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Federal Register / Vol. 86, No. 160 / Monday, August 23, 2021 / Notices
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listing exchange in detecting and deterring misconduct in the Shares.

price of bitcoin mean that attempting to move the price of bitcoin is costly and has grown more expensive over the past b Predominant Influence on Prices in year. In January 2020, for example, the Spot and Bitcoin Futures cost to buy or sell $5 million worth of The Exchange also believes that bitcoin averaged roughly 30 basis points trading in the Shares would not be the compared to 10 basis points in 2/2021
predominant force on prices in the with a market impact of 50 basis points Bitcoin Futures market or spot market compared to 30 basis points in 2/
for a number of reasons, including the 2021.60 For a $10 million market order, significant volume in the Bitcoin the cost to buy or sell was roughly 50
Futures market, the size of bitcoins basis points compared to 20 basis market cap approximately $1 trillion, points in 2/2021 with a market impact and the significant liquidity available in of 80 basis points compared to 50 basis the spot market. In addition to the points in 2/2021. As the liquidity in the Bitcoin Futures market data points cited bitcoin spot market increases, it follows above, the spot market for bitcoin is also that the impact of $5 million and $10
very liquid. According to data from million orders will continue to decrease CoinRoutes from February 2021, the the overall impact in spot price.
cost to buy or sell $5 million worth of Additionally, offering only in-kind bitcoin averages roughly 10 basis points creation and redemption will provide with a market impact of 30 basis unique protections against potential points.59 For a $10 million market order, attempts to manipulate the Shares.
the cost to buy or sell is roughly 20 basis While the Sponsor believes that the points with a market impact of 50 basis methodology which it uses to value the points. Stated another way, a market Trusts bitcoin is itself resistant to participant could enter a market buy or manipulation based on the methodology sell order for $10 million of bitcoin and further described below, the fact that only move the market 0.5%. More creations and redemptions are only strategic purchases or sales such as available in-kind makes the valuation using limit orders and executing methodology significantly less through OTC bitcoin trade desks would important. Specifically, because the likely have less obvious impact on the Trust will not accept cash to buy bitcoin marketwhich is consistent with in order to create new shares, will MicroStrategy, Tesla, and Square being charge fees as a percentage of the Trusts able to collectively purchase billions of bitcoin holdings measure in bitcoin and dollars in bitcoin. As such, the not in dollars, and, barring a forced combination of Bitcoin Futures leading redemption of the Trust or under other price discovery, the overall size of the extraordinary circumstances, will not be bitcoin market, and the ability for forced to sell bitcoin to pay cash for market participants, including redeemed shares, the price that the authorized participants creating and Sponsor uses to value the Trusts bitcoin redeeming in-kind with the Trust, to is not particularly important. When buy or sell large amounts of bitcoin authorized participants are creating without significant market impact will with the Trust, they need to deliver a help prevent the Shares from becoming certain number of bitcoin per share the predominant force on pricing in regardless of the valuation used and either the bitcoin spot or Bitcoin when theyre redeeming, they can Futures markets, satisfying part b of similarly expect to receive a certain the test outlined above.
number of bitcoin per share. As such, c Other Means To Prevent Fraudulent even if the price used to value the and Manipulative Acts and Practices Trusts bitcoin is manipulated which the Sponsor believes that its As noted above, the Commission also methodology is resistant to, the ratio of permits a listing exchange to bitcoin per Share does not change and demonstrate that other means to the Trust will either accept for prevent fraudulent and manipulative creations or distribute for acts and practices are sufficient to redemptions the same number of justify dispensing with the requisite bitcoin regardless of the value. This not surveillance-sharing agreement. The only mitigates the risk associated with Exchange believes that such conditions potential manipulation, but also are present. Specifically, the significant discourages and disincentivizes liquidity in the spot market and the manipulation of the valuation impact of market orders on the overall 59 These statistics are based on samples of bitcoin liquidity in USD excluding stablecoins or Euro liquidity based on executable quotes on Coinbase Pro, Gemini, Bitstamp, Kraken, LMAX Exchange, BinanceUS, and OKCoin during February 2021.

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60 These statistics are based on samples of bitcoin liquidity in USD excluding stablecoins or Euro liquidity based on executable quotes on Coinbase Pro, Gemini, Bitstamp, Kraken, LMAX Exchange, BinanceUS, and OKCoin during February 2021.

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methodology because there is little financial incentive to do so.
Global X Bitcoin Trust Delaware Trust Company is the trustee Trustee. The Sponsor selects the administrator, transfer agent, marketing agent in connection with the creation and redemption of Baskets of Shares, and third-party regulated custodian that will be responsible for custody of the Trusts bitcoin.61
According to the Registration Statement, each Share will represent a fractional undivided beneficial interest in the bitcoin held by the Trust. The Trusts assets will consist of bitcoin held by the Custodian on behalf of the Trust. The Trust generally does not intend to hold cash or cash equivalents.
However, there may be situations where the Trust will hold cash on a temporary basis.
According to the Registration Statement, the Trust is neither an investment company registered under the Investment Company Act of 1940, as amended,62 nor a commodity pool for purposes of the Commodity Exchange Act CEA, and neither the Trust nor the Sponsor is subject to regulation as a commodity pool operator or a commodity trading adviser in connection with the Shares.
When the Trust sells or redeems its Shares, it will do so in in-kind transactions in blocks of Shares of a size to be determined a Creation Basket at the Trusts NAV. 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. Authorized participants may then offer Shares to the public at prices that depend on various factors, including the supply and demand for Shares, the value of the Trusts assets, and market conditions at the time of a transaction. Shareholders who buy or sell Shares during the day from their broker may do so at a premium or discount relative to the NAV of the Shares of the Trust.
Investment Objective According to the Registration Statement and as further described 61 The Exchange notes that the Sponsor is finalizing negotiations with each of the administrator, transfer agent, marketing agent, and custodian, and it will submit an amendment to this proposal upon execution of agreements with the administrator, transfer agent, marketing agent, and custodian.
62 15 U.S.C. 80a1.

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