delivery of the cash. Following receipt 

by the Cash Custodian of the cash from 

an authorized participant, the Sponsor, 

on behalf of the Trust, will approve an 

order with one or more previously 

onboarded trading partners to purchase 

the amount of bitcoin represented by the 

Creation Basket. This purchase of 

bitcoin will normally be cleared through 

an affiliate of the Custodian (although 

the purchase may also occur directly 

with the trading partner) and the bitcoin 

will settle directly into the Trust’s 

account at the Custodian.68 Authorized 

participants may then offer Shares to the 

public at prices that depend on various 

factors, including the supply and 

demand for Shares, the value of the 

Trust’s assets, and market conditions at 

the time of a transaction. Shareholders 

who buy or sell Shares during the day 

from their broker may do so at a 

premium or discount relative to the 

NAV of the Shares of the Trust. 

Investment Objective 

According to the Registration 

Statement and as further described 

below, the investment objective of the 

Trust is for the Shares to reflect the 

performance of bitcoin less the expenses 

of the Trust’s operations. In seeking to 

achieve its investment objective, the 

Trust will hold bitcoin and will value 

its Shares daily based on the reported 

Benchmark and process all creations 

and redemptions in cash transactions 

with authorized participants. The Trust 

is not actively managed. 

The Benchmark 

As described in the Registration 

Statement, the Fund will use the 

Benchmark to calculate the Trust’s 

NAV. The Benchmark is designed to be 

a robust price for bitcoin in USD and 

there is no component other than 

bitcoin in the Benchmark. The 

underlying bitcoin platforms are 

sourced from the industry leading 

CryptoCompare Exchange Benchmark 

review report. CryptoCompare Exchange 

Benchmark was established in 2019 as 

a tool designed to bring clarity to the 

digital asset trading platform sector by 

providing a framework for assessing risk 

and in turn bringing transparency and 

accountability to a complex and rapidly 

evolving market.69 The current bitcoin 

platform composition of the Benchmark 

is Bitstamp, Coinbase, Bitfinex, LMAX 

and Kraken. The MarketVector Indexes 

GmbH (‘‘MarketVector’’) is the index 

sponsor and index administrator for the 

Benchmark. Data is the calculation 

agent for the Benchmark. The 

Benchmark is calculated daily between 

00:00 and 24:00 (CET) and the 

Benchmark values are disseminated to 

data vendors every fifteen seconds. The 

Benchmark is disseminated in USD and 

the closing value is calculated at 

16:00:00 ET with fixed 16:00 bitcoin 

platform rates. 

In calculating the closing price of the 

Benchmark, the methodology captures 

trade prices and sizes from bitcoin 

platforms and examines twenty threeminute periods leading up to 4:00 p.m. 

EST. It then calculates an equalweighted average of the volumeweighted median price of these twenty 

three-minute periods, removing the 

highest and lowest contributed prices. 

Using twenty consecutive three-minute 

segments over a sixty-minute period 

means malicious actors would need to 

sustain efforts to manipulate the market 

over an extended period of time, or 

would need to replicate efforts multiple 

times across bitcoin platforms, 

potentially triggering review. This 

extended period also supports 

authorized participant activity by 

capturing volume over a longer time 

period, rather than forcing authorized 

participants to mark an individual close 

or auction. The use of a median price 

reduces the ability of outlier prices to 

impact the NAV, as it systematically 

excludes those prices from the NAV 

calculation. The use of a volumeweighted median (as opposed to a 

traditional median) serves as an 

additional protection against attempts to 

manipulate the NAV by executing a 

large number of low-dollar trades, 

because, any manipulation attempt 

would have to involve a majority of 

global spot bitcoin volume in a threeminute window to have any influence 

on the NAV. As discussed in the 

Registration Statement, removing the 

highest and lowest prices further 

protects against attempts to manipulate 

the NAV, requiring bad actors to act on 

multiple bitcoin platforms at once to 

have any ability to influence the price. 

Net Asset Value 

NAV means the total assets of the 

Trust (which includes all bitcoin, cash, 

and cash equivalents) less total 

liabilities of the Trust. The 

Administrator determines the NAV of 

the Trust on each day that the Exchange 

is open for regular trading, as promptly 

as practical after 4:00 p.m. ET based on 

the Benchmark. The NAV of the Trust 

is the aggregate value of the Trust’s 

assets less its estimated accrued but 

unpaid liabilities (which include 

accrued expenses). In determining the 

NAV, the Administrator values the 

Shares of the Trust based on the closing 

price of the Benchmark as of 4:00 p.m. 

Eastern time. The Administrator also 

determines the NAV per Share. 

The NAV for the Trust will be 

calculated by the Administrator once a 

day and will be disseminated daily to 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2423 

70Any alternative method to determining NAV 

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. 

71As 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. 

all market participants at the same time. 

The Sponsor will monitor for significant 

events related to crypto assets that may 

impact the value of bitcoin and will 

determine, in good faith, and in 

accordance with its valuation policies 

and procedures, whether to fair value 

the Trust’s bitcoin on a given day based 

on whether certain pre-determined 

criteria have been met. For example, if 

the Benchmark deviates by more than a 

pre-determined amount from an 

alternate benchmark available to the 

Sponsor, the Sponsor may determine to 

utilize an alternate benchmark, such as 

the MarketVectorTM Bitcoin Index or the 

S&P Bitcoin Index. The Sponsor may 

also fair value the Trust’s bitcoin using 

observed market transactions from 

various trading platforms, including 

some or all of the trading platforms 

included in the Benchmark.70

Availability of Information 

In addition to the price transparency 

of the Benchmark, 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 71 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 

aforementioned information will be 

published as of the close of business 

available on the Sponsor’s website at 

www.vaneck.com, or any successor 

thereto. The NAV for the Trust will be 

calculated by the Administrator once a 

day and will be disseminated daily to 

all market participants at the same time. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the Consolidated Tape Association 

(‘‘CTA’’). The Trust will also 

disseminate its holdings on a daily basis 

on its website. 

The Intraday Indicative Value (‘‘IIV’’) 

will be updated during Regular Trading 

Hours to reflect changes in the value of 

the Trust’s bitcoin holdings during the 

trading day. The IIV may differ from the 

NAV because NAV is calculated, using 

the closing price of the Benchmark, 

once a day at 4:00 p.m. Eastern time 

whereas the IIV draws prices from the 

last trade on each bitcoin platform to 

produce a relevant, real-time price. 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 Trust 

will provide an IIV per Share updated 

every 15 seconds, as calculated by the 

Exchange or a third-party financial data 

provider during the Exchange’s Regular 

Trading Hours (9:30 a.m. to 4:00 p.m. 

E.T.). The IIV will be widely 

disseminated on a per Share basis every 

15 seconds during the Exchange’s 

Regular Trading Hours 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 

data vendors, updated at least every 15 

seconds during Regular Trading Hours. 

As noted above, the Benchmark is 

calculated every 15 seconds and 

information about the Benchmark and 

Benchmark value, including index data 

and key elements of how the Benchmark 

is calculated, will be publicly available 

at https://www.marketvector.com/. 

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. 

The Custodian 

The Custodian’s services (i) allow 

bitcoin to be deposited from a public 

blockchain address to the Trust’s bitcoin 

account and (ii) allow bitcoin to be 

withdrawn from the bitcoin account to 

a public blockchain address as 

instructed by the Trust. The custody 

agreement requires the Custodian to 

hold the Trust’s bitcoin in cold storage, 

unless required to facilitate withdrawals 

as a temporary measure. The Custodian 

will use segregated cold storage bitcoin 

addresses for the Trust which are 

separate from the bitcoin addresses that 

the Custodian uses for its other 

customers and which are directly 

verifiable via the Bitcoin Blockchain. 

The Custodian will safeguard the 

private keys to the bitcoin associated 

with the Trust’s bitcoin account. The 

Custodian will at all times record and 

identify in its books and records that 

such bitcoins constitute the property of 

the Trust. The Custodian will not 

withdraw the Trust’s bitcoin from the 

Trust’s account with the Custodian, or 

loan, hypothecate, pledge or otherwise 

encumber the Trust’s bitcoin, without 

the Trust’s instruction. If the custody 

agreement terminates, the Sponsor may 

appoint another custodian and the Trust 

may enter into a custodian agreement 

with such custodian. 

Creation and Redemption of Shares 

When the Trust sells or redeems its 

Shares, it will do so in cash transactions 

in blocks of 50,000 Shares that are based 

on the amount of bitcoin held by the 

Trust on a per unit (i.e., 50,000 Share) 

basis. 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. ET, 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 p.m. ET 

on the date the order to purchase is 

properly received. The Administrator 

determines the required deposit for a 

given day by dividing the number of 

bitcoin held by the Trust as of the 

opening of business on that business 

day, adjusted for the amount of bitcoin 

constituting estimated accrued but 

unpaid fees and expenses of the Trust 

as of the opening of business on that 

business day, by the quotient of the 


khammond on DSKJM1Z7X2PROD with NOTICES
2424 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

72For 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. 

number of Shares outstanding at the 

opening of business divided by 50,000. 

The procedures by which an authorized 

participant can redeem one or more 

Creation Baskets mirror the procedures 

for the creation of Creation Baskets. For 

example, assume the total bitcoin held 

by the Trust less any estimated accrued 

but unpaid fees and expenses is 10,000 

bitcoin and the total number of Shares 

outstanding is 100,000. The 

Administrator would determine the 

required deposit as follows: 

Total deposited cash as described in the 

example above would be 5,000 

multiplied by the price of bitcoin. 

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—not the authorized participant— 

is responsible for selecting the third 

party to facilitate the delivery of 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. When 

fulfilling a redemption request, the 

Trust will deliver bitcoin to a third 

party that is not the authorized 

participant and the Trust—not the 

authorized participant- is responsible 

for selecting such 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. 

The procedures by which an 

authorized participant can redeem one 

or more Creation Baskets mirror the 

procedures for the creation of Creation 

Baskets. 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 NAV will be 

calculated daily and that 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 72 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 

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 


khammond on DSKJM1Z7X2PROD with NOTICESEN12JA24.066</GPH>

10,000BTC 

100,000 Shares = S,OOO BTC per Creation Basket 

( S0,000 ) 
Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2425 

73For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

74Regular Trading Hours is the time between 9:30 

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

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 

Benchmark 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 Benchmark 

occurs. If the interruption to the 

dissemination of the IIV or the value of 

the Benchmark 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.73 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. 

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 74 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. 


khammond on DSKJM1Z7X2PROD with NOTICES
2426 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

75 15 U.S.C. 78f. 

76 15 U.S.C. 78f(b)(5). 

77See Exchange Rule 14.11(f). 

78Commodity-Based Trust Shares, as described in 

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

Issued Receipt. 

79As 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 activity does not normally impact prices on 

other trading platforms because participants will 

generally ignore markets with quotes that they 

deem non-executable. The reason is that wash 

trading aims to manipulate the volume rather than 

the price of an asset to give the impression of 

heightened market activity in hopes of attracting 

investors to that asset. Moreover, wash trades are 

executed within a trading platform rather than cross 

trading platforms since the entity executing the 

wash trades would aim to trade against itself, and 

as such, this can only happen within a trading 

platform. Should the wash trades of that entity 

result in a deviation of the price on that trading 

platform relative to others, arbitrageurs would then 

be able to capitalize on this mispricing, and bring 

the manipulated price back to equilibrium, 

resulting in a loss to the entity executing the wash 

trades. 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. 

80As 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 ISG 

constitutes such a surveillance sharing agreement. 

See Wilshire Phoenix Disapproval. 

81For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

82See Wilshire Phoenix Disapproval. 

83See 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. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with section 6(b) 

of the Act 75 in general and section 

6(b)(5) of the Act 76 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,77 including Commodity-Based 

Trust Shares,78 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; 79 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 80 with a regulated 

market of significant size. Both the 

Exchange and CME are members of 

ISG.81 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.82

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.83

(a) Reasonable Likelihood That a Person 

Attempting To Manipulate the ETP 

Would Also Have To Trade on That 

Market To Manipulate the ETP 

Bitcoin Futures represent a growing 

influence on pricing in the spot bitcoin 

market as has been laid out above and 

in other proposals to list and trade Spot 

Bitcoin ETPs. Pricing in Bitcoin Futures 

is based on pricing from spot bitcoin 

markets. As noted above, the statement 

from the Teucrium Approval that 

‘‘CME’s surveillance can reasonably be 

relied upon to capture the effects on the 

CME Bitcoin Futures market caused by 

a person attempting to manipulate the 

proposed futures ETP by manipulating 

the price of CME Bitcoin Futures 

contracts . . . indirectly by trading 

outside of the CME Bitcoin Futures 

market,’’ makes clear that the 

Commission believes that CME’s 

surveillance can capture the effects of 

trading on the relevant spot markets on 

the pricing of Bitcoin Futures. While the 

Commission makes clear in the 

Teucrium Approval that the analysis 

only applies to the Bitcoin Futures 

market as it relates to an ETP that 

invests in Bitcoin Futures as its only 

non-cash or cash equivalent holding, if 

CME’s surveillance is sufficient to 

mitigate concerns related to trading in 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2427 

84These statistics are based on samples of bitcoin 

liquidity in USD (excluding stablecoins or Euro 

liquidity) based on executable quotes on Coinbase, 

FTX and Kraken during the one year period ending 

May 2022. 

85As 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. 

Bitcoin Futures for which the pricing is 

based directly on pricing from spot 

bitcoin markets, it’s not clear how such 

a conclusion could apply only to ETPs 

based on Bitcoin Futures and not extend 

to Spot Bitcoin ETPs. 

(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. According 

to data from Skew, the cost to buy or 

sell $5 million worth of bitcoin averages 

roughly 48 basis points with a market 

impact of $139.08.84 Stated another 

way, a market participant could enter a 

market buy or sell order for $5 million 

of bitcoin and only move the market 

0.48%. More strategic purchases or sales 

(such as using limit orders and 

executing through OTC bitcoin trade 

desks) would likely have less obvious 

impact on the market—which is 

consistent with MicroStrategy, Tesla, 

and Square being able to collectively 

purchase billions of dollars in bitcoin. 

As such, the combination of the 

Bitcoin Futures leading price discovery, 

the overall size of the bitcoin market, 

and the ability for market participants to 

buy or sell large amounts of bitcoin 

without significant market impact will 

help prevent the Shares from becoming 

the predominant force on pricing in 

either the bitcoin spot or Bitcoin 

Futures markets, satisfying part (b) of 

the test outlined above. 

(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 

and more than a billion dollars of 

exposure 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, also believes that 

such concerns are now outweighed by 

these 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 

exchange-traded 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 Benchmark, 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 85 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 

aforementioned information will be 

published as of the close of business 

available on the Sponsor’s website at 

www.vaneck.com, or any successor 

thereto. The NAV for the Trust will be 

calculated by the Administrator once a 

day and will be disseminated daily to 

all market participants at the same time. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the CTA. The Trust will also 

disseminate its holdings on a daily basis 

on its website. 

The IIV will be updated during 

Regular Trading Hours to reflect 

changes in the value of the Trust’s 

bitcoin holdings during the trading day. 

The IIV may differ from the NAV 

because NAV is calculated, using the 

closing price of the Benchmark, once a 

day at 4:00 p.m. Eastern time whereas 

the IIV draws prices from the last trade 


khammond on DSKJM1Z7X2PROD with NOTICES
2428 Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 

on each bitcoin platform to produce a 

relevant, real-time price. 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 Trust will provide 

an IIV per Share updated every 15 

seconds, as calculated by the Exchange 

or a third-party financial data provider 

during the Exchange’s Regular Trading 

Hours (9:30 a.m. to 4:00 p.m. E.T.). The 

IIV will be widely disseminated on a per 

Share basis every 15 seconds during the 

Exchange’s Regular Trading Hours 

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 

data vendors, updated at least every 15 

seconds during Regular Trading Hours. 

As noted above, the Benchmark is 

calculated every 15 seconds and 

information about the Benchmark and 

Benchmark value, including index data 

and key elements of how the Benchmark 

is calculated, will be publicly available 

at https://www.marketvector.com/. 

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. 

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. 

Premium and discount volatility, high 

fees, rolling costs, insufficient 

disclosures, and technical hurdles are 

putting U.S. investor money at risk on 

a daily basis that could potentially be 

eliminated through access to a Spot 

Bitcoin ETP. As such, the Exchange 

believes that this proposal acts to limit 

the risk to U.S. investors that are 

increasingly seeking exposure to bitcoin 

by providing direct, 1-for-1 exposure to 

bitcoin in a regulated, transparent, 

exchange-traded vehicle, specifically by: 

(i) reducing premium volatility; (ii) 

reducing management fees through 

meaningful competition; (iii) providing 

an alternative to Bitcoin Futures ETFs 

which will eliminate roll cost; (iv) 

reducing risks associated with investing 

in operating companies that are 

imperfect proxies for bitcoin exposure; 

and (v) providing an alternative to 

custodying spot bitcoin. 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 establishes 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–2023–040 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–CboeBZX–2023–040. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

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 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 9 / Friday, January 12, 2024 / Notices 2429 

86 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 97904 

(July 13, 2023), 88 FR 46207. Comments on the 

proposed rule change, as modified by Amendment 

No. 1, are available at: https://www.sec.gov/ 

comments/sr-cboebzx-2023-042/ 

srcboebzx2023042.htm. 

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

5See Securities Exchange Act Release No. 98264, 

88 FR 61657 (Sept. 7, 2023). 

6See Securities Exchange Act Release No. 98623, 

88 FR 68758 (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, and 

intraday indicative values, 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. 5 to Form S– 

1 Registration Statement filed on December 29, 

2023 (Registration No. 333–254134). 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. 

11See Exchange Rule 14.11(f)(1). 

12See 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’’). 

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) 

Continued 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–CboeBZX–2023–040 and should be 

submitted on or before February 2, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.86

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00503 Filed 1–11–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99292; File No. SR– 

CboeBZX–2023–042] 

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 WisdomTree Bitcoin Fund 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 WisdomTree Bitcoin 

Fund (f/k/a WisdomTree Bitcoin Trust) 

under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. On July 

11, 2023, the Exchange filed 

Amendment No. 1 to the proposed rule 

change, which amended and replaced 

the proposed rule change in its entirety. 

The proposed rule change, as modified 

by Amendment No. 1, was published for 

comment in the Federal Register on July 

19, 2023.3 On August 31, 2023, pursuant 

to section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change, as modified by 

Amendment No. 1.5 On September 28, 

2023, 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 WisdomTree Bitcoin Fund (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–2023–042 amends and 

replaces in its entirety the proposal as 

originally submitted on June 30, 2023 

and as amended 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 WisdomTree 

Digital Commodity Services, 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 Coinbase 

Custody Trust Company LLC (the 

‘‘Bitcoin Custodian’’), which is a thirdparty U.S.-based trust company and 

qualified custodian, will be responsible 

for custody of the Trust’s bitcoin. 

As further discussed below, the 

Commission has historically approved 

or disapproved exchange filings to list 

and trade series of Trust Issued 

Receipts,11 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.12 Prior orders from the 

Commission have pointed out that in 

every prior approval order for 

Commodity-Based Trust Shares, there 

has been a derivatives market that 

represents the regulated market of 

significant size, generally a Commodity 

Futures Trading Commission (the 

‘‘CFTC’’) regulated futures market.13


khammond on DSKJM1Z7X2PROD with NOTICES