
[Federal Register Volume 88, Number 162 (Wednesday, August 23, 2023)]
[Notices]
[Pages 57490-57505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18103]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98156; File No. SR-CboeBZX-2023-058]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To List and Trade Shares of the Global 
X Bitcoin Trust, Under BZX Rule 14.11(e)(4), Commodity-Based Trust 
Shares

August 17, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 4, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change to list and trade shares of the Global X Bitcoin 
Trust (the ``Trust''),\3\ under BZX Rule 14.11(e)(4), Commodity-Based 
Trust Shares.
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    \3\ The Trust was formed as a Delaware statutory trust on July 
13, 2021 and is operated as a grantor trust for U.S. federal tax 
purposes. The Trust has no fixed termination date.
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    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares under BZX Rule 
14.11(e)(4),\4\ which governs the listing and trading of Commodity-
Based Trust Shares on the Exchange.\5\ Global X Digital Assets is the 
sponsor of the Trust (``Sponsor''). The Shares will be registered with 
the Commission by means of the Trust's registration statement on Form 
S-1 (the ``Registration Statement'').\6\ A third-party U.S.-based trust 
company and qualified custodian will be responsible for custody of the 
Trust's bitcoin (the ``Custodian'').
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    \4\ The Commission approved BZX Rule 14.11(e)(4) in Securities 
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 
(September 6, 2011) (SR-BATS-2011-018).
    \5\ All statements and representations made in this filing 
regarding (a) the description of the portfolio, (b) limitations on 
portfolio holdings or reference assets, or (c) the applicability of 
Exchange rules and surveillance procedures shall constitute 
continued listing requirements for listing the Shares on the 
Exchange.
    \6\ See Form S-1 Registration Statement submitted to the 
Commission on July 21, 2021. 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.
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    As further discussed below, the Commission has historically 
approved or disapproved exchange filings to list and trade series of 
Trust Issued Receipts, including spot-based Commodity-Based Trust 
Shares, on the basis of whether the listing exchange has in place a 
comprehensive surveillance sharing agreement with a regulated market of 
significant size related to the underlying commodity to be held.\7\ 
Prior orders from the Commission have pointed out that in every prior 
approval order for Commodity-Based Trust Shares, there has been a 
derivatives market that represents the regulated market of significant 
size, generally a Commodity Futures Trading Commission (the ``CFTC'') 
regulated futures market.\8\

[[Page 57491]]

Further to this point, the Commission's prior orders have noted that 
the spot commodities and currency markets for which it has previously 
approved spot ETPs are generally unregulated and that the Commission 
relied on the underlying futures market as the regulated market of 
significant size that formed the basis for approving the series of 
Currency and Commodity-Based Trust Shares, including gold, silver, 
platinum, palladium, copper, and other commodities and currencies. The 
Commission specifically noted in the Winklevoss Order that the First 
Gold Approval Order ``was based on an assumption that the currency 
market and the spot gold market were largely unregulated.'' \9\
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    \7\ See Securities Exchange Act Release No. 83723 (July 26, 
2018), 83 FR 37579 (August 1, 2018). This proposal was subsequently 
disapproved by the Commission. See Securities Exchange Act Release 
No. 83723 (July 26, 2018), 83 FR 37579 (August 1, 2018) (the 
``Winklevoss Order'').
    \8\ See streetTRACKS Gold Shares, Exchange Act Release No. 50603 
(Oct. 28, 2004), 69 FR 64614, 64618-19 (Nov. 5, 2004) (SR-NYSE-2004-
22) (the ``First Gold Approval Order''); iShares COMEX Gold Trust, 
Exchange Act Release No. 51058 (Jan. 19, 2005), 70 FR 3749, 3751, 
3754-55 (Jan. 26, 2005) (SR-Amex-2004-38); iShares Silver Trust, 
Exchange Act Release No. 53521 (Mar. 20, 2006), 71 FR 14967, 14968, 
14973-74 (Mar. 24, 2006) (SR-Amex-2005-072); ETFS Gold Trust, 
Exchange Act Release No. 59895 (May 8, 2009), 74 FR 22993, 22994-95, 
22998, 23000 (May 15, 2009) (SR-NYSEArca-2009-40); ETFS Silver 
Trust, Exchange Act Release No. 59781 (Apr. 17, 2009), 74 FR 18771, 
18772, 18775-77 (Apr. 24, 2009) (SR-NYSEArca-2009-28); ETFS 
Palladium Trust, Exchange Act Release No. 61220 (Dec. 22, 2009), 74 
FR 68895, 68896 (Dec. 29, 2009) (SR-NYSEArca-2009-94) (notice of 
proposed rule change included NYSE Arca's representation that 
``[t]he most significant palladium futures exchanges are the NYMEX 
and the Tokyo Commodity Exchange,'' that ``NYMEX is the largest 
exchange in the world for trading precious metals futures and 
options,'' and that NYSE Arca ``may obtain trading information via 
the Intermarket Surveillance Group,'' of which NYMEX is a member, 
Exchange Act Release No. 60971 (Nov. 9, 2009), 74 FR 59283, 59285-
86, 59291 (Nov. 17, 2009)); ETFS Platinum Trust, Exchange Act 
Release No. 61219 (Dec. 22, 2009), 74 FR 68886, 68887-88 (Dec. 29, 
2009) (SR-NYSEArca-2009-95) (notice of proposed rule change included 
NYSE Arca's representation that ``[t]he most significant platinum 
futures exchanges are the NYMEX and the Tokyo Commodity Exchange,'' 
that ``NYMEX is the largest exchange in the world for trading 
precious metals futures and options,'' and that NYSE Arca ``may 
obtain trading information via the Intermarket Surveillance Group,'' 
of which NYMEX is a member, Exchange Act Release No. 60970 (Nov. 9, 
2009), 74 FR 59319, 59321, 59327 (Nov. 17, 2009)); Sprott Physical 
Gold Trust, Exchange Act Release No. 61496 (Feb. 4, 2010), 75 FR 
6758, 6760 (Feb. 10, 2010) (SR-NYSEArca-2009-113) (notice of 
proposed rule change included NYSE Arca's representation that the 
COMEX is one of the ``major world gold markets,'' that NYSE Arca 
``may obtain trading information via the Intermarket Surveillance 
Group,'' and that NYMEX, of which COMEX is a division, is a member 
of the Intermarket Surveillance Group, Exchange Act Release No. 
61236 (Dec. 23, 2009), 75 FR 170, 171, 174 (Jan. 4, 2010)); Sprott 
Physical Silver Trust, Exchange Act Release No. 63043 (Oct. 5, 
2010), 75 FR 62615, 62616, 62619, 62621 (Oct. 12, 2010) (SR-
NYSEArca-2010-84); ETFS Precious Metals Basket Trust, Exchange Act 
Release No. 62692 (Aug. 11, 2010), 75 FR 50789, 50790 (Aug. 17, 
2010) (SR-NYSEArca-2010-56) (notice of proposed rule change included 
NYSE Arca's representation that ``the most significant gold, silver, 
platinum and palladium futures exchanges are the COMEX and the 
TOCOM'' and that NYSE Arca ``may obtain trading information via the 
Intermarket Surveillance Group,'' of which COMEX is a member, 
Exchange Act Release No. 62402 (Jun. 29, 2010), 75 FR 39292, 39295, 
39298 (July 8, 2010)); ETFS White Metals Basket Trust, Exchange Act 
Release No. 62875 (Sept. 9, 2010), 75 FR 56156, 56158 (Sept. 15, 
2010) (SR-NYSEArca-2010-71) (notice of proposed rule change included 
NYSE Arca's representation that ``the most significant silver, 
platinum and palladium futures exchanges are the COMEX and the 
TOCOM'' and that NYSE Arca ``may obtain trading information via the 
Intermarket Surveillance Group,'' of which COMEX is a member, 
Exchange Act Release No. 62620 (July 30, 2010), 75 FR 47655, 47657, 
47660 (Aug. 6, 2010)); ETFS Asian Gold Trust, Exchange Act Release 
No. 63464 (Dec. 8, 2010), 75 FR 77926, 77928 (Dec. 14, 2010) (SR-
NYSEArca-2010-95) (notice of proposed rule change included NYSE 
Arca's representation that ``the most significant gold futures 
exchanges are the COMEX and the Tokyo Commodity Exchange,'' that 
``COMEX is the largest exchange in the world for trading precious 
metals futures and options,'' and that NYSE Arca ``may obtain 
trading information via the Intermarket Surveillance Group,'' of 
which COMEX is a member, Exchange Act Release No. 63267 (Nov. 8, 
2010), 75 FR 69494, 69496, 69500-01 (Nov. 12, 2010)); Sprott 
Physical Platinum and Palladium Trust, Exchange Act Release No. 
68430 (Dec. 13, 2012), 77 FR 75239, 75240-41 (Dec. 19, 2012) (SR-
NYSEArca-2012–111) (notice of proposed rule change included 
NYSE Arca's representation that ``[f]utures on platinum and 
palladium are traded on two major exchanges: The New York Mercantile 
Exchange . . . and Tokyo Commodities Exchange'' and that NYSE Arca 
``may obtain trading information via the Intermarket Surveillance 
Group,'' of which COMEX is a member, Exchange Act Release No. 68101 
(Oct. 24, 2012), 77 FR 65732, 65733, 65739 (Oct. 30, 2012)); APMEX 
Physical--1 oz. Gold Redeemable Trust, Exchange Act Release No. 
66930 (May 7, 2012), 77 FR 27817, 27818 (May 11, 2012) (SR-NYSEArca-
2012-18) (notice of proposed rule change included NYSE Arca's 
representation that NYSE Arca ``may obtain trading information via 
the Intermarket Surveillance Group,'' of which COMEX is a member, 
and that gold futures are traded on COMEX and the Tokyo Commodity 
Exchange, with a cross-reference to the proposed rule change to list 
and trade shares of the ETFS Gold Trust, in which NYSE Arca 
represented that COMEX is one of the ``major world gold markets,'' 
Exchange Act Release No. 66627 (Mar. 20, 2012), 77 FR 17539, 17542-
43, 17547 (Mar. 26, 2012)); JPM XF Physical Copper Trust, Exchange 
Act Release No. 68440 (Dec. 14, 2012), 77 FR 75468, 75469-70, 75472, 
75485-86 (Dec. 20, 2012) (SR-NYSEArca-2012-28); iShares Copper 
Trust, Exchange Act Release No. 68973 (Feb. 22, 2013), 78 FR 13726, 
13727, 13729-30, 13739-40 (Feb. 28, 2013) (SR-NYSEArca-2012-66); 
First Trust Gold Trust, Exchange Act Release No. 70195 (Aug. 14, 
2013), 78 FR 51239, 51240 (Aug. 20, 2013) (SR-NYSEArca-2013-61) 
(notice of proposed rule change included NYSE Arca's representation 
that FINRA, on behalf of the exchange, may obtain trading 
information regarding gold futures and options on gold futures from 
members of the Intermarket Surveillance Group, including COMEX, or 
from markets ``with which [NYSE Arca] has in place a comprehensive 
surveillance sharing agreement,'' and that gold futures are traded 
on COMEX and the Tokyo Commodity Exchange, with a cross-reference to 
the proposed rule change to list and trade shares of the ETFS Gold 
Trust, in which NYSE Arca represented that COMEX is one of the 
``major world gold markets,'' Exchange Act Release No. 69847 (June 
25, 2013), 78 FR 39399, 39400, 39405 (July 1, 2013)); Merk Gold 
Trust, Exchange Act Release No. 71378 (Jan. 23, 2014), 79 FR 4786, 
4786-87 (Jan. 29, 2014) (SR-NYSEArca-2013-137) (notice of proposed 
rule change included NYSE Arca's representation that ``COMEX is the 
largest gold futures and options exchange'' and that NYSE Arca ``may 
obtain trading information via the Intermarket Surveillance Group,'' 
including with respect to transactions occurring on COMEX pursuant 
to CME and NYMEX's membership, or from exchanges ``with which [NYSE 
Arca] has in place a comprehensive surveillance sharing agreement,'' 
Exchange Act Release No. 71038 (Dec. 11, 2013), 78 FR 76367, 76369, 
76374 (Dec. 17, 2013)); Long Dollar Gold Trust, Exchange Act Release 
No. 79518 (Dec. 9, 2016), 81 FR 90876, 90881, 90886, 90888 (Dec. 15, 
2016) (SR-NYSEArca-2016-84).
    \9\ See Winklevoss Order at 37592.
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    As such, the regulated market of significant size test does not 
require that the spot bitcoin market be regulated in order for the 
Commission to approve this proposal, and precedent makes clear that a 
regulated underlying market for a spot commodity or currency would be 
an exception to the norm. These largely unregulated currency and 
commodity markets do not provide the same protections as the markets 
that are subject to the Commission's oversight, but the Commission has 
consistently looked to surveillance sharing agreements with the 
relevant underlying futures market to determine whether such products 
were consistent with the Act. With this in mind, the CME Bitcoin 
Futures market is the appropriate market to consider in determining 
whether there is a related regulated market of significant size.
    Further to this point, the Exchange notes that the Commission has 
approved proposals related to the listing and trading of funds that 
would primarily hold CME Bitcoin Futures that are registered under the 
Securities Act of 1933.\10\ In the Teucrium Approval, the Commission 
found the CME Bitcoin Futures market to be a regulated market of 
significant size as it relates to CME Bitcoin Futures, an odd 
tautological truth that is also inconsistent with prior disapproval 
orders for ETPs that would hold actual bitcoin instead of derivatives 
contracts (``Spot Bitcoin ETPs'') that use the exact same pricing 
methodology as the CME Bitcoin Futures. As further discussed below, 
both the Exchange and the Sponsor believe that this proposal and the 
included analysis are sufficient to establish that the CME Bitcoin 
Futures market represents a regulated market of significant size as it 
relates both to the CME Bitcoin Futures market and to the spot bitcoin 
market and that this proposal should be approved.
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    \10\ See Exchange Act Release Nos. 94620 (April 6, 2022), 87 FR 
21676 (April 12, 2022) (the ``Teucrium Approval'') and 94853 (May 5, 
2022) (collectively, with the Teucrium Approval, the ``Bitcoin 
Futures Approvals'').
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    Finally, as discussed in greater detail below, by using 
professional custodians and other service providers, the Trust provides 
investors interested in exposure to bitcoin with important protections 
that are not always available to investors that invest directly in 
bitcoin, including protection against insolvency, cyber attacks, and 
other risks. If U.S. investors had access to vehicles such as the Trust 
for their bitcoin investments, instead of directing their bitcoin 
investments into loosely regulated offshore vehicles (such as loosely 
regulated centralized exchanges that have since faced bankruptcy 
proceedings or other insolvencies), then countless investors would have 
had the option to better protect their principal investments in bitcoin 
from the afore-mentioned events and risks.
Background
    Bitcoin is a digital asset based on the decentralized, open source 
protocol of the peer-to-peer computer network launched in 2009 that 
governs the creation, movement, and ownership of bitcoin and hosts the 
public ledger, or ``blockchain,'' on which all bitcoin transactions are 
recorded (the ``Bitcoin Network'' or ``Bitcoin''). The decentralized 
nature of the Bitcoin Network allows parties to transact directly with 
one another based on cryptographic proof instead of relying on a 
trusted third party. The protocol also lays out the rate of issuance of 
new bitcoin within the Bitcoin Network, a rate that is reduced by half 
approximately every four years with an eventual hard cap of 21 million. 
It's generally understood that the combination of these two features--a 
systemic hard cap of 21 million bitcoin and the ability to transact 
trustlessly with anyone connected to the Bitcoin Network--gives bitcoin 
its value. The first rule filing proposing to list an exchange-traded 
product to provide exposure to bitcoin in the U.S. was submitted by the 
Exchange on June 30, 2016.\11\ At that time, blockchain technology, and 
digital assets that utilized it, were relatively new to the broader 
public. The market cap of all bitcoin in existence at that time was 
approximately $10 billion. No registered offering of digital asset 
securities or shares in an investment vehicle with exposure to bitcoin 
or any other cryptocurrency had yet been conducted, and the regulated 
infrastructure for conducting a digital asset securities

[[Page 57492]]

offering had not begun to develop.\12\ Similarly, regulated U.S. 
bitcoin futures contracts did not exist. The CFTC had determined that 
bitcoin is a commodity,\13\ but had not engaged in significant 
enforcement actions in the space. The New York Department of Financial 
Services (``NYDFS'') adopted its final BitLicense regulatory framework 
in 2015, but had only approved four entities to engage in activities 
relating to virtual currencies (whether through granting a BitLicense 
or a limited-purpose trust charter) as of June 30, 2016.\14\ While the 
first over-the-counter bitcoin fund launched in 2013, public trading 
was limited and the fund had only $60 million in assets.\15\ There were 
very few, if any, traditional financial institutions engaged in the 
space, whether through investment or providing services to digital 
asset companies. In January 2018, the Staff of the Commission noted in 
a letter to the Investment Company Institute and SIFMA that it was not 
aware, at that time, of a single custodian providing fund custodial 
services for digital assets.\16\ Fast forward to today and the digital 
assets financial ecosystem, including bitcoin, has progressed 
significantly. The development of a regulated market for digital asset 
securities has significantly evolved, with market participants having 
conducted registered public offerings of both digital asset securities 
\17\ and shares in investment vehicles holding bitcoin futures.\18\ 
Additionally, licensed and regulated service providers have emerged to 
provide fund custodial services for digital assets, among other 
services, including the Custodian. For example, in February 2023, the 
Commission proposed to amend Rule 206(4)-2 under the Advisers Act of 
1940 (the ``custody rule'') to expand the scope beyond client funds and 
securities to include all crypto assets, among other assets; \19\ in 
May 2021, the Staff of the Commission released a statement permitting 
open-end mutual funds to invest in cash-settled bitcoin futures; in 
December 2020, the Commission adopted a conditional no-action position 
permitting certain special purpose broker-dealers to custody digital 
asset securities under Rule 15c3-3 under the Exchange Act (the 
``Custody Statement''); \20\ in September 2020, the Staff of the 
Commission released a no-action letter permitting certain broker-
dealers to operate a non-custodial Alternative Trading System (``ATS'') 
for digital asset securities, subject to specified conditions; \21\ in 
October 2019, the Staff of the Commission granted temporary relief from 
the clearing agency registration requirement to an entity seeking to 
establish a securities clearance and settlement system based on 
distributed ledger technology,\22\ and multiple transfer agents who 
provide services for digital asset securities registered with the 
Commission.\23\
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    \11\ See Winklevoss Order.
    \12\ Digital assets that are securities under U.S. law are 
referred to throughout this proposal as ``digital asset 
securities.'' All other digital assets, including bitcoin, are 
referred to interchangeably as ``cryptocurrencies'' or ``virtual 
currencies.'' The term ``digital assets'' refers to all digital 
assets, including both digital asset securities and 
cryptocurrencies, together.
    \13\ See ``In the Matter of Coinflip, Inc.'' (``Coinflip'') 
(CFTC Docket 15-29 (September 17, 2015)) (order instituting 
proceedings pursuant to Sections 6(c) and 6(d) of the CEA, making 
findings and imposing remedial sanctions), in which the CFTC stated: 
``Section 1a(9) of the CEA defines `commodity' to include, among 
other things, `all services, rights, and interests in which 
contracts for future delivery are presently or in the future dealt 
in.' 7 U.S.C. Sec.  1a(9). The definition of a `commodity' is broad. 
See, e.g., Board of Trade of City of Chicago v. SEC, 677 F. 2d 1137, 
1142 (7th Cir. 1982). Bitcoin and other virtual currencies are 
encompassed in the definition and properly defined as commodities.''
    \14\ A list of virtual currency businesses that are entities 
regulated by the NYDFS is available on the NYDFS website. See 
https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_businesses/regulated_entities.
    \15\ Data as of March 31, 2016 according to publicly available 
filings. See Bitcoin Investment Trust Form S-1, dated May 27, 2016, 
available at https://www.sec.gov/Archives/edgar/data/1588489/000095012316017801/filename1.htm.
    \16\ See letter from Dalia Blass, Director, Division of 
Investment Management, U.S. Securities and Exchange Commission to 
Paul Schott Stevens, President & CEO, Investment Company Institute 
and Timothy W. Cameron, Asset Management Group--Head, Securities 
Industry and Financial Markets Association (January 18, 2018), 
available at https://www.sec.gov/divisions/investment/noaction/2018/cryptocurrency-011818.htm.
    \17\ See Prospectus supplement filed pursuant to Rule 424(b)(1) 
for INX Tokens (Registration No. 333-233363), available at https://www.sec.gov/Archives/edgar/data/1725882/000121390020023202/ea125858-424b1_inxlimited.htm.
    \18\ See Prospectus filed by Stone Ridge Trust VI on behalf of 
NYDIG Bitcoin Strategy Fund Registration, available at https://www.sec.gov/Archives/edgar/data/1764894/000119312519309942/d693146d497.htm.
    \19\ See Investment Advisers Act Release No. 6240 88 FR 14672 
(March 9, 2023) (Safeguarding Advisory Client Assets).
    \20\ See Securities Exchange Act Release No. 90788, 86 FR 11627 
(February 26, 2021) (File Number S7-25-20) (Custody of Digital Asset 
Securities by Special Purpose Broker-Dealers).
    \21\ See letter from Elizabeth Baird, Deputy Director, Division 
of Trading and Markets, U.S. Securities and Exchange Commission to 
Kris Dailey, Vice President, Risk Oversight & Operational 
Regulation, Financial Industry Regulatory Authority (September 25, 
2020), available at https://www.sec.gov/divisions/marketreg/mr-noaction/2020/finra-ats-role-in-settlement-of-digital-asset-security-trades-09252020.pdf.
    \22\ See letter from Jeffrey S. Mooney, Associate Director, 
Division of Trading and Markets, U.S. Securities and Exchange 
Commission to Charles G. Cascarilla & Daniel M. Burstein, Paxos 
Trust Company, LLC (October 28, 2019), available at https://www.sec.gov/divisions/marketreg/mr-noaction/2019/paxos-trust-company-102819-17a.pdf.
    \23\ See, e.g., Form TA-1/A filed by Tokensoft Transfer Agent 
LLC (CIK: 0001794142) on January 8, 2021, available at https://www.sec.gov/Archives/edgar/data/1794142/000179414219000001/xslFTA1X01/primary_doc.xml.
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    Outside the Commission's purview, the regulatory landscape has 
changed significantly since 2016, and cryptocurrency markets have grown 
and evolved as well. The market for bitcoin is approximately 100 times 
larger, having at one point reached a market cap of over $1 
trillion.\24\ According to the CME Bitcoin Futures Report, from 
February 13, 2023 through March 27, 2023, CFTC regulated bitcoin 
futures represented between $750 million and $3.2 billion in notional 
trading volume on Chicago Mercantile Exchange (``CME'') (``Bitcoin 
Futures'') on a daily basis.\25\ Open interest was over $1.4 billion 
for the entirety of the period and at one point was over $2 billion. 
ETPs that primarily hold CME Bitcoin Futures have raised over $1 
billion dollars in assets. The CFTC has exercised its regulatory 
jurisdiction in bringing a number of enforcement actions related to 
bitcoin and against trading platforms that offer cryptocurrency 
trading.\26\ As of February 14, 2023 the NYDFS has granted no fewer 
than thirty-four BitLicenses,\27\ including to established public 
payment companies like PayPal Holdings, Inc. and Square, Inc., and 
limited purpose trust charters to entities providing cryptocurrency 
custody services. In addition, the Treasury's Office of Foreign Assets 
Control (``OFAC'') has brought enforcement actions over apparent 
violations of the sanctions laws in connection with the

[[Page 57493]]

provision of wallet management services for digital assets.\28\
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    \24\ As of December 1, 2021, the total market cap of all bitcoin 
in circulation was approximately $1.08 trillion.
    \25\ Data sourced from the CME Bitcoin Futures Report: 30 March, 
2023, available at https://www.cmegroup.com/markets/cryptocurrencies/bitcoin/bitcoin.volume.htm.
    \26\ The CFTC's annual report for Fiscal Year 2022 (which ended 
on September 30, 2022) noted that the CFTC completed the fiscal year 
with 18 enforcement filings related to digital assets. ``Digital 
asset actions included manipulation, a $1.7 billion fraudulent 
scheme, and a decentralized autonomous organization (DAO) failing to 
register as a SEF or FCM or to seek DCM designation.'' See CFTC FY 
2022 Agency Financial Report, available at https://www.cftc.gov/media/7941/2022afr/download. Additionally, the CFTC filed on March 
27, 2023, a civil enforcement action against the owner/operators of 
the Binance centralized digital asset trading platform, which is one 
of the largest bitcoin derivative exchanges. See CFTC Release No. 
8680-23 (March 27, 2023), available at https://www.cftc.gov/PressRoom/PressReleases/8680-23.
    \27\ See https://www.dfs.ny.gov/virtual_currency_businesses.
    \28\ See U.S. Department of the Treasury Enforcement Release: 
``OFAC Enters Into $98,830 Settlement with BitGo, Inc. for Apparent 
Violations of Multiple Sanctions Programs Related to Digital 
Currency Transactions'' (December 30, 2020) available at https://home.treasury.gov/system/files/126/20201230_bitgo.pdf See also U.S. 
Department of the Treasury Enforcement Release: ``Treasury Announces 
Two Enforcement Actions for over $24M and $29M Against Virtual 
Currency Exchange, Bittrex, Inc.'' (October 11, 2022) available at 
https://home.treasury.gov/news/press-releases/jy1006. See also U.S. 
Department of Treasure Enforcement Release ``OFAC Settles with 
Virtual Currency Exchange Kraken for $362,158.70 Related to Apparent 
Violations of the Iranian Transactions and Sanctions Regulations'' 
(November 28, 2022) available at https://home.treasury.gov/system/files/126/20221128_kraken.pdf.
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    In addition to the regulatory developments laid out above, more 
traditional financial market participants become more active in 
cryptocurrency: large insurance companies, asset managers, university 
endowments, pension funds, and even historically bitcoin skeptical fund 
managers have allocated to bitcoin. As noted in the Financial Stability 
Oversight Council (``FSOC'') Report on Digital Asset Financial 
Stability Risks and Regulation, ``[i]ndustry surveys suggest that the 
scale of these investments grew quickly during the boom in crypto-asset 
markets through late 2021. In June 2022, PwC estimated that the number 
of crypto-specialist hedge funds was more than 300 globally, with $4.1 
billion in assets under management. In addition, in a survey PwC found 
that 38 percent of surveyed traditional hedge funds were currently 
investing in `digital assets,' compared to 21 percent the year prior.'' 
\29\ The largest over-the-counter bitcoin fund previously filed a Form 
10 registration statement, which the Staff of the Commission reviewed 
and which took effect automatically, and is now a reporting 
company.\30\ Established companies like Tesla, Inc., MicroStrategy 
Incorporated, and Square, Inc., among others, have announced 
substantial investments in bitcoin in amounts as large as $1.5 billion 
(Tesla) and $425 million (MicroStrategy). The foregoing examples 
demonstrate that bitcoin has gained mainstream usage and recognition.
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    \29\ See the FSOC ``Report on Digital Asset Financial Stability 
Risks and Regulation 2022'' (October 3, 2022) (at footnote 26) at 
https://home.treasury.gov/system/files/261/FSOC-Digital-Assets-Report-2022.pdf.
    \30\  See Letter from Division of Corporation Finance, Office of 
Real Estate Construction to Barry E. Silbert, Chief Executive 
Officer, Grayscale Bitcoin Trust (January 31, 2020) https://www.sec.gov/Archives/edgar/data/1588489/000000000020000953/filename1.pdf.
---------------------------------------------------------------------------

    Despite these developments, access for U.S. retail investors to 
gain exposure to bitcoin via a transparent and U.S. regulated, U.S. 
exchange-traded vehicle remains limited. Instead current options 
include: (i) facing the counter-party risk, legal uncertainty, 
technical risk, and complexity associated with accessing spot bitcoin; 
(ii) over-the-counter bitcoin funds (``OTC Bitcoin Funds'') with high 
management fees and potentially volatile premiums and discounts; \31\ 
(iii) purchasing shares of operating companies that they believe will 
provide proxy exposure to bitcoin with limited disclosure about the 
associated risks; \32\ or (iv) purchasing Bitcoin Futures ETFs, as 
defined below, which represent a sub-optimal structure for long-term 
investors that will cost them significant amounts of money every year 
compared to Spot Bitcoin ETPs, as further discussed below. Meanwhile, 
investors in many other countries, including Canada and Brazil, are 
able to use more traditional exchange listed and traded products 
(including exchange-traded funds holding physical bitcoin) to gain 
exposure to bitcoin. Similarly, investors in Switzerland and across 
Europe have access to Exchange Traded Products which trade on regulated 
exchanges and provide exposure to a broad array of spot crypto assets. 
U.S. investors, by contrast, are left with fewer and more risky means 
of getting bitcoin exposure, as described above.\33\
---------------------------------------------------------------------------

    \31\ The premium and discount for OTC Bitcoin Funds is known to 
move rapidly. For example, over the period of 12/21/20 to 1/21/21, 
the premium for the largest OTC Bitcoin Fund went from 40.18% to 
2.79%. While the price of bitcoin appreciated significantly during 
this period and NAV per share increased by 41.25%, the price per 
share increased by only 3.58%. This means that investors are buying 
shares of a fund that experiences significant volatility in its 
premium and discount outside of the fluctuations in price of the 
underlying asset. Even operating within the normal premium and 
discount range, it's possible for an investor to buy shares of an 
OTC Bitcoin Fund only to have those shares quickly lose 10% or more 
in dollar value excluding any movement of the price of bitcoin. That 
is to say--the price of bitcoin could have stayed exactly the same 
from market close on one day to market open the next, yet the value 
of the shares held by the investor decreased only because of the 
fluctuation of the premium. As more investment vehicles, including 
mutual funds and ETFs, seek to gain exposure to bitcoin, the easiest 
option for a buy and hold strategy for such vehicles is often an OTC 
Bitcoin Fund, meaning that even investors that do not directly buy 
OTC Bitcoin Funds can be disadvantaged by extreme premiums (or 
discounts) and premium volatility.
    \32\ A number of operating companies engaged in unrelated 
businesses--such as Tesla (a car manufacturer) and MicroStrategy (an 
enterprise software company)--have announced investments as large as 
$5.3 billion in bitcoin. Without access to bitcoin exchange-traded 
products, retail investors seeking investment exposure to bitcoin 
may end up purchasing shares in these companies in order to gain the 
exposure to bitcoin that they seek. In fact, mainstream financial 
news networks have written a number of articles providing investors 
with guidance for obtaining bitcoin exposure through publicly traded 
companies (such as MicroStrategy, Tesla, and bitcoin mining 
companies, among others) instead of dealing with the complications 
associated with buying spot bitcoin in the absence of a bitcoin ETP. 
See e.g., ``7 public companies with exposure to bitcoin'' (February 
8, 2021) available at: https://finance.yahoo.com/news/7-public-companies-with-exposure-to-bitcoin-154201525.html; and ``Want to get 
in the crypto trade without holding bitcoin yourself? Here are some 
investing ideas'' (February 19, 2021) available at: https://www.cnbc.com/2021/02/19/ways-to-invest-in-bitcoin-without-holding-the-cryptocurrency-yourself-.html.
    \33\ The Exchange notes that the list of countries above is not 
exhaustive and that securities regulators in a number of additional 
countries have either approved or otherwise allowed the listing and 
trading of Spot Bitcoin ETPs.
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    To this point, the lack of a Spot Bitcoin ETP exposes U.S. investor 
assets to significant risk because investors that would otherwise seek 
cryptoasset exposure through a Spot Bitcoin ETP are forced to find 
exposure through generally riskier alternatives. For instance, many 
U.S. investors that held their digital assets in accounts at FTX,\34\ 
Celsius Network LLC,\35\ BlockFi Inc.\36\ and Voyager Digital Holdings, 
Inc.\37\ have become unsecured creditors in the insolvencies of those 
entities. If a Spot Bitcoin ETP was available, it is likely that at 
least a portion of the billions of dollars tied up in those proceedings 
would still reside in the brokerage accounts of U.S. investors, having 
instead been invested in a transparent, regulated, and well-understood 
structure--a Spot Bitcoin ETP. For this reason alone, the approval of a 
Spot Bitcoin ETP would represent a major win for the protection of U.S. 
investors in the cryptoasset space. As further described below, the 
Trust, like all other series of Commodity-Based Trust Shares, is 
designed to protect investors against the risk of losses through fraud 
and insolvency that arise by holding digital assets, including bitcoin, 
on centralized platforms.
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    \34\ See FTX Trading Ltd., et al., Case No. 22-11068.
    \35\ See Celsius Network LLC, et al., Case No. 22-10964.
    \36\ See BlockFi Inc., Case No. 22-19361.
    \37\ See Voyager Digital Holdings, Inc., et al., Case No. 22-
10943.
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    Additionally, investors in other countries, specifically Canada, 
generally pay lower fees than U.S. retail investors that invest in OTC 
Bitcoin Funds due to the fee pressure that results from increased 
competition among available bitcoin investment options. Without an 
approved and regulated Spot Bitcoin ETP in the U.S., U.S. investors 
could seek to purchase shares of non-U.S. bitcoin vehicles to get 
access to bitcoin exposure. Given the separate regulatory regime, 
potentially adverse foreign and U.S. tax implications, and the

[[Page 57494]]

difficulties associated with any international legal proceeding, 
including litigation, such an arrangement would create more risk 
exposure and a diminished investment opportunity for U.S. investors 
than they would otherwise have with a U.S. exchange-listed ETP. In 
addition to the benefits to U.S. investors articulated throughout this 
proposal, approving this proposal (and others like it) would provide 
U.S. ETFs and mutual funds with an additional U.S.-listed and regulated 
product through which to obtain exposure to bitcoin thereby lessening 
the need to seek such exposure through investments in either flawed 
products or, to the limited extent currently permitted by Commission 
Staff (i.e., 10% to 15% of a fund's assets), products listed and 
primarily regulated in other countries. Such an approval would also 
give rise to increased competition among the limited product range 
available in the U.S. benefitting both ETFs and mutual funds, including 
those seeking only minimal exposure to bitcoin for its non-correlative 
investment performance, and individual investors.
Bitcoin Futures ETFs
    The Exchange and Sponsor applaud the Commission for allowing the 
launch of ETFs registered under the Investment Company Act of 1940, as 
amended (the ``1940 Act'') and the Bitcoin Futures Approvals that 
provide exposure to bitcoin primarily through CME Bitcoin Futures 
(``Bitcoin Futures ETFs''). Allowing such products to list and trade is 
a productive first step in providing U.S. investors and traders with 
transparent, exchange-listed tools for expressing a view on bitcoin. 
The Bitcoin Futures Approvals, however, have created a logical 
inconsistency in the application of the standard the Commission applies 
when considering bitcoin ETP proposals.
    As discussed further below, the standard applicable to bitcoin ETPs 
is whether the listing exchange has in place a comprehensive 
surveillance sharing agreement with a regulated market of significant 
size in the underlying asset. Previous disapproval orders have made 
clear that a market that constitutes a regulated market of significant 
size is generally a futures and/or options market based on the 
underlying reference asset rather than the spot commodity markets, 
which are often unregulated.\38\ Leaving aside the analysis of that 
standard until later in this proposal,\39\ the Exchange believes that 
the following rationale the Commission applied to a Bitcoin Futures ETF 
should result in the Commission approving this and other Spot Bitcoin 
ETP proposals:
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    \38\ See Winklevoss Order at 37593, specifically footnote 202, 
which includes the language from numerous approval orders for which 
the underlying futures markets formed the basis for approving series 
of ETPs that hold physical metals, including gold, silver, 
palladium, platinum, and precious metals more broadly; and 37600, 
specifically where the Commission provides that ``when the spot 
market is unregulated--the requirement of preventing fraudulent and 
manipulative acts may possibly be satisfied by showing that the ETP 
listing market has entered into a surveillance-sharing agreement 
with a regulated market of significant size in derivatives related 
to the underlying asset.'' As noted above, the Exchange believes 
that these citations are particularly helpful in making clear that 
the spot market for a spot commodity ETP need not be ``regulated'' 
in order for a spot commodity ETP to be approved by the Commission, 
and in fact that it's been the common historical practice of the 
Commission to rely on such derivatives markets as the regulated 
market of significant size because such spot commodities markets are 
largely unregulated.
    \39\ As further outlined below, both the Exchange and the 
Sponsor believe that the Bitcoin Futures market represents a 
regulated market of significant size and that this proposal and 
others like it should be approved on this basis.
---------------------------------------------------------------------------

    The CME ``comprehensively surveils futures market conditions and 
price movements on a real-time and ongoing basis in order to detect and 
prevent price distortions, including price distortions caused by 
manipulative efforts.'' Thus the CME's surveillance can reasonably be 
relied upon to capture the effects on the CME bitcoin futures market 
caused by a person attempting to manipulate the proposed futures ETP by 
manipulating the price of CME bitcoin futures contracts, whether that 
attempt is made by directly trading on the CME bitcoin futures market 
or indirectly by trading outside of the CME bitcoin futures market. As 
such, when the CME shares its surveillance information with Arca, the 
information would assist in detecting and deterring fraudulent or 
manipulative misconduct related to the non-cash assets held by the 
proposed ETP.\40\
---------------------------------------------------------------------------

    \40\ See Teucrium Approval at 21679.
---------------------------------------------------------------------------

    CME Bitcoin Futures pricing is based on pricing from spot bitcoin 
markets. The statement from the Teucrium Approval that ``CME's 
surveillance can reasonably be relied upon to capture the effects on 
the CME bitcoin futures market caused by a person attempting to 
manipulate the proposed futures ETP by manipulating the price of CME 
bitcoin futures contracts . . . indirectly by trading outside of the 
CME bitcoin futures market,'' makes clear that the Commission believes 
that CME's surveillance can capture the effects of trading on the 
relevant spot markets on the pricing of CME Bitcoin Futures. This was 
further acknowledged in the ``Grayscale lawsuit'' \41\ when Judge Rao 
stated ``. . . the Commission in the Teucrium order recognizes that the 
futures prices are influenced by the spot prices, and the Commission 
concludes in approving futures ETPs that any fraud on the spot market 
can be adequately addressed by the fact that the futures market is a 
regulated one . . .'' The Exchange agrees with the Commission on this 
point.
---------------------------------------------------------------------------

    \41\ Grayscale Investments, LLC v. Securities and Exchange 
Commission, et al., Case No. 22-1142.
---------------------------------------------------------------------------

    Further to this point, a Bitcoin Futures ETF is potentially more 
susceptible to potential manipulation than a Spot Bitcoin ETP that 
offers only in-kind creation and redemption because settlement of CME 
Bitcoin Futures (and thus the value of the underlying holdings of a 
Bitcoin Futures ETF) occurs at a single price derived from spot bitcoin 
pricing, while shares of a Spot Bitcoin ETP would represent interest in 
bitcoin directly and authorized participants for a Spot Bitcoin ETP (as 
proposed herein) would be able to source bitcoin from any exchange and 
create or redeem with the applicable trust regardless of the price of 
the underlying index. It is not logically possible to conclude that the 
CME Bitcoin Futures market represents a significant market for a 
futures-based product, but also conclude that the CME Bitcoin Futures 
market does not represent a significant market for a spot-based 
product.
    In addition to potentially being more susceptible to manipulation 
than a Spot Bitcoin ETP, the structure of Bitcoin Futures ETFs provides 
negative outcomes for buy and hold investors as compared to a Spot 
Bitcoin ETP.\42\ Specifically, the cost of rolling CME Bitcoin Futures 
contracts cause the Bitcoin Futures ETFs to lag the performance of 
bitcoin and cost U.S. investors significantly more on an annual basis 
than the cost of a comparable investment in a Spot Bitcoin ETP. Spot 
Bitcoin ETPs hold bitcoin and therefore, do not incur rolling costs. 
Further, Bitcoin Futures ETFs could potentially hit CME position 
limits, which would force a Bitcoin Futures ETF to halt its investments 
in Bitcoin Futures and seek other instruments that would provide

[[Page 57495]]

exposure to bitcoin of which there are few options as discussed 
previously. Such an event could not only cause investor confusion as to 
the Bitcoin Futures ETF's investment strategy, but also prevent the 
Bitcoin Futures ETF from achieving its investment objective (e.g., 
capital appreciation through exposure to CME Bitcoin Futures), not to 
mention completely changing its risk profile. While Bitcoin Futures 
ETFs represent a useful trading tool, they are clearly a sub-optimal 
structure for U.S. investors seeking long-term exposure to bitcoin that 
will unnecessarily cost U.S. investors significantly more every year 
when compared to the cost of investing in Spot Bitcoin ETPs. The 
Exchange believes any proposal to list and trade a Spot Bitcoin ETP 
should be reviewed by the Commission with this important investor 
protection context in mind, as well as the benefit of encouraging 
increased competition among market participants in this space.
---------------------------------------------------------------------------

    \42\ See e.g., ``Bitcoin ETF's Success Could Come at 
Fundholders' Expense,'' Wall Street Journal (October 24, 2021), 
available at https://www.wsj.com/articles/bitcoin-etfs-success-could-come-at-fundholders-expense-11635080580; ``Physical Bitcoin 
ETF Prospects Accelerate,'' ETF.com (October 25, 2021), available 
at: https://www.etf.com/sections/blog/physical-bitcoin-etf-prospects-shine?nopaging=1&__cf_chl_jschl_tk__=pmd_JsK.fjXz9eAQW9zol0qpzhXDrrlpIVdoCloLXbLjl44-1635476946-0-gqNtZGzNApCjcnBszQql.
---------------------------------------------------------------------------

    Based on the foregoing, the Exchange and Sponsor believe that any 
objective review of the proposals to list Spot Bitcoin ETPs compared to 
the Bitcoin Futures ETFs and the Bitcoin Futures Approvals would lead 
to the conclusion that Spot Bitcoin ETPs should be available to U.S. 
investors and, as such, this proposal and other comparable proposals to 
list and trade Spot Bitcoin ETPs should be approved by the Commission. 
Stated simply, U.S. investors will continue to lose significant amounts 
of money from holding Bitcoin Futures ETFs as compared to Spot Bitcoin 
ETPs, losses which could be prevented by the Commission approving Spot 
Bitcoin ETPs. Additionally, any concerns related to preventing 
fraudulent and manipulative acts and practices related to Spot Bitcoin 
ETPs would apply equally to the spot markets underlying the futures 
contracts held by a Bitcoin Futures ETF. Both the Exchange and Sponsor 
believe that the CME Bitcoin Futures market is a regulated market of 
significant size and that such manipulation concerns are mitigated, as 
described extensively below. After allowing and approving the listing 
and trading of Bitcoin Futures ETFs that hold primarily CME Bitcoin 
Futures, however, the only consistent outcome would be approving Spot 
Bitcoin ETPs on the basis that the CME Bitcoin Futures market is a 
regulated market of significant size.
    Given the current landscape, approving this proposal (and others 
like it) and allowing Spot Bitcoin ETPs to be listed and traded 
alongside Bitcoin Futures ETFs would establish a consistent regulatory 
approach, provide U.S. investors with choice in product structures for 
bitcoin exposure, and offer flexibility in the means of gaining 
exposure to bitcoin through transparent, regulated, U.S. exchange-
listed vehicles.
Bitcoin Futures
    CME began offering trading in Bitcoin Futures in 2017. Each 
contract represents five bitcoin and is based on the CME CF Bitcoin 
Reference Rate.\43\ The contracts trade and settle like other cash-
settled commodity futures contracts. Nearly every measurable metric 
related to Bitcoin Futures has generally trended up since launch, 
although certain notional volume calculations have decreased roughly in 
line with the decrease in the price of bitcoin. For example, there were 
143,215 Bitcoin Futures contracts traded in April 2023 (approximately 
$20.7 billion) compared to 193,182 ($5 billion), 104,713 ($3.9 
billion), 118,714 ($42.7 billion), and 111,964 ($23.2 billion) 
contracts traded in April 2019, April 2020, April 2021, and April 2022, 
respectively.\44\
---------------------------------------------------------------------------

    \43\ The CME CF Bitcoin Reference Rate is based on a publicly 
available calculation methodology based on pricing sourced from 
several crypto exchanges and trading platforms, including Bitstamp, 
Coinbase, Gemini, itBit, Kraken, and LMAX Digital.
    \44\ Source: CME, Yahoo Finance 4/30/23.
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BILLING CODE 8011-01-P

[[Page 57496]]

[GRAPHIC] [TIFF OMITTED] TN23AU23.003

    The number of large open interest holders \45\ and unique accounts 
trading Bitcoin Futures have both increased, even in the face of 
heightened Bitcoin price volatility.
---------------------------------------------------------------------------

    \45\ A large open interest holder in Bitcoin Futures is an 
entity that holds at least 25 contracts, which is the equivalent of 
125 bitcoin. At a price of approximately $29,268.81 per bitcoin on 
4/30/2023, more than 100 firms had outstanding positions of greater 
than $3.65 million in Bitcoin Futures.
[GRAPHIC] [TIFF OMITTED] TN23AU23.004


[[Page 57497]]


[GRAPHIC] [TIFF OMITTED] TN23AU23.005

BILLING CODE 8011-01-C
    The Sponsor further believes that publicly available research, 
including research done as part of rule filings proposing to list and 
trade shares of Spot Bitcoin ETPs, corroborates the overall trend 
outlined above and supports the thesis that the Bitcoin Futures pricing 
leads the spot market and, thus, a person attempting to manipulate the 
Shares would also have to trade on that market to manipulate the ETP. 
Specifically, the Sponsor believes that such research indicates that 
bitcoin futures lead the bitcoin spot market in price formation.\46\
---------------------------------------------------------------------------

    \46\ See Exchange Act Releases No. 94080 (January 27, 2022), 87 
FR 5527 (April 12, 2022) (specifically ``Amendment No. 1 to the 
Proposed Rule Change To List and Trade Shares of the Wise Origin 
Bitcoin Trust Under BZX Rule 14.11(3)(4), Commodity-Based Trust 
Shares''); 94982 (May 25, 2022), 87 FR 33250 (June 1, 2022); 94844 
(May 4, 2022), 87 FR 28043 (May 10, 2022); and 93445 (October 28, 
2021), 86 FR 60695 (November 3, 2021). See also Hu, Y., Hou, Y. and 
Oxley, L. (2019). ``What role do futures markets play in Bitcoin 
pricing? Causality, cointegration and price discovery from a time-
varying perspective'' (available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7481826/). This academic research paper concludes 
that ``There exist no episodes where the Bitcoin spot markets 
dominates the price discovery processes with regard to Bitcoin 
futures. This points to a conclusion that the price formation 
originates solely in the Bitcoin futures market. We can, therefore, 
conclude that the Bitcoin futures markets dominate the dynamic price 
discovery process based upon time-varying information share 
measures. Overall, price discovery seems to occur in the Bitcoin 
futures markets rather than the underlying spot market based upon a 
time-varying perspective.''
---------------------------------------------------------------------------

Section 6(b)(5) and the Applicable Standards
    The Commission has approved numerous series of Trust Issued 
Receipts,\47\ including Commodity-Based Trust Shares,\48\ to be listed 
on U.S. national securities exchanges. In order for any proposed rule 
change from an exchange to be approved, the Commission must determine 
that, among other things, the proposal is consistent with the 
requirements of Section 6(b)(5) of the Act, specifically including: (i) 
the requirement that a national securities exchange's rules are 
designed to prevent fraudulent and manipulative acts and practices; 
\49\ and (ii) the requirement that an exchange proposal be designed, in 
general, to protect investors and the public interest. The Exchange 
believes that this proposal is consistent with the requirements of 
Section 6(b)(5) of the Act and that this filing sufficiently 
demonstrates that the CME Bitcoin Futures market represents a regulated 
market of significant size and that, on the whole, the manipulation 
concerns previously articulated by the Commission are sufficiently 
mitigated to the point that they are outweighed by quantifiable 
investor protection issues that would be resolved by approving this 
proposal.
---------------------------------------------------------------------------

    \47\ See Exchange Rule 14.11(f).
    \48\ Commodity-Based Trust Shares, as described in Exchange Rule 
14.11(e)(4), are a type of Trust Issued Receipt.
    \49\ As the Exchange has stated in a number of other public 
documents, it continues to believe that bitcoin is resistant to 
price manipulation and that ``other means to prevent fraudulent and 
manipulative acts and practices'' exist to justify dispensing with 
the requisite surveillance sharing agreement. The geographically 
diverse and continuous nature of bitcoin trading render it difficult 
and prohibitively costly to manipulate the price of bitcoin. The 
fragmentation across bitcoin platforms, the relatively slow speed of 
transactions, and the capital necessary to maintain a significant 
presence on each trading platform make manipulation of bitcoin 
prices through continuous trading activity challenging. To the 
extent that there are bitcoin exchanges engaged in or allowing wash 
trading or other activity intended to manipulate the price of 
bitcoin on other markets, such pricing does not normally impact 
prices on other exchange because participants will generally ignore 
markets with quotes that they deem non-executable. Moreover, the 
linkage between the bitcoin markets and the presence of arbitrageurs 
in those markets means that the manipulation of the price of bitcoin 
price on any single venue would require manipulation of the global 
bitcoin price in order to be effective. Arbitrageurs must have funds 
distributed across multiple trading platforms in order to take 
advantage of temporary price dislocations, thereby making it 
unlikely that there will be strong concentration of funds on any 
particular bitcoin exchange or OTC platform. As a result, the 
potential for manipulation on a trading platform would require 
overcoming the liquidity supply of such arbitrageurs who are 
effectively eliminating any cross-market pricing differences.
---------------------------------------------------------------------------

(i) Designed To Prevent Fraudulent and Manipulative Acts and Practices
    In order to meet this standard in a proposal to list and trade a 
series of Commodity-Based Trust Shares, the Commission requires that an 
exchange demonstrate that there is a comprehensive surveillance-sharing 
agreement in place \50\ with a regulated

[[Page 57498]]

market of significant size. Both the Exchange and CME are members of 
ISG.\51\ The only remaining issue to be addressed is whether the 
Bitcoin Futures market constitutes a market of significant size, which 
both the Exchange and the Sponsor believe that it does. The terms 
``significant market'' and ``market of significant size'' include a 
market (or group of markets) as to which: (a) there is a reasonable 
likelihood that a person attempting to manipulate the ETP would also 
have to trade on that market to manipulate the ETP, so that a 
surveillance-sharing agreement would assist the listing exchange in 
detecting and deterring misconduct; and (b) it is unlikely that trading 
in the ETP would be the predominant influence on prices in that 
market.\52\
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    \50\ As previously articulated by the Commission, ``The standard 
requires such surveillance-sharing agreements since ``they provide a 
necessary deterrent to manipulation because they facilitate the 
availability of information needed to fully investigate a 
manipulation if it were to occur.'' The Commission has emphasized 
that it is essential for an exchange listing a derivative securities 
product to enter into a surveillance-sharing agreement with markets 
trading underlying securities for the listing exchange to have the 
ability to obtain information necessary to detect, investigate, and 
deter fraud and market manipulation, as well as violations of 
exchange rules and applicable federal securities laws and rules. The 
hallmarks of a surveillance-sharing agreement are that the agreement 
provides for the sharing of information about market trading 
activity, clearing activity, and customer identity; that the parties 
to the agreement have reasonable ability to obtain access to and 
produce requested information; and that no existing rules, laws, or 
practices would impede one party to the agreement from obtaining 
this information from, or producing it to, the other party.'' The 
Commission has historically held that joint membership in the 
Intermarket Surveillance Group (``ISG'') constitutes such a 
surveillance sharing agreement. See Securities Exchange Act Release 
No. 88284 (February 26, 2020), 85 FR 12595 (March 3, 2020) (SR-
NYSEArca-2019-39) (the ``Wilshire Phoenix Disapproval'').
    \51\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.
    \52\ See Wilshire Phoenix Disapproval.
---------------------------------------------------------------------------

    The Commission has also recognized that the ``regulated market of 
significant size'' standard is not the only means for satisfying 
Section 6(b)(5) of the act, specifically providing that a listing 
exchange could demonstrate that ``other means to prevent fraudulent and 
manipulative acts and practices'' are sufficient to justify dispensing 
with the requisite surveillance-sharing agreement.\53\
---------------------------------------------------------------------------

    \53\ See Winklevoss Order at 37580. The Commission has also 
specifically noted that it ``is not applying a `cannot be 
manipulated' standard; instead, the Commission is examining whether 
the proposal meets the requirements of the Exchange Act and, 
pursuant to its Rules of Practice, places the burden on the listing 
exchange to demonstrate the validity of its contentions and to 
establish that the requirements of the Exchange Act have been met.'' 
Id. at 37582.
---------------------------------------------------------------------------

(a) Manipulation of the ETP
    According to the research and analysis presented above, the Bitcoin 
Futures market is the leading market for bitcoin price formation. Where 
Bitcoin Futures lead the price in the spot market such that a potential 
manipulator of the bitcoin spot market would have to participate in the 
Bitcoin Futures market, it follows that a potential manipulator of the 
Shares would similarly have to transact in the Bitcoin Futures market 
because the NAV is based on the price of bitcoin on the principal 
market, which identified market must be an active market with orderly 
transactions. Further, the Trust only allows for in-kind creation and 
redemption, which, as further described below, reduces the potential 
for manipulation of the Shares through manipulation of the Trust's 
methodology for calculating NAV or any of its individual constituents, 
again emphasizing that a potential manipulator of the Shares would have 
to manipulate the entirety of the bitcoin spot market, which is led by 
the Bitcoin Futures market. As such, the Exchange believes that part 
(a) of the significant market test outlined above is satisfied and that 
common membership in ISG between the Exchange and CME would assist the 
listing exchange in detecting and deterring misconduct in the Shares.
(b) Predominant Influence on Prices in Spot and Bitcoin Futures
    The Exchange and Sponsor also believe that trading in the Shares 
would not be the predominant force on prices in the Bitcoin Futures 
market or spot market for a number of reasons, including the 
significant volume in the Bitcoin Futures market, the size of bitcoin's 
market cap, and the significant liquidity available in the spot market. 
In addition to the Bitcoin Futures market data points cited above, the 
spot market for bitcoin is also very liquid.
(c) Other Means To Prevent Fraudulent and Manipulative Acts and 
Practices
    As noted above, the Commission also permits a listing exchange to 
demonstrate that ``other means to prevent fraudulent and manipulative 
acts and practices'' are sufficient to justify dispensing with the 
requisite surveillance-sharing agreement. The Exchange and Sponsor 
believe that such conditions are present.
    The Exchange is proposing to take additional steps to those 
described above to supplement its ability to obtain information that 
would be helpful in detecting, investigating, and deterring fraud and 
market manipulation in the Commodity-Based Trust Shares. On June 21, 
2023, the Exchange reached an agreement on terms with Coinbase, Inc. 
(``Coinbase''), an operator of a United States-based spot trading 
platform for Bitcoin that represents a substantial portion of US-based 
and USD denominated Bitcoin trading,\54\ to enter into a surveillance-
sharing agreement (``Spot BTC SSA'') and executed an associated term 
sheet. Based on this agreement on terms, the Exchange and Coinbase will 
finalize and execute a definitive agreement that the parties expect to 
be executed prior to allowing trading of the Commodity-Based Trust 
Shares.
---------------------------------------------------------------------------

    \54\ According to a Kaiko Research report dated June 26, 2023, 
Coinbase represented roughly 50% of exchange trading volume in USD-
BTC trading on a daily basis during May 2023.
---------------------------------------------------------------------------

    The Spot BTC SSA is expected to be a bilateral surveillance-sharing 
agreement between the Exchange and Coinbase that is intended to 
supplement the Exchange's market surveillance program. The Spot BTC SSA 
is expected to have the hallmarks of a surveillance-sharing agreement 
between two members of the ISG, which would give the Exchange 
supplemental access to data regarding spot Bitcoin trades on Coinbase 
where the Exchange determines it is necessary as part of its 
surveillance program for the Commodity-Based Trust Shares.\55\ This 
means that the Exchange expects to receive market data for orders and 
trades from Coinbase, which it will utilize in surveillance of the 
trading of Commodity-Based Trust Shares. In addition, the Exchange can 
request further information from Coinbase related to spot bitcoin 
trading activity on the Coinbase exchange platform, if the Exchange 
determines that such information would be necessary to detect and 
investigate potential manipulation in the trading of the Commodity-
Based Trust Shares.\56\
---------------------------------------------------------------------------

    \55\ For additional information regarding ISG and the hallmarks 
of surveillance-sharing between ISG members, see https://isgportal.org/overview.
    \56\ The Exchange also notes that it already has in place ISG-
like surveillance sharing agreement with Cboe Digital Exchange, LLC 
and Cboe Clear Digital, LLC.
---------------------------------------------------------------------------

    Further, and consistent with prior points above, offering only in-
kind creation and redemption will also provide unique protections 
against potential attempts to manipulate the price of the Shares. While 
the Sponsor believes that the index which it uses to value the Trust's 
bitcoin is itself resistant to manipulation based on the methodology 
further described below, the fact that creations and redemptions are 
only available in-kind makes the index significantly less important. 
Specifically, because the Trust will not accept cash to buy bitcoin in 
order to create new Shares or, barring a forced redemption of the Trust 
or under other extraordinary circumstances, be forced to sell bitcoin 
to pay cash for redeemed Shares, the price that the Sponsor uses to 
value the Trust's bitcoin is not particularly important.\57\ When 
authorized participants are creating Shares with the Trust, they need 
to deliver a certain number of bitcoin per Share (regardless of the 
valuation used) and when they're redeeming, they can

[[Page 57499]]

similarly expect to receive a certain number of bitcoin per Share. As 
such, even if the price used to value the Trust's bitcoin is 
manipulated (which the Sponsor believes that its methodology is 
resistant to), the ratio of bitcoin per Share does not change and the 
Trust will either accept (for creations) or distribute (for 
redemptions) the same number of bitcoin regardless of the value. This 
not only mitigates the risk associated with potential manipulation, but 
also discourages and disincentivizes manipulation of the index because 
there is little financial incentive to do so.
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    \57\ While the Index will not be particularly important for the 
creation and redemption process, it will be used for calculating 
fees.
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(ii) Designed To Protect Investors and the Public Interest
    The Exchange believes that the proposal is designed to protect 
investors and the public interest. Over the past several years, U.S. 
investor exposure to bitcoin through OTC Bitcoin Funds has grown into 
the tens of billions of dollars, including through Bitcoin Futures 
ETFs. With that growth, so too has grown the quantifiable investor 
protection issues to U.S. investors through roll costs for Bitcoin 
Futures ETFs and premium/discount volatility and management fees for 
OTC Bitcoin Funds. The Exchange believes that the concerns related to 
the prevention of fraudulent and manipulative acts and practices have 
been sufficiently addressed to be consistent with the Act and, to the 
extent that the Commission disagrees with that assertion, such concerns 
are now outweighed by investor protection concerns. As such, the 
Exchange believes that approving this proposal (and comparable 
proposals) provides the Commission with the opportunity to allow U.S. 
investors with access to bitcoin in a regulated and transparent 
exchange-traded vehicle that would act to limit risk to U.S. investors 
by: (i) reducing premium and discount volatility; (ii) reducing 
management fees through meaningful competition; (iii) reducing risks 
and costs associated with investing in Bitcoin Futures ETFs and 
operating companies that are imperfect proxies for bitcoin exposure; 
and (iv) providing an alternative to custodying spot bitcoin.
Global X Bitcoin Trust
    Delaware Trust Company is the trustee (``Trustee''). The Bank of 
New York Mellon will be the administrator (``Administrator'') and 
transfer agent (``Transfer Agent''). Coinbase Custody Trust Company, 
LLC, a third-party regulated custodian (the ``Custodian''), will be 
responsible for custody of the Trust's bitcoin. Sponsor selects the 
marketing agent in connection with the creation and redemption of 
``Baskets'' of Shares.\58\
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    \58\ The Exchange notes that the Sponsor is finalizing 
negotiations with the marketing agent and it will submit an 
amendment to this proposal upon execution of the agreement with the 
marketing agent.
---------------------------------------------------------------------------

    According to the Registration Statement, each Share will represent 
a fractional undivided beneficial interest and ownership in the Trust. 
The Trust's assets will consist of bitcoin held by the Custodian on 
behalf of the Trust. The Trust generally does not intend to hold cash 
or cash equivalents. However, there may be situations where the Trust 
will unexpectedly hold cash or cash equivalents on a temporary basis.
    According to the Registration Statement, the Trust is neither an 
investment company registered under the Investment Company Act of 1940, 
as amended,\59\ nor a commodity pool for purposes of the Commodity 
Exchange Act (``CEA''), and neither the Trust nor the Sponsor is 
subject to regulation as a commodity pool operator or a commodity 
trading adviser in connection with the Shares.
---------------------------------------------------------------------------

    \59\ 15 U.S.C. 80a-1.
---------------------------------------------------------------------------

    When the Trust sells or redeems its Shares, it will do so in ``in-
kind'' transactions in large blocks of Shares (a ``Creation Basket'') 
at the Trust's NAV. Authorized participants will deliver, or facilitate 
the delivery of, bitcoin to the Trust's account with the Custodian in 
exchange for Shares when they purchase Shares, and the Trust, through 
the Custodian, will deliver bitcoin to such authorized participants 
when they redeem Shares with the Trust. Authorized participants may 
then offer Shares to the public at prices that depend on various 
factors, including the supply and demand for Shares, the value of the 
Trust's assets, and market conditions at the time of a transaction. 
Shareholders who buy or sell Shares during the day from their broker 
may do so at a premium or discount relative to the NAV of the Shares of 
the Trust.
Investment Objective
    According to the Registration Statement and as further described 
below, the investment objective of the Trust is to reflect the 
performance of the price of bitcoin less the expenses of the Trust's 
operations. In seeking to achieve its investment objective, the Trust 
will hold bitcoin.
    The Trust will value its Shares daily based on the value of bitcoin 
as reflected by the CoinDesk Bitcoin Price Index (XBX) (the ``Index''), 
a real-time, US dollar equivalent spot rate for Bitcoin. The Index 
leverages real-time prices from multiple constituent exchanges to 
provide a representative spot price. Each constituent exchange is 
weighted proportionally to its trailing 24-hour liquidity with 
adjustments for price variance and inactivity. Given the potential for 
anomalies or manipulation at individual exchanges, constituent weights 
may dynamically adjust using CoinDesk Indices proprietary Constituent 
Weighting Adjustment Algorithm (CWAA). The algorithm is designed to 
calculate a real-time index that is an accurate and reliable reflection 
of the market price of each digital asset, using multi-sourced spot 
prices and dynamically reduce the weights of individual exchanges with 
lower liquidity, inactivity, and higher price variance. The Index is 
administered in alignment with the International Organization of 
Securities Commissions (``IOSCO'') Principles for Financial Benchmarks. 
The Index price is calculated using non-GAAP \60\ methodology and is 
not used in the Trust's financial statements.
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    \60\ GAAP refers to generally accepted account principles.
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    The Trust will process all creations and redemptions in-kind in 
transactions with authorized participants. The Trust is not actively 
managed.
Net Asset Value
    The Net Asset Value (``NAV'') of the Trust is used by the Trust in 
its day-to-day operations to measure the net value of the Trust's 
assets. The NAV is calculated on each business day and is equal to the 
aggregate value of the Trust's assets less its liabilities based on the 
Index price. In determining the NAV of the Trust on any business day, 
the Administrator will calculate the price of the bitcoin held by the 
Trust as of 4:00 p.m. EST on such day. The Administrator will also 
calculate the NAV per Share of the Trust, which equals the NAV of the 
Trust divided by the number of outstanding Shares.
    The Administrator will rely on the Index as the Index price to be 
used when determining NAV. The methodology used to calculate the Index 
price to value bitcoin in determining the net asset value of the Trust 
may not be deemed consistent with U.S. GAAP. However, the Trust will 
utilize a pricing source that is consistent with GAAP for the Trust's 
periodic financial statements. Therefore, to the extent the methodology 
used to calculate the Index is deemed not to be consistent with GAAP, 
the Trust's periodic financial statements may not utilize net asset 
value or NAV. The Sponsor will determine in its sole discretion the 
valuation sources and policies used to

[[Page 57500]]

prepare the Trust's financial statements in accordance with GAAP.
Calculation of Net Asset Value and the Index
    On each Business Day, as soon as practicable after 4:00 p.m. EST, 
the Administrator evaluates the bitcoin held by the Trust as reflected 
by the Index and determines the net asset value of the Trust and the 
NAV. For purposes of making these calculations, a Business Day means 
any day other than a day when the Exchange is closed for regular 
trading.
    The Index is a real-time, USD-equivalent spot rate for Bitcoin. The 
Index leverages real-time prices from multiple constituent exchanges to 
provide a representative spot price. Each constituent exchange is 
weighted proportionally to its trailing 24-hour liquidity with 
adjustments for price variance and inactivity. Given the potential for 
anomalies or manipulation at individual exchanges, constituent weights 
may dynamically adjust using CoinDesk Indices proprietary Constituent 
Weighting Adjustment Algorithm (CWAA). The algorithm is designed to 
calculate a real-time index that is an accurate and reliable reflection 
of the market price of each digital asset, using multi-sourced spot 
prices and dynamically reduce the weights of individual exchanges with 
lower liquidity, inactivity, and higher price variance. The Index is 
administered in alignment with the IOSCO Principles for Financial 
Benchmarks.
    If the Index is not available or the Sponsor determines, in its 
sole discretion, that the Index should not be used, the Trust's 
holdings may be fair valued in accordance with the policy approved by 
the Sponsor.
Availability of Information
    In addition to the price transparency of the Index, the Trust will 
provide information regarding the Trust's bitcoin holdings as well as 
additional data regarding the Trust. The Trust will provide an Intraday 
Indicative Value (``IIV'') per Share updated every 15 seconds, as 
calculated by the Exchange or a third-party financial data provider 
during the Exchange's Regular Trading Hours (9:30 a.m. to 4:00 p.m. 
E.T.). The IIV will be calculated by using the prior day's closing NAV 
per Share as a base and updating that value during Regular Trading 
Hours to reflect changes in the value of the Trust's bitcoin holdings 
during the trading day.
    The IIV disseminated during Regular Trading Hours should not be 
viewed as an actual real-time update of the NAV, which will be 
calculated only once at the end of each trading day. The IIV will be 
widely disseminated on a per Share basis every 15 seconds during the 
Exchange's Regular Trading Hours by one or more major market data 
vendors. In addition, the IIV will be available through on-line 
information services.
    The website for the Trust, which will be publicly accessible at no 
charge, will contain the following information: (a) the current NAV per 
Share daily and the prior business day's NAV and the reported closing 
price; (b) the BZX Official Closing Price \61\ in relation to the NAV 
as of the time the NAV is calculated and a calculation of the premium 
or discount of such price against such NAV; (c) data in chart form 
displaying the frequency distribution of discounts and premiums of the 
Official Closing Price against the NAV, within appropriate ranges for 
each of the four previous calendar quarters (or for the life of the 
Trust, if shorter); (d) the prospectus; and (e) other applicable 
quantitative information. The Trust will also disseminate the Trust's 
holdings on a daily basis on the Trust's website. The price of bitcoin 
will be made available by one or more major market data vendors, 
updated at least every 15 seconds during Regular Trading Hours. 
Information about the Index, including key elements on how the Index is 
calculated, will be publicly available at https://www.coindesk.com/indices/xbx/.
---------------------------------------------------------------------------

    \61\ As defined in Rule 11.23(a)(3), the term ``BZX Official 
Closing Price'' shall mean the price disseminated to the 
consolidated tape as the market center closing trade.
---------------------------------------------------------------------------

    The NAV for the Trust will be calculated by the Administrator once 
a day and 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 Consolidated Tape 
Association (``CTA'').
    Quotation and last sale information for bitcoin is widely 
disseminated through a variety of major market data vendors, including 
Bloomberg and Reuters. Information relating to trading, including price 
and volume information, in bitcoin is available from major market data 
vendors and from the exchanges on which bitcoin are traded. Depth of 
book information is also available from bitcoin exchanges. The normal 
trading hours for bitcoin exchanges are 24 hours per day, 365 days per 
year.
Custody of the Trust's Bitcoins
    An investment in the Shares is backed by bitcoin held by the 
Custodian on behalf of the Trust. The Custodian will keep custody of 
all of the Trust's bitcoin, other than that which is maintained in the 
Trading Balance with the Prime Broker, in accounts that are required to 
be segregated from the assets held by the Custodian as principal and 
the assets of its other customers (the ``Vault Balance''), with any 
remainder of the Vault Balance held as part of a ``hot storage''.\62\ 
The Custodian will keep a substantial portion of the private keys 
associated with the Trust's bitcoin in ``cold storage'' \63\ or 
similarly secure technology (the ``Cold Vault Balance''). The hardware, 
software, systems, and procedures of the Custodian may not be available 
or cost effective for many investors to access directly.
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    \62\ A portion of the Trust's bitcoin holdings and cash holdings 
from time to time may be held with the Prime Broker, an affiliate of 
the Custodian, in the Trading Balance, in connection with in-kind 
creations and redemptions of Baskets and the sale of bitcoin to pay 
the Sponsor's Fee and Trust expenses not assumed by the Sponsor. 
These periodic holdings held in the Trading Balance with the Prime 
Broker represent an omnibus claim on the Prime Broker's bitcoins 
held on behalf of clients; these holdings exist across a combination 
of omnibus hot wallets, omnibus cold wallets, or in accounts in the 
Prime Broker's name on a trading venue (including third-party venues 
and the Prime Broker's own execution venue) where the Prime Broker 
executes orders to buy and sell bitcoin on behalf of its clients.
    \63\ The term ``cold storage'' refers to a safeguarding method 
by which the private keys corresponding to bitcoins stored on a 
digital wallet are removed from any computers actively connected to 
the internet. Cold storage of private keys may involve keeping such 
wallet on a non-networked computer or electronic device or storing 
the public key and private keys relating to the digital wallet on a 
storage device (for example, a USB thumb drive) or printed medium 
(for example, papyrus or paper) and deleting the digital wallet from 
all computers.
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Creation and Redemption of Shares
    According to the Registration Statement, on any business day, an 
authorized participant may place an order to create one or more 
baskets. Purchase orders must be placed by 4:00 p.m. Eastern Time, or 
the close of regular trading on the Exchange, whichever is earlier. The 
day on which an order is received is considered the purchase order 
date. The total deposit of bitcoin required is an amount of bitcoin 
that is in the same proportion to the total assets of the Trust, net of 
accrued expenses and other liabilities, on the date the order to 
purchase 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 order is received. Each night, the Sponsor 
will publish the amount of bitcoin that will be required in exchange 
for each creation order. The Administrator determines the required 
deposit for a

[[Page 57501]]

given day by dividing the number of bitcoin held by the Trust as of the 
opening of business on that business day, adjusted for the amount of 
bitcoin constituting estimated accrued but unpaid fees and expenses of 
the Trust as of the opening of business on that business day, by the 
quotient of the number of Shares outstanding at the opening of business 
divided by the number of Shares in a Creation Unit. The procedures by 
which an authorized participant can redeem one or more Creation Baskets 
mirror the procedures for the creation of Creation Baskets.
Rule 14.11(e)(4)--Commodity-Based Trust Shares
    The Shares will be subject to BZX Rule 14.11(e)(4), which sets 
forth the initial and continued listing criteria applicable to 
Commodity-Based Trust Shares. The Exchange will obtain a representation 
that the Trust's NAV will be calculated daily and that these values and 
information about the assets of the Trust will be made available to all 
market participants at the same time. The Exchange notes that, as 
defined in Rule 14.11(e)(4)(C)(i), the Shares will be: (a) issued by a 
trust that holds a specified commodity \64\ deposited with the trust; 
(b) issued by such trust in a specified aggregate minimum number in 
return for a deposit of a quantity of the underlying commodity; and (c) 
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.
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    \64\ For purposes of Rule 14.11(e)(4), the term commodity takes 
on the definition of the term as provided in the Commodity Exchange 
Act. As noted above, the CFTC has opined that Bitcoin is a commodity 
as defined in Section 1a(9) of the Commodity Exchange Act. See 
Coinflip.
---------------------------------------------------------------------------

    Upon termination of the Trust, the Shares will be removed from 
listing. The Trustee, Delaware Trust Company, is a trust company having 
substantial capital and surplus and the experience and facilities for 
handling corporate trust business, as required under Rule 
14.11(e)(4)(E)(iv)(a) and that no change will be made to the trustee 
without prior notice to and approval of the Exchange. The Exchange also 
notes that, pursuant to Rule 14.11(e)(4)(F), neither the Exchange nor 
any agent of the Exchange shall have any liability for damages, claims, 
losses or expenses caused by any errors, omissions or delays in 
calculating or disseminating any underlying commodity value, the 
current value of the underlying commodity required to be deposited to 
the Trust in connection with issuance of Commodity-Based Trust Shares; 
resulting from any negligent act or omission by the Exchange, or any 
agent of the Exchange, or any act, condition or cause beyond the 
reasonable control of the Exchange, its agent, including, but not 
limited to, an act of God; fire; flood; extraordinary weather 
conditions; war; insurrection; riot; strike; accident; action of 
government; communications or power failure; equipment or software 
malfunction; or any error, omission or delay in the reports of 
transactions in an underlying commodity. Finally, as required in Rule 
14.11(e)(4)(G), the Exchange notes that any registered market maker 
(``Market Maker'') in the Shares 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 registered Market Maker may have or over which 
it may exercise investment discretion. No registered Market Maker shall 
trade in an underlying commodity, related commodity futures or options 
on commodity futures, or any other related commodity derivatives, in an 
account in which a registered 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 (see, e.g., Rule 
4.2), the registered Market Maker in Commodity-Based Trust Shares 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.
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. The Exchange will halt trading in the Shares 
under the conditions specified in BZX Rule 11.18. Trading may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the Shares inadvisable. These may include: 
(1) the extent to which trading is not occurring in the bitcoin 
underlying the Shares; or (2) whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present. Trading in the Shares also will be subject to Rule 
14.11(e)(4)(E)(ii), which sets forth circumstances under which trading 
in the Shares may be halted.
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. BZX will allow 
trading in the Shares during all trading sessions on the Exchange. The 
Exchange has appropriate rules to facilitate transactions in the Shares 
during all trading sessions. As provided in BZX Rule 11.11(a) the 
minimum price variation for quoting and entry of orders in securities 
traded on the Exchange is $0.01 where the price is greater than $1.00 
per share or $0.0001 where the price is less than $1.00 per share.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the Shares on the Exchange during 
all trading sessions and to deter and detect violations of Exchange 
rules and the applicable federal securities laws. Trading of the Shares 
through the Exchange will be subject to the Exchange's surveillance 
procedures for derivative products, including Commodity-Based Trust 
Shares. The issuer has represented to the Exchange that it will advise 
the Exchange of any failure by the Trust or the Shares to comply with 
the continued listing requirements, and, pursuant to its obligations 
under Section 19(g)(1) of the Exchange Act, the Exchange will surveil 
for compliance with the continued listing requirements. If the Trust or 
the Shares are not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under 
Exchange Rule 14.12. The Exchange may obtain information regarding 
trading in the Shares and Bitcoin Futures via ISG, from other exchanges 
who are members or affiliates of the ISG, or with which the Exchange 
has entered into a comprehensive surveillance sharing agreement.\65\
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    \65\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com.
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Information Circular
    Prior to the commencement of trading, the Exchange will inform its 
members in an Information Circular of the special characteristics and 
risks associated with trading the Shares.

[[Page 57502]]

Specifically, the Information Circular will discuss the following: (i) 
the procedures for the creation and redemption of Baskets (and that the 
Shares are not individually redeemable); (ii) BZX Rule 3.7, which 
imposes suitability obligations on Exchange members with respect to 
recommending transactions in the Shares to customers; (iii) how 
information regarding the IIV and the Trust's NAV are disseminated; 
(iv) the risks involved in trading the Shares outside of Regular 
Trading Hours \66\ when an updated IIV will not be calculated or 
publicly disseminated; (v) the requirement that members deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; and (vi) trading 
information.
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    \66\ Regular Trading Hours is the time between 9:30 a.m. and 
4:00 p.m. Eastern Time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Shares. Members purchasing the Shares for resale to 
investors will deliver a prospectus to such investors. The Information 
Circular will also discuss any exemptive, no-action and interpretive 
relief granted by the Commission from any rules under the Act.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \67\ in general and Section 6(b)(5) of the Act \68\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
---------------------------------------------------------------------------

    \67\ 15 U.S.C. 78f.
    \68\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission has approved numerous series of Trust Issued 
Receipts, including Commodity-Based Trust Shares, to be listed on U.S. 
national securities exchanges. In order for any proposed rule change 
from an exchange to be approved, the Commission must determine that, 
among other things, the proposal is consistent with the requirements of 
Section 6(b)(5) of the Act, specifically including: (i) the requirement 
that a national securities exchange's rules are designed to prevent 
fraudulent and manipulative acts and practices; \69\ and (ii) the 
requirement that an exchange proposal be designed, in general, to 
protect investors and the public interest. The Exchange believes that 
this proposal is consistent with the requirements of Section 6(b)(5) of 
the Act and that this filing sufficiently demonstrates that the CME 
Bitcoin Futures market represents a regulated market of significant 
size and that, on the whole, the manipulation concerns previously 
articulated by the Commission are sufficiently mitigated to the point 
that they are outweighed by quantifiable investor protection issues 
that would be resolved by approving this proposal.
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    \69\ As the Exchange has stated in a number of other public 
documents, it continues to believe that bitcoin is resistant to 
price manipulation and that ``other means to prevent fraudulent and 
manipulative acts and practices'' exist to justify dispensing with 
the requisite surveillance sharing agreement. The geographically 
diverse and continuous nature of bitcoin trading render it difficult 
and prohibitively costly to manipulate the price of bitcoin. The 
fragmentation across bitcoin platforms, the relatively slow speed of 
transactions, and the capital necessary to maintain a significant 
presence on each trading platform make manipulation of bitcoin 
prices through continuous trading activity challenging. To the 
extent that there are bitcoin exchanges engaged in or allowing wash 
trading or other activity intended to manipulate the price of 
bitcoin on other markets, such pricing does not normally impact 
prices on other exchange because participants will generally ignore 
markets with quotes that they deem non-executable. Moreover, the 
linkage between the bitcoin markets and the presence of arbitrageurs 
in those markets means that the manipulation of the price of bitcoin 
price on any single venue would require manipulation of the global 
bitcoin price in order to be effective. Arbitrageurs must have funds 
distributed across multiple trading platforms in order to take 
advantage of temporary price dislocations, thereby making it 
unlikely that there will be strong concentration of funds on any 
particular bitcoin exchange or OTC platform. As a result, the 
potential for manipulation on a trading platform would require 
overcoming the liquidity supply of such arbitrageurs who are 
effectively eliminating any cross-market pricing differences.
---------------------------------------------------------------------------

(i) Designed To Prevent Fraudulent and Manipulative Acts and Practices
    In order to meet this standard in a proposal to list and trade a 
series of Commodity-Based Trust Shares, the Commission requires that an 
exchange demonstrate that there is a comprehensive surveillance-sharing 
agreement in place \70\ with a regulated market of significant size. 
Both the Exchange and CME are members of ISG. The only remaining issue 
to be addressed is whether the Bitcoin Futures market constitutes a 
market of significant size, which both the Exchange and the Sponsor 
believe that it does. The terms ``significant market'' and ``market of 
significant size'' include a market (or group of markets) as to which: 
(a) there is a reasonable likelihood that a person attempting to 
manipulate the ETP would also have to trade on that market to 
manipulate the ETP, so that a surveillance-sharing agreement would 
assist the listing exchange in detecting and deterring misconduct; and 
(b) it is unlikely that trading in the ETP would be the predominant 
influence on prices in that market.\71\
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    \70\ As previously articulated by the Commission, ``The standard 
requires such surveillance-sharing agreements since ``they provide a 
necessary deterrent to manipulation because they facilitate the 
availability of information needed to fully investigate a 
manipulation if it were to occur.'' The Commission has emphasized 
that it is essential for an exchange listing a derivative securities 
product to enter into a surveillance-sharing agreement with markets 
trading underlying securities for the listing exchange to have the 
ability to obtain information necessary to detect, investigate, and 
deter fraud and market manipulation, as well as violations of 
exchange rules and applicable federal securities laws and rules. The 
hallmarks of a surveillance-sharing agreement are that the agreement 
provides for the sharing of information about market trading 
activity, clearing activity, and customer identity; that the parties 
to the agreement have reasonable ability to obtain access to and 
produce requested information; and that no existing rules, laws, or 
practices would impede one party to the agreement from obtaining 
this information from, or producing it to, the other party.'' The 
Commission has historically held that joint membership in the ISG 
constitutes such a surveillance sharing agreement. See Wilshire 
Phoenix Disapproval).
    \71\ Id.
---------------------------------------------------------------------------

    The Commission has also recognized that the ``regulated market of 
significant size'' standard is not the only means for satisfying 
Section 6(b)(5) of the act, specifically providing that a listing 
exchange could demonstrate that ``other means to prevent fraudulent and 
manipulative acts and practices'' are sufficient to justify dispensing 
with the requisite surveillance-sharing agreement.\72\
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    \72\ See Winklevoss Order at 37580. The Commission has also 
specifically noted that it ``is not applying a `cannot be 
manipulated' standard; instead, the Commission is examining whether 
the proposal meets the requirements of the Exchange Act and, 
pursuant to its Rules of Practice, places the burden on the listing 
exchange to demonstrate the validity of its contentions and to 
establish that the requirements of the Exchange Act have been met.'' 
Id. at 37582.
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(a) Manipulation of the ETP
    According to the research and analysis presented above, the Bitcoin 
Futures market is the leading market for bitcoin price formation. Where 
Bitcoin Futures lead the price in the spot market such that a potential 
manipulator of the bitcoin spot market (beyond just the constituents of 
the Index) would have to participate in the Bitcoin Futures market, it 
follows that a potential manipulator of the Shares would similarly have 
to transact in the Bitcoin Futures market because the NAV is

[[Page 57503]]

based on spot prices. Further, the Trust only allows for in-kind 
creation and redemption, which, as further described below, reduces the 
potential for manipulation of the Shares through manipulation of the 
Trust's methodology for calculating NAV or any of its individual 
constituents, again emphasizing that a potential manipulator of the 
Shares would have to manipulate the entirety of the bitcoin spot 
market, which is led by the Bitcoin Futures market. As such, the 
Exchange believes that part (a) of the significant market test outlined 
above is satisfied and that common membership in ISG between the 
Exchange and CME would assist the listing exchange in detecting and 
deterring misconduct in the Shares.
(b) Predominant Influence on Prices in Spot and Bitcoin Futures
    The Exchange and Sponsor also believe that trading in the Shares 
would not be the predominant force on prices in the Bitcoin Futures 
market or spot market for a number of reasons, including the 
significant volume in the Bitcoin Futures market, the size of bitcoin's 
market cap, and the significant liquidity available in the spot market. 
In addition to the Bitcoin Futures market data points cited above, the 
spot market for bitcoin is also very liquid.
(c) Other Means To Prevent Fraudulent and Manipulative Acts and 
Practices
    As noted above, the Commission also permits a listing exchange to 
demonstrate that ``other means to prevent fraudulent and manipulative 
acts and practices'' are sufficient to justify dispensing with the 
requisite surveillance-sharing agreement. The Exchange and Sponsor 
believe that such conditions are present.
    The Exchange is proposing to take additional steps to those 
described above to supplement its ability to obtain information that 
would be helpful in detecting, investigating, and deterring fraud and 
market manipulation in the Commodity-Based Trust Shares. On June 21, 
2023, the Exchange reached an agreement on terms with Coinbase, Inc. 
(``Coinbase''), an operator of a United States-based spot trading 
platform for Bitcoin that represents a substantial portion of US-based 
and USD denominated Bitcoin trading,\73\ to enter into a surveillance-
sharing agreement (``Spot BTC SSA'') and executed an associated term 
sheet. Based on this agreement on terms, the Exchange and Coinbase will 
finalize and execute a definitive agreement that the parties expect to 
be executed prior to allowing trading of the Commodity-Based Trust 
Shares.
---------------------------------------------------------------------------

    \73\ According to a Kaiko Research report dated June 26, 2023, 
Coinbase represented roughly 50% of exchange trading volume in USD-
BTC trading on a daily basis during May 2023.
---------------------------------------------------------------------------

    The Spot BTC SSA is expected to be a bilateral surveillance-sharing 
agreement between the Exchange and Coinbase that is intended to 
supplement the Exchange's market surveillance program. The Spot BTC SSA 
is expected to have the hallmarks of a surveillance-sharing agreement 
between two members of the ISG, which would give the Exchange 
supplemental access to data regarding spot Bitcoin trades on Coinbase 
where the Exchange determines it is necessary as part of its 
surveillance program for the Commodity-Based Trust Shares.\74\ This 
means that the Exchange expects to receive market data for orders and 
trades from Coinbase, which it will utilize in surveillance of the 
trading of Commodity-Based Trust Shares. In addition, the Exchange can 
request further information from Coinbase related to spot bitcoin 
trading activity on the Coinbase exchange platform, if the Exchange 
determines that such information would be necessary to detect and 
investigate potential manipulation in the trading of the Commodity-
Based Trust Shares.\75\
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    \74\ For additional information regarding ISG and the hallmarks 
of surveillance-sharing between ISG members, see https://isgportal.org/overview.
    \75\ The Exchange also notes that it already has in place ISG-
like surveillance sharing agreement with Cboe Digital Exchange, LLC 
and Cboe Clear Digital, LLC.
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    Further, and consistent with prior points above, offering only in-
kind creation and redemption will also provide unique protections 
against potential attempts to manipulate the price of the Shares. While 
the Sponsor believes that the Index which it uses to value the Trust's 
bitcoin is itself resistant to manipulation based on the methodology 
further described below, the fact that creations and redemptions are 
only available in-kind makes the manipulability of the Index 
significantly less important. Specifically, because the Trust will not 
accept cash to buy bitcoin in order to create new Shares or, barring a 
forced redemption of the Trust or under other extraordinary 
circumstances, be forced to sell bitcoin to pay cash for redeemed 
Shares, the price that the Sponsor uses to value the Trust's bitcoin is 
not particularly important. When authorized participants are creating 
Shares with the Trust, they need to deliver a certain number of bitcoin 
per Share (regardless of the valuation used) and when they're 
redeeming, they can similarly expect to receive a certain number of 
bitcoin per Share. As such, even if the price used to value the Trust's 
bitcoin is manipulated (which the Sponsor believes that its methodology 
is resistant to), the ratio of bitcoin per Share does not change and 
the Trust will either accept (for creations) or distribute (for 
redemptions) the same number of bitcoin regardless of the value. This 
not only mitigates the risk associated with potential manipulation, but 
also discourages and disincentivizes manipulation of the Index because 
there is little financial incentive to do so.
(ii) Designed To Protect Investors and the Public Interest
    The Exchange believes that the proposal is designed to protect 
investors and the public interest. Over the past several years, U.S. 
investor exposure to bitcoin through OTC Bitcoin Funds has grown into 
the tens of billions of dollars, including through Bitcoin Futures 
ETFs. With that growth, so too has grown the quantifiable investor 
protection issues to U.S. investors through roll costs for Bitcoin 
Futures ETFs and premium/discount volatility and management fees for 
OTC Bitcoin Funds. The Exchange believes that the concerns related to 
the prevention of fraudulent and manipulative acts and practices have 
been sufficiently addressed to be consistent with the Act and, to the 
extent that the Commission disagrees with that assertion, such concerns 
are now outweighed by investor protection concerns. As such, the 
Exchange believes that approving this proposal (and comparable 
proposals) provides the Commission with the opportunity to allow U.S. 
investors with access to bitcoin in a regulated and transparent 
exchange-traded vehicle that would act to limit risk to U.S. investors 
by: (i) reducing premium and discount volatility; (ii) reducing 
management fees through meaningful competition; (iii) reducing risks 
and costs associated with investing in Bitcoin Futures ETFs and 
operating companies that are imperfect proxies for bitcoin exposure; 
and (iv) providing an alternative to custodying spot bitcoin.
Commodity-Based Trust Shares
    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed on the Exchange pursuant to the initial and 
continued listing criteria in Exchange Rule 14.11(e)(4). The Exchange 
believes that its surveillance procedures are adequate to properly 
monitor the trading of the Shares on the Exchange during all trading 
sessions and to deter and detect violations of

[[Page 57504]]

Exchange rules and the applicable federal securities laws. Trading of 
the Shares through the Exchange will be subject to the Exchange's 
surveillance procedures for derivative products, including Commodity-
Based Trust Shares. The issuer has represented to the Exchange that it 
will advise the Exchange of any failure by the Trust or the Shares to 
comply with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Exchange Act, the Exchange 
will surveil for compliance with the continued listing requirements. If 
the Trust or the Shares are not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under Exchange Rule 14.12. The Exchange may obtain information 
regarding trading in the Shares and listed bitcoin derivatives via the 
ISG, from other exchanges who are members or affiliates of the ISG, or 
with which the Exchange has entered into a comprehensive surveillance 
sharing agreement.
Availability of Information
    The Exchange also believes that the proposal promotes market 
transparency in that a large amount of information is currently 
available about bitcoin and will be available regarding the Trust and 
the Shares. In addition to the price transparency of the Index, the 
Trust will provide information regarding the Trust's bitcoin holdings 
as well as additional data regarding the Trust. The Trust will provide 
an IIV per Share updated every 15 seconds, as calculated by the 
Exchange or a third-party financial data provider during the Exchange's 
Regular Trading Hours (9:30 a.m. to 4:00 p.m. E.T.). The IIV will be 
calculated by using the prior day's closing NAV per Share as a base and 
updating that value during Regular Trading Hours to reflect changes in 
the value of the Trust's bitcoin holdings during the trading day.
    The IIV disseminated during Regular Trading Hours should not be 
viewed as an actual real-time update of the NAV, which will be 
calculated only once at the end of each trading day. The IIV will be 
widely disseminated on a per Share basis every 15 seconds during the 
Exchange's Regular Trading Hours by one or more major market data 
vendors. In addition, the IIV will be available through on-line 
information services.
    The website for the Trust, which will be publicly accessible at no 
charge, will contain the following information: (a) the current NAV per 
Share daily and the prior business day's NAV and the reported closing 
price; (b) the BZX Official Closing Price in relation to the NAV as of 
the time the NAV is calculated and a calculation of the premium or 
discount of such price against such NAV; (c) data in chart form 
displaying the frequency distribution of discounts and premiums of the 
Official Closing Price against the NAV, within appropriate ranges for 
each of the four previous calendar quarters (or for the life of the 
Trust, if shorter); (d) the prospectus; and (e) other applicable 
quantitative information. The Trust will also disseminate the Trust's 
holdings on a daily basis on the Trust's website. The price of bitcoin 
will be made available by one or more major market data vendors, 
updated at least every 15 seconds during Regular Trading Hours.
    The NAV for the Trust will be calculated by the Administrator once 
a day and 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.
    Quotation and last sale information for bitcoin is widely 
disseminated through a variety of major market data vendors, including 
Bloomberg and Reuters. Information relating to trading, including price 
and volume information, in bitcoin is available from major market data 
vendors and from the exchanges on which bitcoin are traded. Depth of 
book information is also available from bitcoin exchanges. The normal 
trading hours for bitcoin exchanges are 24 hours per day, 365 days per 
year
    In sum, the Exchange believes that this proposal is consistent with 
the requirements of Section 6(b)(5) of the Act, that this filing 
sufficiently demonstrates that the CME Bitcoin Futures market 
represents a regulated market of significant size, and that on the 
whole the manipulation concerns previously articulated by the 
Commission are sufficiently mitigated to the point that they are 
outweighed by investor protection issues that would be resolved by 
approving this proposal.
    The Exchange believes that the proposal is, in particular, designed 
to protect investors and the public interest. The investor protection 
issues for U.S. investors has grown significantly over the last several 
years, through roll costs for Bitcoin Futures ETFs and premium/discount 
volatility and management fees for OTC Bitcoin Funds. As discussed 
throughout, this growth investor protection concerns need to be 
reevaluated and rebalanced with the prevention of fraudulent and 
manipulative acts and practices concerns that previous disapproval 
orders have relied upon. Finally, the Exchange notes that in addition 
to all of the arguments herein which it believes sufficiently establish 
the CME Bitcoin Futures market as a regulated market of significant 
size, it is logically inconsistent to find that the CME Bitcoin Futures 
market is a significant market as it relates to the CME Bitcoin Futures 
market, but not a significant market as it relates to the bitcoin spot 
market for the numerous reasons laid out above.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

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, rather will facilitate the listing and trading of 
an additional exchange-traded product that will enhance competition 
among both market participants and listing venues, 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

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 57505]]

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-058 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-CboeBZX-2023-058. 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-CboeBZX-2023-058 and should 
be submitted on or before September 13, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\76\
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    \76\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-18103 Filed 8-22-23; 8:45 am]
BILLING CODE 8011-01-P


