[Federal Register Volume 86, Number 152 (Wednesday, August 11, 2021)]
[Notices]
[Pages 44062-44077]
[FR Doc No: 2021-17078]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92573; File No. SR-NYSEArca-2021-53)]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of a Proposed Rule Change To List and Trade Shares of Teucrium Bitcoin
Futures Fund Under NYSE Arca Rule 8.200-E

August 5, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on July 23, 2021, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to list and trade the shares of the following
under NYSE Arca Rule 8.200-E, Commentary .02 (``Trust Issued
Receipts''): Teucrium Bitcoin Futures Fund.Teucrium Bitcoin Futures
Fund [sic]. The proposed change is available on the Exchange's website
at www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the
following under NYSE Arca Rule 8.200-E, Commentary .02, which governs
the listing and trading of Trust Issued Receipts: Teucrium Bitcoin
Futures Fund (the ``Fund'').\4\
---------------------------------------------------------------------------

    \4\ Commentary .02 to NYSE Arca Rule 8.200-E applies to Trust
Issued Receipts that invest in ``Financial Instruments.'' The term
``Financial Instruments,'' as defined in Commentary .02(b)(4) to
NYSE Arca Rule 8.200-E, means any combination of investments,
including cash; securities; options on securities and indices;
futures contracts; options on futures contracts; forward contracts;
equity caps, collars, and floors; and swap agreements.
---------------------------------------------------------------------------

    The Fund is a series of Teucrium Commodity Trust (the ``Trust''), a
Delaware statutory trust.\5\ The Fund is managed and controlled by
Teucrium Trading, LLC (``Sponsor''). The Sponsor is registered as a
commodity pool operator (``CPO'') and a commodity trading adviser
(``CTA'') with the Commodity Futures Trading Commission (``CFTC'') and
is a member of the National Futures Association (``NFA'').
---------------------------------------------------------------------------

    \5\ On May 20, 2021, the Trust filed with the Commission a
registration statement on Form S-1 under the Securities Act of 1933
(15 U.S.C. 77a) (``Securities Act'') relating to the Fund (File No.
333-256339) (the ``Registration Statement''). The description of the
operation of the Trust and the Fund herein is based, in part, on the
Registration Statement.
---------------------------------------------------------------------------

The Fund's Investment Objective and Strategy
    According to the Registration Statement, the CME currently offers
two Bitcoin futures contracts, one contract representing 5 Bitcoin
(``BTC Contracts'') and another contract representing 0.10 Bitcoin
(``MBT Contracts''). BTC Contracts began trading on the CME Globex
trading platform on December 15, 2017 under the ticker symbol ``BTC''
and are cash-settled in U.S. dollars. MBT Contracts began trading on
the CME Globex trading platform on May 3, 2021 under the ticker symbol
``MBT'' and are also cash-settled in U.S. dollars.\6\
---------------------------------------------------------------------------

    \6\ The daily settlements in MBT are derived directly from the
settlements in BTC for each contract listing. See https://www.cmegroup.com/confluence/display/EPICSANDBOX/Bitcoin#Bitcoin-NormalDailySettlementProcedure.1.
---------------------------------------------------------------------------

    BTC Contracts and MBT Contracts each trade six consecutive monthly
contracts plus two additional December contract months (if the 6
consecutive months include December, only one additional December
contract month is listed). Because BTC Contracts and MBT Contracts are
exchange-listed, they allow investors to gain exposure to Bitcoin
without having to hold the underlying cryptocurrency. Like a futures
contract on a commodity or stock index, BTC Contracts and MBT Contracts
allow investors to hedge investment positions or speculate on the
future price of Bitcoin.
    According to the Registration Statement, the investment objective
of the Fund is to have the daily changes in the net asset value
(``NAV'') of the Fund's shares (``Shares'') reflect the daily changes
in the price of a specified benchmark (the ``Benchmark''). The
Benchmark is the average of the closing settlement prices for the first
to expire and second to expire BTC Contracts listed on the Chicago
Mercantile Exchange, Inc. (``CME''). The first to expire and second to
expire BTC Contracts and MBT Contracts are referred to as the Bitcoin
Futures Contracts. Under normal market conditions,\7\ the Fund will
invest in Bitcoin Futures Contracts and in cash and cash
equivalents.\8\
---------------------------------------------------------------------------

    \7\ The term ``normal market conditions'' includes, but is not
limited to, the absence of: Trading halts in the applicable
financial markets generally; operational issues (e.g., systems
failure) causing dissemination of inaccurate market information; or
force majeure type events such as a natural or manmade disaster, act
of God, armed conflict, act of terrorism, riot or labor disruption
or any similar intervening circumstance. See NYSE Arca Rule 8.600-
E(c)(5).
    \8\ The term ``cash equivalents'' includes short term Treasury
bills, money market funds, demand deposit accounts and commercial
paper.
---------------------------------------------------------------------------

    According to the Registration Statement, the Fund seeks to maintain
its holdings in Bitcoin Futures Contracts with a roughly constant
expiration profile. Therefore, the Fund's positions will be changed or
``rolled'' on a regular basis in order to track the changing nature of
the Benchmark by closing out first to expire contracts prior to
settlement that are no longer part of the Benchmark, and then entering
into second to expire contracts. Accordingly, the Fund will never carry
futures positions all the way to cash settlement--the Fund will price
only off of the daily settlement prices of the Bitcoin Futures
Contracts.\9\ To achieve this, the Fund will roll its futures

holdings prior to cash settlement of the expiring contract.
---------------------------------------------------------------------------

    \9\ As discussed in more detail below, the CME determines the
daily settlements for Bitcoin futures based on trading activity on
CME Globex between 14:59:00 and 15:00:00 Central Time (CT), which is
the ``settlement period.''
---------------------------------------------------------------------------

    In seeking to achieve the Fund's investment objective, the Sponsor
will employ a ``neutral'' investment strategy that is intended to track
the changes in the Benchmark regardless of whether the Benchmark goes
up or goes down. The Fund will endeavor to trade in Bitcoin Futures
Contracts so that the Fund's average daily tracking error against the
Benchmark will be less than 10 percent over any period of 30 trading
days. The Fund's ``neutral'' investment strategy is designed to permit
investors generally to purchase and sell the Fund's Shares for the
purpose of investing in the Bitcoin Futures Contracts (as discussed
below). Such investors may include participants in the Bitcoin market
seeking to hedge the risk of losses in their Bitcoin-related
transactions, as well as investors seeking price exposure to the
Bitcoin market.
    According to the Registration Statement, one factor determining the
total return from investing in futures contracts is the price
relationship between soon to expire contracts and later to expire
contracts. If the futures market is in a state of backwardation (i.e.,
when the price of BTC Contracts and MBT Contracts in the future is
expected to be less than the current price), the Fund will buy later to
expire contracts for a lower price than the sooner to expire contracts
that it sells. Hypothetically, and assuming no changes to either
prevailing BTC Contracts and MBT Contracts' prices or the price
relationship between soon to expire contracts and later to expire
contracts, the value of a contract will rise as it approaches
expiration. Over time, if backwardation remained constant, the
performance of a portfolio would continue to be affected. If the
futures market is in contango, the Fund will buy later to expire
contracts for a higher price than the sooner to expire contracts that
it sells. Hypothetically, and assuming no other changes to either
prevailing BTC Contracts and MBT Contracts' prices or the price
relationship between the spot price, soon to expire contracts and later
to expire contracts, the value of a contract will fall as it approaches
expiration. Over time, if contango remained constant, the performance
of a portfolio would continue to be affected. Frequently, whether
contango or backwardation exists is a function, among other factors, of
the prevailing market conditions of the underlying market and
government policy.
Summary of the Application
    The CME is a regulated futures exchange with the requisite
oversight, controls, and regulatory scrutiny necessary to maintain,
promote, and effectuate fair and transparent trading of its listed
products, including the BTC Contracts and MBT Contracts. The BTC
Contracts and MBT Contracts are highly liquid, financially-settled
instrument with no ownership interests of any kind in actual Bitcoin.
The unique risks currently posed by the trading and/or storage of
Bitcoins are not posed by BTC Contracts and MBT Contracts. As proposed,
the Fund would solely hold BTC Contracts and MBT Contracts, and as
such, would be an investment product similar to any other exchange-
traded product (``ETP'') whose component holdings are futures contracts
traded on a regulated exchange. The Sponsor believes that investors
would be afforded all of the protections that exchanges provide,
including bilateral surveillance agreements between the listing
exchange of the ETP and the listing exchange of the ETP's futures-based
components.
    According to the Registration Statement, the Fund will be a liquid,
transparent investment product separate and apart from any other
Bitcoin related product, including actual Bitcoin traded in any other
venue. An ETP whose holdings consists exclusively of BTC Contracts and
MBT Contracts would have all the benefits enjoyed by investors
currently holding approved and listed futures-based ETPs without the
risks associated with ETPs that hold actual Bitcoin. A futures-based
Bitcoin ETP will fulfill investor demand for a highly regulated product
that provides exposure to the price of Bitcoin without certain risks
associated with holding actual Bitcoin.
The Bitcoin and Bitcoin Futures Markets Have Progressed and Matured
Significantly
    According to the Registration Statement, and as discussed in
further detail below, Bitcoin is a digital asset based on the
decentralized, open source protocol of the peer-to-peer computer
network launched in 2009 that governs the creation, movement, and
ownership of Bitcoin and hosts the public ledger, or ``blockchain,'' on
which all Bitcoin transactions are recorded (the ``Bitcoin Network'' or
``Bitcoin''). The decentralized nature of the Bitcoin Network allows
parties to transact directly with one another based on cryptographic
proof instead of relying on a trusted third party. The protocol also
lays out the rate of issuance of new Bitcoin within the Bitcoin
Network, a rate that is reduced by half approximately every four years
with an eventual hard cap of 21 million. It is generally understood
that the combination of these two features--a systemic hard cap of 21
million Bitcoin and the ability to transact with anyone connected to
the Bitcoin Network--gives Bitcoin its value.\10\
---------------------------------------------------------------------------

    \10\ For additional information about Bitcoin and the Bitcoin
Network, see https://bitcoin.org/en/gettingstarted.
---------------------------------------------------------------------------

    The first rule filing proposing to list an exchange-traded product
to provide exposure to Bitcoin in the U.S. was submitted by the Cboe
BZX Exchange, Inc. on June 30, 2016.\11\ At that time, blockchain
technology, and digital assets that utilized it, were relatively new to
the broader public. The market cap of all Bitcoin in existence at that
time was approximately $10 billion. No registered offering of digital
asset securities or shares in an investment vehicle with exposure to
Bitcoin or any other cryptocurrency had yet been conducted, and the
regulated infrastructure for conducting a digital asset securities
offering had not begun to develop.\12\ Similarly, regulated U.S.
Bitcoin futures contracts did not exist. The Commodity Futures Trading
Commission (the ``CFTC'') had determined that Bitcoin is a
commodity,\13\ but had not engaged in significant enforcement actions
in the space. The New York Department of Financial Services (``NYDFS'')
adopted its final BitLicense regulatory framework in 2015, but had only
approved four entities to engage in

activities relating to virtual currencies (whether through granting a
BitLicense or a limited-purpose trust charter) as of June 30, 2016.\14\
While the first over-the-counter Bitcoin fund launched in 2013, public
trading was limited and the fund had only $60 million in assets.\15\
There were very few, if any, traditional financial institutions engaged
in the space, whether through investment or providing services to
digital asset companies. In January 2018, the Staff of the Commission
noted in a letter to the Investment Company Institute and SIFMA that it
was not aware, at that time, of a single custodian providing fund
custodial services for digital assets.\16\
---------------------------------------------------------------------------

    \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 (August 1, 2018) (the ``Winklevoss II Order''). This proposal
was subsequently disapproved by the Commission. See id.
    \12\ Digital assets that are securities under U.S. law are
referred to throughout this proposal as ``digital asset
securities.'' All other digital assets, including Bitcoin, are
referred to interchangeably as ``cryptocurrencies'' or ``virtual
currencies.'' The term ``digital assets'' refers to all digital
assets, including both digital asset securities and
cryptocurrencies, together.
    \13\ See ``In the Matter of Coinflip, Inc.'' (``Coinflip'')
(CFTC Docket 15-29 (September 17, 2015)) (order instituting
proceedings pursuant to Sections 6(c) and 6(d) of the CEA, making
findings and imposing remedial sanctions), in which the CFTC stated:
``Section 1a(9) of the CEA defines `commodity' to include, among
other things, `all services, rights, and interests in which
contracts for future delivery are presently or in the future dealt
in.' 7 U.S.C. 1a(9). The definition of a `commodity' is broad. See,
e.g., Board of Trade of City of Chicago v. SEC, 677 F.2d 1137, 1142
(7th Cir. 1982). Bitcoin and other virtual currencies are
encompassed in the definition and properly defined as commodities.''
    \14\ A list of virtual currency businesses that are entities
regulated by the NYDFS is available on the NYDFS website. See
https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_businesses/regulated_entities.
    \15\ See Bitcoin Investment Trust Form S-1, dated May 27, 2016,
available at: https://www.sec.gov/Archives/edgar/data/1588489/000095012316017801/filename1.htm (data as of March 31, 2016
according to publicly available filings).
    \16\ See Letter from Dalia Blass, Director, Division of
Investment Management, U.S. Securities and Exchange Commission to
Paul Schott Stevens, President & CEO, Investment Company Institute
and Timothy W. Cameron, Asset Management Group--Head, Securities
Industry and Financial Markets Association (January 18, 2018),
available at: https://www.sec.gov/divisions/investment/noaction/2018/cryptocurrency-011818.htm.
---------------------------------------------------------------------------

    As of the first quarter of 2021, the digital assets financial
ecosystem, including Bitcoin, has progressed and matured significantly.
The development of a regulated market for digital asset securities has
significantly evolved, with market participants having conducted
registered public offerings of both digital asset securities \17\ and
shares in investment vehicles holding Bitcoin futures.\18\
Additionally, licensed and regulated service providers have emerged to
provide fund custodial services for digital assets, among other
services. For example, in December 2020, the Commission adopted a
conditional no-action position permitting certain special purpose
broker-dealers to custody digital asset securities under Rule 15c3-3
under the Exchange Act.\19\ In September 2020, the Staff of the
Commission released a no-action letter permitting certain broker-
dealers to operate a non-custodial Alternative Trading System (``ATS'')
for digital asset securities, subject to specified conditions.\20\ In
October 2019, the Staff of the Commission granted temporary relief from
the clearing agency registration requirement to an entity seeking to
establish a securities clearance and settlement system based on
distributed ledger technology; \21\ and multiple transfer agents who
provide services for digital asset securities have registered with the
Commission.\22\
---------------------------------------------------------------------------

    \17\ See Prospectus Supplement filed pursuant to Rule 424(b)(1)
for INX Tokens (Registration No. 333-233363), available at: https://www.sec.gov/Archives/edgar/data/1725882/000121390020023202/ea125858-424b1_inxlimited.htm.
    \18\ See Prospectus filed by Stone Ridge Trust VI on behalf of
NYDIG Bitcoin Strategy Fund Registration, available at: https://www.sec.gov/Archives/edgar/data/1764894/000119312519309942/d693146d497.htm.
    \19\ See Securities Exchange Act Release No. 90788, 86 FR 11627
(February 26, 2021) (File Number S7-25-20) (Custody of Digital Asset
Securities by Special Purpose Broker-Dealers).
    \20\ See Letter from Elizabeth Baird, Deputy Director, Division
of Trading and Markets, U.S. Securities and Exchange Commission to
Kris Dailey, Vice President, Risk Oversight & Operational
Regulation, Financial Industry Regulatory Authority (September 25,
2020), available at: https://www.sec.gov/divisions/marketreg/mr-noaction/2020/finra-ats-role-in-settlement-of-digital-asset-security-trades-09252020.pdf.
    \21\ See Letter from Jeffrey S. Mooney, Associate Director,
Division of Trading and Markets, U.S. Securities and Exchange
Commission to Charles G. Cascarilla & Daniel M. Burstein, Paxos
Trust Company, LLC (October 28, 2019), available at: https://www.sec.gov/divisions/marketreg/mr-noaction/2019/paxos-trust-company-102819-17a.pdf.
    \22\ See, e.g., Form TA-1/A filed by Tokensoft Transfer Agent
LLC (CIK:<PHONE_NUMBER>) on January 8, 2021, available at: https://www.sec.gov/Archives/edgar/data/1794142/000179414219000001/xslFTA1X01/primary_doc.xml.
---------------------------------------------------------------------------

    Beyond the Commission's purview, the regulatory landscape has also
changed significantly since 2016, and cryptocurrency markets have grown
and evolved as well. The market for Bitcoin is approximately 100 times
larger, having recently reached a market cap of over $1 trillion. On
February 27, 2021, Bitcoin's market cap was greater than companies such
as Facebook, Inc., Berkshire Hathaway Inc., and JP Morgan Chase & Co.
The number of verified users at Coinbase, the largest U.S.-based
Bitcoin exchange, has grown to over 56 million.\23\ CFTC-regulated
Bitcoin futures (``Bitcoin Futures'') represented approximately $28
billion in notional trading volume on the CME in December 2020 compared
to $737 million, $1.4 billion, and $3.9 billion in total trading in
December 2017, December 2018, and December 2019, respectively. Bitcoin
Futures traded over $1.2 billion per day in December 2020 and
represented $1.6 billion in open interest compared to $115 million in
December 2019.\24\ The CFTC has exercised its regulatory jurisdiction
in bringing a number of enforcement actions related to Bitcoin and
against trading platforms that offer cryptocurrency trading.\25\ The
U.S. Office of the Comptroller of the Currency (the ``OCC'') has made
clear that federally-chartered banks are able to provide custody
services for cryptocurrencies and other digital assets.\26\ The OCC
recently granted conditional approval of two charter conversions by
state-chartered trust companies to national banks, both of which
provide cryptocurrency custody services.\27\ NYDFS has granted no fewer
than twenty-five BitLicenses, including to established public payment
companies like PayPal Holdings, Inc. and Square, Inc., and limited
purpose trust charters to entities providing cryptocurrency custody
services. The U.S. Treasury Financial Crimes Enforcement Network
(``FinCEN'') has released extensive guidance regarding the
applicability of the Bank Secrecy Act (``BSA'') and implementing
regulations to virtual currency businesses,\28\ and has proposed rules
imposing requirements on entities subject to the BSA that are specific
to the technological context of virtual currencies.\29\ In addition,
the Treasury's Office of Foreign Assets Control

(``OFAC'') has brought enforcement actions over apparent violations of
the sanctions laws in connection with the provision of wallet
management services for digital assets.\30\
---------------------------------------------------------------------------

    \23\ See, e.g., ``Riding Bitcoin Surge, Coinbase Active Users
Grew by 117% in Q1 2021; Revenue Tops $1.8B'' (April 6, 2021),
available at: https://www.coindesk.com/coinbase-q1-earnings-report-monthly-active-users.
    \24\ All statistics and charts included in this proposal with
respect to the CME are sourced from https://www.cmegroup.com/trading/bitcoin-futures.html. In addition, as further discussed
below, the Sponsor believes the CME represents a regulated market of
significant size for purposes of addressing the Commission's
concerns about potential manipulation of the Bitcoin market.
    \25\ The CFTC's annual report for Fiscal Year 2020 (which ended
on September 30, 2020) noted that the CFTC ``continued to
aggressively prosecute misconduct involving digital assets that fit
within the CEA's definition of commodity'' and ``brought a record
setting seven cases involving digital assets.'' See CFTC FY2020
Division of Enforcement Annual Report, available at: https://www.cftc.gov/media/5321/DOE_FY2020_AnnualReport_120120/download.
Additionally, the CFTC filed on October 1, 2020, a civil enforcement
action against the owner/operators of the BitMEX trading platform,
which was one of the largest Bitcoin derivative exchanges. See CFTC
Release No. 8270-20 (October 1, 2020), available at: https://www.cftc.gov/PressRoom/PressReleases/8270-20.
    \26\ See OCC News Release 2021-2 (January 4, 2021), available
at: https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-2.html.
    \27\ See OCC News Release 2021-6 (January 13, 2021), available
at: https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-6.html and OCC News Release 2021-19 (February 5, 2021),
available at: https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-19.html.
    \28\ See FinCEN Guidance FIN-2019-G001 (May 9, 2019)
(Application of FinCEN's Regulations to Certain Business Models
Involving Convertible Virtual Currencies), available at: https://www.fincen.gov/sites/default/files/2019-05/FinCEN%20Guidance%20CVC%20FINAL%20508.pdf.
    \29\ See U.S. Department of the Treasury Press Release: ``The
Financial Crimes Enforcement Network Proposes Rule Aimed at Closing
Anti-Money Laundering Regulatory Gaps for Certain Convertible
Virtual Currency and Digital Asset Transactions'' (December 18,
2020), available at: https://home.treasury.gov/news/press-releases/sm1216.
    \30\ See U.S. Department of the Treasury Enforcement Release:
``OFAC Enters Into $98,830 Settlement with BitGo, Inc. for Apparent
Violations of Multiple Sanctions Programs Related to Digital
Currency Transactions'' (December 30, 2020), available at: https://home.treasury.gov/system/files/126/20201230_bitgo.pdf.
---------------------------------------------------------------------------

    In addition to the regulatory developments noted above, more
traditional financial market participants appear to be embracing
cryptocurrency: large insurance companies,\31\ investment banks,\32\
asset managers,\33\ credit card companies,\34\ university
endowments,\35\ pension funds,\36\ and even historically Bitcoin
skeptical fund managers \37\ are allocating to Bitcoin. The largest
over-the-counter Bitcoin fund previously filed a Form 10 registration
statement, which the Staff of the Commission reviewed and which took
effect automatically, and is now a reporting company.\38\ Established
companies like Tesla, Inc.,\39\ MicroStrategy Incorporated,\40\ and
Square, Inc.,\41\ among others, have recently announced substantial
investments in Bitcoin in amounts as large as $1.5 billion (Tesla) and
$425 million (MicroStrategy).
---------------------------------------------------------------------------

    \31\ On December 10, 2020, Massachusetts Mutual Life Insurance
Company (MassMutual) announced that it had purchased $100 million in
Bitcoin for its general investment account. See MassMutual Press
Release ``Institutional Bitcoin provider NYDIG announces minority
stake purchase by MassMutual'' (December 10, 2020), available at:
https://www.massmutual.com/about-us/news-and-press-releases/press-releases/2020/12/institutional-bitcoin-provider-nydig-announces-minority-stake-purchase-by-massmutual.
    \32\ See, e.g., ``Morgan Stanley to Offer Rich Clients Access to
Bitcoin Funds'' (March 17, 2021) available at: https://www.bloomberg.com/news/articles/2021-03-17/morgan-stanley-to-offer-rich-clients-access-to-bitcoin-funds.
    \33\ See, e.g., ``BlackRock's Rick Rieder says the world's
largest asset manager has `started to dabble' in Bitcoin'' (February
17, 2021), available at: https://www.cnbc.com/2021/02/17/blackrock-has-started-to-dabble-in-bitcoin-says-rick-rieder.html and
``Guggenheim's Scott Minerd Says Bitcoin Should Be Worth $400,000''
(December 16, 2020), available at: https://www.bloomberg.com/news/articles/2020-12-16/guggenheim-s-scott-minerd-says-bitcoin-should-be-worth-400-000.
    \34\ See, e.g., ``Visa Moves to Allow Payment Settlements Using
Cryptocurrency'' (March 29, 2021), available at: https://www.reuters.com/business/autos-transportation/exclusive-visa-moves-allow-payment-settlements-using-cryptocurrency-2021-03-29/.
    \35\ See, e.g., ``Harvard and Yale Endowments Among Those
Reportedly Buying Crypto'' (January 25, 2021), available at: https://www.bloomberg.com/news/articles/2021-01-26/harvard-and-yale-endowments-among-those-reportedly-buying-crypto.
    \36\ See, e.g., ``Virginia Police Department Reveals Why its
Pension Fund is Betting on Bitcoin'' (February 14, 2019), available
at: https://finance.yahoo.com/news/virginia-police-department-reveals-why-194558505.html.
    \37\ See, e.g., ``Bridgewater: Our Thoughts on Bitcoin''
(January 28, 2021) available at: https://www.bridgewater.com/research-and-insights/our-thoughts-on-bitcoin and ``Paul Tudor Jones
says he likes bitcoin even more now, rally still in the `first
inning' '' (October 22, 2020), available at: https://www.cnbc.com/2020/10/22/-paul-tudor-jones-says-he-likes-bitcoin-even-more-now-rally-still-in-the-first-inning.html.
    \38\ See Letter from Division of Corporation Finance, Office of
Real Estate & Construction to Barry E. Silbert, Chief Executive
Officer, Grayscale Bitcoin Trust (January 31, 2020), available at:
https://www.sec.gov/Archives/edgar/data/1588489/000000000020000953/filename1.pdf.
    \39\ See Form 10-K submitted by Tesla, Inc. for the fiscal year
ended December 31, 2020 at 23: https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm.
    \40\ See Form 10-Q submitted by MicroStrategy Incorporated for
the quarterly period ended September 30, 2020 at 8: https://www.sec.gov/ix?doc=/Archives/edgar/data/1050446/000156459020047995/mstr-10q_20200930.htm.
    \41\ See Form 10-Q submitted by Square, Inc. for the quarterly
period ended September 30, 2020 at 51: https://www.sec.gov/ix?doc=/Archives/edgar/data/1512673/000151267320000012/sq-20200930.htm.
---------------------------------------------------------------------------

    The Sponsor maintains that despite these developments, access for
U.S. retail investors to gain exposure to Bitcoin via a transparent and
regulated exchange-traded vehicle remains limited. As investors and
advisors increasingly utilize ETPs to manage diversified portfolios
(including equities, fixed income securities, commodities, and
currencies) quickly, easily, relatively inexpensively, tax-efficiently,
and without having to hold directly any of the underlying assets;
options for Bitcoin exposure for U.S. investors remain limited to: (i)
Investing in over-the-counter Bitcoin funds (``OTC Bitcoin Funds'')
that are subject to high premium/discount volatility (and high
management fees) to the advantage of more sophisticated investors that
are able to purchase shares at NAV directly with the issuing trust;
(ii) facing the technical risk, complexity, and generally high fees
associated with buying and storing Bitcoin directly; or (iii)
purchasing shares of operating companies that they believe will provide
proxy exposure to Bitcoin with limited disclosure about the associated
risks. Meanwhile, investors in many other countries, including Canada,
are able to use more traditional exchange listed and traded products to
gain exposure to Bitcoin.\42\
---------------------------------------------------------------------------

    \42\ Securities regulators in a number of other countries have
either approved or otherwise allowed the listing and trading of
Bitcoin ETPs. Specifically, these funds (with their respective
approximate AUMs as of April 14, 2021) include the Purpose Bitcoin
ETF ($993,000,000), VanEck Vectors Bitcoin ETN ($209,000,000),
WisdomTree Bitcoin ETP ($407,000,000), Bitcoin Tracker One
($1,380,000,000), BTCetc Bitcoin ETP ($1,410,000,000), 21Shares
Bitcoin ETP ($362,000,000), 21Shares Bitcoin Suisse ETP
($30,000,000), CoinShares Physical Bitcoin ETP ($396,000,000).
---------------------------------------------------------------------------

    For example, the Purpose Bitcoin ETF, a retail physical Bitcoin ETP
recently launched in Canada, reportedly reached $421.8 million in
assets under management (``AUM'') in two days, and has achieved $993
million in assets as of April 14, 2021, demonstrating the demand for a
North American market listed Bitcoin ETP. The Sponsor believes that the
demand for the Purpose Bitcoin ETF is driven primarily by investors'
desire to have a regulated and accessible means of exposure to [sic].
The Purpose Bitcoin ETF also offers a class of units that is U.S.
dollar Bitcoin denominated, which could appeal to U.S. investors.
Without an approved Bitcoin ETP in the U.S. as a viable alternative,
the Sponsor believes U.S. investors will seek to purchase these shares
in order to get access to Bitcoin exposure, leaving them without the
protections of U.S. securities laws. Given the separate regulatory
regime and the potential difficulties associated with any international
litigation, such an arrangement would create more risk exposure for
U.S. investors than they would otherwise have with a U.S. exchange
listed ETP. With the addition of more Bitcoin ETPs in non-U.S.
jurisdictions expected to grow, the Sponsor anticipates that such risks
will only continue to grow.
    In addition, several funds registered under the Investment Company
Act of 1940 (the ``1940 Act'') have effective registration statements
that contemplate Bitcoin exposure through a variety of means, including
through investments in Bitcoin futures contracts \43\ and through OTC
Bitcoin Funds.\44\ As of the date of this filing, it is anticipated
that other 1940 Act funds will soon begin to pursue Bitcoin through
other means, including through options on Bitcoin futures contracts and
investments in privately offered pooled investment vehicles that invest
in Bitcoin.\45\ In previous statements, the Staff of the Commission has
acknowledged how such funds can satisfy their concerns regarding
custody, valuation, and

manipulation.\46\ The funds that have already invested in Bitcoin
instruments have no reported issues regarding custody, valuation, or
manipulation of the instruments held by these funds. While these funds
do offer investors some means of exposure to Bitcoin, the Sponsor
believes the current offerings fall short of giving investors an
accessible, regulated product that provides concentrated exposure to
Bitcoin and Bitcoin prices.
---------------------------------------------------------------------------

    \43\ See, e.g., Stone Ridge Trust VI (File No. 333-234055);
BlackRock Global Allocation Fund, Inc. (File No. 33-22462); and
BlackRock Funds V (File No. 333-224371).
    \44\ See, e.g., Amplify Transformational Data Sharing ETF (File
No. 333-207937); and ARK Innovation ETF (File No. 333-191019).
    \45\ See Stone Ridge Trust, Post-Effective Amendment No. 74 to
Registration Statement on Form N-1A (File No. 333-184477), available
at: https://www.sec.gov/Archives/edgar/data/1559992/000119312521072856/d129263d485apos.htm.
    \46\ See Dalia Blass, ``Keynote Address--2019 ICI Securities Law
Developments Conference'' (December 3, 2019), available at: https://www.sec.gov/news/speech/blass-keynote-address-2019-ici-securities-law-developments-conference.
---------------------------------------------------------------------------

OTC Bitcoin Funds and Investor Protection
    The Sponsor notes that U.S. investor exposure to Bitcoin through
OTC Bitcoin Funds has grown into the tens of billions of dollars. With
that growth, so too has grown the potential risk to U.S. investors. As
described below, premium and discount volatility, high fees,
insufficient disclosures, and technical hurdles are exposing U.S.
investors to risks that could potentially be eliminated through access
to a Bitcoin futures-based ETP. Investor protection concerns remain and
are growing related to OTC Bitcoin Funds. The Sponsor understands the
Commission's previous focus in prior disapproval orders on potential
manipulation of a Bitcoin ETP holding actual Bitcoin, but believes that
such concerns have been sufficiently mitigated by the use of futures
contracts in the proposed ETP. Accordingly, the Sponsor believes that
the Fund represents an opportunity for U.S. investors to gain price
exposure to Bitcoin futures contracts in a regulated and transparent
exchange-traded vehicle that limits risks by: (i) Reducing premium and
discount volatility; (ii) reducing management fees through meaningful
competition; (iii) reducing risks associated with investing in
operating companies that are imperfect proxies for Bitcoin exposure;
and (iv) avoiding regulatory concerns regarding custody and valuation
posed by ETFs and ETPs that invest directly in Bitcoin rather than in
Bitcoin futures contracts.
OTC Bitcoin Funds and Premium/Discount Volatility
    According to the Sponsor, OTC Bitcoin Funds are generally designed
to provide exposure to Bitcoin in a manner similar to the Shares.
However, unlike the Shares, OTC Bitcoin Funds are unable to freely
offer creation and redemption in a way that incentivizes market
participants to keep their shares trading in line with their NAV \47\
and, as a result, shares of OTC Bitcoin Funds frequently trade at a
price that is out of line with the value of their assets held.
Historically, OTC Bitcoin Funds have traded at a significant premium to
NAV.\48\
---------------------------------------------------------------------------

    \47\ Because OTC Bitcoin Funds are not listed on an exchange,
they are also not subject to the same transparency and regulatory
oversight by a listing exchange as the Shares would be. In the case
of the Fund, the existence of an information sharing agreement
between the Exchange and the CME results in increased investor
protections as compared to OTC Bitcoin Funds.
    \48\ The inability to trade in line with NAV may at some point
result in OTC Bitcoin Funds trading at a discount to their NAV,
which has occurred more recently with respect to one prominent OTC
Bitcoin Fund. While that has not historically been the case, and it
is not clear whether such discounts will continue, such a prolonged,
significant discount scenario would give rise to nearly identical
potential issues related to trading at a premium.
---------------------------------------------------------------------------

    Trading at a premium or a discount is not unique to OTC Bitcoin
Funds and is not in itself problematic, but the size of such premiums/
discounts and volatility thereof highlight the key differences in
operations and market structure of OTC Bitcoin Funds as compared to
ETPs.
    Combined with the significant increase in AUM for OTC Bitcoin Funds
over the past year, the size and volatility of premiums and discounts
for OTC Bitcoin Funds have given rise to significant and quantifiable
investor protection issues, as further described below. In fact, the
largest OTC Bitcoin Fund has grown to $35.0 billion in AUM as of
February 19, 2021 \49\ and has historically traded at a premium of
between roughly five and forty percent, though it has seen premiums at
times above one hundred percent.\50\ Recently, however, it has traded
at a discount. As of March 24, 2021, the discount was approximately
14%,\51\ representing around $4.9 billion less in market value than the
Bitcoin actually held by the fund. If premium/discount numbers move
back to the middle of its historical range to a 20% premium (which
historically could occur at any time and overnight), it would represent
a swing of approximately $11.9 billion in value unrelated to the value
of Bitcoin held by the fund and if the premium returns to the upper end
of its typical range, that number increases to $18.9 billion. These
numbers are only associated with a single OTC Bitcoin Fund--as more and
more OTC Bitcoin Funds come to market and more investor assets flood
into them to get access to Bitcoin exposure, the potential dollars at
risk will only increase.
---------------------------------------------------------------------------

    \49\ Compare to an AUM of approximately $2.6 billion on February
26, 2020, the date on which the Commission issued the most recent
disapproval order for a Bitcoin ETP. See 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 (February 26, 2020), 85 FR 12595 (March 3, 2020) (SR-NYSE
Arca-2019-39) (the ``Wilshire Phoenix Order''). While the price of
one Bitcoin has increased approximately 400% in the intervening
period, the total AUM has increased by approximately 1240%,
indicating that the increase in AUM is attributable to more than
just price appreciation in Bitcoin.
    \50\ See ``Traders Piling Into Overvalued Crypto Funds Risk a
Painful Exit'' (February 4, 2021), available at: https://www.bloomberg.com/news/articles/2021-02-04/bitcoin-one-big-risk-when-investing-in-crypto-funds.
    \51\ This discount is compared to another OTC Bitcoin Product
which had a premium of over 60% on the same day, with a premium of
over 200% a few days earlier.
---------------------------------------------------------------------------

    The Sponsor believes that the risks associated with volatile
premiums/discounts for OTC Bitcoin Funds raise significant investor
protection issues in several ways. First, investors may be buying
shares of a fund for a price that is not reflective of the per share
value of the fund's underlying assets. Even operating within the normal
premium range, it is possible for an investor to buy shares of an OTC
Bitcoin Fund only to have those shares quickly lose 10% or more in
dollar value without any movement of the price of Bitcoin. That is to
say--the price of Bitcoin could have stayed exactly the same from
market close on one day to market open the next, yet the value of the
shares held by the investor decreased only because of the fluctuation
of the premium/discount. As more investment vehicles, including mutual
funds and ETFs, seek to gain exposure to Bitcoin, the easiest option
for a buy and hold strategy is often an OTC Bitcoin Fund, meaning that
even investors that do not directly buy OTC Bitcoin Funds can be
disadvantaged by extreme premiums (or discounts) and premium
volatility.
    The second issue is related to the first and explains how the
premium in OTC Bitcoin Funds essentially creates a transfer of value
from retail investors to more sophisticated investors. Generally
speaking, only accredited investors are able to purchase shares from
the issuing fund, which means that they are able to purchase shares
directly with the fund at NAV (in exchange for either cash or Bitcoin)
without having to pay the premium or sell into the discount. While
there are often minimum holding periods for shares required by law, an
investor that is allowed to purchase directly from the fund is able to
hedge their Bitcoin exposure as needed to satisfy the holding
requirements and collect on the premium or discount opportunity.
    As noted above, the existence of a premium or discount and the
premium/

discount collection opportunity is not unique to OTC Bitcoin Funds and
does not in itself warrant the approval of an exchange traded
product.\52\ What is unique is that such significant and persistent
premiums and discounts can exist in a product with over $35 billion in
assets under management,\53\ that billions of retail investor dollars
are constantly under threat of premium/discount volatility,\54\ and
that premium/discount volatility is generally captured by more
sophisticated investors on a riskless basis. While the Sponsor
appreciates the Commission's focus on potential manipulation of a
Bitcoin ETP in prior disapproval orders and believes those concerns are
adequately addressed in this filing, the Sponsor believes that the
Commission should also consider the direct, quantifiable investor
protection issue in determining whether to approve this proposal,
particularly when the Trust, as a Bitcoin ETP, is designed to reduce
the likelihood of significant and prolonged premiums and discounts with
its open-ended nature as well as the ability of market participants
(i.e., market makers and authorized participants) to create and redeem
on a daily basis.
---------------------------------------------------------------------------

    \52\ For example, similar premiums/discounts and premium/
discount volatility exist for other non-Bitcoin cryptocurrency
related over-the-counter funds, but the size and investor interest
in those funds does not give rise to the same investor protection
concerns that exist for OTC Bitcoin Funds.
    \53\ At $35 billion in AUM, the largest OTC Bitcoin Fund would
be among the top 40 largest out of roughly 2,400 U.S. listed ETPs.
    \54\ In two recent incidents, the premium dropped from 28.28% to
12.29% from the close on 3/19/20 to the close on 3/20/20 and from
38.40% to 21.05% from the close on 5/13/19 to the close on 5/14/19.
Similarly, over the period of 12/21/20 to 1/21/20, the premium went
from 40.18% to 2.79%. While the price of Bitcoin appreciated
significantly during this period and NAV per share increased by
41.25%, the price per share increased by only 3.58%.
---------------------------------------------------------------------------

Spot and Proxy Exposure
    According to the Sponsor, exposure to Bitcoin through a Bitcoin
futures-based ETP like the Fund also presents certain advantages for
retail investors compared to buying spot Bitcoin directly. The most
notable advantage is that, as discussed below, the BTC Contracts and
MBT Contracts in which the Fund will invest do not require special,
potentially complex and untested, custody procedures. Unlike physical
Bitcoin ETPs, the Fund will not be required to use a Bitcoin custodian
because it will not be holding Bitcoin. By contrast, an individual
retail investor holding Bitcoin through a cryptocurrency exchange lacks
these protections. Meanwhile, a retail investor holding spot Bitcoin
directly in a self-hosted wallet may suffer from inexperience in
private key management (e.g., insufficient password protection, lost
key, etc.), which could cause them to lose some or all of their Bitcoin
holdings. In addition, retail investors will be able to hold the Shares
in traditional brokerage accounts which provide SIPC protection if a
brokerage firm fails.
    Finally, as described above, a number of operating companies
engaged in unrelated businesses--such as Tesla (a car manufacturer) and
MicroStrategy (an enterprise software company)--have recently announced
investments as large as $1.5 billion in Bitcoin.\55\ Without access to
a Bitcoin ETP, retail investors seeking investment exposure to Bitcoin
may end up purchasing shares in these companies in order to gain the
exposure to Bitcoin that they seek.\56\ In fact, mainstream financial
news networks have written a number of articles providing investors
with guidance for obtaining Bitcoin exposure through publicly traded
companies (such as MicroStrategy, Tesla, and Bitcoin mining companies,
among others) instead of dealing with the complications associated with
buying spot Bitcoin in the absence of a Bitcoin ETP.\57\ Such operating
companies, however, are imperfect Bitcoin proxies and provide investors
with partial Bitcoin exposure paired with a host of additional risks
associated with whichever operating company they decide to purchase.
Additionally, the disclosures provided by the aforementioned operating
companies with respect to risks relating to their Bitcoin holdings are
generally substantially smaller than the registration statement of a
Bitcoin ETP, including the Sponsor's Registration Statement, typically
amounting to a few sentences of narrative description and a handful of
risk factors.\58\ In other words, investors seeking Bitcoin exposure
through publicly traded companies are gaining only partial exposure to
Bitcoin, without the full benefit of the risk disclosures and
associated investor protections that come from the securities
registration process.
---------------------------------------------------------------------------

    \55\ See notes 39-41, supra. MicroStrategy recently completed a
$900 million convertible note offering for the purpose of acquiring
Bitcoin. See https://www.microstrategy.com/en/investor-relations/press/microstrategy-announces-pricing-of-offering-of-convertible-senior-notes02-17-2021.
    \56\ In August 2017, the Commission's Office of Investor
Education and Advocacy warned investors about situations where
companies were publicly announcing events relating to digital coins
or tokens in an effort to affect the price of the company's publicly
traded common stock. See https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_icorelatedclaims.
    \57\ See, e.g., ``7 public companies with exposure to bitcoin''
(February 8, 2021) available at: https://finance.yahoo.com/news/7-public-companies-with-exposure-to-bitcoin-154201525.html; and ``Want
to get in the crypto trade without holding bitcoin yourself? Here
are some investing ideas'' (February 19, 2021) available at: https://www.cnbc.com/2021/02/19/ways-to-invest-in-bitcoin-without-holding-the-cryptocurrency-yourself-.html.
    \58\ See, e.g., Tesla 10-K for the year ended December 31, 2020,
which mentions Bitcoin just nine times: https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000156459021004599/tsla-10k_20201231.htm.
---------------------------------------------------------------------------

The Bitcoin Futures Market Has Developed Alongside the Bitcoin Spot
Market Into a Strong and Viable Marketplace That Stands On Its Own
    As noted above, CME began offering trading in BTC Contracts in
2017, and in MBT Contracts in 2021. Each of the contract's final cash
settlement is based on the CME CF Bitcoin Reference Rate (the ``CME CF
BRR'').\59\ The contracts trade and settle like other cash-settled
commodity futures contracts. According to the Sponsor, trading in CME
Bitcoin futures contracts has increased significantly, in particular
with respect to BTC Contracts. Nearly every measurable metric related
to BTC Contracts has trended consistently up since launch and/or
accelerated upward in the past year. For example, there was
approximately $28 billion in trading in BTC Contracts in December 2020
compared to $737 million, $1.4 billion, and $3.9 billion in total
trading in December 2017, December 2018, and December 2019,
respectively. BTC Contracts traded over $1.2 billion per day in
December 2020 and represented $1.6 billion in open interest compared to
$115 million in December 2019. This general upward trend in trading
volume and open interest is captured in the following chart.
---------------------------------------------------------------------------

    \59\ According to the CME, the CME CF BRR aggregates the trade
flow of major Bitcoin spot exchanges during a specific calculation
window into a once-a-day reference rate of the U.S. dollar price of
Bitcoin. Calculation rules are geared toward maximum transparency
and real-time replicability in underlying spot markets, including
Bitstamp, Coinbase, Gemini, itBit, and Kraken. For additional
information, refer to https://www.cmegroup.com/trading/cryptocurrency-indices/cf-bitcoin-reference-rate.html?redirect=/trading/cf-bitcoin-reference-rate.html.
---------------------------------------------------------------------------

BILLING CODE 8011-01-P

[GRAPHIC] [TIFF OMITTED] TN11AU21.000

    Similarly, the number of large open interest holders \60\ has
continued to increase even as the price of Bitcoin has risen, as have
the number of unique accounts trading Bitcoin Futures.
---------------------------------------------------------------------------

    \60\ A large open interest holder in BTC Contracts is an entity
that holds at least 25 contracts, which is the equivalent of 125
Bitcoin. At a price of approximately $30,000 per Bitcoin on 12/31/
20, more than 80 firms had outstanding positions of greater than
$3.8 million in BTC Contracts.
---------------------------------------------------------------------------

    As it pertains specifically to the Bitcoin Futures Contracts in
which the Fund will invest, the statistics are equally as profound. The
following table and chart, calculated by the Sponsor, sets forth the
approximate daily notional average volume for the Bitcoin Futures
Contracts together, followed by the daily average volume (in number of
contracts) for each of the Bitcoin Futures Contracts, the first to
expire and the second to expire.

                                             Daily Notional Average
----------------------------------------------------------------------------------------------------------------
                                                                                First-to-       Second-to
                                                              Volume for Bitcoin  expire Bitcoin  expire Bitcoin
                                                               Futures Contracts      Futures         Futures
                                                                    (in $)           Contract        Contract
----------------------------------------------------------------------------------------------------------------
2018........................................................        $126,000,000           3,200             400
2019........................................................         234,000,000           5,400             700
2020........................................................         500,000,000           7,100           1,300
2021........................................................       2,640,000,000           8,800           2,400
----------------------------------------------------------------------------------------------------------------

[GRAPHIC] [TIFF OMITTED] TN11AU21.001

BILLING CODE 8011-01-C
The Bitcoin Industry and Market Transactions
    According to the Registration Statement, Bitcoin is the digital
asset that is native to, and created and transmitted through the
operations of, the peer-to-peer Bitcoin Network, a decentralized
network of computers that operates on cryptographic protocols. No
single entity owns or operates the Bitcoin Network, the infrastructure
of which is collectively maintained by a decentralized user base. The
Bitcoin Network allows people to exchange tokens of value, called
Bitcoin, which are recorded on a public transaction ledger known as the
Blockchain. Bitcoin can be used to pay for goods and services, or it
can be converted to fiat currencies, such as the U.S. dollar, at rates
determined on Bitcoin trading platforms or in individual end-user-to-
end-user transactions under a barter system. Although nascent in use,
Bitcoin may be used as a medium of exchange, unit of account or store
of value.
    The Bitcoin Network is decentralized and does not require
governmental authorities or financial institution intermediaries to
create, transmit, or determine the value of Bitcoin. In addition, no
party may easily censor transactions on the Bitcoin Network. As a
result, the Bitcoin Network is often referred to as decentralized and
censorship resistant.
    According to the Registration Statement, the value of Bitcoin is
determined by the supply of and demand for Bitcoin. New Bitcoin are
created and rewarded to the parties providing the Bitcoin Network's
infrastructure (``miners'') in exchange for their expending
computational power to verify transactions and add them to the
Blockchain. The Blockchain is effectively a decentralized database that
includes all blocks that have been solved by miners, and it is updated
to include new blocks as they are solved. Each Bitcoin transaction is
broadcast to the Bitcoin Network and, when included in a block,
recorded in the Blockchain. As each new block records outstanding
Bitcoin transactions, and outstanding transactions are settled and
validated through such recording, the Blockchain represents a complete,
transparent, and unbroken history of all transactions of the Bitcoin
Network.
The Fund Will Not Transact in Bitcoin and Will Not Be Required To
Retain a Bitcoin Custodian
    The Sponsor notes that individual users, institutional investors
and investment funds that want to provide exposure to Bitcoin by
investing directly in Bitcoin, and therefore must transact in Bitcoin,
must use the Bitcoin Network to download specialized software referred
to as a ``Bitcoin wallet.'' This wallet may be used to send and receive
Bitcoin through users' unique ``Bitcoin addresses.'' The amount of
Bitcoin associated with each Bitcoin address, as well as each Bitcoin
transaction to or from such address, is captured on the Blockchain.
Bitcoin transactions are secured by cryptography known as public-
private key cryptography, represented by the Bitcoin addresses and
digital signature in a transaction's data file. Each Bitcoin Network
address, or wallet, is associated with a unique ``public key'' and
``private key'' pair, both of which are lengthy alphanumeric codes,
derived together and possessing a unique relationship. The private key
is a secret and must be kept in accordance with appropriate controls
and procedures to ensure it is used only for legitimate and intended
transactions. If an unauthorized third person learns of a user's
private key, that third person could forge the user's digital signature
and send the user's Bitcoin to any arbitrary Bitcoin address, thereby
stealing the user's Bitcoin. Similarly, if a user loses his private key
and cannot restore such access (e.g., through a backup), the user may
permanently lose access to the Bitcoin contained in the associated
address.
    According to the Registration Statement, institutional purchasers
of Bitcoin, including other Bitcoin funds that provide exposure to
Bitcoin by investing directly in Bitcoin, generally maintain their
Bitcoin account with a Bitcoin custodian. Bitcoin custodians are
financial institutions that have implemented a series of specialized
security precautions, including holding Bitcoin in ``cold storage,'' to
try to ensure the safety of an account holder's Bitcoin. These Bitcoin
custodians must carefully consider the design of the physical,
operational, and cryptographic systems for secure storage of private
keys in an effort to lower the risk of loss or theft, and many use a
multi-factor security system under which actions by multiple
individuals working together are required to access the private keys
necessary to transfer such digital assets and ensure exclusive
ownership.
    The nature of the Bitcoin Futures Contracts that the Fund will hold
is

such that the Fund will not be required to use a Bitcoin custodian.
According to the Registration Statement, the Fund will deposit an
initial margin amount to initiate an open position in futures
contracts. A margin deposit is like a cash performance bond. It helps
assure the trader's performance of the futures contracts that he or she
purchases or sells. Futures contracts are marked to market at the end
of each trading day and the margin required with respect to such
contracts is adjusted accordingly. The remainder of the Fund's assets
will be held in cash and cash equivalents at the Fund custodian or
other financial institutions. The Fund will only hold Bitcoin Futures
Contracts described above. Accordingly, the Fund will not need a
Bitcoin custodian because it will never hold actual Bitcoin and the
risks posed by transacting and holding actual Bitcoin will be
irrelevant to Fund investors.
The Structure and Operation of the Trust Satisfies Commission
Requirements for Bitcoin-Based Exchange Traded Products
    In disapproving prior proposals to list and trade shares of various
Bitcoin trusts and Bitcoin-based trust issued receipts, the Commission
noted that such proposals did not adequately demonstrate that they were
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest, consistent with Section
6(b)(5) of the Act.\61\ The Commission does not apply a ``cannot be
manipulated'' standard, but instead seeks to examine whether a proposal
meets the requirements of the Act.\62\ The Commission has explained
that a proposal could satisfy the requirements of the Act in the first
instance by demonstrating that the listing exchange has entered into a
comprehensive surveillance-sharing agreement (``CSSA'') with a
regulated ``market of significant size'' relating to the underlying
assets.\63\ The Commission has also recognized that a listing exchange
would not necessarily need to enter into a CSSA with a regulated
significant market if the underlying commodity market inherently
possessed a unique resistance to manipulation beyond the protections
that are utilized by traditional commodity or securities markets or if
the listing exchange could demonstrate that there were sufficient
``other means to prevent fraudulent and manipulative acts and
practices.'' \64\
---------------------------------------------------------------------------

    \61\ See, e.g., Order Disapproving a Proposed Rule Change, as
Modified by Amendments No. 1 and 2, to BZX Rule 14.11(e)(4),
Commodity-Based Trust Shares, To List and Trade Shares Issued by the
Winklevoss Bitcoin Trust, Securities Exchange Act Release No. 80206
(March 10, 2017), 82 FR 14076 (March 16, 2017) (SR-BatsBZX-2016-30)
(the ``Winklevoss I Order''); the Winklevoss II Order; Order
Disapproving a Proposed Rule Change, as Modified by Amendment No. 1,
Relating to the Listing and Trading of Shares of the Bitwise Bitcoin
ETF Trust Under NYSE Arca Rule 8.201-E, Securities Exchange Act
Release No. 87267 (October 9, 2019), 84 FR 55382 (October 16, 2019)
(SR-NYSEArca-2019-01) (the ``Bitwise Order''); the Wilshire Phoenix
Order; 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 (August 22,
2018), 83 FR 43934 (August 28, 2018) (SR-NYSEArca-2017-139); Order
Disapproving a Proposed Rule Change Relating to Listing and Trading
of the Direxion Daily Bitcoin Bear 1X Shares, Direxion Daily Bitcoin
1.25X Bull Shares, Direxion Daily Bitcoin 1.5X Bull Shares, Direxion
Daily Bitcoin 2X Bull Shares, and Direxion Daily Bitcoin 2X Bear
Shares Under NYSE Arca Rule 8.200-E, Securities Exchange Act Release
No. 83912 (August 22, 2018), 83 FR 43912 (August 28, 2018) (SR-
NYSEArca-2018-02); 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 (August 22, 2018), 83 FR 43923 (August 28, 2018) (SR-CboeBZX-
2018-01) (the ``GraniteShares Order'').
    \62\ See Winklevoss II Order, 83 FR at 37582.
    \63\ See Wilshire Phoenix Order, 85 FR at 12596-97.
    \64\ See Winklevoss II Order, 83 FR at 37580, 37582-91; Bitwise
Order, 84 FR at 55383, 55385-406; Wilshire Phoenix Order, 85 FR at
12597.
---------------------------------------------------------------------------

    As described below, the Sponsor believes the structure and
operation of the Trust are designed to prevent fraudulent and
manipulative acts and practices, to protect investors and the public
interest, and to respond to the specific concerns that the Commission
has identified with respect to potential fraud and manipulation in the
context of a Bitcoin or Bitcoin futures ETP. Further, as the Commission
has previously acknowledged, trading in a Bitcoin-based ETP on a
national securities exchange, as compared to trading in an unregulated
Bitcoin spot market, may provide additional protection to
investors.\65\ The Sponsor also believes that listing of the Trust's
Shares on the Exchange will provide investors with such an opportunity
to obtain exposure to Bitcoin within a regulated environment.
---------------------------------------------------------------------------

    \65\ See GraniteShares Order, 83 FR at 43931. See also Hester M.
Peirce, U.S. Sec. Exch. Comm'n, Dissent of Commissioner Hester M.
Peirce to Release No. 34-83723 (July 26, 2018), available at:
https://www.sec.gov/news/public-statement/peirce-dissent-34-83723
(``An ETP based on bitcoin would offer investors indirect exposure
to bitcoin through a product that trades on a regulated securities
market and in a manner that eliminates some of the frictions and
worries of buying and holding bitcoin directly. If we were to
approve the ETP at issue here, investors could choose whether to buy
it or avoid it.'').
---------------------------------------------------------------------------

Surveillance Sharing Agreements With a Market of Significant Size
1. The Presence of Surveillance Sharing Agreements
    In previous orders rejecting the listing of Bitcoin ETFs, the
Commission noted its concerns that the Bitcoin market could be subject
to manipulation.\66\ In these orders, the Commission cited numerous
precedents \67\ in which listing proposals were approved based on
findings that the particular market was either inherently resistant to
manipulation or that the listing exchange had entered into a
surveillance sharing agreement with a market of significant size.\68\
The Commission noted that, for commodity-trust ETPs ``there has been in
every case at least one significant, regulated market for trading
futures in 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 (the ``ISG'') membership in common with, that market.'' \69\
---------------------------------------------------------------------------

    \66\ See Winklevoss I Order and Winklevoss II Order. The Sponsor
represents that some of the concerns raised are that a significant
portion of Bitcoin trading occurs on unregulated platforms and that
there is a concentration of a significant number of Bitcoin in the
hands of a small number of holders. However, these facts are not
unique to Bitcoin and are true of a number of commodity and other
markets. For instance, some gold bullion trading takes place on
unregulated OTC markets and a significant percentage of gold is held
by a relative few (according to estimates of the World Gold Council,
approximately 22% of total above ground gold stocks are held by
private investors and 17% are held by foreign governments; by
comparison, 13.61% of Bitcoin are held by the 86 largest Bitcoin
addresses, some of which are known to be cold storage addresses of
large centralized cryptocurrency trading platforms). See https://www.gold.org/goldhub/data/above-ground-stocks for gold data cited in
this note and https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html for Bitcoin data.
    \67\ For an extensive listing of such precedents, see Winklevoss
I Order, 82 FR at 14083 n. 96.
    \68\ The Exchange to date has not entered into surveillance
sharing agreements with any cryptocurrency platform. However, the
CME, which calculates the CME CF BRR, and which has offered
contracts for Bitcoin futures products since 2017, is, as noted
below, a member of the ISG. In addition, each Constituent Platform
has entered into a data sharing agreement with CME. See https://docs-cfbenchmarks.s3.amazonaws.com/CME+CF+Constituent+Exchanges+Criteria.pdf.
    \69\ See Winklevoss II Order, 83 FR at 37594.
---------------------------------------------------------------------------

    The CME \70\ is a member of the ISG, the purpose of which is ``to
provide a

framework for the sharing of information and the coordination of
regulatory efforts among exchanges trading securities and related
products to address potential intermarket manipulations and trading
abuses.'' \71\ Membership of a relevant futures exchange in ISG is
sufficient to meet the surveillance-sharing requirement.\72\
---------------------------------------------------------------------------

    \70\ The CME is regulated by the CFTC, which has broad reaching
anti-fraud and anti-manipulation authority including with respect to
the Bitcoin market since Bitcoin has been designated as a commodity
by the CFTC. See A CFTC Primer on Virtual Currencies (October 17,
2017), available at: https://www.cftc.gov/sites/default/files/idc/groups/public/documents/file/labcftc_primercurrencies100417.pdf (the
``CFTC Primer on Virtual Currencies'') (``The CFTC's jurisdiction is
implicated when a virtual currency is used in a derivatives contract
or if there is fraud or manipulation involving a virtual currency
traded in interstate commerce.''). See also 7 U.S.C. 7(d)(3) (``The
board of trade shall list on the contract market only contracts that
are not readily susceptible to manipulation.'').
    \71\ See https://isgportal.org/overview.
    \72\ See, e.g., Winklevoss II Order, 83 FR at 37594.
---------------------------------------------------------------------------

    The Commission has previously noted that the existence of a
surveillance-sharing agreement by itself is not sufficient for purposes
of meeting the requirements of Section 6(b)(5); the surveillance-
sharing agreement must be with a market of significant size.\73\ The
Commission has also provided an example of how it interprets the terms
``significant market'' and ``market of significant size,'' though that
definition is meant to be illustrative and not exclusive: ``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 the ETP listing market in
detecting and deterring misconduct and it is unlikely that trading in
the ETP would be the predominant influence on prices in that market.''
\74\
---------------------------------------------------------------------------

    \73\ See, e.g., id. at 37589-90.
    \74\ Id. at 37594; see also GraniteShares Order, 83 FR at 43930
n. 85 and accompanying text.
---------------------------------------------------------------------------

    For the following reasons, the Sponsor maintains that the CME, as
the leading market for Bitcoin futures is a ``market of significant
size'' that satisfies both elements of the example provided by the
Commission.
(a) Reasonable Likelihood That a Person Manipulating the ETP Would Have
To Trade on the Bitcoin Futures Market
    The first element of a ``significant market'' or ``market of
significant size'' is a reasonable likelihood that a person attempting
to manipulate the ETP would also have to trade on that market (or group
of markets) to successfully manipulate the ETP, such that a
surveillance sharing agreement would assist the ETP listing market in
detecting and deterring misconduct. The Commission has stated that
establishing a lead-lag relationship between the Bitcoin futures market
and the spot market is central to understanding whether it is
reasonably likely that a would-be manipulator of the ETP would need to
trade on the Bitcoin futures market to successfully manipulate prices
on those spot platforms that feed into the proposed ETP's pricing
mechanism.\75\
---------------------------------------------------------------------------

    \75\ See Wilshire Phoenix Order, 85 FR at 12612.
---------------------------------------------------------------------------

    The Sponsor believes that the CME meets the first element in
several ways. First, the CME Bitcoin futures is the primary Bitcoin
price discovery market, and compares favorably with other markets that
were deemed to be markets of significant size in precedents.\76\ There
are various prior orders approving the listing of commodity and
commodity futures-based ETPs whose OTC markets and futures markets
exhibit a number of similarities with Bitcoin markets. The Sponsor
maintains that, like Bitcoin, the primary price discovery mechanism for
other commodities are the futures markets in those commodities.\77\
---------------------------------------------------------------------------

exception occurred on : 2021-17078.htm
    \76\ See https://www.wilshirephoenix.com/efficient-price-discovery-in-the-bitcoin-markets/[email protected]. See also https://www.sciencedirect.com/science/article/abs/pii/S0165176518304440?via%3Dihub.
    \77\ ``The OTC market has no formal structure and no open-outcry
meeting place.'' See Securities Exchange Act Release No. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22)
(Order Granting Approval of Proposed Rule Change and Notice of
Filing and Order Granting Accelerated Approval to Amendments No. 1
and No. 2 Thereto to the Proposed Rule Change by the New York Stock
Exchange, Inc. Regarding Listing and Trading of streetTRACKS[supreg]
Gold Shares) (the ``streetTRACKS Order'').
---------------------------------------------------------------------------

    Specifically, the Sponsor notes that as with many OTC commodities
markets, it is not possible to enter into an information sharing
agreement with the OTC Bitcoin market.\78\ When the Commission has
approved the listing of other commodity-trust ETPs, rather than
requiring surveillance sharing agreements with the relevant OTC
markets, it has recognized surveillance sharing agreements between the
listing exchange and ``regulated markets for trading futures on the
underlying commodity,'' \79\ given the understanding that the
manipulation of the market for a commodity often involves the futures
market for that commodity.\80\
---------------------------------------------------------------------------

    \78\ ``It is not possible, however, to enter into an information
sharing agreement with the OTC gold market.'' streetTRACKS Order, 69
FR at 64619. See also Order Granting Approval of Proposed Rule
Change and Amendment Nos. 2, 3 and 4 and Notice of Filing and Order
Granting Accelerated Approval to Amendment No. 5 by the American
Stock Exchange LLC Relating to the Listing and Trading of the
iShares[supreg] COMEX Gold Trust, Securities Exchange Act Release
No. 51058 (January 19, 2005), 70 FR 3749 (January 26, 2005) (SR-
Amex-2004-38); Notice of Filing of Proposed Rule Change Relating to
Listing and Trading of Shares of ETFS Palladium Trust, Securities
Exchange Act Release No. 60971 (November 9, 2009), 74 FR 59283
(November 17, 2009) (SR-NYSEArca-2009-94).
    \79\ See Winklevoss II Order, 83 FR at 37591.
    \80\ See, e.g., Frank Easterbrook, Monopoly, Manipulation, and
the Regulation of Futures Markets, 59 J. of Bus. S103, S103-S127
(1986); William D. Harrington, The Manipulation of Commodity Futures
Prices, 55 St. Johns L. Rev. 240, 240-275 (2012); Robert C. Lower,
Disruptions of the Futures Market: A Comment on Dealing With Market
Manipulation, 8 Yale J. on Reg. 391, 391-402 (1991).
---------------------------------------------------------------------------

    The Sponsor also believes that the CME meets the first element
because, due to the unique structure of the Fund, it is unlikely that
price manipulation or fraud on the trading platforms for Bitcoin will
have a measurable impact on the NAV of the Fund. In this regard, the
Sponsor notes that the Fund will only hold first and second to expire
Bitcoin Futures Contacts along with cash and cash equivalents and will
not hold Bitcoin. Unlike other exchange traded products that propose to
calculate daily NAV based on the CME CF Bitcoin Real-Time Index
(BRTI),\81\ which is in turn based on price feeds from certain
designated spot market exchanges, the Fund will never directly price
off of the CME CF BRR. This is because the Fund will roll its futures
holdings prior to settlement of the expiring contract and intends to
never carry futures positions all the way to cash settlement (the only
date that the BTC Contracts and MBT Contracts settle to the CME CF
BRR). The Fund will only price off of Bitcoin Futures Contracts VWAP
daily settlement price.\82\
---------------------------------------------------------------------------

    \81\ See e.g., Notice of Filing of Proposed Rule Change to List
and Trade Shares of the First Trust SkyBridge Bitcoin ETF Trust
under NYSE Arca Rule 8.201-E, Securities Exchange Act Release No.
91962 (May 21, 2021, 86 FR 28646 (May 27, 2021) (SR-NYSEArca-2021-
37).
    \82\ For an explanation of how the CME VWAP closing price for
Bitcoin futures contracts is calculated, see https://www.cmegroup.com/confluence/display/EPICSANDBOX/Bitcoin.
---------------------------------------------------------------------------

    Because the Fund calculates daily NAV based on Bitcoin Futures
Contracts' settlement prices and does not calculate NAV based directly
on the underlying spot Bitcoin market, the Sponsor believes that the
only practicable way for a bad actor to manipulate the NAV of the Fund
is through manipulating the first and second to expire Bitcoin Futures
Contracts; there is simply no material connection between those two
futures contracts and the underlying Bitcoin spot market. The Sponsor
believes that the market for BTC Contracts and MBT Contracts stands
alone within the overall global Bitcoin ecosphere; BTC Contracts and
MBT Contracts are now of such size and scale that Bitcoin futures
prices are not specifically materially influenced by other Bitcoin
markets.

    The Sponsor notes that this lack of connection between the Bitcoin
Futures Contracts and underlying spot trading platforms makes it
unnecessary and not beneficial to try to establish a ``lead-lag''
relationship between the two. The Sponsor respectfully notes that while
thousands of pages of studies have been devoted to trying to
demonstrate whether the Bitcoin spot market ``leads'' the Bitcoin
futures market, or vice versa, no listing exchanges to date have been
able to bear the burden of proof of satisfactorily establishing through
such a ``lead-lag'' analysis that it is ``reasonably likely'' that a
person who is attempting to manipulate the price of a Bitcoin fund's
shares would need to trade in the underlying spot market. As discussed
above, the structure of the Fund makes such an exercise unnecessary and
irrelevant.
    The Sponsor also notes in this regard that in the Winklevoss II
Order, the SEC stated that ``[c]onsistent with the discussion of
`significant market' described above, the Commission has not
previously, and does not now, require that an ETP listing exchange be
able to enter into a surveillance-sharing agreement with each regulated
spot or derivatives market relating to an underlying asset, provided
that the market or markets with which there is such an agreement
constitute a ``significant market.'' As discussed above, the Sponsor
believes that the Bitcoin futures market is a ``significant market''
and that any bad actor trying to manipulate the price of the Fund would
necessarily have to manipulate the Bitcoin futures market.
    Additionally, the SEC stated in the Winklevoss II Order that
``[a]nd where, as here, a listing exchange fails to establish that
other means to prevent fraudulent and manipulative acts and practices
will be sufficient, the listing exchange must enter into a
surveillance-sharing agreement with a regulated market of significant
size because `[s]uch agreements provide a necessary deterrent to
manipulation because they facilitate the availability of information
needed to fully investigate a manipulation if it were to occur.' ''
\83\ The SEC attributed the quote to a 1998 release, but nowhere does
that release say that the surveillance agreement has to be with a
``market of significant size.'' The release merely states that ``[t]he
SRO also must have a surveillance program adequate to monitor for
abuses in the trading of the new derivative securities product,
including trading in the underlying security or securities.''
---------------------------------------------------------------------------

    \83\ See Winklevoss II Order, 83 FR at 37580 (citing to
Amendment to Rule Filing Requirements for Self-Regulatory
Organizations Regarding New Derivative Securities Products, Exchange
Act Release No. 40761 (Dec. 8, 1998), 63 FR 70952, 70954, 70959
(Dec. 22, 1998) (File No. S7-13-98) (``NDSP Adopting Release'').
---------------------------------------------------------------------------

    For the reasons discussed, the Sponsor believes that the
surveillance agreement already in place between the Exchange and the
CME is ``adequate to monitor'' for abuses in the trading of the Fund's
shares, given the significant likelihood that a person attempting to
manipulate the price of the shares of the Fund would have to manipulate
the prices of the Bitcoin Futures Contracts. In short, in the context
of the Sponsor's unique product design and particularly in light of the
profound growth in the CME futures market since inception, and in
particular over the past 6-9 months, the Sponsor believes it is
entirely appropriate to apply the initial standard from the 1998
release. Importantly, however, to the extent the SEC believes it is
necessary to hew to the ``markets of significant size'' standard, that
standard does not necessarily lead to the two-part ``reasonably
likely'' standard. In this regard, the Winklevoss II Order stated that
``[i]n light of the history and purpose of looking to surveillance-
sharing agreements, with respect to markets for assets underlying an
ETP or for derivatives on those assets, the Commission interprets the
terms `significant market' and `market of significant size' to 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 the ETP listing
market 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. 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.'' \84\
---------------------------------------------------------------------------

    \84\ See Winklevoss II Order, 83 FR at 37594 (emphasis added);
NDSP Adopting Release.
---------------------------------------------------------------------------

    The Sponsor notes that, as discussed above, it sees no difference
between gold futures (or wheat or other futures) versus Bitcoin futures
as acceptable stand-alone components of a futures-based ETP. Stated
another way: Bitcoin futures have grown in size to such a degree that
they cannot be effectively or precisely manipulated by trading in other
Bitcoin interests; neither can gold, or wheat, or other futures. The
Sponsor believes that data discussed above regarding the recent growth
in the Bitcoin futures market clearly establishes that the CME Bitcoin
futures markets generally are a market of significant size and there is
a clear trend in year-over-year growth. Indeed, the current size and
volume of the CME Bitcoin futures market is already more than
adequate--and still growing in size--to make its own trading activity
the primary, if not the lone determinant, of its valuation. The CME has
its own surveillance systems in place to combat manipulation of all
futures contracts, and the CME must follow rules and other protective
protocols applicable as a ``Designated Contracts Market'' or ``DCM,''
which are designed to detect anomalies and prevent fraudulent and/or
manipulative activities.\85\ In short, if manipulation is going to
happen, it will fall under one of two regulated exchanges (CME and NYSE
Arca).
---------------------------------------------------------------------------

    \85\ CME's Department of Market Regulation comprehensively
surveils futures market conditions and price movements on a real-
time and ongoing basis in order to detect and prevent price
distortions, including price distortions caused by manipulative
efforts.
    To reduce the potential threat of price distortions and
manipulation, CME's Market Regulation Department also implements
trader position limits and accountability limits that are linked to
the size of the futures contract's underlying market during the
expiration month of trading.
    Position limits supplement the reporting of large trader
positions (25 contracts or more) to CME's Market Regulation
Department and the Commodity Futures Trading Commission (``CFTC'')
on a daily basis.
    CME's market surveillance program and its related self-
regulatory responsibilities are implemented pursuant to the
Commodity Exchange Act and CFTC regulations thereunder.
    The relevant requirements require CME to (i) only list contracts
that are not readily susceptible to manipulation, (ii) prevent
market disruptions, and (iii) establish tailored position limits or
position accountability rules for each futures contract.
    The above self-regulatory framework is administered under the
CFTC's market oversight mandate which also includes direct
enforcement jurisdiction over manipulative activity in a futures
contract's underlying market.
---------------------------------------------------------------------------

    The Sponsor also maintains that any would-be manipulator of Bitcoin
prices would be reasonably likely to have to do so through the CME
Bitcoin futures market in order to take advantage of the leverage
inherent in trading futures contracts. The inherent leverage in Bitcoin
futures would allow a potential manipulator to attempt a manipulation
scheme with far less upfront capital than it would need to achieve the
same results in the spot market. As the spot Bitcoin market has grown
tremendously since the issuance of the Wilshire Phoenix Order, it would
be critical for a would-be manipulator to efficiently use its capital
to have the desired effect, and a would-be manipulator would certainly
recognize that the chances of

successfully deploying its scheme are increased materially if it can
affect the Bitcoin futures market (and thus the Bitcoin spot market) by
utilizing the inherent leverage in futures markets.\86\ Accordingly, it
is highly likely such manipulators would attempt to do so in the CME
Bitcoin Futures market rather than any spot market.
---------------------------------------------------------------------------

    \86\ As of April 12, 2021, the initial margin required in
connection with CME Bitcoin Futures for the April 2021 contract
ranges from 42% to 38%.
---------------------------------------------------------------------------

    Finally, the Sponsor maintains that a would-be manipulator of
Bitcoin would be required to execute trades on multiple exchanges
simultaneously in order to successfully impact the global price of
Bitcoin due to the decentralized nature of the Bitcoin Network. The
Sponsor thus believes that Bitcoin manipulators would be much more
likely to attempt to manipulate a limited number of futures markets
rather than attempt simultaneous executions on potentially dozens of
different exchanges. Even if a would-be manipulator does attempt to
manipulate Bitcoin prices across platforms, such a scheme would also
necessarily include some attempt to manipulate the price of Bitcoin
futures, including the CME.
(b) Predominant Influence on Prices in Spot and Bitcoin Futures
    The second feature of a ``significant market'' or ``market of
significant size'' in the Commission's example is that the market is
one in which it is unlikely that trading in the ETP would be the
predominant influence on prices in that market. The Sponsor believes
that trading in the Shares would not be the predominant force on prices
in the Bitcoin Futures market (or spot market) for a number of reasons,
including the significant volume in and size of the CME Bitcoin futures
market and the significant liquidity available in the spot market.\87\
---------------------------------------------------------------------------

    \87\ A 12,500 share CU create or redeem at $50 per share and CME
contract value of $200,000 only prompts buying of a little over 3
contracts. 10 CU = 31 contracts, 100 Cu create 310 contracts
compared to YTD avg daily trade volume of 8800 1st to expire and
2450 2nd to expire.
---------------------------------------------------------------------------

    Since the Wilshire Phoenix Order was issued, there has been
significant growth in Bitcoin Futures across each of trading volumes
and open interest as reflected in the chart below:

               Chicago Mercantile Exchange Bitcoin Futures
------------------------------------------------------------------------
                                      February 26,
                                          2020           April 7, 2021
------------------------------------------------------------------------
Trading Volume....................      $433,000,000      $4,321,000,000
Open Interest.....................       238,000,000       2,582,000,000
------------------------------------------------------------------------

    The Sponsor believes that the growth of CME Bitcoin Futures market
has coincided with similar growth in the Bitcoin spot market. The
market for Bitcoin futures is rapidly approaching the size of markets
for other commodity interests, including interests in metals,
agricultural and petroleum products. Accordingly, as the Bitcoin
futures market continues to develop and more closely resemble other
commodity futures markets, it can be reasonably expected that the
relationship between the Bitcoin futures market and Bitcoin spot market
will behave similarly to other future/spot market relationships, where
the spot market may have no relationship to the futures market.
    The Sponsor believes that the significant liquidity in the spot
market and the impact of market orders on the overall price of Bitcoin
have made attempts to move the price of Bitcoin increasingly expensive
over the past year. In January 2020, for example, the cost to buy or
sell $5 million worth of Bitcoin averaged roughly 30 basis points
(compared to 10 basis points in February 2021) with a market impact of
50 basis points (compared to 30 basis points in February 2021).\88\ For
a $10 million market order, the cost to buy or sell was roughly 50
basis points (compared to 20 basis points in February 2021) with a
market impact of 80 basis points (compared to 50 basis points in
February 2021). As the liquidity in the Bitcoin spot market increases,
it follows that the impact of $5 million and $10 million orders will
continue to decrease the overall impact in spot price. Accordingly, to
the extent that the spot market can be used to move the CME Bitcoin
futures market (which the Sponsor does not believe is the case), this
would make it even more likely that a person attempting to manipulate
the price of the shares of the Fund would have to do so by manipulating
the CME Bitcoin futures market.
---------------------------------------------------------------------------

    \88\ These statistics are based on samples of Bitcoin liquidity
in USD (excluding stablecoins or Euro liquidity) based on executable
quotes on Coinbase Pro, Gemini, Bitstamp, Kraken, LMAX Exchange,
BinanceUS, and OKCoin during February 2021.
---------------------------------------------------------------------------

Settlement of BTC Contracts and MBT Contracts
    According to the Registration Statement, each BTC Contract and MBT
Contract settles daily to the BTC Contract volume-weighted average
price (``VWAP'') of all trades that occur between 2:59 p.m. and 3:00
p.m. Central Time, the settlement period, rounded to the nearest
tradable tick.\89\
---------------------------------------------------------------------------

    \89\ VWAP is calculated based first on Tier 1 (if there are
trades during the settlement period); then Tier 2 (if there are no
trades during the settlement period); and then Tier 3 (in the
absence of any trade activity or bid/ask in a given contract month
during the current trading day, as follows:
    Tier 1: Each contract month settles to its VWAP of all trades
that occur between 14:59:00 and 15:00:00 CT, the settlement period,
rounded to the nearest tradable tick. If the VWAP is exactly in the
middle of two tradable ticks, then the settlement will be the
tradable price that is closer to the contract's prior day settlement
price.
    Tier 2: If no trades occur on CME Globex between 14:59:00 and
15:00:00 CT, the settlement period, then the last trade (or the
contract's settlement price from the previous day in the absence of
a last trade price) is used to determine whether to settle to the
bid or the ask during this period.
    a. If the last trade price is outside of the bid/ask spread,
then the contract month settles to the nearest bid or ask price.
    b. If the last trade price is within the bid/ask spread, or if a
bid/ask spread is not available, then the contract month settles to
the last trade price.
    Tier 3: In the absence of any trade activity or bid/ask in a
given contract month during the current trading day, the daily
settlement price will be determined by applying the net change from
the preceding contract month to the given contract month's prior
daily settlement price.
---------------------------------------------------------------------------

    BTC Contracts and MBT Contracts each expire on the last Friday of
the contract month and are settled with cash. The final settlement
value is based on the CME CF BRR at 4:00 p.m. London time on the
expiration day of the futures contract.
    As proposed, the Fund will rollover its soon to expire Bitcoin
Futures Contracts to extend the expiration or maturity of its position
forward by closing the initial contract holdings and opening a new
longer-term contract holding for the same underlying asset at the then-
current market price. The Fund does not intend to hold any Bitcoin
futures positions into cash settlement.
Net Asset Value
    According to the Registration Statement, the Fund's NAV per Share
will be calculated by taking the current

market value of its total assets, subtracting any liabilities, and
dividing that total by the number of Shares.
    The Administrator of the Fund will calculate the NAV once each
trading day, as of the earlier of the close of the New York Stock
Exchange or 4:00 p.m. Eastern Standard Time (EST).
    According to the Registration Statement, to determine the value of
Bitcoin Futures Contracts, the Fund's Administrator will use the
Bitcoin Futures Contract settlement price on the exchange on which the
contract is traded, except that the ``fair value'' of Bitcoin Futures
Contracts (as described in more detail below) may be used when Bitcoin
Futures Contracts close at their price fluctuation limit for the day.
The Fund's Administrator will determine the value of Fund investments
as of the earlier of the close of the New York Stock Exchange or 4:00
p.m. EST. The Fund's NAV will include any unrealized profit or loss on
open Bitcoin futures contacts and any other credit or debit accruing to
the Fund but unpaid or not received by the Fund.
    According to the Registration Statement, the fair value of the
Fund's holdings will be determined by the Fund's Sponsor in good faith
and in a manner that assesses the future Bitcoin market value based on
a consideration of all available facts and all available information on
the valuation date. When a Bitcoin Futures Contract has closed at its
price fluctuation limit, the fair value determination will attempt to
estimate the price at which such Bitcoin Futures Contract would be
trading in the absence of the price fluctuation limit (either above
such limit when an upward limit has been reached or below such limit
when a downward limit has been reached). Typically, this estimate will
be made primarily by reference to exchange traded instruments at 4:00
p.m. EST on settlement day. The fair value of BTC Contracts and MBT
Contracts may not reflect such security's market value or the amount
that the Fund might reasonably expect to receive for the BTC Contracts
and MBT Contracts upon its current sale.
Indicative Fund Value
    According to the Registration Statement, in order to provide
updated information relating to the Fund for use by investors and
market professionals, ICE Data Indices, LLC will calculate an updated
Indicative Fund Value (``IFV''). The IFV will be calculated by using
the prior day's closing NAV per Share of the Fund as a base and will be
updated throughout the Core Trading Session of 9:30 a.m. E.T. to 4:00
p.m. E.T. to reflect changes in the value of the Fund's holdings during
the trading day.
    The IFV will be disseminated on a per Share basis every 15 seconds
during the Exchange's Core Trading Session and be widely disseminated
by one or more major market data vendors during the Exchange's Core
Trading Session.\90\
---------------------------------------------------------------------------

    \90\ Several major market data vendors display and/or make
widely available IFVs taken from the Consolidated Tape Association
(``CTA'') or other data feeds.
---------------------------------------------------------------------------

Creation and Redemption of Shares
    According to the Registration Statement, the Shares issued by the
Fund may only be purchased by Authorized Purchasers and only in blocks
of 12,500 Shares called ``Creation Baskets.'' The amount of the
purchase payment for a Creation Basket is equal to the total NAV of
Shares in the Creation Basket. Similarly, only Authorized Purchasers
may redeem Shares and only in blocks of 12,500 Shares called
``Redemption Baskets.'' The amount of the redemption proceeds for a
Redemption Basket is equal to the total NAV of Shares in the Redemption
Basket. The purchase price for Creation Baskets and the redemption
price for Redemption Baskets are the actual NAV calculated at the end
of the business day when a request for a purchase or redemption is
received by the Fund.
    ``Authorized Purchasers'' will be the only persons that may place
orders to create and redeem Creation Baskets. Authorized Purchasers
must be (1) either registered broker-dealers or other securities market
participants, such as banks and other financial institutions, that are
not required to register as broker-dealers to engage in securities
transactions, and (2) DTC Participants. An Authorized Purchaser is an
entity that has entered into an Authorized Purchaser Agreement with the
Sponsor.
Creation Procedures
    According to the Registration Statement, on any ``Business Day,''
an Authorized Purchaser may place an order with the Transfer Agent to
create one or more Creation Baskets. For purposes of processing both
purchase and redemption orders, a ``Business Day'' means any day other
than a day when the CME or the New York Stock Exchange is closed for
regular trading. Purchase orders for Creation Baskets must be placed by
3:00 p.m. EST or one hour prior to the close of trading on the New York
Stock Exchange, whichever is earlier. The day on which the Distributor
receives a valid purchase order is referred to as the purchase order
date. If the purchase order is received after the applicable cut-off
time, the purchase order date will be the next Business Day. Purchase
orders are irrevocable.
    By placing a purchase order, an Authorized Purchaser agrees to
deposit cash with the Custodian.
Redemption Procedures
    According to the Registration Statement, the procedures by which an
Authorized Purchaser can redeem one or more Creation Baskets will
mirror the procedures for the creation of Creation Baskets. On any
Business Day, an Authorized Purchaser may place an order with the
Transfer Agent to redeem one or more Creation Baskets.
    The redemption procedures allow Authorized Purchasers to redeem
Creation Baskets. Individual shareholders may not redeem directly from
the Fund. By placing a redemption order, an Authorized Purchaser agrees
to deliver the Creation Baskets to be redeemed through DTC's book entry
system to the Fund by the end of the next Business Day following the
effective date of the redemption order or by the end of such later
business day.
Determination of Redemption Distribution
    According to the Registration Statement, the redemption
distribution from the Fund will consist of an amount of cash, cash
equivalents and/or exchange listed Bitcoin futures that is in the same
proportion to the total assets of the Fund on the date that the order
to redeem is properly received as the number of Shares to be redeemed
under the redemption order is in proportion to the total number of
Shares outstanding on the date the order is received.
Delivery of Redemption Distribution
    According to the Registration Statement, an Authorized Purchaser
who places a purchase order will transfer to the Custodian the required
amount of cash, cash equivalents and/or Bitcoin futures by the end of
the next business day following the purchase order date or by the end
of such later business day, not to exceed three business days after the
purchase order date, as agreed to between the Authorized Purchaser and
the Custodian when the purchase order is placed (the ``Purchase
Settlement Date''). Upon receipt of the deposit amount, the Custodian
will direct DTC to credit the number of Creation Baskets ordered to the
Authorized Purchaser's DTC account on the Purchase Settlement Date.

Availability of Information
    The NAV for the Fund's Shares will be disseminated daily to all
market participants at the same time. The intraday, closing prices, and
settlement prices of the Bitcoin Futures Contracts will be readily
available from the applicable futures exchange websites, automated
quotation systems, published or other public sources, or major market
data vendors.
    Complete real-time data for the Bitcoin Futures Contracts will be
available by subscription through on-line information services. ICE
Futures U.S. and CME also provide delayed futures and options on
futures information on current and past trading sessions and market
news free of charge on their respective websites. The specific contract
specifications for Bitcoin Futures Contracts will also be available on
such websites, as well as other financial informational sources.
Quotation and last-sale information regarding the Shares will be
disseminated through the facilities of the CTA. Quotation information
for cash equivalents and commodity futures may be obtained from brokers
and dealers who make markets in such instruments. Intra-day price and
closing price level information for the Benchmark will be available
from major market data vendors. The Benchmark value will be
disseminated once every 15 seconds. The IFV will be available through
on-line information services.
    In addition, the Fund's website, www.teucrium.com, will display the
applicable end of day closing NAV. The daily holdings of the Fund will
be available on the Fund's website. The Fund's website will also
include a form of the prospectus for the Fund that may be downloaded.
The website will include the Shares' ticker and CUSIP information along
with additional quantitative information updated on a daily basis,
including: (1) The prior Business Day's reported NAV and closing price
and a calculation of the premium and discount of the closing price or
mid-point of the bid/ask spread at the time of NAV calculation (the
``Bid/Ask Price'') against the NAV; and (2) data in chart format
displaying the frequency distribution of discounts and premiums of the
daily closing price or Bid/Ask Price against the NAV, within
appropriate ranges, for at least each of the four previous calendar
quarters. The website disclosure of portfolio holdings will be made
daily and will include, as applicable, (i) the name, quantity, price,
and market value of the Fund's holdings, (ii) the counterparty to and
value of forward contracts and any other financial instruments tracking
the Benchmark, and (iii) the total cash and cash equivalents held in
the Fund's portfolio, if applicable.
    The Fund's website will be publicly available at the time of the
public offering of the Shares and accessible at no charge.
Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\91\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Rule
7.12-E have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable.
---------------------------------------------------------------------------

    \91\ See NYSE Arca Rule 7.12-E.
---------------------------------------------------------------------------

    The Exchange may halt trading during the day in which an
interruption to the dissemination of the IFV or the value of the
Benchmark occurs. The Benchmark value will be disseminated once every
15 seconds. If the interruption to the dissemination of the IFV, or to
the value of the Benchmark persists past the trading day in which it
occurred, the Exchange will halt trading no later than the beginning of
the trading day following the interruption. In addition, if the
Exchange becomes aware that the NAV with respect to the Shares is not
disseminated to all market participants at the same time, it will halt
trading in the Shares until such time as the NAV is available to all
market participants.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4 a.m. to 8 p.m. E.T. in accordance with
NYSE Arca Rule 7.34-E (Early, Core, and Late Trading Sessions). The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. As provided in NYSE Arca Rule 7.6-E, the
minimum price variation (``MPV'') for quoting and entry of orders in
equity securities traded on the NYSE Arca Marketplace is $0.01, with
the exception of securities that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
    The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.200-E. The trading of the Shares will
be subject to NYSE Arca Rule 8.200-E, Commentary .02(e), which sets
forth certain restrictions on Equity Trading Permit (``ETP'') Holders
acting as registered Market Makers in Trust Issued Receipts to
facilitate surveillance. With respect to the application of Rule 10A-3
\92\ under the Act, the Trust will rely on the exception contained in
Rule 10A-3(c)(7).\93\ A minimum of 50,000 Shares of the Fund will be
outstanding at the commencement of trading on the Exchange.
---------------------------------------------------------------------------

    \92\ 17 CFR 240.10A-3.
    \93\ See Rule 10A-3(c)(7), 17 CFR 240.10A-3(c)(7) (stating that
a listed issuer is not subject to the requirements of Rule 10A-3 if
the issuer is organized as an unincorporated association that does
not have a board of directors and the activities of the issuer are
limited to passively owning or holding securities or other assets on
behalf of or for the benefit of the holders of the listed
securities).
---------------------------------------------------------------------------

Surveillance
    The Exchange represents that trading in the Shares of the Fund will
be subject to the existing trading surveillances administered by the
Exchange, as well as cross-market surveillances administered by the
Financial Industry Regulatory Authority (``FINRA'') on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
applicable federal securities laws.\94\ The Exchange represents that
these procedures are adequate to properly monitor Exchange trading of
the Shares in all trading sessions and to deter and detect violations
of Exchange rules and federal securities laws applicable to trading on
the Exchange.
---------------------------------------------------------------------------

    \94\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and the Fund's
holdings with other markets and other entities that are members of the
ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may
obtain trading information regarding trading in the Shares and the
Fund's holdings from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares and the
Fund's holdings from

markets and other entities that are members of ISG or with which the
Exchange has in place a CSSA. The Exchange is also able to obtain
information regarding trading in the Shares, the physical commodities
underlying the futures contracts through ETP Holders, in connection
with such ETP Holders' proprietary or customer trades which they effect
through ETP Holders on any relevant market. The Exchange can obtain
market surveillance information, including customer identity
information, with respect to transactions (including transactions in
futures contracts) occurring on U.S. futures exchanges, which are
members of the ISG. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
    The Fund will only hold Bitcoin Futures Contracts that are listed
on an exchange that is a member of the ISG or is a market with which
the Exchange has a CSSA.\95\
---------------------------------------------------------------------------

    \95\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Fund may trade on markets that are members of ISG or with which the
Exchange has in place a CSSA.
---------------------------------------------------------------------------

    All statements and representations made in this filing regarding
(a) the description of the portfolios of the Funds or Benchmark, (b)
limitations on portfolio holdings or the Benchmark, or (c) the
applicability of Exchange listing rules specified in this rule filing
shall constitute continued listing requirements for listing the Shares
on the Exchange.
    The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Fund to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Rule 5.5-E(m).
2. Statutory Basis
    The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \96\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \96\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices and to protect
investors and the public interest in that the Shares will be listed and
traded on the Exchange pursuant to the initial and continued listing
criteria in NYSE Arca Rule 8.200-E. The Exchange has in place
surveillance procedures that are adequate to properly monitor trading
in the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and the Fund's
holdings with other markets and other entities that are members of the
ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may
obtain trading information regarding trading in the Shares and the
Fund's holdings from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares and the
Fund's holdings from markets and other entities that are members of ISG
or with which the Exchange has in place a CSSA. The Exchange is also
able to obtain information regarding trading in the Shares and the
Fund's holdings through ETP Holders, in connection with such ETP
Holders' proprietary or customer trades which they effect through ETP
Holders on any relevant market. The Exchange can obtain market
surveillance information, including customer identity information, with
respect to transactions (including transactions in Bitcoin Futures
Contracts) occurring on U.S. futures exchanges, which are members of
the ISG. The intraday, closing prices, and settlement prices of the
Bitcoin Futures Contracts will be readily available from the applicable
futures exchange websites, automated quotation systems, published or
other public sources, or major market data vendors website or on-line
information services.
    Complete real-time data for the Bitcoin Futures Contracts will be
available by subscription from on-line information services. ICE
Futures U.S. and CME also provide delayed futures information on
current and past trading sessions and market news free of charge on the
Fund's website. The specific contract specifications for Bitcoin
Futures Contracts will also be available on such websites, as well as
other financial informational sources. Information regarding options
will be available from the applicable exchanges or major market data
vendors. Quotation and last-sale information regarding the Shares will
be disseminated through the facilities of the CTA. The IFV will be
disseminated on a per Share basis every 15 seconds during the
Exchange's Core Trading Session and be widely disseminated by one or
more major market data vendors during the NYSE Arca Core Trading
Session. The Fund's website will also include a form of the prospectus
for the Fund that may be downloaded. The website will include the
Share's ticker and CUSIP information along with additional quantitative
information updated on a daily basis, including, for the Fund: (1) The
prior business day's reported NAV and closing price and a calculation
of the premium and discount of the closing price or mid-point of the
Bid/Ask Price against the NAV; and (2) data in chart format displaying
the frequency distribution of discounts and premiums of the daily
closing price or Bid/Ask Price against the NAV, within appropriate
ranges, for at least each of the four previous calendar quarters. The
website disclosure of portfolio holdings will be made daily and will
include, as applicable, (i) the name, quantity, price, and market value
of Bitcoin Futures Contracts, (ii) the counterparty to and value of
forward contracts, and (iii) other financial instruments, if any, and
the characteristics of such instruments and cash equivalents, and
amount of cash held in the Fund's portfolio, if applicable.
    Trading in Shares of the Fund will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12-E have been reached or because of
market conditions or for reasons that, in the view of the Exchange,
make trading in the Shares inadvisable.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
Trust Issued Receipts based on Bitcoin that will enhance competition
among market participants, to the benefit of investors and the
marketplace. As noted above, the Exchange has in place surveillance
procedures that are adequate to properly monitor trading in the Shares
in all trading sessions and to deter and detect violations of Exchange
rules and applicable federal securities laws.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance

of the purpose of the Act. The Exchange notes that the proposed rule
change will facilitate the listing and trading of Trust Issued Receipts
based on Bitcoin and that will enhance competition among market
participants, to the benefit of investors and the marketplace.

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

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

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2021-53 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2021-53. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2021-53 and should be submitted
on or before September 1, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\97\
---------------------------------------------------------------------------

    \97\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-17078 Filed 8-10-21; 8:45 am]
BILLING CODE 8011-01-P