101654 Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / Notices 

15 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Trust is a Delaware statutory trust. On 

November 26, 2024, the Trust filed with the 

Commission an initial registration statement (the 

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

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

description of the operation of the Trust herein is 

based, in part, on the most recent Registration 

Statement. The Registration Statement is not yet 

effective, and the Shares will not trade on the 

Exchange until such time that the Registration 

Statement is effective. 

5Commodity-Based Trust Shares are securities 

issued by a trust that represents investors’ discrete 

identifiable and undivided beneficial ownership 

interest in the commodities deposited into the trust. 

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 the ether market contained herein 

is based, in part, on the Registration Statement. See 

note 4, supra. 

10As of the date of this filing, the relative market 

capitalization of bitcoin and ether is 83% bitcoin 

and 17% ether. The Trust will calculate the market 

capitalization of bitcoin and ether by multiplying 

the Pricing Benchmarks by the current circulating 

supply of bitcoin and ether respectively, as 

determined by the Sponsor, and will calculate the 

relative market capitalization by dividing each of 

bitcoin and ether’s market capitalization by the 

combined market capitalization of both. 

11The Pricing Benchmarks are calculated by CF 

Benchmarks Ltd. (the ‘‘Benchmark Provider’’) based 

on an aggregation of executed trade flow of major 

bitcoin and ether trading platforms. As further 

discussed below, the Pricing Benchmarks are 

designed to provide a daily, 4:00 p.m. Eastern Time 

(‘‘E.T.’’) reference rate of the U.S. dollar price of one 

bitcoin or one ether that may be used to develop 

financial products. 

12The Trust conducts creations and redemptions 

of its Shares for cash. Authorized Participants 

(defined below) will deliver cash to the Cash 

Custodian pursuant to creation orders for Shares 

and the Cash Custodian will hold such cash until 

such time as it can be converted to bitcoin or ether, 

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 bitcoin 

and ether 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 bitcoin 

and ether 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 

withhold entirely from publication 

submitted material that is obscene or 

subject to copyright protection. All 

submissions should refer to file number 

SR–NYSEARCA–2024–90 and should be 

submitted on or before January 6, 2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–29471 Filed 12–13–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–101864; File No. SR– 

NYSEARCA–2024–104] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change to List and Trade Shares 

of the Bitwise Bitcoin and Ethereum 

ETF under NYSE Arca Rule 8.201–E 

(Commodity-Based Trust Shares) 

December 10, 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 26, 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 Bitcoin and 

Ethereum ETF (the ‘‘Trust’’) under 

NYSE Arca Rule 8.201–E (CommodityBased Trust Shares). 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 proposes to list and 

trade shares (‘‘Shares’’) of the Trust 4

pursuant to NYSE Arca Rule 8.201–E, 

which governs the listing and trading of 

Commodity Based Trust Shares.5

According to the Registration 

Statement, 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 NYSE 

Arca Rule 8.201–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 Registration 

Statement, 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 bitcoin 

and ether (the ‘‘Bitcoin and Ether 

Custodian’’). Bank of New York Mellon 

will be the custodian for the Trust’s 

cash holdings (in such role, the ‘‘Cash 

Custodian’’), the administrator of the 

Trust (in such role, the 

‘‘Administrator’’), and the transfer agent 

for the Trust (in such role, the ‘‘Transfer 

Agent’’). 

According to the Registration 

Statement, the investment objective of 

the Trust is to seek to provide exposure 

to the value of bitcoin and ether held by 

the Trust, less the expenses of the 

Trust’s operations and other liabilities. 

The Trust’s allocation of its assets to 

bitcoin and ether will approximate the 

relative market capitalization of bitcoin 

and ether to one another.10 In seeking to 

achieve its investment objective, the 

Trust will hold bitcoin and ether and 

establish its Net Asset Value (‘‘NAV’’) at 

the end of every business day by 

reference to the CME CF Bitcoin—New 

York Variant for its bitcoin holdings (the 

‘‘Bitcoin Pricing Benchmark’’) and to 

the CME CF Ether—Dollar Reference 

Rate—New York Variant for its ether 

holdings (the ‘‘Ether Pricing 

Benchmark,’’ and, with the Bitcoin 

Pricing Benchmark, the ‘‘Pricing 

Benchmarks’’).11

The Trust’s only assets will be 

bitcoin, ether, and cash.12 The Trust 


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immediate aftermath of its Registration Statement 

being declared effective. Lastly, the Trust may also 

sell bitcoin and ether 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 ether, certain 

additional digital assets (‘‘IR Assets’’) or rights to 

receive IR Assets (‘‘Incidental Rights’’) through a 

fork of the Bitcoin network or Ethereum 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 Bitcoin and Ether Custodian, nor 

any other person associated with the Trust will, 

directly or indirectly, engage in action where any 

portion of the Trust’s ether becomes subject to the 

Ethereum proof-of-stake validation or is used to 

earn additional ether or generate income or other 

earnings. 

14The only material difference between the 

Bitcoin Pricing Benchmark and the BRR is that the 

BRR measures the U.S. dollar price of one bitcoin 

as of 4:00 p.m. London time and the Bitcoin Pricing 

Benchmark measures the U.S. dollar price of one 

bitcoin as of 4:00 p.m. E.T. 

15The only material difference between the Ether 

Pricing Benchmark and ERR is that the ERR 

measures the U.S. dollar price of one ether as of 

4:00 p.m. London time, and the Pricing Index 

measures the U.S. dollar price of one ether as of 

4:00 p.m. E.T. 

16The ‘‘Constituent Platforms’’ are the bitcoin 

and ether trading venues included in the Pricing 

Benchmarks. 

does not seek to hold any non-bitcoin or 

non-ether crypto 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 

‘‘Sponsor Fee’’), which will accrue daily 

and will be payable in bitcoin and ether 

monthly in arrears. The Administrator 

will calculate the Sponsor Fee on a 

daily basis by applying an annualized 

rate to the Trust’s total bitcoin and ether 

holdings, and the amount of bitcoin and 

ether payable in respect of each daily 

accrual shall be determined by reference 

to the Pricing Benchmarks. 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. 

Custody of the Trust’s Bitcoin and Ether 

The Trust’s Bitcoin and Ether 

Custodian will maintain custody of all 

of the Trust’s bitcoin and ether, 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 Bitcoin and Ether Custodian). The 

Bitcoin and Ether Custodian will 

maintain an account that holds the 

Trust’s bitcoin (the ‘‘Trust Bitcoin 

Account’’) and an account that holds the 

Trust’s ether (the ‘‘Trust Ether 

Account,’’ and together with the Trust 

Bitcoin Account, the ‘‘Trust Digital 

Asset Accounts’’), and will facilitate the 

transfer of bitcoin and ether 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 bitcoin or ether. 

The Bitcoin and Ether Custodian 

provides safekeeping of bitcoin and 

ether using a multi-layer cold storage 

security platform designed to provide 

offline security of the bitcoin and ether 

held by the Bitcoin and Ether 

Custodian. 

Valuation of the Trust’s Bitcoin and 

Ether 

The net assets of the Trust and its 

Shares are valued on a daily basis with 

reference to the Pricing Benchmarks, 

which are standardized reference rates 

published by the Benchmark Provider 

designed to reflect the performance of 

bitcoin and ether in U.S. dollars. The 

Bitcoin Pricing Benchmark and Ether 

Pricing Benchmark were created to 

facilitate financial products based on 

bitcoin and ether, respectively. The 

Bitcoin Pricing Benchmark serves as a 

once-a-day benchmark rate of the U.S. 

dollar price of bitcoin (USD/BTC), and 

the Ether Pricing Benchmark serves as a 

once-a-day benchmark rate of the U.S. 

dollar price of ether (USD/ETH), each 

calculated as of 4:00 p.m. E.T. The 

Bitcoin Pricing Benchmark aggregates 

the trade flow of several major bitcoin 

trading venues, and the Ether Pricing 

Benchmark aggregates the trade flow of 

several major ether trading venues, each 

during an observation window between 

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

U.S. dollar price of one bitcoin or ether, 

as applicable, at 4:00 p.m. E.T. 

The Bitcoin Pricing Benchmark uses 

the same methodology as the CME CF 

Bitcoin Reference Rate (‘‘BRR’’), which 

was designed by the CME Group and the 

Benchmark Provider to facilitate the 

cash settlement of bitcoin futures 

contracts traded on the Chicago 

Mercantile Exchange (‘‘CME’’).14 The 

CME Group also publishes the CME CF 

Bitcoin Real Time Index (the ‘‘CME 

Bitcoin Real Time Price’’), which is a 

continuous measure of the U.S. dollar 

price of one bitcoin calculated once per 

second. Similarly, the Ether Pricing 

Benchmark uses the same methodology 

as the CME CF Ether-Dollar Reference 

Rate (‘‘ERR’’), which was designed by 

the CME Group and the Benchmark 

Provider to facilitate the cash settlement 

of ether futures contracts traded on the 

CME.15 The CME Group also publishes 

the CME CF Ether Real Time Index (the 

‘‘CME Ether Real Time Price’’), which is 

a continuous measure of the U.S. dollar 

price of one ether calculated once per 

second. Each of the Pricing Benchmarks, 

BRR, ERR, CME Bitcoin Real Time 

Price, and CME Ether Real Time Price 

are representative of the bitcoin or ether 

trading activity, as applicable, on the 

Constituent Platforms,16 which include, 

as of the date of this filing, Bitstamp, 

Coinbase, Gemini, itBit, LMAX, and 

Kraken. 

The Trust uses the Pricing 

Benchmarks to calculate its NAV, as 

described below in ‘‘Net Asset Value.’’ 

The Sponsor, in its sole discretion, 

may cause the Trust to price its portfolio 

based upon an index, benchmark, or 

standard other than the Pricing 

Benchmarks 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 

Pricing Benchmarks price of bitcoin or 

ether differs materially from the global 

market price of bitcoin or ether and/or 

that third parties are able to purchase 

and sell bitcoin or ether on public or 

private markets not included among the 

Constituent Platforms, and such 

transactions may take place at prices 

materially higher or lower than the 

Pricing Benchmarks price. 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 the 

Pricing Benchmarks, it will provide 

shareholders with notice in a prospectus 

supplement and/or through a current 


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17The 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. 

18The Digital Asset Trading Counterparties with 

which the Sponsor will engage in ether 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. 

19The Sponsor will maintain ownership and 

control of bitcoin and ether in a manner consistent 

with good delivery requirements for spot 

commodity transactions. 

report on Form 8–K or in the Trust’s 

annual or quarterly reports.17

Net Asset Value 

The Trust’s only assets will be bitcoin 

and ether 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 number of 

bitcoin and ether held by the Trust by 

the Bitcoin Pricing Benchmark or Ether 

Pricing Benchmark, respectively, 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 Administrator will 

determine the price of the Trust’s 

bitcoin and ether by reference to the 

Pricing Benchmarks, which are 

published and calculated as set forth 

above. 

Intraday Trust Value 

The Trust uses the CME Bitcoin Real 

Time Price and CME Ether Real Time 

Price 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 CME Bitcoin Real 

Time Price and CME Ether Real Time 

Price. 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 ether 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 

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’’). 

According to the Registration 

Statement, when purchasing or selling 

ether 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 bitcoin and ether 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’’) 18 is able to effectuate 

the Trust’s purchase or sale of bitcoin or 

ether. 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 bitcoin and 

ether from an approved Digital Asset 

Trading Counterparty in an amount 

equal to the Basket Amount. When 

seeking to purchase bitcoin and ether on 

behalf of the Trust, the Sponsor will 

seek to purchase bitcoin and ether at 

commercially reasonable prices and 

terms from any of the approved Digital 

Asset Trading Counterparties.19 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 bitcoin or ether 

as part of the creation or redemption 

process or otherwise direct the Trust or 

a third party with respect to purchasing, 

holding, delivering, or receiving bitcoin 

or ether 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 

bitcoin and ether 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 bitcoin and ether. The third party 

will not be acting as an agent of the 

Authorized Participant with respect to 

the delivery of the bitcoin and ether to 

the Trust or acting at the direction of the 

Authorized Participant with respect to 

the delivery of the bitcoin and ether to 

the Trust. Additionally, the Trust will 

redeem Shares by delivering bitcoin and 

ether 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 bitcoin and 

ether. Finally, the third party will not be 

acting as an agent of the Authorized 

Participant with respect to the receipt of 

the bitcoin or ether from the Trust or 

acting at the direction of the Authorized 

Participant with respect to the receipt of 

the bitcoin or ether from the Trust. 

Acquiring and Selling Ether Pursuant to 

Creation and Redemption of Shares 

Under the Trust-Directed Trade Model 

Under the Trust-Directed Trade 

Model and as set forth in the 

Registration Statement, 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. For 

purposes of processing creation and 

redemption orders, a ‘‘business day’’ 

means any day other than a day when 

the Exchange is closed for regular 


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trading (‘‘Business Day’’). 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 

bitcoin and ether 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 bitcoin 

and ether 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 bitcoin and ether 

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 bitcoin and ether with the 

Bitcoin and Ether Custodian by the end 

of the day E.T. on the Business Day 

following the Purchase Order Date. The 

bitcoin and ether 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 bitcoin 

and ether. 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 bitcoin and ether must be deposited 

at the Bitcoin and Ether Custodian. 

The Digital Asset Trading 

Counterparty must deposit the required 

amount of bitcoin and ether 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 

Agent. Upon receipt of the deposit 

amount of bitcoin and ether at the 

Bitcoin and Ether Custodian from the 

Digital Asset Trading Counterparty, the 

Bitcoin and Ether Custodian will notify 

the Sponsor that the bitcoin and ether 

have been received. The Sponsor will 

then notify the Transfer Agent that the 

bitcoin and ether 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 bitcoin and ether 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 bitcoin and ether calculated by the 

Administrator for daily valuation using 

the Pricing Benchmarks and the price at 

which the Trust acquires the bitcoin and 

ether will be borne solely by the 

Authorized Participant to the extent that 

the Trust pays more for bitcoin and 

ether 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 bitcoin and ether to 

the Bitcoin and Ether 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 bitcoin and 

ether 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 bitcoin and ether 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 bitcoin and 

ether 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 bitcoin and ether 

ascribed by the Pricing Benchmarks and 

the price at which the Trust sells the 

bitcoin and ether will be borne solely by 

the Authorized Participant to the extent 

that the Trust receives less for bitcoin 

and ether 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 Bitcoin and 


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101658 Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / Notices 

Ether Custodian will not send the 

Basket Amount of bitcoin and ether 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 bitcoin and ether, the Transfer Agent 

will notify the Sponsor. The Sponsor 

will then notify the Bitcoin and Ether 

Custodian to transfer the bitcoin and 

ether 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 bitcoin or ether or Shares will 

occur. 

Acquiring and Selling Ether 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 bitcoin 

and ether 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 bitcoin, 

ether, 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 

bitcoin or ether (and cash); rather, the 

Trust’s Trading Balance represents an 

entitlement to a pro rata share of the 

bitcoin or ether (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 bitcoin or ether (and cash) held 

on behalf of the Prime Execution 

Agent’s customers. 

To avoid having to pre-fund 

purchases or sales of bitcoin or ether in 

connection with cash creations and 

redemptions and sales of bitcoin or 

ether to pay Trust expenses not assumed 

by the Sponsor, to the extent applicable, 

the Trust may borrow bitcoin, ether, 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’’). 

On the day of the Purchase Order 

Date, the Trust would enter into a 

transaction to buy bitcoin and ether 

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 bitcoin and ether 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 

bitcoin and ether through the Prime 

Execution Agent on the Purchase Order 

Date, with such bitcoin and ether 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 bitcoin and ether 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 Bitcoin and 

Ether Custodian pursuant to a regular 

end-of-day sweep process. Transfers of 

bitcoin and ether into the Trust’s 

Trading Balance are off-chain 

transactions and transfers from the 

Trust’s Trading Balance to the Trust 

Digital Asset Account are ‘‘on-chain’’ 

transactions represented on the bitcoin 

and ether 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 

bitcoin and ether through the Prime 

Execution Agent for cash. The Trust’s 

Trading Balance with the Prime 

Execution Agent may not be funded 

with bitcoin and ether on trade date for 

the sale of bitcoin and ether in 

connection with the redemption order 

under the Agent Execution Model, when 

bitcoin and ether remains in the Trust 

Digital Asset Account with the Bitcoin 

and Ether Custodian at the point of 

intended execution of a sale of bitcoin 

and ether. In those circumstances the 

Trust may borrow Trade Credits in the 

form of bitcoin and ether from the Trade 

Credit Lender, which allows the Trust to 

sell bitcoin and ether through the Prime 

Execution Agent on the Redemption 

Order Date, and the cash proceeds are 

deposited in the 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 bitcoin 

and ether that is moved from the Trust 

Digital Asset Account with the Bitcoin 

and Ether 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 Bitcoin 

and Ether Custodian to prepare to 

transfer the bitcoin and ether associated 

with the redemption order from the 

Trust Digital Asset Account with the 

Bitcoin and Ether 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 bitcoin 

and ether 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. 

Background on Bitcoin 

Bitcoin is the digital asset that is 

native to, and created and transmitted 

through the operations of, the peer-topeer ‘‘Bitcoin network,’’ a decentralized 


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20See ‘‘CME Group Announces Launch of Bitcoin 

Futures,’’ October 31, 2017, available at https:// 

www.cmegroup.com/media-room/press-releases/ 

2017/10/31/cme_group_announceslauncho

fbitcoinfutures.html. At the same time as the launch 

of the CME Market, the Cboe Futures Exchange, 

LLC announced and subsequently launched Cboe 

bitcoin futures. See ‘‘CFE to Commence Trading in 

Cboe Bitcoin (USD) Futures Soon,’’ December 01, 

2017, available at cdn.cboe.com/resources/

release_notes/2017/Cboe-Bitcoin-USD-FuturesLaunch-Notification.pdf. Each future was cash 

settled, with the CME Market tracking the CME UK 

Reference Rate and the Cboe bitcoin futures 

tracking a bitcoin trading platform daily auction 

price. The Cboe Futures Exchange, LLC 

subsequently discontinued its bitcoin futures 

market effective June 2019. ‘‘Cboe put the brakes on 

bitcoin futures,’’ March 15, 2019, available at 

https://www.reuters.com/article/us-cboe-bitcoin/

cboe-puts-the-brakes-on-bitcoin-futures-idUSKCN

1QW261. The Trust uses the CME US Reference 

Rate to calculate its NAV. 

21 Data from CME Volume and Average Daily 

Volume Reports, available at https://www.

cmegroup.com/market-data/volume-open-interest.

htmlvolumeTotals. 

22 Data from CME Open Interest Reports, available 

at https://www.cmegroup.com/market-data/volumeopen-interest.html#openInterestTools. 

23A large open interest holder in bitcoin futures 

is an entity that holds at least 25 contracts, which 

is the equivalent of 125 bitcoin. At a price of 

approximately $64,300.87 per bitcoin on 9/24/2024, 

more than 115 firms had outstanding positions of 

greater than $8.04 million in bitcoin futures. Data 

from The Block, available at https://www.

theblock.co/data/crypto-markets/cme-cots/largeopen-interest-holders-of-cme-bitcoin-futures. 

24 Data from 4/10/2018 to 10/22/24, from The 

Block. 

network of computers that operates on 

cryptographic protocols. No single 

entity owns or operates the Bitcoin 

network, the infrastructure of which is 

collectively maintained by a 

decentralized user base. The Bitcoin 

network allows people to exchange 

tokens of value, called bitcoin, which 

are recorded on a public transaction 

ledger known as the ‘‘Bitcoin 

blockchain.’’ Bitcoin can be used to pay 

for goods and services, or it can be 

converted to fiat currencies, such as the 

U.S. dollar, at rates determined on 

digital asset trading platforms or in 

individual end-user-to-end-user 

transactions under a barter system. 

Although nascent in use, bitcoin may be 

used as a medium of exchange, unit of 

account or store of value. 

The Bitcoin network is decentralized 

and does not require governmental 

authorities or financial institution 

intermediaries to create, transmit or 

determine the value of bitcoin. In 

addition, no party may easily censor 

transactions on the Bitcoin network. As 

a result, the Bitcoin network is often 

referred to as decentralized and 

censorship resistant. 

The value of bitcoin is determined by 

the supply of and demand for bitcoin. 

New bitcoin are created and rewarded to 

the parties providing the Bitcoin 

network’s infrastructure (‘‘miners’’) in 

exchange for their expending 

computational power to verifying 

transactions and add them to the Bitcoin 

blockchain. The Bitcoin blockchain is 

effectively a decentralized database that 

includes all blocks that have been 

solved by miners and it is updated to 

include new blocks as they are solved. 

Each bitcoin transaction is broadcast to 

the Bitcoin network and, when included 

in a block, recorded in the Bitcoin 

blockchain. As each new block records 

outstanding bitcoin transactions, and 

outstanding transactions are settled and 

validated through such recording, the 

Bitcoin blockchain represents a 

complete, transparent and unbroken 

history of all transactions of the Bitcoin 

network. 

The CME Bitcoin Futures Market 

The CME Group announced the 

planned launch of bitcoin futures on 

October 31, 2017. Trading began on 

December 17, 2017.20 Each contract 

represents five bitcoin and is based on 

the CME CF Bitcoin Reference Rate. The 

contracts trade and settle like other cash 

settled commodity futures contracts. 

Nearly every measurable metric 

related to bitcoin futures has trended up 

since launch. For example, there were 

348,635 bitcoin futures contracts traded 

in September 2024 (approximately 

$110.6 billion) compared to 192,620 

($26.0 billion) contracts, 279,859 

contracts ($27.3 billion), 159,803 

contracts ($34.8 billion), and 201,893 

contracts ($10.8 billion) traded in 

September 2023, September 2022, 

September 2021, and September 2020, 

respectively.21

Open interest was 39,590 bitcoin 

futures contracts in September 2024 

(approximately $12.6 billion) compared 

to 15,014 contracts ($2.0 billion), 14,867 

contracts ($1.4 billion), 7,276 contracts 

($1.6 billion), and 7,487 contracts ($0.4 

billion) traded in September 2023, 

September 2022, September 2021, and 

September 2020, respectively.22

The number of large open interest 

holders 23 has increased as well, even in 

the face of heightened bitcoin price 

volatility, as demonstrated in the figure 

that follows.24


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101660 Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / Notices 

25For a list of the current members and affiliate 

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

26See ‘‘CME Group Announces Launch of Ether 

Futures,’’ February 8, 2021, available at https:// 

www.cmegroup.com/media-room/press-releases/ 

2021/2/08/cme_group_announceslaunch

ofetherfutures.html. 

27 Data from CME Volume and Average Daily 

Volume Reports, available at https://www.

cmegroup.com/market-data/volume-openinterest.html volumeTotals. 

28 Data from CME Open Interest Reports, available 

at https://www.cmegroup.com/market-data/volumeopeninterest.html#openInterestTools. 

29A large open interest holder in ether futures is 

an entity that holds at least 25 contracts, which is 

the equivalent of 1250 ether. Data from The Block, 

available at https://www.theblock.co/data/cryptomarkets/cme-cots/large-open-interest-holders-ofcme-ether-futures. 

30 Data from 4/10/2018 to 10/22/2024, from The 

Block. 

The Commodity Futures Trading 

Commission (‘‘CFTC’’) regulates the 

CME bitcoin futures market, and both 

the Exchange and CME are members of 

the Intermarket Surveillance Group 

(‘‘ISG’’).25

Background on Ethereum 

Ethereum is free software that is 

hosted on computers distributed 

throughout the globe. Ethereum 

employs an array of computer codebased logic, called a protocol, to create 

a unified understanding of ownership, 

commercial activity, and economic 

logic. This allows users to engage in 

commerce without the need to trust any 

of its participants or counterparties. 

Ethereum code creates verifiable and 

unambiguous rules that assign clear, 

strong property rights to create a 

platform for unrestrained business 

formation and free exchange. No single 

intermediary or entity operates or 

controls the Ethereum network, the 

transaction validation and 

recordkeeping infrastructure of which is 

collectively maintained by a disparate 

user base. The Ethereum network allows 

people to exchange tokens of value, or 

ether, which are recorded on a 

distributed, public recordkeeping 

system or ledger known as a blockchain, 

and which can be used to pay for goods 

and services, including computational 

power on the Ethereum network, or 

converted to fiat currencies, such as the 

U.S. dollar, at rates determined on spot 

trading platforms or in individual peerto-peer transactions. By combining the 

recordkeeping system of the Ethereum 

blockchain with a flexible scripting 

language that can be used to implement 

a wide variety of instructions, the 

Ethereum network is intended to act as 

a public computational layer on top of 

which users can build their own public 

software programs, as an alternative to 

centralized web services. On the 

Ethereum network, ether is the unit of 

account that users pay for the 

computational resources consumed by 

running programs of their choice. 

CME Ether Futures Market 

CME began offering trading in ether 

futures on February 8, 2021.26 Each 

contract represents fifty ether and is 

based on the ERR. The contracts trade 

and settle like other cash settled 

commodity futures contracts. 

Most measurable metrics related to 

CME ether futures have trended up 

since launch. For example, there were 

95,261 CME ether futures contracts 

traded in September 2024 

(approximately $12.4 billion) compared 

to 78,571 contracts ($6.6 billion), 

163,114 contracts ($10.9 billion), and 

130,546 contracts ($19.5 billion) traded 

in September 2023, September 2022, 

and September 2021, respectively. In 

the first month of trading, there were 

11,637 billion contracts ($0.8 billion) 

traded.27

Open interest was 6,746 CME ether 

futures contracts in September 2024 

(approximately $875.1 million) 

compared to 4,577 contracts ($384.3 

million), 5,035 contracts ($336.8 

million), and 4,388 contracts ($656.8 

million) in September 2023, September 

2022, and September 2021, 

respectively.28

The number of large open interest 

holders 29 has increased as well, as 

demonstrated in the figure that 

follows.30


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CME Bitcoin Futures Large Open Interest Holders (LOIH) 

,~ 

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2018 2019 2020 2021 2022 2023 2024 
Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / Notices 101661 

31See Securities Exchange Act Release No. 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 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. 

32See 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’’). 

33See Spot Bitcoin ETP Approval Order, 89 FR 

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

46938. 

34See Spot Bitcoin ETP Approval Order, 89 FR 

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

46938–39. 

35The 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. 

The CFTC regulates the CME ether 

futures market, and both the Exchange 

and CME are members of the ISG. 

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.31 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.32 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.33 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 comprehensive 

surveillance sharing agreement 

(‘‘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.34

The Trust is structured and will 

operate in a manner materially the same 

as the Spot Bitcoin ETPs and Spot Ether 

ETPs.35 The Sponsor believes that the 

Exchange’s ability to obtain information 

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 Fund would be 

consistent with the requirements of the 

Act. 

Availability of Information 

The NAV per Share will be calculated 

and 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 CTA. The ITV will be 

calculated every 15 seconds throughout 

the Core Trading Session each trading 

day. 


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CME Ethereum Futures Large Open Interest Holders (LOIH) 

90 

2021 
101662 Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / Notices 

36See NYSE Arca Rule 7.12–E. 

37A limit up/limit down condition in the futures 

market would not be considered an interruption 

requiring the Trust to be halted. 

38Under 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. 

39 17 CFR 240.10A–3. See note 8, supra. 

40FINRA 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. 

The Sponsor will cause information 

about the Shares to be posted to the 

Trust’s website (https://

www.bitwiseinvestments.com/): (1) the 

NAV and NAV per Share for each 

Exchange trading day, posted at end of 

day; (2) the daily holdings of the Trust, 

before 9:30 a.m. E.T. on each Exchange 

trading day; (3) the Trust’s effective 

prospectus, in a form available for 

download; and (4) the Shares’ ticker and 

CUSIP information, along with 

additional quantitative information 

updated on a daily basis for the Trust. 

For example, the Trust’s website will 

include (1) the prior Business Day’s 

trading volume, the prior Business Day’s 

reported NAV and closing price, and a 

calculation of the premium and 

discount of the closing price or midpoint of the bid/ask spread at the time 

of NAV calculation (‘‘Bid/Ask Price’’) 

against the NAV; and (2) data in chart 

format displaying the frequency 

distribution of discounts and premiums 

of the daily closing price or Bid/Ask 

Price against the NAV, within 

appropriate ranges, for at least each of 

the four previous calendar quarters. The 

Trust’s website will be publicly 

available prior to the public offering of 

Shares and accessible at no charge. 

Investors may obtain on a 24-hour 

basis ether pricing information based on 

the Pricing Benchmarks, BRR, ERR, 

CME Bitcoin Real Time Price, CME 

Ether Real Time Price, spot bitcoin 

market prices, bitcoin futures prices, 

spot ether market prices, and ether 

futures prices from various financial 

information service providers. Current 

bitcoin spot market prices and ether 

spot market prices are also available 

with bid/ask spreads from bitcoin and 

ether trading platforms, including the 

Constituent Platforms of the Pricing 

Benchmarks. 

Information regarding market price 

and trading volume of the Shares will be 

continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services. 

Information regarding the previous 

day’s closing price and trading volume 

information for the Shares will be 

published daily in the financial section 

of newspapers. 

Trading 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.36 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, CME Bitcoin 

Real Time Price, CME Ether Real Time 

Price, or Pricing Benchmarks (if the 

Exchange becomes aware that the 

Pricing Benchmarks are not being 

published) occurs.37 If the interruption 

to the dissemination of the ITV, CME 

Bitcoin Real Time Price, CME Ether Real 

Time Price, or Pricing Benchmarks 

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 8.201–E. The trading of 

the Shares will be subject to NYSE Arca 

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

restrictions on Equity Trading Permit 

(‘‘ETP’’) Holders acting as registered 

Market Makers in Commodity-Based 

Trust Shares to facilitate surveillance.38

The Exchange represents that, for initial 

and continued listing, the Trust will be 

in compliance with Rule 10A–3 under 

the Act,39 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.40 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, bitcoin 

derivatives, and ether derivatives from 


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Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / Notices 101663 

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

such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares, bitcoin derivatives, and ether 

derivatives from markets and other 

entities or with which the Exchange has 

in place a CSSA. The Exchange is also 

able to obtain information regarding 

trading in the Shares and any 

underlying bitcoin, bitcoin derivatives, 

ether, or ether derivatives in connection 

with ETP Holders’ proprietary trades or 

customer trades effected through ETP 

Holders on any relevant market. Under 

NYSE Arca Rule 8.201–E(g), an ETP 

Holder acting as a registered Market 

Maker in the Shares is required to 

provide the Exchange with information 

relating to its accounts for trading in 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 surveillance sharing agreements 

with regulatory organizations to the 

extent the Exchange has such an 

agreement with an organization of 

which the subsidiary or affiliate is a 

member. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

All statements and representations 

made in this filing regarding (a) the 

description of the index, portfolio, or 

reference asset of the Trust, (b) 

limitations on index or portfolio 

holdings or reference assets, or (c) the 

applicability of Exchange listing rules 

specified in this rule filing shall 

constitute continued listing 

requirements for listing the Shares on 

the Exchange. 

The Sponsor has represented to the 

Exchange that it will advise the 

Exchange of any failure by the Trust to 

comply with the continued listing 

requirements, and, pursuant to its 

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

Act, the Exchange will monitor for 

compliance with the continued listing 

requirements. If the Trust is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

NYSE Arca Rule 5.5–E(m). 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an ‘‘Information 

Bulletin’’ of the special characteristics 

and risks associated with trading the 

Shares. Specifically, the Information 

Bulletin will discuss the following: (1) 

the procedures for creations of Shares in 

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) 41 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 and to protect 

investors and the public interest in that 

the Shares will be listed and traded on 

the Exchange pursuant to the initial and 

continued listing criteria in NYSE Arca 

Rule 8.201–E. The Exchange has in 

place surveillance procedures that are 

adequate to properly monitor Exchange 

trading in the Shares in all trading 

sessions and to deter and detect 

attempted manipulation of the Shares or 

other 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, 

bitcoin derivatives, and ether 

derivatives 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, bitcoin 

derivatives, and ether derivatives from 

such markets. In addition, the Exchange 

may obtain information regarding 

trading in the Shares, bitcoin 

derivatives, and ether derivatives from 

markets that are members of ISG or with 

which the Exchange has in place a 

CSSA. The Exchange is also able to 

obtain information regarding trading in 

the Shares and any underlying bitcoin, 

bitcoin derivatives, ether, or ether 

derivatives through ETP Holders, in 

connection with such ETP Holders’ 

proprietary trades or customer trades 

effected through ETP Holders 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 


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101664 Federal Register / Vol. 89, No. 241 / Monday, December 16, 2024 / Notices 

42 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 80a. 

Exchange could obtain information to 

assist in detecting and deterring 

potential fraud or manipulation. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the CTA. The Trust’s website will also 

include a form of the prospectus for the 

Trust that may be downloaded. The 

website will include the Shares’ ticker 

and CUSIP information, along with 

additional quantitative information 

updated on a daily basis for the Trust. 

The Trust’s website will include (1) 

daily trading volume, the prior Business 

Day’s reported NAV and closing price, 

and a calculation of the premium and 

discount of the closing price or midpoint of the Bid/Ask Price against the 

NAV; and (ii) data in chart format 

displaying the frequency distribution of 

discounts and premiums of the daily 

closing price or Bid/Ask Price against 

the NAV, within appropriate ranges, for 

at least each of the four previous 

calendar quarters. The Trust’s website 

will be publicly available prior to the 

public offering of Shares and accessible 

at no charge. 

Trading in Shares of the Trust will be 

halted if the circuit breaker parameters 

in NYSE Arca Rule 7.12–E have been 

reached or because of market conditions 

or for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. 

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 a new type of exchange-traded 

product based on the price of bitcoin 

and ether that will enhance competition 

among market participants, to the 

benefit of investors and the marketplace. 

As noted above, the Exchange has in 

place surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. 

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 a new type of CommodityBased Trust Share based on the price of 

bitcoin and ether 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–2024–104 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–2024–104. 

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–2024–104 and should 

be submitted on or before January 6, 

2025. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Sherry R. Haywood, 

Assistant Secretary. 

[FR Doc. 2024–29469 Filed 12–13–24; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–232, OMB Control No. 

3235–0225] 

Proposed Collection; Comment 

Request; Extension: Rule 17f–4 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE, Washington, DC 

20549–2736 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 350l–3520) (the 

‘‘Paperwork Reduction Act’’), the 

Securities and Exchange Commission 

(the ‘‘Commission’’) is soliciting 

comments on the collection of 

information summarized below. The 

Commission plans to submit this 

existing collection of information to the 

Office of Management and Budget for 

extension and approval. 

Section 17(f) (15 U.S.C. 80a–17(f)) 

under the Investment Company Act of 

1940 (the ‘‘Act’’) 1 permits registered 

management investment companies and 

their custodians to deposit the securities 

they own in a system for the central 

handling of securities (‘‘securities 


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