Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 95853 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 101470 

(October 29, 2024), 89 FR 87681 (November 4, 2024) 

(SR–NYSEARCA–2024–87). Shares of the Trust will 

not trade on the Exchange until such time that both 

the instant proposed rule change and the proposed 

rule change to adopt Rule 8.800–E have been 

approved by the Commission. 

5The Trust is a Delaware statutory trust. Shares 

of the Trust currently trade under the symbol BITW 

on OTCQX. On March 1, 2024, the Trust filed with 

the Commission an Annual Report on Form 10–K 

for the fiscal year ended December 31, 2023 (the 

‘‘Annual Report’’). 

6 15 U.S.C. 80a–1. 

7 17 U.S.C. 1. 

8With respect to the application of Rule 10A–3 

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

on the exemption contained in Rule 10A–3(c)(7). 

9The description of the operation of the Trust, 

the Shares, and digital asset markets contained 

herein is based, in part, on the Annual Report. See 

note 5, supra. 

10For purposes of this filing, a ‘‘Business Day’’ is 

defined as any day on which the New York Stock 

Exchange is scheduled to be open for trading. 

11 Digital asset trading platforms considered by 

the Valuation Vendor currently include Bitstamp, 

Coinbase, Gemini, itBit, LMAX, and Kraken. The 

Valuation Vendor’s selection of digital asset trading 

platforms from which the Reference Prices may be 

derived is further discussed below. 

12The Trust conducts creations and redemptions 

of its Shares for cash. Authorized Participants 

(defined below) will deliver cash to the Cash 

Continued 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101775; File No. SR– 

NYSEARCA–2024–98] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change To List and Trade Shares 

of the Bitwise 10 Crypto Index Fund 

Under Proposed NYSE Arca Rule 

8.800–E (Commodity- and Digital 

Asset-Based Investment Interests) 

November 27, 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 

November 14, 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 selfregulatory 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 list and 

trade shares of the Bitwise 10 Crypto 

Index Fund (the ‘‘Trust’’) under 

proposed NYSE Arca Rule 8.800–E 

(Commodity- and/or Digital Asset-Based 

Investment Interests). The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange recently proposed to 

adopt new NYSE Arca Rule 8.800–E to 

provide for the listing and trading of 

Commodity- and/or 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.4 The Exchange 

now proposes to list and trade shares of 

the Trust 5 under proposed NYSE Arca 

Rule 8.800–E. 

According to the Annual Report, the 

Trust will not be registered as an 

investment company under the 

Investment Company Act of 1940,6 and 

is not required to register thereunder. 

The Trust is not a commodity pool for 

purposes of the Commodity Exchange 

Act.7

The Exchange represents that the 

Shares satisfy the requirements of 

proposed NYSE Arca Rule 8.800–E and 

thereby qualify for listing on the 

Exchange.8

Operation of the Trust 9

The Trust will issue the Shares 

which, according to the Annual Report, 

represent units of undivided beneficial 

ownership of the Trust. The Trust is a 

Delaware statutory trust and will 

operate pursuant to a trust agreement 

(the ‘‘Trust Agreement’’) between 

Bitwise Investment Advisers, LLC (the 

‘‘Sponsor’’ or ‘‘Bitwise’’) and Delaware 

Trust Company, as the Trust’s trustee 

(the ‘‘Trustee’’). Coinbase Custody Trust 

Company, LLC will maintain custody of 

the Trust’s assets (the ‘‘Custodian’’). The 

Bank of New York Mellon will be the 

custodian for the Trust’s cash holdings 

(in such role, the ‘‘Cash Custodian’’), as 

well as the Trust’s administrator (in 

such role, the ‘‘Administrator’’) and 

transfer agent (in such role, the 

‘‘Transfer Agent’’). 

According to the Annual Report, the 

investment objective of the Trust is to 

invest in a portfolio of digital assets 

(each, a ‘‘Portfolio Asset’’ and, 

collectively, ‘‘Portfolio Assets’’) that 

tracks the Bitwise 10 Large Cap Crypto 

Index (the ‘‘Index’’). The Index is 

administered by Bitwise Index Services, 

LLC, an affiliate of the Sponsor (the 

‘‘Index Provider’’). The Trust rebalances 

monthly alongside the rebalance of the 

Index to stay current with any changes 

to the Index. As of October 31, 2024, the 

Trust’s Portfolio Assets and respective 

weightings are: 

Portfolio asset Symbol Weight 

(%) 

Bitcoin .............................. BTC 75.10 

Ethereum ......................... ETH 16.5 

Solana ............................. SOL 4.30 

XRP ................................. XRP 1.50 

Cardano .......................... ADA 0.70 

Avalanche ........................ AVAX 0.60 

Chainlink .......................... LINK 0.40 

Bitcoin Cash .................... BCH 0.40 

Polkadot .......................... DOT 0.30 

Uniswap ........................... UNI 0.30 

To determine the Trust’s Net Asset 

Value (‘‘NAV’’) at the end of every 

Business Day,10 the Sponsor will rely on 

a third-party valuation vendor, CF 

Benchmarks Ltd. (the ‘‘Valuation 

Vendor’’), to calculate and publish the 

U.S. dollar price for each Portfolio Asset 

(each, a ‘‘Reference Price’’ and, 

collectively, the ‘‘Reference Prices’’) as 

of 4:00 p.m. E.T. using prices from 

several different digital asset trading 

platforms selected by the Valuation 

Vendor.11 Each Reference Price 

aggregates the trade flow of several 

major digital asset trading platforms 

during an observation window between 

3:00 p.m. and 4:00 p.m. E.T. into the 

U.S. dollar price of one of each Portfolio 

Asset at 4:00 p.m. E.T. The Reference 

Price calculation is designed based on 

the IOSCO Principals for Financial 

Benchmarks. 

The Trust’s only assets will be 

Portfolio Assets and cash.12 The Trust 


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Custodian pursuant to creation orders for Shares 

and the Cash Custodian will hold such cash until 

such time as it can be converted to Portfolio Assets, 

which the Trust intends to do on the same Business 

Day in which such cash is received by the Cash 

Custodian. Additionally, the Trust will sell 

Portfolio Assets in exchange for cash pursuant to 

redemption orders of its Shares. In connection with 

such sales, an approved Digital Asset Trading 

Counterparty (defined below) will send cash to the 

Cash Custodian. The Cash Custodian will hold such 

cash until it can be distributed to the redeeming 

Authorized Participant, which it intends to do on 

the same Business Day in which it is received. In 

connection with the purchases and sales of 

Portfolio Assets pursuant to its creation and 

redemption activity, it is possible that the Trust 

may retain de minimis amounts of cash as a result 

of rounding differences. The Trust may also 

initially hold small amounts of cash to initiate Trust 

operations in the immediate aftermath of its 

Registration Statement being declared effective. 

Lastly, the Trust may also sell Portfolio Assets and 

temporarily hold cash as part of a liquidation of the 

Trust or to pay certain extraordinary expenses not 

assumed by the Sponsor. Under the Trust 

Agreement, the Sponsor has agreed to assume the 

normal operating expenses of the Trust, subject to 

certain limitations. For example, the Trust will bear 

any indemnification or litigation liabilities as 

extraordinary expenses. In any event, in the 

ongoing course of business, the amounts of cash 

retained by the Trust are not expected to constitute 

a material portion of the Trust’s holdings. 

13The Trust may, from time to time, passively 

receive, by virtue of holding Portfolio Assets, 

certain additional digital assets (‘‘IR Assets’’) or 

rights to receive IR Assets (‘‘Incidental Rights’’) 

through a fork of a digital asset network or an 

airdrop of assets. The Trust will not seek to acquire 

such IR Assets or Incidental Rights. Pursuant to the 

terms of the Trust Agreement, the Trust has 

disclaimed ownership in any such IR Assets and/ 

or Incidental Rights to make clear that such assets 

are not and shall never be considered assets of the 

Trust and will not be taken into account for 

purposes of determining the Trust’s NAV or NAV 

per Share. Neither the Trust, nor the Sponsor, nor 

the Custodian, nor any other person associated with 

the Trust will, directly or indirectly, engage in 

action where any portion of the Trust’s Portfolio 

Assets becomes subject to any proof-of-stake 

validation or is used to earn additional assets or 

generate income or other earnings. 

14The full Index Methodology is available at 

https://bitwiseinvestments.com/indexes/ 

methodology. 

15Based on the Lukka Prime price. 

16According to the Annual Report, circulating 

supply is the best approximation of the number of 

coins available on public markets. Circulating 

supply is derived by taking the total number of 

existing digital assets native to a specific 

Blockchain and subtracting the number of coins 

verifiably burned, locked, or reserved (for example, 

by a foundation). 

17The Committee determines which trading 

platforms qualify as Eligible Digital Asset Trading 

Platforms. To qualify as an Eligible Digital Asset 

Trading Platform, a venue must: (1) provide an 

open platform for exchanging at least one digital 

asset for either another digital asset or for a fiat 

currency; (2) not be domiciled in a country, region, 

or locality that implements meaningful capital 

controls on international investors; (3) not be 

subject to extraordinary regulatory or legal action 

that is likely to lead to unusual pricing, 

significantly disrupt institutional access to the 

market, or disrupt fiat withdrawals; (4) charge fees 

for trading; (5) have a functioning, secure, and 

reliable application programming interface (API) 

allowing for the timely ingestion of trade and 

volume data; (6) have no significant downtime, 

withdrawal, or known security issues; (7) account 

for more than 1.0% of the combined trailing 30-day 

dollar trading volume of all digital assets on entities 

that meet the prior listed rules; and (8) in the 

opinion of the Committee, have significant real spot 

trading volume. The list of Eligible Digital Asset 

Trading Platforms is reviewed on an annual basis. 

As of January 25, 2024, the date that the Committee 

performed its 2024 annual review of Eligible Digital 

Asset Trading Platforms, the list of Eligible Digital 

Asset Trading Platforms included Bitstamp, 

BitFlyer, Coinbase, Gemini, Kraken, itBit, and 

LMAX. 

18The list of approved custodians is reviewed 

and updated on an annual basis, or at the discretion 

of the Committee. As of January 23, 2024, the date 

that the Committee performed its 2024 annual 

review of eligible custodians, the list of approved 

custodians included Anchorage, Bakkt Warehouse, 

BitGo, Coinbase Custody, Fidelity Digital Assets, 

and Gemini Custody. 

19The Committee conducts a risk-based 

assessment that considers whether the digital asset 

may be deemed a security under U.S. federal 

securities laws and whether it is subject to 

regulatory action that may imperil the value of the 

digital asset. Such assessment does not preclude 

legal or regulatory action based on the presence of 

a security. The Committee does not engage in legal 

analysis of any digital assets or perform any 

analysis of digital assets based upon any legal 

standards. The Committee reviews the following 

information to make this determination: (1) public 

information to determine if the Commission, any 

other U.S. regulatory agency, or any court has made 

any statements regarding the digital asset; (2) public 

information regarding how the digital asset markets 

view the digital asset, including whether the digital 

asset has been listed on entities such as Coinbase 

or other U.S. digital asset trading platforms that 

would have had access to a reasonable amount of 

information when making their determinations to 

list the digital asset; (3) public information to 

undertake reasonable diligence into the structure 

and technology of the digital asset, including 

reviewing the digital asset’s whitepaper if available 

and speaking with the sponsor of the digital asset; 

and (4) any other information gained from reputable 

sources that may impact the Committee’s view of 

the digital asset, including a review of any websites 

associated with the digital asset’s development. If 

the Committee adds a digital asset to the Index, but 

later becomes aware of new information that causes 

the Committee to revalue the risk profile of such 

digital asset, the Committee will review such 

information and determine whether the digital asset 

should be removed from the Index. 

does not seek to hold any digital assets 

other than Portfolio Assets and has 

expressly disclaimed ownership of any 

such assets in the event the Trust ever 

involuntarily comes into possession of 

such assets.13 The Trust will not use 

derivatives that may subject the Trust to 

counterparty and credit risks. The Trust 

will process creations and redemptions 

in cash. The Trust’s only recurring 

ordinary expense is expected to be the 

Sponsor’s unitary management fee (the 

‘‘Management Fee’’), which will accrue 

daily and will be payable monthly in 

arrears. The Administrator will 

calculate the Management Fee by 

applying an annualized rate to the NAV 

of the Trust’s assets at the end of each 

month. Financial institutions authorized 

to create and redeem Shares (each, an 

‘‘Authorized Participant’’) will deliver, 

or cause to be delivered, cash in 

exchange for Shares of the Trust, and 

the Trust will deliver cash to 

Authorized Participants when those 

Authorized Participants redeem Shares 

of the Trust. 

The Index 

The Bitwise Crypto Index Committee 

(the ‘‘Committee’’), convened by the 

Index Provider, is the governing body of 

the Index and is responsible for 

developing, maintaining, and adjusting 

the methodology by which the Index is 

constructed (the ‘‘Index 

Methodology’’).14 The Index is 

comprised of ten digital assets (the 

‘‘Index Components’’) and is designed 

to track the performance of the ten 

largest digital assets that currently trade 

publicly on eligible digital asset trading 

platforms, as selected and weighted by 

free-float market capitalization. The 

market capitalization of a digital asset is 

calculated by multiplying its price 15

times its free-float-adjusted or 

‘‘circulating’’ 16 supply. The proportion 

of each digital asset in the Index is 

based on this adjusted market 

capitalization. 

The Index will only consider for 

eligibility as Index Components digital 

assets that satisfy the following criteria: 

• The digital asset must be a 

cryptographically secured digital bearer 

instrument; 

• The digital asset must have a price 

that is not pegged to another digital 

asset, fiat currency, group of those 

currencies, or hard asset; 

• The digital asset must be freely 

traded and can be freely held for the 

foreseeable future; 

• The digital asset must trade on an 

Eligible Digital Asset Trading 

Platform,17 without withdrawal issues 

specific to that digital asset; 

• The digital asset must be custodied 

by a third-party custodian regulated as 

a federally chartered bank or as a state 

trust company, that meets additional 

security practices, insurance 

requirements, and business practice 

requirements as determined by the 

Committee; 18

• The digital asset must have no 

known security vulnerabilities, 

including critical bugs, undue exposure 

to 51% attacks, or other factors, as 

determined by the Committee; 

• The digital asset must not face 

undue risk of being deemed a security 

under U.S. federal securities laws in the 

opinion of the Committee, given present 

knowable facts and circumstances; 19

• The digital asset must have traded 

more than 1% of its free-float-adjusted 

market capitalization on eligible trading 

venues over the past 30 days; and 


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20The weighting of the Trust’s Portfolio Assets 

will differ slightly from the weightings of the Index 

Components due to the need for the Trust to 

implement actual rebalance transactions, unlike the 

Index. The transactions undertaken by the Trust to 

align the Portfolio Assets with the Index 

Components may create transaction costs, fees, and 

trading slippage, which may cause the Trust’s 

performance to deviate slightly from the Index’s 

performance. 

21Under extraordinary circumstances, digital 

assets may lose eligibility to be Index Components 

and be removed from the Index on a same-day basis 

by a unanimous vote of the quorum of members of 

the Committee. Such emergency removals will take 

place at 4:00 p.m. E.T. following the conclusion of 

such decision by the Committee and will be 

publicly available on the Sponsor’s website. 

22The Sponsor notes that, as of the date of this 

filing, the Index Components and Portfolio Assets 

that meet this standard are bitcoin and ether, which 

make up more than 91% of the Trust and Index. 

• The digital asset must have 

maintained a unit price greater than 

$0.01 for the past 30 consecutive days. 

The Index is reconstituted on a 

monthly basis at 4:00 p.m. E.T. on the 

last Business Day of each month. As of 

October 31, 2024, the Index included 

the following digital assets, and their 

weights were as follows: 20

Digital asset Weight 

(%) 

Bitcoin ........................................... 75.14 

Ethereum ...................................... 16.42 

Solana ........................................... 4.30 

XRP .............................................. 1.56 

Cardano ........................................ 0.66 

Avalanche ..................................... 0.55 

Chainlink ....................................... 0.39 

Bitcoin Cash ................................. 0.38 

Uniswap ........................................ 0.31 

Polkadot ........................................ 0.30 

To the extent that a digital asset meets 

the Index’s eligibility requirements at a 

future date, it would be considered for 

inclusion in the Index in connection 

with a future rebalancing. Digital assets 

will lose eligibility and be removed 

from the Index at the next monthly 

reconstitution event if they violate any 

of the eligibility requirements described 

above for 30 consecutive days.21

The Index is calculated on a daily 

basis and published on the Sponsor’s 

website. Should any material change be 

made to the Index Methodology that 

results in a material change to the 

composition of the Index and, as part of 

the Trust’s monthly rebalancing process, 

results in a material change to the 

composition of the Trust (which the 

Sponsor generally considers to be a 

change of 10% or more to the Trust or 

the Index holdings, but in any event, is 

also determined at the Trust’s 

discretion), the Trust will notify 

shareholders of such material change by 

filing a Form 8–K with the Commission. 

The Index will implement a rule that 

will limit the Index Components and 

weightings thereof such that at least 

90% of the weight of the Index 

Components 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’’) at each monthly 

rebalancing. This rule will be in effect 

prior to such time that Shares of the 

Trust begin trading on the Exchange. 

The Portfolio Assets and Index 

Components 

The Portfolio Assets will consist of 

the Index Components except that the 

Sponsor may determine to exclude a 

particular Index Component in its 

discretion under certain specified 

circumstances further described below 

(including to comply with the proposed 

requirements of Rule 8.800–E(e)(1)). The 

weighting of each Portfolio Asset is 

generally expected to be the same as the 

weighting of the Index Components in 

the Index, except when the Sponsor 

determines to exclude one or more 

digital assets from the Portfolio Assets 

in the rules-based circumstances set 

forth below, in which case the 

weightings of the Portfolio Assets are 

generally expected to be calculated 

proportionally to the respective Index 

Components for the remaining Index 

Components. 

The Sponsor will retain discretion to 

include or exclude individual digital 

assets from the Portfolio Assets only in 

the following circumstances: 

• The Sponsor may exclude a digital 

asset or rebalance the weighting of an 

existing Portfolio Asset to the extent its 

inclusion as a Portfolio Asset or 

projected weighting would exceed a 

threshold that could, in the Sponsor’s 

sole discretion, require the Trust to 

register as an investment company 

under the Investment Company Act or 

require the Sponsor to register as an 

investment adviser under the 

Investment Advisers Act; 

• None or few of the Authorized 

Participants or service providers has the 

ability to trade or otherwise support a 

digital asset; 

• The Sponsor 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; 

• The digital asset’s underlying code 

contains, or may contain, significant 

flaws or vulnerabilities; 

• There is limited or no reliable 

information regarding, or concerns over 

the intentions of, the core developers of 

the digital asset; or 

• Any of the existing criteria used by 

the Index for inclusion in the Index is 

found by the Sponsor to prohibit the 

inclusion of the digital asset in the 

Index, in which case, the Sponsor may, 

in its sole discretion, cause the Portfolio 

Assets to deviate from the Index 

Components until such time as the 

Index has taken similar action. 

The Trust does not intend for the 

Portfolio Assets to deviate from the 

Index Components, and the Trust 

anticipates that such deviation would 

likely occur only if the Trust was unable 

to hold a particular digital asset 

included in the Index, if the Trust 

determined that holding that particular 

digital asset would result in significant 

harm to shareholders, or if the holding 

of that digital asset would cause the 

Trust’s holdings to be inconsistent with 

the proposed requirements of Rule 

8.800–E(c)(1). The Sponsor will ensure 

that the Trust’s holdings are consistent 

with the requirements of Rule 8.800– 

E(c)(1), as proposed, by monitoring the 

weightings of the Portfolio Assets and 

Index Components daily and taking any 

measures as described in the preceding 

section to ensure that 90% of the 

holdings 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 22 and by 

implementing an Index rule that will 

limit the Index Components and 

weightings such that at least 90% of the 

weight of such constituents shall, on 

both an initial and continuing basis, 

consist of the same assets. 

Background on Portfolio Assets 

Bitcoin 

Bitcoin is the most well-recognized 

digital asset in the world. As of October 

31, 2024, bitcoin is the largest digital 

asset in the world by market 

capitalization. Bitcoin was invented in 

2008 by a pseudonymous software 

developer, or a group of software 

developers, under the name Satoshi 

Nakamoto. Nakamoto published a white 

paper titled ‘‘Bitcoin: A Peer-to-Peer 

Electronic Cash System’’ on October 31, 

2008, which provided the technical 

outline for launching the bitcoin 

network. The network went live on 

January 3, 2009, when Nakamoto mined 


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the first block of transactions, known as 

the ‘‘Genesis Block.’’ 

The software underlying the Bitcoin 

Blockchain determines a number of key 

and independent parameters. At the 

heart of the system lies the algorithm 

that enforces that all ledgers converge 

over time (commonly known as the 

‘‘Consensus Algorithm’’). Other 

important portions of the system 

include the rules that deem a 

transaction valid, a programming 

language that allows for different types 

of transactions to be executed, and the 

process through which new digital 

assets are minted (commonly known as 

‘‘Mining’’), and others. The network 

strictly enforces the total amount of 

units issued to converge towards 21 

million by the year 2140 through a 

predetermined schedule. 

New bitcoin is created when Miners 

process blocks of transactions. In the 

bitcoin network, this occurs roughly 

every ten minutes. The Blockchain 

periodically adjusts the difficulty of 

settling transactions to ensure that 

cadence remains approximately 

accurate. The amount of new bitcoin 

created each time a block of bitcoin 

transactions is processed is 

predetermined by the software 

underlying the bitcoin Blockchain. 

Initially, the Miner that settled a block 

of transactions on the bitcoin 

Blockchain received 50 bitcoin. That 

reward was and is programmed to be cut 

in half roughly every four years; 

currently, Miners receive 3.125 bitcoin 

for each block of settled transactions. 

The bitcoin network is known for 

being extremely decentralized, as it is 

maintained by a network of computers 

that, joined together, represents the 

largest supercomputer in the world. 

Some believe that this makes bitcoin 

more secure and resistant to attacks 

compared to other Blockchain networks. 

Ethereum 

Ether is the native digital asset of 

Ethereum, the second largest Blockchain 

network ranked by market capitalization 

as of October 31, 2024. Ethereum was 

described in a white paper in late 2013, 

and an online crowdsale to fund 

development took place between July 

and August 2014. The network went 

live in July 2015. 

Ethereum was specifically designed to 

power smart contracts, which are 

computer programs intended to enforce 

the performance of a contract that 

parties can codify and agree upon with 

minimal or no need of trusted 

intermediaries. 

Ethereum’s script language, the 

programming language that developers 

use for creating Blockchain 

applications, is significantly more 

flexible than bitcoin’s. This allows the 

creation of programs that do general 

computation instead of only the 

relatively simple conditional payments 

that are possible with bitcoin. As such, 

a whole ecosystem of different 

applications including asset issuance, 

decentralized financial applications, 

identity management, and others are 

able to be and have been developed on 

top of the Ethereum network. However, 

Ethereum’s more permissive 

programming language makes the 

network inherently less secure because 

it can increase the odds that a 

catastrophic bug in one smart contract 

could affect the whole network. 

Due to Ethereum’s focus on enabling 

innovation on its Blockchain system, 

events like hard forks are significantly 

more common in Ethereum than in 

bitcoin. For example, on September 15, 

2022, Ethereum transitioned from a 

proof-of-work network to a proof-ofstake network. This infrastructure 

upgrade was known as ‘‘The Merge.’’ 

This was only one of several hard forks 

the Ethereum Blockchain has undergone 

since inception. Some consider 

Ethereum’s stance as an advantage, 

while others perceive it as a risk, 

especially as the project grows larger 

and the cost of potential mistakes rises. 

Solana 

Solana is a decentralized blockchain 

network with a focus on secure, low-fee, 

high-speed transactions that are paid for 

using SOL, which is the Solana 

Blockchain’s native digital asset. By 

leveraging proof-of-history and other 

breakthrough innovations, Solana 

allows for greater throughput than many 

other Blockchains, with the ability to 

scale at the rate of Moore’s Law. Solana, 

like Ethereum, is home to several use 

cases including gaming, decentralized 

finance, and non-fungible token 

marketplaces. 

XRP 

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. 

Cardano 

Cardano is a proof-of-stake 

Blockchain and smart contract platform 

that facilitates secure payments and 

enables developers to build 

decentralized applications. Grounded in 

research and academia, the protocol and 

its token were named after 16th and 

19th century polymaths, and its 

programming language, Haskell, is 

commonly used in the traditional 

finance and security sectors. 

Avalanche 

Avalanche is a Blockchain ecosystem 

that is home to several applications 

across a variety of use cases including, 

but not limited to, gaming and 

decentralized finance. Avalanche’s 

design makes it relatively easy for 

developers to deploy applications to 

and from Ethereum. Avalanche was 

designed to be a faster and cheaper 

alternative to other Blockchains for 

purposes of a better user and developer 

experience. For example, the network 

leverages its different built-in 

Blockchains for enhanced transaction 

speeds at economically feasible costs. 

To that end, some of its built-in 

Blockchains are dedicated to specific 

use cases and/or applications to avoid 

network congestion the popularity of 

other applications can cause. 


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23The Sponsor will provide notice of any such 

changes in the Trust’s periodic or current reports 

and, if the Sponsor makes such a change other than 

on an ad hoc or temporary basis, will file a 

proposed rule change with the Commission. 

Chainlink 

Chainlink is a network that connects 

smart contracts with real world data. 

Blockchain networks are unaware of 

what happens outside of those 

networks, and therefore whenever a 

Blockchain application needs to interact 

with external data, it needs a reliable 

data source to do so. These data sources 

are known in the industry as ‘‘Oracles.’’ 

Relying on one Oracle creates a single 

point of failure, and Chainlink aims to 

solve this issue by providing a 

decentralized network of multiple 

Oracles that can evaluate the same data. 

The accuracy of this data can be 

important if this data is used to trigger 

activity on a smart contract or other 

Blockchain application. Chainlink 

provides price reference data feeds for 

decentralized finance, and also allows 

users to create their own Oracle 

networks. Larger enterprises can also 

use Chainlink to sell their data to smart 

contracts that need them to trigger a 

certain condition. Current use cases for 

Chainlink include stable digital assets, 

decentralized lending and borrowing, 

and asset management. 

Bitcoin Cash 

Bitcoin Cash is a proof-of-work 

lockchain that was created as a hard 

fork of bitcoin on August 1, 2017. At 

inception, the most significant 

difference between Bitcoin Cash’s 

Blockchain design and the Blockchain 

design of bitcoin was Bitcoin Cash’s 

adoption of larger block sizes. Larger 

block sizes allow the Bitcoin Cash 

Blockchain to process more transactions 

per second than the bitcoin Blockchain. 

Uniswap 

Uniswap is the governance token of 

the Uniswap protocol. Over the past five 

years, Uniswap has emerged as a 

leading decentralized exchange for 

digital assets. Uniswap’s automated 

platform lets traders exchange digital 

assets in the same way they do on 

centralized trading venues like 

Coinbase, but without a company 

standing in the middle of the 

transaction. Additionally, Uniswap’s 

decentralized structure allows any 

individual to act as a market maker and 

provide liquidity on the platform, 

earning yield while facing risk. 

Polkadot 

Polkadot is a proof-of-stake 

Blockchain that leverages a newer 

infrastructure design to that of Solana’s 

and Ethereum’s. For purposes of 

enhanced performance, Polkadot splits 

up the workload by hosting various 

independent blockchains on top of one 

central blockchain, known as the Relay 

Chain. The purpose of the Relay Chain 

is to provide ecosystem support, notably 

in terms of security and interoperability. 

Custody of the Trust’s Portfolio Assets 

The Custodian will maintain custody 

of the Portfolio Assets, other than that 

which is maintained in a trading 

account (the ‘‘Trading Balance’’) with 

Coinbase, Inc. (the ‘‘Prime Execution 

Agent,’’ which is an affiliate of the 

Custodian). The Custodian will 

maintain an account that holds the 

Trust’s Portfolio Assets (the ‘‘Trust 

Digital Asset Account’’) and will 

facilitate the transfer of Portfolio Assets 

required for the operation of the Trust. 

The Trading Balance will only be used 

in the limited circumstances in which 

the Trust is using the Agent Execution 

Model (as defined below) to effectuate 

the purchases and sales of Portfolio 

Assets. The Custodian provides 

safekeeping of Portfolio Assets using a 

multi-layer cold storage security 

platform designed to provide offline 

security of the Portfolio Assets held by 

the Custodian. 

Valuation of the Trust’s Portfolio Assets 

and Determination of NAV 

The net assets of the Trust and its 

Shares are valued on a daily basis by the 

Valuation Vendor. The Trust uses the 

Reference Prices to calculate its NAV. 

The Sponsor, in its sole discretion, 

may cause the Trust to price its portfolio 

based upon an index, benchmark, or 

standard other than the Reference Prices 

at any time, with prior notice to the 

shareholders, if investment conditions 

change or the Sponsor believes that 

another index, benchmark, or standard 

better aligns with the Trust’s investment 

objective and strategy. The Sponsor may 

make this decision for a number of 

reasons, including, but not limited to, a 

determination that the Reference Prices 

differ materially from the global market 

price of the Portfolio Assets and/or that 

third parties are able to purchase and 

sell Portfolio Assets on public or private 

markets not included among the 

Valuation Trading Platforms, and such 

transactions may take place at prices 

materially higher or lower than the 

Reference Prices. The Sponsor, 

however, is under no obligation 

whatsoever to make such changes in any 

circumstance. In the event that the 

Sponsor intends to establish the Trust’s 

NAV by reference to an index, 

benchmark, or standard other than 

Reference Prices, it will provide 

shareholders with notice in a prospectus 

supplement and/or through a current 

report on Form 8–K or in the Trust’s 

annual or quarterly reports.23

The Trust’s only assets will be 

Portfolio Assets and, under limited 

circumstances, cash. The Trust’s NAV 

and NAV per Share will be determined 

by the Administrator once each 

Exchange trading day as of 4:00 p.m. 

E.T., or as soon thereafter as practicable. 

The Administrator will calculate the 

NAV by multiplying the Portfolio Assets 

held by the Trust by their respective 

Reference Prices for such day, adding 

any additional receivables and 

subtracting the accrued but unpaid 

liabilities of the Trust. The NAV per 

Share is calculated by dividing the NAV 

by the number of Shares then 

outstanding. The Valuation Vendor will 

determine the price of the Trust’s 

Portfolio Assets by reference to the 

Valuation Trading Platforms. 

Intraday Trust Value 

The Trust uses the real-time prices 

published by the Valuation Vendor for 

each Portfolio Asset to calculate an 

Indicative Trust Value (‘‘ITV’’). One or 

more major market data vendors will 

disseminate the ITV, updated every 15 

seconds each trading day 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.). The ITV will be 

calculated throughout the trading day 

by using the prior day’s holdings at the 

close of business and the most recently 

reported price level of the real-time 

prices for each Portfolio Asset published 

by the Valuation Vendor. The ITV will 

be widely disseminated by one or more 

major market data vendors during the 

NYSE Arca Core Trading Session. 

Creation and Redemption of Shares 

The Trust creates and redeems Shares 

from time to time, but only in one or 

more Creation Units, which will 

initially consist of at least 10,000 

Shares, but may be subject to change 

(‘‘Creation Unit’’). A Creation Unit is 

only made in exchange for delivery to 

the Trust or the distribution by the Trust 

of an amount of cash, equivalent to the 

value of Portfolio Assets represented by 

the Creation Unit being created or 

redeemed, the amount of which is 

representative of the combined NAV of 

the number of Shares included in the 

Creation Units being created or 

redeemed determined as of 4:00 p.m. 

E.T. on the day the order to create or 

redeem Creation Units is properly 


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24The Digital Asset Trading Counterparties with 

which the Sponsor will engage in Portfolio Asset 

transactions are unaffiliated third parties that are 

not acting as agents of the Trust, the Sponsor or the 

Authorized Participant, and all transactions will be 

done on an arms-length basis. There is no 

contractual relationship between the Trust, the 

Sponsor or the Digital Asset Trading Counterparty. 

25The Sponsor will maintain ownership and 

control of the Portfolio Assets in a manner 

consistent with good delivery requirements for spot 

commodity transactions. 

received. Except when aggregated in 

Creation Units or under extraordinary 

circumstances permitted under the 

Trust Agreement, the Shares are not 

redeemable securities. 

Authorized Participants are the only 

persons that may place orders to create 

and redeem Creation Units. Authorized 

Participants must be (1) registered 

broker-dealers or other securities market 

participants, such as banks and other 

financial institutions, that are not 

required to register as broker-dealers to 

engage in securities transactions 

described below, and (2) Depository 

Trust Company (‘‘DTC’’) participants. 

To become an Authorized Participant, a 

person must enter into an Authorized 

Participant Agreement with the Trust 

and/or the Trust’s marketing agent (the 

‘‘Marketing Agent’’). 

When purchasing or selling Portfolio 

Assets in response to the purchase of 

Creation Units or the redemption of 

Creation Units, which will be processed 

in cash, the Trust would do so pursuant 

to either (1) a ‘‘Trust-Directed Trade 

Model,’’ or (2) an ‘‘Agent Execution 

Model,’’ which are each described in 

more detail below. 

The Trust intends to utilize the TrustDirected Trade Model for all purchases 

and sales of Portfolio Assets and would 

only utilize the Agent Execution Model 

in the event that no digital asset trading 

counterparty approved by the Sponsor 

(a ‘‘Digital Asset Trading 

Counterparty’’) 24 is able to effectuate 

the Trust’s purchase or sale of Portfolio 

Assets. Under the Trust-Directed Trade 

Model, in connection with receipt of a 

purchase order or redemption order, the 

Sponsor, on behalf of the Trust, would 

be responsible for acquiring Portfolio 

Assets from an approved Digital Asset 

Trading Counterparty in an amount 

equal to the Basket Amount. When 

seeking to purchase Portfolio Assets on 

behalf of the Trust, the Sponsor will 

seek to purchase Portfolio Assets at 

commercially reasonable prices and 

terms from any of the approved Digital 

Asset Trading Counterparties.25 Once 

agreed upon, the transaction will 

generally occur on an ‘‘over-thecounter’’ basis. 

Whether utilizing the Trust-Directed 

Trade Model or the Agent Execution 

Model, 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 Portfolio Assets 

as part of the creation or redemption 

process or otherwise direct the Trust or 

a third party with respect to purchasing, 

holding, delivering, or receiving 

Portfolio Assets as part of the creation 

or redemption process. Additionally, 

under either the Trust-Directed Trade 

Model or the Agent Execution Model, 

the Trust will create Shares by receiving 

Portfolio Assets from a third party that 

is not the Authorized Participant and is 

not affiliated with the Sponsor or the 

Trust, and the Trust—not the 

Authorized Participant—is responsible 

for selecting the third party to deliver 

the Portfolio Assets. The third party will 

not be acting as an agent of the 

Authorized Participant with respect to 

the delivery of the Portfolio Assets to 

the Trust or acting at the direction of the 

Authorized Participant with respect to 

the delivery of the Portfolio Assets to 

the Trust. Additionally, the Trust will 

redeem Shares by delivering Portfolio 

Assets to a third party that is not the 

Authorized Participant and is not 

affiliated with the Sponsor or the Trust, 

and the Trust—not the Authorized 

Participant—is responsible for selecting 

the third party to receive the Portfolio 

Assets. Finally, the third party will not 

be acting as an agent of the Authorized 

Participant with respect to the receipt of 

Portfolio Assets from the Trust or acting 

at the direction of the Authorized 

Participant with respect to the receipt of 

Portfolio Assets from the Trust. 

Acquiring and Selling Portfolio Assets 

Pursuant to Creation and Redemption of 

Shares Under the Trust-Directed Trade 

Model 

Under the Trust-Directed Trade 

Model, on any Business Day, an 

Authorized Participant may create 

Shares by placing an order to purchase 

one or more Creation Units with the 

Transfer Agent through the Marketing 

Agent. Such orders are subject to 

approval by the Marketing Agent and 

the Transfer Agent. To be processed on 

the date submitted, creation orders must 

be placed before 4:00 p.m. E.T. or the 

close of regular trading on the Exchange, 

whichever is earlier, but may be 

required to be placed earlier at the 

discretion of the Sponsor. A purchase 

order will be effective on the date it is 

received by the Transfer Agent and 

approved by the Marketing Agent 

(‘‘Purchase Order Date’’). 

Creation Units are processed in cash. 

By placing a purchase order, an 

Authorized Participant agrees to 

deposit, or cause to be deposited, an 

amount of cash equal to the quantity of 

Portfolio Assets attributable to each 

Share of the Trust (net of accrued but 

unpaid expenses and liabilities) 

multiplied by the number of Shares 

(10,000) comprising a Creation Unit (the 

‘‘Basket Amount’’). The Sponsor will 

cause to be published each Business 

Day, prior to the commencement of 

trading on the Exchange, the Basket 

Amount relating to a Creation Unit 

applicable for such Business Day. That 

amount is derived by multiplying the 

Basket Amount by the value of Portfolio 

Assets ascribed by the Pricing Index. 

However, the Authorized Participant is 

also responsible for any additional cash 

required to account for the price at 

which the Trust agrees to purchase the 

requisite amount of Portfolio Assets 

from a Digital Asset Trading 

Counterparty to the extent it is greater 

than the Pricing Index price on each 

Purchase Order Date. 

Prior to the delivery of Creation Units, 

the Authorized Participant must also 

have wired to the Transfer Agent the 

nonrefundable transaction fee due for 

the creation order. Authorized 

Participants may not withdraw a 

creation request. If an Authorized 

Participant fails to consummate the 

foregoing, the order may be cancelled. 

Following the acceptance of a 

purchase order, the Authorized 

Participant must wire the cash amount 

described above to the Cash Custodian, 

and the Digital Asset Trading 

Counterparty must deposit the required 

amount of Portfolio Assets with the 

Custodian by the end of the day E.T. on 

the Business Day following the Purchase 

Order Date. The Portfolio Assets will be 

purchased from Digital Asset Trading 

Counterparties that are not acting as 

agents of the Trust or agents of the 

Authorized Participant. These 

transactions will be done on an armslength basis, and there is no contractual 

relationship between the Trust, the 

Sponsor, or the Digital Asset Trading 

Counterparty to acquire such Portfolio 

Assets. Prior to any movement of cash 

from the Cash Custodian to the Digital 

Asset Trading Counterparty or 

movement of Shares from the Transfer 

Agent to the Authorized Participant’s 

DTC account to settle the transaction, 

the Portfolio Assets must be deposited 

at the Custodian. 

The Digital Asset Trading 

Counterparty must deposit the required 

amount of Portfolio Assets by end of day 

E.T. on the Business Day following the 

Purchase Order Date prior to any 

movement of cash from the Cash 

Custodian or Shares from the Transfer 


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Agent. Upon receipt of the deposit 

amount of Portfolio Assets at the 

Custodian from the Digital Asset 

Trading Counterparty, the Custodian 

will notify the Sponsor that the Portfolio 

Assets have been received. The Sponsor 

will then notify the Transfer Agent that 

the Portfolio Assets have been received, 

and the Transfer Agent will direct DTC 

to credit the number of Shares ordered 

to the Authorized Participant’s DTC 

account and will wire the cash 

previously sent by the Authorized 

Participant to the Digital Asset Trading 

Counterparty to complete settlement of 

the Purchase Order and the acquisition 

of the Portfolio Assets by the Trust, as 

described above. 

As between the Trust and the 

Authorized Participant, the expense and 

risk of the difference between the value 

of Portfolio Assets calculated by the 

Administrator for daily valuation using 

the Pricing Benchmarks and the price at 

which the Trust acquires the Portfolio 

Assets will be borne solely by the 

Authorized Participant to the extent that 

the Trust pays more for Portfolio Assets 

than the price used by the Trust for 

daily valuation. Any such additional 

cash amount will be included in the 

amount of cash calculated by the 

Administrator on the Purchase Order 

Date, communicated to the Authorized 

Participant on the Purchase Order Date, 

and wired by the Authorized Participant 

to the Cash Custodian on the day 

following the Purchase Order Date. If 

the Digital Asset Trading Counterparty 

fails to deliver the Portfolio Assets to 

the Custodian, no cash is sent from the 

Cash Custodian to the Digital Asset 

Trading Counterparty, no Shares are 

transferred to the Authorized 

Participant’s DTC account, the cash is 

returned to the Authorized Participant, 

and the Purchase Order is cancelled. 

Under the Trust-Directed Trade 

Model and according to the Registration 

Statement, the procedures by which an 

Authorized Participant can redeem one 

or more Creation Units mirror the 

procedures for the creation of Creation 

Units. On any Business Day, an 

Authorized Participant may place an 

order with the Transfer Agent through 

the Marketing Agent to redeem one or 

more Creation Units. To be processed on 

the date submitted, redemption orders 

must be placed before 4:00 p.m. E.T. or 

the close of regular trading on the 

Exchange, whichever is earlier, or 

earlier as determined by the Sponsor. A 

redemption order will be effective on 

the date it is received by the Transfer 

Agent and approved by the Marketing 

Agent (‘‘Redemption Order Date’’). The 

redemption procedures allow 

Authorized Participants to redeem 

Creation Units and do not entitle an 

individual shareholder to redeem any 

Shares in an amount less than a 

Creation Unit, or to redeem Creation 

Units other than through an Authorized 

Participant. In connection with receipt 

of a redemption order accepted by the 

Marketing Agent and Transfer Agent, 

the Sponsor, on behalf of the Trust, is 

responsible for selling the Portfolio 

Assets to an approved Digital Asset 

Trading Counterparty in an amount 

equal to the Basket Amount. 

The redemption distribution from the 

Trust will consist of a transfer to the 

redeeming Authorized Participant, or its 

agent, of the amount of cash the Trust 

received in connection with a sale of the 

Basket Amount of Portfolio Assets to a 

Digital Asset Trading Counterparty 

made pursuant to the redemption order. 

The Sponsor will cause to be published 

each Business Day, prior to the 

commencement of trading on the 

Exchange, the redemption distribution 

amount relating to a Creation Unit 

applicable for such Business Day. The 

redemption distribution amount is 

derived by multiplying the Basket 

Amount by the value of Portfolio Assets 

ascribed by the Pricing Benchmarks. 

However, as between the Trust and the 

Authorized Participant, the expense and 

risk of the difference between the value 

of Portfolio Assets ascribed by the 

Pricing Benchmarks and the price at 

which the Trust sells the Portfolio 

Assets will be borne solely by the 

Authorized Participant to the extent that 

the Trust receives less for Portfolio 

Assets than the value ascribed by the 

Pricing Benchmarks. Prior to the 

delivery of Creation Units, the 

Authorized Participant must also have 

wired to the Transfer Agent the 

nonrefundable transaction fee due for 

the redemption order. 

The redemption distribution due from 

the Trust will be delivered by the 

Transfer Agent to the Authorized 

Participant once the Cash Custodian has 

received the cash from the Digital Asset 

Trading Counterparty. The Custodian 

will not send the Basket Amount of 

Portfolio Assets to the Digital Asset 

Trading Counterparty until the Cash 

Custodian has received the cash from 

the Digital Asset Trading Counterparty 

and is instructed by the Sponsor to 

make such transfer. Once the Digital 

Asset Trading Counterparty has sent the 

cash to the Cash Custodian in an agreed 

upon amount to settle the agreed upon 

sale of the Basket Amount of Portfolio 

Assets, the Transfer Agent will notify 

the Sponsor. The Sponsor will then 

notify the Custodian to transfer the 

Portfolio Assets to the Digital Asset 

Trading Counterparty, and the Transfer 

Agent will wire the cash proceeds to the 

Authorized Participant once the Trust’s 

DTC account has been credited with the 

Shares represented by the Creation Unit 

from the redeeming Authorized 

Participant. Once the Authorized 

Participant has delivered the Shares 

represented by the Creation Unit to be 

redeemed to the Trust’s DTC account, 

the Cash Custodian will wire the 

requisite amount of cash to the 

Authorized Participant. If the Trust’s 

DTC account has not been credited with 

all of the Shares of the Creation Unit to 

be redeemed, the redemption 

distribution will be delayed until such 

time as the Transfer Agent confirms 

receipt of all such Shares. If the Digital 

Asset Trading Counterparty fails to 

deliver the cash to the Cash Custodian, 

the transaction will be cancelled, and no 

transfer of Portfolio Assets or Shares 

will occur. 

Acquiring and Selling Portfolio Assets 

Pursuant to Creation and Redemption of 

Shares Under the Agent Execution 

Model 

Under the Agent Execution Model, 

the Prime Execution Agent, acting in an 

agency capacity, would conduct 

Portfolio Assets purchases and sales on 

behalf of the Trust with third parties 

through its Coinbase Prime service 

pursuant to the Prime Execution Agent 

Agreement. To utilize the Agent 

Execution Model, the Trust may 

maintain some Portfolio Assets or cash 

in the Trading Balance with the Prime 

Execution Agent. The Prime Execution 

Agent Agreement provides that the 

Trust does not have an identifiable 

claim to any particular Portfolio Assets 

(and cash); rather, the Trust’s Trading 

Balance represents an entitlement to a 

pro rata share of the Portfolio Assets 

(and cash) the Prime Execution Agent 

holds on behalf of customers who hold 

similar entitlements against the Prime 

Execution Agent. In this way, the 

Trust’s Trading Balance represents an 

omnibus claim on the Prime Execution 

Agent’s Portfolio Assets (and cash) held 

on behalf of the Prime Execution 

Agent’s customers. 

To avoid having to pre-fund 

purchases or sales of Portfolio Assets in 

connection with cash creations and 

redemptions and sales of Portfolio 

Assets to pay Trust expenses not 

assumed by the Sponsor, to the extent 

applicable, the Trust may borrow 

Portfolio Assets or cash as trade credit 

(‘‘Trade Credit’’) from Coinbase Credit, 

Inc. (the ‘‘Trade Credit Lender’’) on a 

short-term basis pursuant to the 

Coinbase Credit Committed Trade 

Financing Agreement (the ‘‘Trade 

Financing Agreement’’). 


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26See Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (August 1, 2018) (SRBatsBZX–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 Trust) (‘‘Winklevoss Order’’). In the 

Winklevoss Order, the Commission set forth both 

the importance and definition of a surveilled, 

regulated market of significant size, explaining that, 

for approved commodity-trust ETPs, ‘‘there has 

been in every case at least one significant, regulated 

market for trading futures on the underlying 

commodity—whether gold, silver, platinum, 

palladium, or copper—and the ETP listing exchange 

has entered into surveillance-sharing agreements 

with, or held Intermarket Surveillance Group 

membership in common with, that market.’’ 

Winklevoss Order, 83 FR at 37594. 27See Securities Exchange Act Release No. 34– 

99306 (January 10, 2024), 89 FR 3008 (January 17, 

2024) (SR–NYSEARCA–2021–90; SR–NYSEARCA– 

2023–44; SRNYSEARCA–2023–58; SR–NASDAQ– 

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

2023028; SR–CboeBZX–2023–038; SR–CboeBZX– 

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

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 ‘‘Spot Bitcoin 

ETP Approval Order’’); Securities Exchange Act 

Release No. 100224 (May 23, 2024), 89 FR 46937 

(May 30, 2024) (SR–NYSEARCA–2023–70; SR– 

NYSEARCA–2024–31; SR–NASDAQ–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 ‘‘Spot Ether ETP Approval Order’’). 

28See Spot Bitcoin ETP Approval Order, 89 FR 

at 3010; Spot Ether ETP Approval Order, 89 FR at 

46938. 

29See Spot Bitcoin ETP Approval Order, 89 FR 

at 3010; Spot Ether ETP Approval Order, 89 FR at 

46938–39. 

30The Sponsor is also the sponsor of the Bitwise 

Bitcoin ETF and the Bitwise Ethereum ETF, which 

were approved pursuant to the Spot Bitcoin ETP 

Approval Order and Spot Ether ETP Approval, 

respectively, and which are both currently listed 

and traded on NYSE Arca. 

On the day of the Purchase Order 

Date, the Trust would enter into a 

transaction to buy Portfolio Assets 

through the Prime Execution Agent for 

cash. Because the Trust’s Trading 

Balance may not be funded with cash on 

the Purchase Order Date for the 

purchase of Portfolio Assets in 

connection with the Purchase Order 

under the Agent Execution Model, the 

Trust may borrow Trade Credits in the 

form of cash from the Trade Credit 

Lender pursuant to the Trade Financing 

Agreement or may require the 

Authorized Participant to deliver the 

required cash for the Purchase Order on 

the Purchase Order Date. The extension 

of Trade Credits on the Purchase Order 

Date allows the Trust to purchase 

Portfolio Assets through the Prime 

Execution Agent on the Purchase Order 

Date, with such Portfolio Assets being 

deposited in the Trust’s Trading 

Balance. 

On the day following the Purchase 

Order Date (the ‘‘Purchase Order 

Settlement Date’’), the Trust would 

deliver Shares to the Authorized 

Participant in exchange for cash 

received from the Authorized 

Participant. Where applicable, the Trust 

would use the cash to repay the Trade 

Credits borrowed from the Trade Credit 

Lender. On the Purchase Order 

Settlement Date for a Purchase Order 

utilizing the Agent Execution Model, 

the Portfolio Assets associated with the 

Purchase Order and purchased on the 

Purchase Order Date is swept from the 

Trust’s Trading Balance with the Prime 

Execution Agent to the Trust Digital 

Asset Account with the Custodian 

pursuant to a regular end-of-day sweep 

process. Transfers of Portfolio Assets 

into the Trust’s Trading Balance are offchain transactions and transfers from 

the Trust’s Trading Balance to the Trust 

Digital Asset Account are ‘‘on-chain’’ 

transactions represented on the Portfolio 

Assets blockchains, as applicable. Any 

financing fee owed to the Trade Credit 

Lender is deemed part of trade 

execution costs and embedded in the 

trade price for each transaction. 

For a Redemption Order utilizing the 

Agent Execution Model, on the day of 

the Redemption Order Date the Trust 

would enter into a transaction to sell 

Portfolio Assets through the Prime 

Execution Agent for cash. The Trust’s 

Trading Balance with the Prime 

Execution Agent may not be funded 

with Portfolio Assets on trade date for 

the sale of Portfolio Assets in 

connection with the redemption order 

under the Agent Execution Model, when 

Portfolio Assets remains in the Trust 

Digital Asset Account with the 

Custodian at the point of intended 

execution of a sale of Portfolio Assets. 

In those circumstances the Trust may 

borrow Trade Credits in the form of 

Portfolio Assets from the Trade Credit 

Lender, which allows the Trust to sell 

Portfolio Assets through the Prime 

Execution Agent on the Redemption 

Order Date, and the cash proceeds are 

deposited in the Trust’s Trading Balance 

with the Prime Execution Agent. On the 

business day following the Redemption 

Order Date (the ‘‘Redemption Order 

Settlement Date’’) for a redemption 

order utilizing the Agent Execution 

Model where Trade Credits were 

utilized, the Trust delivers cash to the 

Authorized Participant in exchange for 

Shares received from the Authorized 

Participant. In the event Trade Credits 

were used, the Trust will use the 

Portfolio Assets that are moved from the 

Trust Digital Asset Account with the 

Custodian to the Trading Balance with 

the Prime Execution Agent to repay the 

Trade Credits borrowed from the Trade 

Credit Lender. 

For a redemption of Creation Units 

utilizing the Agent Execution Model, 

the Sponsor would instruct the 

Custodian to prepare to transfer the 

Portfolio Assets associated with the 

redemption order from the Trust Digital 

Asset Account with the Custodian to the 

Trust’s Trading Balance with the Prime 

Execution Agent. On the Redemption 

Order Settlement Date, the Trust would 

enter into a transaction to sell Portfolio 

Assets through the Prime Execution 

Agent for cash, and the Prime Execution 

Agent credits the Trust’s Trading 

Balance with the cash. On the same day, 

the Authorized Participant would 

deliver the necessary Shares to the Trust 

and the Trust delivers cash to the 

Authorized Participant. 

Applicable Standard 

The Commission has historically 

approved or disapproved exchange 

filings to list and trade series of Trust 

Issued Receipts, including spot, 

Commodity-Based Trust Shares, on the 

basis of whether the listing exchange 

has in place a comprehensive 

surveillance sharing agreement with a 

regulated market of significant size 

related to the underlying commodity to 

be held.26 However, the Commission 

recently approved the listing and 

trading of shares of spot bitcoin 

exchange-traded products (‘‘Spot 

Bitcoin ETPs’’) and spot ether exchangetraded products (‘‘Spot Ether ETPs’’), 

finding that there were sufficient ‘‘other 

means’’ of preventing fraud and 

manipulation sufficient to satisfy the 

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

Exchange Act.27 In each of the Spot 

Bitcoin ETP Approval Order and Spot 

Ether Approval Order, the Commission 

concluded, through a robust correlation 

analysis, that fraud or manipulation that 

impacts prices in spot bitcoin markets 

or spot ether markets would likely 

similarly impact CME bitcoin futures 

prices and CME ether futures prices, 

respectively.28 The Commission further 

found that, because the CME’s 

surveillance can assist in detecting 

those impacts on CME bitcoin futures 

prices and CME ether futures prices, a 

listing exchange’s CSSA with the CME 

can be reasonably expected to assist in 

surveilling for fraudulent and 

manipulative acts and practices in the 

context of the Spot Bitcoin ETPs and 

Spot Ether ETPs.29

The Trust is structured and will 

operate in a manner materially the same 

as the Spot Bitcoin ETPs and Spot Ether 

ETPs.30 The Sponsor believes that the 

Exchange’s ability to obtain information 


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31See 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); 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); 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). 

32See Winklevoss Order, 84 FR 37580, 37582–91; 

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

Phoenix Order, 85 FR 12597. 

33See Winklevoss Order, 84 FR 37582; Wilshire 

Phoenix Order, 85 FR 12597. 

34Relevant Pair is defined as each Portfolio Asset 

versus the quote for that asset in U.S. Dollar terms. 

35The latest IASE 300 Reasonable Assurance 

Auditors Report by KPMG is publicly available on 

the Valuation Vendor’s website: https://

www.cfbenchmarks.com/legal/audit. 

36The Sponsor notes that, given the rigorous 

application of the selection criteria described above, 

the list of CME CF Constituent Exchanges has never 

included FTX.com, FTX.US, Binance.com, or 

Binance.US. 

37See note 35, supra. 

regarding trading in bitcoin futures and 

ether futures from the CME, which, like 

the Exchange, is a member of the ISG, 

would assist the Exchange in detecting 

potential fraud or manipulation with 

respect to trading in the Shares. The 

Sponsor thus believes that, for reasons 

similar to those set forth in the Spot 

Bitcoin ETP Approval Order and Spot 

Ether ETP Approval Order, listing and 

trading Shares of the Trust would be 

consistent with the requirements of the 

Act. 

The Sponsor acknowledges that the 

Portfolio Assets currently include 

minority positions in digital assets that 

are not bitcoin or ether. The Sponsor 

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.31

For purposes of the Trust’s proposal, the 

Sponsor anticipates that the 

Commission may have the same 

concerns about digital assets other than 

bitcoin and ether. 

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.32 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.33 The 

Sponsor believes the Trust’s use of the 

Reference Prices provided by the 

Valuation Vendor to value the Trust’s 

holdings and to determine NAV and ITV 

for the Trust, in tandem with the Trust’s 

cash create and redeem structure 

represents a novel means to prevent 

fraud and manipulation from impacting 

the price of the Shares, by offering 

protections beyond those that exist in 

traditional commodity markets and 

consistent with those that exist in equity 

markets. 

As described in more detail below, 

the Sponsor believes that its use of 

Reference Prices accomplishes these 

objectives in the following ways: 

1. The Valuation Vendor calculates 

the Reference Prices for the Portfolio 

Assets exclusively through trading 

activity on spot digital asset trading 

platforms that are ‘‘CME CF Constituent 

Trading Platforms.’’ 

CME CF Constituent Trading 

Platforms are identified by the 

Valuation Vendor and must meet the 

following eligibility criteria, as 

determined by the Valuation Vendor: 

• The average daily volume of the 

venue’s Relevant Pair 34 spot trading 

contributed during the observation 

window for the Reference Price (i.e., 

3:00 p.m. to 4:00 p.m. E.T.) must exceed 

3% for two consecutive calendar 

quarters. 

• The venue has policies to ensure 

fair and transparent market conditions 

at all times and has processes in place 

to identify and impede illegal, unfair, or 

manipulative trading practices. 

• The venue does not impose undue 

barriers to entry or restrictions on 

market participants, and utilizing the 

venue does not expose market 

participants to undue credit risk, 

operational risk, legal risk, or other 

risks. 

• The venue complies with 

applicable laws and regulations, 

including, but not limited to capital 

markets regulations, money 

transmission regulations, client money 

custody regulations, know-your-client 

(KYC) regulations, and anti-money 

laundering (AML) regulations. 

• The venue cooperates with 

inquiries and investigations of 

regulators and the Administrator upon 

request and must execute data sharing 

agreements with the CME Group. 

Continued compliance with these 

criteria is reviewed on an annual basis 

by an independent committee, the CME 

CF Oversight Committee, and the 

Valuation Vendor’s trading platform 

selection process has been continuously 

audited since 2020.35 As of the date of 

this filing, the CME CF Constituent 

Trading Platforms are Bitstamp, 

Coinbase, Gemini, Kraken, itBit and 

LMAX Digital.36 The Sponsor believes 

that the Valuation Vendor’s enforcement 

of the rigorous criteria applicable to the 

CME CF Constituent Trading Platforms 

effectively acts as a first line of defense 

against manipulation of the Shares by 

ensuring that only data from spot 

trading platforms equipped to detect 

and impede market manipulation is 

included in the calculation of the 

Reference Prices that will determine the 

Trust’s NAV and ITV. 

2. The Reference Prices are 

administered and provided by the 

Valuation Vendor, which is an 

Administrator of Benchmarks under the 

UK Benchmarks Regime (‘‘BMR’’). 

The Valuation Vendor received its 

regulatory authorization in 2019 and has 

held this regulatory authorization 

continuously since then. The Valuation 

Vendor’s compliance with the BMR’s 

comprehensive regulation of financial 

benchmarks has been audited since 

2020.37 The Sponsor believes that the 

Valuation Vendor is the leading 

provider of benchmarks and indices for 

regulated financial products that 

reference digital assets in the US and 


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38The 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. 

39The 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. 

internationally. Reference prices 

provided by the Valuation Vendor 

underpin derivatives contracts regulated 

by the Commodity Futures Trading 

Commission and listed by CME Group, 

as well as exchange-traded funds offered 

by BlackRock, Franklin Templeton, and 

the Sponsor under the regulatory 

purview of the Commission. In addition, 

to ensure compliance with BMR Article 

14, the Valuation Vendor conducts 

surveillance of its benchmarks. When a 

surveillance alert is triggered, the 

Valuation Vendor conducts an 

investigation, including seeking further 

information from CME CF Constituent 

Trading Platforms. Each such 

investigation is memorialized in a report 

shared with the CME CF Cryptocurrency 

Committee. The UK Financial Conduct 

Authority (‘‘FCA’’) has regulatory 

oversight of this process, which is also 

subject to audit. The Sponsor believes 

that the Valuation Vendor’s robust 

surveillance efforts would allow it to 

promptly address manipulation or 

attempted manipulation of Reference 

Prices through a regulatory filing with 

the UK FCA and, accordingly, that this 

surveillance of the underlying spot 

trading platforms constitutes a second 

line of defense against manipulation in 

the Shares. 

3. The Valuation Vendor has in place 

information sharing agreements with the 

CME CF Constituent Trading Platforms, 

from which it draws pricing data to 

construct its benchmarks. 

These agreements allow the Valuation 

Vendor to the obtain identifying 

information of any perpetrators of actual 

or attempted benchmark manipulation 

of any Reference Prices from the CME 

CF Constituent Trading Platforms. This 

identifying information can then be 

shared with the UK FCA for potential 

enforcement action under the provisions 

of the Market Abuse Regime (MAR), 

which specifically proscribes 

benchmark manipulation as a criminal 

offense in the UK. The Sponsor believes 

that the availability of this information 

to the Valuation Vendor supports 

enforcement and sanction efforts in 

response to actual or attempted 

manipulation in digital asset markets, 

and provides a third line of defense 

against any potential manipulation in 

the Shares. 

* * * * * 

Finally, the Sponsor believes that the 

cash creation and redemption structure 

of the Trust also underscores the 

protections that the Reference Prices 

afford to the Trust. The Trust’s Shares 

will have their NAV and ITV 

determined by the Reference Prices and 

because all shares in the Trust will be 

created and redeemed and secondary 

traded with cash (not physical digital 

assets), any attempts to manipulate 

Shares would have to involve 

transactions on the spot trading 

platforms that are CME CF Constituent 

Trading Platforms to be able to 

influence the price of the Shares. The 

Sponsor believes that the Valuation 

Vendor’s surveillance of the CME CF 

Constituent Trading Platforms to detect 

such activity and the information 

sharing mechanisms in place between 

the Valuation Vendor and the CME CF 

Constituent Trading Platforms would 

both deter such activity and facilitate 

enforcement action should it occur. 

Availability of Information 

The Trust’s website (https://

www.bitwiseinvestments.com/) 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 38 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 Trust has been trading as an 

ETP if shorter). In addition, on each 

business day the Trust’s website will 

provide pricing information for the 

Shares and disclosed the Trust’s 

holdings, including: (i) the name of each 

Portfolio Asset; (ii) the quantity of each 

Portfolio Asset; and (iii) the weighting 

of each Portfolio Asset. 

One or more major market data 

vendors will provide the ITV 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.).39 The ITV will 

be calculated using the same 

methodology as the NAV per Share of 

the Trust (as described above), 

specifically by using the prior day’s 

closing NAV per Share as a base and 

updating that value during the NYSE 

Arca Core Trading Session to reflect 

changes in the value of the Trust’s NAV 

during the trading day. 

The ITV 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 ITV 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 ITV will be available 

through on-line information services. 

The NAV for the Trust will be 

calculated by the Administrator once a 

day and will be disseminated daily to 

all market participants at the same time. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the Consolidated Tape Association 

(‘‘CTA’’). 

Quotation and last sale information 

for the Portfolio Assets will be widely 

disseminated through a variety of major 

market data vendors. In addition, realtime price (and volume) data for the 

Portfolio Assets is available by 

subscription major market data vendors. 

The spot price of the Portfolio Assets is 

available on a 24-hour basis from major 

market data vendors. 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 

Portfolio Assets 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 Sponsor 

will publish the Reference Prices, the 

Trust’s NAV, and the NAV per Share on 

the Trust’s website as soon as 

practicable after its determination. If the 

NAV and NAV per Share have been 

calculated using a price per Portfolio 

other than the Reference Prices, the 

publication on the Trust’s website will 

note the valuation methodology used 

and the price per Portfolio Asset 

resulting from such calculation. 

The Trust will provide website 

disclosure of its NAV daily. The website 

disclosure of the Trust’s NAV will occur 

at the same time as the disclosure by the 

Administrator 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 Trust through the 

Trust’s website, as well as from one or 

more major market data vendors. 


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40See NYSE Arca Rule 7.12–E. 

41A limit up/limit down condition in the futures 

market would not be considered an interruption 

requiring the Trust to be halted. 

42Under NYSE Arca Rule 8.201–E(g), an ETP 

Holder acting as a registered Market Maker in the 

Shares is required to provide the Exchange with 

information relating to its accounts for trading in 

the underlying commodity, related futures or 

options on futures, or any other related derivatives. 

Commentary .04 of NYSE Arca Rule 11.3–E requires 

an ETP Holder acting as a registered Market Maker, 

and its affiliates, in the Shares to establish, 

maintain and enforce written policies and 

procedures reasonably designed to prevent the 

misuse of any material nonpublic information with 

respect to such products, any components of the 

related products, any physical asset or commodity 

underlying the product, applicable currencies, 

underlying indexes, related futures or options on 

futures, and any related derivative instruments 

(including the Shares). As a general matter, the 

Exchange has regulatory jurisdiction over its ETP 

Holders and their associated persons, which 

include any person or entity controlling an ETP 

Holder. To the extent the Exchange may be found 

to lack jurisdiction over a subsidiary or affiliate of 

an ETP Holder that does business only in 

commodities or futures contracts, the Exchange 

could obtain information regarding the activities of 

such subsidiary or affiliate through surveillance 

sharing agreements with regulatory organizations of 

which such subsidiary or affiliate is a member. 

43 17 CFR 240.10A–3. See note 8, supra. 

44FINRA 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. 

45For a list of the current members of ISG, see 

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

Portfolio Assets 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 Trust’s 

commodity and/or digital asset holdings 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 a CSSA. 

The value of the Index, as well as 

additional information regarding the 

Index such as the Index Methodology, is 

publicly available on a continuous basis 

on the Index Provider’s website. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares of 

the Trust.40 Trading in Shares of the 

Trust will be halted if the circuit breaker 

parameters in NYSE Arca Rule 7.12–E 

have been reached. Trading also may be 

halted because of market conditions or 

for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. 

The Exchange may halt trading during 

the day in which an interruption to the 

dissemination of the ITV or Index 

occurs.41 If the interruption to the 

dissemination of the ITV or Index 

persists past the trading day in which it 

occurred, the Exchange will halt trading 

no later than the beginning of the Core 

Trading Session following the 

interruption. In addition, if the 

Exchange becomes aware that the NAV 

with respect to the Shares is not 

disseminated to all market participants 

at the same time, it will halt trading in 

the Shares until such time as the NAV 

is available to all market participants. 

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, as proposed. 

The trading of the Shares will be subject 

to proposed 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.42 The 

Exchange represents that, for initial and 

continued listing, the Trust will be in 

compliance with Rule 10A–3 under the 

Act,43 as provided by NYSE Arca Rule 

5.3–E. A minimum of 100,000 Shares of 

the Trust will be outstanding at the 

commencement of trading on the 

Exchange. 

Surveillance 

The Exchange represents that trading 

in the Shares of the Trust will be subject 

to the existing trading surveillances 

administered by the Exchange, as well 

as cross-market surveillances 

administered by FINRA on behalf of the 

Exchange, which are designed to detect 

violations of Exchange rules and 

applicable federal securities laws.44 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.45 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 


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46 15 U.S.C. 78f(b)(5). 

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 

Trust, (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 Sponsor has represented to the 

Exchange that it will advise the 

Exchange of any failure by the Trust to 

comply with the continued listing 

requirements, and, pursuant to its 

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

Act, the Exchange will monitor for 

compliance with the continued listing 

requirements. If the Trust is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

NYSE Arca Rule 5.5–E(m). 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an ‘‘Information 

Bulletin’’ of the special characteristics 

and risks associated with trading the 

Shares. Specifically, the Information 

Bulletin will discuss the following: (1) 

the procedures for creations of Shares in 

Creation Units; (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 ITV and NAV is 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 ITV will not be 

calculated or publicly disseminated; (5) 

the requirement that members deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction and (6) trading information. 

In addition, the Information Bulletin 

will reference that the Trust is subject 

to various fees and expenses as 

described in the annual report. The 

Information Bulletin will disclose that 

information about the Shares of the 

Trust is publicly available on the Trust’s 

website. 

The Information Bulletin will also 

discuss any relief, if granted, by the 

Commission or the staff from any rules 

under the Act. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 46 that an 

exchange have rules that are designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to, and perfect the 

mechanism of a free and open market 

and, in general, to protect investors and 

the public interest. 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares will 

be listed and traded on the Exchange 

pursuant to the initial and continued 

listing criteria in proposed 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 Portfolio Asset derivatives 

from such markets. In addition, the 

Exchange may obtain information 

regarding trading in the Shares and 

Portfolio Asset derivatives from markets 

that are members of ISG or with which 

the Exchange has in place a CSSA. Also, 

pursuant to proposed 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 Portfolio Assets or 

any Portfolio Asset derivatives through 

ETP Holders acting as registered Market 

Makers, in connection with such ETP 

Holders’ proprietary or customer trades 

through ETP Holders which they effect 

on any relevant market. 

The proposed rule change is also 

designed to prevent fraudulent and 

manipulative acts and practices because 

the Trust is structured similarly to and 

will operate in materially the same 

manner as the Spot Bitcoin ETPs and 

Spot Ether ETPs previously approved by 

the Commission. The Exchange further 

believes that the proposed rule change 

is designed to prevent fraudulent and 

manipulative acts and practices 

because, as noted by the Commission in 

the Bitcoin ETP Approval Order and 

Ether ETP Approval Order, the 

Exchange’s ability to obtain information 

regarding trading in the Shares and 

futures from other markets that are 

members of the ISG (including the CME) 

would assist the Exchange in detecting 

and deterring misconduct. In particular, 

the CME bitcoin futures market and 

CME ether futures market are large, 

surveilled, and regulated markets that 

are closely connected with the spot 

markets for bitcoin and ether, 

respectively, through which the 

Exchange could obtain information to 

assist in detecting and deterring 

potential fraud or manipulation. 

The proposed rule change is also 

designed to prevent fraudulent and 

manipulative acts and practices because 

the Trust’s use of Reference Prices to 

calculate its NAV serves as a means 

sufficient to mitigate the impact of 

instances of fraud and manipulation on 

a reference price for the Portfolio Assets. 

As noted above, the Reference Prices for 

the Portfolio Assets are calculated by 

the Valuation Vendor based exclusively 

on trading activity at the CME CF 

Constituent Trading Platforms, each of 

which must meet robust eligibility 

criteria designed to protect the 

Reference Prices against fraud and 

manipulation. In addition, the Valuation 

Vendor is an Administrator of 

Benchmarks under the BMR that, among 

other things, conducts surveillance of its 

benchmarks to detect and investigate 

potential manipulation. The Valuation 

Vendor also has information sharing 

agreements with each of the CME CF 

Constituent Trading Platforms that 

support access to identifying 

information for perpetrators of actual or 

attempted manipulation to aid in 

pursuing regulatory action against those 

actors. The layers of defense provided 

by the Trust’s use of Reference Prices to 

calculate NAV, in conjunction with the 

Trust’s use of cash creations and 

redemptions, constitute a novel means 

to detect, prevent, and respond to fraud, 

attempted fraud, and similar 

wrongdoing, including market 

manipulation, consistent with the 

requirements of the Act. 

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 Portfolio 

Assets. Investors may obtain, on a 24- 

hour basis, Portfolio Asset pricing 

information based on the spot price for 

the Portfolio Assets from various 

financial information service providers. 

The closing price and settlement prices 

of the Portfolio Assets are readily 

available from the Valuation Trading 


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Federal Register / Vol. 89, No. 232 / Tuesday, December 3, 2024 / Notices 95865 

47 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Platforms and other publicly available 

websites. In addition, such prices are 

published in public sources, or on-line 

information services such as Bloomberg 

and Reuters. The NAV per Share will be 

calculated daily and made available to 

all market participants at the same time. 

The Trust will provide website 

disclosure of its NAV daily. One or 

more major market data vendors will 

disseminate for the Trust on a daily 

basis information with respect to the 

most recent NAV per Share and Shares 

outstanding. In addition, if the 

Exchange becomes aware that the NAV 

per Share is not disseminated to all 

market participants at the same time, it 

will halt trading in the Shares until such 

time as the NAV is available to all 

market participants. Quotation and lastsale information regarding the Shares 

will be disseminated through the 

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

the Index occurs. If the interruption to 

the dissemination of the ITV or the 

value of the Index persists past the 

trading day in which it occurred, the 

Exchange will halt trading no later than 

the beginning of the 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 

Trust’s commodity and/or digital asset 

holdings. In addition, as noted above, 

investors will have ready access to 

information regarding the Trust’s NAV, 

ITV, 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 that would 

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: 

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–2024–98 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–2024–98. 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–2024–98 and should be 

submitted on or before December 24, 

2024. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.47

Stephanie J. Fouse, 

Assistant Secretary. 

[FR Doc. 2024–28343 Filed 12–2–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101776; File No. SR–Phlx– 

2024–63] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Remove Rules Related 

to the Nasdaq-100® Volatility Index 

November 27, 2024. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on November 

21, 2024, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) a 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 


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