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 VanEck Bitcoin Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, 61418-61420 [2022-21982]
Download as PDF
<![CDATA[
61418
Federal Register / Vol. 87, No. 195 / Tuesday, October 11, 2022 / Notices
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
under Section 19(b)(2)(B) 13 of the Act to
determine whether the proposed rule
change 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:
khammond on DSKJM1Z7X2PROD with NOTICES
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–
NYSENAT–2022–22 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–NYSENAT–2022–22. 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
13 15
U.S.C. 78s(b)(2)(B).
VerDate Sep<11>2014
17:37 Oct 07, 2022
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NYSENAT–2022–22 and
should be submitted on or before
November 1, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–21980 Filed 10–7–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–069, OMB Control No.
3235–0069]
Submission for OMB Review;
Comment Request; Extension:
Industry Guide
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA
Services, 100 F Street NE,
Washington, DC 20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget this
requests for extension of the previously
approved collection of information
discussed below.
Industries Guides are used by
registrants in certain industries as
disclosure guidelines to be followed in
presenting information to investors in
registration statements and reports
under the Securities Act (15 U.S.C. 77a
et seq.) and Exchange Act (15 U.S.C. 78a
et seq.). The paperwork burden from the
Industry Guides is imposed through the
forms that are subject to the disclosure
requirements in the Industry Guides and
is reflected in the analysis of these
documents. To avoid a Paperwork
Reduction Act inventory reflecting
duplicative burdens and for
administrative convenience, the
Commission estimates the total annual
burden imposed by the Industry Guides
to be one hour. The information
required by the Industry Guides is filed
on occasion and is mandatory. All
information is provided to the public.
The Industry Guides do not directly
impose any disclosure burden.
An agency may conduct or sponsor,
and a person is not required to respond
to, a collection of information unless it
displays a currently valid control
number.
14 17
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CFR 200.30–3(a)(12).
Frm 00143
Fmt 4703
Sfmt 4703
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice by November 10, 2022 to (i)
www.reginfo.gov/public/do/PRAMain
and (ii) David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549, or by sending an email to:
PRA_Mailbox@sec.gov.
Dated: October 4, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–21955 Filed 10–7–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–95978; File No. SR–
CboeBZX–2022–035]
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 VanEck Bitcoin Trust Under BZX
Rule 14.11(e)(4), Commodity-Based
Trust Shares
October 4, 2022.
On June 24, 2022, 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 VanEck 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 July
13, 2022.3 The Commission has received
no comments on the proposed rule
change.
On August 24, 2022, 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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 95218
(July 7, 2022), 87 FR 41755 (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
2 17
E:\FR\FM\11OCN1.SGM
11OCN1
Federal Register / Vol. 87, No. 195 / Tuesday, October 11, 2022 / Notices
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.
khammond on DSKJM1Z7X2PROD with NOTICES
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 for the Shares to reflect the
performance of the MVIS®
CryptoCompare Bitcoin Benchmark Rate
(‘‘Benchmark’’), less the expenses of the
Trust’s operations.8 The Benchmark will
be used to calculate the Trust’s net asset
value (‘‘NAV’’). The Benchmark is
designed to be a price for bitcoin in
USD, and there is no component other
than bitcoin in the Benchmark. The
current platform composition of the
Benchmark is Bitstamp, Coinbase,
Gemini, itBit, and Kraken. In calculating
the Benchmark, the methodology
captures trade prices and sizes from
platforms and examines twenty threeminute periods leading up to 4:00 p.m.
E.T. It then calculates an equal-weighted
average of the volume-weighted median
price of these twenty three-minute
periods, removing the highest and
lowest contributed prices.9
Each Share will represent a fractional
undivided beneficial interest in the
Trust’s net assets. 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
5 See Securities Exchange Act Release No. 95596,
87 FR 53038 (Aug. 30, 2022). The Commission
designated October 11, 2022, 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 Notice, supra note 3, 87 FR at 41765.
VanEck Digital Assets, LLC is the sponsor of the
Trust, and Delaware Trust Company is the trustee.
The State Street Bank and Trust Company will be
the administrator (‘‘Administrator’’) and transfer
agent. Van Eck Securities Corporation will be the
marketing agent in connection with the creation
and redemption of Shares. Van Eck Securities
Corporation provides assistance in the marketing of
the Shares. See id. at 41764. A third-party regulated
custodian (‘‘Custodian’’) will be responsible for
custody of the Trust’s bitcoin. See id. at 41755.
9 See id. at 41765.
10 See id. at 41764.
VerDate Sep<11>2014
17:37 Oct 07, 2022
Jkt 259001
regular trading, as promptly as practical
after 4:00 p.m. E.T. The NAV of the
Trust is the aggregate value of the
Trust’s assets less its estimated accrued
but unpaid liabilities (which include
accrued expenses). In determining the
Trust’s NAV, the Administrator values
the bitcoin held by the Trust based on
the price set by the Benchmark as of
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 50,000 Shares
at the Trust’s NAV. 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–2022–035 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
id. at 41766.
id. at 41765.
13 See id. at 41764–65.
14 15 U.S.C. 78s(b)(2)(B).
15 Id.
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
underlying asset for an exchange-traded
product?
2. Based on data and analysis
provided and the academic research
cited by the Exchange,18 do commenters
agree with the Exchange that the
Chicago Mercantile Exchange (‘‘CME’’)
on which bitcoin futures contracts trade
(‘‘CME Bitcoin Futures’’) represents a
regulated market of significant size
related to spot bitcoin? 19 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? Do commenters
agree with the Exchange’s assertion that
the combination of (a) the in-kind
creation and redemption process; (b)
CME Bitcoin Futures leading price
discovery; (c) the overall size of the
bitcoin market; and (d) 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 spot
bitcoin or CME Bitcoin Futures
markets? 20
11 See
16 15
12 See
17 See
PO 00000
Frm 00144
Fmt 4703
U.S.C. 78f(b)(5).
Notice, supra note 3.
18 See id. at 41761–62, 41763 n.51.
19 See id. at 41763.
20 See id. at 41764.
Sfmt 4703
61419
E:\FR\FM\11OCN1.SGM
11OCN1
61420
Federal Register / Vol. 87, No. 195 / Tuesday, October 11, 2022 / Notices
3. The Exchange states 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 requirement
to enter into a comprehensive
surveillance-sharing agreement with a
regulated market of significant size
related to spot bitcoin.21 Do commenters
believe the Exchange has shown that the
bitcoin market is resistant to price
manipulation or that other means to
prevent fraudulent and manipulative
acts and practices exist to justify
dispensing with the relevant
surveillance-sharing agreement?
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.22
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by November 1, 2022. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by November 15, 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–
CboeBZX–2022–035 on the subject line.
• 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–2022–035. 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–2022–035 and
should be submitted by November 1,
2022. Rebuttal comments should be
submitted by November 15, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022–21982 Filed 10–7–22; 8:45 am]
BILLING CODE 8011–01–P
21 See
khammond on DSKJM1Z7X2PROD with NOTICES
id. at 41763 n.54.
22 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).
Paper Comments
VerDate Sep<11>2014
17:37 Oct 07, 2022
Jkt 259001
23 17
PO 00000
CFR 200.30–3(a)(57).
Frm 00145
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–116, OMB Control No.
3235–0109]
Submission for OMB Review;
Comment Request; Extension: Rule
12d1–3
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget this
request for extension of the previously
approved collection of information
discussed below.
Exchange Act Rule 12d1–3 (17 CFR
240.12d1–3) requires a certification that
a security has been approved by an
exchange for listing and registration
pursuant to Section 12(d) of the
Securities Exchange Act of 1934 (15
U.S.C. 78l(d)) to be filed with the
Commission. The information required
under Rule 12d1–3 must be filed with
the Commission and is publicly
available. We estimate that it takes
approximately one-half hour to provide
the information required under Rule
12d1–3 and that the information is filed
by approximately 688 respondents
annually for a total annual reporting
burden of 344 burden hours (0.5 hours
per response × 688 responses). An
agency may conduct or sponsor, and a
person is not required to respond to, a
collection of information unless it
displays a currently valid control
number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice by November 10, 2022 to (i)
www.reginfo.gov/public/do/PRAMain
and (ii) David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549, or by sending an email to:
PRA_Mailbox@sec.gov.
E:\FR\FM\11OCN1.SGM
11OCN1
]]>Agencies
[Federal Register Volume 87, Number 195 (Tuesday, October 11, 2022)]
[Notices]
[Pages 61418-61420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-21982]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95978; File No. SR-CboeBZX-2022-035]
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 VanEck Bitcoin
Trust Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares
October 4, 2022.
On June 24, 2022, 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 VanEck 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 July 13, 2022.\3\ The Commission has received no comments
on the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 95218 (July 7,
2022), 87 FR 41755 (``Notice'').
---------------------------------------------------------------------------
On August 24, 2022, 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
[[Page 61419]]
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. 95596, 87 FR 53038
(Aug. 30, 2022). The Commission designated October 11, 2022, 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 for the Shares to
reflect the performance of the MVIS[supreg] CryptoCompare Bitcoin
Benchmark Rate (``Benchmark''), less the expenses of the Trust's
operations.\8\ The Benchmark will be used to calculate the Trust's net
asset value (``NAV''). The Benchmark is designed to be a price for
bitcoin in USD, and there is no component other than bitcoin in the
Benchmark. The current platform composition of the Benchmark is
Bitstamp, Coinbase, Gemini, itBit, and Kraken. In calculating the
Benchmark, the methodology captures trade prices and sizes from
platforms and examines twenty three-minute periods leading up to 4:00
p.m. E.T. It then calculates an equal-weighted average of the volume-
weighted median price of these twenty three-minute periods, removing
the highest and lowest contributed prices.\9\
---------------------------------------------------------------------------
\8\ See Notice, supra note 3, 87 FR at 41765. VanEck Digital
Assets, LLC is the sponsor of the Trust, and Delaware Trust Company
is the trustee. The State Street Bank and Trust Company will be the
administrator (``Administrator'') and transfer agent. Van Eck
Securities Corporation will be the marketing agent in connection
with the creation and redemption of Shares. Van Eck Securities
Corporation provides assistance in the marketing of the Shares. See
id. at 41764. A third-party regulated custodian (``Custodian'') will
be responsible for custody of the Trust's bitcoin. See id. at 41755.
\9\ See id. at 41765.
---------------------------------------------------------------------------
Each Share will represent a fractional undivided beneficial
interest in the Trust's net assets. 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 41764.
---------------------------------------------------------------------------
The Administrator will determine the NAV and NAV per Share of the
Trust on each day that the Exchange is open for regular trading, as
promptly as practical after 4:00 p.m. E.T. The NAV of the Trust is the
aggregate value of the Trust's assets less its estimated accrued but
unpaid liabilities (which include accrued expenses). In determining the
Trust's NAV, the Administrator values the bitcoin held by the Trust
based on the price set by the Benchmark as of 4:00 p.m. E.T.\11\
---------------------------------------------------------------------------
\11\ See id. at 41766.
---------------------------------------------------------------------------
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 41765.
---------------------------------------------------------------------------
When the Trust sells or redeems its Shares, it will do so in ``in-
kind'' transactions in blocks of 50,000 Shares at the Trust's NAV.
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. at 41764-65.
---------------------------------------------------------------------------
II. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2022-035 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. Based on data and analysis provided and the academic research
cited by the Exchange,\18\ do commenters agree with the Exchange that
the Chicago Mercantile Exchange (``CME'') on which bitcoin futures
contracts trade (``CME Bitcoin Futures'') represents a regulated market
of significant size related to spot bitcoin? \19\ 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? Do commenters agree with the Exchange's
assertion that the combination of (a) the in-kind creation and
redemption process; (b) CME Bitcoin Futures leading price discovery;
(c) the overall size of the bitcoin market; and (d) 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 spot bitcoin or CME
Bitcoin Futures markets? \20\
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\18\ See id. at 41761-62, 41763 n.51.
\19\ See id. at 41763.
\20\ See id. at 41764.
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[[Page 61420]]
3. The Exchange states 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
requirement to enter into a comprehensive surveillance-sharing
agreement with a regulated market of significant size related to spot
bitcoin.\21\ Do commenters believe the Exchange has shown that the
bitcoin market is resistant to price manipulation or that other means
to prevent fraudulent and manipulative acts and practices exist to
justify dispensing with the relevant surveillance-sharing agreement?
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\21\ See id. at 41763 n.54.
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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.\22\
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\22\ 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 November 1, 2022. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
November 15, 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-CboeBZX-2022-035 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-2022-035. 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-2022-035 and should be submitted
by November 1, 2022. Rebuttal comments should be submitted by November
15, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-21982 Filed 10-7-22; 8:45 am]
BILLING CODE 8011-01-P
