Federal Register / Vol. 89, No. 213 / Monday, November 4, 2024 / Notices 87681 

4These estimates are based on an analysis of the 

number of individual clients from Form ADV Item 

5D(a)(1) and (b)(1) of advisers that report they 

provide portfolio management to wrap programs as 

indicated in Form ADV Item 5I(2)(b) and (c), and 

the number of individual clients of advisers that 

identify as internet advisers in Form ADV Item 

2A(11); from analysis comparing reported 

individual client assets in Form ADV Item 5D(a)(3) 

and 5D(b)(3) to reported wrap portfolio manager 

assets in Form ADV Item 5I(2)(b) and (c), we 

discount the estimated number of individual clients 

of non-internet advisers providing portfolio 

management to wrap programs by 10%. 

5These estimates are based on the number of new 

clients expected due to average year-over-year 

growth in individual clients from Form ADV Item 

5D(a)(1) and (b)(1) (about 9%) and an assumed rate 

of yearly client turnover of 10%. 

6These estimates are based upon consultation 

with investment advisers that operate investment 

advisory programs that rely on rule 3a–4. 

7The staff bases this estimate in part on the fact 

that, by business necessity, computer records 

already will be available that contain the 

information in the quarterly reports. 

8This estimate is based on the following 

calculation: (25,852,313 continuing clients × 1 

hour) + (2,127,147 new clients × 1.5 hours) + 

(27,979,460 total clients × (0.25 hours × 4 

statements)) = 57,022,493 hours. 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

management of the account or 

reasonably modify existing restrictions. 

The sponsor (or its designee) must also 

notify the client quarterly, in writing, to 

contact the sponsor (or its designee) 

regarding changes to the client’s 

financial situation, investment 

objectives, or restrictions on the 

account’s management. 

Additionally, the sponsor (or its 

designee) must provide each client with 

a quarterly statement describing all 

activity in the client’s account during 

the previous quarter. The sponsor and 

personnel of the client’s account 

manager who know about the client’s 

account and its management must be 

reasonably available to consult with the 

client. Each client also must retain 

certain indicia of ownership of all 

securities and funds in the account. 

The Commission staff estimates that 

27,979,460 clients participate each year 

in investment advisory programs relying 

on rule 3a–4.4 Of that number, the staff 

estimates that 2,127,147 are new clients 

and 25,852,313 are continuing clients.5

The staff estimates that each year the 

investment advisory program sponsors’ 

staff engage in 1.5 hours per new client 

and 1 hour per continuing client to 

prepare, conduct and/or review 

interviews regarding the client’s 

financial situation and investment 

objectives as required by the rule.6

Furthermore, the staff estimates that 

each year the investment advisory 

program sponsors’ staff spends 1 hour 

per client to prepare and mail quarterly 

client account statements, including 

notices to update information.7 Based 

on the estimates above, the Commission 

estimates that the total annual burden of 

the rule’s paperwork requirements is 

57,022,493 hours.8

The estimate of average burden hours 

is made solely for the purposes of the 

Paperwork Reduction Act. The estimate 

is not derived from a comprehensive or 

even a representative survey or study of 

the costs of Commission rules and 

forms. An agency may not conduct or 

sponsor, and a person is not required to 

respond to a collection of information 

unless it displays a currently valid 

control number. 

Written comments are invited on: (a) 

whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimate of the burden of the collection 

of information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

by January 3, 2025. 

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. 

Please direct your written comments 

to: Austin Gerig, Director/Chief Data 

Officer, Securities and Exchange 

Commission, c/o Tanya Ruttenberg, 100 

F Street NE, Washington, DC 20549 or 

send an email to: PRA_Mailbox@

sec.gov. 

Dated: October 29, 2024. 

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–25546 Filed 11–1–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101470; File No. SR– 

NYSEARCA–2024–87] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To Adopt New NYSE Arca 

Rule 8.800–E To Provide for the Listing 

and Trading of Commodity- and Digital 

Asset-Based Investment Interests and 

To List and Trade Shares of the 

Grayscale Digital Large Cap Fund LLC 

October 29, 2024. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on October 

15, 2024, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to adopt new 

NYSE Arca Rule 8.800–E to provide for 

the listing and trading of Commodityand Digital Asset-Based Investment 

Interests, which are securities issued by 

a trust, limited liability company, or 

other similar entity that holds specified 

commodities, digital assets, Derivative 

Securities Products, and/or cash. The 

Exchange also proposes to list and trade 

shares of the Grayscale Digital Large Cap 

Fund LLC (the ‘‘Fund’’) under proposed 

NYSE Arca Rule 8.800–E. 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. 


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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 

The Exchange proposes to adopt new 

NYSE Arca Rule 8.800–E to provide for 

the listing and trading of Commodityand Digital Asset-Based Investment 

Interests, which are securities issued by 

a trust, limited liability company, or 

other similar entity that holds specified 

commodities, digital assets, Derivative 

Securities Products, and/or cash. The 

Exchange also proposes to list and trade 

shares of the Fund under proposed 

NYSE Arca Rule 8.800–E. 

Proposed Listing Rules 

Proposed Rule 8.800–E(a) provides 

that the Exchange will consider for 

trading, whether by listing or pursuant 

to unlisted trading privileges, 

Commodity- and/or Digital Asset-Based 

Investment Interests that meet the 

criteria of this rule. The Exchange will 

file separate proposals under Section 

19(b) of the Securities Exchange Act of 

1934 before trading, either by listing or 

pursuant to unlisted trading privileges, 

Commodity- and/or Digital Asset-Based 

Investment Interests. All statements or 

representations contained in such rule 

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 such rule filing will 

constitute continued listing 

requirements. An issuer of such 

securities must notify the Exchange of 

any failure to comply with such 

continued listing requirements. If an 

issue of Commodity- and/or Digital 

Asset-Based Investment Interests does 

not satisfy these requirements, the 

Exchange may halt trading in the 

securities and will initiate delisting 

proceedings pursuant to Rule 5.5–E(m). 

Proposed Rule 8.800–E(b) provides 

that this rule is applicable only to 

Commodity- and/or Digital Asset-Based 

Investment Interests. Except to the 

extent inconsistent with this Rule, or 

unless the context otherwise requires, 

the provisions of the Bylaws and all 

other rules and procedures of the Board 

of Directors shall be applicable to the 

trading on the Exchange of such 

securities. Commodity- and/or Digital 

Asset-Based Investment Interests are 

included within the definition of 

‘‘security’’ or ‘‘securities’’ as such terms 

are used in the Bylaws and Rules of the 

Exchange. 

Proposed Rule 8.800–E(c)(1) defines a 

Commodity- and/or Digital Asset-Based 

Investment Interest as a security (a) that 

is issued by a trust, limited liability 

company, or other similar entity (the 

‘‘Fund’’) that holds (1) specified 

commodities and/or digital assets 

deposited with the Fund, or (2) 

specified commodities and/or digital 

assets and, in addition to such specified 

commodities and/or digital assets, 

Derivative Securities Products (as 

defined in NYSE Arca Rule 1.1) 

deposited with the Fund and/or cash; 

(b) that is issued by such Fund in a 

specified aggregate minimum number in 

return for a deposit of a quantity of the 

underlying commodity(ies), digital 

asset(s), Derivative Securities Products, 

and/or cash; and (c) that, when 

aggregated in the same specified 

minimum number, may be redeemed at 

a holder’s request by such Fund which 

will deliver to the redeeming holder the 

quantity of the underlying 

commodity(ies), digital asset(s), 

Derivative Securities Products, and/or 

cash. 

Proposed Rule 8.800–E(c)(2) provides 

that the term ‘‘commodity,’’ as used in 

this rule, includes commodities as 

defined in Section 1a(9) of the 

Commodity Exchange Act. 

Proposed Rule 8.800–E(c)(3) defines 

the term ‘‘digital asset,’’ for purposes of 

this rule, as any digital representation of 

value recorded on a cryptographically 

secured, distributed ledger (i.e., 

blockchain) or similar technology. 

Proposed Rule 8.800–E(d) provides 

that the Exchange may trade, either by 

listing or pursuant to unlisted trading 

privileges, Commodity- and/or Digital 

Asset-Based Investment Interests based 

on an underlying commodity(ies), 

digital asset(s), and/or Derivative 

Securities Products. Each issue of a 

Commodity- and/or Digital Asset-Based 

Investment Interest shall be designated 

as a separate series and shall be 

identified by a unique symbol. 

Proposed Rule 8.800–E(e)(1) sets forth 

initial listing criteria for Commodityand/or Digital Asset-Based Investment 

Interests. Proposed Rule 8.800–E(e)(1)(i) 

provides that the Exchange will 

establish a minimum number of 

Commodity- and/or Digital Asset-Based 

Investment Interests required to be 

outstanding at the time of 

commencement of trading on the 

Exchange. Proposed Rule 8.800–E(1)(ii) 

provides that there shall be no 

limitation on the percentage of a Fund’s 

portfolio that may be invested in 

commodity and/or digital asset 

holdings, except that, in the aggregate, 

at least 90% of the weight of such 

holdings shall, on both an initial and 

continuing basis, consist of 

commodities and/or digital assets 

concerning which the Exchange is able 

to obtain information via the 

Intermarket Surveillance Group (‘‘ISG’’) 

from other members of the ISG or via a 

comprehensive surveillance sharing 

agreement (‘‘CSSA’’). 

Proposed Rule 8.800–E(e)(2) and 

subparagraphs (i) through (viii) 

thereunder set forth continued listing 

criteria for Commodity- and/or Digital 

Asset-Based Investment Interests. 

Proposed Rule 8.800–E(e)(2) provides 

that the Exchange will maintain 

surveillance procedures for securities 

listed under this rule and will consider 

the suspension of trading in, and will 

initiate delisting proceedings under 

NYSE Arca Rule 5.5–E(m) of, such 

series under any of the following 

circumstances: 

• if, following the initial twelvemonth period following commencement 

of trading on the Exchange of 

Commodity- and/or Digital Asset-Based 

Investment Interests, the Fund has more 

than 60 days remaining until 

termination and there are fewer than 50 

record and/or beneficial holders of 

Commodity- and/or Digital Asset-Based 

Investment Interests (proposed Rule 

8.800–E(e)(2)(i)); 

• if, following the initial twelvemonth period following commencement 

of trading on the Exchange of 

Commodity- and/or Digital Asset-Based 

Investment Interests, the Fund has fewer 

than 50,000 securities issued and 

outstanding (proposed Rule 8.800– 

E(e)(2)(ii)); 

• if, following the initial twelvemonth period following commencement 

of trading on the Exchange of 

Commodity- and/or Digital Asset-Based 

Investment Interests, the market value of 

all securities issued and outstanding is 

less than $1,000,000 (proposed Rule 

8.800–E(e)(2)(iii)); 

• if the value of the underlying 

commodity(ies) and/or digital asset(s) is 

no longer calculated or available on at 

least a 15-second delayed basis from a 

source unaffiliated with the sponsor, 

Fund, custodian or the Exchange 

(proposed Rule 8.800–E(e)(2)(iv)); 

• if the Intra-Day Fund Value is no 

longer made available on at least a 15- 

second delayed basis (proposed Rule 

8.800–E(e)(2)(v)); 

• if any of the continued listing 

requirements set forth in this Rule 

8.800–E are not continuously 

maintained (proposed Rule 8.800– 

E(e)(2)(vi)); 


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• if the Exchange submits a rule filing 

pursuant to Section 19(b) of the 

Securities Exchange Act of 1934 to 

permit the listing and trading of a series 

of Commodity- and/or Digital AssetBased Investment Interests and any of 

the statements or representations 

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 such rule filing are not 

continuously maintained (proposed 

Rule 8.800–E(e)(2)(vii)); or 

• if such other event shall occur or 

condition exists which in the opinion of 

the Exchange makes further dealings on 

the Exchange inadvisable (proposed 

Rule 8.800–E(e)(2)(viii)). 

Proposed Rule 8.800–E(e)(3) and the 

subparagraphs thereunder set forth 

certain requirements specific to 

Commodity- and/or Digital Asset-Based 

Investment Interests issued by a trust. 

Proposed Rule 8.800–E(e)(3)(i) provides 

that the stated term of a trust shall be 

as stated in the trust prospectus; 

however, a trust may be terminated 

under such earlier circumstances as may 

be specified in the trust prospectus. In 

addition, a trust may terminate in 

accordance with the provisions of the 

trust prospectus, which may provide for 

termination if the value of the trust falls 

below a specified amount. Proposed 

Rule 8.800–E(e)(3)(ii) provides for the 

following requirements on an initial and 

continued listing basis: (1) that the 

trustee of a trust must be a trust 

company or banking institution having 

substantial capital and surplus and the 

experience and facilities for handling 

corporate trust business, and that, in 

cases where, for any reason, an 

individual has been appointed as 

trustee, a qualified trust company or 

banking institution must be appointed 

co-trustee; and (2) that no change is to 

be made in the trustee of a listed issue 

without prior notice to and approval of 

the Exchange. 

Proposed Rule 8.800–E(f) provides 

that, upon termination of a Fund issuing 

securities pursuant to Rule 8.800–E, the 

Exchange requires that Commodityand/or Digital Asset-Based Investment 

Interests issued in connection with the 

Fund be removed from Exchange listing. 

Proposed Rule 8.800–E(g) provides 

that voting rights shall be as set forth in 

the applicable prospectus of the Fund 

issuing Commodity- and/or Digital 

Asset-Based Investment Interests. 

Proposed Rule 8.800–E(h) provides 

that neither the Exchange nor any agent 

of the Exchange shall have any liability 

for damages, claims, losses or expenses 

caused by any errors, omissions, or 

delays in calculating or disseminating 

any underlying commodity value, the 

current value of the underlying 

commodity required to be deposited to 

the Fund in connection with issuance of 

Commodity- and/or Digital Asset-Based 

Investment Interests; resulting from any 

negligent act or omission by the 

Exchange, or any agent of the Exchange, 

or any act, condition or cause beyond 

the reasonable control of the Exchange, 

its agent, including, but not limited to, 

an act of God; fire; flood; extraordinary 

weather conditions; war; insurrection; 

riot; strike; accident; action of 

government; communications or power 

failure; equipment or software 

malfunction; or any error, omission or 

delay in the reports of transactions in an 

underlying commodity. 

Proposed Rule 8.800–E(i) provides 

that an ETP Holder acting as a registered 

Market Maker in Commodity- and/or 

Digital Asset-Based Investment Units 

with no exposure to a non-U.S. currency 

or currencies must file with the 

Exchange in a manner prescribed by the 

Exchange and keep current a list 

identifying all accounts for trading that 

a Market Maker may have or over which 

it may exercise investment discretion in 

an underlying commodity, related 

commodity futures or options on 

commodity futures, or any other related 

commodity derivatives; an underlying 

digital asset, related digital asset futures 

or options on digital assets, or any other 

related digital asset derivatives; or an 

underlying series of Derivative 

Securities Products, related future or 

options on such Derivative Securities 

Products, or any other related 

derivatives of such Derivative Securities 

Products. An ETP Holder acting as a 

registered Market Maker in Commodityand/or Digital Asset-Based Investment 

Interests with exposure to one or more 

non-U.S. currencies (‘‘Underlying FX’’) 

also must file with the Exchange, in a 

manner prescribed by the Exchange, and 

keep current a list identifying all 

accounts for trading in Underlying FX 

and derivatives overlying Underlying 

FX which the Market Maker may have 

or over which it may exercise 

investment discretion, as well as a list 

of all commodity and commodityrelated accounts referenced above. No 

Market Maker in Commodity- and/or 

Digital-Asset Based Investment Interests 

shall trade in a commodity, Underlying 

FX, or any related derivative in an 

account that the Market Maker (1) 

directly or indirectly controls trading 

activities or has a direct interest in the 

profits or losses thereof, (2) is required 

by this rule to disclose to the Exchange, 

and (3) has not reported to the 

Exchange. 

In addition to the existing obligations 

under Exchange rules regarding the 

production of books and records, the 

ETP Holder acting as a Market Maker in 

Commodity- and/or Digital Asset Based 

Investment Interests shall make 

available to the Exchange such books, 

records, or other information pertaining 

to transactions by such entity or 

registered or non-registered employee 

affiliated with such entity for its or their 

own accounts for trading the underlying 

physical commodity, related commodity 

futures or options on commodity 

futures, applicable Underlying FX, or 

any other related commodity or 

applicable Underlying FX derivatives, 

as may be requested by the Exchange. 

Finally, the Exchange proposes to 

include the following commentary to 

Rule 8.800–E. Proposed Commentary 

.01 provides that ETP Holders shall 

provide to all purchasers of newly 

issued Commodity- and/or Digital 

Asset-Based Investment Interests a 

prospectus for the series of Commodityand/or Digital Asset-Based Investment 

Interests. Proposed Commentary .02 

provides that transactions in 

Commodity- and/or Digital-Asset Based 

Investment Interests will occur during 

the trading hours specified in NYSE 

Arca Rule 7.34–E. 

The Exchange also proposes to amend 

Rule 5.3–E to include Commodity- and/ 

or Digital Asset-Based Investment 

Interests listed pursuant to proposed 

Rule 8.800–E among the derivative or 

special purpose securities that are 

subject to a limited set of corporate 

governance and disclosure policies and 

to amend Rule 5.3–E(e) to include 

Commodity- and/or Digital Asset-Based 

Investment Interests listed pursuant to 

proposed Rule 8.800–E among the 

derivative or special purpose securities 

to which the requirements concerning 

shareholder/annual meetings do not 

apply. 

Commodity- and/or Digital AssetBased Investment Interests listed and 

traded pursuant to proposed Rule 

8.800–E would be substantially similar 

to Commodity-Based Trust Shares listed 

and traded pursuant to current Rule 

8.201–E, with two main differences. 

First, whereas Commodity-Based Trust 

Shares are issued by a trust, 

Commodity- and/or Digital Asset-Based 

Investment Interests could be issued, as 

a proposed, by a trust, limited liability 

company, or other similar entity. 

Second, whereas Commodity-Based 

Trust Shares are based on an underlying 

commodity only, the Exchange proposes 

that Commodity- and/or Digital AssetBased Investment Interests could be 


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4The Exchange notes that the requirement set 

forth in proposed Rule 8.800–E(c)(1) regarding 

digital asset holdings is based on a similar 

provision set forth in current Rule 8.600–E 

regarding Managed Fund Shares. See Rule 8.600– 

E, Commentary .01(d)(1). 

5The Shares are expected to be listed under the 

ticker symbol ‘‘GDLC.’’ 

6On May 13, 2021, the Fund filed its registration 

statement on Form 10 under the Securities Act (File 

No. 000–56284) (the ‘‘Registration Statement on 

Form 10’’). On June 28, 2021, the Fund filed 

Amendment No. 1 to the Registration Statement on 

Form 10. On August 13, 2021, the Fund filed 

Amendment No. 2 to the Registration Statement on 

Form 10. On November 29, 2021, the Fund filed 

Amendment No. 3 to the Registration Statement on 

Form 10. On January 20, 2022, the Fund filed 

Amendment No. 4 to the Registration Statement on 

Form 10. On February 4, 2022, the Fund filed 

Amendment No. 5 to the Registration Statement on 

Form 10. On July 12, 2021, the Registration 

Statement on Form 10 was automatically deemed 

effective. On September 27, 2021, September 1, 

2022, September 1, 2023, and September 6, 2024, 

the Fund filed its annual report on Form 10–K 

under the Securities Act (File No. 000–56284) (the 

‘‘Annual Reports’’). On November 5, 2021, February 

10, 2022, May 6, 2022, November 4, 2022, February 

8, 2023, May 5, 2023, November 3, 2023, February 

7, 2024, and May 3, 2024, the Fund filed its 

quarterly reports on Form 10–Q under the 

Securities Act (File No. 000–56284) (the ‘‘Quarterly 

Reports’’). The descriptions of the Fund, the Shares, 

and the digital assets contained herein are based, 

in part, on the Annual Reports and Quarterly 

Reports. On February 7, 2018, the Fund submitted 

to the Commission a Form D as a limited liability 

company. Shares of the Fund have been quoted on 

OTC Market’s OTCQX Best Marketplace under the 

symbol ‘‘GDLC’’ since October 14, 2019. On October 

15, 2019 and September 23, 2020, the Fund 

published annual reports for GDLC for the periods 

ended June 30, 2019 and June 30, 2020, 

respectively. On November 11, 2019, February 13, 

2020, May 8, 2020, November 6, 2020, February 12, 

2021, and May 13, 2021, the Fund published 

quarterly reports for GDLC for the periods ended 

September 30, 2019, December 31, 2019, March 31, 

2020, September 30, 2020, December 31, 2020, and 

March 31, 2021, respectively. Reports published 

before October 5, 2020, the date on which the 

Fund’s Shares became registered pursuant to 

Section 12(g) of the Act, can be found on OTC 

Market’s website (https://www.otcmarkets.com/ 

stock/GDLC/disclosure), and reports published on 

or after October 5, 2020 can be found on OTC 

Market’s website and the Commission’s website 

(https://www.sec.gov/edgar/browse/?CIK=1729997 

&owner=exclude). The Shares will be of the same 

class and will have the same rights as shares of 

GDLC. According to Grayscale Investments, LLC, 

freely tradeable shares of GDLC will remain freely 

tradeable Shares on the date of the listing of the 

Shares that are unregistered under the Securities 

Act. Restricted shares of GDLC will remain subject 

to private placement restrictions on such date, and 

the holders of such restricted shares will continue 

to hold those Shares subject to those restrictions 

until they become freely tradeable Shares. 7According 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. 8As of October 4, 2024. 

9As of the date of this filing. 

10The Manager will ensure that the Fund’s 

holdings are consistent with the requirements of 

Rule 8.800–E(c)(1). 

11As of October 4, 2024. 

12The Fund will not obtain exposure to any Fund 

Component via futures, options on futures, or any 

other derivative. The Fund may from time to time 

come into possession of Forked Assets (as defined 

below) by virtue of its ownership of the Fund 

Components, generally through a fork in the 

respective Fund Component’s blockchain, an 

airdrop offered to holders of the respective Fund 

Component or other similar event. ‘‘Rights to 

Forked Assets’’ 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 Fund’s ownership of the Fund 

Components and arise without any action of the 

Fund, or of the Manager on behalf of the Fund. A 

‘‘Forked Asset’’ is any virtual currency token, or 

other asset or right, acquired by the Fund through 

the exercise (subject to the applicable provisions of 

the LLC Agreement) of any Rights to Forked Assets. 

Although the Fund is permitted to take certain 

actions with respect to Forked Assets in accordance 

with its LLC Agreement, at this time the Fund will 

prospectively irrevocably abandon any Forked 

Assets. In the event the Fund seeks to change this 

position, the Exchange would file a subsequent 

proposed rule change with the Commission. 

13The ‘‘Digital Asset Reference Rates’’ are 

determined by reference to the Index Price or an 

Indicative Price. The ‘‘Indicative Price’’ is a 

volume-weighted average price in U.S. dollars for 

a Fund Component as of 4:00 p.m., New York time, 

for the immediately preceding 60-minute period 

derived from data collected from Digital Asset 

Trading Platforms trading such Fund Component 

selected by the Reference Rate Provider. The ‘‘Index 

Price’’ for a Fund Component would be determined 

by the Reference Rate Provider by further cleansing 

and compiling the trade data used to determine the 

Indicative Price in such a manner as to 

algorithmically reduce the impact of anomalistic or 

manipulative trading. 

based on an underlying commodity or 

commodities, as well as digital assets 

and Derivative Securities Products.4 The 

Exchange believes this flexibility with 

respect to the structure of the entity 

issuing Commodity- and/or Digital 

Asset-Based Investment Interests and 

the holdings underlying such securities 

would benefit both issuers and the 

investing public and would facilitate the 

availability of a new type of exchangetraded product (‘‘ETP’’). 

Grayscale Digital Large Cap Fund 

The Exchange proposes to list and 

trade shares (‘‘Shares’’) 5 of the Fund 

pursuant to proposed NYSE Arca Rule 

8.800–E.6

The manager of the Fund is Grayscale 

Investments, LLC (‘‘Manager’’), a 

Delaware limited liability company. The 

Manager is a wholly owned indirect 

subsidiary of Digital Currency Group, 

Inc. (‘‘Digital Currency Group’’). The 

custodian for the Fund is Coinbase 

Custody Trust Company, LLC 

(‘‘Custodian’’).7 The administrator and 

transfer agent of the Fund will be BNY 

Mellon Asset Servicing, a division of 

The Bank of New York Mellon (the 

‘‘Transfer Agent’’). The distribution and 

marketing agent for the Fund will be 

Foreside Fund Services, LLC (the 

‘‘Marketing Agent’’). The index provider 

and digital asset reference rate provider 

for the Fund is CoinDesk Indices, Inc. 

(the ‘‘Index Provider’’ and the 

‘‘Reference Rate Provider’’). 

The Fund is a Cayman Islands limited 

liability company, formed on January 

25, 2018, that operates pursuant to a 

limited liability company agreement 

between the Manager and the 

Shareholders (‘‘LLC Agreement’’). The 

Fund has no fixed termination date. 

The Fund is one of the world’s largest 

diversified crypto investment funds by 

assets under management as of the date 

of this filing. The Fund has 

approximately $490.8 million in assets 

under management,8 and its Shares 

have historically traded in the millions 

of dollars in daily volume and are held 

by more than a quarter of a million 

American investor accounts seeking 

exposure to the Fund’s large cap digital 

assets (the ‘‘Fund Components’’) 

without the cost and complexity of 

purchasing any of the individual assets 

directly.9 As of the date of this filing, 

the Fund Component weightings are 

Bitcoin (75.46%), Ether (17.90%), 

Solana (SOL) (4.13%), XRP (1.86%) and 

Avalanche (AVAX) (0.65%).10 However, 

because the Fund is not currently listed 

as an ETP, the value of the Shares has 

not been able to closely track the value 

of the Fund’s underlying Fund 

Components. The Manager thus believes 

that allowing Shares of the Fund to list 

and trade on the Exchange as an ETP 

(i.e., converting the Fund to a spot ETP) 

would unlock over $167 million of 

value 11 for the Fund’s shareholders and 

provide other investors with a safe and 

secure way to invest in the Fund 

Components on a regulated national 

securities exchange. 

Operation of the Fund 

According to the Annual Report, the 

Fund’s assets consist solely of the Fund 

Components.12

Each Share represents a proportional 

interest, based on the total number of 

Shares outstanding, in each of the 

digital assets held by the Fund, as 

determined by reference to the 

respective Digital Asset Reference Rates 

and weightings of each the Fund’s 

digital asset holdings,13 less the Fund’s 

expenses and other liabilities (which 

include accrued but unpaid fees and 

expenses). The Manager expects that the 

market price of the Shares will fluctuate 

over time in response to the market 

prices of the Fund Components. In 

addition, because the Shares reflect the 

estimated accrued but unpaid expenses 

of the Fund, except as otherwise 

affected by a rebalancing of the Fund’s 

portfolio, the number of Fund 

Components represented by a Share is 

generally expected to gradually decrease 


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14The Manager’s Fee means a fee, payable in the 

Fund Components then held by the Fund in 

proportion to such Fund Components’ respective 

weightings, which accrues daily in U.S. dollars at 

an annual rate of currently 2.5%, but which will be 

lowered in connection with the Fund becoming an 

ETP, of the NAV Fee Basis Amount of the Fund 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 Manager’s Fee will be based on 

the NAV Fee Basis Amount from the most recent 

business day, reduced by the accrued and unpaid 

Manager’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 Fund 

Components and Determination of NAV’’ below. 

15Neither the Fund, nor the Manager, nor the 

Custodian, nor any other person associated with the 

Fund will, directly or indirectly, engage in action 

where any portion of the Fund Components 

becomes subject to proof-of-stake validation or is 

used to earn additional Fund Components or 

generate income or other earnings. 

16The Fund is a passive entity that is managed 

and administered by the Manager and does not have 

any officers, directors or employees. The Manager 

will retain limited discretion to exclude digital 

assets from the Fund Components only in certain 

rules-based circumstances, as further discussed 

below. 

17While the Manager uses the terminology 

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

Agreement is ‘‘Digital Asset Holdings.’’ 

18 ‘‘Fund Component Basket Amount’’ means, as 

of any trade date, the amount of tokens of such 

Fund Component required to be delivered in 

connection with each Creation Basket, as 

determined by dividing the amount of tokens of 

such Fund Component held by the Fund at 4:00 

p.m., New York time, on such trade date, after 

deducting the applicable Fund Component 

Aggregate Liability Amount (defined below), by the 

number of Shares outstanding at such time (the 

quotient so obtained calculated to one onehundred-millionth (i.e., carried to the eighth 

decimal place)) and multiplying the quotient so 

obtained for the Fund Component by 100. ‘‘Fund 

Component Aggregate Liability Amount’’ means for 

any Fund Component and any trade date, an 

amount of tokens of such Fund Component equal 

to the sum of (x) all accrued but unpaid Fund 

Component Fee Amounts for such Fund 

Component as of 4:00 p.m., New York time, on such 

trade date and (y) the Fund Component Expense 

Amount as of 4:00 p.m., New York time, on such 

trade date. 

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

meanings set forth in ‘‘Creation and Redemption of 

Shares’’ below. 

20 ‘‘Additional Fund Expenses’’ are any expenses 

incurred by the Fund in addition to the Manager’s 

Fee that are not Manager-paid expenses, including, 

but not limited to, (i) taxes and governmental 

charges, (ii) expenses and costs of any extraordinary 

services performed by the Manager (or any other 

service provider) on behalf of the Fund to protect 

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

indemnification of the Custodian or other agents, 

service providers or counterparties of the Fund, (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 Manager, 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 

Continued 

over time as the Fund Components are 

used to pay the Fund’s expenses. 

The activities of the Fund are limited 

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

below) in exchange for Fund 

Components and cash transferred to the 

Fund as consideration in connection 

with creations, (ii) transferring or selling 

Fund Components as necessary to cover 

the ‘‘Manager’s Fee’’ 14 and/or any 

Additional Fund expenses, (iii) 

transferring Fund Components and cash 

in exchange for Baskets surrendered for 

redemption (subject to obtaining 

regulatory approval from the 

Commission and approval of the 

Manager), (iv) causing the Manager to 

sell Fund Components on the 

termination of the Fund, and (v) 

engaging in all administrative and 

security procedures necessary to 

accomplish such activities in 

accordance with the provisions of the 

LLC Agreement, the Custodian 

Agreement, the Index License 

Agreement, and the Participant 

Agreements (each as defined below).15

The Fund will not be actively 

managed.16 The Fund will not take any 

actions to take advantage, or mitigate, 

the impacts of volatility in the prices of 

the Fund Components. 

Investment Objective 

According to the Annual Report, and 

as further described below, the Fund’s 

investment objective is for the value of 

the Shares (based on net asset value 

(‘‘NAV’’) per Share) to reflect the value 

of the Fund Components held by the 

Fund, as determined by reference to 

their Digital Asset Reference Rates and 

weightings within the Fund, less the 

Fund’s expenses and other liabilities. 

While an investment in the Shares is 

not a direct investment in the Fund 

Components, the Shares are designed to 

provide investors with a cost-effective 

and convenient way to gain investment 

exposure to the digital assets held by the 

Fund. Generally speaking, a substantial 

direct investment in the Fund 

Components may require expensive and 

sometimes complicated arrangements in 

connection with the acquisition, 

security and safekeeping of the Fund 

Components and may involve the 

payment of substantial fees to acquire 

such Fund Components from third-party 

facilitators through cash payments of 

U.S. dollars. Because the value of the 

Shares is correlated with the value of 

Fund Components held by the Fund, it 

is important to understand the 

investment attributes of, and the market 

for, the Fund Components. 

The Fund uses the Digital Asset 

Reference Rate of each Fund Component 

to calculate its NAV, which is the 

aggregate value, expressed in U.S. 

dollars, of the Fund’s assets, less the 

U.S. dollar value of the Fund’s expenses 

and other liabilities calculated in the 

manner set forth under ‘‘Valuation of 

Fund Components and Determination of 

NAV.’’ ‘‘NAV per Share’’ is calculated 

by dividing NAV by the number of 

Shares then outstanding. 

Valuation of the Digital Assets and 

Determination of NAV 

The following is a description of the 

material terms of the LLC Agreement as 

it relates to valuation of the Fund digital 

assets and the NAV calculations.17

At 4:00 p.m., New York time, on each 

business day or as soon thereafter as 

practicable, the Manager will evaluate 

the digital assets held by the Fund and 

calculate and publish the NAV of the 

Fund. To calculate the NAV, the 

Manager will: 

1. For each Fund Component then 

held by the Fund: 

a. Determine the Digital Asset 

Reference Rate for the Fund Component 

as of such business day; 

b. Multiply the Digital Asset 

Reference Rate by the aggregate number 

of tokens of the Fund Component held 

by the Fund as of 4:00 p.m., New York 

time, on the immediately preceding 

business day; 

c. Add the U.S. dollar value of the 

number of tokens of the Fund 

Component receivable under pending 

creation orders, if any, as calculated by 

multiplying the applicable Fund 

Component Basket Amount 18 by the 

applicable Digital Asset Reference Rate, 

and multiplying the result by the 

number of Baskets pending under such 

pending creation orders; and 

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

number of tokens of the Fund 

Component to be distributed under 

pending redemption orders, if any, as 

calculated by multiplying the applicable 

Fund Component Basket Amount by the 

applicable Digital Asset Reference Rate, 

and multiplying the result by the 

number of Baskets pending under such 

pending redemption orders; 19

2. Calculate the sum of the resulting 

U.S. dollar values for all Fund 

Components then held by the Fund, as 

determined pursuant to paragraph 1 

above; 

3. Add (i) the amount of U.S. dollars 

then held by the Fund plus (ii) the 

amount of any U.S. dollars to be 

received by the Fund in connection 

with any pending creations; 

4. Subtract the amount of any U.S. 

dollars to be distributed under pending 

redemption orders; 

5. Subtract the U.S. dollar amount of 

accrued and unpaid Additional Fund 

Expenses, if any; 20


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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. 

21The description of the Fund Components in 

this section, which reflects the Fund Components 

as of the date of this filing, was provided by the 

Manager and is based on the Annual Report. 

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

accrued and unpaid Manager’s Fee as of 

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

immediately preceding business day 

(the amount derived from steps 1 

through 7, the ‘‘NAV Fee Basis 

Amount’’); and 

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

accrued and unpaid Manager’s Fee that 

accrues for such business day, as 

calculated based on the NAV Fee Basis 

Amount for such business day. 

Notwithstanding the foregoing, in the 

event that the Manager determines that 

the primary methodology used to 

determine any of the Digital Asset 

Reference Rates is not an appropriate 

basis for valuation of the Fund’s digital 

assets, the Manager will utilize the 

cascading set of rules as described in 

‘‘Fund Valuation of Fund Components’’ 

below. 

Background on Fund Components 21

Bitcoin and the Bitcoin Network 

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 that trade Bitcoin or in 

individual end-user-to-end-user 

transactions under a barter system. 

The Bitcoin network was initially 

contemplated in a white paper that also 

described Bitcoin and the operating 

software to govern the Bitcoin network. 

The white paper was purportedly 

authored by Satoshi Nakamoto. 

However, no individual with that name 

has been reliably identified as Bitcoin’s 

creator, and the general consensus is 

that the name is a pseudonym for the 

actual inventor or inventors. The first 

Bitcoins were created in 2009 after 

Nakamoto released the Bitcoin network 

source code (the software and protocol 

that created and launched the Bitcoin 

network). The Bitcoin network has been 

under active development since that 

time by a group of engineers known as 

core developers. The core developers 

are able to access, and can alter, the 

Bitcoin network source code and, as a 

result, they are responsible for quasiofficial releases of updates and other 

changes to the Bitcoin network’s source 

code. The release of updates to the 

Bitcoin network’s source code does not 

guarantee that the updates will be 

automatically adopted. Users and 

miners must accept any changes made 

to the Bitcoin source code by 

downloading the proposed modification 

of the Bitcoin network’s source code. A 

modification of the Bitcoin network’s 

source code is effective only with 

respect to the Bitcoin users and miners 

that download it. If a modification is 

accepted by only a percentage of users 

and miners, a division in the Bitcoin 

network will occur such that one 

network will run the pre-modification 

source code and the other network will 

run the modified source code. Such a 

division is known as a ‘‘fork.’’ 

Core development of the Bitcoin 

network source code has increasingly 

focused on modifications of the Bitcoin 

network protocol to increase speed and 

scalability and also allow for nonfinancial, next generation uses. For 

example, following the recent activation 

of Segregated Witness on the Bitcoin 

network, an alpha version of the 

Lightning network was released. The 

Lightning network is an open-source 

decentralized network that enables 

instant off-blockchain transfers of the 

ownership of Bitcoin without the need 

of a trusted third party. The system 

utilizes bidirectional payment channels 

that consist of multi-signature 

addresses. One on-blockchain 

transaction is needed to open a channel 

and another on-blockchain transaction 

can close the channel. Once a channel 

is open, value can be transferred 

instantly between counterparties who 

are engaging in real Bitcoin transactions 

without broadcasting them to the 

Bitcoin network. New transactions will 

replace previous transactions and the 

counterparties will store everything 

locally as long as the channel stays open 

to increase transaction throughput and 

reduce computational burden on the 

Bitcoin network. Other efforts include 

increased use of smart contracts and 

distributed registers built into, built 

atop or pegged alongside the Bitcoin 

blockchain. For example, the white 

paper for Blockstream, an organization 

that includes core developer Pieter 

Wuille, calls for the use of ‘‘pegged 

sidechains’’ to develop programming 

environments that are built within 

Bitcoin blockchain ledgers that can 

interact with and rely on the security of 

the Bitcoin network and the Bitcoin 

blockchain, while remaining 

independent from them. Open-source 

projects such as RSK are a manifestation 

of this concept and seek to create the 

first open-source, smart contract 

platform built on the Bitcoin blockchain 

to enable automated, condition-based 

payments with increased speed and 

scalability. The Fund’s activities will 

not directly relate to such projects, 

though such projects may utilize Bitcoin 

as tokens for the facilitation of their 

non-financial uses, thereby potentially 

increasing demand for Bitcoin and the 

utility of the Bitcoin network as a 

whole. Conversely, projects that operate 

and are built within the blockchain may 

increase the data flow on the Bitcoin 

network and could either ‘‘bloat’’ the 

size of the Bitcoin blockchain or slow 

confirmation times. At this time, such 

projects remain in early stages and have 

not been materially integrated into the 

Bitcoin blockchain or the Bitcoin 

network. 

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 3.125 

Bitcoin per block and this is expected to 

decrease by half to become 1.5625 

Bitcoin after the next 210,000 blocks 

have entered the Bitcoin Network, 

which is expected to be mid-2028. 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 

June 30, 2024, approximately 19.7 

million Bitcoins were outstanding and 

the date when the 21 million Bitcoin 

limitation will be reached is estimated 

to be the year 2140. 

Ether and the Ethereum Network 

Ether is a digital asset that is created 

and transmitted through the operations 

of the peer-to-peer ‘‘Ethereum 

Network,’’ a decentralized network of 

computers that operates on 

cryptographic protocols. No single 

entity owns or operates the Ethereum 

Network, the infrastructure of which is 

collectively maintained by a 

decentralized user base. The Ethereum 

Network allows people to exchange 

tokens of value, called Ether, which are 

recorded on a public transaction ledger 


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22A ‘‘Digital Asset Market’’ is a ‘‘Brokered 

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

Market’’ or ‘‘Exchange Market’’ (referred to as 

‘‘Trading Platform Markets’’ in this proposal), 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 digital assets, 

which consists of transactions on electronic Digital 

Asset Trading Platforms. A ‘‘Digital Asset Trading 

Platform’’ is an electronic marketplace where 

trading platform participants may trade, buy and 

sell digital assets 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. 

23 DeFiLlama, ‘‘Ethereum Total Value Locked,’’ 

https://defillama.com/chain/Ethereum. 

24Neither the Fund, nor the Manager, nor the 

Custodian, nor any other person associated with the 

Fund will, directly or indirectly, engage in action 

where any portion of the Fund’s Fund Components 

becomes subject to proof-of-stake validation or is 

used to earn additional Fund Components or 

generate income or other earnings. 

known as a blockchain. Ether can be 

used to pay for goods and services, 

including computational power on the 

Ethereum Network, or it can be 

converted to fiat currencies, such as the 

U.S. dollar, at rates determined on 

‘‘Digital Asset Markets’’ 22 or in 

individual end-user-to-end-user 

transactions under a barter system. 

Furthermore, the Ethereum Network 

also allows users to write and 

implement smart contracts—that is, 

general-purpose code that executes on 

every computer in the network and can 

instruct the transmission of information 

and value based on a sophisticated set 

of logical conditions. Using smart 

contracts, users can create markets, store 

registries of debts or promises, represent 

the ownership of property, move funds 

in accordance with conditional 

instructions and create digital assets 

other than Ether on the Ethereum 

Network. Smart contract operations are 

executed on the Ethereum blockchain in 

exchange for payment of Ether. The 

Ethereum Network is one of a number 

of projects intended to expand 

blockchain use beyond just a peer-topeer money system. 

The Ethereum Network went live on 

July 30, 2015. 

Smart Contracts and Development on 

the Ethereum Network 

Smart contracts are programs that run 

on a blockchain that can execute 

automatically when certain conditions 

are met. Smart contracts facilitate the 

exchange of anything representative of 

value, such as money, information, 

property, or voting rights. Using smart 

contracts, users can send or receive 

digital assets, create markets, store 

registries of debts or promises, represent 

ownership of property or a company, 

move funds in accordance with 

conditional instructions and create new 

digital assets. 

Development on the Ethereum 

Network involves building more 

complex tools on top of smart contracts, 

such as decentralized apps (‘‘DApps’’); 

organizations that are autonomous, 

known as decentralized autonomous 

organizations (‘‘DAOs’’); and entirely 

new decentralized networks. For 

example, a company that distributes 

charitable donations on behalf of users 

could hold donated funds in smart 

contracts that are paid to charities only 

if the charity satisfies certain predefined conditions. 

Moreover, the Ethereum Network has 

also been used as a platform for creating 

new digital assets and conducting their 

associated initial coin offerings. As of 

March 31, 2024, a majority of digital 

assets were built on the Ethereum 

Network, with such assets representing 

a significant amount of the total market 

value of all digital assets. 

More recently, the Ethereum Network 

has been used for decentralized finance 

(‘‘DeFi’’) or open finance platforms, 

which seek to democratize access to 

financial services, such as borrowing, 

lending, custody, trading, derivatives 

and insurance, by removing third-party 

intermediaries. DeFi can allow users to 

lend and earn interest on their digital 

assets, exchange one digital asset for 

another and create derivative digital 

assets such as stablecoins, which are 

digital assets pegged to a reserve asset 

such as fiat currency. Over the course of 

2023, between $20 billion and $30 

billion worth of digital assets were 

locked up as collateral on DeFi 

platforms on the Ethereum Network.23

SOL and the Solana Network 

The Solana protocol introduced the 

Proof-of-History (‘‘PoH’’) consensus 

mechanism as an alternative to Proof-ofStake (‘‘PoS’’) blockchains like 

Ethereum and Proof-of-Work (‘‘PoW’’) 

blockchains like Bitcoin.24 PoH is a 

consensus mechanism that 

automatically orders on-chain 

transactions by creating a historical 

record that proves an event has occurred 

at a specific moment in time. PoH is 

intended to provide a transaction 

processing speed and capacity 

advantage over traditional PoW and PoS 

networks, which rely on sequential 

production of blocks and can lead to 

delays caused by validator 

confirmations. 

The Solana protocol was first 

conceived by Anatoly Yakovenko in a 

2017 whitepaper. Development of the 

Solana network is overseen by the 

Solana Foundation, a Swiss non-profit 

organization, and Solana Labs, Inc., a 

Delaware corporation, which 

administered the original network 

launch and token distribution. Smart 

contract operations are executed on the 

Solana blockchain in exchange for 

payment of SOL. 

XRP and the XRP Network 

XRP is a digital asset that was created 

by Chris Larsen, Jed McCaleb, Arthur 

Britto and David Schwartz (the ‘‘XRP 

Creators’’) in 2012. Built out of the 

frustrations of Bitcoin’s utility for 

payments, the XRP ledger (the ledger to 

which XRP is native) is designed to be 

a global real-time payment and 

settlement system. The XRP Creators 

developed this unique digital asset to 

solve the scalability concerns that they 

believed were inherent in the structure 

of Bitcoin. In particular, XRP was 

created to improve the efficiency of 

payments. To this end, the open source 

code (available at https://github.com/ 

ripple/rippled/) was designed to 

maximize speed, scalability, and 

stability. 

For example, the XRP ledger can 

accommodate 4,400 transactions per 

second. This is, in part, because XRP is 

not mined like Bitcoin, but is designed 

for the ledgers to close in seconds based 

on a system of consensus. Further, 

because of the consensus methodology 

underlying the XRP design, network 

transaction fees are substantially lower 

than Bitcoin, typically less than $0.01. 

Given the unique qualities of XRP and 

the natural suitability of this digital 

asset to solve the friction experience 

with payments, the XRP Creators started 

a company, calling it Ripple, to further 

develop the ecosystem around XRP and 

build software solutions to address the 

friction in sending, processing, and 

sourcing liquidity for global payments. 

Thus, the company, Ripple, began as, 

and continues to be, a payments 

software company. Today, Ripple is 

focused on designing and deploying 

state-of-the-art and industry-leading 

software to enable banks and financial 

institutions to more easily effect crossborder payments. For maximum 

efficiency, Ripple’s software can 

integrate XRP to solve liquidity and 

value transfer challenges. 

AVAX and the Avalanche Network 

AVAX is a digital asset that is created 

and transmitted through the operations 

of the peer-to-peer Avalanche network, 

a decentralized network of computers 

that operates on cryptographic 

protocols. No single entity owns or 

operates the Avalanche network, the 

infrastructure of which is collectively 


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maintained by a decentralized user base. 

The Avalanche network allows people 

to exchange tokens of value, called 

AVAX, which are recorded on a public 

transaction ledger known as a 

blockchain. AVAX can be used to pay 

for goods and services, including 

computational power on the Avalanche 

network, or it can be converted to fiat 

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

rates determined on digital asset 

exchanges or in individual end-user-toend-user transactions under a barter 

system. Furthermore, the Avalanche 

network was designed to allow users to 

write and implement smart contracts— 

that is, general-purpose code that 

executes on every computer in the 

network and can instruct the 

transmission of information and value 

based on a sophisticated set of logical 

conditions. Using smart contracts, users 

can create markets, store registries of 

debts or promises, represent the 

ownership of property, move funds in 

accordance with conditional 

instructions and create digital assets 

other than AVAX on the Avalanche 

network. Smart contract operations are 

executed on the Avalanche blockchain 

in exchange for payment of AVAX. Like 

the Ethereum Network, the Avalanche 

network is one of a number of projects 

intended to expand blockchain use 

beyond just a peer-to-peer money 

system. 

The Avalanche network uses a 

variation of a proof-of-stake consensus 

protocol. Unlike with other blockchains, 

whereby every validator node validates 

every transaction, each Avalanche 

validator is only required to validate 

what is known as the ‘‘Primary 

Network.’’ The Primary Network in turn 

secures the following three blockchains, 

which are each dedicated to a specific 

use and, together with the Primary 

Network, comprise the core Avalanche 

infrastructure: the Exchange (X) Chain, 

on which AVAX and other assets exist 

and are traded; the Platform (P) Chain, 

which coordinates validators and 

creates subnets (as defined below); and 

the Contract (C) Chain, which executes 

smart contracts. 

Whereas all validators are required to 

validate the Primary Network and the 

three blockchains described above, 

active validators of the Primary Network 

may additionally elect to validate 

certain non-core blockchains (i.e., 

blockchains that are not fundamental to 

or necessary for the Avalanche Network 

to operate) of the Avalanche Platform. 

Avalanche uses a dynamic set of 

validators to validate the non-core 

blockchains (each such set of validators, 

a ‘‘subnet’’). This integration 

functionality is intended to allow 

Avalanche users to tokenize and 

transact in any digital asset. Avalanche 

is reportedly one of the fastest networks 

when measured by transaction time-tofinality at relatively low transaction 

costs. The Avalanche Network was 

founded by Professor Emin Gu ̈n Sirer, a 

professor at Cornell University, and 

launched in September 2020. 

Custody of the Fund Components 

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 Fund, including the Fund 

itself. 

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 

Fund’s Fund Components on the Fund’s 

behalf. The Digital Asset Account uses 

offline storage, or ‘‘cold storage,’’ 

mechanisms to secure the Fund’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 ‘‘air-gapped’’) 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 

Fund’s private keys (which, as noted 

above, facilitate the transfer of 

ownership or control of the Fund 

Components) in accordance with the 

terms and provisions of the custodian 

agreement by and between the 

Custodian, the Manager and the Fund 

(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 

Custodian must be combined to 

reconstitute the private key to sign any 

transaction in order to transfer the 

Fund’s assets. Private key shards are 

distributed geographically in secure 

vaults around the world, including in 

the United States. 


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25 ‘‘Authorized Participant’’ has the meaning set 

forth in ‘‘Creation and Redemption of Shares’’ 

below. 

26Bitcoin market share is calculated using trading 

volume (in Bitcoins) for certain Digital Asset 

Trading Platforms, including Coinbase, LMAX 

Digital and Crypto.com, as well as certain other 

large U.S.-dollar denominated Digital Asset Trading 

Platforms that were not included in the Digital 

Asset Reference Rate as of June 30, 2024, including 

Binance.US (data included from April 1, 2020 

through July 14, 2023), Bitfinex, Bitflyer (data 

included from December 24, 2018), Bitstamp, 

Bittrex (data included from July 31, 2018 through 

December 3, 2023), Bullish (data included from 

March 31,2024), Cboe Digital (data included from 

October 1, 2020 through December 31, 2024), 

FTX.US (data included from April 1, 2022 through 

November 12, 2022), Gemini, itBit, Kraken, 

LakeBTC (data included from from January 27, 2019 

through May 6, 2021), HitBTC (data included from 

April 1, 2019 through March 31, 2020) and OKCoin 

(data included since inception through December 

31, 2022). Ether market share is calculated using 

trading volume (in Ether) for certain Digital Asset 

Trading Platforms, including Coinbase, LMAX 

Digital and Crypto.com, as well as certain other 

large U.S.-dollar denominated Digital Asset Trading 

Platforms that were not included in the Digital 

Asset Reference Rate as of June 30, 2024, including 

Bitstamp, Binance.US (data included from April 1, 

2020 through October 14, 2023), Bittrex (data 

included from July 31, 2018 through December 3, 

2023), Bitfinex, Bitflyer (data included from 

November 13, 2022), Cboe Digital (data included 

from October 1, 2020 through December 31, 2023), 

Gemini, HitBTC (data included from June 13, 2019 

through March 31, 2020), itBit (data included from 

December 27, 2018), Kraken, OKCoin (data 

included from December 25, 2018 through 

December 31, 2022) and FTX.US (data included 

from July 1, 2021 through November 12, 2022). SOL 

market share is calculated using trading volume (in 

SOL) provided by the Reference Rate Provider for 

certain Digital Asset Exchanges, including 

Coinbase, Kraken and LMAX Digital, as well as 

certain other large U.S. dollar-denominated Digital 

Asset Trading Platforms that were not included in 

the Digital Asset Reference Rate as of June 30, 2023, 

including Binance.US (data included from October 

1, 2021 through June 13, 2023), Bitfinex, Bitstamp 

(data included from January 1, 2023), Bittrex (data 

included from January 1, 2023 through December 3, 

2023), Crypto.com (data included from October 31, 

2022), Gate.io (data included from January 1, 2023 

through July 2, 2023), Gemini (data included from 

March 1, 2022), itBit (data included from November 

6, 2022), OKCoin (data included from March 22, 

2022 through December 8, 2022), and FTX.US (data 

included from October 1, 2021 through November 

10, 2022). 

As a result, if any one secure vault is 

ever compromised, this event will have 

no impact on the ability of the Fund 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 Fund’s 

assets. 

Transfers of Fund Components to the 

Digital Asset Account will be available 

to the Fund once processed on the 

relevant blockchain. 

Subject to obtaining regulatory 

approval to operate a redemption 

program and authorization of the 

Manager, the process of accessing and 

withdrawing Fund Components from 

the Fund to redeem a Basket by an 

Authorized Participant 25 will follow the 

same general procedure as transferring 

Fund Components to the Fund to create 

a Basket by an Authorized Participant, 

only in reverse. 

The Manager will maintain ownership 

and control of the Fund Components in 

a manner consistent with good delivery 

requirements for spot commodity 

transactions. 

Fund Component Value 

Digital Asset Trading Platform 

Valuation 

According to the Annual Report, the 

value of digital assets is determined by 

the value that various market 

participants place on digital assets 

through their transactions. The most 

common means of determining the 

value of a digital asset is by surveying 

one or more Digital Asset Trading 

Platforms where the digital asset is 

traded publicly and transparently (e.g., 

Coinbase, Kraken, LMAX Digital, 

Crypto.com, and Bitstamp). 

Additionally, there are over-the-counter 

dealers or market makers that transact in 

digital assets. 

Digital Asset Trading Platform Public 

Market Data 

On each online Digital Asset Trading 

Platform, digital assets are traded with 

publicly disclosed valuations for each 

executed trade, measured by one or 

more fiat currencies such as the U.S. 

dollar or Euro, or by the digital asset 

Bitcoin. Over-the-counter dealers or 

market makers do not typically disclose 

their trade data. 

As of June 30, 2024, the Digital Asset 

Trading Platforms included in the 

Digital Asset Reference Rates were 

Coinbase, Kraken, LMAX Digital, 

Crypto.com, and Bitstamp. As further 

described below, the Manager and the 

Fund 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-your-customer (‘‘KYC’’) and antimoney-laundering (‘‘AML’’) regulations. 

Bitstamp: A U.K.-based trading 

platform registered as a money services 

business (‘‘MSB’’) with the U.S. 

Department of the 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, as well as a 

money transmitter in various U.S. states. 

Coinbase: A U.S.-based trading 

platform registered as an MSB with 

FinCEN and licensed as a virtual 

currency business under the NYDFS 

BitLicense, as well as a money 

transmitter in various U.S. states. 

Crypto.com: A Singapore-based 

trading platform registered as an MSB 

with FinCEN and licensed as a money 

transmitter in various U.S. states. 

Crypto.com does not hold a BitLicense. 

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 buying and 

selling activity and provide the most 

data with respect to prevailing 

valuations of the Fund Components. 

These trading platforms include 

established trading platforms such as 

those included in the Digital Asset 

Reference Rates, which provide a 

number of options for buying and 

selling the Fund Components. The 

below tables reflect the trading volume 

in each Fund Component and market 

share 26 of the Fund Component-U.S. 

dollar trading pairs of each of the Digital 

Asset Trading Platforms included in the 

Digital Asset Reference Rates as of June 

30, 2024 (collectively, ‘‘Constituent 

Trading Platforms’’), using data reported 

by the Reference Rate Provider from 

February 1, 2018 (the inception of the 

Fund’s operations) to June 30, 2024: 

BITCOIN TRADING PLATFORMS INCLUDED IN THE DIGITAL ASSET

Reference rate as of June 30, 2024 Volume 

(Bitcoin) 

Market 

share 

(%) 

Coinbase ............................................................................................................................................................ 37,581,691 30.39 


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BITCOIN TRADING PLATFORMS INCLUDED IN THE DIGITAL ASSET—Continued 

Reference rate as of June 30, 2024 Volume 

(Bitcoin) 

Market 

share 

(%) 

LMAX Digital ...................................................................................................................................................... 9,763,031 7.90 

Crypto.com ......................................................................................................................................................... 1,403,569 1.14 

Total Bitcoin-U.S. Dollar trading pair .......................................................................................................... 48,748,291 39.43 

ETHER TRADING PLATFORMS INCLUDED IN THE DIGITAL ASSET

Reference rate as of June 30, 2024 Volume 

(Ether) 

Market 

share 

(%) 

Coinbase ............................................................................................................................................................ 422,567,767 34.84 

LMAX Digital ...................................................................................................................................................... 73,620,833 6.07 

Crypto.com ......................................................................................................................................................... 34,980,599 2.88 

Total Ether-U.S. Dollar trading pair ............................................................................................................ 531,169,199 43.79 

SOL TRADING PLATFORMS INCLUDED IN THE DIGITAL ASSET

Reference rate as of June 30, 2024 Volume 

(SOL) 

Market 

share 

(%) 

Coinbase ............................................................................................................................................................ 1,696,262,917 66.32 

Kraken ................................................................................................................................................................ 405,019,540 15.83 

LMAX Digital ...................................................................................................................................................... 25,673,612 1.00 

Total SOL–U.S. Dollar trading pair ............................................................................................................ 2,126,956,069 83.15 

AVAX TRADING PLATFORMS INCLUDED IN THE DIGITAL ASSET

Reference rate as of June 30, 2024 Volume 

(AVAX) 

Market 

share 

(%) 

Coinbase ............................................................................................................................................................ 769,187,967 80.19 

Kraken ................................................................................................................................................................ 79,459,277 8.28 

Crypto.com ......................................................................................................................................................... 15,247,633 1.59 

Total AVAX–U.S. Dollar trading pair .......................................................................................................... 863,894,877 90.06 

XRP TRADING PLATFORMS INCLUDED IN THE DIGITAL ASSET

Reference rate as of June 30, 2024 Volume 

(XRP) 

Market 

share 

(%) 

Bitstamp ............................................................................................................................................................. 106,620,277,322 35.85 

Coinbase ............................................................................................................................................................ 72,598,818,507 24.41 

Kraken ................................................................................................................................................................ 37,254,406,142 12.53 

Total XRP–U.S. Dollar trading pair ............................................................................................................ 216,473,501,971 72.79 

The domicile, regulation, and legal 

compliance of the Digital Asset Trading 

Platforms included in the Digital Asset 

Reference Rates vary. Information 

regarding each Digital Asset Trading 

Platform may be found, where available, 

on the websites for such Digital Asset 

Trading Platforms, among other places. 

The Index and the Digital Asset 

Reference Rates 

Since July 1, 2022, the digital assets 

held by the Fund have consisted of the 

digital assets that make up the CoinDesk 

Large Cap Select Index (the ‘‘DLCS’’ or 

the ‘‘Index’’), as rebalanced from time to 

time, subject to the Manager’s discretion 

to exclude individual digital assets in 

certain rules-based circumstances as 

further described in the ‘‘Index 

Components Compared to Fund 

Components—Exclusion Criteria’’ 

below. The DLCS is designed and 

managed by the Index Provider. 

The digital assets that make up the 

DLCS (the ‘‘Index Components’’) are 

drawn from the universe (the ‘‘Index 

Universe’’) of investable digital assets 

meeting the following criteria: (i) the 

digital asset must be ranked in the top 

250 in the Index Provider’s Digital Asset 


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27The Manager notes that, as of the date of this 

filing, the Fund Components that meet this 

standard are Bitcoin and Ether, which make up 

approximately 76% and 18% of the Index, 

respectively. 

Classification Standard (‘‘DACS’’) 

report; (ii) custodian services for the 

digital asset must be available from 

Coinbase Custody, a division of 

Coinbase Global Inc., and must be 

accessible to U.S. investors; (iii) the 

digital asset must not be a stablecoin or 

categorized as a meme coin as 

determined by the Index Provider; and 

(iv) the digital asset must have been 

listed on a Constituent Trading Platform 

for a minimum of 30 days leading up to 

the Index Rebalancing Period (as 

defined below). 

The Index Provider applies market 

capitalization, liquidity and data 

availability criteria to the digital assets 

in the Index Universe in order to arrive 

at between five and ten digital assets 

that, in the Index Provider’s judgment, 

represent a diversified benchmark for 

the largest and most liquid digital assets 

in the digital asset market (the ‘‘Large 

Cap sector’’), rather than exposure to all 

digital assets in the Index Universe. The 

respective weightings of the Index 

Components within the DLCS are 

determined by the Index Provider based 

on market capitalization criteria and are 

referred to as the ‘‘Index Weightings.’’ 

The process followed by the Index 

Provider to determine the Index 

Universe, the Index Components and 

their respective Index Weightings is 

referred to as the ‘‘DLCS Methodology.’’ 

The Fund seeks to (i) provide large 

cap coverage of the digital asset market; 

(ii) minimize transaction costs through 

low turnover of the Fund’s portfolio; 

and (iii) create a portfolio that could be 

replicated through direct purchases in 

the Digital Asset Market. Because Index 

Components target the Large Cap sector 

and are included in the DLCS in 

accordance with market capitalization 

and liquidity criteria, as of June 30, 

2024, the DLCS covered approximately 

83% of the market capitalization of the 

entire digital asset market, excluding 

stablecoins and meme coins, based on 

data provided by the Index Provider 

calculated using data from 

CoinMarketCap.com. Additionally, as of 

June 30, 2024, the DLCS covered 

approximately 92% of the market 

capitalization of the Index Universe. 

The Fund Components consist of the 

Index Components except that the 

Manager may determine to exclude a 

particular Index Component in its 

discretion under certain rules-based 

circumstances (including to comply 

with the requirements of Rule 8.800–E). 

The weightings of each Fund 

Component (the ‘‘Weightings’’) are 

generally expected to be the same as the 

Index Weightings except when the 

Manager determines to exclude one or 

more digital assets from the Fund 

Components, in which case the 

Weightings are generally expected to be 

calculated proportionally to the 

respective Index Weightings for the 

remaining Index Components. The Fund 

uses the DLCS Methodology, described 

further below, to construct its portfolio. 

The Manager will ensure that the 

Fund’s holdings are consistent with the 

requirements of Rule 8.800–E(c)(1), 

including by working with the 

Reference Rate Provider to modify the 

DLCS such that at least 90% of the 

Weightings will consist of commodities 

and/or digital assets concerning which 

the Exchange may obtain information 

via the ISG from other members of the 

ISG or via CSSA.27

Eligibility and Weighting 

Under the DLCS Methodology and 

subject to the below, a digital asset 

included in the Index Universe will 

generally be eligible for inclusion in the 

DLCS as an Index Component, and thus 

the Fund’s portfolio as a Fund 

Component, if it satisfies market 

capitalization, liquidity and data 

availability metrics determined by the 

Index Provider. Digital assets will be 

included in the DLCS on a market 

capitalization-weighted basis. For 

example, a digital asset with a larger 

market capitalization will have a higher 

representation in the DLCS, and thus 

the Fund’s portfolio (unless the Manager 

excludes the digital asset from the 

Fund). Market capitalization refers to a 

digital asset’s market value, as 

determined by multiplying the number 

of tokens of such digital asset in 

circulation by the market price of a 

token of such digital asset. The market 

price per token of a Fund Component 

will be determined by reference to the 

applicable Digital Asset Reference Rate. 

The market capitalization of any digital 

assets not in the DLCS, and therefore 

not held by the Fund, will be 

determined based on data that the Index 

Provider obtains directly from trading 

platforms and other service providers. 

Because the Fund creates Shares in 

exchange for Fund Components on a 

daily basis, the market capitalization of 

each Fund Component is calculated, 

and its Weighting therefore fluctuates, 

daily in accordance with changes in the 

market price of such Fund Components. 

The DLCS, and therefore the Fund, is 

rebalanced on a quarterly basis 

according to the DLCS Methodology 

during a period beginning 14 days 

before the second business day of each 

January, April, July, and October (each 

such period, an ‘‘Index Rebalancing 

Period’’). 

Inclusion of New Fund Components 

In order for a new digital asset to 

qualify for inclusion in the DLCS, and 

thus the Fund’s portfolio during a 

period during which the Manager 

reviews for rebalancing the Fund’s 

portfolio in accordance with the policies 

and procedures set forth in the Annual 

Report (the ‘‘Fund Rebalancing 

Period’’), it must be included in the 

Index Universe and be among the 20 

highest ranked digital assets in the 

Index Universe by market capitalization. 

Such 20 digital assets are referred to as 

the ‘‘Selection Universe.’’ In order for a 

digital asset in the Selection Universe to 

be included in the Fund’s portfolio 

during a Fund Rebalancing Period, such 

digital asset must (i) have a current 

market capitalization that is at least 1.2 

times the median current market 

capitalization of the Selection Universe; 

(ii) have a median daily value traded 

(‘‘MDVT’’) for the Index Rebalancing 

Period that is at least 1.2 times the 

MDVT of the Selection Universe for the 

Index Rebalancing Period; (iii) trade on 

at least three Constituent Trading 

Platforms as of the first day of the Index 

Rebalancing Period; (iv) have been 

included in the Selection Universe 

during the Index Rebalancing Period (as 

defined below) for the prior quarter; (v) 

the inclusion of such new digital asset 

will not result in the Fund holding more 

than ten Fund Components; and (vi) 

such digital asset must have a minimum 

weight of 1.0% (collectively, the ‘‘Index 

Inclusion Criteria’’). In the event that 

more than ten digital assets meet the 

Index Inclusion Criteria, the qualifying 

digital assets will be ranked by current 

market capitalizations. Those ranked 

below the top ten will be excluded. 

The Index Provider may include a 

digital asset that does not meet the 

Index Inclusion Criteria in the DLCS if 

the Index Components no longer 

collectively meet the five constituent 

minimum, at which point the Index 

Provider would first relax the market 

capitalization and liquidity 

requirements included in the Index 

Inclusion Criteria to those included in 

the ‘‘Removal Criteria’’ described below 

and include the next largest digital 

assets by current market capitalization 

that met such requirements, until there 

were five Index Components. If after 

relaxing such requirements, there were 

still fewer than five Index Components, 

the Index Provider would further relax 

the requirements and include the next 

largest digital assets by current market 


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28The Manager has not previously sought to 

include a new Fund Component that does not meet 

the Index Inclusion Criteria. 

29For example, if a digital asset was not included 

in the Selection Universe, failed to meet the 

thresholds in market capitalization and liquidity 

described above, or had a weight in the Index of 

less than 0.8%, such digital asset would be removed 

from the DLCS. However, if its removal would 

result in the DLCS holding less than five Index 

Components, it would not be removed. 

30The Manager will determine whether a 

particular digital asset that is included or eligible 

for inclusion in the Fund is a security for purposes 

of the federal securities laws by considering a 

number of factors, including the various definitions 

of ‘‘security’’ under the federal securities laws and 

federal court decisions interpreting elements of 

these definitions, such as the U.S. Supreme Court’s 

decisions in the Howey and Reves cases, as well as 

reports, orders, press releases, public statements 

and speeches by the Commission and its staff 

providing guidance on when a digital asset may be 

a security for purposes of the federal securities 

laws. The Manager does not intend to permit the 

Fund to hold any digital asset that the Manager 

determines is a security under the federal securities 

laws, whether that determination is initially made 

by the Manager itself, or because a federal court 

upholds an allegation that a digital asset is a 

security. 

31With respect to the application of Rule 10A– 

3 (17 CFR 240.10A–3) under the Act, the Fund 

relies on the exemption contained in Rule 10A– 

3(c)(7). 

32 ‘‘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. 

33Trading platforms with programmatic trading 

offer traders an application programming interface 

that permits trading by sending programmed 

commands to the trading platform. 

capitalization until there were five 

Index Components.28

Removal of Existing Fund Components 

During each Index Rebalancing 

Period, a digital asset will be removed 

as an Index Component from the DLCS, 

and therefore removed from the Fund if 

it is also a Fund Component, if (i) it is 

not included in the Selection Universe; 

(ii) it fails to be listed on at least three 

Constituent Trading Platforms; (iii) it 

has a current market capitalization that 

is less than 1.0 times the median current 

market capitalization of the Selection 

Universe; (iv) it has an MDVT for the 

Index Rebalancing Period that is less 

than 1.0 times the MDVT of the 

Selection Universe for the Index 

Rebalancing Period; or (v) such digital 

asset has a weight of less than 0.8%, and 

if its removal would not result in the 

DLCS holding less than five Index 

Components (collectively, the ‘‘Removal 

Criteria’’).29

Outside of the quarterly Index 

Rebalancing Period, the Index Provider 

may remove a digital asset as an Index 

Component from the DLCS under 

extraordinary circumstances. For 

example, if an Index Component is 

determined to be a ‘‘security’’ under the 

federal securities laws by the 

Commission, a federal court or other 

U.S. government agency, or under such 

consideration by any U.S. government 

oversight agency, it would be removed 

from the DLCS at a date determined and 

announced by the Index Provider. In the 

event the Index Provider removes an 

Index Component outside of the 

quarterly rebalancing period, the 

Manager expects the Fund would 

rebalance and the relevant digital asset 

would be removed as a Fund 

Component as soon as practical. 

Index Components Compared to Fund 

Components 

The Fund Components consist of the 

Index Components except when the 

Manager determines to exclude a 

particular Index Component in view of 

one or more of the following criteria (the 

‘‘Exclusion Criteria’’), as determined in 

the sole discretion of the Manager: 

• none or few of the Authorized 

Participants or service providers has the 

ability to trade or otherwise support the 

digital asset; 

• the Manager believes, based on 

current guidance, that use or trading of 

the digital asset raises or potentially 

raises significant governmental, policy 

or regulatory concerns or is subject or 

likely subject to a specialized regulatory 

regime, such as the U.S. federal 

securities or commodities laws or 

similar laws in other significant 

jurisdictions; 30

• the digital asset’s underlying code 

contains, or may contain, significant 

flaws or vulnerabilities; or 

• there is limited or no reliable 

information regarding, or concerns over 

the intentions of, the core developers of 

the digital asset. 

The Weightings are generally 

expected to be the same as the Index 

Weightings except when one or more 

digital assets have been excluded from 

the Fund Components based on the 

Exclusion Criteria, in which case the 

Weightings are generally expected to be 

calculated proportionally to the 

respective Index Weightings for the 

remaining Index Components. 

The Manager may exclude a digital 

asset or rebalance the Weighting of an 

existing Fund Component to the extent 

its inclusion as a Fund Component or 

projected Weighting would exceed a 

threshold that could, in the Manager’s 

sole discretion, require the Fund to 

register as an investment company 

under the Investment Company Act or 

require the Manager to register as an 

investment adviser under the 

Investment Advisers Act. 

The Manager will retain discretion to 

include or exclude individual digital 

assets from the Fund Components only 

in certain rules-based circumstances, as 

described above. Accordingly, the 

Manager believes that the Fund will be 

in compliance with Rule 10A–3 31 under 

the Act, as provided by NYSE Arca Rule 

5.3–E. 

Constituent Trading Platform Selection 

According to the Annual Report, the 

Constituent Trading Platforms used to 

derive Digital Asset Reference Rates are 

selected by the Reference Rate 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 

Constituent Trading Platform, it must 

satisfy the criteria listed below (the 

‘‘Inclusion Criteria’’): 

• Sufficient USD or USDC 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; 32

• Transparent ownership including a 

publicly-owned ownership entity; 

• Publicly available language and 

policies addressing legal and regulatory 

compliance in the US, including KYC, 

AML and other policies designed to 

comply with relevant regulations that 

might apply to it; 

• Be an exchange that is licensed and 

able to service investors in one or more 

of the following jurisdictions: United 

States, United Kingdom; European 

Union; Hong Kong; or Singapore 

• 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.33

A Digital Asset Trading Platform is 

removed from the Constituent Trading 

Platform when it no longer satisfies the 

criteria for inclusion. The Reference 

Rate Provider does not currently include 

data from over-the-counter markets or 

derivatives platforms among the 

Constituent Trading Platforms. 

According to the Annual Report, overthe-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 


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34Upon entering into the Index License 

Agreement, the Manager and the Reference Rate 

Provider terminated the license agreement between 

the parties dated as of February 28, 2019. 

relative to more active markets. There is 

also a higher potential for over-thecounter transactions to not be armslength, and thus not be representative of 

a true market price. Digital asset 

derivative markets are also not currently 

included, as the markets remain 

relatively thin. While the Reference Rate 

Provider has no plans to include data 

from over-the-counter markets or 

derivative platforms at this time, the 

Reference Rate Provider will consider 

IOSCO principles for financial 

benchmarks, the management of trading 

venues of digital asset derivatives and 

the aforementioned Inclusion Criteria 

when considering whether to include 

over-the-counter or derivative platform 

data in the future. 

The Reference Rate Provider and the 

Manager have entered into the index 

license agreement, dated as of February 

1, 2022 (as amended, the ‘‘Index License 

Agreement’’), governing the Manager’s 

use of the Digital Asset Reference Rates 

that are Index Prices.34 Pursuant to the 

terms of the Index License Agreement, 

the Reference Rate Provider may adjust 

the calculation methodology for a 

Digital Asset Reference Rate without 

notice to, or consent of, the Fund or its 

shareholders. The Reference Rate 

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 

Reference Rate Provider has sole 

discretion over the determination of 

Digital Asset Reference Rates and may 

change the methodologies for 

determining the Digital Asset Reference 

Rates from time to time. Shareholders 

will be notified of any material changes 

to the calculation methodology or the 

Digital Asset Reference Rates in the 

Fund’s current reports and will be 

notified of all other changes that the 

Manager considers significant in the 

Fund’s periodic or current reports. The 

Manager will determine the materiality 

of any changes to the Digital Asset 

Reference Rates on a case-by-case basis, 

in consultation with external counsel. 

Reference Rate Provider may change 

the trading venues that are used to 

calculate a Digital Asset Reference Rate 

or otherwise change the way in which 

a Digital Asset Reference Rate is 

calculated at any time. For example, the 

Reference Rate Provider has scheduled 

quarterly reviews in which it may add 

or remove Constituent Trading 

Platforms that satisfy or fail the criteria 

described above. While the Reference 

Rate Provider is not required to 

publicize or explain the changes or to 

alert the Manager to such changes, it has 

historically notified the Fund (and other 

subscribers to the Index) of any material 

changes to the Constituent Trading 

Platforms, including any additions or 

removals of the Constituent Trading 

Platforms, in addition to issuing press 

releases in connection with the same in 

accordance with its index review and 

index change communication policies. 

The Manager will notify investors of any 

such material event by filing a current 

report on Form 8–K. Although the 

Digital Asset Reference Rate 

methodology is designed to operate 

without any manual intervention, rare 

events would justify manual 

intervention. Intervention of this kind 

would be in response to non-marketrelated 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 Reference 

Rate Provider would issue a public 

announcement through its website, API 

and other established communication 

channels with its clients. 

Determination of Digital Asset Reference 

Rates 

Since July 1, 2022, all of the Digital 

Asset Reference Rates have been 

Indicative Prices. The Indicative Price is 

calculated by multiplying the average 

price on each Constituent Trading 

Platform by the trading volume on such 

Constituent Trading Platform for the 

prior 60 minutes as of 4:00 p.m., New 

York time, multiplied by the 

Constituent Trading Platform’s 

weighting based on trading volume 

relative to the other Constituent Trading 

Platforms included in the Reference 

Rate. Each Constituent Trading Platform 

is weighted relative to its share of 

trading volume to the trading volume of 

all Constituent Trading Platform, 

meaning that price inputs from 

Constituent Trading Platforms with 

higher trading volumes will be weighted 

more heavily in calculating the 

Indicative Price than price inputs from 

Constituent Trading Platforms with 

lower trading volumes. Price and 

volume inputs are weighted as received 

with no further adjustments made to the 

weighting of each trading platform 

based on market anomalies observed on 

a Constituent Trading Platform or 

otherwise. 

For purposes of illustration, outlined 

below is an example using a limited 

number of trades. 

Venue Average price Volume Notional Weight 

(%) 

Indicative price 

contribution 

Trading Platform 1 ............................................................... 999.12 800 799,296 53.33 532.60 

Trading Platform 2 ............................................................... 997.23 500 498,615 33.33 332.25 

Trading Platform 3 ............................................................... 996.65 200 199,330 13.33 132.82 

Indicative Price ..................................................................... ........................ 1,500 1,497,241 ........................ 997.67 

The Index Provider may also use 

Index Prices as the reference rate for an 

Index Component in the future, and if 

it does so, then the Manager will use an 

Index Price for the relevant Fund 

Component. When a Digital Asset 

Reference Rate is an Index Price, the 

Reference Rate Provider applies an 

algorithm to the trade data used to 

determine the Indicative Price. Each 

Digital Asset Reference Rate’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 each 

Digital Asset Reference Rate, increasing 

the ability to execute against (i.e., 

replicate) such Digital Asset Reference 

Rate in the underlying spot markets. 

• Price-Variance Weighting: Each 

Digital Asset Reference Rate reflects 

data points that are discretely weighted 

in proportion to their variance from the 

rest of the Constituent Trading 


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35The Manager updated these rules on January 

11, 2022. 

36The valuation date is any day for which the 

value of the Fund Components in the Fund may be 

calculated utilizing the Digital Asset Reference 

Rates. 

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 

Digital Asset Reference Rate 

consequently decreases. 

• Inactivity Adjustment: Each Digital 

Asset Reference Rate 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 Reference Rate is gradually 

reduced until it is de-weighted 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 Digital 

Asset Reference Rate only includes 

executed trades in its calculation. 

Additionally, each Digital Asset 

Reference Rate only includes 

Constituent Trading Platforms that 

charge trading fees in order to attach a 

real, quantifiable cost to any 

manipulation attempts. 

The Reference Rate Provider reevaluates 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. The 

exact methodology to calculate each 

Index Price is not publicly available. 

Still, each 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. 

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 

an Index Price for a digital asset. 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 below-listed 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, assume 

the Constituent Trading Platforms used 

to calculate the Index Price of the digital 

asset are Coinbase, Kraken, LMAX 

Digital, and Bitstamp. 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: The 

price-variance weighting adjustment is a 

relative measure of each Constituent 

Trading Platform versus the cohort of 

trading platform. The further the price 

at a trading platform is from the mean 

price of the cohort, the less influence 

that trading platform’s price will have 

on the algorithm that produces the 

Index Price, as the trading platform data 

is discretely weighted in proportion to 

their variance from the rest of the 

trading platforms on a per-second basis 

and there is no minimum threshold the 

variance must meet for this adjustment 

to take place. For example, 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 (price 

variance) and reduce that specific 

Constituent Trading Platform’s 

weighting during that one-hour period, 

ensuring a reliable spot reference price 

that is unaffected by the localized event 

and that is reflective of broader market 

activity. 

Determination of Digital Asset Reference 

Rates When Indicative Prices and Index 

Prices Are Unavailable 

If the Digital Asset Reference Rate for 

a Fund Component becomes 

unavailable, or if the Manager 

determines in good faith that such 

Digital Asset Reference Rate does not 

reflect an accurate price for such Fund 

Component, then the Manager will, on 

a best efforts basis, contact the 

Reference Rate Provider to obtain the 

Digital Asset Reference Rate directly 

from the Digital Asset Reference Rate 

Provider. 

If after such contact such Digital Asset 

Reference Rate remains unavailable or 

the Manager continues to believe in 

good faith that such Digital Asset 

Reference Rate does not reflect an 

accurate price for the relevant digital 

asset, the Manager uses the following 

cascading set of rules to calculate the 

Digital Asset Reference Rates for that 

Fund Component.35 For the avoidance 

of doubt, the Manager will employ the 

below rules sequentially and in the 

order as presented below, should one or 

more specific rule(s) fail: 

1. Digital Asset Reference Rate = The 

price set by the relevant Indicative Price 

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

time, on the valuation date.36 If the 

relevant Indicative Price or Index Price 

becomes unavailable, or if the Manager 

determines in good faith that such 

Indicative Price or Index Price does not 

reflect an accurate digital asset price, 

then the Manager will, on a best efforts 

basis, contact the Reference Rate 

Provider to obtain the Digital Asset 

Reference Rate directly from the 

Reference Rate Provider. If after such 

contact such Indicative Price or Index 

Price remains unavailable or the 

Manager continues to believe in good 

faith that such Indicative Price or Index 

Price does not reflect an accurate price 

for the relevant digital asset, then the 

Manager will employ the next rule to 

determine the Digital Asset Reference 

Rate. There are no predefined criteria to 

make a good faith assessment and it will 

be made by the Manager in its sole 

discretion. 

2. Digital Asset Reference Rate = The 

price set by Coin Metrics Real-Time 

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

the valuation date (the ‘‘Secondary 

Digital Asset Reference Rate’’). The 

Secondary Reference Rate is a real-time 

reference rate price, calculated using 


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37According to the Annual Report, when a 

modification is introduced and a substantial 

majority of users and validators consent to the 

modification, the change is implemented and the 

network remains uninterrupted. However, if less 

than a substantial majority of users and validators 

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’’, 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 a 

digital asset running in parallel, yet lacking 

interchangeability, such as in July 2016 when Ether 

‘‘forked’’ into Ether and a new digital asset, Ether 

Classic. 

38The Manager will provide notice of any such 

changes in the Fund’s periodic or current reports 

and, if the Manager makes such a change other than 

on an ad hoc or temporary basis, the Exchange will 

file a proposed rule change under Section 19(b) 

with the Commission. 

39Securities Exchange Act Release No. 99306 

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

(SR–NYSEARCA–2021–90; SR–NYSEARCA–2023– 

44; SR–NYSEARCA–2023–58; SR–NASDAQ–2023– 

016; SR–NASDAQ–2023–019; SR–CboeBZX–2023– 

028; SR–CboeBZX–2023–038; SR–CboeBZX–2023– 

040; SR–CboeBZX–2023–042; SR–CboeBZX–2023– 

044; SR–CboeBZX–2023–072) (Order Granting 

Accelerated Approval of Proposed Rule Changes, as 

Modified by Amendments Thereto, to List and 

Trade Bitcoin-Based Commodity-Based Trust 

Shares and Trust Units) (the ‘‘Bitcoin ETP Approval 

Order’’). 

40Bitcoin ETP Approval Order, 89 FR 3009–11. 

41Securities Exchange Act Release No. 100224 

(May 23, 2024), 89 FR 46937 (May 30, 2024) (SR– 

NYSEARCA–2023–70; SR–NYSEARCA–2024–31; 

SRNASDAQ–2023–045; SR–CboeBZX–2023–069; 

SR–CboeBZX–2023–070; SR–CboeBZX–2023–087; 

SR–CboeBZX–2023–095; SR–CboeBZX–2024–018) 

(Order Granting Accelerated Approval of Proposed 

Rule Changes, as Modified by Amendments 

Thereto, to List and Trade Shares of Ether-Based 

Exchange-Traded Products) (the ‘‘Ether ETP 

Approval Order’’). 

trade data from constituent markets 

selected by Coin Metrics, Inc. (the 

‘‘Secondary Reference Rate Provider’’). 

The Secondary Digital Asset Reference 

Rate 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 Digital Asset Reference Rate 

for the relevant Fund Component 

becomes unavailable, or if the Manager 

determines in good faith that the 

Secondary Digital Asset Reference Rate 

does not reflect an accurate price for 

such Fund Component, then the 

Manager will, on a best efforts basis, 

contact the Secondary Reference Rate 

Provider to obtain the Secondary Digital 

Asset Reference Rate directly from the 

Secondary Reference Rate Provider. If 

after such contact the Secondary Digital 

Asset Reference Rate remains 

unavailable or the Manager continues to 

believe in good faith that the Secondary 

Digital Asset Reference Rate does not 

reflect an accurate price for such Fund 

Component, then the Manager will 

employ the next rule to determine the 

Digital Asset Reference Rate. There are 

no predefined criteria to make a good 

faith assessment and it will be made by 

the Manager in its sole discretion. 

3. Digital Asset Reference Rate = The 

price set by the Fund’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 relevant 

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 

Manager via an application 

programming interface. If the Tertiary 

Pricing Option becomes unavailable, or 

if the Manager determines in good faith 

that the Tertiary Pricing Option does not 

reflect an accurate price for such Fund 

Component, then the Manager 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 Manager continues to believe in 

good faith that the Tertiary Pricing 

Option does not reflect an accurate price 

for such Fund Component, then the 

Manager will employ the next rule to 

determine the Digital Asset Reference 

Rate. There are no predefined criteria to 

make a good faith assessment and it will 

be made by the Manager in its sole 

discretion. 

4. Digital Asset Reference Rate = The 

Manager will use its best judgment to 

determine a good faith estimate of the 

Digital Asset Reference Rate. There are 

no predefined criteria to make a good 

faith assessment and it will be made by 

the Manager in its sole discretion. 

In the event of a fork, the Reference 

Rate Provider may calculate the Digital 

Asset Reference Rate based on a digital 

asset that the Manager does not believe 

to be the appropriate asset that is held 

by the Fund.37 In this event, the 

Manager has full discretion to use a 

different reference rate provider or 

calculate the Digital Asset Reference 

Rate itself using its best judgment. 

The Manager may, in its sole 

discretion, select a different reference 

rate provider, select a different 

indicative or index price provided by 

the Reference Rate Provider, or calculate 

the Indicative Price or Index Price by 

using the cascading set of rules set forth 

above.38

The Structure and Operation of the 

Fund Protects Investors and Satisfies 

Commission Requirements for Digital 

Asset-Based Exchange Traded Products 

On January 10, 2024, the Commission 

approved the listing and trading of 

shares of the Grayscale Bitcoin Trust 

(BTC) and Bitwise Bitcoin ETF under 

NYSE Arca Rule 8.201–E (CommodityBased Trust Shares); the Hashdex 

Bitcoin ETF under NYSE Arca Rule 

8.500–E (Trust Units); the iShares 

Bitcoin Trust and Valkyrie Bitcoin Fund 

under Nasdaq Rule 5711(d) 

(Commodity-Based Trust Shares); and 

the ARK 21Shares Bitcoin ETF, Invesco 

Galaxy Bitcoin ETF, VanEck Bitcoin 

Trust, the WisdomTree Bitcoin Fund, 

Fidelity Wise Origin Bitcoin Fund, and 

Franklin Bitcoin ETF under BZX Rule 

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

Shares) (collectively, the ‘‘Bitcoin 

ETPs’’).39 In the Bitcoin ETP Approval 

Order, the Commission found that the 

proposed rule changes to list the Bitcoin 

ETPs demonstrated that there were 

‘‘sufficient ‘other means’ of preventing 

fraud and manipulation,’’ including 

that: 

[B]ased on the record before the 

Commission and the improved quality of the 

correlation analysis in the record, including 

the Commission’s own analysis, the 

Commission is able to conclude that fraud or 

manipulation that impacts prices in spot 

bitcoin markets would likely similarly 

impact CME bitcoin futures prices. And 

because the CME’s surveillance can assist in 

detecting those impacts on CME bitcoin 

futures prices, the Exchanges’ comprehensive 

surveillance-sharing agreement with the 

CME—a U.S. regulated market whose bitcoin 

futures market is consistently highly 

correlated to spot bitcoin, albeit not of 

‘‘significant size’’ related to spot bitcoin—can 

be reasonably expected to assist in 

surveilling for fraudulent and manipulative 

acts and practices in the specific context of 

the [Bitcoin ETPs].40

Similarly, on May 23, 2024, the 

Commission approved the listing and 

trading of shares of the Grayscale 

Ethereum Trust and the Bitwise 

Ethereum ETF under NYSE Arca Rule 

8.201–E (Commodity-Based Trust 

Shares); the iShares Ethereum Trust 

under Nasdaq Rule 5711(d) 

(Commodity-Based Trust Shares); and 

the VanEck Ethereum Trust, ARK 

21Shares Ethereum ETF, Invesco Galaxy 

Ethereum ETF, Fidelity Ethereum Fund, 

and the Franklin Ethereum ETF under 

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

Trust Shares) (collectively, the ‘‘Ether 

ETPs’’).41 In the Ether ETP Approval 

Order, the Commission found that the 

proposed rule changes to list the Ether 

ETPs demonstrated that there were 


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42Ether ETP Approval Order, 89 FR 46941. 

43 In particular, Grayscale Bitcoin Trust (BTC) 

(‘‘GBTC’’) and Grayscale Ethereum Trust (ETH) 

(‘‘ETHE’’), affiliates of the Fund that are structured 

substantially similarly to the Fund, currently list 

their shares on the Exchange under NYSE Arca Rule 

8.201–E. The Fund will have the same service 

providers as GBTC and ETHE. 

44See Securities Exchange Act Release Nos. 

83723 (July 26, 2018), 83 FR 37579 (August 1, 2018) 

(SR–BatsBZX–2016–30) (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 Fund) (the ‘‘Winklevoss 

Order’’); 87267 (October 9, 2019), 84 FR 55382 

(October 16, 2019) (SR–NYSEArca–2019–01) (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 Fund 

Under NYSE Arca Rule 8.201–E) (the ‘‘Bitwise 

Order’’); 88284 (February 26, 2020), 85 FR 12595 

(March 3, 2020) (SR–NYSEArca–2019–39) (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) (the ‘‘Wilshire Phoenix Order’’); 

83904 (August 22, 2018), 83 FR 43934 (August 28, 

2018) (SR–NYSEArca–2017–139) (Order 

Disapproving a Proposed Rule Change to List and 

Trade the Shares of the ProShares Bitcoin ETF and 

the ProShares Short Bitcoin ETF) (the ‘‘ProShares 

Order’’); 83912 (August 22, 2018), 83 FR 43912 

(August 28, 2018) (SR–NYSEArca–2018–02) (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) (the ‘‘Direxion Order’’); 83913 

(August 22, 2018), 83 FR 43923 (August 28, 2018) 

(SR–CboeBZX–2018–01) (Order Disapproving a 

Proposed Rule Change to List and Trade the Shares 

of the GraniteShares Bitcoin ETF and the 

GraniteShares Short Bitcoin ETF) (the 

‘‘GraniteShares Order’’) (together, the ‘‘Prior Spot 

Digital Asset ETP Disapproval Orders’’). 

45See 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. 

46See generally Bitwise Order. 

‘‘sufficient ‘other means’ of preventing 

fraud and manipulation,’’ including 

that: 

[B]ased on the record before the 

Commission and the correlation analyses in 

the record, including the Commission’s own 

analysis, the Commission is able to conclude 

that fraud or manipulation that impacts 

prices in spot ether markets would likely 

similarly impact CME ether futures prices. 

And because the CME’s surveillance can 

assist in detecting those impacts on CME 

ether futures prices, the Exchanges’ 

comprehensive surveillance-sharing 

agreement with the CME—a U.S.-regulated 

market whose ether futures market is 

consistently highly correlated to spot ether, 

albeit not of ‘‘significant size’’ related to spot 

ether—can be reasonably expected to assist 

in surveilling for fraudulent and 

manipulative acts and practices in the 

specific context of the [Ether ETPs].42

The Fund is structured and will 

operate in a manner materially the same 

as the Bitcoin ETPs and Ether ETPs and 

the Fund Components primarily consist 

of Bitcoin and Ether. Accordingly, the 

Manager believes that, for the reasons 

set forth in the Bitcoin ETP Approval 

Order and Ether ETP Approval Order, 

listing and trading Shares of the Fund 

would be consistent with the 

requirements of the Act.43

The Manager acknowledges that the 

Fund Components currently include 

minority positions in digital assets that 

are not Bitcoin or Ether (i.e., SOL, XRP, 

and AVAX). The Manager also 

represents that, consistent with 

proposed Rule 8.800–E(c)(1), no more 

than 10% of the weight of its digital 

asset holdings will consist of digital 

assets concerning which the Exchange 

may not be able to obtain information 

via the ISG or via a CSSA. In the context 

of prior spot digital asset ETP proposal 

disapproval orders for Bitcoin and 

Ether, the Commission expressed 

concerns about the underlying Digital 

Asset Market due to the potential for 

fraud and manipulation and has 

outlined the reasons why such ETP 

proposals have been unable to satisfy 

these concerns.44 For purposes of the 

Fund’s proposal, the Manager 

anticipates that the Commission may 

have the same concerns about the nonBitcoin and Ether assets and addresses 

each of these in turn below. 

In the Prior Spot Digital Asset ETP 

Disapproval Orders, the Commission 

outlined that a proposal relating to a 

digital asset-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 Manager 

believes the structure and operation of 

the Fund are designed to prevent 

fraudulent and manipulative acts and 

practices, to protect investors and the 

public interest, and to respond to 

concerns that the Commission may have 

with respect to potential fraud and 

manipulation in the context of a Digital 

Asset-based ETP. 

How the Fund Meets Standards in the 

Prior Spot Digital Asset ETP 

Disapproval Orders 

1. Resistance to or Prevention of Fraud 

and Manipulation 

In the Prior Spot Digital Asset ETP 

Disapproval Orders, the Commission 

disagreed with the proposition that a 

digital asset’s fungibility, 

transportability and exchange 

tradability combine to provide unique 

protections against, and allow such 

digital asset to be uniquely resistant to, 

attempts at price manipulation. The 

Commission reached its conclusion 

based on concessions by one issuer that 

95% of the reported trading in the 

digital asset, Bitcoin, is ‘‘fake’’ or noneconomic, effectively admitting that the 

properties of Bitcoin do not make it 

inherently resistant to manipulation. 

Such issuer’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.45

The Manager acknowledges the 

possibility that fraud and manipulation 

may exist in commodity markets and 

that digital asset trading, such as certain 

of the Fund Components, on any given 

trading platform may be no more 

uniquely resistant to fraud and 

manipulation than other commodity 

markets.46 However, the Manager 

believes that the fundamental features of 

digital assets, including 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. 


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47See Winklevoss Order, 84 FR 37580, 37582–91; 

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

Phoenix Order, 85 FR 12597. 

48See Winklevoss Order, 84 FR 37582; Wilshire 

Phoenix Order, 85 FR 12597. 

49SEC, ‘‘Investor Bulletin: Exchange-Traded 

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

investor/alerts/etfs.pdf. 

50Commodity Futures Trading Commission 

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

www.cftc.gov/About/HistoryoftheCFTC/history_

precftc.html. 

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

trading platforms in the Digital Asset Trading 

Platform Market that are compliant with applicable 

U.S. federal and state licensing requirements and 

practices regarding 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. From these 

U.S.-Compliant Trading Platforms, the Reference 

Rate Provider then applies additional Inclusion 

Criteria to determine the Constituent Trading 

Platforms. As of June 30, 2024, the U.S.-Compliant 

Trading Platforms that the Reference Rate Provider 

considered for inclusion in the Digital Asset 

Reference Rates were Coinbase, Kraken, LMAX 

Digital and Crypto.com. 

52According to the Manager, the more trading 

platforms included in the Digital Asset Reference 

Rate, the more ability there is for traders and market 

makers to trade against the Digital Asset Reference 

Rate by arbitraging price differences. For example, 

in the event of variances between Fund Component 

prices on Constituent Trading Platforms and nonConstituent Trading Platforms, arbitrage trading 

opportunities would exist. These discrepancies 

generally consolidate over time, as price differences 

across trading platforms are realized and capitalized 

upon by traders and market makers. 

53See, 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. 

54See ‘‘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. 

55As of the date of this filing, two of the five 

Constituent Trading Platforms, Coinbase, is 

regulated by NYDFS. 

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.47 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.48

The Manager believes the Fund’s use 

of the Index and Digital Asset Reference 

Rates represents a novel means to 

prevent fraud and manipulation from 

impacting a reference price for the Fund 

Components and that it offers 

protections beyond those that exist in 

traditional commodity markets or equity 

markets. Specifically, digital assets, 

such as the Fund Components, are novel 

and exist outside traditional commodity 

markets. It therefore stands to reason 

that the methods by which they trade 

will be novel and that the market for 

digital assets like the Fund Components 

will have different attributes than 

traditional commodity markets. Digital 

assets like the Fund Components were 

only introduced within the past decade, 

twenty years after the first U.S. 

exchange-traded funds (‘‘ETFs’’) were 

offered 49 and 150 years after the first 

futures were offered.50 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 digital assets 

like the Fund Components took place 

entirely in an open, transparent and 

online setting where other commodities 

cannot trade. 

The Fund has priced its Shares 

consistently for approximately two 

years based on the Index and its use of 

the Digital Asset Reference Rates. The 

Manager believes the Fund’s use of the 

Index and Digital Asset Reference Rates 

specifically addresses the Commission’s 

concerns in that they serve as an 

alternative means to prevent fraud and 

manipulation. Specifically, the Index 

and its use of the Digital Asset 

Reference Rates can (i) mitigate the 

effects of fraud, manipulation and other 

anomalous trading activity on the Fund 

Components’ reference rates, (ii) 

provide a real-time, volume-weighted 

fair value of the Fund Components and 

(iii) appropriately handle and adjust for 

non-market related events. 

As described in more detail below, 

the Manager believes that the Index and 

its use of Digital Asset Reference Rates 

accomplishes those objectives in the 

following ways: 

1. The Digital Asset Reference Rates 

track the Digital Asset Trading Platform 

Market prices through trading activity at 

‘‘U.S.-Compliant Trading Platforms’’; 51

2. The Digital Asset Reference Rates 

are constructed and maintained by an 

expert third-party index provider, 

allowing for prudent handling of nonmarket-related events; and 

3. The Digital Asset Reference Rates 

mitigate 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 reference rate over a 60- 

minute period. 

1. The Digital Asset Reference Rates 

Track 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 

Digital Asset Reference Rates, only U.S.- 

Compliant Trading Platforms are 

eligible to be included in the Digital 

Asset Reference Rates. 

The Digital Asset Reference Rates 

maintain a minimum of two and a 

maximum of three trading platforms to 

track the Digital Asset Trading Platform 

Market while offering replicability for 

traders and market makers.52

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.53

These trading platforms also have the 

following obligations: 54

• 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.55

Furthermore, all U.S.-Compliant 

Trading Platforms are considered MSBs 


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56See BSA Requirements for MSBs, FinCEN 

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

57 ‘‘U.S. CFTC Chief Behnam Reinforces View of 

Ether as Commodity,’’ CoinDesk (Mar. 28, 2023), 

https://www.coindesk.com/policy/2023/03/28/uscftc-chief-behnam-reinforces-view-of-ether-ascommodity/; CME Group, https://

www.cmegroup.com/markets/cryptocurrencies/

ether/ether.html?gad=1&gclid=EAIaIQobChMI44

KBmu7ygAMVavvjBx2P4g5yEAAYASAAEgJSZfD_

BwE&gclsrc=aw.ds. 

58See Bitwise Order, 84 FR 55392; Wilshire 

Phoenix Order, 85 FR 12603. 

59To the extent any such intervention has a 

material impact on the Fund, the Manager will also 

issue a public announcement. 

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: 56

• Identify people with ownership 

stakes or controlling roles in the MSB; 

• Establish a formal Anti-Money 

Laundering (AML) policy in place with 

documentation, training, independent 

review, and a named compliance officer; 

• Implement strict customer 

identification and verification policies 

and procedures; 

• 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 and 

Ether’s classifications as commodities, 

the CFTC has authority to police fraud 

and manipulation on U.S.-Compliant 

Trading Platforms that trade those 

digital assets.57

The Manager acknowledges that there 

are substantial differences between 

FinCEN and New York state regulations 

and the Commission’s regulation of the 

national securities exchanges.58 The 

Manager does not believe the inclusion 

of U.S.-Compliant Trading Platforms is 

in and of itself sufficient to prove that 

the Digital Asset Reference Rates are 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 

Digital Asset Reference Rates is one 

significant way in which the Digital 

Asset Reference Rates are protected 

from the potential impacts of fraud and 

manipulation. 

2. The Digital Asset Reference Rates Are 

Constructed and Maintained by an 

Expert Third-Party Index Provider, 

Allowing for Prudent Handling of NonMarket-Related Events 

The Reference Rate Provider reviews 

and periodically updates which trading 

platforms are included in the Digital 

Asset Reference Rates by utilizing a 

methodology that is guided by the 

IOSCO principles for financial 

benchmarks. 

According to the Reference Rate 

Provider’s methodology, for a trading 

platform to become a Constituent 

Trading Platform, it must satisfy the 

following Inclusion Criteria: 

• Sufficient USD or USDC 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, 

AML and other policies designed to 

comply with relevant regulations that 

might apply to it; 

• Be an exchange that is licensed and 

able to service investors in one or more 

of the following jurisdictions: United 

States, United Kingdom; European 

Union; Hong Kong; or Singapore 

• 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 Reference Rate 

Provider’s 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 Reference Rate Provider 

would issue a public announcement 

through its website, API and other 

established communication channels 

with its clients.59

3. The Digital Asset References Rates 

Mitigate the Impact of Instances of 

Fraud, Manipulation and Other 

Anomalous Trading Activity 

Concentrated on Any One Specific 

Trading Platform Through a CrossTrading Platform Composite Reference 

Rate Over a 60-Minute Period 

The Digital Asset Reference Rates are 

based on the price and volume data of 

multiple U.S.-Compliant Trading 

Platforms over a 60-minute period that 

satisfy the Reference Rate 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 each Digital Asset Reference 

Rate is designed to accurately capture 

the market price of the digital asset it 

tracks, third parties may be able to 

purchase and sell such digital assets on 

public or private markets not included 

among the constituent Digital Asset 

Trading Platforms of such Digital Asset 

Reference Rate, and such transactions 

may take place at prices materially 

higher or lower than the Digital Asset 

Reference Rate. Moreover, there may be 

variances in the prices of digital assets 

on the various Digital Asset Trading 

Platforms, including as a result of 

differences in fee structures or 

administrative procedures on different 

Digital Asset Trading Platforms. 

For example, based on data provided 

by the Reference Rate Provider, on any 

given day during the twelve months 

ended June 30, 2024, the maximum 

differential between the 4:00 p.m., New 

York time spot price of Bitcoin on any 

single Digital Asset Trading Platform 

included in the Digital Asset Reference 

Rate was 1.47% 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 

Digital Asset Reference Rate was 1.33%. 

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 

Digital Asset Reference Rate was 0.01%. 

Further, on any given day during the 

twelve months ended June 30, 2024, the 

maximum differential between the 4:00 

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

on any single Digital Asset Trading 

Platform included in the Digital Asset 


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60All Digital Asset Trading Platforms that were 

included in the Digital Asset Reference Rates 

throughout the period were considered in this 

analysis. 

61A ‘‘Liquidity Provider’’ means one or more 

eligible companies that facilitate the purchase and 

sale of the Fund Components 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 Manager (in such other capacity, the 

‘‘Liquidity Engager’’) will engage in Fund 

Component transactions are third parties that are 

not affiliated with the Manager or the Fund and are 

not acting as agents of the Fund, the Manager, 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 Fund, the Manager, or any 

Authorized Participant. When seeking to buy Fund 

Components in connection with creations or sell 

Fund Components 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 ‘‘overthe-counter’’ basis. 

Reference Rate was 2.80% 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 Digital Asset Reference 

Rate was 2.46%. 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 Digital Asset 

Reference Rate was 0.02%. All Digital 

Asset Trading Platforms that were 

included in the relevant Digital Asset 

Reference Rate throughout the period 

were considered in this analysis.60

For approximately two years, the 

Fund has consistently priced its Shares 

at 4:00 p.m., New York time based on 

the Index and its use of the Digital Asset 

Reference Rates. While that pricing 

would be known to the market, the 

Manager believes that, even if efforts to 

manipulate the price of the Fund 

Components at 4:00 p.m., E.T. were 

successful on any trading platform, such 

activity would have had a limited effect 

on the pricing of the Fund, due to the 

controls embedded in the structure of 

the Index and its use of the Digital Asset 

Reference Rates. 

Accordingly, the Manager believes 

that the Index and it use of the Digital 

Asset Reference Rates have proven their 

ability to (i) mitigate the effects of fraud, 

manipulation and other anomalous 

trading activity on the Fund 

Components reference rates, (ii) provide 

a real-time, volume-weighted fair value 

of the Fund Components and (iii) 

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

the Manager believes that the Index 

represents an effective alternative means 

to prevent fraud and manipulation and 

the Fund’s reliance on the Index and its 

use of the Digital Asset Reference Rates 

addresses the Commission’s concerns 

with respect to potential fraud and 

manipulation. 

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 the Fund 

Components as part of the creation or 

redemption process or otherwise direct 

the Fund or a third party with respect 

to purchasing, holding, delivering, or 

receiving the Fund Components as part 

of the creation or redemption process. 

The Fund will create Shares by 

receiving the Fund Components from a 

third party that is not the Authorized 

Participant and the Fund, or an affiliate 

of the Fund (and in any event not the 

Authorized Participant), is responsible 

for selecting the third party to deliver 

the Fund Components. Further, the 

third party will not be acting as an agent 

of the Authorized Participant with 

respect to the delivery of the Fund 

Components to the Fund or acting at the 

direction of the Authorized Participant 

with respect to the delivery of the Fund 

Components to the Fund. The Fund will 

redeem Shares by delivering the Fund 

Components to a third party that is not 

the Authorized Participant and the 

Fund, or an affiliate of the Fund (and in 

any event not the Authorized 

Participant), is responsible for selecting 

the third party to receive the Fund 

Components. Further, the third party 

will not be acting as an agent of the 

Authorized Participant with respect to 

the receipt of the Fund Components 

from the Fund or acting at the direction 

of the Authorized Participant with 

respect to the receipt of the Fund 

Components from the Fund. 

Cash Orders are made through the 

participation of a Liquidity Provider 61

who obtains or receives the Fund 

Components 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 (as defined 

below) and are engaged separately by 

the Liquidity Engager. 

According to the Registration 

Statement, the Fund creates Baskets (as 

described below) of Shares only upon 

receipt of the Fund Components and 

redeems Shares only by distributing the 

Fund Components. ‘‘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 

Manager and Transfer Agent that 

provides the procedures for the creation 

and redemption of Baskets and for the 

delivery of the Fund Components 

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 broker-dealers, 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 Fund 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 Fund will not issue fractions of a 

Basket. 

The creation and redemption of 

Baskets will be made only in exchange 

for the delivery to the Fund, or the 

distribution by the Fund, of the number 

of whole and fractional Fund 

Components represented by each Basket 

being created or redeemed, which is 

determined by dividing (x) the number 

of the Fund Components owned by the 

Fund at 4:00 p.m., New York time, on 

the trade date of a creation or 

redemption order, after deducting the 

number of Fund Components 

representing the U.S. dollar value of 

accrued but unpaid fees and expenses of 

the Fund (converted using the Digital 

Asset Reference Rates 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-hundredmillionth of the Fund Components (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 

Digital Asset Reference Rates 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 Manager and will be 

final and binding on all persons 

interested in the Fund. The number the 

Fund Components represented by a 

Share will gradually decrease over time 


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62With respect to a creation or redemption 

pursuant to an Actual Execution Cash Order, as 

between the Fund and an Authorized Participant, 

the Authorized Participant is responsible for the 

dollar cost of the difference between the Fund 

Components’ price utilized in calculating Total 

Basket NAV on the trade date and the price at 

which the Fund acquires or disposes of the Fund 

Components on the settlement date. If the price 

realized in acquiring or disposing of the 

corresponding Total Basket Amount is higher than 

the Total Basket NAV, the Authorized Participant 

will bear the dollar cost of such difference, in the 

case of a creation, by delivering cash in the amount 

of such shortfall (the ‘‘Additional Creation Cash’’) 

to the Cash Account or, in the case of a redemption, 

with the amount of cash to be delivered to the 

Authorized Participant being reduced by the 

amount of such difference (the ‘‘Redemption Cash 

Shortfall’’). If the price realized in acquiring the 

corresponding Total Basket Amount is lower than 

the Total Basket NAV, the Authorized Participant 

will benefit from such difference, with the Fund 

promptly returning cash in the amount of such 

excess (the ‘‘Excess Creation Cash’’) to the 

Authorized Participant. 

63Unless the Manager determines otherwise in its 

sole discretion based on market conditions and 

other factors existing at the time of such Cash 

Order, all creations and redemptions pursuant to 

Cash Orders are expected to be executed as Variable 

Fee Cash Orders, and any price differential of Fund 

Components between the trade date and the 

settlement date will be borne solely by the Liquidity 

Provider until such Fund Components have been 

received by the Fund. 

as the Fund Components are used to pay 

the Fund’s expenses. Each Share 

represented approximately 0.0004 of 

one Bitcoin, 0.0023 of one Ether, 0.0085 

of one SOL, 0.0072 of one AVAX, and 

1.0537 of one XRP as of June 30, 2024. 

The creation of Baskets requires the 

delivery to the Fund of the Total Basket 

Amount and the redemption of Baskets 

requires the distribution by the Fund of 

the Total Basket Amount. 

Although the Fund creates Baskets 

only upon the receipt of the Fund 

Components, and redeems Baskets only 

by distributing the Fund Components, 

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 

Manager. On an order-by-order basis, 

the Liquidity Engager will engage one or 

more Liquidity Providers to obtain or 

receive the Fund Components in 

exchange for cash in connection with 

such order, as described in more detail 

below. 

Unless the Manager requires that a 

Cash Order be effected at actual 

execution prices (an ‘‘Actual Execution 

Cash Order’’),62 each Authorized 

Participant that submits a Cash Order to 

create or redeem Baskets (a ‘‘Variable 

Fee Cash Order’’) 63 will pay a fee (the 

‘‘Variable Fee’’) based on the Total 

Basket NAV, and any price differential 

of the Fund Components between the 

trade date and the settlement date will 

be borne solely by the Liquidity 

Provider until such Fund Components 

have been received or liquidated by the 

Fund. The Variable Fee is intended to 

cover all of a Liquidity Provider’s 

expenses in connection with the 

creation or redemption order, including 

any trading platform fees that the 

Liquidity Provider incurs in connection 

with buying or selling the Fund 

Components. The amount may be 

changed by the Manager in its sole 

discretion at any time, and Liquidity 

Providers will communicate to the 

Manager in advance the Variable Fee 

they would be willing to accept in 

connection with a Variable Fee Cash 

Order, based on market conditions and 

other factors existing at the time of such 

Variable Fee Cash Order. 

Alternatively, the Manager may 

require that a Cash Order be effected as 

an Actual Execution Cash Order, in its 

sole discretion based on market 

conditions and other factors existing at 

the time of such Cash Order, and under 

such circumstances, any price 

differential of the Fund Components 

between the trade date and the 

settlement date will be borne solely by 

the Authorized Participant until such 

Fund Components have been received 

or liquidated by the Fund. 

In the case of creations, to transfer the 

Total Basket Amount to the Fund’s 

Digital Asset Account, the Liquidity 

Provider will transfer the Fund 

Components to one of the public key 

addresses associated with the Digital 

Asset Account and as provided by the 

Manager. 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 Fund in 

connection with the creation or 

redemption of Baskets, but there may be 

transaction fees associated with the 

validation of the transfer of the Fund 

Components by the online, end-user-toend-user network hosting a public 

transaction ledger, known as a 

Blockchain, and the source code 

comprising the basis for the 

cryptographic and algorithmic protocols 

governing such 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 in connection with 

Variable Fee Cash Orders. Under certain 

circumstances Authorized Participants 

may also be required to deposit 

additional cash in the Cash Account, or 

be entitled to receive excess cash from 

the Cash Account, in connection with 

creations and redemptions pursuant to 

Actual Execution Cash Orders. 

Authorized Participants will receive no 

fees, commissions or other form of 

compensation or inducement of any 

kind from either the Manager or the 

Fund and no such person has any 

obligation or responsibility to the 

Manager or the Fund to effect any sale 

or resale of Shares. 

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 Manager 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 Manager 

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. Before a creation 

order is placed, the Manager determines 

if such creation order will be a Variable 

Fee Cash Order or an Actual Execution 

Cash Order, which determination is 

communicated to the Authorized 

Participant. 


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64The Manager will notify the Exchange in the 

event that the creation or redemption of Shares will 

be suspended generally and will follow the 

Exchange’s ‘‘Immediate Release Policy.’’ 

65Extenuating circumstances outside of the 

control of the Manager 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 

Continued 

Trade date (T) Settlement date (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 Authorized Participant delivers to the Cash Account: * 

(x) in the case of a Variable Fee Cash Order, the Total Basket NAV, 

plus any Variable Fee; or 

(y) in the case of an Actual Execution Cash Order, the Total Basket 

NAV, plus any Additional Creation Cash, less any Excess Creation 

Cash, if applicable (such amount, as applicable, the ‘‘Required Creation Cash’’). 

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

communicated to the Authorized Participant by the Transfer Agent.

• The Liquidity Provider transfers the Total Basket Amount to the 

Fund’s Vault Balance. 

• The Manager notifies the Liquidity Provider of the creation order ....... • Once the Fund is in simultaneous possession of (x) the Total Basket 

Amount and (y) the Required Creation Cash, the Fund 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. 

• The Manager determines the Total Basket NAV and any Variable 

Fee and Additional Creation Cash as soon as practicable after 4:00 

p.m., New York time.

• Cash equal to the Required Creation Cash 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. 

* The ‘‘Cash Account’’ means the account maintained by the Transfer Agent 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 Fund shall have no 

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

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 Manager 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 Manager 

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. Before a 

redemption order is placed, the Manager 

determines if such redemption order 

will be a Variable Fee Cash Order or an 

Actual Execution Cash Order, which 

determination is communicated to the 

Authorized Participant. 

Trade date (T) Settlement date 

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

• The Authorized Participant places a redemption order with the Transfer Agent.• The Authorized Participant delivers Baskets to be redeemed from its 

DTC account to the Transfer Agent. 

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

which is communicated to the Authorized Participant by the Transfer 

Agent.

• The Liquidity Provider delivers to the Cash Account: 

(x) in the case of a Variable Fee Cash Order, the Total Basket NAV 

less any Variable Fee; or 

(y) in the case of an Actual Execution Cash Order, the actual proceeds 

to the Fund from the liquidation of the Total Basket Amount (such 

amount, as applicable, the ‘‘Required Redemption Cash’’). 

• The Manager notifies the Liquidity Provider of the redemption order .. • Once the Fund is in simultaneous possession of (x) the Total Basket 

Amount and (y) the Required Redemption Cash, the Transfer Agent 

cancels the Shares comprising the number of Baskets redeemed by 

the Authorized Participant. 

• The Manager determines the Total Basket NAV and, in the case of a 

Variable Fee Cash Order, any Variable Fee, as soon as practicable 

after 4:00 p.m., New York time.

• The Custodian sends the Liquidity Provider the Total Basket 

Amount, and cash equal to the Required Redemption Cash 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,64 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 Manager 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.65 The 


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trading halts, systems failures involving computer 

or other information systems, including any failures 

or outages of the Ethereum Network, affecting the 

Authorized Participant, the Manager, the Fund, the 

Transfer Agent, the Marketing Agent and the 

Custodian and similar extraordinary events. 

66The bid-ask price of the Fund is determined 

using the highest bid and lowest offer on the 

Consolidated Tape as of the time of calculation of 

the closing day NAV. 

67The IFV on a per Share basis disseminated 

during the NYSE Arca Core Trading Session should 

not be viewed as a real-time update of the NAV, 

which is calculated once a day. 68 17 CFR 240.10A–3. 

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 

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 Manager or its delegates will be 

liable for the suspension, rejection or 

acceptance of any creation order or 

redemption order. 

Availability of Information 

The Fund’s website (https://

grayscale.com/crypto-products/ 

grayscale-digital-large-cap-fund/) 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 66 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 per Share, within 

appropriate ranges, for each of the four 

previous calendar quarters (or for as 

long as the Fund has been trading as an 

ETP if shorter). In addition, on each 

business day the Fund’s website will 

provide pricing information for the 

Shares and disclosed the Fund’s 

holdings, including: (i) the name of each 

Fund Component; (ii) the quantify of 

each Fund Component; and (iii) the 

weighting of each Fund Component. 

One or more major market data 

vendors will provide the Intra-Day Fund 

Value (‘‘IFV’’) 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.).67 The IFV will be calculated using 

the same methodology as the NAV per 

Share of the Fund (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 to reflect 

changes in the value of the Fund’s NAV 

during the trading day. 

The IFV 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 IFV 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 IFV will be available 

through on-line information services. 

The NAV for the Fund will be 

calculated by the Manager once a day 

and will be disseminated daily to all 

market participants at the same time. To 

the extent that the Manager has utilized 

the cascading set of rules described in 

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

will note the valuation methodology 

used and the price per Fund 

Components 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 the Fund Components will be widely 

disseminated through a variety of major 

market data vendors, including 

Bloomberg and Reuters. In addition, 

real-time price (and volume) data for the 

Fund Components is available by 

subscription from Reuters and 

Bloomberg. The spot price of the Fund 

Components 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, will be available from 

major market data vendors and from the 

trading platforms on which the Fund 

Components are traded. The normal 

trading hours for Digital Asset Trading 

Platforms are 24-hours per day, 365- 

days per year. 

On each business day, the Manager 

will publish the Digital Asset Reference 

Rates, the Fund’s NAV, and the NAV 

per Share on the Fund’s website as soon 

as practicable after its determination. If 

the NAV and NAV per Share have been 

calculated using a price per Fund 

Components other than the Digital Asset 

Reference Rates for such Evaluation 

Time, the publication on the Fund’s 

website will note the valuation 

methodology used and the price per 

Fund Components resulting from such 

calculation. 

The Fund will provide website 

disclosure of its NAV daily. The website 

disclosure of the Fund’s NAV will occur 

at the same time as the disclosure by the 

Manager of the NAV 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 of the Fund through the 

Fund’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 such as the DLCS Methodology, is 

publicly available on a continuous 

basis. 

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 8.800–E. The trading of 

the Shares will be subject to NYSE Arca 

Rule 8.800–E(i), 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 Fund will be in compliance 

with Rule 10A–3 68 under the Act, as 

provided by NYSE Arca Rule 5.3–E. A 

minimum of 100,000 Shares of the Fund 

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 


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69See NYSE Arca Rule 7.12–E. 

70FINRA 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. 

71For a list of the current members of ISG, see 

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

Fund Components may trade on markets that are 

members of ISG or with which the Exchange has in 

place a CSSA, but that, consistent with proposed 

Rule 8.800–E(c)(1), at least 90% of the Fund’s 

commodity and/or digital asset holdings will 

consist of commodities and/or digital assets for 

which the Exchange may obtain information via the 

ISG from other members or affiliates of the ISG or 

for which the principal market is a market with 

which the Exchange has a CSSA. 72 15 U.S.C. 78f(b). 

the Fund.69 Trading in Shares of the 

Fund 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 IFV or the value of 

the Index occurs. If the interruption to 

the dissemination of the IFV 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 NYSE Arca Core 

Trading Session on 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 Fund 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.70 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 CSSA.71 The 

Exchange is also able to obtain 

information regarding trading in the 

Shares in connection with such ETP 

Holders’ proprietary or customer trades 

which they effect through ETP Holders 

on any relevant market. 

Under proposed Rule 8.800–E(i), 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 any 

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 and that subsidiary 

or affiliate is a member of another 

regulatory organization, the Exchange 

could obtain information regarding the 

activities of such subsidiary or affiliate 

through a surveillance sharing 

agreement with that regulatory 

organization. 

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 portfolios of the 

Fund, (b) limitations on 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 Manager has represented to the 

Exchange that it will advise the 

Exchange of any failure by the Fund 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 Fund 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 Digital 

Asset Reference Rates and the IFV 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 IFV 

will not be calculated or publicly 

disseminated; and (5) trading 

information. The Exchange notes that 

investors purchasing Shares directly 

from the Fund will receive a prospectus. 

In addition, the Information Bulletin 

will reference that the Fund 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 

Fund is publicly available on the Fund’s 

website. 

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 Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,72 in general, and 

furthers the objectives of Section 6(b)(5) 


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73 15 U.S.C. 78f(b)(5). 

of the Act,73 in particular, in that it is 

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 a national market 

system, and, in general, to protect 

investors and the public interest. 

The Exchange believes that proposed 

Rule 8.800–E is designed to prevent 

fraudulent and manipulative acts and 

practices in that the proposed rules 

relating to listing and trading of 

Commodity- and/or Digital Asset-Based 

Investment Interests provide specific 

initial and continued listing criteria 

required to be met by such securities. 

Proposed Rule 8.800–E(a) provides 

that the Exchange will file separate 

proposals under Rule 19(b) of the Act 

before the listing and trading of 

Commodity- and/or Digital Asset-Based 

Investment Interests. All statements or 

representations contained in such rule 

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 such rule filing will 

constitute continued listing 

requirements. An issuer of such 

securities must notify the Exchange of 

any failure to comply with such 

continued listing requirements. If an 

issue of Commodity- and/or Digital 

Asset-Based Investment Interests does 

not satisfy these requirements, the 

Exchange may halt trading in the 

securities and will initiate delisting 

proceedings pursuant to Rule 5.5–E(m). 

Proposed Rule 8.800–E(e) sets forth 

initial and continued listing criteria 

applicable to Commodity- and/or Digital 

Asset-Based Investment Interests. 

Proposed Rule 8.800–E(e)(1)(i) provides 

that, for each series of Commodity- and/ 

or Digital Asset-Based Investment 

Interests, the Exchange will establish a 

minimum number of Commodity- and/ 

or Digital Asset-Based Investment 

Interests required to be outstanding at 

the time of commencement of trading on 

the Exchange. Proposed Rule 8.800– 

E(e)(1)(ii) provides that in the aggregate, 

at least 90% of the weight of the 

commodity and/or digital asset holdings 

of a series of Commodity- and/or Digital 

Asset-Based Investment Interests shall, 

on both an initial and continuing basis, 

consist of commodities and/or digital 

assets for which the Exchange may 

obtain information pursuant to its ISG 

membership or for which the principal 

market is a market with which the 

Exchange has a CSSA. In addition, 

proposed Rule 8.800–E(e)(2) provides 

that the Exchange will maintain 

surveillance procedures for securities 

listed under proposed Rule 8.800–E and 

sets forth the circumstances under 

which the Exchange would consider the 

suspension of trading in and delisting 

under Rule 5.5–E(m) of a series of 

Commodity- and/or Digital Asset-Based 

Investment Interests. 

With respect to proposed Rule 8.800– 

E, the Exchange believes that the 

proposed rule change is designed to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest because Commodityand/or Digital Asset-Based Investment 

Interests listed and traded pursuant to 

proposed Rule 8.800–E would be 

substantially similar to CommodityBased Trust Shares listed and traded 

pursuant to current Rule 8.201–E. 

Commodity- and/or Digital Asset-Based 

Investment Interests differ from 

Commodity-Based Trust Shares only in 

that Commodity- and/or Digital AssetBased Investment Interests could be 

issued, as a proposed, by a trust, limited 

liability company, or other similar 

entity (rather than only by a trust), and 

in that Commodity- and/or Digital 

Asset-Based Investment Interests could 

be based, as proposed, on underlying 

commodities, digital assets (provided 

that at least 90% of commodity and/or 

digital asset holdings are those 

concerning which the Exchange may 

obtain information via the ISG from 

other members of the ISG or via CSSA), 

and/or Derivative Securities Products. 

The Exchange believes this additional 

flexibility with respect to the structure 

of the entity issuing Commodity- and/or 

Digital Asset-Based Investment Interests 

and the holdings underlying such 

securities would remove impediments 

to and perfect the mechanism of a free 

and open market, as well as promote 

competition, by promoting the listing 

and trading of a new type of ETP, to the 

benefit of all market participants. The 

Exchange further believes that the 

proposed requirement that at least 90% 

of any commodity and/or digital asset 

holdings are those concerning which the 

Exchange may obtain information via 

the ISG from other members of the ISG 

or via a CSSA would remove 

impediments to and perfect the 

mechanism of a free and open market, 

as well as protect investors and the 

public interest, because it would offer 

flexibility to issuers of series of 

Commodity- and/or Digital Asset-Based 

Investment Interests, to the benefit of 

investors, while facilitating information 

sharing among market participants 

regarding the vast majority of any 

commodities and/or digital assets 

underlying series of Commodity- and/or 

Digital Asset-Based Investment 

Interests. As noted above, this 

requirement is based on a similar 

provision approved by the Commission 

in Commentary .01(d)(1) to Rule 8.600– 

E regarding Managed Fund Shares. 

The Exchange also believes that the 

proposed addition of Commodity- and/ 

or Digital Asset-Based Investment 

Interests to the enumerated derivative 

and special purpose securities that are 

subject to the provisions of Rule 5.3–E 

(Corporate Governance and Disclosure 

Policies) and Rule 5.3–E(e) 

(Shareholder/Annual Meetings) would 

promote just and equitable principles of 

trade and remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system by holding Commodity- and/or 

Digital Asset-Based Investment Interests 

to the same requirements currently 

applicable to other similar derivative 

and special purpose securities such as 

those listed pursuant to Rule 8.201–E. 

With respect to the proposed listing 

and trading of Shares of the Fund, 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 

8.800–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 and Fund Component 

derivatives from such markets. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares and Fund Component 

derivatives from markets that are 

members of ISG or with which the 

Exchange has in place a CSSA. Also, 

pursuant to NYSE Arca Rule 8.800–E(i), 

the Exchange is able to obtain 

information regarding Market Maker 

accounts for trading in the Shares and 

the underlying Fund Components or 

any Fund Component derivatives 

through ETP Holders acting as 

registered Market Makers, in connection 

with such ETP Holders’ proprietary or 


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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 and its use of 

the Digital Asset Reference Rates serves 

as a means sufficient to mitigate the 

impact of instances of fraud and 

manipulation on a reference price for 

the Fund Components. Specifically, the 

Index and its use of the Digital Asset 

Reference Rates provides a better 

benchmark for the price of the Fund 

Components than the Digital Asset 

Trading Platform Market price because 

(1) the Digital Asset Reference Rates 

track the Digital Asset Trading Platform 

Market price through trading activity at 

U.S.-Compliant Trading Platforms; (2) is 

the Digital Asset Reference Rates are 

constructed and maintained by an 

expert third-party index provider, 

allowing for prudent handling of nonmarket-related events; and (3) the 

Digital Asset Reference Rates mitigate 

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 

reference rate over a 60-minute period. 

The Fund has relied on the Index and 

its use of the Digital Asset Reference 

Rates to price the Shares for 

approximately two years, and the Index 

and its use of the Digital Asset 

Reference Rates has proven its ability to 

(i) mitigate the effects of fraud, 

manipulation and other anomalous 

trading activity from impacting the 

Fund Components’ reference rates, (ii) 

provide a real-time, volume-weighted 

fair value of the Fund Components and 

(iii) appropriately handle and adjust for 

non-market related events, such that 

efforts to manipulate the price of the 

Fund Components would have had a 

negligible effect on the pricing of the 

Fund, due to the controls embedded in 

the structure of the Index. In addition, 

certain of the Digital Asset Reference 

Rates’ 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 because, as noted above, fraud 

or manipulation that impacts prices in 

spot Bitcoin markets or spot Ether 

markets would likely similarly impact 

CME Bitcoin futures and CME Ether 

futures prices, and the Exchange could 

obtain information from the CME to 

assist in detecting and deterring 

potential fraud or manipulation with 

respect to certain Fund Components. 

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 price and 

market information available on public 

websites and through professional and 

subscription services for the Fund 

Components. Investors may obtain, on a 

24-hour basis, Fund Component pricing 

information based on the spot price for 

the Fund Components from various 

financial information service providers. 

The closing price and settlement prices 

of the Fund Components 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 Fund will provide website 

disclosure of its NAV daily. One or 

more major market data vendors will 

disseminate for the Fund 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 is available to all 

market participants. Quotation and lastsale information regarding the Shares 

will be disseminated through the 

facilities of the CTA. The IFV 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 IFV or the value of 

the Index occurs. If the interruption to 

the dissemination of the IFV 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 NYSE Arca Core 

Trading Session on 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 for at least 90% of the 

Fund’s commodity and/or digital asset 

holdings. In addition, as noted above, 

investors will have ready access to 

information regarding the Fund’s NAV, 

IFV, 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 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. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period 

up to 90 days (i) as the Commission may 

designate if it finds such longer period 

to be appropriate and publishes its 

reasons for so finding or (ii) as to which 

the self-regulatory organization 

consents, the Commission will: 

(A) by order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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: 


lotter on DSK11XQN23PROD with NOTICES1
87706 Federal Register / Vol. 89, No. 213 / Monday, November 4, 2024 / Notices 

74 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See, e.g., https://www.nasdaqtrader.com/ 

Trader.aspx?id=DPPriceListOptions#nom; and 

https://www.nyse.com/publicdocs/nyse/data/ 

NYSE_Market_Data_Fee_Schedule.pdf. 

4See, for example, EDGX Fee Schedule, BZX Fee 

Schedule, BYX Fee Schedule. 

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–2024–87 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–2024–87. 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–2024–87 and should be 

submitted on or before November 25, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.74

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–25529 Filed 11–1–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101465; File No. SR– 

CBOE–2024–048] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fee 

Schedule 

October 29, 2024. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on October 

18, 2024, Cboe Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘Cboe Options’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe Exchange, Inc. (the ‘‘Exchange’’ 

or ‘‘Cboe Options’’) proposes to amend 

its Fee Schedule. The text of the 

proposed rule change is provided in 

Exhibit 5. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://www.cboe.com/About

CBOE/CBOELegalRegulatory

Home.aspx), at the Exchange’s Office of 

the Secretary, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to update its 

Fee Schedule to provide a temporary 

20% discount on fees assessed to 

Exchange Trading Permit Holders and 

non-Trading Permit Holders that 

purchase $20,000 or more of ad hoc 

purchases of CBOE Options Historical 

Depth Data (‘‘Historical Depth 

Reports’’), effective October 18, 2024 

through December 31, 2024. 

By way of background, the Exchange 

currently makes available for purchase 

Depth Data, which is a daily archive of 

the Exchange’s depth of book real-time 

feed, which provides depth-of-book 

quotations and execution information 

based on options orders entered into the 

System. The Exchange also offers 

Historical Depth Data, which offers such 

data on a historical basis, i.e., T+1 or 

later. The Historical Depth Report is a 

completely voluntary product, in that 

the Exchange is not required by any rule 

or regulation to make this data available 

and that potential customers may 

purchase it on an ad-hoc basis only if 

they voluntarily choose to do so. 

Cboe LiveVol, LLC (‘‘LiveVol’’), a 

wholly owned subsidiary of the 

Exchange’s parent company, Cboe 

Global Markets, Inc., makes the 

Historical Depth Report available for 

purchase to Users on the LiveVol 

DataShop website (datashop.cboe.com). 

The Historical Depth Data is available 

for purchase to Trading Permit Holders 

and non-Trading Permit Holders; the 

Exchange charges a fee per month of 

historical data of $1,500. The Historical 

Depth Report provided on a historical 

basis is only provided to data recipients 

for internal use only, and thus, no 

redistribution will be permitted. The 

Exchange notes that the Historical 

Depth Report is subject to direct 

competition from other exchanges, as 

other exchanges offer similar products 

for a fee.3

The Exchange and affiliated equities 

and options exchanges (i.e., Cboe C2 

Exchange, Inc. (‘‘C2 Options’’), Cboe 

EDGX Exchange, Inc. (‘‘EDGX’’), Cboe 

BYX Exchange, Inc. (‘‘BYX’’), Cboe BZX 

Exchange, Inc. (‘‘BZX’’), and Cboe 

EDGA Exchange, Inc. (‘‘EDGA’’) 

(collectively, ‘‘Affiliates’’) also offer 

similar data products.4 Particularly, 


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