28848 Federal Register / Vol. 87, No. 91 / Wednesday, May 11, 2022 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 92865 

(Sept. 2, 2021), 86 FR 50570 (‘‘Notice’’). 

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

5See Securities Exchange Act Release No. 93172, 

86 FR 55071 (Oct. 5, 2021). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 93731, 

86 FR 70882 (Dec. 13, 2021). 

8See Securities Exchange Act Release No. 94316, 

87 FR 12211 (Mar. 3, 2022). 

9 In Amendment No. 2, the Exchange clarified, 

among other things, that under no circumstances 

will the Trust hold and/or invest in any assets other 

than bitcoin futures contracts traded on the Chicago 

Mercantile Exchange, Inc., cash, and Money Market 

Instruments (as defined below), and provided 

additional representations that are commonly made 

by and/or required for futures-based exchangetraded products listed under Nasdaq Rule 5711(g) 

(Commodity Futures Trust Shares). Because 

Amendment No. 2 does not materially alter the 

substance of the proposed rule change, Amendment 

No. 2 is not subject to notice and comment. The full 

text of Amendment No. 2 is available on the 

Commission’s website at: https://www.sec.gov/ 

comments/sr-nasdaq-2021-066/srnasdaq2021066- 

20125377-284868.pdf (‘‘Amendment No. 2’’). 

10Such filings are made under Section 19(b)(1) of 

the Exchange Act, 15 U.S.C. 78s(b)(1), and 

Exchange Act Rule 19b–4, 17 CFR 240.19b–4. 

11See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 

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

12See, e.g., Order Disapproving a Proposed Rule 

Change, as Modified by Amendment No. 1, To 

Amend NYSE Arca Rule 8.201–E (CommodityBased Trust Shares) and To List and Trade Shares 

of the United States Bitcoin and Treasury 

Investment Trust Under NYSE Arca Rule 8.201–E, 

Securities Exchange Act Release No. 88284 (Feb. 26, 

2020), 85 FR 12595, 12597 (Mar. 3, 2020) (SR– 

NYSEArca–2019–39) (‘‘USBT Order’’); Order 

Disapproving a Proposed Rule Change To List and 

Trade Shares of the NYDIG Bitcoin ETF Under 

NYSE Arca Rule 8.201–E (Commodity-Based Trust 

Shares), Securities Exchange Act Release No. 94395 

(Mar. 10, 2022), 87 FR 14932, 14934 (Mar. 16, 2022) 

(SR–NYSEArca–2021–57) (‘‘NYDIG Order’’). 

13See Notice, supra note 3; Amendment No. 2, 

supra note 9. 

14Bitcoins are digital assets that are issued and 

transferred via a decentralized, open-source 

protocol used by a peer-to-peer computer network 

through which transactions are recorded on a 

public transaction ledger known as the ‘‘bitcoin 

blockchain.’’ The bitcoin protocol governs the 

creation of new bitcoins and the cryptographic 

system that secures and verifies bitcoin 

transactions. See, e.g., Notice, 86 FR at 50571. 

15See id. at 50574. Valkyrie Funds LLC 

(‘‘Sponsor’’) serves as the Trust’s sponsor and 

commodity pool operator; Vident Investment 

Advisory, LLC (‘‘Sub-Advisor’’) serves as the Trust’s 

sub-advisor and commodity trading advisor; and 

XBTO Trading, LLC is the research provider for the 

Sponsor and the Sub-Advisor. Delaware Trust 

Company serves as the trustee for the Trust. The 

Sponsor is currently considering third-party service 

providers for the roles of administrator, transfer 

agent, custodian, and marketing agent. See id. at 

50571. 

16See id. at 50573 n.8. According to the 

Exchange, calculation rules are geared toward 

maximum transparency and real-time replicability 

in underlying spot markets, including Bitstamp, 

Coinbase, Gemini, itBit, and Kraken. See id. 

POSTAL SERVICE 

Product Change—Priority Mail Express 

and Priority Mail Negotiated Service 

Agreement 

AGENCY: Postal ServiceTM. 

ACTION: Notice. 

SUMMARY: The Postal Service gives 

notice of filing a request with the Postal 

Regulatory Commission to add a 

domestic shipping services contract to 

the list of Negotiated Service 

Agreements in the Mail Classification 

Schedule’s Competitive Products List. 

DATES: Date of required notice: May 11, 

2022. 

FOR FURTHER INFORMATION CONTACT: 

Sean Robinson, 202–268–8405. 

SUPPLEMENTARY INFORMATION: The 

United States Postal Service® hereby 

gives notice that, pursuant to 39 U.S.C. 

3642 and 3632(b)(3), on May 2, 2022, it 

filed with the Postal Regulatory 

Commission a USPS Request to Add 

Priority Mail Express & Priority Mail 

Contract 132 to Competitive Product 

List. Documents are available at 

www.prc.gov, Docket Nos. MC2022–54, 

CP2022–59. 

Sean Robinson, 

Attorney, Corporate and Postal Business Law. 

[FR Doc. 2022–10107 Filed 5–10–22; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94853; File No. SR– 

NASDAQ–2021–066] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Granting Approval of a Proposed Rule 

Change, as Modified by Amendment 

Nos. 1 and 2, To List and Trade Shares 

of the Valkyrie XBTO Bitcoin Futures 

Fund Under Nasdaq Rule 5711(g) 

May 5, 2022. 

I. Introduction 

On August 23, 2021, The Nasdaq 

Stock Market LLC (‘‘Nasdaq’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Exchange Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to list and trade shares 

(‘‘Shares’’) of the Valkyrie XBTO Bitcoin 

Futures Fund (‘‘Trust’’) under Nasdaq 

Rule 5711(g) (Commodity Futures Trust 

Shares). On August 25, 2021, the 

Exchange filed Amendment No. 1 to the 

proposed rule change. The proposed 

rule change, as modified by Amendment 

No. 1, was published for comment in 

the Federal Register on September 9, 

2021.3

On September 29, 2021, pursuant to 

Section 19(b)(2) of the Exchange Act,4

the Commission designated a longer 

period within which to approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether to 

disapprove the proposed rule change.5

On December 7, 2021, the Commission 

instituted proceedings under Section 

19(b)(2)(B) of the Exchange Act 6 to 

determine whether to approve or 

disapprove the proposed rule change.7

On February 25, 2022, the Commission 

designated a longer period for 

Commission action on the proposed rule 

change.8 On April 12, 2022, the 

Exchange filed partial Amendment No. 

2 to the proposed rule change.9 The 

Commission has received no comments 

on the proposed rule change. 

When an exchange files a proposed 

rule change,10 the Commission must 

determine whether the proposed rule 

change is consistent with the statutory 

provisions, and the rules and 

regulations, that apply to national 

securities exchanges.11 As discussed 

further below, the Commission is 

approving the proposed rule change, as 

modified by Amendment Nos. 1 and 2. 

In approving this proposed rule change, 

however, the Commission emphasizes— 

as it has with previous orders regarding 

bitcoin-related ETPs 12—that its action 

does not rest on an evaluation of 

whether bitcoin, or blockchain 

technology more generally, has utility or 

value as an innovation or an investment. 

II. Description of the Proposed Rule 

Change, as Modified by Amendment 

Nos. 1 and 2 

As described in more detail in the 

Notice and Amendment No. 2,13 the 

Exchange proposes to list and trade the 

Shares of the Trust under Nasdaq Rule 

5711(g), which governs the listing and 

trading of Commodity Futures Trust 

Shares on the Exchange. 

The investment objective of the Trust 

is for the Shares to reflect the 

performance of bitcoin 14 as represented 

by the CME CF Bitcoin Reference Rate 

(‘‘CME CF BRR’’), less the Trust’s 

liabilities and expenses.15 The CME CF 

BRR aggregates the trade flow of major 

bitcoin spot platforms during a specific 

calculation window into a one-a-day 

reference rate of the U.S. dollar price of 

bitcoin.16 The Trust will pursue its 

investment objective by holding bitcoin 

futures that are cash-settled and traded 

on the Chicago Mercantile Exchange, 

Inc. (the ‘‘CME’’), which was selfcertified with the Commodity Futures 


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Federal Register / Vol. 87, No. 91 / Wednesday, May 11, 2022 / Notices 28849 

17See id. at 50574. 

18See Amendment No. 2, supra note 9, at 3. 

19See id.; Notice, 86 FR at 50574. 

20See Notice, 86 FR at 50574. 

21See id. at 50579–80. Upon the request of an 

Authorized Participant made at the time of a 

redemption order, the Sponsor at its sole discretion 

may determine, in addition to delivering 

redemption proceeds, to transfer futures contracts 

to the Authorized Participant pursuant to an 

exchange of a futures contract for a related position 

or to a block trade sale of futures contracts to the 

Authorized Participant. See id. at 50580. 

22See Amendment No. 2, supra note 9, at 4. 

23 In approving this proposed rule change, as 

modified by Amendment Nos. 1 and 2, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

24 15 U.S.C. 78f(b)(5). 

25 15 U.S.C. 78k–1(a)(1)(C)(iii). 

26See 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, Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (Aug. 1, 2018) (SR– 

BatsBZX–2016–30) (‘‘Winklevoss Order’’); USBT 

Order, 85 FR 12595; Order Disapproving a Proposed 

Rule Change To List and Trade Shares of the 

WisdomTree Bitcoin Trust Under BZX Rule 

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

Securities Exchange Act Release No. 93700 (Dec. 1, 

2021), 86 FR 69322 (Dec. 7, 2021) (SR–CboeBZX– 

2021–024) (‘‘WisdomTree Order’’); Order 

Disapproving a Proposed Rule Change To List and 

Trade Shares of the Kryptoin Bitcoin ETF Trust 

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

Trust Shares, Securities Exchange Act Release No. 

93860 (Dec. 22, 2021), 86 FR 74166 (Dec. 29, 2021) 

(SR–CboeBZX–2021–029) (‘‘Kryptoin Order’’); 

Order Disapproving a Proposed Rule Change To List 

and Trade Shares of the Valkyrie Bitcoin Fund 

Under NYSE Arca Rule 8.201–E (Commodity-Based 

Trust Shares), Securities Exchange Act Release No. 

93859 (Dec. 22, 2021), 86 FR 74156 (Dec. 29, 2021) 

(SR–NYSEArca–2021–31) (‘‘Valkyrie Order’’); Order 

Disapproving a Proposed Rule Change To List and 

Trade Shares of the First Trust SkyBridge Bitcoin 

ETF Trust Under NYSE Arca Rule 8.201–E, 

Securities Exchange Act Release No. 94006 (Jan. 20, 

2022), 87 FR 3869 (Jan. 25, 2022) (SR–NYSEArca– 

2021–37) (‘‘Skybridge Order’’); Order Disapproving 

a Proposed Rule Change To List and Trade Shares 

of the Wise Origin Bitcoin Trust Under BZX Rule 

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

Securities Exchange Act Release No. 94080 (Jan. 27, 

2022), 87 FR 5527 (Feb. 1, 2022) (SR–CboeBZX– 

2021–029) (‘‘Wise Origin Order’’); NYDIG Order, 87 

FR 14932; Order Disapproving a Proposed Rule 

Change To List and Trade Shares of the Global X 

Bitcoin Trust Under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares, Securities 

Exchange Act Release No. 94396 (Mar. 10, 2022), 87 

FR 14912 (Mar. 16, 2022) (SR–CboeBZX–2021–052) 

(‘‘Global X Order’’); Order Disapproving a Proposed 

Rule Change, as Modified by Amendment No. 1, To 

List and Trade Shares of the ARK 21Shares Bitcoin 

ETF Under BZX Rule 14.11(e)(4), Commodity-Based 

Trust Shares, Securities Exchange Act Release No. 

94571 (Mar. 31, 2022), 87 FR 20014 (Apr. 6, 2022) 

(SR–CboeBZX–2021–051) (‘‘ARK 21Shares Order’’). 

See also Order Disapproving a Proposed Rule 

Change, as Modified by Amendment No. 1, Relating 

to the Listing and Trading of Shares of the SolidX 

Bitcoin Trust Under NYSE Arca Equities Rule 

8.201, Securities Exchange Act Release No. 80319 

(Mar. 28, 2017), 82 FR 16247 (Apr. 3, 2017) (SR– 

NYSEArca–2016–101) (‘‘SolidX Order’’). The 

Commission also notes that orders were issued by 

delegated authority on the following matters: Order 

Disapproving a Proposed Rule Change To List and 

Trade the Shares of the ProShares Bitcoin ETF and 

the ProShares Short Bitcoin ETF, Securities 

Exchange Act Release No. 83904 (Aug. 22, 2018), 

83 FR 43934 (Aug. 28, 2018) (SR–NYSEArca–2017– 

139) (‘‘ProShares Order’’); Order Disapproving a 

Proposed Rule Change To List and Trade the Shares 

of the GraniteShares Bitcoin ETF and the 

GraniteShares Short Bitcoin ETF, Securities 

Exchange Act Release No. 83913 (Aug. 22, 2018), 

83 FR 43923 (Aug. 28, 2018) (SR–CboeBZX–2018– 

001) (‘‘GraniteShares Order’’); Order Disapproving a 

Proposed Rule Change To List and Trade Shares of 

the VanEck Bitcoin Trust Under BZX Rule 

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

Securities Exchange Act Release No. 93559 (Nov. 

12, 2021), 86 FR 64539 (Nov. 18, 2021) (SR– 

CboeBZX–2021–019) (‘‘VanEck Order’’); Order 

Granting Approval of a Proposed Rule Change, as 

Modified by Amendment No. 2, To List and Trade 

Shares of the Teucrium Bitcoin Futures Fund Under 

NYSE Arca Rule 8.200–E, Commentary .02 (Trust 

Issued Receipts), Securities Exchange Act Release 

No. 94620 (Apr. 6, 2022), 87 FR 21676 (Apr. 12, 

2022) (SR–NYSEArca–2021–053) (‘‘Teucrium 

Order’’). 27See USBT Order, 85 FR at 12596. In the context 

of derivative securities products such as 

commodity-trust ETPs, the Commission has long 

recognized the importance of comprehensive 

surveillance-sharing agreements to detect and deter 

fraudulent and manipulative activity. See, e.g., 

streetTRACKS Gold Shares, Securities Exchange 

Act Release No. 50603 (Oct. 28, 2004), 69 FR 64614, 

64618–19 (Nov. 5, 2004) (SR–NYSE–2004–22); 

iShares Silver Trust, Securities Exchange Act 

Release No. 53521 (Mar. 20, 2006), 71 FR 14967, 

14968, 14973–74 (Jan 26, 2005) (SR–Amex–2004– 

38); JPM XF Physical Copper Trust, Securities 

Exchange Act Release No. 68440 (Dec. 14, 2012), 77 

FR 75468, 75469–70, 75272, 75485–86 (Dec. 20, 

2012) (SR–NYSEArca–2012–28). See also 

Winklevoss Order, 83 FR at 37592 n.202 and 

accompanying text (discussing previous 

Commission approvals of commodity-trust ETPs). 

And the Commission’s approval orders for 

commodity-futures ETPs consistently note the 

Continued 

Trading Commission (the ‘‘CFTC’’).17

The Trust will not invest in or hold spot 

bitcoin.18 In addition to the Trust’s 

investments in CME bitcoin futures, the 

Trust expects to have significant 

holdings of cash and high-quality, shortterm debt instruments that have 

remaining terms-to maturity of less than 

397 days, and include only U.S. 

Treasury securities and repurchase 

agreements (‘‘Money Market 

Instruments’’).19

The net asset value (‘‘NAV’’) of the 

Trust will be determined in accordance 

with Generally Accepted Accounting 

Principles. The NAV per Share will be 

determined by dividing the NAV of the 

Trust by the number of Shares 

outstanding. The NAV of the Trust is 

typically determined as of 4:00 p.m. E.T. 

on each day the Shares trade on the 

Exchange (‘‘Business Day’’). The Trust’s 

daily activities are generally not 

reflected in the NAV determined for the 

Business Day on which the transactions 

are effected (the trade date), but rather 

on the following Business Day.20

The Trust will issue and redeem 

Shares on a continuous basis at NAV 

per Share in large, specified blocks of 

Shares (‘‘Creation Units’’) in 

transactions with broker-dealers and 

large institutional investors that have 

entered into participation agreements 

(‘‘Authorized Participants’’). The 

Exchange currently anticipates that a 

Creation Unit will consist of 50,000 

Shares, although this number may 

change from time to time.21 In addition, 

the Shares will generally be created and 

redeemed in cash.22

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change, as 

modified by Amendment Nos. 1 and 2, 

is consistent with the Exchange Act and 

rules and regulations thereunder 

applicable to a national securities 

exchange.23 In particular, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

Nos. 1 and 2, is consistent with Section 

6(b)(5) of the Exchange Act,24 which 

requires, among other things, that the 

Exchange’s rules be designed to 

‘‘prevent fraudulent and manipulative 

acts and practices,’’ to ‘‘promote just 

and equitable principles of trade,’’ to 

‘‘remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system,’’ and, ‘‘in 

general, to protect investors and the 

public interest.’’ The Commission also 

finds, with respect to the dissemination 

of quotation and last trade information 

for the proposed ETP, that the proposed 

rule change, as modified by Amendment 

Nos. 1 and 2, is consistent with Section 

11A(a)(1)(C)(iii) of the Exchange Act,25

which sets forth Congress’ finding that 

it is in the public interest and 

appropriate for the protection of 

investors and the maintenance of fair 

and orderly markets to assure the 

availability to brokers, dealers, and 

investors of information with respect to 

quotations for and transactions in 

securities. 

When considering whether Nasdaq’s 

proposal to list and trade the Shares is 

designed to prevent fraudulent and 

manipulative acts and practices, the 

Commission applies the same standard 

it used in orders considering previous 

proposals to list bitcoin-based 

commodity trusts and bitcoin-based 

trust issued receipts.26 As the 

Commission has explained, an exchange 

that lists bitcoin-based exchange-traded 

products (‘‘ETPs’’) can meet its 

obligations under Exchange Act Section 

6(b)(5) by demonstrating that the 

exchange has a comprehensive 

surveillance-sharing agreement with a 

regulated market of significant size 

related to the underlying or reference 

bitcoin assets.27 The Winklevoss Order 


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ability of an ETP listing exchange to share 

surveillance information either through 

surveillance-sharing agreements or through 

membership by the listing exchange and the 

relevant futures exchange in the Intermarket 

Surveillance Group. See, e.g., Securities Exchange 

Act Release No. 53105 (Jan. 11, 2006), 71 FR 3129, 

3136 (Jan. 19, 2006) (SR–Amex–2005–059); 

Securities Exchange Act Release No. 53582 (Mar. 

31, 2006), 71 FR 17510, 17518 (Apr. 6, 2006) (SR– 

Amex–2005–127); Securities Exchange Act Release 

No. 54013 (June 16, 2006), 71 FR 36372, 36378–79 

(June 26, 2006) (SR–NYSE–2006–17). See also 

GraniteShares Order, 83 FR at 43925–27 nn.35–39 

and accompanying text (discussing previous 

Commission approvals of commodity-futures ETPs). 

28See ProShares Order, 83 FR at 43936; 

GraniteShares Order, 83 FR at 43925; Teucrium 

Order, 87 FR at 21677. 

29The Commission is not suggesting that either 

the development of the CME bitcoin futures market 

or the approval of this proposal would require the 

Commission to approve a proposed rule change 

seeking to list and trade shares of an ETP holding 

spot bitcoin as an asset or ETPs related to other 

digital assets. See, e.g., GraniteShares Order, 83 FR 

at 43931. Other proposed ETPs will continue to be 

assessed on their particular facts and circumstances 

and on whether those proposals are consistent with 

the requirements of the Exchange Act. 

30See supra note 27. 

31See Winklevoss Order, 83 FR at 37580. 

32See id.; USBT Order, 85 FR at 12598. 

33See Teucrium Order, 87 FR at 21676. 

34See Amendment to Rule Filing Requirements 

for Self-Regulatory Organizations Regarding New 

Derivative Securities Products, Securities Exchange 

Act Release No. 40761 (Dec. 8, 1998), 63 FR 70952, 

70959 (Dec. 22, 1998). 

35 Id. See also Winklevoss Order, 83 FR at 37594; 

ProShares Order, 83 FR at 43936; GraniteShares 

Order, 83 FR at 43924; USBT Order, 85 FR at 12596. 

36See Winklevoss Order, 83 FR at 37592–93 

(discussing Letter from Brandon Becker, Director, 

Division of Market Regulation, Commission, to 

Gerard D. O’Connell, Chairman, Intermarket 

Surveillance Group (June 3, 1994), available at 

http://www.sec.gov/divisions/marketreg/mrnoaction/isg060394.htm). 

37See id. at 37580 n.19. 

38See Notice, 86 FR at 50576. 

39See, e.g., WisdomTree Order, 86 FR at 69330; 

Wise Origin Order, 87 FR at 5534. 

applied this standard to a commoditytrust ETP based on spot bitcoin, and the 

Commission has found that this 

standard is also appropriate for, and has 

applied the standard to, proposed ETPs 

based on bitcoin futures.28

In the analysis below, the 

Commission examines whether the 

proposed rule change, as modified by 

Amendment Nos. 1 and 2, is consistent 

with Section 6(b)(5) of the Exchange Act 

by addressing: in Section III.A whether 

Nasdaq has entered into a 

comprehensive surveillance-sharing 

agreement with a regulated market of 

significant size related to the underlying 

bitcoin assets (here, CME bitcoin futures 

contracts); in Section III.B assertions 

that allowing investors to obtain 

exposure to bitcoin futures contracts 

through a bitcoin futures-based ETP 

would be beneficial; and in Section III.C 

whether the proposed ETP is consistent 

with other standards for commodityfutures ETPs. Based on its analysis, the 

Commission concludes that the 

proposed rule change, as modified by 

Amendment Nos. 1 and 2, is consistent 

with the statutory requirements of 

Exchange Act Sections 6(b)(5) and 

11A(a)(1)(C)(iii). 

As discussed in more detail below, 

the approval is based on a finding that 

the CME is a ‘‘significant market’’ 

related to CME bitcoin futures contracts, 

which would be the exclusive non-cash 

holdings of the proposed ETP. The 

Commission emphasizes that its 

approval of this proposal is based on the 

specific facts and circumstances of the 

proposal.29

A. Comprehensive Surveillance-Sharing 

Agreement With a Regulated Market of 

Significant Size Related to CME Bitcoin 

Futures Contracts 

As stated above, an exchange that lists 

a bitcoin-based ETP can meet its 

obligations under Exchange Act Section 

6(b)(5) by demonstrating that the 

exchange has a comprehensive 

surveillance-sharing agreement with a 

regulated market of significant size 

related to the underlying bitcoin 

assets.30 When disapproving the earliest 

proposals for bitcoin-based ETPs, the 

Commission recognized that ‘‘regulated 

bitcoin-related markets are in the early 

stages of their development,’’ but that 

‘‘[o]ver time, regulated bitcoin-related 

markets may continue to grow and 

develop’’ in a way that would make it 

possible for a bitcoin-based ETP to 

satisfy the requirements of the Exchange 

Act.31 The Commission previously 

stated that, for example, ‘‘existing or 

newly created bitcoin futures markets’’ 

that are regulated may achieve 

significant size, and an ETP listing 

exchange may be able to demonstrate in 

a proposed rule change that it will be 

able to address the risk of fraud and 

manipulation by entering into a 

surveillance-sharing agreement with a 

regulated market of significant size.32

With respect to the proposed ETP, the 

underlying bitcoin assets are CME 

bitcoin futures contracts. The relevant 

analysis, therefore, is whether Nasdaq 

has a comprehensive surveillancesharing agreement with a regulated 

market of significant size related to CME 

bitcoin futures contracts. As discussed 

below, taking into consideration the 

direct relationship between the 

regulated market with which Nasdaq 

has a surveillance-sharing agreement 

and the assets held by the proposed 

ETP—including the current state of the 

CME bitcoin futures market and the 

trading of exchange-traded funds 

registered under the Investment 

Company Act of 1940 (‘‘1940 Act’’) that 

hold CME bitcoin futures (‘‘Bitcoin 

Futures ETFs’’)—the Commission 

concludes that the Exchange has the 

requisite surveillance-sharing 

agreement. The Commission notes that 

in the Teucrium Order it recently 

approved NYSE Arca, Inc.’s proposal to 

list and trade shares of an ETP that 

similarly would hold CME bitcoin 

futures contracts as its only non-cash 

holdings.33

Comprehensive Surveillance-Sharing 

Agreements With the CME, a Regulated 

Market 

The Commission has emphasized that 

it is essential for an exchange listing a 

derivative securities product to enter 

into a surveillance-sharing agreement 

with markets trading the underlying 

assets for the listing exchange to have 

the ability to obtain information 

necessary to detect, investigate, and 

deter fraud and market manipulation, as 

well as violations of exchange rules and 

applicable federal securities laws and 

rules.34 Comprehensive surveillancesharing agreements ‘‘provide a 

necessary deterrent to manipulation 

because they facilitate the availability of 

information needed to fully investigate 

a manipulation if it were to occur.’’ 35

The hallmarks of a surveillance-sharing 

agreement are that the agreement 

provides for the sharing of information 

about market trading activity, clearing 

activity, and customer identity; that the 

parties to the agreement have reasonable 

ability to obtain access to and produce 

requested information; and that no 

existing rules, laws, or practices would 

impede one party to the agreement from 

obtaining this information from, or 

producing it to, the other party.36

As the Commission has stated, it 

considers two markets to have a 

comprehensive surveillance-sharing 

agreement with one another if they are 

both members of the Intermarket 

Surveillance Group (‘‘ISG’’), even if they 

do not have a separate bilateral 

surveillance-sharing agreement.37

Accordingly, based on the common 

membership of Nasdaq and the CME in 

the ISG,38 Nasdaq has the equivalent of 

a comprehensive surveillance-sharing 

agreement with the CME. Moreover, as 

the Commission has previously 

recognized, the CFTC regulates the CME 

futures market, including the CME 

bitcoin futures market, and thus that 

market is ‘‘regulated.’’ 39


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40See Winklevoss Order, 83 FR at 37594. 

41See id. 

42See Teucrium Order, 87 FR at 21679. See also 

Notice, 86 FR at 50574 (stating that ‘‘[l]ike other 

futures products on the CME, [CME bitcoin futures] 

are subject to oversight by the CFTC, and the CME 

itself is empowered to enforce its own rulebook as 

it relates to the [CME bitcoin futures]’’ and ‘‘has a 

surveillance team that monitors the trading of [CME 

bitcoin futures] at all times’’); 50579 (stating that as 

a Designated Contract Market (‘‘DCM’’), the CME 

must ‘‘certify that it has the ability to prevent 

manipulation, price distortion, and disruptions of 

the cash-settlement process through market 

surveillance, compliance, and enforcement 

practices and procedures’’). This reasoning, 

however, does not extend to spot bitcoin ETPs. Spot 

bitcoin markets are not currently ‘‘regulated.’’ See, 

e.g., USBT Order, 85 FR at 12604; NYDIG Order, 87 

FR at 14936 nn.65–67. If an exchange seeking to list 

a spot bitcoin ETP relies on the CME as the 

regulated market with which it has a 

comprehensive surveillance-sharing agreement, 

because the assets held by a spot bitcoin ETP would 

not be traded on the CME, that proposal would be 

significantly different from the current proposal. 

Because of this important difference, with respect 

to a spot bitcoin ETP, there would be reason to 

question whether a surveillance-sharing agreement 

with the CME would, in fact, assist in detecting and 

deterring fraudulent and manipulative misconduct 

affecting the price of the spot bitcoin held by that 

ETP. If, however, an exchange proposing to list and 

trade a spot bitcoin ETP identifies the CME as the 

regulated market with which it has a 

comprehensive surveillance-sharing agreement, the 

exchange could overcome the Commission’s 

concern by demonstrating that there is a reasonable 

likelihood that a person attempting to manipulate 

the spot bitcoin ETP would have to trade on the 

CME in order to manipulate the ETP, because such 

demonstration would help establish that the 

exchange’s surveillance-sharing agreement with the 

CME would have the intended effect of aiding in 

the detection and deterrence of fraudulent and 

manipulative misconduct related to the spot bitcoin 

held by the ETP. See Teucrium Order, 87 FR at 

21679 n.46. 43 In addition, when considering past proposals 

for spot bitcoin ETPs, the Commission has 

discussed whether there is a lead-lag relationship 

between the regulated market (e.g., the CME) and 

the market on which the assets held by the ETP 

would have traded (i.e., spot bitcoin platforms), as 

part of an analysis of whether a would-be 

manipulator of the spot bitcoin ETP would need to 

trade on the regulated market to effect such 

manipulation. See, e.g., USBT Order, 85 FR at 

12612. For the present proposal, because of the 

direct relationship between the regulated market 

(i.e., the CME) and the only non-cash assets held 

by the proposed ETP (i.e., CME bitcoin futures 

contracts) establishing a ‘‘lead-lag’’ relationship 

between the CME and non-CME markets is also 

unnecessary. See Teucrium Order, 87 FR at 21679 

n.47. 

44See Notice, 86 FR at 50575–78. 

45See id. at 50576. 

46 Id. at 50577. 

47 Id. (citing Staff Statement on Funds Registered 

Under the Investment Company Act Investing in the 

Bitcoin Futures Market (May 11, 2021), available at: 

https://www.sec.gov/news/public-statement/staffstatement-investing-bitcoin-futures-market#_

ftnref5) (‘‘Staff Statement’’). 

48 Id. 

49See id. at 50577–78 (discussing Y. Hu, Y. Hou 

& L. Oxley, What role do futures markets play in 

Bitcoin pricing? Causality, cointegration and price 

discovery from a time-varying perspective, 72 Int’l 

Rev. of Fin. Analysis 101569 (2020) (‘‘Hu, Hou & 

Oxley’’); and J. Wu, K. Xu, X. Zheng & J. Chen, 

Fractional cointegration in bitcoin spot and futures 

markets, 41 J. Futures Mkts. 1478 (2021) (‘‘Wu et 

al.’’)). 

50 Id. at 50578 (citing B. Kapar & J. Olmo, An 

analysis of price discovery between Bitcoin futures 

and spot markets, 174 Econ. Letters 62 (2019) 

(‘‘Kapar & Olmo’’); E. Akyildirim, S. Corbet, P. 

Katsiampa, N. Kellard & A. Sensoy, The 

development of Bitcoin futures: Exploring the 

interactions between cryptocurrency derivatives, 34 

Fin. Res. Letters 101234 (2020) (‘‘Akyildirim et 

al.’’); A. Chang, W. Herrmann & W. Cai, Efficient 

Price Discovery in the Bitcoin Markets, Wilshire 

Phoenix, Oct. 14, 2020, available at: https://

www.wilshirephoenix.com/efficient-price-discoveryin-the-bitcoin-markets/ (‘‘Wilshire Phoenix’’). See 

also id. at 50577 (citing J. Hung, H. Liu & J. Yang, 

Trading activity and price discovery in Bitcoin 

futures markets, 62 J. Empirical Finance 107 (2021) 

(‘‘Hung, Liu & Yang’’). 

Whether the CME Is a Market of 

Significant Size Related to CME Bitcoin 

Futures Contracts 

In the Winklevoss Order, the 

Commission stated that the term 

‘‘significant market’’ or ‘‘market of 

significant size’’ includes a market (or 

group of markets) as to which (1) there 

is a reasonable likelihood that a person 

attempting to manipulate the ETP 

would also have to trade on that market 

to successfully manipulate the ETP, so 

that a surveillance-sharing agreement 

would assist in detecting and deterring 

misconduct, and (2) it is unlikely that 

trading in the ETP would be the 

predominant influence on prices in that 

market.40 The Commission explained 

that this definition is illustrative and 

not exclusive, and that there could be 

other types of ‘‘significant markets’’ and 

‘‘markets of significant size.’’ 41

(1) Prong 1 

The first prong of the analysis 

addresses whether the surveillancesharing agreement on which the ETP 

listing exchange proposes to rely would 

assist in detecting and deterring 

fraudulent or manipulative misconduct 

related to the assets held by the ETP. In 

the present proposal, the proposed 

ETP’s only non-cash holdings will be 

CME bitcoin futures contracts. 

Moreover, the proposed ‘‘significant’’ 

regulated market (i.e., the CME) with 

which the listing exchange has a 

surveillance-sharing agreement is the 

same market on which these assets 

trade. As the Commission previously 

recognized in the Teucrium Order, the 

CME’s surveillance can reasonably be 

relied upon to capture the effects on the 

CME bitcoin futures market caused by a 

person attempting to manipulate the 

proposed futures ETP by manipulating 

the price of CME bitcoin futures 

contracts, whether that attempt is made 

by directly trading on the CME bitcoin 

futures market or indirectly by trading 

outside of the CME bitcoin futures 

market, such that when the CME shares 

its surveillance information with 

Nasdaq, the information would assist in 

detecting and deterring fraudulent or 

manipulative misconduct related to the 

non-cash assets held by the proposed 

ETP.42 Accordingly, for the present 

proposal, it is unnecessary for Nasdaq to 

establish a reasonable likelihood that a 

would-be manipulator would have to 

trade on the CME itself to manipulate 

the proposed ETP.43

Nasdaq, however, makes several 

arguments in support of its assertion 

that it is reasonably likely that a person 

attempting to manipulate the proposed 

ETP would have to trade on the CME 

bitcoin futures market to successfully 

manipulate the proposed ETP.44 First, 

Nasdaq states that the CME bitcoin 

futures market has grown considerably 

since Commission disapprovals of a 

bitcoin futures ETP in August 2018 and 

a spot bitcoin ETP in January 2020, as 

evidenced by empirical data on trading 

volume and open interest.45 Nasdaq 

further states that ‘‘because the [CME 

bitcoin futures] market has grown to 

resemble other futures markets, a leadlag relationship that exists in other 

mature futures markets has also likely 

developed between the [CME bitcoin 

futures] market and the bitcoin spot 

market.’’ 46 Second, Nasdaq argues that 

observations made by the Staff of the 

Commission’s Division of Investment 

Management regarding the maturity of 

the bitcoin futures market ‘‘is strong 

evidence that concerns previously 

raised regarding price manipulation in 

that market have been significantly 

reduced.’’ 47 Finally, Nasdaq argues that 

the majority of academic literature 

concerning the lead-lag relationship 

between the bitcoin futures market and 

the spot bitcoin market, including 

studies with more recent data, 

‘‘supports the proposition that price 

discovery does take place in the [CME 

bitcoin futures] market and therefore a 

lead-lag relationship exists between the 

spot and futures markets.’’ 48 Nasdaq 

discusses two more recent studies,49

and concludes that this research 

‘‘build[s] upon the already emerging 

academic consensus . . . that the [CME 

bitcoin futures] market does lead the 

spot market such that a would-be 

manipulator would necessarily 

conclude that it must trade in the 

futures market to successfully 

manipulate the spot price of bitcoin.’’ 50

The Commission disagrees with much 

of Nasdaq’s reasoning. Nasdaq’s 

assertions about the general upward 

trends in trading volume and open 

interest of CME bitcoin futures do not 

establish whether it is reasonably likely 

that a would-be manipulator would 


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51The Commission has previously considered 

and rejected similar arguments in the context of 

spot bitcoin ETPs. See, e.g., USBT Order, 85 FR at 

12612; GlobalX Order, 87 FR at 14919; NYDIG 

Order, 87 FR at 14938. 

52See Notice, 86 FR at 50577. 

53See also USBT Order, 85 FR at 12612; 

WisdomTree Order, 86 FR at 69331; Wise Origin 

Order, 87 FR at 5535; GlobalX Order, 87 FR at 

14920; NYDIG Order, 87 FR at 14938; Teucrium 

Order, 87 FR at 21679. 

54See Notice, 86 FR at 50577 (citing Hung, Liu 

& Yang). See also C. Alexander & D. Heck, Price 

discovery in Bitcoin: The impact of unregulated 

markets, 50 J. Financial Stability 100776 (2020) 

(finding that, in a multi-dimensional setting, 

including the main price leaders within futures, 

perpetuals, and spot markets, CME bitcoin futures 

have a very minor effect on price discovery; and 

that faster speed of adjustment and information 

absorption occurs on the unregulated spot and 

derivatives platforms than on CME bitcoin futures). 

55See supra notes 49–50 and accompanying text. 

56See, e.g., GlobalX Order, 87 FR at 14920 n.119 

(concluding that papers on the lead-lag relationship 

and price discovery between bitcoin spot and 

futures markets, including the Wu et al. paper, the 

Hung, Liu & Yang paper, and the Akyildirim et al. 

paper, show that the academic literature is 

unsettled); NYDIG Order, 87 FR at 14938 (stating 

that Hu, Hou & Oxley’s Granger causality analysis 

had findings that are ‘‘concededly mixed’’ and that 

issues the Commission previously raised in the 

USBT Order about an unpublished version of that 

paper had not been addressed). See also USBT 

Order, 85 FR at 12613 n.244 (discussing that the use 

of daily price data, as opposed to intraday prices, 

by Kapar & Olmo and Hu, Hou & Oxley (in an 

unpublished version of the paper) may not be able 

to distinguish which market incorporates new 

information faster); WisdomTree Order, 86 FR at 

69331 n.143 (concluding that the papers cited by a 

commenter, including the Wilshire Phoenix 

working paper, evidence the unsettled nature of the 

academic literature). 

57See Winklevoss Order, 83 FR at 37594; USBT 

Order, 85 FR at 12596–97. 

58See Notice, 86 FR at 50578. 

59See id. at 50576. 

60See id. 

61See id. 

62See id. at 50578. 

63See id. According to Nasdaq, these statistics are 

based on samples of bitcoin liquidity in U.S. dollars 

(excluding stablecoins or Euro liquidity) based on 

executable quotes on Coinbase Pro, Gemini, 

Bitstamp, Kraken, LMAX Exchange, Binance US, 

and OK Coin during February 2021. See id. at 50578 

n.47. 

64See id. at 50578. 

65See id. 

66See id. 

67See id. (citing CF Benchmarks, ‘‘An Analysis of 

the Suitability of the CME CF BRR for the Creation 

of Regulated Financial Products,’’ December 2020 

(available at: https://docsend.com/view/ 

kizk7rarzaba6jxf)). 

68See id. 

69See id. 

have to trade on the CME to successfully 

manipulate the proposed ETP.51 In 

addition, as Nasdaq recognized, the 

Staff Statement did not reach a 

conclusion that the CME bitcoin futures 

market is a ‘‘significant market’’ or a 

‘‘market of significant size’’ related to 

bitcoin in the context of the 

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

Exchange Act,52 nor did it even 

undertake such an assessment. 

Moreover, the evidence in the record for 

this proposal does not support a finding 

that the CME leads bitcoin price 

discovery.53 As Nasdaq recognizes, 

studies indicate that price discovery 

takes place in the bitcoin spot market.54

Moreover, the literature discussed by 

Nasdaq in its filing has been previously 

considered by the Commission.55 As 

discussed in past Commission orders, 

the ‘‘mixed results’’ of price discovery 

analyses, including the studies 

discussed by Nasdaq in its filing, fail to 

demonstrate that the CME bitcoin 

futures market constitutes a market of 

significant size vis-a`-vis the bitcoin spot 

market.56

However, none of these deficiencies 

in Nasdaq’s arguments concerning 

whether there is a reasonable likelihood 

that a would-be manipulator of the 

proposed ETP would have to trade on 

the CME conflicts with the 

Commission’s determination that, 

because the only non-cash assets held 

by the proposed ETP (i.e., CME bitcoin 

futures contracts) are traded on the CME 

itself, Nasdaq’s surveillance-sharing 

agreement with the CME can reasonably 

be relied upon to assist in detecting and 

deterring fraudulent or manipulative 

misconduct related to those assets. Thus 

the first prong of the standard for 

‘‘market of significant size’’ has been 

established. 

(2) Prong 2 

As discussed above, in determining 

whether the CME bitcoin futures market 

constitutes a ‘‘market of significant size’’ 

related to CME bitcoin futures contracts, 

the Commission has also considered as 

a second prong of the analysis whether 

trading in the proposed ETP would be 

unlikely to be the predominant 

influence on prices in the CME bitcoin 

futures market.57 Based on the facts and 

circumstances here, the Commission 

finds that this second prong has been 

satisfied. 

Nasdaq asserts that trading in the 

Shares would not be the predominant 

force on prices in the CME bitcoin 

futures market (or spot market) because 

of the significant volume in the CME 

bitcoin futures market, the size of 

bitcoin’s market capitalization, which is 

approximately $1 trillion, and the 

significant liquidity available in the spot 

market.58 Nasdaq states that, since the 

GraniteShares Order and the USBT 

Order were issued, there has been 

steady and robust growth observed in 

the CME bitcoin futures market.59 For 

example, according to Nasdaq, the daily 

average trading volume for CME bitcoin 

futures was $117 million or 3,629 

contracts for the week including August 

24, 2018, as compared to $354.75 

million or 7,731 contracts for the week 

including February 26, 2020, and to 

$2.412 billion or 12,610 contracts for the 

week ending May 28, 2021.60

Additionally, according to Nasdaq, the 

daily average open interest in CME 

bitcoin futures was $95.4 million or 

2,956 contracts for the week including 

August 24, 2018, as compared to 

$250.25 million or 5,407 contracts for 

the week including February 26, 2020, 

and to $1.6626 billion or 8,677 contracts 

for the week ending May 28, 2021.61

Nasdaq also states that the spot 

market for bitcoin is very liquid.62

According to Nasdaq, in February 2021, 

for example, the cost to buy or sell $5 

million worth of bitcoin averaged 

roughly 10 basis points, with a market 

impact of 30 basis points.63 For a $10 

million market order, the cost to buy or 

sell was roughly 20 basis points, with a 

market impact of 50 basis points.64

Stated another way, Nasdaq provides 

that a market participant could enter a 

market buy or sell order for $10 million 

and only move the market 0.5%.65

Nasdaq further asserts that more 

strategic purchases or sales (such as 

using limit orders and executing 

through OTC bitcoin desks) would 

likely have a less obvious impact on the 

market, which Nasdaq states is 

consistent with the ability of 

MicroStrategy, Tesla, and Square to 

collectively purchase billions of dollars 

in bitcoin without resulting in 

significant price movements.66

Nasdaq also provides the results from 

a study conducted by CF Benchmarks 

(‘‘CF Benchmarks Analysis’’) to 

determine the extent of ‘‘slippage’’ (i.e., 

the difference between the expected 

price of a trade and the price at which 

the trade was actually executed), which, 

according to the Exchange, offers further 

evidence that trading in the Shares in 

unlikely to be the predominant 

influence in either the bitcoin spot or 

futures market.67 According to Nasdaq, 

the CF Benchmarks Analysis simulates 

the purchase of 50 bitcoins a day for 686 

days (an amount chosen, according to 

the Exchange, specifically to replicate 

hypothetical trades by a bitcoin ETP) 

and found that the maximum amount of 

slippage on a particular day was 0.3%, 

with the remainder of values between 

0% and 0.15%.68 According to Nasdaq, 

the CF Benchmarks Analysis 

demonstrates that, during the 

observation period, the slippage was 

largely negligible or, at most, minor.69

Nasdaq argues that, while the CF 

Benchmarks Analysis focuses on the 


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70See id. 71See id. 72See, e.g., WisdomTree Order, 86 FR at 69332; 

Skybridge Order, 87 FR at 3878–80; Wise Origin 

Order, 87 FR at 5536–37. 73See Teucrium Order, 87 FR at 21680. 74See id. at 21681. 

75See id. Among other things, the Commission 

considered that the CME bitcoin futures market 

began offering trading in bitcoin futures contracts 

in 2017 and, as of March 2022, trading in the 

standard-sized CME bitcoin futures contract was 

$38.9 billion. The Commission also stated that, 

since the launch of 1940 Act-registered Bitcoin 

Futures ETFs in October 2021, the Commission has 

neither observed any disruption to the CME bitcoin 

futures market, nor any evidence that the Bitcoin 

Futures ETFs have exerted a dominant influence on 

CME bitcoin futures prices. See id. 

76The 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 a 

comprehensive surveillance-sharing agreement with 

a regulated market of significant size, including by 

demonstrating that the bitcoin market as a whole or 

the underlying bitcoin market is uniquely and 

inherently resistant to fraud and manipulation. See 

USBT Order, 85 FR at 12587 n.23. Such resistance 

to fraud and manipulation must be novel and 

beyond those protections that exist in traditional 

commodities or securities markets. See id. at 12597. 

Moreover, in the context of previous spot bitcoin 

ETP proposals that have attempted to demonstrate 

that other means besides surveillance-sharing 

agreements are sufficient to prevent fraudulent and 

manipulative acts and practices, the Commission 

has consistently rejected arguments made by the 

listing exchanges. See supra note 26. In this 

proposal, Nasdaq likewise asserts that, with respect 

to the proposed ETP, there are other means to 

prevent fraudulent and manipulative acts and 

practices sufficient to justify dispensing with the 

requisite surveillance-sharing requirement. See 

Notice, 86 FR at 50578–79. Because Nasdaq has the 

requisite surveillance sharing agreement, the 

Commission does not need to reach the separate 

question of whether Nasdaq has demonstrated that 

there are other means, besides the surveillancesharing agreement, that would be sufficient to 

prevent fraudulent and manipulative acts and 

practices. 

77See Notice, 86 FR at 50582. 

78See id. 

79See id. 

80See id. 

81See id. 

82See id. 

83See id. 

84The Commission has disagreed with similar 

arguments made in the context of a previous bitcoin 

futures-related ETP. See GraniteShares Order, 83 FR 

at 43931. 

85See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 

778s(b)(2)(C). 

impact of a hypothetical ETP in the 

bitcoin spot market, arbitrage 

mechanisms in the spot and futures 

market dictate that it would be unlikely 

for a bitcoin futures ETP such as the 

Trust to overrun the CME bitcoin 

futures market without also overrunning 

the bitcoin spot market. Accordingly, 

the Exchange explains that the CF 

Benchmarks Analysis further bolsters its 

contention that the Trust and other 

similar ETPs would be unlikely to 

overrun the market.70 Nasdaq finally 

concludes that the combination of CME 

bitcoin futures leading price discovery, 

the overall size of the bitcoin market, 

and the ability for market participants, 

including authorized participants 

creating and redeeming in-kind with the 

Trust, to buy or sell large amounts of 

bitcoin without significant market 

impact will help prevent the Shares 

from becoming the predominant force 

on pricing in either the bitcoin spot or 

CME bitcoin futures markets.71

The Commission has considered and 

rejected nearly identical arguments as 

provided above in past disapproval 

orders of spot bitcoin ETPs.72 Moreover, 

as stated in the Teucrium Order, the 

Commission finds arguments centered 

around the relationship between the 

bitcoin spot market and the CME bitcoin 

futures market to be inapposite where, 

as here, the proposed ‘‘significant’’ 

market (i.e., the CME bitcoin futures 

market) is the same as the market on 

which the proposed ETP’s only noncash assets (i.e., CME bitcoin futures 

contracts) trade.73

Nonetheless, the Commission 

concludes that it is unlikely that trading 

in the proposed ETP would be the 

predominant influence on prices in the 

CME bitcoin futures market. In the 

Teucrium Order, the Commission stated 

that the CME bitcoin futures market has 

sufficiently developed to support ETPs 

seeking exposure to bitcoin by holding 

CME bitcoin futures contracts.74 As the 

order explained, the maturation of the 

CME bitcoin futures market since its 

inception in 2017—including, but not 

limited to, its overall size, volume, and 

liquidity, as well as number of years 

since its commencement—and evidence 

from the recent introduction of the 1940 

Act-registered Bitcoin Futures ETFs 

help support the conclusion that trading 

in an ETP that would hold CME bitcoin 

futures is not likely to be the 

predominant influence on prices in the 

CME bitcoin futures market. 75 Here, the 

proposed ETP also holds CME bitcoin 

futures contracts as its only non-cash 

holdings. The Commission, therefore, 

reaches the same conclusion—that 

trading in the proposed ETP is not likely 

to be the predominant influence on 

prices in the CME bitcoin futures 

market. Thus the second prong of the 

standard for ‘‘market of significant size’’ 

has been established. 

The Commission, accordingly, 

concludes that the CME is a ‘‘significant 

market’’ related to CME bitcoin futures 

contracts, and thus that the Exchange 

has entered into the requisite 

surveillance-sharing agreement. Nasdaq 

may, therefore, rely on this surveillancesharing agreement to demonstrate that 

its proposal to list and trade the Shares 

is designed to prevent fraudulent and 

manipulative acts and practices, as 

required by Section 6(b)(5) of the 

Exchange Act.76

B. Exposure to Bitcoin Futures Contracts 

Through a Bitcoin Futures-Based ETP 

Nasdaq states that, despite growing 

investor interest in bitcoin, the primary 

means for investors to gain access to 

bitcoin exposure remains either through 

CME bitcoin futures or a direct 

investment through bitcoin platforms or 

over-the-counter trading.77 Nasdaq 

asserts that, for regular investors simply 

wishing to express an investment view 

in bitcoin, investment through CME 

bitcoin futures is complex and requires 

active management. Moreover, direct 

investment in bitcoin brings with it 

significant inconvenience, complexity, 

expense, and risk.78 Directly holding 

bitcoin requires investors to retain and 

protect their private keys, which, if lost 

or compromised, renders their bitcoin 

unavailable.79 According to Nasdaq, 

investment vehicles that invest directly 

in bitcoin, or investors that hold bitcoin 

through digital wallets or other storage 

mechanisms, must take extraordinary 

steps in order to protect their bitcoin, 

such as placing the bitcoin in ‘‘cold 

storage.’’ 80

Nasdaq asserts that the Shares, 

instead, would represent a significant 

innovation in the bitcoin market by 

providing an inexpensive and simple 

vehicle for investors to gain exposure to 

bitcoin in a secure and easily accessible 

product that is familiar and 

transparent.81 As compared to a direct 

investment in bitcoin, the proposed ETP 

would enhance the security afforded to 

investors.82 Further, the Trust would 

not face risks similar to investment 

vehicles that hold bitcoin directly 

because the Trust’s exposure to bitcoin 

would be through cash-settled CME 

bitcoin futures.83

In essence, Nasdaq asserts that the 

risky nature of direct investment in spot 

bitcoin or a spot bitcoin ETP and the 

complex nature of direct investment in 

CME bitcoin futures compels approval 

of the proposed ETP. The Commission 

disagrees.84 Pursuant to Section 19(b)(2) 

of the Exchange Act, the Commission 

must approve a proposed rule change 

filed by a national securities exchange if 

it finds that the proposed rule change is 

consistent with the applicable 

requirements of the Exchange Act, and 

it must disapprove the filing if it does 

not make such a finding.85 Thus, even 

if a proposed rule change purports to 

protect investors from a particular type 

of investment risk—such as the 

susceptibility of an asset to loss or 


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86See SolidX Order, 82 FR at 16259; WisdomTree 

Order, 86 FR at 69334; Wise Origin Order, 87 FR 

at 5538. 

87See supra Section III.A. 

88See infra Section III.C. 

89The Commission acknowledges that, compared 

to trading in unregulated spot bitcoin markets, 

trading a CME bitcoin futures-based ETP on a 

national securities exchange may provide some 

additional protection to investors. See 

GraniteShares Order, 83 FR at 43931; USBT Order, 

85 FR at 12615; Teucrium Order, 87 FR at 21682 

n.109. 

90See, e.g., ProShares UltraPro 3X Natural Gas 

ETF and ProShares UltraPro 3X Short Natural Gas 

ETF, Securities Exchange Act Release No. 86532 

(July 31, 2019), 84 FR 38312 (Aug. 6, 2019) (SR– 

NYSEArca–2019–02); Teucrium Order, 87 FR at 

21683–84. 

91See Notice, 86 FR at 50580, 50583; Amendment 

No. 2, supra note 9, at 4–5. 

92The Trust’s website will include: (1) The prior 

business day’s NAV and the reported closing price; 

(2) the mid-point of the bid/ask price in relation to 

the NAV as of the time the NAV is calculated (‘‘Bid/ 

Ask Price’’) and a calculation of the premium or 

discount of such price against such NAV; and (3) 

data in chart format displaying the frequency 

distribution of discounts and premiums of the daily 

Bid/Ask Price against the NAV, within appropriate 

ranges, for at least each of the four previous 

calendar quarters (or for the life of the Trust, if 

shorter). 

93See Notice, 86 FR at 50580; Amendment No. 2, 

supra note 9, at 4, 7. 

94See Notice, 86 FR at 50574, 50580. 

95See id. at 50581. 

96See id. at 50580–81. 

theft—the proposed rule change may 

still fail to meet the requirements under 

the Exchange Act.86

Regardless of Nasdaq’s assertions and 

for the reasons discussed herein— 

including that Nasdaq has demonstrated 

that it has a comprehensive 

surveillance-sharing agreement with a 

regulated market of significant size 

related to CME bitcoin futures contracts 

that will help prevent fraudulent and 

manipulative acts and practices,87 and 

that core aspects of the proposed ETP 

will be consistent with other 

commodity-futures ETPs that the 

Commission has approved, including 

with respect to the availability of 

pricing information, transparency of 

portfolio holdings, and types of 

surveillance procedures 88—the 

Commission finds that the proposal is 

also consistent with the requirement 

under Section 6(b)(5) that the 

Exchange’s rules be designed to protect 

investors and the public interest.89

C. Other Standards for CommodityFutures ETPs 

Nasdaq’s proposal sets forth aspects of 

the proposed ETP, including the 

availability of pricing information, 

transparency of portfolio holdings, and 

types of surveillance procedures, that 

are consistent with the other 

commodity-futures ETPs that the 

Commission has approved.90

According to Nasdaq,91 quotation and 

last-sale information regarding the 

Shares will be disseminated through the 

facilities of the Consolidated Tape 

Association. Information regarding 

market price and trading of the Shares 

will be continually available on a realtime basis throughout the day on 

brokers’ computer screens and other 

electronic services. Price information for 

CME bitcoin futures can be found on the 

CME’s website. Intraday price 

quotations on Money Market 

Instruments of the type held by the 

Trust will be available from major 

broker-dealer firms and from third 

parties, which may provide prices free 

with a time delay, or ‘‘live’’ with a paid 

fee. For CME bitcoin futures, such 

intraday information will be available 

directly from the applicable listing 

venue. Intraday price information will 

also be available through subscription 

services, such as Bloomberg and 

Thomson Reuters, which can be 

accessed by authorized participants and 

other investors. Pricing information 

related to Money Market Instruments 

will be available through issuer websites 

and publicly available quotation 

services, such as Bloomberg, Markit, 

and Thomson Reuters. The CME CF 

BRR will be disseminated once daily at 

4:00 p.m. London time and will be 

available on the CME’s website. 

Information regarding the CME CF BRR, 

including rules and methodologies can 

also be found on the CME’s website. 

The Trust’s website will display the 

prior business day’s NAV. On each 

business day, before commencement of 

trading in the Shares during Regular 

Trading Hours, the Trust will disclose 

on its website the portfolio holdings of 

the Trust. The Trust’s website will also 

include a form of the prospectus for the 

Trust. The website will include the 

Shares’ ticker symbol and CUSIP 

information, along with additional 

quantitative information updated on a 

daily basis.92 The website will also 

contain pricing information for the 

Shares. All information disclosed on the 

Trust’s website will be publicly 

available at no charge.93

The Trust’s NAV will be calculated by 

the Sponsor once a day and will 

typically be determined as of 4:00 p.m. 

(Eastern time) on each day the Shares 

trade on the Exchange. The Exchange or 

a third-party financial data provider will 

calculate an intra-day indicative value 

(‘‘IIV’’) by using the prior day’s closing 

NAV per Share as a base and updating 

that value during the Exchange’s 

Regular Market Session (9:30 a.m. to 

4:00 p.m. (Eastern time)) to reflect 

changes in the value of the Trust’s NAV 

during the trading day. The IIV will be 

widely disseminated on a per Share 

basis every 15 seconds during the 

Exchange’s Regular Market Session by 

one or more major market data vendors. 

The NAV for the Trust will be 

disseminated daily to all market 

participants at the same time.94

The proposal also is reasonably 

designed to promote fair disclosure of 

information that may be necessary to 

price the Shares appropriately and to 

prevent trading in the Shares when a 

reasonable degree of transparency 

cannot be assured. 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. 

Further, if the IIV or the value of the 

underlying futures contract is not being 

disseminated as required, the Exchange 

may halt trading during the day in 

which an interruption to the 

dissemination of the IIV or the value of 

the underlying futures contract occurs. 

If the interruption to the dissemination 

of the IIV or the value of the underlying 

futures contract persists past the trading 

day in which it occurred, the Exchange 

will halt trading no later than the 

beginning of the trading day following 

the interruption. Trading in Shares of 

the Trust will be halted if conditions 

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

the circuit breaker parameters in Nasdaq 

Rules 4120(a)(11) and (12) 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 states that it 

has a general policy prohibiting the 

distribution of material, non-public 

information by its employees.95

Moreover, trading of the Shares will be 

subject to Nasdaq Rule 5711(g), which 

sets forth certain restrictions on 

registered Market Makers in the Shares 

to facilitate surveillance.96

The Commission notes that the 

Exchange or the Financial Industry 

Regulatory Authority (‘‘FINRA’’), on 

behalf of the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and the underlying 

CME bitcoin futures 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 information regarding trading in 

the Shares and the underlying CME 

bitcoin futures from such markets and 

entities. In addition, the Exchange may 

obtain information regarding trading in 


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Federal Register / Vol. 87, No. 91 / Wednesday, May 11, 2022 / Notices 28855 

97For a list of the current members and affiliate 

members of ISG, see www.isgportal.org. According 

to the Exchange, not all components of the 

Disclosed Portfolio for the Trust may trade on 

markets that are members of the ISG or with which 

the Exchange has in place a CSSA. See Notice, 86 

FR at 50581 n.68. 

98See Notice, 86 FR at 50581; Amendment No. 2, 

supra note 9, at 5. For additional discussion of the 

CME bitcoin futures market and how surveillancesharing between the Exchange and the CME via 

common membership in the ISG would assist in 

detecting and deterring manipulative conduct 

related to the Shares, see Section III.A above. 

99See Notice, 86 FR at 50581. 

100See id.; Amendment No. 2. 101 17 CFR 240.10A–3. 

102 15 U.S.C. 78f(b)(2). 

103 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k– 

1(a)(1)(C)(iii). 

104 15 U.S.C. 78f(b)(2). 

105 17 CFR 200.30–3(a)(12). 

the Shares and the underlying CME 

bitcoin futures from other exchanges 

who are members or affiliates of the ISG 

or with which the Exchange has in place 

a comprehensive surveillance-sharing 

agreement (‘‘CSSA’’).97 The Exchange 

may also obtain information regarding 

trading in the spot bitcoin market from 

the exchanges with which the CME or 

the Exchange has entered into a CSSA.98

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.99 In support of this 

proposal, the Exchange represented 

that: 100

(1) The Shares of the Trust will 

conform to the initial and continued 

listing criteria set forth in Nasdaq Rule 

5711(g). 

(2) The Exchange has appropriate 

rules to facilitate transactions in the 

Shares during all trading sessions. 

(3) The Exchange believes that its 

surveillance procedures are adequate to 

properly monitor the trading of the 

Shares on the Exchange during all 

trading sessions and to deter and detect 

violations of Exchange rules and the 

applicable federal securities laws. 

Trading of Shares on the Exchange will 

be subject to the Exchange’s 

surveillance procedures for derivative 

products. 

(4) Prior to the commencement of 

trading, the Exchange will inform its 

members in an Information Circular of 

the special characteristics and risks 

associated with trading in the Shares. 

Specifically, the Information Circular 

will discuss the following: (a) The 

procedures for purchases and 

redemptions of Shares in Creation Units 

(and that Shares are not individually 

redeemable); (b) Section 10 of Nasdaq 

General Rule 9, which imposes 

suitability obligations on Nasdaq 

members with respect to recommending 

transactions in the Shares to customers; 

(c) how information regarding the IIV 

and the portfolio holdings is 

disseminated; (d) the risks involved in 

trading the Shares during the PreMarket and Post-Market Sessions when 

an updated IIV will not be calculated or 

publicly disseminated; (e) the 

requirement that members deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; and (f) trading information. 

(5) For initial and continued listing, 

the Trust will be in compliance with 

Rule 10A–3 under the Exchange Act.101

(6) Under no circumstances will the 

Trust hold and/or invest in any assets 

other than CME bitcoin futures 

contracts, cash, and Money Market 

Instruments. The Trust will not invest 

in or hold spot bitcoin. 

(7) The Trust’s investments will be 

consistent with the Trust’s investment 

objective and will not be used to 

enhance leverage. That is, the Trust’s 

investments will not be used to seek 

performance that is the multiple or 

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

and ¥3Xs) of the Trust’s benchmark. 

(8) A minimum of 100,000 Shares of 

the Trust will be outstanding at the 

commencement of trading on the 

Exchange. 

(9) The Exchange represents that all 

statements and representations made in 

the filing regarding (a) the description of 

the reference assets or trust holdings; (b) 

limitations on reference assets, or trust 

holdings; (c) dissemination and 

availability of the reference asset or 

intraday indicative values; or (d) the 

applicablilty of Nasdaq listing rules 

specified in the filing shall constitute 

continued listing standards. The 

Exchange will require the Trust to 

represent to the Exchange that it will 

advise the Exchange of any failure by 

the Trust to comply with the continued 

listing requirements, and, pursuant to 

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

the Exchange Act, the Exchange will 

surveil for compliance with the 

continued listing requirements. If the 

Trust is not in compliance with the 

applicable listing requirements, the 

Exchange will commence delisting 

procedures under the Nasdaq 5800 

Series. 

IV. Conclusion 

This approval order is based on all of 

the Exchange’s representations and 

description of the Trust, including those 

set forth above and in Amendment No. 

2. The Commission notes that the 

Shares must comply with the 

requirements of Nasdaq Rule 5711(g) to 

be listed and traded on the Exchange on 

an initial and continuing basis. 

For the reasons set forth above, the 

Commission finds, pursuant to Section 

19(b)(2) of the Exchange Act,102 that the 

proposed rule change, as modified by 

Amendment Nos. 1 and 2, is consistent 

with the requirements of the Exchange 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange, and in particular, 

with Section 6(b)(5) and Section 

11A(a)(1)(C)(iii) of the Exchange Act.103

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act,104

that proposed rule change SR– 

NASDAQ–2021–066, as modified by 

Amendment Nos. 1 and 2, be, and 

hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.105

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10065 Filed 5–10–22; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice 11727] 

Determination Pursuant to Section 451 

of the Foreign Assistance Act for the 

Use of Funds To Support South Sudan 

Peace Agreement Monitoring 

Mechanisms 

Pursuant to section 451 of the Foreign 

Assistance Act of 1961 (the ‘‘Act’’) (22 

U.S.C. 2261), section 1–100(a)(1) of E.O. 

12163 and Delegation of Authority 513, 

I hereby authorize, notwithstanding any 

other provision of law, the use of up to 

$3,000,000 made available to carry out 

provisions of the Act (other than the 

provisions of chapter 1 of part I of the 

Act) to provide assistance authorized by 

part I of the Act to support countries 

that participate in the Reconstituted 

Joint Monitoring and Evaluation 

Commission and the Ceasefire and 

Transitional Security Arrangements 

Monitoring and Verification Mechanism 

in South Sudan. 

This Determination and the 

accompanying Memorandum of 

Justification shall be promptly reported 

to the Congress. This Determination 

shall be published in the Federal 

Register. 

Dated: February 24, 2022. 

Brian P. McKeon, 

Deputy Secretary of State for Management 

and Resources. 

[FR Doc. 2022–10150 Filed 5–10–22; 8:45 am] 

BILLING CODE 4710–25–P 


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