Document ID: SEC-2019-0137-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2019-02-15T05:00Z

[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Notices]
[Pages 4589-4594]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02389]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85093; File No. SR-NYSEArca-2019-01]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to the Listing and Trading of Shares 
of the Bitwise Bitcoin ETF Trust Under NYSE Arca Rule 8.201-E

February 11, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on January 28, 2019, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade shares of the Bitwise 
Bitcoin ETF Trust under NYSE Arca Rule 8.201-E. The proposed change is 
available on the Exchange's website at www.nyse.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
Bitwise Bitcoin ETF Trust (the ``Trust''), under NYSE Arca Rule 8.201-
E.\4\
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    \4\ The Trust is a Delaware statutory trust and registered under 
the Securities Act of 1933. On January10, 2018 [sic], the Trust 
filed with the Commission a registration statement on Form S-1 under 
the Securities Act of 1933 (15 U.S.C. 77a) (the ``Securities Act'') 
relating to the Trust (File No. 333-229180) (the ``Registration 
Statement''). The description of the operation of the Trust herein 
is based, in part, on the Registration Statement.
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    According to the Registration Statement, the Trust will not be 
registered as an investment company under the Investment Company Act of 
1940, as amended,\5\ and is not required to register under such act. 
The Trust is not a commodity pool for purposes of the Commodity 
Exchange Act, as amended.\6\
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    \5\ 15 U.S.C. 80a-1.
    \6\ 17 U.S.C. 1.
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    The Trust is managed and controlled by Bitwise Investment Advisers, 
LLC (the ``Sponsor'').
    The custodian for the Trust may hold the Trust's investment assets 
and cash and cash equivalents pursuant to a custodian agreement. The 
custodian is also the transfer agent for the Trust.
    The Trust will offer Shares of the Trust for sale through the 
Trust's distributor in ``Creation Units'', as described below. The 
distributor will also assist the Sponsor and the Trust's administrator 
with certain functions and duties relating to distribution and 
marketing.
    The Exchange represents that the Shares satisfy the requirements of 
NYSE Arca Rule 8.201-E and thereby qualify for listing on the 
Exchange.\7\
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    \7\ With respect to the application of Rule 10A-3 (17 CFR 
240.10A-3) under the Act, the Trust relies on the exemption 
contained in Rule 10A-3(c)(7).
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Operation of the Trust \8\
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    \8\ The description of the operation of the Trust, the Shares 
and the bitcoin market contained herein are based, in part, on the 
Registration Statement. See note 4, supra.
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    According to the Registration Statement, the investment objective 
of the Trust is to reflect the performance of the total returns 
available to investors in bitcoin, as measured by the performance of 
the Bitwise Bitcoin Total Return Index (the ``Index''), less fees and 
expenses. The Index was designed by Bitwise Index Services, LLC (the 
``Index Provider'') to measure the total return of an investment in 
bitcoin utilizing bitcoin price transactions from 10

[[Page 4590]]

exchanges that offer trading on cryptocurrencies (the ``Verified 
Exchanges'') spanning 5 countries and including exchanges located in 
the United States, Europe and Asia. The methodology and composition of 
the Index is described more fully below.\9\
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    \9\ The Index Provider manages the Index with input from its 
Bitwise Global Investable Market Crypto Index Committee (the 
``Committee''), which has ultimate responsibility and authority for 
developing, maintaining and adjusting the Index. The Committee is 
composed of three members of the Bitwise leadership team selected 
for seniority and expertise in indexing, cryptoassets and data 
engineering. The Committee is advised in this effort by the Bitwise 
Global Investable Market Crypto Index Advisory Board (the ``Advisory 
Board''), an independent group of leading experts in the fields of 
both traditional asset indexing and crypto assets.
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    The Trust will seek to achieve its investment objective of tracking 
the Index by investing, under normal market conditions,\10\ 
substantially all of the Trust's assets in OTC and exchange-traded 
bitcoin.
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    \10\ The term ``normal market conditions'' includes, but is not 
limited to, the absence of trading halts in the applicable financial 
markets generally; operational issues (e.g., systems failure) 
causing dissemination of inaccurate market information; or force 
majeure type events such as natural or manmade disaster, act of God, 
armed conflict, act of terrorism, riot or labor disruption or any 
similar intervening circumstance.
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    The Trust will not hold or trade in any instrument or asset on any 
futures exchange or over the counter (``OTC'') other than bitcoin 
traded in the OTC markets and traded on domestic and international 
bitcoin exchanges.
Overview of Bitcoin
    Bitcoin is a new type of digital asset issued by, and transmitted 
through, the decentralized, open source protocol of the bitcoin peer-
to-peer network (the ``Bitcoin Network'') that hosts a public 
transaction ledger where bitcoin transfers are recorded (the ``Bitcoin 
Blockchain''). Bitcoin is ``stored'' or reflected on the Bitcoin 
Blockchain, which through the transparent reporting of bitcoin 
transactions, allows the Bitcoin Network to verify and confirm the 
rightful ownership of the bitcoin assets. The Bitcoin Network and 
bitcoin software programs can interpret the Bitcoin Blockchain to 
determine the exact bitcoin balance, if any, of any digital wallet 
listed in the Bitcoin Blockchain as having taken part in a transaction 
on the Bitcoin Network. The Bitcoin Blockchain is comprised of a 
digital file, which can be downloaded and stored, in whole or in part, 
on any Bitcoin users' software programs. Each validated bitcoin 
transaction is broadcast to the Bitcoin Network and permanently 
recorded on the Bitcoin Blockchain.
    The process by which bitcoin are created and bitcoin transactions 
are verified is called ``mining.'' To begin mining, a user, or 
``miner,'' can download and run a mining client, which, like regular 
Bitcoin Network software programs, turns the user's computer into a 
``node'' on the Bitcoin Network that validates blocks. Bitcoin 
transactions are recorded in new blocks that are added to the Bitcoin 
Blockchain and new bitcoins are provided as compensation issued to the 
miners for updating the Blockchain. Miners, through the use of the 
bitcoin software program, engage in a set of prescribed complex 
mathematical calculations in order to add a block to the Bitcoin 
Blockchain and thereby confirm bitcoin transactions included in that 
block's data. Bitcoin is created and allocated by the Bitcoin Network 
protocol through a ``mining'' process subject to a strict, well-known 
issuance schedule.
    Confirmed and validated bitcoin transactions are recorded in blocks 
added to the Bitcoin Blockchain. Each block contains the details of 
some or all of the most recent transactions that are not memorialized 
in prior blocks, as well as a record of the award of bitcoin to the 
miner who added the new block. Each unique block can only be solved and 
added to the Bitcoin Blockchain by one miner; therefore, all individual 
miners and mining pools on the Bitcoin Network are engaged in a 
competitive process of constantly increasing their computing power to 
improve their likelihood of solving for new blocks. As more miners join 
the Bitcoin Network and its processing power increases, the Bitcoin 
Network adjusts the complexity of the block-solving equation to 
maintain a predetermined pace of adding a new block to the Bitcoin 
Blockchain approximately every ten minutes.
    The value of bitcoin is determined, in part, by the supply of and 
demand for bitcoin in the global exchange market for the trading of 
bitcoin, market expectations for the adoption of bitcoin by 
individuals, the number of merchants that accept bitcoin as a form of 
payment and the volume of private end-user-to-end-user transactions.
Overview of Index Methodology and Composition
    The Index was developed to provide investors with a clear, rules-
based, and transparent way to track the value of bitcoin. The Index is 
designed as an investable benchmark, suitable both for benchmarking 
active strategies and serving as the underlying index for an investment 
in bitcoin.
    As described below, in valuing the price of bitcoin, the Index 
Provider will make use of bitcoin price transactions from a universe of 
cryptocurrency exchanges that it classifies as ``Verified Exchanges.'' 
The Index Provider at present tracks over 200 online cryptocurrency 
exchanges that offer trading on cryptocurrencies. From that list the 
Index Provider will eliminate a significant portion based on a number 
of factors, including eliminating exchanges that (1) are domiciled in 
emerging market countries and countries that have capital controls; (2) 
do not charge fees for trading, either explicitly or through ``trade 
mining'' activities where an exchange provides an off-setting rebate to 
the client for the trades; (3) lack functioning and stable Application 
Programing Interfaces (``API'') for the transmission of price and 
volume data; (4) issues [sic] with significant downtime, problems with 
customers withdrawal abilities, or known security issues; (5) are or 
may be subject to extraordinary legal or regulatory activity; and (6) 
do not account for at least 0.1% of the trailing 30-day Average Daily 
Volume among all exchanges that charge transaction fees. Those 
exchanges that remain after the Index Provider has eliminated exchanges 
are considered the ``Verified Exchanges.'' \11\
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    \11\ The list of Verified Exchanges used to price the Index will 
be available on the Index Provider's website, www.bitwiseinvestments 
[sic].
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    In addition, on no less than a quarterly basis, the Index Committee 
will review the actual published trading data of each otherwise 
Verified Exchange. This includes bid/ask spreads and size, actual 
claimed executed trades with price and volume, and any other factors 
the Committee deems relevant. Exchanges that show persistent signs of 
artificial or inflated volume may be removed from the list of Verified 
Exchanges.
    According to the Registration Statement, as a result of its 
screening process, the Index Provider's list of Verified Exchanges will 
be derived by significantly reducing the universe of over 200 exchanges 
down to approximately 10. At present, the Index Provider believes that 
these Verified Exchanges account for a majority of the total global 
volume of bitcoin traded on exchanges, although both the number of 
Verified Exchanges and the percentage of global volume they represent 
is subject to change.
    In addition to using prices and volume from Verified Exchanges to 
calculate the Index, the Committee will also include executed prices 
and volume from listed futures contracts on

[[Page 4591]]

any regulated futures exchange domiciled in a developed market country 
and on which bitcoin are traded as long as the futures contract settles 
to physical ``coins'' at the expiration of the contract(s). In the case 
of listed futures contracts that offer more than one planned expiration 
date, the futures contract that is closest to expiration, the ``spot 
contract,'' will be used.
    The Index Provider believes that the use of a large number of pre-
screened cryptocurrency exchanges, as well as listed futures that are 
physically settled, representing a majority of global bitcoin trading 
to provide price and volume inputs, provides certain benefits compared 
to using a limited number of exchanges for index pricing inputs. These 
benefits include minimizing the potential negative impacts of any 
single exchange going off-line due to technical problems, or financial, 
hacking, legal or regulatory issues. In addition, given the fungible 
nature of bitcoin, the Index Provider believes that the potential 
impact on Index values of individual exchanges experiencing outside 
attempts to manipulate either reported volume or reported prices is 
muted by the use of a large number of exchange price and volume inputs.
    When calculating the value of the Index the Index Provider makes 
use of the actual trades executed on the various Verified Exchanges. 
Prices are weighted such that bitcoin prices from exchanges with a 
greater amount of the trading volume in the prior hour are weighted 
more heavily than bitcoin prices from exchanges with lesser amounts of 
volume.
    The Index has provisions for handling isolated, or ``one-off,'' 
events in the cryptocurrency market generally, such as ``hard forks.'' 
A hard fork occurs if an alternative version of bitcoin is developed 
and the holders of the original version of bitcoin also end up owning a 
pro-rata share of the new version. As a general rule, the Index 
attributes the value of significant hard forks, if any, to the value of 
the Index at the time of the event. However, the Index would not 
continue to be calculated going forward as if those new holdings were 
an ongoing part of the Index. The Index Provider may from time to time 
adopt additional policies for the Index to address changes and new 
developments in the bitcoin universe.
    The Index Provider will publish the daily Index values each day at 
or shortly after 4:00 p.m. Eastern Time (``E.T.''). An indicative Index 
value will be published every 15 seconds during all business days, 
although this value is not the official Index value.
Net Asset Value
    According to the Registration Statement, the Trust's per Share Net 
Asset Value (``NAV'') will be calculated by dividing the value of the 
net assets of the Trust (i.e., the value of its total assets less total 
liabilities) by the total number of Shares outstanding. The Trust's NAV 
will be calculated on each trading day on the Exchange. The Trust will 
compute its NAVs as of 4:00 p.m. E.T. The Trust's NAV will be 
calculated only once each trading day. The Trust's daily NAV may be 
found at, www.bitwiseinvestments [sic].
Indicative Fund Value
    In order to provide updated information relating to the Trust for 
use by investors and market professionals, the Exchange will calculate 
an updated ``Indicative Fund Value'' (``IFV''). The IFV will be 
calculated by using the prior day's closing net assets of the Trust as 
a base and updating throughout the Exchange's Core Trading Session of 
9:30 a.m. E.T. to 4:00 p.m. E.T. reflect changes in the most recently 
reported price level of the Index as reported by Bloomberg, L.P. or 
another reporting service.
    The IFV will be disseminated on a per Share basis every 15 seconds 
during the Exchange's Core Trading Session and be widely disseminated 
by one or more major market data vendors during the NYSE Arca Core 
Trading Session.\12\
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    \12\ Several major market data vendors display and/or make 
widely available IFVs taken from the Consolidated Tape Association 
(``CTA'') or other data feeds.
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Creation and Redemption of Shares
    According to the Registration Statement, the Trust intends to 
create and redeem Shares in one or more Creation Baskets or Redemption 
Baskets. A Creation Basket and a Redemption Basket are a block of 
25,000 Shares of the Trust. Except when aggregated in Creation Units, 
the Shares are not redeemable securities.
    Only Authorized Participants may purchase and redeem Creation 
Baskets. Authorized Participants must be (1) registered broker-dealers 
or other securities market participants, such as banks and other 
financial institutions, that are not required to register as broker-
dealers to engage in securities transactions described below, and (2) 
the Depository Trust Company (``DTC'') Participants. An Authorized 
Participant is an entity that has entered into an Authorized 
Participant Agreement with the Trust and the Sponsor.
Creation Procedures
    On any business day, an Authorized Participant may place an order 
with the distributor to create one or more Creation Baskets. For 
purposes of processing both purchase and redemption orders, a 
``business day'' means any day other than a day when the Exchange or 
the New York Stock Exchange is closed for regular trading.
    By placing a purchase order, an Authorized Participant agrees to 
deposit bitcoin, Treasuries, cash or a combination of bitcoin, 
Treasuries and cash with the Trust. Prior to the delivery of baskets 
for a purchase order, the Authorized Participant must also have wired 
to the custodian the nonrefundable transaction fee due for the purchase 
order. Authorized Participants may not withdraw a creation request. If 
an Authorized Participant fails to consummate the foregoing, the order 
shall be cancelled.
Redemption Procedures
    According to the Registration Statement, the procedures by which an 
Authorized Participant can redeem one or more baskets mirror the 
procedures for the creation of creation baskets. On any business day, 
an Authorized Participant may place an order with the Marketing Agent 
to redeem one or more baskets. A redemption order so received will be 
effective on the date it is received in satisfactory form by the 
Marketing Agent (``Redemption Order Date''). The redemption procedures 
allow Authorized Participants to redeem baskets and do not entitle an 
individual shareholder to redeem any shares in an amount less than a 
Redemption Basket, or to redeem baskets other than through an 
Authorized Participant.

[[Page 4592]]

    By placing a redemption order, an Authorized Participant agrees to 
deliver the baskets to be redeemed through DTC's book-entry system to 
the Trust not later than noon E.T. on the second business day following 
the effective date of the redemption order. Prior to the delivery of 
the redemption distribution for a redemption order, the Authorized 
Participant must also have wired to the Sponsor's account at the 
custodian the non-refundable transaction fee due for the redemption 
order. An Authorized Participant may not withdraw a redemption order.
    The manner by which redemptions are made is dictated by the terms 
of the Authorized Participant Agreement. If an Authorized Participant 
fails to consummate the foregoing, the order shall be cancelled.
Determination of Redemption Distribution
    The redemption distribution from the Trust will consist of a 
transfer to the redeeming Authorized Participant of an amount of 
bitcoin, Treasuries and/or cash that is in the same proportion to the 
total assets of the Trust (net of estimated accrued but unpaid fees, 
expenses and other liabilities) on the date the order to redeem is 
properly received as the number of shares to be redeemed under the 
redemption order is in proportion to the total number of shares 
outstanding on the date the order is received. The Sponsor, directly or 
in consultation with the Administrator, determines the requirements for 
bitcoin, Treasuries and cash, including the remaining maturities of the 
Treasuries and proportions of Treasuries and cash that may be included 
in distributions to redeem baskets. The Marketing Agent will publish an 
estimate of the redemption distribution per basket as of the beginning 
of each business day.
Availability of Information Regarding Bitcoin
    The NAV for the Trust's Shares 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. The IFV will be 
available through online information services.
    In addition, the Trust's website, www.bitwiseinvestments.com, will 
display the applicable end of day closing NAV. The daily holdings of 
the Trust will be available on the Trust's website before 9:30 a.m. 
E.T. The Trust's total portfolio composition will be disclosed each 
business day that NYSE Arca is open for trading, on the Trust's 
website. The Trust's website will also include a form of the prospectus 
for the Trust that may be downloaded. The website will include the 
Shares' ticker and CUSIP information, along with additional 
quantitative information updated on a daily basis for the Trust. The 
Trust's website will include (1) the prior business day's trading 
volume, the prior business day's reported NAV and closing price, and a 
calculation of the premium and discount of the closing price or mid-
point of the bid/ask spread at the time of NAV calculation (``Bid/Ask 
Price'') against the NAV; and (2) data in chart format displaying the 
frequency distribution of discounts and premiums of the daily closing 
price or Bid/Ask Price against the NAV, within appropriate ranges, for 
at least each of the four previous calendar quarters. The Trust's 
website will be publicly available prior to the public offering of 
Shares and accessible at no charge.
    The spot price of bitcoin as reflected in the Index will also be 
available on a 24-hour basis from the Trust's website.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Trust.\13\ Trading in Shares of the Trust 
will be halted if the circuit breaker parameters in NYSE Arca Rule 
7.12-E have been reached. Trading also may be halted because of market 
conditions or for reasons that, in the view of the Exchange, make 
trading in the Shares inadvisable.
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    \13\ See NYSE Arca Rule 7.12-E.
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    The Exchange may halt trading during the day in which an 
interruption to the dissemination of the IFV or the value of the Index 
occurs.\14\ If the interruption to the dissemination of the IFV or the 
value of the Index persists past the trading day in which it occurred, 
the Exchange will halt trading no later than the beginning of the 
trading day following the interruption. In addition, if the Exchange 
becomes aware that the NAV with respect to the Shares is not 
disseminated to all market participants at the same time, it will halt 
trading in the Shares until such time as the NAV is available to all 
market participants.
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    \14\ A limit up/limit down condition in the futures market would 
not be considered an interruption requiring the Trust to be halted.
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Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. in accordance with 
NYSE Arca Rule 7.34-E (Early, Core, and Late Trading Sessions). The 
Exchange has appropriate rules to facilitate transactions in the Shares 
during all trading sessions. As provided in NYSE Arca Rule 7.6-E, the 
minimum price variation (``MPV'') for quoting and entry of orders in 
equity securities traded on the NYSE Arca Marketplace is $0.01, with 
the exception of securities that are priced less than $1.00 for which 
the MPV for order entry is $0.0001.
    Further, NYSE Arca Rule 8.201-E sets forth certain restrictions on 
Equity Trading Permit (``ETP'') Holders acting as registered Market 
Makers in the Shares to facilitate surveillance. Under NYSE Arca Rule 
8.201-E(g), an ETP Holder acting as a registered Market Maker in the 
Shares is required to provide the Exchange with information relating to 
its trading in the underlying commodity, related futures or options on 
futures, or any other related derivatives. Commentary .04 of NYSE Arca 
Rule 11.3-E [sic] requires an ETP Holder acting as a registered Market 
Maker, and its affiliates, in the Shares to establish, maintain and 
enforce written policies and procedures reasonably designed to prevent 
the misuse of any material nonpublic information with respect to such 
products, any components of the related products, any physical asset or 
commodity underlying the product, applicable currencies, underlying 
indexes, related futures or options on futures, and any related 
derivative instruments (including the Shares).
    As a general matter, the Exchange has regulatory jurisdiction over 
its ETP Holders and their associated persons, which include any person 
or entity controlling an ETP Holder. A subsidiary or affiliate of an 
ETP Holder that does business only in commodities or futures contracts 
would not be subject to Exchange jurisdiction, but the Exchange could 
obtain information regarding the activities of such subsidiary or 
affiliate through surveillance sharing agreements with regulatory 
organizations of which such subsidiary or affiliate is a member.
Surveillance
    The Exchange represents that trading in the Shares of the Trust 
will be subject to the existing trading surveillances administered by 
the Exchange, as well as cross-market surveillances administered by 
FINRA on behalf of the Exchange, which are designed to detect 
violations of Exchange rules and applicable federal securities 
laws.\15\ The

[[Page 4593]]

Exchange represents that these procedures are adequate to properly 
monitor Exchange trading of the Shares in all trading sessions and to 
deter and detect violations of Exchange rules and federal securities 
laws applicable to trading on the Exchange.
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    \15\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
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    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares with other 
markets and other entities that are members of the ISG, and the 
Exchange or FINRA, on behalf of the Exchange, or both, may obtain 
trading information regarding trading in the Shares from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares from markets and other entities that 
are members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement (``CSSA'').\16\
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    \16\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Trust may trade on markets that are members of ISG or with which the 
Exchange has in place a CSSA.
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    Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able 
to obtain information regarding trading in the Shares and the 
underlying bitcoin through ETP Holders acting as registered ``Market 
Makers'', in connection with such ETP Holders' proprietary or customer 
trades through ETP Holders which they effect on any relevant market.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    All statements and representations made in this filing regarding 
(a) the description of the portfolios of the Trust or the Index, (b) 
limitations on portfolio holdings, reference assets or the Index, or 
(c) the applicability of Exchange listing rules specified in this rule 
filing shall constitute continued listing requirements for listing the 
Shares on the Exchange.
    The issuer has represented to the Exchange that it will advise the 
Exchange of any failure by the Trust to comply with the continued 
listing requirements, and, pursuant to its obligations under Section 
19(g)(1) of the Act, the Exchange will monitor for compliance with the 
continued listing requirements. If the Trust is not in compliance with 
the applicable listing requirements, the Exchange will commence 
delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
    Prior to the commencement of trading, the Exchange will inform its 
ETP Holders in an Information Bulletin of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Bulletin will discuss the following: (1) The risks involved 
in trading the Shares during the Early and Late Trading Sessions when 
an updated IFV will not be calculated or publicly disseminated; (2) the 
procedures for purchases and redemptions of Shares in Creation Units 
(and that Shares are not individually redeemable); (3) NYSE Arca Rule 
9.2-E(a), which imposes a duty of due diligence on its ETP Holders to 
learn the essential facts relating to every customer prior to trading 
the Shares; (4) how information regarding the IFV is disseminated; (5) 
how information regarding portfolio holdings is disseminated; (6) the 
requirement that ETP Holders deliver a prospectus to investors 
purchasing newly issued Shares prior to or concurrently with the 
confirmation of a transaction; (7) trading information; and (8) NYSE 
Arca suitability rules.
    The Information Bulletin will also discuss any exemptive, no-
action, and interpretive relief granted by the Commission from any 
rules under the Act. In addition, the Information Bulletin will 
reference that the Trust is subject to various fees and expenses 
described in the Registration Statement.
    The Information Bulletin will also disclose the trading hours of 
the Shares that the NAV for the Shares will be calculated after 4:00 
p.m. E.T. each trading day. The Information Bulletin will disclose that 
information about the Shares will be publicly available on the Trust's 
website.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \17\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
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    \17\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices and to protect 
investors and the public interest in that the Shares will be listed and 
traded on the Exchange pursuant to the initial and continued listing 
criteria in NYSE Arca Rule 8.201-E.
    The Exchange has in place surveillance procedures that are adequate 
to properly monitor trading in the Shares in all trading sessions and 
to deter and detect violations of Exchange rules and applicable federal 
securities laws. The Exchange or FINRA, on behalf of the Exchange, or 
both, will communicate as needed regarding trading in the Shares with 
other markets and other entities that are members of the ISG, and the 
Exchange or FINRA, on behalf of the Exchange, or both, may obtain 
trading information regarding trading in the Shares from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares from markets and other entities that 
are members of ISG or with which the Exchange has in place a CSSA. The 
Exchange is also able to obtain information regarding trading in the 
Shares or the underlying bitcoin through ETP Holders, in connection 
with such ETP Holders' proprietary or customer trades which they effect 
through ETP Holders on any relevant market.
    Quotation and last-sale information regarding the Shares will be 
disseminated through the facilities of the CTA. The Trust's website 
will also include a form of the prospectus for the Trust that may be 
downloaded. The website will include the Shares' ticker and CUSIP 
information, along with additional quantitative information updated on 
a daily basis for the Trust. The Trust's website will include (1) daily 
trading volume, the prior business day's reported NAV and closing 
price, and a calculation of the premium and discount of the closing 
price or mid-point of the Bid/Ask Price against the NAV; and (2) data 
in chart format displaying the frequency distribution of discounts and 
premiums of the daily closing price or Bid/Ask Price against the NAV, 
within appropriate ranges, for at least each of the four previous 
calendar quarters. The Trust's website will be publicly available prior 
to the public offering of Shares and accessible at no charge.

[[Page 4594]]

    Moreover, prior to the commencement of trading, the Exchange will 
inform its ETP Holders in an Information Bulletin of the special 
characteristics and risks associated with trading the Shares. The 
Information Bulletin will also discuss any exemptive, no-action, and 
interpretive relief granted by the Commission from any rules under the 
Act. In addition, the Information Bulletin will reference that the 
Trust is subject to various fees and expenses described in the 
Registration Statement. The Information Bulletin will also disclose the 
trading hours of the Shares and that the NAV for the Shares will be 
calculated after 4:00 p.m. E.T. each trading day. The Information 
Bulletin will disclose that information about the Shares will be 
publicly available on the Trust's website.
    Trading in Shares of the Trust will be halted if the circuit 
breaker parameters in NYSE Arca Rule 7.12-E have been reached or 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the Shares inadvisable.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of a 
new type of exchange-traded product based on the price of bitcoin that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace. As noted above, the Exchange has in 
place surveillance procedures that are adequate to properly monitor 
trading in the Shares in all trading sessions and to deter and detect 
violations of Exchange rules and applicable federal securities laws.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of a new 
type of Commodity-Based Trust Share based on the price of bitcoin that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2019-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2019-01. 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 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-NYSEArca-2019-01, and should be 
submitted on or before March 8, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-02389 Filed 2-14-19; 8:45 am]
 BILLING CODE 8011-01-P