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 Wise Origin Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, 48272-48274 [2021-18457]
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48272
Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices
obligated to ensure that the amount of
regulatory revenue collected from the
ORF, in combination with its other
regulatory fees and fines, does not
exceed regulatory costs.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act,21 and Rule
19b–4(f)(2) 22 thereunder. At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or 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:
lotter on DSK11XQN23PROD with NOTICES1
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 No. SR–
EMERALD–2021–27 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 No.
SR–EMERALD–2021–27. 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 No.
SR–EMERALD–2021–27, and should be
submitted on or before September 17,
2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021–18462 Filed 8–26–21; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–92721; File No. SR–
CboeBZX–2021–039]
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 Wise Origin Bitcoin Trust Under
BZX Rule 14.11(e)(4), CommodityBased Trust Shares
August 23, 2021.
On May 10, 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 Wise Origin Bitcoin
Trust (‘‘Trust’’) under BZX Rule
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A)(ii).
22 17 CFR 240.19b–4(f)(2).
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1 15
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I. Summary of the Proposal
As described in more detail in the
Notice,7 the Exchange proposes to list
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 seek to track the
performance of bitcoin, as measured by
the Fidelity Bitcoin Index PR (‘‘Index’’),
adjusted for the Trust’s expenses and
other liabilities.8 Each Share will
represent a fractional undivided
beneficial interest in and ownership of
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
BILLING CODE 8011–01–P
23 17
21 15
14.11(e)(4), Commodity-Based Trust
Shares. The proposed rule change was
published for comment in the Federal
Register on June 1, 2021.3
On July 13, 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.
PO 00000
Frm 00159
Fmt 4703
Sfmt 4703
3 See Securities Exchange Act Release No. 91994
(May 25, 2021), 86 FR 29321 (June 1, 2021)
(‘‘Notice’’). Comments on the proposed rule change
can be found at: https://www.sec.gov/comments/srcboebzx-2021-039/srcboebzx2021039.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 92388
(July 13, 2021), 86 FR 38163 (July 19, 2021). The
Commission designated August 30, 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.
8 FD Funds Management LLC (‘‘Sponsor’’) is the
sponsor of the Trust, Delaware Trust Company is
the trustee, and Fidelity Service Company, Inc. will
be the administrator (‘‘Administrator’’). A thirdparty transfer agent will facilitate the issuance and
redemption of Shares of the Trust, respond to
correspondence by Trust shareholders and others
relating to its duties, maintain shareholder
accounts, and make periodic reports to the Trust.
An affiliate of the Sponsor, Fidelity Distributors
Corporation, 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. Fidelity
Digital Asset Services, LLC will serve as the Trust’s
custodian (‘‘Custodian’’). The Index methodology
was developed by Fidelity Product Services, LLC
and is administered by the Fidelity Index
Committee. Coin Metrics, Inc. is the third-party
calculation agent for the Index. The Sponsor’s
affiliates have an ownership interest in Coin
Metrics, Inc. See id. at 29321, 29327 n.57, 29328–
29.
E:\FR\FM\27AUN1.SGM
27AUN1
lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices
unexpectedly hold cash on a temporary
basis.9
In seeking to achieve its investment
objective, the Trust will hold bitcoin
and will value its Shares daily as of 4:00
p.m. E.T. using the same methodology
used to calculate the Index. The Index
is designed to reflect the performance of
bitcoin in U.S. dollars. The Index is
calculated using bitcoin price feeds
from eligible bitcoin spot platforms. The
current platform composition of the
Index is Bitstamp, Coinbase, Gemini,
itBit and Kraken. The Index market
value is the volume-weighted median
price of bitcoin in U.S. dollars over the
previous five minutes, which is
calculated by (1) ordering all individual
transactions on eligible spot platforms
over the previous five minutes by price,
and then (2) selecting the price
associated with the 50th percentile of
total volume.10
The Net Asset Value (‘‘NAV’’) of the
Trust means the total assets of the Trust
including, but not limited to, all bitcoin
and cash, if any, less total liabilities of
the Trust, each determined on the basis
of generally accepted accounting
principles. The NAV of the Trust is
calculated by taking the fair market
value of its total assets based on the
volume-weighted median price of
bitcoin used for the calculation of the
Index, subtracting any liabilities (which
include accrued expenses), and dividing
that total by the total number of
outstanding Shares. The Administrator
calculates the NAV of the Trust once
each Exchange trading day. The NAV
for a normal trading day will be released
after 4:00 p.m. E.T.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 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–2021–039 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
‘‘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
id. at 29328–29.
14 15 U.S.C. 78s(b)(2)(B).
15 Id.
16 15 U.S.C. 78f(b)(5).
17 See Notice, supra note 3.
9 See
id. at 29328.
id. at 29329.
11 See id. at 29329–30.
12 See id. at 29329.
10 See
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17:52 Aug 26, 2021
Jkt 253001
underlying asset for an exchange-traded
product?
2. What are commenters’ views of the
Exchange’s assertion that the 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 proposal to list and trade the
Shares is designed to protect investors
and the public interest and is consistent
with the other applicable requirements
of Section 6(b)(5) of 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 reduce risk’’ associated with exposure
through other means.19 Further, the
Exchange asserts that ‘‘the manipulation
concerns previously articulated by the
Commission are sufficiently
mitigated.’’ 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’’)’s
bitcoin futures market now represents a
regulated market of 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
are commenters’ views on 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
18 See
13 See
PO 00000
Frm 00160
Fmt 4703
Sfmt 4703
48273
id. at 29322–23.
id. at 29324.
20 See id. at 29327.
21 See id. at 29325.
22 See id. at 29322.
23 See id. at 29332.
19 See
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27AUN1
48274
Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices
surveillance sharing agreement with a
regulated market of significant size
related to bitcoin? 24 What are
commenters’ views on 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 are commenters’
views on 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
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
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by September 17, 2021.
Any person who wishes to file a rebuttal
to any other person’s submission must
file that rebuttal by October 1, 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
24 See
id. at 29327 n.51.
id. at 29328.
26 See id.
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).
lotter on DSK11XQN23PROD with NOTICES1
25 See
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17:52 Aug 26, 2021
Jkt 253001
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2021–039 on the subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–92724; File No. SR–BOX–
2021–17]
• 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–2021–039. 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–2021–039 and
should be submitted by September 17,
2021. Rebuttal comments should be
submitted by October 1, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021–18457 Filed 8–26–21; 8:45 am]
BILLING CODE 8011–01–P
Self-Regulatory Organizations; BOX
Exchange LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend the Response
Time Period in the Facilitation and
Solicitation Auction Mechanisms
August 23, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
10, 2021, BOX Exchange LLC (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
time period allowed for Participant
submission of Responses in the
Facilitation and Solicitation auction
mechanisms from one (1) second to a
time period designated by the Exchange
of no less than 100 milliseconds and no
more than one (1) second. The text of
the proposed rule change is available
from the principal office of the
Exchange, at the Commission’s Public
Reference Room and also on the
Exchange’s internet website at https://
boxoptions.com.
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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
1 15
28 17
PO 00000
CFR 200.30–3(a)(57).
Frm 00161
Fmt 4703
Sfmt 4703
2 17
E:\FR\FM\27AUN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
27AUN1
]]>Agencies
[Federal Register Volume 86, Number 164 (Friday, August 27, 2021)]
[Notices]
[Pages 48272-48274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18457]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92721; File No. SR-CboeBZX-2021-039]
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 Wise Origin
Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares
August 23, 2021.
On May 10, 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 Wise Origin Bitcoin 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 June 1, 2021.\3\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 91994 (May 25,
2021), 86 FR 29321 (June 1, 2021) (``Notice''). Comments on the
proposed rule change can be found at: https://www.sec.gov/comments/sr-cboebzx-2021-039/srcboebzx2021039.htm.
---------------------------------------------------------------------------
On July 13, 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. 92388 (July 13,
2021), 86 FR 38163 (July 19, 2021). The Commission designated August
30, 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 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 seek to track the
performance of bitcoin, as measured by the Fidelity Bitcoin Index PR
(``Index''), adjusted for the Trust's expenses and other
liabilities.\8\ Each Share will represent a fractional undivided
beneficial interest in and ownership of 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
[[Page 48273]]
unexpectedly hold cash on a temporary basis.\9\
---------------------------------------------------------------------------
\8\ FD Funds Management LLC (``Sponsor'') is the sponsor of the
Trust, Delaware Trust Company is the trustee, and Fidelity Service
Company, Inc. will be the administrator (``Administrator''). A
third-party transfer agent will facilitate the issuance and
redemption of Shares of the Trust, respond to correspondence by
Trust shareholders and others relating to its duties, maintain
shareholder accounts, and make periodic reports to the Trust. An
affiliate of the Sponsor, Fidelity Distributors Corporation, 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. Fidelity Digital Asset Services, LLC
will serve as the Trust's custodian (``Custodian''). The Index
methodology was developed by Fidelity Product Services, LLC and is
administered by the Fidelity Index Committee. Coin Metrics, Inc. is
the third-party calculation agent for the Index. The Sponsor's
affiliates have an ownership interest in Coin Metrics, Inc. See id.
at 29321, 29327 n.57, 29328-29.
\9\ See id. at 29328.
---------------------------------------------------------------------------
In seeking to achieve its investment objective, the Trust will hold
bitcoin and will value its Shares daily as of 4:00 p.m. E.T. using the
same methodology used to calculate the Index. The Index is designed to
reflect the performance of bitcoin in U.S. dollars. The Index is
calculated using bitcoin price feeds from eligible bitcoin spot
platforms. The current platform composition of the Index is Bitstamp,
Coinbase, Gemini, itBit and Kraken. The Index market value is the
volume-weighted median price of bitcoin in U.S. dollars over the
previous five minutes, which is calculated by (1) ordering all
individual transactions on eligible spot platforms over the previous
five minutes by price, and then (2) selecting the price associated with
the 50th percentile of total volume.\10\
---------------------------------------------------------------------------
\10\ See id. at 29329.
---------------------------------------------------------------------------
The Net Asset Value (``NAV'') of the Trust means the total assets
of the Trust including, but not limited to, all bitcoin and cash, if
any, less total liabilities of the Trust, each determined on the basis
of generally accepted accounting principles. The NAV of the Trust is
calculated by taking the fair market value of its total assets based on
the volume-weighted median price of bitcoin used for the calculation of
the Index, subtracting any liabilities (which include accrued
expenses), and dividing that total by the total number of outstanding
Shares. The Administrator calculates the NAV of the Trust once each
Exchange trading day. The NAV for a normal trading day will be released
after 4:00 p.m. E.T.\11\
---------------------------------------------------------------------------
\11\ See id. at 29329-30.
---------------------------------------------------------------------------
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\
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\12\ See id. at 29329.
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When the Trust sells or redeems its Shares, it will do so in ``in-
kind'' transactions in blocks of 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\
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\13\ See id. at 29328-29.
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II. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2021-039 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.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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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\
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\15\ Id.
\16\ 15 U.S.C. 78f(b)(5).
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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:
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\17\ See Notice, supra note 3.
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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 the
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 proposal to list and trade the Shares is
designed to protect investors and the public interest and is consistent
with the other applicable requirements of Section 6(b)(5) of the Act?
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\18\ See id. at 29322-23.
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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 reduce risk''
associated with exposure through other means.\19\ Further, the Exchange
asserts that ``the manipulation concerns previously articulated by the
Commission are sufficiently mitigated.'' \20\ What are commenters'
views regarding such assertions?
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\19\ See id. at 29324.
\20\ See id. at 29327.
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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'')'s bitcoin futures market now represents a regulated market of
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 are
commenters' views on 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\
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\21\ See id. at 29325.
\22\ See id. at 29322.
\23\ See id. at 29332.
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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
[[Page 48274]]
surveillance sharing agreement with a regulated market of significant
size related to bitcoin? \24\ What are commenters' views on 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 are commenters' views on 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\
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\24\ See id. at 29327 n.51.
\25\ See id. at 29328.
\26\ See id.
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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\
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\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).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by September 17, 2021. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
October 1, 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-2021-039 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-2021-039. 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-2021-039 and should be submitted
by September 17, 2021. Rebuttal comments should be submitted by October
1, 2021.
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\28\ 17 CFR 200.30-3(a)(57).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2021-18457 Filed 8-26-21; 8:45 am]
BILLING CODE 8011-01-P
