Notice2025-03031
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend the Fidelity Wise Origin Bitcoin Fund and the Fidelity Ethereum Fund
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 25, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 36 (Tuesday, February 25, 2025)</title>
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[Federal Register Volume 90, Number 36 (Tuesday, February 25, 2025)]
[Notices]
[Pages 10664-10667]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-03031]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102451; File No. SR-CboeBZX-2025-023]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Amend the Fidelity Wise Origin
Bitcoin Fund and the Fidelity Ethereum Fund
February 19, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 7, 2025, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to amend the Fidelity Wise Origin Bitcoin Fund
(the ``Bitcoin Trust'') and the Fidelity Ethereum Fund (the ``Eth
Trust'' and, collectively with the Bitcoin Trust, the ``Trusts'').
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/">http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/</a>), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Commission approved the listing and trading of shares (the
``Bitcoin ETP Shares'') of the Bitcoin Trust on the Exchange pursuant
to Exchange Rule 14.11(e)(4), Commodity-Based Trust Shares, on January
10, 2024.\3\ The Commission also approved the listing and trading of
shares (the ``ETH ETP Shares'') of the Eth Trust on the Exchange
pursuant to Exchange Rule 14.11(e)(4), Commodity-Based Trust Shares, on
May 23, 2024.\4\ Exchange Rule 14.11(e)(4) governs the listing and
trading of Commodity-Based Trust Shares, which means a security (a)
that is issued by a trust that holds (1) a specified commodity
deposited with the trust, or (2) a specified commodity and,
[[Page 10665]]
in addition to such specified commodity, cash; (b) that is issued by
such trust in a specified aggregate minimum number in return for a
deposit of a quantity of the underlying commodity and/or cash; and (c)
that, when aggregated in the same specified minimum number, may be
redeemed at a holder's request by such trust which will deliver to the
redeeming holder the quantity of the underlying commodity and/or cash.
The Bitcoin ETP Shares are issued by the Bitcoin Trust and the ETH ETP
Shares are issued by the Eth Trust. The Bitcoin Trust was formed as a
Delaware statutory trust on March 17, 2021 and the Eth Trust was formed
as a Delaware statutory trust on October 31, 2023.
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\3\ See Securities Exchange Act Release Nos. 99290 (January 8,
2024) 89 FR 2338 (January 12, 2024) (SR-CboeBZX-2023-044) (Notice of
Filing of Amendment No. 3 to a Proposed Rule Change To List and
Trade Shares of the Wise Origin Bitcoin Fund Under BZX Rule
14.11(e)(4), Commodity-Based Trust Shares) (``Bitcoin ETP Amendment
No. 3''); 99306 (January 10, 2024) 89 FR 3008 (January 17, 2024)
(SR-CboeBZX-2023-044) (Order Granting Accelerated Approval of
Proposed Rule Changes, as Modified by Amendments Thereto, To List
and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust
Units) (the ``Bitcoin ETP Approval Order'').
\4\ See Securities Exchange Act Release Nos. 100215 (May 22,
2024) 89 FR 46478 (May 29, 2024) (SR-CboeBZX-2023-095) (Notice of
Filing of Amendment No. 2 to a Proposed Rule Change to List and
Trade Shares of the Fidelity Ethereum Fund Under BZX Rule
14.11(e)(4), Commodity-Based Trust Shares) (``Eth ETP Amendment No.
2''); 100224 (May 23, 2024) 89 FR 46937 (May 30, 2024) (SR-CboeBZX-
2023-095) (Order Granting Accelerated Approval of Proposed Rule
Changes, as Modified by Amendments Thereto, to List and Trade Shares
of Ether-Based Exchange-Traded Products) (the ``ETH ETP Approval
Order'').
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Bitcoin Trust
The Exchange proposes to amend several portions of the Bitcoin ETP
Amendment No. 3 in order to permit in-kind creation and redemptions.
Representations
The Bitcoin ETP Amendment No. 3 included a specific representation
making clear that the Bitcoin Trust would only process creations and
redemptions in cash. Specifically, the ``Investment Objective'' section
of the Bitcoin ETP Amendment No. 3 stated:
In seeking to achieve its investment objective, the Trust will hold
bitcoin, cash, and cash equivalents and will value its Shares daily as
of 4:00 p.m. Eastern time using the Index price to value the bitcoin
and process all creations and redemptions in cash transactions with
authorized participants.\5\
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\5\ Bitcoin ETP Amendment No. 3 at 2366.
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The Exchange proposes to replace the above with the following:
In seeking to achieve its investment objective, the Trust will hold
bitcoin, cash, and cash equivalents and will value its Shares daily as
of 4:00 p.m. Eastern time using the Index price to value the bitcoin
and process all creations and redemptions in cash or in-kind
transactions with authorized participants.
Creation and Redemption of Shares
Additionally, the ``Creation and Redemption of Shares'' section of
the filing includes a detailed description of how the cash-only
creation and redemption process works.\6\ The Exchange proposes to
replace this section as follows:
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\6\ Bitcoin ETP Amendment No. 3 at 2368.
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Creation and Redemption of Shares
When the Trust creates or redeems its Shares, it will do so in cash
or in-kind. In connection with cash creations and cash redemptions, the
authorized participants will submit orders to create or redeem Baskets
of Shares in exchange for cash. When the Trust creates or redeems its
Shares in cash, it will do so in transactions in blocks of 25,000
Shares that are based on the quantity of bitcoin attributable to each
Share of the Trust (e.g., a Creation Basket) at the Trust's NAV. When
the Trust creates or redeems its Shares in kind, it will do so in
transfers of bitcoin in blocks of 25,000 Shares that are based on the
quantity of bitcoin attributable to the Creation Basket being created
or redeemed.
The authorized participants will deliver or cause to be delivered
cash or bitcoin to create Shares and the authorized participant or its
designee will receive cash or bitcoin when redeeming Shares. The Trust
will create Shares by receiving bitcoin or cash from an authorized
participant or its designee and will redeem shares by delivering
bitcoin or cash to an authorized participant or its designee.
On any business day, an authorized participant may place an order
to create one or more Creation Baskets. Purchase orders must be placed
by the close of Regular Trading Hours on the Exchange or another time
determined by the Sponsor. The day on which an order is received is
considered the purchase order date.
For a cash creation order, the total deposit of cash required is an
amount of cash sufficient to purchase such amount of bitcoin, the
amount of which is equal to the combined NAV of the number of Shares
included in the Creation Baskets being created determined as of 4:00
p.m. ET on the date the order to purchase is properly received.
For a creation order in kind, the total in-kind transfer of bitcoin
is based on the quantity of bitcoin attributable to the Creation
Baskets being created determined as of 4:00 p.m. ET on the date the
order to purchase is properly received.
The Administrator determines the quantity of bitcoin used to
calculate the Creation Basket for a given day by dividing the number of
bitcoin held by the Trust as of the opening of business on that
business day, adjusted for the amount of bitcoin constituting estimated
accrued but unpaid fees and expenses of the Trust as of the opening of
business on that business day, by the quotient of the number of Shares
outstanding at the opening of business divided by the number of Shares
in a Creation Basket.
The procedures by which an authorized participant can redeem one or
more Creation Baskets mirror the procedures for the creation of
Creation Baskets. For a cash creation order, an authorized participant
will deliver cash to create Shares. For an in-kind creation order, an
authorized participant or its designee will deliver bitcoin to create
Shares. For a cash redemption order, an authorized participant will
deliver Shares to the Trust and will receive cash for the Shares
delivered. For an in-kind redemption order, an authorized participant
will deliver Shares to the Trust and the authorized participant or its
designee will receive bitcoin for the Shares delivered.
Eth Trust
Similarly, the Exchange proposes to amend several portions of the
Eth ETP Amendment No. 2 in order to permit in-kind creations and
redemptions.
Representations
The Eth ETP Amendment No. 2 included a specific representation
making clear that the Eth Trust would only process creations and
redemptions in cash. Specifically, the ``Investment Objective'' section
of the Eth ETP Amendment No. 2 stated:
In seeking to achieve its investment objective, the Trust will hold
ETH, cash, and cash equivalents and will value its Shares daily as of
4:00 p.m. Eastern time using the Index price to value the ether and
process all creations and redemptions in transactions in cash
transactions with authorized participants. The Trust is not actively
managed.\7\
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\7\ See Eth ETP Amendment No. 2 at 46488.
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The Exchange proposes to replace the above with the following:
In seeking to achieve its investment objective, the Trust will hold
ETH, cash, and cash equivalents and will value its Shares daily as of
4:00 p.m. Eastern time using the Index price to value the ether and
process all creations and redemptions in transactions in cash or in-
kind transactions with authorized participants. The Trust is not
actively managed.
Creation and Redemption of Shares
Additionally, the ``Creation and Redemption of Shares'' section of
the filing includes a detailed description of how the cash-only
creation and redemption process works.\8\ The Exchange proposes to
replace this section as follows:
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\8\ See Eth ETP Amendment No. 2 at 46489-46490.
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Creation and Redemption of Shares
When the Trust creates or redeems its Shares, it will do so in cash
or in-kind. In connection with cash creations and
[[Page 10666]]
cash redemptions, the authorized participants will submit orders to
create or redeem Baskets of Shares in exchange for cash. When the Trust
creates or redeems its Shares in cash, it will do so in transactions in
blocks of 25,000 Shares that are based on the quantity of ether
attributable to each Share of the Trust (e.g., a Creation Basket) at
the Trust's NAV. When the Trust creates or redeems its Shares in-kind,
it will do so in transfers of ether in blocks of 25,000 Shares that are
based on the quantity of ether attributable to the Creation Basket
being created or redeemed.
The authorized participants will deliver or cause to be delivered
cash or ether to create Shares and the authorized participant or its
designee will receive cash or ether when redeeming Shares. The Trust
will create Shares by receiving ether or cash from an authorized
participant or its designee and will redeem Shares by delivering ether
or cash to an authorized participant or its designee.
On any business day, an authorized participant may place an order
to create one or more Creation Baskets. Purchase orders must be placed
by the close of Regular Trading Hours on the Exchange or another time
determined by the Sponsor. The day on which an order is received is
considered the purchase order date.
For a cash creation order, the total deposit of cash required is an
amount of cash sufficient to purchase such amount of ether, the amount
of which is based on the combined NAV of the number of Shares included
in the Creation Baskets being created determined as of 4:00 p.m. ET on
the date the order to purchase is properly received.
For a creation order in kind, the total in-kind transfer of ether
is based on the quantity of ether attributable to the Creation Baskets
being created determined as of 4:00 p.m. ET on the date the order to
purchase is properly received.
The Administrator determines the quantity of ether used to
calculate the Creation Basket for a given day by dividing the number of
ether held by the Trust as of the opening of business on that business
day, adjusted for the amount of ether constituting estimated accrued
but unpaid fees and expenses of the Trust as of the opening of business
on that business day, by the quotient of the number of Shares
outstanding at the opening of business divided by the number of Shares
in a Creation Basket.
The procedures by which an authorized participant can redeem one or
more Creation Baskets mirror the procedures for the creation of
Creation Baskets. For a cash creation order, an authorized participant
will deliver cash to create Shares. For an in-kind creation order, an
authorized participant or its designee will deliver ether to create
Shares. For a cash redemption order, an authorized participant will
deliver Shares to the Trust and will receive cash for the Shares
delivered. For an in-kind redemption order, an authorized participant
will deliver Shares to the Trust and the authorized participant or its
designee will receive ether for the Shares delivered.
Conclusion
Except for the above changes, all other representations in the
Bitcoin ETP Amendment No. 3 and the Eth ETP Amendment No. 2 remain
unchanged and will continue to constitute continuing listing
requirements. In addition, the Bitcoin Trust will continue to comply
with the terms of Bitcoin ETP Amendment No. 3 and the Eth Trust will
continue to comply with the terms of Eth ETP Amendment No. 2 and the
Trusts will continue to comply with the requirements of Rule
14.11(e)(4).
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\9\ Specifically, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \10\ requirements that the rules of
an exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes the proposed rule change is designed to
remove impediments to and perfect the mechanism of a free and open
market and, in general, to protect investors and the public interest
because it would update representations in both the Bitcoin ETP
Amendment No. 3 and the Eth ETP Amendment No. 2 such that the Trusts
would both be able to engage in in-kind creation and redemptions with
authorized participants or their designees, as described above. This
ability would make the Trusts (and the market more generally) operate
more efficiently because authorized participants would be able to
source bitcoin or ether, as applicable, rather than to provide cash to
the applicable Trust and to receive bitcoin or ether from the Trusts.
This means that the authorized participant would be responsible for
buying and selling the applicable crypto asset rather than the Trust
itself, which would potentially lessen the impact on the market of the
Trusts on both sides of the transaction by allowing the authorized
participant to decide how and where to source the underlying crypto
asset for creations and deciding how, where, and whether to sell the
underlying crypto asset received for redemptions. This would improve
the creation and redemption process for both authorized participants
and the Trusts, increase efficiency, and ultimately benefit the end
investors in the Trusts.
Except for the addition of in-kind creation and redemption for the
Bitcoin Trust as specifically set forth herein, all other
representations made in the Bitcoin ETP Amendment No. 3 remain
unchanged and will continue to constitute continuing listing
requirements for the Bitcoin Trust. Similarly, except for the addition
of in-kind creation and redemption for the Eth Trust as specifically
set forth herein, all other representations made in the Eth ETP
Amendment No. 2 remain unchanged and will continue to constitute
continuing listing requirements for the Eth Trust.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. As noted above, the proposed
amendment is intended to allow the Trusts to operate more efficiently
by allowing for in-kind creation and redemption. The Exchange believes
these changes will not impose any burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period
[[Page 10667]]
up to 90 days (i) as the Commission may designate if it finds such
longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the Exchange consents, the Commission will:
A. by order approve or disapprove such proposed rule change, or
B. institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f280879e97df919d9f9f979c8681b2819791dc959d84"><span class="__cf_email__" data-cfemail="97e5e2fbf2baf4f8fafaf2f9e3e4d7e4f2f4b9f0f8e1">[email protected]</span></a>. Please include
file number SR-CboeBZX-2025-023 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-CboeBZX-2025-023. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-CboeBZX-2025-023 and should
be submitted on or before March 18, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-03031 Filed 2-24-25; 8:45 am]
BILLING CODE 8011-01-P
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