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reimbursable basis. The assessments are 3206–0252 are almost always the Exchange, and at the Commission’s authorized by various statutes and administered electronically. Public Reference Room. regulations: Section 4702 of Title 5, Analysis II. Self-Regulatory Organization’s U.S.C; E.O. 12862; E.O. 13715; Section Statement of the Purpose of, and 1128 of the National Defense Agency: Human Resources Strategy and Evaluation Solutions, Office of Statutory Basis for, the Proposed Rule Authorization Act for Fiscal Year 2004, Change Public Law 108–136; 5 U.S.C. 1101 note, Personnel Management. 1103(a)(5), 1104, 1302, 3301, 3302, Title: Organizational Surveys. In its filing with the Commission, the 4702, 7701 note; E.O. 13197, 66 FR OMB: 3206–0252. self-regulatory organization included 7853, 3 CFR 748 (2002); E.O. 10577, 12 Frequency: On occasion. statements concerning the purpose of, FR 1259, 3 CFR, 1954–1958 Comp., p. Affected Public: Government and basis for, the proposed rule change 218; and Section 4703 of Title 5, United contractors and individuals. and discussed any comments it received States Code. Number of Respondents: on the proposed rule change. The text of those statements may be examined at This collection request includes approximately 78,780. the places specified in Item IV below. surveys we currently use and plan to Estimated Time per Respondent: The Exchange has prepared summaries, use during the next three years to 10.62 minutes. set forth in sections A, B, and C below, measure agency performance, climate, Total Burden Hours: 13,944 hours. of the most significant parts of such engagement, and leadership Office of Personnel Management. statements. effectiveness. OMB No. 3206–0252 Alexys Stanley, covers a broad range of surveys all Director, Office of Privacy and Information A. Self-Regulatory Organization’s focused on improving organizational Management. Statement of the Purpose of, and the performance. Non-Federal respondents [FR Doc. 2021–11177 Filed 5–26–21; 8:45 am] Statutory Basis for, the Proposed Rule will almost never receive more than one BILLING CODE 6325–43–P Change of these surveys. All of these surveys 1. Purpose consist of Likert-type, mark-one, and mark-all-that-apply items, and may Under NYSE Arca Rule 8.201–E, the SECURITIES AND EXCHANGE Exchange may propose to list and/or include a small number of open-ended COMMISSION comment items. Organizational trade pursuant to unlisted trading Assessment Surveys (OAS) typically [Release No. 34–91962; File No. SR– privileges ‘‘Commodity-Based Trust 4 include a customized set of 50–150 NYSEArca–2021–37] Shares.’’ The Exchange proposes to list standard items pulled from an item and trade shares of the Trust (the bank of nearly 500 items and a small set Self-Regulatory Organizations; NYSE ‘‘Shares’’) pursuant to NYSE Arca Rule 5 of 5–10 custom items developed to meet Arca, Inc.; Notice of Filing of Proposed 8.201–E. the agency’s specific needs. OPM’s Rule Change To List and Trade Shares The sponsor of the Trust is First Trust Advisors L.P. (the ‘‘Sponsor’’ or Human Resources Strategy and of the First Trust SkyBridge Bitcoin ‘‘Advisor’’). The sub-adviser for the trust Evaluation Solutions administers a ETF Trust Under NYSE Arca Rule is SkyBridge Capital II, LLC (the ‘‘Sub- supplemental OPM Federal Employee 8.201–E Advisor’’). The trustee for the Trust is Viewpoint Survey (Supplemental OPM May 21, 2021. Delaware Trust Company (the FEVS), a type of organizational Pursuant to Section 19(b)(1) 1 of the ‘‘Trustee’’). The Bank of New York assessment survey, to employee groups Securities Exchange Act of 1934 (the Mellon is the transfer agent of the Trust not covered by the official OPM FEVS ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 (in such capacity, the ‘‘Transfer Agent’’) administration. Exit Surveys consist of notice is hereby given that, on May 6, and the administrator of the Trust (in approximately 100 items that assess 2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or such capacity, the ‘‘Administrator’’). reasons why employees decided to leave the ‘‘Exchange’’) filed with the The bitcoin custodian for the Trust is their organization. Customization is Securities and Exchange Commission NYDIG Trust Company LLC (the possible. The New Leaders Onboarding (the ‘‘Commission’’) the proposed rule ‘‘Bitcoin Custodian’’). Assessment (NLOA) is a combined change as described in Items I, II, and The Trust is a Delaware statutory assessment consisting of approximately III below, which Items have been trust, organized on March 12, 2021, that 100 items, including items measuring prepared by the self-regulatory operates pursuant to a trust agreement organizational climate, employee organization. The Commission is between the Advisor and the Trustee engagement, and leadership. New publishing this notice to solicit (the ‘‘Trust Agreement’’). The Trust has Employee Surveys consist of comments on the proposed rule change no fixed termination date. approximately 100 items that assess from interested persons. satisfaction with the hiring, orientation, Background and socialization of new employees. I. Self-Regulatory Organization’s As discussed in further detail below,6 Training Needs Assessment Surveys Statement of the Terms of Substance of bitcoin is a digital asset based on the consist of approximately 100 items that the Proposed Rule Change decentralized, open source protocol of assess an agency’s climate for training The Exchange proposes to list and and employees’ training preferences. trade shares of the following under 4 Commodity-Based Trust Shares are securities Program Evaluation surveys evaluate the issued by a trust that represent investors’ discrete NYSE Arca Rule 8.201–E: First Trust identifiable and undivided beneficial ownership effectiveness of government initiatives, SkyBridge Bitcoin ETF Trust (the interest in the commodities deposited into the programs, and offices. Program ‘‘Trust’’). The proposed change is Trust. Evaluation surveys are always available on the Exchange’s website at 5 On March 19, 2021, the Trust filed a registration customized to assess specific program www.nyse.com, at the principal office of statement on Form S–1 under the Securities Act of elements. Program Evaluation surveys 1933 (15 U.S.C. 77a) (the ‘‘Securities Act’’) (File No. 333–254529) and amended such registration may contain from 20 to 200 items, with 1 15 U.S.C. 78s(b)(1). statement on May 6, 2021 (the ‘‘Registration an average of approximately 100 items. 2 15 U.S.C. 78a. Statement’’). The surveys included under OMB No. 3 17 CFR 240.19b–4. 6 See ‘‘The Bitcoin Industry and Market,’’ infra.

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the peer-to-peer computer network significant enforcement actions in the emerged to provide fund custodial launched in 2009 that governs the space. The New York Department of services for digital assets, among other creation, movement, and ownership of Financial Services (‘‘NYDFS’’) adopted services. For example, in December bitcoin and hosts the public ledger, or its final BitLicense regulatory 2020, the Commission adopted a ‘‘blockchain,’’ on which all bitcoin framework in 2015, but had only conditional no-action position transactions are recorded (the ‘‘Bitcoin approved four entities to engage in permitting certain special purpose Network’’ or ‘‘Bitcoin’’). The activities relating to virtual currencies broker-dealers to custody digital asset decentralized nature of the Bitcoin (whether through granting a BitLicense securities under Rule 15c3–3 under the Network allows parties to transact or a limited-purpose trust charter) as of Exchange Act; 16 in September 2020, the directly with one another based on June 30, 2016.11 While the first over-the- Staff of the Commission released a no- cryptographic proof instead of relying counter bitcoin fund launched in 2013, action letter permitting certain broker- on a trusted third party. The protocol public trading was limited and the fund dealers to operate a non-custodial also lays out the rate of issuance of new had only $60 million in assets.12 There Alternative Trading System (‘‘ATS’’) for bitcoin within the Bitcoin Network, a were very few, if any, traditional digital asset securities, subject to rate that is reduced by half financial institutions engaged in the specified conditions; 17 in October 2019, approximately every four years with an space, whether through investment or the Staff of the Commission granted eventual hard cap of 21 million. It is providing services to digital asset temporary relief from the clearing generally understood that the companies. In January 2018, the Staff of agency registration requirement to an combination of these two features—a the Commission noted in a letter to the entity seeking to establish a securities systemic hard cap of 21 million bitcoin Investment Company Institute and clearance and settlement system based and the ability to transact trustlessly SIFMA that it was not aware, at that on distributed ledger technology; 18 and with anyone connected to the Bitcoin time, of a single custodian providing multiple transfer agents who provide Network—gives bitcoin its value.7 fund custodial services for digital services for digital asset securities have The first rule filing proposing to list assets.13 registered with the Commission.19 an exchange-traded product to provide As of the first quarter of 2021, the Beyond the Commission’s purview, exposure to bitcoin in the U.S. was digital assets financial ecosystem, the regulatory landscape has also submitted by the Cboe BZX Exchange, including bitcoin, has progressed changed significantly since 2016, and Inc. on June 30, 2016.8 At that time, significantly. The development of a cryptocurrency markets have grown and blockchain technology, and digital regulated market for digital asset evolved as well. The market for bitcoin assets that utilized it, were relatively securities has significantly evolved, is approximately 100 times larger, new to the broader public. The market with market participants having having recently reached a market cap of cap of all bitcoin in existence at that conducted registered public offerings of over $1 trillion. As of February 27, 2021, 14 time was approximately $10 billion. No both digital asset securities and shares bitcoin’s market cap is greater than in investment vehicles holding bitcoin companies such as Facebook, Inc., registered offering of digital asset 15 securities or shares in an investment futures. Additionally, licensed and Berkshire Hathaway Inc., and JP Morgan vehicle with exposure to bitcoin or any regulated service providers have Chase & Co. The number of verified other cryptocurrency had yet been users at Coinbase, the largest U.S.-based ‘commodity’ to include, among other things, ‘all bitcoin exchange, has grown to over 56 conducted, and the regulated services, rights, and interests in which contracts for 20 infrastructure for conducting a digital million. CFTC-regulated bitcoin future delivery are presently or in the future dealt futures (‘‘Bitcoin Futures’’) represented asset securities offering had not begun in.’ 7 U.S.C. 1a(9). The definition of a ‘commodity’ approximately $28 billion in notional to develop.9 Similarly, regulated U.S. is broad. See, e.g., Board of Trade of City of Chicago v. SEC, 677 F.2d 1137, 1142 (7th Cir. 1982). Bitcoin trading volume on the Chicago bitcoin futures contracts did not exist. and other virtual currencies are encompassed in the The Commodity Futures Trading definition and properly defined as commodities.’’ 16 See Securities Exchange Act Release No. 90788, 11 Commission (the ‘‘CFTC’’) had A list of virtual currency businesses that are 86 FR 11627 (February 26, 2021) (File Number entities regulated by the NYDFS is available on the determined that bitcoin is a _ S7–25–20) (Custody of Digital Asset Securities by 10 NYDFS website. See https://www.dfs.ny.gov/apps Special Purpose Broker-Dealers). commodity, but had not engaged in and_licensing/virtual_currency_businesses/ 17 See Letter from Elizabeth Baird, Deputy regulated_entities. Director, Division of Trading and Markets, U.S. 7 12 For additional information about bitcoin and the See Bitcoin Investment Trust Form S–1, dated Securities and Exchange Commission to Kris Bitcoin Network, see https://bitcoin.org/en/getting May 27, 2016, available at: https://www.sec.gov/ Dailey, Vice President, Risk Oversight & started. Archives/edgar/data/1588489/ Operational Regulation, Financial Industry 8 See Order Setting Aside Action by Delegated 000095012316017801/filename1.htm (data as of Regulatory Authority (September 25, 2020), Authority and Disapproving a Proposed Rule March 31, 2016 according to publicly available available at: https://www.sec.gov/divisions/ Change, as Modified by Amendments No. 1 and 2, filings). marketreg/mr-noaction/2020/finra-ats-role-in- to List and Trade Shares of the Winklevoss Bitcoin 13 See Letter from Dalia Blass, Director, Division settlement-of-digital-asset-security-trades- Trust, Securities Exchange Act Release No. 83723 of Investment Management, U.S. Securities and 09252020.pdf. (July 26, 2018), 83 FR 37579 (August 1, 2018) (the Exchange Commission to Paul Schott Stevens, 18 See Letter from Jeffrey S. Mooney, Associate ‘‘Winklevoss II Order’’). This proposal was President & CEO, Investment Company Institute Director, Division of Trading and Markets, U.S. subsequently disapproved by the Commission. See and Timothy W. Cameron, Asset Management Securities and Exchange Commission to Charles G. id. Group—Head, Securities Industry and Financial Cascarilla & Daniel M. Burstein, Paxos Trust 9 Digital assets that are securities under U.S. law Markets Association (January 18, 2018), available Company, LLC (October 28, 2019), available at: are referred to throughout this proposal as ‘‘digital at: https://www.sec.gov/divisions/investment/ https://www.sec.gov/divisions/marketreg/mr- asset securities.’’ All other digital assets, including noaction/2018/cryptocurrency-011818.htm. noaction/2019/paxos-trust-company-102819- bitcoin, are referred to interchangeably as 14 See Prospectus Supplement filed pursuant to 17a.pdf. ‘‘cryptocurrencies’’ or ‘‘virtual currencies.’’ The Rule 424(b)(1) for INX Tokens (Registration No. 19 See, e.g., Form TA–1/A filed by Tokensoft term ‘‘digital assets’’ refers to all digital assets, 333–233363), available at: https://www.sec.gov/ Transfer Agent LLC (CIK: 0001794142) on January including both digital asset securities and Archives/edgar/data/1725882/ 8, 2021, available at: https://www.sec.gov/Archives/ cryptocurrencies, together. 000121390020023202/ea125858-424b1_ edgar/data/1794142/000179414219000001/ 10 See ‘‘In the Matter of Coinflip, Inc.’’ inxlimited.htm. xslFTA1X01/primary_doc.xml. (‘‘Coinflip’’) (CFTC Docket 15–29 (September 17, 15 See Prospectus filed by Stone Ridge Trust VI 20 See, e.g., ‘‘Riding Bitcoin Surge, Coinbase 2015)) (order instituting proceedings pursuant to on behalf of NYDIG Bitcoin Strategy Fund Active Users Grew by 117% in Q1 2021; Revenue Sections 6(c) and 6(d) of the CEA, making findings Registration, available at: https://www.sec.gov/ Tops $1.8B’’ (April 6, 2021), available at: https:// and imposing remedial sanctions), in which the Archives/edgar/data/1764894/ www.coindesk.com/coinbase-q1-earnings-report- CFTC stated: ‘‘Section 1a(9) of the CEA defines 000119312519309942/d693146d497.htm. monthly-active-users.

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Mercantile Exchange (the ‘‘CME’’) in imposing requirements on entities even historically bitcoin skeptical fund December 2020 compared to $737 subject to the BSA that are specific to managers 34 are allocating to bitcoin. million, $1.4 billion, and $3.9 billion in the technological context of virtual The largest over-the-counter bitcoin total trading in December 2017, currencies.26 In addition, the Treasury’s fund previously filed a Form 10 December 2018, and December 2019, Office of Foreign Assets Control registration statement, which the Staff of respectively. Bitcoin Futures traded (‘‘OFAC’’) has brought enforcement the Commission reviewed and which over $1.2 billion per day in December actions over apparent violations of the took effect automatically, and is now a 2020 and represented $1.6 billion in sanctions laws in connection with the reporting company.35 Established open interest compared to $115 million provision of wallet management companies like Tesla, Inc.,36 in December 2019.21 The CFTC has services for digital assets.27 MicroStrategy Incorporated,37 and exercised its regulatory jurisdiction in In addition to the regulatory Square, Inc.,38 among others, have bringing a number of enforcement developments laid out above, more recently announced substantial actions related to bitcoin and against traditional financial market participants investments in bitcoin in amounts as trading platforms that offer appear to be embracing cryptocurrency: large as $1.5 billion (Tesla) and $425 cryptocurrency trading.22 The U.S. Large insurance companies,28 million (MicroStrategy). Office of the Comptroller of the investment banks,29 asset managers,30 Despite these developments, access Currency (the ‘‘OCC’’) has made clear credit card companies,31 university for U.S. retail investors to gain exposure that federally-chartered banks are able endowments,32 pension funds,33 and to bitcoin via a transparent and to provide custody services for regulated exchange-traded vehicle cryptocurrencies and other digital Certain Business Models Involving Convertible remains limited. As investors and assets.23 The OCC recently granted Virtual Currencies), available at: https:// advisors increasingly utilize exchange- www.fincen.gov/sites/default/files/2019-05/FinCEN conditional approval of two charter %20Guidance%20CVC%20FINAL%20508.pdf. traded product (‘‘ETP’’) to manage conversions by state-chartered trust 26 See U.S. Department of the Treasury Press diversified portfolios (including companies to national banks, both of Release: ‘‘The Financial Crimes Enforcement equities, fixed income securities, which provide cryptocurrency custody Network Proposes Rule Aimed at Closing Anti- commodities, and currencies) quickly, 24 Money Laundering Regulatory Gaps for Certain services. NYDFS has granted no fewer Convertible Virtual Currency and Digital Asset easily, relatively inexpensively, tax- than twenty-five BitLicenses, including Transactions’’ (December 18, 2020), available at: efficiently, and without having to hold to established public payment https://home.treasury.gov/news/press-releases/ directly any of the underlying assets, companies like PayPal Holdings, Inc. sm1216. options for bitcoin exposure for U.S. 27 See U.S. Department of the Treasury and Square, Inc., and limited purpose Enforcement Release: ‘‘OFAC Enters Into $98,830 investors remain limited to: (i) Investing trust charters to entities providing Settlement with BitGo, Inc. for Apparent Violations in over-the-counter bitcoin funds (‘‘OTC cryptocurrency custody services. The of Multiple Sanctions Programs Related to Digital Bitcoin Funds’’) that are subject to high U.S. Treasury Financial Crimes Currency Transactions’’ (December 30, 2020), premium/discount volatility (and high available at: https://home.treasury.gov/system/files/ Enforcement Network (‘‘FinCEN’’) has 126/20201230_bitgo.pdf. management fees) to the advantage of released extensive guidance regarding 28 On December 10, 2020, Massachusetts Mutual more sophisticated investors that are the applicability of the Bank Secrecy Life Insurance Company (MassMutual) announced able to purchase shares at net asset Act (‘‘BSA’’) and implementing that it had purchased $100 million in bitcoin for its value (‘‘NAV’’) directly with the issuing general investment account. See MassMutual Press regulations to virtual currency Release ‘‘Institutional Bitcoin provider NYDIG trust; (ii) facing the technical risk, businesses,25 and has proposed rules announces minority stake purchase by complexity, and generally high fees MassMutual’’ (December 10, 2020), available at: associated with buying and storing 21 All statistics and charts included in this https://www.massmutual.com/about-us/news-and- bitcoin directly; or (iii) purchasing proposal with respect to the CME are sourced from press-releases/press-releases/2020/12/institutional- bitcoin-provider-nydig-announces- minority-stake- shares of operating companies that they https://www.cmegroup.com/trading/bitcoin- purchase-by-massmutual. futures.html. In addition, as further discussed believe will provide proxy exposure to 29 below, the Sponsor believes the CME represents a See, e.g., ‘‘Morgan Stanley to Offer Rich Clients regulated market of significant size for purposes of Access to Bitcoin Funds’’ (March 17, 2021) 34 See, e.g., ‘‘Bridgewater: Our Thoughts on addressing the Commission’s concerns about available at: https://www.bloomberg.com/news/ Bitcoin’’ (January 28, 2021) available at: https:// articles/2021-03-17/morgan-stanley-to-offer-rich- potential manipulation of the bitcoin market. www.bridgewater.com/research-and-insights/our- clients-access-to-bitcoin-funds. 22 The CFTC’s annual report for Fiscal Year 2020 thoughts-on-bitcoin and ‘‘Paul Tudor Jones says he 30 See, e.g., ‘‘BlackRock’s Rick Rieder says the (which ended on September 30, 2020) noted that likes bitcoin even more now, rally still in the ‘first world’s largest asset manager has ‘started to dabble’ the CFTC ‘‘continued to aggressively prosecute inning’’’ (October 22, 2020), available at: https:// in bitcoin’’ (February 17, 2021), available at: www.cnbc.com/2020/10/22/-paul-tudor-jones-says- misconduct involving digital assets that fit within https://www.cnbc.com/2021/02/17/blackrock-has- he-likes-bitcoin-even-more-now-rally-still-in-the- the CEA’s definition of commodity’’ and ‘‘brought started-to-dabble-in-bitcoin-says-rick-rieder.html first-inning.html. a record setting seven cases involving digital and ‘‘Guggenheim’s Scott Minerd Says Bitcoin 35 assets.’’ See CFTC FY2020 Division of Enforcement Should Be Worth $400,000’’ (December 16, 2020), See Letter from Division of Corporation Annual Report, available at: https://www.cftc.gov/ available at: https://www.bloomberg.com/news/ Finance, Office of Real Estate & Construction to _ _ _ media/5321/DOE FY2020 AnnualReport 120120/ articles/2020-12-16/guggenheim-s-scott- minerd- Barry E. Silbert, Chief Executive Officer, Grayscale download. Additionally, the CFTC filed on October says-bitcoin-should-be-worth-400-000. Bitcoin Trust (January 31, 2020), available at: 1, 2020, a civil enforcement action against the 31 See, e.g., ‘‘Visa Moves to Allow Payment https://www.sec.gov/Archives/edgar/data/1588489/ owner/operators of the BitMEX trading platform, Settlements Using Cryptocurrency’’ (March 29, 000000000020000953/filename1.pdf. which was one of the largest bitcoin derivative 2021), available at: https://www.reuters.com/ 36 See Form 10–K submitted by Tesla, Inc. for the exchanges. See CFTC Release No. 8270–20 (October business/autos-transportation/exclusive-visa- fiscal year ended December 31, 2020 at 23: https:// 1, 2020), available at: https://www.cftc.gov/ moves-allow-payment-settlements-using- www.sec.gov/ix?doc=/Archives/edgar/data/ PressRoom/PressReleases/8270-20. cryptocurrency-2021-03-29/. 1318605/000156459021004599/tsla-10k_ 23 See OCC News Release 2021–2 (January 4, 32 See, e.g., ‘‘Harvard and Yale Endowments 20201231.htm. 2021), available at: https://www.occ.gov/news- Among Those Reportedly Buying Crypto’’ (January 37 See Form 10–Q submitted by MicroStrategy issuances/news-releases/2021/nr-occ-2021-2.html. 25, 2021), available at: https:// Incorporated for the quarterly period ended 24 See OCC News Release 2021–6 (January 13, www.bloomberg.com/news/articles/2021-01-26/ September 30, 2020 at 8: https://www.sec.gov/ 2021), available at: https://www.occ.gov/news- harvard-and-yale- endowments-among-those- ix?doc=/Archives/edgar/data/1050446/ issuances/news-releases/2021/nr-occ-2021-6.html reportedly-buying-crypto. 000156459020047995/mstr-10q_20200930.htm. and OCC News Release 2021–19 (February 5, 2021), 33 See, e.g., ‘‘Virginia Police Department Reveals 38 See Form 10–Q submitted by Square, Inc. for available at: https://www.occ.gov/news-issuances/ Why its Pension Fund is Betting on Bitcoin’’ the quarterly period ended September 30, 2020 at news-releases/2021/nr-occ-2021-19.html. (February 14, 2019), available at: https:// 51: https://www.sec.gov/ix?doc=/Archives/edgar/ 25 See FinCEN Guidance FIN–2019–G001 (May 9, finance.yahoo.com/news/virginia-police- data/1512673/000151267320000012/sq- 2019) (Application of FinCEN’s Regulations to department-reveals-why-194558505.html. 20200930.htm.

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bitcoin with limited disclosure about through OTC Bitcoin Funds.41 As of the imperfect proxies for bitcoin exposure; the associated risks. Meanwhile, date of this filing, it is anticipated that and (iv) providing an alternative to investors in many other countries, other 1940 Act funds will soon begin to custodying spot bitcoin. pursue bitcoin through other means, including Canada, are able to use more OTC Bitcoin Funds and Premium/ including through put options on traditional exchange listed and traded Discount Volatility products to gain exposure to bitcoin, bitcoin futures contracts and disadvantaging U.S. investors and investments in privately offered pooled OTC Bitcoin Funds are generally leaving them with riskier, more investment vehicles that invest in designed to provide exposure to bitcoin 42 expensive, and less regulated means of bitcoin. In previous statements, the in a manner similar to the Shares. Staff of the Commission has However, unlike the Shares, OTC getting bitcoin exposure.39 acknowledged how such funds can Bitcoin Funds are unable to freely offer For example, the Purpose Bitcoin satisfy their concerns regarding custody, creation and redemption in a way that ETF, a retail physical bitcoin ETP valuation, and manipulation.43 The incentivizes market participants to keep recently launched in Canada, reportedly funds that have already invested in their shares trading in line with their reached $421.8 million in assets under bitcoin instruments have no reported NAV 44 and, as a result, shares of OTC management (‘‘AUM’’) in two days, and issues regarding custody, valuation, or Bitcoin Funds frequently trade at a price has achieved $993 million in assets as manipulation of the instruments held by that is out of line with the value of their of April 14, 2021, demonstrating the these funds. While these funds do offer assets held. Historically, OTC Bitcoin demand for a North American market investors some means of exposure to Funds have traded at a significant listed bitcoin ETP. The Sponsor believes bitcoin, the current offerings fall short of premium to NAV.45 that the demand for the Purpose Bitcoin giving investors an accessible, regulated Trading at a premium or a discount is ETF is driven primarily by investors’ product that provides concentrated not unique to OTC Bitcoin Funds and is desire to have a regulated and accessible exposure to bitcoin. not in itself problematic, but the size of means of exposure to bitcoin. The OTC Bitcoin Funds and Investor such premiums/discounts and volatility Purpose Bitcoin ETF also offers a class Protection thereof highlight the key differences in operations and market structure of OTC of units that is U.S. dollar denominated, Recently, U.S. investor exposure to which could appeal to U.S. investors. Bitcoin Funds as compared to ETPs. bitcoin through OTC Bitcoin Funds has Combined with the significant increase Without an approved bitcoin ETP in the grown into the tens of billions of U.S. as a viable alternative, the Sponsor in AUM for OTC Bitcoin Funds over the dollars. With that growth, so too has past year, the size and volatility of believes U.S. investors will seek to grown the potential risk to U.S. purchase these shares in order to get premiums and discounts for OTC investors. As described below, premium Bitcoin Funds have given rise to access to bitcoin exposure, leaving them and discount volatility, high fees, without the protections of U.S. significant and quantifiable investor insufficient disclosures, and technical protection issues, as further described securities laws. Given the separate hurdles are exposing U.S. investors to below. In fact, the largest OTC Bitcoin regulatory regime and the potential risks that could potentially be Fund has grown to $35.0 billion in difficulties associated with any eliminated through access to a bitcoin AUM as of February 19, 2021 46 and has international litigation, such an ETP. The Sponsor understands the historically traded at a premium of arrangement would create more risk Commission’s previous focus on between roughly five and forty percent, exposure for U.S. investors than they potential manipulation of a bitcoin ETP would otherwise have with a U.S. in prior disapproval orders, but believes 44 Because OTC Bitcoin Funds are not listed on exchange listed ETP. With the addition that such concerns have been an exchange, they are also not subject to the same of more bitcoin ETPs in non-U.S. sufficiently mitigated and may be transparency and regulatory oversight by a listing outweighed by the growing and exchange as the Shares would be. In the case of the jurisdictions expected to grow, the Trust, the existence of a surveillance-sharing Sponsor anticipates that such risks will quantifiable investor protection agreement between the Exchange and the Bitcoin only continue to grow. concerns related to OTC Bitcoin Funds. Futures market results in increased investor Accordingly, the Sponsor believes that protections as compared to OTC Bitcoin Funds. In addition, several funds registered this proposal (and other comparable 45 The inability to trade in line with NAV may at under the Investment Company Act of proposals) represents an opportunity for some point result in OTC Bitcoin Funds trading at 1940 (the ‘‘1940 Act’’) have effective a discount to their NAV, which has occurred more U.S. investors to gain exposure to recently with respect to one prominent OTC Bitcoin registration statements that contemplate bitcoin in a regulated and transparent Fund. While that has not historically been the case, bitcoin exposure through a variety of exchange-traded vehicle that limits risks and it is not clear whether such discounts will means, including through investments by: (i) Reducing premium and discount continue, such a prolonged, significant discount in bitcoin futures contacts 40 and scenario would give rise to nearly identical volatility; (ii) reducing management fees potential issues related to trading at a premium. through meaningful competition; (iii) 46 Compare to an AUM of approximately $2.6 39 Securities regulators in a number of other reducing risks associated with investing billion on February 26, 2020, the date on which the countries have either approved or otherwise in operating companies that are Commission issued the most recent disapproval allowed the listing and trading of bitcoin ETPs. order for a bitcoin ETP. See Order Disapproving a Specifically, these funds (with their respective Proposed Rule Change, as Modified by Amendment approximate AUMs as of April 14, 2021) include 41 See, e.g., Amplify Transformational Data No. 1, to Amend NYSE Arca Rule 8.201–E the Purpose Bitcoin ETF ($993,000,000), VanEck Sharing ETF (File No. 333–207937); and ARK (Commodity-Based Trust Shares) and to List and Vectors Bitcoin ETN ($209,000,000), WisdomTree Innovation ETF (File No. 333–191019). Trade Shares of the United States Bitcoin and Bitcoin ETP ($407,000,000), Bitcoin Tracker One 42 See Stone Ridge Trust, Post-Effective Treasury Investment Trust Under NYSE Arca Rule ($1,380,000,000), BTCetc bitcoin ETP Amendment No. 74 to Registration Statement on 8.201–E, Securities Exchange Act Release No. 88284 ($1,410,000,000), 21Shares Bitcoin ETP Form N–1A (File No. 333–184477), available at: (February 26, 2020), 85 FR 12595 (March 3, 2020) ($362,000,000), 21Shares Bitcoin Suisse ETP https://www.sec.gov/Archives/edgar/data/1559992/ (SR–NYSEArca–2019–39) (the ‘‘Wilshire Phoenix ($30,000,000), CoinShares Physical Bitcoin ETP 000119312521072856/d129263d485apos.htm. Order’’). While the price of one bitcoin has ($396,000,000). 43 See Dalia Blass, ‘‘Keynote Address—2019 ICI increased approximately 400% in the intervening 40 See, e.g., Stone Ridge Trust VI (File No. 333– Securities Law Developments Conference’’ period, the total AUM has increased by 234055); BlackRock Global Allocation Fund, Inc. (December 3, 2019), available at: https:// approximately 1240%, indicating that the increase (File No. 33–22462); and BlackRock Funds V (File www.sec.gov/news/speech/blass-keynote-address- in AUM is attributable to more than just price No. 333–224371). 2019-ici-securities-law-developments-conference. appreciation in bitcoin.

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though it has seen premiums at times fund, which means that they are able to present in and potentially magnified by above one hundred percent.47 Recently, purchase shares directly with the fund OTC Bitcoin Funds. however, it has traded at a discount. As at NAV (in exchange for either cash or Spot and Proxy Exposure of March 24, 2021, the discount was bitcoin) without having to pay the approximately 14%,48 representing premium or sell into the discount. Exposure to bitcoin through an ETP around $4.9 billion less in market value While there are often minimum holding also presents certain advantages for than the bitcoin actually held by the periods for shares required by law, an retail investors compared to buying spot fund. If premium/discount numbers investor that is allowed to purchase bitcoin directly. The most notable move back to the middle of its historical directly from the fund is able to hedge advantage is the use of the Bitcoin range to a 20% premium (which their bitcoin exposure as needed to Custodian to custody the Trust’s bitcoin historically could occur at any time and satisfy the holding requirements and assets. The Sponsor has carefully overnight), it would represent a swing of collect on the premium or discount selected the Bitcoin Custodian, a third- approximately $11.9 billion in value opportunity. party custodian that carries insurance unrelated to the value of bitcoin held by covering both hot and cold storage and As noted above, the existence of a the fund and if the premium returns to is chartered as a limited purpose trust premium or discount and the premium/ the upper end of its typical range, that company under the New York Banking discount collection opportunity is not number increases to $18.9 billion. These Law,52 due to its manner of holding the numbers are only associated with a unique to OTC Bitcoin Funds and does Trust’s bitcoin. Among other things, the single OTC Bitcoin Fund—as more and not in itself warrant the approval of an Bitcoin Custodian will use ‘‘cold’’ 49 more OTC Bitcoin Funds come to exchange traded product. What makes (offline) storage to hold private keys and market and more investor assets flood this situation unique is that such meet a certain degree of cybersecurity into them to get access to bitcoin significant and persistent premiums and measures and operational best exposure, the potential dollars at risk discounts can exist in a product with practices.53 By contrast, an individual will only increase. over $35 billion in assets under retail investor holding bitcoin through a The risks associated with volatile management,50 that billions of retail cryptocurrency exchange lacks these premiums/discounts for OTC Bitcoin investor dollars are constantly under protections. Typically, retail exchanges Funds raise significant investor threat of premium/discount volatility,51 hold most, if not all, retail investors’ protection issues in several ways. First, and that premium/discount volatility is bitcoin in ‘‘hot’’ (internet-connected) investors may be buying shares of a generally captured by more storage and do not make any fund for a price that is not reflective of sophisticated investors on a riskless commitments to indemnify retail the per share value of the fund’s basis. While the Sponsor appreciates the investors or to observe any particular underlying assets. Even operating Commission’s focus on potential cybersecurity standard. Meanwhile, a within the normal premium range, it is manipulation of a bitcoin ETP in prior retail investor holding spot bitcoin possible for an investor to buy shares of disapproval orders and believes those directly in a self-hosted wallet may an OTC Bitcoin Fund only to have those concerns are adequately addressed in suffer from inexperience in private key shares quickly lose 10% or more in this filing, the Sponsor submits that management (e.g., insufficient password dollar value without any movement of current circumstances warrant that the protection, lost key, etc.), which could the price of bitcoin. That is to say—the Commission also consider the direct, cause them to lose some or all of their price of bitcoin could have stayed bitcoin holdings. In the Bitcoin exactly the same from market close on quantifiable investor protection issue in determining whether to approve this Custodian, the Trust has engaged a one day to market open the next, yet the regulated and licensed entity highly value of the shares held by the investor proposal, particularly when the Trust, as a bitcoin ETP, is designed to reduce experienced in bitcoin custody, with decreased only because of the dedicated, trained employees and fluctuation of the premium/discount. As the likelihood of significant and prolonged premiums and discounts procedures to manage the private keys more investment vehicles, including to the Trust’s bitcoin, and which is mutual funds and ETFs, seek to gain with its open-ended nature as well as exposure to bitcoin, the easiest option the ability of market participants (i.e., market makers and authorized 52 New York state trust companies are subject to for a buy and hold strategy is often an rigorous oversight similar to other types of entities, OTC Bitcoin Fund, meaning that even participants) to create and redeem on a such as nationally chartered banking entities, that investors that do not directly buy OTC daily basis. Furthermore, the risk of hold customer assets. Like national banks, they Bitcoin Funds can be disadvantaged by manipulation of a bitcoin ETP is also must obtain specific approval of their primary regulator for the exercise of their fiduciary powers. extreme premiums (or discounts) and Moreover, limited purpose trust companies engaged premium volatility. 49 For example, similar premiums/discounts and in the custody of digital assets are subject to even The second issue is related to the first premium/discount volatility exist for other non- more stringent requirements than national banks and explains how the premium in OTC bitcoin cryptocurrency related over-the-counter which, following initial approval of trust powers, funds, but the size and investor interest in those generally can exercise those powers broadly Bitcoin Funds essentially creates a funds does not give rise to the same investor without further approval of the OCC. In contrast, transfer of value from retail investors to protection concerns that exist for OTC Bitcoin NYDFS requires in their approval orders that more sophisticated investors. Generally Funds. limited purpose trust companies obtain separate speaking, only accredited investors are 50 At $35 billion in AUM, the largest OTC Bitcoin approval for all material changes in business. able to purchase shares from the issuing Fund would be among the top 40 largest out of 53 In addition to enforcing specific regulatory roughly 2,400 U.S. listed ETPs. reporting requirements, NYDFS consistently 51 In two recent incidents, the premium dropped exercises its broad authority to examine trust 47 See ‘‘Traders Piling Into Overvalued Crypto from 28.28% to 12.29% from the close on 3/19/20 companies for compliance with law, risk Funds Risk a Painful Exit’’ (February 4, 2021), to the close on 3/20/20 and from 38.40% to 21.05% management and general safety and soundness available at: https://www.bloomberg.com/news/ from the close on 5/13/19 to the close on 5/14/19. considerations, including to assess items such as articles/2021-02-04/bitcoin-one-big-risk-when- Similarly, over the period of 12/21/20 to 1/21/20, the internal controls, client records and segregation investing-in-crypto-funds. the premium went from 40.18% to 2.79%. While of assets topics that are typically important to the 48 This discount is compared to another OTC the price of bitcoin appreciated significantly during ability of an entity to act as a qualified custodian. Bitcoin Product which had a premium of over 60% this period and NAV per share increased by In this regard, the Bitcoin Custodian is subject to on the same day, with a premium of over 200% a 41.25%, the price per share increased by only annual examination, with specific attention to its few days earlier. 3.58%. internal controls and risk management systems.

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accountable for failures.54 In addition, companies in order to gain the exposure seeking bitcoin exposure through retail investors will be able to hold the to bitcoin that they seek.56 In fact, publicly traded companies are gaining Shares in traditional brokerage accounts mainstream financial news networks only partial exposure to bitcoin, without which provide SIPC protection if a have written a number of articles the full benefit of the risk disclosures brokerage firm fails. Thus, with respect providing investors with guidance for and associated investor protections that to custody of the Trust’s bitcoin assets, obtaining bitcoin exposure through come from the securities registration the Trust presents advantages from an publicly traded companies (such as process. investment protection standpoint for MicroStrategy, Tesla, and bitcoin Bitcoin Futures retail investors compared to owning mining companies, among others) spot bitcoin directly. instead of dealing with the CME began offering trading in Bitcoin Finally, as described in the complications associated with buying Futures in 2017. Each contract Background section above, a number of spot bitcoin in the absence of a bitcoin represents five bitcoin and is based on operating companies engaged in ETP.57 Such operating companies, the CME CF Bitcoin Reference Rate (the unrelated businesses—such as Tesla (a however, are imperfect bitcoin proxies ‘‘CME CF BRR’’).59 The contracts trade car manufacturer) and MicroStrategy (an and provide investors with partial and settle like other cash-settled enterprise software company)—have bitcoin exposure paired with a host of commodity futures contracts. Nearly recently announced investments as large additional risks associated with every measurable metric related to as $1.5 billion in bitcoin.55 Without whichever operating company they Bitcoin Futures has trended consistently access to bitcoin exchange-traded decide to purchase. Additionally, the up since launch and/or accelerated products, retail investors seeking disclosures provided by the upward in the past year. For example, investment exposure to bitcoin may end aforementioned operating companies there was approximately $28 billion in up purchasing shares in these with respect to risks relating to their trading in Bitcoin Futures in December bitcoin holdings are generally 2020 compared to $737 million, $1.4 52 New York state trust companies are subject to substantially smaller than the billion, and $3.9 billion in total trading rigorous oversight similar to other types of entities, registration statement of a bitcoin ETP, in December 2017, December 2018, and such as nationally chartered banking entities, that including the Registration Statement, hold customer assets. Like national banks, they December 2019, respectively. Bitcoin must obtain specific approval of their primary typically amounting to a few sentences Futures traded over $1.2 billion per day regulator for the exercise of their fiduciary powers. of narrative description and a handful of on the CME in December 2020 and 58 Moreover, limited purpose trust companies engaged risk factors. In other words, investors represented $1.6 billion in open interest in the custody of digital assets are subject to even compared to $115 million in December more stringent requirements than national banks 54 The Sponsor notes that the Sub-Advisor of the which, following initial approval of trust powers, Trust advises a 1940 Act-registered fund that 2019. This general upward trend in generally can exercise those powers broadly invests substantially in a private bitcoin fund to trading volume and open interest is without further approval of the OCC. In contrast, which NYDIG Trust Company LLC serves as bitcoin captured in the following chart. NYDFS requires in their approval orders that custodian. Pursuant to that investment, the Sub- limited purpose trust companies obtain separate Advisor has previously conducted substantial due approval for all material changes in business. diligence on the capabilities of the Bitcoin tokens in an effort to affect the price of the 53 In addition to enforcing specific regulatory Custodian. See SkyBridge Multi-Adviser Hedge company’s publicly traded common stock. See reporting requirements, NYDFS consistently Fund Portfolios LLC (File No. 333–232584). https://www.sec.gov/oiea/investor-alerts-and- _ exercises its broad authority to examine trust 55 See notes 35–37 [sic], supra. MicroStrategy bulletins/ia icorelatedclaims companies for compliance with law, risk recently completed a $900 million convertible note 57 See, e.g., ‘‘7 public companies with exposure to management and general safety and soundness offering for the purpose of acquiring bitcoin. See bitcoin’’ (February 8, 2021) available at: https:// considerations, including to assess items such as https://www.microstrategy.com/en/investor- finance.yahoo.com/news/7-public-companies-with- the internal controls, client records and segregation relations/press/microstrategy-announces-pricing-of- exposure-to-bitcoin-154201525.html; and ‘‘Want to of assets topics that are typically important to the offering-of-convertible-senior-notes_02-17-2021. get in the crypto trade without holding bitcoin ability of an entity to act as a qualified custodian. 56 In August 2017, the Commission’s Office of yourself? Here are some investing ideas’’ (February In this regard, the Bitcoin Custodian is subject to Investor Education and Advocacy warned investors 19, 2021) available at: https://www.cnbc.com/2021/ annual examination, with specific attention to its about situations where companies were publicly 02/19/ways-to-invest-in-bitcoin-without-holding- internal controls and risk management systems. announcing events relating to digital coins or the-cryptocurrency-yourself-.html.

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Similarly, the number of large open The Trust will not be actively platforms or in individual end-user-to- interest holders 60 has continued to managed. It will not engage in any end-user transactions under a barter increase even as the price of bitcoin has activities designed to obtain a profit system. Although nascent in use, bitcoin risen, as have the number of unique from, or to ameliorate losses caused by, may be used as a medium of exchange, accounts trading Bitcoin Futures. changes in the market prices of bitcoins. unit of account or store of value. The Bitcoin Network is decentralized Operation of the Trust Investment Objective and does not require governmental According to the Registration According to the Registration authorities or financial institution Statement, the Trust will hold only Statement, the investment objective of intermediaries to create, transmit, or bitcoins and is expected from time to the Trust is for the Shares to reflect the determine the value of bitcoin. In time to issue Creation Units (as defined performance of the value of bitcoin less addition, no party may easily censor below) in exchange for deposits of the Trust’s liabilities and expenses. The transactions on the Bitcoin Network. As bitcoins and to distribute bitcoins in Trust will not seek to reflect the a result, the Bitcoin Network is often connection with redemptions of performance of any benchmark or index. referred to as decentralized and Creation Units. The Shares represent In order to pursue its investment censorship resistant. units of fractional undivided beneficial objective, the Trust will seek to The value of bitcoin is determined by interest in, and ownership of, the Trust. purchase and sell such number of the supply of and demand for bitcoin. The activities of the Trust will be bitcoin so that the total value of the New bitcoin are created and rewarded to limited to (1) issuing Creation Units in bitcoin held by the Trust is as close to the parties providing the Bitcoin exchange for bitcoins deposited by the 100% of the net assets of the Trust, as Network’s infrastructure (‘‘miners’’) in Authorized Participants (as defined is reasonably practicable to achieve. exchange for their expending below) with the Bitcoin Custodian as The Bitcoin Industry and Market computational power to verify consideration, (2) transferring actual transactions and add them to the bitcoins as necessary to cover the Bitcoin Blockchain. The Blockchain is Advisor’s investment management fee Bitcoin is the digital asset that is effectively a decentralized database that and selling bitcoins as necessary to pay native to, and created and transmitted includes all blocks that have been Trust expenses, (3) transferring actual through the operations of, the peer-to- solved by miners, and it is updated to bitcoins in exchange for Creation Units peer Bitcoin Network, a decentralized include new blocks as they are solved. surrendered for redemption by the network of computers that operates on Each bitcoin transaction is broadcast to Authorized Participants, (4) causing the cryptographic protocols. No single the Bitcoin Network and, when Advisor to sell bitcoins on the entity owns or operates the Bitcoin included in a block, recorded in the termination of the Trust, and (5) Network, the infrastructure of which is Blockchain. As each new block records engaging in all administrative and collectively maintained by a outstanding bitcoin transactions, and custodial procedures necessary to decentralized user base. The Bitcoin outstanding transactions are settled and accomplish such activities in Network allows people to exchange validated through such recording, the accordance with the provisions of the tokens of value, called bitcoin, which Blockchain represents a complete, Trust Agreement. are recorded on a public transaction transparent, and unbroken history of all ledger known as the Blockchain. Bitcoin transactions of the Bitcoin Network. 58 See, e.g., Tesla 10–K for the year ended can be used to pay for goods and December 31, 2020, which mentions bitcoin just Bitcoin Network nine times: https://www.sec.gov/ix?doc=/Archives/ services, or it can be converted to fiat edgar/data/1318605/000156459021004599/tsla- currencies, such as the U.S. dollar, at The first step in directly using the 10k_20201231.htm. rates determined on bitcoin trading Bitcoin Network for transactions is to

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download specialized software referred bitcoin addresses and digital signature confirmed Blockchain on the Bitcoin to as a ‘‘bitcoin wallet.’’ A user’s bitcoin in a transaction’s data file. Each Bitcoin Network. For a transaction, inclusion in wallet can run on a computer or Network address, or wallet, is associated a block on the Blockchain constitutes a smartphone and can be used both to with a unique ‘‘public key’’ and ‘‘private ‘‘confirmation’’ of a Bitcoin transaction. send and to receive bitcoin. Within a key’’ pair, both of which are lengthy As each block contains a reference to bitcoin wallet, a user can generate one alphanumeric codes, derived together the immediately preceding block, or more unique ‘‘bitcoin addresses,’’ and possessing a unique relationship. additional blocks appended to and which are conceptually similar to bank The public key is visible to the public incorporated into the Blockchain account numbers. After establishing a and analogous to the Bitcoin Network constitute additional confirmations of bitcoin address, a user can send or address. The private key is a secret and the transactions in such prior blocks, receive bitcoin from his or her bitcoin may be used to digitally sign a and a transaction included in a block for address to another user’s address. transaction in a way that proves the the first time is confirmed once against Sending bitcoin from one bitcoin transaction has been signed by the double-spending. The layered address to another is similar in concept holder of the public-private key pair, confirmation process makes changing to sending a bank wire from one without having to reveal the private key. historical blocks (and reversing person’s bank account to another A user’s private key must be kept in transactions) exponentially more person’s bank account, provided, accordance with appropriate controls difficult the further back one goes in the however, that such transactions are not and procedures to ensure it is used only Blockchain. managed by an intermediary and for legitimate and intended transactions. To undo past transactions in a block erroneous transactions generally may If an unauthorized third person learns of recorded on the Blockchain, a malicious not be reversed or remedied once sent. a user’s private key, that third person actor would have to exert tremendous The amount of bitcoin associated with could forge the user’s digital signature computer power in re-solving each each bitcoin address, as well as each and send the user’s bitcoin to any block in the Blockchain starting with bitcoin transaction to or from such arbitrary bitcoin address, thereby and after the target block and address, is transparently reflected in the stealing the user’s bitcoin. Similarly, if broadcasting all such blocks to the Blockchain and can be viewed by a user loses his private key and cannot Bitcoin Network. The Bitcoin Network websites that operate as ‘‘blockchain restore such access (e.g., through a is generally programmed to consider the explorers.’’ Copies of the Blockchain backup), the user may permanently lose longest Blockchain containing solved exist on thousands of computers on the access to the bitcoin contained in the and valid blocks to be the most accurate Bitcoin Network. A user’s bitcoin wallet associated address. Blockchain. In order to undo multiple will either contain a copy of the The Bitcoin Network incorporates a layers of confirmation and alter the blockchain or be able to connect with system to prevent double-spending of a Blockchain, a malicious actor must re- another computer that holds a copy of single bitcoin. To prevent the possibility solve all of the old blocks sought to be the blockchain. The innovative design of double-spending a single bitcoin, regenerated and be able to continuously of the Bitcoin Network protocol allows each validated transaction is recorded, add new blocks to the Blockchain at a each Bitcoin user to trust that their copy time stamped and publicly displayed in speed that would have to outpace that of the Blockchain will generally be a ‘‘block’’ in the Blockchain, which is of all of the other miners on the Bitcoin updated consistent with each other publicly available. Thus, the Bitcoin Network, who would be continuously user’s copy. Network provides confirmation against solving for and adding new blocks to the When a Bitcoin user wishes to double-spending by memorializing Blockchain. transfer bitcoin to another user, the every transaction in the Blockchain, sender must first have the recipient’s which is publicly accessible and Custody of the Trust’s Bitcoins Bitcoin address. The sender then uses downloaded in part or in whole by all According to the Registration his or her Bitcoin wallet software to users of the Bitcoin Network software Statement, all bitcoins exist and are create a proposed transaction to be program. Any user may validate, stored on the Blockchain, the added to the Blockchain. The proposal through their Bitcoin wallet or a decentralized transaction ledger of the would reduce the amount of bitcoin blockchain explorer, that each Bitcoin Network. The Blockchain allocated to the sender’s address and transaction in the Bitcoin Network was records most transactions (including increase the amount allocated authorized by the holder of the mining of new bitcoins) for all bitcoins recipient’s address, in each case by the applicable private key, and Bitcoin in existence, and in doing so verifies the amount of bitcoin desired to be Network mining software consistent location of each bitcoin (or fraction transferred. The proposal is completely with reference software requirements thereof) in a particular digital wallet. digital in nature, similar to a file on a typically validates each such transaction The Trust’s Bitcoin Account 61 will be computer, and it can be sent to other before including it in the Blockchain. maintained by the Bitcoin Custodian, computers participating in the Bitcoin This cryptographic security ensures that and cold storage mechanisms are used Network; however, the use of ‘‘unspent bitcoin transactions may not generally for the Vault Account by the Bitcoin transaction outputs’’ that are verified be counterfeited, although it does not Custodian. Each digital wallet of the cryptographically prevents the ability to protect against the ‘‘real world’’ theft or Trust may be accessed using its duplicate or counterfeit bitcoin. coercion of use of a Bitcoin user’s corresponding private key. The Bitcoin private key, including the hacking of a Custodian’s custodial operations will Bitcoin Transactions Bitcoin user’s computer or a service A bitcoin transaction contains the provider’s systems. 61 According to the Registration Statement, the sender’s bitcoin address, the recipient’s A Bitcoin transaction between two ‘‘Bitcoin Account’’ is defined as the Vault Account and Wallet Account and any associated bitcoin address, the amount of bitcoin to parties is settled when recorded in a subaccounts of either. The ‘‘Vault Account’’ is be sent, a transaction fee, and the block added to the Blockchain. defined as one or more cold storage accounts in the sender’s digital signature. Bitcoin Validation of a block is achieved by name of the Advisor and of the Trust held for the transactions are secured by confirming the cryptographic hash value safekeeping of the Trust’s bitcoins. The ‘‘Wallet Account’’ is defined as one or more wallets in the cryptography known as public-private included in the block’s solution and by name of the Advisor and of the Trust held for key cryptography, represented by the the block’s addition to the longest deposit and withdrawal of bitcoins.

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maintain custody of the private keys multifactor security system generates depositing bitcoins with the Trust for a that have been deposited in cold storage private keys using a FIPS 140–2- creation of a Creation Unit, only in at its various vaulting premises. The certified random number generator to reverse. locations of the vaulting premises may ensure the keys’ uniqueness. The Trust generally will not hold cash change regularly and will be kept Before these keys are used, the Bitcoin or cash equivalents. However, the Trust confidential by the Bitcoin Custodian Custodian will validate that the public may hold cash and cash equivalents on for security purposes. addresses associated with these keys a temporary basis to pay extraordinary The term ‘‘cold storage’’ refers to a have no associated digital asset expenses. The Trust has entered into a safeguarding method by which the balances. The software used for key cash custody agreement with the Bank private keys corresponding to bitcoins generation and verification will be of New York Mellon under which the stored on a digital wallet are removed tested by the Bitcoin Custodian and Bank of New York Mellon acts as from any computers actively connected reviewed by third-party advisors from custodian of the Trust’s cash and cash to the internet. Cold storage of private the security community with specific equivalents. keys may involve keeping such wallet expertise in computer security and Calculation of the Trust’s NAV on a non-networked computer or applied cryptography. The private keys electronic device or storing the public will be stored in an encrypted manner According to the Registration key and private keys relating to the using a FIPS 140–2-certified security Statement, the net asset value (‘‘NAV’’) digital wallet on a storage device (for module held in redundant secure, of the Trust will be determined in example, a USB thumb drive) or printed geographically dispersed locations with accordance with Generally Accepted medium (for example, papyrus or paper) high levels of physical security, Accounting Principles (‘‘GAAP’’) as the and deleting the digital wallet from all including robust physical barriers to total value of bitcoin held by the Trust, computers. A digital wallet may receive entry, electronic surveillance, and plus any cash or other assets, less any deposits of bitcoins but may not send continuously roving patrols. The liabilities including accrued but unpaid bitcoins without use of the bitcoins’ operational procedures of these facilities expenses. The NAV per Share will be corresponding private keys. In order to and of the Bitcoin Custodian will be determined by dividing the NAV of the send bitcoin from a digital wallet in reviewed by third-party advisors with Trust by the number of Shares which the private keys are kept in cold specific expertise in physical security. outstanding. storage, either the private keys must be The devices that store the keys will The NAV of the Trust will be retrieved from cold storage and entered never be connected to the internet or determined as of 4:00 p.m. Eastern time them into a bitcoin software program to any other public or private distributed (‘‘E.T.’’) on each Business Day.62 The sign the transaction, or the unsigned network (colloquially known as ‘‘cold Trust’s daily activities will generally not transaction must be sent to the ‘‘cold’’ storage’’). Only specific individuals will be reflected in the NAV determined for server in which the private keys are be authorized to participate in the the Business Day on which the held for signature by the private keys. custody process, and no individual transactions are effected (the trade date), At that point, the user of the digital acting alone will be able to access or use but rather on the following Business wallet can transfer its bitcoins. any of the private keys. In addition, no Day. The Trust’s Bitcoin Custodian will combination of the executive officers of According to the Registration custody of all of the Trust’s bitcoin. the Advisor, the Sub-Advisor, or the Statement, under normal circumstances, Custody of bitcoin typically involves the investment professionals managing the the Trust will use the CF Bitcoin US generation, storage, and utilization of Trust, acting alone or together, will be Settlement Price (the ‘‘Reference Rate’’) private keys. These private keys are able to access or use any of the private to calculate the Trust’s NAV. The used to effect transfer transactions, i.e., keys that hold the Trust’s bitcoin. Reference Rate is not affiliated with the transfers of bitcoin from an address The Trust may engage third-party Sponsor and was created and is associated with the private key to custodians or vendors besides the administered by CF Benchmarks Ltd. another address. While private keys Bitcoin Custodian to provide custody (the ‘‘BRR Administrator’’), an must be used to send bitcoin, private and security services for all or a portion independent entity, to facilitate keys do not need to be used or shared of its bitcoin and/or cash, and the financial products based on bitcoin. The in order to receive a bitcoin transfer; Advisor will pay the custody fees and Reference Rate is designed based on the every private key has an associated any other expenses associated with any IOSCO Principals for Financial public key, and an address derived from such third-party custodian or vendor. Benchmarks and serves as a once-a-day that public key that can be freely shared, The Bitcoin Custodian will be benchmark rate of the U.S. dollar price to which counterparties can transfer authorized to accept, on behalf of the of bitcoin (USD/BTC), calculated as of bitcoin. The Bitcoin Network has a Trust, deposits of bitcoins from 4:00 p.m. E.T. The Reference Rate is public ledger, meaning that anybody Authorized Participant Self- based on materially the same with access to the address can see the Administered Accounts (as defined methodology (except calculation time) balance of digital assets in that address. below) held with the Bitcoin Custodian as the CME CF BRR, which was first The Bitcoin Custodian will carefully and transfer such bitcoins into the introduced on November 14, 2016 and consider the design of the physical, Bitcoin Account. Deposits of bitcoins is the rate on which bitcoin futures operational, and cryptographic systems will be immediately available to the contracts are cash-settled in U.S. dollars for secure storage of the Trust’s private Trust to the extent such bitcoins have at the CME. The Reference Rate keys in an effort to lower the risk of loss not already been transferred to the Vault aggregates the trade flow of several or theft. Account. Generally, bitcoins transferred bitcoin exchanges, during an The Bitcoin Custodian will use a to the Bitcoin Account will be directly observation window between 3:00 p.m. multi-factor security system under deposited into digital wallets for which and 4:00 p.m. E.T. into the U.S. dollar which actions by multiple individuals the keys are already in cold storage. price of one bitcoin at 4:00 p.m. E.T. working together are required to access The process of accessing and The current constituent bitcoin the private keys necessary to transfer withdrawing bitcoins from the Trust for such digital assets and ensure the a redemption of a Creation Unit will 62 ‘‘Business Day’’ is defined as each day that the Trust’s exclusive ownership. The follow the same general procedure as Shares trade on the Exchange.

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exchanges of the Reference Rate are its assets other than bitcoin and prevent fraudulent and manipulative Bitstamp, Coinbase, Gemini, itBit, and liabilities. Under this policy, the acts and practices and to protect Kraken (the ‘‘Constituent Platforms’’). Advisor will use fair value standards investors and the public interest, The Reference Rate is calculated according to GAAP. Generally, the fair consistent with Section 6(b)(5) of the based on the ‘‘Relevant Transactions’’ value of an asset that is traded on a Act.65 The Commission does not apply (as defined below) of all Constituent market is measured by reference to the a ‘‘cannot be manipulated’’ standard, Platforms, as follows: 63 orderly transactions on an active but instead seeks to examine whether a 1. All Relevant Transactions are market. Among all active markets with proposal meets the requirements of the added to a joint list, recording the trade orderly transactions, the market that is Act.66 The Commission has explained price and size for each transaction. used to determine the fair value of an that a proposal could satisfy the 2. The list is partitioned into a asset is the principal market (with requirements of the Act in the first number of equally-sized time intervals. exceptions described in more detail instance by demonstrating that the 3. For each partition separately, the below), which is either the market on 64 listing exchange has entered into a volume-weighted median trade price which the Trust actually transacts, or if comprehensive surveillance-sharing is calculated from the trade prices and there is sufficient evidence, the market agreement (‘‘CSSA’’) with a regulated sizes of all Relevant Transactions, i.e., with the most trading volume and level market of significant size relating to the across all Constituent Platforms. of activity for the asset. Where there is underlying assets.67 The Commission 4. The Reference Rate is then no active market with orderly has also recognized that a listing determined by the equally-weighted transactions for an asset, the Advisor’s exchange would not necessarily need to average of the volume-weighted valuation committee will follow policies enter into a CSSA with a regulated medians of all partitions. and procedures described in more detail significant market if the underlying The Reference Rate does not include below to determine the fair value. any futures prices in its methodology. A commodity market inherently possessed While the Trust will publish its NAV a unique resistance to manipulation ‘‘Relevant Transaction’’ is any every day the Exchange is open, the cryptocurrency versus U.S. dollar spot beyond the protections that are utilized Trust’s operations will not rely to any by traditional commodity or securities trade that occurs during the observation significant extent on its valuation window between 3:00 p.m. and 4:00 markets or if the listing exchange could procedures. The Trust’s only regular demonstrate that there were sufficient p.m. E.T. on a Constituent Platform in recurring expense is the Investment the BTC/USD pair that is reported and ‘‘other means to prevent fraudulent and Management Fee, which is both 68 disseminated by a Constituent Platform manipulative acts and practices.’’ calculated by reference to and paid in As described below, the Sponsor through its publicly available API and bitcoin. Payment for Creation Units by observed by the Benchmark believes the structure and operation of Authorized Participants may only be the Trust are designed to prevent Administrator, CF Benchmarks Ltd. made in-kind in bitcoin, and If the Reference Rate is unavailable, fraudulent and manipulative acts and redemption proceeds are similarly only practices, to protect investors and the the Trust’s bitcoin will be valued as paid in bitcoin. While the Trust may determined in good faith pursuant to from time to time incur certain policies and procedures approved by 65 See, e.g., Order Disapproving a Proposed Rule extraordinary, non-recurring expenses Change, as Modified by Amendments No. 1 and 2, the Advisor’s valuation committee (‘‘fair that must be paid in U.S. Dollars or to BZX Rule 14.11(e)(4), Commodity-Based Trust value pricing’’). In these circumstances, other fiat currency, such events would Shares, To List and Trade Shares Issued by the the Trust will determine fair value in a only impact the amount of bitcoin Winklevoss Bitcoin Trust, Securities Exchange Act manner that seeks to reflect the market Release No. 80206 (March 10, 2017), 82 FR 14076 represented by a Share of the Trust. (March 16, 2017) (SR–BatsBZX–2016–30) (the value of the investment at the time of Accordingly, while other proposed ‘‘Winklevoss I Order’’); the Winklevoss II Order; valuation based on consideration of any bitcoin ETPs rely on a benchmark or Order Disapproving a Proposed Rule Change, as information or factors the Advisor’s other reference rate to value their assets Modified by Amendment No. 1, Relating to the valuation committee deems appropriate, Listing and Trading of Shares of the Bitwise Bitcoin and liabilities and determine the ETF Trust Under NYSE Arca Rule 8.201–E, as further described below. The amount of cash necessary to purchase or Securities Exchange Act Release No. 87267 (October Advisor’s valuation committee will be redeem Creation Units (or their 9, 2019), 84 FR 55382 (October 16, 2019) (SR– responsible for overseeing the equivalent), the Trust will not rely on NYSEArca–2019–01) (the ‘‘Bitwise Order’’); the implementation of the Trust’s valuation Wilshire Phoenix Order; Order Disapproving a any such conversion rate, as it is Proposed Rule Change to List and Trade the Shares procedures and fair value designed to transact only in bitcoin in of the ProShares Bitcoin ETF and the ProShares determinations. For purposes of nearly all circumstances. The Trust’s Short Bitcoin ETF, Securities Exchange Act Release determining the fair value of bitcoin, the calculation of its NAV is intended to No. 83904 (August 22, 2018), 83 FR 43934 (August valuation committee may consider, 28, 2018) (SR–NYSEArca–2017–139); Order assist investors in valuing their Shares, Disapproving a Proposed Rule Change Relating to without limitation: (i) Indications or and the Trust’s ability to transact only Listing and Trading of the Direxion Daily Bitcoin quotes from brokers; (ii) valuations in bitcoin further insulates the Trust Bear 1X Shares, Direxion Daily Bitcoin 1.25X Bull provided by a third-party pricing agent; from activities designed to manipulate Shares, Direxion Daily Bitcoin 1.5X Bull Shares, (iii) internal models that take into Direxion Daily Bitcoin 2X Bull Shares, and Direxion the price of the bitcoin held by the Daily Bitcoin 2X Bear Shares Under NYSE Arca consideration different factors Trust. Rule 8.200–E, Securities Exchange Act Release No. determined to be relevant by the 83912 (August 22, 2018), 83 FR 43912 (August 28, Advisor; or (iv) any combination of the The Structure and Operation of the 2018) (SR–NYSEArca–2018–02); Order above. Trust Satisfies Commission Disapproving a Proposed Rule Change to List and The Advisor has adopted a policy Requirements for Bitcoin-Based Trade the Shares of the GraniteShares Bitcoin ETF Exchange Traded Products and the GraniteShares Short Bitcoin ETF, Securities pursuant to which the Trust will value Exchange Act Release No. 83913 (August 22, 2018), In disapproving prior proposals to list 83 FR 43923 (August 28, 2018) (SR–CboeBZX– 63 See https://docs- and trade shares of various bitcoin trusts 2018–01) (the ‘‘GraniteShares Order’’). 66 cfbenchmarks.s3.amazonaws.com/ and bitcoin-based trust issued receipts, See Winklevoss II Order, 84 FR 37582. CME+CF+Reference+Rates+Methodology.pdf. 67 See Wilshire Phoenix Order, 85 FR 12596–97. 64 A volume-weighted median differs from a the Commission noted that such 68 See Winklevoss II Order, 84 FR 37580, 37582– standard median in that a weighting factor, in this proposals did not adequately 91; Bitwise Order, 84 FR 55383, 55385–406; case trade size, is factored into the calculation. demonstrate that they were designed to Wilshire Phoenix Order, 85 FR 12597.

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public interest, and to respond to the Commission noted that, for commodity- detecting and deterring misconduct and specific concerns that the Commission trust ETPs ‘‘there has been in every case (b) it is unlikely that trading in the ETP has identified with respect to potential at least one significant, regulated market would be the predominant influence on fraud and manipulation in the context for trading futures in the underlying prices in that market.’’ 78 of a bitcoin ETP. Further, as the commodity—whether gold, silver, For the following reasons, the Commission has previously platinum, palladium or copper—and the Sponsor maintains that the CME, either acknowledged, trading in a bitcoin- ETP listing exchange has entered into alone as the sole market for bitcoin based ETP on a national securities surveillance-sharing agreements with, or futures or as a group of markets together exchange, as compared to trading in an held Intermarket Surveillance Group with the Constituent Platforms, is a unregulated bitcoin spot market, may (the ‘‘ISG’’) membership in common ‘‘market of significant size’’ that satisfies provide additional protection to with, that market.’’ 73 both elements of the example provided investors.69 The Sponsor also believes The CME 74 is a member of the ISG, by the Commission. that listing of the Trust’s Shares on the the purpose of which is ‘‘to provide a Exchange will provide investors with framework for the sharing of (a) Reasonable Likelihood That a Person such an opportunity to obtain exposure information and the coordination of Manipulating the ETP Would Have To to bitcoin within a regulated regulatory efforts among exchanges Trade on the Market environment. trading securities and related products The first element of a ‘‘significant to address potential intermarket market’’ or ‘‘market of significant size’’ Surveillance Sharing Agreements With a manipulations and trading abuses.’’ 75 is a reasonable likelihood that a person Market of Significant Size Membership of a relevant futures attempting to manipulate the ETP 1. The Presence of Surveillance Sharing exchange in ISG is sufficient to meet the would also have to trade on that market Agreements surveillance-sharing requirement.76 (or group of markets) to successfully In previous orders rejecting the listing The Commission has previously noted manipulate the ETP, such that a of Bitcoin ETFs, the Commission noted that the existence of a surveillance- surveillance sharing agreement would its concerns that the bitcoin market sharing agreement by itself is not assist the ETP listing market in could be subject to manipulation.70 In sufficient for purposes of meeting the detecting and deterring misconduct. The these orders, the Commission cited requirements of Section 6(b)(5); the Commission has stated that establishing numerous precedents 71 in which listing surveillance-sharing agreement must be a lead-lag relationship between the 77 proposals were approved based on with a market of significant size. The bitcoin futures market and the spot findings that the particular market was Commission has also provided an market is central to understanding either inherently resistant to example of how it interprets the terms whether it is reasonably likely that a manipulation or that the listing ‘‘significant market’’ and ‘‘market of would-be manipulator of the ETP would exchange had entered into a significant size,’’ though that definition need to trade on the bitcoin futures surveillance sharing agreement with a is meant to be illustrative and not market to successfully manipulate market of significant size.72 The exclusive: ‘‘the terms ‘significant prices on those spot platforms that feed market’ and ‘market of significant size’ into the proposed ETP’s pricing 69 See GraniteShares Order, 83 FR 43931. See also . . . include a market (or group of mechanism.79 Hester M. Peirce, U.S. Sec. Exch. Comm’n, Dissent markets) as to which (a) there is a The Sponsor believes that the CME of Commissioner Hester M. Peirce to Release No. reasonable likelihood that a person meets the first element in several ways. 34–83723 (July 26, 2018), available at: https:// attempting to manipulate the ETP www.sec.gov/news/public-statement/peirce-dissent- First, it is the primary market for bitcoin 34-83723 (‘‘An ETP based on bitcoin would offer would also have to trade on that market futures, and compares favorably with investors indirect exposure to bitcoin through a to successfully manipulate the ETP so other markets that were deemed to be product that trades on a regulated securities market that a surveillance sharing agreement markets of significant size in and in a manner that eliminates some of the would assist the ETP listing market in frictions and worries of buying and holding bitcoin precedents. One particularly salient directly. If we were to approve the ETP at issue group of precedents are prior orders here, investors could choose whether to buy it or cryptocurrency platform. However, the CME, which approving the listing of ETPs that invest calculates the CME CF BRR, and which has offered avoid it.’’). in gold bullion, since the gold market 70 See Winklevoss I Order and Winklevoss II contracts for bitcoin futures products since 2017, is, Order. The Sponsor represents that some of the as noted below, a member of the ISG. In addition, exhibits a number of similarities with concerns raised are that a significant portion of each Constituent Platform has entered into a data the market for bitcoin. The Sponsor bitcoin trading occurs on unregulated platforms and sharing agreement with CME. See https://docs- maintains that, like bitcoin, the primary that there is a concentration of a significant number cfbenchmarks.s3.amazonaws.com/ CME+CF+Constituent+Exchanges+Criteria.pdf. markets for gold bullion are of bitcoin in the hands of a small number of 80 holders. However, these facts are not unique to 73 See Winklevoss II Order, 84 FR 37594. unstructured OTC markets and the bitcoin and are true of a number of commodity and 74 The CME is regulated by the CFTC, which has futures market. other markets. For instance, some gold bullion broad reaching anti-fraud and anti-manipulation Specifically, the Sponsor notes that trading takes place on unregulated OTC markets authority including with respect to the bitcoin the CME is similarly situated to the and a significant percentage of gold is held by a market since bitcoin has been designated as a relative few (according to estimates of the World commodity by the CFTC. See A CFTC Primer on COMEX division of NYMEX with Gold Council, approximately 22% of total above Virtual Currencies (October 17, 2017), available at: ground gold stocks are held by private investors and https://www.cftc.gov/sites/default/files/idc/groups/ 78 Id. at 37594; see also GraniteShares Order, 83 17% are held by foreign governments; by public/documents/file/labcftc_ FR 43930 n. 85 and accompanying text. comparison, 13.61% of bitcoin are held by the 86 primercurrencies100417.pdf (the ‘‘CFTC Primer on 79 See Wilshire Phoenix Order, 85 FR 12612. largest bitcoin addresses, some of which are known Virtual Currencies’’) (‘‘The CFTC’s jurisdiction is 80 ‘‘The OTC market has no formal structure and to be cold storage addresses of large centralized implicated when a virtual currency is used in a no open-outcry meeting place.’’ Order Granting cryptocurrency trading platforms). See https:// derivatives contract or if there is fraud or Approval of Proposed Rule Change and Notice of www.gold.org/goldhub/data/above-ground-stocks manipulation involving a virtual currency traded in Filing and Order Granting Accelerated Approval to for gold data cited in this note and https:// interstate commerce.’’). See also 7 U.S.C. 7(d)(3) Amendments No. 1 and No. 2 Thereto to the bitinfocharts.com/top-100-richest-bitcoin- (‘‘The board of trade shall list on the contract Proposed Rule Change by the New York Stock addresses.html for Bitcoin data. market only contracts that are not readily Exchange, Inc. Regarding Listing and Trading of 71 For an extensive listing of such precedents, see susceptible to manipulation.’’). streetTRACKS® Gold Shares, Securities Exchange Winklevoss I Order, 82 FR 14083 n. 96. 75 See https://isgportal.org/overview. Act Release No. 50603 (October 28, 2004), 69 FR 72 The Exchange to date has not entered into 76 See, e.g., Winklevoss II Order, 84 FR 37594. 64614 (November 5, 2004) (SR–NYSE–2004–22) surveillance sharing agreements with any 77 See, e.g., id. at 37589–90. (the ‘‘streetTRACKS Order’’).

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respect to gold ETPs.81 As with the OTC to its Know-Your-Customer multiple exchanges simultaneously in gold market, it is not possible to enter procedures.87 As a result, the CME and order to successful move the global into an information sharing agreement the Exchange would be able, in the case price of bitcoin due to the decentralized with the OTC bitcoin market.82 When of any suspicious trades, to discover all nature of the Bitcoin Network. The the Commission has approved the material trade information, including Sponsor thus believes that bitcoin listing of gold ETPs and other the identities of the customers placing manipulators would be much more commodity-trust ETPs, rather than the trades. likely to attempt to manipulate a limited requiring surveillance sharing The Sponsor also maintains that any number of futures markets rather than agreements with the relevant OTC would-be manipulator of bitcoin prices attempt simultaneous executions on markets, it has recognized surveillance would be reasonably likely to do so potentially dozens of different sharing agreements between the listing through the Bitcoin Futures market in exchanges. Even if a would-be exchange and ‘‘regulated markets for order to take advantage of the leverage manipulator does attempt to manipulate trading futures on the underlying inherent in trading futures contracts. bitcoin across platforms, such a scheme commodity,’’ 83 given the understanding The inherent leverage in Bitcoin Futures would also necessarily include some that the manipulation of the market for would allow a potential manipulator to attempt to manipulate the price of a commodity often involves the futures attempt a manipulation scheme with far bitcoin futures, including the CME. market for that commodity.84 less upfront capital than it would need (b) Predominant Influence on Prices in The Sponsor also believes that the to achieve the same results in the spot Spot and Bitcoin Futures CME meets the first element because its market. As the spot bitcoin market has Bitcoin Futures are cash settled by grown tremendously since the issuance The second feature of a ‘‘significant reference to a final settlement price of the Wilshire Phoenix Order, it would market’’ or ‘‘market of significant size’’ based on the CME CF BRR. Anyone be critical for a would-be manipulator to in the Commission’s example is that the attempting to manipulate the CME CF efficiently use its capital to have the market is one in which it is unlikely BRR would need to place numerous desired effect, and a would-be that trading in the ETP would be the large sized trades on any of the manipulator would certainly recognize predominant influence on prices in that Constituent Platforms that are used to that the chances of successfully market. The Sponsor believes that calculate the CME CF BRR,85 and the deploying its scheme are increased trading in the Shares would not be the resulting manipulative trading patterns exponentially if it can affect the Bitcoin predominant force on prices in the would be detectable by the BRR Futures market (and thus the bitcoin Bitcoin Futures market (or spot market) Administrator and the CME.86 In spot market) by posting only the for a number of reasons, including the addition, any platform that is accepted minimum margin required the Bitcoin significant volume in the Bitcoin by the CME to become part of the Futures exchange.88 Accordingly, Futures market, the size of bitcoin’s constituent trading platforms that are because the Bitcoin Futures market is in market cap (approximately $1 trillion), used to calculate the CME CF BRR, effect the ‘‘cheapest’’ route to and the significant liquidity available in including the Constituent Platforms, (1) manipulate bitcoin, it is highly likely the spot market. must enter into a data sharing agreement such manipulators would attempt to do Since the Wilshire Phoenix Order was with the CME, (2) must cooperate with so there rather than any spot market. issued, there has been significant inquiries and investigations of Finally, the Sponsor maintains that a growth in Bitcoin Futures across each of regulators and the BRR Administrator would-be manipulator of bitcoin would trading volumes and open interest as and (3) must submit each of its clients be required to execute trades on reflected in the chart below:

CHICAGO MERCANTILE EXCHANGE BITCOIN FUTURES

February 26, 2020 April 7, 2021

Trading Volume ...... $433,000,000 $4,321,000,000 Open Interest ...... 238,000,000 2,582,000,000

The growth of the Bitcoin Futures has interests, including interests in metals, futures markets, it can be reasonably coincided with similar growth in the agricultural and petroleum products. expected that the relationship between bitcoin spot market. The market for Accordingly, as the Bitcoin Futures the Bitcoin Futures market and bitcoin Bitcoin Futures is rapidly approaching market continues to develop and more spot market will behave similarly to the size of markets for other commodity closely resemble other commodity other future/spot market relationships,

81 Other applicants have made similar arguments Exchange Act Release No. 51058 (January 19, 2005), 85 Because the CME CF BRR is based solely on the in their respective filings. See Notice of Filing of 70 FR 3749 (January 26, 2005) (SR–Amex–2004–38); price data from the Constituent Platforms, Proposed Rule Change To List and Trade Shares of Notice of Filing of Proposed Rule Change Relating manipulating the CME CF BRR must necessarily SolidX Bitcoin Shares Issued by the VanEck SolidX to Listing and Trading of Shares of ETFS Palladium entail manipulating the price data at one or more Bitcoin Trust, Under BZX Rule 14.11(e)(4), Trust, Securities Exchange Act Release No. 60971 Constituent Platforms. (November 9, 2009), 74 FR 59283 (November 17, Commodity-Based Trust, Securities Exchange Act 86 The BRR Calculation Agent receives trading 2009) (SRNYSEArca–2009–94). Release No. 85119 (February 13, 2019), 84 FR 5140 data from the Constituent Platforms through its (February 20, 2019) (SRCboeBZX–2019–004), n. 11. 83 See Winklevoss II Order, 84 FR 37591. Automatic Programming Interface. See CME–CF 82 84 ‘‘It is not possible, however, to enter into an See, e.g., Frank Easterbrook, Monopoly, Practice Standards, available at: https:// information sharing agreement with the OTC gold Manipulation, and the Regulation of Futures www.cfbenchmarks.com/indices/BRR. market.’’ streetTRACKS Order, 69 FR 64619. See Markets, 59 J. of Bus. S103, S103–S127 (1986); 87 also Order Granting Approval of Proposed Rule William D. Harrington, The Manipulation of See https://docs- Change and Amendment Nos. 2, 3 and 4 and Notice Commodity Futures Prices, 55 St. Johns L. Rev. 240, cfbenchmarks.s3.amazonaws.com/ of Filing and Order Granting Accelerated Approval 240–275 (2012); Robert C. Lower, Disruptions of the CME+CF+Constituent+Exchanges+Criteria.pdf. to Amendment No. 5 by the American Stock Futures Market: A Comment on Dealing With 88 As of April 12, 2021, the initial margin required Exchange LLC Relating to the Listing and Trading Market Manipulation, 8 Yale J. on Reg. 391, 391– in connection with CME Bitcoin Futures for the of the iShares® COMEX Gold Trust, Securities 402 (1991). April 2021 contract ranges from 42% to 38%.

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including periods where a lead-lag Other Means To Prevent Fraudulent and Trust’s bitcoin has been manipulated relationship between the Bitcoin Manipulative Acts and Practices (which the Sponsor believes is unlikely Futures market and bitcoin spot market As noted above, the Commission also given the resistance afforded by the exists. permits a listing exchange to independent Reference Rate In addition, the spot market for demonstrate that ‘‘other means to methodology), the ratio of bitcoin per bitcoin is also very liquid. According to prevent fraudulent and manipulative Share does not change and the Trust data from CoinRoutes from February acts and practices’’ are sufficient to will either accept (for creations) or 2021, the cost to buy or sell $5 million justify dispensing with the requisite distribute (for redemptions) the same number of bitcoin regardless of the worth of bitcoin averages roughly 10 surveillance-sharing agreement. The value. This structure not only mitigates basis points with a market impact of 30 Sponsor believes that the significant the risk associated with potential basis points.89 For a $10 million market liquidity in the spot market and the manipulation, but also discourages and order, the cost to buy or sell is roughly impact of market orders on the overall disincentivizes manipulation of the 20 basis points with a market impact of price of bitcoin have made attempts to move the price of bitcoin increasingly Reference Rate because there is little 50 basis points. Stated another way, a financial incentive to do so. market participant could enter a market expensive over the past year, curtailing buy or sell order for $10 million of potential fraud or manipulation in Creation and Redemption of Shares connection with bitcoin pricing. In bitcoin and only move the market 0.5%. According to the Registration January 2020, for example, the cost to More strategic purchases or sales (such Statement, the Trust will issue and buy or sell $5 million worth of bitcoin as using limit orders and executing redeem Shares on an ongoing basis in averaged roughly 30 basis points through OTC bitcoin trade desks) would one or more Creation Units. A Creation (compared to 10 basis points in likely have less obvious impact on the Unit will consist of a block of 50,000 February 2021) with a market impact of market—which is consistent with Shares. The creation and redemption of 50 basis points (compared to 30 basis MicroStrategy, Tesla, and Square being Creation Units will be effected in in- points in February 2021).91 For a $10 able to collectively purchase billions of kind transactions based on the quantity million market order, the cost to buy or dollars in bitcoin. The Sponsor believes of bitcoin attributable to each Share. that the combination of Bitcoin Futures’ sell was roughly 50 basis points The quantity of bitcoin required to important role in price discovery, the (compared to 20 basis points in create each Creation Unit (the ‘‘Creation overall size of the bitcoin market, and February 2021) with a market impact of Unit Deposit’’) may change from day to the ability of market participants, 80 basis points (compared to 50 basis day. On each day that the Exchange is including authorized participants points in February 2021). As the open for regular trading, the creating and redeeming in-kind with the liquidity in the bitcoin spot market Administrator will determine the increases, it follows that the impact of Trust, to buy or sell large amounts of quantity of bitcoin constituting the $5 million and $10 million orders will bitcoin without significant market Creation Unit Deposit and may make continue to decrease the overall impact impact will help prevent the Shares adjustments as appropriate to reflect in spot price. accrued expenses. Each Business Day, from becoming the predominant force Additionally, the Sponsor believes the Administrator will communicate the on pricing in either the bitcoin spot or that offering only in-kind creation and final Creation Unit Deposit for that same Bitcoin Futures markets. redemption will provide unique Business Day and an estimated Creation The results from a study conducted by protections against potential attempts to CF Benchmarks simulating to determine Unit Deposit for the next Business Day. manipulate the Shares. While the The number of outstanding Shares is the extent of ‘‘slippage’’ (i.e., the Sponsor believes that the Reference Rate expected to increase and decrease from difference between the expected price of used to value the Trust’s bitcoin is itself time to time as a result of the creation a trade and the price at which the trade resistant to manipulation based on the and redemption of Creation Units. The was actually executed) offer further methodology described above, the fact creation and redemption of Creation evidence that trading in the Shares is that creations and redemptions are only Units require the delivery to the Trust, unlikely to be the predominant available in-kind makes the or the distribution by the Trust, of the influence in the bitcoin spot market.90 manipulability of the Reference Rate number of bitcoins represented by the The CF Benchmarks Analysis simulated significantly less important. Creation Units being created or the purchase of 50 bitcoins a day for 686 Specifically, because the Trust will not redeemed. The creation and redemption days (an amount chosen specifically to accept cash to buy bitcoin in order to of a Creation Unit will be made only in replicate hypothetical trades by an ETP) create or redeem Shares, the price that exchange for the delivery to the Trust, and found that the maximum amount of the Sponsor uses to value the Trust’s or the distribution by the Trust, of the slippage on a particular day was 0.3%, bitcoin is not particularly important.92 number of whole and fractional bitcoins with the remainder of values between When authorized participants create represented by each Creation Unit being 0% and 0.15%. Thus, according to CF Shares with the Trust, they need to created or redeemed, the number of Benchmarks, the slippage in this study deliver a certain number of bitcoin per which is determined by dividing the could be described as having been Share (regardless of the valuation used) number of bitcoins owned by the Trust largely negligible or, at most, minor and when they redeem Shares, they can at 4:00 p.m. E.T on the trade date of a during the observation period. similarly expect to receive a certain number of bitcoin per Share. As a result, creation or redemption order, as adjusted for the number of whole and 89 even if the price used to value the These statistics are based on samples of bitcoin fractional bitcoins constituting accrued liquidity in USD (excluding stablecoins or Euro liquidity) based on executable quotes on Coinbase 91 These statistics are based on samples of bitcoin but unpaid fees and expenses of the Pro, Gemini, Bitstamp, Kraken, LMAX Exchange, liquidity in USD (excluding stablecoins or Euro Trust, by the number of Shares BinanceUS, and OKCoin during February 2021. liquidity) based on executable quotes on Coinbase outstanding at such time and 90 See CF Benchmarks, ‘‘An Analysis of the Pro, Gemini, Bitstamp, Kraken, LMAX Exchange, multiplying such quotient by 50,000. Suitability of the CME CF BRR for the Creation of BinanceUS, and OKCoin during February 2021. Authorized Participants are the only Regulated Financial Products,’’ December 2020 (the 92 The Investment Management Fee, which is the ‘‘CF Benchmarks Analysis’’), available at: https:// Trust’s only normal recurring expense is both paid persons that may place orders to create docsend.com/view/kizk7rarzaba6jxf. and calculated in bitcoin. and redeem Creation Units. An

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Authorized Participant must (i) be a Redemption orders must be placed prior and a calculation of the premium or registered broker-dealer, (ii) enter into a to 4:00 p.m. E.T. or the close of regular discount of such price against such Participant Agreement with the Advisor trading on the Exchange, whichever is NAV; and (iii) data in chart format and the Bitcoin Custodian, and (iii) own earlier. A redemption order will be displaying the frequency distribution of a bitcoin wallet address that is effective on the date it is received by the discounts and premiums of the daily recognized by the Bitcoin Custodian as Transfer Agent (‘‘Redemption Order Bid-Ask Price against the NAV, within belonging to the Authorized Participant Date’’). appropriate ranges, for each of the four (an ‘‘Authorized Participant Self- The redemption distribution from the previous calendar quarters (or for the Administered Account’’). Authorized Trust consists of a transfer of bitcoin to life of the Trust, if shorter). In addition, Participants may act for their own the redeeming Authorized Participant on each business day the Trust’s website accounts or as agents for broker-dealers, corresponding to the number of Shares will provide pricing information for the custodians, and other securities market being redeemed. The redemption Shares. participants that wish to create or distribution due from the Trust will be The Trust’s website, as well as one or redeem Creation Units. Shareholders delivered once the Transfer Agent more major market data vendors, will who are not Authorized Participants notifies the Bitcoin Custodian and the provide an intra-day indicative value will only be able to redeem their Advisor that the Authorized Participant (‘‘IIV’’) per Share updated every 15 Common Shares through an Authorized has delivered the Shares represented by seconds, as calculated by the Exchange Participant. the Creation Units to be redeemed to the or a third party financial data provider Creation Procedures Transfer Agent’s DTC account. If the during the Exchange’s Core Trading Transfer Agent’s DTC account has not Session (9:30 a.m. to 4:00 p.m., E.T.).94 On any Business Day, an Authorized been credited with all of the Shares of The IIV will be calculated by using the Participant may place an order with the the Creation Units to be redeemed, the prior day’s closing NAV per Share as a Transfer Agent to create one or more redemption distribution will be delayed base and updating that value during the Creation Units. Purchase orders must be until such time as the Transfer Agent NYSE Arca Core Trading Session to placed prior to 4:00 p.m. E.T. or the confirms receipt of all such Shares. reflect changes in the value of the close of regular trading on the Exchange, Once the Transfer Agent notifies the Trust’s NAV during the trading day. whichever is earlier. The day on which Bitcoin Custodian and the Advisor that The IIV disseminated during the a valid order is received by the Transfer the Shares have been received in the NYSE Arca Core Trading Session should Agent is considered the purchase order Transfer Agent’s DTC account, the not be viewed as an actual real-time date. Advisor will instruct the Bitcoin update of the NAV, which will be By placing a purchase order, an Custodian to transfer the redemption calculated only once at the end of each Authorized Participant agrees to distribution from the Trust’s Bitcoin trading day. The IIV will be widely facilitate the deposit of bitcoin with the Account to the Authorized Participant. disseminated on a per Share basis every Trust. The total deposit of bitcoin The redemption distribution from the 15 seconds during the NYSE Arca Core required to create each Creation Unit is Trust will consist of a transfer to the Trading Session by one or more major an amount of bitcoin that is in the same redeeming Authorized Participant of an market data vendors. In addition, the IIV proportion to the total assets of the amount of bitcoin that is determined in will be available through on-line Trust (net of accrued but unpaid fees the same manner as the determination information services. and expenses) on the date the purchase of Creation Unit Deposits, as discussed The NAV for the Trust will be order is properly received as the number above. The redemption distribution due calculated by the Sponsor once a day of Shares to be created under the from the Trust will be delivered to the and will be disseminated daily to all purchase order is to the total number of Authorized Participant on the first market participants at the same time. Shares outstanding on the date the order Business Day following the Redemption Quotation and last-sale information is received. regarding the Shares will be Following an Authorized Participant’s Order Date if, by 9:00 a.m. E.T. on such disseminated through the facilities of purchase order, the Bitcoin Account Business Day, the Transfer Agent’s DTC the Consolidated Tape Association must be credited with the required account has been credited with the (‘‘CTA’’). bitcoin by the end of the Business Day Creation Units to be redeemed. If the Quotation and last sale information following the purchase order date. Upon Transfer Agent’s DTC account has not for bitcoin will be widely disseminated receipt of the bitcoin deposit amount in been credited with all of the Creation through a variety of major market data the Trust’s Bitcoin Account, the Bitcoin Units to be redeemed by such time, the vendors, including Bloomberg and Custodian will notify the Transfer redemption distribution will also be Reuters. In addition, the complete real- Agent, the Authorized Participant, and delayed. time price (and volume) data for bitcoin the Advisor that the bitcoin has been Availability of Information is available by subscription from deposited. The Transfer Agent will then The Trust’s website (https:// Reuters and Bloomberg. The spot price direct the Depository Trust Company www.ftportfolios.com) will include of bitcoin is available on a 24-hour basis (‘‘DTC’’) to credit the number of Shares quantitative information on a per Share from major market data vendors, created to the Authorized Participant’s basis updated on a daily basis, including Bloomberg and Reuters. DTC account. including (i) the current NAV per Share Information relating to trading, Redemption Procedures daily and the prior business day’s NAV including price and volume According to the Registration and the reported closing price; (ii) the information, in bitcoin will be available 93 Statement, on any Business Day, an mid-point of the bid-ask price in from major market data vendors and Authorized Participant may place an relation to the NAV as of the time the from the exchanges on which bitcoin are order with the Transfer Agent to redeem NAV is calculated (‘‘Bid-Ask Price’’) traded. The normal trading hours for one or more Creation Units. Authorized 93 The bid-ask price of the Trust is determined 94 The IIV on a per Share basis disseminated Participants may only redeem Creation using the highest bid and lowest offer on the during the Core Trading Session should not be Units and cannot redeem any Shares in Consolidated Tape as of the time of calculation of viewed as a real-time update of the NAV, which is an amount less than a Creation Unit. the closing day NAV. calculated once a day.

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bitcoin exchanges are 24-hours per day, the Trust.96 Trading in Shares of the regarding trading in the Shares from 365-days per year. Trust will be halted if the circuit breaker markets and other entities that are The Sponsor will publish the NAV parameters in NYSE Arca Rule 7.12–E members of ISG or with which the per Share on the Trust’s website as soon have been reached. Trading also may be Exchange has in place a CSSA.98 The as practicable after its determination. halted because of market conditions or Exchange is also able to obtain The Trust will provide website for reasons that, in the view of the information regarding trading in the disclosure of its NAV daily. The website Exchange, make trading in the Shares Shares in connection with such ETP disclosure of the Trust’s NAV will occur inadvisable. Holders’ proprietary or customer trades at the same time as the disclosure by the The Exchange may halt trading during which they effect through ETP Holders Sponsor of the NAV to Authorized the day in which an interruption to the on any relevant market. Participants so that all market dissemination of the IIV occurs. If the In addition, the Exchange also has a participants are provided such interruption to the dissemination of the general policy prohibiting the information at the same time. Therefore, IIV persists past the trading day in distribution of material, non-public the same information will be provided which it occurred, the Exchange will information by its employees. on the public website as well as in halt trading no later than the beginning All statements and representations electronic files provided to Authorized of the trading day following the made in this filing regarding (a) the Participants. Accordingly, each investor interruption. In addition, if the description of the portfolios of the will have access to the current NAV of Exchange becomes aware that the NAV Trust, (b) limitations on portfolio the Trust through the Trust’s website, as with respect to the Shares is not holdings or reference assets, or (c) the well as from one or more major market disseminated to all market participants applicability of Exchange listing rules data vendors. at the same time, it will halt trading in specified in this rule filing shall the Shares until such time as the NAV constitute continued listing Trading Rules is available to all market participants. requirements for listing the Shares on The Exchange deems the Shares to be the Exchange. equity securities, thus rendering trading Surveillance The Sponsor has represented to the in the Shares subject to the Exchange’s The Exchange represents that trading Exchange that it will advise the existing rules governing the trading of in the Shares of the Trust will be subject Exchange of any failure by the Trust to equity securities. Shares will trade on to the existing trading surveillances comply with the continued listing the NYSE Arca Marketplace from 4:00 administered by the Exchange, as well requirements, and, pursuant to its a.m. to 8:00 p.m., E.T. in accordance as cross-market surveillances obligations under Section 19(g)(1) of the with NYSE Arca Rule 7.34–E (Early, administered by FINRA on behalf of the Act, the Exchange will monitor for Core, and Late Trading Sessions). The Exchange, which are designed to detect compliance with the continued listing Exchange has appropriate rules to violations of Exchange rules and requirements. If the Trust is not in facilitate transactions in the Shares applicable federal securities laws.97 The compliance with the applicable listing during all trading sessions. As provided Exchange represents that these requirements, the Exchange will in NYSE Arca Rule 7.6–E, the minimum procedures are adequate to properly commence delisting procedures under price variation (‘‘MPV’’) for quoting and monitor Exchange trading of the Shares NYSE Arca Rule 5.5–E(m). in all trading sessions and to deter and entry of orders in equity securities 2. Statutory Basis traded on the NYSE Arca Marketplace is detect violations of Exchange rules and $0.01, with the exception of securities federal securities laws applicable to The basis under the Act for this that are priced less than $1.00, for trading on the Exchange. proposed rule change is the requirement which the MPV for order entry is The surveillances referred to above under Section 6(b)(5) that an exchange $0.0001. generally focus on detecting securities have rules that are designed to prevent The Shares will conform to the initial trading outside their normal patterns, fraudulent and manipulative acts and and continued listing criteria under which could be indicative of practices, to promote just and equitable NYSE Arca Rule 8.201–E. The trading of manipulative or other violative activity. principles of trade, to remove the Shares will be subject to NYSE Arca When such situations are detected, impediments to, and perfect the Rule 8.201–E(g), which sets forth certain surveillance analysis follows and mechanism of a free and open market restrictions on Equity Trading Permit investigations are opened, where and, in general, to protect investors and Holders (‘‘ETP Holders’’) acting as appropriate, to review the behavior of the public interest.99 registered Market Makers in all relevant parties for all relevant The Exchange believes that the Commodity-Based Trust Shares to trading violations. proposed rule change is designed to facilitate surveillance. The Exchange The Exchange or FINRA, on behalf of prevent fraudulent and manipulative represents that, for initial and continued the Exchange, or both, will acts and practices in that the Shares will listing, the Trust will be in compliance communicate as needed regarding be listed and traded on the Exchange with Rule 10A–3 95 under the Act, as trading in the Shares with other markets pursuant to the initial and continued provided by NYSE Arca Rule 5.3–E. A and other entities that are members of listing criteria in NYSE Arca Rule minimum of 100,000 Shares of the Trust the ISG, and the Exchange or FINRA, on 8.201–E. The Exchange has in place will be outstanding at the behalf of the Exchange, or both, may surveillance procedures that are commencement of trading on the obtain trading information regarding adequate to properly monitor trading in Exchange. trading in the Shares from such markets the Shares in all trading sessions and to and other entities. In addition, the deter and detect violations of Exchange Trading Halts Exchange may obtain information rules and applicable federal securities With respect to trading halts, the Exchange may consider all relevant 96 See NYSE Arca Rule 7.12–E. 98 For a list of the current members of ISG, see factors in exercising its discretion to 97 FINRA conducts cross-market surveillances on www.isgportal.org. The Exchange notes that not all behalf of the Exchange pursuant to a regulatory components of the Trust may trade on markets that halt or suspend trading in the Shares of services agreement. The Exchange is responsible for are members of ISG or with which the Exchange has FINRA’s performance under this regulatory services in place a CSSA. 95 17 CFR 240.10A–3. agreement. 99 15 U.S.C. 78f(b)(5).

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laws. The Exchange or FINRA, on behalf Commission’s guidance with respect to it will facilitate the listing and trading of the Exchange, or both, will surveillance sharing agreements. As of an additional type of exchange-traded communicate as needed regarding discussed above, the CME is the primary product that will enhance competition trading in the Shares with other markets market for bitcoin futures, is designed to among market participants, to the that are members of the ISG, and the detect and resist potentially benefit of investors and the marketplace. Exchange or FINRA, on behalf of the manipulative trading activity, and, as a As noted above, the Exchange has in Exchange, or both, may obtain trading member of ISG, can provide the place surveillance procedures relating to information regarding trading in the Exchange with information to assist in trading in the Shares and may obtain Shares from such markets. In addition, detecting and deterring potential fraud information via ISG from other the Exchange may obtain information or manipulation. exchanges that are members of ISG or regarding trading in the Shares from The proposed rule change is also with which the Exchange has entered markets that are members of ISG or with designed to promote just and equitable into a CSSA. In addition, as noted which the Exchange has in place a principles of trade and to protect above, investors will have ready access CSSA. Also, pursuant to NYSE Arca investors and the public interest in that to information regarding the Trust’s Rule 8.201–E(g), the Exchange is able to there is a considerable amount of NAV, IIV, and quotation and last sale obtain information regarding trading in bitcoin price and market information information for the Shares. the Shares and the underlying bitcoin or available on public websites and any bitcoin derivative through ETP through professional and subscription B. Self-Regulatory Organization’s Holders acting as registered Market services. Investors may obtain, on a 24- Statement on Burden on Competition Makers, in connection with such ETP hour basis, bitcoin pricing information The Exchange does not believe that Holders’ proprietary or customer trades based on the spot price for bitcoin from the proposed rule change will impose through ETP Holders which they effect various financial information service any burden on competition that is not on any relevant market. providers. The closing price and settlement prices of bitcoin are readily necessary or appropriate in furtherance The Exchange also believes that the available from the bitcoin exchanges of the purposes of the Act. The proposed rule change is designed to and other publicly available websites. In Exchange notes that the proposed rule prevent fraudulent and manipulative addition, such prices are published in change will facilitate the listing and acts and practices and to protect public sources, or on-line information trading of an additional type of investors and the public interest services such as Bloomberg and Reuters. exchange-traded product, which will because investing in the Trust will The NAV per Share will be calculated enhance competition among market provide investors with exposure to daily and made available to all market participants, to the benefit of investors bitcoin in a manner that is more participants at the same time. The Trust and the marketplace. efficient and convenient than the will provide website disclosure of its C. Self-Regulatory Organization’s purchase of stand-alone bitcoin, while NAV daily. One or more major market also mitigating some of the volatility data vendors will disseminate for the Statement on Comments on the risk typically associated with the Trust on a daily basis information with Proposed Rule Change Received From purchase of stand-alone bitcoin. As respect to the most recent NAV per Members, Participants, or Others discussed above, the Trust will use the Share and Shares outstanding. In No written comments were solicited Reference Rate to determine the value of addition, if the Exchange becomes its bitcoin assets and its NAV. While or received with respect to the proposed aware that the NAV with respect to the rule change. bitcoin is listed and traded on a number Shares is not disseminated to all market of markets and platforms, the Reference participants at the same time, it will halt III. Date of Effectiveness of the Rate is determined exclusively based on trading in the Shares until such time as Proposed Rule Change and Timing for its Constituent Platforms, and therefore, the NAV is available to all market Commission Action use of the Reference Rate would participants. Quotation and last-sale mitigate the effects of potential information regarding the Shares will be Within 45 days of the date of manipulation of the bitcoin market. disseminated through the facilities of publication of this notice in the Federal Additionally, the capital necessary to the CTA. The IIV will be widely Register or up to 90 days (i) as the maintain a significant presence on any disseminated on a per Share basis every Commission may designate if it finds Constituent Platform would make 15 seconds during the NYSE Arca Core such longer period to be appropriate manipulation of the Reference Rate Trading Session (normally 9:30 a.m., and publishes its reasons for so finding unlikely. Bitcoin trades in a well- E.T., to 4:00 p.m., E.T.) by one or more or (ii) as to which the self-regulatory arbitraged and distributed market. The major market data vendors. In addition, organization consents, the Commission linkage between the bitcoin markets and the IIV will be available on the Trust’s will: the presence of arbitrageurs in those website and through on-line information (A) By order approve or disapprove markets means that the manipulation of services. The Exchange represents that the proposed rule change, or the price of bitcoin on any Constituent the Exchange may halt trading during (B) institute proceedings to determine Platform would likely require the day in which an interruption to the whether the proposed rule change overcoming the liquidity supply of such dissemination of the IIV occurs. If the arbitrageurs who are potentially interruption to the dissemination of the should be disapproved. eliminating any cross-market pricing IIV persists past the trading day in IV. Solicitation of Comments differences. The proposed rule change is which it occurred, the Exchange will also designed to prevent fraudulent and halt trading no later than the beginning Interested persons are invited to manipulative acts and practices based of the trading day following the submit written data, views, and on the function of the CME, either alone interruption. arguments concerning the foregoing, as the sole market for bitcoin futures or The proposed rule change is designed including whether the proposed rule as a group of markets together with the to perfect the mechanism of a free and change is consistent with the Act. Constituent Platforms, as a ‘‘market of open market and, in general, to protect Comments may be submitted by any of significant size’’ consistent with the investors and the public interest in that the following methods:

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Electronic Comments SECURITIES AND EXCHANGE will be available to all Members and Non-Members.3 The proposed Open- • COMMISSION Use the Commission’s internet Close Report would be described in comment form (http://www.sec.gov/ [Release No. 34–91963; File No. SR– EMERALD–2021–18] Exchange Rule 531(b)(1) and is based on rules/sro.shtml); or market data products currently available • Send an email to rule-comments@ Self-Regulatory Organizations; MIAX on most other options exchanges.4 sec.gov. Please include File Number SR– Emerald, LLC; Notice of Filing and The Exchange proposes to offer the NYSEArca–2021–37 on the subject line. Immediate Effectiveness of a Proposed Open-Close Report, which will be a Rule Change To Adopt a New volume summary of trading activity on Paper Comments Historical Market Data Product To Be the Exchange at the option level by • Known as the Open-Close Report origin (Priority Customer, Non-Priority Send paper comments in triplicate Customer, Firm, Broker-Dealer, and to: Secretary, Securities and Exchange May 21, 2021. Market Maker 5), side of the market (buy Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the or sell), contract volume, and Washington, DC 20549–1090. Securities Exchange Act of 1934 transaction type (opening or closing). 1 2 All submissions should refer to File (‘‘Act’’), and Rule 19b–4 thereunder, The Priority Customer, Non-Priority notice is hereby given that on May 10, Number SR–NYSEArca–2021–37. This Customer, Firm, Broker-Dealer, and 2021, MIAX Emerald, LLC (‘‘MIAX Market Maker volume is further broken file number should be included on the Emerald’’ or the ‘‘Exchange’’) filed with down into trade size buckets (less than subject line if email is used. To help the the Securities and Exchange 100 contracts, 100–199 contracts, greater Commission process and review your Commission (‘‘Commission’’) a than 199 contracts). The Open-Close comments more efficiently, please use proposed rule change as described in Report is proprietary Exchange trade only one method. The Commission will Items I and II below, which Items have data and does not include trade data post all comments on the Commission’s been prepared by the Exchange. The from any other exchange. It is also a internet website (http://www.sec.gov/ Commission is publishing this notice to historical data product and not a real- rules/sro.shtml). Copies of the solicit comments on the proposed rule time data feed. The Open-Close Report submission, all subsequent change from interested persons. would be described under proposed amendments, all written statements 6 I. Self-Regulatory Organization’s Exchange Rule 531(b)(1). with respect to the proposed rule Specifically, the Open-Close Report Statement of the Terms of Substance of would include the following data: change that are filed with the the Proposed Rule Change Commission, and all written • Aggregate number of buy and sell The Exchange proposes to adopt a transactions in the affected series; communications relating to the • proposed rule change between the new historical market data product to be Aggregate volume traded known as the Open-Close Report. Commission and any person, other than electronically on the Exchange in the The text of the proposed rule change affected series; those that may be withheld from the is available on the Exchange’s website at • Aggregate number of trades effected public in accordance with the http://www.miaxoptions.com/rule- on the Exchange to open a position; 7 provisions of 5 U.S.C. 552, will be filings/emerald at MIAX Emerald’s available for website viewing and principal office, and at the 3 The term ‘‘Member’’ means an individual or printing in the Commission’s Public Commission’s Public Reference Room. organization approved to exercise the trading rights Reference Room, 100 F Street NE, associated with a Trading Permit. Members are deemed ‘‘members’’ under the Exchange Act. See Washington, DC 20549 on official II. Self-Regulatory Organization’s Statement of the Purpose of, and Exchange Rule 100. business days between the hours of 4 Statutory Basis for, the Proposed Rule See Securities Exchange Act Release Nos. 89497 10:00 a.m. and 3:00 p.m. Copies of the (August 6, 2020), 85 FR 48747 (August 12, 2020) Change filing also will be available for (SR–CboeBZX–2020–059); 89498 (August 6, 2020), In its filing with the Commission, the 85 FR 48735 (August 12, 2020) (SR–Cboe–EDGX– inspection and copying at the principal 2020–36); 85817 (May 9, 2019), 84 FR 21863 (May office of the Exchange. All comments Exchange included statements 15, 2019) (SR–CBOE–2019–026); 89496 (August 6, received will be posted without change. concerning the purpose of and basis for 2020), 85 FR 48743 (August 12, 2020) (SR–C2– 2020–010); 89596 (August 17, 2020), 85 FR 51833 Persons submitting comments are the proposed rule change and discussed any comments it received on the (August 21, 2020) (SR–C2–2020–012); 62887 cautioned that we do not redact or edit (September 10, 2010), 75 FR 57092 (September 17, personal identifying information from proposed rule change. The text of these 2010) (SR–Phlx–2010–121); 65587 (October 18, comment submissions. You should statements may be examined at the 2011), 76 FR 65765 (October 24, 2011) (SR– places specified in Item IV below. The NASDAQ–2011–144); 61317 (January 8, 2010), 75 submit only information that you wish Exchange has prepared summaries, set FR 2915 (January 19, 2010) (SR–ISE–2009–103); to make available publicly. All 62887 (September 10, 2010), 75 FR 57092 forth in sections A, B, and C below, of submissions should refer to File (September 17, 2010) (SR–Phlx–2010–121); 65587 the most significant aspects of such (October 18, 2011), 76 FR 65765 (October 24, 2011) Number SR–NYSEArca–2021–37 and statements. (SR–NASDAQ–2011–144); and 81632 (September should be submitted on or before June 15, 2017), 82 FR 44235 (September 21, 2017) (SR– 17, 2021. A. Self-Regulatory Organization’s GEMX–2017–42). Statement of the Purpose of, and 5 See Exchange Rule 100 for the definitions of the For the Commission, by the Division of Statutory Basis for, the Proposed Rule terms Priority Customer, Non-Priority Customer, Firm, Broker-Dealer, and Market Maker. Trading and Markets, pursuant to delegated Change authority.100 6 The Exchange also proposes to amend the title 1. Purpose of Exchange Rule 531 to include ‘‘Market Data J. Matthew DeLesDernier, Products.’’ Assistant Secretary. The Exchange proposes to adopt a 7 The Open-Close Report would provide [FR Doc. 2021–11172 Filed 5–26–21; 8:45 am] new historical market data product to be subscribers with the aggregate number of ‘‘opening known as the Open-Close Report, which purchase transactions’’ in the affected series. An BILLING CODE 8011–01–P opening purchase transaction is an Exchange options transaction in which the purchaser’s 1 15 U.S.C. 78s(b)(1). intention is to create or increase a long position in 100 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. the series of options involved in such transaction.

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