
[Federal Register Volume 81, Number 201 (Tuesday, October 18, 2016)]
[Notices]
[Pages 71778-71782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-25082]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79084; File No. SR-BatsBZX-2016-30]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order 
Instituting Proceedings To Determine Whether To Approve or Disapprove a 
Proposed Rule Change to BZX Rule 14.11(e)(4), Commodity-Based Trust 
Shares, To List and Trade Winklevoss Bitcoin Shares Issued by the 
Winklevoss Bitcoin Trust

October 12, 2016.
    On June 30, 2016, Bats BZX Exchange, Inc. (``BZX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
list and trade Winklevoss Bitcoin Shares (``Shares'') issued by the 
Winklevoss Bitcoin Trust (``Trust'') under BZX Rule 14.11(e)(4). The 
proposed rule change was published for comment in the Federal Register 
on July 14, 2016.\3\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 78262 (Jul. 8, 
2016), 81 FR 45554 (``Notice'').
---------------------------------------------------------------------------

    The Commission has received six comment letters on the proposed 
rule change.\4\ On August 23, 2016, pursuant

[[Page 71779]]

to Section 19(b)(2) of the Act,\5\ 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.\6\ This order institutes 
proceedings under Section 19(b)(2)(B) of the Act \7\ to determine 
whether to approve or disapprove the proposed rule change.
---------------------------------------------------------------------------

    \4\ See Letters from Robert D. Miller, VP Technical Services, 
RKL eSolutions (July 11, 2016) (``Miller Letter''); Jorge Stolfi, 
Full Professor, Institute of Computing UNICAMP (July 13, 2016) 
(``Stolfi Letter''); Guillaume Lethuillier (July 26, 2016) 
(``Lethuillier Letter''); Michael B. Casey (July 31, 2016) (``Casey 
Letter''); Erik A. Aronesty, Sr. Software Engineer, Bloomberg LP 
(Aug. 2, 2016) (``Aronesty Letter''); and Dan Anderson (Aug. 27, 
2016) (``Anderson Letter''). All comments on the proposed rule 
change are available on the Commission's Web site at: https://www.sec.gov/comments/sr-batsbzx-2016-30/batsbzx201630.shtml.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 78653, 81 FR 59256 
(Aug. 29, 2016). The Commission designated October 12, 2016, as the 
date by which it should approve, disapprove, or institute 
proceedings to determine whether to disapprove the proposed rule 
change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

I. Summary of the Proposal \8\
---------------------------------------------------------------------------

    \8\ The Commission notes that additional information regarding 
the Trust and the Shares, including investment objectives, risks, 
creation and redemption procedures, fees, portfolio holdings 
disclosure policies, calculation of NAV, distributions, and taxes, 
as well as additional background information about bitcoins and the 
Bitcoin network, including information relating to Bitcoin network 
operations, bitcoin transfers and transactions, cryptographic 
security used in the Bitcoin network, Bitcoin mining and creation of 
new bitcoins, the mathematically controlled supply of bitcoins, 
modifications to the Bitcoin protocol, among other things, can be 
found in the Notice (see supra note 3) and the registration 
statement filed with the Commission on Form S-1 (File No. 333-
189752) under the Securities Act of 1933 (``Registration 
Statement''), as applicable.
---------------------------------------------------------------------------

    The Exchange proposes to list and trade the Shares under BZX Rule 
14.11(e)(4), which governs the listing and trading of Commodity-Based 
Trust Shares on the Exchange.\9\ The Shares, which will be registered 
with the Commission by means of the Trust's Registration Statement,\10\ 
represent units of fractional undivided beneficial interest in and 
ownership of the Trust. Digital Asset Services, LLC will be the sponsor 
of the Trust (``Sponsor''). Gemini Trust Company, LLC, the custodian of 
the Trust (``Custodian''), will hold the deposited bitcoins on behalf 
of the Trust in a segregated custody account. The Exchange has 
represented that the Custodian will use its proprietary and patent-
pending offline (i.e., air-gapped) cold-storage system to store the 
Trust's bitcoins.\11\
---------------------------------------------------------------------------

    \9\ See BZX Rule 14.11(e)(4)(C) (permitting the listing and 
trading of ``Commodity-Based Trust Shares,'' defined as a security 
(a) that is issued by a trust that holds a specified commodity 
deposited with the trust; (b) that is issued by such Trust in a 
specified aggregate minimum number in return for a deposit of a 
quantity of the underlying commodity; and (c) that, when aggregated 
in the same specified minimum number, may be redeemed at a holder's 
request by such Trust which will deliver to the redeeming holder the 
quantity of the underlying commodity).
    \10\ See Registration Statement, supra note 8. The Exchange 
states that the most recent amendment to the Registration Statement 
was filed on June 29, 2016, and that the Registration Statement will 
be effective as of the date of any offer and sale pursuant to the 
Registration Statement.
    \11\ According to the Exchange, the Custodian is an affiliate of 
the Sponsor and a New York State-chartered limited liability trust 
company that operates under the direct supervision and regulatory 
authority of the New York State Department of Financial Services. 
The Trust's public Bitcoin addresses are established by the 
Custodian using its proprietary hardware and software security 
technology. The Trust will employ security procedures, described in 
greater detail in the Notice and the Registration Statement, to 
safeguard the bitcoin assets of the Trust. See Notice and 
Registation Statement, supra notes 3 and 8, respectively.
---------------------------------------------------------------------------

    According to the Exchange, the Trust will hold only bitcoins as an 
asset.\12\ The investment objective of the Trust is for the Shares to 
track the price of bitcoins, as measured by the spot price at 4:00 p.m. 
Eastern time on the Gemini Exchange \13\ each day the Exchange is open 
for trading, minus the Trust's liabilities (which include accrued but 
unpaid fees and expenses). On each business day, the Trust's 
administrator will use the Gemini Exchange spot price as measured at 
4:00 p.m. Eastern time to calculate the Trust's net asset value 
(``NAV''). The Trust will issue and redeem the Shares in ``Baskets'' 
only to certain Authorized Participants on an ongoing basis.\14\ 
Creation Baskets will be distributed to the Authorized Participants by 
the Trust in exchange for the delivery to the Trust of the appropriate 
number of bitcoins (i.e., bitcoins equal in value to the value of the 
Shares being purchased). On a redemption, the Trust will distribute 
bitcoins equal in value to the value of the Shares being redeemed to 
the redeeming Authorized Participant in exchange for the delivery to 
the Trust of one or more Baskets. On each business day, the value of a 
Basket for a creation transaction and the value of a Basket for a 
redemption transaction will be equal to one another (i.e., each Basket 
will consist of 50,000 Shares, and the value of the Basket will be 
equal to the value of 50,000 Shares at the NAV per Share on that day).
---------------------------------------------------------------------------

    \12\ As described in greater detail in the Notice and the 
Registration Statement, a bitcoin (with a lower case ``b'') is a 
digital asset that is based on the decentralized, open-source 
protocol of the peer-to-peer Bitcoin computer network. The Bitcoin 
network (with a capital ``B'') hosts the decentralized public 
transaction ledger, known as the ``Blockchain,'' on which all 
bitcoins are recorded. See Notice and Registation Statement, supra 
notes 3 and 8, respectively.
    \13\ The Gemini Exchange is a digital-asset exchange owned and 
operated by the Custodian and is an affiliate of the Sponsor.
    \14\ Each Basket will consist of 50,000 Shares, and the value of 
the Basket will be equal to the value of 50,000 Shares at their NAV 
per Share on that day.
---------------------------------------------------------------------------

II. Summary of Comment Letters

    The Commission has received six comment letters on the proposed 
rule change.\15\ The following is a summary of those letters.
---------------------------------------------------------------------------

    \15\ See supra note 4 and accompanying text.
---------------------------------------------------------------------------

A. Timing of the Proposal and Investor Access to Bitcoin

    One commenter states that the proposal is a timely opportunity for 
the Exchange and investors, and that the proposal will allow investors 
to invest in the technology without having to deal with the complexity 
of holding bitcoins directly.\16\ Another commenter states that it 
supports the goals of the Trust and finds the proposal to be 
appropriate and timely, noting that Bitcoin is in a pivotal year and is 
maturing, and noting that the average number of daily Bitcoin 
transactions is currently 200,000, that more than 350,000 unique 
addresses are being used to hold bitcoins,\17\ and that the Bitcoin 
miners (who validate transaction blocks through computational hashes) 
conduct more than a billion hashes per second.\18\ In addition, the 
commenter states that, in practice, while using Bitcoin may appear 
complex and forbidding, based on fear of theft and concerns about legal 
and tax issues, among other things, the Trust can help a whole category 
of people to gain access, albeit indirectly, to Bitcoin.\19\
---------------------------------------------------------------------------

    \16\ See Miller Letter, supra note 4.
    \17\ Additional information about Bitcoin addresses and storage, 
mining, bitcoin transfers, and the Blockchain, among other things, 
can be found in the Notice. See Notice, 81 FR at 45556-45561, supra 
note 3.
    \18\ See Lethuillier Letter at 1-2, supra note 4.
    \19\ See id. at 2.
---------------------------------------------------------------------------

B. Need for Additional Control and Security Measures

    With respect to security measures to be implemented by the Trust, 
one commenter recommends that additional steps mandating ``proof of 
control'' audits be employed to protect the consumers of this ETP.\20\ 
Specifically, the commenter recommends a monthly ``proof of control'' 
audit of all of the Trust's bitcoins to be performed by the Custodian 
and provided to the Sponsor, who should display the signed messages on 
its Web site to publicly demonstrate proof of control over the bitcoins 
held by the Trust.\21\ According to this commenter, the message to be 
signed can be the mined hash of a

[[Page 71780]]

predetermined block height, which is guaranteed to be both easily 
verifiable and unknown in advance,\22\ and the signatures can be 
created with the private keys still in cold storage and air-gapped.\23\ 
This commenter notes that publicly identifying the addresses holding 
the bitcoins adds no risk to them being stolen due to the nature of 
Bitcoin.\24\ According to the commenter, the bitcoins remain secure 
from even quantum attack as the public key is never revealed, no 
additional risk is incurred by publishing the proof-of-control audit, 
and opening control to public audit vastly increases confidence in 
possession and control of the underlying asset.\25\ In addition, the 
commenter notes that publishing the proof-of-control audit on a monthly 
basis would not place an undue burden on either the Sponsor or 
Custodian, as less-regular audits are scheduled in any event.\26\
---------------------------------------------------------------------------

    \20\ See Casey Letter, supra note 4.
    \21\ See id. at 2.
    \22\ See id.
    \23\ See id.
    \24\ See id.
    \25\ See id.
    \26\ See id.
---------------------------------------------------------------------------

    Another commenter addressed proof-of-control audits, adding that, 
unlike with non[hyphen]digital assets, an ``audit'' of assets in 
bitcoins can be low cost, public, and automated, and that there is no 
legitimate reason to maintain secrecy of the holdings involved in a 
trust or exchange.\27\ This commenter notes that a well[hyphen]managed 
trust should be able to trivially update its proof of assets at least 
once every day, if not more often (every time a bitcoin is moved or 
acquired).\28\ This commenter proposes that the Commission require that 
any trust holding bitcoins either (i) maintain insurance on its assets, 
or (ii) allow for public, daily audit of funds. Without one of those 
two measures, the commenter states, investors in a bitcoin trust cannot 
be reasonably assured that their investment is being soundly 
custodied.\29\ The commenter concludes by stating that, given the 
nature of bitcoins as electronic assets, a public and daily proof, 
rather than the stated provisions for private audits, should also be 
considered.\30\
---------------------------------------------------------------------------

    \27\ See Aronesty Letter, supra note 4.
    \28\ See id.
    \29\ See id.
    \30\ See id.
---------------------------------------------------------------------------

    Another commenter states that, according to the proposed rule 
change, the Custodian's Cold Storage System utilizes multiple-signature 
(``Multisig'') technology with an ``M-of-N'' signing design that 
requires a signature from more than one (1) Signer (but fewer than the 
full complement of potential Signers) in order to move the Trust's 
bitcoins.\31\ The commenter recommends amending the proposal in order 
to unambiguously specify the M-of-N signing design used to secure the 
Custodian's Cold Storage System and to require the Trust to notify 
interested third parties, such as the Commission or, as the case may 
be, the Trust's insurer, of any modification of the Multisig 
characteristics in the future.\32\ Specifically, this commenter notes 
that the proposed rule change fails to provide a meaningful description 
of the security level of the storage system Multisig.\33\ The proposal, 
the commenter asserts, ``merely defines what a [M]ultisig is, in 
general, while only excluding the extreme cases M = 1, insecure, and M 
= N, unpractical.'' \34\ The commenter states that the present signing 
design is complicated by the fact that the Signers, which are hardware 
devices, are activated by Signatories, which are human beings.\35\ The 
commenter states that, as result, the given definition is overly 
abstract and incomplete. Because the signing design is critical to the 
safety of the funds, the commenter asserts, ``the Trust should 
communicate the following elements to the interested third parties such 
as the Commission or, as the case should be, the Trust's insurer: (i) 
Exact number of required Signers; (ii) Exact number of potential 
Signers; (iii) detailed explanation of why the chosen M-of-N 
configuration is adequate; (iv) complete list of the Signatories and 
what Signer(s) they can activate; and (v) useful information related to 
the Signatories' keys. . . . '' \36\ The commenter adds that the Trust 
should notify the relevant persons without delay of any modification of 
any of the above elements: (i) Through (iii) should be publicly 
announced, and, for security reasons, (iv) and (v) should be notified 
to the interested third parties only.\37\
---------------------------------------------------------------------------

    \31\ Additional information about the ``M-of-N'' signing design 
can be found in the Notice. See Notice, 81 FR at 45566-45567, supra 
note 3.
    \32\ See Lethuillier Letter at 3, supra note 4.
    \33\ See id.
    \34\ See id.
    \35\ See id.
    \36\ See id.
    \37\ See id.
---------------------------------------------------------------------------

C. Need for Insurance on the Fund's Holdings

    A commenter notes that ``[b]ecause safety measures cannot prevent 
thefts from the outside or the inside, [and] because human rationality 
is inherently bounded,'' he does not support the fact that the Trust's 
bitcoins are not insured.\38\ This commenter further asserts that the 
Gemini Exchange was able to discover on its own a failure to secure the 
secret keys that would maintain the safe custody of bitcoins.\39\
---------------------------------------------------------------------------

    \38\ See Lethuillier Letter at 2-3, supra note 4.
    \39\ See id.
---------------------------------------------------------------------------

D. Need for Regulation of the Bitcoin ETP Industry

    One commenter states that, despite the advances in Bitcoin 
development, owning and controlling bitcoins remains a highly 
specialized task, which includes secure management of private keys and 
``fairly advanced technological know-how.'' \40\ Because of the 
difficulty and specialized knowledge required to manage bitcoins, many 
investors rely on exchanges to act as custodians of their value. As a 
result, the commenter believes that a Bitcoin ETP is a major milestone 
and improvement and that it is crucial that the Commission regulate 
this industry.\41\ The commenter concludes by noting that the concerns 
regarding bitcoin security would be greatly diminished were it possible 
to trade an ETP backed by bitcoins, rather than the bitcoins 
themselves.\42\
---------------------------------------------------------------------------

    \40\ See Anderson Letter, supra note 4.
    \41\ See id.
    \42\ See id.
---------------------------------------------------------------------------

E. Speculative Nature of Bitcoin as an Underlying Digital Asset

    One commenter disagreed with the notion that bitcoins are 
commodities; rather, the commenter likened bitcoins to be more like 
``penny stock'' or shares of a ponzi scheme.\43\ The commenter notes 
that the market price of a bitcoin, like that of a penny stock or ponzi 
fund, is ``entirely speculative, based on expectations of traders about 
future prices, which will be based on expectations of future 
expectations.'' \44\ The commenter asserts that Bitcoin has the 
essential characteristics of a penny stock or a pyramid scheme: The 
profit of early investors comes entirely from the investment of later 
ones.\45\ In the commenter's view, because bitcoins are primarily used 
for investment, bitcoins should be regulated like a security, in which 
case they should be regulated the same way a penny stock or ponzi fund 
would be.\46\ The commenter concludes that the proposed ETF does not 
add any productive mechanism to the underlying bitcoins, but rather 
makes bitcoins accessible to investments funds, such as retirement 
funds.\47\
---------------------------------------------------------------------------

    \43\ See Stolfi Letter, supra note 4.
    \44\ See id.
    \45\ See id.
    \46\ See id.
    \47\ See id.

---------------------------------------------------------------------------

[[Page 71781]]

F. Concerns Regarding the Gemini Exchange and the Gemini Exchange Spot 
Price

    One commenter expresses concerns regarding the Gemini Exchange Spot 
Price.\48\ Specifically, the commenter states, the nominal price of the 
shares under the proposal is supposed to be tied to the market price of 
bitcoins at the Gemini Exchange, which is closely tied to the ETP 
proponents.\49\ In addition, the commenter states, the Gemini Exchange 
has relatively low liquidity and trade volume in bitcoins.\50\ The 
commenter asserts that there is a significant risk that the nominal ETP 
share price ``will be manipulated, by relatively small trades that 
manipulate the bitcoin price at that exchange.'' \51\
---------------------------------------------------------------------------

    \48\ See id.
    \49\ See id.
    \50\ See id.
    \51\ See id.
---------------------------------------------------------------------------

III. Proceedings To Determine Whether To Approve or Disapprove SR-
BatsBZX-2016-30 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \52\ to determine whether the proposed rule 
change should be approved or disapproved. Institution of such 
proceedings is appropriate at this time in view of the legal and policy 
issues raised by the proposed rule change. Institution of proceedings 
does not indicate that the Commission has reached any conclusions with 
respect to any of the issues involved. Rather, as described below, the 
Commission seeks and encourages interested persons to provide comments 
on the proposed rule change.
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act,\53\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of the proposed rule change's consistency with Section 6(b)(5) 
of the Act, which requires, among other things, that the rules of a 
national securities exchange be ``designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade,'' and ``to protect investors and the public 
interest.'' \54\
---------------------------------------------------------------------------

    \53\ Id.
    \54\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) or any other provision of the Act, or 
the rules and regulations thereunder. Although there do not appear to 
be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\55\
---------------------------------------------------------------------------

    \55\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by November 8, 2016. Any person who wishes to file a 
rebuttal to any other person's submission must file that rebuttal by 
November 22, 2016. The Commission asks that commenters address the 
sufficiency of the Exchange's statements in support of the proposal, 
which are set forth in the Notice,\56\ in addition to any other 
comments they may wish to submit about the proposed rule change. In 
particular, the Commission seeks comment on the following:
---------------------------------------------------------------------------

    \56\ See supra note 3.
---------------------------------------------------------------------------

    1. The proposed fund, if approved, would be the first exchange-
traded product available on U.S. markets to hold a digital asset such 
as bitcoins, which have neither a physical form (unlike commodities) 
nor an issuer that is currently registered with any regulatory body 
(unlike securities, futures, or derivatives), and whose fundamental 
properties and ownership can, by coordination among a majority of its 
network processing power, be changed (unlike any of the above). 
Moreover, as the Exchange acknowledges in its proposal, less than three 
years ago, the bitcoin exchange then responsible for nearly three-
quarters of worldwide bitcoin trading lost a substantial amount of its 
bitcoin holdings through computer hacking or fraud and failed.\57\ What 
are commenters' views about the current stability, resilience, 
fairness, and efficiency of the markets on which bitcoina are traded? 
What are commenters' views on whether an asset with the novel and 
unique properties of a bitcoin is an appropriate underlying asset for a 
product that will be traded on a national securities exchange? What are 
commenters' views on the risk of loss via computer hacking posed by 
such an asset? What are commenters' views on whether an ETP based on 
such an asset would be susceptible to manipulation?
---------------------------------------------------------------------------

    \57\ See Notice, supra note 3, at 25 n.19.
---------------------------------------------------------------------------

    2. According to the Exchange, the Gemini Exchange Spot Price is 
representative of the accurate price of a bitcoin because of the 
positive price-discovery attributes of the Gemini Exchange marketplace. 
What are commenters' views on the manner in which the Trust proposes to 
value its holdings?
    3. According to the Exchange, the Gemini Exchange is a Digital 
Asset exchange owned and operated by the Custodian and is an affiliate 
of the Sponsor. What are commenters' views regarding whether any 
potential conflict of interest or other issue might arise due to the 
relationship between entities such as the Sponsor, the Custodian, and 
the Gemini Exchange?
    4. According to several commenters, there is a need for the 
Exchange to provide additional information regarding ``proof of 
control'' auditing, multisig protocols, and insurance with respect to 
the bitcoins held in custody on behalf of the Trust, in the interest of 
adequate security and investor confidence in bitcoin control. What are 
commenters' views on these recommendations regarding additional 
security, control, and insurance measures?
    5. A commenter notes that the Gemini Exchange has relatively low 
liquidity and trading volume in bitcoins and that there is a 
significant risk that the nominal ETP share price ``will be 
manipulated, by relatively small trades that manipulate the bitcoin 
price at that exchange.'' \58\ What are commenters' views on the 
concerns expressed by this commenter? What are commenters' views 
regarding the susceptibility of the price of the Shares to 
manipulation, considering that the NAV would be based on the spot price 
of a single bitcoin exchange? What are commenters' views generally with 
respect to the liquidity and transparency of the bitcoin market, and 
thus the suitability of bitcoins as an underlying asset for an ETP?
---------------------------------------------------------------------------

    \58\ See Stolfi Letter, supra note 4.
---------------------------------------------------------------------------

    6. The Exchange asserts that the widespread availability of 
information

[[Page 71782]]

regarding Bitcoin, the Trust, and the Shares, combined with the ability 
of Authorized Participants to create and redeem Baskets each Business 
Day, thereby utilizing the arbitrage mechanism, will be sufficient for 
market participants to value and trade the Shares in a manner that will 
not lead to significant deviations between intraday Best Bid/Best Ask 
and the Intraday Indicative Value or between the Best Bid/Best Ask and 
the NAV. In addition, the Exchange asserts that the numerous options 
for buying and selling bitcoins will both provide Authorized 
Participants with many options for hedging their positions and provide 
market participants generally with potential arbitrage opportunities, 
further strengthening the arbitrage mechanism as it relates to the 
Shares. What are commenters' views regarding these statements? Do 
commenters' agree or disagree with the assertion that Authorized 
Participants and other market makers will be able to make efficient and 
liquid markets in the Shares at prices generally in line with the NAV? 
What are commenters' views on whether the relationship between the 
Gemini Exchange and the Trust's Sponsor and Custodian might affect the 
arbitrage mechanism?
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-BatsBZX-2016-30 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 Numbers SR-BatsBZX-2016-30. 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 Web site (http://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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of these filings also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BatsBZX-2016-30 and should 
be submitted on or before November 8, 2016. Rebuttal comments should be 
submitted by November 22, 2016.
---------------------------------------------------------------------------

    \59\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\59\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25082 Filed 10-17-16; 8:45 am]
 BILLING CODE 8011-01-P


