Notice2025-14036
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend NYSE Arca Rule 8.500-E (Trust Units) and To List and Trade Shares of the Bitwise 10 Crypto Index ETF Under Amended NYSE Arca Rule 8.500-E (Trust Units)
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
July 25, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 141 (Friday, July 25, 2025)</title>
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[Federal Register Volume 90, Number 141 (Friday, July 25, 2025)]
[Notices]
[Pages 35339-35343]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-14036]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103531; File No. SR-NYSEARCA-2024-98]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1 Thereto, To Amend NYSE Arca Rule 8.500-E (Trust Units)
and To List and Trade Shares of the Bitwise 10 Crypto Index ETF Under
Amended NYSE Arca Rule 8.500-E (Trust Units)
July 22, 2025.
I. Introduction
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ NYSE Arca, Inc.
(``NYSE Arca'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change, as modified by
Amendment No. 1 (``Proposal''), to amend NYSE Arca Rule 8.500-E (Trust
Units) and to list and trade shares (``Shares'') of the Bitwise 10
Crypto Index ETF (``Trust'') under amended NYSE Arca Rule 8.500-E
(Trust Units).\3\ The Proposal was subject to notice and comment.\4\
This order approves the Proposal on an accelerated basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ For the complete procedural history of the Proposal, see
Notice of Filing of Amendment No. 1 to a Proposed Rule Change to
Amend NYSE Arca Rule 8.500-E (Trust Units) and to List and Trade
Shares of the Bitwise 10 Crypto Index ETF under Amended NYSE Arca
Rule 8.500-E, Securities Exchange Act Release No. 103499 (July 18,
2025) (SR-NYSEARCA-2024-98) (``Amendment No. 1''), available at
<a href="https://www.sec.gov/files/rules/sro/nysearca/2025/34-103499.pdf">https://www.sec.gov/files/rules/sro/nysearca/2025/34-103499.pdf</a>.
Shares of the Trust currently trade over-the-counter. See Amendment
No. 1 at 6 n.11.
\4\ Comments received on the Proposal are available at: <a href="https://www.sec.gov/comments/sr-nysearca-2024-98/srnysearca202498.htm">https://www.sec.gov/comments/sr-nysearca-2024-98/srnysearca202498.htm</a>.
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II. Description of the Proposal
A. Amendments to NYSE Arca Rules 8.500-E and 5.3-E
As described in more detail in the Amendment No. 1,\5\ the Exchange
proposes to amend NYSE Arca Rule 8.500-E (Trust Units).\6\ First, the
[[Page 35340]]
Exchange proposes to revise the definition of ``Trust Units.''
Currently, the rule provides that Trust Units are securities ``issued
by a trust or similar entity that is constituted as a commodity pool
that holds investments comprising or otherwise based on any combination
of futures contracts, options on futures contracts, forward contracts,
swap contracts, commodities and/or securities.'' \7\ The Exchange
proposes to amend this definition to specify that (i) Trust Units may
also be issued by a limited liability company; and (ii) Trust Units may
be commodity pools, ``if applicable.'' \8\
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\5\ See supra note 3.
\6\ The Exchange proposed identical changes to NYSE Arca Rule
8.500-E in a prior filing. See Order Granting Accelerated Approval
of a Proposed Rule Change, as Modified by Amendment No. 1 Thereto,
to Amend NYSE Arca Rule 8.500-E (Trust Units) and to List and Trade
Shares of the Grayscale Digital Large Cap Fund LLC under Amended
NYSE Arca Rule 8.500-E (Trust Units), Securities Exchange Act
Release No. 103364 (July 1, 2025), 90 FR 29923 (July 7, 2025)
(``Grayscale Order''). The Grayscale Order, which was approved
pursuant to delegated authority, 17 CFR 200.30-3(a)(12), is
currently stayed while pending review by the Commission.
\7\ See NYSE Arca Rule 8.500-E(b)(2).
\8\ See Amendment No. 1 at 3-4.
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Second, the Exchange proposes to amend NYSE Arca Rule 8.500-E to
specify that the Exchange may list and trade Trust Units with
investments that are represented by an index or portfolio.\9\
Currently, the rule only provides that the Exchange may list and trade
Trust Units based on an underlying asset, commodity, security, or
portfolio.\10\ As revised, Trust Units may be based on an underlying
asset, commodity, security, and/or portfolio, ``which may be
represented by an index or portfolio of any of the foregoing.'' \11\
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\9\ See id. at 4.
\10\ See NYSE Arca Rule 8.500-E(c).
\11\ See Amendment No. 1 at 4.
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Third, the Exchange proposes certain conforming changes to the
rule, consistent with the proposed changes described above.\12\
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\12\ See id. at 4-6 for additional details. The Exchange also
proposes to amend NYSE Arca Rule 8.500-E(b)(1), which defines the
term ``commodity,'' to update the reference to Section 1(a)(4) of
the Commodity Exchange Act (``CEA'') with a reference to Section
1a(9) of the CEA. See id. at 3.
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Fourth, the Exchange proposes to amend NYSE Arca Rules 5.3-E
(Corporate Governance and Disclosure Policies) and 5.3-E(e)
(Shareholder Annual Meetings) to include Trust Units listed pursuant to
NYSE Arca Rule 8.500-E among the derivative and special purpose
securities to which a limited set of corporate governance and
disclosure policies would apply and to which the requirements
concerning shareholder/annual meetings would not be required.\13\
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\13\ See id. at 6.
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B. The Trust
The Exchange proposes to list and trade Shares of the Trust under
amended NYSE Arca Rule 8.500-E, as described above. The investment
objective of the Trust is to invest in a portfolio of digital assets
(each, a ``Portfolio Asset'' and, collectively, ``Portfolio Assets'')
that tracks the Bitwise 10 Large Cap Crypto Index (``Index'').\14\ The
Trust's only assets will be the Portfolio Assets and cash.\15\ The
Trust rebalances monthly alongside the rebalance of the Index to stay
current with any changes to the Index.\16\ The Portfolio Assets, as
well as their weightings, are generally expected to be the same as the
Index, except that the Sponsor may determine to exclude a particular
digital asset from the Portfolio Assets and/or rebalance the weighting
of the Portfolio Assets in certain rules-based circumstances.\17\ The
Sponsor will ensure that, on an initial and continuing basis, as of
4:00 p.m. E.T. on every trading day, at least 85% of the Portfolio
Assets will consist of commodities that are the primary investment
underlying exchange-traded products (``ETPs'') that have been approved
by the Commission to list and trade on a national securities exchange
(``Approved Components'') \18\ and that no more than 15% of the
Portfolio Assets will be non-Approved Components.\19\ As of June 30,
2025, the Trust's Portfolio Assets and their weightings were: 78.72%
bitcoin (BTC), 11.10% ether (ETH), 4.97% XRP (XRP), 3.03% Solana (SOL),
0.78% Cardano (ADA), 0.35% SUI (SUI), 0.32% Chainlink (LINK), 0.28%
Avalanche (AVAX), 0.24% Litecoin (LTC), and 0.19% Polkadot (DOT).\20\
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\14\ See id. at 7. The Trust is a Delaware statutory trust and
will operate pursuant to a trust agreement between Bitwise
Investment Advisers, LLC (``Sponsor'') and Delaware Trust Company,
as trustee. Coinbase Custody Trust Company, LLC will maintain
custody of the Trust's assets. The Bank of New York Mellon
(``Administrator'') will be the custodian for the Trust's cash
holdings, as well as the Trust's administrator and transfer agent.
See id.
\15\ See id. at 9.
\16\ See id. at 7-8. The Index is administered by Bitwise Index
Services, LLC, an affiliate of the Sponsor. The Index is comprised
of ten digital assets and is designed to track the performance of
the ten largest digital assets that currently trade publicly on
eligible digital asset trading platforms, as selected and weighted
by free-float market capitalization. See id. at 10. The Sponsor
represents that it will maintain a firewall between it and the
personnel responsible for the maintenance of the Index or who have
access to information concerning changes and adjustments to the
Index. See id. at 7 n.15.
\17\ See id. at 8. The weighting of the Portfolio Assets will
differ slightly from the weightings of the Index components due to
the need for the Trust to implement actual rebalance transactions,
unlike the Index. See id. at 13 n.29.
\18\ As of the filing of Amendment No. 1, more than 85% of the
Portfolio Assets were bitcoin (78.72%) and ether (11.10%). The
Commission approved both spot bitcoin and spot ether to underlie
ETPs as primary investments. See 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, Securities Exchange Act Release No. 99306 (Jan. 10, 2024), 89
FR 3008 (Jan. 17, 2024) (SR-NYSEARCA-2021-90; SR-NYSEARCA-2023-44;
SR-NYSEARCA-2023-58; SR-NASDAQ-2023-016; SR-NASDAQ-2023-019; SR-
CboeBZX-2023-028; SR-CboeBZX-2023-038; SR-CboeBZX-2023-040; SR-
CboeBZX-2023-042; SR-CboeBZX-2023-044; SR-CboeBZX-2023-072) (``Spot
Bitcoin ETP Approval Order''); Order Granting Accelerated Approval
of Proposed Rule Changes, as Modified by Amendments Thereto, To List
and Trade Shares of Ether-Based Exchange-Traded Products, Securities
Exchange Act Release No. 100224 (May 23, 2024), 89 FR 46937 (May 30,
2024) (SR-NYSEARCA-2023-70; SR-NYSEARCA-2024-31; SR-NASDAQ-2023-045;
SR-CboeBZX-2023-069; SR-CboeBZX-2023-070; SR-CboeBZX-2023-087; SR-
CboeBZX-2023-095; SR-CboeBZX-2024-018) (``Spot Ether ETP Approval
Order''); Order Granting Approval of a Proposed Rule Change, as
Modified by Amendment No. 1, to List and Trade Shares of the Hashdex
Nasdaq Crypto Index US ETF and Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, to List and
Trade Shares of the Franklin Crypto Index ETF, a Series of the
Franklin Crypto Trust, Securities Exchange Act Release No. 101998
(Dec. 19, 2024), 89 FR 106707 (Dec. 30, 2024) (SR-NASDAQ-2024-028;
SR-CBOEBZX-2024-091) (``Spot Bitcoin & Ether ETP Approval Order'').
The Spot Bitcoin ETP Approval Order, Spot Ether ETP Approval Order;
and Spot Bitcoin & Ether ETP Approval Order each approved the
listing and trading of Commodity-Based Trust Shares holding 100% of
their assets in spot bitcoin and/or spot ether.
\19\ See Amendment No. 1 at 15. The Exchange states that, to the
extent the Trust's composition is, or is anticipated to be, less
than 85% Approved Components as of 4:00 p.m. E.T. on a given trading
day, the Sponsor will promptly notify the Exchange. As soon as
practicable and in any event by no later than the beginning of the
NYSE Arca Core Trading Session on the following trading day, the
Sponsor will rebalance the Trust's portfolio according to the
methodology described in the Trust's prospectus such that at least
85% of the weightings of the Portfolio Assets will consist of
Approved Components. If it is anticipated that, as of 4:00 p.m. E.T.
on a given trading day, the Trust's portfolio will not consist of at
least 85% Approved Components by the start of the next NYSE Arca
Core Trading Session, the Sponsor will notify the Exchange as soon
as practicable (and, in any event, no later than 9:15 a.m. E.T.),
and the Exchange will halt trading in the Shares until at least 85%
of the weightings of the Portfolio Assets consist of Approved
Components. See id. at 16. The Exchange also states that the Index
will implement a rule that will limit the Index components and
weightings thereof such that at least 85% of the weight of the Index
components shall, on both an initial and a continuing basis, consist
of Approved Components. See id. at 14.
\20\ See id. at 8.
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To determine the Trust's net asset value (``NAV''), the Sponsor
will rely on CF Benchmarks Ltd. (the ``Valuation Vendor'') to calculate
and publish the U.S. dollar price for each Portfolio Asset (each, a
``Reference Price'' and, collectively, ``Reference Prices'') as of 4:00
p.m. E.T.,\21\ and the Trust will use
[[Page 35341]]
the Reference Prices to calculate its NAV.\22\ The Trust creates and
redeems Shares from time to time for cash in one or more ``Creation
Units,'' which will initially consist of at least 10,000 Shares, but
may be subject to change.\23\
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\21\ See id. at 8-9. Each Reference Price aggregates the trade
flow of several major digital asset trading 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 of each Portfolio Asset at 4:00 p.m. E.T.
Digital asset trading platforms considered by the Valuation Vendor
currently include Bitstamp, Coinbase, Gemini, itBit, LMAX, and
Kraken. See id. at 9.
\22\ See id. at 24. The Trust's NAV 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 Portfolio Assets held by the
Trust by their respective Reference Prices for such day, adding any
additional receivables and subtracting the accrued but unpaid
liabilities of the Trust. See id. at 25.
\23\ See id. at 26.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the Proposal is
consistent with the Exchange Act and rules and regulations thereunder
applicable to a national securities exchange.\24\ In particular, the
Commission finds that the Proposal is consistent with Section 6(b)(5)
of the Exchange Act,\25\ which requires, among other things, that the
Exchange's rules be designed to ``prevent fraudulent and manipulative
acts and practices'' and, ``in general, to protect investors and the
public interest;'' and with Section 11A(a)(1)(C)(iii) of the Exchange
Act,\26\ which sets forth Congress' finding that it is in the public
interest and appropriate for the protection of investors and the
maintenance of fair and orderly markets to assure the availability to
brokers, dealers, and investors of information with respect to
quotations for and transactions in securities.
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\24\ In approving the Proposal, the Commission has considered
the Proposal's impacts on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\25\ 15 U.S.C. 78f(b)(5).
\26\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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A. Amendments to NYSE Arca Rule 8.500-E and 5.3-E
The Commission finds that the proposed changes to NYSE Arca Rule
8.500-E are consistent with the Exchange Act. The proposed change to
the definition of Trust Units as described above simply specifies that
an entity structured as a limited liability company can issue Trust
Units. Moreover, by amending the rule so that Trust Units may be
commodity pools ``if applicable,'' the Proposal no longer requires
Trust Units to be commodity pools.\27\ Although the Proposal no longer
requires the entity issuing Trust Units to be a commodity pool, it does
not change Trust Units' permissible investments, which remain ``any
combination of futures contracts, options on futures contracts, forward
contracts, swap contracts, commodities and/or securities.'' \28\
Accordingly, the Proposal provides flexibility on Trust Units structure
without changes to permissible investments. Similarly, the Proposal's
provision that Trust Units' underlying investments may be represented
by an index or portfolio of permissible investments merely adds
specificity that is consistent with the current rule text. All Trust
Units listed and traded on the Exchange will continue to be subject to
the initial and continued listing standards set forth in NYSE Arca Rule
8.500-E and will continue to be subject to the full panoply of the
Exchange's rules and procedures that currently govern the trading of
equity securities on the Exchange including, among others, rules and
procedures governing trading halts, surveillance procedures,
disclosures to members, customer suitability requirements, and market
maker obligations.
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\27\ See Section 1a(10) of the CEA for the definition of
``commodity pool.''
\28\ NYSE Arca Rule 8.500-E(b)(2).
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The Commission finds that it is consistent with Section 6(b)(5) of
the Exchange Act \29\ for the Exchange to include Trust Units among the
types of securities to which a limited set of corporate governance and
disclosure policies would apply and to which the requirements
concerning shareholder/annual meetings would not be required. Like
other types of securities listed in NYSE Arca Rules 5.3-E and 5.3-E(e),
Trust Units are investment vehicles where unit holders, unlike other
equity holders, do not directly participate or vote in the annual
election of directors or generally on the operations or policies of the
listed company.\30\ Thus, the Exchange's rules, as amended, would
continue to ensure that the appropriate listed companies are required
to comply with corporate governance and disclosure policies and hold
annual shareholder meetings, for the benefit of investors and the
public interest.
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\29\ 15 U.S.C. 78f(b)(5).
\30\ See Order Granting Approval of a Proposed Rule Change
Amending Section 302 of the Listed Company Manual To Provide
Exemptions for the Issuers of Certain Categories of Securities From
the Obligation To Hold Annual Shareholders' Meetings, Securities
Exchange Act Release No. 86406 (July 18, 2019), 84 FR 35431 (July
23, 2019) (SR-NYSE-2019-20) (``The Commission believes the right of
shareholders to vote at an annual meeting is an essential and
important one. The Commission, however, believes that the
requirement to hold an annual shareholder meeting may not be
necessary for certain issuers of specific types of securities
because the holders of such securities do not directly participate
as equity holders and vote in the annual election of directors or
generally on the operations or policies of the listed company.'');
Order Granting Approval of a Proposed Rule Change and Amendment Nos.
1 and 2 Thereto and Notice of Filing and Order Granting Accelerated
Approval of Amendment No. 3 Thereto Relating to Rule 4350(e) To
Amend the Annual Shareholder Meeting Requirement, Securities
Exchange Act Release No. 53578 (Mar. 30, 2006), 71 FR 17532 (Apr. 4,
2006) (SR-NASD-2005-073). The Exchange is reverting the previous
deletion of Trust Units from NYSE Arca Rules 5.3-E and 5.3-E(e). See
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
To Amend NYSE Arca Rule 5.3-E To Exclude Certain Categories of
Issuers From the Exchange's Annual Meeting Requirement, Securities
Exchange Act Release No. 83324 (May 24, 2018), 83 FR 25076 (May 31,
2018) (SR-NYSEARCA-2018-31) (stating that the Exchange is removing
Trust Units from those derivative and special purpose securities
that are excluded from certain corporate governance requirements
because ``the Exchange does not presently list any security under
the . . . Trust Units standards'' and that ``[s]hould the Exchange
list securities under the . . . Trust Units standards in the future,
it may consider whether to amend its rules at that time to allow for
certain corporate governance exclusions applicable to such classes
of securities.''). See id. at 25077-78 and n.10.
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B. The Trust
1. Exchange Act Section 6(b)(5)
The Commission finds that the listing and trading of the Trust is
consistent with the Exchange Act. The structure of the Trust, the terms
of its operation and the trading of its Shares, and the representations
in the Proposal are substantially similar to those of other proposals
approved in prior Commission orders. On an initial basis, and on a
continuing basis reflecting subsequent ETP approvals, at least 85% of
the Trust's holdings will consist of commodities that the Commission
has approved to underlie an ETP as primary investments, with no more
than 15% of the Trust's investments in other assets, which could
include other types of commodities as well as securities.\31\ The
Commission has previously found that the risks associated with fraud
and manipulation are sufficiently mitigated if an ETP holds at least
80% of the investments in assets that do not raise concerns relating to
fraud and manipulation.\32\ In approving an ETP
[[Page 35342]]
with a commodity as a primary investment, the Commission must find
under Section 6(b)(5) that there are sufficient means to prevent fraud
and manipulation.\33\ Accordingly, the Commission finds that the
requirement that the Trust will hold at least 85% of its investments in
assets approved by the Commission to underlie an ETP as primary
investments will enable adequate surveillance of the Shares on the
Exchange.
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\31\ See Amendment No. 1 at 15. See also supra notes 18-19 and
accompanying text.
\32\ See, e.g., Notice of Filing of Amendment No. 2, and Order
Granting Accelerated Approval of a Proposed Rule Change, as Modified
by Amendment No. 2, To List and Trade Shares of the SPDR DoubleLine
Short Duration Total Return Tactical ETF of the SSgA Active Trust,
Securities Exchange Act Release No. 77499 (Apr. 1, 2016), 81 FR
20428 (Apr. 7, 2016) (SR-BATS-2016-04) (approving the listing and
trading of a series of Managed Fund Shares that would hold up to at
least 80% of its net assets in a diversified portfolio of fixed
income securities, with 20% limitations on certain holdings such as
junior bank loans); Notice of Filing of Amendment No. 1 and Order
Granting Accelerated Approval of a Proposed Rule Change, as Modified
by Amendment No. 1, To Allow the JPMorgan Core Plus Bond ETF of the
J.P. Morgan Exchange-Traded Fund Trust To Hold Certain Instruments
in a Manner That May Not Comply With Rule 14.11(i), Managed Fund
Shares, Securities Exchange Act Release No. 85701 (Apr. 22, 2019),
84 FR 17902 (Apr. 26, 2019) (SR-CboeBZX-2019-016) (approving the
listing and trading of a series of Managed Fund Shares that could
hold up to 20% of the weight of the fixed income portion of its
portfolio in asset-backed securities and mortgage-backed securities
issued by private issuers); Order Granting Approval of Proposed Rule
Change, as Modified by Amendment No. 2 Thereto Relating to the Use
of Derivative Instruments by PIMCO Total Return Exchange Traded
Fund, Securities Exchange Act Release No. 72666 (July. 3, 2014), 79
FR 44224 (July 30, 2014) (SR-NYSEARCA-2013-122) (approving the
listing and trading of a series of Managed Fund Shares that would
invest under normal market circumstances at least 65% of its total
assets in a diversified portfolio of fixed income derivatives,
including over-the-counter derivatives); Order Granting Approval of
Proposed Rule Change, as Modified by Amendment No. 7 Thereto,
Amending NYSE Arca Equities Rule 8.600 To Adopt Generic Listing
Standards for Managed Fund Shares, Securities Exchange Act Release
No. 78397 (July 22, 2016), 81 FR 49320 (July 27, 2016) (SR-NYSEARCA-
2015-110) (approving generic listing standards for Managed Fund
Shares allowing for up to 10% of the equity weight of the portfolio
to consist of non-exchange-traded ADRs; up to 20% of the weight of
the fixed income portion of the portfolio to consist of non-agency,
non-government-sponsored entity, and privately-issued mortgage-
related and other asset-backed securities components; up to 10% of
the weight of holdings invested in futures, exchange-traded options,
and listed swaps to consist of futures, options, and swaps which
trade on markets that are not members of ISG or with which the
Exchange does not have in place a comprehensive surveillance sharing
agreement; and up to 20% of the assets in the portfolio to be
invested in OTC derivatives) (``Managed Fund Shares Order''). In the
Managed Fund Shares Order, the Commission found that the 20%
limitation on OTC derivatives ``is sufficient to mitigate the risks
associated with price manipulation because at least 80% of a Managed
Fund Shares portfolio would consist of: Cash and cash equivalents;
listed derivatives, of which 90% by portfolio weight would be traded
on a principal market that is a member of ISG; and equity securities
or fixed income instruments subject to numerous restrictions
designed to prevent manipulation and ensure pricing transparency.''
See Managed Fund Shares Order at 49326.
\33\ For example, as of the filing of Amendment No. 1, more than
85% of the Trust's holdings would be in bitcoin and ether. In
approving the ETPs with primary investments in bitcoin and ether,
the Commission found that there were sufficient means to prevent
fraud and manipulation of bitcoin and ether ETPs under Section
6(b)(5) of the Exchange Act. See supra note 18.
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Pursuant to Section 19(b)(2) of the Exchange Act, the Commission
must approve a proposed rule change filed by a national securities
exchange if it finds that the proposed rule change is consistent with
the applicable requirements of the Exchange Act.\34\ As such, based on
the record before the Commission, the Commission finds that the
Proposal is consistent with the requirements of the Exchange Act,
including the requirement in Section 6(b)(5) \35\ that the Exchange's
rules be designed to ``prevent fraudulent and manipulative acts and
practices.'' \36\
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\34\ 15 U.S.C. 78s(b)(2)(C).
\35\ 15 U.S.C. 78f(b)(5).
\36\ The Commission received one comment letter supporting the
Proposal and stating that approving the Proposal would provide clear
benefits to investors while promoting fair, orderly, and efficient
markets. See Letter from Gregory E. Xethalis, General Counsel,
Daniel A. Leonardo, Chief Compliance Officer & Deputy General
Counsel, and Jay B. Stolkin, Deputy General Counsel, Multicoin
Capital Management, LLC, dated Apr. 29, 2025. Another commenter
contends that the Proposal should be disapproved because the Trust
would hold XRP and Solana and details a number of arguments in favor
of disapproval, including, among other things: neither XRP nor
Solana has an established futures market; each of XRP and Solana has
been allegedly classified as an unregistered security by the
Commission; neither XRP nor Solana is truly decentralized; and
reliable on-chain analytics are not widely available for either XRP
or Solana. See Letter from Anonymous, dated Feb. 10, 2025. As
discussed above, the Trust will limit the amount of assets that are
not the primary investment underlying ETPs approved by the
Commission, such as XRP and Solana, to 15% of the weight of the
Trust's portfolio, and this limitation is consistent with similar
limitations approved by the Commission with respect to ETP
investments. See supra notes 31-32. In addition, although this
commenter states that neither XRP nor Solana has an established
futures market, the Chicago Mercantile Exchange currently lists and
trades both XRP and Solana futures contracts. See <a href="https://www.cmegroup.com/markets/cryptocurrencies/xrp/xrp.html">https://www.cmegroup.com/markets/cryptocurrencies/xrp/xrp.html</a>. See also
<a href="https://www.cmegroup.com/markets/cryptocurrencies/solana.html">https://www.cmegroup.com/markets/cryptocurrencies/solana.html</a>.
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2. Exchange Act Section 11A(a)(1)(C)(iii)
The Proposal sets forth aspects of the Trust, including the
availability of pricing information, transparency of portfolio
holdings, and types of surveillance procedures, that are consistent
with other ETPs that the Commission has approved.\37\ This includes
commitments regarding: the availability of quotation and last-sale
information for the Shares; the availability on the Trust's website of
certain information related to the Trust, including NAV; the
dissemination of an intra-day indicative value by one or more major
market data vendors, updated every 15 seconds throughout the Exchange's
core trading session; the Exchange's surveillance procedures and
ability to obtain information regarding trading in the Shares; the
conditions under which the Exchange would implement trading halts and
suspensions; and the requirements of registered market makers in the
Shares.\38\ In addition, 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.\39\ Further, the listing rules of the Exchange require that
all statements and representations made in its filing regarding, among
others, the description of the Trust's holdings, limitations on such
holdings, and the applicability of the Exchange's listing rules
specified in the filing, will constitute continued listing
requirements.\40\ Moreover, the Proposal states that: the Trust's
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; pursuant to obligations under Section 19(g)(1) of
the Exchange Act, the Exchange will monitor for compliance with the
continued listing requirements; and if the Trust is not in compliance
with the applicable listing requirements, the Exchange will commence
delisting procedures.\41\
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\37\ See, e.g., Spot Bitcoin & Ether ETP Approval Order at
106709.
\38\ See Amendment No. 1 at 43-50.
\39\ See id. at 46.
\40\ See NYSE Arca Rule 8.500-E, Commentary .03.
\41\ See Amendment No. 1 at 49-50.
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The Commission therefore finds that the Proposal, as with other
ETPs that the Commission has approved,\42\ is reasonably designed to
promote fair disclosure of information that may be necessary to price
the Shares appropriately, to prevent trading when a reasonable degree
of transparency cannot be assured, to safeguard material non-public
information relating to the Trust's portfolio, and to ensure fair and
orderly markets for the Shares.\43\
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\42\ See Spot Bitcoin ETP Approval Order, Spot Ether ETP
Approval Order, and Spot Bitcoin & Ether ETP Approval Order.
\43\ A commenter states that recent events, such as the hack of
crypto exchange Bybit, have exposed the risk that investors will
suffer losses due to crypto hacks as well as to crypto assets'
extreme volatility. Accordingly, this commenter believes that
approving the Proposal would endanger investors. See Letter from
Benjamin L. Schiffrin, Director of Securities Policy, Better
Markets, Inc., dated Mar. 28, 2025. While the Commission
acknowledges concerns relating to hacking and volatility, pursuant
to Section 19(b)(2) of the Exchange Act, the Commission must approve
a proposed rule change filed by a national securities exchange if it
finds that the proposed rule change is consistent with the
applicable requirements of the Exchange Act. See Exchange Act
Section 19(b)(2)(C), 15 U.S.C. 78s(b)(2)(C). The Commission does not
apply a ``cannot be manipulated'' standard; rather, the Commission
examines whether a proposal meets the requirements of the Exchange
Act. See, e.g., Spot Bitcoin ETP Approval Order at 3013 n.61. The
Commission does not understand the Exchange Act to require that a
particular product or market be immune from manipulation. Rather,
the inquiry into whether the rules of an exchange are designed to
prevent fraudulent and manipulative acts and practices and, in
general, to protect investors and the public interest, has long
focused on the mechanisms in place for the detection and deterrence
of fraud and manipulation. For the reasons described above, the
Commission finds that the Proposal satisfies the requirements of the
Exchange Act, including the requirement in Section 6(b)(5) that the
Exchange's rules be designed to ``prevent fraudulent and
manipulative acts and practices.''
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[[Page 35343]]
IV. Accelerated Approval
The Commission finds good cause to approve the Proposal prior to
the 30th day after the date of publication of Amendment No. 1 \44\ in
the Federal Register. Amendment No. 1 proposed modifications to NYSE
Arca Rule 8.500-E (Trust Units), which modifications are either
consistent with the current rule text or do not raise any novel
regulatory issues. In addition, Amendment No. 1 clarified the
description of the Trust, further described the terms of the Trust, and
conformed various representations in the amended filing to the
Exchange's listing standard for Trust Units and to representations that
exchanges have made for other ETPs that the Commission has
approved.\45\ These changes do not raise any novel regulatory issues.
The changes assist the Commission in evaluating the Proposal and in
determining that it is consistent with the Exchange Act and the rules
and regulations thereunder applicable to a national securities
exchange, as discussed above. Accordingly, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Exchange Act,\46\ to approve
the Proposal on an accelerated basis.
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\44\ See supra note 3.
\45\ See supra Item III.B.2.
\46\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
This approval order is based on all of the Exchange's
representations and descriptions in the Proposal, which the Commission
has evaluated as discussed above.\47\ For the reasons set forth above,
the Commission finds, pursuant to Section 19(b)(2) of the Exchange
Act,\48\ that the Proposal is consistent with the requirements of the
Exchange Act and the rules and regulations thereunder applicable to a
national securities exchange, and in particular, with Section 6(b)(5)
and Section 11A(a)(1)(C)(iii) of the Exchange Act.\49\
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\47\ In addition, the Shares of the Trust must comply with the
requirements of NYSE Arca Rule 8.500-E (Trust Units), as amended, to
be listed and traded on the Exchange on an initial and a continuing
basis.
\48\ 15 U.S.C. 78s(b)(2).
\49\ 15 U.S.C. 78f(b)(5); 15 U.S.C. 78k-1(a)(1)(C)(iii).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\50\ that the proposed rule change, as modified by
Amendment No. 1 (SR-NYSEARCA-2024-98) be, and hereby is, approved on an
accelerated basis.
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\50\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
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\51\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-14036 Filed 7-24-25; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on July 25, 2025.
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