Notice2025-04152
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change To List and Trade Shares of the Bitwise Dogecoin ETF Under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares)
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
March 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 50 (Monday, March 17, 2025)</title>
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[Federal Register Volume 90, Number 50 (Monday, March 17, 2025)]
[Notices]
[Pages 12429-12438]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-04152]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102570; File No. SR-NYSEARCA-2025-19]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change To List and Trade Shares of the Bitwise
Dogecoin ETF Under NYSE Arca Rule 8.201-E (Commodity-Based Trust
Shares)
March 11, 2025.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on March 3, 2025, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the self-regulatory organization. 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\ 15 U.S.C. 78a.
\3\ 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
The Exchange proposes to list and trade shares of the Bitwise
Dogecoin ETF (the ``Trust'') under NYSE Arca Rule 8.201-E (Commodity-
Based Trust Shares). The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, at the principal office of the
Exchange, 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 self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade shares (``Shares'') of the
Trust \4\ pursuant to NYSE Arca Rule 8.201-E, which governs the listing
and trading of Commodity Based Trust Shares.\5\
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\4\ The Trust is a Delaware statutory trust. On January 28,
2025, the Trust filed with the Commission an initial registration
statement (the ``Registration Statement'') on Form S-1 under the
Securities Act of 1933 (15 U.S.C. 77a). The description of the
operation of the Trust herein is based, in part, on the most recent
Registration Statement. The Registration Statement is not yet
effective, and the Shares will not trade on the Exchange until such
time that the Registration Statement is effective.
\5\ Commodity-Based Trust Shares are securities issued by a
trust that represents investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
trust.
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According to the Registration Statement, the Trust will not be
registered as an investment company under the Investment Company Act of
1940,\6\ and is not required to register thereunder. The Trust is not a
commodity pool for purposes of the Commodity Exchange Act.\7\
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\6\ 15 U.S.C. 80a-1.
\7\ 17 U.S.C. 1.
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The Exchange represents that the Shares satisfy the requirements of
NYSE Arca Rule 8.201-E and thereby qualify for listing on the Exchange.
Operation of the Trust \8\
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\8\ The description of the operation of the Trust, the Shares,
and the Dogecoin market contained herein is based, in part, on the
Registration Statement. See note 4, supra.
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The Trust will issue the Shares which, according to the
Registration Statement, represent units of undivided beneficial
ownership of the Trust. The Trust is a Delaware statutory trust and
will operate pursuant to a trust agreement (the ``Trust Agreement'')
between Bitwise Investment Advisers, LLC (the ``Sponsor'' or
``Bitwise'') and Delaware Trust Company, as the Trust's trustee (the
``Trustee''). Coinbase Custody Trust Company, LLC will maintain custody
of the Trust's Dogecoin (the ``Dogecoin Custodian''). Bank of New York
Mellon will be the custodian for the Trust's cash holdings (in such
role, the ``Cash Custodian''), the administrator of the Trust (in such
role, the ``Administrator''), and the transfer agent for the Trust (in
such role, the ``Transfer Agent'').
According to the Registration Statement, the investment objective
of the Trust is to seek to provide exposure to the value of Dogecoin
held by the Trust, less the expenses of the Trust's
[[Page 12430]]
operations. In seeking to achieve its investment objective, the Trust
will hold Dogecoin and establish its Net Asset Value (``NAV'') at the
end of every business day by reference to the CF Dogecoin-Dollar
Settlement Price (the ``Pricing Benchmark'').\9\
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\9\ The Pricing Benchmark is a standardized reference rate
published by CF Benchmarks Ltd. that is designed to reflect the
performance of Dogecoin in U.S. dollars.
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The Trust's only asset will be Dogecoin and, under limited
circumstances, cash.\10\ The Trust does not seek to hold any non-
Dogecoin crypto assets and has expressly disclaimed ownership of any
such assets in the event the Trust ever involuntarily comes into
possession of such assets.\11\ The Trust will not use derivatives that
may subject the Trust to counterparty and credit risks. The Trust will
process creations and redemptions in cash. The Trust's only recurring
ordinary expense is expected to be the Sponsor's unitary management fee
(the ``Sponsor Fee''), which will accrue daily and will be payable in
Dogecoin monthly in arrears. The Administrator will calculate the
Sponsor Fee on a daily basis by applying an annualized rate to the
Trust's total Dogecoin holdings, and the amount of Dogecoin payable in
respect of each daily accrual shall be determined by reference to the
Pricing Benchmark. Financial institutions authorized to create and
redeem Shares (each, an ``Authorized Participant'') will deliver, or
cause to be delivered, cash in exchange for Shares of the Trust, and
the Trust will deliver cash to Authorized Participants when those
Authorized Participants redeem Shares of the Trust.
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\10\ The Trust conducts creations and redemptions of its Shares
for cash. Authorized Participants will deliver cash to the Cash
Custodian pursuant to creation orders for Shares, and the Cash
Custodian will hold such cash until such time as it can be converted
to Dogecoin, which the Trust intends to do on the same business day
in which such cash is received by the Cash Custodian. Additionally,
the Trust will sell Dogecoin in exchange for cash pursuant to
redemption orders of its Shares. In connection with such sales, an
approved Dogecoin Trading Counterparty (defined below) will send
cash to the Cash Custodian. The Cash Custodian will hold such cash
until it can be distributed to the redeeming Authorized Participant,
which it intends to do on the same business day in which it is
received. In connection with the purchases and sales of Dogecoin
pursuant to its creation and redemption activity, it is possible
that the Trust may retain de minimis amounts of cash as a result of
rounding differences. The Trust may also initially hold small
amounts of cash to initiate Trust operations in the immediate
aftermath of its Registration Statement being declared effective.
Lastly, the Trust may also sell Dogecoin and temporarily hold cash
as part of a liquidation of the Trust or to pay certain
extraordinary expenses not assumed by the Sponsor. Under the Trust
Agreement, the Sponsor has agreed to assume the normal operating
expenses of the Trust, subject to certain limitations. For example,
the Trust will bear any indemnification or litigation liabilities as
extraordinary expenses. In any event, in the ongoing course of
business, the amounts of cash retained by the Trust are not expected
to constitute a material portion of the Trust's holdings.
\11\ The Trust may, from time to time, passively receive, by
virtue of holding Dogecoin, certain additional digital assets (``IR
Assets'') or rights to receive IR Assets (``Incidental Rights'')
through a fork of the Dogecoin Network or an airdrop of assets. The
Trust will not seek to acquire such IR Assets or Incidental Rights.
Pursuant to the terms of the Trust Agreement, the Trust has
disclaimed ownership in any such IR Assets and/or Incidental Rights
to make clear that such assets are not and shall never be considered
assets of the Trust and will not be taken into account for purposes
of determining the Trust's NAV or NAV per Share.
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Custody of the Trust's Custodian
The Trust's Dogecoin Custodian will maintain custody of all of the
Trust's Dogecoin, other than that which is maintained in a trading
account (the ``Trading Balance'') with Coinbase, Inc. (the ``Prime
Execution Agent,'' which is an affiliate of the Dogecoin Custodian), in
the ``Trust Dogecoin Account.'' The Trading Balance will only be used
in the limited circumstances in which the Trust is using the Agent
Execution Model (as defined below) to effectuate the purchases and
sales of Dogecoin. The Dogecoin Custodian provides safekeeping of
Dogecoin using a multi-layer cold storage security platform designed to
provide offline security of the Dogecoin held by the Dogecoin
Custodian.
Valuation of the Trust's Dogecoin
The net assets of the Trust and its Shares are valued on a daily
basis with reference to the Pricing Benchmark, a standardized reference
rate that is designed to reflect the performance of Dogecoin in U.S.
dollars. The Trust uses the Pricing Benchmark to calculate its NAV, as
described below in ``Net Asset Value.''
The Sponsor, in its sole discretion, may cause the Trust to price
its portfolio based upon an index, benchmark, or standard other than
the Pricing Benchmark at any time, with prior notice to the
shareholders and the Exchange, if investment conditions change or the
Sponsor believes that another index, benchmark, or standard better
aligns with the Trust's investment objective and strategy. The Sponsor
may make this decision for a number of reasons, including, but not
limited to, a determination that the Pricing Benchmark price of
Dogecoin differs materially from the global market price of Dogecoin
and/or that third parties are able to purchase and sell Dogecoin on
public or private markets not included among the Constituent Platforms,
and such transactions may take place at prices materially higher or
lower than the Pricing Benchmark price. The Sponsor, however, is under
no obligation whatsoever to make such changes in any circumstance. In
the event that the Sponsor intends to establish the Trust's NAV by
reference to an index, benchmark, or standard other than the Pricing
Benchmark, it will provide shareholders with notice in a prospectus
supplement and/or through a current report on Form 8-K or in the
Trust's annual or quarterly reports.\12\
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\12\ The Sponsor will provide notice of any such changes in the
Trust's periodic or current reports and, if the Sponsor makes such a
change other than on an ad hoc or temporary basis, will file a
proposed rule change with the Commission.
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The Pricing Benchmark
The Pricing Benchmark is published by CF Benchmarks Ltd. (the
``Benchmark Provider'') \13\ and was created to facilitate financial
products based on Dogecoin. It serves as a once-a-day benchmark rate of
the U.S. dollar price of Dogecoin (USD/DOGE), calculated as of 4:00
p.m. Eastern Time (``E.T.''). The Pricing Benchmark aggregates the
trade flow of several major Dogecoin trading venues (the ``Constituent
Platforms''), during an observation window between 3:00 p.m. and 4:00
p.m. E.T. into the U.S. dollar price of one Dogecoin at 4:00 p.m. E.T.
The Pricing Benchmark is representative of the Dogecoin trading
activity on the Constituent Platforms.
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\13\ The Benchmark Provider also publishes the CF Dogecoin-
Dollar Spot Rate, which is a continuous measure of the U.S. dollar
price of one Dogecoin calculated once per second. The CF Dogecoin-
Dollar Spot Rate is also representative of the Dogecoin trading
activity on the Constituent Platforms.
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The Pricing Benchmark is designed based on the IOSCO Principals for
Financial Benchmarks and subject to the U.K. Benchmarks Regulation
(``BMR''). The Pricing Benchmark is administered through the Benchmark
Provider's codified policies for index integrity, including a
conflicts-of-interest policy, a control framework, an accountability
framework, and an input data policy. The Pricing Benchmark is subject
to oversight by the Benchmark Provider's CF Cryptocurrency Index Family
Oversight Function (``Benchmark Provider Oversight Function'').
Methodology
The Benchmark Provider calculates the Pricing Benchmark based on
the ``Relevant Transactions'' \14\ of the Constituent Platforms as
follows:
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\14\ ``Relevant Transactions'' are any Dogecoin spot trades that
occur during the twelve equally sized time intervals of five minutes
in length that occur on a Constituent Platform and ares reported
through an API.
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[[Page 12431]]
<bullet> All Relevant Transactions are added to a joint list,
recording the time of execution, trade price and size for each
transaction.
<bullet> The list is partitioned by timestamp into twelve equally
sized time intervals of five minutes in length.
<bullet> For each partition separately, the volume-weighted median
\15\ trade price is calculated from the trade prices and sizes of all
Relevant Transactions (i.e., across all Constituent Platforms).
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\15\ A volume-weighted median differs from a standard median in
that a weighting factor, in this case trade size, is factored into
the calculation.
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<bullet> The Pricing Benchmark is then determined by the equally
weighted average of the volume medians of all partitions.
A trading venue is eligible as a Constituent Platform if, in the
opinion of the Benchmark Provider Oversight Function, it fulfills the
following criteria:
<bullet> The venue facilitates spot trading of the relevant base
asset against the corresponding quote asset (the ``Relevant Pair'') and
makes trade data and order data available through an Automatic
Programming Interface (``API'') with sufficient reliability, detail,
and timeliness.
<bullet> The average daily volume contribution of the Relevant Pair
spot trading volume during the observation window for the Relevant Pair
is greater than 3% of the other Constituent Platforms in combination
for 45 consecutive days.
<bullet> The venue has published policies designed to ensure fair
and transparent market conditions at all times and has processes in
place intended to identify and impede illegal, unfair or manipulative
trading practices.
<bullet> The venue does not impose undue barriers to entry or
restrictions on market participants, and utilizing the venue does not
expose market participants to undue credit risk, operational risk,
legal risk or other risks.
<bullet> The venue complies with applicable law and regulation,
including, but not limited to capital markets regulations, money
transmission regulations, client money custody regulations, know-your-
client regulations, and anti-money laundering regulations.
<bullet> The venue cooperates with inquiries and investigations of
regulators and the Administrator upon request.
As of the date of this filing, the Constituent Platforms included
in the Pricing Benchmark are Coinbase, Gemini, and Kraken.
<bullet> Coinbase: A U.S.-based digital asset trading platform
registered as a Money Services Business (``MSB'') with the U.S.
Department of the Treasury Financial Crimes Enforcement Network
(``FinCEN'') and licensed as a virtual currency business under the New
York Department of Financial Services (``NYDFS'') BitLicense, as well
as a money transmitter in various U.S. states. Subsidiaries operating
internationally are further regulated as e-money providers (Republic of
Ireland, Central Bank of Ireland) and Major Payment Institutions
(Singapore, Monetary Authority of Singapore).
<bullet> Gemini: A U.S.-based digital asset trading platform that
is licensed as a virtual currency business under the NYDFS BitLicense.
It is also registered with FinCEN as an MSB and is licensed as a money
transmitter in various U.S. states. It is also registered with the UK
Financial Conduct Authority (``FCA'') as a Crypto Asset Business.
<bullet> Kraken: A U.S.-based digital asset trading platform that
is registered as an MSB with FinCEN in various U.S. states, Kraken is
registered with the FCA as a Crypto Asset Business and is authorized by
the Central Bank of Ireland as a Virtual Asset Service Provider. Kraken
also holds a variety of other licenses and regulatory approvals,
including from the Canadian Securities Administrators.
Net Asset Value
The Trust's only asset will be Dogecoin and, under limited
circumstances, cash. The Trust's NAV and NAV per Share will be
determined by the Administrator once each Exchange trading day as of
4:00 p.m. E.T., or as soon thereafter as practicable. The Administrator
will calculate the NAV by multiplying the number of Dogecoin held by
the Trust by the Pricing Benchmark for such day, adding any additional
receivables and subtracting the accrued but unpaid liabilities of the
Trust. The NAV per Share is calculated by dividing the NAV by the
number of Shares then outstanding. The Administrator will determine the
price of the Trust's Dogecoin by reference to the Pricing Benchmark,
which is published and calculated as set forth above.
Intraday Trust Value
The Trust uses the CF Dogecoin-Dollar Spot Price to calculate an
Indicative Trust Value (``ITV''). One or more major market data vendors
will disseminate the ITV, updated every 15 seconds each trading day as
calculated by the Exchange or a third-party financial data provider
during the Exchange's Core Trading Session (9:30 a.m. to 4:00 p.m.,
E.T.). The ITV will be calculated throughout the trading day by using
the prior day's holdings at the close of business and the most recently
reported price level of the CF Dogecoin-Dollar Spot Price. The ITV will
be widely disseminated by one or more major market data vendors during
the NYSE Arca Core Trading Session.
Creation and Redemption of Shares
The Trust creates and redeems Shares from time to time, but only in
one or more Creation Units, which will initially consist of at least
10,000 Shares, but may be subject to change (``Creation Unit''). A
Creation Unit is only made in exchange for delivery to the Trust or the
distribution by the Trust of an amount of cash, equivalent to the value
of Dogecoin represented by the Creation Unit being created or redeemed,
the amount of which is representative of the combined NAV of the number
of Shares included in the Creation Units being created or redeemed
determined as of 4:00 p.m. E.T. on the day the order to create or
redeem Creation Units is properly received. Except when aggregated in
Creation Units or under extraordinary circumstances permitted under the
Trust Agreement, the Shares are not redeemable securities.
Authorized Participants are the only persons that may place orders
to create and redeem Creation Units. Authorized Participants must be
(1) registered broker-dealers or other securities market participants,
such as banks and other financial institutions, that are not required
to register as broker-dealers to engage in securities transactions
described below, and (2) Depository Trust Company (``DTC'')
participants. To become an Authorized Participant, a person must enter
into an Authorized Participant Agreement with the Trust and/or the
Trust's marketing agent (the ``Marketing Agent'').
According to the Registration Statement, when purchasing or selling
Dogecoin in response to the purchase of Creation Units or the
redemption of Creation Units, which will be processed in cash, the
Trust would do so pursuant to either (1) a ``Trust-Directed Trade
Model,'' or (2) an ``Agent Execution Model,'' which are each described
in more detail below.
The Trust intends to utilize the Trust-Directed Trade Model for all
purchases and sales of Dogecoin and would only utilize the Agent
Execution Model in the event that no Dogecoin trading counterparty
approved by the Sponsor (an ``Dogecoin Trading
[[Page 12432]]
Counterparty'') \16\ is able to effectuate the Trust's purchase or sale
of Dogecoin. Under the Trust-Directed Trade Model, in connection with
receipt of a purchase order or redemption order, the Sponsor, on behalf
of the Trust, would be responsible for acquiring Dogecoin from an
approved Dogecoin Trading Counterparty in an amount equal to the Basket
Amount (as defined below). When seeking to purchase Dogecoin on behalf
of the Trust, the Sponsor will seek to purchase Dogecoin at
commercially reasonable price and terms from any of the approved
Dogecoin Trading Counterparties.\17\ Once agreed upon, the transaction
will generally occur on an ``over-the-counter'' basis.
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\16\ The Dogecoin Trading Counterparties with which the Sponsor
will engage in Dogecoin transactions are unaffiliated third-parties
that are not acting as agents of the Trust, the Sponsor or the
Authorized Participant, and all transactions will be done on an
arms-length basis. There is no contractual relationship between the
Trust, the Sponsor or the Dogecoin Trading Counterparty.
\17\ The Sponsor will maintain ownership and control of Dogecoin
in a manner consistent with good delivery requirements for spot
commodity transactions.
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Whether utilizing the Trust-Directed Trade Model or the Agent
Execution Model, the Authorized Participants will deliver only cash to
create shares and will receive only cash when redeeming Shares.
Further, Authorized Participants will not directly or indirectly
purchase, hold, deliver, or receive Dogecoin as part of the creation or
redemption process or otherwise direct the Trust or a third party with
respect to purchasing, holding, delivering, or receiving Dogecoin as
part of the creation or redemption process. Additionally, under either
the Trust-Directed Trade Model or the Agent Execution Model, the Trust
will create Shares by receiving Dogecoin from a third party that is not
the Authorized Participant and is not affiliated with the Sponsor or
the Trust, and the Trust--not the Authorized Participant--is
responsible for selecting the third party to deliver the Dogecoin. The
third party will not be acting as an agent of the Authorized
Participant with respect to the delivery of the Dogecoin to the Trust
or acting at the direction of the Authorized Participant with respect
to the delivery of the Dogecoin to the Trust. Additionally, the Trust
will redeem Shares by delivering Dogecoin to a third party that is not
the Authorized Participant and is not affiliated with the Sponsor or
the Trust, and the Trust--not the Authorized Participant--is
responsible for selecting the third party to receive the Dogecoin.
Finally, the third party will not be acting as an agent of the
Authorized Participant with respect to the receipt of the Dogecoin from
the Trust or acting at the direction of the Authorized Participant with
respect to the receipt of the Dogecoin from the Trust.
Acquiring and Selling Dogecoin Pursuant to Creation and Redemption of
Shares Under the Trust-Directed Trade Model
Under the Trust-Directed Trade Model and as set forth in the
Registration Statement, on any business day, an Authorized Participant
may create Shares by placing an order to purchase one or more Creation
Units with the Transfer Agent through the Marketing Agent. Such orders
are subject to approval by the Marketing Agent and the Transfer Agent.
For purposes of processing creation and redemption orders, a ``business
day'' means any day other than a day when the Exchange is closed for
regular trading (``Business Day''). To be processed on the date
submitted, creation orders must be placed before 4:00 p.m. E.T. or the
close of regular trading on the Exchange, whichever is earlier, but may
be required to be placed earlier at the discretion of the Sponsor. A
purchase order will be effective on the date it is received by the
Transfer Agent and approved by the Marketing Agent (``Purchase Order
Date'').
Creation Units are processed in cash. By placing a purchase order,
an Authorized Participant agrees to deposit, or cause to be deposited,
an amount of cash equal to the quantity of Dogecoin attributable to
each Share of the Trust (net of accrued but unpaid expenses and
liabilities) multiplied by the number of Shares (10,000) comprising a
Creation Unit (such quantity, the ``Basket Amount''). That cash amount
is derived by multiplying the Basket Amount by the value of Dogecoin
ascribed by the Pricing Benchmark. The Sponsor will cause to be
published each Business Day, prior to the commencement of trading on
the Exchange, the Basket Amount relating to a Creation Unit applicable
for such Business Day. However, the Authorized Participant is also
responsible for any additional cash required to account for the price
at which the Trust agrees to purchase the requisite amount of Dogecoin
from an Dogecoin Trading Counterparty to the extent it is greater than
the Pricing Benchmark price on each Purchase Order Date.
Prior to the delivery of Creation Units, the Authorized Participant
must also have wired to the Transfer Agent the nonrefundable
transaction fee due for the creation order. Authorized Participants may
not withdraw a creation request. If an Authorized Participant fails to
consummate the foregoing, the order may be cancelled.
Following the acceptance of a purchase order, the Authorized
Participant must wire the cash amount described above to the Cash
Custodian, and the Dogecoin Trading Counterparty must deposit the
required amount of Dogecoin with the Dogecoin Custodian by the end of
the day E.T. on the Business Day following the Purchase Order Date. The
Dogecoin will be purchased from Dogecoin Trading Counterparties that
are not acting as agents of the Trust or agents of the Authorized
Participant. These transactions will be done on an arms-length basis,
and there is no contractual relationship between the Trust, the
Sponsor, or the Dogecoin Trading Counterparty to acquire such Dogecoin.
Prior to any movement of cash from the Cash Custodian to the Dogecoin
Trading Counterparty or movement of Shares from the Transfer Agent to
the Authorized Participant's DTC account to settle the transaction, the
Dogecoin must be deposited at the Dogecoin Custodian.
The Dogecoin Trading Counterparty must deposit the required amount
of Dogecoin by end of day E.T. on the Business Day following the
Purchase Order Date prior to any movement of cash from the Cash
Custodian or Shares from the Transfer Agent. Upon receipt of the
deposit amount of Dogecoin at the Dogecoin Custodian from the Dogecoin
Trading Counterparty, the Dogecoin Custodian will notify the Sponsor
that the Dogecoin has been received. The Sponsor will then notify the
Transfer Agent that the Dogecoin has been received, and the Transfer
Agent will direct DTC to credit the number of Shares ordered to the
Authorized Participant's DTC account and will wire the cash previously
sent by the Authorized Participant to the Dogecoin Trading Counterparty
to complete settlement of the Purchase Order and the acquisition of the
Dogecoin by the Trust, as described above.
As between the Trust and the Authorized Participant, the expense
and risk of the difference between the value of Dogecoin calculated by
the Administrator for daily valuation using the Pricing Benchmark and
the price at which the Trust acquires the Dogecoin will be borne solely
by the Authorized Participant to the extent that the Trust pays more
for Dogecoin than the price used by the Trust for daily valuation. Any
such additional cash amount will be included in the amount of cash
calculated by the Administrator on the Purchase Order Date,
communicated to the Authorized Participant on the
[[Page 12433]]
Purchase Order Date, and wired by the Authorized Participant to the
Cash Custodian on the day following the Purchase Order Date. If the
Dogecoin Trading Counterparty fails to deliver the Dogecoin to the
Dogecoin Custodian, no cash is sent from the Cash Custodian to the
Dogecoin Trading Counterparty, no Shares are transferred to the
Authorized Participant's DTC account, the cash is returned to the
Authorized Participant, and the Purchase Order is cancelled.
Under the Trust-Directed Trade Model and according to the
Registration Statement, the procedures by which an Authorized
Participant can redeem one or more Creation Units mirror the procedures
for the creation of Creation Units. On any Business Day, an Authorized
Participant may place an order with the Transfer Agent through the
Marketing Agent to redeem one or more Creation Units. To be processed
on the date submitted, redemption orders must be placed before 4:00
p.m. E.T. or the close of regular trading on the Exchange, whichever is
earlier, or earlier as determined by the Sponsor. A redemption order
will be effective on the date it is received by the Transfer Agent and
approved by the Marketing Agent (``Redemption Order Date''). The
redemption procedures allow Authorized Participants to redeem Creation
Units and do not entitle an individual shareholder to redeem any Shares
in an amount less than a Creation Unit, or to redeem Creation Units
other than through an Authorized Participant. In connection with
receipt of a redemption order accepted by the Marketing Agent and
Transfer Agent, the Sponsor, on behalf of the Trust, is responsible for
selling the Dogecoin to an approved Dogecoin Trading Counterparty in an
amount equal to the Basket Amount.
The redemption distribution from the Trust will consist of a
transfer to the redeeming Authorized Participant, or its agent, of the
amount of cash the Trust received in connection with a sale of the
Basket Amount of Dogecoin to an Dogecoin Trading Counterparty made
pursuant to the redemption order. The Sponsor will cause to be
published each Business Day, prior to the commencement of trading on
the Exchange, the redemption distribution amount relating to a Creation
Unit applicable for such Business Day. The redemption distribution
amount is derived by multiplying the Basket Amount by the value of
Dogecoin ascribed by the Pricing Benchmark. However, as between the
Trust and the Authorized Participant, the expense and risk of the
difference between the value of Dogecoin ascribed by the Pricing
Benchmark and the price at which the Trust sells the Dogecoin will be
borne solely by the Authorized Participant to the extent that the Trust
receives less for Dogecoin than the value ascribed by Pricing
Benchmark.
Prior to the delivery of Creation Units, the Authorized Participant
must also have wired to the Transfer Agent the nonrefundable
transaction fee due for the redemption order.
The redemption distribution due from the Trust will be delivered by
the Transfer Agent to the Authorized Participant once the Cash
Custodian has received the cash from the Dogecoin Trading Counterparty.
The Dogecoin Custodian will not send the Basket Amount of Dogecoin to
the Dogecoin Trading Counterparty until the Cash Custodian has received
the cash from the Dogecoin Trading Counterparty and is instructed by
the Sponsor to make such transfer. Once the Dogecoin Trading
Counterparty has sent the cash to the Cash Custodian in an agreed upon
amount to settle the agreed upon sale of the Basket Amount of Dogecoin,
the Transfer Agent will notify Sponsor. The Sponsor will then notify
the Dogecoin Custodian to transfer the Dogecoin to the Dogecoin Trading
Counterparty, and the Transfer Agent will wire the cash proceeds to the
Authorized Participant once the Trust's DTC account has been credited
with the Shares represented by the Creation Unit from the redeeming
Authorized Participant. Once the Authorized Participant has delivered
the Shares represented by the Creation Unit to be redeemed to the
Trust's DTC account, the Cash Custodian will wire the requisite amount
of cash to the Authorized Participant. If the Trust's DTC account has
not been credited with all of the Shares of the Creation Unit to be
redeemed, the redemption distribution will be delayed until such time
as the Transfer Agent confirms receipt of all such Shares. If the
Dogecoin Trading Counterparty fails to deliver the cash to the Cash
Custodian, the transaction will be cancelled, and no transfer of
Dogecoin or Shares will occur.
Acquiring and Selling Dogecoin Pursuant to Creation and Redemption of
Shares Under the Agent Execution Model
Under the Agent Execution Model, the Prime Execution Agent, acting
in an agency capacity, would conduct Dogecoin purchases and sales on
behalf of the Trust with third parties through its Coinbase Prime
service pursuant to the Prime Execution Agent Agreement. To utilize the
Agent Execution Model, the Trust may maintain some Dogecoin or cash in
the Trading Balance with the Prime Execution Agent. The Prime Execution
Agent Agreement provides that the Trust does not have an identifiable
claim to any particular Dogecoin (and cash); rather, the Trust's
Trading Balance represents an entitlement to a pro rata share of the
Dogecoin (and cash) the Prime Execution Agent holds on behalf of
customers who hold similar entitlements against the Prime Execution
Agent. In this way, the Trust's Trading Balance represents an omnibus
claim on the Prime Execution Agent's Dogecoin (and cash) held on behalf
of the Prime Execution Agent's customers.
To avoid having to pre-fund purchases or sales of Dogecoin in
connection with cash creations and redemptions and sales of Dogecoin to
pay Trust expenses not assumed by the Sponsor, to the extent
applicable, the Trust may borrow Dogecoin or cash as trade credit
(``Trade Credit'') from Coinbase Credit, Inc. (the ``Trade Credit
Lender'') on a short-term basis pursuant to the Coinbase Credit
Committed Trade Financing Agreement (the ``Trade Financing
Agreement'').
On the day of the Purchase Order Date, the Trust would enter into a
transaction to buy Dogecoin through the Prime Execution Agent for cash.
Because the Trust's Trading Balance may not be funded with cash on the
Purchase Order Date for the purchase of Dogecoin in connection with the
Purchase Order under the Agent Execution Model, the Trust may borrow
Trade Credits in the form of cash from the Trade Credit Lender pursuant
to the Trade Financing Agreement or may require the Authorized
Participant to deliver the required cash for the Purchase Order on the
Purchase Order Date. The extension of Trade Credits on the Purchase
Order Date allows the Trust to purchase Dogecoin through the Prime
Execution Agent on the Purchase Order Date, with such Dogecoin being
deposited in the Trust's Trading Balance.
On the day following the Purchase Order Date (the ``Purchase Order
Settlement Date''), the Trust would deliver Shares to the Authorized
Participant in exchange for cash received from the Authorized
Participant. Where applicable, the Trust would use the cash to repay
the Trade Credits borrowed from the Trade Credit Lender. On the
Purchase Order Settlement Date for a Purchase Order utilizing the Agent
Execution Model, the Dogecoin associated with the Purchase Order and
purchased on the Purchase Order Date is swept from the
[[Page 12434]]
Trust's Trading Balance with the Prime Execution Agent to the Trust
Dogecoin Account with the Dogecoin Custodian pursuant to a regular end-
of-day sweep process. Transfers of Dogecoin into the Trust's Trading
Balance are off-chain transactions and transfers from the Trust's
Trading Balance to the Trust Dogecoin Account are ``on-chain''
transactions represented on the Dogecoin blockchain. Any financing fee
owed to the Trade Credit Lender is deemed part of trade execution costs
and embedded in the trade price for each transaction.
For a Redemption Order utilizing the Agent Execution Model, on the
day of the Redemption Order Date the Trust would enter into a
transaction to sell Dogecoin through the Prime Execution Agent for
cash. The Trust's Trading Balance with the Prime Execution Agent may
not be funded with Dogecoin on trade date for the sale of Dogecoin in
connection with the redemption order under the Agent Execution Model,
when Dogecoin remains in the Trust Dogecoin Account with the Dogecoin
Custodian at the point of intended execution of a sale of Dogecoin. In
those circumstances the Trust may borrow Trade Credits in the form of
Dogecoin from the Trade Credit Lender, which allows the Trust to sell
Dogecoin through the Prime Execution Agent on the Redemption Order
Date, and the cash proceeds are deposited in the Trust's Trading
Balance with the Prime Execution Agent. On the business day following
the Redemption Order Date (the ``Redemption Order Settlement Date'')
for a redemption order utilizing the Agent Execution Model where Trade
Credits were utilized, the Trust delivers cash to the Authorized
Participant in exchange for Shares received from the Authorized
Participant. In the event Trade Credits were used, the Trust will use
the Dogecoin that is moved from the Trust Dogecoin Account with the
Dogecoin Custodian to the Trading Balance with the Prime Execution
Agent to repay the Trade Credits borrowed from the Trade Credit Lender.
For a redemption of Creation Units utilizing the Agent Execution
Model, the Sponsor would instruct the Dogecoin Custodian to prepare to
transfer the Dogecoin associated with the redemption order from the
Trust Dogecoin Account with the Dogecoin Custodian to the Trust's
Trading Balance with the Prime Execution Agent. On the Redemption Order
Settlement Date, the Trust would enter into a transaction to sell
Dogecoin through the Prime Execution Agent for cash, and the Prime
Execution Agent credits the Trust's Trading Balance with the cash. On
the same day, the Authorized Participant would deliver the necessary
Shares to the Trust and the Trust delivers cash to the Authorized
Participant.
Fee Accrual
According to the Registration Statement, the Trust's only recurring
ordinary expense is expected to be the Sponsor Fee, which will accrue
daily and will be payable in Dogecoin monthly in arrears. The
Administrator will calculate the Sponsor Fee on a daily basis by
applying an annualized rate to the Trust's total Dogecoin holdings, and
the amount of Dogecoin payable in respect of each daily accrual shall
be determined by reference to the Pricing Benchmark.
Background
Dogecoin is a digital asset that is created and transmitted through
the operations of the peer-to-peer ``Dogecoin Network,'' a
decentralized network of computers that operates on cryptographic
protocols. The Dogecoin Network allows people to exchange tokens of
value, called Dogecoin or ``DOGE.''
Transactions of Dogecoin are processed by a distributed network of
computers called ``miners.'' Miners are rewarded with Dogecoin for
their efforts. No single entity owns or operates the Dogecoin Network
or manages the ``Dogecoin Blockchain,'' a secure digital ledger where
all transactions of Dogecoin are recorded; instead, the infrastructure
is collectively maintained by a decentralized user base.
Dogecoin can be used to pay for goods and services, including to
send a transaction on the Dogecoin Network, or it can be converted to
fiat currencies, such as the U.S. dollar. The Dogecoin Network is based
on a shared public ledger, the Dogecoin Blockchain, similar to the
Bitcoin network. However, the Dogecoin Network differentiates itself
from many other digital asset networks in that its stated primary
function is as an open-source peer-to-peer digital currency, not a
store of value. Dogecoin may be used, among other purposes, for
tipping, donations, and online purchases.
Unlike a centralized system, no single entity controls the Dogecoin
Network. Instead, a network of independent nodes validates transactions
and reaches consensus using the proof-of-work mechanism employed by the
Dogecoin Blockchain. This system ensures network security by requiring
computational power from miners. The Dogecoin Blockchain was originally
created as a fork of the Litecoin Blockchain, but was subsequently
refactored to operate from a technical perspective in a manner similar
to the Bitcoin Blockchain. Unlike the Bitcoin Blockchain, however,
which settles a block of transactions roughly every 10 minutes, the
Dogecoin Blockchain settles a block of transactions roughly every 1
minute. This makes the Dogecoin Blockchain suitable for transactions
that need faster confirmation times. The Dogecoin Blockchain can also
settle more transactions per second than the Bitcoin Blockchain.
Notably, however, significantly less computing power is directed to
maintaining the Dogecoin Blockchain as compared to the Bitcoin
Blockchain, which may make the Dogecoin Blockchain less secure than the
Bitcoin Blockchain.
Transactions on the Dogecoin blockchain are validated by a
decentralized network of miners using a proof-of-work consensus
mechanism. These miners compete to solve complex cryptographic puzzles,
and the first to solve a puzzle adds a new block to the blockchain.
Unlike systems that rely on trusted validators, Dogecoin's network
relies on computational power to ensure that transactions are valid and
correctly ordered on the ledger. Miners are entities (which can be
individuals, mining pools, or organizations) that dedicate computing
resources to secure the network and validate transactions. This
decentralized process is designed to maintain the integrity and
accuracy of the Dogecoin Blockchain. Each node in the network
independently verifies transactions and blocks to ensure they follow
the protocol's rules. The decentralized architecture of Dogecoin
eliminates the need for trusted lists, as consensus is achieved through
the proof-of-work system, ensuring a trustless and secure network.
Dogecoin was initially developed in 2013 by the software developers
Billy Markus and Jackson Palmer, who created the Dogecoin Blockchain
and launched the Dogecoin Network as a way of making fun of Bitcoin and
other digital assets, which they believed were being taken too
seriously. Dogecoin was designed as a ``fun and friendly internet
currency,'' and adopted the image of a Shibu Inu dog as its logo.
Despite, or perhaps because of, its satirical origins, Dogecoin gained
rapid interest and adoption in online communities, and rapidly became
one of the larger digital assets when measured by market
capitalization. Users soon began using Dogecoin for certain financial
transactions, including tipping, trading, and donations. Dogecoin is
often referred to as the first ``meme coin,''
[[Page 12435]]
which refers to digital assts that are inspired by internet memes or
trends.
At the time of its launch in 2013, Dogecoin's Blockchain had no
pre-mined supply. Instead, new Dogecoins are continuously created as
miners validate transactions and secure the network. Dogecoin's
issuance follows an inflationary model, with no fixed supply cap.
Initially, the reward for mining a block was randomized, but in 2014,
it was fixed at 10,000 Dogecoins per block. This ongoing issuance
ensures a consistent supply of Dogecoins to reward miners and maintain
network security. Dogecoin's supply is entirely determined by its
blockchain protocol and mining process, without any controlling
organization managing reserves or distributing coins.
Applicable Standard
As described below, the Sponsor believes the structure and
operation of the Trust are designed to mitigate fraudulent and
manipulative acts and practices, to protect investors and the public
interest. The Sponsor accordingly believe the Commission should approve
the listing and trading of Shares of the Trust.
Use of Pricing Benchmark
The Sponsor believes that the Pricing Benchmark represents an
effective means to mitigate the impact of potential fraud and
manipulation on the reference price for Dogecoin.
Specifically, the Sponsor believes that the use of the Pricing
Benchmark can (i) mitigate the effects of fraud, manipulation, and
other anomalous trading activity on the Dogecoin reference rate, (ii)
provide a real-time, volume-weighted fair value of Dogecoin, and (iii)
appropriately handle and adjust for non-market related events.
The Sponsor believes that the Pricing Benchmark accomplishes those
objectives in the following ways:
1. The Pricing Benchmark selects as Constituent Platforms trading
venues that contribute to pricing in a manner that is consistent with
increasing manipulation resistance and integrity. As noted above,
trading venues are only eligible for selection as Constituent Platforms
if the Benchmark Provider Oversight Function concludes that they meet
the following criteria:
a. The venue facilitates spot trading of the Relevant Pair and
makes trade data and order data available through an API with
sufficient reliability, detail, and timeliness.
b. The average daily volume contribution of the Relevant Pair spot
trading volume during the observation window for the Relevant Pair is
greater than 3% of the other Constituent Platforms in combination for
45 consecutive days.
c. The venue has published policies designed to ensure fair and
transparent market conditions at all times and has processes in place
intended to identify and impede illegal, unfair or manipulative trading
practices.
d. The venue does not impose undue barriers to entry or
restrictions on market participants, and utilizing the venue does not
expose market participants to undue credit risk, operational risk,
legal risk or other risks.
e. The venue complies with applicable law and regulation,
including, but not limited to, capital markets regulations, money
transmission regulations, client money custody regulations, know-your-
client regulations, and anti-money laundering regulations.
2. The Pricing Benchmark is administered and provided by the
Benchmark Provider, which is an Administrator of Benchmarks under the
BMR, received its regulatory authorization in 2019, and has held this
regulatory authorization continuously since then. The Benchmark
Provider's compliance with the BMR's comprehensive regulation of
financial benchmarks has been audited since 2020.\18\
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\18\ The latest IASE 300 Reasonable Assurance Auditors Report by
KPMG as of the date of this filing is publicly available at: <a href="https://www.cfbenchmarks.com/legal/audit">https://www.cfbenchmarks.com/legal/audit</a>.
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3. The Pricing Benchmark's continued compliance with venue
eligibility and other criteria is reviewed on an annual basis by the
Benchmark Provider Oversight Function, an independent committee as
defined in Article 5 of the EU Benchmark Regulation 2016/1011 (EU BMR)
and the retained EU law in the UK (The Benchmarks (Amendment and
Transitional Provision) (EU Exit) Regulations 2019) and Article 3 of
the Level 2 Delegated Act 2018/1637 (Commission Delegated Regulation
(EU) 2018/1637).
Availability of Information
The NAV per Share will be calculated and disseminated daily to all
market participants at the same time. Quotation and last-sale
information regarding the Shares will be disseminated through the
facilities of the CTA. The ITV will be calculated every 15 seconds
throughout the core trading session each trading day.
The Sponsor will cause information about the Shares to be posted to
the Trust's website (<a href="https://www.bitwiseinvestments.com/">https://www.bitwiseinvestments.com/</a>): (1) the NAV
and NAV per Share for each Exchange trading day, posted at end of day;
(2) the daily holdings of the Trust, before 9:30 a.m. E.T. on each
Exchange trading day; (3) the Trust's effective prospectus, in a form
available for download; and (4) the Shares' ticker and CUSIP
information, along with additional quantitative information updated on
a daily basis for the Trust. For example, the Trust's website will
include (1) the prior Business Day's trading volume, the prior Business
Day's reported NAV and closing price, and a calculation of the premium
and discount of the closing price or mid-point of the bid/ask spread at
the time of NAV calculation (``Bid/Ask Price'') against the NAV; and
(2) data in chart format displaying the frequency distribution of
discounts and premiums of the daily closing price or Bid/Ask Price
against the NAV, within appropriate ranges, for at least each of the
four previous calendar quarters. The Trust's website will be publicly
available prior to the public offering of Shares and accessible at no
charge.
Investors may obtain on a 24-hour basis Dogecoin pricing
information based on the Pricing Benchmark, CF Dogecoin-Dollar Spot
Rate, and spot Dogecoin market prices from various financial
information service providers. Current Dogecoin spot market prices are
also available with bid/ask spreads from Dogecoin trading platforms,
including the Constituent Platforms of the Pricing Benchmark.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services.
Information regarding the previous day's closing price and trading
volume information for the Shares will be published daily in the
financial section of newspapers.
Trading Halts
With respect to trading halts, the Exchange may halt or suspend
trading in the Shares of the Trust in accordance with its rules.
Additionally, trading in Shares of the Trust will be halted if the
circuit breaker parameters in NYSE Arca Rule 7.12-E have been reached.
Trading also may be halted because of market conditions or for reasons
that, in the view of the Exchange, make trading in the Shares
inadvisable.
The Exchange may halt trading during the day in which an
interruption to the dissemination of the ITV or Pricing Benchmark (if
the Exchange becomes aware that the Pricing Benchmark is not
[[Page 12436]]
being published) occurs. If the interruption to the dissemination of
the ITV or Pricing Benchmark persists past the trading day in which it
occurred, the Exchange will halt trading no later than the beginning of
the trading day following the interruption. In addition, if the
Exchange becomes aware that the NAV with respect to the Shares is not
disseminated to all market participants at the same time, it will halt
trading in the Shares until such time as the NAV is available to all
market participants.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m. E.T. in
accordance with NYSE Arca Rule 7.34-E (Early, Core, and Late Trading
Sessions). The Exchange has appropriate rules to facilitate
transactions in the Shares during all trading sessions. As provided in
NYSE Arca Rule 7.6-E, the minimum price variation (``MPV'') for quoting
and entry of orders in equity securities traded on the NYSE Arca
Marketplace is $0.01, with the exception of securities that are priced
less than $1.00 for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing
criteria under NYSE Arca Rule 8.201-E. The trading of the Shares will
be subject to NYSE Arca Rule 8.201-E(g), which sets forth certain
restrictions on Equity Trading Permit (``ETP'') Holders acting as
registered Market Makers in Commodity-Based Trust Shares to facilitate
surveillance. The Exchange represents that, for initial and continued
listing, the Trust will be in compliance with Rule 10A-3 under the
Act,\19\ as provided by NYSE Arca Rule 5.3-E. A minimum of 100,000
Shares of the Trust will be outstanding at the commencement of trading
on the Exchange.
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\19\ With respect to the application of Rule 10A-3 (17 CFR
240.10A-3) under the Act, the Trust relies on the exemption
contained in Rule 10A-3(c)(7).
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Surveillance
The Exchange represents that trading in the Shares of the Trust on
the Exchange will be subject to the existing trading surveillances
administered by the Exchange, as well as cross-market surveillances
administered by the Financial Industry Regulatory Authority (``FINRA'')
on behalf of the Exchange, which are designed to detect potential
violations of Exchange rules and applicable federal securities laws
with respect to the Shares of the Trust trading on the Exchange.\20\
The Exchange represents that these procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules and federal securities
laws with respect to the Shares of the Trust trading on the Exchange.
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\20\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
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The existing surveillances referred to above generally focus on
detecting securities trading outside their normal trading patterns,
which could be indicative of manipulative or other violative activity
with respect to the Shares of the Trust. When such situations are
detected, surveillance analysis follows and investigations are opened,
where appropriate, to review the behavior of all relevant parties for
all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, may
communicate regarding trading in the Shares with other markets and
other entities that are members of the Intermarket Surveillance Group
(``ISG''). The Exchange or FINRA, on behalf of the Exchange, or both,
may obtain trading information regarding trading in the Shares and
Dogecoin derivatives from such markets and other entities. In addition,
the Exchange may obtain information regarding trading in the Shares and
Dogecoin derivatives from markets and other entities with which the
Exchange has in place a comprehensive surveillance sharing agreement
(``CSSA'').\21\ The Exchange is also able to obtain information from
ETP Holders regarding their trading (as principal or agent) in the
Shares and any underlying Dogecoin, options on Dogecoin futures, or any
other Dogecoin derivatives.\22\
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\21\ For a list of the current members of ISG, see
<a href="http://www.isgportal.org">www.isgportal.org</a>. The Exchange notes that not all components of the
Trust may trade on markets that are members of ISG or with which the
Exchange has in place a CSSA.
\22\ See NYSE Arca Rule 10.8210.
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In addition, under NYSE Arca Rule 8.201-E(g), an ETP Holder acting
as a registered Market Maker in the Shares is required to provide the
Exchange with information relating to its accounts for trading in any
underlying commodity, related futures or options on futures, or any
other related derivatives. Commentary .04 of NYSE Arca Rule 11.3-E
requires an ETP Holder acting as a registered Market Maker, and its
affiliates, in the Shares to establish, maintain and enforce written
policies and procedures reasonably designed to prevent the misuse of
any material nonpublic information with respect to such products, any
components of the related products, any physical asset or commodity
underlying the product, applicable currencies, underlying indexes,
related futures or options on futures, and any related derivative
instruments (including the Shares). As a general matter, the Exchange
has regulatory jurisdiction over its ETP Holders and their associated
persons, which include any person or entity controlling an ETP Holder.
To the extent the Exchange may be found to lack jurisdiction over a
subsidiary or affiliate of an ETP Holder that does business only in
commodities or futures contracts and that subsidiary or affiliate is a
member of another regulatory organization, the Exchange could obtain
information regarding the activities of such subsidiary or affiliate
through surveillance sharing agreements with regulatory organizations
to the extent the Exchange has such an agreement with that regulatory
organization.
In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding
(a) the description of the index, portfolio, or reference assets of the
Trust, (b) limitations on index or portfolio holdings or reference
assets, or (c) the applicability of Exchange listing rules specified in
this rule filing shall constitute continued listing requirements for
listing the Shares on the Exchange.
The Sponsor has represented to the Exchange that it will advise the
Exchange of any failure by the Trust to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will monitor for compliance with the
continued listing requirements. If the Trust is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under NYSE Arca Rule 5.5-E(m).
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an ``Information Bulletin'' of the special
characteristics and risks associated with trading the Shares.
Specifically, the Information Bulletin will discuss the following: (1)
the procedures for creations of Shares in Creation Units; (2) NYSE Arca
Rule 9.2-E(a), which imposes a duty of due diligence on its ETP Holders
to learn the essential facts relating to every customer
[[Page 12437]]
prior to trading the Shares; (3) information regarding how the value of
the ITV and NAV is disseminated; (4) the possibility that trading
spreads and the resulting premium or discount on the Shares may widen
during the Opening and Late Trading Sessions, when an updated ITV will
not be calculated or publicly disseminated; (5) the requirement that
members deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction
and (6) trading information.
In addition, the Information Bulletin will reference that the Trust
is subject to various fees and expenses as described in the
Registration Statement. The Information Bulletin will disclose that
information about the Shares of the Trust is publicly available on the
Trust's website.
The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(5) \23\ that an exchange have rules that
are designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to, and perfect the mechanism of a free and open market
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in NYSE Arca Rule 8.201-E. The
Exchange has in place certain surveillance procedures that are adequate
to properly monitor trading in the Shares on the Exchange in all
trading sessions and to deter and detect violations of Exchange rules
and federal securities laws applicable to the Shares of the Trust
trading on the Exchange. The Exchange or FINRA, on behalf of the
Exchange, or both, will communicate as needed regarding trading in the
Shares with other markets that are members of the ISG, and the Exchange
or FINRA, on behalf of the Exchange, or both, may obtain trading
information regarding trading in the Shares from such markets. In
addition, the Exchange may obtain information regarding trading in the
Shares from markets with which the Exchange has in place a CSSA. Also,
pursuant to NYSE Arca rules, the Exchange is able to obtain information
from ETP Holders regarding their trading (as principal or agent) in the
Shares and any underlying Dogecoin, options on Dogecoin futures, or any
Dogecoin derivatives.
The proposed rule change is also designed to prevent fraudulent and
manipulative acts and practices in connection with trading in the
Shares on the Exchange because of the Pricing Benchmark's eligibility
criteria for Constituent Platforms, regulation under the BMR, and
monitoring for continued compliance by the Benchmark Provider Oversight
Function. Accordingly, the Pricing Benchmark is designed to (i)
mitigate the effects of fraud, manipulation, and other anomalous
trading activity on the Dogecoin reference rate, (ii) provide a real-
time, volume-weighted fair value of Dogecoin, and (iii) appropriately
handle and adjust for non-market related events.
The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that there is a considerable amount of Dogecoin price and market
information available on public websites and through professional and
subscription services. Investors may obtain, on a 24-hour basis,
Dogecoin pricing information based on the spot price for Dogecoin from
various financial information service providers. The closing price and
settlement prices of Dogecoin are readily available from the
Constituent Platforms and other publicly available websites. In
addition, such prices are published in public sources, or on-line
information services. The NAV per Share will be calculated daily and
made available to all market participants at the same time. The Trust
will provide website disclosure of its NAV daily. One or more major
market data vendors will disseminate for the Trust on a daily basis
information with respect to the most recent NAV per Share and Shares
outstanding. In addition, if the Exchange becomes aware that the NAV
per Share is not disseminated to all market participants at the same
time, it will halt trading in the Shares until such time as the NAV is
available to all market participants. Quotation and last-sale
information regarding the Shares will be disseminated through the
facilities of the CTA. The ITV will be widely disseminated on a per
Share basis every 15 seconds during the NYSE Arca Core Trading Session
(normally 9:30 a.m., E.T., to 4:00 p.m., E.T.) by one or more major
market data vendors. The Exchange represents that the Exchange may halt
trading during the day in which an interruption to the dissemination of
the ITV or the value of the Pricing Benchmark occurs. If the
interruption to the dissemination of the ITV or the value of the
Pricing Benchmark persists past the trading day in which it occurred,
the Exchange will halt trading no later than the beginning of the
trading day following the interruption.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
an additional type of exchange-traded product that will enhance
competition among market participants, to the benefit of investors and
the marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares on the Exchange and may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a CSSA. In addition, as
noted above, investors will have ready access to information regarding
the Trust's NAV, ITV, and quotation and last sale information for the
Shares.
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. The Exchange notes that the
proposed rule change will facilitate the listing and trading of a new
type of Commodity-Based Trust Share based on the price of Dogecoin that
would enhance competition among market participants, to the benefit of
investors and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
[[Page 12438]]
(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#f486819891d9979b9999919a8087b4879197da939b82"><span class="__cf_email__" data-cfemail="2e5c5b424b034d4143434b405a5d6e5d4b4d00494158">[email protected]</span></a>. Please include
file number SR-NYSEARCA-2025-19 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-NYSEARCA-2025-19. 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-NYSEARCA-2025-19 and should
be submitted on or before April 7, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-04152 Filed 3-14-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on March 17, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.