Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To List and Trade Shares of the Kryptoin Bitcoin ETF Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, 40883-40885 [2021-16121]
Download as PDF
<![CDATA[
Federal Register / Vol. 86, No. 143 / Thursday, July 29, 2021 / Notices
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES:
Date of required notice: July 29,
2021.
The
United States Postal
hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 12, 2021,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & First-Class Package
Service Contract 199 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2021–111,
CP2021–113.
SUPPLEMENTARY INFORMATION:
Service®
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2021–16103 Filed 7–28–21; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
Product Change—Priority Mail and
First-Class Package Service
Negotiated Service Agreement
Postal ServiceTM.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Date of required notice: July 29,
2021.
ACTION:
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
SUMMARY:
DATES:
Date of required notice: July 29,
2021.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 12, 2021,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express, Priority Mail, &
First-Class Package Service Contract 74
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2021–112, CP2021–114.
SUPPLEMENTARY INFORMATION:
[FR Doc. 2021–16102 Filed 7–28–21; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
Product Change—Priority Mail
Negotiated Service Agreement
AGENCY:
ACTION:
Postal ServiceTM.
Notice.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 21, 2021,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail & First-Class Package
Service Contract 200 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2021–115,
CP2021–117.
jbell on DSKJLSW7X2PROD with NOTICES
Sean Robinson,
Attorney, Corporate and Postal Business Law.
BILLING CODE 7710–12–P
VerDate Sep<11>2014
19:19 Jul 28, 2021
Jkt 253001
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
SUMMARY:
SUPPLEMENTARY INFORMATION:
[FR Doc. 2021–16101 Filed 7–28–21; 8:45 am]
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2021–16100 Filed 7–28–21; 8:45 am]
Postal ServiceTM.
Sean Robinson,
Attorney, Corporate and Postal Business Law.
Notice.
SUMMARY:
DATES:
Product Change—Priority Mail
Express, Priority Mail, & First-Class
Package Service Negotiated Service
Agreement
AGENCY:
Sean Robinson, 202–268–8405.
ACTION:
are available at www.prc.gov, Docket
Nos. MC2021–114, CP2021–116.
POSTAL SERVICE
BILLING CODE 7710–12–P
FOR FURTHER INFORMATION CONTACT:
AGENCY:
40883
DATES:
Date of required notice: July 29,
2021.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 19, 2021,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Contract 713 to
Competitive Product List. Documents
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00082
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92476; File No. SR–
CboeBZX–2021–029]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change To List and Trade Shares
of the Kryptoin Bitcoin ETF Trust
Under BZX Rule 14.11(e)(4),
Commodity-Based Trust Shares
July 23, 2021.
On April 9, 2021, Cboe BZX
Exchange, Inc. (‘‘BZX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares
(‘‘Shares’’) of the Kryptoin Bitcoin ETF
Trust (‘‘Trust’’) under BZX Rule
14.11(e)(4), Commodity-Based Trust
Shares. The proposed rule change was
published for comment in the Federal
Register on April 28, 2021.3
On June 9, 2021, pursuant to Section
19(b)(2) of the Act,4 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to disapprove the proposed
rule change.5 This order institutes
proceedings under Section 19(b)(2)(B) of
the Act 6 to determine whether to
approve or disapprove the proposed
rule change.
I. Summary of the Proposal
As described in more detail in the
Notice,7 the Exchange proposes to list
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 91646
(April 22, 2021), 86 FR 22485 (April 28, 2021)
(‘‘Notice’’). Comments on the proposed rule change
can be found at: https://www.sec.gov/comments/srcboebzx-2021-029/srcboebzx2021029.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 92131
(June 9, 2021), 86 FR 31772 (June 15, 2021). The
Commission designated July 27, 2021, as the date
by which it should approve, disapprove, or institute
proceedings to determine whether to disapprove the
proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
7 See Notice, supra note 3.
2 17
E:\FR\FM\29JYN1.SGM
29JYN1
40884
Federal Register / Vol. 86, No. 143 / Thursday, July 29, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES
and trade the Shares of the Trust under
BZX Rule 14.11(e)(4), which governs the
listing and trading of Commodity-Based
Trust Shares on the Exchange.
The investment objective of the Trust
would be to provide exposure to bitcoin
at a price that is reflective of the actual
bitcoin market where investors purchase
and sell bitcoin, less the expense of the
Trust’s operation.8 The Trust would
hold bitcoin and it would calculate the
Trust’s net asset value (‘‘NAV’’) daily
based on the value of bitcoin as
reflected by the CF Bitcoin US
Settlement Price (‘‘Reference Rate’’).
The administrator of the Reference Rate
is CF Benchmarks Ltd. The Reference
Rate aggregates the trade flow of several
bitcoin platforms. The current platform
composition of the Reference Rate is
Bitstamp, Coinbase, Gemini, itBit and
Kraken. In calculating the Reference
Rate, the methodology creates a joint list
of certain trade prices and sizes from the
constituent platforms between 3:00 p.m.
E.T. and 4:00 p.m. E.T. The
methodology then divides this list into
12 equally-sized time intervals of 5
minutes and it calculates the volumeweighted median trade price for each of
those time intervals. The Reference Rate
is the arithmetic mean of these 12
volume-weighted median trade prices.9
Each Share will represent a fractional
undivided beneficial interest in the
bitcoin held by the Trust. The Trust’s
assets will consist of bitcoin held by the
Custodian on behalf of the Trust. The
Trust generally does not intend to hold
cash or cash equivalents. However,
there may be situations where the Trust
will unexpectedly hold cash on a
temporary basis.10
The Administrator will determine the
NAV and NAV per Share of the Trust,
on each day that the Exchange is open
for regular trading, after 4:00 p.m. E.T.
The NAV of the Trust is the aggregate
value of the Trust’s assets less its
liabilities (which include estimated
accrued but unpaid fees and expenses).
In determining the Trust’s NAV, the
Administrator values the bitcoin held by
the Trust on the basis of the price of
8 Kryptoin Investment Advisors, LLC (‘‘Sponsor’’)
is the sponsor of the Trust, Delaware Trust
Company is the trustee, and The Bank of New York
Mellon will be the administrator (‘‘Administrator’’)
and transfer agent. Foreside Fund Services, LLC
will be the marketing agent in connection with the
creation and redemption of ‘‘baskets’’ of Shares, and
the Sponsor will provide assistance in the
marketing of the Shares. Gemini Trust Company,
LLC, a third-party regulated custodian
(‘‘Custodian’’), will be responsible for custody of
the Trust’s bitcoin. See id. at 22485 and 22492–93.
9 See id. at 22493.
10 See id. at 22492.
VerDate Sep<11>2014
19:19 Jul 28, 2021
Jkt 253001
bitcoin as determined by the Reference
Rate.11
The Trust will provide information
regarding the Trust’s bitcoin holdings,
as well as an Intraday Indicative Value
(‘‘IIV’’) per Share updated every 15
seconds, as calculated by the Exchange
or a third-party financial data provider
during the Exchange’s Regular Trading
Hours (9:30 a.m. to 4:00 p.m. E.T.). The
IIV will be calculated by using the prior
day’s closing NAV per Share as a base
and updating that value during Regular
Trading Hours to reflect changes in the
value of the Trust’s bitcoin holdings
during the trading day.12
When the Trust sells or redeems its
Shares, it will do so in ‘‘in-kind’’
transactions in blocks of 50,000 Shares.
Authorized participants will deliver, or
facilitate the delivery of, bitcoin to the
Trust’s account with the Custodian in
exchange for Shares when they
purchase Shares, and the Trust, through
the Custodian, will deliver bitcoin to
such authorized participants when they
redeem Shares with the Trust.13
II. Proceedings To Determine Whether
To Approve or Disapprove SR–
CboeBZX–2021–029 and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 14 to determine
whether the proposed rule change
should be approved or disapproved.
Institution of proceedings is appropriate
at this time in view of the legal and
policy issues raised by the proposed
rule change, as discussed below.
Institution of proceedings does not
indicate that the Commission has
reached any conclusions with respect to
any of the issues involved. Rather, as
described below, the Commission seeks
and encourages interested persons to
provide comments on the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the
Act,15 the Commission is providing
notice of the grounds for disapproval
under consideration. The Commission is
instituting proceedings to allow for
additional analysis of the proposed rule
change’s consistency with Section
6(b)(5) of the Act, which requires,
among other things, that the rules of a
national securities exchange be
‘‘designed to prevent fraudulent and
manipulative acts and practices’’ and
PO 00000
‘‘to protect investors and the public
interest.’’ 16
The Commission asks that
commenters address the sufficiency of
the Exchange’s statements in support of
the proposal, which are set forth in the
Notice,17 in addition to any other
comments they may wish to submit
about the proposed rule change. In
particular, the Commission seeks
comment on the following questions
and asks commenters to submit data
where appropriate to support their
views:
1. What are commenters’ views on
whether the proposed Trust and Shares
would be susceptible to manipulation?
What are commenters’ views generally
on whether the Exchange’s proposal is
designed to prevent fraudulent and
manipulative acts and practices? What
are commenters’ views generally with
respect to the liquidity and transparency
of the bitcoin markets, the bitcoin
markets’ susceptibility to manipulation,
and thus the suitability of bitcoin as an
underlying asset for an exchange-traded
product?
2. What are commenters’ views of the
Exchange’s assertion that regulatory and
financial landscapes relating to bitcoin
and other digital assets have changed
significantly since 2016? 18 Are the
changes that the Exchange identifies
sufficient to support the determination
that the proposed listing and trading of
the Shares are consistent with the Act?
3. The Exchange states that
‘‘approving this proposal . . . [would]
allow U.S. investors with access to
bitcoin in a regulated and transparent
exchange-traded vehicle that would act
to limit risk’’ associated with exposure
through other means.19 Further, the
Exchange asserts that ‘‘the manipulation
concerns previously articulated by the
Commission are sufficiently mitigated to
the point that they are outweighed by
quantifiable investor protection
issues.’’ 20 What are commenters’ views
regarding such assertions?
4. According to the Exchange,
‘‘[n]early every measurable metric
related to [Chicago Mercantile
Exchange’s] Bitcoin Futures has trended
consistently up since launch and/or
accelerated upward in the past year.’’ 21
Based on data provided and the
academic research cited by the
Exchange, do commenters agree that the
Chicago Mercantile Exchange (‘‘CME’’)
now represents a regulated market of
16 15
U.S.C. 78f(b)(5).
Notice, supra note 3.
18 See id. at 22486–87.
19 See id. at 22487.
20 See id. at 22491.
21 See id. at 22489.
11 See
id. at 22494.
12 See id. at 22493.
13 See id.
14 15 U.S.C. 78s(b)(2)(B).
15 Id.
Frm 00083
Fmt 4703
17 See
Sfmt 4703
E:\FR\FM\29JYN1.SGM
29JYN1
Federal Register / Vol. 86, No. 143 / Thursday, July 29, 2021 / Notices
significant size? 22 What are
commenters’ views on whether there is
a reasonable likelihood that a person
attempting to manipulate the Shares
would also have to trade on CME to
manipulate the Shares? What of the
Exchange’s assertion that the
combination of (a) CME bitcoin futures
leading price discovery; (b) the overall
size of the bitcoin market; and (c) the
ability for market participants to buy or
sell large amounts of bitcoin without
significant market impact helps to
prevent the Shares from becoming the
predominant force on pricing in either
the bitcoin spot or CME bitcoin futures
markets? 23
5. What are commenters’ views on the
Exchange’s statement, generally, that
bitcoin is resistant to price
manipulation and that other means to
prevent fraudulent and manipulative
acts and practices exist to justify
dispensing with the requisite
surveillance sharing agreement with a
regulated market of significant size
related to bitcoin? 24 What of the
Exchange’s assertion in support of such
statement that significant liquidity in
the spot market and the impact of
market orders on the overall price of
bitcoin mean that attempting to move
the price of bitcoin is costly? 25 What of
the assertion that offering only in-kind
creations and redemptions provides
unique protections against potential
attempts to manipulate the Shares and
that the price the Sponsor uses to value
the Trust’s bitcoin ‘‘is not particularly
important’’? 26
jbell on DSKJLSW7X2PROD with NOTICES
III. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) or any other provision of the Act,
and the rules and regulations
thereunder. Although there do not
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
22 See
id. at 22486.
23 See id. at 22492.
24 See id. at 22491 n.55.
25 See id. at 22492.
26 See id.
VerDate Sep<11>2014
19:19 Jul 28, 2021
Jkt 253001
opportunity to make an oral
presentation.27
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by August 19, 2021. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by September 2, 2021.
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2021–029 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2021–029. 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 (https://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
27 Section 19(b)(2) of the Act, as amended by the
Securities Act Amendments of 1975, Public Law
94–29 (June 4, 1975), grants the Commission
flexibility to determine what type of proceeding—
either oral or notice and opportunity for written
comments—is appropriate for consideration of a
particular proposal by a self-regulatory
organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975).
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
40885
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2021–029 and
should be submitted by August 19,
2021. Rebuttal comments should be
submitted by September 2, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–16121 Filed 7–28–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92480; File No. SR–NYSE–
2020–95]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Amendment No. 2 and Order
Granting Accelerated Approval of
Proposed Rule Change, as Modified by
Amendment No. 2, To Make Permanent
Commentaries to Rule 7.35A and
Commentaries to Rule 7.35B and To
Make Related Changes to Rules 7.32,
7.35C, 46B, and 47
July 23, 2021.
I. Introduction
On November 30, 2020, New York
Stock Exchange, Inc. (‘‘NYSE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
make permanent Commentaries .01(a)
and (b) and .06 to Rule 7.35A (DMMFacilitated Core Open and Trading Halt
Auctions) and Commentaries .01 and
.03 to Rule 7.35B (DMM-Facilitated
Closing Auctions) and to make related
changes to NYSE Rules 7.32 (Order
Entry), 7.35C (Exchange-Facilitated
Closing Auctions), 46B (Regulatory
Trading Official), and 47 (Floor
Officials—Unusual Situations). The
proposed rule change was published for
comment in the Federal Register on
December 1, 2020.3
On January 13, 2021, the Commission
extended to March 1, 2021, the time
period in which to approve the
28 17
CFR 200.30–3(a)(57).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 90495
(Nov. 24, 2020), 85 FR 77304 (Dec. 1, 2020) (SR–
NYSE–2020–95) (‘‘Notice’’).
1 15
E:\FR\FM\29JYN1.SGM
29JYN1
]]>Agencies
[Federal Register Volume 86, Number 143 (Thursday, July 29, 2021)]
[Notices]
[Pages 40883-40885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16121]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92476; File No. SR-CboeBZX-2021-029]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To List and Trade Shares of the Kryptoin Bitcoin
ETF Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares
July 23, 2021.
On April 9, 2021, Cboe BZX Exchange, Inc. (``BZX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
list and trade shares (``Shares'') of the Kryptoin Bitcoin ETF Trust
(``Trust'') under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares.
The proposed rule change was published for comment in the Federal
Register on April 28, 2021.\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 91646 (April 22,
2021), 86 FR 22485 (April 28, 2021) (``Notice''). Comments on the
proposed rule change can be found at: https://www.sec.gov/comments/sr-cboebzx-2021-029/srcboebzx2021029.htm.
---------------------------------------------------------------------------
On June 9, 2021, pursuant to Section 19(b)(2) of the Act,\4\ the
Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ This order institutes proceedings under Section 19(b)(2)(B)
of the Act \6\ to determine whether to approve or disapprove the
proposed rule change.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 92131 (June 9,
2021), 86 FR 31772 (June 15, 2021). The Commission designated July
27, 2021, as the date by which it should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
I. Summary of the Proposal
As described in more detail in the Notice,\7\ the Exchange proposes
to list
[[Page 40884]]
and trade the Shares of the Trust under BZX Rule 14.11(e)(4), which
governs the listing and trading of Commodity-Based Trust Shares on the
Exchange.
---------------------------------------------------------------------------
\7\ See Notice, supra note 3.
---------------------------------------------------------------------------
The investment objective of the Trust would be to provide exposure
to bitcoin at a price that is reflective of the actual bitcoin market
where investors purchase and sell bitcoin, less the expense of the
Trust's operation.\8\ The Trust would hold bitcoin and it would
calculate the Trust's net asset value (``NAV'') daily based on the
value of bitcoin as reflected by the CF Bitcoin US Settlement Price
(``Reference Rate''). The administrator of the Reference Rate is CF
Benchmarks Ltd. The Reference Rate aggregates the trade flow of several
bitcoin platforms. The current platform composition of the Reference
Rate is Bitstamp, Coinbase, Gemini, itBit and Kraken. In calculating
the Reference Rate, the methodology creates a joint list of certain
trade prices and sizes from the constituent platforms between 3:00 p.m.
E.T. and 4:00 p.m. E.T. The methodology then divides this list into 12
equally-sized time intervals of 5 minutes and it calculates the volume-
weighted median trade price for each of those time intervals. The
Reference Rate is the arithmetic mean of these 12 volume-weighted
median trade prices.\9\
---------------------------------------------------------------------------
\8\ Kryptoin Investment Advisors, LLC (``Sponsor'') is the
sponsor of the Trust, Delaware Trust Company is the trustee, and The
Bank of New York Mellon will be the administrator
(``Administrator'') and transfer agent. Foreside Fund Services, LLC
will be the marketing agent in connection with the creation and
redemption of ``baskets'' of Shares, and the Sponsor will provide
assistance in the marketing of the Shares. Gemini Trust Company,
LLC, a third-party regulated custodian (``Custodian''), will be
responsible for custody of the Trust's bitcoin. See id. at 22485 and
22492-93.
\9\ See id. at 22493.
---------------------------------------------------------------------------
Each Share will represent a fractional undivided beneficial
interest in the bitcoin held by the Trust. The Trust's assets will
consist of bitcoin held by the Custodian on behalf of the Trust. The
Trust generally does not intend to hold cash or cash equivalents.
However, there may be situations where the Trust will unexpectedly hold
cash on a temporary basis.\10\
---------------------------------------------------------------------------
\10\ See id. at 22492.
---------------------------------------------------------------------------
The Administrator will determine the NAV and NAV per Share of the
Trust, on each day that the Exchange is open for regular trading, after
4:00 p.m. E.T. The NAV of the Trust is the aggregate value of the
Trust's assets less its liabilities (which include estimated accrued
but unpaid fees and expenses). In determining the Trust's NAV, the
Administrator values the bitcoin held by the Trust on the basis of the
price of bitcoin as determined by the Reference Rate.\11\
---------------------------------------------------------------------------
\11\ See id. at 22494.
---------------------------------------------------------------------------
The Trust will provide information regarding the Trust's bitcoin
holdings, as well as an Intraday Indicative Value (``IIV'') per Share
updated every 15 seconds, as calculated by the Exchange or a third-
party financial data provider during the Exchange's Regular Trading
Hours (9:30 a.m. to 4:00 p.m. E.T.). The IIV will be calculated by
using the prior day's closing NAV per Share as a base and updating that
value during Regular Trading Hours to reflect changes in the value of
the Trust's bitcoin holdings during the trading day.\12\
---------------------------------------------------------------------------
\12\ See id. at 22493.
---------------------------------------------------------------------------
When the Trust sells or redeems its Shares, it will do so in ``in-
kind'' transactions in blocks of 50,000 Shares. Authorized participants
will deliver, or facilitate the delivery of, bitcoin to the Trust's
account with the Custodian in exchange for Shares when they purchase
Shares, and the Trust, through the Custodian, will deliver bitcoin to
such authorized participants when they redeem Shares with the
Trust.\13\
---------------------------------------------------------------------------
\13\ See id.
---------------------------------------------------------------------------
II. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2021-029 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \14\ to determine whether the proposed rule
change should be approved or disapproved. Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the proposed rule change, as discussed below. Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, as
described below, the Commission seeks and encourages interested persons
to provide comments on the proposed rule change.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2)(B) of the Act,\15\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with Section 6(b)(5)
of the Act, which requires, among other things, that the rules of a
national securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices'' and ``to protect investors and the
public interest.'' \16\
---------------------------------------------------------------------------
\15\ Id.
\16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice,\17\ in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on the following questions and asks commenters to submit
data where appropriate to support their views:
---------------------------------------------------------------------------
\17\ See Notice, supra note 3.
---------------------------------------------------------------------------
1. What are commenters' views on whether the proposed Trust and
Shares would be susceptible to manipulation? What are commenters' views
generally on whether the Exchange's proposal is designed to prevent
fraudulent and manipulative acts and practices? What are commenters'
views generally with respect to the liquidity and transparency of the
bitcoin markets, the bitcoin markets' susceptibility to manipulation,
and thus the suitability of bitcoin as an underlying asset for an
exchange-traded product?
2. What are commenters' views of the Exchange's assertion that
regulatory and financial landscapes relating to bitcoin and other
digital assets have changed significantly since 2016? \18\ Are the
changes that the Exchange identifies sufficient to support the
determination that the proposed listing and trading of the Shares are
consistent with the Act?
---------------------------------------------------------------------------
\18\ See id. at 22486-87.
---------------------------------------------------------------------------
3. The Exchange states that ``approving this proposal . . . [would]
allow U.S. investors with access to bitcoin in a regulated and
transparent exchange-traded vehicle that would act to limit risk''
associated with exposure through other means.\19\ Further, the Exchange
asserts that ``the manipulation concerns previously articulated by the
Commission are sufficiently mitigated to the point that they are
outweighed by quantifiable investor protection issues.'' \20\ What are
commenters' views regarding such assertions?
---------------------------------------------------------------------------
\19\ See id. at 22487.
\20\ See id. at 22491.
---------------------------------------------------------------------------
4. According to the Exchange, ``[n]early every measurable metric
related to [Chicago Mercantile Exchange's] Bitcoin Futures has trended
consistently up since launch and/or accelerated upward in the past
year.'' \21\ Based on data provided and the academic research cited by
the Exchange, do commenters agree that the Chicago Mercantile Exchange
(``CME'') now represents a regulated market of
[[Page 40885]]
significant size? \22\ What are commenters' views on whether there is a
reasonable likelihood that a person attempting to manipulate the Shares
would also have to trade on CME to manipulate the Shares? What of the
Exchange's assertion that the combination of (a) CME bitcoin futures
leading price discovery; (b) the overall size of the bitcoin market;
and (c) the ability for market participants to buy or sell large
amounts of bitcoin without significant market impact helps to prevent
the Shares from becoming the predominant force on pricing in either the
bitcoin spot or CME bitcoin futures markets? \23\
---------------------------------------------------------------------------
\21\ See id. at 22489.
\22\ See id. at 22486.
\23\ See id. at 22492.
---------------------------------------------------------------------------
5. What are commenters' views on the Exchange's statement,
generally, that bitcoin is resistant to price manipulation and that
other means to prevent fraudulent and manipulative acts and practices
exist to justify dispensing with the requisite surveillance sharing
agreement with a regulated market of significant size related to
bitcoin? \24\ What of the Exchange's assertion in support of such
statement that significant liquidity in the spot market and the impact
of market orders on the overall price of bitcoin mean that attempting
to move the price of bitcoin is costly? \25\ What of the assertion that
offering only in-kind creations and redemptions provides unique
protections against potential attempts to manipulate the Shares and
that the price the Sponsor uses to value the Trust's bitcoin ``is not
particularly important''? \26\
---------------------------------------------------------------------------
\24\ See id. at 22491 n.55.
\25\ See id. at 22492.
\26\ See id.
---------------------------------------------------------------------------
III. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\27\
---------------------------------------------------------------------------
\27\ Section 19(b)(2) of the Act, as amended by the Securities
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
---------------------------------------------------------------------------
Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by August 19, 2021. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
September 2, 2021.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2021-029 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeBZX-2021-029. 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 (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeBZX-2021-029 and should be submitted
by August 19, 2021. Rebuttal comments should be submitted by September
2, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------
\28\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-16121 Filed 7-28-21; 8:45 am]
BILLING CODE 8011-01-P
