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lotter on DSK11XQN23PROD with NOTICES1

Federal Register / Vol. 86, No. 164 / Friday, August 27, 2021 / Notices unexpectedly hold cash on a temporary basis.9
In seeking to achieve its investment objective, the Trust will hold bitcoin and will value its Shares daily as of 4:00
p.m. E.T. using the same methodology used to calculate the Index. The Index is designed to reflect the performance of bitcoin in U.S. dollars. The Index is calculated using bitcoin price feeds from eligible bitcoin spot platforms. The current platform composition of the Index is Bitstamp, Coinbase, Gemini, itBit and Kraken. The Index market value is the volume-weighted median price of bitcoin in U.S. dollars over the previous five minutes, which is calculated by 1 ordering all individual transactions on eligible spot platforms over the previous five minutes by price, and then 2 selecting the price associated with the 50th percentile of total volume.10
The Net Asset Value NAV of the Trust means the total assets of the Trust including, but not limited to, all bitcoin and cash, if any, less total liabilities of the Trust, each determined on the basis of generally accepted accounting principles. The NAV of the Trust is calculated by taking the fair market value of its total assets based on the volume-weighted median price of bitcoin used for the calculation of the Index, subtracting any liabilities which include accrued expenses, and dividing that total by the total number of outstanding Shares. The Administrator calculates the NAV of the Trust once each Exchange trading day. The NAV
for a normal trading day will be released after 4:00 p.m. E.T.11
The Trust will provide information regarding the Trusts bitcoin holdings, as well as an Intraday Indicative Value IIV per Share updated every 15
seconds, as calculated by the Exchange or a third-party financial data provider during the Exchanges Regular Trading Hours 9:30 a.m. to 4:00 p.m. E.T.. The IIV will be calculated by using the prior days closing NAV per Share as a base and updating that value during Regular Trading Hours to reflect changes in the value of the Trusts bitcoin holdings during the trading day.12
When the Trust sells or redeems its Shares, it will do so in in-kind transactions in blocks of Shares.
Authorized participants will deliver, or facilitate the delivery of, bitcoin to the Trusts account with the Custodian in exchange for Shares when they purchase Shares, and the Trust, through
the Custodian, will deliver bitcoin to such authorized participants when they redeem Shares with the Trust.13
II. Proceedings To Determine Whether To Approve or Disapprove SR
CboeBZX2021039 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19b2B of the Act 14 to determine whether the proposed rule change should be approved or disapproved.
Institution of proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change, as discussed below.
Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide comments on the proposed rule change.
Pursuant to Section 19b2B of the Act,15 the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings to allow for additional analysis of the proposed rule changes consistency with Section 6b5 of the Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. 16
The Commission asks that commenters address the sufficiency of the Exchanges statements in support of the proposal, which are set forth in the Notice,17 in addition to any other comments they may wish to submit about the proposed rule change. In particular, the Commission seeks comment on the following questions and asks commenters to submit data where appropriate to support their views:
1. What are commenters views on whether the proposed Trust and Shares would be susceptible to manipulation?
What are commenters views generally on whether the Exchanges proposal is designed to prevent fraudulent and manipulative acts and practices? What are commenters views generally with respect to the liquidity and transparency of the bitcoin markets, the bitcoin markets susceptibility to manipulation, and thus the suitability of bitcoin as an id. at 2932829.
14 15 U.S.C. 78sb2B.
15 Id.
16 15 U.S.C. 78fb5.
17 See Notice, supra note 3.

9 See
id. at 29328.
id. at 29329.
11 See id. at 2932930.
12 See id. at 29329.
10 See
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underlying asset for an exchange-traded product?
2. What are commenters views of the Exchanges assertion that the regulatory and financial landscapes relating to bitcoin and other digital assets have changed significantly since 2016? 18 Are the changes that the Exchange identifies sufficient to support the determination that the proposal to list and trade the Shares is designed to protect investors and the public interest and is consistent with the other applicable requirements of Section 6b5 of the Act?
3. The Exchange states that approving this proposal . . . would allow U.S. investors with access to bitcoin in a regulated and transparent exchange-traded vehicle that would act to reduce risk associated with exposure through other means.19 Further, the Exchange asserts that the manipulation concerns previously articulated by the Commission are sufficiently mitigated. 20 What are commenters views regarding such assertions?
4. According to the Exchange, nearly every measurable metric related to Chicago Mercantile Exchanges Bitcoin Futures has trended consistently up since launch and/or accelerated upward in the past year. 21
Based on data provided and the academic research cited by the Exchange, do commenters agree that the Chicago Mercantile Exchange CMEs bitcoin futures market now represents a regulated market of significant size? 22
What are commenters views on whether there is a reasonable likelihood that a person attempting to manipulate the Shares would also have to trade on CME to manipulate the Shares? What are commenters views on the Exchanges assertion that the combination of a CME bitcoin futures leading price discovery; b the overall size of the bitcoin market; and c the ability for market participants to buy or sell large amounts of bitcoin without significant market impact helps to prevent the Shares from becoming the predominant force on pricing in either the bitcoin spot or CME bitcoin futures markets? 23
5. What are commenters views on the Exchanges statement, generally, that bitcoin is resistant to price manipulation and that other means to prevent fraudulent and manipulative acts and practices exist to justify dispensing with the requisite 18 See
13 See
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id. at 2932223.
id. at 29324.
20 See id. at 29327.
21 See id. at 29325.
22 See id. at 29322.
23 See id. at 29332.
19 See
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