Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Valkyrie XBTO Bitcoin Futures Fund Under Nasdaq Rule 5711(g), 70882-70885 [2021-26860]
Download as PDF
<![CDATA[
70882
Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices
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–Phlx–2021–71, and should
be submitted on or before January 3,
2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Assistant Secretary.
BILLING CODE 8011–01–P
[Release No. 34–93734; File Nos. SR–MIAX–
2021–43, SR–EMERALD–2021–31]
Self-Regulatory Organizations; Miami
International Securities Exchange LLC,
MIAX Emerald, LLC; Notice of
Withdrawal of Proposed Rule Changes
To Amend the Fee Schedules To Adopt
a Tiered-Pricing Structure for
Additional Limited Service MIAX and
MIAX Emerald Express Interface Ports
December 7, 2021.
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On September 28, 2021, Miami
International Securities Exchange LLC,
LLC (‘‘MIAX’’) and MIAX Emerald, LLC
(‘‘MIAX Emerald’’) (collectively, the
‘‘Exchanges’’) each 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
(File Numbers SR–MIAX–2021–43 and
SR–EMERALD–2021–31) to adopt a
tiered-pricing structure for additional
limited service express interface ports.
The proposed rule changes were
immediately effective upon filing with
the Commission pursuant to Section
19(b)(3)(A) of the Act.3 The proposed
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
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[FR Doc. 2021–26863 Filed 12–10–21; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–93731; File No. SR–
NASDAQ–2021–066]
SECURITIES AND EXCHANGE
COMMISSION
1 15
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
J. Matthew DeLesDernier,
Assistant Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[FR Doc. 2021–26859 Filed 12–10–21; 8:45 am]
11 17
rule changes were published for
comment in the Federal Register on
October 5, 2021.4 On November 22,
2021, the Commission temporarily
suspended the proposed rule changes
and instituted proceedings under
Section 19(b)(2)(B) of the Act 5 to
determine whether to approve or
disapprove the proposed rule changes.6
On December 1, 2021, the Exchanges
withdrew the proposed rule changes
(SR–MIAX–2021–43 and SR–
EMERALD–2021–31).
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Order
Instituting Proceedings To Determine
Whether To Approve or Disapprove a
Proposed Rule Change, as Modified by
Amendment No. 1, To List and Trade
Shares of the Valkyrie XBTO Bitcoin
Futures Fund Under Nasdaq Rule
5711(g)
December 7, 2021.
On August 23, 2021, The Nasdaq
Stock Market LLC (‘‘Nasdaq’’ 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
Valkyrie XBTO Bitcoin Futures Fund
(‘‘Trust’’) under Nasdaq Rule 5711(g).
On August 25, 2021, Nasdaq filed
Amendment No. 1 to the proposed rule
change. The proposed rule change, as
modified by Amendment No. 1, was
4 See Securities Exchange Act Release Nos. 93185
(September 29, 2021), 86 FR 55093 (SR–MIAX–
2021–43); 93188 (September 29, 2021), 86 FR 55052
(SR–EMERALD–2021–31). Comments received on
the proposed rule changes are available on the
Commission’s website at: https://www.sec.gov/
comments/sr-miax-2021-43/srmiax202143.htm
(SR–MIAX–2021–43); https://www.sec.gov/
comments/sr-emerald-2021-31/
sremerald202131.htm (SR–EMERALD–2021–31).
5 15 U.S.C. 78s(b)(2)(B).
6 See Securities Exchange Act Release No. 93640,
86 FR 67745 (November 29, 2021).
7 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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published for comment in the Federal
Register on September 9, 2021.3
On September 29, 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 The Commission
has received no comments on the
proposed rule change. 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, as modified by
Amendment No. 1.
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
Nasdaq Rule 5711(g), which governs the
listing and trading of Commodity
Futures Trust Shares on the Exchange.
The investment objective of the Trust
is for the Shares to reflect the
performance of bitcoin as represented
by the CME CF Bitcoin Reference Rate
(‘‘CME CF BRR’’), less the Trust’s
liabilities and expenses.8 The CME CF
BRR aggregates the trade flow of major
bitcoin spot platforms during a specific
calculation window into a one-a-day
reference rate of the U.S. dollar price of
bitcoin.9 The Trust pursues its
investment objective primarily by
investing in bitcoin futures (‘‘Bitcoin
Futures’’) that are cash-settled and
traded on commodity exchanges
registered with the Commodity Futures
Trading Commission (‘‘CFTC’’).10 At
3 See Securities Exchange Act Release No. 92865
(Sept. 2, 2021), 86 FR 50570 (Sept. 9, 2021)
(‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 93172,
86 FR 55071 (Oct. 5, 2021). The Commission
designated December 8, 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 See id. at 50574. Valkyrie Funds LLC
(‘‘Sponsor’’) serves as the Trust’s sponsor and
commodity pool operator; Vident Investment
Advisory, LLC (‘‘Sub-Advisor’’) serves as the Trust’s
sub-advisor and commodity trading advisor; and
XBTO Trading, LLC is the research provider for the
Sponsor and the Sub-Advisor. Delaware Trust
Company serves as the trustee for the Trust. The
Sponsor is currently considering third-party service
providers for the roles of administrator, transfer
agent, custodian, and marketing agent. See id. at
50571.
9 See id. at 50573 n.8. According to the Exchange,
calculation rules are geared toward maximum
transparency and real-time replicability in
underlying spot markets, including Bitstamp,
Coinbase, Gemini, itBit, and Kraken. See id.
10 See id. at 50574. The Exchange also represents
that it will pursue its investment objective solely by
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Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices
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expiration, the cash settlement amount
for the Bitcoin Futures held by the Trust
will be determined by comparing the
price at which the Trust purchased the
futures contract on the relevant futures
exchange with the reference rate
specified by that exchange on the
expiration date.11 The Trust does not
invest in bitcoin or other digital assets
directly. In addition to the Trust’s
investments in Bitcoin Futures, the
Trust expects to have significant
holdings of cash and high-quality, shortterm debt instruments that have termsto-maturity of less than 397 days, such
as U.S. government securities and
repurchase agreements (‘‘Money Market
Instruments’’).12
The net asset value (‘‘NAV’’) of the
Trust will be determined in accordance
with Generally Accepted Accounting
Principles as the total value of bitcoin
held by the Trust, plus any cash or other
assets, less any liabilities including
accrued but unpaid expenses. The NAV
per Share will be determined by
dividing the NAV of the Trust by the
number of Shares outstanding. The NAV
of the Trust is typically determined as
of 4:00 p.m. E.T., on each day the Shares
trade on the Exchange (‘‘Business Day’’).
The Trust’s daily activities are generally
not reflected in the NAV determined for
the Business Day on which the
transactions are effected (the trade date),
but rather on the following Business
Day. Bitcoin Futures traded on a U.S.
exchange are generally valued using the
last traded price before the NAV
calculation time on the date with
respect to which the NAV is being
determined. Money Market Instruments
will generally be valued at their market
price using market quotations or
information provided by a pricing
service.13
On each Business Day, before
commencement of trading in Shares
during regular trading hours, the Trust
will disclose on its website the portfolio
that will form the basis for the Trust’s
calculation of NAV at the end of the
Business Day.14 The Trust’s website will
provide an intra-day 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 Market
Session (9:30 a.m. to 4:00 p.m. E.T.).
holding Bitcoin Futures that are cash-settled and
traded on the Chicago Mercantile Exchange, Inc.
(‘‘CME’’). See id. at 50571.
11 For example, the CME has specified that the
reference rate for its Bitcoin Futures will be a
volume-weighted composite of Bitcoin prices on
multiple bitcoin platforms. See id. at 50574.
12 See id.
13 See id. at 50574–75.
14 See id. at 50582.
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The IIV will be calculated by using the
prior day’s closing NAV per Share as a
base and updating that value during the
Exchange’s Regular Market Session to
reflect changes in the value of the
Trust’s NAV during the trading day.15
Intraday price information for Bitcoin
Futures is available directly from the
applicable listing venue and through
subscription services, such as
Bloomberg and Thomson Reuters,
which can be accessed by authorized
participants (as defined herein) and
other investors. Intraday price
quotations on Money Market
Instruments of the type held by the
Trust are available from major brokerdealer firms and from third-parties, and
pricing information related to Money
Market Instruments will also be
available through issuer websites and
publicly available quotation services
such as Bloomberg, Markit, and
Thomson Reuters.16
The Trust would issue and redeem
Shares on a continuous basis at NAV
per Share in large, specified blocks of
Shares (‘‘Creation Units’’) in
transactions with broker-dealers and
large institutional investors that have
entered into participation agreements
(‘‘Authorized Participants’’). The
Exchange currently anticipates that a
Creation Unit will consist of 50,000
Shares, although this number may
change from time to time. In addition,
the Exchange currently expects that the
Trust’s Creation Units will generally be
issued and redeemed for cash.17
II. Proceedings To Determine Whether
To Approve or Disapprove SR–
NASDAQ–2021–066 and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Act 18 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
15 See
id. at 50580.
id. at 50583.
17 See id. at 50579–80. Upon the request of an
Authorized Participant made at the time of a
redemption order, the Sponsor at its sole discretion
may determine, in addition to delivering
redemption proceeds, to transfer futures contracts
to the Authorized Participant pursuant to an
exchange of a futures contract for related position
or to a block trade sale of futures contracts to the
Authorized Participant. See id. at 50580.
18 15 U.S.C. 78s(b)(2)(B).
16 See
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70883
and encourages interested persons to
provide comments on the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the
Act,19 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.’’ 20
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,21 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?
2. The Exchange asserts that ‘‘bitcoin
and its surrounding ecosystem have
evolved sufficiently to support the
approval of a Bitcoin Futures ETF
because the concerns the Commission
has identified previously have been
addressed.’’ 22 The Exchange also asserts
that ‘‘the Bitcoin Futures market has
sufficiently developed since the prior
disapproval orders such that the market
for Bitcoin Futures now resembles the
market for other commodities at the
time the related commodity futuresbased ETP was approved for listing.’’ 23
What are commenters’ views regarding
such assertions? Are the developments
that the Exchange identifies sufficient to
support a 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. According to the Exchange,
‘‘[n]early every measurable metric
related to CME Bitcoin Futures has
trended consistently up since launch
19 Id.
20 15
U.S.C. 78f(b)(5).
Notice, supra note 3.
22 See id. at 50571.
23 See id. at 50575.
21 See
E:\FR\FM\13DEN1.SGM
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70884
Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices
and/or accelerated upward in the past
year.’’ 24 The Exchange asserts that
‘‘both the bitcoin and bitcoin futures
markets have developed to the point
that the CME Bitcoin Futures market is
a ‘regulated market of significant
size.’ ’’ 25 Based on data provided and
the academic research cited by the
Exchange, do commenters agree that the
CME Bitcoin Futures market now
represents a regulated market of
significant size? 26 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 the CME to
manipulate the Shares?
4. The Exchange states it believes that
‘‘trading in the Shares would not be the
predominant force on prices in the
Bitcoin Futures market’’ because of the
significant volume in the Bitcoin
Futures market, the size of bitcoin’s
market cap, and the significant liquidity
available in the spot market.27 What are
commenters’ views on the Exchange’s
assertion and the data provided by the
Exchange to support such assertion?
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5. The Exchange asserts that the CME
CF BRR is not readily susceptible to
manipulation due to the design of its
methodology, which the Exchange
believes adequately protects the Trust
from potential price manipulation.28
What are commenters’ views on these
assertions?
6. The Exchange asserts the CME’s
compliance with the CFTC’s Core
Principles for Designated Contract
Markets as set forth in the Commodity
Exchange Act means that the Trust’s
core asset (i.e., CME Bitcoin Futures) is
‘‘a well-regulated instrument that is not
readily susceptible to manipulation.’’ 29
The Exchange further asserts that CME
Bitcoin Futures are not readily subject
to manipulation or distortion because
they are cash-settled and subject to realtime trade monitoring and
comprehensive and accurate trade
reconstruction.30 What are commenters’
views regarding the Exchange’s
assertions? Are the Exchange’s
assertions sufficient to support the
determination that the proposal to list
and trade the Shares is designed to
prevent fraudulent and manipulative
acts and practices and is consistent with
24 See
id. at 50573.
id. at 50571.
26 See id. at 50576–78.
27 See id. at 50578.
28 See id. at 50578–79.
29 See id. at 50579.
30 See id.
25 See
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16:50 Dec 10, 2021
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the other applicable requirements of
Section 6(b)(5) of the Act?
7. What are commenters’ views of the
claim that the similarities of the
operational characteristics and
regulatory requirements applicable to
bitcoin futures-based exchange-traded
funds (‘‘ETFs’’) that both register the
sale of their shares under the Securities
Act of 1933 (‘‘1933 Act’’) and are
regulated under the Investment
Company Act of 1940 (‘‘1940 Act’’) and
bitcoin futures-based exchange-traded
products (‘‘ETPs’’) that register the sale
of their shares under the 1933 Act but
are not regulated under the 1940 Act are
such that these types of products should
not be treated differently by the
Commission? 31
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.32
Interested persons are invited to
submit written data, views, and
31 The Commission previously made a similar
request for comment in connection with statements
made by a sponsor of a proposed bitcoin futuresbased ETP similar to the Trust. See Securities
Exchange Act Release No. 93534 (Nov. 8, 2021), 86
FR 63082, 63084 (Nov. 15, 2021) (SR–NYSEArca2021–53) (Order Instituting Proceedings to
Determine Whether to Approve or Disapprove a
Proposed Rule Change To List and Trade Shares of
the Teucrium Bitcoin Futures Fund Under NYSE
Arca Rule 8.200–E, Commentary .02) (Trust Issued
Receipts) (citing to Letter from W. Thomas Conner,
Vedder Price, on behalf of the sponsor, dated
September 1, 2021, available at https://
www.sec.gov/comments/sr-nysearca-2021-53/
srnysearca202153-9197848-249688.pdf.)).
32 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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Sfmt 4703
arguments regarding whether the
proposal should be approved or
disapproved by January 3, 2022. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by January 18, 2022.
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–
NASDAQ–2021–066 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–NASDAQ–2021–066. 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–NASDAQ–2021–066 and
should be submitted by January 3, 2022.
Rebuttal comments should be submitted
by January 18, 2022.
E:\FR\FM\13DEN1.SGM
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Federal Register / Vol. 86, No. 236 / Monday, December 13, 2021 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–26860 Filed 12–10–21; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Delegation of Authority No. 522]
Delegation of Authority; Designation of
U.S. Delegations to International
Conferences
By virtue of the authority vested in
the Secretary of State by the laws of the
United States of America, including 22
U.S.C. 2651a(a)(4), and as Minister of
Foreign Affairs of the United States of
America, I hereby delegate to the
Assistant Secretary of State for
International Organization Affairs (IO)
and the IO Director of International
Conferences (IO/C), the authority to
designate delegates of the United States
of America to international conferences,
including any meeting convened by an
international organization.
The Secretary of State, the Deputy
Secretary, the Deputy Secretary for
Management and Resources, and the
Under Secretary for Political Affairs
may also exercise the authority
delegated herein. The delegations of
authority from the Secretary of State to
the IO Assistant Secretary of State,
dated March 6, 1953, and from IO to the
Director of the Office of International
Conferences, dated May 29, 1975, are
hereby rescinded. This delegation does
not rescind or otherwise affect any other
delegation currently in effect.
This memorandum shall be published
in the Federal Register.
Dated: November 23, 2021.
Antony J. Blinken,
Secretary of State.
[FR Doc. 2021–26929 Filed 12–10–21; 8:45 am]
DEPARTMENT OF STATE
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[Public Notice: 11607]
Determination Under Section 7012 of
the Department of State, Foreign
Operations, and Related Programs
Appropriations Act, 2021 Relating to
Assistance to Zimbabwe
Pursuant to the authority vested in me
by section 7012 of the Department of
State, Foreign Operations, and Related
Programs Appropriations Act, 2021
CFR 200.30–3(a)(57).
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Dated: November 9, 2021.
Brian P. McKeon,
Deputy Secretary of State for Management
and Resources.
[FR Doc. 2021–26931 Filed 12–10–21; 8:45 am]
BILLING CODE 4710–26–P
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
[Docket Number USTR–2021–0021]
Request for Comments and Notice of
a Public Hearing Regarding the 2022
Special 301 Review
Office of the United States
Trade Representative.
ACTION: Request for comments and
notice of public hearing.
AGENCY:
Each year, the Office of the
United States Trade Representative
(USTR) conducts a review to identify
countries that deny adequate and
effective protection of intellectual
property (IP) rights or deny fair and
equitable market access to U.S. persons
who rely on IP protection. Based on this
review, the U.S. Trade Representative
determines which, if any, of these
countries to identify as Priority Foreign
Countries. USTR requests written
comments that identify acts, policies, or
practices that may form the basis of a
country’s identification as a Priority
Foreign Country or placement on the
Priority Watch List or Watch List.
DATES:
SUMMARY:
BILLING CODE 4710–19–P
33 17
(Div. K, Pub. L. 116–260) (FY 2021
SFOAA); Executive Order 12163, as
amended by Executive Order 13346; and
Delegation of Authority 513, I hereby
determine that targeted assistance to
Zimbabwe in the areas of health, good
governance and respect for human
rights, leadership, agriculture/food
security, poverty reduction, livelihoods,
family planning and reproductive
health, macroeconomic growth
including anti-corruption efforts,
helping victims of trafficking and
combatting trafficking, and advancing
biodiversity and wildlife conservation,
as well as the continuation of assistance
that would have a significant adverse
effect on vulnerable populations if
suspended, is in the national interest of
the United States. I thereby waive with
respect to Zimbabwe the application of
section 7012 of the FY 2021 SFOAA
with respect to such assistance.
This determination shall be published
in the Federal Register and, along with
the accompanying Memorandum of
Justification, shall be transmitted to
Congress.
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January 31, 2022 at 11:59 p.m. EST:
Deadline for submission of written
comments from the public.
February 14, 2022 at 11:59 p.m. EST:
Deadline for submission of written
comments from foreign governments.
February 23, 2022: Deadline for the
Special 301 Subcommittee of the Trade
Policy Staff Committee (Subcommittee)
to pose questions on written comments.
March 8, 2022 at 11:59 p.m. EST:
Deadline for submission of commenters’
responses to questions from the
Subcommittee.
On or about April 29, 2022: USTR
will publish the 2022 Special 301
Report within 30 days of the publication
of the National Trade Estimate Report.
ADDRESSES: USTR strongly encourages
electronic submissions made through
the Federal eRulemaking Portal: https://
www.regulations.gov (Regulations.gov).
Follow the submission instructions in
section IV below. The docket number is
USTR–2021–0021. For alternatives to
on-line submissions, please contact
USTR at Special301@ustr.eop.gov before
transmitting a comment and in advance
of the relevant deadline.
FOR FURTHER INFORMATION CONTACT:
Jacob Ewerdt, Director for Innovation
and Intellectual Property, at
Special301@ustr.eop.gov or (202) 395–
4510. You can find information about
the Special 301 Review at https://
www.ustr.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Section 182 of the Trade Act of 1974
(Trade Act) (19 U.S.C. 2242), commonly
known as the Special 301 provisions,
requires the U.S. Trade Representative
to identify countries that deny adequate
and effective IP protections or fair and
equitable market access to U.S. persons
who rely on IP protection. The Trade
Act requires the U.S. Trade
Representative to determine which, if
any, of these countries to identify as
Priority Foreign Countries. Acts,
policies, or practices that are the basis
of a country’s identification as a Priority
Foreign Country can be subject to the
procedures set out in sections 301–305
of the Trade Act (19 U.S.C. 2411–2415).
In addition, USTR has created a
Priority Watch List and Watch List to
assist in pursuing the goals of the
Special 301 provisions. Placement of a
trading partner on the Priority Watch
List or Watch List indicates that
particular problems exist in that country
with respect to IP protection,
enforcement, or market access for
persons that rely on intellectual
property protection. Trading partners
placed on the Priority Watch List are the
E:\FR\FM\13DEN1.SGM
13DEN1
]]>Agencies
[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Notices]
[Pages 70882-70885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26860]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93731; File No. SR-NASDAQ-2021-066]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade
Shares of the Valkyrie XBTO Bitcoin Futures Fund Under Nasdaq Rule
5711(g)
December 7, 2021.
On August 23, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' 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
Valkyrie XBTO Bitcoin Futures Fund (``Trust'') under Nasdaq Rule
5711(g). On August 25, 2021, Nasdaq filed Amendment No. 1 to the
proposed rule change. The proposed rule change, as modified by
Amendment No. 1, was published for comment in the Federal Register on
September 9, 2021.\3\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 92865 (Sept. 2,
2021), 86 FR 50570 (Sept. 9, 2021) (``Notice'').
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On September 29, 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\ The Commission has received no comments on the proposed rule
change. 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, as modified by Amendment No. 1.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 93172, 86 FR 55071
(Oct. 5, 2021). The Commission designated December 8, 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).
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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 Nasdaq Rule 5711(g),
which governs the listing and trading of Commodity Futures Trust Shares
on the Exchange.
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\7\ See Notice, supra note 3.
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The investment objective of the Trust is for the Shares to reflect
the performance of bitcoin as represented by the CME CF Bitcoin
Reference Rate (``CME CF BRR''), less the Trust's liabilities and
expenses.\8\ The CME CF BRR aggregates the trade flow of major bitcoin
spot platforms during a specific calculation window into a one-a-day
reference rate of the U.S. dollar price of bitcoin.\9\ The Trust
pursues its investment objective primarily by investing in bitcoin
futures (``Bitcoin Futures'') that are cash-settled and traded on
commodity exchanges registered with the Commodity Futures Trading
Commission (``CFTC'').\10\ At
[[Page 70883]]
expiration, the cash settlement amount for the Bitcoin Futures held by
the Trust will be determined by comparing the price at which the Trust
purchased the futures contract on the relevant futures exchange with
the reference rate specified by that exchange on the expiration
date.\11\ The Trust does not invest in bitcoin or other digital assets
directly. In addition to the Trust's investments in Bitcoin Futures,
the Trust expects to have significant holdings of cash and high-
quality, short-term debt instruments that have terms-to-maturity of
less than 397 days, such as U.S. government securities and repurchase
agreements (``Money Market Instruments'').\12\
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\8\ See id. at 50574. Valkyrie Funds LLC (``Sponsor'') serves as
the Trust's sponsor and commodity pool operator; Vident Investment
Advisory, LLC (``Sub-Advisor'') serves as the Trust's sub-advisor
and commodity trading advisor; and XBTO Trading, LLC is the research
provider for the Sponsor and the Sub-Advisor. Delaware Trust Company
serves as the trustee for the Trust. The Sponsor is currently
considering third-party service providers for the roles of
administrator, transfer agent, custodian, and marketing agent. See
id. at 50571.
\9\ See id. at 50573 n.8. According to the Exchange, calculation
rules are geared toward maximum transparency and real-time
replicability in underlying spot markets, including Bitstamp,
Coinbase, Gemini, itBit, and Kraken. See id.
\10\ See id. at 50574. The Exchange also represents that it will
pursue its investment objective solely by holding Bitcoin Futures
that are cash-settled and traded on the Chicago Mercantile Exchange,
Inc. (``CME''). See id. at 50571.
\11\ For example, the CME has specified that the reference rate
for its Bitcoin Futures will be a volume-weighted composite of
Bitcoin prices on multiple bitcoin platforms. See id. at 50574.
\12\ See id.
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The net asset value (``NAV'') of the Trust will be determined in
accordance with Generally Accepted Accounting Principles as the total
value of bitcoin held by the Trust, plus any cash or other assets, less
any liabilities including accrued but unpaid expenses. The NAV per
Share will be determined by dividing the NAV of the Trust by the number
of Shares outstanding. The NAV of the Trust is typically determined as
of 4:00 p.m. E.T., on each day the Shares trade on the Exchange
(``Business Day''). The Trust's daily activities are generally not
reflected in the NAV determined for the Business Day on which the
transactions are effected (the trade date), but rather on the following
Business Day. Bitcoin Futures traded on a U.S. exchange are generally
valued using the last traded price before the NAV calculation time on
the date with respect to which the NAV is being determined. Money
Market Instruments will generally be valued at their market price using
market quotations or information provided by a pricing service.\13\
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\13\ See id. at 50574-75.
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On each Business Day, before commencement of trading in Shares
during regular trading hours, the Trust will disclose on its website
the portfolio that will form the basis for the Trust's calculation of
NAV at the end of the Business Day.\14\ The Trust's website will
provide an intra-day 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 Market Session (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 the
Exchange's Regular Market Session to reflect changes in the value of
the Trust's NAV during the trading day.\15\ Intraday price information
for Bitcoin Futures is available directly from the applicable listing
venue and through subscription services, such as Bloomberg and Thomson
Reuters, which can be accessed by authorized participants (as defined
herein) and other investors. Intraday price quotations on Money Market
Instruments of the type held by the Trust are available from major
broker-dealer firms and from third-parties, and pricing information
related to Money Market Instruments will also be available through
issuer websites and publicly available quotation services such as
Bloomberg, Markit, and Thomson Reuters.\16\
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\14\ See id. at 50582.
\15\ See id. at 50580.
\16\ See id. at 50583.
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The Trust would issue and redeem Shares on a continuous basis at
NAV per Share in large, specified blocks of Shares (``Creation Units'')
in transactions with broker-dealers and large institutional investors
that have entered into participation agreements (``Authorized
Participants''). The Exchange currently anticipates that a Creation
Unit will consist of 50,000 Shares, although this number may change
from time to time. In addition, the Exchange currently expects that the
Trust's Creation Units will generally be issued and redeemed for
cash.\17\
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\17\ See id. at 50579-80. Upon the request of an Authorized
Participant made at the time of a redemption order, the Sponsor at
its sole discretion may determine, in addition to delivering
redemption proceeds, to transfer futures contracts to the Authorized
Participant pursuant to an exchange of a futures contract for
related position or to a block trade sale of futures contracts to
the Authorized Participant. See id. at 50580.
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II. Proceedings To Determine Whether To Approve or Disapprove SR-
NASDAQ-2021-066 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \18\ 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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\18\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\19\ 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.'' \20\
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\19\ Id.
\20\ 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,\21\ 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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\21\ 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?
2. The Exchange asserts that ``bitcoin and its surrounding
ecosystem have evolved sufficiently to support the approval of a
Bitcoin Futures ETF because the concerns the Commission has identified
previously have been addressed.'' \22\ The Exchange also asserts that
``the Bitcoin Futures market has sufficiently developed since the prior
disapproval orders such that the market for Bitcoin Futures now
resembles the market for other commodities at the time the related
commodity futures-based ETP was approved for listing.'' \23\ What are
commenters' views regarding such assertions? Are the developments that
the Exchange identifies sufficient to support a 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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\22\ See id. at 50571.
\23\ See id. at 50575.
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3. According to the Exchange, ``[n]early every measurable metric
related to CME Bitcoin Futures has trended consistently up since launch
[[Page 70884]]
and/or accelerated upward in the past year.'' \24\ The Exchange asserts
that ``both the bitcoin and bitcoin futures markets have developed to
the point that the CME Bitcoin Futures market is a `regulated market of
significant size.' '' \25\ Based on data provided and the academic
research cited by the Exchange, do commenters agree that the CME
Bitcoin Futures market now represents a regulated market of significant
size? \26\ 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 the CME to manipulate the Shares?
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\24\ See id. at 50573.
\25\ See id. at 50571.
\26\ See id. at 50576-78.
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4. The Exchange states it believes that ``trading in the Shares
would not be the predominant force on prices in the Bitcoin Futures
market'' because of the significant volume in the Bitcoin Futures
market, the size of bitcoin's market cap, and the significant liquidity
available in the spot market.\27\ What are commenters' views on the
Exchange's assertion and the data provided by the Exchange to support
such assertion?
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\27\ See id. at 50578.
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5. The Exchange asserts that the CME CF BRR is not readily
susceptible to manipulation due to the design of its methodology, which
the Exchange believes adequately protects the Trust from potential
price manipulation.\28\ What are commenters' views on these assertions?
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\28\ See id. at 50578-79.
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6. The Exchange asserts the CME's compliance with the CFTC's Core
Principles for Designated Contract Markets as set forth in the
Commodity Exchange Act means that the Trust's core asset (i.e., CME
Bitcoin Futures) is ``a well-regulated instrument that is not readily
susceptible to manipulation.'' \29\ The Exchange further asserts that
CME Bitcoin Futures are not readily subject to manipulation or
distortion because they are cash-settled and subject to real-time trade
monitoring and comprehensive and accurate trade reconstruction.\30\
What are commenters' views regarding the Exchange's assertions? Are the
Exchange's assertions sufficient to support the determination that the
proposal to list and trade the Shares is designed to prevent fraudulent
and manipulative acts and practices and is consistent with the other
applicable requirements of Section 6(b)(5) of the Act?
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\29\ See id. at 50579.
\30\ See id.
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7. What are commenters' views of the claim that the similarities of
the operational characteristics and regulatory requirements applicable
to bitcoin futures-based exchange-traded funds (``ETFs'') that both
register the sale of their shares under the Securities Act of 1933
(``1933 Act'') and are regulated under the Investment Company Act of
1940 (``1940 Act'') and bitcoin futures-based exchange-traded products
(``ETPs'') that register the sale of their shares under the 1933 Act
but are not regulated under the 1940 Act are such that these types of
products should not be treated differently by the Commission? \31\
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\31\ The Commission previously made a similar request for
comment in connection with statements made by a sponsor of a
proposed bitcoin futures-based ETP similar to the Trust. See
Securities Exchange Act Release No. 93534 (Nov. 8, 2021), 86 FR
63082, 63084 (Nov. 15, 2021) (SR-NYSEArca-2021-53) (Order
Instituting Proceedings to Determine Whether to Approve or
Disapprove a Proposed Rule Change To List and Trade Shares of the
Teucrium Bitcoin Futures Fund Under NYSE Arca Rule 8.200-E,
Commentary .02) (Trust Issued Receipts) (citing to Letter from W.
Thomas Conner, Vedder Price, on behalf of the sponsor, dated
September 1, 2021, available at https://www.sec.gov/comments/sr-nysearca-2021-53/srnysearca202153-9197848-249688.pdf.)).
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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.\32\
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\32\ 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 January 3, 2022. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
January 18, 2022.
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-NASDAQ-2021-066 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-NASDAQ-2021-066. 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-NASDAQ-2021-066 and should be submitted
by January 3, 2022. Rebuttal comments should be submitted by January
18, 2022.
[[Page 70885]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-26860 Filed 12-10-21; 8:45 am]
BILLING CODE 8011-01-P
