Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 14941 

120See id. at 38136. 

121See id. For example, NYSE Arca states that the 

largest U.S. OTC bitcoin fund returned 46.41% 

year-to-date through April 30, 2021, while spot 

bitcoin returned 95.61% over the same period. 

NYSE Arca asserts that the deviation in price 

performance can be attributed to the fluctuation in 

NAV of this fund. See id. 

122See id. 

123See id. at 38134. 

124See id. See also supra note 30. 

125See Exchange Act Section 19(b)(2)(C), 15 

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

126See SolidX Order, 82 FR at 16259; VanEck 

Order, 86 FR at 54550–51; WisdomTree Order, 86 

FR at 69334; Kryptoin Order, 86 FR at 74179; 

Valkyrie Order, 86 FR at 74163; SkyBridge Order, 

87 FR at 3881; Wise Origin Order, 87 FR at 5538. 

127See supra note 114. 

128See 15 U.S.C. 78s(b)(2)(C). 

129 15 U.S.C. 78f(b)(5). 

130 In disapproving the proposed rule change, the 

Commission has considered its impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

131See Letter from Sam Ahn (July 21, 2021). 

NYSE Arca further asserts that, with 

the growth of OTC bitcoin funds, so too 

has grown the potential risk to U.S. 

investors.120 Specifically, NYSE Arca 

argues that significant and prolonged 

premiums and discounts, significant 

premium/discount volatility, high fees, 

insufficient disclosures, limited 

liquidity to trade or borrow shares, and 

the lack of surveillance and oversight 

through a listed exchange place U.S. 

investor money at risk in ways that 

could potentially be eliminated through 

access to the Shares.121 As such, the 

Exchange believes that the proposal 

would act to limit risk to U.S. investors 

that are increasingly seeking exposure to 

bitcoin, while providing benefits such 

as the elimination of significant and 

prolonged premiums and discounts, the 

reduction of significant premium/ 

discount volatility, the reduction of 

management fees through meaningful 

competition, the avoidance of risks 

associated with investing in operating 

companies that are imperfect proxies for 

bitcoin exposure, and substantially 

greater surveillance and regulatory 

oversight.122

Additionally, the Exchange states that 

investors holding bitcoin through a 

cryptocurrency trading platform often 

face credit risk to the platform for cash 

balances, and often face risk of loss or 

theft of their bitcoin as a result of the 

platform using internet-connected 

storage (i.e., ‘‘hot’’ wallets) and/or 

having poor private key management 

(e.g., insufficient password protection, 

lost key, etc.).123 The Exchange states 

that, on the other hand, through use of 

the Bitcoin Custodian, the Trust would 

hold bitcoin in 100% ‘‘cold’’ storage, 

meaning the entire storage process 

would be done completely offline, with 

a regulated and licensed entity (i.e., the 

Bitcoin Custodian) applying industry 

best practices.124

In essence, NYSE Arca argues that the 

risky nature of direct investment in the 

underlying bitcoin and the unregulated 

markets on which bitcoin and OTC 

bitcoin funds trade compel approval of 

the proposed rule change. The 

Commission disagrees. Pursuant to 

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

the Commission must approve a 

proposed rule change filed by a national 

securities exchange if it finds that the 

proposed rule change is consistent with 

the applicable requirements of the 

Exchange Act—including the 

requirement under Section 6(b)(5) that 

the rules of a national securities 

exchange be designed to prevent 

fraudulent and manipulative acts and 

practices—and it must disapprove the 

filing if it does not make such a 

finding.125 Thus, even if a proposed rule 

change purports to protect investors 

from a particular type of investment 

risk—such as the susceptibility of an 

asset to loss or theft—the proposed rule 

change may still fail to meet the 

requirements under the Exchange 

Act.126

Here, even if it were true that, 

compared to trading in unregulated 

bitcoin spot markets or trading in OTC 

bitcoin funds, trading in a bitcoin-based 

ETP on a national securities exchange 

provides some additional protection to 

investors, the Commission must 

consider this potential benefit in the 

broader context of whether the proposal 

meets each of the applicable 

requirements of the Exchange Act.127 As 

explained above, for bitcoin-based ETPs, 

the Commission has consistently 

required that the listing exchange have 

a comprehensive surveillance-sharing 

agreement with a regulated market of 

significant size related to bitcoin, or 

demonstrate that other means to prevent 

fraudulent and manipulative acts and 

practices are sufficient to justify 

dispensing with the requisite 

surveillance-sharing agreement. The 

listing exchange has not met that 

requirement here. Therefore, the 

Commission is unable to find that the 

proposed rule change is consistent with 

the statutory standard. 

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

Exchange Act, the Commission must 

disapprove a proposed rule change filed 

by a national securities exchange if it 

does not find that the proposed rule 

change is consistent with the applicable 

requirements of the Exchange Act— 

including the requirement under 

Section 6(b)(5) that the rules of a 

national securities exchange be 

designed to prevent fraudulent and 

manipulative acts and practices.128

For the reasons discussed above, 

NYSE Arca has not met its burden of 

demonstrating that the proposal is 

consistent with Exchange Act Section 

6(b)(5),129 and, accordingly, the 

Commission must disapprove the 

proposal.130

D. Other Comments 

The Commission received a comment 

letter that addressed the general nature 

and intrinsic value of bitcoin.131

Ultimately, however, additional 

discussion of these topics is 

unnecessary, as they do not bear on the 

basis for the Commission’s decision to 

disapprove the proposal. 

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

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

that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange, and in 

particular, with Section 6(b)(5) of the 

Exchange Act. 

It is therefore ordered, pursuant to 

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

that proposed rule change SR– 

NYSEArca–2021–57 be, and hereby is, 

disapproved. 

By the Commission. 

Eduardo A. Aleman, 

Deputy Secretary. 

[FR Doc. 2022–05499 Filed 3–15–22; 8:45 am] 

BILLING CODE 8011–01–P 

SURFACE TRANSPORTATION BOARD 

[Docket No. FD 36593] 

OPSEU Pension Plan Trust Fund, 

Jaguar Transport Holdings, LLC, and 

Jaguar Rail Holdings, LLC— 

Continuance in Control Exemption— 

Charlotte Western Railroad, LLC 

OPSEU Pension Plan Trust Fund 

(OPTrust), Jaguar Transport Holdings, 

LLC (JTH), and Jaguar Rail Holdings, 

LLC (JRH, and collectively with OPTrust 

and JTH, Jaguar), all noncarriers, have 

filed a verified notice of exemption 

under 49 CFR 1180.2(d)(2) to continue 

in control of Charlotte Western Railroad, 

LLC (CWRR), a noncarrier, upon 

CWRR’s becoming a Class III rail carrier. 

This transaction is related to a 

concurrently filed verified notice of 

exemption in Charlotte Western 

Railroad, LLC—Change in Operator 

Exemption—Line in Gaston County, 


jspears on DSK121TN23PROD with NOTICES1
14942 Federal Register / Vol. 87, No. 51 / Wednesday, March 16, 2022 / Notices 

1See Piedmont & N. R.R.—Change in Operator 

Exemption—Piedmont Ry., FD 36120 (STB served 

June 16, 2017). 

N.C., Docket No. FD 36592. In that 

proceeding, CWRR has filed a verified 

notice of exemption pursuant to 49 CFR 

1150.31 to assume operation of 

approximately 13.04 miles of rail line 

currently operated by Piedmont and 

Northern Railroad LLC (PNRW) and 

owned by the North Carolina 

Department of Transportation (NCDOT), 

extending from milepost SFC 11.39 at 

Mt. Holly to milepost SFC 23.0 at 

Gastonia, including the Belmont Spur 

extending from milepost SFF 0.13/SFC 

13.6 at Mt. Holly to milepost SFF 1.56 

at or near Belmont (collectively, the 

Line), all in Gaston County, N.C. CWRR 

will assume an existing lease of the 

Line, to be assigned to CWRR by PNRW 

with NCDOT’s consent. 

Jaguar states that it will continue in 

control of CWRR upon CWRR’s 

becoming a railroad common carrier. 

According to the verified notice, 

OPTrust indirectly controls JTH, which 

directly controls JRH. JTH currently 

controls, indirectly: Four Class III 

railroads directly controlled by JRH— 

Southwestern Railroad, Inc., Texas & 

Eastern Railroad, LLC, Wyoming and 

Colorado Railroad, Inc., (WYCO) (which 

also does business under the name 

Oregon Eastern Railroad), and Missouri 

Eastern Railroad, LLC; two Class III 

railroads indirectly controlled by JRH 

through WYCO—Cimarron Valley 

Railroad, L.C., and Washington Eastern 

Railroad, LLC; and one Class III railroad 

indirectly controlled by JTH through its 

subsidiary Jaguar Transport, LLC—West 

Memphis Base Railroad, L.L.C. The 

lines of the rail carriers controlled by 

JTH and JRH are located in Arkansas, 

Colorado, Kansas, Missouri, New 

Mexico, Oklahoma, Oregon, Texas, and 

Washington. 

Jaguar states that: (1) The Line does 

not connect with any other rail lines 

operated by carriers controlled by 

Jaguar, and none of those rail lines 

connect with each other; (2) the 

continuance in control transaction is not 

part of a series of anticipated 

transactions that would connect the 

Line with any railroad lines controlled 

by Jaguar or that would connect any of 

those rail lines with each other; and (3) 

the transaction does not involve a Class 

I rail carrier. Therefore, the proposed 

transaction is exempt from the prior 

approval requirements of 49 U.S.C. 

11323. See 49 CFR 1180.2(d)(2). 

Under 49 U.S.C. 10502(g), the Board 

may not use its exemption authority to 

relieve a rail carrier of its statutory 

obligation to protect the interests of its 

employees. However, 49 U.S.C. 11326(c) 

does not provide for labor protection for 

transactions under 49 U.S.C. 11324 and 

11325 that involve only Class III rail 

carriers. Because this transaction 

involves Class III rail carriers only, the 

Board, under the statute, may not 

impose labor protective conditions for 

this transaction. 

The earliest this transaction may be 

consummated is March 30, 2022, the 

effective date of the exemption (30 days 

after the verified notice was filed). If the 

verified notice contains false or 

misleading information, the exemption 

is void ab initio. Petitions to revoke the 

exemption under 49 U.S.C. 10502(d) 

may be filed at any time. The filing of 

a petition to revoke will not 

automatically stay the effectiveness of 

the exemption. Petitions to stay must be 

filed no later than March 23, 2022. 

All pleadings, referring to Docket No. 

FD 36593, should be filed with the 

Surface Transportation Board via efiling on the Board’s website. In 

addition, a copy of each pleading must 

be served on Jaguar’s representative, 

Robert A. Wimbish, Fletcher & Sippel 

LLC, 29 North Wacker Drive, Suite 800, 

Chicago, IL 60606–3208. 

According to Jaguar, this action is 

excluded from environmental review 

under 49 CFR 1105.6(c) and from 

historic preservation reporting 

requirements under 49 CFR 1105.8(b). 

Board decisions and notices are 

available at www.stb.gov. 

Decided: March 10, 2022. 

By the Board, Scott M. Zimmerman, Acting 

Director, Office of Proceedings. 

Kenyatta Clay, 

Clearance Clerk. 

[FR Doc. 2022–05527 Filed 3–15–22; 8:45 am] 

BILLING CODE 4915–01–P 

SURFACE TRANSPORTATION BOARD 

[Docket No. FD 36592] 

Charlotte Western Railroad, LLC— 

Change in Operator Exemption— 

Piedmont & Northern Railroad, LLC 

Charlotte Western Railroad, LLC 

(CWRR), a noncarrier, has filed a 

verified notice of exemption pursuant to 

49 CFR 1150.31 to assume operation of 

approximately 13.04 miles of rail line 

extending from milepost SFC 11.39 at 

Mt. Holly to milepost SFC 23.0 at 

Gastonia, including the Belmont Spur 

extending from milepost SFF 0.13/SFC 

13.6 at Mt. Holly to milepost SFF 1.56 

at or near Belmont (collectively, the 

Line), all in Gaston County, N.C. The 

North Carolina Department of 

Transportation (NCDOT) owns the Line, 

and Piedmont and Northern Railroad, 

LLC (PNRW), currently operates the 

Line under a lease with NCDOT (the 

Lease) and has done so since 2017.1

According to the verified notice, 

CWRR has entered into an agreement 

with PNRW—with NCDOT’s consent— 

under which PNRW will assign its 

rights and obligations under the Lease to 

operate the Line to CWRR, and CWRR 

will commence common carrier 

operations over the Line in place of 

PNRW. Based on projected annual 

revenues for the Line, CWRR expects to 

become a Class III rail carrier after 

consummation of the proposed 

transaction. 

This transaction is related to a 

concurrently filed verified notice in 

OPSEU Pension Plan Trust Fund, Jaguar 

Transport Holdings, LLC, & Jaguar Rail 

Holdings, LLC—Continuance in Control 

Exemption—Charlotte Western 

Railroad, LLC, Docket No. FD 36593, in 

which the filings parties seek to 

continue in control of CWRR upon 

CWRR’s becoming a Class III rail carrier. 

As required under 49 CFR 

1150.33(h)(1), CWRR certifies in its 

verified notice that the proposed change 

of operator on the Line does not involve, 

and the Lease between NCDOT and 

PNRW does not include, any provision 

or agreement that may limit future 

interchange with a third-party 

connecting carrier. 

CWRR certifies that its projected 

annual revenues as a result of the 

transaction will not exceed $5 million 

and will not result in the creation of a 

Class I or Class II rail carrier. Under 49 

CFR 1150.32(b), a change in operator 

exemption requires that notice be given 

to shippers. CWRR certifies that it has 

provided notice of the proposed change 

in operator to the shippers on the Line. 

The transaction may be consummated 

on or after March 30, 2022, the effective 

date of the exemption (30 days after the 

verified notice was filed). 

If the verified notice contains false or 

misleading information, the exemption 

is void ab initio. Petitions to revoke the 

exemption under 49 U.S.C. 10502(d) 

may be filed at any time. The filing of 

a petition to revoke will not 

automatically stay the effectiveness of 

the exemption. Petitions for stay must 

be filed no later than March 23, 2022 (at 

least seven days before the exemption 

becomes effective). 

All pleadings, referring to Docket No. 

FD 36592, should be filed with the 

Surface Transportation Board via efiling on the Board’s website. In 

addition, a copy of each pleading must 

be served on CWRR’s representative, 


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