3008 Federal Register / Vol. 89, No. 11 / Wednesday, January 17, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

3See Amendment No. 2 to Proposed Rule Change 

to List and Trade Shares of the Grayscale Bitcoin 

Trust (BTC) under NYSE Arca Rule 8.201–E 

(Commodity-Based Trust Shares) (SR–NYSEARCA– 

2021–90), filed Jan. 5, 2024, available at https://

www.sec.gov/comments/sr-nysearca-2021-90/ 

srnysearca202190-358659-884182.pdf (‘‘Grayscale 

Amendment’’). 

4See Amendment No. 2 to Proposed Rule Change 

to List and Trade Shares of the Bitwise Bitcoin ETF 

under NYSE Arca Rule 8.201–E (Commodity-Based 

Trust Shares) (SR–NYSEARCA–2023–44), filed Jan. 

5, 2024, available at https://www.sec.gov/ 

comments/sr-nysearca-2023-44/srnysearca202344- 

358800-884322.pdf (‘‘Bitwise Amendment’’). 

5See Amendment No. 1 to Proposed Rule Change 

to List and Trade Shares of the Hashdex Bitcoin 

ETF under NYSE Arca Rule 8.500–E (Trust Units) 

(SR–NYSEARCA–2023–58), filed Jan. 5, 2024, 

available at https://www.sec.gov/comments/srnysearca-2023-58/srnysearca202358-358819- 

884342.pdf (‘‘Hashdex Amendment’’). 

6See Amendment No. 1 to Proposed Rule Change 

to List and Trade Shares of the iShares Bitcoin 

Trust under Nasdaq Rule 5711(d), CommodityBased Trust Shares (SR–NASDAQ–2023–016), filed 

Jan. 5, 2024, available at https://www.sec.gov/ 

comments/sr-nasdaq-2023-016/srnasdaq2023016- 

357659-883042.pdf (‘‘iShares Amendment’’). 

7See Amendment No. 1 to Proposed Rule Change 

to List and Trade Shares of the Valkyrie Bitcoin 

Fund under Nasdaq Rule 5711(d), CommodityBased Trust Shares (SR–NASDAQ–2023–019), filed 

Jan. 5, 2024, available at https://www.sec.gov/ 

comments/sr-nasdaq-2023-019/srnasdaq2023019- 

358120-883602.pdf (‘‘Valkyrie Amendment’’). 

8See Amendment No. 5 to Proposed Rule Change 

to List and Trade Shares of the ARK 21Shares 

Bitcoin ETF under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares (SR–CboeBZX– 

2023–028), filed Jan. 5, 2024, available at https:// 

www.sec.gov/comments/sr-cboebzx-2023-028/ 

srcboebzx2023028-358679-884202.pdf (‘‘ARK 

Amendment’’). 

9See Amendment No. 2 to Proposed Rule Change 

to List and Trade Shares of the Invesco Galaxy 

Bitcoin ETF under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares (SR–CboeBZX– 

2023–038), filed Jan. 5, 2024, available at https:// 

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

srcboebzx2023038-358719-884222.pdf (‘‘Invesco 

Amendment’’). 

10See Amendment No. 2 to Proposed Rule 

Change to List and Trade Shares of the VanEck 

Bitcoin Trust under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares (SR–CboeBZX– 

2023–040), filed Jan. 5, 2024, available at https:// 

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

srcboebzx2023040-366299-893383.pdf (‘‘VanEck 

Amendment’’). 

11See Amendment No. 2 to Proposed Rule 

Change to List and Trade Shares of the WisdomTree 

Bitcoin Fund under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares (SR–CboeBZX– 

2023–042), filed Jan. 5, 2024, available at https:// 

www.sec.gov/comments/sr-cboebzx-2023-042/ 

srcboebzx2023042-366319-893402.pdf 

(‘‘WisdomTree Amendment’’). 

12See Amendment No. 3 to Proposed Rule 

Change to List and Trade Shares of the Fidelity 

Wise Origin Bitcoin Fund under BZX Rule 

14.11(e)(4), Commodity-Based Trust Shares (SR– 

CboeBZX–2023–044), filed Jan. 5, 2024, available at 

https://www.sec.gov/comments/sr-cboebzx-2023- 

044/srcboebzx2023044-358759-884163.pdf (‘‘Wise 

Origin Amendment’’). 

13See Amendment No. 1 to Proposed Rule 

Change to List and Trade Shares of the Franklin 

Bitcoin ETF under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares (SR–CboeBZX– 

2023–072), filed Jan. 5, 2024, available at https:// 

www.sec.gov/comments/sr-cboebzx-2023-072/ 

srcboebzx2023072-358799-884282.pdf (‘‘Franklin 

Amendment’’). 

14Comments received on SR–NYSEARCA–2021– 

90 are available at https://www.sec.gov/comments/ 

sr-nysearca-2021-90/srnysearca202190.htm. 

Comments received on SR–NYSEARCA–2023–44 

are available at https://www.sec.gov/comments/srnysearca-2023-44/srnysearca202344.htm. 

Comments received on SR–NYSEARCA–2023–58 

are available at https://www.sec.gov/comments/srnysearca-2023-58/srnysearca202358.htm. 

Comments received on SR–NASDAQ–2023–016 are 

available at https://www.sec.gov/comments/srnasdaq-2023-016/srnasdaq2023016.htm. Comments 

received on SR–NASDAQ–2023–019 are available 

at https://www.sec.gov/comments/sr-nasdaq-2023- 

019/srnasdaq2023019.htm. Comments received on 

SR–CboeBZX–2023–028 are available at https://

www.sec.gov/comments/sr-cboebzx-2023-028/ 

srcboebzx2023028.htm. Comments received on SR– 

CboeBZX–2023–038 are available at https://

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

srcboebzx2023038.htm. Comments received on SR– 

CboeBZX–2023–040 are available at https://

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

srcboebzx2023040.htm. Comments received on SR– 

CboeBZX–2023–042 are available at https://

www.sec.gov/comments/sr-cboebzx-2023-042/ 

srcboebzx2023042.htm. Comments received on SR– 

CboeBZX–2023–044 are available at https://

www.sec.gov/comments/sr-cboebzx-2023-044/ 

srcboebzx2023044.htm. Comments received on SR– 

CboeBZX–2023–072 are available at https://

www.sec.gov/comments/sr-cboebzx-2023-072/ 

srcboebzx2023072.htm. 

15See supra notes 3–13. 

16Bitcoins are digital assets that are issued and 

transferred via a distributed, open-source protocol 

used by a peer-to-peer computer network through 

which transactions are recorded on a public 

transaction ledger known as the ‘‘Bitcoin 

blockchain.’’ The Bitcoin protocol governs the 

creation of new bitcoins and the cryptographic 

system that secures and verifies bitcoin 

transactions. 

17The Trust described in the Hashdex 

Amendment currently holds, and could continue to 

hold, bitcoin futures contracts traded on the 

Chicago Mercantile Exchange. See Hashdex 

Amendment at 37. Most of the Trusts could also 

hold cash, and some Trusts could also hold cash 

equivalents, as described in their respective 

amended filings. See Bitwise Amendment at 5; 

Hashdex Amendment at 37; iShares Amendment at 

4; Valkyrie Amendment at 5; ARK Amendment at 

43; Invesco Amendment at 28; VanEck Amendment 

at 30; WisdomTree Amendment at 28; Wise Origin 

Amendment at 68; Franklin Amendment at 29. 

18See infra Section III. 

19 In approving the Proposals, the Commission 

has considered the Proposals’ impacts on efficiency, 

competition, and capital formation. See 15 U.S.C. 

78c(f). See also infra note 51 and accompanying 

text, discussing comments received regarding the 

efficiency of spot bitcoin ETPs; Letter from Michael 

McGinley, dated July 18, 2023, regarding SR– 

CboeBZX–2023–044 (‘‘McGinley Letter’’), stating 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99306; File Nos. SR– 

NYSEARCA–2021–90; SR–NYSEARCA– 

2023–44; SR–NYSEARCA–2023–58; SR– 

NASDAQ–2023–016; SR–NASDAQ–2023– 

019; SR–CboeBZX–2023–028; SR– 

CboeBZX–2023–038; SR–CboeBZX–2023– 

040; SR–CboeBZX–2023–042; SR– 

CboeBZX–2023–044; SR–CboeBZX–2023– 

072] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; The Nasdaq Stock Market 

LLC; Cboe BZX Exchange, Inc.; Order 

Granting Accelerated Approval of 

Proposed Rule Changes, as Modified 

by Amendments Thereto, To List and 

Trade Bitcoin-Based CommodityBased Trust Shares and Trust Units 

January 10, 2024. 

I. Introduction 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 each of NYSE Arca, Inc. 

(‘‘NYSE Arca’’), The Nasdaq Stock 

Market LLC (‘‘Nasdaq’’), and Cboe BZX 

Exchange, Inc. (‘‘BZX’’; and together 

with NYSE Arca and Nasdaq, the 

‘‘Exchanges’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) proposed rule changes 

to list and trade shares of the following. 

NYSE Arca proposes to list and trade 

shares of (1) the Grayscale Bitcoin 

Trust 3 and (2) the Bitwise Bitcoin ETF 4

under NYSE Arca Rule 8.201–E 

(Commodity-Based Trust Shares), and 

(3) the Hashdex Bitcoin ETF 5 under 

NYSE Arca Rule 8.500–E (Trust Units); 

Nasdaq proposes to list and trade shares 

of (4) the iShares Bitcoin Trust 6 and (5) 

the Valkyrie Bitcoin Fund 7 under 

Nasdaq Rule 5711(d) (Commodity-Based 

Trust Shares); and BZX proposes to list 

and trade shares of (6) the ARK 

21Shares Bitcoin ETF,8 (7) the Invesco 

Galaxy Bitcoin ETF,9 (8) the VanEck 

Bitcoin Trust,10 (9) the WisdomTree 

Bitcoin Fund,11 (10) the Fidelity Wise 

Origin Bitcoin Fund,12 and (11) the 

Franklin Bitcoin ETF 13 under BZX Rule 

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

Shares). Each filing was subject to 

notice and comment.14

Each of the foregoing proposed rule 

changes, as modified by their respective 

amendments, is referred to herein as a 

‘‘Proposal’’ and collectively as the 

‘‘Proposals.’’ Each trust (or series of a 

trust) described in a Proposal is referred 

to herein as a ‘‘Trust’’ and collectively 

as the ‘‘Trusts.’’ As described in more 

detail in the Proposals’ respective 

amended filings,15 each Proposal seeks 

to list and trade shares of a Trust that 

would hold spot bitcoin,16 in whole or 

in part.17 This order approves the 

Proposals on an accelerated basis.18

II. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the Proposals are consistent 

with the Exchange Act and rules and 

regulations thereunder applicable to a 

national securities exchange.19 In 


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that approving a spot bitcoin ETP ‘‘under stringent 

regulation . . . aids the formation of new capital in 

this increasingly relevant market sector.’’ 

20 15 U.S.C. 78f(b)(5). 

21 15 U.S.C. 78k–1(a)(1)(C)(iii). 

22See Order Disapproving a Proposed Rule 

Change To List and Trade Shares of the VanEck 

Bitcoin Trust Under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares, Securities 

Exchange Act Release No. 97102 (Mar. 10, 2023), 88 

FR 16055 (Mar. 15, 2023) (SR–CboeBZX–2022–035) 

(‘‘VanEck Order II’’) and n.11 therein for the 

complete list of previous proposals. The Grayscale 

order referenced therein (‘‘Grayscale Order’’) is 

discussed below. 

23See, e.g., VanEck Order II at 16056. The 

Commission has provided an illustrative definition 

for ‘‘market of significant size’’ to 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 successfully manipulate the ETP, so 

that a surveillance-sharing agreement would assist 

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. See 

Order Setting Aside Action by Delegated Authority 

and Disapproving a Proposed Rule Change, as 

Modified by Amendments No. 1 and 2, To List and 

Trade Shares of the Winklevoss Bitcoin Trust, 

Securities Exchange Act Release No. 83723 (July 26, 

2018), 83 FR 37579, 37594 (Aug. 1, 2018) (SR– 

BatsBZX–2016–30) (‘‘Winklevoss Order’’). 

24See, e.g., VanEck Order II at 16064–67 and the 

disapproval orders listed at n.11 therein. 

25See, e.g., Winklevoss Order at 37580; VanEck 

Order II at 16059 n.43 and accompanying text. 

26See Winklevoss Order at 37580. 

27See supra note 22. 

28See Grayscale Investments, LLC v. SEC, 82 

F.4th 1239 (D.C. Cir. 2023). 

29See, e.g., VanEck Order II at 16064. 

30See ARK Amendment at 24–27. A commenter 

to another Proposal also conducted a correlation 

analysis and found a 99.9 percent correlation 

between a ‘‘daily’’ spot bitcoin price and a ‘‘daily’’ 

CME bitcoin futures price over a four-month sample 

period (Nov. 4, 2021, through Feb. 23, 2022). See 

Letter from Paul Grewal, Chief Legal Officer, 

Coinbase Global, Inc., dated Mar. 3, 2022, regarding 

SR–NYSEARCA–2021–90. However, based on the 

commenter’s description of its correlation analysis 

at Figure 6 therein, it appears that this correlation 

was calculated using time series of price levels. 

Time series of price levels are often non-stationary, 

which leads to results that indicate relationships 

that do not actually exist. In addition, calculating 

correlation using only daily price observations 

provides no information on how prices in the two 

markets are associated—if at all—throughout the 

trading day. Moreover, correlation over a single 

four-month sample period does not provide 

evidence of a consistently high correlation over 

time. Several other commenters also assert a 

relationship between spot bitcoin prices and futures 

prices, but provide no evidence to support their 

assertions. See, e.g., Letter from James J. Angel, 

Georgetown University, dated Aug. 11, 2023, 

regarding SR–CboeBZX–2023–028, SR–CboeBZX– 

2023–038, SR–NASDAQ–2023–016, SR–NASDAQ– 

2023–019, SR–CboeBZX–2023–040, SR–CboeBZX– 

2023–042, and SR–CboeBZX–2023–044 (‘‘Angel 

Letter’’), at 2 (asserting that spot and futures 

markets are ‘‘closely locked together through 

arbitrage, and the difference in market prices 

between the spot bitcoin price and the futures price 

is negligible’’); Letter from Mike Spotto, dated Aug. 

23, 2023, regarding SR–CboeBZX–2023–028 

(‘‘Spotto Letter’’) (asserting that the price of a 

futures-based exchange-traded vehicle ‘‘is derived 

from’’ the spot market); Letter from Michael Es, 

dated Aug. 27, 2023, regarding SR–CboeBZX–2023– 

028 (‘‘Es Letter’’) (asserting that ‘‘the price of futures 

are correlated with spot’’). 

particular, the Commission finds that 

the Proposals are consistent with 

Section 6(b)(5) of the Exchange Act,20

which requires, among other things, that 

the Exchanges’ rules be designed to 

‘‘prevent fraudulent and manipulative 

acts and practices’’ and, ‘‘in general, to 

protect investors and the public 

interest;’’ and with Section 

11A(a)(1)(C)(iii) of the Exchange Act,21

which sets forth Congress’ finding that 

it is in the public interest and 

appropriate for the protection of 

investors and the maintenance of fair 

and orderly markets to assure the 

availability to brokers, dealers, and 

investors of information with respect to 

quotations for and transactions in 

securities. 

A. Exchange Act Section 6(b)(5) 

When considering previous proposals 

to list bitcoin-based commodity trusts 

and bitcoin-based trust issued 

receipts,22 the Commission has 

explained that one way an exchange 

that lists bitcoin-based exchange-traded 

products (‘‘ETPs’’) can meet the 

obligation under Exchange Act Section 

6(b)(5) that its rules be designed to 

prevent fraudulent and manipulative 

acts and practices is by demonstrating 

that the exchange has a comprehensive 

surveillance-sharing agreement with a 

regulated market of significant size 

related to the underlying or reference 

bitcoin assets.23 Such an agreement 

would assist in detecting and deterring 

fraud and manipulation related to that 

underlying asset. While past proposals 

to list spot bitcoin-based ETPs have 

argued that the bitcoin futures market of 

the Chicago Mercantile Exchange 

(‘‘CME’’) is a market of ‘‘significant 

size’’ related to spot bitcoin, for reasons 

discussed in the orders disapproving 

each such proposal, the Commission 

was unable to make such a finding.24

The Commission also has consistently 

recognized, however, that having a 

comprehensive surveillance-sharing 

agreement with a regulated market of 

significant size related to the underlying 

or reference bitcoin assets is not the 

exclusive means by which an ETP 

listing exchange can meet this statutory 

obligation under Exchange Act Section 

6(b)(5).25 A listing exchange could, 

alternatively, demonstrate that ‘‘other 

means to prevent fraudulent and 

manipulative acts and practices will be 

sufficient’’ to justify dispensing with a 

surveillance-sharing agreement with a 

regulated market of significant size.26

In the Grayscale Order,27 the 

Commission determined that the 

proposing Exchange had not established 

that the CME bitcoin futures market was 

a market of significant size related to 

spot bitcoin, or that the ‘‘other means’’ 

asserted were sufficient to satisfy the 

statutory standard. On review of the 

Grayscale Order, the U.S. Court of 

Appeals for the D.C. Circuit held that 

the Commission failed to adequately 

explain its reasoning. The court 

therefore vacated the Grayscale Order 

and remanded the matter to the 

Commission.28

The Commission is considering in 

this order the remand of the Grayscale 

Order and the other Proposals 

referenced above. For the reasons 

discussed below, based on the record 

before the Commission and the 

Commission’s analysis of available data 

and information, the Commission finds 

that sufficient ‘‘other means’’ of 

preventing fraud and manipulation in 

this context have been demonstrated. 

Each Exchange has a comprehensive 

surveillance-sharing agreement with the 

CME via their common membership in 

the Intermarket Surveillance Group.29

This facilitates the sharing of 

information that is available to the CME 

through its surveillance of its markets, 

including its surveillance of the CME 

bitcoin futures market. 

Spot bitcoin, however, does not trade 

on the CME and the CME does not 

engage in surveillance of spot bitcoin 

markets. As with prior proposals, this 

raises questions regarding the 

sufficiency of a surveillance-sharing 

agreement with the CME in preventing 

fraud and manipulation when the 

proposed ETPs hold spot bitcoin. If a 

would-be manipulator of a spot bitcoin 

ETP engages in misconduct (such as 

fraud, manipulation, or other trading 

abuses) on the CME itself, the CME’s 

surveillance can be reasonably expected 

to detect such misconduct. But if the 

would-be manipulator is not transacting 

on the CME itself, the impacts of its 

misconduct would not necessarily be 

surveilled by the CME unless the 

misconduct also impacts the CME 

bitcoin futures market. Thus, when 

assessing the sufficiency of a 

surveillance-sharing agreement with the 

CME, it is critical to establish whether, 

and to what extent, fraud or 

manipulation that impacts the spot 

bitcoin market also impacts the CME 

bitcoin futures market. 

In making that assessment, the 

Commission begins with a correlation 

analysis provided in one Proposal (the 

‘‘ARK Analysis’’) that examines the 

relationship between prices in the CME 

bitcoin futures market and the spot 

bitcoin market.30 The ARK Analysis 


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31See ARK Amendment at 24 n.54 (explaining 

that Pearson correlation is a measure of linear 

association between two variables and indicates the 

magnitude as well as direction of this relationship, 

and that the value can range between ¥1 

(suggesting a strong negative association) and 1 

(suggesting a strong positive association)). 32Price returns data are typically stationary and 

thus less prone to misleading results than price 

levels data. See also supra note 30. 33Several aspects of the ARK Analysis are unclear 

based on the description in the ARK Amendment. 

For example, the description does not indicate the 

particular time series that were used for the 

correlation analysis (e.g., last trade price, bid price, 

ask price, midpoint of bid-ask). The ARK Analysis 

also computed correlations among several spot 

bitcoin markets, in addition to between the CME 

bitcoin futures market and those spot markets. 

However, the ARK Amendment does not present 

the individual numerical results for each 

correlation, and thus the results that are specific to 

the CME bitcoin futures market are unknown. 

34See also infra note 38. 

35 Data were sourced from the CME via the SEC’s 

Market Information Data Analytics System 

(‘‘MIDAS’’) for the closest-to-maturity CME bitcoin 

futures contract price and from Kaiko for the BTC/ 

USD prices on Coinbase and Kraken. All data sets 

used in the Commission’s analysis are publicly 

available (although some require subscriptions). 

One-minute, five-minute, and hourly price level 

time series were created using the last trade price 

over the given interval for the spot BTC/USD pairs 

and the closest-to-maturity CME bitcoin futures 

contract. Each price level time series was then log 

differenced to create price returns time series. The 

stationarity of each price returns time series was 

confirmed through Augmented Dickey-Fuller tests. 

36The spot bitcoin market has grown since 2009 

into a 24-hour, global marketplace. However, due to 

the unregulated and fragmented nature of the spot 

bitcoin market, there are no authoritative published 

figures for spot bitcoin trading. Nonetheless, 

multiple sources of pricing information for the spot 

bitcoin market are available 24 hours per day on 

public websites and through subscription services. 

See, e.g., Grayscale Amendment at 41 (stating that 

real-time price and volume data for bitcoin is 

available by subscription from Reuters and 

Bloomberg). 

37The CME bitcoin futures market, which is 

regulated by the U.S. Commodity Futures Trading 

Commission (‘‘CFTC’’), has developed since its 

inception in Dec. 2017 into an active market, 

growing from 498 open BTC contracts on Dec. 31, 

2017, to 16,281 open BTC contracts and 6,409 open 

MBT contracts on Oct. 31, 2023 (source: Refinitiv). 

Real-time trade information, including prices, for 

the CME bitcoin futures market is made available 

through CME at: https://www.cmegroup.com/ 

markets/cryptocurrencies/bitcoin/bitcoin.quotes.

html#venue=globex and https://

www.cmegroup.com/markets/cryptocurrencies/ 

bitcoin/micro-bitcoin.quotes.html#venue=globex. 

38The robustness of the Commission’s correlation 

analysis rests on the pre-requisites of (1) the 

correlations being calculated with respect to bitcoin 

futures that trade on the CME, a U.S. market 

regulated by the CFTC, (2) the lengthy sample 

period of price returns for both the CME bitcoin 

futures market and the spot bitcoin market, (3) the 

frequent intra-day trading data in both the CME 

bitcoin futures market and the spot bitcoin market 

over that lengthy sample period, and (4) the 

consistency of the correlation results throughout the 

lengthy sample period. 

39Correlation should not be interpreted as an 

indicator of a causal relationship or whether one 

variable leads or lags the other. 

40The Commission years ago, in analyzing 

previous proposals, recognized that there may be a 

change in conditions or available information that 

affects the Exchange Act analysis, and that the 

Commission would then have the opportunity to 

consider whether a spot bitcoin ETP would be 

consistent with the requirements of the Exchange 

Act. See Winklevoss Order at 37580. 

calculates Pearson correlation 

statistics 31 using time series of price 

returns data 32 that were compiled at the 

hour- and minute-levels, which account 

for intra-day movements in prices, and 

over a lengthy sample period (January 

20, 2021, through February 1, 2023). 

The ARK Analysis claims 33 that price 

changes in its selected spot bitcoin 

markets and the CME bitcoin futures 

market are ‘‘highly correlated.’’ Using 

hourly data, the correlation results are 

‘‘no less than 92%’’. Using minute-byminute data, the results are ‘‘no less 

than 78%’’. Importantly, however, the 

analysis does not assess whether any of 

the results are consistent across the 

sample period. 

The Commission undertook to verify 

the ARK Analysis’ correlation results for 

a subset of its selected spot bitcoin 

markets, as well as to supplement the 

analysis by assessing the consistency of 

the results across the sample period. For 

robust 34 results, the Commission used 

stationary time series of price returns 

data at hourly, five-minute, and oneminute intervals for the spot BTC/USD 

trading pair on Coinbase and Kraken, as 

well as for the closest-to-maturity CME 

bitcoin futures contract, over a similarly 

lengthy sample period (March 1, 2021, 

through October 20, 2023).35 Pearson 

correlation statistics were calculated for 

the full sample period as well as for 

rolling three-month segments within the 

sample period. The Commission’s 

correlation analysis utilized frequent 

intra-day trading data over the lengthy 

sample period on this subset of spot 

bitcoin platforms 36 and—crucially—on 

the CME bitcoin futures market as 

well.37

The results of the Commission’s 

analysis confirm that the CME bitcoin 

futures market has been consistently 

highly correlated with this subset of the 

spot bitcoin market throughout the past 

2.5 years. The correlation between the 

CME bitcoin futures market and this 

subset of spot bitcoin platforms for the 

full sample period is no less than 98.4 

percent using data at an hourly interval, 

94.2 percent using data at a five-minute 

interval, and 76.9 percent using data at 

a one-minute interval. The rolling threemonth correlation results are similar: 

ranging between 95.0 and 99.2 percent 

using data at an hourly interval, 84.0 

and 94.5 percent using data at a fiveminute interval, and 67.9 and 83.2 

percent using data at a one-minute 

interval. 

CORRELATIONS BETWEEN CERTAIN SPOT BITCOIN MARKETS AND THE CME BITCOIN FUTURES MARKET

Coinbase Kraken 

Hourly 5 Minutes 1 Minute Hourly 5 Minutes 1 Minute 

Full Sample: 03/01/21 to 10/20/23 .................................. 98.4 94.6 77.1 98.4 94.2 76.9 

Rolling Three-Month Correlations Over the Full Sample 

Period: 

Maximum .................................................................. 99.2 94.3 83.2 99.1 94.5 82.4 

Minimum ................................................................... 95.0 87.6 69.5 95.0 84.0 67.9 

Moreover, the results of the 

Commission’s robust correlation 

analysis 38 provide empirical evidence 

supporting the ARK Analysis’ 

conclusion that prices generally move in 

close (although not perfect) alignment 

between the spot bitcoin market and the 

CME bitcoin futures market.39 As such, 

in contrast to previous proposals,40

based on the record before the 

Commission and the improved quality 

of the correlation analysis in the record, 

including the Commission’s own 

analysis, the Commission is able to 

conclude that fraud or manipulation 

that impacts prices in spot bitcoin 

markets would likely similarly impact 

CME bitcoin futures prices. And 

because the CME’s surveillance can 

assist in detecting those impacts on 

CME bitcoin futures prices, the 

Exchanges’ comprehensive surveillancesharing agreement with the CME—a 

U.S. regulated market whose bitcoin 


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41 In the original filings of their respective 

Proposals, Nasdaq and BZX had each stated that 

they expected to enter into a bilateral surveillancesharing agreement with Coinbase, Inc. (‘‘Coinbase’’) 

that would provide supplemental access to certain 

data regarding spot bitcoin trades on Coinbase. The 

Commission received comments regarding such 

potential agreements. Some commenters state that 

such agreements would adequately address the 

Commission’s concerns around market 

manipulation with respect to the operation of spot 

bitcoin ETPs (see, e.g., Letter from Simpson 

Thacher & Bartlett LLP on behalf of Skybridge 

Capital LLC, dated Aug. 14, 2023, regarding SR– 

CboeBZX–2023–028, SR–CboeBZX–2023–038, SR– 

NASDAQ–2023–016, SR–NASDAQ–2023–019, SR– 

CboeBZX–2023–040, SR–CboeBZX–2023–042, and 

SR–CboeBZX–2023–044, at 2–3; Letter from Jason 

Grunstra, dated Aug. 15, 2023, regarding SR– 

CboeBZX–2023–028, SR–CboeBZX–2023–038, SR– 

NASDAQ–2023–016, SR–NASDAQ–2023–019, SR– 

CboeBZX–2023–040, SR–CboeBZX–2023–042, and 

SR–CboeBZX–2023–044), would help to protect 

against attempted manipulation (see Letter from Joe 

Stevens, dated Nov. 29, 2023, regarding SR– 

CboeBZX–2023–072), and would significantly 

enhance the Exchanges’ market monitoring 

capabilities (see Letter from Julian Schettler, dated 

Dec. 2, 2023, regarding SR–CboeBZX–2023–072 

(‘‘Schettler Letter’’)). Other commenters disagree 

that such agreements would add much value, citing, 

among other reasons, Coinbase’s small portion of 

overall, global spot bitcoin trading; its lack of 

registration with either the SEC or CFTC; and that 

utilizing just Coinbase for surveillance purposes 

could introduce a single point of failure. See, e.g., 

Letter from Stephen W. Hall, Legal Director and 

Securities Specialist, and Scott Farnin, Legal 

Counsel, Better Markets, Inc., dated Aug. 8, 2023, 

regarding SR–CboeBZX–2023–028, SR–CboeBZX–

2023–038, SR–NASDAQ–2023–016, SR–NASDAQ– 

2023–019, SR–CboeBZX–2023–040, SR–CboeBZX– 

2023–042, and SR–CboeBZX–2023–044 (‘‘Better 

Markets Letter I’’), at 6–7; Letter from Dennis M. 

Kelleher, Co-Founder, President, and CEO, and 

Stephen W. Hall, Legal Director and Securities 

Specialist, Better Markets, Inc., dated Jan. 5, 2024, 

regarding SR–CboeBZX–2023–028, SR–CboeBZX– 

2023–038, SR–NASDAQ–2023–016, SR–NASDAQ– 

2023–019, SR–CboeBZX–2023–040, SR–CboeBZX–

2023–042, and SR–CboeBZX–2023–044 (‘‘Better 

Markets Letter II’’), at 9–10; Letter from Occupy the 

SEC, dated Aug. 30, 2023, regarding SR–CboeBZX– 

2023–028, SR–CboeBZX–2023–038, SR–NASDAQ– 

2023–016, SR–NASDAQ–2023–019, SR–CboeBZX– 

2023–040, SR–CboeBZX–2023–042, SR–CboeBZX– 

2023–044, and SR–NYSEARCA–2023–44 (‘‘Occupy 

Letter’’), at 2–3; Letter from Travis Kling, dated 

Aug. 14, 2023, regarding SR–CboeBZX–2023–028 

(‘‘Kling Letter’’). Another commenter contends that 

the Commission may not require that an Exchange 

enter into such an agreement to satisfy Exchange 

Act Section 6(b)(5). See Letter from Davis Polk & 

Wardwell LLP on behalf of Grayscale Investments, 

LLC, dated July 27, 2023, regarding SR–CboeBZX– 

2023–028, SR–CboeBZX–2023–038, SR–NASDAQ– 

2023–016, SR–NASDAQ–2023–019, SR–CboeBZX– 

2023–040, SR–CboeBZX–2023–042, and SR–

CboeBZX–2023–044. Nasdaq’s and BZX’s amended 

filings (see supra notes 6–13) removed any 

statements regarding such potential agreements. 

Because those amended filings no longer reference 

these agreements, and because the Commission 

finds that other means have been demonstrated to 

satisfy the Exchange Act Section 6(b)(5) statutory 

obligation that an exchange’s rules be designed to 

prevent fraudulent and manipulative acts and 

practices, the surveillance-sharing agreements with 

Coinbase are not a basis for approval. 

42See, e.g., Securities Exchange Act Release No. 

61220 (Dec. 22, 2009), 74 FR 68895 (Dec. 29, 2009) 

(SR–NYSEARCA–2009–94) (Order Granting 

Approval of Proposed Rule Change Relating To 

Listing and Trading Shares of the ETFS Palladium 

Trust); Securities Exchange Act Release No. 94518 

(Mar. 25, 2022), 87 FR 18837 (Mar. 31, 2022) (SR– 

NYSEARCA–2021–65) (Notice of Filing of 

Amendment No. 1 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 1, To List and Trade Shares of 

the Sprott ESG Gold ETF Under NYSE Arca Rule 

8.201–E (Commodity-Based Trust Shares)). 

43See Grayscale Amendment at 40–45; Bitwise 

Amendment at 54–58; Hashdex Amendment at 50– 

55; iShares Amendment at 41–47, 55–57; Valkyrie 

Amendment at 32–40, 44–48; ARK Amendment at 

51–53, 56–62; Invesco Amendment at 32–34, 37–43; 

VanEck Amendment at 34–36, 39–45; WisdomTree 

Amendment at 32–35, 37–44; Wise Origin 

Amendment at 71–74, 77–83; Franklin Amendment 

at 34–36, 38–45. 

44See Grayscale Amendment at 42; Bitwise 

Amendment at 55; Hashdex Amendment at 52; 

iShares Amendment at 44; Valkyrie Amendment at 

37; ARK Amendment at 59; Invesco Amendment at 

40; VanEck Amendment at 43; WisdomTree 

Amendment at 41; Wise Origin Amendment at 80; 

Franklin Amendment at 42. 

45See Nasdaq Rule 5711(d)(iii); NYSE Arca Rule 

8.201–E(e)(2)(vii); NYSE Arca Rule 8.500– 

E(d)(2)(i)(C); BZX Rule 14.11(a). 

46See Grayscale Amendment at 44; Bitwise 

Amendment at 57; Hashdex Amendment at 54; 

iShares Amendment at 40; Valkyrie Amendment at 

39; ARK Amendment at 61; Invesco Amendment at 

41–42; VanEck Amendment at 44; WisdomTree 

Amendment at 42–43; Wise Origin Amendment at 

82; Franklin Amendment at 43–44. 

47See supra note 42. 

48See, e.g., Letter from Chris, dated Aug. 11, 

2023, regarding SR–CboeBZX–2023–028; Letter 

from Rocket Academic Services, LLC, dated July 23, 

2023, regarding SR–NASDAQ–2023–019. 

49See, e.g., Angel Letter at 2; Letter from Douglas 

A. Cifu, Chief Executive Officer, Virtu Financial, 

Inc., regarding SR–CboeBZX–2023–028, SR– 

CboeBZX–2023–038, SR–CboeBZX–2023–040, SR– 

CboeBZX–2023–042, SR–CboeBZX–2023–044, SR– 

NASDAQ–2023–016, SR–NASDAQ–2023–019, and 

SR–NYSEARCA–2023–44 (‘‘Virtu Letter’’), at 2; 

Letter from Erica Woods, dated July 18, 2023, 

regarding SR–CboeBZX–2023–044 (‘‘Woods 

Continued 

futures market is consistently highly 

correlated to spot bitcoin, albeit not of 

‘‘significant size’’ related to spot 

bitcoin—can be reasonably expected to 

assist in surveilling for fraudulent and 

manipulative acts and practices in the 

specific context of the Proposals.41

B. Exchange Act Section 

11A(a)(1)(C)(iii) 

Each Proposal sets forth aspects of its 

proposed ETP, including the availability 

of pricing information, transparency of 

portfolio holdings, and types of 

surveillance procedures, that are 

consistent with other spot commodity 

ETPs that the Commission has 

approved.42 This includes commitments 

regarding: the availability via the 

relevant securities information 

processor of quotation and last-sale 

information for the shares of each Trust; 

the availability on the websites of each 

Trust of certain information related to 

the Trusts’ intra-day indicative values 

(‘‘IIV’’) and net asset values; the 

dissemination of IIV by one or more 

major market data vendors, updated 

every 15 seconds throughout the 

Exchanges’ regular trading hours; the 

Exchanges’ surveillance procedures and 

ability to obtain information regarding 

trading in the shares of the Trusts; the 

conditions under which the Exchanges 

would implement trading halts and 

suspensions; and the requirements of 

registered market makers in the shares 

of each Trust.43 In addition, in each 

Proposal, the applicable Exchange 

deems the shares of the applicable Trust 

to be equity securities, thus rendering 

trading in such shares subject to that 

Exchange’s existing rules governing the 

trading of equity securities.44 Further, 

the applicable listing rules of each 

Exchange require that all statements and 

representations made in its filing 

regarding, among others, the description 

of the applicable Trust’s holdings, 

limitations on such holdings, and the 

applicability of that Exchange’s listing 

rules specified in the filing, will 

constitute continued listing 

requirements.45 Moreover, each 

Proposal states that: its issuer has 

represented to the applicable Exchange 

that it will advise that Exchange of any 

failure to comply with the applicable 

continued listing requirements; 

pursuant to obligations under Section 

19(g)(1) of the Exchange Act, that 

Exchange will monitor for compliance 

with the continued listing requirements; 

and if the applicable Trust is not in 

compliance with the applicable listing 

requirements, that Exchange will 

commence delisting procedures.46

The Commission therefore believes 

that the Proposals, as with the other 

spot commodity ETPs that the 

Commission has approved,47 are 

reasonably designed to promote fair 

disclosure of information that may be 

necessary to price the shares of the 

Trusts appropriately, to prevent trading 

when a reasonable degree of 

transparency cannot be assured, to 

safeguard material non-public 

information relating to the Trusts’ 

portfolios, and to ensure fair and orderly 

markets for the shares of the Trusts. 

C. Other Comments Related to Bitcoin 

ETPs 

Some commenters assert that the 

Commission must approve the 

Proposals because exchange-traded 

funds (‘‘ETFs’’) and ETPs holding CME 

bitcoin futures, including leveraged 

ETFs, are already trading on national 

securities exchanges.48 Other 

commenters state that the Commission 

should approve the Proposals because 

ETFs/ETPs holding CME bitcoin futures 

and spot bitcoin ETPs ultimately track 

the same underlying asset.49 These 


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Letter’’); Letter from John Rundle, dated July 18, 

2023, regarding SR–CboeBZX–2023–028, SR– 

CboeBZX–2023–038, and SR–CboeBZX–2023–044. 

50 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k– 

1(a)(1)(C)(iii). 

51See, e.g., Spotto Letter; Letter from John Smith, 

dated July 18, 2023, regarding SR–CboeBZX–2023– 

040 (‘‘John Smith Letter’’); Letters from Peter L. 

Briger, Jr., Chairman, Fortress Investment Group 

LLC, dated Sept. 29, 2023, regarding SR–CboeBZX– 

2023–028, and dated Oct. 20, 2023, regarding SR– 

NASDAQ–2023–016 (‘‘Fortress Letters’’), at 2. 

52See, e.g., Virtu Letter at 1 and 3; Fortress Letters 

at 1; McGinley Letter; Letter from Nick, dated July 

18, 2023, regarding SR–NASDAQ–2023–016; Letter 

from Patrick Brogan, dated July 17, 2023, regarding 

SR–NASDAQ–2023–016 (‘‘Brogan Letter’’); Letter 

from Parthiban Rathinaswamy, dated July 21, 2023, 

regarding SR–CboeBZX–2023–044; Letter from 

Richard Sapp, dated July 17, 2023, regarding SR– 

CboeBZX–2023–040, SR–CboeBZX–2023–042, and 

SR–CboeBZX–2023–044 (‘‘Sapp Letter’’); Letter 

from Eric Murphy, dated Aug. 31, 2023, regarding 

SR–CboeBZX–2023–028; Letter from Dave Lester, 

dated Aug. 11, 2023, regarding SR–CboeBZX–2023– 

028 (‘‘Lester Letter’’); Letter from Anonymous, 

dated Nov. 28, 2023, regarding SR–CboeBZX–2023– 

028, SR–CboeBZX–2023–038, SR–CboeBZX–2023– 

040, SR–CboeBZX–2023–042, SR–CboeBZX–2023– 

044, SR–CboeBZX–2023–072, SR–NASDAQ–2023– 

016, SR–NASDAQ–2023–019, SR–NYSEARCA– 

2023–44, and SR–NYSEARCA–2023–58. 

53See, e.g., Fortress Letters at 1–2; Es Letter; 

Woods Letter; Brogan Letter; Letter from Mark S. 

Abner, dated July 17, 2023, regarding SR– 

CboeBZX–2023–040, SR–CboeBZX–2023–042, and 

SR–CboeBZX–2023–044; Letter from Peter 

Bouraphael, dated Aug. 13, 2023, regarding SR– 

CboeBZX–2023–028 (‘‘Bouraphael Letter’’). The 

Trust described in the Hashdex Amendment would 

purchase and sell spot bitcoin exclusively through 

Exchange for Physical (‘‘EFP’’) transactions, which 

NYSE Arca describes as a ‘‘CME-regulated, 

bilaterally negotiated block trade’’ in which both 

parties engage in a composite transaction that 

involves both a CME bitcoin futures leg and a spot 

bitcoin leg. See Hashdex Amendment at 6, 17. Some 

commenters assert that such EFP transactions 

involve ‘‘enhanced regulatory standards.’’ See, e.g., 

Letter from Philippe Bekhazi, Chief Executive 

Officer, XBTO Global Ltd., dated Dec. 27, 2023, 

regarding SR–NYSEARCA–2023–58, at 2 (‘‘The 

proposal’s commitment to transparency is actively 

demonstrated through the reporting of EFPs to 

CME, subjecting prices to ongoing surveillance and 

review.’’); Letter from David Vizsolyi, CEO, DV 

Chain, LLC, dated Dec. 22, 2023, regarding SR– 

NYSEARCA–2023–58, at 2 (efforts to affect the 

price of the Trust’s shares could involve a CME 

participant influencing the EFP prices, but 

‘‘[p]resumably, such attempted manipulation would 

be strictly monitored, prevented, and if need be, 

sanctioned by CME’’). 

54See, e.g., Occupy Letter at 3 (stating that the 

Trusts would be ‘‘fertile ground for high-pressure 

brokers exploiting the hype and volatility to take 

advantage of unsophisticated investors’’); Letter 

from Tally.xyz, dated Dec. 4, 2023, regarding SR– 

NASDAQ–2023–016 (stating that certain spot 

bitcoin ETP sponsors have ‘‘accumulated huge 

positions to dump on an excited retail market’’); 

Letter from Daniel P.B. Smith, dated Aug. 12, 2023, 

regarding SR–CboeBZX–2023–028 (‘‘Daniel Smith 

Letter’’) (stating that spot bitcoin ETP sponsors ‘‘just 

see money flowing from mark to con artist and 

figure if people are being conned anyway, they 

might as well divert a little bit of that flow to 

themselves.’’); Letter from Public Citizen, dated 

Dec. 28, 2023, regarding SR–NYSEARCA–2021–90, 

at 1 and 4 (stating that ‘‘[b]itcoin specifically, and 

cryptocurrencies generally, do not serve the public 

interest and are, in fact, a trap for vulnerable 

investors’’ and that ‘‘[s]ome cryptocurrency 

sponsors may be exploiting those who believe 

they’ve been shut out of the traditional financial 

system’’). See also infra note 60 and accompanying 

text. 

55See also Winklevoss Order at 37602. 

56 15 U.S.C. 78f(b)(5). 

57Exchange Act rule 15l–1(a). 

58Exchange Act rules 15l–1(a)(2)(ii)(A) and (B). 

Separately, under Reg BI’s Conflict of Interest 

Obligation, broker-dealers must establish, maintain, 

and enforce written policies and procedures 

reasonably designed to, among other things, 

identify and disclose or eliminate all conflicts of 

interest associated with a recommendation and 

mitigate conflicts of interest at the associated 

person level. See Exchange Act rules 15l– 

1(a)(2)(iii)(A) and (B). To the extent that brokerdealers recommend ETPs to customers who are not 

retail customers covered by Reg BI, FINRA Rule 

2111 requires, in part, that a member broker-dealer 

or associated person ‘‘have a reasonable basis to 

believe that a recommended transaction or 

investment strategy involving a security or 

securities is suitable for the customer, based on the 

information obtained through the reasonable 

diligence of the [broker-dealer] or associated person 

to ascertain the customer’s investment profile.’’ 

59See Commission Interpretation Regarding 

Standard of Conduct for Investment Advisers, 

Investment Advisers Act Release No. 5248 (June 5, 

2019), 84 FR 33669 (July 12, 2019), at 33671; 

Investment Company Act Release No. 34084 (Nov. 

2, 2020), 85 FR 83162 (Dec. 21, 2020), at 83217 

(discussing the best interest standard of conduct for 

broker-dealers and the fiduciary obligations of 

investment advisers in the context of all ETPs). 

60See, e.g., Kling Letter (stating that the bitcoin 

futures price is beholden to the spot price, and the 

spot price has always been, and continues to be, 

manipulated by bad actors); Better Markets Letter I 

at 2 and 4–9 and Better Markets Letter II at 4–6 

(stating that spot bitcoin ETPs are extremely 

vulnerable to manipulation by bad actors because 

spot bitcoin markets (1) have a history of artificially 

inflated trading volumes due to rampant 

manipulation and wash trading, (2) are highly 

concentrated, and (3) rely on a select group of 

individuals and entities to maintain the bitcoin 

network); Letter from John Palmer, dated Aug. 11, 

2023, regarding SR–CboeBZX–2023–028 (stating 

that 75% of the bitcoin in circulation is controlled 

by a small minority who use market makers to 

pump and dump); Daniel Smith Letter (‘‘[t]he 

history of crypto is a never-ending history of frauds 

and scams’’); Letter from Billy Jensen, dated Sept. 

commenters, however, do not provide 

any empirical evidence to support these 

claims. 

The Commission has considered and, 

for the reasons described above, is 

approving the Proposals on their own 

merits and under the standards 

applicable to them; namely, the 

standards provided by Section 6(b)(5) 

and Section 11A(a)(1)(C)(iii) of the 

Exchange Act.50 As described above, 

based on the record before the 

Commission and the Commission’s own 

correlation analysis, the Commission 

concludes that fraud or manipulation 

that impacts prices in spot bitcoin 

markets would likely similarly impact 

CME bitcoin futures prices, such that a 

surveillance-sharing agreement with the 

CME can be reasonably expected to 

assist in surveilling for fraud and 

manipulation that may impact the 

proposed spot bitcoin ETPs. 

Some commenters state that the 

Commission should approve the 

Proposals for a variety of investor 

protection reasons, including that spot 

bitcoin ETPs would offer a less costly 

and more efficient way to gain exposure 

to bitcoin,51 would be more convenient 

and secure relative to directly holding 

bitcoin,52 and would be more 

regulated.53 Other commenters state that 

the Commission should disapprove the 

Proposals on investor protection 

grounds, citing concerns that certain 

market players would take advantage of 

retail investors.54

The Commission has considered these 

potential benefits and concerns in the 

broader context of whether the 

Proposals meet each of the applicable 

requirements of the Exchange Act,55

including the requirement in Section 

6(b)(5) 56 that the Exchanges’ rules be 

designed to ‘‘prevent fraudulent and 

manipulative acts and practices.’’ For 

the reasons described above, the 

Commission has determined that the 

Proposals meet such requirement. The 

Commission also finds that the 

Proposals are consistent with the 

Section 6(b)(5) requirement that the 

Exchanges’ rules be designed to protect 

investors and the public interest 

because, in addition to the factors 

discussed in Section II.A and II.B above, 

existing rules and standards of conduct 

would apply to recommending and 

advising investments in the shares of 

the Trusts. For example, when brokerdealers recommend ETPs to retail 

customers, Regulation Best Interest 

(‘‘Reg BI’’) would apply.57 Reg BI 

requires broker-dealers to, among other 

things, exercise reasonable diligence, 

care, and skill when making a 

recommendation to a retail customer to: 

(1) understand potential risks, rewards, 

and costs associated with the 

recommendation and have a reasonable 

basis to believe that the 

recommendation could be in the best 

interest of at least some retail customers; 

and (2) have a reasonable basis to 

believe the recommendation is in the 

best interest of a particular retail 

customer based on that retail customer’s 

investment profile.58 In addition, 

investment advisers have a fiduciary 

duty under the Investment Advisers Act 

of 1940 comprised of a duty of care and 

a duty of loyalty. These obligations 

require the adviser to act in the best 

interest of its client and not subordinate 

its client’s interest to its own.59

Some commenters contend that the 

Commission should disapprove the 

Proposals because the bitcoin market 

has been, is being, and/or will likely 

continue to be, manipulated.60 The 


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5, 2023, regarding SR–CboeBZX–2023–028 (stating 

that bitcoin is a digital Ponzi, and that approving 

a spot ETF ‘‘will bring greater unsuspecting fools 

into the pyramid scheme’’); Letter from The 

Registered Principal, dated Aug. 9, 2023, regarding 

SR–CboeBZX–2023–038, SR–CboeBZX–2023–040, 

SR–CboeBZX–2023–042, SR–CboeBZX–2023–044, 

SR–NASDAQ–2023–016, SR–NASDAQ–2023–019, 

and SR–NYSEARCA–2023–44 (‘‘[t]here are no 

verifiable entities or persons as points of ultimate 

origin of [b]itcoin which makes it very likely to be 

a major fraud operation’’); Letter from Joseph, dated 

July 18, 2023, regarding SR–CboeBZX–2023–044 

(‘‘[a] cartel of organized crime and money-launders 

[sic] actively manipulate the price of [b]itcoin 

through the use of Tether and other crypto-ponzi 

schemes’’); Letter from Avinash Shenoy, dated Oct. 

18, 2023, regarding SR–NASDAQ–2023–016 (stating 

that manipulation in the bitcoin marketplace has 

not gone away); Letter from Winston Wood, dated 

Oct. 19, 2023, regarding SR–NASDAQ–2023–016 

(stating that the bitcoin market is manipulated and 

has a history rife with scams and criminal activity); 

Letter from Greg Steven, dated Oct. 19, 2023, 

regarding SR–NASDAQ–2023–016 (‘‘Steven Letter’’) 

(stating that bitcoin is wash traded on platforms 

outside of U.S. jurisdiction); Letter from Neil 

Fulton, dated Oct. 20, 2023, regarding SR– 

NASDAQ–2023–016 (recommending that spot 

bitcoin ETPs be disapproved until bitcoin wash 

trading is minimized); Letters from Micah Warren, 

Associate Professor of Mathematics, University of 

Oregon, dated Oct. 27, 2023, regarding SR– 

NASDAQ–2023–016, and dated Dec. 15, 2023, 

regarding SR–CboeBZX–2023–072 (‘‘Warren 

Letters’’) (explaining how the bitcoin ledger, which 

is maintained by for-profit mining entities, could 

become significantly less diverse and less costly to 

manipulate). Some commenters also assert that the 

bitcoin asset itself is a manipulation or fraud. One 

commenter states that ‘‘the complete lack of 

knowledge of who the operators of the bitcoin 

network are means that it is impossible to 

implement sufficient control measures to ensure a 

fair market that is free from manipulation of both 

token trades, actions of the operators, or even the 

fundamental properties of the asset itself.’’ See 

Letter from Brandon B., dated Oct. 25, 2023, 

regarding SR–NASDAQ–2023–016 (‘‘Brandon 

Letter’’), at 4. Another commenter asserts that the 

questions the Commission has been asking about 

fraud and manipulation are misguided because 

‘‘they are predicated on the idea that [b]itcoin is 

something legitimate which could possibly serve 

the public interest.’’ This commenter claims that 

‘‘[b]itcoin is, and has always been, a form of 

investment fraud’’ that should be banned, not 

regulated. See Letter from Sal Bayat, dated Oct. 24, 

2023, regarding SR–CboeBZX–2023–028, SR– 

CboeBZX–2023–038, SR–NASDAQ–2023–016, SR– 

NASDAQ–2023–019, SR–CboeBZX–2023–040, SR– 

CboeBZX–2023–042, and SR–CboeBZX–2023–044 

(‘‘Bayat Letter’’), at 11–14. 

61See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 

78s(b)(2)(C). The Commission does not apply a 

‘‘cannot be manipulated’’ standard; rather, the 

Commission examines whether a proposal meets 

the requirements of the Exchange Act. See, e.g., 

Winklevoss Order at 37582; VanEck Order II at 

16059 n.43. The Commission does not understand 

the Exchange Act to require that a particular 

product or market be immune from manipulation. 

Rather, the inquiry into whether the rules of an 

exchange are designed to prevent fraudulent and 

manipulative acts and practices and, in general, to 

protect investors and the public interest, has long 

focused on the mechanisms in place for the 

detection and deterrence of fraud and 

manipulation. 

62 15 U.S.C. 78f(b)(5). 

63See, e.g., Better Markets Letter at 2 (‘‘[t]he 

concentrated nature of the spot bitcoin market and 

the heavy reliance on a select group of individuals 

and entities to maintain its network threatens a 

myriad of harms, such as hacking’’); Letter from 

Nathaniel Parton, dated Nov. 14, 2023, regarding 

SR–NASDAQ–2023–016 (stating that hacking losses 

have occurred on bitcoin and ether decentralized 

platforms, centralized platforms, and when spot 

crypto is in transit; and that a Trust and its 

shareholders may have ‘‘huge unresolvable loss’’ 

from court-ordered ‘‘reverse hacking’’ if the bitcoin 

held by the Trust is itself the product of a prior 

alleged hack). 

64See, e.g., Letter from Alexander Rohner, dated 

Nov. 30, 2023, regarding SR–CboeBZX–2023–072; 

Letter from Burak Aktas, dated Nov. 30, 2023, 

regarding SR–CboeBZX–2023–072; Letter from 

Michael Fuhrmann, dated Nov. 30, 2023, regarding 

SR–CboeBZX–2023–072; Letter from Marius, dated 

Nov. 30, 2023, regarding SR–CboeBZX–2023–072; 

Letter from Anonymous, dated Nov. 30, 2023, 

regarding SR–CboeBZX–2023–072. 

65See Brandon Letter at 1. 

66See id. at 4. 

67See, e.g., Schettler Letter. 

68See supra note 52. 

69See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 

78s(b)(2)(C). 

70See BZX Rule 14.11(e)(4)(E)(ii); Nasdaq Rule 

5711(d)(vi)(B); NYSE Arca Rule 8.201–E(e)(2); 

NYSE Arca Rule 8.500–E(d)(2)(i). 

71See, e.g., Bouraphael Letter; Lester Letter; Bayat 

Letter; Letter from Shady Attia, dated July 20, 2023, 

regarding SR–NASDAQ–2023–016; Letter from 

Maria Fernanda, dated July 19, 2023, regarding SR– 

CboeBZX–2023–038 (‘‘Fernanda Letter’’); Letter 

from Joseph B. Dart, dated July 18, 2023, regarding 

SR–CboeBZX–2023–038, SR–CboeBZX–2023–040, 

SR–CboeBZX–2023–042, and SR–CboeBZX–2023– 

044; Letter from Leeor Shapira, dated Sept. 28, 

2023, regarding SR–CboeBZX–2023–028; Letter 

from Miller McGee, dated Sept. 8, 2023, regarding 

SR–CboeBZX–2023–028; Letter from The Due 

Diligence, dated July 31, 2023, regarding SR– 

CboeBZX–2023–028, SR–CboeBZX–2023–038, SR– 

NASDAQ–2023–016, SR–NASDAQ–2023–019, SR– 

CboeBZX–2023–040, SR–CboeBZX–2023–042, SR– 

CboeBZX–2023–044, and SR–NYSEARCA–2023–44 

(‘‘TDD Letter’’); Letter from Randy Donnelly, dated 

Oct. 24, 2023, regarding SR–CboeBZX–2023–028; 

Letter from N. Vittal, dated July 23, 2023, regarding 

SR–CboeBZX–2023–038; Letter from Adam R. 

Smith, dated Oct. 18, 2023, regarding SR– 

NASDAQ–2023–016; Letter from Jethro Davies, 

dated Oct. 19, 2023, regarding SR–NASDAQ–2023– 

016; Letter from Dylan Henderson, dated Nov. 28, 

2023, regarding SR–CboeBZX–2023–072. 

Commission acknowledges these 

concerns. Pursuant to Section 19(b)(2) of 

the Exchange Act, however, the 

Commission must approve a proposed 

rule change filed by a national securities 

exchange if it finds that the proposed 

rule change is consistent with the 

applicable requirements of the Exchange 

Act.61 For the reasons described above, 

the Commission finds that the Proposals 

satisfy the requirements of the Exchange 

Act, including the requirement in 

Section 6(b)(5) 62 that the Exchanges’ 

rules be designed to ‘‘prevent fraudulent 

and manipulative acts and practices.’’ 

Commenters also raise concerns 

regarding the custody of spot bitcoin. 

Some commenters express concern that 

the Bitcoin blockchain is susceptible to 

hacking and that the Trusts’ bitcoin 

could be susceptible to ‘‘reverse 

hacking.’’ 63 Other commenters express 

concern that a Trust could become 

‘‘uncovered’’ if it issues shares that are 

not backed by adequate amounts of 

bitcoin held on behalf of the Trust by its 

bitcoin custodian. These commenters 

recommend various verification 

methods, such as publicly sharing the 

relevant wallet addresses.64 Another 

commenter states that a bitcoin 

custodian is not a ‘‘true custodian,’’ but 

merely a ‘‘pass-through custodian’’ 

because it would only hold keys rather 

than directly possessing the underlying 

bitcoin balance.65 According to this 

commenter, the bitcoin ‘‘network of 

strangers’’ is the true custodian, 

undermining the safety and security 

investors have come to expect for 

exchange-traded securities.66

Conversely, some commenters 

consider the transparency of the Bitcoin 

blockchain to be an advantage over 

traditional asset classes, because it 

could enable the real-time tracking of 

the Trusts’ bitcoin holdings.67 And as 

stated above,68 some commenters 

consider custody by the Trusts’ bitcoin 

custodians to be more secure than the 

self-custody of bitcoin. 

The Commission acknowledges that 

the aggregation of bitcoin under the 

Trusts’ control, and the fact that bitcoin 

custodians only hold keys to such 

bitcoin and not the bitcoin itself, could 

introduce risks. As noted above, 

however, the Commission must approve 

a proposed rule change filed by a 

national securities exchange if it finds 

that the proposed rule change is 

consistent with the applicable 

requirements of the Exchange Act.69

The Commission has considered the 

risks raised by commenters, but for the 

reasons set forth in Section II.A and II.B 

above, it finds that the Proposals satisfy 

the requirements of the Exchange Act. 

With respect to ‘‘uncovered’’ shares, the 

potential for a gap between issued 

shares and underlying holdings is a risk 

pertinent to ETPs in general and is not 

unique to those that would hold bitcoin. 

Any such gap could constitute a 

potential violation of Exchange rules 

and grounds for suspension and the 

commencement of delisting 

proceedings.70 More generally, a failure 

to maintain good ownership and control 

of sufficient bitcoin to cover issued ETP 

shares could, depending on the facts 

and circumstances, create potential 

violations of the Exchange Act, the 

Securities Act of 1933, and/or the 

Commodity Exchange Act. 

Commenters also address, among 

other things: the nature, uses, merits, 

and drawbacks of bitcoin, other crypto 

assets, and blockchain technology; 71 the 

merits and drawbacks of an investment 


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3014 Federal Register / Vol. 89, No. 11 / Wednesday, January 17, 2024 / Notices 

72See, e.g., Spotto Letter; Lester Letter; Bayat 

Letter; Occupy Letter at 2; Letter from James Erbe, 

dated July 17, 2023, regarding SR–NASDAQ–2023– 

016; Letter from Keith Boyd, dated Oct. 24, 2023, 

regarding SR–CboeBZX–2023–028; Letter from 

Michael H., dated Nov. 29, 2023, regarding SR– 

CboeBZX–2023–028. 73See, e.g., TDD Letter; Steven Letter; Bayat 

Letter; Schettler Letter; Warren Letters; Letter from 

Mandy DeRoche of Earthjustice, Scott Faber and 

Jessica Hernandez of the Environmental Working 

Group, and Josh Archer and Erik Kojola of 

Greenpeace, dated Aug. 30, 2023, regarding SR– 

CboeBZX–2023–028, SR–CboeBZX–2023–038, SR– 

CboeBZX–2023–042, SR–NASDAQ–2023–016, SR– 

NASDAQ–2023–019, SR–NYSEARCA–2023–44; 

Letter from Marcus AE, dated Nov. 8, 2023, 

regarding SR–CboeBZX–2023–028. 

74See, e.g., Woods Letter; Fernanda Letter; John 

Smith Letter; Sapp Letter; Letter from David Alden, 

dated Aug. 14, 2023, regarding SR–CboeBZX–2023– 

028; Letter from Dennis Smith, dated Oct. 24, 2023, 

regarding SR–NASDAQ–2023–016; McGinley 

Letter; Letter from Berkshire, dated Aug. 7, 2023, 

regarding SR–CboeBZX–2023–038; Letter from 

Omar Ibrahim, dated July 15, 2023, regarding SR– 

CboeBZX–2023–040, SR–CboeBZX–2023–044, and 

SR–NASDAQ–2023–016; Letter from Paul Knight, 

dated July 18, 2023, regarding SR–CboeBZX–2023– 

028, SR–CboeBZX–2023–038, SR–CboeBZX–2023– 

040, SR–CboeBZX–2023–042, and SR–CboeBZX– 

2023–044; Letter from Jeff Calhoun, dated Dec. 12, 

2023, regarding SR–CboeBZX–2023–028. 

75See, e.g., Occupy Letter at 2; Brogan Letter. 

76See, e.g., Angel Letter at 3–6. 

77See, e.g., Letter from Naceur Hussein, dated 

July 18, 2023, regarding SR–CboeBZX–2023–044; 

Letter from Axel Hoogland, dated Aug. 15, 2023, 

regarding SR–CboeBZX–2023–028. A commenter 

discusses the benefits of in-kind creation and 

redemption mechanisms for spot bitcoin ETPs, and 

the drawbacks to having only cash creation and 

redemption mechanisms for such ETPs. See Letter 

from James J. Angel, Georgetown University, dated 

Dec. 12, 2023, regarding SR–NYSEARCA–2021–90, 

SR–NYSEARCA–2023–44, SR–NYSEARCA–2023– 

58, SR–NASDAQ–2023–016, SR–NASDAQ–2023– 

019, SR–CboeBZX–2023–028, SR–CboeBZX–2023– 

038, SR–CboeBZX–2023–040, SR–CboeBZX–2023– 

042, SR–CboeBZX–2023–044, and SR–CboeBZX– 

2023–072. The Proposals under consideration by 

the Commission in this order only contemplate cash 

creation and redemption by authorized participants. 

Accordingly, in-kind creation and redemption 

processes by authorized participants, and their 

relative benefits or drawbacks, are outside the scope 

of this order. 

78See, e.g., Angel Letter at 3. 

79See, e.g., Letters from Marie-Lise Lipchik, dated 

Aug. 11, 2023, and Aug. 15, 2023, regarding SR– 

CboeBZX–2023–028; Letter from William C. 

Piontek, dated Aug. 12, 2023, regarding SR– 

CboeBZX–2023–028. 

80 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k– 

1(a)(1)(C)(iii). 

81See supra notes 3–13. 

82See also supra Section II.B. 

83 15 U.S.C. 78s(b)(2). 

84See supra notes 3–13. In addition, the shares 

of the Trusts in SR–NYSEARCA–2021–90 and 

NYSEARCA–2023–44 must comply with the 

requirements of NYSE Arca Rule 8.201–E 

(Commodity-Based Trust Shares) to be listed and 

traded on NYSE Arca on an initial and continuing 

basis; the shares of the Trust in SR–NYSEARCA– 

2023–58 must comply with the requirements of 

NYSE Arca Rule 8.500–E (Trust Units) to be listed 

and traded on NYSE Arca on an initial and 

continuing basis; the shares of the Trusts in SR– 

NASDAQ–2023–016 and SR–NASDAQ–2023–019 

must comply with the requirements of Nasdaq Rule 

5711(d) (Commodity-Based Trust Shares) to be 

listed and traded on Nasdaq on an initial and 

continuing basis; and the shares of the Trusts in 

SR–CboeBZX–2023–028, SR–CboeBZX–2023–038, 

SR–CboeBZX–2023–040, SR–CboeBZX–2023–042, 

SR–CboeBZX–2023–044, and SR–CboeBZX–2023– 

072 must comply with the requirements of BZX 

Rule 14.11(e)(4) (Commodity-Based Trust Shares) to 

be listed and traded on BZX on an initial and 

continuing basis. 

85 15 U.S.C. 78f(b)(2). 

86 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k– 

1(a)(1)(C)(iii). 

87 15 U.S.C. 78f(b)(2). 

in bitcoin and/or bitcoin ETPs; 72 the 

nature of the bitcoin mining network 

and its environmental impacts; 73 the 

potential impact of Commission 

approval of spot bitcoin ETPs on the 

economy, jobs, U.S. innovation, and/or 

U.S. geopolitical position; 74 the 

potential impact of Commission 

approval of spot bitcoin ETPs on the 

bitcoin market itself; 75 suggestions for 

improving regulation of crypto asset 

markets 76 and criticisms of the current 

regulatory approach; 77 suggestions for 

the Commission’s allocation of its 

resources; 78 and specific concerns 

relating to a sponsor of one of the 

Trusts.79 Ultimately, however, the 

Commission has considered and, for the 

reasons discussed above, is approving 

the Proposals under the standards 

applicable to them; namely, the 

standards provided by Section 6(b)(5) 

and Section 11A(a)(1)(C)(iii) of the 

Exchange Act.80

III. Accelerated Approval of the 

Proposals 

The Commission finds good cause to 

approve the Proposals prior to the 30th 

day after the date of publication of 

notice of the Exchanges’ amended 

filings 81 in the Federal Register. The 

amended filings clarified the 

descriptions of the Trusts; further 

described the terms of the Trusts; and 

conformed various representations in 

the amended filings to the applicable 

Exchange’s listing standards and to 

representations that the Exchanges have 

made for other spot commodity ETPs 

that the Commission has approved.82

These changes do not raise any novel 

regulatory issues. Further, the changes 

assist the Commission in evaluating the 

Proposals and in determining that they 

are consistent with the Exchange Act 

and the rules and regulations 

thereunder applicable to a national 

securities exchange, as discussed above. 

Accordingly, the Commission finds 

good cause, pursuant to Section 19(b)(2) 

of the Exchange Act,83 to approve the 

Proposals on an accelerated basis. 

IV. Conclusion 

This approval order is based on all of 

the Exchanges’ representations and 

descriptions in their respective 

amended filings, which the Commission 

has carefully evaluated as discussed 

above.84 For the reasons set forth above, 

including the Commission’s correlation 

analysis, the Commission finds, 

pursuant to Section 19(b)(2) of the 

Exchange Act,85 that the Proposals are 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange, and in 

particular, with Section 6(b)(5) and 

Section 11A(a)(1)(C)(iii) of the Exchange 

Act.86

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,87

that the Proposals (SR–NYSEARCA– 

2021–90; SR–NYSEARCA–2023–44; 

SR–NYSEARCA–2023–58; SR– 

NASDAQ–2023–016; SR–NASDAQ– 

2023–019; SR–CboeBZX–2023–028; SR– 

CboeBZX–2023–038; SR–CboeBZX– 

2023–040; SR–CboeBZX–2023–042; SR– 

CboeBZX–2023–044; SR–CboeBZX– 

2023–072) be, and hereby are, approved 

on an accelerated basis. 

By the Commission. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–00743 Filed 1–16–24; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

Small Business Size Standards: 

Notification of Two Virtual Public 

Forums on the 2023 Revised Size 

Standards Methodology White Paper 

AGENCY: Small Business Administration. 

ACTION: Notification of virtual public 

forums on size standards review and 

methodology. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is holding a series 

of two virtual public forums on size 

standards to update the public on the 

status of the forthcoming third five-year 

review of size standards, as mandated 

by the Small Business Jobs Act of 2010, 

and to consider public testimony on 

proposed changes to the SBA’s size 

standards methodology for establishing, 

reviewing, or modifying size standards, 

as detailed in SBA’s 2023 Revised Size 

Standards Methodology White Paper 

(2023 Revised Methodology). Testimony 

presented at these forums will become 

part of the administrative record for 

SBA’s consideration when finalizing the 

2023 Revised Methodology. 

DATES: The virtual forum dates are as 

follows: 

• Tuesday, January 23, 2024, from 

1:00 p.m. to 3:00 p.m., EST. 


lotter on DSK11XQN23PROD with NOTICES1