Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2661 

10See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005). 

11See NetCoalition v. SEC, 615 F.3d 525, 539 

(D.C. Cir. 2010) (quoting Securities Exchange Act 

Release No. 59039 (December 2, 2008), 73 FR 

74770, 74782–83 (December 9, 2008) (SR– 

NYSEArca–2006–21)). 

12 15 U.S.C. 78s(b)(3)(A). 

13 17 CFR 240.19b–4(f). 

14 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. 93504 

(Nov. 2, 2021), 86 FR 61804. Comments received on 

the proposed rule change are available at: https:// 

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

srnysearca202190.htm. 

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

5See Securities Exchange Act Release No. 93788, 

86 FR 72291 (Dec. 21, 2021). 

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

7See Securities Exchange Act Release No. 94151, 

87 FR 7889 (Feb. 10, 2022). 

exchange venues if they deem fee levels 

at those other venues to be more 

favorable. Moreover, the Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 10 The 

fact that this market is competitive has 

also long been recognized by the courts. 

In NetCoalition v. Securities and 

Exchange Commission, the D.C. Circuit 

stated as follows: ‘‘[n]o one disputes 

that competition for order flow is 

‘fierce.’ . . . As the SEC explained, ‘[i]n 

the U.S. national market system, buyers 

and sellers of securities, and the brokerdealers that act as their order-routing 

agents, have a wide range of choices of 

where to route orders for execution’; 

[and] ‘no exchange can afford to take its 

market share percentages for granted’ 

because ‘no exchange possesses a 

monopoly, regulatory or otherwise, in 

the execution of order flow from broker 

dealers’ . . . .’’.11 Accordingly, the 

Exchange does not believe its proposed 

fee change imposes any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 12 and paragraph (f) of Rule 

19b–4 13 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• 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– 

CboeEDGX–2024–001 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–CboeEDGX–2024–001. 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–CboeEDGX–2024–001 and should be 

submitted on or before February 6, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00640 Filed 1–12–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99298; File No. SR– 

NYSEARCA–2021–90] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of 

Amendment No. 2 to a Proposed Rule 

Change To List and Trade Shares of 

Grayscale Bitcoin Trust Under NYSE 

Arca Rule 8.201–E (Commodity-Based 

Trust Shares) 

January 9, 2024. 

On October 19, 2021, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’ or 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

list and trade shares (‘‘Shares’’) of 

Grayscale Bitcoin Trust (‘‘Trust’’) under 

NYSE Arca Rule 8.201–E (CommodityBased Trust Shares). The proposed rule 

change was published for comment in 

the Federal Register on November 8, 

2021.3 On December 15, 2021, pursuant 

to Section 19(b)(2) of the Exchange 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.5

On February 4, 2022, the Commission 

instituted proceedings under Section 

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

determine whether to disapprove the 

proposed rule change.7 On April 21, 

2022, the Exchange filed Amendment 


ddrumheller on DSK120RN23PROD with NOTICES1
2662 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

8See Securities Exchange Act Release No. 94844, 

87 FR 28043 (May 10, 2022). 

9See Securities Exchange Act Release No. 95180, 

87 FR 40299 (July 6, 2022). 

10See Grayscale Investments, LLC v. SEC, 82 

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

11The Trust was previously named Bitcoin 

Investment Trust, whose name was changed 

pursuant to a Certificate of Amendment to the 

Certificate of Trust of Bitcoin Investment Trust filed 

with the Delaware Secretary of State on January 11, 

2019. 

12Commodity-Based Trust Shares are securities 

issued by a trust that represent investors’ discrete 

identifiable and undivided beneficial ownership 

interest in the commodities deposited into the 

Trust. 

13The Shares are expected to be listed under the 

ticker symbol ‘‘GBTC.’’ 

14On March 22, 2016, the Trust confidentially 

filed its draft registration statement on Form 10 

under the Securities Act of 1933 (15 U.S.C. 77a) (the 

‘‘Securities Act’’ or ‘‘’33 Act’’) (File No. 377–01289) 

(the ‘‘Draft Registration Statement on Form S–1’’). 

On May 31, 2016, the Trust confidentially filed 

Amendment No. 1 to the Draft Registration 

Statement on Form S–1. On July 29, 2016, the Trust 

confidentially filed Amendment No. 2 to the Draft 

Registration Statement on Form S–1. On November 

2, 2016, the Trust confidentially filed Amendment 

No. 3 to the Draft Registration Statement on Form 

S–1. The Jumpstart Our Business Startups Act (the 

‘‘JOBS Act’’), enacted on April 5, 2012, added 

Section 6(e) to the Securities Act. Section 6(e) of the 

Securities Act provides that an ‘‘emerging growth 

company’’ may confidentially submit to the 

Commission a draft registration statement for 

confidential, non-public review by the Commission 

staff prior to public filing, provided that the initial 

confidential submission and all amendments 

thereto shall be publicly filed not later than 21 days 

before the date on which the issuer conducts a road 

show, as such term is defined in Securities Act Rule 

433(h)(4). An emerging growth company is defined 

in Section 2(a)(19) of the Securities Act as an issuer 

with less than $1,000,000,000 total annual gross 

revenues during its most recently completed fiscal 

year. The Trust meets the definition of an emerging 

growth company and consequently submitted its 

Draft Registration Statement on Form S–1 to the 

Commission on a confidential basis. On January 20, 

2017, the Trust filed its registration statement on 

Form S–1 under the Securities Act (File No. 333– 

215627) (the ‘‘Registration Statement on Form S– 

1’’). On March 24, 2017, the Trust filed Amendment 

No. 1 to the Registration Statement on Form S–1. 

On May 4, 2017, the Trust filed Amendment No. 

2 to the Registration Statement on Form S–1. On 

October 25, 2017, the Trust requested the 

withdrawal of the Registration Statement on Form 

S–1. On October 3, 2018, the Trust confidentially 

filed its draft registration statement on Form 10 

under the Securities Act (File No. 377–02297) (the 

‘‘Draft Registration Statement on Form 10’’). On 

December 6, 2018, the Trust confidentially filed 

Amendment No. 1 to the Draft Registration 

Statement on Form 10. On February 25, 2019 the 

Trust confidentially filed Amendment No. 2 to the 

Draft Registration Statement on Form 10. On April 

15, 2019, the Trust confidentially filed Amendment 

No. 3 to the Draft Registration Statement on Form 

10. On September 9, 2019, the Trust confidentially 

filed Amendment No. 4 to the Draft Registration 

Statement on Form 10. As noted above, the Trust 

meets the definition of an emerging growth 

company under the JOBS Act and consequently 

submitted its Draft Registration Statement on Form 

10 to the Commission on a confidential basis. On 

November 19, 2019, the Trust filed its registration 

statement on Form 10 under the Securities Act (File 

No. 000–56121) (the ‘‘Registration Statement on 

Form 10’’). On December 31, 2019, the Trust filed 

Amendment No. 1 to the Registration Statement on 

Form 10. On January 21, 2020, the Registration 

Statement on Form 10 was automatically deemed 

effective. On March 20, 2020, March 5, 2021, 

February 25, 2022 and March 1, 2023, the Trust 

filed its annual reports on Form 10–K under the 

Securities Act (File No. 000–56121) (the ‘‘Annual 

Reports’’). On May 8, 2020, August 7, 2020, 

November 6, 2020, May 7, 2021, August 6, 2021, 

November 5, 2021, May 6, 2022, August 5, 2022, 

November 4, 2022, May 5, 2023, August 4, 2023, 

and November 3, 2023, the Trust filed its quarterly 

reports on Form 10–Q under the Securities Act (File 

No. 000–56121) (the ‘‘Quarterly Reports’’). On 

October 19, 2023, the Trust filed a registration 

statement on Form S–3 under the Securities Act 

(File No. 333–275079) (the ‘‘Registration 

Statement’’). On November 22, 2023, the Trust filed 

Amendment No. 1 to the Registration Statement on 

Form S–3. On December 26, 2023, the Trust filed 

Amendment No. 2 to the Registration Statement on 

Form S–3. On January 2, 2024, the Trust filed 

Amendment No. 3 to the Registration Statement on 

Form S–3. The descriptions of the Trust, the Shares, 

and Bitcoin contained herein are based, in part, on 

the Annual Report, Quarterly Reports and 

Registration Statement. On January 17, 2019, the 

Trust submitted to the Commission an amended 

Form D as a business trust. Shares of the Trust have 

been quoted on OTC Market’s OTCQX Best 

Marketplace under the symbol ‘‘GBTC’’ since March 

26, 2015. On February 22, 2019 and March 20, 

2020, the Trust published annual reports for GBTC 

for the periods ended December 31, 2018 and 

December 31, 2019, respectively. On May 14, 2019, 

August 8, 2019, November 14, 2019, May 8, 2020, 

August 7, 2020 and November 6, 2020, the Trust 

published quarterly reports for GBTC for the 

periods ended March 31, 2019, June 30, 2019, 

September 30, 2019, March 31, 2020, June 30, 2020 

and September 30, 2020 respectively. Reports 

published before January 11, 2020, the date on 

which the Trust’s Shares became registered 

pursuant to Section 12(g) of the Act, can be found 

on OTC Market’s website (http://

www.otcmarkets.com/stock/GBTC/disclosure), and 

reports published on or after January 11, 2020 can 

be found on OTC Market’s website (http://

www.otcmarkets.com/stock/GBTC/disclosure) and 

the Commission’s website (https://www.sec.gov/cgibin/browse-edgar?CIK=gbtc&

owner=exclude&action=getcompany). The Shares 

will be of the same class and will have the same 

rights as Shares of GBTC. Effective October 28, 

2014, the Trust suspended its redemption program 

for shares of GBTC, in which shareholders were 

permitted to request the redemption of their shares 

through Genesis Global Trading, Inc. (formerly 

known as SecondMarket, Inc.), an affiliate of the 

Sponsor and the Trust. According to the Sponsor, 

freely tradeable shares of GBTC will remain freely 

tradeable Shares on the date of the listing of the 

Shares that are unregistered under the Securities 

Act. Restricted shares of GBTC will remain subject 

to private placement restrictions and the holders of 

such restricted shares will continue to hold those 

Shares subject to those restrictions until they 

become freely tradable Shares. 

15As of November 14, 2023. 

No. 1, which amended and replaced the 

proposed rule change in its entirety, and 

on May 4, 2022, the Commission 

provided notice of Amendment No. 1 to 

the proposed rule change and 

designated a longer period for 

Commission action on the proposed rule 

change, as modified by Amendment No. 

1.8 On June 29, 2022, the Commission 

disapproved the proposed rule change, 

as modified by Amendment No. 1.9

Thereafter, the U.S. Court of Appeals for 

the D.C. Circuit vacated the 

Commission’s order disapproving the 

proposed rule change and remanded the 

matter to the Commission.10 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 selfregulatory organization. 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 

The Exchange proposes to list and 

trade shares of the following under 

NYSE Arca Rule 8.201–E: Grayscale 

Bitcoin Trust (BTC) (the ‘‘Trust’’).11 This 

Amendment No. 2 to SR–NYSEArca– 

2021–90 replaces SR–NYSEArca–2021– 

90 as originally filed and supersedes 

such filing in its entirety The proposed 

rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Under NYSE Arca Rule 8.201–E, the 

Exchange may propose to list and/or 

trade pursuant to unlisted trading 

privileges ‘‘Commodity-Based Trust 

Shares.’’ 12 The Exchange proposes to 

list and trade shares (‘‘Shares’’) 13 of the 

Trust pursuant to NYSE Arca Rule 

8.201–E.14

The Trust is the world’s largest 

Bitcoin investment fund by assets under 

management as of the date of this filing. 

The Trust has approximately $21.9 

billion in assets under management 15


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2663 

16Based on a discount of 13.4% as of November 

14, 2023. 

17According to the Annual Report, Digital 

Currency Group owns a minority interest in 

Coinbase, Inc., which is the parent company of the 

Custodian, representing less than 1.0% of its equity. 

18The Trust may from time to time come into 

possession of Incidental Rights and/or IR Virtual 

Currency by virtue of its ownership of Bitcoins, 

generally through a fork in the Bitcoin Blockchain, 

an airdrop offered to holders of Bitcoins or other 

similar event. ‘‘Incidental Rights’’ are rights to 

acquire, or otherwise establish dominion and 

control over, any virtual currency or other asset or 

right, which rights are incident to the Trust’s 

ownership of Bitcoins and arise without any action 

of the Trust, or of the Sponsor or Trustee on behalf 

of the Trust. ‘‘IR Virtual Currency’’ is any virtual 

currency tokens, or other asset or right, acquired by 

the Trust through the exercise (subject to the 

applicable provisions of the Trust Agreement) of 

any Incidental Right. Although the Trust is 

permitted to take certain actions with respect to 

Incidental Rights and IR Virtual Currency in 

accordance with its Trust Agreement, at this time 

the Trust will prospectively irrevocably abandon 

any Incidental Rights and IR Virtual Currency. In 

the event the Trust seeks to change this position, 

the Exchange would file a subsequent proposed rule 

change with the Commission. 

19The ‘‘Index Price’’ means the U.S. dollar value 

of a Bitcoin derived from the Digital Asset Trading 

Platforms that are reflected in the CoinDesk Bitcoin 

Price Index (XBX) (the ‘‘Index’’), calculated at 4:00 

p.m., New York time, each day. For purposes of the 

Trust Agreement, the term Bitcoin Index Price has 

the same meaning as the Index Price as defined 

herein. 

20The Sponsor’s Fee means a fee, payable in 

Bitcoins, which accrues daily in U.S. dollars at an 

annual rate of currently 2.0%, but which will be 

lowered in connection with the Trust becoming an 

ETP, of the NAV Fee Basis Amount of the Trust as 

of 4:00 p.m., New York time, on each day; provided 

that for a day that is not a business day, the 

calculation of the Sponsor’s Fee will be based on 

the NAV Fee Basis Amount from the most recent 

business day, reduced by the accrued and unpaid 

Sponsor’s Fee for such most recent business day 

and for each day after such most recent business 

day and prior to the relevant calculation date. The 

‘‘NAV Fee Basis Amount’’ is calculated in the 

manner set forth under ‘‘Valuation of Bitcoin and 

Determination of NAV’’ below. 

21While the Sponsor uses the terminology 

‘‘NAV’’ in this filing, the term used in the Trust 

Agreement is ‘‘Digital Asset Holdings.’’ 

(representing 3.1% of all Bitcoin in 

circulation), and its Shares trade 

millions of dollars in daily volume and 

are held by nearly a million American 

investor accounts seeking exposure to 

Bitcoin without the cost and complexity 

of purchasing the asset directly. 

However, because the Trust is not 

currently listed as an exchange-traded 

product (‘‘ETP’’), the value of the Shares 

has not been able to closely track the 

value of the Trust’s underlying Bitcoin. 

The Sponsor thus believes that allowing 

Shares of the Trust to list and trade on 

the Exchange as an ETP (i.e., converting 

the Trust to a spot Bitcoin ETP) would 

unlock over $2.9 billion of value 16 for 

the Trust’s shareholders and provide 

other investors with a safe and secure 

way to invest in Bitcoin on a regulated 

national securities exchange. 

The sponsor of the Trust is Grayscale 

Investments, LLC (‘‘Sponsor’’), a 

Delaware limited liability company. The 

Sponsor is a wholly-owned subsidiary 

of Digital Currency Group, Inc. (‘‘Digital 

Currency Group’’). The trustee for the 

Trust is Delaware Trust Company 

(‘‘Trustee’’). The custodian for the 

Trust’s Bitcoin is Coinbase Custody 

Trust Company, LLC (‘‘Custodian’’).17

The administrator and transfer agent of 

the Trust is BNY Mellon Asset 

Servicing, a division of The Bank of 

New York Mellon (the ‘‘Transfer 

Agent’’). The distribution and marketing 

agent for the Trust will be Foreside 

Fund Services, LLC (the ‘‘Marketing 

Agent’’). The index provider for the 

Trust is CoinDesk Indices, Inc. (the 

‘‘Index Provider’’). 

The Trust is a Delaware statutory 

trust, organized on September 13, 2013, 

that operates pursuant to a trust 

agreement between the Sponsor and the 

Trustee (‘‘Trust Agreement’’). The Trust 

has no fixed termination date. 

Operation of the Trust 

According to the Annual Report and 

Registration Statement, the Trust’s 

assets consist solely of Bitcoins.18

Each Share represents a proportional 

interest, based on the total number of 

Shares outstanding, in the Trust’s assets 

as determined by reference to the Index 

Price,19 less the Trust’s expenses and 

other liabilities (which include accrued 

but unpaid fees and expenses). The 

Sponsor expects that the market price of 

the Shares will fluctuate over time in 

response to the market prices of Bitcoin. 

In addition, because the Shares reflect 

the estimated accrued but unpaid 

expenses of the Trust, the number of 

Bitcoins represented by a Share will 

gradually decrease over time as the 

Trust’s Bitcoins are used to pay the 

Trust’s expenses. 

The activities of the Trust will be 

limited to (i) issuing ‘‘Baskets’’ (as 

defined below) in exchange for Bitcoins 

transferred to the Trust as consideration 

in connection with creations, (ii) 

transferring or selling Bitcoins as 

necessary to cover the Sponsor’s Fee 20

and/or certain Trust expenses, (iii) 

transferring Bitcoins in exchange for 

Baskets surrendered for redemption 

(subject to obtaining regulatory approval 

from the SEC and approval of the 

Sponsor), (iv) causing the Sponsor to 

sell Bitcoins on the termination of the 

Trust, and (v) engaging in all 

administrative and security procedures 

necessary to accomplish such activities 

in accordance with the provisions of the 

Trust Agreement, the Custodian 

Agreement, the Index License 

Agreement and the Participant 

Agreements (each as defined below). 

The Trust will not be actively 

managed. It will not engage in any 

activities designed to obtain a profit 

from, or to ameliorate losses caused by, 

changes in the market prices of Bitcoins. 

Investment Objective 

According to the Annual Report and 

Registration Statement, the Trust’s 

investment objective is for the value of 

the Shares (based on Bitcoin per Share) 

to reflect the value of the Bitcoins held 

by the Trust, determined by reference to 

the Index Price, less the Trust’s 

expenses and other liabilities. 

While an investment in the Shares is 

not a direct investment in Bitcoin, the 

Shares are designed to provide investors 

with a cost-effective and convenient 

way to gain investment exposure to 

Bitcoin. Generally speaking, a 

substantial direct investment in Bitcoin 

may require expensive and sometimes 

complicated arrangements in 

connection with the acquisition, 

security and safekeeping of the Bitcoin 

and may involve the payment of 

substantial fees to acquire such Bitcoin 

from third-party facilitators through 

cash payments of U.S. dollars. Because 

the value of the Shares is correlated 

with the value of Bitcoin held by the 

Trust, it is important to understand the 

investment attributes of, and the market 

for, Bitcoin. 

The Trust uses the Index Price to 

calculate its ‘‘NAV,’’ which is the 

aggregate value, expressed in U.S. 

dollars, of the Trust’s assets (other than 

U.S. dollars or other fiat currency), less 

the U.S. dollar value of the Trust’s 

expenses and other liabilities calculated 

in the manner set forth under 

‘‘Valuation of Bitcoin and 

Determination of NAV.’’ ‘‘NAV per 

Share’’ is calculated by dividing NAV 

by the number of Shares then 

outstanding. 

Valuation of Bitcoin and Determination 

of NAV 

The following is a description of the 

material terms of the Trust Agreement 

as it relates to valuation of the Trust’s 

Bitcoin and the NAV calculations.21

On each business day at 4:00 p.m., 

New York time, or as soon thereafter as 

practicable (the ‘‘Evaluation Time’’), the 

Sponsor will evaluate the Bitcoins held 

by the Trust and calculate and publish 

the NAV of the Trust. To calculate the 

NAV, the Sponsor will: 

1. Determine the Index Price as of 

such business day. 


ddrumheller on DSK120RN23PROD with NOTICES1
2664 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

22 ‘‘Baskets’’ and ‘‘Basket Amount’’ have the 

meanings set forth in ‘‘Creation and Redemption of 

Shares’’ below. 

23 ‘‘Additional Trust Expenses’’ are any expenses 

incurred by the Trust in addition to the Sponsor’s 

Fee that are not Sponsor-paid expenses, including, 

but not limited to, (i) taxes and governmental 

charges, (ii) expenses and costs of any extraordinary 

services performed by the Sponsor (or any other 

service provider) on behalf of the Trust to protect 

the Trust or the interests of shareholders, (iii) any 

indemnification of the Custodian or other agents, 

service providers or counterparties of the Trust, (iv) 

the fees and expenses related to the listing, 

quotation or trading of the Shares on any 

marketplace or other alternative trading system, as 

determined by the Sponsor, on which the Shares 

may then be listed, quoted or traded, including but 

not limited to, NYSE Arca, Inc. (including legal, 

marketing and audit fees and expenses) to the 

extent exceeding $600,000 in any given fiscal year 

and (v) extraordinary legal fees and expenses, 

including any legal fees and expenses incurred in 

connection with litigation, regulatory enforcement 

or investigation matters. 

24A ‘‘Digital Asset Market’’ is a ‘‘Brokered 

Market,’’ ‘‘Dealer Market,’’ ‘‘Principal-to-Principal 

Market’’ or ‘‘Exchange Market,’’ as each such term 

is defined in the Financial Accounting Standards 

Board Accounting Standards Codification Master 

Glossary. The ‘‘Digital Asset Trading Platform 

Market’’ is the global trading platform market for 

the trading of Bitcoins, which consists of 

transactions on electronic Digital Asset Trading 

Platforms. A ‘‘Digital Asset Trading Platform’’ is an 

electronic marketplace where participants may 

trade, buy and sell Bitcoins based on bid-ask 

trading. The largest Digital Asset Trading Platforms 

are online and typically trade on a 24-hour basis, 

publishing transaction price and volume data. 

2. Multiply the Index Price by the 

Trust’s aggregate number of Bitcoins 

owned by the Trust as of 4:00 p.m., New 

York time, on the immediately 

preceding day, less the aggregate 

number of Bitcoins payable as the 

accrued and unpaid Sponsor’s Fee as of 

4:00 p.m., New York time, on the 

immediately preceding day. 

3. Add the U.S. dollar value of 

Bitcoins, calculated using the Index 

Price, receivable under pending creation 

orders, if any, determined by 

multiplying the number of the Baskets 

represented by such creation orders by 

the Basket Amount and then 

multiplying such product by the Index 

Price.22

4. Subtract the U.S. dollar amount of 

accrued and unpaid Additional Trust 

Expenses,23 if any. 

5. Subtract the U.S. dollar value of the 

Bitcoins, calculated using the Index 

Price, to be distributed under pending 

redemption orders, if any, determined 

by multiplying the number of Baskets to 

be redeemed represented by such 

redemption orders by the Basket 

Amount and then multiplying such 

product by the Index Price (the amount 

derived from steps 1 through 5 above, 

the ‘‘NAV Fee Basis Amount’’). 

6. Subtract the U.S. dollar amount of 

the Sponsor’s Fee that accrues for such 

business day, as calculated based on the 

NAV Fee Basis Amount for such 

business day. 

In the event that the Sponsor 

determines that the primary 

methodology used to determine the 

Index Price is not an appropriate basis 

for valuation of the Trust’s Bitcoins, the 

Sponsor will utilize the cascading set of 

rules as described in ‘‘Determination of 

the Index Price When Index Price is 

Unavailable’’ below. 

Bitcoin and the Bitcoin Network 

According to the Annual Report, 

Bitcoin is a digital asset that is created 

and transmitted through the operations 

of the peer-to-peer ‘‘Bitcoin Network,’’ a 

decentralized network of computers that 

operates on cryptographic protocols. No 

single entity owns or operates the 

Bitcoin Network, the infrastructure of 

which is collectively maintained by a 

decentralized user base. The Bitcoin 

Network allows people to exchange 

tokens of value, called Bitcoin, which 

are recorded on a public transaction 

ledger known as a Blockchain. Bitcoin 

can be used to pay for goods and 

services, or it can be converted to fiat 

currencies, such as the U.S. dollar, at 

rates determined on ‘‘Digital Asset 

Markets’’ 24 that trade Bitcoin or in 

individual end-user-to-end-user 

transactions under a barter system. 

The Bitcoin Network is decentralized 

in that it does not require governmental 

authorities or financial institution 

intermediaries to create, transmit or 

determine the value of Bitcoin. Rather, 

Bitcoin is created and allocated by the 

Bitcoin Network protocol through a 

‘‘mining’’ process. The value of Bitcoin 

is determined by the supply of and 

demand for Bitcoin on the Digital Asset 

Markets or in private end-user-to-enduser transactions. 

New Bitcoin are created and rewarded 

to the miners of a block in the 

Blockchain for verifying transactions. 

The Blockchain is effectively a 

decentralized database that includes all 

blocks that have been mined by miners 

and it is updated to include new blocks 

as they are solved. Each Bitcoin 

transaction is broadcast to the Bitcoin 

Network and, when included in a block, 

recorded in the Blockchain. As each 

new block records outstanding Bitcoin 

transactions, and outstanding 

transactions are settled and validated 

through such recording, the Blockchain 

represents a complete, transparent and 

unbroken history of all transactions of 

the Bitcoin Network. 

Overview of the Bitcoin Network’s 

Operations 

In order to own, transfer or use 

Bitcoin directly on the Bitcoin Network 

(as opposed to through an intermediary, 

such as a custodian), a person generally 

must have internet access to connect to 

the Bitcoin Network. Bitcoin 

transactions may be made directly 

between end-users without the need for 

a third-party intermediary. To prevent 

the possibility of double-spending 

Bitcoin, a user must notify the Bitcoin 

Network of the transaction by 

broadcasting the transaction data to its 

network peers. The Bitcoin Network 

provides confirmation against doublespending by memorializing every 

transaction in the Blockchain, which is 

publicly accessible and transparent. 

This memorialization and verification 

against double-spending is 

accomplished through the Bitcoin 

Network mining process, which adds 

‘‘blocks’’ of data, including recent 

transaction information, to the 

Blockchain. 

Summary of a Bitcoin Transaction 

Prior to engaging in Bitcoin 

transactions directly on the Bitcoin 

Network, a user generally must first 

install on its computer or mobile device 

a Bitcoin Network software program that 

will allow the user to generate a private 

and public key pair associated with a 

Bitcoin address, commonly referred to 

as a ‘‘wallet.’’ The Bitcoin Network 

software program and the Bitcoin 

address also enable the user to connect 

to the Bitcoin Network and transfer 

Bitcoin to, and receive Bitcoin from, 

other users. 

Each Bitcoin Network address, or 

wallet, is associated with a unique 

‘‘public key’’ and ‘‘private key’’ pair. To 

receive Bitcoin, the Bitcoin recipient 

must provide its public key to the party 

initiating the transfer. This activity is 

analogous to a recipient for a transaction 

in U.S. dollars providing a routing 

address in wire instructions to the payor 

so that cash may be wired to the 

recipient’s account. The payor approves 

the transfer to the address provided by 

the recipient by ‘‘signing’’ a transaction 

that consists of the recipient’s public 

key with the private key of the address 

from where the payor is transferring the 

Bitcoin. The recipient, however, does 

not make public or provide to the 

sender its related private key. 

Neither the recipient nor the sender 

reveal their private keys in a 

transaction, because the private key 

authorizes transfer of the funds in that 

address to other users. Therefore, if a 

user loses his private key, the user may 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2665 

permanently lose access to the Bitcoin 

contained in the associated address. 

Likewise, Bitcoin is irretrievably lost if 

the private key associated with them is 

deleted and no backup has been made. 

When sending Bitcoin, a user’s Bitcoin 

Network software program must 

validate the transaction with the 

associated private key. In addition, 

since every computation on the Bitcoin 

Network requires processing power, 

there is a transaction fee involved with 

the transfer that is paid by the payor. 

The resulting digitally validated 

transaction is sent by the user’s Bitcoin 

Network software program to the 

Bitcoin Network miners to allow 

transaction confirmation. 

Bitcoin Network miners record and 

confirm transactions when they mine 

and add blocks of information to the 

Blockchain. When a miner mines a 

block, it creates that block, which 

includes data relating to (i) newly 

submitted and accepted transactions; (ii) 

a reference to the prior block in the 

Bitcoin Blockchain; and (iii) the 

satisfaction of the consensus mechanism 

to mine the block. The miner becomes 

aware of outstanding, unrecorded 

transactions through the data packet 

transmission and distribution discussed 

above. 

Upon the addition of a block included 

in the Blockchain, the Bitcoin Network 

software program of both the spending 

party and the receiving party will show 

confirmation of the transaction on the 

Blockchain and reflect an adjustment to 

the Bitcoin balance in each party’s 

Bitcoin Network public key, completing 

the Bitcoin transaction. Once a 

transaction is confirmed on the 

Blockchain, it is irreversible. 

Some Bitcoin transactions are 

conducted ‘‘off-blockchain’’ and are 

therefore not recorded in the 

Blockchain. Some ‘‘off-blockchain 

transactions’’ involve the transfer of 

control over, or ownership of, a specific 

digital wallet holding Bitcoin or the 

reallocation of ownership of certain 

Bitcoin in a pooled-ownership digital 

wallet, such as a digital wallet owned by 

a Digital Asset Trading Platform. In 

contrast to on-blockchain transactions, 

which are publicly recorded on the 

Blockchain, information and data 

regarding off-blockchain transactions 

are generally not publicly available. 

Therefore, off-blockchain transactions 

are not truly Bitcoin transactions in that 

they do not involve the transfer of 

transaction data on the Bitcoin Network 

and do not reflect a movement of 

Bitcoin between addresses recorded in 

the Blockchain. For these reasons, offblockchain transactions are subject to 

risks, as any such transfer of Bitcoin 

ownership is not protected by the 

protocol behind the Bitcoin Network or 

recorded in, and validated through, the 

blockchain mechanism. 

Limits on Bitcoin Supply 

The supply of new Bitcoin is 

mathematically controlled so that the 

number of Bitcoin grows at a limited 

rate pursuant to a pre-set schedule. The 

number of Bitcoin awarded for solving 

a new block is automatically halved 

after every 210,000 blocks are added to 

the Blockchain. Currently, the fixed 

reward for solving a new block is 6.25 

Bitcoin per block and this is expected to 

decrease by half to become 3.125 

Bitcoin after the next 210,000 blocks 

have entered the Bitcoin Network, 

which is expected to be mid-2024. This 

deliberately controlled rate of Bitcoin 

creation means that the number of 

Bitcoin in existence will increase at a 

controlled rate until the number of 

Bitcoin in existence reaches the predetermined 21 million Bitcoin. As of 

September 30, 2023, approximately 19.5 

million Bitcoins were outstanding and 

the date when the 21 million Bitcoin 

limitation will be reached is estimated 

to be the year 2140. 

Custody of the Trust’s Bitcoins 

Digital assets and digital asset 

transactions are recorded and validated 

on blockchains, the public transaction 

ledgers of a digital asset network. Each 

digital asset blockchain serves as a 

record of ownership for all of the units 

of such digital asset, even in the case of 

certain privacy-preserving digital assets, 

where the transactions themselves are 

not publicly viewable. All digital assets 

recorded on a blockchain are associated 

with a public blockchain address, also 

referred to as a digital wallet. Digital 

assets held at a particular public 

blockchain address may be accessed and 

transferred using a corresponding 

private key. 

Key Generation 

Public addresses and their 

corresponding private keys are 

generated by the Custodian in secret key 

generation ceremonies at secure 

locations inside faraday cages, which 

are enclosures used to block 

electromagnetic fields and thus mitigate 

against attacks. The Custodian uses 

quantum random number generators to 

generate the public and private key 

pairs. 

Once generated, private keys are 

encrypted, separated into ‘‘shards,’’ and 

then further encrypted. After the key 

generation ceremony, all materials used 

to generate private keys, including 

computers, are destroyed. All key 

generation ceremonies are performed 

offline. No party other than the 

Custodian has access to the private key 

shards of the Trust. 

Key Storage 

Private key shards are distributed 

geographically in secure vaults around 

the world, including in the United 

States. The locations of the secure vaults 

may change regularly and are kept 

confidential by the Custodian for 

security purposes. 

The ‘‘Digital Asset Account’’ is a 

segregated custody account controlled 

and secured by the Custodian to store 

private keys, which allows for the 

transfer of ownership or control of the 

Trust’s Bitcoins on the Trust’s behalf. 

The Digital Asset Account uses offline 

storage, or ‘‘cold’’ storage, mechanisms 

to secure the Trust’s private keys. The 

term cold storage refers to a 

safeguarding method by which the 

private keys corresponding to digital 

assets are disconnected and/or deleted 

entirely from the internet. Cold storage 

of private keys may involve keeping 

such keys on a non-networked (or ‘‘airgapped’’) computer or electronic device 

or storing the private keys on a storage 

device (for example, a USB thumb 

drive) or printed medium (for example, 

papyrus, paper or a metallic object). A 

digital wallet may receive deposits of 

digital assets but may not send digital 

assets without use of the digital assets’ 

corresponding private keys. In order to 

send digital assets from a digital wallet 

in which the private keys are kept in 

cold storage, either the private keys 

must be retrieved from cold storage and 

entered into an online, or ‘‘hot,’’ digital 

asset software program to sign the 

transaction, or the unsigned transaction 

must be transferred to the cold server in 

which the private keys are held for 

signature by the private keys and then 

transferred back to the online digital 

asset software program. At that point, 

the user of the digital wallet can transfer 

its digital assets. 

Security Procedures 

The Custodian is the custodian of the 

Trust’s private keys (which, as noted 

above, facilitate the transfer of 

ownership or control of the Trust’s 

Bitcoins) in accordance with the terms 

and provisions of the custodian 

agreement by and between the 

Custodian, the Sponsor and the Trust 

(the ‘‘Custodian Agreement’’). Transfers 

from the Digital Asset Account require 

certain security procedures, including, 

but not limited to, multiple encrypted 

private key shards, usernames, 

passwords and 2-step verification. 

Multiple private key shards held by the 


ddrumheller on DSK120RN23PROD with NOTICES1
2666 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

25 ‘‘Authorized Participant’’ has the meaning set 

forth in ‘‘Creation and Redemption of Shares’’ 

below. 

26Market share is calculated using trading 

volume data (in Bitcoins) for certain Digital Asset 

Trading Platforms, including Coinbase, Bitstamp, 

Kraken, and LMAX Digital, as well as certain other 

large U.S.-dollar denominated Digital Asset Trading 

Platforms that were not included in the Index as of 

September 30, 2023, including Binance.US (data 

included from April 1, 2020), Bitfinex, Bitflyer (data 

included from December 24, 2018), Bittrex (data 

included from July 31, 2018), Cboe Digital (data 

included from October 1, 2020), FTX.US (data 

included from July 1, 2021 through November 10, 

2022), Gemini (data included from October 7, 2015), 

itBit, LakeBTC (data included from May 1, 2015 to 

June 1, 2018 and from January 27, 2019 to May 6, 

2021), HitBTC (data included from April 1, 2019 to 

March 31, 2020) and OKCoin (data included 

through March 31, 2023). 

27On January 19, 2020, the Index Provider 

removed Bittrex due to a lack of trading volume and 

added LMAX Digital based on its meeting the 

liquidity thresholds for inclusion in the Index. On 

April 6, 2020, the Index Provider removed itBit due 

to a lack of trading volume and did not add any 

constituents as part of its scheduled quarterly 

review. On October 29, 2022, the Index Provider 

removed Bitstamp from the Index due to its failure 

to meet the minimum liquidity requirement and 

added Binance.US as a Constituent Trading 

Platform based on its satisfaction of the minimum 

liquidity requirement as part of its scheduled 

quarterly review. On June 17, 2023, the Index 

Provider removed Binance.US from the Index, due 

to Binance.US’s announcement that it was 

suspending U.S. dollar deposits and withdrawals 

and planned to delist its U.S. dollar trading pairs 

and did not add any Constituent Trading Platforms 

as part of its review. Effective July 29, 2023, the 

Index Provider added Bitstamp to the Index based 

on its satisfaction of the Index Provider’s minimum 

liquidity requirement and did not remove any 

Constituent Trading Platforms as part of its 

scheduled quarterly review. On October 28, 2023, 

the Index Provider added Crypto.com to the Index 

based on its satisfaction of the Index Provider’s 

minimum liquidity requirement and did not remove 

any Constituent Trading Platforms as part of its 

scheduled quarterly review. 

Custodian must be combined to 

reconstitute the private key to sign any 

transaction in order to transfer the 

Trust’s assets. Private key shards are 

distributed geographically in secure 

vaults around the world, including in 

the United States. 

As a result, if any one secure vault is 

ever compromised, this event will have 

no impact on the ability of the Trust to 

access its assets, other than a possible 

delay in operations, while one or more 

of the other secure vaults is used 

instead. These security procedures are 

intended to remove single points of 

failure in the protection of the Trust’s 

assets. 

Transfers of Bitcoins to the Digital 

Asset Account will be available to the 

Trust once processed on the Blockchain. 

Subject to obtaining regulatory 

approval to operate a redemption 

program and authorization of the 

Sponsor, the process of accessing and 

withdrawing Bitcoins from the Trust to 

redeem a Basket by an Authorized 

Participant 25 will follow the same 

general procedure as transferring 

Bitcoins to the Trust to create a Basket 

by an Authorized Participant, only in 

reverse. 

The Sponsor will maintain ownership 

and control of the Trust’s Bitcoin in a 

manner consistent with good delivery 

requirements for spot commodity 

transactions. 

Bitcoin Value 

Digital Asset Trading Platform 

Valuation 

According to the Annual Report and 

Registration Statement, the value of 

Bitcoin is determined by the value that 

various market participants place on 

Bitcoin through their transactions. The 

most common means of determining the 

value of a Bitcoin is by surveying one 

or more Digital Asset Trading Platforms 

where Bitcoin is traded publicly (e.g., 

Coinbase, Bitstamp, Kraken, and LMAX 

Digital). Additionally, there are overthe-counter dealers or market makers 

that transact in Bitcoin. 

Digital Asset Trading Platforms Public 

Market Data 

On each online Digital Asset Trading 

Platforms, Bitcoin is traded with 

publicly disclosed valuations for each 

executed trade, measured by one or 

more fiat currencies such as the U.S. 

dollar or Euro. Over-the-counter dealers 

or market makers do not typically 

disclose their trade data. 

As of September 30, 2023, the Digital 

Asset Trading Platforms included in the 

Index are Coinbase, Bitstamp, Kraken 

and LMAX Digital. As further described 

below, the Sponsor and the Trust 

reasonably believe each of these Digital 

Asset Trading Platforms are in material 

compliance with applicable U.S. federal 

and state licensing requirements and 

maintain practices and policies 

designed to comply with know-yourcustomer (‘‘KYC’’), anti-moneylaundering (‘‘AML’’) regulations. 

Coinbase: A U.S.-based trading 

platform registered as a money services 

business (‘‘MSB’’) with the U.S. 

Department of Treasury’s Financial 

Crimes Enforcement Network 

(‘‘FinCEN’’) and licensed as a virtual 

currency business under the New York 

State Department of Financial Services 

(‘‘NYDFS’’) BitLicense and as a money 

transmitter in various U.S. states. 

Bitstamp: A U.K.-based trading 

platform registered as an MSB with 

FinCen and licensed as a virtual 

currency business under the NYDFS 

BitLicense and as a money transmitter 

in various U.S. states. 

Kraken: A U.S.-based trading platform 

registered as an MSB with FinCEN and 

licensed as a money transmitter in 

various U.S. states. Kraken does not 

hold a BitLicense. 

LMAX Digital: A U.K.-based trading 

platform registered as a broker with the 

Financial Conduct Authority. LMAX 

Digital does not hold a BitLicense. 

Currently, there are several Digital 

Asset Trading Platforms operating 

worldwide, and online Digital Asset 

Trading Platforms represent a 

substantial percentage of Bitcoin buying 

and selling activity and provide the 

most data with respect to prevailing 

valuations of Bitcoins. These trading 

platforms include established trading 

platforms such as trading platforms 

included in the Index, which provide a 

number of options for buying and 

selling Bitcoins. The below table reflects 

the trading volume in Bitcoins and 

market share 26 of the BTC–U.S. dollar 

trading pairs of each of the Digital Asset 

Trading Platforms included in the Index 

as of September 30, 2023 27 using data 

reported by the Index Provider from 

May 1, 2015 to September 30, 2023: 

DIGITAL TRADING PLATFORMS INCLUDED IN THE INDEX AS OF SEPTEMBER 30, 2023 

Volume 

(BTC) 

Market 

share 

(%) 

Coinbase .................................................................................................................................................................. 44,082,174 24.33 

Bitstamp ................................................................................................................................................................... 23,391,038 12.91 

Kraken ...................................................................................................................................................................... 13,173,711 7.27 

LMAX Digital ............................................................................................................................................................ 8,929,858 4.93 

Total BTC–U.S. dollar trading pair ................................................................................................................... 89,576,781 49.44 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2667 

28 ‘‘Capital controls’’ in this context means 

governmental sanctions that would limit the 

movement of capital into, or out of, the jurisdiction 

in which such Digital Asset Trading Platforms 

operate. 

29Trading platforms with programmatic trading 

offer traders an application programming interface 

that permits trading by sending programmed 

commands to the trading platform. 

30Upon entering into the Index License 

Agreement, the Sponsor and the Index Provider 

terminated the license agreement between the 

parties dated as of February 28, 2019. 

The domicile, regulation, and legal 

compliance of the Digital Asset Trading 

Platforms included in the Index varies. 

Information regarding each Digital Asset 

Trading Plaform may be found, where 

available, on the websites for such 

Digital Asset Trading Platforms, among 

other places. 

The Index and the Index Price 

The Index is a U.S. dollardenominated composite reference rate 

for the price of Bitcoin. The Index is 

designed to (i) mitigate the effects of 

fraud, manipulation and other 

anomalous trading activity from 

impacting the Bitcoin reference rate, (ii) 

provide a real-time, volume-weighted 

fair value of Bitcoin and (iii) 

appropriately handle and adjust for nonmarket related events. 

The Index Price is determined by the 

Index Provider through a process in 

which trade data is cleansed and 

compiled in such a manner as to 

algorithmically reduce the impact of 

anomalistic or manipulative trading. 

This is accomplished by adjusting the 

weight of each data input based on price 

deviation relative to the observable set, 

as well as recent and long-term trading 

volume at each venue relative to the 

observable set. 

The value of the Index is calculated 

and disseminated on a 24-hour basis 

and will be available on a continuous 

basis at https://www.coindesk.com/ 

indices. 

Constituent Trading Platform Selection 

According to the Annual Report and 

Registration Statement, the Digital Asset 

Trading Platforms that are included in 

the Index are selected by the Index 

Provider utilizing a methodology that is 

guided by the International 

Organization of Securities Commissions 

(‘‘IOSCO’’) principles for financial 

benchmarks. For a trading platform to 

become a Digital Asset Trading Platform 

included in the Index (a ‘‘Constituent 

Trading Platform’’), it must satisfy the 

criteria listed below (the ‘‘Inclusion 

Criteria’’): 

• Sufficient USD liquidity relative to 

the size of the listed assets; 

• No evidence in the past 12 months 

of trading restrictions on individuals or 

entities that would otherwise meet the 

trading platform’s eligibility 

requirements to trade; 

• No evidence in the past 12 months 

of undisclosed restrictions on deposits 

or withdrawals from user accounts; 

• Real-time price discovery; 

• Limited or no capital controls; 28

• Transparent ownership including a 

publicly-owned ownership entity; 

• Publicly available language and 

policies addressing legal and regulatory 

compliance in the US, including KYC 

(Know Your Customer), AML (AntiMoney Laundering) and other policies 

designed to comply with relevant 

regulations that might apply to it; 

• Be a US-domiciled trading platform 

or a non-US domiciled trading platform 

that is able to service US investors; 

• Offer programmatic spot trading of 

the trading pair,29 and reliably publish 

trade prices and volumes on a real-time 

basis through Rest and Websocket APIs. 

A Digital Asset Trading Platform is 

removed from the Constituent Trading 

Platforms when it no longer satisfies the 

Inclusion Criteria. The Index Provider 

does not currently include data from 

non-Digital Asset Trading Platforms (or 

over-the-counter markets) or derivatives 

platforms among the Constituent 

Trading Platforms. According to the 

Annual Report and Registration 

Statement, over-the-counter data is not 

currently included because of the 

potential for trades to include a 

significant premium or discount paid 

for larger liquidity, which creates an 

uneven comparison relative to more 

active markets. There is also a higher 

potential for over-the-counter 

transactions to not be arms-length, and 

thus not be representative of a true 

market price. Bitcoin derivative markets 

data, including Bitcoin futures markets 

and perpetuals markets data, are also 

not currently included as the markets 

remain relatively thin. The Index 

Provider will consider IOSCO principles 

for financial benchmarks and the 

management of trading venues of 

Bitcoin derivatives and the 

aforementioned Inclusion Criteria when 

considering inclusion of over-thecounter or derivative platform data in 

the future. 

The Index Provider and the Sponsor 

have entered into the index license 

agreement, dated as of February 1, 2022 

(as amended, the ‘‘Index License 

Agreement’’), governing the Sponsor’s 

use of the Index Price.30 Pursuant to the 

terms of the Index License Agreement, 

the Index Provider may adjust the 

calculation methodology for the Index 

Price without notice to, or consent of, 

the Trust or its shareholders. The Index 

Provider may decide to change the 

calculation methodology to maintain the 

integrity of the Index Price calculation 

should it identify or become aware of 

previously unknown variables or issues 

with the existing methodology that it 

believes could materially impact its 

performance and/or reliability. The 

Index Provider has sole discretion over 

the determination of Index Price and 

may change the methodologies for 

determining the Index Price from time 

to time. Shareholders will be notified of 

any material changes to the calculation 

methodology or the Index Price in the 

Trust’s current reports and will be 

notified of all other changes that the 

Sponsor considers significant in the 

Trust’s periodic or current reports. The 

Trust will determine the materiality of 

any changes to the Index Price on a 

case-by-case basis, in consultation with 

external counsel. 

The Index Provider may change the 

trading venues that are used to calculate 

the Index or otherwise change the way 

in which the Index is calculated at any 

time. For example, the Index Provider 

has scheduled quarterly reviews in 

which it may add or remove Constituent 

Trading Platforms that satisfy or fail the 

Inclusion Criteria. The Index Provider 

does not have any obligation to consider 

the interests of the Sponsor, the Trust, 

the shareholders, or anyone else in 

connection with such changes. 

Although the Index Provider is not 

required to publicize or explain the 

changes or to alert the Sponsor to such 

changes, it has historically notified the 

Trust (and other subscribers to the 

Index) of any material changes to the 

Constituent Trading Platforms, 

including any additions or removals, 

contemporaneous with its issuance of 

press releases in connection with the 

same. The Sponsor will notify investors 

of any such material event by filing a 

current report on Form 8–K. Although 

the Index methodology is designed to 

operate without any manual 

intervention, rare events would justify 

manual intervention. Intervention of 

this kind would be in response to nonmarket-related events, such as the 

halting of deposits or withdrawals of 

funds on a Digital Asset Trading 

Platform, the unannounced closure of 

operations on a Digital Asset Trading 

Platform, insolvency or the compromise 

of user funds. In the event that such an 

intervention is necessary, the Index 

Provider would issue a public 

announcement through its website, API 

and other established communication 

channels with its clients. 


ddrumheller on DSK120RN23PROD with NOTICES1
2668 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

31The Sponsor updated these rules on January 11, 

2022. 

Determination of the Index Price 

The Index applies an algorithm to the 

price of Bitcoin on the Constituent 

Trading Platforms calculated on a per 

second basis over a 24-hour period. The 

Index’s algorithm is expected to reflect 

a four-pronged methodology to calculate 

the Index Price from the Constituent 

Trading Platforms: 

• Volume Weighting: Constituent 

Trading Platforms with greater liquidity 

receive a higher weighting in the Index, 

increasing the ability to execute against 

(i.e., replicate) the Index in the 

underlying spot markets. 

• Price-Variance Weighting: The 

Index Price reflects data points that are 

discretely weighted in proportion to 

their variance from the rest of the 

Constituent Trading Platforms. As the 

price at a particular trading platform 

diverges from the prices at the rest of 

the Constituent Trading Platforms, its 

weight in the Index Price consequently 

decreases. 

• Inactivity Adjustment: The Index 

Price algorithm penalizes stale activity 

from any given Constituent Trading 

Platform. When a Constituent Trading 

Platform does not have recent trading 

data, its weighting in the Index Price is 

gradually reduced until it is deweighted entirely. Similarly, once 

trading activity at a Constituent Trading 

Platform resumes, the corresponding 

weighting for that Constituent Trading 

Platform is gradually increased until it 

reaches the appropriate level. 

• Manipulation Resistance: In order 

to mitigate the effects of wash trading 

and order book spoofing, the Index only 

includes executed trades in its 

calculation. Additionally, the Index 

only includes Constituent Trading 

Platforms that charge trading fees to its 

users in order to attach a real, 

quantifiable cost to any manipulation 

attempts. 

The Index Provider re-evaluates the 

weighting algorithm on a periodic basis, 

but maintains discretion to change the 

way in which an Index Price is 

calculated based on its periodic review 

or in extreme circumstances and does 

not make the exact methodology to 

calculate the Index Price publicly 

available. Nonetheless, the Sponsor 

believes that, the Index is designed to 

limit exposure to trading or price 

distortion of any individual Digital 

Asset Trading Platform that experiences 

periods of unusual activity or limited 

liquidity by discounting, in real-time, 

anomalous price movements at 

individual Digital Asset Trading 

Platforms. 

The Sponsor believes the Index 

Provider’s selection process for 

Constituent Trading Platforms as well as 

the methodology of the Index Price’s 

algorithm provides a more accurate 

picture of Bitcoin price movements than 

a simple average of Digital Asset 

Trading Platform spot prices, and that 

the weighting of Bitcoin prices on the 

Constituent Trading Platforms limits the 

inclusion of data that is influenced by 

temporary price dislocations that may 

result from technical problems, limited 

liquidity or fraudulent activity 

elsewhere in the Bitcoin spot market. By 

referencing multiple trading venues and 

weighting them based on trade activity, 

the Sponsor believes that the impact of 

any potential fraud, manipulation or 

anomalous trading activity occurring on 

any single venue is reduced. 

If the Index Price becomes 

unavailable, or if the Sponsor 

determines in good faith that such Index 

Price does not reflect an accurate price 

for Bitcoin, then the Sponsor will, on a 

best efforts basis, contact the Index 

Provider to obtain the Index Price 

directly from the Index Provider. If after 

such contact such Index Price remains 

unavailable or the Sponsor continues to 

believe in good faith that such Index 

Price does not reflect an accurate price 

for the relevant digital asset, then the 

Sponsor will employ a cascading set of 

rules to determine the Index Price, as 

described below in ‘‘Determination of 

the Index Price When Index Price is 

Unavailable.’’ 

The Trust values its Bitcoin for 

operational purposes by reference to the 

Index Price. The Index Price is the value 

of a Bitcoin as represented by the Index, 

calculated at 4:00 p.m., New York time, 

on each business day. 

Illustrative Example 

For the purposes of illustration, 

outlined below are examples of how the 

attributes that impact weighting and 

adjustments in the aforementioned 

methodology may be utilized to generate 

the Index Price for a digital asset. For 

example, the Constituent Trading 

Platforms for the Index Price for a 

digital asset are Coinbase, Kraken, 

LMAX Digital and Bitstamp. 

The Index Price algorithm, as 

described above, accounts for 

manipulation at the outset by only 

including data from executed trades on 

Constituent Trading Platforms that 

charge trading fees. Then, the belowlisted elements may impact the 

weighting of the Constituent Trading 

Platforms on the Index price as follows: 

• Volume Weighting: Each 

Constituent Trading Platform will be 

weighted to appropriately reflect the 

trading volume share of the Constituent 

Trading Platform relative to all the 

Constituent Trading Platforms during 

this same period. For example, an 

average hourly weighting of 67.06%, 

14.57%, 11.88% and 6.49% for 

Coinbase, Kraken, LMAX Digital and 

Bitstamp, respectively, would represent 

each Constituent Trading Platform’s 

share of trading volume during the same 

period. 

• Inactivity Adjustment: Assume that 

a Constituent Trading Platform 

represented a 14% weighting on the 

Index Price of the digital asset, which is 

based on the per-second calculations of 

its trading volume and price-variance 

relative to the cohort of Constituent 

Trading Platforms included in such 

Index, and then went offline for 

approximately two hours. The index 

algorithm would automatically 

recognize inactivity and start deweighting the Constituent Trading 

Platform at the 3-minute mark and 

continue to do so over a 7-minute 

period until its influence was effectively 

zero, 10 minutes after becoming 

inactive. As soon as trading activity 

resumed at the Constituent Trading 

Platform, the index algorithm would reweight it to the appropriate weighting 

based on trading volume and pricevariance relative to the cohort of 

Constituent Trading Platforms included 

in the Index. Due to the period of 

inactivity, it would re-weight the 

Constituent Trading Platform activity to 

a weight lower than its original 

weighting—for example, to 12%. 

• Price-Variance Weighting: Assume 

that for a one-hour period, the digital 

asset’s execution prices on one 

Constituent Trading Platform were 

trading more than 7% higher than the 

average execution prices on another 

Constituent Trading Platform. The 

algorithm will automatically detect the 

anomaly and reduce that specific 

Constituent Trading Platform’s 

weighting to 0% for that one-hour 

period, ensuring a reliable spot 

reference unaffected by the localized 

event. 

Determination of the Index Price When 

Index Price Is Unavailable 

The Sponsor uses the following 

cascading set of rules to calculate the 

Index Price when the Index Price is 

unavailable.31 For the avoidance of 

doubt, the Sponsor will employ the 

below rules sequentially and in the 

order as presented below, should one or 

more specific rule(s) fail. 

1. Index Price = The price set by the 

Index as of 4:00 p.m., New York time, 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2669 

32The valuation date is any day for which the 

value of the Bitcoin in the Trust may be calculated 

utilizing the Index Price. This calculation may be 

performed on business days for creation or 

redemption procedures or on non-business days in 

relation to calculating information that may be 

included in SEC reports comparing the GAAP and 

non-GAAP prices on period end dates that are nonbusiness days. The cascading rule set is consistent 

for determining the value of the Bitcoin in the Trust 

on both business days and non-business days. 

33According to the Annual Report, when a 

modification is introduced and a substantial 

majority of users and miners consent to the 

modification, the change is implemented and the 

network remains uninterrupted. However, if less 

than a substantial majority of users and miners 

consent to the proposed modification, and the 

modification is not compatible with the software 

prior to its modification, the consequence would be 

what is known as a ‘‘hard fork’’ of the Bitcoin 

Network, with one group running the pre-modified 

software and the other running the modified 

software. The effect of such a fork would be the 

existence of two versions of Bitcoin running in 

parallel, yet lacking interchangeability. For 

example, in August 2017, Bitcoin ‘‘forked’’ into 

Bitcoin and a new digital asset, Bitcoin Cash, as a 

result of a several-year dispute over how to increase 

the rate of transactions that the Bitcoin Network can 

process. In the event of a hard fork of the Bitcoin 

Network, the Sponsor will, consistent with its 

obligations pursuant to the Trust Agreement, use its 

discretion to determine, in good faith, which peerto-peer network, among a group of incompatible 

forks of the Bitcoin Network, is generally accepted 

as the Bitcoin Network and should therefore be 

considered the appropriate network for the Trust’s 

purposes. The Sponsor will base its determination 

on a variety of then relevant factors, including, but 

not limited to, the Sponsor’s beliefs regarding 

expectations of the core developers of Bitcoin, 

users, services, businesses, miners, and other 

constituencies, as well as the actual continued 

acceptance of, mining power on, and community 

engagement with, the Bitcoin Network. There is no 

guarantee that the Sponsor will choose the digital 

asset that is ultimately the most valuable fork, and 

the Sponsor’s decision may adversely affect the 

value of the Shares as a result. The Sponsor may 

also disagree with shareholders, security vendors, 

and the Index Provider on what is generally 

accepted as Bitcoin and should therefore be 

considered ‘‘Bitcoin’’ for the Trust’s purposes, 

which may also adversely affect the value of the 

Shares as a result. 

34See supra note 18. 

35The Sponsor will provide notice of any such 

changes in the Trust’s periodic or current reports 

and, if the Sponsor makes such a change other than 

on an ad hoc or temporary basis, it will file a 

proposed rule change under Section 19(b) with the 

Commission. 

36See Securities Exchange Act Release No. 93504 

(November 2, 2021), 86 FR 61804 (November 8, 

2021) (Notice of Filing of Proposed Rule Change to 

List and Trade Shares of the Grayscale Bitcoin Trust 

(BTC) Under NYSE Arca Rule 8.201–E). 

37ProShares Bitcoin Strategy ETF (BITO). 

38See, e.g., Securities Exchange Act Release No. 

94620 (April 6, 2022), 87 FR 21676 (April 12, 2022) 

(SR–NYSEArca–2021–53) (Order Granting Approval 

of a Proposed Rule Change, as Modified by 

Amendment No. 2, to List and Trade Shares of the 

Teucrium Bitcoin Futures Fund under NYSE ARCA 

Rule 8.200–E, Commentary .02 (Trust Issued 

Receipts)) (‘‘Teucrium Order’’); VanEck Bitcoin 

Strategy ETF (XBTF); Valkyrie Bitcoin Strategy ETF 

(BTF). 

on the valuation date.32 If the Index 

becomes unavailable, or if the Sponsor 

determines in good faith that the Index 

does not reflect an accurate price, then 

the Sponsor will, on a best efforts basis, 

contact the Index Provider to obtain the 

Index Price directly from the Index 

Provider. If after such contact the Index 

remains unavailable or the Sponsor 

continues to believe in good faith that 

the Index does not reflect an accurate 

price, then the Sponsor will employ the 

next rule to determine the Index Price. 

There are no predefined criteria to make 

a good faith assessment and it will be 

made by the Sponsor in its sole 

discretion. 

2. Index Price = The price set by Coin 

Metrics Real-Time Rate (the ‘‘Secondary 

Index’’) as of 4:00 p.m., New York time, 

on the valuation date (the ‘‘Secondary 

Index Price’’). The Secondary Index 

Price is a real-time reference rate price, 

calculated using trade data from 

constituent markets selected by Coin 

Metrics (the ‘‘Secondary Index 

Provider’’). The Secondary Index Price 

is calculated by applying weightedmedian techniques to such trade data 

where half the weight is derived from 

the trading volume on each constituent 

market and half is derived from inverse 

price variance, where a constituent 

market with high price variance as a 

result of outliers or market anomalies 

compared to other constituent markets 

is assigned a smaller weight. If the 

Secondary Index becomes unavailable, 

or if the Sponsor determines in good 

faith that the Secondary Index does not 

reflect an accurate price, then the 

Sponsor will, on a best efforts basis, 

contact the Secondary Index Provider to 

obtain the Secondary Index Price 

directly from the Secondary Index 

Provider. If after such contact the 

Secondary Index remains unavailable or 

the Sponsor continues to believe in 

good faith that the Secondary Index 

does not reflect an accurate price, then 

the Sponsor will employ the next rule 

to determine the Index Price. There are 

no predefined criteria to make a good 

faith assessment and it will be made by 

the Sponsor in its sole discretion. 

3. Index Price = The price set by the 

Trust’s principal market (as defined in 

the Annual Report) (the ‘‘Tertiary 

Pricing Option’’) as of 4:00 p.m., New 

York time, on the valuation date. The 

Tertiary Pricing Option is a spot price 

derived from the principal market’s 

public data feed that is believed to be 

consistently publishing pricing 

information as of 4:00 p.m., New York 

time, and is provided to the Sponsor via 

an application programming interface. If 

the Tertiary Pricing Option becomes 

unavailable, or if the Sponsor 

determines in good faith that the 

Tertiary Pricing Option does not reflect 

an accurate price, then the Sponsor will, 

on a best efforts basis, contact the 

Tertiary Pricing Provider to obtain the 

Tertiary Pricing Option directly from 

the Tertiary Pricing Provider. If after 

such contact the Tertiary Pricing Option 

remains unavailable after such contact 

or the Sponsor continues to believe in 

good faith that the Tertiary Pricing 

Option does not reflect an accurate 

price, then the Sponsor will employ the 

next rule to determine the Index Price. 

There are no predefined criteria to make 

a good faith assessment and it will be 

made by the Sponsor in its sole 

discretion. 

4. Index Price = The Sponsor will use 

its best judgment to determine a good 

faith estimate of the Index Price. There 

are no predefined criteria to make a 

good faith assessment and it will be 

made by the Sponsor in its sole 

discretion. 

In the event of a fork, the Index 

Provider may calculate the Index Price 

based on a digital asset that the Sponsor 

does not believe to be an appropriate 

asset of the Trust (i.e., a digital asset 

other than Bitcoin).33 In this event, the 

Sponsor has full discretion to use a 

different index provider or calculate the 

Index Price itself using its best 

judgment. In such an event, the 

Exchange will submit a proposed rule 

filing to contemplate the assets that 

would subsequently be held by the 

Trust.34

The Sponsor may, in its sole 

discretion, select a different index 

provider, select a different index price 

provided by the Index Provider, 

calculate the Index Price by using the 

cascading set of rules set forth above, or 

change the cascading set of rules set 

forth above at any time.35

The Impact of the Approval of Bitcoin 

Futures ETFs and ETPs on Spot Bitcoin 

ETPs Like the Trust 

On October 19, 2021, the date of the 

Exchange’s initial submission of this 

proposed rule change,36 the first 

Bitcoin-based exchange-traded fund 

(‘‘ETF’’) was approved by the 

Commission for trading.37 Additional 

Bitcoin-based ETFs and ETPs were 

subsequently approved for trading.38 All 

of those approved ETFs and ETPs hold 

Bitcoin futures contracts that trade on 

the CME and many settle using the CME 

CF Bitcoin Reference Rate (‘‘BRR’’), 

which is priced based on the spot 

Bitcoin markets Coinbase, Kraken, 

LMAX, Bitstamp, Gemini, and itBit, 

essentially the same spot markets that 

are included in the Index that the Trust 

uses to value its Bitcoin holdings. Given 

that the Commission has approved ETFs 


ddrumheller on DSK120RN23PROD with NOTICES1
2670 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

39See, e.g., Chair Gary Gensler Public Statement, 

‘‘Remarks Before the Aspen Security Forum,’’ 

(August 3, 2021), stating that the Chair looked 

forward to the Commission’s review of Bitcoinbased ETF proposals registered under the ’40 Act, 

‘‘particularly if those are limited to [the] CMEtraded Bitcoin futures,’’ noting the ‘‘significant 

investor protection’’ offered by the ’40 Act, https:// 

www.sec.gov/news/public-statement/gensler-aspensecurity-forum-2021-08-03; Securities Exchange Act 

Release No. 93559 (November 12, 2021), 86 FR 

64539 (November 18, 2021) (SR–CboeBZX–2021– 

019) (Order Disapproving a Proposed Rule Change 

to List and Trade Shares of the VanEck Bitcoin 

Trust under BZX Rule 14.11(e)(4), CommodityBased Trust Shares) (‘‘VanEck Order’’) (denying the 

first spot bitcoin ETP registered under the ’33 Act 

following the first approval of a bitcoin futures ETF 

registered under the ‘40 Act, noting the differences 

in the standard of review that applies to such 

products); Teucrium Order (approving the first 

bitcoin futures ETP registered under the ’33 Act). 

40Teucrium Order, 87 FR 21678 (‘‘With respect 

to the proposed ETP, the underlying bitcoin assets 

are CME bitcoin futures contracts. The relevant 

analysis, therefore, is whether Arca has a 

comprehensive surveillance sharing agreement with 

a regulated market of significant size related to CME 

bitcoin futures contracts. As discussed below, 

taking into consideration the direct relationship 

between the regulated market with which Arca has 

a surveillance-sharing agreement and the assets 

held by the proposed ETP, as well as developments 

with respect to the CME bitcoin futures market— 

including the launch of exchange-traded funds 

registered under the Investment Company Act of 

1940 (‘1940 Act’) that hold CME bitcoin futures 

(‘Bitcoin Futures ETFs’)—the Commission 

concludes that the Exchange has the requisite 

surveillance-sharing agreement.’’). 

41See Comment Letter from Robert E. Whaley 

(May 25, 2022), available at: https://www.sec.gov/ 

comments/sr-nysearca-2021-90/srnysearca202190- 

20129557-295794.pdf. 42See Securities Exchange Act Release No. 95180 

(June 29, 2022), 87 FR 40299 (July 6, 2022) (SR– 

NYSEArca–2021–90) (Order Disapproving a 

Proposed Rule Change, as Modified by Amendment 

No. 1, to List and Trade Share of Grayscale Bitcoin 

Trust Under NYSE Arca Rule 8.201–E (CommodityBased Trust Shares)) (‘‘Grayscale Order’’). 

43 Grayscale Investments, LLC v. Securities and 

Exchange Commission (‘‘Grayscale v. SEC’’), No. 

22–1142, Brief of Petitioner Grayscale Investments, 

LLC (October 11, 2022). 

44 Grayscale v. SEC, No. 22–1142, Opinion at 10 

(August 29, 2023) (‘‘Grayscale presented 

uncontested evidence that there is a 99.9 percent 

correlation between bitcoin’s spot market and CME 

futures contract prices. This tight correlation is not 

a coincidence: bitcoin futures prices are ultimately 

based on spot market prices. Bitcoin futures trade 

based on predicted settlement prices that are in turn 

calculated using the Bitcoin Reference Rate. The 

Reference Rate, like the CoinDesk Index, aggregates 

spot prices from multiple exchanges. Four of the six 

exchanges are shared between the indexes. A study 

conducted by a finance professor and expert on 

derivative contract valuation found the CoinDesk 

Index and the Reference Rate are ‘near perfect 

substitutes.’’’) (internal citations omitted). 

45 Id. at 11. 

and ETPs that offer exposure to Bitcoin 

futures, which themselves are priced 

based on the underlying spot Bitcoin 

market, the Sponsor believes that the 

Commission must also approve ETPs 

that offer exposure to spot Bitcoin, like 

the Trust. 

The Commission has historically 

sought to justify treating futures-based 

ETFs and ETPs differently from spotbased ETPs because of (i) distinctions 

between the regulations under which 

the two products would be registered 

(the Investment Company Act of 1940 

(the ‘‘’40 Act’’) for digital-asset futures 

ETFs and ’33 Act for spot digital-asset 

ETPs) and/or (ii) the existence of 

regulation and surveillance-sharing over 

the CME digital-asset futures market 

through the Intermarket Surveillance 

Group (‘‘ISG’’), as compared to the spot 

market for those digital assets.39 The 

Sponsor believes that this reasoning is 

unsupported for the following reasons. 

The ’40 Act Offers No More Investor 

Protections Than the ’33 Act in the 

Context of Bitcoin-Based ETF and ETP 

Proposals 

While the ’40 Act has certain added 

investor protections that the ’33 Act 

does not require, these protections do 

not seek to allay harms arising from 

underlying assets or markets of assets 

that ETFs hold, such as the potential for 

fraud or manipulation in such markets. 

In other words, the Sponsor does not 

believe that the application of the ’40 

Act supports the purported 

justifications the Commission has made 

in denying other spot digital asset ETPs. 

Instead, the ’40 Act seeks to remedy 

certain abusive practices in the 

management of investment companies 

such as ETFs, and thus places certain 

restrictions on ETFs and ETF sponsors. 

The ’40 Act explicitly lists out the types 

of abuses it seeks to prevent, and places 

certain restrictions related to 

accounting, borrowing, custody, fees, 

and independent boards, among others. 

Notably, none of these restrictions 

address an ETF’s underlying assets, 

whether Bitcoin futures or spot Bitcoin, 

or the markets from which such assets’ 

pricing is derived, whether the CME 

Bitcoin futures market or spot Bitcoin 

markets. As a result, the Sponsor 

believes that the distinction between 

registration of Bitcoin futures ETFs 

under the ’40 Act and the registration of 

spot Bitcoin ETPs under the ’33 Act is 

one without a difference in the context 

of Bitcoin-based ETP proposals. 

Indeed, the Sponsor believes that the 

Commission implicitly confirmed as 

much in the April 2022 Teucrium 

Order.40 Much like prior approved 

Bitcoin-based ETFs, the Teucrium ETP 

holds only Bitcoin futures, rather than 

spot Bitcoin. Unlike previous filings, 

however, the Teucrium ETP was filed 

under the ’33 Act, rather than the ’40 

Act. The Sponsor believes that, by 

approving the Teucrium ETP, the 

Commission has indicated that 

registration under the ’40 Act and the 

registration under the ’33 Act is a 

distinction without a difference. 

Surveillance-Sharing With the CME 

Bitcoin Futures Market Is Sufficient To 

Protect Against Fraud and Manipulation 

in the Underlying Spot Bitcoin Market 

The Sponsor believes that, because 

the CME Bitcoin futures market is 

priced based on the underlying spot 

Bitcoin market, any fraud or 

manipulation in the spot market would 

necessarily affect the price of Bitcoin 

futures, thereby affecting the net asset 

value of an ETP holding spot Bitcoin or 

an ETF holding Bitcoin futures, as well 

as the price investors pay for such 

product’s shares. 

This conclusion has been 

corroborated by a study conducted by 

Professor Robert E. Whaley, a finance 

professor and expert on derivative 

contract valuation, which found that the 

BRR, the index underlying many of the 

Bitcoin-futures based ETFs, and the 

Index underlying the Trust, are near 

perfect substitutes.41 In fact, according 

to the study, there is a 99.9% correlation 

between prices in the Bitcoin futures 

market and the spot Bitcoin market. 

Nevertheless, the Commission denied 

the Exchange’s original proposed rule 

change.42 In its petition for review in 

the D.C. Circuit challenging the 

Grayscale Order, the Sponsor argued 

that the Trust and the approved Bitcoin 

futures ETPs (the Teucrium and 

Valkyrie Futures ETPs) rely on nearly 

identical sets of spot-market Bitcoin 

pricing data to calculate the value of 

their holdings.43 The D.C. Circuit 

agreed—in the court’s unanimous 

decision vacating the Grayscale Order, 

the Court held the Sponsor ‘‘presented 

uncontested evidence that there is a 

99.9 percent correlation between 

bitcoin’s spot market and CME futures 

contract prices’’ and that the ‘‘tight 

correlation is not a coincidence: bitcoin 

futures prices are ultimately based on 

spot market prices.’’ 44 In fact, the Court 

held the Sponsor’s proposed spot 

Bitcoin ETP and approved Bitcoin 

futures ETPs, were ‘‘materially similar 

across relevant regulatory factors.’’ 45

Given the similarity between the two 

types of products, the Sponsor believes 

that it must be the case that CME 

surveillance can either detect spotmarket fraud that affects both futures 

ETFs and spot ETPs, or that such 

surveillance cannot do so for either type 

of product. Having approved Bitcoin 

futures ETFs in part on the basis of such 

surveillance, the Commission has 

clearly determined that CME 

surveillance can detect spot-market 

fraud that would affect spot ETPs, and 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2671 

46See 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 (Aug. 1, 2018) (SR– 

BatsBZX–2016–30) (the ‘‘Winklevoss Order’’); 

Order Disapproving a Proposed Rule Change, as 

Modified by Amendment No. 1, Relating to the 

Listing and Trading of Shares of the Bitwise Bitcoin 

ETF Trust Under NYSE Arca Rule 8.201–E, 

Securities Exchange Act Release No. 87267 (Oct. 9, 

2019), 84 FR 55382 (Oct. 16, 2019) (SR–NYSEArca– 

2019–01) (the ‘‘Bitwise Order’’); Order 

Disapproving a Proposed Rule Change, as Modified 

by Amendment No. 1, to Amend NYSE Arca Rule 

8.201–E (Commodity-Based Trust Shares) and to 

List and Trade Shares of the United States Bitcoin 

and Treasury Investment Trust Under NYSE Arca 

Rule 8.201–E, Securities Exchange Act Release No. 

88284 (February 26, 2020), 85 FR 12595 (March 3, 

2020) (SR–NYSEArca–2019–39) (the ‘‘Wilshire 

Phoenix Order’’); Order Disapproving a Proposed 

Rule Change to List and Trade the Shares of the 

ProShares Bitcoin ETF and the ProShares Short 

Bitcoin ETF, Securities Exchange Act Release No. 

83904 (Aug. 22, 2018), 83 FR 43934 (Aug. 28, 2018) 

(SR–NYSEArca–2017–139) (the ‘‘ProShares Order’’); 

Order Disapproving a Proposed Rule Change 

Relating to Listing and Trading of the Direxion 

Daily Bitcoin Bear 1X Shares, Direxion Daily 

Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 

1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull 

Shares, and Direxion Daily Bitcoin 2X Bear Shares 

Under NYSE Arca Rule 8.200–E, Securities 

Exchange Act Release No. 83912 (Aug. 22, 2018), 

83 FR 43912 (Aug. 28, 2018) (SR–NYSEArca–2018– 

02) (the ‘‘Direxion Order’’); Order Disapproving a 

Proposed Rule Change to List and Trade the Shares 

of the GraniteShares Bitcoin ETF and the 

GraniteShares Short Bitcoin ETF, Securities 

Exchange Act Release No. 83913 (Aug. 22, 2018), 

83 FR 43923 (Aug. 28, 2018) (SR–CboeBZX–2018– 

01) (the ‘‘GraniteShares Order’’). 

47See Bitwise Order, 84 FR 55383 (discussing 

analysis of the Bitcoin spot market that asserts that 

95% of the spot market is dominated by fake and 

non-economic activity, such as wash trades), 55391 

(discussing possible sources of fraud and 

manipulation in the bitcoin spot market). See also 

Winklevoss Order, 83 FR 37585–86 (discussing 

pending litigation against a Bitcoin trading platform 

for fraudulent conduct relating to Tether); Bitwise 

Order, 84 FR 55391 n.140, 55402 & n.331 (same); 

Winklevoss Order, 83 FR 37584–86 (discussing 

potential types of manipulation in the Bitcoin spot 

market). The Commission has also noted that fraud 

and manipulation in the Bitcoin spot market could 

persist for a significant duration. See, e.g., Bitwise 

Order, 84 FR 55405 & n.379. 

48See generally Bitwise Order. 

49See Winklevoss Order, 84 FR 37580, 37582–91; 

Bitwise Order, 84 FR 55383, 55385–406; Wilshire 

Phoenix Order, 85 FR 12597. 

50See Winklevoss Order, 84 FR 37582; Wilshire 

Phoenix Order, 85 FR 12597. 

the Sponsor thus believes that it must 

also approve spot Bitcoin ETPs on that 

basis. 

* * * * * 

In summary, the Sponsor believes that 

the distinctions between the ’40 Act and 

the ’33 Act, and the surveillance-sharing 

available for the CME Bitcoin futures 

market versus the spot Bitcoin market, 

are not meaningful in the context of 

Bitcoin-based ETF and ETP proposals, 

and that such reasoning cannot be a 

basis for the Commission treating 

Bitcoin futures ETFs differently from 

spot Bitcoin ETPs like the Trust. The 

Sponsor believes that the Commission’s 

approval of Bitcoin futures ETFs means 

it must also approve spot Bitcoin ETPs 

like the Trust. 

The Structure and Operation of the 

Trust Protects Investors and Satisfies 

Commission Requirements for BitcoinBased Exchange Traded Products 

Even if the Commission had not 

approved Bitcoin futures ETFs and 

ETPs, the Sponsor still believes the 

Commission should approve the listing 

and trading of Shares of the Trust. The 

Commission has expressed legitimate 

concerns about the underlying Digital 

Asset Market due to the potential for 

fraud and manipulation and has clearly 

outlined the reasons why prior Bitcoinbased ETP proposals have been unable 

to satisfy these concerns in orders 

disapproving the proposed listing and 

trading of the Winklevoss Bitcoin Trust, 

Bitwise Bitcoin ETF Trust, United States 

Bitcoin and Treasury Investment Trust, 

and various Bitcoin-based trust issued 

receipts.46

In these disapproval orders, the 

Commission outlined that a proposal 

relating to a Bitcoin-based ETP could 

satisfy its concerns regarding potential 

for fraud and manipulation by 

demonstrating: 

(1) Inherent Resistance to Fraud and 

Manipulation: that the underlying 

commodity market is inherently 

resistant to fraud and manipulation; 

(2) Other Means to Prevent Fraud and 

Manipulation: that there are other 

means to prevent fraudulent and 

manipulative acts and practices that are 

sufficient; or 

(3) Surveillance Sharing: that the 

listing exchange has entered into a 

surveillance sharing agreement with a 

regulated market of significant size 

relating to the underlying or reference 

assets. 

As described below, the Sponsor 

believes the structure and operation of 

the Trust are designed to prevent 

fraudulent and manipulative acts and 

practices, to protect investors and the 

public interest, and to respond to the 

specific concerns that the Commission 

has identified with respect to potential 

fraud and manipulation in the context 

of a Bitcoin-based ETP. 

How the Trust Meets Standards in the 

Winklevoss Order, Bitwise Order and 

Wilshire Phoenix Order and Vacated 

Grayscale Order 

1. Resistance to or Prevention of Fraud 

and Manipulation 

In the Bitwise Order, the Commission 

disagreed with the proposition that 

Bitcoin’s fungibility, transportability 

and exchange tradability combine to 

provide unique protections against, and 

allow Bitcoin to be uniquely resistant to, 

attempts at price manipulation. The 

Commission reached its conclusion 

based on concessions by Bitwise that 

95% of the reported trading in Bitcoin 

is ‘‘fake’’ or non-economic, effectively 

admitting that the properties of Bitcoin 

do not make it inherently resistant to 

manipulation. Bitwise’s concessions 

were further compounded by evidence 

of potential and actual fraud and 

manipulation in the historical trading of 

Bitcoin on certain marketplaces such as 

(1) ‘‘wash’’ trading, (2) trading based on 

material, non-public information, 

including the dissemination of false and 

misleading information, (3) 

manipulative activity involving Tether, 

and (4) fraud and manipulation.47

The Sponsor acknowledges the 

possibility that fraud and manipulation 

may exist and that Bitcoin trading on 

any given exchange may be no more 

uniquely resistant to fraud and 

manipulation than other commodity 

markets.48 However, the Sponsor 

believes that the fundamental features of 

Bitcoin’s fungibility, transportability 

and exchange tradability offer novel 

protections beyond those that exist in 

traditional commodity markets or equity 

markets when combined with other 

means, as discussed further below. 

2. Other Means To Prevent Fraud and 

Manipulation 

The Commission has recognized 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.49 In evaluating the 

effectiveness of this type of resistance, 

the Commission does not apply a 

‘‘cannot be manipulated’’ standard. 

Instead, the Commission requires that 

such resistance to fraud and 

manipulation be novel and beyond 

those protections that exist in 

traditional commodity markets or equity 

markets for which the Commission has 

long required surveillance-sharing 

agreements in the context of listing 

derivative securities products.50

The Sponsor believes the Index 

represents a novel means to prevent 

fraud and manipulation from impacting 

a reference price for Bitcoin and that it 

offers protections beyond those that 

exist in traditional commodity markets 

or equity markets. Specifically, Bitcoin 

is novel and exists outside traditional 

commodity markets. It therefore stands 

to reason that the methods in which it 


ddrumheller on DSK120RN23PROD with NOTICES1
2672 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

51SEC, ‘‘Investor Bulletin: Exchange-Traded 

Funds (ETFs),’’ August 2012, https://www.sec.gov/ 

investor/alerts/etfs.pdf. 

52Commodity Futures Trading Commission 

(‘‘CFTC’’), ‘‘History of the CFTC,’’ https://

www.cftc.gov/About/HistoryoftheCFTC/history_

precftc.html. 

53 ‘‘U.S.-Compliant Trading Platforms’’ are 

trading platforms in the Digital Asset Trading 

Platform Market are in material compliance with 

applicable U.S. federal and state licensing 

requirements and maintain practices and policies 

designed to comply with AML and KYC 

regulations. All Constituent Trading Platforms are 

U.S.-Compliant Trading Platforms. ‘‘Non-U.S.- 

Compliant Trading Platforms’’ are all other trading 

platforms in the Digital Asset Trading Platform 

Market. As of September 30, 2023, the U.S.- 

Compliant Trading Platforms that the Index 

Provider considered for inclusion in the Index were 

Coinbase, Bitstamp, Kraken and LMAX Digital. On 

October 29, 2022, the Index Provider removed 

Bitstamp due to its failure to meet the minimum 

liquidity requirement and added Binance.US as a 

Constituent Trading Platform based on its 

satisfaction of the minimum liquidity requirement 

as part of its scheduled quarterly review. On June 

17, 2023, the Index Provider removed Binance.US 

from the Index, due to Binance.US’s announcement 

that it was suspending U.S. dollar deposits and 

withdrawals and planned to delist its U.S. dollar 

trading pairs and did not add any Constituent 

Trading Platforms as part of its review. On July 29, 

2023, the Index Provider added Bitstamp to the 

Index based on its satisfaction of the Index 

Provider’s minimum liquidity requirement and did 

not remove any Constituent Trading Platforms as 

part of its scheduled quarterly review. On October 

28, 2023, the Index Provider added Crypto.com to 

the Index based on its satisfaction of the Index 

Provider’s minimum liquidity requirement and did 

not remove any Constituent Trading Platforms as 

part of its scheduled quarterly review. From these 

U.S.-Compliant Trading Platforms, the Index 

Provider then applies additional Inclusion Criteria 

to determine the Constituent Trading Platforms. As 

of September 30, 2023, the Constituent Trading 

Platforms were Coinbase, Bitstamp, Kraken, and 

LMAX Digital. As of the date of filing, the 

Constituent Trading Platforms were Coinbase, 

Bitstamp, Crypto.com, Kraken, and LMAX Digital. 

54According to the Sponsor, the more trading 

platforms included in the Index, the more ability 

there is for traders and market makers to arbitrage 

price differences. For example, in the event of 

variances between Bitcoin prices on Constituent 

Trading Platforms and non-Constituent Trading 

Platforms, arbitrage trading opportunities would 

exist. These discrepancies generally consolidate 

over time, as traders and market makers trade 

against the Index to realize price differences across 

trading platforms and capitalize upon arbitrage 

opportunities. 

55See, e.g., ‘‘DFS Takes Action to Deter Fraud and 

Manipulation in Virtual Currency Markets,’’ 

available at: https://www.dfs.ny.gov/about/press/ 

pr1802071.htm. 

56See ‘‘New York’s Final ‘‘BitLicense’’ Rule: 

Overview and Changes from July 2014 Proposal,’’ 

June 5, 2015, Davis Polk, available at: https://

www.davispolk.com/files/new_yorks_final_

bitlicense_rule_overview_changes_july_2014_

proposal.pdf. 

57As of the date of filing, two of the five 

Constituent Trading Platforms, Coinbase and 

Bitstamp, are regulated by NYDFS. 

58See BSA Requirements for MSBs, FinCEN 

website: https://www.fincen.gov/bsarequirementsmsbs. 

trades will be novel and that the market 

for Bitcoin will have different attributes 

than traditional commodity markets. 

Bitcoin was only introduced within the 

past decade, twenty years after the first 

U.S. ETFs were offered 51 and 150 years 

after the first futures were offered.52 In 

contrast to older commodities such as 

gold, silver, platinum, palladium or 

copper, which the Commission has 

noted all had at least one significant, 

regulated market for trading futures on 

the underlying commodity at the time 

commodity trust ETPs were approved 

for listing and trading, the first trading 

in Bitcoin took place entirely in an 

open, transparent and online setting 

where other commodities cannot trade. 

The Trust has priced its Shares 

consistently for more than seven years 

based on the Index. The Sponsor 

believes the Trust’s use of the Index 

specifically addresses the Commission’s 

concerns in that the Index serves as an 

alternative means to prevent fraud and 

manipulation. Specifically, the Index 

can (i) mitigate the effects of fraud, 

manipulation and other anomalous 

trading activity on the Bitcoin reference 

rate, (ii) provide a real-time, volumeweighted fair value of Bitcoin and (iii) 

appropriately handle and adjust for nonmarket related events. 

As described in more detail below, 

the Sponsor believes that the Index 

accomplishes those objectives in the 

following ways: 

1. The Index tracks the Digital Asset 

Trading Platform Market price through 

trading activity at ‘‘U.S.-Compliant 

Trading Platforms’’; 53

2. The Index mitigates the impact of 

instances of fraud, manipulation and 

other anomalous trading activity in realtime through systematic adjustments; 

3. The Index is constructed and 

maintained by an expert third-party 

index provider, allowing for prudent 

handling of non-market-related events; 

and 

4. The Index mitigates the impact of 

instances of fraud, manipulation and 

other anomalous trading activity 

concentrated on any one specific trading 

platform through a cross-trading 

platform composite index rate. 

1. The Index tracks the Digital Asset 

Trading Platform Market price through 

trading activity at ‘‘U.S.-Compliant 

Trading Platforms’’. 

To reduce the risk of fraud, 

manipulation, and other anomalous 

trading activity from impacting the 

Index, only U.S.-Compliant Trading 

Platforms are eligible to be included in 

the Index. 

The Index maintains a minimum 

number of three trading platforms and a 

maximum number of five trading 

platforms to track the Digital Asset 

Trading Platform Market while offering 

replicability for traders and market 

makers.54

U.S.-Compliant Trading Platforms 

possess safeguards that protect against 

fraud and manipulation. For example, 

U.S.-Compliant Trading Platforms 

regulated by the NYDFS under the 

BitLicense program have regulatory 

requirements to implement measures 

designed to effectively detect, prevent, 

and respond to fraud, attempted fraud, 

market manipulation, and similar 

wrongdoing, and to monitor, control, 

investigate and report back to the 

NYDFS regarding any wrongdoing.55

These trading platforms also have the 

following obligations: 56

• Submission of audited financial 

statements including income 

statements, statements of assets/ 

liabilities, insurance, and banking; 

• Compliance with capitalization 

requirements set at NYDFS’s discretion; 

• Prohibitions against the sale or 

encumbrance to protect full reserves of 

custodian assets; 

• Fingerprints and photographs of 

employees with access to customer 

funds; 

• Retention of a qualified Chief 

Information Security Officer and annual 

penetration testing/audits; 

• Documented business continuity 

and disaster recovery plan, 

independently tested annually; and 

• Participation in an independent 

exam by NYDFS. 

Other U.S.-Compliant Trading 

Platforms have voluntarily implemented 

measures to protect against common 

forms of market manipulation.57

Furthermore, all U.S.-Compliant 

Trading Platforms are considered MSBs 

that are subject to FinCEN’s federal and 

state reporting requirements that 

provide additional safeguards. For 

example, unscrupulous traders may be 

less likely to engage in fraudulent or 

manipulative acts and practices on 

trading platforms that (1) report 

suspicious activity to FinCEN as money 

services businesses, (2) report to state 

regulators as money transmitters, and/or 

(3) require customer identification 

through KYC procedures. U.S.- 

Compliant Trading Platforms are 

required to: 58

• Identify people with ownership 

stakes or controlling roles in the MSB; 

• Establish a formal AML policy in 

place with documentation, training, 

independent review, and a named 

compliance officer; 

• Implement strict customer 

identification and verification policies 

and procedures; 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2673 

59CFTC, What is a Bitcoin Futures ETF?, https:// 

www.cftc.gov/LearnAndProtect/Advisories

AndArticles/BitcoinFuturesETF.html. 

60See Bitwise Order, 84 FR 55392; Wilshire 

Phoenix Order, 85 FR 12603. 

61To the extent any such intervention has a 

material impact on the Trust, the Sponsor will also 

issue a public announcement. 

62All Digital Asset Trading Platforms that were 

included in the Index throughout the period were 

considered in this analysis. 

63Prior to February 1, 2022, the Trust valued its 

Bitcoins for operational purposes by reference to 

Continued 

• File Suspicious Activity Reports 

(SARs) for suspicious customer 

transactions; 

• File Currency Transaction Reports 

(CTRs) for cash-in or cash-out 

transactions greater than $10,000; and 

• Maintain a five-year record of 

currency exchanges greater than $1,000 

and money transfers greater than $3,000. 

Lastly, because of Bitcoin’s 

classification as a commodity,59 the 

CFTC has authority to police fraud and 

manipulation on U.S.-Compliant 

Trading Platforms. 

The Sponsor acknowledges that there 

are substantial differences between 

FinCEN and New York state regulations 

and the Commission’s regulation of the 

national securities exchanges.60 The 

Sponsor does not believe the inclusion 

of U.S.-Compliant Trading Platforms is 

in and of itself sufficient to prove that 

the Index is an alternative means to 

prevent fraud and manipulation such 

that surveillance sharing agreements are 

not required, but does believe that the 

inclusion of only U.S.-Compliant 

Trading Platforms in the Index is one 

significant way in which the Index is 

protected from the potential impacts of 

fraud and manipulation. 

2. The Index mitigates the impact of 

instances of fraud, manipulation and 

other anomalous trading activity in realtime through systematic adjustments. 

The Index is calculated once every 

second according to a systematic 

methodology that relies on observed 

trading activity on the Constituent 

Trading Platforms. While the precise 

methodology underlying the Index is 

currently proprietary, the key elements 

of the Index are outlined below: 

• Volume Weighting: Constituent 

Trading Platforms with greater liquidity 

receive a higher weighting in the Index, 

increasing the ability to execute against 

(i.e., replicate) the Index in the 

underlying spot markets. 

• Price-Variance Weighting: The 

Index reflects data points that are 

discretely weighted in proportion to 

their variance from the rest of the 

Constituent Trading Platforms. As the 

price at a Constituent Trading Platform 

diverges from the prices at the rest of 

the Constituent Trading Platforms, its 

weight in the Index consequently 

decreases. 

• Inactivity Adjustment: The Index 

algorithm penalizes stale activity from 

any given Constituent Trading Platform. 

When a Constituent Trading Platform 

does not have recent trading data, its 

weighting in the Index is gradually 

reduced, until it is de-weighted entirely. 

Similarly, once trading activity at the 

Constituent Trading Platform resumes, 

the corresponding weighting for that 

Constituent Trading Platform is 

gradually increased until it reaches the 

appropriate level. 

• Manipulation Resistance: In order 

to mitigate the effects of wash trading 

and order book spoofing, the Index only 

includes executed trades in its 

calculation. Additionally, the Index 

only includes Constituent Trading 

Platforms that charge trading fees to its 

users in order to attach a real, 

quantifiable cost to any manipulation 

attempts. 

3. The Index is constructed and 

maintained by an expert third-party 

index provider, allowing for prudent 

handling of non-market-related events. 

The Index Provider reviews and 

periodically updates which trading 

platforms are included in the Index by 

utilizing a methodology that is guided 

by the IOSCO principles for financial 

benchmarks. 

For a trading platform to become a 

Constituent Trading Platform, it must 

satisfy the following Inclusion Criteria: 

• Sufficient USD liquidity relative to 

the size of the listed assets; 

• No evidence in the past 12 months 

of trading restrictions on individuals or 

entities that would otherwise meet the 

trading platform’s eligibility 

requirements to trade; 

• No evidence in the past 12 months 

of undisclosed restrictions on deposits 

or withdrawals from user accounts; 

• Real-time price discovery; 

• Limited or no capital controls; 

• Transparent ownership including a 

publicly-owned ownership entity; 

• Publicly available language and 

policies addressing legal and regulatory 

compliance in the US, including KYC 

(Know Your Customer), AML (AntiMoney Laundering) and other policies 

designed to comply with relevant 

regulations that might apply to it; 

• Be a US-domiciled trading platform 

or a non-US domiciled trading platform 

that is able to service US investors; 

• Offer programmatic spot trading of 

the trading pair, and reliably publish 

trade prices and volumes on a real-time 

basis through Rest and Websocket APIs. 

Although the Index methodology is 

designed to operate without any human 

interference, rare events would justify 

manual intervention. Manual 

intervention would only be in response 

to ‘‘non-market-related events’’ (e.g., 

halting of deposits or withdrawals of 

funds, unannounced closure of trading 

platform operations, insolvency, 

compromise of user funds, etc.). In the 

event that such an intervention is 

necessary, the Index Provider would 

issue a public announcement through 

its website, API and other established 

communication channels with its 

clients.61

4. The Index mitigates the impact of 

instances of fraud, manipulation and 

other anomalous trading activity 

concentrated on any one specific 

trading platform through a cross-trading 

platform composite index rate. 

The Index is based on the price and 

volume data of multiple U.S.-Compliant 

Trading Platforms that satisfy the Index 

Provider’s Inclusion Criteria. By 

referencing multiple trading venues and 

weighting them based on trade activity, 

the impact of any potential fraud, 

manipulation, or anomalous trading 

activity occurring on any single venue is 

reduced. Specifically, the effects of 

fraud, manipulation, or anomalous 

trading activity occurring on any single 

venue are de-weighted and 

consequently diluted by non-anomalous 

trading activity from other Constituent 

Trading Platforms. 

Although the Index is designed to 

accurately capture the market price of 

Bitcoin, third parties may be able to 

purchase and sell Bitcoin on public or 

private markets included or not 

included among the Constituent Trading 

Platforms, and such transactions may 

take place at prices materially higher or 

lower than the Index Price. For 

example, based on data provided by the 

Index Provider, on any given day during 

the twelve months ended September 30, 

2023, the maximum differential between 

the 4:00 p.m., New York time spot price 

of any single Digital Asset Trading 

Platform included in the Index and the 

Index Price was 3.18% and the average 

of the maximum differentials of the 4:00 

p.m., New York time spot price of each 

Digital Asset Trading Platform included 

in the Index and the Index Price was 

0.83%. During this same period, the 

average differential between the 4:00 

p.m., New York time spot prices of all 

the Digital Asset Trading Platforms 

included in the Index and the Index 

Price was 0.01%.62

Since November 1, 2014, the Trust 

has consistently priced its Shares at 4:00 

p.m., New York time based on the Index 

Price.63 While that pricing would be 


ddrumheller on DSK120RN23PROD with NOTICES1
2674 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

the volume-weighted average Index Price (the ‘‘Old 

Index Price’’). The Old Index Price was calculated 

by applying a weighting algorithm to the price and 

trading volume data for the immediately preceding 

24-hour period as of 4:00 p.m., New York time, 

derived from the Constituent Trading Platforms 

reflected in the Index on such trade date, and 

overlaying an averaging mechanism to the price 

produced. Thus, whereas the Old Index Price 

reflected the price of a Bitcoin at 4:00 p.m., New 

York time, calculated by taking the average of each 

price of a Bitcoin produced by the Index over the 

preceding 24-hour period, the Index Price now is 

the price of a Bitcoin at 4:00 p.m., New York time, 

calculated based on the price and trading volume 

data of the Digital Asset Trading Platforms included 

in the Index over the preceding 24-hour period. The 

Index Price differs from the Old Index Price only 

in that it does not use an additional averaging 

mechanism; the Index Price otherwise uses the 

same methodology as the Old Index Price, and there 

has been no change to the Index used to determine 

the Index Price or the criteria used to select the 

Constituent Trading Platforms. 

64See Winklevoss Order, 83 FR 37593–94; 

Bitwise Order, 84 FR 55383, 55410; Wilshire 

Phoenix Order, 85 FR 12609; Grayscale Order, 87 

FR 40300. 

65See Winklevoss Order, 83 FR 37594. 

66See Winklevoss Order, 83 FR 37594; Bitwise 

Order, 84 FR 55410; ProShares Order, 83 FR 43936; 

GraniteShares Order, 83 FR 43925; Direxion Order, 

83 FR 43914; Wilshire Phoenix Order, 85 FR 12609. 

67See Winklevoss Order, 83 FR 37594. This 

definition is illustrative and not exclusive. There 

could be other types of ‘‘significant markets’’ and 

‘‘markets of significant size,’’ but this definition is 

an example that will provide guidance to market 

participants. 

68See Bitwise Order, 84 FR 55411; Wilshire 

Phoenix Order, 85 FR 12612. 

69See Memorandum to File from Neel Maitra, 

Senior Special Counsel (Fintech & Crypto 

Specialist), Division of Trading and Markets, U.S. 

Securities and Exchange Commission re: Meeting 

with Representatives from Fidelity Digital Assets, et 

al. and attachment (SR–CboeBZX–2021–039) 

(September 8, 2021), available at: https://

www.sec.gov/comments/sr-cboebzx-2021-039/ 

srcboebzx2021039-250110.pdf; Letter from Bitwise 

Asset Management, Inc. re: File Number SR– 

NYSEArca–2021–89 (February 25, 2022), available 

at: https://www.sec.gov/comments/sr-nysearca2021-89/srnysearca202189-20117902-270822.pdf; 

Letter from Wilson Sonsini Goodrich and Rosati, 

P.C. and Chapman and Cutler LLP, on behalf of 

Bitwise Asset Management, Inc. re: File No. SR– 

NYSEArca–2021–89 (March 7, 2022), available at: 

https://www.sec.gov/comments/sr-nysearca-2021- 

89/srnysearca202189-20118794-271630.pdf. 70 Grayscale v. SEC, No. 22–1142, Commission 

Reply Brief at 27 (February 3, 2023). 71These Bitcoin spot markets include 

Binance.US, Coinbase, Bitfinex, Kraken, Bitstamp, 

BitFlyer, Poloniex, Bittrex and itBit. 

known to the market, the Sponsor 

believes that, even if efforts to 

manipulate the price of Bitcoin at 4:00 

p.m., E.T. were successful on any 

trading platform, such activity would 

have had a negligible effect on the 

pricing of the Trust, due to the controls 

embedded in the structure of the Index. 

Accordingly, the Sponsor believes 

that the Index has proven its ability to 

(i) mitigate the effects of fraud, 

manipulation and other anomalous 

trading activity on the Bitcoin reference 

rate, (ii) provide a real-time, volumeweighted fair value of Bitcoin and (iii) 

appropriately handle and adjust for nonmarket related events. For these reasons, 

the Sponsor believes that the Index 

represents an effective alternative means 

to prevent fraud and manipulation and 

the Trust’s reliance on the Index 

addresses the Commission’s concerns 

with respect to potential fraud and 

manipulation. 

3. A Significant, Regulated and 

Surveilled Market Exists and Is Closely 

Connected With Spot Market for Bitcoin 

In the Winklevoss Order, Bitwise 

Order, Wilshire Phoenix Order and 

vacated Grayscale Order, the 

Commission described both the need for 

and the definition of a surveilled market 

of significant size for commodity-trust 

ETPs like the Trust to date.64

Specifically, the Commission explained 

that: 

for the commodity-trust ETPs approved to 

date for listing and trading, there has been in 

every case at least one significant, regulated 

market for trading futures on the underlying 

commodity—whether gold, silver, platinum, 

palladium, or copper—and the ETP listing 

exchange has entered into surveillancesharing agreements with, or held Intermarket 

Surveillance Group membership in common 

with, that market.65

Further, the Commission stated that 

its interpretation of the term ‘‘market of 

significant size’’ depends on the 

interrelationship between the market 

with which the listing exchange has a 

surveillance-sharing agreement and the 

proposed ETP.66 Accordingly, the terms 

‘‘significant market’’ and ‘‘market of 

significant size’’ could mean: 

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.67

In the context of Bitcoin-based ETPs 

specifically, the Commission has stated 

that establishing a lead-lag relationship 

between the Bitcoin futures market and 

the spot market is central to 

understanding whether it is reasonably 

likely that a would-be manipulator of 

the ETP would need to trade on the 

Bitcoin futures market to successfully 

manipulate prices on those spot 

platforms that feed into the proposed 

ETP’s pricing mechanism such that a 

surveillance-sharing agreement would 

assist the ETP listing market in 

detecting and deterring misconduct.68

In particular, if the spot market leads 

the futures market, this would indicate 

that it would not be necessary to trade 

on the futures market to manipulate the 

proposed ETP, even if arbitrage worked 

efficiently, because the futures price 

would move to meet the spot price. 

While studies have found that the 

CME futures market does lead the spot 

Bitcoin market,69 as explained in the 

Sponsor’s briefs and argument in its 

prevailing case before the D.C. Circuit 

Court of Appeals regarding its Bitcoinbased ETP proposal, the Sponsor 

believes that the lead/lag question is 

irrelevant. If a would-be manipulator 

were to attempt to manipulate either a 

spot ETP or futures ETP by trading 

futures on the CME, then a surveillancesharing agreement with the CME would 

provide access to information 

concerning that activity.70 If, on the 

other hand, a would-be manipulator 

were to attempt to manipulate either a 

spot ETP or a futures ETP by trading on 

the spot market, then a surveillancesharing agreement with the CME would 

also be able to provide access to 

information concerning that activity. If 

that were not true, the Commission 

could not have approved the Bitcoin 

futures ETPs. Given that the 

Commission has approved Bitcoin 

futures ETPs, the Commission must 

have concluded that the CME is capable 

of detecting manipulation attempts in 

the spot bitcoin market. 

Regardless of the irrelevance of the 

lead/lag relationship and the mixed 

findings regarding the lead/lag 

relationship between the CME futures 

and Bitcoin spot markets, the Sponsor 

believes that the CME futures market 

represents a large, surveilled and 

regulated market and meets the 

Commission’s definition of a 

‘‘significant market.’’ For example, from 

November 1, 2019 to September 30, 

2023, the CME futures market trading 

volume was over $1.4 trillion, compared 

to $1.15 trillion in trading volume 

across the Constituent Trading 

Platforms included in the Index. With 

over 121% of the Index trading volume, 

the CME futures market represents 

significant coverage of U.S.-Compliant 

Trading Platforms in the Bitcoin market. 

In addition, the CME futures market 

trading volume from November 1, 2019 

to September 30, 2023 was 

approximately equal to trading volume 

of the U.S. dollar-denominated Bitcoin 

spot markets referenced in the Bitwise 

Order.71

Given the size of the CME futures 

markets, the Sponsor believes such 

markets meet the Commission’s 

definition of ‘‘significant market’’ 

because there is a reasonable likelihood 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2675 

72To further illustrate the size and liquidity of the 

Trust, as of September 30, 2023, compared with 

global commodity ETPs, the Trust would rank third 

in assets under management and fourth in notional 

trading volume from November 1, 2019 to 

September 30, 2023. 

73A ‘‘Liquidity Provider’’ means one or more 

eligible companies that facilitate the purchase and 

sale of Bitcoins in connection with creations or 

redemptions pursuant to Cash Orders. The 

Liquidity Providers with which Grayscale 

Investments, LLC, acting other than in its capacity 

as the Sponsor (in such other capacity, the 

‘‘Liquidity Engager’’) will engage in Bitcoin 

transactions are third parties that are not affiliated 

with the Sponsor or the Trust and are not acting as 

agents of the Trust, the Sponsor, or any Authorized 

Participant, and all transactions will be done on an 

arms-length basis. Except for the contractual 

relationships between each Liquidity Provider and 

Grayscale Investments, LLC in its capacity as the 

Liquidity Engager, there is no contractual 

relationship between each Liquidity Provider and 

the Trust, the Sponsor, or any Authorized 

Participant. When seeking to buy Bitcoin in 

connection with creations or sell Bitcoin in 

connection with redemptions, the Liquidity Engager 

will seek to obtain commercially reasonable prices 

and terms from the approved Liquidity Providers. 

Once agreed upon, the transaction will generally 

occur on an ‘‘over-the-counter’’ basis. 

that a person attempting to manipulate 

the ETP would also have to trade on that 

market to successfully manipulate the 

ETP, since arbitrage between the 

derivative and spot markets would tend 

to counter an attempt to manipulate the 

spot market alone. As a result, the 

Exchange’s ability to obtain information 

regarding trading in the Shares and 

futures from markets and other entities 

that are members of the ISG, including 

the CME, would assist the Exchange in 

detecting and deterring misconduct. 

The Sponsor also believes it is 

unlikely that the ETP would become the 

predominant influence on prices in the 

market. 

While future inflows to the proposed 

Trust cannot be predicted, to provide 

comparable data, the Sponsor examined 

the change in market capitalization of 

Bitcoin with net inflows into the Trust, 

which currently trades on OTC Markets 

and is the largest and most liquid 

Bitcoin investment product in the 

world.72 From November 1, 2019 to 

September 30, 2023, the market 

capitalization of Bitcoin grew from $166 

billion to $527 billion, a $361 billion 

increase. Over the same period, the 

Trust experienced $6.6 billion of 

inflows. The cumulative inflow into the 

Trust over the stated time period was 

only 1.8% of the aggregate growth of 

Bitcoin’s market capitalization. 

Additionally, the Trust experienced 

approximately $153 billion of trading 

volume from November 1, 2019 to 

September 30, 2023, only 11% of the 

CME futures market and 13% of the 

Index over the same period. 

* * * * * 

In summary, the Sponsor believes that 

the foregoing addresses concerns the 

Commission may have with respect to 

Bitcoin-based ETPs, based on the 

Commission’s articulated concerns with 

respect to potential fraud and 

manipulation in Bitcoin-based ETPs. 

Specifically, the Sponsor believes that, 

although Bitcoin is not itself inherently 

resistant to fraud and manipulation, the 

Index represents an effective means to 

prevent fraudulent and manipulative 

acts and practices. As discussed above, 

the Trust has used the Index to price the 

Shares for more than seven years, and 

the Sponsor believes that the Index has 

proven its ability to (i) mitigate the 

effects of fraud, manipulation and other 

anomalous trading activity on the 

Bitcoin reference rate, (ii) provide a realtime, volume-weighted fair value of 

Bitcoin and (iii) appropriately handle 

and adjust for non-market related 

events. The Sponsor also believes that 

the CME futures market is a significant, 

surveilled and regulated market that is 

closely connected with the spot market 

for Bitcoin fulfills the requirements for 

surveillance sharing given the 

Exchange’s ability to obtain information 

from markets and other entities that are 

members of the ISG to assist in detecting 

and deterring misconduct. 

Creation and Redemption of Shares 

Authorized Participants may submit 

orders to create or redeem Shares under 

procedures for ‘‘Cash Orders.’’ 

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, or an affiliate of the Trust 

(and in any event not the Authorized 

Participant), is responsible for selecting 

the third party to deliver the Bitcoin. 

Further, the third party will not be 

acting as an agent of the Authorized 

Participant with respect to the delivery 

of the Bitcoin to the Trust or acting at 

the direction of the Authorized 

Participant with respect to the delivery 

of the Bitcoin to the Trust. The Trust 

will redeem Shares by delivering 

Bitcoin to a third party that is not the 

Authorized Participant and the Trust, or 

an affiliate of the Trust (and in any 

event not the Authorized Participant), is 

responsible for selecting the third party 

to receive the Bitcoin. Further, the third 

party will not be acting as an agent of 

the Authorized Participant with respect 

to the receipt of the Bitcoin from the 

Trust or acting at the direction of the 

Authorized Participant with respect to 

the receipt of the Bitcoin from the Trust. 

Cash Orders are made through the 

participation of a Liquidity Provider 73

who obtains or receives Bitcoin in 

exchange for cash, and are facilitated by 

the Transfer Agent and Grayscale 

Investments, LLC, acting in its capacity 

as the Liquidity Engager. Liquidity 

Providers are not party to the 

Participant Agreements and are engaged 

separately by the Liquidity Engager. 

According to the Registration 

Statement, the Trust creates Baskets (as 

described below) of Shares only upon 

receipt of Bitcoins and redeems Shares 

only by distributing Bitcoins. 

‘‘Authorized Participants’’ are the only 

persons that may place orders to create 

and redeem Baskets. Each Authorized 

Participant must (i) be a registered 

broker-dealer and (ii) enter into an 

agreement with the Sponsor and 

Transfer Agent that provides the 

procedures for the creation and 

redemption of Baskets and for the 

delivery of Bitcoins required for the 

creation and redemption of Baskets via 

a Liquidity Provider (each, a 

‘‘Participant Agreement’’). An 

Authorized Participant may act for its 

own account or as agent for brokerdealers, custodians and other securities 

market participants that wish to create 

or redeem Baskets. Shareholders who 

are not Authorized Participants will 

only be able to create or redeem their 

Shares through an Authorized 

Participant. 

The Trust issues Shares to and 

redeems Shares from Authorized 

Participants on an ongoing basis, but 

only in one or more ‘‘Baskets’’ (with a 

Basket being a block of 10,000 Shares). 

The Trust will not issue fractions of a 

Basket. 

The creation and redemption of 

Baskets will be made only in exchange 

for the delivery to the Trust, or the 

distribution by the Trust, of the number 

of whole and fractional Bitcoins 

represented by each Basket being 

created or redeemed, which is 

determined by dividing (x) the number 

of Bitcoins owned by the Trust at 4:00 

p.m., New York time, on the trade date 

of a creation or redemption order, after 

deducting the number of Bitcoins 

representing the U.S. dollar value of 

accrued but unpaid fees and expenses of 

the Trust (converted using the Index 


ddrumheller on DSK120RN23PROD with NOTICES1
2676 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

Price at such time, and carried to the 

eighth decimal place), by (y) the number 

of Shares outstanding at such time (with 

the quotient so obtained calculated to 

one one-hundred-millionth of one 

Bitcoin (i.e., carried to the eighth 

decimal place)), and multiplying such 

quotient by 10,000 (the ‘‘Basket 

Amount’’). The U.S. dollar value of a 

Basket is calculated by multiplying the 

Basket Amount by the Index Price as of 

the trade date (the ‘‘Basket NAV’’). The 

Basket NAV multiplied by the number 

of Baskets being created or redeemed is 

referred to as the ‘‘Total Basket NAV.’’ 

All questions as to the calculation of the 

Basket Amount will be conclusively 

determined by the Sponsor and will be 

final and binding on all persons 

interested in the Trust. The number of 

Bitcoins represented by a Share will 

gradually decrease over time as the 

Trust’s Bitcoins are used to pay the 

Trust’s expenses. As of September 30, 

2023, each Share represented 

approximately 0.0009 of one Bitcoin. 

The creation of Baskets requires the 

delivery to the Trust of the Total Basket 

Amount and the redemption of Baskets 

requires the distribution by the Trust of 

the Total Basket Amount. 

Although the Trust creates Baskets 

only upon the receipt of Bitcoins, and 

redeems Baskets only by distributing 

Bitcoins, an Authorized Participant will 

submit Cash Orders, pursuant to which 

the Authorized Participant will deposit 

cash with, or accept cash from, the 

Transfer Agent in connection with the 

creation and redemption of Baskets. 

Cash Orders will be facilitated by the 

Transfer Agent and Liquidity Engager, 

acting other than in its capacity as 

Sponsor. On an order-by-order basis, the 

Liquidity Engager will engage one or 

more Liquidity Providers to obtain or 

receive Bitcoin in exchange for cash in 

connection with such order, as 

described in more detail below. 

Each Authorized Participant that 

submits a Cash Order to create or 

redeem Baskets will pay a fee based on 

the Total Basket NAV (the ‘‘Variable 

Fee’’). The Variable Fee is intended to 

cover all of a Liquidity Provider’s 

expenses in connection with the 

creation or redemption order, including 

any Bitcoin trading platform fees that 

the Liquidity Provider incurs in 

connection with buying or selling 

Bitcoins, and the risk of intervening 

spot Bitcoin market movements. The 

amount may be changed by the Sponsor 

in its sole discretion at any time. 

In the case of creations, to transfer the 

Total Basket Amount to the Trust’s 

Digital Asset Account, the Liquidity 

Provider will transfer Bitcoin to one of 

the public key addresses associated with 

the Digital Asset Account and as 

provided by the Sponsor. In the case of 

redemptions, the same procedure is 

conducted, but in reverse, using the 

public key addresses associated with the 

wallet of the Liquidity Provider and as 

provided by such party. All such 

transactions will be conducted on the 

Blockchain and parties acknowledge 

and agree that such transfers may be 

irreversible if done incorrectly. 

Authorized Participants do not pay a 

transaction fee to the Trust in 

connection with the creation or 

redemption of Baskets, but there may be 

transaction fees associated with the 

validation of the transfer of Bitcoins by 

the Bitcoin Network, which will be paid 

by the Custodian in the case of 

redemptions and the Authorized 

Participant or the Liquidity Provider in 

the case of creations. Service providers 

may charge Authorized Participants 

administrative fees for order placement 

and other services related to creation of 

Baskets. As discussed above, 

Authorized Participants will also pay 

the Variable Fee. Authorized 

Participants will receive no fees, 

commissions or other form of 

compensation or inducement of any 

kind from either the Sponsor or the 

Trust and no such person has any 

obligation or responsibility to the 

Sponsor or the Trust to effect any sale 

or resale of Shares. 

The following is a summary of the 

procedures for the creation and 

redemption of Baskets. 

Creation Procedures 

On any business day, an Authorized 

Participant may place an order with the 

Transfer Agent to create one or more 

Baskets. 

Cash Orders for creation must be 

placed with the Transfer Agent no later 

than 1:59:59 p.m., New York time. 

The Sponsor may in its sole discretion 

limit the number of Shares created 

pursuant to Cash Orders on any 

specified day without notice to the 

Authorized Participants and may direct 

the Marketing Agent to reject any Cash 

Orders in excess of such capped 

amount. In exercising its discretion to 

limit the number of Shares created 

pursuant to Cash Orders, the Sponsor 

expects to take into consideration a 

number of factors, including the 

availability of Liquidity Providers to 

facilitate Cash Orders and the cost of 

processing Cash Orders. 

Creations under Cash Orders will take 

place as follows, where ‘‘T’’ is the trade 

date and each day in the sequence must 

be a business day: 

T T+1, or T+2, as established at the time of order placement 

• The Authorized Participant places a creation order with the Transfer 

Agent. 

• The Marketing Agent accepts (or rejects) the creation order, which is 

communicated to the Authorized Participant by the Transfer Agent. 

• The Sponsor notifies the Liquidity Provider of the creation order. 

• The Sponsor determines the Total Basket NAV and any Variable 

Fee as soon as practicable after 4:00 p.m., New York time. 

• The Authorized Participant delivers the Total Basket NAV and any 

Variable Fee to the Cash Account.1

• The Liquidity Provider transfers the Total Basket Amount to the 

Trust’s Digital Asset Account. 

The Trust issues the aggregate number of Shares corresponding to the 

Baskets ordered by the Authorized Participant, which the Transfer 

Agent holds for the benefit of the Authorized Participant. 

• Cash equal to the U.S. dollar value of the Total Basket NAV, plus 

any Variable Fee, is delivered to the Liquidity Provider from the Cash 

Account. 

• The Transfer Agent delivers Shares to the Authorized Participant by 

crediting the number of Baskets created to the Authorized Participant’s DTC account. 

1The ‘‘Cash Account’’ means the account maintained by the Transfer Agent in the name of Grayscale Securities, LLC, designated as ‘‘Special 

Account for the Exclusive Benefit of Customers of Grayscale Securities, LLC,’’ for purposes of receiving cash from, and distributing cash to, Authorized Participants in connection with creations and redemptions pursuant to Cash Orders. For the avoidance of doubt, the Trust shall have no 

interest (beneficial, equitable or otherwise) in the Cash Account or any cash held therein. 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2677 

74Extenuating circumstances outside of the 

control of the Sponsor and its delegates or that 

could cause the transfer books of the Transfer Agent 

to be closed are outlined in the Participant 

Agreement and include, for example, public service 

or utility problems, power outages resulting in 

telephone, telecopy and computer failures, acts of 

God such as fires, floods or extreme weather 

conditions, market conditions or activities causing 

trading halts, systems failures involving computer 

or other information systems, including any failures 

or outages of the Bitcoin Network, affecting the 

Authorized Participant, the Sponsor, the Trust, the 

Transfer Agent, the Marketing Agent and the 

Custodian and similar extraordinary events. 

75The bid-ask price of the Trust is determined 

using the highest bid and lowest offer on the 

Consolidated Tape as of the time of calculation of 

the closing day NAV. 

76The IIV on a per Share basis disseminated 

during the Core Trading Session should not be 

viewed as a real-time update of the NAV, which is 

calculated once a day. 

Redemption Procedures 

The procedures by which an 

Authorized Participant can redeem one 

or more Baskets mirror the procedures 

for the creation of Baskets. On any 

business day, an Authorized Participant 

may place a redemption order 

specifying the number of Baskets to be 

redeemed. 

The redemption of Shares pursuant to 

Cash Orders will only take place if 

approved by the Sponsor in writing, in 

its sole discretion and on a case-by-case 

basis. In exercising its discretion to 

approve the redemption of Shares 

pursuant to Cash Orders, the Sponsor 

expects to take into consideration a 

number of factors, including the 

availability of Liquidity Providers to 

facilitate Cash Orders and the cost of 

processing Cash Orders 

Cash Orders for redemption must be 

placed no later than 1:59:59 p.m., New 

York time on each business day. The 

Authorized Participants may only 

redeem Baskets and cannot redeem any 

Shares in an amount less than a Basket. 

Redemptions under Cash Orders will 

take place as follows, where ‘‘T’’ is the 

trade date and each day in the sequence 

must be a business day: 

T T+2 (or T+1 on case-by-case basis, as approved by Sponsor) 

• The Authorized Participant places a redemption order with the Transfer Agent. 

• The Marketing Agent accepts (or rejects) the redemption order, 

which is communicated to the Authorized Participant by the Transfer 

Agent. 

• The Sponsor notifies the Liquidity Provider(s) of the redemption 

order. 

• The Sponsor determines the Total Basket NAV and any Variable 

Fee as soon as practicable after 4:00 p.m., New York time. 

• The Authorized Participant delivers Baskets to be redeemed from its 

DTC account to the Transfer Agent. 

• The Liquidity Provider delivers the Total Basket NAV, less any Variable Fee, to the Cash Account. 

• The Transfer Agent cancels the Shares comprising the number of 

Baskets redeemed by the Authorized Participant. 

• The Custodian sends the Liquidity Provider the Total Basket Amount 

and cash equal to the U.S. dollar value of the Total Basket NAV, 

less any Variable Fee and any other charges and fees payable in 

connection with the redemption order, is delivered to the Authorized 

Participant from the Cash Account. 

Suspension or Rejection of Orders and 

Total Basket Amount 

The creation or redemption of Shares 

may be suspended generally, or refused 

with respect to particular requested 

creations or redemptions, during any 

period when the transfer books of the 

Transfer Agent are closed or if 

circumstances outside the control of the 

Sponsor or its delegates make it for all 

practicable purposes not feasible to 

process creation orders or redemption 

orders or for any other reason at any 

time or from time to time.74 The 

Transfer Agent may reject an order or, 

after accepting an order, may cancel 

such order if: (i) such order is not 

presented in proper form as described in 

the Participant Agreement, (ii) the 

transfer of the Total Basket Amount 

comes from an account other than a 

Bitcoin wallet address that is known to 

the Custodian as belonging to a 

Liquidity Provider or (iii) the fulfillment 

of the order, in the opinion of counsel, 

might be unlawful, among other 

reasons. None of the Sponsor or its 

delegates will be liable for the 

suspension, rejection or acceptance of 

any creation order or redemption order. 

Availability of Information 

The Trust’s website (https://

grayscale.com/crypto-products/ 

grayscale-bitcoin-trust/) will include 

quantitative information on a per Share 

basis updated on a daily basis, 

including, (i) the current NAV per Share 

daily and the prior business day’s NAV 

per Share and the reported closing price 

of the Shares; (ii) the mid-point of the 

bid-ask price 75 as of the time the NAV 

per Share is calculated (‘‘Bid-Ask 

Price’’) and a calculation of the 

premium or discount of such price 

against such NAV per Share; and (iii) 

data in chart format displaying the 

frequency distribution of discounts and 

premiums of the daily Bid-Ask Price 

against the NAV, within appropriate 

ranges, for each of the four previous 

calendar quarters (or for as long as the 

Trust has been trading as an ETP if 

shorter). In addition, on each business 

day the Trust’s website will provide 

pricing information for the Shares. 

One or more major market data 

vendors, will provide an intra-day 

indicative value (‘‘IIV’’) per Share 

updated every 15 seconds, as calculated 

by the Exchange or a third party 

financial data provider during the 

Exchange’s Core Trading Session (9:30 

a.m. to 4:00 p.m., E.T.).76 The IIV will 

be calculated using the same 

methodology as the NAV per Share of 

the Trust (as described above), 

specifically by using the prior day’s 

closing NAV per Share as a base and 

updating that value during the NYSE 

Arca Core Trading Session based on the 

value of the Index during the trading 

day. 

The IIV disseminated during the 

NYSE Arca Core Trading Session should 

not be viewed as an actual real-time 

update of the NAV per Share, which 

will be calculated only once at the end 

of each trading day. The IIV will be 

widely disseminated on a per Share 

basis every 15 seconds during the NYSE 

Arca Core Trading Session by one or 

more major market data vendors. In 

addition, the IIV will be available 

through on-line information services. 

The NAV for the Trust will be 

calculated by the Sponsor once a day 

and will be disseminated daily to all 

market participants at the same time. To 

the extent that the Sponsor has utilized 

the cascading set of rules described in 

‘‘Index Price’’ above, the Trust’s website 

will note the valuation methodology 

used and the price per Bitcoin resulting 

from such calculation. Quotation and 

last-sale information regarding the 

Shares will be disseminated through the 

facilities of the Consolidated Tape 

Association (‘‘CTA’’). 

Quotation and last sale information 

for Bitcoin will be widely disseminated 

through a variety of major market data 

vendors, including Bloomberg and 

Reuters. In addition, real-time price 


ddrumheller on DSK120RN23PROD with NOTICES1
2678 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

77 17 CFR 240.10A–3. 

78See NYSE Arca Rule 7.12–E. 

79FINRA conducts 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. 

80For a list of the current members of ISG, see 

www.isgportal.org. The Exchange notes that not all 

components of the Trust may trade on markets that 

are members of ISG or with which the Exchange has 

in place a CSSA. 

(and volume) data for Bitcoin is 

available by subscription from Reuters 

and Bloomberg. The spot price of 

Bitcoin is available on a 24-hour basis 

from major market data vendors, 

including Bloomberg and Reuters. 

Information relating to trading, 

including price and volume 

information, in Bitcoin will be available 

from major market data vendors and 

from the trading platforms on which 

Bitcoin is traded. The normal trading 

hours for Digital Asset Trading 

Platforms are 24-hours per day, 365- 

days per year. 

On each business day, the Sponsor 

will publish the Index Price, the Trust’s 

NAV, and the NAV per Share on the 

Trust’s website as soon as practicable 

after its determination. If the NAV and 

NAV per Share have been calculated 

using a price per Bitcoin other than the 

Index Price for such Evaluation Time, 

the publication on the Trust’s website 

will note the valuation methodology 

used and the price per Bitcoin resulting 

from such calculation. 

The Trust will provide website 

disclosure of its NAV and NAV per 

Share daily. The website disclosure of 

the Trust’s NAV and NAV per Share 

will occur at the same time as the 

disclosure by the Sponsor of the NAV 

and NAV per Share to Authorized 

Participants so that all market 

participants are provided such portfolio 

information at the same time. Therefore, 

the same portfolio information will be 

provided on the public website as well 

as in electronic files provided to 

Authorized Participants. Accordingly, 

each investor will have access to the 

current NAV and NAV per Share of the 

Trust through the Trust’s website, as 

well as from one or more major market 

data vendors. 

The value of the Index, as well as 

additional information regarding the 

Index, will be available on a continuous 

basis at https://www.coindesk.com/ 

indices. 

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. 

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. Shares will trade on 

the NYSE Arca Marketplace from 4:00 

a.m. to 8:00 p.m., E.T. in accordance 

with NYSE Arca Rule 7.34–E (Early, 

Core, and Late Trading Sessions). The 

Exchange has appropriate rules to 

facilitate transactions in the Shares 

during all trading sessions. As provided 

in NYSE Arca Rule 7.6–E, the minimum 

price variation (‘‘MPV’’) for quoting and 

entry of orders in equity securities 

traded on the NYSE Arca Marketplace is 

$0.01, with the exception of securities 

that are priced less than $1.00, for 

which the MPV for order entry is 

$0.0001. 

The Shares will conform to the initial 

and continued listing criteria under 

NYSE Arca Rule 8.201–E. The trading of 

the Shares will be subject to NYSE Arca 

Rule 8.201–E(g), which sets forth certain 

restrictions on Equity Trading Permit 

Holders (‘‘ETP Holders’’) acting as 

registered Market Makers in 

Commodity-Based Trust Shares to 

facilitate surveillance. The Exchange 

represents that, for initial and continued 

listing, the Trust will be in compliance 

with Rule 10A–3 77 under the Act, as 

provided by NYSE Arca Rule 5.3–E. A 

minimum of 100,000 Shares of the Trust 

will be outstanding at the 

commencement of trading on the 

Exchange. 

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 of 

the Trust.78 Trading in Shares of the 

Trust will be halted if the circuit breaker 

parameters in NYSE Arca Rule 7.12–E 

have been reached. Trading also may be 

halted because of market conditions or 

for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. 

The Exchange may halt trading during 

the day in which an interruption to the 

dissemination of the IIV or the value of 

the Index occurs. If the interruption to 

the dissemination of the IIV or the value 

of the Index persists past the trading day 

in which it occurred, the Exchange will 

halt trading no later than the beginning 

of the trading day following the 

interruption. In addition, if the 

Exchange becomes aware that the NAV 

per Share is not disseminated to all 

market participants at the same time, it 

will halt trading in the Shares until such 

time as the NAV per Share is available 

to all market participants. 

Surveillance 

The Exchange represents that trading 

in the Shares of the Trust will be subject 

to the existing trading surveillances 

administered by the Exchange, as well 

as cross-market surveillances 

administered by FINRA on behalf of the 

Exchange, which are designed to detect 

violations of Exchange rules and 

applicable federal securities laws.79 The 

Exchange represents that these 

procedures are adequate to properly 

monitor Exchange trading of the Shares 

in all trading sessions and to deter and 

detect violations of Exchange rules and 

federal securities laws applicable to 

trading on the Exchange. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares 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 from such markets 

and other entities. In addition, the 

Exchange may obtain information 

regarding trading in the Shares from 

markets and other entities that are 

members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement 

(‘‘CSSA’’).80 The Exchange is also 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 in connection with 

such ETP Holders’ proprietary or 

customer trades which they effect 

through ETP Holders on any relevant 

market. 

Under NYSE Arca Rule 8.201–E(g), an 

ETP Holder acting as a registered Market 

Maker in the Shares is required to 

provide the Exchange with information 

relating to its accounts for trading in the 


ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 2679 

81 15 U.S.C. 78f(b)(5). 

underlying commodity, related futures 

or options on futures, or any other 

related derivatives. Commentary .04 of 

NYSE Arca Rule 11.3–E requires an ETP 

Holder acting as a registered Market 

Maker, and its affiliates, in the Shares to 

establish, maintain and enforce written 

policies and procedures reasonably 

designed to prevent the misuse of any 

material nonpublic information with 

respect to such products, any 

components of the related products, any 

physical asset or commodity underlying 

the product, applicable currencies, 

underlying indexes, related futures or 

options on futures, and any related 

derivative instruments (including the 

Shares). As a general matter, the 

Exchange has regulatory jurisdiction 

over its ETP Holders and their 

associated persons, which include any 

person or entity controlling an ETP 

Holder. To the extent the Exchange may 

be found to lack jurisdiction over a 

subsidiary or affiliate of an ETP Holder 

that does business only in commodities 

or futures contracts, the Exchange could 

obtain information regarding the 

activities of such subsidiary or affiliate 

through surveillance sharing agreements 

with regulatory organizations of which 

such subsidiary or affiliate is a member. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

All statements and representations 

made in this filing regarding (a) the 

description of the index, portfolio or 

reference asset, (b) limitations on index 

or portfolio holdings or reference assets, 

or (c) the applicability of Exchange 

listing rules specified in this rule filing 

shall constitute continued listing 

requirements for listing the Shares on 

the Exchange. 

The Sponsor has represented to the 

Exchange that it will advise the 

Exchange of any failure by the Trust to 

comply with the continued listing 

requirements, and, pursuant to its 

obligations under Section 19(g)(1) of the 

Act, the Exchange will monitor for 

compliance with the continued listing 

requirements. If the Trust is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

NYSE Arca Rule 5.5–E(m). 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an ‘‘Information 

Bulletin’’ of the special characteristics 

and risks associated with trading the 

Shares. Specifically, the Information 

Bulletin will discuss the following: (1) 

the procedures for creations of Shares in 

Baskets; (2) NYSE Arca Rule 9.2–E(a), 

which imposes a duty of due diligence 

on its ETP Holders to learn the essential 

facts relating to every customer prior to 

trading the Shares; (3) information 

regarding how the value of the Index 

and NAV are disseminated; (4) the 

possibility that trading spreads and the 

resulting premium or discount on the 

Shares may widen during the Opening 

and Late Trading Sessions, when an 

updated IIV will not be calculated or 

publicly disseminated; (5) the 

requirement that members deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction and (6) trading information. 

In addition, the Information Bulletin 

will reference that the Trust is subject 

to various fees and expenses as 

described in the Annual Report. The 

Information Bulletin will disclose that 

information about the Shares of the 

Trust is publicly available on the Trust’s 

website. The Information Bulletin 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. 

The Information Bulletin will also 

discuss any relief, if granted, by the 

Commission or the staff from any rules 

under the Act. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 81 that an 

exchange have rules that are designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to, and perfect the 

mechanism of a free and open market 

and, in general, to protect investors and 

the public interest. 

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 and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in NYSE Arca Rule 

8.201–E. The Exchange has in place 

surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. The Exchange or FINRA, on behalf 

of the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares with other markets 

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 from such markets. In addition, 

the Exchange may obtain information 

regarding trading in the Shares from 

markets that are members of ISG or with 

which the Exchange has in place a 

CSSA. Also, pursuant to NYSE Arca 

Rule 8.201–E(g), the Exchange is able to 

obtain information regarding Market 

Maker accounts for trading in the Shares 

and the underlying Bitcoin or any 

Bitcoin derivative through ETP Holders 

acting as registered Market Makers, in 

connection with such ETP Holders’ 

proprietary or customer trades through 

ETP Holders which they effect on any 

relevant market. 

The proposed rule change is also 

designed to prevent fraudulent and 

manipulative acts and practices 

because, although the Digital Asset 

Trading Platform Market is not 

inherently resistant to fraud and 

manipulation, the Index serves as a 

means sufficient to mitigate the impact 

of instances of fraud and manipulation 

on a reference price for Bitcoin. 

Specifically, the Index provides a better 

benchmark for the price of Bitcoin than 

the Digital Asset Trading Platform 

Market price because it (1) tracks the 

Digital Asset Trading Platform Market 

price through trading activity at U.S.- 

Compliant Trading Platforms; (2) 

mitigates the impact of instances of 

fraud, manipulation and other 

anomalous trading activity in real-time 

through systematic adjustments; (3) is 

constructed and maintained by an 

expert third-party index provider, 

allowing for prudent handling of nonmarket-related events; and (4) mitigates 

the impact of instances of fraud, 

manipulation and other anomalous 

trading activity concentrated on any one 

specific trading platform through a 

cross-trading platform composite index 

rate. The Trust has used the Index to 

price the Shares for more than seven 

years, and the Sponsor believes the 

Index has proven its ability to (i) 

mitigate the effects of fraud, 

manipulation and other anomalous 

trading activity from impacting the 

Bitcoin reference rate, (ii) provide a realtime, volume-weighted fair value of 

Bitcoin and (iii) appropriately handle 

and adjust for non-market related 

events, such that efforts to manipulate 

the price of Bitcoin would have had a 

negligible effect on the pricing of the 

Trust, due to the controls embedded in 

the structure of the Index. In addition, 


ddrumheller on DSK120RN23PROD with NOTICES1
2680 Federal Register / Vol. 89, No. 10 / Tuesday, January 16, 2024 / Notices 

82 17 CFR 200.30–3(a)(12). 

certain of the Index’s Constituent 

Trading Platforms also have or have 

begun to implement market surveillance 

infrastructure to further detect, prevent, 

and respond to fraud, attempted fraud, 

and similar wrongdoing, including 

market manipulation. The proposed rule 

change is also designed to prevent 

fraudulent and manipulative acts and 

practices based on the existence of the 

CME futures market as a large, 

surveilled and regulated market that is 

closely connected with the spot market 

for Bitcoin and through which the 

Exchange could obtain information to 

assist in detecting and deterring 

potential fraud or manipulation. 

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest in that there is a 

considerable amount of Bitcoin price 

and market information available on 

public websites and through 

professional and subscription services. 

Investors may obtain, on a 24-hour 

basis, Bitcoin pricing information based 

on the spot price for Bitcoin from 

various financial information service 

providers. The closing price and 

settlement prices of Bitcoin are readily 

available from the Digital Asset Trading 

Platforms and other publicly available 

websites. In addition, such prices are 

published in public sources, or on-line 

information services such as Bloomberg 

and Reuters. The NAV per Share will be 

calculated daily and made available to 

all market participants at the same time. 

The Trust will provide website 

disclosure of its NAV and NAV per 

Share daily. One or more major market 

data vendors will disseminate for the 

Trust on a daily basis information with 

respect to the most recent NAV per 

Share and Shares outstanding. In 

addition, if the Exchange becomes 

aware that the NAV per Share is not 

disseminated to all market participants 

at the same time, it will halt trading in 

the Shares until such time as the NAV 

per Share is available to all market 

participants. Quotation and last-sale 

information regarding the Shares will be 

disseminated through the facilities of 

the CTA. The IIV will be widely 

disseminated on a per Share basis every 

15 seconds during the NYSE Arca Core 

Trading Session (normally 9:30 a.m., 

E.T., to 4:00 p.m., E.T.) by one or more 

major market data vendors. The 

Exchange represents that the Exchange 

may halt trading during the day in 

which an interruption to the 

dissemination of the IIV or the value of 

the Index occurs. If the interruption to 

the dissemination of the IIV or the value 

of the Index persists past the trading day 

in which it occurred, the Exchange will 

halt trading no later than the beginning 

of the trading day following the 

interruption. 

The proposed rule change is designed 

to perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest in that 

it will facilitate the listing and trading 

of an additional type of exchange-traded 

product that will enhance competition 

among market participants, to the 

benefit of investors and the marketplace. 

As noted above, the Exchange has in 

place surveillance procedures relating to 

trading in the Shares and may obtain 

information via ISG from other 

exchanges that are members of ISG or 

with which the Exchange has entered 

into a CSSA. In addition, as noted 

above, investors will have ready access 

to information regarding the Trust’s 

NAV per Share, IIV, and quotation and 

last sale information for the Shares. 

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 purposes of the Act. The 

Exchange notes that the proposed rule 

change will facilitate the listing and 

trading of an additional type of 

exchange-traded product, and the first 

such product based on Bitcoin, which 

will enhance competition among market 

participants, 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 

No written comments were solicited 

or received with respect to 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– 

NYSEARCA–2021–90 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–NYSEARCA–2021–90. 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–NYSEARCA–2021–90 and should be 

submitted on or before February 6, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.82

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–00636 Filed 1–12–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2 p.m. on Thursday, 

January 18, 2024. 

PLACE: The meeting will be held via 

remote means and/or at the 

Commission’s headquarters, 100 F 

Street NE, Washington, DC 20549. 


ddrumheller on DSK120RN23PROD with NOTICES1