[Federal Register Volume 83, Number 178 (Thursday, September 13, 2018)]
[Notices]
[Pages 46476-46478]
[FR Doc No: 2018-19907]

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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FSIS-2018-0036]

Joint Public Meeting on the Use of Cell Culture Technology To
Develop Products Derived From Livestock and Poultry

AGENCY: Food Safety and Inspection Service, USDA; Food and Drug
Administration, HHS.

ACTION: Notice of public meeting; request for comments.

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SUMMARY: The Food Safety and Inspection Service (FSIS) and the Food and
Drug Administration (FDA) are hosting a joint public meeting to discuss
the potential hazards, oversight considerations, and labeling of cell
cultured food products derived from livestock and poultry tissue. FSIS
and FDA officials will make presentations on their roles and
responsibilities relative to the production and labeling of safe and
wholesome food and their respective regulatory frameworks, including
their inspection systems, as a basis for discussing what oversight
framework might be most appropriate for cell cultured food products
derived from livestock and poultry. Representatives of industry,
interested individuals, and other stakeholders are invited to
participate in the meeting.

DATES: The public meeting will be held on Tuesday, October 23, 2018
from 8:30 a.m. to 4:00 p.m., and Wednesday, October 24, 2018, from 8:30
a.m. to 3:00 p.m. EDT. Submit either electronic or written comments on
this public meeting by November 26, 2018.

ADDRESSES: The meeting will be held at the Jefferson Auditorium in the
South Building, U.S. Department of Agriculture (USDA), 1400
Independence Avenue SW, Washington, DC 20250. Attendance is free. Non-
USDA employees must enter through the Wing 5 entrance on Independence
Avenue. The South Building is a Federal facility and attendees should
plan to take adequate time to pass through the security screening
system. Attendees must show a valid photo ID to enter the building.

FOR FURTHER INFORMATION CONTACT: Roxanne Smith, Director, Congressional
and Public Affairs in the FSIS Office of Public Affairs and Consumer
Education at<PHONE_NUMBER> or [email protected]; as well as
Juanita Yates, Public Affairs Specialist in the FDA Center for Food
Safety and Applied Nutrition at<PHONE_NUMBER> or
[email protected].

SUPPLEMENTARY INFORMATION: Further information on this meeting will be
posted on the FSIS website at: https://www.fsis.usda.gov/wps/portal/fsis/newsroom/meetings and through the FSIS Constituent Update, and on
the FDA website at: https://www.fda.gov/Food/NewsEvents/WorkshopsMeetingsConferences/default.htm.

Background

    FSIS is the public health agency responsible for ensuring that
meat, poultry, and egg products are safe, wholesome, and accurately
labeled. FDA has responsibility for ensuring the safety of all other
foods, including seafood (except catfish) and game animals as well as
ensuring that the labels of these foods contain useful and reliable
information.
    Animal cell culture food technology, as will be discussed at the
public meeting, refers to the controlled growth of animal cells from
livestock, poultry, fish, or other animals, their subsequent
differentiation into various cell types, and their collection and
processing into food. Full tissue formation in culture is

an active medical research area, as well as a strong focus of
commercial interest for food applications. Many companies, both
domestic and foreign, are actively developing products using this
technology. Some of these products are being designed to have the same
or similar compositional, nutritional, and organoleptic characteristics
as traditional meat and poultry products. Once produced, the harvested
cells could potentially be processed, packaged, and marketed in the
same, or similar, manner as traditional meat and poultry products.
    In the past several months, FSIS has received a significant amount
of correspondence regarding the food products of animal cell culture
technology. Much of the correspondence is in regard to a petition from
the United States Cattlemen's Association to FSIS requesting, among
other things, that FSIS prohibit products derived from livestock and
manufactured using animal cell culture technology from being labeled or
marketed as ``beef'' or ``meat.'' The publication of this petition and
related comments received by FSIS has brought significant attention to
animal cell culture based food products. To date, FSIS has received
over 6,100 comments on this petition from industry trade associations;
consumer advocacy groups; firms operating in the meat, poultry, and/or
cell culture based food product markets; and consumers. In recent
years, FDA also has been contacted by firms interested in developing
foods that incorporate cultured animal cells from various species and
has had a number of stakeholder engagements on this topic.
    FDA, with USDA's participation, is developing technical questions
related to cell cultured food products to put before FDA's Science
Advisory Board on October 22, 2018 (notice will be published in an
upcoming issue of the Federal Register). The intent of these questions
is to support a process for identifying potential hazards, assessing
risks, and establishing control measures appropriate to each risk for
cell cultured food products. The dialogue with stakeholders at the
joint public meeting that is the subject of this announcement will be
informed by the FDA Science Board discussion, which will occur the
previous day.

Topics for Discussion at the Joint Public Meeting

    Given the high level of public interest, FSIS and FDA will be
holding this joint public meeting in October to further discuss cell
culture technology and provide the public with an opportunity to
provide comments. The first day of the meeting will focus primarily on
the potential hazards that need to be controlled for the safe
production of animal cell cultured food products and oversight
considerations by regulatory agencies. The second day of the meeting
will focus on labeling considerations. General topics to be covered and
discussed include:
     Potential hazards associated with the production of these
products and a discussion on whether they are the same hazards as those
associated with traditional meat and poultry products. What are the
most significant sources of potential hazards for each and how are they
similar and different?
     Strategies to ensure that all potential hazards are
identified and appropriately controlled, including consideration of
various factors relevant to determining oversight activities for these
products, such as:
    [cir] Is there an effective and efficient application of pre-market
programs to ensure the safety of foods produced by animal cell culture?
    [cir] What type and frequency of inspection will be appropriate for
various stages of the manufacture of these products?
    [cir] What type and frequency of inspection will be appropriate for
products that combine cell cultured food products and other ingredients
(e.g., multicomponent foods like soups, protein bars that contain cell
cultured protein as an ingredient, or products that contain both
traditional meat or poultry as well as cell cultured ingredients,
including food products of animal cell culture derived from livestock
and poultry tissue)?
     FSIS and FDA are actively working to reduce the
duplicative and inefficient regulation of establishments and products
under both agencies' jurisdiction. How could this be done for products
of animal cell culture derived from livestock and poultry?
     What factors should be considered in the labeling of
products of animal cell culture? Questions include:
    [cir] Should standards of identity or criteria for statements of
identity be established for these products to ensure that product names
are truthful, not misleading, and sufficiently differentiate cell
cultured products from traditional products?
    [cir] Should the methods by which animal cell cultured products are
produced (i.e., the culturing process be considered required
information for purposes of labeling? If so, what factors should be
considered in accurately describing the production methods?
    [cir] Should the source of the animal cells (i.e., the species from
which the cell line was initiated) be considered required information
for the purposes of labeling?
    [cir] What factors should be considered in potentially allowing
health, safety, and other claims in the marketing of animal cell
cultured products?
    [cir] How should products containing both animal cell cultured
products and traditional meat and poultry products be labeled?

Public Comments and Participation in Meetings

Registration

    To register for the public meeting, please visit the following
website: https://www.fsis.usda.gov/wps/portal/fsis/newsroom/meetings/meetings-archive/upcoming-meetings/meeting-registration-cell-culture-technology. Please provide complete contact information for each
attendee, including name, title, affiliation, address, email, and
telephone.
    Registration is free and voluntary and based on space availability,
with priority given to early registrants. Persons interested in
attending this public meeting are requested to register by Friday,
October 19, 2018, although non-registered attendees may still
participate subject to availability. Early registration is recommended
because seating is limited. Registrants will receive confirmation of
their registration.

Accommodations for Persons With Disabilities

    To request accommodations due to a disability, please indicate any
accommodations needed when registering. FSIS and FDA will provide sign
language interpreters for this meeting.
    Attendees from the media will also be asked to identify themselves
during the registration process.

Public Comments: Oral Comments

    Stakeholders will have an opportunity to provide oral comments
during the public meeting. Due to the anticipated high level of
interest in the opportunity to make public comments and the limited
time available to do so, FSIS and FDA encourage participants to
indicate when registering if they wish to give public comment during a
public comment session and which topic(s) you wish to address. FSIS and
FDA will do their best to accommodate all persons who wish to express
an opinion. FSIS and FDA encourage persons and groups who have similar

interests to consolidate their information for presentation by a single
representative and request time for a joint presentation. Speakers will
be limited to making oral remarks; there will not be an opportunity to
display materials such as slide shows, videos, or other media during
the meeting. No commercial or promotional material will be permitted to
be presented or distributed at the public meeting. All requests to make
oral presentations should be received by Friday, October 19, 2018.

Public Comments: Written Comments

    Any stakeholder wishing to submit written comments prior to the
meeting may do so, and may also submit comments after the meeting,
using any of the following methods: Electronically: Go to http://www.regulations.gov/ and follow the online instructions for submitting
comments to docket FSIS-2018-0036; Mail, including CD-ROMs, etc.: Send
to Docket Clerk, U.S. Department of Agriculture, Food Safety and
Inspection Service, 1400 Independence Avenue SW, Mailstop 3758, Room
6065, Washington, DC 20250-3700; Hand- or courier-delivered submittals:
Deliver to 1400 Independence Avenue SW, Room 6065, Washington, DC
20250-3700.
    Instructions: All items submitted by mail or electronic mail must
include the Agency name (in this case FDA and FSIS) and docket number
FSIS-2018-0036. Comments received in response to this docket will be
made available for public inspection and posted without change,
including any personal information, to http://www.regulations.gov/.
Comments must be received by November 26, 2018.
    On July 12, 2018, FDA held a public meeting on foods produced using
animal cell culture technology. Comments received in response to that
meeting will be reviewed jointly by FDA and FSIS. There is no need to
resubmit comments already submitted to FDA.
    Docket: For access to background documents or comments received, go
to https://www.regulations.gov and insert docket number FSIS-2018-0036
into the ``Search'' box and follow the prompts; and/or call (202) 720-
5627 to schedule a time to visit the FSIS Docket Room at 1400
Independence Avenue SW, Room 6065, Washington, DC 20250-3700.

Question-and-Answer Periods

    Time has been allotted for audience questions after most
presentations delivered during the meeting. Participants will have the
opportunity to ask questions via a microphone in the auditorium.

Streaming Webcast of the Public Meeting

    This public meeting will also be webcast. Webcast participants are
asked to preregister at https://www.fsis.usda.gov/wps/portal/fsis/newsroom/meetings/meetings-archive/upcoming-meetings/meeting-registration-cell-culture-technology.

Transcripts

    The transcript of the proceedings from the public meeting will
become part of the administrative record. As soon as the meeting
transcripts are available, they will be accessible at https://www.regulations.gov; on the FSIS website at http://www.fsis.usda.gov/wps/portal/fsis/newsroom/meetings; or on the FDA website at https://www.fda.gov/Food/NewsEvents/WorkshopsMeetingsConferences/default.htm.
The transcripts may also be viewed at the FSIS Docket Room at the
addressed listed above.

Additional Public Notification

    Public awareness of all segments of rulemaking and policy
development is important. Consequently, FSIS will announce this Federal
Register publication online through the FSIS web page located at:
http://www.fsis.usda.gov/federal-register and on the FDA website at:
https://www.fda.gov/Food/NewsEvents/WorkshopsMeetingsConferences/default.htm.
    FSIS also will make copies of this publication available through
the FSIS Constituent Update, which is used to provide information
regarding FSIS policies, procedures, regulations, Federal Register
notices, FSIS public meetings, and other types of information that
could affect or would be of interest to our constituents and
stakeholders. The Constituent Update is available on the FSIS web page.
Through the web page, FSIS can provide information to a much broader,
more diverse audience. In addition, FSIS offers an email subscription
service which provides automatic and customized access to selected food
safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export
information, regulations, directives, and notices. Customers can add or
delete subscriptions themselves, and have the option to password
protect their accounts.

USDA Non-Discrimination Statement

    No agency, officer, or employee of the USDA shall, on the grounds
of race, color, national origin, religion, sex, gender identity, sexual
orientation, disability, age, marital status, family/parental status,
income derived from a public assistance program, or political beliefs,
exclude from participation in, deny the benefits of, or subject to
discrimination, any person in the United States under any program or
activity conducted by the USDA.

How To File a Complaint of Discrimination

    To file a complaint of discrimination, complete the USDA Program
Discrimination Complaint Form, which may be accessed online at: http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your
authorized representative.
    Send your completed complaint form or letter to USDA by mail, fax,
or email:
    Mail: U.S. Department of Agriculture, Director, Office of
Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410.
    Fax:<PHONE_NUMBER>.
    Email: [email protected].
    Persons with disabilities who require alternative means for
communication (Braille, large print, audiotape, etc.), should contact
USDA's TARGET Center at<PHONE_NUMBER> (voice and TDD).

    Done at Washington, DC, on September 7, 2018.
Paul Kiecker,
Acting Administrator.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2018-19907 Filed 9-10-18; 4:15 pm]
 BILLING CODE 3410-DM-P


[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Notices]
[Pages 74156-74164]
[FR Doc No: 2021-28254]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93859; File No. SR-NYSEArca-2021-31]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order
Disapproving a Proposed Rule Change To List and Trade Shares of the
Valkyrie Bitcoin Fund Under NYSE Arca Rule 8.201-E (Commodity-Based
Trust Shares)

December 22, 2021.

I. Introduction

    On April 23, 2021, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to list and trade shares (``Shares'') of the Valkyrie Bitcoin
Fund (``Trust'') under NYSE Arca Rule 8.201-E (Commodity-Based Trust
Shares). The proposed rule change was published for comment in the
Federal Register on May 12, 2021.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 91771 (May 6, 2021),
86 FR 26073 (``Notice''). Comments on the proposed rule change can
be found at: https://www.sec.gov/comments/sr-nysearca-2021-31/srnysearca202131.htm.
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    On June 22, 2021, pursuant to Section 19(b)(2) of the Exchange
Act,\4\ the Commission designated a longer period within which to
approve the proposed rule change, disapprove the proposed rule change,
or institute proceedings to determine whether to disapprove the
proposed rule change.\5\ On August 9, 2021, the Commission instituted
proceedings under Section 19(b)(2)(B) of the Exchange Act \6\ to
determine whether to approve or disapprove the proposed rule change.\7\
On November 1, 2021, the Commission designated a longer period for
Commission action on the proposed rule change.\8\
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    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 92233, 86 FR 34107
(June 28, 2021).
    \6\ 15 U.S.C. 78s(b)(2)(B).
    \7\ See Securities Exchange Act Release No. 92610, 86 FR 44763
(Aug. 13, 2021).
    \8\ See Securities Exchange Act Release No. 93489, 86 FR 61344
(Nov. 5, 2021).
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    This order disapproves the proposed rule change. The Commission
concludes that NYSE Arca has not met its burden under the Exchange Act
and the Commission's Rules of Practice to demonstrate that its proposal
is consistent with the requirements of Exchange Act Section 6(b)(5),
and in particular, the requirement that the rules of a national
securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices'' and ``to protect investors and the
public interest.'' \9\
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    \9\ 15 U.S.C. 78f(b)(5).
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    When considering whether NYSE Arca's proposal to list and trade the
Shares is designed to prevent fraudulent and manipulative acts and
practices, the Commission applies the same standard used in its orders
considering previous proposals to list bitcoin \10\-based commodity
trusts and bitcoin-based trust issued receipts.\11\ As the

Commission has explained, an exchange that lists bitcoin-based
exchange-traded products (``ETPs'') can meet its obligations under
Exchange Act Section 6(b)(5) by demonstrating that the exchange has a
comprehensive surveillance-sharing agreement with a regulated market of
significant size related to the underlying or reference bitcoin
assets.\12\
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    \10\ Bitcoins are digital assets that are issued and transferred
via a decentralized, open-source protocol used by a peer-to-peer
computer network through which transactions are recorded on a public
transaction ledger known as the ``bitcoin blockchain.'' The bitcoin
protocol governs the creation of new bitcoins and the cryptographic
system that secures and verifies bitcoin transactions. See, e.g.,
Notice, 86 FR at 26074-75.
    \11\ See Order Setting Aside Action by Delegated Authority and
Disapproving a Proposed Rule Change, as Modified by Amendments No. 1
and 2, To List and Trade Shares of the Winklevoss Bitcoin Trust,
Securities Exchange Act Release No. 83723 (July 26, 2018), 83 FR
37579 (Aug. 1, 2018) (SR-BatsBZX-2016-30) (``Winklevoss Order'');
Order Disapproving a Proposed Rule Change, as Modified by Amendment
No. 1, To Amend NYSE Arca Rule 8.201-E (Commodity-Based Trust
Shares) and To List and Trade Shares of the United States Bitcoin
and Treasury Investment Trust Under NYSE Arca Rule 8.201-E,
Securities Exchange Act Release No. 88284 (Feb. 26, 2020), 85 FR
12595 (Mar. 3, 2020) (SR-NYSEArca-2019-39) (``USBT Order''); Order
Disapproving a Proposed Rule Change To List and Trade Shares of the
WisdomTree Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based
Trust Shares, Securities Exchange Act Release No. 93700 (Dec. 1,
2021), 86 FR 69322 (Dec. 7, 2021) (SR-CboeBZX-2021-024)
(``WisdomTree Order''). See also Order Disapproving a Proposed Rule
Change, as Modified by Amendment No. 1, Relating to the Listing and
Trading of Shares of the SolidX Bitcoin Trust Under NYSE Arca
Equities Rule 8.201, Securities Exchange Act Release No. 80319 (Mar.
28, 2017), 82 FR 16247 (Apr. 3, 2017) (SR-NYSEArca-2016-101)
(``SolidX Order''). The Commission also notes that orders were
issued by delegated authority on the following matters: Order
Disapproving a Proposed Rule Change To List and Trade the Shares of
the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF,
Securities Exchange Act Release No. 83904 (Aug. 22, 2018), 83 FR
43934 (Aug. 28, 2018) (SR-NYSEArca-2017-139) (``ProShares Order'');
Order Disapproving a Proposed Rule Change To List and Trade the
Shares of the GraniteShares Bitcoin ETF and the GraniteShares Short
Bitcoin ETF, Securities Exchange Act Release No. 83913 (Aug. 22,
2018), 83 FR 43923 (Aug. 28, 2018) (SR-CboeBZX-2018-001)
(``GraniteShares Order''); Order Disapproving a Proposed Rule Change
To List and Trade Shares of the VanEck Bitcoin Trust Under BZX Rule
14.11(e)(4), Commodity-Based Trust Shares, Securities Exchange Act
Release No. 93559 (Nov. 12, 2021), 86 FR 64539 (Nov. 18, 2021) (SR-
CboeBZX-2021-019).
    \12\ See USBT Order, 85 FR at 12596. See also Winklevoss Order,
83 FR at 37592 n.202 and accompanying text (discussing previous
Commission approvals of commodity-trust ETPs); GraniteShares Order,
83 FR at 43925-27 nn.35-39 and accompanying text (discussing
previous Commission approvals of commodity-futures ETPs).
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    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.'' \13\ The Commission has
emphasized that it is essential for an exchange listing a derivative
securities product to enter into a surveillance-sharing agreement with
markets trading the underlying assets for the listing exchange to have
the ability to obtain information necessary to detect, investigate, and
deter fraud and market manipulation, as well as violations of exchange
rules and applicable federal securities laws and rules.\14\ 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.\15\
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    \13\ See Amendment to Rule Filing Requirements for Self-
Regulatory Organizations Regarding New Derivative Securities
Products, Securities Exchange Act Release No. 40761 (Dec. 8, 1998),
63 FR 70952, 70959 (Dec. 22, 1998) (``NDSP Adopting Release''). See
also Winklevoss Order, 83 FR at 37594; ProShares Order, 83 FR at
43936; GraniteShares Order, 83 FR at 43924; USBT Order, 85 FR at
12596.
    \14\ See NDSP Adopting Release, 63 FR at 70959.
    \15\ See Winklevoss Order, 83 FR at 37592-93; Letter from
Brandon Becker, Director, Division of Market Regulation, Commission,
to Gerard D. O'Connell, Chairman, Intermarket Surveillance Group
(June 3, 1994), available at https://www.sec.gov/divisions/marketreg/mr-noaction/isg060394.htm.
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    In the context of this standard, 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 successfully manipulate the ETP, so that a surveillance-
sharing agreement would assist 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.\16\ A surveillance-sharing
agreement must be entered into with a ``significant market'' to assist
in detecting and deterring manipulation of the ETP, because a person
attempting to manipulate the ETP is reasonably likely to also engage in
trading activity on that ``significant market.'' \17\
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    \16\ See Winklevoss Order, 83 FR at 37594. This definition is
illustrative and not exclusive. There could be other types of
``significant markets'' and ``markets of significant size,'' but
this definition is an example that will provide guidance to market
participants. See id.
    \17\ See USBT Order, 85 FR at 12597.
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    Consistent with this standard, for the commodity-trust ETPs
approved to date for listing and trading, there has been in every case
at least one significant, regulated market for trading futures on the
underlying commodity--whether gold, silver, platinum, palladium, or
copper--and the ETP listing exchange has entered into surveillance-
sharing agreements with, or held Intermarket Surveillance Group
(``ISG'') membership in common with, that market.\18\ Moreover, the
surveillance-sharing agreements have been consistently present whenever
the Commission has approved the listing and trading of derivative
securities, even where the underlying securities were also listed on
national securities exchanges--such as options based on an index of
stocks traded on a national securities exchange--and were thus subject
to the Commission's direct regulatory authority.\19\
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    \18\ See Winklevoss Order, 83 FR at 37594.
    \19\ See USBT Order, 85 FR at 12597; Securities Exchange Act
Release No. 33555 (Jan. 31, 1994), 59 FR 5619, 5621 (Feb. 7, 1994)
(SR-Amex-93-28) (order approving listing of options on American
Depository Receipts (``ADRs'')). The Commission has also required a
surveillance-sharing agreement in the context of index options even
when (i) all of the underlying index component stocks were either
registered with the Commission or exempt from registration under the
Exchange Act; (ii) all of the underlying index component stocks
traded in the U.S. either directly or as ADRs on a national
securities exchange; and (iii) effective international ADR arbitrage
alleviated concerns over the relatively smaller ADR trading volume,
helped to ensure that ADR prices reflected the pricing on the home
market, and helped to ensure more reliable price determinations for
settlement purposes, due to the unique composition of the index and
reliance on ADR prices. See Securities Exchange Act Release No.
26653 (Mar. 21, 1989), 54 FR 12705, 12708 (Mar. 28, 1989) (SR-Amex-
87-25) (stating that ``surveillance-sharing agreements between the
exchange on which the index option trades and the markets that trade
the underlying securities are necessary'' and that ``[t]he exchange
of surveillance data by the exchange trading a stock index option
and the markets for the securities comprising the index is important
to the detection and deterrence of intermarket manipulation.''). And
the Commission has required a surveillance-sharing agreement even
when approving options based on an index of stocks traded on a
national securities exchange. See Securities Exchange Act Release
No. 30830 (June 18, 1992), 57 FR 28221, 28224 (June 24, 1992) (SR-
Amex-91-22) (stating that surveillance-sharing agreements ``ensure
the availability of information necessary to detect and deter
potential manipulations and other trading abuses'').
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    Listing exchanges have also attempted to demonstrate that other
means besides surveillance-sharing agreements will be sufficient to
prevent fraudulent and manipulative acts and practices, including that
the bitcoin market as a whole or the relevant underlying bitcoin market
is ``uniquely'' and ``inherently'' resistant to fraud and
manipulation.\20\ In response, the Commission has agreed that, if a
listing exchange could establish that the underlying market inherently
possesses a unique resistance to manipulation beyond the protections
that are utilized by traditional commodity or securities markets, it
would not necessarily need to enter into a surveillance-sharing
agreement with a regulated significant market.\21\ Such resistance to
fraud and manipulation, however, must be novel and beyond those
protections that exist in traditional commodity markets or equity
markets for which the Commission has

long required surveillance-sharing agreements in the context of listing
derivative securities products.\22\ No listing exchange has satisfied
its burden to make such demonstration.\23\
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    \20\ See USBT Order, 85 FR at 12597.
    \21\ See Winklevoss Order, 83 FR at 37580, 37582-91 (addressing
assertions that ``bitcoin and bitcoin [spot] markets'' generally, as
well as one bitcoin trading platform specifically, have unique
resistance to fraud and manipulation); see also USBT Order, 85 FR at
12597.
    \22\ See USBT Order, 85 FR at 12597.
    \23\ See supra note 11.
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    Here, NYSE Arca contends that approval of the proposal is
consistent with Section 6(b)(5) of the Exchange Act, in particular
Section 6(b)(5)'s requirement that the rules of a national securities
exchange be designed to prevent fraudulent and manipulative acts and
practices and to protect investors and the public interest.\24\
Although NYSE Arca recognizes the Commission's concern with potential
manipulation of bitcoin ETPs in prior disapproval orders, NYSE Arca
argues that the proposal is consistent with Section 6(b)(5) of the
Exchange Act because the growth of liquidity and presence of arbitrage
in the spot market for bitcoin as well as the methodology and framework
of the Index (as defined below) that is used to determine the value of
the assets and net asset value (``NAV'') of the Trust sufficiently
mitigate effects of potential manipulation in the bitcoin market.\25\
Further, NYSE Arca believes that the proposal would provide investors a
more convenient, more efficient, and less risky way to invest in
bitcoin than the purchase of a standalone bitcoin.\26\
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    \24\ See Notice, 86 FR at 26080-81.
    \25\ See id. at 26078-80.
    \26\ See id. at 26073, 26080.
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    In the analysis that follows, the Commission examines whether the
proposed rule change is consistent with Section 6(b)(5) of the Exchange
Act by addressing: in Section III.B.1 assertions that other means
besides surveillance-sharing agreements will be sufficient to prevent
fraudulent and manipulative acts and practices; in Section III.B.2
assertions relating to NYSE Arca's surveillance-sharing agreements
related to bitcoin; and in Section III.C assertions that the proposal
is consistent with the protection of investors and the public interest.
As discussed further below, NYSE Arca repeats various assertions made
in prior bitcoin-based ETP proposals that the Commission has previously
addressed and rejected--and more importantly, NYSE Arca does not
respond to the Commission's reasons for rejecting those assertions but
merely repeats them. The Commission concludes that NYSE Arca has not
established that other means to prevent fraudulent and manipulative
acts and practices are sufficient to justify dispensing with the
requisite surveillance-sharing agreement. The Commission further
concludes that NYSE Arca has not established that it has a
comprehensive surveillance-sharing agreement with a regulated market of
significant size related to bitcoin. As a result, the Commission is
unable to find that the proposed rule change is consistent with the
statutory requirements of Exchange Act Section 6(b)(5).
    The Commission again emphasizes that its disapproval of this
proposed rule change does not rest on an evaluation of whether bitcoin,
or blockchain technology more generally, has utility or value as an
innovation or an investment. Rather, the Commission is disapproving
this proposed rule change because, as discussed below, NYSE Arca has
not met its burden to demonstrate that its proposal is consistent with
the requirements of Exchange Act Section 6(b)(5).

II. Description of the Proposed Rule Change

    As described in more detail in the Notice,\27\ the Exchange
proposes to list and trade the Shares of the Trust under NYSE Arca Rule
8.201-E, which governs the listing and trading of Commodity-Based Trust
Shares on the Exchange.
---------------------------------------------------------------------------

    \27\ See Notice, supra note 3. See also Registration Statement
on Form S-1/A, dated April 30, 2021 (File No. 333-252344), filed
with the Commission on behalf of the Trust (``Registration
Statement'').
---------------------------------------------------------------------------

    The investment objective of the Trust will be for the Shares to
reflect the performance of the value of a bitcoin as represented by the
CF Bitcoin U.S. Settlement Price (``Index''), less the Trust's
liabilities and expenses.\28\ The Trust will use the Index to calculate
the Trust's NAV. The Index was created and is administered by CF
Benchmarks Ltd. (``Benchmark Administrator'') and serves as a once-a-
day benchmark rate of the U.S. dollar price of bitcoin (USD/BTC),
calculated as of 4:00 p.m. E.T.\29\ The Index aggregates the trade flow
of several bitcoin platforms during an observation window between 3:00
p.m. and 4:00 p.m. E.T. into the U.S. dollar price of one bitcoin at
4:00 p.m. E.T. The current constituent bitcoin platforms of the Index
are Bitstamp, Coinbase, Gemini, itBit, and Kraken (``Constituent
Bitcoin Platforms''). The Index is calculated based on the ``Relevant
Transactions'' \30\ of all of its Constituent Bitcoin Platforms. All
Relevant Transactions are added to a joint list, recording the time of
execution, trade price, and size for each transaction, and the list is
partitioned by timestamp into 12 equally-sized time intervals of five
minute length.\31\ For each partition separately, the volume-weighted
median trade price is calculated from the trade prices and sizes of all
Relevant Transactions.\32\ The Index is then determined by the
arithmetic mean of the volume-weighted medians of all partitions.\33\
---------------------------------------------------------------------------

    \28\ Valkyrie Digital Assets LLC is the sponsor of the Trust
(``Sponsor'') and Delaware Trust Company is the trustee. Coinbase
Custody Trust Company, LLC (``Custodian'') will act as custodian for
the Trust's bitcoins. U.S. Bancorp Fund Services, LLC
(``Administrator'') will act as the transfer agent and administrator
of the Trust. See Notice, 86 FR at 26073.
    \29\ According to NYSE Arca, the Index is based on materially
the same methodology (except calculation time, as described herein)
as the Benchmark Administrator's CME CF Bitcoin Reference Rate
(``BRR''), which was first introduced on November 14, 2016, and is
the rate on which bitcoin futures contracts are cash-settled in U.S.
dollars on the Chicago Mercantile Exchange (``CME''). The Index is
calculated as of 4:00 p.m. E.T., whereas the BRR is calculated as of
4:00 p.m. London Time. See id. at 26076 & n.9.
    \30\ According to the Exchange, a ``Relevant Transaction'' is
any cryptocurrency versus U.S. dollar spot trade that occurs during
the observation window between 3:00 p.m. and 4:00 p.m. E.T. on a
Constituent Bitcoin Platform in the BTC/USD pair that is reported
and disseminated by a Constituent Bitcoin Platform and observed by
the Benchmark Administrator. See id. at 26076 n.10.
    \31\ See id. at 26076.
    \32\ See id. According to the Exchange, a volume-weighted median
differs from a standard median in that a weighting factor, in this
case trade size, is factored into the calculation. See id.
    \33\ See id.
---------------------------------------------------------------------------

    The Shares of the Trust represent units of fractional undivided
beneficial interest in, and ownership of, the Trust. The Trust will
only hold bitcoin. The Custodian will establish accounts that hold the
bitcoins deposited with the Custodian on behalf of the Trust.\34\
---------------------------------------------------------------------------

    \34\ See id. at 26073.
---------------------------------------------------------------------------

    The Administrator will calculate the NAV of the Trust once each
Exchange trading day. The Sponsor will publish the NAV and NAV per
Share as soon as practicable after their determination and
availability, and the NAV will be released after the end of the Core
Trading Session (4:00 p.m. E.T.). The NAV of the Trust is not
officially struck until later in the day (often by 5:30 p.m. E.T, and
usually by 8:00 p.m. E.T.). The Trust's NAV per Share is calculated by
taking the current market value of its total assets, less any
liabilities of the Trust, and dividing that total by the total number
of outstanding Shares. The bitcoin held by the Trust will be valued
based on the price set by the Index.\35\
---------------------------------------------------------------------------

    \35\ See id. at 26076.
---------------------------------------------------------------------------

    The Trust will provide website disclosure of its bitcoin holdings
daily.\36\ The Trust will also disseminate an intraday indicative value
(``IIV'') per Share updated every 15 seconds by one or more major
market data vendors

during the Exchange's Core Trading Session (normally 9:30 a.m. to 4:00
p.m. E.T.). The IIV will be calculated by a third-party financial data
provider using the prior day's closing NAV per Share of the Trust as a
base and updating that value throughout the trading day to reflect
changes in the most recently reported price level of the CME CF Bitcoin
Real-Time Index (``BRTI''), as reported by CME Group, Inc., Bloomberg,
L.P., or another reporting service.\37\
---------------------------------------------------------------------------

    \36\ See id. at 26081.
    \37\ According to NYSE Arca, the BRTI is calculated in real time
based on the universe of the currently unmatched limit orders to buy
or sell in the BTC/USD pair of all Constituent Bitcoin Platforms.
See id. at 26076.
---------------------------------------------------------------------------

    The Trust will issue and redeem Shares to authorized participants
on an ongoing basis in one or more ``Baskets'' of 50,000 Shares. The
creation and redemption of a Basket requires the delivery to the Trust,
or the distribution by the Trust, of the number of whole and fractional
bitcoins represented by each Basket being created or redeemed.\38\
Creation orders and redemption orders may be placed either ``in-kind''
or ``in-cash.'' Although the Trust will create Baskets only upon the
receipt of bitcoins, and will redeem Baskets only by distributing
bitcoins, an authorized participant may deposit cash with the
Administrator, which will facilitate the purchase or sale of bitcoins
through a liquidity provider on behalf of an authorized participant
(``Conversion Procedures'').\39\
---------------------------------------------------------------------------

    \38\ See id. at 26076-77.
    \39\ The Conversion Procedures will be facilitated by a single
liquidity provider, which will be selected by the Sponsor on an
order-by-order basis. In the event that an order cannot be filled in
its entirety by a single liquidity provider, additional liquidity
provider(s) will be selected by the Sponsor to fill the remaining
amount. See id. at 26076-78.
---------------------------------------------------------------------------

III. Discussion

A. The Applicable Standard for Review

    The Commission must consider whether NYSE Arca's proposal is
consistent with the Exchange Act. Section 6(b)(5) of the Exchange Act
requires, in relevant part, that the rules of a national securities
exchange be designed ``to prevent fraudulent and manipulative acts and
practices'' and ``to protect investors and the public interest.'' \40\
Under the Commission's Rules of Practice, the ``burden to demonstrate
that a proposed rule change is consistent with the Exchange Act and the
rules and regulations issued thereunder . . . is on the self-regulatory
organization [`SRO'] that proposed the rule change.'' \41\
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78f(b)(5). Pursuant to Section 19(b)(2) of the
Exchange Act, 15 U.S.C. 78s(b)(2), the Commission must disapprove a
proposed rule change filed by a national securities exchange if it
does not find that the proposed rule change is consistent with the
applicable requirements of the Exchange Act. Exchange Act Section
6(b)(5) states that an exchange shall not be registered as a
national securities exchange unless the Commission determines that
``[t]he rules of the exchange are 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 regulating, clearing, settling, processing
information with respect to, and 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; and are not designed
to permit unfair discrimination between customers, issuers, brokers,
or dealers, or to regulate by virtue of any authority conferred by
this title matters not related to the purposes of this title or the
administration of the exchange.'' 15 U.S.C. 78f(b)(5).
    \41\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
---------------------------------------------------------------------------

    The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\42\ and any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Exchange Act and the applicable rules and
regulations.\43\ Moreover, ``unquestioning reliance'' on an SRO's
representations in a proposed rule change is not sufficient to justify
Commission approval of a proposed rule change.\44\
---------------------------------------------------------------------------

    \42\ See id.
    \43\ See id.
    \44\ Susquehanna Int'l Group, LLP v. Securities and Exchange
Commission, 866 F.3d 442, 447 (D.C. Cir. 2017) (``Susquehanna'').
---------------------------------------------------------------------------

B. Whether NYSE Arca Has Met Its Burden To Demonstrate That the
Proposal Is Designed To Prevent Fraudulent and Manipulative Acts and
Practices

(1) Assertions That Other Means Besides Surveillance-Sharing Agreements
Will Be Sufficient To Prevent Fraudulent and Manipulative Acts and
Practices
    As stated above, the Commission has recognized that a listing
exchange could demonstrate that other means to prevent fraudulent and
manipulative acts and practices are sufficient to justify dispensing
with a comprehensive surveillance-sharing agreement with a regulated
market of significant size, including by demonstrating that the bitcoin
market as a whole or the relevant underlying bitcoin market is uniquely
and inherently resistant to fraud and manipulation.\45\ Such resistance
to fraud and manipulation must be novel and beyond those protections
that exist in traditional commodities or securities markets.\46\
---------------------------------------------------------------------------

    \45\ See USBT Order, 85 FR at 12597 n.23. The Commission 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. See id.
    \46\ See id. at 12597.
---------------------------------------------------------------------------

    NYSE Arca asserts that the bitcoin marketplace has matured rapidly
in recent years regarding user growth, market capitalization, volume,
market participants, and liquidity shifts, such that billion-dollar
bitcoin transactions have occurred without significantly distorting the
marketplace.\47\ NYSE Arca further asserts that bitcoin trades in a
well-arbitraged and distributed market.\48\ NYSE Arca concludes that,
due to the linkage between the bitcoin markets and the presence of
arbitrageurs in those markets, the manipulation of the price of bitcoin
on any Constituent Bitcoin Platform would likely require overcoming the
liquidity supply of such arbitrageurs who are potentially eliminating
any cross-market pricing differences.\49\
---------------------------------------------------------------------------

    \47\ See Notice, 86 FR at 26078.
    \48\ See id. at 26080.
    \49\ See id.
---------------------------------------------------------------------------

    As with the previous proposals, the Commission here concludes that
the Exchange's assertions about the nature of the bitcoin market do not
constitute other means to prevent fraud and manipulation sufficient to
justify dispensing with the requisite surveillance-sharing
agreement.\50\ The Exchange argues that the maturation of the bitcoin
market mitigates against the Commission's concerns about fraud and
manipulation,\51\ but NYSE Arca provides no evidence for how such
maturation serves to detect and deter potential fraud and manipulation.
Nor does the Exchange provide any data or analysis to support its
assertions regarding efficient price arbitrage across bitcoin
platforms, either in terms of how closely bitcoin prices are aligned
across different bitcoin trading venues or how quickly price
disparities may be arbitraged away. Indeed, NYSE Arca

concedes that ``the global [b]itcoin market is not inherently resistant
to fraud and manipulation.'' \52\ As stated above, ``unquestioning
reliance'' on an SRO's representations in a proposed rule change is not
sufficient to justify Commission approval of a proposed rule
change.\53\
---------------------------------------------------------------------------

    \50\ One commenter describes digital assets such as bitcoin, and
the blockchains on which they rely, as having complexity that makes
users vulnerable to fraud. See letter from JC, dated June 24, 2021
(``JC Letter'').
    \51\ The Commission notes that the Exchange does not explicitly
tie the asserted maturation of the bitcoin market to an argument
that such market evolution provides sufficient means besides
surveillance-sharing agreements to prevent fraud and manipulation.
    \52\ See Notice, 86 FR at 26080. See also id. at 26078 (``There
has been concern over whether cryptocurrency exchanges have
mechanisms in place to report and remediate price and overall,
ensure integrity.'').
    \53\ See supra note 44.
---------------------------------------------------------------------------

    Efficient price arbitrage, moreover, is not sufficient to dispense
with surveillance-sharing agreements.\54\ The Commission has stated,
for example, that even for equity options based on securities listed on
national securities exchanges, the Commission relies on surveillance-
sharing agreements to detect and deter fraud and manipulation.\55\
Here, the Exchange provides no evidence to support its assertion of
efficient price arbitrage across bitcoin platforms, let alone any
evidence that price arbitrage in the bitcoin market is novel or unique
so as to warrant the Commission dispensing with the requisite
surveillance-sharing agreement. Moreover, NYSE Arca does not take into
account that a market participant with a dominant ownership position
would not find it prohibitively expensive to overcome the liquidity
supplied by arbitrageurs and could use dominant market share to engage
in manipulation.\56\
---------------------------------------------------------------------------

    \54\ See Winklevoss Order, 83 FR at 37586; SolidX Order, 82 FR
at 16256-57; USBT Order, 85 FR at 12601.
    \55\ See, e.g., USBT Order, 85 FR at 12601.
    \56\ See, e.g., Winklevoss Order, 83 FR at 37584; USBT Order, 85
FR at 12600-01.
---------------------------------------------------------------------------

    Furthermore, NYSE Arca concedes that the global bitcoin market is
not inherently resistant to fraud and manipulation and that concerns
exist over whether bitcoin trading platforms ``have mechanisms in place
to report and remediate price and overall, ensure market integrity.''
\57\ In addition, the Trust's Registration Statement acknowledges that
``[bitcoin platforms] are relatively new and, in some cases, largely
unregulated, and, therefore, may be more exposed to fraud and security
breaches than established, regulated exchanges for other financial
assets or instruments;'' that the bitcoin network is currently
vulnerable to a ``51% attack,'' in which a bad actor or actors that
control a majority of the processing power dedicated to mining on the
bitcoin network may be able to gain full control of the network and the
ability to manipulate the bitcoin blockchain; that ``in 2019 there were
reports claiming that 80-95% of Bitcoin trading volume on [bitcoin
platforms] was false or non-economic in nature;'' and that ``over the
past several years, some [bitcoin trading platforms] have been closed
due to fraud and manipulative activity, business failure or security
breaches.'' \58\
---------------------------------------------------------------------------

    \57\ See supra note 52 and accompanying text.
    \58\ See Registration Statement at 14, 17, 36.
---------------------------------------------------------------------------

    NYSE Arca also does not contest the presence of possible sources of
fraud and manipulation in the bitcoin spot market generally that the
Commission has raised in previous orders, which have included (1)
``wash'' trading, (2) persons with a dominant position in bitcoin
manipulating bitcoin pricing, (3) hacking of the bitcoin network and
trading platforms, (4) malicious control of the bitcoin network, (5)
trading based on material, non-public information (such as plans of
market participants to significantly increase or decrease their
holdings in bitcoin; new sources of demand for bitcoin; the decision of
a bitcoin-based investment vehicle on how to respond to a ``fork'' in
the bitcoin blockchain, which would create two different, non-
interchangeable types of bitcoin), or based on the dissemination of
false and misleading information, (6) manipulative activity involving
the purported ``stablecoin'' Tether (USDT), and (7) fraud and
manipulation at bitcoin trading platforms.\59\
---------------------------------------------------------------------------

    \59\ See USBT Order, 85 FR at 12600-01 & nn.66-67 (discussing J.
Griffin & A. Shams, Is Bitcoin Really Untethered? (October 28,
2019), available at https://ssrn.com/abstract=3195066 and published
in 75 J. Finance 1913 (2020)); Winklevoss Order, 83 FR at 37585-86.
---------------------------------------------------------------------------

    Instead, NYSE Arca asserts that the methodology and framework of
the Index used by the Trust to determine the value of its bitcoin
assets and its NAV serve to mitigate against fraud and
manipulation.\60\ First, NYSE Arca asserts that the methodology
employed in constructing the Index makes the Index more resistant to
manipulation than other measurements that employ different
methodologies and that the Benchmark Administrator aggregates the trade
data from the Constituent Bitcoin Platforms in a manner designed to
resist manipulation.\61\ NYSE Arca states that the Index utilizes
partitions to ensure large individual trades have a limited effect on
the price of the Index, and the Index utilizes volume-weighted medians
to ensure that outlying prices do not have an excessive effect on the
value of a partition.\62\ NYSE Arca also states that transactions from
a Constituent Bitcoin Platform may be excluded from the Index
calculation if they are deemed potentially erroneous.\63\
---------------------------------------------------------------------------

    \60\ See Notice, 86 FR at 26078, 26080.
    \61\ See id. at 26076, 26079.
    \62\ See id. at 26079.
    \63\ See id. The Exchange states that, where a Constituent
Bitcoin Platform's volume-weighted median transaction price exhibits
an absolute percentage deviation from the volume-weighted median
price of other Constituent Bitcoin Platform transactions greater
than the potentially erroneous data parameter (10%), then
transactions from that Constituent Bitcoin Platform are deemed
potentially erroneous and excluded from the index calculation. See
id.
---------------------------------------------------------------------------

    Second, NYSE Arca argues that the Index's exclusive use of
transactions from Constituent Bitcoin Platforms mitigates the effects
of potential manipulation of the bitcoin market.\64\ NYSE Arca states
that, to be eligible for inclusion in the Index, a Constituent Bitcoin
Platform must make trade and order data available through an Automatic
Programming Interface with sufficient reliability, relevant data, and
appropriate speed, and must meet a minimum trading volume
threshold.\65\ In addition, NYSE Arca states that a Constituent Bitcoin
Platform must enforce policies to ensure fair and transparent market
conditions; have processes in place to impede illegal or manipulative
trading practices; and comply with applicable law and regulation,
including proper Anti-Money Laundering (``AML'') and Know-Your-Customer
(``KYC'') procedures.\66\ NYSE Arca states that the calculation agent
of the Index conducts a thorough review of any bitcoin trading platform
under consideration and the arrangements of all Constituent Bitcoin
Platforms are reviewed regularly to ensure they continue to meet all
criteria.\67\
---------------------------------------------------------------------------

    \64\ See id. at 26080.
    \65\ See id. at 26078. The Exchange states that the Index
included over $133,293,551,000 in bitcoin trades (approximately
16,304,168 bitcoins) during the one-year period ended December 31,
2020. See id. at 26076.
    \66\ See id. at 26078.
    \67\ See id. at 26079.
---------------------------------------------------------------------------

    Third, NYSE Arca asserts that the Commodity Futures Trading
Commission (``CFTC'') has been successfully exercising its enforcement
authority related to fraud and manipulation on the Constituent Bitcoin
Platforms.\68\ In addition, the Exchange asserts that the Constituent
Bitcoin Platforms must enter into a data sharing agreement with the
CME, cooperate with inquiries and investigations of regulators and the
Benchmark Administrator, and submit each of their clients to their KYC
procedures.\69\ According to the Exchange, in the case of any
suspicious trades on the Constituent Bitcoin Platforms, the CME would
therefore be able to discover all

material trade information, including the identities of the customers
placing the trades.\70\
---------------------------------------------------------------------------

    \68\ See id.
    \69\ See id.
    \70\ See id.
---------------------------------------------------------------------------

    Finally, NYSE Arca asserts that the oversight of the Index by the
Benchmark Administrator and the CME mitigates concerns relating to
manipulation.\71\ The Exchange states that, to date, there has been no
evidence that the Index has been subject to manipulation or that the
``Index provider'' \72\ has been failing to maintain processes and
controls to prevent manipulation by its organization. It further
asserts that the CME participates in an oversight committee of the
Index that is responsible for regularly reviewing and overseeing the
methodology, practice, standards, and scope of the Index to ensure that
it continues to accurately track the spot prices of bitcoin.\73\
According to the Exchange, given that the Index formula and data
sources are publicly available, if manipulation of the Index were to
occur, it would be quickly detected by the CME and hundreds of
sophisticated market participants.\74\
---------------------------------------------------------------------------

    \71\ See id. at 26076, 26079.
    \72\ See id. at 26079. The Exchange uses the term ``Index
provider'' with respect to this particular assertion. The Commission
understands the term to mean the Benchmark Administrator.
    \73\ See id. at 26076, 26079.
    \74\ See id. at 26079.
---------------------------------------------------------------------------

    Based on assertions made and the information provided, the
Commission can find no basis to conclude that NYSE Arca has articulated
other means to prevent fraud and manipulation that are sufficient to
justify dispensing with the requisite surveillance-sharing agreement.
First, the record does not demonstrate that the proposed methodology
for calculating the Index would make the proposed ETP resistant to
fraud or manipulation such that a surveillance-sharing agreement with a
regulated market of significant size is unnecessary.\75\ Specifically,
the Exchange has not assessed the possible influence that spot
platforms not included among the Constituent Bitcoin Platforms would
have on bitcoin prices used to calculate the Index. As discussed above,
NYSE Arca does not contest the presence of possible sources of fraud
and manipulation in the bitcoin spot market generally.\76\ Instead,
NYSE Arca focuses its analysis on the Constituent Bitcoin Platforms.
Importantly, however, the record does not demonstrate that these
possible sources of fraud and manipulation in the broader bitcoin spot
market do not affect the Constituent Bitcoin Platforms that represent a
slice of the bitcoin spot market. To the extent that fraudulent and
manipulative trading on the broader bitcoin market could influence
prices or trading activity on the Constituent Bitcoin Platforms, the
Constituent Bitcoin Platforms would not be inherently resistant to
manipulation.\77\
---------------------------------------------------------------------------

    \75\ The Commission has previously considered and rejected
similar arguments about the valuation of bitcoin according to a
benchmark or reference price. See, e.g., SolidX Order, 82 FR at
16258; Winklevoss Order, 83 FR at 37587-90; USBT Order, 85 FR at
12599-601.
    \76\ See supra notes 57-59 and accompanying text.
    \77\ See USBT Order, 85 FR at 12601.
---------------------------------------------------------------------------

    Moreover, the Exchange's assertions that the Index's methodology
helps make the Index resistant to manipulation are contradicted by the
Registration Statement's own statements. The Sponsor raises, but does
not address here, concerns regarding the Index in the Registration
Statement, stating that ``the [Index] has a limited history and there
are limitations with the price of bitcoin reflected there.'' \78\ And
while the Exchange asserts that the Index's exclusive use of
Constituent Bitcoin Platforms helps make the Index resistant to
manipulation, such assertions are called into question by the Sponsor's
own statements in the Registration Statement that ``[b]itcoin
[platforms] on which users trade bitcoin . . . may be more exposed to
fraud and security breaches than established, regulated exchanges for
other financial assets or instruments, which could have a negative
impact on the performance of the Trust.'' \79\ Constituent Bitcoin
Platforms are a subset of the existing bitcoin platforms. Although the
Sponsor raises concerns regarding fraud and security of bitcoin
platforms in the Registration Statement, the Exchange does not explain
how or why such concerns are consistent with its assertion that the
Index is resistant to fraud and manipulation.
---------------------------------------------------------------------------

    \78\ See Registration Statement at 30.
    \79\ See id. at 14.
---------------------------------------------------------------------------

    NYSE Arca also has not shown that its proposed use of 12 equally-
sized time intervals of five minute length over the observation window
between 3:00 p.m. and 4:00 p.m. E.T. to calculate the Index would
effectively be able to eliminate fraudulent or manipulative activity
that is not transient. Fraud and manipulation in the bitcoin spot
market could persist for a ``significant duration.'' \80\ The Exchange
does not connect the use of such partitions to the duration of the
effects of the wash and fictitious trading that may exist in the
bitcoin spot market.\81\ Thus, the Exchange fails to establish how the
Index's methodology eliminates fraudulent or manipulative activity that
is not transient.\82\
---------------------------------------------------------------------------

    \80\ See USBT Order, 85 FR at 12601 n.66; see also id. at 12607.
    \81\ See WisdomTree Order, 86 FR at 69327.
    \82\ See USBT Order, 85 FR at 12607.
---------------------------------------------------------------------------

    While the Exchange asserts that the oversight of the Constituent
Bitcoin Platforms helps to prevent and detect manipulation, the level
of regulation of the Constituent Bitcoin Platforms is not equivalent to
the obligations, authority, and oversight of national securities
exchanges or futures exchanges and therefore is not an appropriate
substitute.\83\ National securities exchanges are required to have
rules that are ``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 regulating,
clearing, settling, processing information with respect to, and
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.'' \84\ Moreover, national securities exchanges must file
proposed rules with the Commission regarding certain material aspects
of their operations,\85\ and the Commission has the authority to
disapprove any such rule that is not consistent with the requirements
of the Exchange Act.\86\ Thus, national securities exchanges are
subject to Commission oversight of, among other things, their
governance, membership qualifications, trading rules, disciplinary
procedures, recordkeeping, and fees.\87\
---------------------------------------------------------------------------

    \83\ See also id. at 12603-05.
    \84\ See 15 U.S.C. 78f(b)(5).
    \85\ 17 CFR 240.19b-4(a)(6)(i).
    \86\ Section 6 of the Exchange Act, 15 U.S.C. 78f, requires
national securities exchanges to register with the Commission and
requires an exchange's registration to be approved by the
Commission, and Section 19(b) of the Exchange Act, 15 U.S.C. 78s(b),
requires national securities exchanges to file proposed rules
changes with the Commission and provides the Commission with the
authority to disapprove proposed rule changes that are not
consistent with the Exchange Act. Designated contract markets
(``DCMs'') (commonly called ``futures markets'') registered with and
regulated by the CFTC must comply with, among other things, a
similarly comprehensive range of regulatory principles and must file
rule changes with the CFTC. See, e.g., Designated Contract Markets
(DCMs), CFTC, available at https://www.cftc.gov/IndustryOversight/TradingOrganizations/DCMs/index.htm.
    \87\ See Winklevoss Order, 83 FR at 37597.
---------------------------------------------------------------------------

    The Constituent Bitcoin Platforms, on the other hand, have none of
these requirements (none are registered as a national securities
exchange).\88\ While the Exchange asserts that various entities require
the Constituent Bitcoin Platforms to adopt certain policies and
processes, including AML/KYC

compliance policies, such requirements are fundamentally different from
the Exchange Act's requirements for national securities exchanges.\89\
---------------------------------------------------------------------------

    \88\ See 15 U.S.C. 78e, 78f.
    \89\ See USBT Order, 85 FR at 12603. The Commission has
previously concluded that such AML and KYC policies and procedures
do not serve as a substitute for, and are not otherwise dispositive
in the analysis regarding the importance of having a surveillance-
sharing agreement with a regulated market of significant size
relating to bitcoin. For example, AML and KYC policies and
procedures do not substitute for the sharing of information about
market trading activity or clearing activity and do not substitute
for regulation of a national securities exchange. See id. at 12603
n.101.
---------------------------------------------------------------------------

    NYSE Arca's further assertions regarding CFTC's enforcement
authority with respect to the Constituent Bitcoin Platforms also do not
establish a level of oversight sufficient to dispense with the
requisite surveillance-sharing agreement. While the Commission
recognizes that the CFTC maintains some jurisdiction over the bitcoin
spot market, under the Commodity Exchange Act, the CFTC does not have
regulatory authority over bitcoin spot trading platforms, including the
Constituent Bitcoin Platforms.\90\ Except in certain limited
circumstances, bitcoin spot trading platforms are not required to
register with the CFTC, and the CFTC does not set standards for,
approve the rules of, examine, or otherwise regulate bitcoin spot
markets.\91\ As the CFTC itself stated, while the CFTC ``has an
important role to play,'' U.S. law ``does not provide for direct,
comprehensive Federal oversight of underlying Bitcoin or virtual
currency spot markets.'' \92\
---------------------------------------------------------------------------

    \90\ See id. at 12604.
    \91\ See id.
    \92\ See Winklevoss Order, 83 FR at 37599 n.288.
---------------------------------------------------------------------------

    Further, although NYSE Arca states that the Constituent Bitcoin
Platforms must cooperate with inquiries and investigations of
regulators and the Benchmark Administrator, it does not describe the
scope of such requirements or what authority the Benchmark
Administrator or regulators would have to compel the platforms''
cooperation. And while NYSE Arca asserts that the CME has in place
information-sharing agreements with the Constituent Bitcoin Platforms,
it does not provide any information on the scope, terms, or enforcement
authority for such agreements. Nor has NYSE Arca put any information in
the record as to whether and how it would use or enforce such
agreements. Moreover, such agreements are contractual in nature and do
not satisfy the regulatory requirements or purposes of national
securities exchanges and the Exchange Act. The CME (and the CFTC, as
discussed above) does not have regulatory authority over the spot
bitcoin trading platforms,\93\ and, while the CME is regulated by the
CFTC, the CFTC's regulations do not extend to the Constituent Bitcoin
Platforms by virtue of such contractual agreements.
---------------------------------------------------------------------------

    \93\ See supra notes 90-92 and accompanying text.
---------------------------------------------------------------------------

    While NYSE Arca asserts the Benchmark Administrator oversees the
integrity of the Index, the oversight by the Benchmark Administrator
does not represent a unique measure to resist manipulation beyond
mechanisms that exist in securities or commodities markets. Other
commodity-based and equity index ETPs approved by the Commission for
listing and trading utilize reference rates or indices administered by
similar benchmark administrators,\94\ and the Commission has not, in
those instances, dispensed with the need for a surveillance-sharing
agreement with a significant regulated market.\95\ For the same reason,
even if, as the Exchange claims, there is no evidence that the Index
has been subject to manipulation or that the Benchmark Administrator
ever failed to maintain processes and controls to prevent manipulation
by its organization, such lack of evidence is not a basis for the
Commission to disregard the need for a surveillance-sharing agreement.
---------------------------------------------------------------------------

    \94\ See, e.g., Securities Exchange Act Release Nos. 80840 (June
1, 2017) 82 FR 26534 (June 7, 2017) (SR-NYSEArca-2017-33) (approving
the listing and trading of shares of exchange traded funds seeking
to track the Solactive GLD EUR Gold Index, Solactive GLD GBP Gold
Index, and the Solactive GLD JPY Gold Index); and 83046 (Apr. 13,
2018) 83 FR 17462 (Apr. 19, 2018) (SR-Nasdaq-2018-012) (approving
the listing and trading of shares of an exchange-traded fund that
seeks to track an equity index, the CBOE Russell 2000 30-Delta
BuyWrite V2 Index).
    \95\ See USBT Order, 85 FR at 12605. See also supra note 19.
---------------------------------------------------------------------------

    Moreover, the Benchmark Administrator does not itself exercise
governmental regulatory authority. Rather, the Benchmark Administrator
is a registered, privately-held company in England.\96\ The Benchmark
Administrator's relationship with the Constituent Bitcoin Platforms is
based on their participation in the determination of reference rates,
such as the Index. While the Benchmark Administrator is regulated by
the UK FCA as a benchmark administrator, the UK FCA's regulations do
not extend to the Constituent Bitcoin Platforms by virtue of their
trade prices serving as input data underlying the Index.\97\
---------------------------------------------------------------------------

    \96\ See https://blog.cfbenchmarks.com/legal/ (stating that the
Benchmark Administrator is authorized and regulated by the UK
Financial Conduct Authority (``UK FCA'') as a registered Benchmark
Administrator (FRN 847100) under the EU benchmark regulation, and
further noting that the Benchmark Administrator is a member of the
Crypto Facilities group of companies which is in turn a member of
the Payward, Inc. group of companies, and Payward, Inc. is the owner
and operator of the Kraken Exchange, a venue that facilitates the
trading of cryptocurrencies). The Commission notes that the Kraken
is one of the Constituent Bitcoin Platforms underlying the Index.
    \97\ See USBT Order, 85 FR at 12604. The Benchmark Administrator
is also not required to apply certain provisions of EU benchmark
regulation to the Constituent Bitcoin Platforms because the
Reference Rate's input data is not ``contributed.'' See Benchmark
Statement, at 5 available at https://docs-cfbenchmarks.s3.amazonaws.com/CME+CF+Benchmark+Statement.pdf.
---------------------------------------------------------------------------

    Further, the oversight performed by the Benchmark Administrator of
the Constituent Bitcoin Platforms is for the purpose of ensuring the
accuracy and integrity of the Index.\98\ Such oversight serves a
fundamentally different purpose as compared to the regulation of
national securities exchanges and the requirements of the Exchange Act.
Likewise, while the Exchange states that the CME participates in an
oversight committee for the Index, the purpose of such committee is to
ensure that the Index continues to accurately track the spot prices of
bitcoin. While the Commission recognizes that these oversight functions
may be important in ensuring the integrity of the Index, such
requirements do not imbue either the Benchmark Administrator, the CME
with respect to the Constituent Bitcoin Platforms, or the Constituent
Bitcoin Platforms themselves, with regulatory authority similar to that
the Exchange Act confers upon self-regulatory organizations such as
national securities exchanges.\99\
---------------------------------------------------------------------------

    \98\ See Notice, 86 FR at 26077 (``. . . an oversight function
is implemented by the Benchmark Administrator in seeking to ensure
that the Index is administered through codified policies for Index
integrity.'').
    \99\ See 15 U.S.C. 78f(b).
---------------------------------------------------------------------------

    Finally, the Exchange does not sufficiently explain the
significance of the Index's purported resistance to manipulation to the
overall analysis of whether the proposal to list and trade the Shares
is designed to prevent fraud and manipulation. The Index is used by the
Trust to value its bitcoin and to calculate its NAV. However, the
Shares would trade at market-based prices in the secondary market, not
at NAV.
    In sum, none of NYSE Arca's assertions suggests that other means to
prevent fraud and manipulation are sufficient to justify dispensing
with the requisite surveillance-sharing agreement. Importantly, even if
NYSE Arca had provided evidence to establish its assertions addressed
above regarding the robustness of the Index methodology and framework
and the regulation and oversight of the Constituent Bitcoin Platforms
and Index, such assertions would render the proposed ETP no

more resistant to manipulation than derivative products based on
traditional commodities or securities markets.\100\ Thus, the record
does not establish that NYSE Arca may satisfy Section 6(b)(5) of the
Exchange Act without entering into a surveillance-sharing agreement
with a regulated market of significant size.
---------------------------------------------------------------------------

    \100\ See USBT Order, 85 FR at 12599.
---------------------------------------------------------------------------

    (2) Assertions Relating to Surveillance-Sharing Agreements
    As NYSE Arca has not demonstrated that other means besides
surveillance-sharing agreements will be sufficient to prevent
fraudulent and manipulative acts and practices, the Commission next
examines whether the record supports the conclusion that NYSE Arca has
entered into a comprehensive surveillance-sharing agreement with a
regulated market of significant size relating to the underlying assets.
In this context, the term ``market of significant size'' includes a
market (or group of markets) as to which (i) there is a reasonable
likelihood that a person attempting to manipulate the ETP would also
have to trade on that market to successfully manipulate the ETP, so
that a surveillance-sharing agreement would assist in detecting and
deterring misconduct, and (ii) it is unlikely that trading in the ETP
would be the predominant influence on prices in that market.\101\
---------------------------------------------------------------------------

    \101\ See Winklevoss Order, 83 FR at 37594. This definition is
illustrative and not exclusive. There could be other types of
``significant markets'' and ``markets of significant size,'' but
this definition is an example that provides guidance to market
participants. See id.
---------------------------------------------------------------------------

    However, NYSE Arca does not identify any market as a ``market of
significant size'' and accordingly makes no assertions regarding, and
provides no information to establish, either prong of the ``market of
significant size'' determination.
    The requirements of Section 6(b)(5) of the Exchange Act apply to
the rules of national securities exchanges. Accordingly, the relevant
obligation for a comprehensive surveillance-sharing agreement with a
regulated market of significant size, or other means to prevent
fraudulent and manipulative acts and practices that are sufficient to
justify dispensing with the requisite surveillance-sharing agreement,
resides with the listing exchange. Because there is insufficient
evidence in the record demonstrating that NYSE Arca has satisfied this
obligation, the Commission cannot approve the proposed ETP for listing
and trading on NYSE Arca.

C. Whether NYSE Arca Has Met Its Burden to Demonstrate That the
Proposal Is Designed To Protect Investors and the Public Interest

    NYSE Arca contends that, if approved, the proposed ETP would
protect investors and the public interest. However, the Commission must
consider these potential benefits in the broader context of whether the
proposal meets each of the applicable requirements of the Exchange
Act.\102\ Because NYSE Arca has not demonstrated that its proposed rule
change is designed to prevent fraudulent and manipulative acts and
practices, the Commission must disapprove the proposal.
---------------------------------------------------------------------------

    \102\ See id. at 37601. See also GraniteShares Order, 83 FR at
43931; ProShares Order, 83 FR at 43941; USBT Order, 85 FR at 12615.
---------------------------------------------------------------------------

    NYSE Arca asserts that the Trust will provide investors with
exposure to bitcoin in a manner that is more efficient and convenient
than the purchase of stand-alone bitcoin, while also mitigating some of
the risk by reducing the volatility typically associated with the
purchase of stand-alone bitcoin and without the uncertain and often
complex requirements relating to acquiring and/or holding bitcoin.\103\
NYSE Arca concludes that the manipulation concerns previously
articulated by the Commission are mitigated by investor protection
issues.\104\
---------------------------------------------------------------------------

    \103\ See Notice, 86 FR at 26073.
    \104\ See id. at 26078.
---------------------------------------------------------------------------

    In essence, NYSE Arca asserts that the risky nature of a direct
investment in the underlying bitcoin compels approval of the proposed
rule change. The Commission disagrees. Pursuant to Section 19(b)(2) of
the Exchange Act, the Commission must approve a proposed rule change
filed by a national securities exchange if it finds that the proposed
rule change is consistent with the applicable requirements of the
Exchange Act--including the requirement under Section 6(b)(5) that the
rules of a national securities exchange be designed to prevent
fraudulent and manipulative acts and practices--and it must disapprove
the filing if it does not make such a finding.\105\ Thus, even if a
proposed rule change purports to protect investors from a particular
type of investment risk--such as complexity to acquire and/or hold the
underlying asset--the proposed rule change may still fail to meet the
requirements under the Exchange Act.\106\
---------------------------------------------------------------------------

    \105\ See Exchange Act Section 19(b)(2)(C), 15 U.S.C.
78s(b)(2)(C).
    \106\ See SolidX Order, 82 FR at 16259; WisdomTree Order, 86 FR
at 69334.
---------------------------------------------------------------------------

    Here, even if it were true that, compared to trading in unregulated
bitcoin spot markets, trading a bitcoin-based ETP on a national
securities exchange provides some additional protection to investors,
the Commission must consider this potential benefit in the broader
context of whether the proposal meets each of the applicable
requirements of the Exchange Act.\107\ As explained above, for bitcoin-
based ETPs, the Commission has consistently required that the listing
exchange have a comprehensive surveillance-sharing agreement with a
regulated market of significant size related to bitcoin, or demonstrate
that other means to prevent fraudulent and manipulative acts and
practices are sufficient to justify dispensing with the requisite
surveillance-sharing agreement. The listing exchange has not met that
requirement here. Therefore, the Commission is unable to find that the
proposed rule change is consistent with the statutory standard.
---------------------------------------------------------------------------

    \107\ See supra note 102.
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2) of the Exchange Act, the Commission
must disapprove a proposed rule change filed by a national securities
exchange if it does not find that the proposed rule change is
consistent with the applicable requirements of the Exchange Act--
including the requirement under Section 6(b)(5) that the rules of a
national securities exchange be designed to prevent fraudulent and
manipulative acts and practices.\108\
---------------------------------------------------------------------------

    \108\ See 15 U.S.C. 78s(b)(2)(C).
---------------------------------------------------------------------------

    For the reasons discussed above, NYSE Arca has not met its burden
of demonstrating that the proposal is consistent with Exchange Act
Section 6(b)(5),\109\ and, accordingly, the Commission must disapprove
the proposal.\110\
---------------------------------------------------------------------------

    \109\ 15 U.S.C. 78f(b)(5).
    \110\ In disapproving the proposed rule change, the Commission
has considered its impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f). A commenter argues, for efficiency
reasons, against approving a bitcoin ETP. This commenter asserts
that the adoption of multiple digital assets would force merchants
to deal with ``complexity [that] doesn't foster [the] modularity
which is needed to gain economic efficiency.'' See JC Letter at 1.
For the reasons discussed throughout, however, see supra note 40,
the Commission is disapproving the proposed rule change because it
does not find that the proposed rule change is consistent with the
Exchange Act. See also USBT Order, 85 FR at 12615.
---------------------------------------------------------------------------

D. Other Comments

    Comment letters address the general nature and value of bitcoin;
\111\ the inherent value of, and risks of investing

in, bitcoin; \112\ the potential impact of Commission approval of
bitcoin ETPs on the U.S. economy and financial system; \113\ and the
retirement investment risks of a bitcoin ETP.\114\ Ultimately, however,
additional discussion of these topics is unnecessary, as they do not
bear on the basis for the Commission's decision to disapprove the
proposal.
---------------------------------------------------------------------------

    \111\ See JC Letter; letter from Sam Ahn, dated May 26, 2021
(``Ahn Letter'').
    \112\ See JC Letter; Ahn Letter.
    \113\ See JC Letter.
    \114\ See id.
---------------------------------------------------------------------------

IV. Conclusion

    For the reasons set forth above, the Commission does not find,
pursuant to Section 19(b)(2) of the Exchange Act, that the proposed
rule change is consistent with the requirements of the Exchange Act and
the rules and regulations thereunder applicable to a national
securities exchange, and in particular, with Section 6(b)(5) of the
Exchange Act.
    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act, that proposed rule change SR-NYSEArca-2021-31 be, and
hereby is, disapproved.

    By the Commission.
Vanessa A. Countryman,
Secretary.
 [FR Doc. 2021-28254 Filed 12-28-21; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 185 (Tuesday, September 26, 2023)]
[Notices]
[Pages 66149-66150]
[FR Doc No: 2023-21064]

=======================================================================
-----------------------------------------------------------------------

UNIFIED CARRIER REGISTRATION PLAN

Sunshine Act Meetings

TIME AND DATE: September 28, 2023, 12:00 p.m. to 3:00 p.m., Eastern
Time.

PLACE: This meeting will be accessible via conference call and via Zoom
Meeting and Screenshare. Any interested person may call (i) 1-929-205-
6099 (US Toll) or 1-669-900-6833 (US Toll), Meeting ID: 977 5563 5193,
to listen and participate in this meeting. The website to participate
via Zoom Meeting and Screenshare is https://kellen.zoom.us/meeting/register/tJMqcuyurT4rE9ci8uT0K9V3WLD2Ly4pTPm5.

STATUS: This meeting will be open to the public.

MATTERS TO BE CONSIDERED: The Unified Carrier Registration Plan Board
of Directors (the ``Board'') will continue its work in developing and
implementing the Unified Carrier Registration Plan and Agreement. The
subject matter of this meeting will include:

Proposed Agenda

I. Welcome and Call to Order--UCR Board Chair

    The UCR Board Chair will welcome attendees, call the meeting to
order, call roll for the Board, confirm the presence of a quorum, and
facilitate self-introductions.

II. Verification of Publication of Meeting Notice--UCR Executive
Director

    The UCR Executive Director will verify publication of the meeting
notice on the UCR website and distribution to the UCR contact list via
email, followed by subsequent publication of the notice in the Federal
Register.

III. Review and Approval of Board Agenda--UCR Board Chair

For Discussion and Possible Board Action

    The proposed Agenda will be reviewed, and the Board will consider
adoption.
Ground Rules
[rtarr8] Board actions taken only in designated areas on agenda

IV. Approval of Minutes of the July 27 UCR Board Meeting--UCR Board
Chair

For Discussion and Possible Board Action

    Draft Minutes from the July 27, 2023 UCR Board meeting will be
reviewed. The Board will consider action to approve.

V. Report of FMCSA--FMCSA Representative

    The Federal Motor Carrier Safety Administration (FMCSA) will
provide a report on relevant agency activity.

VI. UCR Penetration Test--Kellen Representative

    Kellen's Chief Technology Officer will provide an update and report
on relevant activity.

VII. Chief Legal Officer's Report--UCR Chief Legal Officer

    The UCR Chief Legal Officer will provide the Board with a status
report on his efforts to protect UCR's intellectual property.

VIII. Nominations for the Position of Vice-Chair of the UCR Board--UCR
Board Chair

For Discussion and Possible Board Action

    The UCR Board Chair will ask for nominations for the position of
Vice-Chair of the UCR Board. The position will be voted on at the
December 7, 2023, UCR Board meeting. Provided a Vice-Chair is selected
at the December 7, Board meeting, that name will be submitted to FMCSA
for its consideration and possible action.

IX. Annual Unregistered Broker Letter--UCR Executive Director and
Seikosoft

For Discussion and Possible Board Action

    The UCR Executive Director and a representative from Seikosoft will
lead a discussion on a proposed initiative to send a letter to
unregistered brokers each year to improve UCR compliance within the
broker population. The Board may consider and approve the cost of
sending a letter to all brokers who remain unregistered just prior to
the enforcement date each year.

X. Subcommittee Reports

Audit Subcommittee--UCR Audit Subcommittee Chair

A. Discussion of Automatic Annual Renewal of UCR Registration--UCR
Audit Subcommittee Chair, UCR Audit Subcommittee Vice-Chair, UCR
Executive Director and Seikosoft Representatives
For Discussion and Possible Board Action
    The UCR Audit Subcommittee Chair will lead a discussion on the
issues involved in the voluntary annual automatic renewal of UCR
registrations and options for Seikosoft to design and implement a
system that allows for the voluntary annual automatic renewal of UCR
registrations using business rules defined by the UCR Audit
Subcommittee. The Board may take action to approve such options as may
be discussed. The UCR Audit Subcommittee recommends the UCR Board adopt
this proposal.
B. Discuss Options To Review and Clean up the Unregistered Motor
Carrier UCR Universe in Shadow MCMIS--UCR Audit Subcommittee Chair, UCR
Audit Subcommittee Vice-Chair, Seikosoft Representative
For Discussion and Possible Board Action
    The UCR Audit Subcommittee Chair will lead a discussion on steps
necessary for the NRS and State Auditors to review and clean up the
2022/2023 unregistered motor carriers with no activity in the previous
365 days. The Board may take action to approve such options as may be
discussed. The UCR Audit Subcommittee recommends the UCR Board adopt
this proposal.

Finance Subcommittee--UCR Finance Subcommittee Chair

2025 Registration Fee Submission--UCR Finance Subcommittee Chair
    The UCR Finance Subcommittee Chair will provide an update on the
2025 registration fee recommendation approved at the last Board
meeting.

Education and Training Subcommittee--UCR Education and Training
Subcommittee Chair

Update on Current and Future Training Initiatives--UCR Education and
Training Subcommittee Chair
    The UCR Education and Training Subcommittee Chair will provide an
update on current and planned future training initiatives.

Industry Advisory Subcommittee--UCR Industry Advisory Subcommittee
Chair

Update on Current Initiatives--UCR Industry Advisory Subcommittee Chair
    The UCR Industry Advisory Subcommittee Chair will provide an update
on current and planned initiatives regarding motor carrier industry
concerns.

Enforcement Subcommittee--UCR Enforcement Subcommittee Chair

Update on Current Initiatives--UCR Enforcement Subcommittee Chair
    The UCR Enforcement Subcommittee Chair will provide an update on
current and planned initiatives.

Dispute Resolution Subcommittee--UCR Dispute Resolution Subcommittee
Chair

Update on Current Initiatives--UCR Dispute Resolution Subcommittee
Chair
    The UCR Dispute Resolution Subcommittee Chair will provide an
update on planned initiatives.

XI. Contractor Reports--UCR Board Chair

UCR Executive Director's Report

    The UCR Executive Director will provide a report covering his
recent activity for the UCR Plan.

DSL Transportation Services, Inc.

    DSL Transportation Services, Inc. will report on the latest data
from the Focused Anomaly Reviews (FARs) program, discuss motor carrier
inspection results, pilot projects and other matters.

Seikosoft

    Seikosoft will provide an update on recent/new activity related to
the National Registration System (NRS).

UCR Administrator Report (Kellen)

    The UCR Chief of Staff will provide a management report covering
recent activity for the Depository, Operations, and Communications.

XII. Other Business--UCR Board Chair

    The UCR Board Chair will call for any other business, old or new,
from the floor.

XIII. Adjournment--UCR Board Chair

    The UCR Board Chair will adjourn the meeting.
    The agenda will be available no later than 5:00 p.m. Eastern time,
September 21, 2023, at: https://plan.ucr.gov.

CONTACT PERSON FOR MORE INFORMATION: Elizabeth Leaman, Chair, Unified
Carrier Registration Plan Board of Directors,<PHONE_NUMBER>,
[email protected].

Alex B. Leath,
Chief Legal Officer, Unified Carrier Registration Plan.
[FR Doc. 2023-21064 Filed 9-22-23; 4:15 pm]
BILLING CODE 4910-YL-P