33250 Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 

78The Operating Committee recognizes that an 

Industry Member’s knowledge of its own fees in the 

illustrative example would be helpful in analyzing 

the Executed Share Model. Accordingly, if a CBB 

or CBS is interested in learning which anonymized 

CBB or CBS in the illustrative example represents 

its volume and fees, the CBB or CBS may contact 

the FINRA CAT Helpdesk by email at help@

finracat.com. Industry Members other than CBBs 

and CBSs will not be charged a fee under the 

Executed Share Model; however, CBBs and CBSs 

may choose to pass-through CAT fees to such 

Industry Members. Therefore, if an Industry 

Member other than a CBB or CBS is interested in 

learning its associated volume in the illustrative 

example and potential fee (assuming the CBB or 

CBS passes the fee through), the Industry Member 

may also contact the FINRA Helpdesk by email at 

help@finracat.com. Accordingly, subject to 

verification of the identity of the requesting party 

as an authorized representative of the relevant 

Industry Member, the Helpdesk will provide the 

authorized representative of the CBB or CBS with 

the number of the applicable anonymized CBB or 

CBS in Exhibit B. or the authorized representative 

of the Industry Member other than the CBB or CBS 

with its associated volume and potential passthrough fee from the illustrative example. 

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

2 17 CFR 240.19b–4. 

3The Trust was formed as a Delaware statutory 

trust on June 22, 2021 and is operated as a grantor 

trust for U.S. federal tax purposes. The Trust has 

no fixed termination date. 

4The Commission approved BZX Rule 14.11(e)(4) 

in Securities Exchange Act Release No. 65225 

(August 30, 2011), 76 FR 55148 (September 6, 2011) 

(SR–BATS–2011–018). 

5All statements and representations made in this 

filing regarding (a) the description of the portfolio, 

(b) limitations on portfolio holdings or reference 

assets, or (c) the applicability of Exchange rules and 

surveillance procedures shall constitute continued 

listing requirements for listing the Shares on the 

Exchange. 

6The Exchange notes that a different proposal to 

list and trade shares of the Trust was disapproved 

by the Commission on March 31, 2022. See 

Exchange Act Release No. 94571 (March 31, 2022), 

87 FR 20014 (April 6, 2022). 

7See draft Registration Statement on Form S–1, 

dated June 28, 2021 submitted to the Commission 

by the Sponsor on behalf of the Trust. The 

descriptions of the Trust, the Shares, and the Index 

(as defined below) contained herein are based, in 

part, on information in the 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. 

8See Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (August 1, 2018). This 

proposal was subsequently disapproved by the 

Commission. See Securities Exchange Act Release 

No. 83723 (July 26, 2018), 83 FR 37579 (August 1, 

2018) (the ‘‘Winklevoss Order’’). 

9See streetTRACKS Gold Shares, Exchange Act 

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

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

‘‘First Gold Approval Order’’); iShares COMEX 

Gold Trust, Exchange Act Release No. 51058 (Jan. 

19, 2005), 70 FR 3749, 3751, 3754–55 (Jan. 26, 2005) 

(SR–Amex–2004–38); iShares Silver Trust, 

Exchange Act Release No. 53521 (Mar. 20, 2006), 71 

FR 14967, 14968, 14973–74 (Mar. 24, 2006) (SR– 

Amex–2005–072); ETFS Gold Trust, Exchange Act 

Release No. 59895 (May 8, 2009), 74 FR 22993, 

22994–95, 22998, 23000 (May 15, 2009) (SR– 

NYSEArca–2009–40); ETFS Silver Trust, Exchange 

Act Release No. 59781 (Apr. 17, 2009), 74 FR 18771, 

INDUSTRY MEMBER CAT FEES 78—Continued 

CBBs & CBSs 

Executed equivalent share volume 

of transactions in 

eligible securities 

for 2021 

Annual CAT fee Monthly CAT fee 

183 ............................................................................................................................. 3 0.00 0.00 

[FR Doc. 2022–11675 Filed 5–31–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94982; File No. SR– 

CboeBZX–2022–031] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To List and 

Trade Shares of the ARK 21Shares 

Bitcoin ETF Under BZX Rule 

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

Shares 

May 25, 2022. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on May 13, 

2022, Cboe BZX Exchange, Inc. (the 

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

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to list and trade shares of the ARK 

21Shares Bitcoin ETF (the ‘‘Trust’’),3

under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade the Shares under BZX Rule 

14.11(e)(4),4 which governs the listing 

and trading of Commodity-Based Trust 

Shares on the Exchange.5 6 21Shares US 

LLC is the sponsor of the Trust (the 

‘‘Sponsor’’). The Shares will be 

registered with the Commission by 

means of the Trust’s registration 

statement on Form S–1 (the 

‘‘Registration Statement’’).7 As further 

discussed below, the Commission has 

historically approved or disapproved 

exchange filings to list and trade series 

of Trust Issued Receipts, including spotbased 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.8 Prior orders from the 

Commission have pointed out that in 

every prior approval order for 

Commodity-Based Trust Shares, there 

has been a derivatives market that 

represents the regulated market of 

significant size, generally a Commodity 

Futures Trading Commission (the 

‘‘CFTC’’) regulated futures market.9


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Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 33251 

18772, 18775–77 (Apr. 24, 2009) (SR–NYSEArca– 

2009–28); ETFS Palladium Trust, Exchange Act 

Release No. 61220 (Dec. 22, 2009), 74 FR 68895, 

68896 (Dec. 29, 2009) (SR–NYSEArca–2009–94) 

(notice of proposed rule change included NYSE 

Arca’s representation that ‘‘[t]he most significant 

palladium futures exchanges are the NYMEX and 

the Tokyo Commodity Exchange,’’ that ‘‘NYMEX is 

the largest exchange in the world for trading 

precious metals futures and options,’’ and that 

NYSE Arca ‘‘may obtain trading information via the 

Intermarket Surveillance Group,’’ of which NYMEX 

is a member, Exchange Act Release No. 60971 (Nov. 

9, 2009), 74 FR 59283, 59285–86, 59291 (Nov. 17, 

2009)); ETFS Platinum Trust, Exchange Act Release 

No. 61219 (Dec. 22, 2009), 74 FR 68886, 68887–88 

(Dec. 29, 2009) (SR–NYSEArca–2009–95) (notice of 

proposed rule change included NYSE Arca’s 

representation that ‘‘[t]he most significant platinum 

futures exchanges are the NYMEX and the Tokyo 

Commodity Exchange,’’ that ‘‘NYMEX is the largest 

exchange in the world for trading precious metals 

futures and options,’’ and that NYSE Arca ‘‘may 

obtain trading information via the Intermarket 

Surveillance Group,’’ of which NYMEX is a 

member, Exchange Act Release No. 60970 (Nov. 9, 

2009), 74 FR 59319, 59321, 59327 (Nov. 17, 2009)); 

Sprott Physical Gold Trust, Exchange Act Release 

No. 61496 (Feb. 4, 2010), 75 FR 6758, 6760 (Feb. 

10, 2010) (SR–NYSEArca–2009–113) (notice of 

proposed rule change included NYSE Arca’s 

representation that the COMEX is one of the ‘‘major 

world gold markets,’’ that NYSE Arca ‘‘may obtain 

trading information via the Intermarket 

Surveillance Group,’’ and that NYMEX, of which 

COMEX is a division, is a member of the 

Intermarket Surveillance Group, Exchange Act 

Release No. 61236 (Dec. 23, 2009), 75 FR 170, 171, 

174 (Jan. 4, 2010)); Sprott Physical Silver Trust, 

Exchange Act Release No. 63043 (Oct. 5, 2010), 75 

FR 62615, 62616, 62619, 62621 (Oct. 12, 2010) (SR– 

NYSEArca–2010–84); ETFS Precious Metals Basket 

Trust, Exchange Act Release No. 62692 (Aug. 11, 

2010), 75 FR 50789, 50790 (Aug. 17, 2010) (SR– 

NYSEArca–2010–56) (notice of proposed rule 

change included NYSE Arca’s representation that 

‘‘the most significant gold, silver, platinum and 

palladium futures exchanges are the COMEX and 

the TOCOM’’ and that NYSE Arca ‘‘may obtain 

trading information via the Intermarket 

Surveillance Group,’’ of which COMEX is a 

member, Exchange Act Release No. 62402 (Jun. 29, 

2010), 75 FR 39292, 39295, 39298 (July 8, 2010)); 

ETFS White Metals Basket Trust, Exchange Act 

Release No. 62875 (Sept. 9, 2010), 75 FR 56156, 

56158 (Sept. 15, 2010) (SR–NYSEArca–2010–71) 

(notice of proposed rule change included NYSE 

Arca’s representation that ‘‘the most significant 

silver, platinum and palladium futures exchanges 

are the COMEX and the TOCOM’’ and that NYSE 

Arca ‘‘may obtain trading information via the 

Intermarket Surveillance Group,’’ of which COMEX 

is a member, Exchange Act Release No. 62620 (July 

30, 2010), 75 FR 47655, 47657, 47660 (Aug. 6, 

2010)); ETFS Asian Gold Trust, Exchange Act 

Release No. 63464 (Dec. 8, 2010), 75 FR 77926, 

77928 (Dec. 14, 2010) (SR–NYSEArca–2010–95) 

(notice of proposed rule change included NYSE 

Arca’s representation that ‘‘the most significant gold 

futures exchanges are the COMEX and the Tokyo 

Commodity Exchange,’’ that ‘‘COMEX is the largest 

exchange in the world for trading precious metals 

futures and options,’’ and that NYSE Arca ‘‘may 

obtain trading information via the Intermarket 

Surveillance Group,’’ of which COMEX is a 

member, Exchange Act Release No. 63267 (Nov. 8, 

2010), 75 FR 69494, 69496, 69500–01 (Nov. 12, 

2010)); Sprott Physical Platinum and Palladium 

Trust, Exchange Act Release No. 68430 (Dec. 13, 

2012), 77 FR 75239, 75240–41 (Dec. 19, 2012) (SR– 

NYSEArca–2012–111) (notice of proposed rule 

change included NYSE Arca’s representation that 

‘‘[f]utures on platinum and palladium are traded on 

two major exchanges: The New York Mercantile 

Exchange . . . and Tokyo Commodities Exchange’’ 

and that NYSE Arca ‘‘may obtain trading 

information via the Intermarket Surveillance 

Group,’’ of which COMEX is a member, Exchange 

Act Release No. 68101 (Oct. 24, 2012), 77 FR 65732, 

65733, 65739 (Oct. 30, 2012)); APMEX Physical— 

1 oz. Gold Redeemable Trust, Exchange Act Release 

No. 66930 (May 7, 2012), 77 FR 27817, 27818 (May 

11, 2012) (SR–NYSEArca– 2012–18) (notice of 

proposed rule change included NYSE Arca’s 

representation that NYSE Arca ‘‘may obtain trading 

information via the Intermarket Surveillance 

Group,’’ of which COMEX is a member, and that 

gold futures are traded on COMEX and the Tokyo 

Commodity Exchange, with a cross-reference to the 

proposed rule change to list and trade shares of the 

ETFS Gold Trust, in which NYSE Arca represented 

that COMEX is one of the ‘‘major world gold 

markets,’’ Exchange Act Release No. 66627 (Mar. 

20, 2012), 77 FR 17539, 17542–43, 17547 (Mar. 26, 

2012)); JPM XF Physical Copper Trust, Exchange 

Act Release No. 68440 (Dec. 14, 2012), 77 FR 75468, 

75469–70, 75472, 75485–86 (Dec. 20, 2012) (SR– 

NYSEArca–2012–28); iShares Copper Trust, 

Exchange Act Release No. 68973 (Feb. 22, 2013), 78 

FR 13726, 13727, 13729–30, 13739–40 (Feb. 28, 

2013) (SR–NYSEArca–2012–66); First Trust Gold 

Trust, Exchange Act Release No. 70195 (Aug. 14, 

2013), 78 FR 51239, 51240 (Aug. 20, 2013) (SR– 

NYSEArca–2013–61) (notice of proposed rule 

change included NYSE Arca’s representation that 

FINRA, on behalf of the exchange, may obtain 

trading information regarding gold futures and 

options on gold futures from members of the 

Intermarket Surveillance Group, including COMEX, 

or from markets ‘‘with which [NYSE Arca] has in 

place a comprehensive surveillance sharing 

agreement,’’ and that gold futures are traded on 

COMEX and the Tokyo Commodity Exchange, with 

a cross-reference to the proposed rule change to list 

and trade shares of the ETFS Gold Trust, in which 

NYSE Arca represented that COMEX is one of the 

‘‘major world gold markets,’’ Exchange Act Release 

No. 69847 (June 25, 2013), 78 FR 39399, 39400, 

39405 (July 1, 2013)); Merk Gold Trust, Exchange 

Act Release No. 71378 (Jan. 23, 2014), 79 FR 4786, 

4786–87 (Jan. 29, 2014) (SR–NYSEArca–2013–137) 

(notice of proposed rule change included NYSE 

Arca’s representation that ‘‘COMEX is the largest 

gold futures and options exchange’’ and that NYSE 

Arca ‘‘may obtain trading information via the 

Intermarket Surveillance Group,’’ including with 

respect to transactions occurring on COMEX 

pursuant to CME and NYMEX’s membership, or 

from exchanges ‘‘with which [NYSE Arca] has in 

place a comprehensive surveillance sharing 

agreement,’’ Exchange Act Release No. 71038 (Dec. 

11, 2013), 78 FR 76367, 76369, 76374 (Dec. 17, 

2013)); Long Dollar Gold Trust, Exchange Act 

Release No. 79518 (Dec. 9, 2016), 81 FR 90876, 

90881, 90886, 90888 (Dec. 15, 2016) (SR– 

NYSEArca–2016–84). 

10See Winklevoss Order at 37592. 

11See Exchange Act Release No. 94620 (April 6, 

2022), 87 FR 21676 (April 12, 2022) (the ‘‘Teucrium 

Approval’’) and 94853 (May 5, 2022) (collectively, 

with the Teucrium Approval, the ‘‘Bitcoin Futures 

Approvals’’). 

Further to this point, the Commission’s 

prior orders have noted that the spot 

commodities and currency markets for 

which it has previously approved spot 

ETPs are generally unregulated and that 

the Commission relied on the 

underlying futures market as the 

regulated market of significant size that 

formed the basis for approving the series 

of Currency and Commodity-Based 

Trust Shares, including gold, silver, 

platinum, palladium, copper, and other 

commodities and currencies. The 

Commission specifically noted in the 

Winklevoss Order that the First Gold 

Approval Order ‘‘was based on an 

assumption that the currency market 

and the spot gold market were largely 

unregulated.’’ 10

As such, the regulated market of 

significant size test does not require that 

the spot bitcoin market be regulated in 

order for the Commission to approve 

this proposal, and precedent makes 

clear that an underlying market for a 

spot commodity or currency being a 

regulated market would actually be an 

exception to the norm. These largely 

unregulated currency and commodity 

markets do not provide the same 

protections as the markets that are 

subject to the Commission’s oversight, 

but the Commission has consistently 

looked to surveillance sharing 

agreements with the underlying futures 

market in order to determine whether 

such products were consistent with the 

Act. With this in mind, the CME Bitcoin 

Futures market is the proper market to 

consider in determining whether there 

is a related regulated market of 

significant size. 

Further to this point, the Exchange 

notes that the Commission has recently 

approved proposals related to the listing 

and trading of funds that would 

primarily hold CME Bitcoin Futures that 

are registered under the Securities Act 

of 1933 instead of the Investment 

Company Act of 1940, as amended (the 

‘‘1940 Act’’).11 In the Teucrium 

Approval, the Commission found the 

CME Bitcoin Futures market to be a 

regulated market of significant size as it 

relates to CME Bitcoin Futures, an odd 

tautological truth that is also 

inconsistent with prior disapproval 

orders for ETPs that would hold actual 

bitcoin instead of derivatives contracts 

(‘‘Spot Bitcoin ETPs’’) that use the exact 

same pricing methodology as the CME 

Bitcoin Futures. As further discussed 

below, both the Exchange and the 

Sponsor believe that this proposal and 

the included analysis are sufficient to 

establish that the CME Bitcoin Futures 

market represents a regulated market of 

significant size as it relates both to the 

CME Bitcoin Futures market and to the 

spot bitcoin market and that this 

proposal should be approved. 

Background 

Bitcoin is a digital asset based on the 

decentralized, open source protocol of 

the peer-to-peer computer network 

launched in 2009 that governs the 

creation, movement, and ownership of 

bitcoin and hosts the public ledger, or 

‘‘blockchain,’’ on which all bitcoin 


jspears on DSK121TN23PROD with NOTICES1
33252 Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 

12For additional information about bitcoin and 

the Bitcoin Network, see https://bitcoin.org/en/ 

getting-started; https://

www.fidelitydigitalassets.com/articles/addressingbitcoin-criticisms; and https://www.vaneck.com/ 

education/investment-ideas/investing-in-bitcoinand-digital-assets/. 

13See Winklevoss Order. 

14 Digital assets that are securities under U.S. law 

are referred to throughout this proposal as ‘‘digital 

asset securities.’’ All other digital assets, including 

bitcoin, are referred to interchangeably as 

‘‘cryptocurrencies’’ or ‘‘virtual currencies.’’ The 

term ‘‘digital assets’’ refers to all digital assets, 

including both digital asset securities and 

cryptocurrencies, together. 

15See ‘‘In the Matter of Coinflip, Inc.’’ 

(‘‘Coinflip’’) (CFTC Docket 15–29 (September 17, 

2015)) (order instituting proceedings pursuant to 

Sections 6(c) and 6(d) of the CEA, making findings 

and imposing remedial sanctions), in which the 

CFTC stated: ‘‘Section 1a(9) of the CEA defines 

‘commodity’ to include, among other things, ‘all 

services, rights, and interests in which contracts for 

future delivery are presently or in the future dealt 

in.’ 7 U.S.C. 1a(9). The definition of a ‘commodity’ 

is broad. See, e.g., Board of Trade of City of Chicago 

v. SEC, 677 F. 2d 1137, 1142 (7th Cir. 1982). Bitcoin 

and other virtual currencies are encompassed in the 

definition and properly defined as commodities.’’ 

16A list of virtual currency businesses that are 

entities regulated by the NYDFS is available on the 

NYDFS website. See https://www.dfs.ny.gov/apps_

and_licensing/virtual_currency_businesses/ 

regulated_entities. 

17 Data as of March 31, 2016 according to publicly 

available filings. See Bitcoin Investment Trust Form 

S–1, dated May 27, 2016, available: https://

www.sec.gov/Archives/edgar/data/1588489/ 

000095012316017801/filename1.htm. 

18See letter from Dalia Blass, Director, Division 

of Investment Management, U.S. Securities and 

Exchange Commission to Paul Schott Stevens, 

President & CEO, Investment Company Institute 

and Timothy W. Cameron, Asset Management 

Group—Head, Securities Industry and Financial 

Markets Association (January 18, 2018), available at 

https://www.sec.gov/divisions/investment/ 

noaction/2018/cryptocurrency-011818.htm. 

19See Prospectus supplement filed pursuant to 

Rule 424(b)(1) for INX Tokens (Registration No. 

333–233363), available at: https://www.sec.gov/ 

Archives/edgar/data/1725882/

000121390020023202/ea125858-424b1_

inxlimited.htm. 

20See Prospectus filed by Stone Ridge Trust VI 

on behalf of NYDIG Bitcoin Strategy Fund 

Registration, available at: https://www.sec.gov/ 

Archives/edgar/data/1764894/ 

000119312519309942/d693146d497.htm. 

21See Securities Exchange Act Release No. 90788, 

86 FR 11627 (February 26, 2021) (File Number S7– 

25–20) (Custody of Digital Asset Securities by 

Special Purpose Broker-Dealers). 

22See letter from Elizabeth Baird, Deputy 

Director, Division of Trading and Markets, U.S. 

Securities and Exchange Commission to Kris 

Dailey, Vice President, Risk Oversight & 

Operational Regulation, Financial Industry 

Regulatory Authority (September 25, 2020), 

available at: https://www.sec.gov/divisions/ 

marketreg/mr-noaction/2020/finra-ats-role-insettlement-of-digital-asset-security-trades09252020.pdf. 

23See letter from Jeffrey S. Mooney, Associate 

Director, Division of Trading and Markets, U.S. 

Securities and Exchange Commission to Charles G. 

Cascarilla & Daniel M. Burstein, Paxos Trust 

Company, LLC (October 28, 2019), available at: 

https://www.sec.gov/divisions/marketreg/mrnoaction/2019/paxos-trust-company-102819- 

17a.pdf. 

24See, e.g., Form TA–1/A filed by Tokensoft 

Transfer Agent LLC (CIK: 0001794142) on January 

8, 2021, available at: https://www.sec.gov/Archives/ 

edgar/data/1794142/000179414219000001/ 

xslFTA1X01/primary_doc.xml. 

25As of December 1, 2021, the total market cap 

of all bitcoin in circulation was approximately 

$1.08 trillion. 

26 Data sourced from the CME Bitcoin Futures 

Report: 19 Nov, 2021, available at: https://

www.cmegroup.com/ftp/bitcoinfutures/Bitcoin_

Futures_Liquidity_Report.pdf. 

transactions are recorded (the ‘‘Bitcoin 

Network’’ or ‘‘Bitcoin’’). The 

decentralized nature of the Bitcoin 

Network allows parties to transact 

directly with one another based on 

cryptographic proof instead of relying 

on a trusted third party. The protocol 

also lays out the rate of issuance of new 

bitcoin within the Bitcoin Network, a 

rate that is reduced by half 

approximately every four years with an 

eventual hard cap of 21 million. It’s 

generally understood that the 

combination of these two features—a 

systemic hard cap of 21 million bitcoin 

and the ability to transact trustlessly 

with anyone connected to the Bitcoin 

Network—gives bitcoin its value.12 The 

first rule filing proposing to list an 

exchange-traded product to provide 

exposure to bitcoin in the U.S. was 

submitted by the Exchange on June 30, 

2016.13 At that time, blockchain 

technology, and digital assets that 

utilized it, were relatively new to the 

broader public. The market cap of all 

bitcoin in existence at that time was 

approximately $10 billion. No registered 

offering of digital asset securities or 

shares in an investment vehicle with 

exposure to bitcoin or any other 

cryptocurrency had yet been conducted, 

and the regulated infrastructure for 

conducting a digital asset securities 

offering had not begun to develop.14

Similarly, regulated U.S. bitcoin futures 

contracts did not exist. The CFTC had 

determined that bitcoin is a 

commodity,15 but had not engaged in 

significant enforcement actions in the 

space. The New York Department of 

Financial Services (‘‘NYDFS’’) adopted 

its final BitLicense regulatory 

framework in 2015, but had only 

approved four entities to engage in 

activities relating to virtual currencies 

(whether through granting a BitLicense 

or a limited-purpose trust charter) as of 

June 30, 2016.16 While the first over-thecounter bitcoin fund launched in 2013, 

public trading was limited and the fund 

had only $60 million in assets.17 There 

were very few, if any, traditional 

financial institutions engaged in the 

space, whether through investment or 

providing services to digital asset 

companies. In January 2018, the Staff of 

the Commission noted in a letter to the 

Investment Company Institute and 

SIFMA that it was not aware, at that 

time, of a single custodian providing 

fund custodial services for digital 

assets.18 Fast forward to today and the 

digital assets financial ecosystem, 

including bitcoin, has progressed 

significantly. The development of a 

regulated market for digital asset 

securities has significantly evolved, 

with market participants having 

conducted registered public offerings of 

both digital asset securities 19 and shares 

in investment vehicles holding bitcoin 

futures.20 Additionally, licensed and 

regulated service providers have 

emerged to provide fund custodial 

services for digital assets, among other 

services. For example, in May 2021, the 

Staff of the Commission released a 

statement permitting open-end mutual 

funds to invest in cash-settled bitcoin 

futures; in December 2020, the 

Commission adopted a conditional noaction position permitting certain 

special purpose broker-dealers to 

custody digital asset securities under 

Rule 15c3–3 under the Exchange Act 

(the ‘‘Custody Statement’’); 21 in 

September 2020, the Staff of the 

Commission released a no-action letter 

permitting certain broker-dealers to 

operate a non-custodial Alternative 

Trading System (‘‘ATS’’) for digital asset 

securities, subject to specified 

conditions; 22 in October 2019, the Staff 

of the Commission granted temporary 

relief from the clearing agency 

registration requirement to an entity 

seeking to establish a securities 

clearance and settlement system based 

on distributed ledger technology,23 and 

multiple transfer agents who provide 

services for digital asset securities 

registered with the Commission.24

Outside the Commission’s purview, 

the regulatory landscape has changed 

significantly since 2016, and 

cryptocurrency markets have grown and 

evolved as well. The market for bitcoin 

is approximately 100 times larger, 

having at one point reached a market 

cap of over $1 trillion.25 According to 

the CME Bitcoin Futures Report, from 

March 28, 2022 through April 22, 2022, 

CFTC regulated bitcoin futures 

represented approximately $1.3 billion 

in notional trading volume on Chicago 

Mercantile Exchange (‘‘CME’’) (‘‘Bitcoin 

Futures’’) on a daily basis and notional 

volume was never below $670 

million.26 Open interest was over $2 

billion for the entirety of the period and 

at one point was over $3 billion. The 

CFTC has exercised its regulatory 

jurisdiction in bringing a number of 

enforcement actions related to bitcoin 

and against trading platforms that offer 


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Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 33253 

27The CFTC’s annual report for Fiscal Year 2020 

(which ended on September 30, 2020) noted that 

the CFTC ‘‘continued to aggressively prosecute 

misconduct involving digital assets that fit within 

the CEA’s definition of commodity’’ and ‘‘brought 

a record setting seven cases involving digital 

assets.’’ See CFTC FY2020 Division of Enforcement 

Annual Report, available at: https://www.cftc.gov/ 

media/5321/DOE_FY2020_AnnualReport_120120/ 

download. Additionally, the CFTC filed on October 

1, 2020, a civil enforcement action against the 

owner/operators of the BitMEX trading platform, 

which was one of the largest bitcoin derivative 

exchanges. See CFTC Release No. 8270–20 (October 

1, 2020) available at: https://www.cftc.gov/

PressRoom/PressReleases/8270-20. 

28See OCC News Release 2021–2 (January 4, 

2021) available at: https://www.occ.gov/newsissuances/news-releases/2021/nr-occ-2021-2.html. 

29See OCC News Release 2021–6 (January 13, 

2021) available at: https://www.occ.gov/newsissuances/news-releases/2021/nr-occ-2021-6.html 

and OCC News Release 2021–19 (February 5, 2021) 

available at: https://www.occ.gov/news-issuances/ 

news-releases/2021/nr-occ-2021-19.html. 

30See FinCEN Guidance FIN–2019–G001 (May 9, 

2019) (Application of FinCEN’s Regulations to 

Certain Business Models Involving Convertible 

Virtual Currencies) available at: https://

www.fincen.gov/sites/default/files/2019-05/Fin

CEN%20Guidance%20CVC%20FINAL%20508.pdf. 

31See U.S. Department of the Treasury Press 

Release: ‘‘The Financial Crimes Enforcement 

Network Proposes Rule Aimed at Closing AntiMoney Laundering Regulatory Gaps for Certain 

Convertible Virtual Currency and Digital Asset 

Transactions’’ (December 18, 2020), available at: 

https://home.treasury.gov/news/press-releases/ 

sm1216. 

32See U.S. Department of the Treasury 

Enforcement Release: ‘‘OFAC Enters Into $98,830 

Settlement with BitGo, Inc. for Apparent Violations 

of Multiple Sanctions Programs Related to Digital 

Currency Transactions’’ (December 30, 2020) 

available at: https://home.treasury.gov/system/files/ 

126/20201230_bitgo.pdf. 33On December 10, 2020, Massachusetts Mutual 

Life Insurance Company (MassMutual) announced 

that it had purchased $100 million in bitcoin for its 

general investment account. See MassMutual Press 

Release ‘‘Institutional Bitcoin provider NYDIG 

announces minority stake purchase by 

MassMutual’’ (December 10, 2020) available at: 

https://www.massmutual.com/about-us/news-andpress-releases/press-releases/2020/12/institutionalbitcoin-provider-nydig-announces-minority-stakepurchase-by-massmutual. 

34See e.g., ‘‘BlackRock’s Rick Rieder says the 

world’s largest asset manager has ‘started to dabble’ 

in bitcoin’’ (February 17, 2021) available at: https:// 

www.cnbc.com/2021/02/17/blackrock-has-startedto-dabble-in-bitcoin-says-rick-rieder.html and 

‘‘Guggenheim’s Scott Minerd Says Bitcoin Should 

Be Worth $400,000’’ (December 16, 2020) available 

at: https://www.bloomberg.com/news/articles/2020- 

12-16/guggenheim-s-scott-minerd-says-bitcoinshould-be-worth-400-000. 

35See e.g., ‘‘Harvard and Yale Endowments 

Among Those Reportedly Buying Crypto’’ (January 

25, 2021) available at: https://www.bloomberg.com/ 

news/articles/2021-01-26/harvard-and-yaleendowments-among-those-reportedly-buyingcrypto. 36See e.g., ‘‘Virginia Police Department Reveals 

Why its Pension Fund is Betting on Bitcoin’’ 

(February 14, 2019) available at: https://

finance.yahoo.com/news/virginia-policedepartment-reveals-why-194558505.html. 37See e.g., ‘‘Bridgewater: Our Thoughts on 

Bitcoin’’ (January 28, 2021) available at: https://

www.bridgewater.com/research-and-insights/ourthoughts-on-bitcoin and ‘‘Paul Tudor Jones says he 

likes bitcoin even more now, rally still in the ‘first 

inning’ ’’ (October 22, 2020) available at: https://

www.cnbc.com/2020/10/22/-paul-tudor-jones-sayshe-likes-bitcoin-even-more-now-rally-still-in-thefirst-inning.html. 

38See Letter from Division of Corporation 

Finance, Office of Real Estate & Construction to 

Barry E. Silbert, Chief Executive Officer, Grayscale 

Bitcoin Trust (January 31, 2020) https://

www.sec.gov/Archives/edgar/data/1588489/ 

000000000020000953/filename1.pdf. 39See Form 10–K submitted by Tesla, Inc. for the 

fiscal year ended December 31, 2020 at 23: https:// 

www.sec.gov/ix?doc=/Archives/edgar/data/ 

1318605/000156459021004599/tsla-10k_

20201231.htm. 40See Form 10–Q submitted by MicroStrategy 

Incorporated for the quarterly period ended 

September 30, 2020 at 8: https://www.sec.gov/ 

ix?doc=/Archives/edgar/data/1050446/00015

6459020047995/mstr-10q_20200930.htm. 

41See Form 10–Q submitted by Square, Inc. for 

the quarterly period ended September 30, 2020 at 

51: https://www.sec.gov/ix?doc=/Archives/edgar/ 

data/1512673/000151267320000012/sq20200930.htm. 

42The largest OTC Bitcoin Fund has an AUM of 

$23 billion. The premium and discount for OTC 

Bitcoin Funds is known to move rapidly. For 

example, over the period of 12/21/20 to 1/21/20, the 

premium for the largest OTC Bitcoin Fund went 

from 40.18% to 2.79%. While the price of bitcoin 

appreciated significantly during this period and 

NAV per share increased by 41.25%, the price per 

share increased by only 3.58%. This means that 

investors are buying shares of a fund that 

experiences significant volatility in its premium 

and discount outside of the fluctuations in price of 

the underlying asset. Even operating within the 

normal premium and discount range, it’s possible 

for an investor to buy shares of an OTC Bitcoin 

Fund only to have those shares quickly lose 10% 

or more in dollar value excluding any movement of 

the price of bitcoin. That is to say—the price of 

bitcoin could have stayed exactly the same from 

market close on one day to market open the next, 

yet the value of the shares held by the investor 

decreased only because of the fluctuation of the 

premium. As more investment vehicles, including 

mutual funds and ETFs, seek to gain exposure to 

bitcoin, the easiest option for a buy and hold 

strategy for such vehicles is often an OTC Bitcoin 

Fund, meaning that even investors that do not 

directly buy OTC Bitcoin Funds can be 

disadvantaged by extreme premiums (or discounts) 

and premium volatility. 

43Recently a number of operating companies 

engaged in unrelated businesses—such as Tesla (a 

car manufacturer) and MicroStrategy (an enterprise 

software company)—have announced investments 

as large as $5.3 billion in bitcoin. Without access 

to bitcoin exchange-traded products, retail investors 

seeking investment exposure to bitcoin may end up 

purchasing shares in these companies in order to 

gain the exposure to bitcoin that they seek. In fact, 

mainstream financial news networks have written 

a number of articles providing investors with 

guidance for obtaining bitcoin exposure through 

publicly traded companies (such as MicroStrategy, 

Tesla, and bitcoin mining companies, among 

others) instead of dealing with the complications 

Continued 

cryptocurrency trading.27 The U.S. 

Office of the Comptroller of the 

Currency (the ‘‘OCC’’) has made clear 

that federally-chartered banks are able 

to provide custody services for 

cryptocurrencies and other digital 

assets.28 The OCC recently granted 

conditional approval of two charter 

conversions by state-chartered trust 

companies to national banks, both of 

which provide cryptocurrency custody 

services.29 NYDFS has granted no fewer 

than twenty-five BitLicenses, including 

to established public payment 

companies like PayPal Holdings, Inc. 

and Square, Inc., and limited purpose 

trust charters to entities providing 

cryptocurrency custody services, 

including the Trust’s Custodian. The 

U.S. Treasury Financial Crimes 

Enforcement Network (‘‘FinCEN’’) has 

released extensive guidance regarding 

the applicability of the Bank Secrecy 

Act (‘‘BSA’’) and implementing 

regulations to virtual currency 

businesses,30 and has proposed rules 

imposing requirements on entities 

subject to the BSA that are specific to 

the technological context of virtual 

currencies.31 In addition, the Treasury’s 

Office of Foreign Assets Control 

(‘‘OFAC’’) has brought enforcement 

actions over apparent violations of the 

sanctions laws in connection with the 

provision of wallet management 

services for digital assets.32

In addition to the regulatory 

developments laid out above, more 

traditional financial market participants 

have embraced and continue to embrace 

cryptocurrency: Large insurance 

companies,33 asset managers,34

university endowments,35 pension 

funds,36 and even historically bitcoin 

skeptical fund managers 37 are allocating 

to bitcoin. The largest over-the-counter 

bitcoin fund previously filed a Form 10 

registration statement, which the Staff of 

the Commission reviewed and which 

took effect automatically, and is now a 

reporting company.38 Established 

companies like Tesla, Inc.,39

MicroStrategy Incorporated,40 and 

Square, Inc.,41 among others, have 

recently announced substantial 

investments in bitcoin in amounts as 

large as $1.5 billion (Tesla) and $425 

million (MicroStrategy). The foregoing 

examples demonstrate that bitcoin has 

gained mainstream usage and 

recognition. 

Despite these developments, access 

for U.S. retail investors to gain exposure 

to bitcoin via a transparent and U.S. 

regulated, U.S. exchange-traded vehicle 

remains limited. Instead current options 

include: (i) Over-the-counter bitcoin 

funds (‘‘OTC Bitcoin Funds’’) with high 

management fees and potentially 

volatile premiums and discounts; 42 (ii) 

facing the technical risk, complexity 

and generally high fees associated with 

buying spot bitcoin; (iii) purchasing 

shares of operating companies that they 

believe will provide proxy exposure to 

bitcoin with limited disclosure about 

the associated risks; 43 or (iv) purchasing 


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associated with buying spot bitcoin in the absence 

of a bitcoin ETP. See e.g., ‘‘7 public companies with 

exposure to bitcoin’’ (February 8, 2021) available at: 

https://finance.yahoo.com/news/7-publiccompanies-with-exposure-to-bitcoin154201525.html; and ‘‘Want to get in the crypto 

trade without holding bitcoin yourself? Here are 

some investing ideas’’ (February 19, 2021) available 

at: https://www.cnbc.com/2021/02/19/ways-toinvest-in-bitcoin-without-holding-thecryptocurrency-yourself-.html. Such operating 

companies, however, are imperfect bitcoin proxies 

and provide investors with partial bitcoin exposure 

paired with a host of additional risks associated 

with whichever operating company they decide to 

purchase. Additionally, the disclosures provided by 

such operating companies with respect to risks 

relating to their bitcoin holdings are generally 

substantially smaller than the registration statement 

of a bitcoin ETP, including the Registration 

Statement, typically amounting to a few sentences 

of narrative description and a handful of risk 

factors. In other words, investors seeking bitcoin 

exposure through publicly traded companies are 

gaining only partial exposure to bitcoin and are not 

fully benefitting from the risk disclosures and 

associated investor protections that come from the 

securities registration process. 

44The Exchange notes that securities regulators in 

a number of other countries have either approved 

or otherwise allowed the listing and trading of 

bitcoin ETPs. 

45See Winklevoss Order at 37593, specifically 

footnote 202, which includes the language from 

numerous approval orders for which the underlying 

futures markets formed the basis for approving 

series of ETPs that hold physical metals, including 

gold, silver, palladium, platinum, and precious 

metals more broadly; and 37600, specifically where 

the Commission provides that ‘‘when the spot 

market is unregulated—the requirement of 

preventing fraudulent and manipulative acts may 

possibly be satisfied by showing that the ETP listing 

market has entered into a surveillance-sharing 

agreement with a regulated market of significant 

size in derivatives related to the underlying asset.’’ 

As noted above, the Exchange believes that these 

citations are particularly helpful in making clear 

that the spot market for a spot commodity ETP need 

not be ‘‘regulated’’ in order for a spot commodity 

ETP to be approved by the Commission, and in fact 

that it’s been the common historical practice of the 

Commission to rely on such derivatives markets as 

the regulated market of significant size because 

such spot commodities markets are largely 

unregulated. 

46As further outlined below, both the Exchange 

and the Sponsor believe that the CME Bitcoin 

Futures market represents a regulated market of 

significant size and that this proposal and others 

like it should be approved on this basis. 47See Teucrium Approval at 21679. 

Bitcoin Futures ETFs, as defined below, 

which represent a sub-optimal structure 

for long-term investors that will cost 

them significant amounts of money 

every year compared to Spot Bitcoin 

ETPs, as further discussed below. 

Meanwhile, investors in many other 

countries, including Canada and Brazil, 

are able to use more traditional 

exchange listed and traded products 

(including exchange-traded funds 

holding physical bitcoin) to gain 

exposure to bitcoin, disadvantaging U.S. 

investors and leaving them with more 

risky means of getting bitcoin 

exposure.44 Additionally, investors in 

other countries, specifically Canada, 

generally pay lower fees than U.S. retail 

investors that invest in OTC Bitcoin 

Funds due to the fee pressure that 

results from increased competition 

among available bitcoin investment 

options. Without an approved and 

regulated Spot Bitcoin ETP in the U.S. 

as a viable alternative, U.S. investors 

could seek to purchase shares of nonU.S. bitcoin vehicles in order to get 

access to bitcoin exposure. Given the 

separate regulatory regime and the 

potential difficulties associated with 

any international litigation, such an 

arrangement would create more risk 

exposure for U.S. investors than they 

would otherwise have with a U.S. 

exchange listed ETP. Further to this 

point, the lack of a U.S.-listed Spot 

Bitcoin ETP is not preventing U.S. funds 

from gaining exposure to bitcoin— 

several U.S. exchange-traded funds are 

using Canadian bitcoin ETPs to gain 

exposure to spot bitcoin. In addition to 

the benefits to U.S. investors articulated 

throughout this proposal, approving this 

proposal (and others like it) would 

provide U.S. exchange-traded funds and 

mutual funds with a U.S.-listed and 

regulated product to provide such 

access rather than relying on either 

flawed products or products listed and 

primarily regulated in other countries. 

Bitcoin Futures ETFs 

The Exchange and Sponsor applaud 

the Commission for allowing the launch 

of ETFs registered under the 1940 Act 

and the recent Bitcoin Futures 

Approvals that provide exposure to 

bitcoin primarily through CME Bitcoin 

Futures (‘‘Bitcoin Futures ETFs’’). 

Allowing such products to list and trade 

is a productive first step in providing 

U.S. investors and traders with 

transparent, exchange-listed tools for 

expressing a view on bitcoin. The 

Bitcoin Futures Approvals, however, 

have created a logical inconsistency in 

the application of the standard the 

Commission applies when considering 

bitcoin ETP proposals. 

As discussed further below, the 

standard applicable to bitcoin ETPs is 

whether the listing exchange has in 

place a comprehensive surveillance 

sharing agreement with a regulated 

market of significant size in the 

underlying asset. Previous disapproval 

orders have made clear that a market 

that constitutes a regulated market of 

significant size is generally a futures 

and/or options market based on the 

underlying reference asset rather than 

the spot commodity markets, which are 

often unregulated.45 Leaving aside the 

analysis of that standard until later in 

this proposal,46 the Exchange believes 

that the following rationale the 

Commission applied to a Bitcoin 

Futures ETF should result in the 

Commission approving this and other 

Spot Bitcoin ETP proposals: 

The CME ‘‘comprehensively surveils 

futures market conditions and price 

movements on a real-time and ongoing basis 

in order to detect and prevent price 

distortions, including price distortions 

caused by manipulative efforts.’’ Thus 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. As such, when the CME shares its 

surveillance information with Arca, the 

information would assist in detecting and 

deterring fraudulent or manipulative 

misconduct related to the non-cash assets 

held by the proposed ETP.47

CME Bitcoin Futures pricing is based 

on pricing from spot bitcoin markets. 

The statement from the Teucrium 

Approval that ‘‘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 . . . indirectly by 

trading outside of the CME bitcoin 

futures market,’’ makes clear that the 

Commission believes that CME’s 

surveillance can capture the effects of 

trading on the relevant spot markets on 

the pricing of CME Bitcoin Futures. The 

Exchange agrees with the Commission 

on this point and notes that the pricing 

mechanism applicable to the Shares is 

similar to that of the CME Bitcoin 

Futures. As further discussed below, 

this view is also consistent with the 

Advisor’s research. 

Further to this point, a Bitcoin 

Futures ETF is potentially more 

susceptible to potential manipulation 

than a Spot Bitcoin ETP that offers only 

in-kind creation and redemption 

because settlement of CME Bitcoin 

Futures (and thus the value of the 

underlying holdings of a Bitcoin Futures 

ETF) occurs at a single price derived 

from spot bitcoin pricing, while shares 

of a Spot Bitcoin ETP would represent 

interest in bitcoin directly and 

authorized participants for a Spot 

Bitcoin ETP (as proposed herein) would 

be able to source bitcoin from any 

exchange and create or redeem with the 

applicable trust regardless of the price 

of the underlying index. It is not 

logically possible to conclude that the 

CME Bitcoin Futures market represents 


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48See e.g., ‘‘Bitcoin ETF’s Success Could Come at 

Fundholders’ Expense,’’ Wall Street Journal 

(October 24, 2021), available at: https://

www.wsj.com/articles/bitcoin-etfs-success-couldcome-at-fundholders-expense-11635080580; 

‘‘Physical Bitcoin ETF Prospects Accelerate,’’ 

ETF.com (October 25, 2021), available at: https://

www.etf.com/sections/blog/physical-bitcoin-etfprospects-shine?nopaging=1&__cf_chl_jschl_tk__

=pmd_JsK.fjXz9eAQW9zol0qpz

hXDrrlpIVdoCloLXbLjl44-1635476946-0- 

gqNtZGzNApCjcnBszQql. 

49 Id. 

50See, e.g., Division of Investment Management 

Staff, Staff Statement on Funds Registered Under 

the Investment Company Act Investing in the 

Bitcoin Futures Market, May 11, 2021 (‘‘The Bitcoin 

futures market also has not presented the custody 

challenges associated with some cryptocurrencybased investing because the futures are cashsettled’’). 

a significant market for a futures-based 

product, but also conclude that the CME 

Bitcoin Futures market does not 

represent a significant market for a spotbased product. 

In addition to potentially being more 

susceptible to manipulation than a Spot 

Bitcoin ETP, the structure of Bitcoin 

Futures ETFs provides negative 

outcomes for buy and hold investors as 

compared to a Spot Bitcoin ETP.48

Specifically, the cost of rolling CME 

Bitcoin Futures contracts (which has 

reached as high as 17% annually 49

excluding a fund’s management fees and 

borrowing costs, if any) will cause the 

Bitcoin Futures ETFs to lag the 

performance of bitcoin itself and, at over 

a billion dollars in assets under 

management, would cost U.S. investors 

significant amounts of money on an 

annual basis compared to Spot Bitcoin 

ETPs. Such rolling costs would not be 

required for Spot Bitcoin ETPs that hold 

bitcoin. Further, Bitcoin Futures ETFs 

could potentially hit CME position 

limits, which would force a Bitcoin 

Futures ETF to invest in non-futures 

assets for bitcoin exposure and cause 

potential investor confusion and lack of 

certainty about what such Bitcoin 

Futures ETFs are actually holding to try 

to get exposure to bitcoin, not to 

mention completely changing the risk 

profile associated with such an ETF. 

While Bitcoin Futures ETFs represent a 

useful trading tool, they are clearly a 

sub-optimal structure for U.S. investors 

that are looking for long-term exposure 

to bitcoin that will, based on the 

calculations above, unnecessarily cost 

U.S. investors significant amounts of 

money every year compared to Spot 

Bitcoin ETPs and the Exchange believes 

that any proposal to list and trade a Spot 

Bitcoin ETP should be reviewed by the 

Commission with this important 

investor protection context in mind. 

To the extent the Commission may 

view differential treatment of Bitcoin 

Futures ETFs and Spot Bitcoin ETPs as 

warranted based on the Commission’s 

concerns about the custody of physical 

Bitcoin that a Spot Bitcoin ETP would 

hold (compared to cash-settled futures 

contracts),50 the Sponsor believes this 

concern is mitigated to a significant 

degree by the custodial arrangements 

that the Trust has contracted with 

Coinbase Trust Company, LLC (the 

‘‘Custodian’’) to provide. In the Custody 

Statement, the Commission stated that 

the fourth step that a broker-dealer 

could take to shield traditional 

securities customers and others from the 

risks and consequences of digital asset 

security fraud, theft, or loss is to 

establish, maintain, and enforce 

reasonably designed written policies, 

procedures, and controls for safekeeping 

and demonstrating the broker-dealer has 

exclusive possession or control over 

digital asset securities that are 

consistent with industry best practices 

to protect against the theft, loss, and 

unauthorized and accidental use of the 

private keys necessary to access and 

transfer the digital asset securities the 

broker-dealer holds in custody. While 

bitcoin is not a security and the 

Custodian is not a broker-dealer, the 

Sponsor believes that similar 

considerations apply to the Custodian’s 

holding of the Trust’s bitcoin. After 

diligent investigation, the Sponsor 

believes that the Custodian’s policies, 

procedures, and controls for 

safekeeping, exclusively possessing, and 

controlling the Trust’s bitcoin holdings 

are consistent with industry best 

practices to protect against the theft, 

loss, and unauthorized and accidental 

use of the private keys. As a trust 

company chartered by the New York 

Department of Financial Services, the 

Sponsor notes that the Custodian is 

subject to extensive regulation and has 

among longest track records in the 

industry of providing custodial services 

for digital asset private keys. The 

Custodian has represented to the Trust 

that it has never suffered a loss of 

bitcoin belonging to customers. Under 

the circumstances, therefore, to the 

extent the Commission believes that its 

concerns about the risks of spot bitcoin 

custody justifies differential treatment 

of a Bitcoin Futures ETF versus a Spot 

Bitcoin ETP, the Sponsor believes that 

the fact that the Custodian employs the 

same types of policies, procedures, and 

safeguards in handling spot bitcoin that 

the Commission has stated that brokerdealers should implement with respect 

to digital asset securities would appear 

to weaken the justification for treating a 

Bitcoin Futures ETF compared to a Spot 

Bitcoin ETP differently due to spot 

bitcoin custody concerns. 

Based on the foregoing, the Exchange 

and Sponsor believe that any objective 

review of the proposals to list Spot 

Bitcoin ETPs compared to the Bitcoin 

Futures ETFs and the Bitcoin Futures 

Approvals would lead to the conclusion 

that Spot Bitcoin ETPs should be 

available to U.S. investors and, as such, 

this proposal and other comparable 

proposals to list and trade Spot Bitcoin 

ETPs should be approved by the 

Commission. Stated simply, U.S. 

investors will continue to lose 

significant amounts of money from 

holding Bitcoin Futures ETFs as 

compared to Spot Bitcoin ETPs, losses 

which could be prevented by the 

Commission approving Spot Bitcoin 

ETPs. Additionally, any concerns 

related to preventing fraudulent and 

manipulative acts and practices related 

to Spot Bitcoin ETPs would apply 

equally to the spot markets underlying 

the futures contracts held by a Bitcoin 

Futures ETF. While the 1940 Act does 

offer certain investor protections, those 

protections do not relate to mitigating 

potential manipulation of the holdings 

of an ETF in a way that warrants 

distinction between Bitcoin Futures 

ETFs and Spot Bitcoin ETPs. To be 

clear, both the Exchange and Sponsor 

believe that the CME Bitcoin Futures 

market is a regulated market of 

significant size and that such 

manipulation concerns are mitigated, as 

described extensively below. After 

allowing the listing and trading of 

Bitcoin Futures ETFs that hold 

primarily CME Bitcoin Futures, 

however, the only consistent outcome 

would be approving Spot Bitcoin ETPs 

on the basis that the CME Bitcoin 

Futures market is a regulated market of 

significant size. Including in the 

analysis the significant and preventable 

losses to U.S. investors that comes with 

Bitcoin Futures ETFs, disapproving 

Spot Bitcoin ETPs seems even more 

arbitrary and capricious. Given the 

current landscape, approving this 

proposal (and others like it) and 

allowing Spot Bitcoin ETPs to be listed 

and traded alongside Bitcoin Futures 

ETFs would establish a consistent 

regulatory approach, provide U.S. 

investors with choice in product 

structures for bitcoin exposure, and 

offer flexibility in the means of gaining 

exposure to bitcoin through transparent, 

regulated, U.S. exchange-listed vehicles. 


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51Unless otherwise noted, all data and analysis 

presented in this section and referenced elsewhere 

in the filing has been provided by the Sponsor. 52According to CME, the CME CF Bitcoin 

Reference Rate aggregates the trade flow of major 

bitcoin spot exchanges during a specific calculation 

window into a once-a-day reference rate of the U.S. 

dollar price of bitcoin. Calculation rules are geared 

toward maximum transparency and real-time 

replicability in underlying spot markets, including 

Bitstamp, Coinbase, Gemini, itBit, and Kraken. For 

additional information, refer to https://

www.cmegroup.com/trading/cryptocurrencyindices/cf-bitcoin-reference-rate.html?redirect=/ 

trading/cf-bitcoin-reference-rate.html. 

53 Data on Bitcoin futures is obtained from 

https://www.cmegroup.com/markets/

cryptocurrencies/bitcoin/bitcoin.volume.html. 

54 Data on Bitcoin volume traded on 

cryptocurrency exchanges is obtained from https:// 

www.cryptocompare.com. 

55The calculation of correlations used the period 

January 20, 2021 to October 1, 2021 as this is the 

common period across all the exchanges and data 

sources being analyzed. 

56The Pearson correlation is a measure of linear 

association between two variables, and indicates 

the magnitude as well as direction of this 

relationship. The value can range between ¥1 

(suggesting a strong negative association) and 1 

(suggesting a strong positive association). 

Bitcoin Futures 51

CME began offering trading in Bitcoin 

Futures in 2017. Each contract 

represents five bitcoin and is based on 

the CME CF Bitcoin Reference Rate.52

The contracts trade and settle like other 

cash-settled commodity futures 

contracts. Nearly every measurable 

metric related to Bitcoin Futures has 

trended consistently up since launch. 

According to the Sponsor, the 

increase in the volume on CME is 

reflected in a higher proportion of the 

bitcoin market share. This is illustrated 

by plotting the proportion of monthly 

volume traded in bitcoin on the CME 53

(categorized as regulated in the chart 

and used as the numerator) in relation 

to the total bitcoin market, which 

comprises of the sum of the volume of 

bitcoin futures on the CME and the spot 

volume on cryptocurrency exchanges 54

(categorized as unregulated and used as 

the denominator) from January 1, 2018 

to October 1, 2021 illustrates this point. 

The proportion of volume traded on 

CME has increased from less than 5% at 

inception, to more than 20% over three 

and a half years. Furthermore, the CME 

market, as well as other crypto-linked 

markets, and the spot market are highly 

correlated. In markets that are globally 

and efficiently integrated, one would 

expect that changes in prices of an asset 

across all markets to be highly 

correlated. The rationale behind this is 

that quick and efficient arbitrageurs 

would capture potentially profitable 

opportunities, consequently converging 

prices to the average intrinsic value very 

rapidly. 

Bitcoin markets exhibit a high degree 

of correlation. Using daily Bitcoin prices 

from centralized exchanges, ETP 

providers, and the CME from January 

20, 2021 to October 1, 2021,55 the 

Sponsor calculates the Pearson 

correlation of returns 56 across these 

markets and find a high degree of 

correlation. 

Correlations are between 57% and 

99%, with the latter found mainly 

across centralized exchanges due to 

their higher level of interconnectedness. 

The lower correlations pertain mainly to 

the ETPs, which are relatively newer 

products and are mainly offered by a 

few competing market makers who are 

required to trade in large blocks, thus 

making it economically infeasible to 

capture small mispricings. As additional 

investors and arbitrageurs enter the 

market and capture the mispricing 

opportunities between these markets, it 

is likely that there will be much higher 

levels of correlations across all markets. 


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Pair-wise correlations of Bitcoin 

returns are also calculated on hourly 

and minute-by-minute sampling 

frequencies in order to estimate the 

intra-day associations across the 

different Bitcoin markets. The results 

remain largely the same as shown in the 

charts below, with correlations ranging 

between 70% and 97% among 

centralized exchanges, and between 

55% and 72% between ETPs and 

centralized exchanges. This suggests 

that Bitcoin prices across all considered 

markets move very similarly and in a 

very efficient manner to quickly reflect 

changes in market conditions, not only 

on a daily basis, but also at much higher 

intra-day frequencies. 

BILLING CODE 8011–01–P 


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57Coskewness and Cokurtosis are higher order 

cross-moments used in finance to examine how 

assets move together. Coskewness measures the 

extent to which two variables undergo extreme 

deviations at the same time, whereby a positive 

(negative) value means that both values exhibit 

positive (negative) values simultaneously. While 

this measure is useful for estimating comovements 

in one direction or the other, it does not allow us 

to test whether two variables comove similarly in 

either direction. For that, we apply the cokurtosis, 

which measures the extent to which two variables 

undergo both extreme positive and negative 

deviations at the same time. 

BILLING CODE 8011–01–C 

According to the Sponsor’s research, 

this relationship holds true during 

periods of extreme price volatility. This 

implies that no single Bitcoin market 

can deviate significantly from the 

consensus, such that the market is 

sufficiently large and has an inherent 

unique resistance to manipulation. 

Hence, the Sponsor introduces a 

statistical comoment called cokurtosis, 

which measures to what extent two 

random variables change together.57 If 

two returns series exhibit a high degree 

of cokurtosis, this means that they tend 

to undergo extreme positive and 

negative changes simultaneously. A 

cokurtosis value larger than +3 or less 

than ¥3 is considered statistically 

significant. The following table shows 

that the level of cokurtosis is positive 

and very high between all market 

combinations of hourly returns,58 which 

suggests that Bitcoin markets tend to 

move very similarly especially for 

extreme price deviations. 


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As a robustness check, the cokurtosis 

metric is also calculated using minuteby-minute returns, and the conclusion 

remains the same, suggesting that all 

Bitcoin markets move in tandem 

especially during extreme market 

movements. 


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59See Hu, Y., Hou, Y. and Oxley, L. (2019). 

‘‘What role do futures markets play in Bitcoin 

pricing? Causality, cointegration and price 

discovery from a time-varying perspective’’ 

(available at: https://www.ncbi.nlm.nih.gov/pmc/ 

articles/PMC7481826/). This academic research 

paper concludes that ‘‘There exist no episodes 

where the Bitcoin spot markets dominates the price 

discovery processes with regard to Bitcoin futures. 

This points to a conclusion that the price formation 

originates solely in the Bitcoin futures market. We 

can, therefore, conclude that the Bitcoin futures 

markets dominate the dynamic price discovery 

process based upon time-varying information share 

measures. Overall, price discovery seems to occur 

in the Bitcoin futures markets rather than the 

underlying spot market based upon a time-varying 

perspective.’’ 

60See Exchange Rule 14.11(f). 

61Commodity-Based Trust Shares, as described in 

Exchange Rule 14.11(e)(4), are a type of Trust 

Issued Receipt. 

62As the Exchange has stated in a number of 

other public documents, it continues to believe that 

bitcoin is resistant to price manipulation and that 

‘‘other means to prevent fraudulent and 

manipulative acts and practices’’ exist to justify 

dispensing with the requisite surveillance sharing 

agreement. The geographically diverse and 

continuous nature of bitcoin trading render it 

difficult and prohibitively costly to manipulate the 

price of bitcoin. The fragmentation across bitcoin 

platforms, the relatively slow speed of transactions, 

and the capital necessary to maintain a significant 

presence on each trading platform make 

manipulation of bitcoin prices through continuous 

trading activity challenging. To the extent that there 

are bitcoin exchanges engaged in or allowing wash 

trading or other activity intended to manipulate the 

price of bitcoin on other markets, such pricing does 

not normally impact prices on other exchange 

because participants will generally ignore markets 

with quotes that they deem non-executable. 

Moreover, the linkage between the bitcoin markets 

and the presence of arbitrageurs in those markets 

means that the manipulation of the price of bitcoin 

price on any single venue would require 

manipulation of the global bitcoin price in order to 

be effective. Arbitrageurs must have funds 

distributed across multiple trading platforms in 

order to take advantage of temporary price 

dislocations, thereby making it unlikely that there 

Continued 

These results present evidence of a 

robust global Bitcoin market that 

quickly reacts in a unanimous manner 

to extreme price movements across both 

the spot markets, futures and ETP 

markets. 

The Sponsor further believes that 

academic research corroborates the 

overall trend outlined above and 

supports the thesis that the Bitcoin 

Futures pricing leads the spot market 

and, thus, a person attempting to 

manipulate the Shares would also have 

to trade on that market to manipulate 

the ETP. Specifically, the Sponsor 

believes that such research indicates 

that bitcoin futures lead the bitcoin spot 

market in price formation.59

Section 6(b)(5) and the Applicable 

Standards 

The Commission has approved 

numerous series of Trust Issued 

Receipts,60 including Commodity-Based 

Trust Shares,61 to be listed on U.S. 

national securities exchanges. In order 

for any proposed rule change from an 

exchange to be approved, the 

Commission must determine that, 

among other things, the proposal is 

consistent with the requirements of 

Section 6(b)(5) of the Act, specifically 

including: (i) The requirement that a 

national securities exchange’s rules are 

designed to prevent fraudulent and 

manipulative acts and practices; 62 and 


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will be strong concentration of funds on any 

particular bitcoin exchange or OTC platform. As a 

result, the potential for manipulation on a trading 

platform would require overcoming the liquidity 

supply of such arbitrageurs who are effectively 

eliminating any cross-market pricing differences. 

63As previously articulated by the Commission, 

‘‘The standard requires such surveillance-sharing 

agreements since ‘‘they provide a necessary 

deterrent to manipulation because they facilitate the 

availability of information needed to fully 

investigate a manipulation if it were to occur.’’ 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 underlying securities 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. The hallmarks of a surveillancesharing 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.’’ The Commission has 

historically held that joint membership in the 

Intermarket Surveillance Group (‘‘ISG’’) constitutes 

such a surveillance sharing agreement. See Wilshire 

Phoenix Disapproval. 

64For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

65See Wilshire Phoenix Disapproval. 

66See Winklevoss Order at 37580. The 

Commission has also specifically noted that it ‘‘is 

not applying a ‘cannot be manipulated’ standard; 

instead, the Commission is examining whether the 

proposal meets the requirements of the Exchange 

Act and, pursuant to its Rules of Practice, places the 

burden on the listing exchange to demonstrate the 

validity of its contentions and to establish that the 

requirements of the Exchange Act have been met.’’ 

Id. at 37582. 

67As further described below, the ‘‘Index’’ for the 

Fund is the S&P Bitcoin Index. The current 

exchange composition of the Index is Binance, BitÉ 

nex, BitÖyer, Bittrex, Bitstamp, Coinbase Pro, Gemini, 

HitBTC, Huobi, Kraken, KuCoin, and Poloniex. 

68These statistics are based on samples of bitcoin 

liquidity in USD (excluding stablecoins or Euro 

liquidity) based on executable quotes on Coinbase 

Pro, Gemini, Bitstamp, Kraken, LMAX Exchange, 

BinanceUS, and OKCoin during February 2021. 

(ii) the requirement that an exchange 

proposal be designed, in general, to 

protect investors and the public interest. 

The Exchange believes that this 

proposal is consistent with the 

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

Act and that this filing sufficiently 

demonstrates that the CME Bitcoin 

Futures market represents a regulated 

market of significant size and that, on 

the whole, the manipulation concerns 

previously articulated by the 

Commission are sufficiently mitigated to 

the point that they are outweighed by 

quantifiable investor protection issues 

that would be resolved by approving 

this proposal. 

(i) Designed To Prevent Fraudulent and 

Manipulative Acts and Practices 

In order to meet this standard in a 

proposal to list and trade a series of 

Commodity-Based Trust Shares, the 

Commission requires that an exchange 

demonstrate that there is a 

comprehensive surveillance-sharing 

agreement in place 63 with a regulated 

market of significant size. Both the 

Exchange and CME are members of 

ISG.64 The only remaining issue to be 

addressed is whether the Bitcoin 

Futures market constitutes a market of 

significant size, which both the 

Exchange and the Sponsor believe that 

it does. The terms ‘‘significant market’’ 

and ‘‘market of significant size’’ include 

a market (or group of markets) as to 

which: (a) There is a reasonable 

likelihood that a person attempting to 

manipulate the ETP would also have to 

trade on that market to manipulate the 

ETP, so that a surveillance-sharing 

agreement would assist the listing 

exchange in detecting and deterring 

misconduct; and (b) it is unlikely that 

trading in the ETP would be the 

predominant influence on prices in that 

market.65

The Commission has also recognized 

that the ‘‘regulated market of significant 

size’’ standard is not the only means for 

satisfying Section 6(b)(5) of the act, 

specifically providing that a listing 

exchange could demonstrate that ‘‘other 

means to prevent fraudulent and 

manipulative acts and practices’’ are 

sufficient to justify dispensing with the 

requisite surveillance-sharing 

agreement.66

(a) Manipulation of the ETP 

According to the Sponsor’s research 

presented above, the Bitcoin Futures 

market is the leading market for bitcoin 

price formation. Where Bitcoin Futures 

lead the price in the spot market such 

that a potential manipulator of the 

bitcoin spot market (beyond just the 

constituents of the Index 67) would have 

to participate in the Bitcoin Futures 

market, it follows that a potential 

manipulator of the Shares would 

similarly have to transact in the Bitcoin 

Futures market because the Index is 

based on spot prices. Further, the Trust 

only allows for in-kind creation and 

redemption, which, as further described 

below, reduces the potential for 

manipulation of the Shares through 

manipulation of the Index or any of its 

individual constituents, again 

emphasizing that a potential 

manipulator of the Shares would have 

to manipulate the entirety of the bitcoin 

spot market, which is led by the Bitcoin 

Futures market. As such, the Exchange 

believes that part (a) of the significant 

market test outlined above is satisfied 

and that common membership in ISG 

between the Exchange and CME would 

assist the listing exchange in detecting 

and deterring misconduct in the Shares. 

(b) Predominant Influence on Prices in 

Spot and Bitcoin Futures 

The Exchange and Sponsor also 

believe that trading in the Shares would 

not be the predominant force on prices 

in the Bitcoin Futures market or spot 

market for a number of reasons, 

including the significant volume in the 

Bitcoin Futures market, the size of 

bitcoin’s market cap, and the significant 

liquidity available in the spot market. In 

addition to the Bitcoin Futures market 

data points cited above, the spot market 

for bitcoin is also very liquid. According 

to data from CoinRoutes from February 

2021, the cost to buy or sell $5 million 

worth of bitcoin averages roughly 10 

basis points with a market impact of 30 

basis points.68 For a $10 million market 

order, the cost to buy or sell is roughly 

20 basis points with a market impact of 

50 basis points. Stated another way, a 

market participant could enter a market 

buy or sell order for $10 million of 

bitcoin and only move the market 0.5%. 

More strategic purchases or sales (such 

as using limit orders and executing 

through OTC bitcoin trade desks) would 

likely have less obvious impact on the 

market—which is consistent with 

MicroStrategy, Tesla, and Square being 

able to collectively purchase billions of 

dollars in bitcoin. As such, the 

combination of 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 Bitcoin 

Futures markets, satisfying part (b) of 

the test outlined above. 

(c) Other Means To Prevent Fraudulent 

and Manipulative Acts and Practices 

As noted above, the Commission also 

permits a listing exchange to 

demonstrate that ‘‘other means to 

prevent fraudulent and manipulative 

acts and practices’’ are sufficient to 

justify dispensing with the requisite 

surveillance-sharing agreement. The 

Exchange and Sponsor believe that such 

conditions are present. According to the 

Sponsor, a significant portion of the 

considerations around crypto pricing 

have historically stemmed from a lack of 

consistent pricing across markets. 

However, according to the Sponsor’s 


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69The exchanges include Binance, Bitfinex, 

Bithumb, Bitstamp, Cexio, Coinbase, Coinone, 

Gateio, Gemini, HuobiPro, itBit, Kraken, Kucoin, 

and OKEX. 

research, cross-exchange spreads in 

Bitcoin have been declining consistently 

over the past several years. Based on the 

daily Bitcoin price series from several 

popular centralized exchanges 69 the 

Sponsor has calculated the largest crossexchange percentage spread (labelled as 

%C-Spread) by deducting the highest or 

maximum price (P) at time t from the 

lowest or minimum, and dividing by the 

lowest across all exchanges (i). 

Formally, this is expressed as: 

The results show a clear and sharp 

decline in the %C-Spread, indicating 

that the Bitcoin market has become 

more efficient as cross-exchange prices 

have converged over time. 

In addition, the magnitude of outlier 

% C-spreads has also declined over 

time. This boxplot shows that, not only 

did the median value of the %C-Spread 

decline over time, but also the extreme 

outlier values. For instance, the 

maximum %C-Spread for 2017, 2018, 

2019, 2020, and 2021 are 29.14%, 

14.45%, 8.54%, 6.04%, and 7.1%, 

respectively. The market has 

experienced a 38% year-on-year decline 

in the annual median %C-Spread 

indicating a greater degree of Bitcoin 

price convergence across exchanges and 

a more efficient market. 


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The dispersion (s) of Bitcoin Prices 

has also declined over the same period. 

This chart shows the 7-day rolling 

standard deviation of the %C-Spread 

from January 1, 2017 to October 1, 2021. 

The Sponsor’s research finds that the 

dispersion in Bitcoin prices across all 

exchanges has decreased over time, 

indicating that prices on all the 

considered exchanges converge towards 

the intrinsic average much more 

efficiently. This suggests that the market 

has become better at quickly reaching a 

consensus price for Bitcoin. 

As the pricing of the crypto market 

becomes increasingly efficient, pricing 

methodologies become more accurate 

and less susceptible to manipulation. 

The clustering of prices across a variety 

of sources within the primary market 

points towards robust price discovery 

mechanisms and efficient arbitrage. 


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One factor that has contributed to the 

overall efficiency of, and improved 

price discovery within the Bitcoin 

market is the increase in the number of 

participants, and subsequently, the total 

dollar amount allocated to this market. 

This can be illustrated by the following 

chart, which shows the number of 

wallet addresses holding Bitcoin from 

January 2016 to June 2021. 

The increase in the number of 

participants has manifested itself in 

higher liquidity in the market. This is 

exhibited in the following chart, which 

shows the daily aggregated dollar 

notional of the bid and ask order books 

within the first 100 price levels across 

several of the largest centralized crypto 

exchanges from October 2020 to April 

2021. Specifically, the dollar notional 

that is allocated closest to the mid price 

has increased from around $230 million 

to $860 million over that period, 

representing a 270% increase in half a 

year. 


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An increased notional order book 

suggests that there is a higher degree of 

consensus among investors regarding 

the price of Bitcoin. Moreover, this 

market characteristic hampers any 

attempt of price manipulation by any 

single large entity. 

As a robustness check, the Sponsor 

investigates whether the dollar notional 

in the order book changes significantly 

prior to, and post an extreme price 

event. Specifically, for events 

constituting large increases in the price 

of Bitcoin, if the ask (or sell) side of the 

order book experiences a significant 

shrinkage in the dollar notional right 

before the event, then this may be an 

indication of market manipulation 

whereby the ask-side of the order book 

becomes sufficiently thin for a large 

order to move the price upward. 

Similarly, for events constituting large 

decreases in the price of Bitcoin, if the 

bid (or buy) side of the order book 

experiences a significant shrinkage in 

the dollar notional prior to such events, 

then this may be an indication of market 

manipulation whereby the thinner bidside of the order book may potentially 

lead to significant downward price 

movements. 

Using the top and bottom 0.1% of 

hourly price changes from October 2020 

to April 2021 as events of extreme 

upward and downward market 

movements, respectively, the Sponsor 

plotted the bid (left charts) and ask 

(right charts) dollar notional of the 

Bitcoin order book within a six-hour 

window around these events in the 

chart below, which shows the results for 

extreme upward price movements. The 

extreme price events (indicated by the 

dashed green lines) perfectly coincide 

with the decrease in dollar notional of 

the ask-side of the order book. This is 

indicative of an efficient market, 

whereby large market movements are 

quickly and dynamically absorbed by a 

thick orderbook. Moreover, the dollar 

notional on the ask side after the event 

is replenished back to its pre-event 

level, which implies that market 

participants’ reactions are quick to 

restore the market back to its 

equilibrium level. 


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The same results and conclusions are 

found for extreme downward price 

movements. The charts below show that 

such price events perfectly coincide 

with shrinkages on the bid side of the 

order book (left charts), indicating an 

efficient and dynamic Bitcoin market. 

Moreover, the bid-side of the order book 

after the event is also restored back to 

its pre-event level, which suggests that 

the market is symmetrically efficient in 

moving back to equilibrium. 


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70While the Index will not be particularly 

important for the creation and redemption process, 

it will be used for calculating fees. 

Finally, offering only in-kind creation 

and redemption will provide unique 

protections against potential attempts to 

manipulate the Shares. While the 

Sponsor believes that the Index which 

it uses to value the Trust’s bitcoin is 

itself resistant to manipulation based on 

the methodology further described 

below, the fact that creations and 

redemptions are only available in-kind 

makes the manipulability of the Index 

significantly less important. 

Specifically, because the Trust will not 

accept cash to buy bitcoin in order to 

create new shares or, barring a forced 

redemption of the Trust or under other 

extraordinary circumstances, be forced 

to sell bitcoin to pay cash for redeemed 

shares, the price that the Sponsor uses 

to value the Trust’s bitcoin is not 

particularly important.70 When 

authorized participants are creating 

with the Trust, they need to deliver a 

certain number of bitcoin per share 

(regardless of the valuation used) and 

when they’re redeeming, they can 

similarly expect to receive a certain 

number of bitcoin per share. As such, 

even if the price used to value the 

Trust’s bitcoin is manipulated (which 

the Sponsor believes that its 

methodology is resistant to), the ratio of 

bitcoin per Share does not change and 

the Trust will either accept (for 

creations) or distribute (for 

redemptions) the same number of 

bitcoin regardless of the value. This not 

only mitigates the risk associated with 

potential manipulation, but also 

discourages and disincentivizes 

manipulation of the Index because there 

is little financial incentive to do so. 

(ii) Designed To Protect Investors and 

the Public Interest 

The Exchange believes that the 

proposal is designed to protect investors 

and the public interest. Over the past 

several years, U.S. investor exposure to 

bitcoin through OTC Bitcoin Funds has 

grown into the tens of billions of dollars 

and more than a billion dollars of 

exposure through Bitcoin Futures ETFs. 

With that growth, so too has grown the 

quantifiable investor protection issues 

to U.S. investors through roll costs for 

Bitcoin Futures ETFs and premium/ 

discount volatility and management fees 

for OTC Bitcoin Funds. The Exchange 

believes that the concerns related to the 

prevention of fraudulent and 

manipulative acts and practices have 

been sufficiently addressed to be 

consistent with the Act and, to the 

extent that the Commission disagrees 

with that assertion, such concerns are 

now outweighed by investor protection 

concerns. As such, the Exchange 

believes that approving this proposal 

(and comparable proposals) provides 

the Commission with the opportunity to 

allow U.S. investors with access to 

bitcoin in a regulated and transparent 

exchange-traded vehicle that would act 

to limit risk to U.S. investors by: (i) 

Reducing premium and discount 

volatility; (ii) reducing management fees 

through meaningful competition; (iii) 

reducing risks and costs associated with 

investing in Bitcoin Futures ETFs and 

operating companies that are imperfect 

proxies for bitcoin exposure; and (iv) 

providing an alternative to custodying 

spot bitcoin. 

ARK 21Shares Bitcoin ETF 

Delaware Trust Company is the 

trustee (‘‘Trustee’’). The Bank of New 

York Mellon will be the administrator 

(‘‘Administrator’’) and transfer agent 

(‘‘Transfer Agent’’). Foreside Global 

Services, LLC will be the marketing 

agent (‘‘Marketing Agent’’) in 

connection with the creation and 

redemption of ‘‘Baskets’’ of Shares. ARK 

Investment Management LLC (‘‘ARK’’) 

will provide assistance in the marketing 

of the Shares. Coinbase Custody Trust 

Company, LLC, a third-party regulated 

custodian (the ‘‘Custodian’’), will be 

responsible for custody of the Trust’s 

bitcoin. 

According to the Registration 

Statement, each Share will represent a 


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71 15 U.S.C. 80a–1. 

72Lukka is an independent third-party digital 

asset data company engaged by the Sponsor to 

provide fair market value (FMV) bitcoin prices. This 

price, commercially available from Lukka, will form 

the basis for determining the value of the Trust’s 

Bitcoin Holdings. Lukka is not affiliated with the 

Trust or the Sponsor other than through a 

commercial relationship. All of Lukka’s products 

are also SOC 1 and 2 Type 2 certified. 

73The purpose of Lukka’s Pricing Integrity 

Oversight Board is to ensure (i) the integrity and 

validity of the Lukka pricing and valuation 

products and (ii) the Lukka pricing and valuation 

products remain fit for purpose in the rapidly 

evolving market and corresponding regulatory 

environments. 

fractional undivided beneficial interest 

in the bitcoin held by the Trust. The 

Trust’s assets will consist of bitcoin 

held by the Custodian on behalf of the 

Trust. The Trust generally does not 

intend to hold cash or cash equivalents. 

However, there may be situations where 

the Trust will unexpectedly hold cash 

on a temporary basis. 

According to the Registration 

Statement, the Trust is neither an 

investment company registered under 

the Investment Company Act of 1940, as 

amended,71 nor a commodity pool for 

purposes of the Commodity Exchange 

Act (‘‘CEA’’), and neither the Trust nor 

the Sponsor is subject to regulation as 

a commodity pool operator or a 

commodity trading adviser in 

connection with the Shares. 

When the Trust sells or redeems its 

Shares, it will do so in ‘‘in-kind’’ 

transactions in blocks of 5,000 Shares (a 

‘‘Creation Basket’’) at the Trust’s NAV. 

Authorized participants will deliver, or 

facilitate the delivery of, bitcoin to the 

Trust’s account with the Custodian in 

exchange for Shares when they 

purchase Shares, and the Trust, through 

the Custodian, will deliver bitcoin to 

such authorized participants when they 

redeem Shares with the Trust. 

Authorized participants may then offer 

Shares to the public at prices that 

depend on various factors, including the 

supply and demand for Shares, the 

value of the Trust’s assets, and market 

conditions at the time of a transaction. 

Shareholders who buy or sell Shares 

during the day from their broker may do 

so at a premium or discount relative to 

the NAV of the Shares of the Trust. 

Investment Objective 

According to the Registration 

Statement and as further described 

below, the investment objective of the 

Trust is to seek to track the performance 

of bitcoin, as measured by the 

performance of the S&P Bitcoin Index 

(the ‘‘Index’’), adjusted for the Trust’s 

expenses and other liabilities. In seeking 

to achieve its investment objective, the 

Trust will hold bitcoin and will value 

the Shares daily based on the Index. The 

Trust will process all creations and 

redemptions in-kind in transactions 

with authorized participants. The Trust 

is not actively managed. 

The Index 

As described in the Registration 

Statement, the Fund will use the Index 

to calculate the Trust’s NAV. The Index 

is a U.S. dollar-denominated composite 

reference rate for the price of bitcoin. 

There is no component other than 

bitcoin in the Index. The underlying 

exchanges are sourced by Lukka Inc. 

(the ‘‘Data Provider’’) 72 based on a 

combination of qualitative and 

quantitative metrics to analyze a 

comprehensive data set and evaluate 

factors including legal/regulation, KYC/ 

transaction risk, data provision, 

security, team/exchange, asset quality/ 

diversity, market quality and negative 

events. The Index price is currently 

sourced from the following set of 

exchanges: Binance, Bitfinex, Bitflyer, 

Bittrex, Bitstamp, Coinbase Pro, Gemini, 

HitBTC, Huobi, Kraken, KuCoin, and 

Poloniex. As the digital ecosystem 

continues to evolve, the Data Provider 

can add additional or remove exchanges 

based on the processes established by 

Lukka’s Pricing Integrity Oversight 

Board.73

The Index methodology is intended to 

determine the fair market value 

(‘‘FMV’’) for bitcoin by determining the 

principal market for bitcoin as of 4pm 

ET daily. The Index methodology uses 

a ranking approach that considers 

several exchange characteristics 

including oversight and intra-day 

trading volume. Specifically, to rank the 

credibility and quality of each exchange, 

the Data Provider dynamically assigns a 

Base Exchange Score (‘‘BES’’) score to 

the key characteristics for each 

exchange. 

The BES reflects the fundamentals of 

an exchange and determines which 

exchange should be designated as the 

principal market at a given point of 

time. This score is determined by 

computing a weighted average of the 

values assigned to four different 

exchange characteristics. The exchange 

characteristics are as follows: (i) 

Oversight; (ii) microstructure efficiency; 

(iii) data transparency and (iv) data 

integrity. 

Oversight 

This score reflects the rules in place 

to protect and to give access to the 

investor. The score assigned for 

exchange oversight will depend on 

parameters such as jurisdiction, 

regulation, ‘‘Know Your Customer and 

Anti-Money Laundering Compliance’’ 

(KYC/AML), among other proprietary 

factors. 

Microstructure Efficiency 

The effective bid ask spread is used as 

a proxy for efficiency. For example, for 

each exchange and currency pair, the 

Data Provider takes an estimate of the 

‘‘effective spread’’ relative to the price. 

Data Transparency 

Transparency is the term used for a 

quality score that is determined by the 

level of detail of the data offered by an 

exchange. The most transparent 

exchanges offer order-level data, 

followed by order book, trade-level, and 

then candles. 

Data Integrity 

Data integrity reconstructs orders to 

ensure the transaction amounts that 

make up an order equal the overall 

order amount matching on both a 

minute and daily basis. This data would 

help expose nefarious actions such as 

wash trading or other potential 

manipulation of data. 

The methodology then applies a fivestep weighting process for identifying a 

principal exchange and the last price on 

that exchange. Following this weighting 

process, an executed exchange price is 

assigned for bitcoin as of 4pm ET. The 

Index price is determined according to 

the following procedure: 

• Step 1: Assign each exchange a Base 

Exchange Score (‘‘BES’’) reflecting static 

exchange characteristics such as 

oversight, microstructure and 

technology, as discussed below. 

• Step 2: Adjust the BES based on the 

relative monthly volume each exchange 

services. This new score is the Volume 

Adjusted Score (‘‘VAS’’). 

• Step 3: Decay the VAS based on the 

time passed since the last trade on the 

exchange. Here, the Data Provider is 

assessing the level of activity in the 

market by considering the frequency 

(volume) of trades. The decay factor 

reflects the time since the last trade on 

the exchange. This is the final Decayed 

Volume Adjusted Score (‘‘DVAS’’), 

which tracks the freshness of the data by 

tracking most recent trades. 

• Step 4: Rank the exchanges by the 

DVAS score and designate the highestranking exchange as the principal 

market for that point in time. The 

principal market is the exchange with 

the highest DVAS. 

• Step 5: After selecting a primary 

exchange, an executed exchange price is 

used for bitcoin representing FMV at 

4p.m. ET. The Data Provider takes the 

last traded prices at that moment in time 

on that trading venue for the relevant 


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74Upon request, Lukka can provide additional 

information and detail to the Commission regarding 

the algorithms and data quality checks that are put 

in place, with confidential treatment requested. 

75Upon request, Lukka can provide the 

Commission the Lukka Pricing Integrity Manual, 

with confidential treatment requested. 

76As defined in Rule 11.23(a)(3), the term ‘‘BZX 

Official Closing Price’’ shall mean the price 

disseminated to the consolidated tape as the market 

center closing trade. 

pair (Bitcoin/USD) when determining 

the Index price. 

As discussed in the Registration 

Statement, the fact that there are 

multiple bitcoin spot markets that may 

contribute prices to the Index price 

makes manipulation more difficult in a 

well-arbitraged and fractured market, as 

a malicious actor would need to 

manipulate multiple spot markets 

simultaneously to impact the Index 

price, or dramatically skew the 

historical distribution of volume 

between the various exchanges. 

The Data Provider has designed a 

series of automated algorithms designed 

to supplement the core Lukka Prime 

Methodology in enhancing the ability to 

detect potentially anomalous price 

activity which could be detrimental to 

the goal of obtaining a Fair Market 

Value price that is representative of the 

market at a point in time.74

In addition to the automated 

algorithms, the Data Provider has 

dedicated resources and has established 

committees to ensure all prices are 

representative of the market. Any price 

challenges will result in an independent 

analysis of the price. This includes 

assessing whether the price from the 

selected exchange is biased according to 

analyses designed to recognize patterns 

consistent with manipulative activity, 

such as a quick reversion to previous 

traded levels following a sharp price 

change or any significant deviations 

from the volume weighted average price 

on a particular exchange or pricing on 

any other exchange included in the 

Lukka Prime eligibility universe. 

Policies and procedures for any 

adjustments to prices or changes to core 

parameters (e.g., exchange selection) are 

described in the Lukka Price Integrity 

Manual.75

Upon detection or external referral of 

suspect manipulative activities, the case 

is raised to the Price Integrity Oversight 

Board. These checks occur on an ongoing, intraday basis and any 

investigations are typically resolved 

promptly, in clear cases within minutes 

and in more complex cases same 

business day. The evidence uncovered 

shall be turned over to the Data 

Provider’s Price Integrity Oversight 

Board for final decision and action. The 

Price Integrity Oversight Board may 

choose to pick an alternative primary 

market and may exclude such market 

from future inclusion in the Index 

methodology or choose to stand by the 

original published price upon fully 

evaluating all available evidence. It may 

also initiate an investigation of prior 

prices from such markets and shall 

evaluate evidence presented on a caseby-case basis. 

After the Lukka Prime price is 

generated, the S&P DJI (‘‘The Index 

Provider’’) performs independent 

quality checks as a second layer of 

validation to those employed by the 

Data Provider, including checks against 

assets with large price movements, 

assets with missing prices, assets with 

zero prices, assets with unchanged 

prices, assets that have ceased pricing 

and assets where the price does not 

match the Lukka Prime primary 

exchange. The Index Provider may 

submit a price challenge to Lukka if any 

of the checks listed above are found to 

be material. Lukka will perform an 

independent review of the price 

challenge to ensure the price is 

representative of the fair value of a 

particular cryptocurrency. If there is a 

change, the process will follow that 

described in the Recalculation Policy 

found on The Index Provider Digital 

Assets Indices Policies & Practices and 

Index Mathematics Methodology. 

In addition, The Index Provider 

currently provides the below additional 

quality assurance mechanisms with 

respect to crypto price validation. These 

checks are based on current market 

conditions, internal system processes 

and other assessments. The Index 

Provider reserves the right within its 

sole discretion to supplement, modify 

and/or remove individual checks and/or 

the parameters used within the checks, 

at any time without notice. 

Crypto Price and Exchange Validation 

• Check for any assets with no price 

received from Lukka; 

• Check for any assets with a zero 

price received from Lukka; 

• Check for any assets with a large 

change from the previous day. (Outliers 

+/¥ 40%); 

• Check for any assets with a stale 

price, aggregating the number of days 

the price remains stale; 

• Confirm the Lukka price matches 

the Lukka Prime primary exchange 

price; 

• Confirm the Lukka price is 

consistent with other Lukka Prime 

exchange prices; 

• Check the volume of the Lukka 

Prime exchanges and challenge the 

Lukka primary exchange if the exchange 

is not within the top percentile of the 

trading volume for that asset; 

• Aggregation of Lukka Prime 

primary exchange changes. 

Availability of Information 

In addition to the price transparency 

of the Index, the Trust will provide 

information regarding the Trust’s 

bitcoin holdings as well as additional 

data regarding the Trust. The Trust will 

provide an Intraday Indicative Value 

(‘‘IIV’’) per Share updated every 15 

seconds, as calculated by the Exchange 

or a third-party financial data provider 

during the Exchange’s Regular Trading 

Hours (9:30 a.m. to 4:00 p.m. E.T.). The 

IIV will be calculated by using the prior 

day’s closing NAV per Share as a base 

and updating that value during Regular 

Trading Hours to reflect changes in the 

value of the Trust’s bitcoin holdings 

during the trading day. 

The IIV disseminated during Regular 

Trading Hours should not be viewed as 

an actual real-time update of the NAV, 

which will be calculated only once at 

the end of each trading day. The IIV will 

be widely disseminated on a per Share 

basis every 15 seconds during the 

Exchange’s Regular Trading Hours by 

one or more major market data vendors. 

In addition, the IIV will be available 

through on-line information services. 

The website for the Trust, which will 

be publicly accessible at no charge, will 

contain the following information: (a) 

The current NAV per Share daily and 

the prior business day’s NAV and the 

reported closing price; (b) the BZX 

Official Closing Price 76 in relation to 

the NAV as of the time the NAV is 

calculated and a calculation of the 

premium or discount of such price 

against such NAV; (c) data in chart form 

displaying the frequency distribution of 

discounts and premiums of the Official 

Closing Price against the NAV, within 

appropriate ranges for each of the four 

previous calendar quarters (or for the 

life of the Trust, if shorter); (d) the 

prospectus; and (e) other applicable 

quantitative information. The Trust will 

also disseminate the Trust’s holdings on 

a daily basis on the Trust’s website. The 

price of bitcoin will be made available 

by one or more major market data 

vendors, updated at least every 15 

seconds during Regular Trading Hours. 

Information about the Index, including 

key elements of how the Index is 

calculated, will be publicly available at 

https://www.spglobal.com/spdji/en/ 

indices/digital-assets/sp-bitcoin-index//. 

The NAV for the Trust will be 

calculated by the Administrator once a 

day and will be disseminated daily to 

all market participants at the same time. 

Quotation and last-sale information 


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77For purposes of Rule 14.11(e)(4), the term 

commodity takes on the definition of the term as 

provided in the Commodity Exchange Act. As noted 

above, the CFTC has opined that Bitcoin is a 

commodity as defined in Section 1a(9) of the 

Commodity Exchange Act. See Coinflip. 

regarding the Shares will be 

disseminated through the facilities of 

the Consolidated Tape Association 

(‘‘CTA’’). 

Quotation and last sale information 

for bitcoin is widely disseminated 

through a variety of major market data 

vendors, including Bloomberg and 

Reuters, as well as the Index. 

Information relating to trading, 

including price and volume 

information, in bitcoin is available from 

major market data vendors and from the 

exchanges on which bitcoin are traded. 

Depth of book information is also 

available from bitcoin exchanges. The 

normal trading hours for bitcoin 

exchanges are 24 hours per day, 365 

days per year. 

Net Asset Value 

NAV means the total assets of the 

Trust including, but not limited to, all 

bitcoin and cash less total liabilities of 

the Trust, each determined on the basis 

of generally accepted accounting 

principles. The Administrator 

determines the NAV of the Trust on 

each day that the Exchange is open for 

regular trading, as promptly as practical 

after 4:00 p.m. EST. The NAV of the 

Trust is the aggregate value of the 

Trust’s assets less its estimated accrued 

but unpaid liabilities (which include 

accrued expenses). In determining the 

Trust’s NAV, the Administrator values 

the bitcoin held by the Trust based on 

the price set by the Index as of 4:00 p.m. 

EST. The Administrator also determines 

the NAV per Share. 

Creation and Redemption of Shares 

According to the Registration 

Statement, on any business day, an 

authorized participant may place an 

order to create one or more baskets. 

Purchase orders must be placed by 4:00 

p.m. Eastern Time, or the close of 

regular trading on the Exchange, 

whichever is earlier. The day on which 

an order is received is considered the 

purchase order date. The total deposit of 

bitcoin required is an amount of bitcoin 

that is in the same proportion to the 

total assets of the Trust, net of accrued 

expenses and other liabilities, on the 

date the order to purchase is properly 

received, as the number of Shares to be 

created under the purchase order is in 

proportion to the total number of Shares 

outstanding on the date the order is 

received. Each night, the Sponsor will 

publish the amount of bitcoin that will 

be required in exchange for each 

creation order. The Administrator 

determines the required deposit for a 

given day by dividing the number of 

bitcoin held by the Trust as of the 

opening of business on that business 

day, adjusted for the amount of bitcoin 

constituting estimated accrued but 

unpaid fees and expenses of the Trust 

as of the opening of business on that 

business day, by the quotient of the 

number of Shares outstanding at the 

opening of business divided by 5,000. 

The procedures by which an authorized 

participant can redeem one or more 

Creation Baskets mirror the procedures 

for the creation of Creation Baskets. 

Rule 14.11(e)(4)—Commodity-Based 

Trust Shares 

The Shares will be subject to BZX 

Rule 14.11(e)(4), which sets forth the 

initial and continued listing criteria 

applicable to Commodity-Based Trust 

Shares. The Exchange will obtain a 

representation that the Trust’s NAV will 

be calculated daily and that these values 

and information about the assets of the 

Trust will be made available to all 

market participants at the same time. 

The Exchange notes that, as defined in 

Rule 14.11(e)(4)(C)(i), the Shares will be: 

(a) Issued by a trust that holds a 

specified commodity 77 deposited with 

the trust; (b) issued by such trust in a 

specified aggregate minimum number in 

return for a deposit of a quantity of the 

underlying commodity; and (c) when 

aggregated in the same specified 

minimum number, may be redeemed at 

a holder’s request by such trust which 

will deliver to the redeeming holder the 

quantity of the underlying commodity. 

Upon termination of the Trust, the 

Shares will be removed from listing. 

The Trustee, Delaware Trust Company, 

is a trust company having substantial 

capital and surplus and the experience 

and facilities for handling corporate 

trust business, as required under Rule 

14.11(e)(4)(E)(iv)(a) and that no change 

will be made to the trustee without prior 

notice to and approval of the Exchange. 

The Exchange also notes that, pursuant 

to Rule 14.11(e)(4)(F), neither the 

Exchange nor any agent of the Exchange 

shall have any liability for damages, 

claims, losses or expenses caused by 

any errors, omissions or delays in 

calculating or disseminating any 

underlying commodity value, the 

current value of the underlying 

commodity required to be deposited to 

the Trust in connection with issuance of 

Commodity-Based Trust Shares; 

resulting from any negligent act or 

omission by the Exchange, or any agent 

of the Exchange, or any act, condition or 

cause beyond the reasonable control of 

the Exchange, its agent, including, but 

not limited to, an act of God; fire; flood; 

extraordinary weather conditions; war; 

insurrection; riot; strike; accident; 

action of government; communications 

or power failure; equipment or software 

malfunction; or any error, omission or 

delay in the reports of transactions in an 

underlying commodity. Finally, as 

required in Rule 14.11(e)(4)(G), the 

Exchange notes that any registered 

market maker (‘‘Market Maker’’) in the 

Shares must file with the Exchange in 

a manner prescribed by the Exchange 

and keep current a list identifying all 

accounts for trading in an underlying 

commodity, related commodity futures 

or options on commodity futures, or any 

other related commodity derivatives, 

which the registered Market Maker may 

have or over which it may exercise 

investment discretion. No registered 

Market Maker shall trade in an 

underlying commodity, related 

commodity futures or options on 

commodity futures, or any other related 

commodity derivatives, in an account in 

which a registered Market Maker, 

directly or indirectly, controls trading 

activities, or has a direct interest in the 

profits or losses thereof, which has not 

been reported to the Exchange as 

required by this Rule. In addition to the 

existing obligations under Exchange 

rules regarding the production of books 

and records (see, e.g., Rule 4.2), the 

registered Market Maker in CommodityBased Trust Shares shall make available 

to the Exchange such books, records or 

other information pertaining to 

transactions by such entity or registered 

or non-registered employee affiliated 

with such entity for its or their own 

accounts for trading the underlying 

physical commodity, related commodity 

futures or options on commodity 

futures, or any other related commodity 

derivatives, as may be requested by the 

Exchange. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares. 

The Exchange will halt trading in the 

Shares under the conditions specified in 

BZX Rule 11.18. Trading may be halted 

because of market conditions or for 

reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. These may include: (1) The 

extent to which trading is not occurring 

in the bitcoin underlying the Shares; or 

(2) whether other unusual conditions or 

circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. Trading in the 

Shares also will be subject to Rule 


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78For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

79Regular Trading Hours is the time between 9:30 

a.m. and 4:00 p.m. Eastern Time. 

80 15 U.S.C. 78f. 

81 15 U.S.C. 78f(b)(5). 

82See Exchange Rule 14.11(f). 

83Commodity-Based Trust Shares, as described in 

Exchange Rule 14.11(e)(4), are a type of Trust 

Issued Receipt. 

84As the Exchange has stated in a number of 

other public documents, it continues to believe that 

bitcoin is resistant to price manipulation and that 

‘‘other means to prevent fraudulent and 

manipulative acts and practices’’ exist to justify 

dispensing with the requisite surveillance sharing 

agreement. The geographically diverse and 

continuous nature of bitcoin trading render it 

difficult and prohibitively costly to manipulate the 

price of bitcoin. The fragmentation across bitcoin 

platforms, the relatively slow speed of transactions, 

and the capital necessary to maintain a significant 

presence on each trading platform make 

manipulation of bitcoin prices through continuous 

trading activity challenging. To the extent that there 

are bitcoin exchanges engaged in or allowing wash 

trading or other activity intended to manipulate the 

price of bitcoin on other markets, such activity does 

not normally impact prices on other exchange 

because participants will generally ignore markets 

with quotes that they deem non-executable. The 

reason is that wash trading aims to manipulate the 

volume rather than the price of an asset to give the 

impression of heightened market activity in hopes 

of attracting investors to that asset. Moreover, wash 

trades are executed within an exchange rather than 

cross exchange since the entity executing the wash 

trades would aim to trade against itself, and as 

such, this can only happen within an exchange. 

Should the wash trades of that entity result in a 

deviation of the price on that exchange relative to 

others, arbitrageurs would then be able to capitalize 

on this mispricing, and bring the manipulated price 

back to equilibrium, resulting in a loss to the entity 

executing the wash trades. Moreover, the linkage 

between the bitcoin markets and the presence of 

arbitrageurs in those markets means that the 

manipulation of the price of bitcoin price on any 

single venue would require manipulation of the 

global bitcoin price in order to be effective. 

Arbitrageurs must have funds distributed across 

multiple trading platforms in order to take 

advantage of temporary price dislocations, thereby 

making it unlikely that there will be strong 

concentration of funds on any particular bitcoin 

exchange or OTC platform. As a result, the potential 

for manipulation on a trading platform would 

require overcoming the liquidity supply of such 

arbitrageurs who are effectively eliminating any 

cross-market pricing differences. 

14.11(e)(4)(E)(ii), which sets forth 

circumstances under which trading in 

the Shares may be halted. 

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. BZX will allow trading 

in the Shares during all trading sessions 

on the Exchange. The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. As provided in BZX 

Rule 11.11(a), the minimum price 

variation for quoting and entry of orders 

in securities traded on the Exchange is 

$0.01 where the price is greater than 

$1.00 per share or $0.0001 where the 

price is less than $1.00 per share. 

Surveillance 

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 the Shares through the 

Exchange will be subject to the 

Exchange’s surveillance procedures for 

derivative products, including 

Commodity-Based Trust Shares. The 

issuer has represented to the Exchange 

that it will advise the Exchange of any 

failure by the Trust or the Shares 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 or the 

Shares are not in compliance with the 

applicable listing requirements, the 

Exchange will commence delisting 

procedures under Exchange Rule 14.12. 

The Exchange may obtain information 

regarding trading in the Shares and 

Bitcoin Futures via ISG, from other 

exchanges who are members or affiliates 

of the ISG, or with which the Exchange 

has entered into a comprehensive 

surveillance sharing agreement.78

Information Circular 

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 the Shares. 

Specifically, the Information Circular 

will discuss the following: (i) The 

procedures for the creation and 

redemption of Baskets (and that the 

Shares are not individually redeemable); 

(ii) BZX Rule 3.7, which imposes 

suitability obligations on Exchange 

members with respect to recommending 

transactions in the Shares to customers; 

(iii) how information regarding the IIV 

and the Trust’s NAV are disseminated; 

(iv) the risks involved in trading the 

Shares outside of Regular Trading 

Hours 79 when an updated IIV will not 

be calculated or publicly disseminated; 

(v) the requirement that members 

deliver a prospectus to investors 

purchasing newly issued Shares prior to 

or concurrently with the confirmation of 

a transaction; and (vi) trading 

information. 

In addition, the Information Circular 

will advise members, prior to the 

commencement of trading, of the 

prospectus delivery requirements 

applicable to the Shares. Members 

purchasing the Shares for resale to 

investors will deliver a prospectus to 

such investors. The Information Circular 

will also discuss any exemptive, noaction and interpretive relief granted by 

the Commission from any rules under 

the Act. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with Section 6(b) 

of the Act 80 in general and Section 

6(b)(5) of the Act 81 in particular in that 

it is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 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 has approved 

numerous series of Trust Issued 

Receipts,82 including Commodity-Based 

Trust Shares,83 to be listed on U.S. 

national securities exchanges. In order 

for any proposed rule change from an 

exchange to be approved, the 

Commission must determine that, 

among other things, the proposal is 

consistent with the requirements of 

Section 6(b)(5) of the Act, specifically 

including: (i) The requirement that a 

national securities exchange’s rules are 

designed to prevent fraudulent and 

manipulative acts and practices; 84 and 

(ii) the requirement that an exchange 

proposal be designed, in general, to 

protect investors and the public interest. 

The Exchange believes that this 

proposal is consistent with the 

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

Act and that this filing sufficiently 

demonstrates that the CME Bitcoin 

Futures market represents a regulated 

market of significant size and that, on 

the whole, the manipulation concerns 

previously articulated by the 

Commission are sufficiently mitigated to 

the point that they are outweighed by 

quantifiable investor protection issues 

that would be resolved by approving 

this proposal. 

(i) Designed To Prevent Fraudulent and 

Manipulative Acts and Practices 

In order to meet this standard in a 

proposal to list and trade a series of 

Commodity-Based Trust Shares, the 

Commission requires that an exchange 

demonstrate that there is a 

comprehensive surveillance-sharing 


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85As previously articulated by the Commission, 

‘‘The standard requires such surveillance-sharing 

agreements since ‘‘they provide a necessary 

deterrent to manipulation because they facilitate the 

availability of information needed to fully 

investigate a manipulation if it were to occur.’’ 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 underlying securities 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. The hallmarks of a surveillancesharing 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.’’ The Commission has 

historically held that joint membership in ISG 

constitutes such a surveillance sharing agreement. 

See Wilshire Phoenix Disapproval. 

86For a list of the current members and affiliate 

members of ISG, see www.isgportal.com. 

87See Wilshire Phoenix Disapproval. 

88See Winklevoss Order at 37580. The 

Commission has also specifically noted that it ‘‘is 

not applying a ‘cannot be manipulated’ standard; 

instead, the Commission is examining whether the 

proposal meets the requirements of the Exchange 

Act and, pursuant to its Rules of Practice, places the 

burden on the listing exchange to demonstrate the 

validity of its contentions and to establish that the 

requirements of the Exchange Act have been met.’’ 

Id. at 37582. 

89As further described below, the ‘‘Index’’ for the 

Fund is the S&P Bitcoin Index. The current 

exchange composition of the Index is Binance, 

Bitfinex, Bitflyer, Bittrex, Bitstamp, Coinbase Pro, 

Gemini, HitBTC, Huobi, Kraken, KuCoin, and 

Poloniex. 

90These statistics are based on samples of bitcoin 

liquidity in USD (excluding stablecoins or Euro 

liquidity) based on executable quotes on Coinbase 

Pro, Gemini, Bitstamp, Kraken, LMAX Exchange, 

BinanceUS, and OKCoin during February 2021. 

91The exchanges include Binance, Bitfinex, 

Bithumb, Bitstamp, Cexio, Coinbase, Coinone, 

Gateio, Gemini, HuobiPro, itBit, Kraken, Kucoin, 

and OKEX. 

agreement in place 85 with a regulated 

market of significant size. Both the 

Exchange and CME are members of 

ISG.86 The only remaining issue to be 

addressed is whether the Bitcoin 

Futures market constitutes a market of 

significant size, which both the 

Exchange and the Sponsor believe that 

it does. The terms ‘‘significant market’’ 

and ‘‘market of significant size’’ include 

a market (or group of markets) as to 

which: (a) There is a reasonable 

likelihood that a person attempting to 

manipulate the ETP would also have to 

trade on that market to manipulate the 

ETP, so that a surveillance-sharing 

agreement would assist the listing 

exchange in detecting and deterring 

misconduct; and (b) it is unlikely that 

trading in the ETP would be the 

predominant influence on prices in that 

market.87

The Commission has also recognized 

that the ‘‘regulated market of significant 

size’’ standard is not the only means for 

satisfying Section 6(b)(5) of the act, 

specifically providing that a listing 

exchange could demonstrate that ‘‘other 

means to prevent fraudulent and 

manipulative acts and practices’’ are 

sufficient to justify dispensing with the 

requisite surveillance-sharing 

agreement.88

(a) Manipulation of the ETP 

According to the Sponsor’s research 

presented above, the Bitcoin Futures 

market is the leading market for bitcoin 

price formation. Where Bitcoin Futures 

lead the price in the spot market such 

that a potential manipulator of the 

bitcoin spot market (beyond just the 

constituents of the Index 89) would have 

to participate in the Bitcoin Futures 

market, it follows that a potential 

manipulator of the Shares would 

similarly have to transact in the Bitcoin 

Futures market because the Index is 

based on spot prices. Further, the Trust 

only allows for in-kind creation and 

redemption, which, as further described 

below, reduces the potential for 

manipulation of the Shares through 

manipulation of the Index or any of its 

individual constituents, again 

emphasizing that a potential 

manipulator of the Shares would have 

to manipulate the entirety of the bitcoin 

spot market, which is led by the Bitcoin 

Futures market. As such, the Exchange 

believes that part (a) of the significant 

market test outlined above is satisfied 

and that common membership in ISG 

between the Exchange and CME would 

assist the listing exchange in detecting 

and deterring misconduct in the Shares. 

(b) Predominant Influence on Prices in 

Spot and Bitcoin Futures 

The Exchange and Sponsor also 

believe that trading in the Shares would 

not be the predominant force on prices 

in the Bitcoin Futures market or spot 

market for a number of reasons, 

including the significant volume in the 

Bitcoin Futures market, the size of 

bitcoin’s market cap, and the significant 

liquidity available in the spot market. In 

addition to the Bitcoin Futures market 

data points cited above, the spot market 

for bitcoin is also very liquid. According 

to data from CoinRoutes from February 

2021, the cost to buy or sell $5 million 

worth of bitcoin averages roughly 10 

basis points with a market impact of 30 

basis points.90 For a $10 million market 

order, the cost to buy or sell is roughly 

20 basis points with a market impact of 

50 basis points. Stated another way, a 

market participant could enter a market 

buy or sell order for $10 million of 

bitcoin and only move the market 0.5%. 

More strategic purchases or sales (such 

as using limit orders and executing 

through OTC bitcoin trade desks) would 

likely have less obvious impact on the 

market—which is consistent with 

MicroStrategy, Tesla, and Square being 

able to collectively purchase billions of 

dollars in bitcoin. As such, the 

combination of 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 Bitcoin 

Futures markets, satisfying part (b) of 

the test outlined above. 

(c) Other Means To Prevent Fraudulent 

and Manipulative Acts and Practices 

As noted above, the Commission also 

permits a listing exchange to 

demonstrate that ‘‘other means to 

prevent fraudulent and manipulative 

acts and practices’’ are sufficient to 

justify dispensing with the requisite 

surveillance-sharing agreement. The 

Exchange and Sponsor believe that such 

conditions are present. According to the 

Sponsor, a significant portion of the 

considerations around crypto pricing 

have historically stemmed from a lack of 

consistent pricing across markets. 

However, according to the Sponsor’s 

research, cross-exchange spreads in 

Bitcoin have been declining consistently 

over the past several years. Based on the 

daily Bitcoin price series from several 

popular centralized exchanges 91 the 

Sponsor has calculated the largest crossexchange percentage spread (labelled as 

%C-Spread) by deducting the highest or 

maximum price (P) at time t from the 

lowest or minimum, and dividing by the 

lowest across all exchanges (i). 

Formally, this is expressed as: 

BILLING CODE 8011–01–P 


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The results show a clear and sharp 

decline in the %C-Spread, indicating 

that the Bitcoin market has become 

more efficient as cross-exchange prices 

have converged over time. 

In addition, the magnitude of outlier 

% C-spreads has also declined over 

time. This boxplot shows that, not only 

did the median value of the %C-Spread 

decline over time, but also the extreme 

outlier values. For instance, the 

maximum %C-Spread for 2017, 2018, 

2019, 2020, and 2021 are 29.14%, 

14.45%, 8.54%, 6.04%, and 7.1%, 

respectively. The market has 

experienced a 38% year-on-year decline 

in the annual median %C-Spread 

indicating a greater degree of Bitcoin 

price convergence across exchanges and 

a more efficient market. 


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Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 33275 

The dispersion (s) of Bitcoin Prices 

has also declined over the same period. 

This chart shows the 7-day rolling 

standard deviation of the %C-Spread 

from January 1, 2017 to October 1, 2021. 

The Sponsor’s research finds that the 

dispersion in Bitcoin prices across all 

exchanges has decreased over time, 

indicating that prices on all the 

considered exchanges converge towards 

the intrinsic average much more 

efficiently. This suggests that the market 

has become better at quickly reaching a 

consensus price for Bitcoin. 

As the pricing of the crypto market 

becomes increasingly efficient, pricing 

methodologies become more accurate 

and less susceptible to manipulation. 

The clustering of prices across a variety 

of sources within the primary market 

points towards robust price discovery 

mechanisms and efficient arbitrage. 


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It is very important to note that the 

cross-exchange spreads, and therefore 

the process of price discovery in the 

Bitcoin market has improved 

significantly over time despite the 

market experiencing rather uniform 

albeit sinusoidal volatility. This can be 

shown in the graphs below where we 

can clearly observe a slightly decreasing 

yet consistent level of volatility in the 

Bitcoin market based on daily and 

hourly returns across the considered 

exchanges. Again, this further supports 

the argument that the Bitcoin market 

has exhibited significant improvements 

in terms of price discovery over time, 

irrespective and despite of the volatility 

of the asset itself, which can be 

attributed to efficient arbitrage 

operations. 


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One factor that has contributed to the 

overall efficiency of, and improved 

price discovery within the Bitcoin 

market is the increase in the number of 

participants, and subsequently, the total 

dollar amount allocated to this market. 

This can be illustrated by the following 

chart, which shows the number of 

wallet addresses holding Bitcoin from 

January 2016 to June 2021. 

The increase in the number of 

participants has manifested itself in 

higher liquidity in the market. This is 

exhibited in the following chart, which 

shows the daily aggregated dollar 

notional of the bid and ask order books 

within the first 100 price levels across 

several of the largest centralized crypto 

exchanges from October 2020 to April 

2021. Specifically, the dollar notional 

that is allocated closest to the mid price 

has increased from around $230 million 

to $860 million over that period, 

representing a 270% increase in half a 

year. 


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An increased notional order book 

suggests that there is a higher degree of 

consensus among investors regarding 

the price of Bitcoin. Moreover, this 

market characteristic hampers any 

attempt of price manipulation by any 

single large entity. 

As a robustness check, the Sponsor 

investigates whether the dollar notional 

in the order book changes significantly 

prior to, and post an extreme price 

event. Specifically, for events 

constituting large increases in the price 

of Bitcoin, if the ask (or sell) side of the 

order book experiences a significant 

shrinkage in the dollar notional right 

before the event, then this may be an 

indication of market manipulation 

whereby the ask-side of the order book 

becomes sufficiently thin for a large 

order to move the price upward. 

Similarly, for events constituting large 

decreases in the price of Bitcoin, if the 

bid (or buy) side of the order book 

experiences a significant shrinkage in 

the dollar notional prior to such events, 

then this may be an indication of market 

manipulation whereby the thinner bidside of the order book may potentially 

lead to significant downward price 

movements. 

Using the top and bottom 0.1% of 

hourly price changes from October 2020 

to April 2021 as events of extreme 

upward and downward market 

movements, respectively, the Sponsor 

plotted the bid (left charts) and ask 

(right charts) dollar notional of the 

Bitcoin order book within a six-hour 

window around these events in the 

chart below, which shows the results for 

extreme upward price movements. The 

extreme price events (indicated by the 

dashed green lines) perfectly coincide 

with the decrease in dollar notional of 

the ask-side of the order book. This is 

indicative of an efficient market, 

whereby large market movements are 

quickly and dynamically absorbed by a 

thick orderbook. Moreover, the dollar 

notional on the ask side after the event 

is replenished back to its pre-event 

level, which implies that market 

participants’ reactions are quick to 

restore the market back to its 

equilibrium level. 


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The same results and conclusions are 

found for extreme downward price 

movements. The charts below show that 

such price events perfectly coincide 

with shrinkages on the bid side of the 

order book (left charts), indicating an 

efficient and dynamic Bitcoin market. 

Moreover, the bid-side of the order book 

after the event is also restored back to 

its pre-event level, which suggests that 

the market is symmetrically efficient in 

moving back to equilibrium. 


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92While the Index will not be particularly 

important for the creation and redemption process, 

it will be used for calculating fees. 

BILLING CODE 8011–01–C 

Finally, offering only in-kind creation 

and redemption will provide unique 

protections against potential attempts to 

manipulate the Shares. While the 

Sponsor believes that the Index which 

it uses to value the Trust’s bitcoin is 

itself resistant to manipulation based on 

the methodology further described 

below, the fact that creations and 

redemptions are only available in-kind 

makes the manipulability of the Index 

significantly less important. 

Specifically, because the Trust will not 

accept cash to buy bitcoin in order to 

create new shares or, barring a forced 

redemption of the Trust or under other 

extraordinary circumstances, be forced 

to sell bitcoin to pay cash for redeemed 

shares, the price that the Sponsor uses 

to value the Trust’s bitcoin is not 

particularly important.92 When 

authorized participants are creating 

with the Trust, they need to deliver a 

certain number of bitcoin per share 

(regardless of the valuation used) and 

when they’re redeeming, they can 

similarly expect to receive a certain 

number of bitcoin per share. As such, 

even if the price used to value the 

Trust’s bitcoin is manipulated (which 

the Sponsor believes that its 

methodology is resistant to), the ratio of 

bitcoin per Share does not change and 

the Trust will either accept (for 

creations) or distribute (for 

redemptions) the same number of 

bitcoin regardless of the value. This not 

only mitigates the risk associated with 

potential manipulation, but also 

discourages and disincentivizes 

manipulation of the Index because there 

is little financial incentive to do so. 

(ii) Designed To Protect Investors and 

the Public Interest 

The Exchange believes that the 

proposal is designed to protect investors 

and the public interest. Over the past 

several years, U.S. investor exposure to 

bitcoin through OTC Bitcoin Funds has 

grown into the tens of billions of dollars 

and more than a billion dollars of 

exposure through Bitcoin Futures ETFs. 

With that growth, so too has grown the 

quantifiable investor protection issues 

to U.S. investors through roll costs for 

Bitcoin Futures ETFs and premium/ 

discount volatility and management fees 

for OTC Bitcoin Funds. The Exchange 

believes that the concerns related to the 

prevention of fraudulent and 

manipulative acts and practices have 

been sufficiently addressed to be 

consistent with the Act and, to the 

extent that the Commission disagrees 

with that assertion, also believes that 

such concerns are now outweighed by 

these investor protection concerns. As 

such, the Exchange believes that 

approving this proposal (and 

comparable proposals) provides the 

Commission with the opportunity to 

allow U.S. investors with access to 

bitcoin in a regulated and transparent 

exchange-traded vehicle that would act 

to limit risk to U.S. investors by: (i) 

Reducing premium and discount 

volatility; (ii) reducing management fees 

through meaningful competition; (iii) 

reducing risks and costs associated with 

investing in Bitcoin Futures ETFs and 

operating companies that are imperfect 

proxies for bitcoin exposure; and (iv) 

providing an alternative to custodying 

spot bitcoin. 

Commodity-Based Trust Shares 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares will 

be listed on the Exchange pursuant to 

the initial and continued listing criteria 

in Exchange Rule 14.11(e)(4). 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 the 

Shares through the Exchange will be 

subject to the Exchange’s surveillance 


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procedures for derivative products, 

including Commodity-Based Trust 

Shares. The issuer has represented to 

the Exchange that it will advise the 

Exchange of any failure by the Trust or 

the Shares 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 or the Shares are not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

Exchange Rule 14.12. The Exchange 

may obtain information regarding 

trading in the Shares and listed bitcoin 

derivatives via the ISG, from other 

exchanges who are members or affiliates 

of the ISG, or with which the Exchange 

has entered into a comprehensive 

surveillance sharing agreement. 

Availability of Information 

The Exchange also believes that the 

proposal promotes market transparency 

in that a large amount of information is 

currently available about bitcoin and 

will be available regarding the Trust and 

the Shares. In addition to the price 

transparency of the Index, the Trust will 

provide information regarding the 

Trust’s bitcoin holdings as well as 

additional data regarding the Trust. The 

Trust will provide an IIV per Share 

updated every 15 seconds, as calculated 

by the Exchange or a third-party 

financial data provider during the 

Exchange’s Regular Trading Hours (9:30 

a.m. to 4:00 p.m. E.T.). The IIV will be 

calculated by using the prior day’s 

closing NAV per Share as a base and 

updating that value during Regular 

Trading Hours to reflect changes in the 

value of the Trust’s bitcoin holdings 

during the trading day. 

The IIV disseminated during Regular 

Trading Hours should not be viewed as 

an actual real-time update of the NAV, 

which will be calculated only once at 

the end of each trading day. The IIV will 

be widely disseminated on a per Share 

basis every 15 seconds during the 

Exchange’s Regular Trading Hours by 

one or more major market data vendors. 

In addition, the IIV will be available 

through on-line information services. 

The website for the Trust, which will 

be publicly accessible at no charge, will 

contain the following information: (a) 

The current NAV per Share daily and 

the prior business day’s NAV and the 

reported closing price; (b) the BZX 

Official Closing Price in relation to the 

NAV as of the time the NAV is 

calculated and a calculation of the 

premium or discount of such price 

against such NAV; (c) data in chart form 

displaying the frequency distribution of 

discounts and premiums of the Official 

Closing Price against the NAV, within 

appropriate ranges for each of the four 

previous calendar quarters (or for the 

life of the Trust, if shorter); (d) the 

prospectus; and (e) other applicable 

quantitative information. The Trust will 

also disseminate the Trust’s holdings on 

a daily basis on the Trust’s website. The 

price of bitcoin will be made available 

by one or more major market data 

vendors, updated at least every 15 

seconds during Regular Trading Hours. 

Information about the Index, including 

key elements of how the Index is 

calculated, will be publicly available at 

https://www.spglobal.com/spdji/en/

indices/digital-assets/sp-bitcoin-index/. 

The NAV for the Trust will be 

calculated by the Administrator once a 

day and will be disseminated daily to 

all market participants at the same time. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the CTA. 

Quotation and last sale information 

for bitcoin is widely disseminated 

through a variety of major market data 

vendors, including Bloomberg and 

Reuters, as well as the Index. 

Information relating to trading, 

including price and volume 

information, in bitcoin is available from 

major market data vendors and from the 

exchanges on which bitcoin are traded. 

Depth of book information is also 

available from bitcoin exchanges. The 

normal trading hours for bitcoin 

exchanges are 24 hours per day, 365 

days per year 

For the above reasons, the Exchange 

believes that the proposed rule change 

is consistent with the requirements of 

Section 6(b)(5) of the Act. 

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 purpose of the Act. The Exchange 

notes that the proposed rule change, 

rather will facilitate the listing and 

trading of an additional exchange-traded 

product that will enhance competition 

among both market participants and 

listing venues, 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 

The Exchange has neither solicited 

nor received written comments on 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 Exchange consents, the Commission 

will: 

A. By order approve or disapprove 

such 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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2022–031 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–CboeBZX–2022–031. 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 (http://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 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 


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93 17 CFR 200.30–3(a)(12). 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2022–031 and 

should be submitted on or before June 

22, 2022 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.93

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11676 Filed 5–31–22; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

Data Collection Available for Public 

Comments 

ACTION: 60-Day notice and request for 

comments. 

SUMMARY: The Small Business 

Administration (SBA) intends to request 

approval, from the Office of 

Management and Budget (OMB) for the 

collection of information described 

below. The Paperwork Reduction Act 

(PRA) requires federal agencies to 

publish a notice in the Federal Register 

concerning each proposed collection of 

information before submission to OMB, 

and to allow 60 days for public 

comment in response to the notice. This 

notice complies with that requirement. 

DATES: Submit comments on or before 

August 1, 2022. 

ADDRESSES: Send all comments to Kelly 

LoTempio, Detailee for the Office of 

Strategic Alliances, Small Business 

Administration, Washington, DC 20416. 

FOR FURTHER INFORMATION CONTACT: 

Kelly LoTempio, Detailee for the Office 

of Strategic Alliances, 716–551–3249, 

kelly.lotempio@sba.gov, Curtis B. Rich, 

Agency Clearance Office, 202–205–7030 

curtis.rich@sba.gov. 

SUPPLEMENTARY INFORMATION: Small 

business owners or advocates who have 

been nominated for an SBA recognition 

award submit this information for use in 

evaluating nominee’s eligibility for an 

award: Verifying accuracy of 

information submitted and determining 

whether there are any actual or potential 

conflicts of interest. Awards are 

presented to winners during the 

Presidentially declared Small Business 

Week. 

Solicitation of Public Comments 

SBA is requesting comments on (a) 

Whether the collection of information is 

necessary for the agency to properly 

perform its functions; (b) whether the 

burden estimates are accurate; (c) 

whether there are ways to minimize the 

burden, including through the use of 

automated techniques or other forms of 

information technology; and (d) whether 

there are ways to enhance the quality, 

utility, and clarity of the information. 

Summary of Information Collection 

OMB Control Number: 3245–0360. 

Title: U.S. Small Business 

Administration Award Nominations. 

Description of Respondents: Nominated 

Small Business Owners or Advocates. 

Form Number: 3300–3315/2023 

Nomination Guidelines. 

Annual Responses: 600. 

Annual Burden: 1,200. 

Curtis Rich, 

Agency Clearance Officer. 

[FR Doc. 2022–11755 Filed 5–31–22; 8:45 am] 

BILLING CODE 8026–09–P 

SOCIAL SECURITY ADMINISTRATION 

[Docket No: SSA–2022–0024] 

Agency Information Collection 

Activities: Comment Request 

The Social Security Administration 

(SSA) publishes a list of information 

collection packages requiring clearance 

by the Office of Management and 

Budget (OMB) in compliance with 

Public Law 104–13, the Paperwork 

Reduction Act of 1995, effective October 

1, 1995. This notice includes a new 

collection and revisions of OMBapproved information collections. 

SSA is soliciting comments on the 

accuracy of the agency’s burden 

estimate; the need for the information; 

its practical utility; ways to enhance its 

quality, utility, and clarity; and ways to 

minimize burden on respondents, 

including the use of automated 

collection techniques or other forms of 

information technology. Mail, email, or 

fax your comments and 

recommendations on the information 

collection(s) to the OMB Desk Officer 

and SSA Reports Clearance Officer at 

the following addresses or fax numbers. 

(OMB) Office of Management and 

Budget, Attn: Desk Officer for SSA 

Comments: https://www.reginfo.gov/ 

public/do/PRAMain. Submit your 

comments online referencing Docket ID 

Number [SSA–2022–0024]. 

(SSA) Social Security Administration, 

OLCA, Attn: Reports Clearance 

Director, 3100 West High Rise, 6401 

Security Blvd., Baltimore, MD 21235, 

Fax: 410–966–2830, Email address: 

OR.Reports.Clearance@ssa.gov 

Or you may submit your comments 

online through https://www.reginfo.gov/ 

public/do/PRAMain, referencing Docket 

ID Number [SSA–2022–0024]. 

SSA submitted the information 

collections below to OMB for clearance. 

Your comments regarding these 

information collections would be most 

useful if OMB and SSA receive them 

within 30 days from the date of this 

publication. To be sure we consider 

your comments, we must receive them 

no later than July 1, 2022. Individuals 

can obtain copies of these OMB 

clearance packages by writing to 

OR.Reports.Clearance@ssa.gov. 

1. Disability Perception Survey 

(DPS)—0960–NEW. 

Background 

The Social Security Administration’s 

(SSA’s) Social Security Disability 

Insurance (SSDI) program provides 

crucial financial support to individuals 

unable to work due to a medical 

condition. Having access to and 

understanding information about SSDI 

among working adults is an important 

factor in connecting people with 

benefits. The purpose of the survey is to 

understand the type of information 

working adults currently have about the 

SSDI program to improve projections of 

disability applications and incidence. 

SSA is requesting clearance to 

administer the Disability Perception 

Survey (DPS) to a sample of working age 

adult SSDI program recipients, and 

those who may qualify for this benefit, 

to capture attitudes and perceptions 

about SSDI among working-age adults in 

the general population, and to 

determine what roles those factors 

ultimately play in an individual’s 

decision to apply to the program. 

The DPS evaluation will consist of 

two parts: (1) The DPS administered to 

working-age adults (18 to 64 years of 

age) SSDI program recipients, and those 

who may qualify for SSDI benefits; and 

(2) links of the survey data, including 

the individuals’ social security 

numbers, to individuals’ administrative 

records for research purpose. SSA will 

use the data the DPS collects to learn 

about the average American SSDI adult 

recipient’s knowledge and 

understanding of the SSDI program and 

about who qualifies for these benefits. 

Section 1110(a) of the Social Security 

Act (Act) gives the Commissioner of 

Social Security authorization to help 


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