[Federal Register Volume 87, Number 133 (Wednesday, July 13, 2022)]
[Notices]
[Pages 41755-41771]
[FR Doc No: 2022-14884]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95218; File No. SR-CboeBZX-2022-035]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To List and Trade Shares of the VanEck
Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares

July 7, 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 June 24, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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

    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 VanEck Bitcoin Trust (the
``Trust''),\3\ under BZX Rule 14.11(e)(4), Commodity-Based Trust
Shares.
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    \3\ The Trust was formed as a Delaware statutory trust on
December 17, 2020 and is operated as a grantor trust for U.S.
federal tax purposes. The Trust has no fixed termination date.
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    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\ VanEck Digital Assets, LLC is
the sponsor of the Trust (``Sponsor'').\6\ The Shares will be
registered with the Commission by means of the Trust's registration
statement on Form S-1 (the ``Registration Statement'').\7\ A third-
party regulated custodian will be responsible for custody of the
Trust's bitcoin (the ``Custodian''). As further discussed below, the
Commission has historically approved or disapproved exchange filings to
list and trade series of Trust Issued Receipts, including spot-based
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\
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\
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    \4\ The 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).
    \5\ All 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.
    \6\ The Exchange notes that another proposal to list and trade
shares of the Trust was previously disapproved pursuant to delegated
authority and is currently pending Commission Review pursuant to
Rule 431 of the Commission's Rules of Practice, 17 CFR 201.431. See
Securities Exchange Act Release No. 93559 (November 12, 2021), 86 FR
64539 (November 18, 2021). See also Letter from Assistant Secretary
J. Matthew DeLesDernier to Kyle Murray, Assistant General Counsel,
Cboe Global Markets, dated November 12, 2021.
    \7\ See Amendment No. 2 to Registration Statement on Form S-1,
dated June 22, 2022, submitted to the Commission by the Sponsor on
behalf of the Trust (333-251808). The descriptions of the Trust, the
Shares, and the Benchmark 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.
    \8\ See 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'').
    \9\ See 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,
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).
    \10\ See Winklevoss Order at 37592.
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    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 Bitcoin Futures market, as defined below, 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 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 Bitcoin Futures market to be a regulated market of
significant size as it relates to 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
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 Bitcoin Futures market represents a
regulated market of significant size as it relates both to the Bitcoin
Futures

market and to the spot bitcoin market and that this proposal should be
approved.
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    \11\ See 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'').
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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 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-the-counter 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,
including Bitcoin Futures ETFs (as defined below). 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 no-
action position permitting certain special purpose broker-dealers to
custody digital asset securities under Rule 15c3-3 under the Exchange
Act (the ``Custody Statement''); \20\ 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; \21\ 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,\22\ and multiple transfer agents who
provide services for digital asset securities registered with the
Commission.\23\
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    \12\ For additional information about bitcoin and the Bitcoin
Network, see https://bitcoin.org/en/getting-started; https://www.fidelitydigitalassets.com/articles/addressing-bitcoin-criticisms; and https://www.vaneck.com/education/investment-ideas/investing-in-bitcoin-and-digital-assets/.
    \13\ See 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.
    \15\ See ``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.''
    \16\ A 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.
    \18\ See 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.
    \19\ See 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.
    \20\ See 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).
    \21\ See 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-in-settlement-of-digital-asset-security-trades-09252020.pdf.
    \22\ See 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/mr-noaction/2019/paxos-trust-company-102819-17a.pdf.
    \23\ See, e.g., Form TA-1/A filed by Tokensoft Transfer Agent
LLC (CIK:<PHONE_NUMBER>) on January 8, 2021, available at: https://www.sec.gov/Archives/edgar/data/1794142/000179414219000001/xslFTA1X01/primary_doc.xml.
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    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.\24\ 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.\25\ 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
cryptocurrency trading.\26\ 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.\27\ 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.\28\ 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. 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,\29\ and has
proposed rules imposing requirements on entities subject to the BSA
that are specific to the technological context of virtual
currencies.\30\ 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.\31\
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    \24\ As of December 1, 2021, the total market cap of all bitcoin
in circulation was approximately $1.08 trillion.
    \25\ Data sourced from the CME Bitcoin Futures Report: 19 Nov,
2021, available at: https://www.cmegroup.com/ftp/bitcoinfutures/Bitcoin_Futures_Liquidity_Report.pdf.
    \26\ The 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.
    \27\ See OCC News Release 2021-2 (January 4, 2021) available at:
https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-2.html.
    \28\ See OCC News Release 2021-6 (January 13, 2021) available
at: https://www.occ.gov/news-issuances/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.
    \29\ See 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/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf.
    \30\ See U.S. Department of the Treasury Press Release: ``The
Financial Crimes Enforcement Network Proposes Rule Aimed at Closing
Anti-Money 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.
    \31\ See 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.
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    In addition to the regulatory developments laid out above, more
traditional financial market participants have embraced and continue to
embrace cryptocurrency: large insurance companies,\32\ asset
managers,\33\ university endowments,\34\ pension funds,\35\ and even
historically bitcoin skeptical fund managers \36\ 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.\37\ Established companies like Tesla, Inc., MicroStrategy
Incorporated, and Square, Inc., among others, have made substantial
investments in bitcoin. The foregoing examples demonstrate that bitcoin
has gained mainstream usage and recognition.
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    \32\ On 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-and-press-releases/press-releases/2020/12/institutional-bitcoin-provider-nydig-announces-minority-stake-purchase-by-massmutual.
    \33\ See 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-started-to-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-bitcoin-should-be-worth-400-000.
    \34\ See 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-yale-endowments-among-those-reportedly-buying-crypto.
    \35\ See 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-police-department-reveals-why-194558505.html.
    \36\ See e.g., ``Bridgewater: Our Thoughts on Bitcoin'' (January
28, 2021) available at: https://www.bridgewater.com/research-and-insights/our-thoughts-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-says-he-likes-bitcoin-even-more-now-rally-still-in-the-first-inning.html.
    \37\ See 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.
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    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; \38\ (ii) facing the technical risk, complexity and
generally high fees associated with buying spot bitcoin; (iii)
purchasing shares of operating companies that they
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    \38\ The 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.

---------------------------------------------------------------------------

believe will provide proxy exposure to bitcoin with limited disclosure
about the associated risks; \39\ or (iv) purchasing 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.\40\
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 non-U.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.
---------------------------------------------------------------------------

    \39\ Recently 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 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-public-companies-with-exposure-to-bitcoin-154201525.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-to-invest-in-bitcoin-without-holding-the-cryptocurrency-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.
    \40\ The Exchange notes that securities regulators in a number
of other countries have either approved or otherwise allowed the
listing and trading of bitcoin ETPs.
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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
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.\41\ Leaving aside the analysis of that
standard until later in this proposal,\42\ the Exchange believes that
the following rationale that the Commission applied to a Bitcoin
Futures ETF should result in the Commission approving this and other
Spot Bitcoin ETP proposals:
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    \41\ See 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.
    \42\ As further outlined below, both the Exchange and the
Sponsor believe that the Bitcoin Futures market represents a
regulated market of significant size and that this proposal and
others like it should be approved on this basis.

    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.\43\
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    \43\ See Teucrium Approval at 21679.

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 Bitcoin Futures. If CME is able to detect such attempts at
manipulation in the complex and interconnected spot bitcoin market, how
would such an ability to detect attempted manipulation and the utility
in sharing that information with the listing exchange apply only to
Bitcoin Futures ETFs and not Spot Bitcoin ETPs? Stated a different way,
given that there is significant trading volume on numerous bitcoin
exchanges that are not part of the CME CF Bitcoin Reference

Rate and that arbitrage opportunities across bitcoin exchanges means
that such trading volume will influence spot bitcoin prices across the
market and, despite this, the Commission still believes that CME can
detect attempted manipulation of the Bitcoin Futures through ``trading
outside of the CME bitcoin futures market,'' it is clear that such
ability would apply equally to both Bitcoin Futures ETFs and Spot
Bitcoin ETPs. To take it a step further, such an ability would also
seem to be a strong indication that the CME Bitcoin Futures market
represents a regulated market of significant size. To be clear, the
Exchange agrees with the Commission on this point (and the implications
of their conclusions) and notes that the pricing mechanism applicable
to the Shares is similar to the CME CF Bitcoin Reference Rate, as
further discussed below.
    The Exchange also notes that a Bitcoin Futures ETF may also be more
susceptible to potential manipulation than a Spot Bitcoin ETP that
offers only in-kind creation and redemption because Bitcoin Futures
pricing (and thus the value of the underlying holdings of a Bitcoin
Futures ETF) is based on 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. As such, the Exchange believes that, in addition
to the CME Bitcoin Futures market representing a regulated market of
significant size as it relates to the spot bitcoin market, in-kind Spot
Bitcoin ETPs are likely less susceptible to manipulation than Bitcoin
Futures ETFs because of the underlying creation and redemption
arbitrage mechanism that will operate in the same manner as it does for
all other ETFs.
    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.\44\ Specifically, the cost of rolling Bitcoin Futures
contracts 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.
---------------------------------------------------------------------------

    \44\ See 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-could-come-at-fundholders-expense-11635080580; ``Physical Bitcoin
ETF Prospects Accelerate,'' ETF.com (October 25, 2021), available
at: https://www.etf.com/sections/blog/physical-bitcoin-etf-prospects-shine?nopaging=1&_cf_chl_jschl_tk_=pmd_JsK.fjXz9eAQW9zol0qpzhXDrrlpIVdoCloLXbLjl44-1635476946-0-gqNtZGzNApCjcnBszQql.
---------------------------------------------------------------------------

    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
Bitcoin Futures market is a regulated market of significant size and
that such manipulation concerns are mitigated as described throughout
this proposal. After issuing the Bitcoin Futures Approvals which
conclude the CME Bitcoin Futures market is a regulated market of
significant size as it relates to Bitcoin Futures, the only consistent
outcome would be approving Spot Bitcoin ETPs on the basis that the
Bitcoin Futures market is also a regulated market of significant size
as it relates to the bitcoin spot market. 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.
Spot and Proxy Exposure to Bitcoin
    Exposure to bitcoin through an ETP also presents certain advantages
for retail investors compared to buying spot bitcoin directly. The most
notable advantage from the Sponsor's perspective is the elimination of
the need for an individual retail investor to either manage their own
private keys or to hold bitcoin through a cryptocurrency exchange that
lacks sufficient protections. Typically, retail exchanges hold most, if
not all, retail investors' bitcoin in ``hot'' (internet-connected)
storage and do not make any commitments to indemnify retail investors
or to observe any particular cybersecurity standard. Meanwhile, a
retail investor holding spot bitcoin directly in a self-hosted wallet
may suffer from inexperience in private key management (e.g.,
insufficient password protection, lost key, etc.), which could cause
them to lose some or all of their bitcoin holdings. Thus, with respect
to custody of the Trust's bitcoin assets, the Trust presents advantages
from an investment protection standpoint for retail investors compared
to owning spot bitcoin directly.
    Finally, as described in the Background section above, a number of
operating companies largely engaged in unrelated businesses--such as
Tesla (a car manufacturer) and MicroStrategy (an enterprise software
company)--have announced significant investments 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.\45\ 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
associated with buying spot bitcoin in the absence of a bitcoin
ETP.\46\ 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 the
aforementioned 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.\47\ 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.
---------------------------------------------------------------------------

    \45\ In August 2017, the Commission's Office of Investor
Education and Advocacy warned investors about situations where
companies were publicly announcing events relating to digital coins
or tokens in an effort to affect the price of the company's publicly
traded common stock. See https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_icorelatedclaims.
    \46\ See e.g., ``7 public companies with exposure to bitcoin''
(February 8, 2021) available at: https://finance.yahoo.com/news/7-public-companies-with-exposure-to-bitcoin-154201525.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-to-invest-in-bitcoin-without-holding-the-cryptocurrency-yourself-.html.
    \47\ See, e.g., Tesla 10-K for the year ended December 31, 2020,
which mentions bitcoin just nine times: https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm.
---------------------------------------------------------------------------

Bitcoin Futures
    CME began offering trading in Bitcoin Futures in 2017. Each
contract represents five bitcoin and is based on the CME CF Bitcoin
Reference Rate.\48\ The contracts trade and settle like other cash-
settled commodity futures contracts. Nearly every measurable metric
related to Bitcoin Futures has generally trended up since launch,
although certain notional volume calculations have decreased roughly in
line with the decrease in the price of bitcoin. For example, there were
219,089 Bitcoin Futures contracts traded in April 2022 (approximately
$31.2 billion) compared to 89,852 ($5.4 billion), 118,235 ($4.6b
billion), and 201,295 ($55.8b billion) contracts traded in April 2019,
April 2020, and April 2021, respectively.\49\
---------------------------------------------------------------------------

    \48\ The CME CF Bitcoin Reference Rate is based on a publicly
available calculation methodology based on pricing sourced from
several crypto exchanges and trading platforms, including Bitstamp,
Coinbase, Gemini, itBit, Kraken, and LMAX Digital.
    \49\ Source: CME, Bloomberg 4/30/22.
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BILLING CODE 8011-01-P
[GRAPHIC] [TIFF OMITTED] TN13JY22.000

    The number of large open interest holders \50\and unique accounts
trading Bitcoin Futures have both increased, even in the face of
heightened Bitcoin price volatility.
---------------------------------------------------------------------------

    \50\ A large open interest holder in Bitcoin Futures is an
entity that holds at least 25 contracts, which is the equivalent of
125 bitcoin. At a price of approximately $38,605 per bitcoin on 4/
30/2022, more than 80 firms had outstanding positions of greater
than $4.8 million in Bitcoin Futures.
[GRAPHIC] [TIFF OMITTED] TN13JY22.001

[GRAPHIC] [TIFF OMITTED] TN13JY22.002

BILLING CODE 8011-01-C
    The Sponsor further believes that publicly available research,
including research done as part of rule filings proposing to list and
trade shares of Spot Bitcoin ETPs, 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.\51\
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    \51\ See Exchange Act Releases No. 94080 (January 27, 2022), 87
FR 5527 (April 12, 2022) (specifically ``Amendment No. 1 to the
Proposed Rule Change To List and Trade Shares of the Wise Origin
Bitcoin Trust Under BZX Rule 14.11(3)(4), Commodity-Based Trust
Shares''); 94982 (May 25, 2022), 87 FR 33250 (June 1, 2022); 94844
(May 4, 2022), 87 FR 28043 (May 10, 2022); and 93445 (October 28,
2021), 86 FR 60695 (November 3, 2021). See also 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.''
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Section 6(b)(5) and the Applicable Standards
    The Commission has approved numerous series of Trust Issued
Receipts,\52\ including Commodity-Based Trust Shares,\53\ 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;
\54\ 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 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.
---------------------------------------------------------------------------

    \52\ See Exchange Rule 14.11(f).
    \53\ Commodity-Based Trust Shares, as described in Exchange Rule
14.11(e)(4), are a type of Trust Issued Receipt.
    \54\ As 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 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.
---------------------------------------------------------------------------

(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 \55\ with a regulated market of significant size.
Both the Exchange and CME are members of ISG.\56\ 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.\57\
---------------------------------------------------------------------------

    \55\ As 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 surveillance-sharing agreement are that the agreement
provides for the sharing of information about market trading
activity, clearing activity, and customer identity; that the parties
to the agreement have reasonable ability to obtain access to and
produce requested information; and that no existing rules, laws, or
practices would impede one party to the agreement from obtaining
this information from, or producing it to, the other party.'' The
Commission has historically held that joint membership in the
Intermarket Surveillance Group (``ISG'') constitutes such a
surveillance sharing agreement. See Securities Exchange Act Release
No. 88284 (February 26, 2020), 85 FR 12595 (March 3, 2020) (SR-
NYSEArca-2019-39) (the ``Wilshire Phoenix Disapproval'').
    \56\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com.
    \57\ See Wilshire Phoenix Disapproval.
---------------------------------------------------------------------------

    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.\58\
---------------------------------------------------------------------------

    \58\ See 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.
---------------------------------------------------------------------------

(a) Reasonable Likelihood That a Person Attempting To Manipulate the
ETP Would Also Have To Trade on That Market To Manipulate the ETP
    Bitcoin Futures represent a growing influence on pricing in the
spot bitcoin market as has been laid out above and in other proposals
to list and trade Spot Bitcoin ETPs. Pricing in Bitcoin Futures is
based on pricing from spot bitcoin markets. As noted above, 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 Bitcoin Futures. While the Commission makes
clear in the Teucrium Approval that the analysis only applies to the
Bitcoin Futures market as it relates to an ETP that invests in Bitcoin
Futures as its only non-cash or cash equivalent holding, if CME's
surveillance is sufficient to mitigate concerns related to trading in
Bitcoin Futures for which the pricing is based directly on pricing from
spot

bitcoin markets, it's not clear how such a conclusion could apply only
to ETPs based on Bitcoin Futures and not extend to Spot Bitcoin ETPs.
    Additionally, a Bitcoin Futures ETF is actually potentially more
susceptible to manipulation than a Spot Bitcoin ETP where the
underlying trust offers only in-kind creation and redemption.
Specifically, the pricing of Bitcoin Futures is based on prices from
spot bitcoin markets, while shares of a Spot Bitcoin ETP would
represent an interest in bitcoin directly and authorized participants
for a Spot Bitcoin ETP 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. Potential manipulation of a Bitcoin
Futures ETF would require manipulation on the spot markets on which the
pricing for Bitcoin Futures are based while the in-kind creation and
redemption process and fungibility of bitcoin means that a would be
manipulator of a Spot Bitcoin ETP would need to manipulate the price
across all bitcoin markets or risk simply providing arbitrage
opportunities for authorized participants. Further to this point, this
arbitrage opportunity also acts to reduce any incentives to manipulate
the price of a Spot Bitcoin ETP because the underlying trust will
create and redeem shares at set rates of bitcoin per share without
regard to the price that the ETP is trading at in the secondary market
or the price of the underlying index. 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 in-kind
creation and redemption process, the spot market arbitrage
opportunities that such in-kind creation and redemption process
creates, 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 Skew, the cost to buy or sell $5 million worth of bitcoin
averages roughly 48 basis points with a market impact of $139.08.\59\
Stated another way, a market participant could enter a market buy or
sell order for $5 million of bitcoin and only move the market 0.48%.
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.
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    \59\ These statistics are based on samples of bitcoin liquidity
in USD (excluding stablecoins or Euro liquidity) based on executable
quotes on Coinbase, FTX and Kraken during the one year period ending
May 2022.
---------------------------------------------------------------------------

    As such, the combination of the in-kind creation and redemption
process, the 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. Consistent with prior points
above, offering only in-kind creation and redemption will provide
unique protections against potential attempts to manipulate the Shares.
While the Sponsor believes that the Benchmark 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
Benchmark 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.\60\ 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 Benchmark
because there is little financial incentive to do so.
---------------------------------------------------------------------------

    \60\ While the Benchmark will not be particularly important for
the creation and redemption process, it will be used for calculating
fees.
---------------------------------------------------------------------------

VanEck Bitcoin Trust
    Delaware Trust Company is the trustee (``Trustee''). The State
Street Bank and Trust Company will be the administrator
(``Administrator'') and transfer agent (``Transfer Agent''). Van Eck
Securities Corporation will be the marketing agent (``Marketing
Agent'') in connection with the creation and redemption of ``Baskets''
of Shares. Van Eck Securities Corporation (``VanEck'') provides
assistance in the marketing of the Shares. The Custodian will be
responsible for custody of the Trust's bitcoin.
    According to the Registration Statement, each Share will represent
a fractional undivided beneficial interest in the Trust's net assets.
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,\61\ 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.
---------------------------------------------------------------------------

    \61\ 15 U.S.C. 80a-1.
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    When the Trust sells or redeems its Shares, it will do so in ``in-
kind'' transactions in blocks of 50,000 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 for the Shares to
reflect the performance of the MVIS[supreg] CryptoCompare Bitcoin
Benchmark Rate less the expenses of the Trust's operations. In seeking
to achieve its investment objective, the Trust will hold bitcoin and
will value its Shares daily based on the reported MVIS[supreg]
CryptoCompare Bitcoin Benchmark Rate and process all creations and
redemptions in-kind in transactions with authorized participants. The
Trust is not actively managed.
The Benchmark
    As described in the Registration Statement, the Fund will use the
Benchmark to calculate the Trust's NAV. The Benchmark is designed to be
a robust price for bitcoin in USD and there is no component other than
bitcoin in the index. The underlying exchanges are sourced from the
industry leading CryptoCompare Exchange Benchmark review report.
CryptoCompare Exchange Benchmark was established in 2019 as a tool
designed to bring clarity to the digital asset exchange sector by
providing a framework for assessing risk and in turn bringing
transparency and accountability to a complex and rapidly evolving
market.\62\ The current exchange composition of the Benchmark is
Bitstamp, Coinbase, Gemini, itBit and Kraken, which are the same
constituents that compose the CME CF Bitcoin Reference Rate.
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    \62\ The CryptoCompare Exchange Benchmark methodology utilizes a
combination of qualitative and quantitative metrics to analyze a
comprehensive data set across eight categories of evaluation legal/
regulation, KYC/transaction risk, data provision, security, team/
exchange, asset quality/diversity, market quality and negative
events. The CryptoCompare Exchange Benchmark review report assigns a
grade to each exchange which helps identify what it believes to be
the lowest risk exchanges in the industry. Based on the
CryptoCompare Exchange Benchmark, MVIS initially selects the top
five exchanges by rank for inclusion in the MVIS[supreg]
CryptoCompare Bitcoin Benchmark Rate. If an eligible exchange is
downgraded by two or more notches in a semi-annual review and is no
longer in the top five by rank, it is replaced by the highest ranked
non-component exchange. Adjustments to exchange coverage are
announced four business days prior to the first business day of each
of March and September at 23:00 CET. The MVIS[supreg] CryptoCompare
Bitcoin Benchmark Rate is rebalanced at 16:00:00 GMT/BST on the last
business day of each of February and August.
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    In calculating the MVIS[supreg] CryptoCompare Bitcoin Benchmark
Rate, the methodology captures trade prices and sizes from exchanges
and examines twenty three-minute periods leading up to 4:00 p.m. EST.
It then calculates an equal-weighted average of the volume-weighted
median price of these twenty three-minute periods, removing the highest
and lowest contributed prices. Using twenty consecutive three-minute
segments over a sixty-minute period means malicious actors would need
to sustain efforts to manipulate the market over an extended period of
time, or would need to replicate efforts multiple times across
exchanges, potentially triggering review. This extended period also
supports authorized participant activity by capturing volume over a
longer time period, rather than forcing authorized participants to mark
an individual close or auction. The use of a median price reduces the
ability of outlier prices to impact the NAV, as it systematically
excludes those prices from the NAV calculation. The use of a volume-
weighted median (as opposed to a traditional median) serves as an
additional protection against attempts to manipulate the NAV by
executing a large number of low-dollar trades, because, any
manipulation attempt would have to involve a majority of global spot
bitcoin volume in a three-minute window to have any influence on the
NAV. As discussed in the Registration Statement, removing the highest
and lowest prices further protects against attempts to manipulate the
NAV, requiring bad actors to act on multiple exchanges at once to have
any ability to influence the price.
Availability of Information
    In addition to the price transparency of the Benchmark, 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 \63\ 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 Benchmark, including key elements of how the
Benchmark is calculated, will be publicly available at www.mvis-indices.com/.
---------------------------------------------------------------------------

    \63\ As 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.
---------------------------------------------------------------------------

    The NAV for the Trust will be calculated by the Administrator once
a day and will be disseminated daily to all market participants at the
same time. Quotation and last-sale information regarding the Shares
will be disseminated through the facilities of the Consolidated Tape
Association (``CTA'').
    Quotation and last sale information for bitcoin is widely
disseminated through a variety of major market data vendors, including
Bloomberg and Reuters, as well as the Benchmark. 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.
The Bitcoin Custodian
    The Custodian's services (i) allow bitcoin to be deposited from a
public blockchain address to the Trust's bitcoin account and (ii) allow
bitcoin to be withdrawn from the bitcoin account to a public blockchain
address as instructed by the Trust. The Custody Agreement requires the
Custodian to hold the Trust's bitcoin in cold storage, unless required
to facilitate withdrawals as a temporary measure. The Custodian will
use segregated cold storage bitcoin addresses for the Trust which are
separate from the bitcoin addresses that the Custodian uses for its
other customers and which are directly verifiable via the Bitcoin
Blockchain. The Custodian will safeguard the private keys to the
bitcoin associated with the Trust's bitcoin account. The Custodian will
at all times record and identify in its books and records that such
bitcoins constitute the property of the Trust. The Custodian will not
withdraw the Trust's bitcoin from the Trust's account with the
Custodian, or loan, hypothecate, pledge or otherwise encumber the
Trust's bitcoin, without the Trust's instruction. If the custody
agreement terminates, the Sponsor may appoint another custodian and the
Trust may enter into a custodian agreement with such custodian.
Net Asset Value
    NAV means the total assets of the Trust including, but not limited
to, all bitcoin and cash, if any, less total liabilities of the Trust,
each determined on the basis of generally accepted accounting
principles. The Administrator will determine 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 MVIS[supreg] CryptoCompare Bitcoin
Benchmark Rate 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 50,000. 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 \64\ 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.
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    \64\ For 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.
---------------------------------------------------------------------------

    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 Commodity-Based 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
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.\65\
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    \65\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com.
---------------------------------------------------------------------------

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 \66\
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.
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    \66\ Regular Trading Hours is the time between 9:30 a.m. and
4:00 p.m. Eastern Time.
---------------------------------------------------------------------------

    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, no-action 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 \67\ in general and Section 6(b)(5) of the Act \68\ 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.
---------------------------------------------------------------------------

    \67\ 15 U.S.C. 78f.
    \68\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission has approved numerous series of Trust Issued
Receipts,\69\ including Commodity-Based Trust Shares,\70\ 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;
\71\ 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 because this filing sufficiently
demonstrates that the standard that has previously been articulated by
the Commission applicable to Commodity-

Based Trust Shares has been met as outlined below.
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    \69\ See Exchange Rule 14.11(f).
    \70\ Commodity-Based Trust Shares, as described in Exchange Rule
14.11(e)(4), are a type of Trust Issued Receipt.
    \71\ As 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 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.
---------------------------------------------------------------------------

Designed To Prevent Fraudulent and Manipulative Acts and Practices
    In order for a proposal to list and trade a series of Commodity-
Based Trust Shares to be deemed consistent with the Act, the Commission
requires that an exchange demonstrate that there is a comprehensive
surveillance-sharing agreement in place \72\ with a regulated market of
significant size. Both the Exchange and CME are members of ISG.\73\ As
such, the only remaining issue to be addressed is whether the Bitcoin
Futures market constitutes a market of significant size, which the
Exchange believes 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.\74\
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    \72\ As 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 surveillance-sharing agreement are that the agreement
provides for the sharing of information about market trading
activity, clearing activity, and customer identity; that the parties
to the agreement have reasonable ability to obtain access to and
produce requested information; and that no existing rules, laws, or
practices would impede one party to the agreement from obtaining
this information from, or producing it to, the other party.'' The
Commission has historically held that joint membership in ISG
constitutes such a surveillance sharing agreement. See Wilshire
Phoenix Disapproval.
    \73\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com.
    \74\ See Wilshire Phoenix Disapproval.
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    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.\75\
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    \75\ See 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.
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(a) Reasonable Likelihood That a Person Attempting To Manipulate the
ETP Would Also Have To Trade on That Market To Manipulate the ETP
    Bitcoin Futures represent a growing influence on pricing in the
spot bitcoin market as has been laid out above and in other proposals
to list and trade Spot Bitcoin ETPs. Pricing in Bitcoin Futures is
based on pricing from spot bitcoin markets. As noted above, 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 Bitcoin Futures. While the Commission makes
clear in the Teucrium Approval that the analysis only applies to the
Bitcoin Futures market as it relates to an ETP that invests in Bitcoin
Futures as its only non-cash or cash equivalent holding, if CME's
surveillance is sufficient to mitigate concerns related to trading in
Bitcoin Futures for which the pricing is based directly on pricing from
spot bitcoin markets, it's not clear how such a conclusion could apply
only to ETPs based on Bitcoin Futures and not extend to Spot Bitcoin
ETPs.
    Additionally, a Bitcoin Futures ETF is actually potentially more
susceptible to manipulation than a Spot Bitcoin ETP where the
underlying trust offers only in-kind creation and redemption.
Specifically, the pricing of Bitcoin Futures is based on prices from
spot bitcoin markets, while shares of a Spot Bitcoin ETP would
represent an interest in bitcoin directly and authorized participants
for a Spot Bitcoin ETP 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. Potential manipulation of a Bitcoin
Futures ETF would require manipulation on the spot markets on which the
pricing for Bitcoin Futures are based while the in-kind creation and
redemption process and fungibility of bitcoin means that a would be
manipulator of a Spot Bitcoin ETP would need to manipulate the price
across all bitcoin markets or risk simply providing arbitrage
opportunities for authorized participants. Further to this point, this
arbitrage opportunity also acts to reduce any incentives to manipulate
the price of a Spot Bitcoin ETP because the underlying trust will
create and redeem shares at set rates of bitcoin per share without
regard to the price that the ETP is trading at in the secondary market
or the price of the underlying index. 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 in-kind
creation and redemption process, the spot market arbitrage
opportunities that such in-kind creation and redemption process
creates, 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 Skew, the cost to buy or sell $5 million worth of bitcoin
averages roughly 48 basis points with a market impact of $139.08.\76\
Stated another way, a market participant could enter a market buy or
sell order for $5 million of bitcoin and only move the market 0.48%.
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.
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    \76\ These statistics are based on samples of bitcoin liquidity
in USD (excluding stablecoins or Euro liquidity) based on executable
quotes on Coinbase, FTX and Kraken during the one year period ending
May 2022.
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    As such, the combination of the in-kind creation and redemption
process, the 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. Consistent with prior points
above, offering only in-kind creation and redemption will provide
unique protections against potential attempts to manipulate the Shares.
While the Sponsor believes that the Benchmark 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
Benchmark 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.\77\ 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 Benchmark
because there is little financial incentive to do so.
---------------------------------------------------------------------------

    \77\ While the Benchmark will not be particularly important for
the creation and redemption process, it will be used for calculating
fees.
---------------------------------------------------------------------------

    The Exchange also believes that reviewing this proposal through the
lens of the Bitcoin Futures Approvals would also lead the Commission to
approving this proposal. 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.\78\ The Exchange believes that the following excerpt from
the Teucrium Approval is particular informative:
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    \78\ See 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.

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.\79\
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    \79\ See Teucrium Approval at 21679.

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 Bitcoin Futures. If CME is able to detect
such attempts at manipulation in the complex and interconnected spot
bitcoin market, how would such an ability to detect attempted
manipulation and the utility in sharing that information with the
listing exchange apply only to Bitcoin Futures ETFs and not Spot
Bitcoin ETPs? Stated a different way, given that there is significant
trading volume on numerous bitcoin exchanges that are not part of the
CME CF Bitcoin Reference Rate and that arbitrage opportunities across
bitcoin exchanges means that such trading volume will influence spot
bitcoin prices across the market and, despite this, the Commission
still believes that CME can detect attempted manipulation of the
Bitcoin Futures through ``trading outside of the CME bitcoin futures
market,'' it is clear that such ability would apply equally to both
Bitcoin Futures ETFs and Spot Bitcoin ETPs. To take it a step further,
such an ability would also seem to be a strong indication that the CME
Bitcoin Futures market represents a regulated market of significant
size. To be clear, the Exchange agrees with the Commission on this
point (and the implications of their conclusions) and further notes
that the pricing mechanism applicable to the Shares is similar to the
CME CF Bitcoin Reference Rate.
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 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 Benchmark, 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 Benchmark, including key elements of how the
Benchmark is calculated, will be publicly available at www.mvis-indices.com/.
    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 Benchmark. 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
    In sum, the Exchange believes that this proposal is consistent with
the requirements of Section 6(b)(5) of the Act, 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 investor protection issues that would be resolved by
approving this proposal.
    The Exchange believes that the proposal is, in particular, designed
to protect investors and the public interest. Premium and discount
volatility, high fees, rolling costs, insufficient disclosures, and
technical hurdles are putting U.S. investor money at risk on a daily
basis that could potentially be eliminated through access to a Spot
Bitcoin ETP. As such, the Exchange believes that this proposal acts to
limit the risk to U.S. investors that are increasingly seeking exposure
to bitcoin by providing direct, 1-for-1 exposure to bitcoin in a
regulated, transparent, exchange-traded vehicle, specifically by: (i)
reducing premium volatility; (ii) reducing management fees through
meaningful competition; (iii) providing an alternative to Bitcoin
Futures ETFs which will eliminate roll cost; (iv) reducing risks
associated with investing in operating companies that are imperfect
proxies for bitcoin exposure; and (v) providing an alternative to
custodying spot bitcoin. Finally, the Exchange notes that in addition
to all of the arguments herein which it believes sufficiently
establishes the Bitcoin Futures market as a regulated market of
significant size, it is logically inconsistent to find that the CME
Bitcoin Futures market is a significant market as it relates to the CME
Bitcoin Futures market, but not a significant market as it relates to
the bitcoin spot market for the numerous reasons laid out above.
    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 [email protected]. Please include
File Number SR-CboeBZX-2022-035 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-2022-035. 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-CboeBZX-2022-035 and should be submitted
on or before August 3, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\80\
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    \80\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-14884 Filed 7-12-22; 8:45 am]
BILLING CODE 8011-01-P