Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 4 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 4, To List and Trade Shares of the 7RCC Spot Bitcoin and Carbon Credit Futures ETF Under NYSE Arca Rule 8.500-E (Trust Units), 92252-92266 [2024-27221]
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 47 of the Act and
subparagraph (f)(2) of Rule 19b–4 48
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such 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
under Section 19(b)(2)(B) 49 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSEARCA–2024–94 and should be
submitted on or before December 12,
2024.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
Stephanie J. Fouse,
Assistant Secretary.
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–
NYSEARCA–2024–94 on the subject
line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSEARCA–2024–94. 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
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
49 15 U.S.C. 78s(b)(2)(B).
[FR Doc. 2024–27217 Filed 11–20–24; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–101641; File No. SR–
NYSEARCA–2024–27]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of
Amendment No. 4 and Order Granting
Accelerated Approval of a Proposed
Rule Change, as Modified by
Amendment No. 4, To List and Trade
Shares of the 7RCC Spot Bitcoin and
Carbon Credit Futures ETF Under
NYSE Arca Rule 8.500–E (Trust Units)
November 15, 2024.
I. Introduction
On March 13, 2024, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’ or
‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares of the 7RCC Spot
Bitcoin and Carbon Credit Futures ETF
under NYSE Arca Rule 8.500–E (Trust
Units). The proposed rule change was
47 15
50 17
48 17
1 15
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CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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published for comment in the Federal
Register on March 26, 2024.3
On May 2, 2024, 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 On June 20, 2024, the
Commission instituted proceedings
pursuant to Section 19(b)(2)(B) of the
Act 6 to determine whether to approve
or disapprove the proposed rule
change.7 On September 3, 2024,
pursuant to Section 19(b)(2) of the Act,8
the Commission designated a longer
period for Commission action on the
proposed rule change.9
On September 30, 2024, the Exchange
filed Amendment No. 1 to the proposed
rule change, which amended and
replaced the proposed rule change in its
entirety as originally filed.10 On October
3, 2024, the Exchange filed Partial
Amendment No. 2, which amended the
proposed rule change, as modified by
Amendment No. 1.11 On October 18,
2024, the Exchange filed Amendment
No. 3 to the proposed rule change,
which amended and replaced the
proposed rule change in its entirety, as
modified by Amendment No. 1 and
Partial Amendment No. 2.12 On October
24, 2024, the Exchange filed
Amendment No. 4 to the proposed rule
change, which amended and replaced
3 See Securities Exchange Act Release No. 99801
(Mar. 20, 2024), 89 FR 21104. The Commission
received only one comment on the proposed rule
change, which is available at: https://www.sec.gov/
comments/sr-nysearca-2024-27/
srnysearca202427.htm. The comment letter was not
germane to the proposed rule change and instead
concerned voluntary carbon markets more broadly.
See Letter from James D. Milas (Mar. 27, 2024). As
stated below, the Exchange represents that the Fund
will not provide exposure to voluntary carbon
markets.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No.
100050, 89 FR 38932 (May 8, 2024).
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No.
100390, 89 FR 53466 (June 26, 2024).
8 15 U.S.C. 78s(b)(2).
9 See Securities Exchange Act Release No.
100896, 89 FR 73135 (Sept. 9, 2024). The
Commission, pursuant to Section 19(b)(2) of the
Act, designated Nov. 21, 2024 as the date by which
the Commission shall either approve or disapprove
the proposed rule change.
10 Amendment No. 1 is available on the
Commission’s website at: https://www.sec.gov/
comments/sr-nysearca-2024-27/srnysearca202427527675-1515762.pdf.
11 Partial Amendment No. 2 is available on the
Commission’s website at: https://www.sec.gov/
comments/sr-nysearca-2024-27/srnysearca202427527695-1515782.pdf.
12 Amendment No. 3 is available on the
Commission’s website at: https://www.sec.gov/
comments/sr-nysearca-2024-27/srnysearca202427530955-1525482.pdf.
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the proposed rule change in its entirety,
as modified by Amendment No. 3.13
The Commission is publishing this
notice to solicit comments on
Amendment No. 4 to the proposed rule
change from interested persons, and is
approving the proposed rule change, as
modified by Amendment No. 4, on an
accelerated basis.
II. The Exchange’s Description of the
Proposal, as Modified by Amendment
No. 4
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
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The Exchange proposes to list and
trade shares (‘‘Shares’’) of the 7RCC
Spot Bitcoin and Carbon Credit Futures
ETF (the ‘‘Fund’’) under NYSE Arca
Rule 8.500–E.14
The Fund is a series of the Tidal
Commodities Trust I (the ‘‘Trust’’), a
Delaware statutory trust organized on
February 10, 2023.15 The Trust has no
fixed termination date. The Trust will
not be registered as an investment
company under the Investment
Company Act of 1940, as amended,16
and is not required to register under
such act.
13 Amendment No. 4 is available on the
Commission’s website at: https://www.sec.gov/
comments/sr-nysearca-2024-27/srnysearca202427534335-1532242.pdf.
14 NYSE Arca Rule 8.500–E governs the listing
and trading of Trust Units, which are securities
issued by a trust or other similar entity that is
constituted as a commodity pool that holds
investments comprising or otherwise based on any
combination of futures contracts, options on futures
contracts, forward contracts, swap contracts,
commodities, and/or securities.
15 On December 18, 2023, the Trust filed with the
Commission a registration statement on Form S–1
(File No. 333–276125) (the ‘‘Registration
Statement’’) under the Securities Act of 1933 (15
U.S.C. 77a) (the ‘‘Securities Act’’). On October 7,
2024, the Trust filed Amendment No. 1 to the
Registration Statement. The description of the
operation of the Fund herein is based, in part, on
the Registration Statement. The Registration
Statement is not yet effective and the Shares will
not trade on the Exchange until such time that the
Registration Statement is effective.
16 15 U.S.C. 80a–1.
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The sponsor of the Trust is Tidal
Investments LLC (the ‘‘Sponsor’’). The
Sponsor is registered as a commodity
pool operator and a commodity trading
adviser with the Commodity Futures
Trading Commission (the ‘‘CFTC’’) and
is a member of the National Futures
Association.
The administrator of the Fund is Tidal
ETF Services (the ‘‘Administrator’’). The
custodian of the Fund’s bitcoin holdings
is Gemini Trust Company, LLC (the
‘‘Bitcoin Custodian’’). The Sponsor will
appoint a non-digital custodian (the
‘‘Non-Digital Custodian’’ and, together
with the Bitcoin Custodian, the
‘‘Custodians’’), who will serve as the
Fund’s custodian with respect to its
cash and cash equivalents,17 as well as
any investments in connection with its
exposure to Carbon Credit Futures, as
defined below.
The Fund’s Investment Objective and
Strategy
According to the Registration
Statement, the Fund’s investment
objective is to reflect the daily changes
of the price of bitcoin and the value of
carbon credit futures contracts (‘‘Carbon
Credit Futures’’), as represented by the
Vinter Bitcoin Carbon Credits Index (the
‘‘Index’’), less expenses from the Fund’s
operations.
The Fund will pursue its investment
objective by investing 80% of its assets
in bitcoin and the remaining 20% of its
assets in Carbon Credit Futures that
provide exposure to Carbon Credit
Futures represented by the Index. The
Index seeks to provide exposure to both
bitcoin and Carbon Credit Futures and
is designed to track the performance of
investing in a portfolio comprised of
80% of bitcoin and 20% Carbon Credit
Futures. The Index’s Carbon Credit
Futures are linked to the value of
emissions allowances issued under the
following ‘‘cap-and-trade’’ regimes: the
European Union Emissions Trading
System (‘‘EU ETS’’), the California
Carbon Allowance (‘‘CCA’’), and the
Regional Greenhouse Gas Initiative
(‘‘RGGI’’). The Fund will gain exposure
to these Carbon Credit Futures only by
investing directly in only such futures
17 ‘‘Cash Equivalents’’ shall mean such
investments that, in the view of the Sponsor, are of
high credit quality and liquidity and can be
converted to cash quickly. Such investments shall
include: (a) cash; (b) debt securities issued or
directly or indirectly fully guaranteed or insured by
the United States or any agency or instrumentality
thereof (such as U.S. Treasury Bills); (c) commercial
paper or finance company paper of sufficient credit
quality in the view of the Sponsor; or (d) money
market mutual funds. Additionally, the Fund will
implement foreign exchange dollarization using
spot market or foreign exchange forwards and
customary foreign exchange hedging instruments.
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contracts. The Fund does not intend to
invest in Carbon Credit Futures
specifically linked to bitcoin mining or
other related processes. As further
discussed below, the Fund will not
provide exposure to voluntary carbon
markets.
Carbon Credit Futures
According to the Registration
Statement, Carbon Credit Futures are
futures contracts on emissions
allowances issued by various ‘‘cap-andtrade’’ regulatory regimes that seek to
reduce greenhouse gases over time. A
cap-and-trade regime typically involves
a regulator setting a limit on the total
amount of specific greenhouse gases
(‘‘GHG’’) (such as carbon dioxide
(‘‘CO2’’)) that can be emitted by
regulated entities. Capping and reducing
the cap on GHGs is viewed as a key
policy tool in reaching climate change
objectives. The regime is designed to
promote sustainable development by
putting a price on carbon emissions.
The regulator will then issue or sell
‘‘emissions allowances’’ to regulated
entities, which in turn may buy or sell
the emissions allowances to the open
market. To the extent that the regulator
may then reduce the cap on emission
allowances, regulated entities are
incentivized to reduce their emissions;
otherwise, they must purchase
additional emission allowances on the
open market, where the price of such
allowances will likely be increasing as
a result of demand, and regulated
entities that reduce their emissions will
be able to sell unneeded emission
allowances for profit. An emission
allowance or carbon credit is a unit of
emissions (typically one ton of CO2) that
the owner of the allowance or credit is
permitted to emit. Futures contracts
linked to the value of emission
allowances are known as carbon credit
futures.
Overview of the Bitcoin Industry and
Market
Bitcoin
According to the Registration
Statement, bitcoin is the digital asset
that is native to, and created and
transmitted through the operations of,
the peer-to-peer ‘‘Bitcoin Network,’’ a
decentralized network of computers that
operates on cryptographic protocols. No
single entity owns or operates the
Bitcoin Network, the infrastructure of
which is collectively maintained by a
decentralized user base. The Bitcoin
Network allows people to exchange
tokens of value, called bitcoin, which
are recorded on a public transaction
ledger known as the Blockchain. Bitcoin
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can be used to pay for goods and
services, or it can be converted to fiat
currencies, such as the U.S. dollar, at
rates determined on digital asset trading
platforms or in individual end-user-toend-user transactions under a barter
system. Although nascent in use, bitcoin
may be used as a medium of exchange,
unit of account or store of value.
The Bitcoin Network is decentralized
and does not require governmental
authorities or financial institution
intermediaries to create, transmit, or
determine the value of bitcoin. In
addition, no party may easily censor
transactions on the Bitcoin Network. As
a result, the Bitcoin Network is often
referred to as decentralized and
censorship resistant.
The value of bitcoin is determined by
the supply of and demand for bitcoin.
New bitcoin are created and rewarded to
the parties providing the Bitcoin
Network’s infrastructure (‘‘miners’’) in
exchange for their expending
computational power to verifying
transactions and add them to the
‘‘Blockchain.’’ The Blockchain is
effectively a decentralized database that
includes all blocks that have been
solved by miners and it is updated to
include new blocks as they are solved.
Each bitcoin transaction is broadcast to
the Bitcoin Network and, when
included in a block, recorded in the
Blockchain. As each new block records
outstanding bitcoin transactions, and
outstanding transactions are settled and
validated through such recording, the
Blockchain represents a complete,
transparent, and unbroken history of all
transactions of the Bitcoin Network.
Bitcoin Network
Bitcoin was first described in a white
paper released in 2008 and published
under the pseudonym ‘‘Satoshi
Nakamoto.’’ The protocol underlying
Bitcoin was subsequently released in
2009 as open-source software and
currently operates on a worldwide
network of computers. The Bitcoin
Network and its software have been
under active development since that
time by a group of computer engineers
known as ‘‘core developers,’’ each of
whom operates under a volunteer basis
and without strict hierarchical
administration.
The Bitcoin Network utilizes a digital
asset known as ‘‘bitcoin,’’ which can be
transferred among parties via the
internet. Unlike other means of
electronic payments such as credit card
transactions, one of the advantages of
bitcoin is that it can be transferred
without the use of a central
administrator or clearing agency. As a
central party is not necessary to
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administer bitcoin transactions or
maintain the bitcoin ledger, the term
decentralized is often used in
descriptions of bitcoin. Unless it is
using a third-party service provider, a
party transacting in bitcoin is generally
not afforded some of the protections that
may be offered by intermediaries.
The first step in directly using the
Bitcoin Network for transactions is to
download specialized software referred
to as a ‘‘bitcoin wallet.’’ A user’s bitcoin
wallet can run on a computer or
smartphone and can be used both to
send and to receive bitcoin. Within a
bitcoin wallet, a user can generate one
or more unique ‘‘bitcoin addresses,’’
which are conceptually similar to bank
account numbers. After establishing a
bitcoin address, a user can send or
receive bitcoin from his or her bitcoin
address to or from another user’s bitcoin
address. Sending bitcoin from one
bitcoin address to another is similar in
concept to sending a bank wire from one
person’s bank account to another
person’s bank account; however, such
transactions are not managed by an
intermediary and erroneous transactions
generally may not be reversed or
remedied once sent.
The amount of bitcoin associated with
each bitcoin address, as well as each
bitcoin transaction to or from such
bitcoin address, is transparently
reflected in the Blockchain and can be
viewed by websites that operate as
‘‘blockchain explorers.’’ Copies of the
Blockchain exist on thousands of
computers on the Bitcoin Network
throughout the internet. A user’s bitcoin
wallet will either contain a copy of the
blockchain or be able to connect with
another computer that holds a copy of
the blockchain. The innovative design
of the Bitcoin Network protocol allows
each Bitcoin user to trust that their copy
of the Blockchain will generally be
updated consistent with each other
user’s copy.
When a Bitcoin user wishes to
transfer bitcoin to another user, the
sender must first request a Bitcoin
address from the recipient. The sender
then uses his or her Bitcoin wallet
software to create a proposed
transaction that is confirmed and settled
when included in the Blockchain. The
transaction would reduce the amount of
bitcoin allocated to the sender’s bitcoin
address and increase the amount
allocated to the recipient’s bitcoin
address, in each case by the amount of
bitcoin desired to be transferred. The
transaction is completely digital in
nature, similar to a file on a computer,
and it can be sent to other computers
participating in the Bitcoin Network;
however, the use of cryptographic
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verification is believed to prevent the
ability to duplicate or counterfeit
bitcoin.
Bitcoin Protocol
The Bitcoin protocol is built using
open-source software, meaning any
developer can review the underlying
code and suggest changes. There is no
official company or group that is
responsible for making modifications to
Bitcoin. There are, however, a number
of individual developers that regularly
contribute to a specific distribution of
Bitcoin software known as the ‘‘Bitcoin
Core,’’ which is maintained in an opensource repository on the website Github.
There are many other compatible
versions of Bitcoin software, but Bitcoin
Core provides the de-facto standard for
the Bitcoin protocol, also known as the
‘‘reference software.’’ The core
developers for Bitcoin Core operate
under a volunteer basis and without
strict hierarchical administration.
Significant changes to the Bitcoin
protocol are typically accomplished
through a so-called ‘‘Bitcoin
Improvement Proposal’’ or ‘‘BIP.’’ Such
proposals are generally posted on
websites, and the proposals explain
technical requirements for the protocol
change as well as reasons why the
change should be accepted. Upon its
inclusion in the most recent version of
Bitcoin Core, a new BIP becomes part of
the reference software’s Bitcoin
protocol. Several BIPs have been
implemented since 2011 and have
provided various new features and
scaling improvements.
Because Bitcoin has no central
authority, updating the reference
software’s Bitcoin protocol will not
immediately change the Bitcoin
Network’s operations. Instead, the
implementation of a change is achieved
by users and transaction validators
(known as miners) downloading and
running updated versions of Bitcoin
Core or other Bitcoin software that
abides by the new Bitcoin protocol.
Users and miners must accept any
changes made to the Bitcoin source code
by downloading a version of their
Bitcoin software that incorporates the
proposed modification of the Bitcoin
Network’s source code. A modification
of the Bitcoin Network’s source code is
only effective with respect to those
Bitcoin users and miners who download
it. If an incompatible modification is
accepted by a less than overwhelming
percentage of users and miners, a
division in the Bitcoin Network will
occur such that one network will run
the pre-modification source code and
the other network will run the modified
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source code. Such a division is known
as a ‘‘fork’’ in the Bitcoin Network.
Such a fork in the Bitcoin Network
occurred on August 1, 2017, when a
group of developers and miners
accepted certain changes to the Bitcoin
Network software intended to increase
transaction capacity. Blocks mined on
this network now diverge from blocks
mined on the Bitcoin Network, which
has resulted in the creation of a new
blockchain whose digital asset is
referred to as ‘‘bitcoin cash.’’ Bitcoin
and bitcoin cash now operate as
separate, independent networks, and
have distinct related assets (bitcoin and
bitcoin cash). Additional forks have
followed the bitcoin cash fork, and it is
possible that additional ‘‘forks’’ will
occur in the future.18
Bitcoin Transactions
A bitcoin transaction is similar in
concept to an irreversible digital check.
The transaction contains the sender’s
bitcoin address, the recipient’s bitcoin
address, the amount of bitcoin to be
sent, a transaction fee and the sender’s
digital signature. Bitcoin transactions
are secured by cryptography known as
public-private key cryptography,
represented by the bitcoin addresses
and digital signature in a transaction’s
data file. Each Bitcoin Network address,
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18 The Fund may from time to time come into
possession of Incidental Rights and/or IR Virtual
Currency by virtue of its ownership of bitcoin,
generally through a fork in the Blockchain, an
airdrop offered to holders of bitcoin or other similar
event. ‘‘Incidental Rights’’ are rights to acquire, or
otherwise establish dominion and control over, any
virtual currency or other asset or right, which rights
are incident to the Fund’s ownership of bitcoin and
arise without any action of the Fund, or of the
Sponsor on behalf of the Fund. ‘‘IR Virtual
Currency’’ is any virtual currency tokens, or other
asset or right, acquired by the Fund through the
exercise of any Incidental Right. Although the Fund
may be permitted to take certain actions with
respect to Incidental Rights and IR Virtual
Currency, at this time the Fund will prospectively
irrevocably abandon any Incidental Rights and IR
Virtual Currency. In the event the Fund seeks to
change this position, the Exchange would file a
subsequent proposed rule change with the
Commission.
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or ‘‘wallet,’’ is associated with a unique
‘‘public key’’ and ‘‘private key’’ pair,
both of which are lengthy alphanumeric
codes, derived together and possessing
a unique relationship.
The use of key pairs is a cornerstone
of the Bitcoin Network technology. This
is because the use of a private key is the
only mechanism by which a bitcoin
transaction can be signed. If a private
key is lost, the corresponding bitcoin is
thereafter permanently non-transferable.
Moreover, the theft of a private key
provides the thief immediate and
unfettered access to the corresponding
bitcoin. Bitcoin users must therefore
understand that in this regard, bitcoin is
similar to cash: that is, the person or
entity in control of the private key
corresponding to a particular quantity of
bitcoin has de facto control of the
bitcoin. For large quantities of bitcoin,
holders often embrace sophisticated
security measures.
The public key is visible to the public
and analogous to the Bitcoin Network
address. The private key is a secret and
is used to digitally sign a transaction in
a way that proves the transaction has
been signed by the holder of the publicprivate key pair, without having to
reveal the private key. A user’s private
key must be kept safe in accordance
with appropriate controls and
procedures to ensure it is used only for
legitimate and intended transactions. If
an unauthorized third person learns of
a user’s private key, that third person
could apply the user’s digital signature
without authorization and send the
user’s bitcoin to their or another bitcoin
address, thereby stealing the user’s
bitcoin. Similarly, if a user loses his
private key and cannot restore such
access (e.g., through a backup), the user
may permanently lose access to the
bitcoin associated with that private key
and bitcoin address.
To prevent the possibility of doublespending bitcoin, each validated
transaction is recorded, time stamped
and publicly displayed in a ‘‘block’’ in
the Blockchain, which is publicly
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92255
available. Thus, the Bitcoin Network
provides confirmation against doublespending by memorializing every
transaction in the Blockchain, which is
publicly accessible and downloaded in
part or in whole by all users of the
Bitcoin Network software program. Any
user may validate, through their Bitcoin
wallet or a blockchain explorer, that
each transaction in the Bitcoin Network
was authorized by the holder of the
applicable private key, and Bitcoin
Network mining software consistent
with reference software requirements
validates each such transaction before
including it in the Blockchain. This
cryptographic security ensures that
bitcoin transactions may not generally
be counterfeited, although it does not
protect against the ‘‘real world’’ theft or
coercion of use of a Bitcoin user’s
private key, including the hacking of a
Bitcoin user’s computer or a service
provider’s systems.
A Bitcoin transaction between two
parties is recorded if such transaction is
included in a valid block added to the
Blockchain. A block is accepted as valid
through consensus formation among
Bitcoin Network participants.
Validation of a block is achieved by
confirming the cryptographic hash value
included in the block’s data and by the
block’s addition to the longest
confirmed blockchain on the Bitcoin
Network. For a transaction, inclusion in
a block on the Blockchain constitutes a
‘‘confirmation’’ of validity. As each
block contains a reference to the
immediately preceding block, additional
blocks appended to and incorporated
into the Blockchain constitute
additional confirmations of the
transactions in such prior blocks, and a
transaction included in a block for the
first time is confirmed once against
double-spending. This layered
confirmation process makes changing
historical blocks (and reversing
transactions) exponentially more
difficult the further back one goes in the
Blockchain.
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Bitcoin Mining—Creation of New
Bitcoins
The process by which bitcoin are
created and bitcoin transactions are
verified is called ‘‘mining.’’ To begin
mining, a user, or miner, can download
and run a mining ‘‘client,’’ which, like
regular Bitcoin Network software
programs, turns the user’s computer into
a ‘‘node’’ on the Bitcoin Network that
validates blocks, and, in this case, gives
such user the ability to validate
transactions and add new blocks of
transactions to the Blockchain.
Miners, through the use of the bitcoin
software program, engage in a set of
prescribed complex mathematical
calculations in order to verify
transactions and compete for the right to
add a block of verified transactions to
the Blockchain and thereby confirm
bitcoin transactions included in that
block’s data. The miner who
successfully ‘‘solves’’ the complex
mathematical calculations has the right
to add a block of transactions to the
Blockchain and is then rewarded with
new bitcoin, the amount of which is
determined by the Bitcoin protocol, plus
any transaction fees paid for the
transactions included in such block.
Confirmed and validated bitcoin
transactions are recorded in blocks
added to the Blockchain. Each block
contains the details of some or all of the
most recent transactions that are not
memorialized in prior blocks, as well as
a record of the award of bitcoin to the
miner who added the new block. Each
unique block can only be solved and
added to the Blockchain by one miner;
therefore, all individual miners and
mining pools on the Bitcoin Network
are engaged in a competitive process of
constantly increasing their computing
power to improve their likelihood of
solving for new blocks. As more miners
join the Bitcoin Network and its
processing power increases, the Bitcoin
Network adjusts the complexity of the
block-solving equation to maintain a
predetermined pace of adding a new
block to the Blockchain approximately
every ten minutes.
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Mathematically Controlled Supply
The method for creating new bitcoin
is mathematically controlled in a
manner so that the supply of bitcoin
grows at a limited rate pursuant to a preset schedule. The number of bitcoin
awarded for solving a new block is
automatically halved every 210,000
blocks. Thus, the current fixed reward
for solving a new block is 6.25 bitcoin
per block; the reward decreased from 25
bitcoin in July 2016 and 12.5 in May
2020. It is estimated to halve again in
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April or May of 2024. This deliberately
controlled rate of bitcoin creation means
that the number of bitcoin in existence
will never exceed 21 million and that
bitcoin cannot be devalued through
excessive production unless the Bitcoin
Network’s source code (and the
underlying protocol for bitcoin
issuance) is altered. As of November
2023, approximately 19.5 million
bitcoin are outstanding. The date when
the 21 million bitcoin limitation will be
reached is estimated to be the year 2140.
Bitcoin Market and Bitcoin Trading
Platforms
In addition to using bitcoin to engage
in transactions, investors may purchase
and sell bitcoin to speculate as to the
value of bitcoin in the bitcoin market, or
as a long-term investment to diversify
their portfolio. The value of bitcoin
within the market is determined, in
part, by: (i) the supply of and demand
for bitcoin in the bitcoin market; (ii)
market expectations for the expansion of
investor interest in bitcoin and the
adoption of bitcoin by individuals; (iii),
the number of merchants that accept
bitcoin as a form of payment; and (iv)
the volume of private end-user-to-enduser transactions.
Although the value of bitcoin is
determined by the value that two
transacting market participants place on
bitcoin through their transaction, the
most common means of determining a
reference value is by surveying one or
more trading platforms where secondary
markets for bitcoin exist. The most
prominent digital asset trading
platforms neither report trade
information nor are they regulated in
the same way as a national securities
exchange. As such, there is some
difference in the form, transparency,
and reliability of trading data from
digital asset trading platforms. Generally
speaking, bitcoin data is available from
these trading platforms with publicly
disclosed valuations for each executed
trade, measured by one or more fiat
currencies such as the U.S. dollar or
Euro or another digital asset such as
ether. OTC dealers or market makers do
not typically disclose their trade data.
Currently, there are many digital asset
trading platforms operating worldwide
and trading platforms represent a
substantial percentage of bitcoin buying
and selling activity and, therefore,
provide large data sets for market
valuation of bitcoin. A digital asset
trading platform provides investors with
a way to purchase and sell bitcoin,
similar to stock exchanges like the New
York Stock Exchange or Nasdaq, which
provide ways for investors to buy stocks
and bonds in the ‘‘secondary market.’’
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Unlike stock exchanges, which are
regulated to monitor securities trading
activity, digital asset trading platforms
are largely regulated as money services
businesses (or a foreign regulatory
equivalent) and are required to monitor
for and detect money-laundering and
other illicit financing activities that may
take place on the platform. Digital asset
trading platforms operate websites
designed to permit investors to open
accounts with the trading platform and
then purchase and sell bitcoin.
As with conventional stock
exchanges, an investor opening a
trading account and wishing to transact
at a digital asset trading platform must
deposit an accepted government-issued
currency into their account, or a
previously acquired digital asset. The
process of establishing an account with
a digital asset trading platform and
trading bitcoin is different from, and
should not be confused with, the
process of users sending bitcoin from
one bitcoin address to another bitcoin
address, such as to pay for goods and
services. This latter process is an
activity that occurs wholly within the
confines of the Bitcoin network, while
the former is an activity that occurs
largely on private websites and
databases owned by the digital asset
trading platform.
Overview of Commodity Futures
Markets and Carbon Markets
Futures Markets
According to the Registration
Statement, the Fund will invest in
Carbon Credit Futures. A futures
contract is a standardized contract
traded on, or subject to the rules of, an
exchange that calls for the future
delivery of a specified quantity and type
of a particular underlying asset at a
specified time and place or alternatively
may call for cash settlement. Futures
contracts are traded on a wide variety of
underlying assets, including bonds,
interest rates, agricultural products,
stock indexes, currencies, energy,
metals, economic indicators and
statistical measures. The notional size
and calendar term futures contracts on
a particular underlying asset are
identical and are not subject to any
negotiation, other than with respect to
price and the number of contracts
traded between the buyer and seller.
Certain futures contracts settle in
cash. The cash settlement amount
reflects the difference between the
contract purchase/sale price and the
contract settlement price. The cash
settlement mechanism avoids the
potential for either side to have to
deliver the underlying asset. For other
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futures contracts, the contractual
obligations of a buyer or seller may
generally be satisfied by taking or
making physical delivery of the
underlying asset or by making an
offsetting sale or purchase of an
identical futures contract on the same or
linked exchange before the designated
date of delivery. The difference between
the price at which the futures contract
is purchased or sold and the price paid
for the offsetting sale or purchase, after
allowance for brokerage commissions
and exchange fees, constitutes the profit
or loss to the trader.
Futures contracts involve, to varying
degrees, elements of market risk.
Additional risks associated with the use
of futures contracts are imperfect
correlation between movements in the
price of the futures contracts and the
level of the underlying benchmark and
the possibility of an illiquid market for
a futures contract. With futures
contracts, there is minimal but some
counterparty risk to a fund since futures
contracts are exchange traded and the
exchange’s clearing house, as
counterparty to all exchange-traded
futures contracts, effectively guarantees
futures contracts against default. Many
futures exchanges and boards of trade
limit the amount of fluctuation
permitted in futures contract prices
during a single trading day. Once the
daily limit has been reached in a
particular contract, no trades may be
made that day at a price beyond that
limit or trading may be suspended for
specified times during the trading day.19
Futures contracts prices could move to
the limit for several consecutive trading
days with little or no trading, thereby
preventing prompt liquidation of futures
positions.
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Carbon Markets
Carbon markets are designed to
reduce GHG emissions and promote
sustainable development by putting a
price on carbon. Carbon markets are
markets where GHG emissions are
commodified as a tradable unit either as
an emission allowance in government
compliance markets or as a verified
emission reduction/removal credit in
voluntary markets. There are two types
of instruments that are traded in carbon
markets: carbon credits (sometimes
called ‘‘allowances’’) and carbon offsets.
The two main types of carbon markets
are compliance carbon markets
(‘‘CCMs’’) and voluntary carbon markets
(‘‘VCMs’’). Carbon Credit Futures are an
19 The
calculation of the Index will be based on
the last traded price for each of the Carbon Credit
Futures components, regardless of whether trading
has been limited or suspended during a trading day.
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expansion of the carbon market. Carbon
Credit Futures are credit instruments
where the buyer seeks to have exposure
to CCMs or VCM carbon offset projects,
but without directly buying or selling
allowances or investing in any
projects.20
CCMs are established by governments
and operate under a cap-and-trade
system. Cap-and-trade regimes set
emission limits (i.e., the right to emit a
certain quantity of GHG emissions),
which can be allocated or auctioned to
the parties in the mechanism up to the
total emissions cap. In these types of
markets, a regulator will define an
allowed maximum level of GHG
emissions (the ‘‘Cap’’) for a certain
group of entities (e.g., countries,
companies, or facilities). The Cap is
then subdivided into distinct emission
allowances, which are distributed by
regulated entities. To stay in compliance
with the regulator, the covered entities
need to submit one allowance for each
ton of carbon dioxide equivalent
emitted during a compliance period
(usually a year). The initial allocation of
allowances to covered entities can be
free of charge, partially free, and/or sold
at auction by the regulator.
The Index
The Index is designed to track the
performance of investing in a portfolio
comprised of 80% bitcoin and 20%
Carbon Credit Futures, which are linked
to the value of emissions allowances
issued under the following cap-andtrade regimes: the European Union
Emissions Trading System, the
California Carbon Allowance, and
Regional Greenhouse Gas Initiative. The
purpose of the Index is to obtain
exposure to both bitcoin and Carbon
Credit Futures. Because the Fund’s
investment objective is to track the daily
changes of the price of bitcoin and
Carbon Credit Futures, changes in the
price of the Shares will vary from
changes in the spot price of bitcoin,
carbon credits, and Carbon Credit
Futures individually.
Invierno AB (‘‘Vinter’’) administers
and calculates the bitcoin portion of the
Index. According to the Sponsor, Vinter
is a trusted index provider with
experience constructing and
maintaining indexes relied upon by
banks and exchange-traded products.
Vinter is a registered benchmark
administrator governed by the European
Benchmarks Regulation (2016/1011)
(‘‘BMR’’) and included in the European
Securities and Markets Authority’s
register over benchmark administrators.
20 The Fund will not provide any exposure to
VCMs.
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92257
To calculate the value of bitcoin,
Vinter selects bitcoin trading platforms
based on the criteria described below in
‘‘Valuation of Bitcoin’’ and takes the last
price on each trading platform. Vinter
then takes the median price across these
trading platforms and calculates the
time-weighted average price between
3:00 p.m. to 4:00 p.m. Eastern Time
(‘‘E.T.’’) to determine the value of
bitcoin at 4:00 p.m. E.T.
The Carbon Credit Futures component
of the Index is calculated by Solactive
and built with a combination of three
Carbon Credit Futures indices, each of
which is calculated and administered by
a third party: (i) Solactive Carbon
European Union Allowance Futures ER
Index (SOCARBN), which tracks EU
ETS futures; (ii) Solactive California
Carbon Rolling Futures ER Index
(SOCCAER), which tracks CCA futures;
and (iii) Solactive Futures Series
Regional Greenhouse Gas Rolling
Futures Index, which tracks RGGI
futures. The weights of the components
are adjusted once per year (in
November) and the weights are
proportional to the trading volume over
the last six months. As of the last
quarterly rebalancing date, September
10, 2024, the weighting of Carbon Credit
Futures in the Index was, and the
weighting of Carbon Credit Futures in
the Fund would have been, 18% EU
ETS futures; 2% CCA futures; and 0%
RGGI futures. The combination of
exposure to the three underlying indices
provides the Index with returns tied to
futures contracts on carbon credits
connected to EU ETS, CCA, and RGGI.
The value of the Carbon Credit Futures
that comprise the Index will be based on
market prices. The Index includes only
Carbon Credit Futures that mature in
December of the next one to two years.21
Although the Carbon Credit Futures in
the Index are physically settled futures
contracts, the Sponsor does not
anticipate that the Fund will hold
Carbon Futures until expiry or take or
make delivery of any physical
commodities. Instead, the Sponsor
expects to roll Carbon Credit Futures in
the Fund’s portfolio approximately two
weeks prior to expiry. Thus, the
Sponsor expects to sell near to expiry
Carbon Credit Futures and reinvest the
proceeds in new Carbon Credit Futures
to achieve the Fund’s investment
objective.
Vinter is the benchmark administrator
for the bitcoin portion of the Index. As
benchmark administrator for the bitcoin
21 The Index includes front-month futures
contracts that are rolled each month. The Index
rolls over five business days into the new contract,
with an expiration of December of the next calendar
year.
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portion of the Index, Vinter is the
central recipient of input data and
evaluates the integrity and accuracy of
input data on a consistent basis.
Solactive is the benchmark
administrator for the Carbon Credit
Futures portion of the Index. Solactive
calculates the value of the Carbon Credit
Futures portion of the Index and the
value of the overall Index.
The Index is rebalanced quarterly,
starting at the end of January. After a
rebalance, the portfolio is updated so
that its current weights per asset equal
the rebalancing weights per asset.
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Valuation of Bitcoin
The Fund uses the same methodology
that the Index does to determine the
value of bitcoin for purposes of
calculating the NAV of the Fund. The
Index requires each digital asset trading
platform used to calculate the price of
bitcoin to meet each of the following
criteria:
• Has had operating history as a
digital asset trading platform for a
minimum of two years;
• Implemented trading, deposits, and
withdrawal fees for a minimum of one
month without interruption;
• Met a minimum monthly volume
threshold of $30 million with respect to
total trading volume;
• Provided reliable, continuous, and
valid market data for a minimum of one
month;
• Offered the possibility to withdraw
and deposit for a minimum of one
month, settling in two to seven business
days;
• Chosen a jurisdiction of
incorporation that offers sufficient
investor protection, such as Financial
Action Task Force (‘‘FATF’’), FATFstyle regional bodies (‘‘FSRBs’’), or
Moneyval member states;
• Complied with relevant anti-money
laundering and know-your-customer
regulations;
• Cooperated with requests from
Vinter and relevant regulatory bodies;
• Has not been domiciled in a
jurisdiction subject to EU restrictive
measures (sanctions);
• Provided information concerning
ownership and corporate structure; and
• Has not been declared unlawful by
any governmental authority or agency
with jurisdiction over the exchange.
Digital asset trading platforms
meeting these criteria are used to
calculate the price of the bitcoin portion
of the Index (the ‘‘Index Pricing
Sources’’). Vinter reviews the eligibility
of digital asset trading platforms for
inclusion in the Index twice a year, and
such platforms must meet Vinter’s
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criteria at the time of such review.22 The
selection of Index Pricing Sources may
evolve from time to time, and Vinter
may make changes to the eligibility
requirements.23 As of the date of this
filing, the following digital asset trading
platforms are used to calculate the Index
price: Kraken, Coinbase, Bitstamp, Itbit,
Gemini, Gate.io, and Crypto.com.
Custody of the Fund’s Assets
The Bitcoin Custodian will establish
accounts that hold the bitcoins
deposited with the Bitcoin Custodian on
behalf of the Fund, pursuant to the
agreement between the Trust, on behalf
of the Fund, and the Bitcoin Custodian
(the ‘‘Bitcoin Custody Agreement’’). The
Non-Digital Custodian will custody the
Fund’s investments in cash and cash
equivalents in connection with its
exposure to the returns of the Carbon
Credit Futures portion of the Index.
With respect to the settlement of
Shares in response to the placement of
creation orders and redemption orders
from Authorized Purchasers (as defined
below), the Sponsor will retain
discretion to determine which
Custodians, to the extent there are
multiple custodians for Bitcoin or
multiple custodians for cash and cash
equivalents in connection with Carbon
Credit Futures, are selected to facilitate
the respective order.
The Fund will maintain ownership
and control of bitcoin in a manner
consistent with good delivery
requirements for spot commodity
transactions.
Custody of Bitcoin
The Fund is responsible for acquiring
bitcoin from a ‘‘Bitcoin Trading
Counterparty.’’ 24 Once the bitcoin has
22 According to the Sponsor, Vinter does not
require a minimum number of Index Pricing
Sources comprising the Index.
23 According to the Sponsor, Vinter may, as
permitted under BMR Article 12, change the
eligibility requirements for Index Pricing Sources if,
for example, market conditions evolved in such a
way that the requirements no longer reflected the
intended economic reality. Any material change to
the eligibility requirements would be subject to the
notification and consultation provisions detailed in
Vinter’s Benchmark Statement.
24 Each Bitcoin Trading Counterparty must be
approved by the Sponsor on behalf of the Fund
before the Fund may engage in transactions with
the entity. The Sponsor continuously reviews all
approved Bitcoin Trading Counterparties and will
reject the approval of any previously approved
Bitcoin Trading Counterparty if new information
arises regarding the entity that puts the
appropriateness of that entity as an approved
Bitcoin Trading Counterparty in doubt. The Bitcoin
Trading Counterparties with which the Sponsor
will engage in bitcoin transactions are unaffiliated
third parties of the Trust and Sponsor and are not
acting as agents of the Trust, the Sponsor, or any
Authorized Purchaser (as defined below), and all
transactions will be done on an arms-length basis.
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been transferred to the Bitcoin
Custodian, it will be stored pursuant to
the terms of the Bitcoin Custody
Agreement.
Bitcoin private keys are stored in two
different forms: ‘‘hot’’ storage, whereby
the private keys are stored on secure,
internet-connected devices, and ‘‘cold’’
storage, where digital currency private
keys are stored completely offline. The
Bitcoin Custody Agreement requires the
Bitcoin Custodian to hold the Fund’s
bitcoin in cold storage, unless required
to facilitate withdrawals as a temporary
measure. The Bitcoin Custodian will use
segregated cold storage bitcoin
addresses for the Fund which are
separate from the bitcoin addresses that
the Bitcoin Custodian uses for its other
customers and which are directly
verifiable via the Bitcoin Blockchain.
The Bitcoin Custodian will at all times
record and identify in its books and
records that such bitcoins constitute the
property of the Fund. The Bitcoin
Custodian will not withdraw the Fund’s
bitcoin from the Fund’s account with
the Bitcoin Custodian, or loan,
hypothecate, pledge or otherwise
encumber the Fund’s bitcoin, without
the Fund’s instruction.
The Sponsor has evaluated the
Bitcoin Custodian’s policies,
procedures, and controls for
safekeeping, exclusively possessing, and
controlling the Fund’s bitcoin holdings
and believes these are designed
consistent with accepted industry
practices to protect against theft, loss,
and unauthorized and accidental use of
the private keys.
Net Asset Value (‘‘NAV’’)
According to the Registration
Statement, the Fund’s NAV per Share is
calculated by taking the current market
value of its total assets, subtracting any
liabilities, and dividing that total by the
total number of outstanding Shares.
The Administrator will calculate the
NAV of the Fund once each trading day
as of the earlier of the close of trading
on the Exchange or 4:00 p.m. E.T. The
NAV for a normal trading day will be
released after 4:00 p.m. E.T.
In determining the NAV of the Fund,
the Administrator ordinarily values the
bitcoin held by the Fund based on the
methodology used by the Index. If the
Index is not available or the Sponsor in
There will be no contractual relationship between
each Bitcoin Trading Counterparty and the Trust,
the Sponsor, or any Authorized Purchaser. When
seeking to purchase bitcoin on behalf of the Fund,
the Sponsor will seek to purchase bitcoin at
commercially reasonable prices and terms from any
of the approved Bitcoin Trading Counterparties.
Once agreed upon, the transaction will generally
occur on an ‘‘over-the-counter’’ basis.
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its sole discretion determines that the
price of bitcoin determined by the Index
should not be used, the Fund’s holdings
may be fair valued in accordance with
the policy approved by the Sponsor.25
For purposes of determining the NAV of
the Fund, Carbon Credit Futures held by
the Fund will be valued based on
market price as of the time the NAV is
calculated on each trading day.
Intraday Indicative Value
According to the Registration
Statement, in order to provide updated
information relating to the Fund for use
by shareholders and market
professionals, an updated intraday
indicative value (‘‘IIV’’) will be
calculated and disseminated throughout
the core trading session on each trading
day. The IIV will be calculated by using
the prior day’s closing NAV per Share
of the Fund as a base and updating that
value throughout the trading day to
reflect changes in the most recently
reported price level of the Fund’s assets.
The IIV disseminated during the
Exchange’s core trading session should
not be viewed as an actual real time
update of the NAV, because NAV per
Share is calculated only once at the end
of each trading day based upon the
relevant end of day values of the Fund’s
investments. The IIV will be
disseminated on a per Share basis every
15 seconds during the Exchange’s Core
Trading Session and be widely
disseminated by one or more major
market data vendors during the
Exchange’s Core Trading Session.26
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Creation and Redemption of Shares
According to the Registration
Statement, when the Fund creates or
redeems its Shares, it will do so only in
‘‘Baskets’’ (blocks of 10,000 Shares)
based on the NAV per Share. The
allocation between Bitcoin and Carbon
Credit Futures is fixed at 80% and 20%,
respectively, for all creations and
redemptions of Shares. ‘‘Authorized
Purchasers’’ are the only persons that
may place orders to create and redeem
Baskets. Authorized Purchasers must be
25 The Sponsor does not anticipate that the need
to ‘‘fair value’’ bitcoin will be a common
occurrence. If the Sponsor determines in good faith
that the Index does not reflect an accurate bitcoin
price, then the Fund will cause to be employed an
alternative method to determine the fair value of the
Fund’s assets as reviewed and approved by the
Sponsor’s valuation committee. If the Sponsor
determines to use any alternative method other than
on an ad hoc or temporary basis, such change to the
calculation of the NAV would be subject to a
proposed rule change under Section 19(b) filed with
the Commission.
26 Several major market data vendors display and/
or make widely available IIVs taken from the
Consolidated Tape Association (‘‘CTA’’) or other
data feeds.
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(1) registered broker-dealers or other
securities market participants, such as
banks and other financial institutions,
that are not required to register as
broker-dealers to engage in securities
transactions described below, and (2)
Depository Trust Company (‘‘DTC’’)
participants.
To become an Authorized Purchaser,
a person must enter into an Authorized
Purchaser Agreement. The Authorized
Purchaser Agreement provides the
procedures for the creation and
redemption of Baskets and for the
delivery of the cash or Shares required
for such creation and redemptions.
The ‘‘Basket Price’’ for the creation or
redemption of Baskets is the NAV per
Share (net of accrued but unpaid
expenses and liabilities) multiplied by
the number of Shares comprising a
Basket. The Basket Price required to
create each Basket changes from day to
day. On each day that the Exchange is
open for regular trading, the
Administrator adjusts the Basket Price
as appropriate to reflect accrued
expenses and any loss in value of the
assets that may occur. The computation
is made by the Administrator each
business day, prior to the
commencement of trading on the
Exchange. The Basket Price so
determined is communicated to all
Authorized Purchasers and made
available on the Fund’s website for the
Shares.
The Authorized Purchasers will
deliver only cash to create Shares and
will receive only cash when redeeming
Shares. Authorized Purchasers will
deliver cash to the Non-Digital
Custodian pursuant to Purchase Orders
(as defined below) for Shares, and the
Non-Digital Custodian will hold such
cash until such time as it can be
converted to bitcoin or Carbon Credit
Futures. With respect to bitcoin
transactions, the Non-Digital Custodian
will transfer the cash received from the
Authorized Purchaser to the Bitcoin
Trading Counterparty upon the Bitcoin
Custodian’s receipt of bitcoin from the
Bitcoin Trading Counterparty. The Fund
will acquire bitcoin from a Bitcoin
Trading Counterparty and will purchase
Carbon Credit Futures via a Futures
Commission Merchant (‘‘FCM’’) to
facilitate Purchase Orders. The Fund
will sell bitcoin and Carbon Credit
Futures in exchange for cash pursuant
to Redemption Orders (as defined
below) of its Shares, and the Non-Digital
Custodian will hold such cash until it
can be distributed to the redeeming
Authorized Purchaser. In connection
with such sales, the Non-Digital
Custodian will receive cash from an
approved Bitcoin Trading Counterparty
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92259
for the sale of the Fund’s bitcoin and
from an FCM for the sale of the Fund’s
Carbon Credit Futures. With respect to
bitcoin transactions, the Bitcoin
Custodian will transfer the bitcoin to the
Bitcoin Trading Counterparty upon the
Non-Digital Custodian’s receipt of cash
from the Bitcoin Trading Counterparty.
Authorized Purchasers will not
directly or indirectly purchase, hold,
deliver, or receive bitcoin as part of the
creation or redemption process or
otherwise direct the Fund or a third
party with respect to purchasing,
holding, delivering, or receiving bitcoin
as part of the creation or redemption
process. The Fund will create shares by
receiving bitcoin from a third party that
is not the Authorized Purchaser and is
not affiliated with the Sponsor or the
Fund, and the Fund—not the
Authorized Purchaser—is responsible
for selecting the third party to deliver
the bitcoin. Further, the third party will
not be acting as an agent of the
Authorized Purchaser with respect to
the delivery of the bitcoin to the Fund
or acting at the direction of the
Authorized Purchaser with respect to
the delivery of the bitcoin to the Fund.
The Fund will redeem shares by
delivering bitcoin to a third party that
is not the Authorized Purchaser and is
not affiliated with the Sponsor or the
Fund, and the Fund—not the
Authorized Purchaser—is responsible
for selecting the third party to receive
the bitcoin. Further, the third party will
not be acting as an agent of the
Authorized Purchaser with respect to
the receipt of the bitcoin from the Fund
or acting at the direction of the
Authorized Purchaser with respect to
the receipt of the bitcoin from the Fund.
Creation Procedures
According to the Registration
Statement, on any Business Day,27 an
Authorized Purchaser may create Shares
by placing an order to purchase one or
more Baskets with the transfer agent
(‘‘Transfer Agent’’) through the
marketing agent (‘‘Marketing Agent’’) in
exchange for cash (a ‘‘Purchase Order’’).
Purchase Orders must be placed by 2:00
p.m. E.T., or the close of regular trading
on the Exchange, whichever is earlier,
or an earlier time as determined and
communicated by the Sponsor and its
agent. The day on which a Purchase
Order is accepted by the Transfer Agent
is considered the ‘‘Purchase Order
Date.’’
27 For purposes of processing creation and
redemption orders, a ‘‘Business Day’’ means any
day other than a day when the Exchange is closed
for regular trading.
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By placing a Purchase Order, an
Authorized Purchaser agrees to deposit
cash as determined by the Sponsor with
the Fund’s Non-Digital Custodian. The
total deposit required to create each
basket will be an amount of cash that is
in the same proportion to the total assets
of the Fund (net of estimated accrued
but unpaid fees, expenses and other
liabilities) on the date the Purchase
Order is properly received as the
number of Shares to be created under
the Purchase Order is in proportion to
the total number of Shares outstanding
on the date the Purchase Order is
received. The Sponsor, through the
Transfer Agent, shall notify the
Authorized Purchaser of the amount of
cash to be included in deposits to create
Baskets by email or telephone
correspondence and such amount will
be available via the Fund’s website.
An Authorized Purchaser who places
a Purchase Order is responsible for
transferring to the Fund’s account with
the Non-Digital Custodian the required
amount of cash by the end of the next
Business Day following the Purchase
Order Date or as agreed to by the
Authorized Purchaser, Sponsor,
Marketing Agent, and Transfer Agent in
advance of when the Purchase Order is
placed. Upon receipt of the deposit
amount, the Administrator will cause
DTC to credit the number of Baskets
ordered to the Authorized Purchaser’s
DTC account.
Redemption Procedures
On any business day, an Authorized
Purchaser may place an order with the
Transfer Agent to redeem one or more
Baskets (a ‘‘Redemption Order’’).
Redemption Orders must be placed by
2:00 p.m. E.T., or the close of regular
trading on the Exchange, whichever is
earlier. A Redemption Order will be
effective on the date it is accepted by
the Transfer Agent (‘‘Redemption Order
Date’’).
By placing a Redemption Order, an
Authorized Purchaser agrees to deliver
the Redemption Basket to be redeemed
through DTC’s book-entry system to the
Fund’s account with the Non-Digital
Custodian not later than the end of the
next Business Day following the
effective date of the Redemption Order
(‘‘Redemption Distribution Date’’) or the
end of such later Business Day as agreed
to by the Authorized Purchaser and the
Transfer Agent in advance of when the
Redemption Order is placed. Failure to
consummate such delivery shall result
in the cancellation of the order.
The redemption distribution due from
the Fund is delivered to the Authorized
Purchaser on the Redemption
Distribution Date if the Fund’s DTC
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account has been credited with the
Baskets to be redeemed pursuant to the
terms of the Authorized Purchaser
Agreement.
Standard for Approval
On January 10, 2024, the Commission
approved the listing and trading of
shares of Grayscale Bitcoin Trust (BTC)
and Bitwise Bitcoin ETF under NYSE
Arca Rule 8.201–E (Commodity-Based
Trust Shares); the Hashdex Bitcoin ETF
under NYSE Arca Rule 8.500–E (Trust
Units); the iShares Bitcoin Trust and
Valkyrie Bitcoin Fund under Nasdaq
Rule 5711(d) (Commodity-Based Trust
Shares); and the ARK 21Shares Bitcoin
ETF, Invesco Galaxy Bitcoin ETF,
VanEck Bitcoin Trust, the WisdomTree
Bitcoin Fund, Fidelity Wise Origin
Bitcoin Fund, and Franklin Bitcoin
ETF under BZX Rule 14.11(e)(4)
(Commodity-Based Trust Shares)
(collectively, the ‘‘Bitcoin ETPs’’).28 In
the Bitcoin ETP Approval Order, the
Commission found that the proposed
rule changes to list the Bitcoin ETPs
demonstrated that there were ‘‘sufficient
‘other means’ of preventing fraud and
manipulation,’’ including that:
[B]ased on the record before the
Commission and the improved quality of the
correlation analysis in the record, including
the Commission’s own analysis, the
Commission is able to conclude that fraud or
manipulation that impacts prices in spot
bitcoin markets would likely similarly
impact CME bitcoin futures prices. And
because the CME’s surveillance can assist in
detecting those impacts on CME bitcoin
futures prices, the Exchanges’ comprehensive
surveillance-sharing agreement with the
CME—a U.S. regulated market whose bitcoin
futures market is consistently highly
correlated to spot bitcoin, albeit not of
‘‘significant size’’ related to spot bitcoin—can
be reasonably expected to assist in
surveilling for fraudulent and manipulative
acts and practices in the specific context of
the [Bitcoin ETPs].29
The Fund is structured and will
operate in a manner materially the same
as the Bitcoin ETPs. With respect to the
Fund’s bitcoin holdings, the Sponsor
believes that the Exchange’s ability to
obtain information regarding trading in
bitcoin futures from the CME, which,
like the Exchange, is a member of the
28 Securities Exchange Act Release No. 34–99306
(January 10, 2024), 89 FR 3008 (January 17, 2024)
(SR–NYSEARCA–2021–90; SR–NYSEARCA–2023–
44; SRNYSEARCA–2023–58; SR–NASDAQ–2023–
016; SR–NASDAQ–2023–019; SR–CboeBZX–
2023028; SR–CboeBZX–2023–038; SR–CboeBZX–
2023–040; SR–CboeBZX–2023–042; SRCboeBZX–
2023–044; SR–CboeBZX–2023–072) (Order
Granting Accelerated Approval of Proposed Rule
Changes, as Modified by Amendments Thereto, to
List and Trade Bitcoin-Based Commodity-Based
Trust Shares and Trust Units) (the ‘‘Bitcoin ETP
Approval Order’’).
29 Bitcoin ETP Approval Order, 89 FR at 3009–11.
PO 00000
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Intermarket Surveillance Group (‘‘ISG’’),
would assist the Exchange in detecting
potential fraud or manipulation with
respect to trading in the Shares. In
addition, with respect to the Fund’s
Carbon Credit Futures holdings, the
Sponsor believes that the Exchange
would be able to obtain information
regarding trading in Carbon Credit
Futures that would similarly assist in
surveilling for potential fraud or
manipulation. As stated above, the Fund
will hold only: (i) EU ETS futures which
trade only on ICE Endex Markets B.V.
(‘‘ICE Endex’’),30 with which the
Exchange has entered into a
comprehensive surveillance sharing
agreement (‘‘CSSA’’); and (ii) CCA
futures and RGGI futures which are
traded only on ICE Futures U.S.,31
which, like the Exchange, is a member
of the ISG. Accordingly, the Sponsor
believes that the Exchange’s ability to
share information with ICE Endex and
ICE Futures U.S., pursuant to a CSSA or
common ISG membership, would assist
in surveilling for fraudulent and
manipulative acts and practices. The
Sponsor thus believes that, for reasons
similar to those set forth in the Bitcoin
ETP Approval Order, listing and trading
Shares of the Fund would be consistent
with the requirements of the Act.
Availability of Information
The NAV per Share will be
disseminated daily to all market
participants at the same time. Quotation
and last-sale information regarding the
Shares will be disseminated through the
facilities of the CTA. The IIV will be
calculated every 15 seconds throughout
the core trading session each trading
day.
Quotation and last sale information
for bitcoin will be widely disseminated
through a variety of major market data
vendors, including Bloomberg and
30 ICE Endex is regulated in the Netherlands by
the Dutch Authority for the Financial Markets
(‘‘AFM’’) as a RM, as defined in MIFID II, which
is implemented in Dutch Act on Financial
Supervision (‘‘DFSA’’). The license as a RM is
obtained under Section 5:26(1) of the DFSA,
resulting in an authorization by the Minister of
Dutch Ministry of Finance to operate a RM and
supervised by the AFM. In the UK, ICE Endex is
a Recognized Overseas Investment Exchange by the
Financial Conduct Authority. See https://
www.ice.com/endex/regulation#:∼:text=The%20
Dutch%20Authority%20for%20Consumers,
energy%20industry%20and%20
wholesale%20trading. ICE Endex is also recognized
by the CFTC as an authorized Foreign Board of
Trade. See https://www.cftc.gov/sites/default/files/
idc/groups/public/@otherif/documents/ifdocs/
orgiceeregorder170110.pdf.
31 ICE Futures U.S. is a registered Designated
Contract Market regulated by the CFTC and subject
to the requirements of the Commodity Exchange
Act (‘‘CEA’’), as amended, and the regulations
issues by the CFTC pursuant to the CEA. See
https://www.ice.com/futures-us.
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Reuters. In addition, real-time price
(and volume) data for bitcoin is
available by subscription from Reuters
and Bloomberg. The spot price of
bitcoin is available on a 24-hour basis
from major market data vendors,
including Bloomberg and Reuters. The
real-time version of the value of the
Index will be disseminated once every
15 seconds during the Core Trading
Session. Information relating to trading,
including price and volume
information, in bitcoin will be available
from major market data vendors and
from the trading platforms on which
bitcoin is traded.
The intraday, closing prices, and
settlement prices of the Carbon Credit
Futures will be readily available from
automated quotation systems, published
or other public sources, or major market
data vendors, such as ICE Data Services.
Information regarding market price and
trading volume of the Shares will be
continually available on a real-time
basis throughout the day on brokers’
computer screens and other electronic
services. Information regarding the
previous day’s closing price and trading
volume information for the Shares will
be published daily in the financial
section of newspapers.
Real-time data for Carbon Credit
Futures will be available by
subscription through on-line
information services. Delayed futures
and options on futures information on
current and past trading sessions and
market news will also be available. The
specific contract specifications for
Carbon Credit Futures will also be
available on such websites, as well as
other financial informational sources.
On each business day, the Sponsor
will publish the value of the Index, the
Fund’s NAV, and the NAV per Share on
the Fund’s website as soon as
practicable after its determination. If the
NAV and NAV per Share have been
calculated using a price per bitcoin
other than the price of bitcoin
determined by the Index, the
publication on the Fund’s website will
note the valuation methodology used
and the price per bitcoin resulting from
such calculation.
The Fund will provide website
disclosure of its NAV and NAV per
Share daily. The website disclosure of
the Fund’s NAV and NAV per Share
will occur at the same time as the
disclosure by the Sponsor of the NAV
and NAV per Share to Authorized
Purchasers so that all market
participants are provided such portfolio
information at the same time. Therefore,
the same portfolio information will be
provided on the public website as well
as in electronic files provided to
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Authorized Purchasers. Accordingly,
each investor will have access to the
current NAV and NAV per Share of the
Fund through the Fund’s website, as
well as from one or more major market
data vendors.
The value of the Index, as well as
additional information regarding the
Index, will be available on a continuous
basis on the Fund’s website.
Information regarding market price
and trading volume of the Shares will be
continually available on a real-time
basis throughout the day on brokers’
computer screens and other electronic
services.
Information regarding the previous
day’s closing price and trading volume
information for the Shares will be
published daily in the financial section
of newspapers.
The Sponsor will cause information
about the Shares to be posted to the
Fund’s website: (1) the NAV and NAV
per Share for each Exchange trading
day, posted at end of day; (2) the daily
holdings of the Fund, before 9:30 a.m.
E.T. on each Exchange trading day; (3)
the Fund’s effective prospectus, in a
form available for download; and (4) the
Shares’ ticker and CUSIP information,
along with additional quantitative
information updated on a daily basis for
the Fund. The Fund’s website will
include (1) the prior Business Day’s
trading volume, the prior Business Day’s
reported NAV and closing price, and a
calculation of the premium and
discount of the closing price or midpoint of the bid/ask spread at the time
of NAV calculation (‘‘Bid/Ask Price’’)
against the NAV; and (2) data in chart
format displaying the frequency
distribution of discounts and premiums
of the daily closing price or Bid/Ask
Price against the NAV, within
appropriate ranges, for at least each of
the four previous calendar quarters. The
website disclosure of portfolio holdings
will be made daily and will include (i)
the name, quantity, price, and market
value of the Fund’s holdings and (ii) the
total cash and cash equivalents held in
the Fund’s portfolio, if applicable.
The Fund’s website will be publicly
available prior to the public offering of
Shares and accessible at no charge.
Trading Halts
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares of
the Fund.32 Trading in Shares of the
Fund will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12–E
have been reached. Trading also may be
32 See
PO 00000
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Frm 00176
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92261
halted because of market conditions or
for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable.
The Exchange may halt trading during
the day in which an interruption to the
dissemination of the IIV or the value of
the Index occurs. The real-time version
of the value of the Index will be
disseminated once every 15 seconds
during the Core Trading Session. If the
interruption to the dissemination of the
IIV or to the value of the Index persists
past the trading day in which it
occurred, the Exchange will halt trading
no later than the beginning of the
trading day following the interruption.
In addition, if the Exchange becomes
aware that the NAV with respect to the
Shares is not disseminated to all market
participants at the same time, it will halt
trading in the Shares until such time as
the NAV is available to all market
participants.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Shares will trade on
the NYSE Arca Marketplace from 4:00
a.m. to 8:00 p.m. E.T. in accordance
with NYSE Arca Rule 7.34–E (Early,
Core, and Late Trading Sessions). The
Exchange has appropriate rules to
facilitate transactions in the Shares
during all trading sessions. As provided
in NYSE Arca Rule 7.6–E, the minimum
price variation (‘‘MPV’’) for quoting and
entry of orders in equity securities
traded on the NYSE Arca Marketplace is
$0.01, with the exception of securities
that are priced less than $1.00 for which
the MPV for order entry is $0.0001.
The Shares will conform to the initial
and continued listing criteria under
NYSE Arca Rule 8.500–E. The trading of
the Shares will be subject to NYSE Arca
Rule 8.500–E(f), which sets forth certain
restrictions on Equity Trading Permit
Holders (‘‘ETP Holders’’) acting as
registered market makers in Trust Units
to facilitate surveillance. Pursuant to
NYSE Arca Rule 8.500–E(f), an ETP
Holder acting as a registered market
maker in Trust Units must file with the
Exchange in a manner prescribed by the
Exchange and keep current a list
identifying all accounts for trading in an
underlying commodity, related
commodity futures or options on
commodity futures, or any other related
commodity derivatives, which the
market maker may have or over which
it may exercise investment discretion.
No market maker shall trade in an
underlying commodity, related
commodity futures or options on
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commodity futures, or any other related
commodity derivatives, in an account in
which a market maker, directly or
indirectly, controls trading activities, or
has a direct interest in the profits or
losses thereof, which has not been
reported to the Exchange as required by
this Rule. In addition to the existing
obligations under Exchange rules
regarding the production of books and
records, the ETP Holder acting as a
market maker in Trust Units shall make
available to the Exchange such books,
records or other information pertaining
to transactions by such entity or
registered or non-registered employee
affiliated with such entity for its or their
own accounts for trading the underlying
physical commodity, related commodity
futures or options on commodity
futures, or any other related commodity
derivatives, as may be requested by the
Exchange.
For initial and continued listing as
proposed herein, the Fund will be in
compliance with Rule 10A–3 under the
Act, and the Trust will rely on the
exception contained in Rule 10A–
3(c)(7).33 A minimum of 50,000 Shares
of the Fund will be outstanding at the
commencement of trading on the
Exchange.
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Surveillance
The Exchange represents that trading
in the Shares of the Fund will be subject
to the existing trading surveillances
administered by the Exchange, as well
as cross-market surveillances
administered by FINRA on behalf of the
Exchange, which are designed to detect
violations of Exchange rules and
applicable federal securities laws.34 The
Exchange represents that these
procedures are adequate to properly
monitor Exchange trading of the Shares
in all trading sessions and to deter and
detect violations of Exchange rules and
federal securities laws applicable to
trading on the Exchange.
The surveillances referred to above
generally focus on detecting securities
trading outside their normal patterns,
which could be indicative of
manipulative or other violative activity.
When such situations are detected,
surveillance analysis follows and
33 See Rule 10A–3(c)(7), 17 CFR 240.10A–3(c)(7)
(stating that a listed issuer is not subject to the
requirements of Rule 10A–3 if the issuer is
organized as an unincorporated association that
does not have a board of directors and the activities
of the issuer are limited to passively owning or
holding securities or other assets on behalf of or for
the benefit of the holders of the listed securities).
34 FINRA conducts cross-market surveillances on
behalf of the Exchange pursuant to a regulatory
services agreement. The Exchange is responsible for
FINRA’s performance under this regulatory services
agreement.
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investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations.
The Exchange or FINRA, on behalf of
the Exchange, or both, will
communicate as needed regarding
trading in the Shares and the Fund’s
holdings with other markets and other
entities that are members of the ISG, and
the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading
information regarding trading in the
Shares and the Fund’s holdings from
such markets and other entities. In
addition, the Exchange may obtain
information regarding trading in the
Shares and the Fund’s holdings from
markets and other entities that are
members of ISG 35 or with which the
Exchange has in place a CSSA.
Specifically, the Exchange or FINRA, on
behalf of the Exchange, may
communicate as needed and may obtain
information regarding trading in bitcoin
futures from the CME, which is a
member of the ISG. Also, the Exchange
may communicate as needed and may
obtain information regarding trading in
Carbon Credit Futures from ICE Endex,
with which the Exchange has in place
a CSSA, and ICE Futures U.S., which is
a member of the ISG.
The Exchange believes that ICE Endex
and ICE Futures U.S. are regulated 36
markets of significant size related to the
Carbon Credit Futures held by the Fund
and that it is reasonably likely that any
bad actor trying to manipulate the price
of the Fund would have to trade on
those markets. As noted above, the EU
ETS futures held by the Fund trade only
on ICE Endex, and CCA futures and
RGGI futures held by the Fund are
traded only on ICE Futures U.S.
Therefore, ICE Endex and ICE Futures
U.S. are appropriate markets to surveil
in order to detect and deter fraud and
manipulation.
The Exchange is also able to obtain
information regarding trading in the
Shares, the underlying bitcoin, Carbon
Credit Futures, bitcoin futures contracts,
options on bitcoin futures, or any other
bitcoin derivative through ETP Holders,
in connection with such ETP Holders’
proprietary or customer trades which
they effect through ETP Holders on any
relevant market. The Exchange can
obtain market surveillance information,
including customer identity
information, with respect to transactions
(including transactions in futures
35 For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all
components of the Fund may trade on markets that
are members of ISG or with which the Exchange has
in place a CSSA.
36 See notes 29 & 30, supra.
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Frm 00177
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contracts) occurring on US futures
exchanges, which are members of the
ISG. In addition, the Exchange also has
a general policy prohibiting the
distribution of material, non-public
information by its employees.
Under NYSE Arca Rule 8.500–E(f), an
ETP Holder acting as a registered market
maker in the Shares is required to
provide the Exchange with information
relating to its accounts for trading in the
underlying physical commodity, related
commodity futures or options on
commodity futures, or any other related
commodity derivatives, and must
provide any information concerning
trading in those accounts that the
Exchange may request. Commentary .04
of NYSE Arca Rule 11.3–E requires an
ETP Holder acting as a registered market
maker, and its affiliates, in the Shares to
establish, maintain and enforce written
policies and procedures reasonably
designed to prevent the misuse of any
material nonpublic information with
respect to such products, any
components of the related products, any
physical asset or commodity underlying
the product, applicable currencies,
underlying indexes, related futures or
options on futures, and any related
derivative instruments (including the
Shares). As a general matter, the
Exchange has regulatory jurisdiction
over its ETP Holders and their
associated persons, which include any
person or entity controlling an ETP
Holder. To the extent the Exchange may
be found to lack jurisdiction over a
subsidiary or affiliate of an ETP Holder
that does business only in commodities
or futures contracts, the Exchange could
obtain information regarding the
activities of such subsidiary or affiliate
through surveillance sharing agreements
with regulatory organizations to the
extent the Exchange has such an
agreement with an organization of
which the subsidiary or affiliate is a
member.
All statements and representations
made in this filing regarding (a) the
description of the portfolio or reference
asset, (b) limitations on portfolio
holdings or reference assets, or (c) the
applicability of Exchange listing rules
specified in this rule filing shall
constitute continued listing
requirements for listing the Shares on
the Exchange.
The issuer has represented to the
Exchange that it will advise the
Exchange of any failure by the Fund to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will monitor for
compliance with the continued listing
requirements. If the Fund is not in
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compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
NYSE Arca Rule 5.5–E(m).
Information Bulletin
Prior to the commencement of trading
of the Shares, the Exchange will inform
its ETP Holders in an information
bulletin (‘‘Information Bulletin’’) of the
special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (1) the risks
involved in trading the Shares during
the Early and Late Trading Sessions
when an updated IIV will not be
calculated or publicly disseminated; (2)
the procedures for purchases and
redemptions of Shares in Creation
Baskets and Redemption Baskets (and
that Shares are not individually
redeemable); (3) NYSE Arca Rule 9.2–
E(a), which imposes a duty of due
diligence on its ETP Holders to learn the
essential facts relating to every customer
prior to trading the Shares; (4) how
information regarding the IIV is
disseminated; (5) how information
regarding portfolio holdings is
disseminated; (6) the requirement that
ETP Holders deliver a prospectus to
investors purchasing newly issued
Shares prior to or concurrently with the
confirmation of a transaction; and (7)
trading information.
In addition, the Information Bulletin
will advise ETP Holders, prior to the
commencement of trading, of the
prospectus delivery requirements
applicable to the Fund. The Exchange
notes that investors purchasing Shares
directly from the Fund will receive a
prospectus. ETP Holders purchasing
Shares from the Fund for resale to
investors will deliver a prospectus to
such investors. The Information Bulletin
will also discuss any exemptive, noaction, and interpretive relief granted by
the Commission from any rules under
the Act. In addition, the Information
Bulletin will reference that the Fund is
subject to various fees and expenses
described in the Registration Statement.
The Information Bulletin will also
reference the fact that there is no
regulated source of last sale information
regarding bitcoin, that the Commission
has no jurisdiction over the trading of
Bitcoin as a commodity, and that the
CFTC has regulatory jurisdiction over
the trading of bitcoin futures contracts
and options on bitcoin futures contracts.
The Information Bulletin will also
disclose the trading hours of the Shares
and that the NAV for the Shares will be
calculated after 4:00 p.m. E.T. each
trading day. The Information Bulletin
will disclose that information about the
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18:02 Nov 20, 2024
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Shares will be publicly available on the
Fund’s website.
2. Statutory Basis
The basis under the Act for this
proposed rule change is the requirement
under Section 6(b)(5) 37 that an
exchange have rules that are designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest.
The Exchange believes that the
proposed rule change is designed to
prevent fraudulent and manipulative
acts and practices and to protect
investors and the public interest in that
the Shares will be listed and traded on
the Exchange pursuant to the initial and
continued listing criteria in NYSE Arca
Rule 8.500–E. The proposed rule change
is also designed to prevent fraudulent
and manipulative acts and practices
because the Fund is structured similarly
to and will operate in materially the
same manner as the Bitcoin ETPs
previously approved by the
Commission. The Exchange further
believes that the proposed rule change
is designed to prevent fraudulent and
manipulate acts and practices because,
as noted by the Commission in the
Bitcoin ETP Approval Order, the
Exchange’s ability to obtain information
regarding trading in the Shares and
futures from markets and other entities
that are members of the ISG (including
the CME and ICE Futures U.S.) or with
which the Exchange has in place a
CSSA would assist the Exchange in
detecting and deterring misconduct.
The Exchange has in place
surveillance procedures that are
adequate to properly monitor Exchange
trading in the Shares in all trading
sessions and to deter and detect
attempted manipulation of the Shares or
other violations of Exchange rules and
applicable federal securities laws. The
Exchange or FINRA, on behalf of the
Exchange, or both, will communicate as
needed regarding trading in the Shares
with other markets and other entities
that are members of the ISG, and the
Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading
information regarding trading in the
Shares from such markets and other
entities. In addition, the Exchange may
obtain information regarding trading in
the Shares from markets and other
entities that are members of ISG or with
which the Exchange has in place a
CSSA. The Exchange is also able to
37 15
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92263
obtain information regarding trading in
the Shares and bitcoin futures or the
underlying bitcoin through ETP
Holders, in connection with such ETP
Holders’ proprietary or customer trades
which they effect through ETP Holders
on any relevant market.
Quotation and last-sale information
regarding the Shares will be
disseminated through the facilities of
the CTA. The Fund’s website will also
include a form of the prospectus for the
Fund that may be downloaded. The
website will include the Shares’ ticker
and CUSIP information, along with
additional quantitative information
updated on a daily basis for the Fund.
The Fund’s website will include (1)
daily trading volume, the prior Business
Day’s reported NAV and closing price,
and a calculation of the premium and
discount of the closing price or midpoint of the Bid/Ask Price against the
NAV; and (ii) data in chart format
displaying the frequency distribution of
discounts and premiums of the daily
closing price or Bid/Ask Price against
the NAV, within appropriate ranges, for
at least each of the four previous
calendar quarters. The Fund’s website
will be publicly available prior to the
public offering of Shares and accessible
at no charge.
Trading in Shares of the Fund will be
halted if the circuit breaker parameters
in NYSE Arca Rule 7.12–E have been
reached or because of market conditions
or for reasons that, in the view of the
Exchange, make trading in the Shares
inadvisable.
The proposed rule change is designed
to perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest in that
it will facilitate the listing and trading
of a new type of exchange-traded
product based on the price of bitcoin
that will enhance competition among
market participants, to the benefit of
investors and the marketplace. As noted
above, the Exchange has in place
surveillance procedures that are
adequate to properly monitor trading in
the Shares in all trading sessions and to
deter and detect violations of Exchange
rules and applicable federal securities
laws.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purpose of the Act. The Exchange
notes that the proposed rule change will
facilitate the listing and trading of the
Shares, which are Trust Units based on
bitcoin and Carbon Credit Futures and
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
that will enhance competition among
market participants, to the benefit of
investors and the marketplace.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule change, as
modified by Amendment No. 4, is
consistent with the Act and the rules
and regulations thereunder applicable to
a national securities exchange.38 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(5) of the Exchange
Act,39 which requires, among other
things, that the Exchange’s rules be
designed to ‘‘prevent fraudulent and
manipulative acts and practices’’ and,
‘‘in general, to protect investors and the
public interest’’; and with Section
11A(a)(1)(C)(iii) of the Exchange Act,40
which sets forth Congress’ finding that
it is in the public interest and
appropriate for the protection of
investors and the maintenance of fair
and orderly markets to assure the
availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities.
lotter on DSK11XQN23PROD with NOTICES1
A. Exchange Act Section 6(b)(5)
In approving the listing and trading of
shares of exchange-traded products
(‘‘ETPs’’) that hold bitcoin, the
Commission explained that one way an
exchange that lists such ETPs can meet
the obligation under Exchange Act
Section 6(b)(5) that its rules be designed
to prevent fraudulent and manipulative
acts and practices is by demonstrating
that the exchange has a comprehensive
surveillance-sharing agreement with a
regulated market of significant size
related to the underlying or reference
assets.41 Such an agreement would
38 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
39 15 U.S.C. 78f(b)(5).
40 15 U.S.C. 78k–1(a)(1)(C)(iii).
41 See Order Granting Approval of a Proposed
Rule Change, as Modified by Amendment No. 1, to
List and Trade Shares of the Grayscale Bitcoin Mini
Trust and Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment
No. 1, to List and Trade Shares of the Pando Asset
Spot Bitcoin Trust, Securities Exchange Act Release
No. 100610 (July 26, 2024), 89 FR 62821 (Aug. 1,
2024) (SR–NYSEARCA–2024–45; SR–CboeBZX–
2023–101) (‘‘July 2024 Spot Bitcoin ETP Approval
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assist in detecting and deterring fraud
and manipulation related to that
underlying asset.
The Commission also recognized,
however, that this is not the exclusive
means by which an ETP listing
exchange can meet this statutory
obligation.42 A listing exchange could,
alternatively, demonstrate that ‘‘other
means to prevent fraudulent and
manipulative acts and practices will be
sufficient’’ to justify dispensing with a
surveillance-sharing agreement with a
regulated market of significant size.43 In
the Spot Bitcoin ETP Approval Orders,
the Commission determined that having
a comprehensive surveillance-sharing
agreement with a U.S.-regulated market
that, based on evidence from robust
correlation analysis, is consistently
highly correlated with the ETPs’
underlying assets (spot bitcoin)
constituted ‘‘other means’’ sufficient to
satisfy the Exchange Act Section 6(b)(5)
standard.44 Specifically, given the
consistently high correlation between
the bitcoin futures market of the
Chicago Mercantile Exchange (‘‘CME’’)
and a sample of spot bitcoin markets—
confirmed by the Commission through
robust 45 correlation analysis using data
at hourly, five-minute, and one-minute
intervals—the Commission was able to
conclude that fraud or manipulation
that impacts prices in spot bitcoin
markets would likely similarly impact
CME bitcoin futures prices. And
because the CME’s surveillance can
Order’’); Order Granting Accelerated Approval of
Proposed Rule Changes, as Modified by
Amendments Thereto, To List and Trade BitcoinBased Commodity-Based Trust Shares and Trust
Units, Securities Exchange Act Release No. 99306
(Jan. 10, 2024), 89 FR 3008 (Jan. 17, 2024) (SR–
NYSEARCA–2021–90; SR–NYSEARCA–2023–44;
SR–NYSEARCA–2023–58; SR–NASDAQ–2023–016;
SR–NASDAQ–2023–019; SR–CboeBZX–2023–028;
SR–CboeBZX–2023–038; SR–CboeBZX–2023–040;
SR–CboeBZX–2023–042; SR–CboeBZX–2023–044;
SR–CboeBZX–2023–072) (‘‘January 2024 Spot
Bitcoin ETP Approval Order’’) (collectively, ‘‘Spot
Bitcoin ETP Approval Orders’’).
42 See July 2024 Spot Bitcoin ETP Approval Order
at 62822; January 2024 Spot Bitcoin ETP Approval
Order at 3009.
43 See July 2024 Spot Bitcoin ETP Approval Order
at 62822; January 2024 Spot Bitcoin ETP Approval
Order at 3009.
44 See July 2024 Spot Bitcoin ETP Approval Order
at 62822; January 2024 Spot Bitcoin ETP Approval
Order at 3009–11.
45 The Commission stated that the ‘‘robustness’’ of
its correlation analysis rested on the pre-requisites
of (1) the correlations being calculated with respect
to bitcoin futures that trade on the CME, a U.S.
market regulated by the CFTC, (2) the lengthy
sample period of price returns for both the CME
bitcoin futures market and the spot bitcoin market,
(3) the frequent intra-day trading data in both the
CME bitcoin futures market and the spot bitcoin
market over that lengthy sample period, and (4) the
consistency of the correlation results throughout the
lengthy sample period. See July 2024 Spot Bitcoin
ETP Approval Order at 62822 n.17; January 2024
Spot Bitcoin ETP Approval Order at 3010 n.38.
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assist in detecting those impacts on
CME bitcoin futures prices, the
Commission was able to conclude that
the comprehensive surveillance-sharing
agreement among the relevant listing
exchanges and the CME can be
reasonably expected to assist in
surveilling for fraudulent and
manipulative acts and practices in the
specific context of the proposals
considered in the Spot Bitcoin ETP
Approval Orders.
With respect to the bitcoin holdings of
the Fund,46 the structure of the Fund,
the terms of its operation and the
trading of the Shares, and the
representations in the proposed rule
change, as modified by Amendment No.
4, are substantially similar to those of
the proposals considered in the Spot
Bitcoin ETP Approval Orders.47 In
addition, the Commission finds that the
spot bitcoin market continues to be
consistently highly correlated with the
CME bitcoin futures market.48 In the
proposal, as modified by Amendment
No. 4, the Exchange represents that the
Exchange or FINRA, on behalf of the
Exchange, may communicate as needed
and may obtain information regarding
trading in CME bitcoin futures from the
CME, which is a member of the ISG. As
such, based on the record before the
Commission, including the
Commission’s correlation analysis, the
Commission is able to conclude that the
Exchange’s comprehensive surveillancesharing agreement with the CME can be
reasonably expected to assist in
surveilling for fraudulent and
manipulative acts and practices with
respect to the spot bitcoin proposed to
be held by the Fund.
With respect to the Carbon Credit
Futures proposed to be held by the
Fund, the Commission is able to
conclude that the Exchange has CSSAs
or shares ISG membership with
46 While the Fund uses ‘‘ETF’’ in its name, it is
not registered under the Investment Company Act
of 1940.
47 See also infra Section III.B.
48 The Commission examined correlation between
the CME bitcoin futures market and the Coinbase
and Kraken spot bitcoin trading platforms at hourly,
five-minute, and one-minute intervals, using the
same data sources and methodology as in the Spot
Bitcoin ETP Approval Orders (see July 2024 Spot
Bitcoin ETP Approval Order at 62822 n.19; January
2024 Spot Bitcoin ETP Approval Order at 3010
n.35), for the period from March 1, 2021, to August
22, 2024. The correlation between the CME bitcoin
futures market and this subset of spot bitcoin
platforms for the full sample period is no less than
98.9 percent using data at an hourly interval, 93.9
percent using data at a five-minute interval, and
83.1 percent using data at a one-minute interval.
The rolling three-month correlation results range
between 94.0 and 99.5 percent using data at an
hourly interval, 79.9 and 96.2 percent using data at
a five-minute interval, and 73.7 and 88.5 percent
using data at a one-minute interval.
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significant, regulated markets related to
such holdings, and, thus, that such
CSSAs and ISG membership can be
reasonably expected to assist in
surveilling for fraudulent and
manipulative acts and practices with
respect to such holdings.49 The
Exchange represents that the Fund will
hold only: (i) EU ETS futures which
trade only on ICE Endex, with which
the Exchange has entered into a CSSA;
and (ii) CCA futures and RGGI futures
which are traded only on ICE Futures
U.S., which, like the Exchange, is a
member of the ISG. Further, each of ICE
Endex and ICE Futures U.S. is
‘‘regulated’’ because ICE Endex is
regulated in the Netherlands by the
Dutch Authority for the Financial
Markets and is registered with the CFTC
as an authorized Foreign Board of
Trade,50 and ICE Futures U.S. is a
registered Designated Contract Market
regulated by the CFTC.51
Moreover, each of ICE Endex and ICE
Futures U.S. is a ‘‘significant market’’ 52
in relation to the respective Carbon
Credit Futures that trade thereon.
Specifically, with respect to the first
prong of the ‘‘significant market’’
analysis, as the Commission has
previously recognized,53 because the
Carbon Credit Futures that would be
held by the Fund (i.e., EU ETS futures,
CCA futures, and RGGI futures) are only
traded on markets which are members
of the ISG or with which the Exchange
holds a CSSA, the ISG membership and
CSSA can reasonably be relied upon to
assist in detecting and deterring
fraudulent or manipulative misconduct
that affects those assets.
With respect to the second prong of
the ‘‘significant market’’ analysis,
evidence supports the Commission’s
conclusion that it is unlikely that
trading in the Fund’s Shares would be
the predominant influence on prices in
the EU ETS futures market of ICE
Endex, or the CCA or RGGI futures
markets of ICE Futures U.S. ICE Endex
and ICE Futures U.S., on which the
Fund’s investments in Carbon Credit
Futures exclusively trade, are currently
the largest and most liquid carbon credit
futures markets for these instruments.54
In addition, since the launch of the KFA
Global Carbon ETF under the
Investment Company Act of 1940,55
which holds CCA and RGGI futures
traded on ICE Futures U.S., and EU ETS
futures traded on ICE Endex, the
49 As the Commission has explained (see Order
Setting Aside Action by Delegated Authority and
Disapproving a Proposed Rule Change, as Modified
by Amendments No. 1 and 2, To List and Trade
Shares of the Winklevoss Bitcoin Trust, Securities
Exchange Act Release No. 83723 (July 26, 2018), 83
FR 37579 (Aug. 1, 2018) (SR–BatsBZX–2016–30)
(‘‘Winklevoss Order’’)), an exchange that lists
commodity-based ETPs can meet its obligations
under Exchange Act Section 6(b)(5) by
demonstrating that the exchange has a CSSA with
a regulated market of significant size related to the
underlying or reference assets. The Winklevoss
Order applied this standard to a commodity-trust
ETP based on spot bitcoin, and the Commission has
found that this standard is also appropriate for, and
has applied the standard to, proposed ETPs based
on bitcoin futures. See, e.g., Order Granting
Approval of a Proposed Rule Change, as Modified
by Amendment No. 2, To List and Trade Shares of
the Teucrium Bitcoin Futures Fund Under NYSE
Arca Rule 8.200–E, Commentary .02 (Trust Issued
Receipts), Securities Exchange Act Release No.
94620 (Apr. 6, 2022), 87 FR 21676 (Apr. 12, 2022)
(SR–NYSEArca–2021–053) (‘‘Teucrium Order’’).
50 See supra note 30. See also CFTC Order of
Registration for ICE Endex at
orgiceeregorder170110.pdf.
51 See supra note 31.
52 In the Winklevoss Order, the Commission
stated that the term ‘‘significant market’’ or ‘‘market
of significant size’’ includes a market (or group of
markets) as to which (1) there is a reasonable
likelihood that a person attempting to manipulate
the ETP would also have to trade on that market
to successfully manipulate the ETP, so that a
surveillance-sharing agreement would assist in
detecting and deterring misconduct, and (2) it is
unlikely that trading in the ETP would be the
predominant influence on prices in that market. See
Winklevoss Order, 83 FR at 37594. The Commission
explained that this definition is illustrative and not
exclusive, and that there could be other types of
‘‘significant markets’’ and ‘‘markets of significant
size. See id.
53 See Teucrium Order, 87 FR at 21679; Order
Granting Approval of a Proposed Rule Change, as
Modified by Amendment Nos. 1 and 2, To List and
Trade Shares of the Valkyrie XBTO Bitcoin Futures
Fund Under Nasdaq Rule 5711(g), Securities
Exchange Act Release No. 94853 (May 5, 2022), 87
FR 28848 (May11, 2022) (SR–NASDAQ–2021–066),
at 28852.
54 For example, ICE Futures U.S. open interest in
RGGI Futures were 77 million allowances in June
2024. The next largest RGGI Futures exchange,
Nodal, had only 15.6 million allowances open
interest at that time. Report on the Secondary
Market for RGGI CO2 Allowances: Second Quarter
2024, Prepared for RGGI, Inc. by Potomac
Economics (Aug. 2024), available at https://
www.rggi.org/sites/default/files/Uploads/MarketMonitor/Quarterly-Reports/MM_Secondary_
Market_Report_2024_Q2.pdf. Similarly, ICE
Endex’s EU ETS futures reached record
participation throughout 2023 and during the first
quarter of 2024. See Press Release, Intercontinental
Exchange, ICE Environmental Contracts Traded the
Equivalent of $1 Trillion in Notional Value for the
Third Consecutive Year (Apr. 22, 2024) available at
https://s2.q4cdn.com/154085107/files/doc_news/
ICE-Environmental-Contracts-Traded-theEquivalent-of-1-Trillion-in-Notional-Value-for-theThird-Consecutive-Year-2024.pdf.
55 See Securities Exchange Act Release No. 88255
(Feb. 20, 2020), 85 FR 11146, 11156 (Feb. 26, 2020)
(SR–NYSEArca–2019–60) (Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 4, To List and
Trade Shares of the KFA Global Carbon ETF under
NYSE Arca Rule 8.600–E) (approving the listing and
trading of an exchange-traded fund (‘‘ETF’’),
registered under the Investment Company Act of
1940, holding carbon credit futures). In 2021, EU
ETS futures were transitioned from ICE Futures
Europe to ICE Endex. See press release at
Intercontinental Exchange—ICE to transition
European Union Emission Allowance Contracts to
ICE Endex in the Netherlands during the Second
Quarter of 2021.
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92265
Commission has neither observed any
disruption to the ICE Futures U.S. or
ICE Endex futures markets, nor any
evidence that this ETF has exerted a
dominant influence on CCA, RGGI, and/
or EU ETS futures’ prices. For example,
based on ICE Futures U.S. and ICE
Endex data,56 the Commission has not
observed any disruption to, or dominant
influence from this ETF on, settlement
prices, spreads, or roll costs of the EU
ETS, RGGI, or CCA futures contracts.
For these reasons, the Commission is
able to conclude that the Exchange’s ISG
membership and comprehensive
surveillance-sharing agreement with ICE
Endex can be reasonably expected to
assist in surveilling for fraudulent and
manipulative acts and practices with
respect to the Carbon Credit Futures
proposed to be held by the Fund.
B. Exchange Act Section
11A(a)(1)(C)(iii)
The proposed rule change, as
modified by Amendment No. 4, sets
forth aspects of the Fund, including the
availability of pricing information,
transparency of portfolio holdings, and
types of surveillance procedures, that
are consistent with other ETPs that the
Commission has approved.57 This
includes commitments regarding: the
availability via the Consolidated Tape
Association of quotation and last-sale
information for the Shares; the
availability on the Fund’s website of
certain information related to the Fund,
including net asset value; the
dissemination of the intra-day
indicative value by one or more major
market data vendors, updated every 15
seconds throughout the Exchange’s
regular trading hours; the Exchange’
surveillance procedures and ability to
56 The Commission examined futures volume,
open interest, price, and spread data provided by
Bloomberg.
57 See, e.g., July 2024 Spot Bitcoin ETP Approval
Order at 62822; January 2024 Spot Bitcoin ETP
Approval Order at 3011; Securities Exchange Act
Release No. 61220 (Dec. 22, 2009), 74 FR 68895
(Dec. 29, 2009) (SR–NYSEARCA–2009–94) (Order
Granting Approval of Proposed Rule Change
Relating To Listing and Trading Shares of the ETFS
Palladium Trust); Securities Exchange Act Release
No. 94518 (Mar. 25, 2022), 87 FR 18837 (Mar. 31,
2022) (SR–NYSEARCA–2021–65) (Notice of Filing
of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, To List and
Trade Shares of the Sprott ESG Gold ETF Under
NYSE Arca Rule 8.201–E (Commodity-Based Trust
Shares); Securities Exchange Act Release No.
100224 (May 23, 2024), 89 FR 46937 (May 30, 2024)
(SR–NYSEARCA–2023–70; SR–NYSEARCA–2024–
31; SR–NASDAQ–2023–045; SR–CboeBZX–2023–
069; SR–CboeBZX–2023–070; SR–CboeBZX–2023–
087; SR–CboeBZX–2023–095; SR–CboeBZX–2024–
018) (Order Granting Accelerated Approval of
Proposed Rule Changes, as Modified by
Amendments Thereto, To List and Trade Shares of
Ether-Based Exchange-Traded Products).
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Federal Register / Vol. 89, No. 225 / Thursday, November 21, 2024 / Notices
obtain information regarding trading in
the Shares of the Fund; the conditions
under which the Exchange would
implement trading halts and
suspensions; and the requirements of
registered market makers in the Shares
of the Fund. In addition, the Exchange
deems the Shares to be equity securities,
thus rendering trading in the Shares
subject to that Exchange’s rules
governing the trading of equity
securities. Further, the applicable listing
rule of the Exchange requires that all
statements and representations made in
its filing regarding, among others, the
description of the Fund’s holdings,
limitations on such holdings, and the
applicability of the Exchange’s listing
rules specified in the filing, will
constitute continued listing
requirements.58 Moreover, the proposed
rule change states that the Sponsor has
represented to the Exchange that it will
advise that Exchange of any failure to
comply with the applicable continued
listing requirements; pursuant to
obligations under Section 19(g)(1) of the
Exchange Act, the Exchange will
monitor for compliance with the
continued listing requirements; and if
the Fund is not in compliance with the
applicable listing requirements, that
Exchange will commence delisting
procedures.
The Commission therefore finds that
the proposed rule change, as modified
by Amendment No. 4, is reasonably
designed to promote fair disclosure of
information that may be necessary to
price the Shares appropriately, to
prevent trading when a reasonable
degree of transparency cannot be
assured, to safeguard material nonpublic information relating to the
Fund’s portfolio, and to ensure fair and
orderly markets for the Shares of the
Fund.
IV. Solicitation of Comments on
Amendment No. 4 to the Proposed Rule
Change
Interested persons are invited to
submit written data, views and
arguments concerning whether
Amendment No. 4 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 number SR–
NYSEARCA–2024–27 on the subject
line.
58 See
NYSE Arca Rule 8.500–E(d)(2).
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Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSEARCA–2024–27. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSEARCA–2024–27 and should be
submitted on or before December 12,
2024.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 4
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 4, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 4 in the Federal
Register. Amendment No. 4 to the
proposed rule change clarified the
creation and redemptions procedures
for the Shares and provided additional
clarification relating to statements
concerning the holdings of the Fund
and the custody of cash and cash
equivalents. The changes and additional
information in Amendment No. 4 assist
the Commission in evaluating the
Exchange’s proposal and in determining
that it is consistent with the Act. The
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Frm 00181
Fmt 4703
Sfmt 4703
amended filing is now substantially
similar to other spot bitcoin ETPs that
the Commission has approved with
respect to the Fund’s spot bitcoin
holdings, and as discussed above in
Section III.A, the spot bitcoin market
and the CME bitcoin futures market
remain consistently highly correlated.
Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Act,59 to approve the proposed
rule change, as modified by Amendment
No. 4, on an accelerated basis.
VI. Conclusion
This approval order is based on all of
the Exchange’s representations,
including those set forth above and in
Amendment No. 4. For the foregoing
reasons, the Commission finds that the
proposed rule change, as modified by
Amendment No. 4, is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
exchange, and in particular, Section
6(b)(5) and Section 11A(a)(1)(C)(iii) of
the Act.60
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,61 that the
proposed rule change (SR–NYSEARCA–
2024–27), as modified by Amendment
No. 4, be, and it hereby is, approved on
an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.62
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024–27221 Filed 11–20–24; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101638; File No. SR–
NASDAQ–2024–066]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend Its
Schedule of Credits at Equity 7,
Section 118(a)
November 15, 2024.
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 November
1, 2024, The Nasdaq Stock Market LLC
59 15
U.S.C. 78s(b)(2).
U.S.C. 78f(b)(5); 15 U.S.C. 78k–
1(a)(1)(C)(iii).
61 15 U.S.C. 78s(b)(2).
62 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
60 15
E:\FR\FM\21NON1.SGM
21NON1
]]>Agencies
[Federal Register Volume 89, Number 225 (Thursday, November 21, 2024)]
[Notices]
[Pages 92252-92266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27221]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101641; File No. SR-NYSEARCA-2024-27]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendment No. 4 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 4, To List and Trade
Shares of the 7RCC Spot Bitcoin and Carbon Credit Futures ETF Under
NYSE Arca Rule 8.500-E (Trust Units)
November 15, 2024.
I. Introduction
On March 13, 2024, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares of the 7RCC Spot Bitcoin
and Carbon Credit Futures ETF under NYSE Arca Rule 8.500-E (Trust
Units). The proposed rule change was published for comment in the
Federal Register on March 26, 2024.\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. 99801 (Mar. 20,
2024), 89 FR 21104. The Commission received only one comment on the
proposed rule change, which is available at: https://www.sec.gov/comments/sr-nysearca-2024-27/srnysearca202427.htm. The comment
letter was not germane to the proposed rule change and instead
concerned voluntary carbon markets more broadly. See Letter from
James D. Milas (Mar. 27, 2024). As stated below, the Exchange
represents that the Fund will not provide exposure to voluntary
carbon markets.
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On May 2, 2024, 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\ On June 20, 2024, the Commission instituted proceedings
pursuant to Section 19(b)(2)(B) of the Act \6\ to determine whether to
approve or disapprove the proposed rule change.\7\ On September 3,
2024, pursuant to Section 19(b)(2) of the Act,\8\ the Commission
designated a longer period for Commission action on the proposed rule
change.\9\
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 100050, 89 FR 38932
(May 8, 2024).
\6\ 15 U.S.C. 78s(b)(2)(B).
\7\ See Securities Exchange Act Release No. 100390, 89 FR 53466
(June 26, 2024).
\8\ 15 U.S.C. 78s(b)(2).
\9\ See Securities Exchange Act Release No. 100896, 89 FR 73135
(Sept. 9, 2024). The Commission, pursuant to Section 19(b)(2) of the
Act, designated Nov. 21, 2024 as the date by which the Commission
shall either approve or disapprove the proposed rule change.
---------------------------------------------------------------------------
On September 30, 2024, the Exchange filed Amendment No. 1 to the
proposed rule change, which amended and replaced the proposed rule
change in its entirety as originally filed.\10\ On October 3, 2024, the
Exchange filed Partial Amendment No. 2, which amended the proposed rule
change, as modified by Amendment No. 1.\11\ On October 18, 2024, the
Exchange filed Amendment No. 3 to the proposed rule change, which
amended and replaced the proposed rule change in its entirety, as
modified by Amendment No. 1 and Partial Amendment No. 2.\12\ On October
24, 2024, the Exchange filed Amendment No. 4 to the proposed rule
change, which amended and replaced
[[Page 92253]]
the proposed rule change in its entirety, as modified by Amendment No.
3.\13\
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\10\ Amendment No. 1 is available on the Commission's website
at: https://www.sec.gov/comments/sr-nysearca-2024-27/srnysearca202427-527675-1515762.pdf.
\11\ Partial Amendment No. 2 is available on the Commission's
website at: https://www.sec.gov/comments/sr-nysearca-2024-27/srnysearca202427-527695-1515782.pdf.
\12\ Amendment No. 3 is available on the Commission's website
at: https://www.sec.gov/comments/sr-nysearca-2024-27/srnysearca202427-530955-1525482.pdf.
\13\ Amendment No. 4 is available on the Commission's website
at: https://www.sec.gov/comments/sr-nysearca-2024-27/srnysearca202427-534335-1532242.pdf.
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The Commission is publishing this notice to solicit comments on
Amendment No. 4 to the proposed rule change from interested persons,
and is approving the proposed rule change, as modified by Amendment No.
4, on an accelerated basis.
II. The Exchange's Description of the Proposal, as Modified by
Amendment No. 4
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade shares (``Shares'') of the
7RCC Spot Bitcoin and Carbon Credit Futures ETF (the ``Fund'') under
NYSE Arca Rule 8.500-E.\14\
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\14\ NYSE Arca Rule 8.500-E governs the listing and trading of
Trust Units, which are securities issued by a trust or other similar
entity that is constituted as a commodity pool that holds
investments comprising or otherwise based on any combination of
futures contracts, options on futures contracts, forward contracts,
swap contracts, commodities, and/or securities.
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The Fund is a series of the Tidal Commodities Trust I (the
``Trust''), a Delaware statutory trust organized on February 10,
2023.\15\ The Trust has no fixed termination date. The Trust will not
be registered as an investment company under the Investment Company Act
of 1940, as amended,\16\ and is not required to register under such
act.
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\15\ On December 18, 2023, the Trust filed with the Commission a
registration statement on Form S-1 (File No. 333-276125) (the
``Registration Statement'') under the Securities Act of 1933 (15
U.S.C. 77a) (the ``Securities Act''). On October 7, 2024, the Trust
filed Amendment No. 1 to the Registration Statement. The description
of the operation of the Fund herein is based, in part, on the
Registration Statement. The Registration Statement is not yet
effective and the Shares will not trade on the Exchange until such
time that the Registration Statement is effective.
\16\ 15 U.S.C. 80a-1.
---------------------------------------------------------------------------
The sponsor of the Trust is Tidal Investments LLC (the
``Sponsor''). The Sponsor is registered as a commodity pool operator
and a commodity trading adviser with the Commodity Futures Trading
Commission (the ``CFTC'') and is a member of the National Futures
Association.
The administrator of the Fund is Tidal ETF Services (the
``Administrator''). The custodian of the Fund's bitcoin holdings is
Gemini Trust Company, LLC (the ``Bitcoin Custodian''). The Sponsor will
appoint a non-digital custodian (the ``Non-Digital Custodian'' and,
together with the Bitcoin Custodian, the ``Custodians''), who will
serve as the Fund's custodian with respect to its cash and cash
equivalents,\17\ as well as any investments in connection with its
exposure to Carbon Credit Futures, as defined below.
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\17\ ``Cash Equivalents'' shall mean such investments that, in
the view of the Sponsor, are of high credit quality and liquidity
and can be converted to cash quickly. Such investments shall
include: (a) cash; (b) debt securities issued or directly or
indirectly fully guaranteed or insured by the United States or any
agency or instrumentality thereof (such as U.S. Treasury Bills); (c)
commercial paper or finance company paper of sufficient credit
quality in the view of the Sponsor; or (d) money market mutual
funds. Additionally, the Fund will implement foreign exchange
dollarization using spot market or foreign exchange forwards and
customary foreign exchange hedging instruments.
---------------------------------------------------------------------------
The Fund's Investment Objective and Strategy
According to the Registration Statement, the Fund's investment
objective is to reflect the daily changes of the price of bitcoin and
the value of carbon credit futures contracts (``Carbon Credit
Futures''), as represented by the Vinter Bitcoin Carbon Credits Index
(the ``Index''), less expenses from the Fund's operations.
The Fund will pursue its investment objective by investing 80% of
its assets in bitcoin and the remaining 20% of its assets in Carbon
Credit Futures that provide exposure to Carbon Credit Futures
represented by the Index. The Index seeks to provide exposure to both
bitcoin and Carbon Credit Futures and is designed to track the
performance of investing in a portfolio comprised of 80% of bitcoin and
20% Carbon Credit Futures. The Index's Carbon Credit Futures are linked
to the value of emissions allowances issued under the following ``cap-
and-trade'' regimes: the European Union Emissions Trading System (``EU
ETS''), the California Carbon Allowance (``CCA''), and the Regional
Greenhouse Gas Initiative (``RGGI''). The Fund will gain exposure to
these Carbon Credit Futures only by investing directly in only such
futures contracts. The Fund does not intend to invest in Carbon Credit
Futures specifically linked to bitcoin mining or other related
processes. As further discussed below, the Fund will not provide
exposure to voluntary carbon markets.
Carbon Credit Futures
According to the Registration Statement, Carbon Credit Futures are
futures contracts on emissions allowances issued by various ``cap-and-
trade'' regulatory regimes that seek to reduce greenhouse gases over
time. A cap-and-trade regime typically involves a regulator setting a
limit on the total amount of specific greenhouse gases (``GHG'') (such
as carbon dioxide (``CO2'')) that can be emitted by
regulated entities. Capping and reducing the cap on GHGs is viewed as a
key policy tool in reaching climate change objectives. The regime is
designed to promote sustainable development by putting a price on
carbon emissions. The regulator will then issue or sell ``emissions
allowances'' to regulated entities, which in turn may buy or sell the
emissions allowances to the open market. To the extent that the
regulator may then reduce the cap on emission allowances, regulated
entities are incentivized to reduce their emissions; otherwise, they
must purchase additional emission allowances on the open market, where
the price of such allowances will likely be increasing as a result of
demand, and regulated entities that reduce their emissions will be able
to sell unneeded emission allowances for profit. An emission allowance
or carbon credit is a unit of emissions (typically one ton of
CO2) that the owner of the allowance or credit is permitted
to emit. Futures contracts linked to the value of emission allowances
are known as carbon credit futures.
Overview of the Bitcoin Industry and Market
Bitcoin
According to the Registration Statement, bitcoin is the digital
asset that is native to, and created and transmitted through the
operations of, the peer-to-peer ``Bitcoin Network,'' a decentralized
network of computers that operates on cryptographic protocols. No
single entity owns or operates the Bitcoin Network, the infrastructure
of which is collectively maintained by a decentralized user base. The
Bitcoin Network allows people to exchange tokens of value, called
bitcoin, which are recorded on a public transaction ledger known as the
Blockchain. Bitcoin
[[Page 92254]]
can be used to pay for goods and services, or it can be converted to
fiat currencies, such as the U.S. dollar, at rates determined on
digital asset trading platforms or in individual end-user-to-end-user
transactions under a barter system. Although nascent in use, bitcoin
may be used as a medium of exchange, unit of account or store of value.
The Bitcoin Network is decentralized and does not require
governmental authorities or financial institution intermediaries to
create, transmit, or determine the value of bitcoin. In addition, no
party may easily censor transactions on the Bitcoin Network. As a
result, the Bitcoin Network is often referred to as decentralized and
censorship resistant.
The value of bitcoin is determined by the supply of and demand for
bitcoin. New bitcoin are created and rewarded to the parties providing
the Bitcoin Network's infrastructure (``miners'') in exchange for their
expending computational power to verifying transactions and add them to
the ``Blockchain.'' The Blockchain is effectively a decentralized
database that includes all blocks that have been solved by miners and
it is updated to include new blocks as they are solved. Each bitcoin
transaction is broadcast to the Bitcoin Network and, when included in a
block, recorded in the Blockchain. As each new block records
outstanding bitcoin transactions, and outstanding transactions are
settled and validated through such recording, the Blockchain represents
a complete, transparent, and unbroken history of all transactions of
the Bitcoin Network.
Bitcoin Network
Bitcoin was first described in a white paper released in 2008 and
published under the pseudonym ``Satoshi Nakamoto.'' The protocol
underlying Bitcoin was subsequently released in 2009 as open-source
software and currently operates on a worldwide network of computers.
The Bitcoin Network and its software have been under active development
since that time by a group of computer engineers known as ``core
developers,'' each of whom operates under a volunteer basis and without
strict hierarchical administration.
The Bitcoin Network utilizes a digital asset known as ``bitcoin,''
which can be transferred among parties via the internet. Unlike other
means of electronic payments such as credit card transactions, one of
the advantages of bitcoin is that it can be transferred without the use
of a central administrator or clearing agency. As a central party is
not necessary to administer bitcoin transactions or maintain the
bitcoin ledger, the term decentralized is often used in descriptions of
bitcoin. Unless it is using a third-party service provider, a party
transacting in bitcoin is generally not afforded some of the
protections that may be offered by intermediaries.
The first step in directly using the Bitcoin Network for
transactions is to download specialized software referred to as a
``bitcoin wallet.'' A user's bitcoin wallet can run on a computer or
smartphone and can be used both to send and to receive bitcoin. Within
a bitcoin wallet, a user can generate one or more unique ``bitcoin
addresses,'' which are conceptually similar to bank account numbers.
After establishing a bitcoin address, a user can send or receive
bitcoin from his or her bitcoin address to or from another user's
bitcoin address. Sending bitcoin from one bitcoin address to another is
similar in concept to sending a bank wire from one person's bank
account to another person's bank account; however, such transactions
are not managed by an intermediary and erroneous transactions generally
may not be reversed or remedied once sent.
The amount of bitcoin associated with each bitcoin address, as well
as each bitcoin transaction to or from such bitcoin address, is
transparently reflected in the Blockchain and can be viewed by websites
that operate as ``blockchain explorers.'' Copies of the Blockchain
exist on thousands of computers on the Bitcoin Network throughout the
internet. A user's bitcoin wallet will either contain a copy of the
blockchain or be able to connect with another computer that holds a
copy of the blockchain. The innovative design of the Bitcoin Network
protocol allows each Bitcoin user to trust that their copy of the
Blockchain will generally be updated consistent with each other user's
copy.
When a Bitcoin user wishes to transfer bitcoin to another user, the
sender must first request a Bitcoin address from the recipient. The
sender then uses his or her Bitcoin wallet software to create a
proposed transaction that is confirmed and settled when included in the
Blockchain. The transaction would reduce the amount of bitcoin
allocated to the sender's bitcoin address and increase the amount
allocated to the recipient's bitcoin address, in each case by the
amount of bitcoin desired to be transferred. The transaction is
completely digital in nature, similar to a file on a computer, and it
can be sent to other computers participating in the Bitcoin Network;
however, the use of cryptographic verification is believed to prevent
the ability to duplicate or counterfeit bitcoin.
Bitcoin Protocol
The Bitcoin protocol is built using open-source software, meaning
any developer can review the underlying code and suggest changes. There
is no official company or group that is responsible for making
modifications to Bitcoin. There are, however, a number of individual
developers that regularly contribute to a specific distribution of
Bitcoin software known as the ``Bitcoin Core,'' which is maintained in
an open-source repository on the website Github. There are many other
compatible versions of Bitcoin software, but Bitcoin Core provides the
de-facto standard for the Bitcoin protocol, also known as the
``reference software.'' The core developers for Bitcoin Core operate
under a volunteer basis and without strict hierarchical administration.
Significant changes to the Bitcoin protocol are typically
accomplished through a so-called ``Bitcoin Improvement Proposal'' or
``BIP.'' Such proposals are generally posted on websites, and the
proposals explain technical requirements for the protocol change as
well as reasons why the change should be accepted. Upon its inclusion
in the most recent version of Bitcoin Core, a new BIP becomes part of
the reference software's Bitcoin protocol. Several BIPs have been
implemented since 2011 and have provided various new features and
scaling improvements.
Because Bitcoin has no central authority, updating the reference
software's Bitcoin protocol will not immediately change the Bitcoin
Network's operations. Instead, the implementation of a change is
achieved by users and transaction validators (known as miners)
downloading and running updated versions of Bitcoin Core or other
Bitcoin software that abides by the new Bitcoin protocol. Users and
miners must accept any changes made to the Bitcoin source code by
downloading a version of their Bitcoin software that incorporates the
proposed modification of the Bitcoin Network's source code. A
modification of the Bitcoin Network's source code is only effective
with respect to those Bitcoin users and miners who download it. If an
incompatible modification is accepted by a less than overwhelming
percentage of users and miners, a division in the Bitcoin Network will
occur such that one network will run the pre-modification source code
and the other network will run the modified
[[Page 92255]]
source code. Such a division is known as a ``fork'' in the Bitcoin
Network.
Such a fork in the Bitcoin Network occurred on August 1, 2017, when
a group of developers and miners accepted certain changes to the
Bitcoin Network software intended to increase transaction capacity.
Blocks mined on this network now diverge from blocks mined on the
Bitcoin Network, which has resulted in the creation of a new blockchain
whose digital asset is referred to as ``bitcoin cash.'' Bitcoin and
bitcoin cash now operate as separate, independent networks, and have
distinct related assets (bitcoin and bitcoin cash). Additional forks
have followed the bitcoin cash fork, and it is possible that additional
``forks'' will occur in the future.\18\
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\18\ The Fund may from time to time come into possession of
Incidental Rights and/or IR Virtual Currency by virtue of its
ownership of bitcoin, generally through a fork in the Blockchain, an
airdrop offered to holders of bitcoin or other similar event.
``Incidental Rights'' are rights to acquire, or otherwise establish
dominion and control over, any virtual currency or other asset or
right, which rights are incident to the Fund's ownership of bitcoin
and arise without any action of the Fund, or of the Sponsor on
behalf of the Fund. ``IR Virtual Currency'' is any virtual currency
tokens, or other asset or right, acquired by the Fund through the
exercise of any Incidental Right. Although the Fund may be permitted
to take certain actions with respect to Incidental Rights and IR
Virtual Currency, at this time the Fund will prospectively
irrevocably abandon any Incidental Rights and IR Virtual Currency.
In the event the Fund seeks to change this position, the Exchange
would file a subsequent proposed rule change with the Commission.
---------------------------------------------------------------------------
Bitcoin Transactions
A bitcoin transaction is similar in concept to an irreversible
digital check. The transaction contains the sender's bitcoin address,
the recipient's bitcoin address, the amount of bitcoin to be sent, a
transaction fee and the sender's digital signature. Bitcoin
transactions are secured by cryptography known as public-private key
cryptography, represented by the bitcoin addresses and digital
signature in a transaction's data file. Each Bitcoin Network address,
or ``wallet,'' is associated with a unique ``public key'' and ``private
key'' pair, both of which are lengthy alphanumeric codes, derived
together and possessing a unique relationship.
The use of key pairs is a cornerstone of the Bitcoin Network
technology. This is because the use of a private key is the only
mechanism by which a bitcoin transaction can be signed. If a private
key is lost, the corresponding bitcoin is thereafter permanently non-
transferable. Moreover, the theft of a private key provides the thief
immediate and unfettered access to the corresponding bitcoin. Bitcoin
users must therefore understand that in this regard, bitcoin is similar
to cash: that is, the person or entity in control of the private key
corresponding to a particular quantity of bitcoin has de facto control
of the bitcoin. For large quantities of bitcoin, holders often embrace
sophisticated security measures.
The public key is visible to the public and analogous to the
Bitcoin Network address. The private key is a secret and is used to
digitally sign a transaction in a way that proves the transaction has
been signed by the holder of the public-private key pair, without
having to reveal the private key. A user's private key must be kept
safe in accordance with appropriate controls and procedures to ensure
it is used only for legitimate and intended transactions. If an
unauthorized third person learns of a user's private key, that third
person could apply the user's digital signature without authorization
and send the user's bitcoin to their or another bitcoin address,
thereby stealing the user's bitcoin. Similarly, if a user loses his
private key and cannot restore such access (e.g., through a backup),
the user may permanently lose access to the bitcoin associated with
that private key and bitcoin address.
To prevent the possibility of double-spending bitcoin, each
validated transaction is recorded, time stamped and publicly displayed
in a ``block'' in the Blockchain, which is publicly available. Thus,
the Bitcoin Network provides confirmation against double-spending by
memorializing every transaction in the Blockchain, which is publicly
accessible and downloaded in part or in whole by all users of the
Bitcoin Network software program. Any user may validate, through their
Bitcoin wallet or a blockchain explorer, that each transaction in the
Bitcoin Network was authorized by the holder of the applicable private
key, and Bitcoin Network mining software consistent with reference
software requirements validates each such transaction before including
it in the Blockchain. This cryptographic security ensures that bitcoin
transactions may not generally be counterfeited, although it does not
protect against the ``real world'' theft or coercion of use of a
Bitcoin user's private key, including the hacking of a Bitcoin user's
computer or a service provider's systems.
A Bitcoin transaction between two parties is recorded if such
transaction is included in a valid block added to the Blockchain. A
block is accepted as valid through consensus formation among Bitcoin
Network participants. Validation of a block is achieved by confirming
the cryptographic hash value included in the block's data and by the
block's addition to the longest confirmed blockchain on the Bitcoin
Network. For a transaction, inclusion in a block on the Blockchain
constitutes a ``confirmation'' of validity. As each block contains a
reference to the immediately preceding block, additional blocks
appended to and incorporated into the Blockchain constitute additional
confirmations of the transactions in such prior blocks, and a
transaction included in a block for the first time is confirmed once
against double-spending. This layered confirmation process makes
changing historical blocks (and reversing transactions) exponentially
more difficult the further back one goes in the Blockchain.
[[Page 92256]]
Bitcoin Mining--Creation of New Bitcoins
The process by which bitcoin are created and bitcoin transactions
are verified is called ``mining.'' To begin mining, a user, or miner,
can download and run a mining ``client,'' which, like regular Bitcoin
Network software programs, turns the user's computer into a ``node'' on
the Bitcoin Network that validates blocks, and, in this case, gives
such user the ability to validate transactions and add new blocks of
transactions to the Blockchain.
Miners, through the use of the bitcoin software program, engage in
a set of prescribed complex mathematical calculations in order to
verify transactions and compete for the right to add a block of
verified transactions to the Blockchain and thereby confirm bitcoin
transactions included in that block's data. The miner who successfully
``solves'' the complex mathematical calculations has the right to add a
block of transactions to the Blockchain and is then rewarded with new
bitcoin, the amount of which is determined by the Bitcoin protocol,
plus any transaction fees paid for the transactions included in such
block.
Confirmed and validated bitcoin transactions are recorded in blocks
added to the Blockchain. Each block contains the details of some or all
of the most recent transactions that are not memorialized in prior
blocks, as well as a record of the award of bitcoin to the miner who
added the new block. Each unique block can only be solved and added to
the Blockchain by one miner; therefore, all individual miners and
mining pools on the Bitcoin Network are engaged in a competitive
process of constantly increasing their computing power to improve their
likelihood of solving for new blocks. As more miners join the Bitcoin
Network and its processing power increases, the Bitcoin Network adjusts
the complexity of the block-solving equation to maintain a
predetermined pace of adding a new block to the Blockchain
approximately every ten minutes.
Mathematically Controlled Supply
The method for creating new bitcoin is mathematically controlled in
a manner so that the supply of bitcoin grows at a limited rate pursuant
to a pre-set schedule. The number of bitcoin awarded for solving a new
block is automatically halved every 210,000 blocks. Thus, the current
fixed reward for solving a new block is 6.25 bitcoin per block; the
reward decreased from 25 bitcoin in July 2016 and 12.5 in May 2020. It
is estimated to halve again in April or May of 2024. This deliberately
controlled rate of bitcoin creation means that the number of bitcoin in
existence will never exceed 21 million and that bitcoin cannot be
devalued through excessive production unless the Bitcoin Network's
source code (and the underlying protocol for bitcoin issuance) is
altered. As of November 2023, approximately 19.5 million bitcoin are
outstanding. The date when the 21 million bitcoin limitation will be
reached is estimated to be the year 2140.
Bitcoin Market and Bitcoin Trading Platforms
In addition to using bitcoin to engage in transactions, investors
may purchase and sell bitcoin to speculate as to the value of bitcoin
in the bitcoin market, or as a long-term investment to diversify their
portfolio. The value of bitcoin within the market is determined, in
part, by: (i) the supply of and demand for bitcoin in the bitcoin
market; (ii) market expectations for the expansion of investor interest
in bitcoin and the adoption of bitcoin by individuals; (iii), the
number of merchants that accept bitcoin as a form of payment; and (iv)
the volume of private end-user-to-end-user transactions.
Although the value of bitcoin is determined by the value that two
transacting market participants place on bitcoin through their
transaction, the most common means of determining a reference value is
by surveying one or more trading platforms where secondary markets for
bitcoin exist. The most prominent digital asset trading platforms
neither report trade information nor are they regulated in the same way
as a national securities exchange. As such, there is some difference in
the form, transparency, and reliability of trading data from digital
asset trading platforms. Generally speaking, bitcoin data is available
from these trading platforms with publicly disclosed valuations for
each executed trade, measured by one or more fiat currencies such as
the U.S. dollar or Euro or another digital asset such as ether. OTC
dealers or market makers do not typically disclose their trade data.
Currently, there are many digital asset trading platforms operating
worldwide and trading platforms represent a substantial percentage of
bitcoin buying and selling activity and, therefore, provide large data
sets for market valuation of bitcoin. A digital asset trading platform
provides investors with a way to purchase and sell bitcoin, similar to
stock exchanges like the New York Stock Exchange or Nasdaq, which
provide ways for investors to buy stocks and bonds in the ``secondary
market.'' Unlike stock exchanges, which are regulated to monitor
securities trading activity, digital asset trading platforms are
largely regulated as money services businesses (or a foreign regulatory
equivalent) and are required to monitor for and detect money-laundering
and other illicit financing activities that may take place on the
platform. Digital asset trading platforms operate websites designed to
permit investors to open accounts with the trading platform and then
purchase and sell bitcoin.
As with conventional stock exchanges, an investor opening a trading
account and wishing to transact at a digital asset trading platform
must deposit an accepted government-issued currency into their account,
or a previously acquired digital asset. The process of establishing an
account with a digital asset trading platform and trading bitcoin is
different from, and should not be confused with, the process of users
sending bitcoin from one bitcoin address to another bitcoin address,
such as to pay for goods and services. This latter process is an
activity that occurs wholly within the confines of the Bitcoin network,
while the former is an activity that occurs largely on private websites
and databases owned by the digital asset trading platform.
Overview of Commodity Futures Markets and Carbon Markets
Futures Markets
According to the Registration Statement, the Fund will invest in
Carbon Credit Futures. A futures contract is a standardized contract
traded on, or subject to the rules of, an exchange that calls for the
future delivery of a specified quantity and type of a particular
underlying asset at a specified time and place or alternatively may
call for cash settlement. Futures contracts are traded on a wide
variety of underlying assets, including bonds, interest rates,
agricultural products, stock indexes, currencies, energy, metals,
economic indicators and statistical measures. The notional size and
calendar term futures contracts on a particular underlying asset are
identical and are not subject to any negotiation, other than with
respect to price and the number of contracts traded between the buyer
and seller.
Certain futures contracts settle in cash. The cash settlement
amount reflects the difference between the contract purchase/sale price
and the contract settlement price. The cash settlement mechanism avoids
the potential for either side to have to deliver the underlying asset.
For other
[[Page 92257]]
futures contracts, the contractual obligations of a buyer or seller may
generally be satisfied by taking or making physical delivery of the
underlying asset or by making an offsetting sale or purchase of an
identical futures contract on the same or linked exchange before the
designated date of delivery. The difference between the price at which
the futures contract is purchased or sold and the price paid for the
offsetting sale or purchase, after allowance for brokerage commissions
and exchange fees, constitutes the profit or loss to the trader.
Futures contracts involve, to varying degrees, elements of market
risk. Additional risks associated with the use of futures contracts are
imperfect correlation between movements in the price of the futures
contracts and the level of the underlying benchmark and the possibility
of an illiquid market for a futures contract. With futures contracts,
there is minimal but some counterparty risk to a fund since futures
contracts are exchange traded and the exchange's clearing house, as
counterparty to all exchange-traded futures contracts, effectively
guarantees futures contracts against default. Many futures exchanges
and boards of trade limit the amount of fluctuation permitted in
futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit or trading may be suspended for
specified times during the trading day.\19\ Futures contracts prices
could move to the limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures
positions.
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\19\ The calculation of the Index will be based on the last
traded price for each of the Carbon Credit Futures components,
regardless of whether trading has been limited or suspended during a
trading day.
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Carbon Markets
Carbon markets are designed to reduce GHG emissions and promote
sustainable development by putting a price on carbon. Carbon markets
are markets where GHG emissions are commodified as a tradable unit
either as an emission allowance in government compliance markets or as
a verified emission reduction/removal credit in voluntary markets.
There are two types of instruments that are traded in carbon markets:
carbon credits (sometimes called ``allowances'') and carbon offsets.
The two main types of carbon markets are compliance carbon markets
(``CCMs'') and voluntary carbon markets (``VCMs''). Carbon Credit
Futures are an expansion of the carbon market. Carbon Credit Futures
are credit instruments where the buyer seeks to have exposure to CCMs
or VCM carbon offset projects, but without directly buying or selling
allowances or investing in any projects.\20\
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\20\ The Fund will not provide any exposure to VCMs.
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CCMs are established by governments and operate under a cap-and-
trade system. Cap-and-trade regimes set emission limits (i.e., the
right to emit a certain quantity of GHG emissions), which can be
allocated or auctioned to the parties in the mechanism up to the total
emissions cap. In these types of markets, a regulator will define an
allowed maximum level of GHG emissions (the ``Cap'') for a certain
group of entities (e.g., countries, companies, or facilities). The Cap
is then subdivided into distinct emission allowances, which are
distributed by regulated entities. To stay in compliance with the
regulator, the covered entities need to submit one allowance for each
ton of carbon dioxide equivalent emitted during a compliance period
(usually a year). The initial allocation of allowances to covered
entities can be free of charge, partially free, and/or sold at auction
by the regulator.
The Index
The Index is designed to track the performance of investing in a
portfolio comprised of 80% bitcoin and 20% Carbon Credit Futures, which
are linked to the value of emissions allowances issued under the
following cap-and-trade regimes: the European Union Emissions Trading
System, the California Carbon Allowance, and Regional Greenhouse Gas
Initiative. The purpose of the Index is to obtain exposure to both
bitcoin and Carbon Credit Futures. Because the Fund's investment
objective is to track the daily changes of the price of bitcoin and
Carbon Credit Futures, changes in the price of the Shares will vary
from changes in the spot price of bitcoin, carbon credits, and Carbon
Credit Futures individually.
Invierno AB (``Vinter'') administers and calculates the bitcoin
portion of the Index. According to the Sponsor, Vinter is a trusted
index provider with experience constructing and maintaining indexes
relied upon by banks and exchange-traded products. Vinter is a
registered benchmark administrator governed by the European Benchmarks
Regulation (2016/1011) (``BMR'') and included in the European
Securities and Markets Authority's register over benchmark
administrators.
To calculate the value of bitcoin, Vinter selects bitcoin trading
platforms based on the criteria described below in ``Valuation of
Bitcoin'' and takes the last price on each trading platform. Vinter
then takes the median price across these trading platforms and
calculates the time-weighted average price between 3:00 p.m. to 4:00
p.m. Eastern Time (``E.T.'') to determine the value of bitcoin at 4:00
p.m. E.T.
The Carbon Credit Futures component of the Index is calculated by
Solactive and built with a combination of three Carbon Credit Futures
indices, each of which is calculated and administered by a third party:
(i) Solactive Carbon European Union Allowance Futures ER Index
(SOCARBN), which tracks EU ETS futures; (ii) Solactive California
Carbon Rolling Futures ER Index (SOCCAER), which tracks CCA futures;
and (iii) Solactive Futures Series Regional Greenhouse Gas Rolling
Futures Index, which tracks RGGI futures. The weights of the components
are adjusted once per year (in November) and the weights are
proportional to the trading volume over the last six months. As of the
last quarterly rebalancing date, September 10, 2024, the weighting of
Carbon Credit Futures in the Index was, and the weighting of Carbon
Credit Futures in the Fund would have been, 18% EU ETS futures; 2% CCA
futures; and 0% RGGI futures. The combination of exposure to the three
underlying indices provides the Index with returns tied to futures
contracts on carbon credits connected to EU ETS, CCA, and RGGI. The
value of the Carbon Credit Futures that comprise the Index will be
based on market prices. The Index includes only Carbon Credit Futures
that mature in December of the next one to two years.\21\ Although the
Carbon Credit Futures in the Index are physically settled futures
contracts, the Sponsor does not anticipate that the Fund will hold
Carbon Futures until expiry or take or make delivery of any physical
commodities. Instead, the Sponsor expects to roll Carbon Credit Futures
in the Fund's portfolio approximately two weeks prior to expiry. Thus,
the Sponsor expects to sell near to expiry Carbon Credit Futures and
reinvest the proceeds in new Carbon Credit Futures to achieve the
Fund's investment objective.
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\21\ The Index includes front-month futures contracts that are
rolled each month. The Index rolls over five business days into the
new contract, with an expiration of December of the next calendar
year.
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Vinter is the benchmark administrator for the bitcoin portion of
the Index. As benchmark administrator for the bitcoin
[[Page 92258]]
portion of the Index, Vinter is the central recipient of input data and
evaluates the integrity and accuracy of input data on a consistent
basis. Solactive is the benchmark administrator for the Carbon Credit
Futures portion of the Index. Solactive calculates the value of the
Carbon Credit Futures portion of the Index and the value of the overall
Index.
The Index is rebalanced quarterly, starting at the end of January.
After a rebalance, the portfolio is updated so that its current weights
per asset equal the rebalancing weights per asset.
Valuation of Bitcoin
The Fund uses the same methodology that the Index does to determine
the value of bitcoin for purposes of calculating the NAV of the Fund.
The Index requires each digital asset trading platform used to
calculate the price of bitcoin to meet each of the following criteria:
Has had operating history as a digital asset trading
platform for a minimum of two years;
Implemented trading, deposits, and withdrawal fees for a
minimum of one month without interruption;
Met a minimum monthly volume threshold of $30 million with
respect to total trading volume;
Provided reliable, continuous, and valid market data for a
minimum of one month;
Offered the possibility to withdraw and deposit for a
minimum of one month, settling in two to seven business days;
Chosen a jurisdiction of incorporation that offers
sufficient investor protection, such as Financial Action Task Force
(``FATF''), FATF-style regional bodies (``FSRBs''), or Moneyval member
states;
Complied with relevant anti-money laundering and know-
your-customer regulations;
Cooperated with requests from Vinter and relevant
regulatory bodies;
Has not been domiciled in a jurisdiction subject to EU
restrictive measures (sanctions);
Provided information concerning ownership and corporate
structure; and
Has not been declared unlawful by any governmental
authority or agency with jurisdiction over the exchange.
Digital asset trading platforms meeting these criteria are used to
calculate the price of the bitcoin portion of the Index (the ``Index
Pricing Sources''). Vinter reviews the eligibility of digital asset
trading platforms for inclusion in the Index twice a year, and such
platforms must meet Vinter's criteria at the time of such review.\22\
The selection of Index Pricing Sources may evolve from time to time,
and Vinter may make changes to the eligibility requirements.\23\ As of
the date of this filing, the following digital asset trading platforms
are used to calculate the Index price: Kraken, Coinbase, Bitstamp,
Itbit, Gemini, Gate.io, and Crypto.com.
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\22\ According to the Sponsor, Vinter does not require a minimum
number of Index Pricing Sources comprising the Index.
\23\ According to the Sponsor, Vinter may, as permitted under
BMR Article 12, change the eligibility requirements for Index
Pricing Sources if, for example, market conditions evolved in such a
way that the requirements no longer reflected the intended economic
reality. Any material change to the eligibility requirements would
be subject to the notification and consultation provisions detailed
in Vinter's Benchmark Statement.
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Custody of the Fund's Assets
The Bitcoin Custodian will establish accounts that hold the
bitcoins deposited with the Bitcoin Custodian on behalf of the Fund,
pursuant to the agreement between the Trust, on behalf of the Fund, and
the Bitcoin Custodian (the ``Bitcoin Custody Agreement''). The Non-
Digital Custodian will custody the Fund's investments in cash and cash
equivalents in connection with its exposure to the returns of the
Carbon Credit Futures portion of the Index.
With respect to the settlement of Shares in response to the
placement of creation orders and redemption orders from Authorized
Purchasers (as defined below), the Sponsor will retain discretion to
determine which Custodians, to the extent there are multiple custodians
for Bitcoin or multiple custodians for cash and cash equivalents in
connection with Carbon Credit Futures, are selected to facilitate the
respective order.
The Fund will maintain ownership and control of bitcoin in a manner
consistent with good delivery requirements for spot commodity
transactions.
Custody of Bitcoin
The Fund is responsible for acquiring bitcoin from a ``Bitcoin
Trading Counterparty.'' \24\ Once the bitcoin has been transferred to
the Bitcoin Custodian, it will be stored pursuant to the terms of the
Bitcoin Custody Agreement.
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\24\ Each Bitcoin Trading Counterparty must be approved by the
Sponsor on behalf of the Fund before the Fund may engage in
transactions with the entity. The Sponsor continuously reviews all
approved Bitcoin Trading Counterparties and will reject the approval
of any previously approved Bitcoin Trading Counterparty if new
information arises regarding the entity that puts the
appropriateness of that entity as an approved Bitcoin Trading
Counterparty in doubt. The Bitcoin Trading Counterparties with which
the Sponsor will engage in bitcoin transactions are unaffiliated
third parties of the Trust and Sponsor and are not acting as agents
of the Trust, the Sponsor, or any Authorized Purchaser (as defined
below), and all transactions will be done on an arms-length basis.
There will be no contractual relationship between each Bitcoin
Trading Counterparty and the Trust, the Sponsor, or any Authorized
Purchaser. When seeking to purchase bitcoin on behalf of the Fund,
the Sponsor will seek to purchase bitcoin at commercially reasonable
prices and terms from any of the approved Bitcoin Trading
Counterparties. Once agreed upon, the transaction will generally
occur on an ``over-the-counter'' basis.
---------------------------------------------------------------------------
Bitcoin private keys are stored in two different forms: ``hot''
storage, whereby the private keys are stored on secure, internet-
connected devices, and ``cold'' storage, where digital currency private
keys are stored completely offline. The Bitcoin Custody Agreement
requires the Bitcoin Custodian to hold the Fund's bitcoin in cold
storage, unless required to facilitate withdrawals as a temporary
measure. The Bitcoin Custodian will use segregated cold storage bitcoin
addresses for the Fund which are separate from the bitcoin addresses
that the Bitcoin Custodian uses for its other customers and which are
directly verifiable via the Bitcoin Blockchain. The Bitcoin Custodian
will at all times record and identify in its books and records that
such bitcoins constitute the property of the Fund. The Bitcoin
Custodian will not withdraw the Fund's bitcoin from the Fund's account
with the Bitcoin Custodian, or loan, hypothecate, pledge or otherwise
encumber the Fund's bitcoin, without the Fund's instruction.
The Sponsor has evaluated the Bitcoin Custodian's policies,
procedures, and controls for safekeeping, exclusively possessing, and
controlling the Fund's bitcoin holdings and believes these are designed
consistent with accepted industry practices to protect against theft,
loss, and unauthorized and accidental use of the private keys.
Net Asset Value (``NAV'')
According to the Registration Statement, the Fund's NAV per Share
is calculated by taking the current market value of its total assets,
subtracting any liabilities, and dividing that total by the total
number of outstanding Shares.
The Administrator will calculate the NAV of the Fund once each
trading day as of the earlier of the close of trading on the Exchange
or 4:00 p.m. E.T. The NAV for a normal trading day will be released
after 4:00 p.m. E.T.
In determining the NAV of the Fund, the Administrator ordinarily
values the bitcoin held by the Fund based on the methodology used by
the Index. If the Index is not available or the Sponsor in
[[Page 92259]]
its sole discretion determines that the price of bitcoin determined by
the Index should not be used, the Fund's holdings may be fair valued in
accordance with the policy approved by the Sponsor.\25\ For purposes of
determining the NAV of the Fund, Carbon Credit Futures held by the Fund
will be valued based on market price as of the time the NAV is
calculated on each trading day.
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\25\ The Sponsor does not anticipate that the need to ``fair
value'' bitcoin will be a common occurrence. If the Sponsor
determines in good faith that the Index does not reflect an accurate
bitcoin price, then the Fund will cause to be employed an
alternative method to determine the fair value of the Fund's assets
as reviewed and approved by the Sponsor's valuation committee. If
the Sponsor determines to use any alternative method other than on
an ad hoc or temporary basis, such change to the calculation of the
NAV would be subject to a proposed rule change under Section 19(b)
filed with the Commission.
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Intraday Indicative Value
According to the Registration Statement, in order to provide
updated information relating to the Fund for use by shareholders and
market professionals, an updated intraday indicative value (``IIV'')
will be calculated and disseminated throughout the core trading session
on each trading day. The IIV will be calculated by using the prior
day's closing NAV per Share of the Fund as a base and updating that
value throughout the trading day to reflect changes in the most
recently reported price level of the Fund's assets.
The IIV disseminated during the Exchange's core trading session
should not be viewed as an actual real time update of the NAV, because
NAV per Share is calculated only once at the end of each trading day
based upon the relevant end of day values of the Fund's investments.
The IIV will be disseminated on a per Share basis every 15 seconds
during the Exchange's Core Trading Session and be widely disseminated
by one or more major market data vendors during the Exchange's Core
Trading Session.\26\
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\26\ Several major market data vendors display and/or make
widely available IIVs taken from the Consolidated Tape Association
(``CTA'') or other data feeds.
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Creation and Redemption of Shares
According to the Registration Statement, when the Fund creates or
redeems its Shares, it will do so only in ``Baskets'' (blocks of 10,000
Shares) based on the NAV per Share. The allocation between Bitcoin and
Carbon Credit Futures is fixed at 80% and 20%, respectively, for all
creations and redemptions of Shares. ``Authorized Purchasers'' are the
only persons that may place orders to create and redeem Baskets.
Authorized Purchasers must be (1) registered broker-dealers or other
securities market participants, such as banks and other financial
institutions, that are not required to register as broker-dealers to
engage in securities transactions described below, and (2) Depository
Trust Company (``DTC'') participants.
To become an Authorized Purchaser, a person must enter into an
Authorized Purchaser Agreement. The Authorized Purchaser Agreement
provides the procedures for the creation and redemption of Baskets and
for the delivery of the cash or Shares required for such creation and
redemptions.
The ``Basket Price'' for the creation or redemption of Baskets is
the NAV per Share (net of accrued but unpaid expenses and liabilities)
multiplied by the number of Shares comprising a Basket. The Basket
Price required to create each Basket changes from day to day. On each
day that the Exchange is open for regular trading, the Administrator
adjusts the Basket Price as appropriate to reflect accrued expenses and
any loss in value of the assets that may occur. The computation is made
by the Administrator each business day, prior to the commencement of
trading on the Exchange. The Basket Price so determined is communicated
to all Authorized Purchasers and made available on the Fund's website
for the Shares.
The Authorized Purchasers will deliver only cash to create Shares
and will receive only cash when redeeming Shares. Authorized Purchasers
will deliver cash to the Non-Digital Custodian pursuant to Purchase
Orders (as defined below) for Shares, and the Non-Digital Custodian
will hold such cash until such time as it can be converted to bitcoin
or Carbon Credit Futures. With respect to bitcoin transactions, the
Non-Digital Custodian will transfer the cash received from the
Authorized Purchaser to the Bitcoin Trading Counterparty upon the
Bitcoin Custodian's receipt of bitcoin from the Bitcoin Trading
Counterparty. The Fund will acquire bitcoin from a Bitcoin Trading
Counterparty and will purchase Carbon Credit Futures via a Futures
Commission Merchant (``FCM'') to facilitate Purchase Orders. The Fund
will sell bitcoin and Carbon Credit Futures in exchange for cash
pursuant to Redemption Orders (as defined below) of its Shares, and the
Non-Digital Custodian will hold such cash until it can be distributed
to the redeeming Authorized Purchaser. In connection with such sales,
the Non-Digital Custodian will receive cash from an approved Bitcoin
Trading Counterparty for the sale of the Fund's bitcoin and from an FCM
for the sale of the Fund's Carbon Credit Futures. With respect to
bitcoin transactions, the Bitcoin Custodian will transfer the bitcoin
to the Bitcoin Trading Counterparty upon the Non-Digital Custodian's
receipt of cash from the Bitcoin Trading Counterparty.
Authorized Purchasers will not directly or indirectly purchase,
hold, deliver, or receive bitcoin as part of the creation or redemption
process or otherwise direct the Fund or a third party with respect to
purchasing, holding, delivering, or receiving bitcoin as part of the
creation or redemption process. The Fund will create shares by
receiving bitcoin from a third party that is not the Authorized
Purchaser and is not affiliated with the Sponsor or the Fund, and the
Fund--not the Authorized Purchaser--is responsible for selecting the
third party to deliver the bitcoin. Further, the third party will not
be acting as an agent of the Authorized Purchaser with respect to the
delivery of the bitcoin to the Fund or acting at the direction of the
Authorized Purchaser with respect to the delivery of the bitcoin to the
Fund. The Fund will redeem shares by delivering bitcoin to a third
party that is not the Authorized Purchaser and is not affiliated with
the Sponsor or the Fund, and the Fund--not the Authorized Purchaser--is
responsible for selecting the third party to receive the bitcoin.
Further, the third party will not be acting as an agent of the
Authorized Purchaser with respect to the receipt of the bitcoin from
the Fund or acting at the direction of the Authorized Purchaser with
respect to the receipt of the bitcoin from the Fund.
Creation Procedures
According to the Registration Statement, on any Business Day,\27\
an Authorized Purchaser may create Shares by placing an order to
purchase one or more Baskets with the transfer agent (``Transfer
Agent'') through the marketing agent (``Marketing Agent'') in exchange
for cash (a ``Purchase Order''). Purchase Orders must be placed by 2:00
p.m. E.T., or the close of regular trading on the Exchange, whichever
is earlier, or an earlier time as determined and communicated by the
Sponsor and its agent. The day on which a Purchase Order is accepted by
the Transfer Agent is considered the ``Purchase Order Date.''
---------------------------------------------------------------------------
\27\ For purposes of processing creation and redemption orders,
a ``Business Day'' means any day other than a day when the Exchange
is closed for regular trading.
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[[Page 92260]]
By placing a Purchase Order, an Authorized Purchaser agrees to
deposit cash as determined by the Sponsor with the Fund's Non-Digital
Custodian. The total deposit required to create each basket will be an
amount of cash that is in the same proportion to the total assets of
the Fund (net of estimated accrued but unpaid fees, expenses and other
liabilities) on the date the Purchase Order is properly received as the
number of Shares to be created under the Purchase Order is in
proportion to the total number of Shares outstanding on the date the
Purchase Order is received. The Sponsor, through the Transfer Agent,
shall notify the Authorized Purchaser of the amount of cash to be
included in deposits to create Baskets by email or telephone
correspondence and such amount will be available via the Fund's
website.
An Authorized Purchaser who places a Purchase Order is responsible
for transferring to the Fund's account with the Non-Digital Custodian
the required amount of cash by the end of the next Business Day
following the Purchase Order Date or as agreed to by the Authorized
Purchaser, Sponsor, Marketing Agent, and Transfer Agent in advance of
when the Purchase Order is placed. Upon receipt of the deposit amount,
the Administrator will cause DTC to credit the number of Baskets
ordered to the Authorized Purchaser's DTC account.
Redemption Procedures
On any business day, an Authorized Purchaser may place an order
with the Transfer Agent to redeem one or more Baskets (a ``Redemption
Order''). Redemption Orders must be placed by 2:00 p.m. E.T., or the
close of regular trading on the Exchange, whichever is earlier. A
Redemption Order will be effective on the date it is accepted by the
Transfer Agent (``Redemption Order Date'').
By placing a Redemption Order, an Authorized Purchaser agrees to
deliver the Redemption Basket to be redeemed through DTC's book-entry
system to the Fund's account with the Non-Digital Custodian not later
than the end of the next Business Day following the effective date of
the Redemption Order (``Redemption Distribution Date'') or the end of
such later Business Day as agreed to by the Authorized Purchaser and
the Transfer Agent in advance of when the Redemption Order is placed.
Failure to consummate such delivery shall result in the cancellation of
the order.
The redemption distribution due from the Fund is delivered to the
Authorized Purchaser on the Redemption Distribution Date if the Fund's
DTC account has been credited with the Baskets to be redeemed pursuant
to the terms of the Authorized Purchaser Agreement.
Standard for Approval
On January 10, 2024, the Commission approved the listing and
trading of shares of Grayscale Bitcoin Trust (BTC) and Bitwise Bitcoin
ETF under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares); the
Hashdex Bitcoin ETF under NYSE Arca Rule 8.500-E (Trust Units); the
iShares Bitcoin Trust and Valkyrie Bitcoin Fund under Nasdaq Rule
5711(d) (Commodity-Based Trust Shares); and the ARK 21Shares Bitcoin
ETF, Invesco Galaxy Bitcoin ETF, VanEck Bitcoin Trust, the WisdomTree
Bitcoin Fund, Fidelity Wise Origin Bitcoin Fund, and Franklin Bitcoin
ETF under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares)
(collectively, the ``Bitcoin ETPs'').\28\ In the Bitcoin ETP Approval
Order, the Commission found that the proposed rule changes to list the
Bitcoin ETPs demonstrated that there were ``sufficient `other means' of
preventing fraud and manipulation,'' including that:
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\28\ Securities Exchange Act Release No. 34-99306 (January 10,
2024), 89 FR 3008 (January 17, 2024) (SR-NYSEARCA-2021-90; SR-
NYSEARCA-2023-44; SRNYSEARCA-2023-58; SR-NASDAQ-2023-016; SR-NASDAQ-
2023-019; SR-CboeBZX-2023028; SR-CboeBZX-2023-038; SR-CboeBZX-2023-
040; SR-CboeBZX-2023-042; SRCboeBZX-2023-044; SR-CboeBZX-2023-072)
(Order Granting Accelerated Approval of Proposed Rule Changes, as
Modified by Amendments Thereto, to List and Trade Bitcoin-Based
Commodity-Based Trust Shares and Trust Units) (the ``Bitcoin ETP
Approval Order'').
[B]ased on the record before the Commission and the improved
quality of the correlation analysis in the record, including the
Commission's own analysis, the Commission is able to conclude that
fraud or manipulation that impacts prices in spot bitcoin markets
would likely similarly impact CME bitcoin futures prices. And
because the CME's surveillance can assist in detecting those impacts
on CME bitcoin futures prices, the Exchanges' comprehensive
surveillance-sharing agreement with the CME--a U.S. regulated market
whose bitcoin futures market is consistently highly correlated to
spot bitcoin, albeit not of ``significant size'' related to spot
bitcoin--can be reasonably expected to assist in surveilling for
fraudulent and manipulative acts and practices in the specific
context of the [Bitcoin ETPs].\29\
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\29\ Bitcoin ETP Approval Order, 89 FR at 3009-11.
The Fund is structured and will operate in a manner materially the
same as the Bitcoin ETPs. With respect to the Fund's bitcoin holdings,
the Sponsor believes that the Exchange's ability to obtain information
regarding trading in bitcoin futures from the CME, which, like the
Exchange, is a member of the Intermarket Surveillance Group (``ISG''),
would assist the Exchange in detecting potential fraud or manipulation
with respect to trading in the Shares. In addition, with respect to the
Fund's Carbon Credit Futures holdings, the Sponsor believes that the
Exchange would be able to obtain information regarding trading in
Carbon Credit Futures that would similarly assist in surveilling for
potential fraud or manipulation. As stated above, the Fund will hold
only: (i) EU ETS futures which trade only on ICE Endex Markets B.V.
(``ICE Endex''),\30\ with which the Exchange has entered into a
comprehensive surveillance sharing agreement (``CSSA''); and (ii) CCA
futures and RGGI futures which are traded only on ICE Futures U.S.,\31\
which, like the Exchange, is a member of the ISG. Accordingly, the
Sponsor believes that the Exchange's ability to share information with
ICE Endex and ICE Futures U.S., pursuant to a CSSA or common ISG
membership, would assist in surveilling for fraudulent and manipulative
acts and practices. The Sponsor thus believes that, for reasons similar
to those set forth in the Bitcoin ETP Approval Order, listing and
trading Shares of the Fund would be consistent with the requirements of
the Act.
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\30\ ICE Endex is regulated in the Netherlands by the Dutch
Authority for the Financial Markets (``AFM'') as a RM, as defined in
MIFID II, which is implemented in Dutch Act on Financial Supervision
(``DFSA''). The license as a RM is obtained under Section 5:26(1) of
the DFSA, resulting in an authorization by the Minister of Dutch
Ministry of Finance to operate a RM and supervised by the AFM. In
the UK, ICE Endex is a Recognized Overseas Investment Exchange by
the Financial Conduct Authority. See https://www.ice.com/endex/
regulation#:~:text=The%20Dutch%20Authority%20for%20Consumers,energy%2
0industry%20and%20wholesale%20trading. ICE Endex is also recognized
by the CFTC as an authorized Foreign Board of Trade. See https://www.cftc.gov/sites/default/files/idc/groups/public/@otherif/documents/ifdocs/orgiceeregorder170110.pdf.
\31\ ICE Futures U.S. is a registered Designated Contract Market
regulated by the CFTC and subject to the requirements of the
Commodity Exchange Act (``CEA''), as amended, and the regulations
issues by the CFTC pursuant to the CEA. See https://www.ice.com/futures-us.
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Availability of Information
The NAV per Share will be disseminated daily to all market
participants at the same time. Quotation and last-sale information
regarding the Shares will be disseminated through the facilities of the
CTA. The IIV will be calculated every 15 seconds throughout the core
trading session each trading day.
Quotation and last sale information for bitcoin will be widely
disseminated through a variety of major market data vendors, including
Bloomberg and
[[Page 92261]]
Reuters. In addition, real-time price (and volume) data for bitcoin is
available by subscription from Reuters and Bloomberg. The spot price of
bitcoin is available on a 24-hour basis from major market data vendors,
including Bloomberg and Reuters. The real-time version of the value of
the Index will be disseminated once every 15 seconds during the Core
Trading Session. Information relating to trading, including price and
volume information, in bitcoin will be available from major market data
vendors and from the trading platforms on which bitcoin is traded.
The intraday, closing prices, and settlement prices of the Carbon
Credit Futures will be readily available from automated quotation
systems, published or other public sources, or major market data
vendors, such as ICE Data Services. Information regarding market price
and trading volume of the Shares will be continually available on a
real-time basis throughout the day on brokers' computer screens and
other electronic services. Information regarding the previous day's
closing price and trading volume information for the Shares will be
published daily in the financial section of newspapers.
Real-time data for Carbon Credit Futures will be available by
subscription through on-line information services. Delayed futures and
options on futures information on current and past trading sessions and
market news will also be available. The specific contract
specifications for Carbon Credit Futures will also be available on such
websites, as well as other financial informational sources.
On each business day, the Sponsor will publish the value of the
Index, the Fund's NAV, and the NAV per Share on the Fund's website as
soon as practicable after its determination. If the NAV and NAV per
Share have been calculated using a price per bitcoin other than the
price of bitcoin determined by the Index, the publication on the Fund's
website will note the valuation methodology used and the price per
bitcoin resulting from such calculation.
The Fund will provide website disclosure of its NAV and NAV per
Share daily. The website disclosure of the Fund's NAV and NAV per Share
will occur at the same time as the disclosure by the Sponsor of the NAV
and NAV per Share to Authorized Purchasers so that all market
participants are provided such portfolio information at the same time.
Therefore, the same portfolio information will be provided on the
public website as well as in electronic files provided to Authorized
Purchasers. Accordingly, each investor will have access to the current
NAV and NAV per Share of the Fund through the Fund's website, as well
as from one or more major market data vendors.
The value of the Index, as well as additional information regarding
the Index, will be available on a continuous basis on the Fund's
website.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services.
Information regarding the previous day's closing price and trading
volume information for the Shares will be published daily in the
financial section of newspapers.
The Sponsor will cause information about the Shares to be posted to
the Fund's website: (1) the NAV and NAV per Share for each Exchange
trading day, posted at end of day; (2) the daily holdings of the Fund,
before 9:30 a.m. E.T. on each Exchange trading day; (3) the Fund's
effective prospectus, in a form available for download; and (4) the
Shares' ticker and CUSIP information, along with additional
quantitative information updated on a daily basis for the Fund. The
Fund's website will include (1) the prior Business Day's trading
volume, the prior Business Day's reported NAV and closing price, and a
calculation of the premium and discount of the closing price or mid-
point of the bid/ask spread at the time of NAV calculation (``Bid/Ask
Price'') against the NAV; and (2) data in chart format displaying the
frequency distribution of discounts and premiums of the daily closing
price or Bid/Ask Price against the NAV, within appropriate ranges, for
at least each of the four previous calendar quarters. The website
disclosure of portfolio holdings will be made daily and will include
(i) the name, quantity, price, and market value of the Fund's holdings
and (ii) the total cash and cash equivalents held in the Fund's
portfolio, if applicable.
The Fund's website will be publicly available prior to the public
offering of Shares and accessible at no charge.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of the Fund.\32\ Trading in Shares of the Fund
will be halted if the circuit breaker parameters in NYSE Arca Rule
7.12-E have been reached. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the Shares inadvisable.
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\32\ See NYSE Arca Rule 7.12-E.
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The Exchange may halt trading during the day in which an
interruption to the dissemination of the IIV or the value of the Index
occurs. The real-time version of the value of the Index will be
disseminated once every 15 seconds during the Core Trading Session. If
the interruption to the dissemination of the IIV or to the value of the
Index persists past the trading day in which it occurred, the Exchange
will halt trading no later than the beginning of the trading day
following the interruption. In addition, if the Exchange becomes aware
that the NAV with respect to the Shares is not disseminated to all
market participants at the same time, it will halt trading in the
Shares until such time as the NAV is available to all market
participants.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. E.T. in
accordance with NYSE Arca Rule 7.34-E (Early, Core, and Late Trading
Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Rule 7.6-E, the minimum price variation (``MPV'') for quoting
and entry of orders in equity securities traded on the NYSE Arca
Marketplace is $0.01, with the exception of securities that are priced
less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.500-E. The trading of the Shares will
be subject to NYSE Arca Rule 8.500-E(f), which sets forth certain
restrictions on Equity Trading Permit Holders (``ETP Holders'') acting
as registered market makers in Trust Units to facilitate surveillance.
Pursuant to NYSE Arca Rule 8.500-E(f), an ETP Holder acting as a
registered market maker in Trust Units must file with the Exchange in a
manner prescribed by the Exchange and keep current a list identifying
all accounts for trading in an underlying commodity, related commodity
futures or options on commodity futures, or any other related commodity
derivatives, which the market maker may have or over which it may
exercise investment discretion. No market maker shall trade in an
underlying commodity, related commodity futures or options on
[[Page 92262]]
commodity futures, or any other related commodity derivatives, in an
account in which a market maker, directly or indirectly, controls
trading activities, or has a direct interest in the profits or losses
thereof, which has not been reported to the Exchange as required by
this Rule. In addition to the existing obligations under Exchange rules
regarding the production of books and records, the ETP Holder acting as
a market maker in Trust Units shall make available to the Exchange such
books, records or other information pertaining to transactions by such
entity or registered or non-registered employee affiliated with such
entity for its or their own accounts for trading the underlying
physical commodity, related commodity futures or options on commodity
futures, or any other related commodity derivatives, as may be
requested by the Exchange.
For initial and continued listing as proposed herein, the Fund will
be in compliance with Rule 10A-3 under the Act, and the Trust will rely
on the exception contained in Rule 10A-3(c)(7).\33\ A minimum of 50,000
Shares of the Fund will be outstanding at the commencement of trading
on the Exchange.
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\33\ See Rule 10A-3(c)(7), 17 CFR 240.10A-3(c)(7) (stating that
a listed issuer is not subject to the requirements of Rule 10A-3 if
the issuer is organized as an unincorporated association that does
not have a board of directors and the activities of the issuer are
limited to passively owning or holding securities or other assets on
behalf of or for the benefit of the holders of the listed
securities).
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Surveillance
The Exchange represents that trading in the Shares of the Fund will
be subject to the existing trading surveillances administered by the
Exchange, as well as cross-market surveillances administered by FINRA
on behalf of the Exchange, which are designed to detect violations of
Exchange rules and applicable federal securities laws.\34\ The Exchange
represents that these procedures are adequate to properly monitor
Exchange trading of the Shares in all trading sessions and to deter and
detect violations of Exchange rules and federal securities laws
applicable to trading on the Exchange.
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\34\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
---------------------------------------------------------------------------
The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and the Fund's
holdings with other markets and other entities that are members of the
ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may
obtain trading information regarding trading in the Shares and the
Fund's holdings from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares and the
Fund's holdings from markets and other entities that are members of ISG
\35\ or with which the Exchange has in place a CSSA. Specifically, the
Exchange or FINRA, on behalf of the Exchange, may communicate as needed
and may obtain information regarding trading in bitcoin futures from
the CME, which is a member of the ISG. Also, the Exchange may
communicate as needed and may obtain information regarding trading in
Carbon Credit Futures from ICE Endex, with which the Exchange has in
place a CSSA, and ICE Futures U.S., which is a member of the ISG.
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\35\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Fund may trade on markets that are members of ISG or with which the
Exchange has in place a CSSA.
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The Exchange believes that ICE Endex and ICE Futures U.S. are
regulated \36\ markets of significant size related to the Carbon Credit
Futures held by the Fund and that it is reasonably likely that any bad
actor trying to manipulate the price of the Fund would have to trade on
those markets. As noted above, the EU ETS futures held by the Fund
trade only on ICE Endex, and CCA futures and RGGI futures held by the
Fund are traded only on ICE Futures U.S. Therefore, ICE Endex and ICE
Futures U.S. are appropriate markets to surveil in order to detect and
deter fraud and manipulation.
---------------------------------------------------------------------------
\36\ See notes 29 & 30, supra.
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The Exchange is also able to obtain information regarding trading
in the Shares, the underlying bitcoin, Carbon Credit Futures, bitcoin
futures contracts, options on bitcoin futures, or any other bitcoin
derivative through ETP Holders, in connection with such ETP Holders'
proprietary or customer trades which they effect through ETP Holders on
any relevant market. The Exchange can obtain market surveillance
information, including customer identity information, with respect to
transactions (including transactions in futures contracts) occurring on
US futures exchanges, which are members of the ISG. In addition, the
Exchange also has a general policy prohibiting the distribution of
material, non-public information by its employees.
Under NYSE Arca Rule 8.500-E(f), an ETP Holder acting as a
registered market maker in the Shares is required to provide the
Exchange with information relating to its accounts for trading in the
underlying physical commodity, related commodity futures or options on
commodity futures, or any other related commodity derivatives, and must
provide any information concerning trading in those accounts that the
Exchange may request. Commentary .04 of NYSE Arca Rule 11.3-E requires
an ETP Holder acting as a registered market maker, and its affiliates,
in the Shares to establish, maintain and enforce written policies and
procedures reasonably designed to prevent the misuse of any material
nonpublic information with respect to such products, any components of
the related products, any physical asset or commodity underlying the
product, applicable currencies, underlying indexes, related futures or
options on futures, and any related derivative instruments (including
the Shares). As a general matter, the Exchange has regulatory
jurisdiction over its ETP Holders and their associated persons, which
include any person or entity controlling an ETP Holder. To the extent
the Exchange may be found to lack jurisdiction over a subsidiary or
affiliate of an ETP Holder that does business only in commodities or
futures contracts, the Exchange could obtain information regarding the
activities of such subsidiary or affiliate through surveillance sharing
agreements with regulatory organizations to the extent the Exchange has
such an agreement with an organization of which the subsidiary or
affiliate is a member.
All statements and representations made in this filing regarding
(a) the description of the portfolio or reference asset, (b)
limitations on portfolio holdings or reference assets, or (c) the
applicability of Exchange listing rules specified in this rule filing
shall constitute continued listing requirements for listing the Shares
on the Exchange.
The issuer has represented to the Exchange that it will advise the
Exchange of any failure by the Fund to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Fund is not in
[[Page 92263]]
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
Prior to the commencement of trading of the Shares, the Exchange
will inform its ETP Holders in an information bulletin (``Information
Bulletin'') of the special characteristics and risks associated with
trading the Shares. Specifically, the Information Bulletin will discuss
the following: (1) the risks involved in trading the Shares during the
Early and Late Trading Sessions when an updated IIV will not be
calculated or publicly disseminated; (2) the procedures for purchases
and redemptions of Shares in Creation Baskets and Redemption Baskets
(and that Shares are not individually redeemable); (3) NYSE Arca Rule
9.2-E(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (4) how information regarding the IIV is disseminated; (5)
how information regarding portfolio holdings is disseminated; (6) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; and (7) trading information.
In addition, the Information Bulletin will advise ETP Holders,
prior to the commencement of trading, of the prospectus delivery
requirements applicable to the Fund. The Exchange notes that investors
purchasing Shares directly from the Fund will receive a prospectus. ETP
Holders purchasing Shares from the Fund for resale to investors will
deliver a prospectus to such investors. The Information Bulletin will
also discuss any exemptive, no-action, and interpretive relief granted
by the Commission from any rules under the Act. In addition, the
Information Bulletin will reference that the Fund is subject to various
fees and expenses described in the Registration Statement.
The Information Bulletin will also reference the fact that there is
no regulated source of last sale information regarding bitcoin, that
the Commission has no jurisdiction over the trading of Bitcoin as a
commodity, and that the CFTC has regulatory jurisdiction over the
trading of bitcoin futures contracts and options on bitcoin futures
contracts.
The Information Bulletin will also disclose the trading hours of
the Shares and that the NAV for the Shares will be calculated after
4:00 p.m. E.T. each trading day. The Information Bulletin will disclose
that information about the Shares will be publicly available on the
Fund's website.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \37\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices and to protect
investors and the public interest in that the Shares will be listed and
traded on the Exchange pursuant to the initial and continued listing
criteria in NYSE Arca Rule 8.500-E. The proposed rule change is also
designed to prevent fraudulent and manipulative acts and practices
because the Fund is structured similarly to and will operate in
materially the same manner as the Bitcoin ETPs previously approved by
the Commission. The Exchange further believes that the proposed rule
change is designed to prevent fraudulent and manipulate acts and
practices because, as noted by the Commission in the Bitcoin ETP
Approval Order, the Exchange's ability to obtain information regarding
trading in the Shares and futures from markets and other entities that
are members of the ISG (including the CME and ICE Futures U.S.) or with
which the Exchange has in place a CSSA would assist the Exchange in
detecting and deterring misconduct.
The Exchange has in place surveillance procedures that are adequate
to properly monitor Exchange trading in the Shares in all trading
sessions and to deter and detect attempted manipulation of the Shares
or other violations of Exchange rules and applicable federal securities
laws. The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares from markets and other entities that
are members of ISG or with which the Exchange has in place a CSSA. The
Exchange is also able to obtain information regarding trading in the
Shares and bitcoin futures or the underlying bitcoin through ETP
Holders, in connection with such ETP Holders' proprietary or customer
trades which they effect through ETP Holders on any relevant market.
Quotation and last-sale information regarding the Shares will be
disseminated through the facilities of the CTA. The Fund's website will
also include a form of the prospectus for the Fund that may be
downloaded. The website will include the Shares' ticker and CUSIP
information, along with additional quantitative information updated on
a daily basis for the Fund. The Fund's website will include (1) daily
trading volume, the prior Business Day's reported NAV and closing
price, and a calculation of the premium and discount of the closing
price or mid-point of the Bid/Ask Price against the NAV; and (ii) data
in chart format displaying the frequency distribution of discounts and
premiums of the daily closing price or Bid/Ask Price against the NAV,
within appropriate ranges, for at least each of the four previous
calendar quarters. The Fund's website will be publicly available prior
to the public offering of Shares and accessible at no charge.
Trading in Shares of the Fund will be halted if the circuit breaker
parameters in NYSE Arca Rule 7.12-E have been reached or because of
market conditions or for reasons that, in the view of the Exchange,
make trading in the Shares inadvisable.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of a
new type of exchange-traded product based on the price of bitcoin that
will enhance competition among market participants, to the benefit of
investors and the marketplace. As noted above, the Exchange has in
place surveillance procedures that are adequate to properly monitor
trading in the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of the
Shares, which are Trust Units based on bitcoin and Carbon Credit
Futures and
[[Page 92264]]
that will enhance competition among market participants, to the benefit
of investors and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 4, is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\38\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Exchange
Act,\39\ which requires, among other things, that the Exchange's rules
be designed to ``prevent fraudulent and manipulative acts and
practices'' and, ``in general, to protect investors and the public
interest''; and with Section 11A(a)(1)(C)(iii) of the Exchange Act,\40\
which sets forth Congress' finding that it is in the public interest
and appropriate for the protection of investors and the maintenance of
fair and orderly markets to assure the availability to brokers,
dealers, and investors of information with respect to quotations for
and transactions in securities.
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\38\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\39\ 15 U.S.C. 78f(b)(5).
\40\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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A. Exchange Act Section 6(b)(5)
In approving the listing and trading of shares of exchange-traded
products (``ETPs'') that hold bitcoin, the Commission explained that
one way an exchange that lists such ETPs can meet the obligation under
Exchange Act Section 6(b)(5) that its rules be designed to prevent
fraudulent and manipulative acts and practices is by demonstrating that
the exchange has a comprehensive surveillance-sharing agreement with a
regulated market of significant size related to the underlying or
reference assets.\41\ Such an agreement would assist in detecting and
deterring fraud and manipulation related to that underlying asset.
---------------------------------------------------------------------------
\41\ See Order Granting Approval of a Proposed Rule Change, as
Modified by Amendment No. 1, to List and Trade Shares of the
Grayscale Bitcoin Mini Trust and Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, to List and
Trade Shares of the Pando Asset Spot Bitcoin Trust, Securities
Exchange Act Release No. 100610 (July 26, 2024), 89 FR 62821 (Aug.
1, 2024) (SR-NYSEARCA-2024-45; SR-CboeBZX-2023-101) (``July 2024
Spot Bitcoin ETP Approval Order''); Order Granting Accelerated
Approval of Proposed Rule Changes, as Modified by Amendments
Thereto, To List and Trade Bitcoin-Based Commodity-Based Trust
Shares and Trust Units, Securities Exchange Act Release No. 99306
(Jan. 10, 2024), 89 FR 3008 (Jan. 17, 2024) (SR-NYSEARCA-2021-90;
SR-NYSEARCA-2023-44; SR-NYSEARCA-2023-58; SR-NASDAQ-2023-016; SR-
NASDAQ-2023-019; SR-CboeBZX-2023-028; SR-CboeBZX-2023-038; SR-
CboeBZX-2023-040; SR-CboeBZX-2023-042; SR-CboeBZX-2023-044; SR-
CboeBZX-2023-072) (``January 2024 Spot Bitcoin ETP Approval Order'')
(collectively, ``Spot Bitcoin ETP Approval Orders'').
---------------------------------------------------------------------------
The Commission also recognized, however, that this is not the
exclusive means by which an ETP listing exchange can meet this
statutory obligation.\42\ A listing exchange could, alternatively,
demonstrate that ``other means to prevent fraudulent and manipulative
acts and practices will be sufficient'' to justify dispensing with a
surveillance-sharing agreement with a regulated market of significant
size.\43\ In the Spot Bitcoin ETP Approval Orders, the Commission
determined that having a comprehensive surveillance-sharing agreement
with a U.S.-regulated market that, based on evidence from robust
correlation analysis, is consistently highly correlated with the ETPs'
underlying assets (spot bitcoin) constituted ``other means'' sufficient
to satisfy the Exchange Act Section 6(b)(5) standard.\44\ Specifically,
given the consistently high correlation between the bitcoin futures
market of the Chicago Mercantile Exchange (``CME'') and a sample of
spot bitcoin markets--confirmed by the Commission through robust \45\
correlation analysis using data at hourly, five-minute, and one-minute
intervals--the Commission was able to conclude that fraud or
manipulation that impacts prices in spot bitcoin markets would likely
similarly impact CME bitcoin futures prices. And because the CME's
surveillance can assist in detecting those impacts on CME bitcoin
futures prices, the Commission was able to conclude that the
comprehensive surveillance-sharing agreement among the relevant listing
exchanges and the CME can be reasonably expected to assist in
surveilling for fraudulent and manipulative acts and practices in the
specific context of the proposals considered in the Spot Bitcoin ETP
Approval Orders.
---------------------------------------------------------------------------
\42\ See July 2024 Spot Bitcoin ETP Approval Order at 62822;
January 2024 Spot Bitcoin ETP Approval Order at 3009.
\43\ See July 2024 Spot Bitcoin ETP Approval Order at 62822;
January 2024 Spot Bitcoin ETP Approval Order at 3009.
\44\ See July 2024 Spot Bitcoin ETP Approval Order at 62822;
January 2024 Spot Bitcoin ETP Approval Order at 3009-11.
\45\ The Commission stated that the ``robustness'' of its
correlation analysis rested on the pre-requisites of (1) the
correlations being calculated with respect to bitcoin futures that
trade on the CME, a U.S. market regulated by the CFTC, (2) the
lengthy sample period of price returns for both the CME bitcoin
futures market and the spot bitcoin market, (3) the frequent intra-
day trading data in both the CME bitcoin futures market and the spot
bitcoin market over that lengthy sample period, and (4) the
consistency of the correlation results throughout the lengthy sample
period. See July 2024 Spot Bitcoin ETP Approval Order at 62822 n.17;
January 2024 Spot Bitcoin ETP Approval Order at 3010 n.38.
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With respect to the bitcoin holdings of the Fund,\46\ the structure
of the Fund, the terms of its operation and the trading of the Shares,
and the representations in the proposed rule change, as modified by
Amendment No. 4, are substantially similar to those of the proposals
considered in the Spot Bitcoin ETP Approval Orders.\47\ In addition,
the Commission finds that the spot bitcoin market continues to be
consistently highly correlated with the CME bitcoin futures market.\48\
In the proposal, as modified by Amendment No. 4, the Exchange
represents that the Exchange or FINRA, on behalf of the Exchange, may
communicate as needed and may obtain information regarding trading in
CME bitcoin futures from the CME, which is a member of the ISG. As
such, based on the record before the Commission, including the
Commission's correlation analysis, the Commission is able to conclude
that the Exchange's comprehensive surveillance-sharing agreement with
the CME can be reasonably expected to assist in surveilling for
fraudulent and manipulative acts and practices with respect to the spot
bitcoin proposed to be held by the Fund.
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\46\ While the Fund uses ``ETF'' in its name, it is not
registered under the Investment Company Act of 1940.
\47\ See also infra Section III.B.
\48\ The Commission examined correlation between the CME bitcoin
futures market and the Coinbase and Kraken spot bitcoin trading
platforms at hourly, five-minute, and one-minute intervals, using
the same data sources and methodology as in the Spot Bitcoin ETP
Approval Orders (see July 2024 Spot Bitcoin ETP Approval Order at
62822 n.19; January 2024 Spot Bitcoin ETP Approval Order at 3010
n.35), for the period from March 1, 2021, to August 22, 2024. The
correlation between the CME bitcoin futures market and this subset
of spot bitcoin platforms for the full sample period is no less than
98.9 percent using data at an hourly interval, 93.9 percent using
data at a five-minute interval, and 83.1 percent using data at a
one-minute interval. The rolling three-month correlation results
range between 94.0 and 99.5 percent using data at an hourly
interval, 79.9 and 96.2 percent using data at a five-minute
interval, and 73.7 and 88.5 percent using data at a one-minute
interval.
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With respect to the Carbon Credit Futures proposed to be held by
the Fund, the Commission is able to conclude that the Exchange has
CSSAs or shares ISG membership with
[[Page 92265]]
significant, regulated markets related to such holdings, and, thus,
that such CSSAs and ISG membership can be reasonably expected to assist
in surveilling for fraudulent and manipulative acts and practices with
respect to such holdings.\49\ The Exchange represents that the Fund
will hold only: (i) EU ETS futures which trade only on ICE Endex, with
which the Exchange has entered into a CSSA; and (ii) CCA futures and
RGGI futures which are traded only on ICE Futures U.S., which, like the
Exchange, is a member of the ISG. Further, each of ICE Endex and ICE
Futures U.S. is ``regulated'' because ICE Endex is regulated in the
Netherlands by the Dutch Authority for the Financial Markets and is
registered with the CFTC as an authorized Foreign Board of Trade,\50\
and ICE Futures U.S. is a registered Designated Contract Market
regulated by the CFTC.\51\
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\49\ As the Commission has explained (see Order Setting Aside
Action by Delegated Authority and Disapproving a Proposed Rule
Change, as Modified by Amendments No. 1 and 2, To List and Trade
Shares of the Winklevoss Bitcoin Trust, Securities Exchange Act
Release No. 83723 (July 26, 2018), 83 FR 37579 (Aug. 1, 2018) (SR-
BatsBZX-2016-30) (``Winklevoss Order'')), an exchange that lists
commodity-based ETPs can meet its obligations under Exchange Act
Section 6(b)(5) by demonstrating that the exchange has a CSSA with a
regulated market of significant size related to the underlying or
reference assets. The Winklevoss Order applied this standard to a
commodity-trust ETP based on spot bitcoin, and the Commission has
found that this standard is also appropriate for, and has applied
the standard to, proposed ETPs based on bitcoin futures. See, e.g.,
Order Granting Approval of a Proposed Rule Change, as Modified by
Amendment No. 2, To List and Trade Shares of the Teucrium Bitcoin
Futures Fund Under NYSE Arca Rule 8.200-E, Commentary .02 (Trust
Issued Receipts), Securities Exchange Act Release No. 94620 (Apr. 6,
2022), 87 FR 21676 (Apr. 12, 2022) (SR-NYSEArca-2021-053)
(``Teucrium Order'').
\50\ See supra note 30. See also CFTC Order of Registration for
ICE Endex at orgiceeregorder170110.pdf.
\51\ See supra note 31.
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Moreover, each of ICE Endex and ICE Futures U.S. is a ``significant
market'' \52\ in relation to the respective Carbon Credit Futures that
trade thereon. Specifically, with respect to the first prong of the
``significant market'' analysis, as the Commission has previously
recognized,\53\ because the Carbon Credit Futures that would be held by
the Fund (i.e., EU ETS futures, CCA futures, and RGGI futures) are only
traded on markets which are members of the ISG or with which the
Exchange holds a CSSA, the ISG membership and CSSA can reasonably be
relied upon to assist in detecting and deterring fraudulent or
manipulative misconduct that affects those assets.
---------------------------------------------------------------------------
\52\ In the Winklevoss Order, the Commission stated that the
term ``significant market'' or ``market of significant size''
includes a market (or group of markets) as to which (1) there is a
reasonable likelihood that a person attempting to manipulate the ETP
would also have to trade on that market to successfully manipulate
the ETP, so that a surveillance-sharing agreement would assist in
detecting and deterring misconduct, and (2) it is unlikely that
trading in the ETP would be the predominant influence on prices in
that market. See Winklevoss Order, 83 FR at 37594. The Commission
explained that this definition is illustrative and not exclusive,
and that there could be other types of ``significant markets'' and
``markets of significant size. See id.
\53\ See Teucrium Order, 87 FR at 21679; Order Granting Approval
of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, To
List and Trade Shares of the Valkyrie XBTO Bitcoin Futures Fund
Under Nasdaq Rule 5711(g), Securities Exchange Act Release No. 94853
(May 5, 2022), 87 FR 28848 (May11, 2022) (SR-NASDAQ-2021-066), at
28852.
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With respect to the second prong of the ``significant market''
analysis, evidence supports the Commission's conclusion that it is
unlikely that trading in the Fund's Shares would be the predominant
influence on prices in the EU ETS futures market of ICE Endex, or the
CCA or RGGI futures markets of ICE Futures U.S. ICE Endex and ICE
Futures U.S., on which the Fund's investments in Carbon Credit Futures
exclusively trade, are currently the largest and most liquid carbon
credit futures markets for these instruments.\54\ In addition, since
the launch of the KFA Global Carbon ETF under the Investment Company
Act of 1940,\55\ which holds CCA and RGGI futures traded on ICE Futures
U.S., and EU ETS futures traded on ICE Endex, the Commission has
neither observed any disruption to the ICE Futures U.S. or ICE Endex
futures markets, nor any evidence that this ETF has exerted a dominant
influence on CCA, RGGI, and/or EU ETS futures' prices. For example,
based on ICE Futures U.S. and ICE Endex data,\56\ the Commission has
not observed any disruption to, or dominant influence from this ETF on,
settlement prices, spreads, or roll costs of the EU ETS, RGGI, or CCA
futures contracts. For these reasons, the Commission is able to
conclude that the Exchange's ISG membership and comprehensive
surveillance-sharing agreement with ICE Endex can be reasonably
expected to assist in surveilling for fraudulent and manipulative acts
and practices with respect to the Carbon Credit Futures proposed to be
held by the Fund.
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\54\ For example, ICE Futures U.S. open interest in RGGI Futures
were 77 million allowances in June 2024. The next largest RGGI
Futures exchange, Nodal, had only 15.6 million allowances open
interest at that time. Report on the Secondary Market for RGGI CO2
Allowances: Second Quarter 2024, Prepared for RGGI, Inc. by Potomac
Economics (Aug. 2024), available at https://www.rggi.org/sites/default/files/Uploads/Market-Monitor/Quarterly-Reports/MM_Secondary_Market_Report_2024_Q2.pdf. Similarly, ICE Endex's EU
ETS futures reached record participation throughout 2023 and during
the first quarter of 2024. See Press Release, Intercontinental
Exchange, ICE Environmental Contracts Traded the Equivalent of $1
Trillion in Notional Value for the Third Consecutive Year (Apr. 22,
2024) available at https://s2.q4cdn.com/154085107/files/doc_news/ICE-Environmental-Contracts-Traded-the-Equivalent-of-1-Trillion-in-Notional-Value-for-the-Third-Consecutive-Year-2024.pdf.
\55\ See Securities Exchange Act Release No. 88255 (Feb. 20,
2020), 85 FR 11146, 11156 (Feb. 26, 2020) (SR-NYSEArca-2019-60)
(Order Granting Accelerated Approval of a Proposed Rule Change, as
Modified by Amendment No. 4, To List and Trade Shares of the KFA
Global Carbon ETF under NYSE Arca Rule 8.600-E) (approving the
listing and trading of an exchange-traded fund (``ETF''), registered
under the Investment Company Act of 1940, holding carbon credit
futures). In 2021, EU ETS futures were transitioned from ICE Futures
Europe to ICE Endex. See press release at Intercontinental
Exchange--ICE to transition European Union Emission Allowance
Contracts to ICE Endex in the Netherlands during the Second Quarter
of 2021.
\56\ The Commission examined futures volume, open interest,
price, and spread data provided by Bloomberg.
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B. Exchange Act Section 11A(a)(1)(C)(iii)
The proposed rule change, as modified by Amendment No. 4, sets
forth aspects of the Fund, including the availability of pricing
information, transparency of portfolio holdings, and types of
surveillance procedures, that are consistent with other ETPs that the
Commission has approved.\57\ This includes commitments regarding: the
availability via the Consolidated Tape Association of quotation and
last-sale information for the Shares; the availability on the Fund's
website of certain information related to the Fund, including net asset
value; the dissemination of the intra-day indicative value by one or
more major market data vendors, updated every 15 seconds throughout the
Exchange's regular trading hours; the Exchange' surveillance procedures
and ability to
[[Page 92266]]
obtain information regarding trading in the Shares of the Fund; the
conditions under which the Exchange would implement trading halts and
suspensions; and the requirements of registered market makers in the
Shares of the Fund. In addition, the Exchange deems the Shares to be
equity securities, thus rendering trading in the Shares subject to that
Exchange's rules governing the trading of equity securities. Further,
the applicable listing rule of the Exchange requires that all
statements and representations made in its filing regarding, among
others, the description of the Fund's holdings, limitations on such
holdings, and the applicability of the Exchange's listing rules
specified in the filing, will constitute continued listing
requirements.\58\ Moreover, the proposed rule change states that the
Sponsor has represented to the Exchange that it will advise that
Exchange of any failure to comply with the applicable continued listing
requirements; pursuant to obligations under Section 19(g)(1) of the
Exchange Act, the Exchange will monitor for compliance with the
continued listing requirements; and if the Fund is not in compliance
with the applicable listing requirements, that Exchange will commence
delisting procedures.
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\57\ See, e.g., July 2024 Spot Bitcoin ETP Approval Order at
62822; January 2024 Spot Bitcoin ETP Approval Order at 3011;
Securities Exchange Act Release No. 61220 (Dec. 22, 2009), 74 FR
68895 (Dec. 29, 2009) (SR-NYSEARCA-2009-94) (Order Granting Approval
of Proposed Rule Change Relating To Listing and Trading Shares of
the ETFS Palladium Trust); Securities Exchange Act Release No. 94518
(Mar. 25, 2022), 87 FR 18837 (Mar. 31, 2022) (SR-NYSEARCA-2021-65)
(Notice of Filing of Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment No. 1,
To List and Trade Shares of the Sprott ESG Gold ETF Under NYSE Arca
Rule 8.201-E (Commodity-Based Trust Shares); Securities Exchange Act
Release No. 100224 (May 23, 2024), 89 FR 46937 (May 30, 2024) (SR-
NYSEARCA-2023-70; SR-NYSEARCA-2024-31; SR-NASDAQ-2023-045; SR-
CboeBZX-2023-069; SR-CboeBZX-2023-070; SR-CboeBZX-2023-087; SR-
CboeBZX-2023-095; SR-CboeBZX-2024-018) (Order Granting Accelerated
Approval of Proposed Rule Changes, as Modified by Amendments
Thereto, To List and Trade Shares of Ether-Based Exchange-Traded
Products).
\58\ See NYSE Arca Rule 8.500-E(d)(2).
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The Commission therefore finds that the proposed rule change, as
modified by Amendment No. 4, is reasonably designed to promote fair
disclosure of information that may be necessary to price the Shares
appropriately, to prevent trading when a reasonable degree of
transparency cannot be assured, to safeguard material non-public
information relating to the Fund's portfolio, and to ensure fair and
orderly markets for the Shares of the Fund.
IV. Solicitation of Comments on Amendment No. 4 to the Proposed Rule
Change
Interested persons are invited to submit written data, views and
arguments concerning whether Amendment No. 4 is consistent with the
Act. 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-NYSEARCA-2024-27 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 number SR-NYSEARCA-2024-27. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEARCA-2024-27 and should
be submitted on or before December 12, 2024.
V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 4
The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 4, prior to the thirtieth day
after the date of publication of notice of the filing of Amendment No.
4 in the Federal Register. Amendment No. 4 to the proposed rule change
clarified the creation and redemptions procedures for the Shares and
provided additional clarification relating to statements concerning the
holdings of the Fund and the custody of cash and cash equivalents. The
changes and additional information in Amendment No. 4 assist the
Commission in evaluating the Exchange's proposal and in determining
that it is consistent with the Act. The amended filing is now
substantially similar to other spot bitcoin ETPs that the Commission
has approved with respect to the Fund's spot bitcoin holdings, and as
discussed above in Section III.A, the spot bitcoin market and the CME
bitcoin futures market remain consistently highly correlated.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\59\ to approve the proposed rule change, as
modified by Amendment No. 4, on an accelerated basis.
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\59\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion
This approval order is based on all of the Exchange's
representations, including those set forth above and in Amendment No.
4. For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 4, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange, and in particular,
Section 6(b)(5) and Section 11A(a)(1)(C)(iii) of the Act.\60\
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\60\ 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k-1(a)(1)(C)(iii).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\61\ that the proposed rule change (SR-NYSEARCA-2024-27), as
modified by Amendment No. 4, be, and it hereby is, approved on an
accelerated basis.
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\61\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\62\
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\62\ 17 CFR 200.30-3(a)(12).
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Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2024-27221 Filed 11-20-24; 8:45 am]
BILLING CODE P
