80970 Federal Register / Vol. 89, No. 193 / Friday, October 4, 2024 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 100434 

(June 26, 2024), 89 FR 54868. The proposed rule 

change was subject to notice and comment. The 

Commission has not received any comments. 

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

5See Securities Exchange Act Release No. 

100681, 89 FR 66470 (Aug. 15, 2024) (designating 

September 30, 2024, as the date by which the 

Commission shall either approve, disapprove, or 

institute proceedings to determine whether to 

disapprove the proposed rule change). 

6The full text of Amendment No. 1 is available 

on the Commission’s website at: https://

www.sec.gov/comments/sr-nasdaq-2024-028/ 

srnasdaq2024028-516575-1489102.pdf. 

7 15 U.S.C. 78s(b)(2)(B). 

8On July 24, 2024, the Trust filed with the 

Commission an initial registration statement (the 

‘‘Registration Statement’’) on Form S–1 under the 

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

description of the operation of the Trust herein is 

based, in part, on the most recent Registration 

Statement. The Registration Statement is not yet 

effective and the Shares will not trade on the 

Exchange until such time that the Registration 

Statement is effective. 

9 ‘‘Cash equivalents’’ are limited to short-term 

treasury bills (90 days or less to maturity), money 

market funds, and demand deposit accounts. 

10The Trust may engage additional custodians for 

its bitcoin and ether, each of whom may be referred 

to as a Crypto Custodian. The Trust may also 

remove or change current Crypto Custodians, 

provided that there is at least one Crypto Custodian 

at all times. Any such changes to the Trust’s Crypto 

Custodians would require a rule filing under Rule 

19b–4 of the Act. 

11See https://indexes.nasdaqomx.com/docs/ 

Methodology_NCIUS.pdf. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101218; File No. SR– 

NASDAQ–2024–028] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Amendment No. 1 and Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change, as Modified by 

Amendment No. 1, To List and Trade 

Shares of the Hashdex Nasdaq Crypto 

Index US ETF Under Nasdaq Rule 

5711(d) 

September 30, 2024. 

I. Introduction 

On June 17, 2024, The Nasdaq Stock 

Market LLC (‘‘Nasdaq’’ 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 the 

Hashdex Nasdaq Crypto Index US ETF 

(‘‘Trust’’) under Nasdaq Rule 5711(d), 

Commodity-Based Trust Shares. The 

proposed rule change was published for 

comment in the Federal Register on July 

2, 2024.3

On August 9, 2024, 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 September 5, 2024, the Exchange 

filed Amendment No. 1 to the proposed 

rule change, described in Item II below, 

which Item has been prepared by the 

Exchange. 6 Amendment No. 1 amended 

and superseded the original proposed 

rule change in its entirety. The 

Commission is publishing this notice 

and order to solicit comments on the 

proposed rule change, as modified by 

Amendment No. 1, from interested 

persons and to institute proceedings 

under Section 19(b)(2)(B) of the Act 7 to 

determine whether to approve or 

disapprove the proposed rule change, as 

modified by Amendment No. 1. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade Shares of the Trust under Nasdaq 

Rule 5711(d), which governs the listing 

and trading of ‘‘Commodity-Based Trust 

Shares.’’ The Trust is managed and 

controlled by the Hashdex Asset 

Management Ltd. (‘‘Sponsor’’) and 

administered by Tidal ETF Services LLC 

(the ‘‘Administrator’’). The Shares will 

be registered with the SEC by means of 

the Trust’s registration statement on 

Form S–1 (the ‘‘Registration 

Statement’’).8

Description of the Trust 

The Shares will be issued by the 

Trust, a Delaware statutory trust to be 

established by the Sponsor. The Trust 

will operate pursuant to the rules and 

guidelines set forth in the Trust 

agreement (‘‘Trust Agreement’’). The 

Trust will issue Shares representing 

fractional undivided beneficial interests 

in its net assets. The assets of the Trust 

will consist only of bitcoin and ether. 

Under limited circumstances, the Trust 

will hold cash and/or cash equivalents 

to pay its expenses. The Trust will not 

be an investment company registered 

under the Investment Company Act of 

1940, as amended (the ‘‘1940 Act’’), and 

will not be a commodity pool under the 

Commodity Exchange Act. 

U.S. Bancorp Fund Services, LLC will 

be the sub-administrator, and transfer 

agent for the Trust (‘‘SubAdministrator’’ or ‘‘Transfer Agent’’). 

U.S. Bank, N.A. will hold the Trust’s 

cash and/or cash equivalents 9 (‘‘Cash 

Custodian’’). The Sponsor intends to 

enter into an agreement with Coinbase 

Custody Trust Company, LLC and BitGo 

Trust Company, Inc. (‘‘Crypto 

Custodians’’, and together with the Cash 

Custodian, the ‘‘Custodians’’). The 

Crypto Custodians will keep custody of 

all the Trust’s bitcoin and ether.10

The Trust’s Investment Objective 

The investment objective of the Trust 

is to have the daily changes in the net 

asset value (‘‘NAV’’) of the Shares 

correspond to the daily changes in the 

price of the Nasdaq Crypto US 

Settlement Price Index,11 NCIUSS (the 

‘‘NCIUSS’’ or ‘‘Index’’), less expenses 

and liabilities from the Trust’s 

operations, by investing in bitcoin and 

ether. 

The Shares are designed to provide a 

straightforward means of obtaining 

investment exposure to bitcoin and 

ether through the public securities 

market, as opposed to direct acquisition, 

holding, and trading of spot bitcoin and 

spot ether on a peer-to-peer or other 

basis or via a crypto asset platform. The 

Shares have been designed to remove 

the obstacles represented by the 

complexities and operational burdens 

involved in a direct investment in 

bitcoin and ether, while at the same 

time having an intrinsic value that 

reflects, at any given time, the 

investment exposure to the bitcoin and 

ether owned by the Trust at such time, 

less the Trust’s expenses and liabilities. 

The Shares provide investors with an 

alternative method of achieving 

exposure to bitcoin and ether through 

the public securities market, which may 

be more familiar to them. 

The Trust will gain exposure to 

bitcoin and ether by buying spot bitcoin 

and spot ether. The Trust will maintain 

cash and/or cash equivalent balances to 

the extent it is necessary for currently 

due Trust-payable expenses. 


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12The Index Constituents will be weighted 

according to their relative free float market 

capitalizations, as described in the next section 

‘‘The Trust’s Benchmark’’. 

13The closing level of the Index is calculated 

once a day on business days at 4:05 p.m. New York 

Time. See https://indexes.nasdaqomx.com/docs/ 

Methodology_NCIUS.pdf (under ‘‘Index Calculation 

and Dissemination’’). 

14Currently, there are no U.S.-regulated digital 

asset trading platforms and therefore, no crypto 

assets are eligible for inclusion in the Index based 

on this criteria today; however, the Nasdaq Crypto 

U.S. Index methodology has been written and 

designed to be forward-looking to account for any 

potential future regulatory changes, including 

potential changes where digital asset trading 

platforms would be regulated by U.S. regulators 

such as the SEC and the CFTC . 

15Currently, U.S.-regulated derivatives platforms 

would be regulated by the CFTC, and therefore 

crypto assets eligible for inclusion in the Index 

based on this criteria includes crypto assets (i.e., 

spot bitcoin and spot ether) that are used as a 

reference price for futures contracts traded on a 

CFTC-regulated exchange. 

16As discussed above, to be eligible for Index 

inclusion, a crypto asset must trade on at least two 

‘‘Core Crypto Platforms.’’ As set forth in the Index 

methodology, a ‘‘Core Crypto Platform’’ is a crypto 

asset platform that, in the opinion of the NCIOC, 

exhibits at a minimum the characteristics specified 

in the Index methodology, such as having strong 

forking controls, effective anti-money laundering 

controls, including surveillance for manipulative 

trading practices and erroneous transactions, 

demonstrating robust IT infrastructure and active 

capacity management, evidencing cooperation with 

regulators and law enforcement, and be licensed by 

a public independent governing body. Such license 

could be obtained today through the New York 

State Department of Financial Services’ (NYDFS) 

BitLicense, and Core Crypto Platforms could also be 

registered with FinCEN as Money Services 

Businesses. The list of existing Core Crypto 

Platforms will be recertified by the NCIOC at a 

minimum on an annual basis. The Core Crypto 

Platforms as of May 27, 2024 are BitStamp, 

Coinbase, Gemini, itBit, and Kraken. 

17As discussed above, only crypto assets that are 

supported by at least one ‘‘Core Custodian’’ for the 

entire period since the previous Index 

reconstitution will be considered for inclusion in 

the Index. A ‘‘Core Custodian’’ is a crypto assets 

custodian that, in the opinion of the NCIOC, 

exhibits the characteristics specified in the Index 

methodology. See https://indexes.nasdaqomx.com/ 

docs/Methodology_NCIUS.pdf (under ‘‘Core 

Custodians’’). A Core Custodian might lose 

eligibility if it does not comply with the specified 

requirements in the Index methodology or with any 

other NCIOC requirements. The NCIOC will review 

new Core Custodian candidates throughout the year 

and announce any new additions when approved. 

The list of existing Core Custodians will be 

recertified by the NCIOC at a minimum on an 

annual basis. Changes to the list of Core Custodians 

may be made by the approval of the NCIOC and 

announced accordingly in the case of exceptional 

Continued 

If there are no Share redemption 

orders or currently due Trust-payable 

expenses, the Trust’s portfolio is 

expected to consist of bitcoin and ether. 

The Trust will not invest in any other 

spot crypto asset besides bitcoin and 

ether. The Trust will not invest in 

crypto securities, tokenized assets or 

stablecoins. As of May 27, 2024, the 

crypto asset constituents of the Index 

(‘‘Index Constituents’’) and their 

weightings 12 were as follows: 

Constituents Weight 

(%) 

Bitcoin (BTC) ................................ 70.54 

Ether (ETH) .................................. 29.46 

The Sponsor will employ a passive 

investment strategy that is intended to 

track the changes in the Index regardless 

of whether the Index goes up or goes 

down, meaning that the Sponsor will 

not try to ‘‘beat’’ the Index. The Trust’s 

passive investment strategy is designed 

to allow investors to purchase and sell 

the Shares for the purpose of investing 

in the Index, whether to hedge the risk 

of losses in their Index-related 

transactions or gain price exposure to 

the Index. The Trust’s investments will 

be consistent with the Trust’s 

investment objective and will not be 

used to enhance leverage. That is, given 

its passive investment strategy, the 

Trust’s investments will not be used to 

seek performance that is the multiple or 

inverse multiple (e.g., 2Xs, 3Xs, ¥2Xs, 

and ¥3Xs) of the Trust’s Index. 

None of the Trust, the Sponsor, any 

Crypto Custodian, or any other person 

associated with the Trust will, directly 

or indirectly, engage in action where 

any portion of the Trust’s ether becomes 

subject to the Ethereum proof-of-stake 

validation or is used to earn additional 

ether or generate income or other 

earnings. 

From time to time, the Trust may be 

entitled to or come into possession of 

‘‘Incidental Rights’’ and/or ‘‘IR Virtual 

Currency’’ by virtue of its ownership of 

bitcoin or ether, generally through a fork 

in the Bitcoin or Ethereum blockchain, 

an airdrop offered to holders of bitcoin 

or ether or other similar event. 

‘‘Incidental Rights’’ are rights to acquire, 

or otherwise establish dominion and 

control over, any crypto asset (for the 

avoidance of doubt, other than bitcoin 

and ether) or other asset or right, which 

rights are incident to the Trust’s 

ownership of bitcoin or ether and arise 

without any action of the Trust or of the 

Sponsor. ‘‘IR Virtual Currency’’ is any 

crypto asset (other than bitcoin or 

ether), or other assets or rights, acquired 

through the exercise of any Incidental 

Right. 

With respect to a fork, airdrop or 

similar event, the Sponsor will cause 

the Trust to permanently and 

irrevocably abandon any such 

Incidental Rights and IR Virtual 

Currency and no such Incidental Right 

or IR Virtual Currency shall be taken 

into account for purposes of 

determining the NAV of the Trust. 

The Trust’s Benchmark 

The Trust will use the Index as a 

reference to track and measure its 

performance compared to the price 

performance of the markets for the 

Index Constituents and to value the 

bitcoin and ether held by the Trust for 

purposes of calculating the Trust’s NAV. 

The Index is designed to measure the 

performance of a portion of the overall 

crypto asset market. The Index does not 

track the overall performance of all 

crypto assets generally, nor the 

performance of any specific crypto 

assets. The Index is owned and 

administered by Nasdaq, Inc. (‘‘Index 

Provider’’) and is calculated by CF 

Benchmarks Limited (‘‘Calculation 

Agent’’), which is experienced in 

calculating and administering crypto 

assets indices. The Calculation Agent 

publishes daily the Index Constituents, 

the Index Constituents’ weightings, the 

intraday value of the Index (under the 

ticker NCIUS), and the daily settlement 

value of the Index (under the ticker 

NCIUSS), which is effectively the 

Index’s closing value.13

The Index is derived from a rulesbased methodology (‘‘Index Rules’’), 

which is overseen by the Nasdaq 

Cryptocurrency Index Oversight 

Committee (‘‘NCIOC’’). The NCIOC 

governs the Index and is responsible for 

its implementation, administration, and 

general oversight, including assessing 

crypto assets for eligibility, adjustments 

to account for regulatory changes and 

periodic methodology reviews. Neither 

the Trust, nor the Sponsor have control 

over the Index Rules or the Index 

administration. 

According to the Index Rules, crypto 

assets are eligible for inclusion in the 

Index if they satisfy the criteria set forth 

under the Nasdaq Crypto U.S. Index 

methodology, which includes being 

listed on a U.S.-regulated digital asset 

trading platform at the time of 

inclusion 14 or serving as the underlying 

asset for a derivative instrument listed 

on a U.S.-regulated derivatives 

platform.15 The Index adjusts its 

constituents and weightings on a 

quarterly basis to reflect changes in the 

crypto asset markets. 

Pursuant to the Index Rules, to be 

eligible for inclusion in the Index, 

crypto assets must meet the following 

criteria on a quarterly basis: 

(1) Have active tradable markets listed 

on at least two Core Crypto Platforms 16

for the entire period since the previous 

Index reconstitution; 

(2) Be supported by at least one Core 

Custodian 17 for the entire period since 

the previous Index reconstitution. 


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events or in order to maintain the integrity of the 

Index. The Core Custodians as of May 27, 2024 are 

BitGo, Coinbase, Fidelity and Gemini. 

18See supra notes 14–15. 

19The Exchange would file an amendment to this 

rule filing if any Index change would require a 

change to the Trust’s investment objective. 

20The Index will utilize ‘‘Circulating Supply’’ of 

an Index Constituent for all calculations of free float 

market capitalization and the determination of 

constituent weights. ‘‘Circulating Supply’’ is 

defined as the total supply of all units of a digital 

asset issued outside of the codebase since the initial 

block on a digital asset’s blockchain or since the 

point of inception of the digital asset on a 

cryptographic distributed ledger that can be ‘‘spent’’ 

or moved from one deposit address to another that 

is deemed to be likely to be available for trading as 

defined by the Calculation Agent and described by 

the methods in the CF Cryptocurrency Index Family 

Multi Asset Ground Rules (section 4.2.1 to 

4.3.1.2.1). Circulating Supply data will be 

determined at the block height or ledger number 

which is the last confirmed block or ledger number 

at 16:00:00 UTC on the day that is eight (8) business 

days immediately preceding the relevant 

Reconstitution Date. Where the Calculation Agent 

cannot reliably determine any of the respective 

inputs for the calculation of the Circulating Supply 

for a given crypto asset that is an Index Constituent 

then its Circulating Supply shall be approximated. 

This will be done by applying the Median Free 

Float Factor (Circulating Supply/Total Supply) that 

has been determined for that reconstitution of all 

Index Constituents to the Total Supply (Circulating 

Supply = Total Supply × Median Free Float Factor). 

During reconstitution, updated Circulating Supply 

of crypto assets will be set and will remain fixed 

until the next reconstitution. The Index fixes 

Circulating Supply of Index Constituents between 

reconstitutions in order to preserve the investability 

property of the Index. 

21All Index Constituent calculations are 

performed concurrently with the Index calculation, 

which takes place at 4:05 p.m. New York time. See 

supra note 13. 

22Nasdaq, Inc. (‘‘Nasdaq’’), the Index Provider, 

adheres to the International Organization of 

Securities Commissions principles for benchmarks 

(the ‘‘IOSCO Principles’’) for many of its indexes 

via an internal control and governance framework 

that is audited by an external, independent auditor 

on an annual basis. Although NCIUSS is not 

currently one of the indexes that is required to 

comply with IOSCO Principles, as a reference rate 

index, it is administered in a manner that is 

generally consistent with both the IOSCO Principles 

and the elements of Nasdaq’s internal control and 

governance framework pursuant to IOSCO 

Principles. NCIUSS is administered and governed 

by the NCIOC in accordance with the publicly 

available NCIUS methodology. The NCIOC oversees 

all aspects of the administration of the NCIUSS, 

including the defined processes and controls for the 

selection and recertification of third parties such as 

the Core Crypto Platforms and Core Custodians, as 

well as the validation and reconciliation of Index 

calculations and pricing data. As discussed above, 

the list of existing Core Crypto Platforms and Core 

Custodians will be recertified by the NCIOC at a 

minimum on an annual basis. The NCIOC also 

oversees the identification and mitigation of any 

potential conflicts of interest, formal complaints, 

and updates or changes to the Index methodology 

consistent with the IOSCO Principles. 

23See supra notes 14–15. 

(3) To be considered for entry to the 

Index at any Index reconstitution, an 

asset must have a median daily trading 

volume in the USD pair conducted 

across all Core Crypto Platforms that is 

no less than 0.5% of the cryptocurrency 

asset that has the highest median daily 

trading volume. 

(4) Be listed (at the time of inclusion) 

on a U.S.-regulated digital asset trading 

platform or serve as the underlying asset 

for a derivative instrument listed on a 

U.S.-regulated derivatives platform.18

(5) Have free-floating pricing (i.e., not 

be pegged to the value of any asset). 

If a crypto asset meets requirements 

(1) through (5), it will be considered 

eligible for Index inclusion. 

Notwithstanding inclusion in the 

eligible list, the NCIOC reserves the 

right to further exclude any additional 

assets based on one or more factors, 

including but not limited to its risk of 

being deemed a security by United 

States securities laws along with its 

review of general reputational, fraud, 

manipulation, or security concerns 

connected to the asset. Assets that, in 

the sole discretion of the Nasdaq Crypto 

Index Oversight Committee, do not offer 

utility, do not facilitate novel use cases, 

or that do not exhibit technical, 

structural or cryptoeconomic innovation 

(e.g., assets inspired by memes or 

internet jokes) may also be excluded. 

The Index will assess any crypto 

assets resulting from a hard fork or an 

airdrop under the same criteria as 

established digital assets and will only 

include a new digital asset if it meets 

the eligibility criteria set forth above. 

The Sponsor will not invest the 

Trust’s assets in any other crypto assets 

(i.e., other than bitcoin and ether), even 

if such other crypto assets are included 

in the Index pursuant to the Index Rules 

and the eligibility criteria above.19

The Index Constituents will be 

weighted according to their relative free 

float market capitalizations. The free 

float market capitalization of an Index 

Constituent on any given day is defined 

as the product of an Index Constituent 

Settlement Price (as defined below) and 

its ‘‘Circulating Supply’’ 20 as set in the 

most recent reconstitution. Weights are 

calculated by dividing the free float 

market capitalization of a digital asset 

by the total free float market 

capitalization of all Index Constituents 

at the time of rebalancing. 

The Index will be reconstituted and 

rebalanced quarterly, on the first 

Business Day in March, June, 

September, and December (each a 

‘‘Reconstitution Date’’). 

The settlement price of each Index 

Constituent (‘‘Index Constituent 

Settlement Price’’) is calculated once 

every trading day 21 by applying a 

publicly available rules-based pricing 

methodology (the ‘‘Pricing 

Methodology’’) to a diverse collection of 

pricing sources to provide an 

institutional-grade reference price for 

each constituent. The Pricing 

Methodology is designed to account for 

variances in price across a wide range 

of sources, each of which has been 

vetted according to criteria identified in 

the methodology. Specifically, the Index 

Constituent Settlement Price is the Time 

Weighted Average Price (‘‘TWAP’’) 

calculated across the volume weighted 

average prices (‘‘VWAPs’’) for each 

minute in the settlement price window, 

which is between 3:50:00 and 4:00:00 

p.m. New York time, on all Core Crypto 

Platforms. Where there are no 

transactions observed in any given 

minute of the settlement price window, 

that minute is excluded from the 

calculation of the TWAP. 

The Pricing Methodology also utilizes 

penalty factors to mitigate the impact of 

anomalous trading activity such as 

manipulation, illiquidity, large block 

trading, or operational issues that could 

compromise price representation. Three 

types of penalties are applied when 

three or more contributing Core Crypto 

Platforms contribute pricing for a 

constituent asset: abnormal price 

penalties, abnormal volatility penalties, 

and abnormal volume penalties. These 

penalties are defined as adjustment 

factors to the weight of information from 

each platform that contributes pricing 

information based on the deviation of a 

platform’s price, volatility, or volume 

from the median across all Core Crypto 

Platforms. For example, if a Core Crypto 

Platform’s price is 2.5 standard 

deviations away from the median price, 

its price penalty factor will be a 1/2.5 

multiplier. 

The Sponsor believes that the NCIUSS 

is a suitable Index for the Trust for 

pricing the Trust’s assets and as an 

Index that the Trust tracks. Specifically, 

it would provide reliable pricing for 

purposes of tracking the actual 

performance of the crypto asset markets 

for bitcoin and ether. Second, it is 

administered by a reputable index 

administrator that is not affiliated with 

the Sponsor or Trust,22 which provides 

assurances of accountability and 

independence. Finally, its Pricing 

Methodology is designed to resist 

potential price manipulation from 

unregulated crypto markets by applying 

the following safeguards: 

(1) Requiring that constituents be 

listed (at the time of inclusion) on a 

U.S.-regulated crypto asset trading 

platform or serve as the underlying asset 

for a derivative instrument listed on a 

U.S.-regulated derivatives platform 23

(2) Strict eligibility criteria for the 

Core Crypto Platforms from which the 

Index data is drawn; 


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24See https://indexes.nasdaqomx.com/docs/ 

Methodology_NCIUS.pdf. As noted above, the Core 

Custodians as of May 27, 2024 are BitGo, Coinbase, 

Fidelity and Gemini, and the Trust’s Crypto 

Custodians are on this list. 

25 If the Trust determines to do so, the Exchange 

will submit a rule filing with the Commission under 

Rule 19b–4 of the Act. 

26Baskets will be offered continuously at NAV 

per Share for 5,000 Shares. Therefore, a Basket of 

Shares would be valued at NAV per Share 

multiplied by the Basket size and the value of the 

bitcoin and ether to be acquired by the Trust as part 

of the creation of a Basket would be based on the 

dollar value of the NAV per Share multiplied by the 

Basket size for such creations. Only Authorized 

Participants may purchase or redeem Baskets. 

27The Trust issues and redeems Shares only in 

blocks or ‘‘Baskets’’ of 5,000 or integral multiples 

thereof. 

(3) A diverse collection of trustworthy 

pricing sources to provide an 

institutional-grade reference price for 

the Index Constituents; and 

(4) The use of adjustment factors to 

mitigate against the impact of any 

anomalous trading activity on the Index 

Constituent Settlement Prices. 

Custody of the Trust’s Bitcoin and Ether 

An investment in the Shares is backed 

by assets held by the Trust, including 

the bitcoin and ether held by the Crypto 

Custodians on behalf of the Trust. The 

Crypto Custodians must qualify as Core 

Custodians by the NCIOC and, thus 

satisfy at least the requirements set forth 

by the NCIOC in the NCIUSS 

methodology.24 The Trust may engage 

additional custodians for its bitcoin and 

ether and may also remove or change 

current Crypto Custodians, provided 

that there is at least one Crypto 

Custodian who is also a Core Custodian 

at all times.25

The Trust’s Crypto Custodians will 

hold and be responsible for maintaining 

custody of the Trust’s bitcoin and ether. 

The Sponsor will cause the Trust to 

maintain ownership and control of the 

Trust’s bitcoin in a manner consistent 

with good delivery requirements for 

spot commodity transactions. 

All of the Trust’s bitcoin and ether 

will be held in one or more accounts in 

the name of the Trust (each a ‘‘Custody 

Account’’ and together the ‘‘Custody 

Accounts’’), other than the Trust’s assets 

which are temporarily maintained in a 

trading account under limited 

circumstances (‘‘Trading Account’’), i.e., 

in connection with creation and 

redemption basket activity or sales of 

bitcoin and ether deducted from the 

Trust’s holdings in payment of Trust 

expenses or the Sponsor’s fee (or, in 

extraordinary circumstances, upon 

liquidation of the Trust). 

The Trust’s bitcoin, ether and cash 

holdings from time to time may 

temporarily be maintained in the 

Trading Account. The Sponsor intends 

to execute an agreement so Coinbase 

Inc. can serve as the Trust’s ‘‘Prime 

Execution Agent’’ (‘‘Prime Execution 

Agent Agreement’’). In this capacity, the 

Prime Execution Agent will facilitate 

the buying and selling of bitcoin and 

ether by the Trust in response to cash 

creations and redemptions between the 

Trust and registered broker-dealers that 

are Depositary Trust Company (‘‘DTC’’) 

participants that enter into an 

authorized participant agreement with 

the Sponsor (‘‘Authorized 

Participants’’), and the sale of bitcoin 

and ether to pay the Sponsor’s fee, any 

other Trust expenses not assumed by 

the Sponsor, to the extent applicable, 

and in extraordinary circumstances, in 

connection with the liquidation of the 

Trust’s assets. 

Creation and Redemption of Shares 

The Trust issues and redeems 

‘‘Baskets’’ 26 on a continuous basis. 

Baskets are issued or redeemed only in 

exchange for an amount of cash 

determined by the Sponsor or the 

Administrator on each Business Day. No 

Shares are issued unless the Cash 

Custodian has allocated to the Trust’s 

account the corresponding amount of 

cash. Baskets may be created or 

redeemed only by Authorized 

Participants. Each Authorized 

Participant must be registered as a 

broker-dealer under the Exchange Act 

and regulated by the FINRA, and must 

be qualified to act as a broker or dealer 

in the states or other jurisdictions where 

the nature of its business so requires. 

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 and 

ether 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 and ether as part of the 

creation or redemption process. 

The Trust will create Shares by 

receiving bitcoin and ether from a third 

party that is not the Authorized 

Participant, and the Trust—not the 

Authorized Participant—is responsible 

for selecting the third party to deliver 

the assets. Further, the third party will 

not be acting as an agent of the 

Authorized Participant with respect to 

the delivery of the bitcoin and ether to 

the Trust or acting at the direction of the 

Authorized Participant with respect to 

the delivery of the bitcoin and ether to 

the Trust. The Trust will redeem Shares 

by delivering bitcoin and ether to a third 

party that is not the Authorized 

Participant, and the Trust—not the 

Authorized Participant—is responsible 

for selecting the third party to receive 

the bitcoin and ether. Further, the third 

party will not be acting as an agent of 

the Authorized Participant with respect 

to the receipt of the bitcoin and ether 

from the Trust or acting at the direction 

of the Authorized Participant with 

respect to the receipt of the bitcoin and 

ether from the Trust. The third-party 

will be unaffiliated with the Trust and 

the Sponsor. 

In connection with cash creations and 

cash redemptions, the Authorized 

Participants will submit orders to create 

or redeem Baskets 27 of Shares 

exclusively in exchange for cash. The 

Trust will engage in transactions to 

convert cash into bitcoin and ether (in 

association with creation orders) and 

bitcoin and ether into cash (in 

association with redemption orders). 

The Trust will conduct its bitcoin and 

ether purchase and sale transactions by 

choosing, in its sole discretion, either to 

trade directly with designated third 

parties (each, a ‘‘Crypto Trading 

Counterparty’’), who are not registered 

broker-dealers pursuant to written 

agreements between each such Crypto 

Trading Counterparty and the Trust, or 

to trade through the Prime Execution 

Agent acting in an agency capacity with 

third parties pursuant to the Prime 

Execution Agent Agreement. Crypto 

Trading Counterparties settle trades 

with the Trust using their own accounts 

at the Prime Execution Agent when 

trading with the Trust. 

For a creation of a Basket of Shares, 

the Authorized Participant will be 

required to submit the creation order by 

2:00 p.m. ET, or the close of regular 

trading on the Exchange, whichever is 

earlier (the ‘‘Order Cutoff Time’’). The 

Order Cutoff Time may be modified by 

the Sponsor in its sole discretion. 

On the date of the Order Cutoff Time 

for a creation order, the Trust will enter 

into a transaction by choosing, in its 

sole discretion, to trade directly with a 

Crypto Trading Counterparty or the 

Prime Execution Agent, to buy bitcoin 

and ether in exchange for the cash 

proceeds from such creation order. The 

Authorized Participant is responsible 

for the dollar cost of the difference 

between the bitcoin and ether price 

utilized in calculating the NAV per 

Share on the Creation Order Date (as 

described below) and the price at which 

the Trust acquires the bitcoin and ether 

to the extent the price amount for 

buying the bitcoin and ether is higher 

than the price utilized in calculating the 


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NAV. In the case the price amount for 

buying the bitcoin and ether is lower 

than the price utilized in calculating the 

NAV, the Authorized Participant shall 

keep the dollar impact of any such 

difference. 

Creation orders will take place as 

follows, where ‘‘T’’ is the date of the 

creation order and each day in the 

sequence must be a business day in the 

U.S. 

Creation order date 

(T) 

Settlement date 

(T+1) 

• Authorized Participant places a creation order. 

• The Transfer Agent accepts (or rejects) the creation order. 

• The Trust will enter into a transaction with the Crypto Trading 

Counterparty or the Prime Execution Agent to purchase the corresponding bitcoin and ether. 

• As soon as practicable after 4:00 p.m. ET, the Sponsor determines 

the Basket cash component, including any dollar cost difference between the bitcoin and ether price utilized in calculating NAV per 

Share and the price at which the Trust acquires the bitcoin and 

ether. 

• The Authorized Participant delivers the Basket cash component to 

the Trust’s cash account that is maintained with the Cash Custodian. 

• The Crypto Trading Counterparty or the Prime Execution Agent deposits the bitcoin and ether into the Trust’s Trading Account related 

to the purchase transaction. 

• Once the Trust is in simultaneous possession of the Basket cash 

component and the bitcoin and ether, the Trust delivers the corresponding Shares to the Authorized Participant. 

• The Trust transfers the cash related to the purchase transaction from 

the Trust cash account maintained with the Cash Custodian to the 

Crypto Trading Counterparty or the Prime Execution Agent. 

When the Trust chooses to enter into 

a transaction with the Prime Execution 

Agent, because the Trust’s Trading 

Account may not be funded with cash 

on the Creation Order Date for the 

purchase of bitcoin and ether associated 

with a cash creation order, the Trust 

may borrow trade credits (‘‘Trade 

Credits’’) in the form of cash from the 

‘‘Trade Credit Lender’’, under a trade 

financing agreement (‘‘Trade Financing 

Agreement’’) or may require the 

Authorized Participant to deliver the 

required cash for the creation order on 

the Creation Order Date. The extension 

of Trade Credits on the Creation Order 

Date allows the Trust to purchase 

bitcoin and ether through the Prime 

Execution Agent on the Creation Order 

Date, with such bitcoin and ether being 

deposited in the Trust’s Trading 

Account. On Settlement Date for a 

creation order, the Trust delivers Shares 

to the Authorized Participant in 

exchange for cash received from the 

Authorized Participant. To the extent 

Trade Credits were utilized, the Trust 

uses the cash to repay the Trade Credits 

borrowed from the Trade Credit Lender. 

On the Settlement Date for a creation 

order, the bitcoin and ether purchased 

are swept from the Trust’s Trading 

Account to the Custody Account 

pursuant to a regular end-of-day sweep 

process. 

For a redemption of a Basket of 

Shares, the Authorized Participant will 

be required to submit a redemption 

order by the Order Cutoff Time. On the 

date of the Order Cutoff Time for a 

redemption order, the Trust will enter 

into a transaction by choosing, in its 

sole discretion, to trade directly with a 

Crypto Trading Counterparty or the 

Prime Execution Agent, to sell bitcoin 

and ether in exchange for cash. The 

Authorized Participant will bear the 

difference between the bitcoin and ether 

price utilized in calculating the NAV 

per Share on the Redemption Order 

Date and the price realized in selling the 

bitcoin and ether to raise the cash 

needed for the cash redemption order to 

the extent the price realized in selling 

the bitcoin and ether is lower than the 

price utilized in the NAV. To the extent 

the price realized in selling the bitcoin 

and ether is higher than the price 

utilized in the NAV, the Trust will 

deliver the dollar impact of any such 

difference to the Authorized Participant. 

Redemption orders will take place as 

follows, where ‘‘T’’ is the date of the 

redemption order and each day in the 

sequence must be a business day. 

Redemption order date 

(T) 

Settlement date 

(T+1) 

• Authorized Participant places a redemption order. 

• The Transfer Agent accepts (or rejects) the redemption order. 

• The Trust instructs the Crypto Custodian to prepare to move the corresponding bitcoin and ether from the Trust’s Custody Account to the 

Trading Account. 

• The Trust enters into a transaction with the Crypto Trading 

Counterparty or the Prime Execution Agent to sell the corresponding 

bitcoin and ether. 

• As soon as practicable after 4:00 p.m. ET, the Sponsor determines 

the Basket cash component, including any dollar cost difference between the bitcoin and ether price utilized in calculating NAV per 

Share and the price at which the Trust sells the bitcoin and ether. 

• The Authorized Participant delivers the Baskets of Shares to be redeemed to the Trust. 

• The Crypto Trading Counterparty or the Prime Execution Agent delivers cash to the Trust’s cash account that is maintained with the 

Cash Custodian related to the sell transaction. 

• Once the Trust is in simultaneous possession of the Basket of 

Shares and the respective Basket cash component, the Trust cancels the Shares comprising the number of Baskets redeemed by the 

Authorized Participant. 

• The Trust instructs the Crypto Custodian to transfer the corresponding bitcoin and ether agreed on the sell transaction from the 

Trust’s Trading Account to the Crypto Trading Counterparty or Prime 

Execution Agent. 

• The Trust transfers the Basket cash component from the cash account maintained with the Cash Custodian to the Authorized Participant. 

The Trust may use financing in 

connection with a redemption order 

when bitcoin and ether remain in the 

Custody Account at the point of 

intended execution of a sale of bitcoin 

and ether. In those circumstances, the 

Trust may borrow Trade Credits in the 

form of bitcoin and ether from the Trade 

Credit Lender, which allows the Trust to 

sell bitcoin and ether through the Prime 

Execution Agent on the Redemption 

Order Date, and the cash proceeds are 

deposited in the Trading Account. On 

the Settlement Date for a redemption 

order, the Trust delivers cash to the 

Authorized Participant in exchange for 

Shares received from the Authorized 

Participant. In the event financing was 


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28See FASB (Financial Accounting Standards 

Board) Accounting standards codification (ASC) 

820–10. For financial reporting purposes only, the 

Trustee has adopted a valuation policy that outlines 

the methodology for valuing the Trust’s assets. The 

policy also outlines the methodology for 

determining the principal market (or in the absence 

of a principal market, the most advantageous 

market) in accordance with FASB ASC 820–10. 

29A ‘‘Relevant Transaction’’ is any crypto asset 

versus U.S. dollar spot trade that occurs during the 

observation window between 3:00 p.m. and 4:00 

p.m. ET on a ‘‘Core Crypto Platform’’ in the BTC/ 

USD and ETH/USD pair that is reported and 

disseminated by a Core Crypto Platform through its 

publicly available application programming 

interface and observed by the index administrator. 

30The Nasdaq Crypto US Index (Index symbol 

NCIUS) is calculated every second throughout a 24- 

hour trading day, seven days per week, using 

published, real-time bid and ask quotes for Index 

constituents observed on Core Crypto Platforms 

through the publicly available API. See https://

indexes.nasdaqomx.com/Index/Overview/NCIUS. 

31Several major market data vendors display and/ 

or make widely available ITVs taken from the 

Consolidated Tape Association (‘‘CTA’’) or other 

data feeds. 

32See Exchange Act Release No. 99306 (January 

10, 2024), 89 FR 3008 (January 17, 2024) (SelfContinued 

used, the Trust will use the bitcoin and 

ether moved from the Custody Account 

to the Trading Account to repay the 

Trade Credits borrowed from the Trade 

Credit Lender. 

Net Asset Value 

The Trust’s NAV per Share will be 

calculated by taking the current value of 

its total assets, subtracting any 

liabilities, and dividing that total by the 

number of Shares. The assets of the 

Trust will consist of bitcoin, ether, cash 

and cash equivalents. The Sponsor has 

the exclusive authority to determine the 

Trust’s NAV, which it has delegated to 

the Administrator. 

The Administrator of the Trust will 

calculate the NAV once each Business 

Day, as of the earlier of the close of the 

Nasdaq or 4:00 p.m. New York time. For 

purposes of making these calculations, a 

Business Day means any day other than 

a day when Nasdaq is closed for regular 

trading (‘‘Business Day’’). 

The Administrator will value the 

bitcoin and ether held by the Trust 

based on the Index Constituent 

Settlement Price, unless the prices are 

not available or the Administrator, in its 

sole discretion, determines that the 

Index Constituent Settlement Price is 

unreliable (‘‘Fair Value Event’’). In the 

instance of a Fair Value Event, the 

Trust’s holdings may be fair valued on 

a temporary basis in accordance with 

the fair value policies approved by the 

Administrator. 

In the instance of a Fair Value Event 

and pursuant to the Administrator’s fair 

valuation policies and procedures, 

VWAP or Volume Weighted Median 

Prices (‘‘VWMP’’) from another index 

administrator (‘‘Secondary Index’’) will 

be utilized. 

If a Secondary Index is also not 

available or the Administrator in its sole 

discretion determines the Secondary 

Index is unreliable, the price set by the 

Trust’s principal market as of 4:00 p.m. 

ET, on the valuation date will be 

utilized. In the event the principal 

market price is not available or the 

Administrator in its sole discretion 

determines the principal market 

valuation is unreliable, the 

Administrator will use its best judgment 

to determine a good faith estimate of fair 

value. The Administrator identifies and 

determines the Trust’s principal market 

(or in the absence of a principal market, 

the most advantageous market) for 

bitcoin and ether consistent with the 

application of fair value measurement 

framework in FASB ASC 820–10.28 The 

principal market is the market where 

the reporting entity would normally 

enter into a transaction to sell the asset 

or transfer the liability. The principal 

market must be available to and be 

accessible by the reporting entity. The 

reporting entity is the Trust. 

If the Index Constituent Settlement 

Price is not used to determine the 

Trust’s bitcoin and ether holdings, 

owners of the beneficial interests of 

Shares (the ‘‘Shareholders’’) will be 

notified in a prospectus supplement or 

on the Trust’s website and, if this index 

change is on a permanent basis, a filing 

with the Commission under Rule 19b– 

4 of the Act will be required. 

A Fair Value Event value 

determination will be based upon all 

available factors that the Sponsor or the 

Administrator deems relevant at the 

time of the determination and may be 

based on analytical values determined 

by the Sponsor or Administrator using 

third-party valuation models. Fair value 

policies approved by the Administrator 

will seek to determine the fair value 

price that the Trust might reasonably 

expect to receive from the current sale 

of that asset or liability in an arm’slength transaction on the date on which 

the asset or liability is being valued 

consistent with ‘‘Relevant 

Transactions’’.29

Indicative Trust Value 

In order to provide updated 

information relating to the Trust for use 

by Shareholders and market 

professionals, the Sponsor will engage 

an independent calculator to calculate 

an updated Indicative Trust Value 

(‘‘ITV’’). The ITV will be calculated by 

using the prior day’s closing NAV per 

Share of the Trust as a base and will be 

updated throughout the regular market 

session of 9:30 a.m. E.T. to 4:00 p.m. 

E.T. (the ‘‘Regular Market Session’’) to 

reflect changes in the value of the 

Trust’s holdings during the trading day. 

For purposes of calculating the ITV, the 

Trust’s spot bitcoin and ether holdings 

will be priced using a real time version 

of the Index, the Nasdaq Crypto US 

Index (‘‘NCIUS’’).30

The ITV will be disseminated on a per 

Share basis every 15 seconds during the 

Exchange’s Regular Market Session and 

be widely disseminated by one or more 

major market data vendors during the 

Regular Market Session.31

Background—Spot Bitcoin and Ether 

ETPs 

The Commission has recently 

permitted exchange-traded products 

(‘‘ETPs’’) to directly hold bitcoin and 

ether. The Exchange and the Sponsor 

applaud the Commission as these 

approvals mark a significant step 

forward in offering U.S. investors and 

traders transparent, exchange-listed 

products for expressing views on crypto 

assets. 

The Exchange and the Sponsor 

believe that the proposed rule change 

does not introduce any elements that 

the Commission has not previously 

approved, and therefore, it will not 

impose any inappropriate consequences 

on the market. Although building on 

previously approved ETP proposals, the 

Trust employs a new strategy of 

investing in bitcoin and ether, as it will 

hold both spot bitcoin and spot ether in 

accordance with the Index 

methodology, and its approval will add 

value to the U.S. market. 

The Trust will hold spot bitcoin and 

spot ether, commodities for which 

proposals to list and trade ETPs have 

recently been approved by the 

Commission. As the Trust will invest in 

bitcoin and ether for which proposals to 

list and trade ETPs have been recently 

approved by the Commission, and 

because the Exchange will utilize the 

same surveillance mechanisms that 

were deployed pursuant to the 

proposals to list and trade those 

approved ETPs, the Sponsor and the 

Exchange understand that the proposed 

rule change does not introduce any 

novel regulatory issues and believe that 

the Commission should approve this 

proposal. 

Spot Bitcoin ETP 

On January 10, 2024, the Commission 

issued an order granting approval for 

proposals to list certain bitcoin-based 

commodity trust and bitcoin-based trust 

units (‘‘Spot Bitcoin ETPs’’).32 In 


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Regulatory Organizations; NYSE Arca, Inc.; The 

Nasdaq Stock Market LLC; Cboe BZX Exchange, 

Inc.; Order Granting Accelerated Approval of 

Proposed Rule Changes, as Modified by 

Amendments Thereto, To List and Trade BitcoinBased Commodity-Based Trust Shares and Trust 

Units) (the ‘‘Spot Bitcoin ETP Approval Order’’). 

33The robustness of the Commission’s correlation 

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

correlations being calculated with respect to bitcoin 

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

regulated by the CFTC, (2) the lengthy sample 

period of price returns for both the CME bitcoin 

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

frequent intra-day trading data in both the CME 

bitcoin futures market and the spot bitcoin market 

over that lengthy sample period, and (4) the 

consistency of the correlation results throughout the 

lengthy sample period. 

34Correlation should not be interpreted as an 

indicator of a causal relationship or whether one 

variable leads or lags the other. 

35See Exchange Act Release No. 100224 (May 23, 

2024), 89 FR 46937 (May 30, 2024) (Self-Regulatory 

Organizations; NYSE Arca, Inc.; The Nasdaq Stock 

Market LLC; Cboe BZX Exchange, Inc.; Order 

Granting Accelerated Approval of Proposed Rule 

Changes, as Modified by Amendments Thereto, to 

List and Trade Shares of Ether-Based ExchangeTraded Products) (the ‘‘Spot Ether ETP Approval 

Order’’). 

considering the Spot Bitcoin ETPs, the 

Commission determined in the Spot 

Bitcoin ETP Approval Order that the 

exchanges’ comprehensive surveillancesharing agreement with the Chicago 

Mercantile Exchange (‘‘CME’’)—a U.S. 

regulated market whose bitcoin futures 

market is consistently highly correlated 

to spot bitcoin—could be reasonably 

expected to assist in surveilling for 

fraudulent and manipulative acts and 

practices in the specific context of the 

proposals. The exchanges have 

comprehensive surveillance-sharing 

agreements with the CME via their 

common membership in the Intermarket 

Surveillance Group (‘‘ISG’’), which 

facilitates the sharing of information 

that is available to the CME through its 

surveillance of its markets. 

After reviewing the proposals for the 

Spot Bitcoin ETPs, the Commission 

found that they were consistent with the 

Act, including with Section 6(b)(5), and 

rules and regulations thereunder 

applicable to a national securities 

exchange, including the Exchange. The 

abovementioned Section 6(b)(5) 

requires, among other things, that the 

investment product is designed to 

‘‘prevent fraudulent and manipulative 

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

protect investors and the public 

interest.’’ 

The Commission’s analysis 33 in the 

Spot Bitcoin ETP Approval Order also 

demonstrated that prices typically move 

in close, though not perfect, 

correlation 34 between the spot bitcoin 

market and the CME bitcoin futures 

market. Therefore, the Commission 

concluded that fraud or manipulation 

affecting spot bitcoin market prices 

would likely similarly impact CME 

bitcoin futures prices. Since the CME’s 

surveillance can help detect these 

impacts on CME bitcoin futures prices, 

such surveillance can be reasonably 

expected to assist in surveilling for 

fraudulent and manipulative acts and 

practices in the specific context of the 

Spot Bitcoin ETPs proposals. 

In the Spot Bitcoin ETP Approval 

Order, the Commission also stated that 

the Spot Bitcoin ETP proposals, similar 

to other spot commodity ETPs it has 

approved, are reasonably designed to 

ensure fair disclosure of information 

necessary for accurate share pricing, to 

prevent trading in the absence of 

sufficient transparency, to protect 

material nonpublic information related 

to the products’ portfolios, and to 

maintain fair and orderly markets for 

the shares of the Spot Bitcoin ETPs. 

Spot Ether ETP 

A few months after the issuance of its 

Spot Bitcoin ETP Approval Order, the 

Commission issued on May 23, 2024 an 

approval order for proposals to list 

certain ether-based trusts (‘‘Spot Ether 

ETPs’’).35 The Commission also 

concluded in the Spot Ether ETP 

Approval Order that the exchanges’ 

comprehensive surveillance-sharing 

agreement with the CME, a U.S.- 

regulated market whose ether futures 

market is consistently highly correlated 

with spot ether, can be reasonably 

expected to assist in surveilling for 

fraudulent and manipulative acts and 

practices within the context of the 

mentioned proposals. 

As in the case of the Spot Bitcoin ETP 

Approval Order, in the Spot Ether ETP 

Approval Order, the Commission 

determined that the exchanges’ 

comprehensive surveillance-sharing 

agreement with the CME ether futures 

market, which exhibits a consistent high 

correlation with spot ether, can 

reasonably be expected to assist in 

surveilling for fraudulent and 

manipulative practices in the specific 

context of the Spot Ether ETP proposals. 

Therefore, based on similar reasons to 

the Spot Bitcoin ETP Approval Order, 

the Commission approved the Spot 

Ether ETPs, stating that the proposals to 

list and trade those Spot Ether ETPs 

were also consistent with the 

requirements of the Act and the 

regulations applicable to a national 

securities exchange, in particular with 

Section 6(b)(5) and Section 

11A(a)(1)(C)(iii) of the Act. 

Availability of Information 

The website for the Trust, which will 

be publicly accessible at no charge, will 

contain the following information: (a) 

the prior Business Day’s NAV per Share; 

(b) the prior Business Day’s Nasdaq 

official closing price; (c) calculation of 

the premium or discount of such 

Nasdaq official closing price against 

such NAV per Share; (d) data in chart 

form displaying the frequency 

distribution of discounts and premiums 

of the Nasdaq official closing price 

against the NAV per Share, within 

appropriate ranges for each of the four 

previous calendar quarters (or for the 

life of the Trust, if shorter); (e) the 

prospectus; and (f) other applicable 

quantitative information. The 

Administrator will also disseminate the 

Trust’s holdings on a daily basis on the 

Trust’s website. The NAV per Share for 

the Trust will be calculated by the 

Administrator once a day and will be 

disseminated daily to all market 

participants at the same time. Quotation 

and last sale information regarding the 

Shares will be disseminated through the 

facilities of the relevant securities 

information processor. 

Also, an estimated value that reflects 

an estimated ITV will be disseminated. 

For more information on the ITV, 

including the calculation methodology, 

see ‘‘Indicative Trust Value’’ above. The 

ITV disseminated during the Regular 

Market 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 

ITV will be widely disseminated on a 

per Share basis every 15 seconds during 

the Regular Market Session by one or 

more major market data vendors. In 

addition, the ITV will be available 

through online information services. 

Quotation and last sale information 

for bitcoin and ether is widely 

disseminated through a variety of major 

market data vendors, including 

Bloomberg and Reuters. Information 

relating to trading, including price and 

volume information for bitcoin and 

ether, is available from major market 

data vendors and from the platforms on 

which such bitcoin and ether are traded. 

Depth of book information is also 

available from such crypto platforms. 

The normal trading hours for the ether 

and bitcoin platforms are 24 hours per 

day, 365 days per year. 

Information regarding market price 

and trading volume of the Shares will be 

continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services. Information regarding the 

previous day’s closing price and trading 

volume information for the Shares will 

be published daily in the financial 

section of newspapers. 


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36For a list of the current members and affiliate 

members of ISG, see https://www.isgportal.com/. 

Initial and Continued Listing 

The Shares will be subject to Nasdaq 

Rule 5711(d)(vi), which sets forth the 

initial and continued listing criteria 

applicable to Commodity-Based Trust 

Shares. A minimum of 40,000 Shares, or 

the equivalent of eight Baskets, will be 

required to be outstanding at the time of 

commencement of trading on the 

Exchange. Upon termination of the 

Trust, the Shares will be removed from 

listing. 

As required in Nasdaq Rule 

5711(d)(viii), the Exchange notes that 

any registered market maker (‘‘Market 

Maker’’) in the Shares must file with the 

Exchange, in a manner prescribed by the 

Exchange, and keep current a list 

identifying all accounts for trading the 

underlying commodity, related futures 

or options on futures, or any other 

related derivatives, which the registered 

Market Maker may have or over which 

it may exercise investment discretion. 

No registered Market Maker in the 

Shares shall trade in the underlying 

commodity, related futures or options 

on futures, or any other related 

derivatives, in an account in which a 

registered Market Maker, directly or 

indirectly, controls trading activities, or 

has a direct interest in the profits or 

losses thereof, which has not been 

reported to the Exchange as required by 

Nasdaq Rule 5711(d). In addition to the 

existing obligations under Exchange 

rules regarding the production of books 

and records, the registered Market 

Maker in the Shares shall make 

available to the Exchange such books, 

records or other information pertaining 

to transactions by such entity or any 

limited partner, officer or approved 

person thereof, registered or nonregistered employee affiliated with such 

entity for its or their own accounts in 

the underlying commodity, related 

futures or options on futures, or any 

other related derivatives, as may be 

requested by the Exchange. 

The Exchange is able to obtain 

information regarding trading in the 

Shares and the underlying bitcoin and 

ether, or any other bitcoin or ether 

derivative through members acting as 

registered Market Makers, in connection 

with their proprietary or customer 

trades. 

As a general matter, the Exchange has 

regulatory jurisdiction over its members, 

and their associated persons. The 

Exchange also has regulatory 

jurisdiction over any person or entity 

controlling a member, as well as a 

subsidiary or affiliate of a member that 

is in the securities business. A 

subsidiary or affiliate of a member 

organization that does business only in 

commodities would not be subject to 

Exchange jurisdiction, but the Exchange 

could obtain information regarding the 

activities of such subsidiary or affiliate 

through surveillance sharing agreements 

with regulatory or self-regulatory 

organizations of which such subsidiary 

or affiliate is a member. 

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. The Exchange will 

allow trading in the Shares from 4:00 

a.m. to 8:00 p.m. ET. The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. The Shares of the Trust 

will conform to the initial and 

continued listing criteria set forth in 

Nasdaq Rule 5711(d) and will comply 

with the requirements of Rule 10A–3 of 

the Act. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares. 

The Exchange will halt trading in the 

Shares under the conditions specified in 

Nasdaq Rules 4120 and 4121, including 

without limitation the conditions 

specified in Nasdaq Rule 4120(a)(9) and 

(10) and the trading pauses under 

Nasdaq Rules 4120(a)(11) and (12). 

Trading may be halted because of 

market conditions or for reasons that, in 

the view of the Exchange, make trading 

in the Shares inadvisable. These may 

include: (1) the extent to which trading 

is not occurring in the bitcoin and ether 

underlying the Shares; or (2) whether 

other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. 

If the ITV or the value of the Index is 

not being disseminated as required, the 

Exchange may halt trading during the 

day in which the interruption to the 

dissemination of the ITV or the value of 

the Index occurs. If the interruption to 

the dissemination of the ITV 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 with 

respect to the Shares is not 

disseminated to all market participants 

at the same time, it will halt trading in 

the Shares until such time as the NAV 

per Share is available to all market 

participants. 

Surveillance 

The Exchange believes that its 

surveillance procedures are adequate to 

properly monitor the trading of the 

Shares on the Exchange during all 

trading sessions and to deter and detect 

violations of Exchange rules and the 

applicable federal securities laws. The 

surveillance program includes real-time 

patterns for price and volume 

movements and post-trade surveillance 

patterns (e.g., spoofing, marking the 

close, pinging, phishing). In addition to 

the Exchange’s existing surveillance, a 

new pattern will be added to surveil for 

significant deviation in the Shares’ price 

from the underlying asset’s price. The 

Exchange will use the trade data from 

an external vendor that consolidates the 

real-time data from multiple crypto 

assets platforms. 

Trading of Shares on the Exchange 

will be subject to the Exchange’s 

surveillance program for derivative 

products, as well as cross-market 

surveillances administered by FINRA, 

on behalf of the Exchange pursuant to 

a regulatory services agreement, which 

are also designed to detect violations of 

Exchange rules and applicable federal 

securities laws. The Exchange is 

responsible for FINRA’s performance 

under this regulatory services 

agreement. 

The Exchange will require the Trust 

to represent 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 Exchange Act, the Exchange will 

surveil 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 the Nasdaq 5800 

Series. In addition, the Exchange also 

has a general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and bitcoin and 

ether derivatives with other markets and 

other entities that are members of the 

ISG,36 and the Exchange or FINRA, on 

behalf of the Exchange, or both, may 

obtain trading information regarding 

trading in the Shares and bitcoin and 

ether derivatives from such markets and 

other entities. The Exchange also may 

obtain information regarding trading in 

the Shares and listed bitcoin and ether 

derivatives via the ISG, from other 


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80978 Federal Register / Vol. 89, No. 193 / Friday, October 4, 2024 / Notices 

37 15 U.S.C. 78f(b)(5). 

38See ‘‘Background—Spot Bitcoin and Ether 

ETPs’’ above. 

exchanges who are members or affiliates 

of the ISG, or with which the Exchange 

has entered into a comprehensive 

surveillance sharing agreement. 

The Exchange’s current trading 

surveillance focuses on detecting 

securities trading outside their normal 

patterns. 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 is able 

to obtain information regarding trading 

in the Shares, the physical commodities 

included in, or options, futures or 

options on futures on, Shares through 

Members, in connection with such 

Members’ proprietary or customer 

trades which they effect on any relevant 

market. The Exchange can obtain market 

surveillance information, including 

customer identity information, with 

respect to transactions occurring on the 

exchanges that are members of the ISG. 

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 

applicable federal securities laws. 

Information Circular 

Prior to the commencement of 

trading, the Exchange will inform its 

members in an information circular 

(‘‘Information Circular’’) of the special 

characteristics and risks associated with 

trading the Shares. Specifically, the 

Information Circular will discuss the 

following: (1) the procedures for 

creations and redemptions of Shares in 

Baskets (and that Shares are not 

individually redeemable); (2) Section 10 

of Nasdaq General Rule 9, which 

imposes suitability obligations on 

Nasdaq members with respect to 

recommending transactions in the 

Shares to customers; (3) how 

information regarding the ITV and NAV 

is disseminated; (4) the risks involved in 

trading the Shares during the pre-market 

and postmarket sessions when an 

updated ITV 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. 

The Information Circular will also 

discuss any exemptive, no action and 

interpretive relief granted by the 

Commission from any rules under the 

Act. 

The Information Circular will also 

reference the fact that there is no 

regulated source of last sale information 

regarding bitcoin and ether, that the 

Commission has no jurisdiction over the 

trading of bitcoin and ether as a 

commodity. 

Additionally, the Information Circular 

will reference that the Trust is subject 

to various fees and expenses described 

in the Registration Statement. The 

Information Circular will also disclose 

the trading hours of the Shares. The 

Information Circular will disclose that 

information about the Shares will be 

publicly available on the Trust’s 

website. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 37 that an 

exchange has 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 and to protect 

investors and the public interest in that 

the Shares will be listed and traded on 

the Exchange pursuant to the initial and 

continued listing criteria set forth in 

Nasdaq Rule 5711(d). 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 and bitcoin and 

ether derivatives with other markets and 

other entities that are members of the 

ISG, and the Exchange or FINRA, on 

behalf of the Exchange, or both, may 

obtain trading information regarding 

trading in the Shares and bitcoin and 

ether derivatives from such markets and 

other entities. In addition, the Exchange 

may obtain information regarding 

trading in the Shares and listed bitcoin 

and ether derivatives via the ISG, from 

other exchanges that are members or 

affiliates of ISG, or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement. The 

Exchange is also able to obtain 

information regarding trading in the 

Shares and bitcoin and ether derivatives 

through Members, in connection with 

such Members’ proprietary or customer 

trades which they effect on any relevant 

market. The Exchange will require the 

Trust to represent 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 Exchange Act, the 

Exchange will surveil 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 the Nasdaq 5800 

Series. 

Trading in Shares of the Trust will be 

halted if the circuit breaker parameters 

have been reached or because of market 

conditions or for reasons that, in the 

view of the Exchange, make trading in 

the Shares inadvisable. These may 

include unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market. 

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 Shares 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 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 Commission has approved 

numerous spot-based bitcoin and ether 

products to be listed on U.S. national 

securities exchanges.38 In order for any 

proposed rule change from an exchange 

to be approved, the Commission must 

determine that, among other things, the 

proposal is consistent with the 

requirements of Section 6(b)(5) of the 

Act, specifically including: (i) the 

requirement that a national securities 

exchange’s rules are designed to prevent 

fraudulent and manipulative acts and 

practices; and (ii) the requirement that 

an exchange proposal be designed, in 

general, to protect investors and the 

public interest. The Exchange believes 

that this proposal is consistent with the 

requirements of Section 6(b)(5) of the 

Act because this filing sufficiently 

demonstrates that the applicable 

standard that has previously been 

articulated by the Commission with 

respect to proposals to list and trade 

units of commodity-based trusts has 

been met as outlined below. 

To list and trade the commodity-trust 

ETPs, one way that an exchange can 

meet the obligation under Exchange Act 


khammond on DSKJM1Z7X2PROD with NOTICES
Federal Register / Vol. 89, No. 193 / Friday, October 4, 2024 / Notices 80979 

39 15 U.S.C. 78s(b)(2)(B). 

40 Id. 

41 15 U.S.C. 78f(b)(5). 

42Section 19(b)(2) of the Act, as amended by the 

Securities Acts Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants the Commission 

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Acts Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 

(1975). 

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

to prevent fraudulent and manipulative 

acts and practices is by demonstrating 

that the exchange has a comprehensive 

surveillance-sharing agreement with a 

regulated market of significant size 

related to the underlying or reference 

assets. The Exchange and CME are 

members of the ISG, satisfying the 

comprehensive surveillance sharing 

agreement portion. 

In the Spot Bitcoin ETP Approval 

Order and the Spot Ether ETP Approval 

Order, the Commission concluded that 

the proposing exchanges’ 

comprehensive surveillance-sharing 

agreement with the CME—a U.S. 

regulated market—whose bitcoin and 

ether futures market is consistently 

highly correlated to spot bitcoin and 

spot ether, respectively—could be 

reasonably expected to assist in 

surveilling for fraudulent and 

manipulative acts and practices in the 

specific context of the proposals. 

Consequently, this Trust, which 

invests solely in bitcoin and ether, is 

similar to these approved products, 

since its only holdings are bitcoin, 

ether, cash and/or cash equivalents. 

CME’s bitcoin futures market and ether 

futures market are highly, though not 

perfectly correlated with the spot 

bitcoin market and the spot ether market 

respectively, so that surveillance of 

CME’s bitcoin futures market and CME’s 

ether futures market can be reasonably 

expected to assist in surveilling for 

fraudulent and manipulative acts and 

practices in the specific context of this 

proposal. 

For all the above reasons, the 

Exchange believes that the proposed 

rule change is consistent with the 

requirements of Section 6(b)(5) of the 

Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. The Exchange 

notes that the proposed rule change will 

facilitate the listing and trading of the 

Shares, which are Commodity-Based 

Trust Shares and that 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 either 

solicited or received. 

III. Proceedings To Determine Whether 

To Approve or Disapprove SR– 

NASDAQ–2024–028, as Modified by 

Amendment No. 1, and Grounds for 

Disapproval Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 39 to determine 

whether the proposed rule change, as 

modified by Amendment No. 1, should 

be approved or disapproved. Institution 

of proceedings is appropriate at this 

time in view of the legal and policy 

issues raised by the proposed rule 

change, as modified by Amendment No. 

1, as discussed below. Institution of 

proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. Rather, as described 

below, the Commission seeks and 

encourages interested persons to 

provide comments on the proposed rule 

change, as modified by Amendment No. 

1. 

Pursuant to Section 19(b)(2)(B) of the 

Act,40 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with Section 

6(b)(5) of the Act, which requires, 

among other things, that the rules of a 

national securities exchange be 

‘‘designed to prevent fraudulent and 

manipulative acts and practices’’ and 

‘‘to protect investors and the public 

interest.’’ 41

The Commission asks that 

commenters address the sufficiency of 

the Exchange’s statements in support of 

the proposal, which are set forth in Item 

II above, in addition to any other 

comments they may wish to submit 

about the proposed rule change, as 

modified by Amendment No. 1. In 

particular, the Commission seeks 

comment on whether the proposed 

Trust, which would hold both spot 

bitcoin and spot ether, and Shares 

would be susceptible to manipulation 

and whether the Exchange’s proposal, as 

modified by Amendment No. 1, is 

designed to prevent fraudulent and 

manipulative acts and practices. 

Namely, as the Trust would hold both 

spot bitcoin and spot ether, the 

Commission seeks comment on whether 

the Trust raises any new or novel 

concerns not previously contemplated 

by the Commission. 

IV. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

and the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval that would be 

facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.42

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposed rule change, as modified by 

Amendment No. 1, should be approved 

or disapproved by October 25, 2024. 

Any person who wishes to file a rebuttal 

to any other person’s submission must 

file that rebuttal by November 8, 2024. 

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– 

NASDAQ–2024–028 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to file 

number SR–NASDAQ–2024–028. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 


khammond on DSKJM1Z7X2PROD with NOTICES
80980 Federal Register / Vol. 89, No. 193 / Friday, October 4, 2024 / Notices 

43 17 CFR 200.30–3(a)(12); 17 CFR 200.30– 

3(a)(57). 

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–NASDAQ–2024–028 and should be 

submitted on or before October 25, 

2024. Rebuttal comments should be 

submitted by November 8, 2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–22903 Filed 10–3–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–263, OMB Control No. 

3235–0275] 

Submission for OMB Review; 

Comment Request; Extension: Rule 

17Ad–13 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that pursuant 

to the Paperwork Reduction Act of 1995 

(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the 

Securities and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget 

(‘‘OMB’’) a request for approval of 

extension of the previously approved 

collection of information provided for in 

Rule 17Ad–13 (17 CFR 240.17Ad–13), 

under the Securities Exchange Act of 

1934 (15 U.S.C. 78a et seq.). 

Rule 17Ad–13 requires certain 

registered transfer agents to file 

annually with the Commission and the 

transfer agent’s appropriate regulatory 

authority a report prepared by an 

independent accountant on the basis of 

a study and evaluation of the transfer 

agent’s system of internal accounting 

controls for the transfer of record 

ownership and the safeguarding of 

related securities and funds. If the 

independent accountant’s report 

specifies any material inadequacy in a 

transfer agent’s system, the rule requires 

the transfer agent to notify the 

Commission and its appropriate 

regulatory agency in writing, within 

sixty calendar days after the transfer 

agent receives the independent 

accountant’s report, of any corrective 

action taken or proposed to be taken by 

the transfer agent. In addition, Rule 

17Ad–13 requires that transfer agents 

maintain the independent accountant’s 

report and any other documents 

required by the rule for at least three 

years, the first year in an easily 

accessible place. These recordkeeping 

requirements assist the Commission and 

other regulatory agencies with 

monitoring transfer agents and ensuring 

compliance with the rule. Small transfer 

agents and transfer agents that service 

only their own companies’ securities are 

exempt from Rule 17Ad–13. 

Approximately 100 professional 

independent transfer agents must file 

with the Commission one report 

prepared by an independent accountant 

pursuant to Rule 17Ad–13 each year. 

Commission staff estimates that, on 

average, the annual internal time burden 

for each transfer agent to submit the 

independent accountant’s report to the 

Commission is minimal or zero. The 

time required for an independent 

accountant to conduct the study and 

evaluation of a transfer agent’s system of 

internal accounting controls and 

complete the report varies depending on 

the size and nature of the transfer 

agent’s operations. Commission staff 

estimates that, on average, each Rule 

17Ad–13 report can be completed by the 

independent accountant in 120 hours. 

In light of Commission staff’s review of 

previously filed Rule 17Ad–13 reports 

and Commission staff’s conversations 

with transfer agents and accountants, 

Commission staff estimates that 120 

hours are needed to perform the study 

and prepare the report on an annual 

basis. Commission staff estimates that 

the average hourly rate of an 

independent accountant is $291, 

resulting in a total annual external cost 

burden of $34,920 for each of the 

approximately 100 professional 

independent transfer agents. The 

aggregate total annual external cost for 

the 100 respondents is approximately 

$3,492,000. 

The retention period for the 

recordkeeping requirement under Rule 

17Ad–13 is three years following the 

date of a report prepared pursuant to the 

rule. The recordkeeping requirement 

under this rule is mandatory to assist 

the Commission and other regulatory 

agencies with monitoring transfer agents 

and ensuring compliance with the rule. 

This rule does not involve the collection 

of confidential information. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

under the PRA unless it displays a 

currently valid OMB control number. 

The public may view background 

documentation for this information 

collection at the following website: 

www.reginfo.gov. Find this particular 

information collection by selecting 

‘‘Currently under 30-day Review—Open 

for Public Comments’’ or by using the 

search function. Written comments and 

recommendations for the proposed 

information collection should be sent by 

November 4, 2024 to (i) 

www.reginfo.gov/public/do/PRAMain 

and (ii) Austin Gerig, Director/Chief 

Data Officer, Securities and Exchange 

Commission, c/o Oluwaseun Ajayi, 100 

F Street NE, Washington, DC 20549, or 

by sending an email to: PRA_Mailbox@

sec.gov. 

Dated: October 1, 2024. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2024–23005 Filed 10–3–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–544, OMB Control No. 

3235–0604] 

Submission for OMB Review; 

Comment Request; Extension: 

Exchange Act Form 10–D 

Upon Written Request Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission 

(‘‘Commission’’) has submitted to the 

Office of Management and Budget this 

request for extension of the previously 


khammond on DSKJM1Z7X2PROD with NOTICES