Notice2025-19350
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade Shares of iShares Bitcoin Premium Income ETF Under Nasdaq Rule 5711(d) (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
October 2, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 189 (Thursday, October 2, 2025)</title>
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[Federal Register Volume 90, Number 189 (Thursday, October 2, 2025)]
[Notices]
[Pages 47846-47853]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19350]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104148; File No. SR-NASDAQ-2025-085]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To List and Trade Shares of
iShares Bitcoin Premium Income ETF Under Nasdaq Rule 5711(d)
(Commodity-Based Trust Shares)
September 30, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on September 30, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of iShares[supreg]
Bitcoin Premium Income ETF (the ``Trust'') under Nasdaq Rule 5711(d)
(``Commodity-Based Trust Shares''). The shares of the Trust are
referred to herein as the ``Shares.''
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings">https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings</a>, and at the principal office of the Exchange.
[[Page 47847]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade the Shares under Nasdaq
Rule 5711(d), which governs the listing and trading of Commodity-Based
Trust Shares on the Exchange.\3\ iShares[supreg] Delaware Trust Sponsor
LLC, a Delaware limited liability company and an indirect subsidiary of
BlackRock, Inc. (``BlackRock''), is the sponsor of the Trust (the
``Sponsor''). The Trust will be an actively-managed exchange-traded
product (``ETP''), that intends to be treated as a publicly-traded
partnership for U.S. federal income tax purposes and is registered
under the Securities Act of 1933, as amended (the ``1933 Act''). Rule
5711(d)(iii)(A)(2) currently requires Commodity-Based Trust Shares to
be designed to reflect the performance of one or more reference assets
or an index of reference assets, less expenses, and other liabilities.
In other words, the Generic Listing Standards require Commodity-Based
Trust Shares to be passively managed. For the securities options
holdings of Commodity-Based Trust Shares, the Generic Listing Standards
require that such options be listed and traded on an ISG market. The
Exchange submits this proposal because the Trust will be actively
managed and may hold over-the-counter (``OTC'') securities options that
are not listed and traded on an ISG market; however, it will meet all
of the other requirements under the Generic Listing Standards. Any
statements or representations included in this proposal regarding: (a)
the description of the trust holdings or reference assets; (b)
limitations on the trust holdings or reference assets; (c)
dissemination and availability of the trust holdings, reference assets
or intraday indicative value; or (d) the applicability of Exchange
listing rules specified in this proposal shall constitute continued
listing standards for the Shares listed on the Exchange. The Shares
will be registered with the SEC by means of the Trust's forthcoming
registration statement on Form S-1 (the ``Registration Statement'').\4\
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\3\ The Commission approved Nasdaq Rule 5711 in Securities
Exchange Act Release No. 66648 (March 23, 2012), 77 FR 19428 (March
30, 2012) (SR-NASDAQ-2012-013). The Commission subsequently approved
amendments to Rule 5711(d) to adopt generic listing standards for
Commodity-Based Trust Shares. See Securities Exchange Act Release
No. 103995 (September 17, 2025), 90 FR 45414 (September 22, 2025)
(SR-NASDAQ-2025-056; SR-CboeBZX-2025-104; SR-NYSEARCA-2025-54)
(Order Granting Accelerated Approval of Proposed Rule Changes, as
Modified by Amendments Thereto, to Adopt Generic Listing Standards
for Commodity-Based Trust Shares) (``Generic Listing Standards'').
\4\ The Shares will not trade on the Exchange until such time
that the Registration Statement is effective.
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Overview of the Trust
The Shares will be issued by the Trust, a Delaware statutory trust.
The Trust will operate pursuant to a trust agreement (the ``Trust
Agreement'') between the Sponsor, a third party as the trustee of the
Trust (the ``Trustee''), and Wilmington Trust, National Association, as
Delaware trustee (the ``Delaware Trustee''). The Trust issues Shares
representing fractional undivided beneficial interests in its net
assets. The assets of the Trust consist primarily of bitcoin held by a
custodian on behalf of the Trust, as well as shares of iShares Bitcoin
Trust ETF (``IBIT''), cash, and the premiums associated with written
options on IBIT or indices tracking spot bitcoin ETPs (``options'',
collectively with IBIT, the ``Securities''). In the event IBIT listed
options are exercised early, the Trust will deliver IBIT shares out to
the options clearer. In the event the Trust is holding OTC options or
options on indices that track spot bitcoin ETPs, such options will be
cash-settled. A third party (the ``Bitcoin Custodian'') is the
custodian for the Trust's bitcoin holdings, and maintains a custody
account for the Trust (``Custody Account''); a third party (the ``Prime
Execution Agent''), is the prime broker for the Trust and maintains a
bitcoin trading account for the Trust (``Bitcoin Trading Account'');
and a third party is the custodian for the Trust's Securities holdings
(the ``Securities Custodian'') and its cash holdings (the ``Cash
Custodian'' and together with the Securities Custodian and Bitcoin
Custodian, the ``Custodians''). The Trust is not an investment company
registered under the Investment Company Act of 1940, as amended (the
``1940 Act'') and, in accordance therewith, will not own or acquire
Securities in excess of 40% of the value of the Trust's total assets
(excluding Government Securities (as defined in the 1940 Act) and cash
items) on an unconsolidated basis.
Investment Objective
The investment objective of the Trust is to reflect generally the
performance of the price of bitcoin while providing income by writing
(selling) call options primarily on IBIT or indices that track spot
bitcoin ETPs. The Trust seeks to reflect such performance before
payment of the Trust's expenses and liabilities.
Actively-Managed Strategies
Actively-managed exchange-traded funds (``ETFs'') have become a
significant and growing segment of the U.S. and global ETF markets. For
example, in 2024, around 49% of all ETFs launched globally were active,
and in the U.S., active ETF launches outnumbered index launches by
nearly 4:1.\5\ Active ETFs in the U.S. represent the vast majority of
total ETF launches in 2025,\6\ with over a third of U.S. ETF inflows
coming from active strategies over the past two years.\7\ The Exchange
believes that these figures demonstrate substantial market demand in
actively-managed strategies, and that this proposal would benefit
investors by providing a transparent, regulated investment vehicle as
an alternative to less regulated avenues that investors could use to
obtain bitcoin exposure.
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\5\ See ``Decoding active ETFs,'' BlackRock, available at
<a href="https://www.ishares.com/us/literature/whitepaper/decoding-active-etfs.pdf">https://www.ishares.com/us/literature/whitepaper/decoding-active-etfs.pdf</a>.
\6\ See ``How active ETFs are unlocking innovation and
opportunity for investors,'' BlackRock, available at <a href="https://www.ishares.com/us/insights/active-etf-investors">https://www.ishares.com/us/insights/active-etf-investors</a> (``Active ETFs
accounted for 88% of all U.S.-listed ETF launches through June 2025,
and 51% of global ETF launches.''); see also ``Monthly Active ETF
Monitor (August 31, 2025),'' J.P.Morgan, available at <a href="https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/etf-insights/monthly-active-etf.pdf">https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/etf-insights/monthly-active-etf.pdf</a> (``60 active ETFs were launched in
August. Active ETFs represent 85% of total ETF launches in 2025.'').
\7\ See ``Decoding active ETFs,'' BlackRock, available at
<a href="https://www.ishares.com/us/literature/whitepaper/decoding-active-etfs.pdf">https://www.ishares.com/us/literature/whitepaper/decoding-active-etfs.pdf</a> (``31% of net asset inflows come from actively managed
strategies,'' sourcing BlackRock Global Business Intelligence data
through June 2024); see also ``Monthly Active ETF Monitor (August
31, 2025),'' J.P.Morgan, available at <a href="https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/etf-insights/monthly-active-etf.pdf">https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/etf-insights/monthly-active-etf.pdf</a> (``Over 37% of ETF flows in 2025 have gone into
active strategies'').
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Background on Trust Holdings
The Trust will invest primarily in spot bitcoin and IBIT, will hold
cash, and will write options on IBIT or
[[Page 47848]]
indices tracking spot bitcoin ETPs. The Trust's IBIT and cash holdings
would be used to settle written options positions if those are
exercised. The options may consist of (i) U.S. exchange-listed options,
which may include listed index options, (``listed options''), (ii)
flexible exchange options, which may include flexible exchange index
options, (``FLEX options''), or (iii) OTC options, which are a type of
customized derivative not listed on public exchanges, (``OTC
options''). Bitcoin, IBIT, listed options, and FLEX options meet the
eligibility criteria for Commodity-Based Trust Shares set forth in Rule
5711(d)(iv)(A) (Bitcoin) and (B) (IBIT, listed options, and FLEX
options). While OTC options are not listed and traded on an ISG market,
the Trust may include these holdings to better meet its investment
objective.
Bitcoin (BTC)
Bitcoin is a digital asset that is created and transmitted through
the operations of the peer-to-peer Bitcoin network, a decentralized
network of computers that operates on cryptographic protocols (the
``Bitcoin network''). No single entity owns or operates the Bitcoin
network, the infrastructure of which is collectively maintained by its
user base.
The Bitcoin network allows people to exchange tokens of value,
called bitcoin, which are recorded on a public transaction ledger known
as the Bitcoin blockchain (the ``Bitcoin blockchain''). Bitcoin can be
used to pay for goods and services, or it can be converted to fiat
currencies, such as the U.S. dollar, at rates determined on bitcoin
platforms that enable trading in bitcoin or in individual end-user-to-
end-user transactions under a barter system.
The Bitcoin network is commonly understood to be decentralized and
does not require governmental authorities or financial institution
intermediaries to create, transmit or determine the value of bitcoin.
Rather, bitcoin is created and allocated by the Bitcoin network
protocol through a ``mining'' process. The value of bitcoin is
determined by the supply of and demand for bitcoin-on-bitcoin platforms
or in private end-user-to-end-user transactions.
New bitcoins are created and rewarded to the miners of a block in
the Bitcoin blockchain for verifying transactions. The Bitcoin
blockchain is a shared database that includes all blocks that have been
solved by miners and it is updated to include new blocks as they are
solved. Each bitcoin transaction is broadcast to the Bitcoin network
and, when included in a block, recorded in the Bitcoin blockchain. As
each new block records outstanding bitcoin transactions, and
outstanding transactions are settled and validated through such
recording, the Bitcoin blockchain represents a complete, transparent,
and unbroken history of all transactions of the Bitcoin network.
Under the source code that governs the Bitcoin network, the supply
of new bitcoin is mathematically controlled so that the number of
bitcoin grows at a limited rate pursuant to a pre-set schedule. The
number of bitcoin awarded for solving a new block is automatically
halved after every 210,000 blocks are added to the Bitcoin blockchain,
approximately every 4 years. This deliberately controlled rate of
bitcoin creation means that the number of bitcoin in existence will
increase at a controlled rate until the number of bitcoin in existence
reaches the pre-determined 21 million bitcoin. However, the 21 million
supply cap could be changed in a hard fork. A hard fork could change
the source code to the Bitcoin network, including the 21 million
bitcoin supply cap.
Bitcoin's role as the dominant digital asset has positioned it as a
key component of institutional portfolios and investment products. Its
market dynamics are influenced by macroeconomic trends, adoption rates,
and its regulatory environment, making it a focal point for the broader
crypto industry. With a decentralized governance model and a community-
driven upgrade process, bitcoin continues to evolve while adhering to
its core principles of decentralization and security.
Other Investments
As noted above, the Trust will also invest in Securities. The
Commission approved the listing and trading of IBIT on January 10, 2024
\8\ and IBIT listed options on September 20, 2024.\9\ In addition to
IBIT listed options, the Commission has approved listed options on
other spot bitcoin ETPs and listed options on indices designed to track
the performance of a basket of spot bitcoin ETPs listed on U.S.
exchanges.\10\ The Trust may also invest in exchange-listed FLEX
options, which is presently available on multiple U.S. options
exchanges and available for IBIT options and indices tracking multiple
U.S. spot bitcoin ETPs.\11\
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\8\ See infra note 11.
\9\ See Securities Exchange Act Release No. 101128 (September
20, 2024), 89 FR 78942 (September 26, 2024) (SR-ISE-2024-03).
\10\ For example, Cboe offers listed options on spot bitcoin
ETPs. See Securities Exchange Act Release No. 101387 (October 18,
2024). Cboe also offers listed index options on the Cboe Bitcoin
U.S. ETF Index and the Mini-Cboe Bitcoin U.S. ETF Index. See <a href="https://www.cboe.com/tradable_products/bitcoin-etf-index-options/">https://www.cboe.com/tradable_products/bitcoin-etf-index-options/</a>.
\11\ For example, both Nasdaq ISE and Cboe Options offer
electronic FLEX trading today. Additionally, the Commission recently
approved the trading of FLEX IBIT options on Nasdaq ISE. See
Securities Exchange Act Release No. 103563 (July 29, 2025), 90 FR
36242 (August 1, 2025) (SR-ISE-2025-12). Cboe also offers FLEX
trading on both its bitcoin ETP index options and mini bitcoin ETP
index options. See <a href="https://www.cboe.com/tradable_products/bitcoin-etf-index-options/">https://www.cboe.com/tradable_products/bitcoin-etf-index-options/</a>.
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In addition to listed options and FLEX options, the Trust's options
holdings may consist of OTC options. OTC options represent an important
component in the toolkit of an actively managed product, especially one
seeking exposure to alternative assets such as bitcoin. The Trust may
utilize available OTC options for customized options positions,
allowing the Trust to more efficiently obtain exposure to bitcoin and
meet its investment objective. The Trust's options holdings will be
available on its website (<a href="http://www.ishares.com">www.ishares.com</a>), which will give investors
the ability to track whether the Trust has shifted to the OTC markets.
Creation and Redemption of Shares
The Trust issues and redeems Baskets \12\ on a continuous basis.
Baskets are only issued or redeemed in exchange for an amount of cash,
bitcoin or Securities as determined by the Trustee on each day that
Nasdaq is open for regular trading. No Shares are issued unless the
Cash Custodian, Bitcoin Custodian, Prime Execution Agent, and
Securities Custodian has allocated to the Trust's account the
corresponding amount of cash, bitcoin, or Securities, as applicable.
The amount of cash, bitcoin, or Securities necessary for the creation
of a Basket, or to be received upon redemption of a Basket, will vary
over the life of the Trust, due to the payment or accrual of fees and
other expenses or liabilities payable by the Trust. Baskets may be
created or redeemed only by Authorized Participants, who pay BlackRock
Investments, LLC (``BRIL''), an affiliate of the Advisor that has been
retained by the Trust to perform certain order processing, Authorized
Participant communications, and related services in connection with the
issuance and redemption of Baskets (``ETF Services''), a transaction
fee for each order to create or redeem Baskets.
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\12\ Baskets will be offered continuously at NAV per Share for
40,000 Shares.
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The Sponsor will maintain ownership and control of bitcoin and
Securities in a manner consistent with good delivery requirements for
spot commodity transactions and securities transactions, respectively.
[[Page 47849]]
Net Asset Value
The net asset value (``NAV'') of the Trust is used by the Trust in
its day-to-day operations to measure the net value of the Trust's
assets. The NAV of the Trust will be equal to the total assets of the
Trust, which will consist of bitcoin, IBIT and cash, less total
liabilities of the Trust, which includes written options on IBIT or
indices tracking spot bitcoin ETPs, each determined by the Trustee
pursuant to policies established from time to time by the Trustee or
its affiliates as described herein. The Sponsor has the exclusive
authority to determine the Trust's NAV, which it has delegated to the
Trustee under the Trust Agreement. The Sponsor has delegated to the
Trustee the responsibility to calculate the NAV and the NAV per Share
for the Trust, based on a pricing source selected by the Trustee. In
determining the Trust's NAV per Share, the Trustee will assess the
value of bitcoin and the Securities.
Bitcoin Valuation
The value of the bitcoin held by the Trust will be based on the
index price, unless the Sponsor in its sole discretion determines that
the index is unreliable. The CME CF Bitcoin Reference Rate--New York
Variant for the Bitcoin--U.S. Dollar trading pair (the ``CF Benchmarks
Index'') shall constitute the index (the ``Index''), unless the CF
Benchmarks Index is not available or the Sponsor in its sole discretion
determines that the CF Benchmarks Index is unreliable and therefore
determines not to use the CF Benchmarks Index as the Index. If the CF
Benchmarks Index is not available or the Sponsor determines, in its
sole discretion, that the CF Benchmarks Index is unreliable, (together
a ``Fair Value Event'') the Trust's holdings may be fair valued on a
temporary basis in accordance with the fair value policies approved by
the Trustee. If the CF Benchmarks Index is not used as the Index price,
owners of the beneficial interests of Shares (the ``Shareholders'')
will be notified in a prospectus supplement or on the Trust's website
and, if this index change is on a permanent basis, a filing with the
SEC under Rule 19b-4 of the Act will be required. A Fair Value Event
value determination will be based upon all available factors that the
Sponsor or Trustee deems relevant at the time of the determination, and
may be based on analytical values determined by the Sponsor or Trustee
using third-party valuation models. Fair value policies approved by the
Trustee will seek to determine the fair value price that the Trust
might reasonably expect to receive from the current sale of that asset
or liability in an arm's-length transaction on the date on which the
asset or liability is being valued consistent with ``Relevant
Transactions''. In the instance of a Fair Value Event and pursuant the
Sponsor's fair valuation policies and procedures Volume Weighted
Average Prices (``VWAP'') or Volume Weighted Median Prices (``VWMP'')
from another index administrator (``Secondary Index'') would be
utilized. If a Secondary Index is not available or the Sponsor in its
sole discretion determines the Secondary Index is unreliable the price
set by the Trust's principal market as of 4:00 p.m. ET, on the
valuation date would be utilized. In the event the principal market
price is not available or the Sponsor in its sole discretion determines
the principal market valuation is unreliable the Sponsor will use its
best judgment to determine a good faith estimate of fair value. The
Trustee identifies and determines the Trust's principal market (or in
the absence of a principal market, the most advantageous market) for
bitcoin consistent with the application of fair value measurement
framework in FASB ASC 820-10.\13\ The principal market is the market
where the reporting entity would normally enter into a transaction to
sell the asset or transfer the liability. The principal market must be
available to and be accessible by the reporting entity. The reporting
entity is the Trust.
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\13\ See FASB (Financial Accounting Standards Board) Accounting
standards codification (ASC) 820-10. For financial reporting
purposes only, the Trustee has adopted a valuation policy that
outlines the methodology for valuing the Trust's assets. The policy
also outlines the methodology for determining the principal market
(or in the absence of a principal market, the most advantageous
market) in accordance with FASB ASC 820-10.
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Securities Valuation
The valuation of the Trust's Securities will be done by a third
party, which will utilize one or more authorized data sources
designated by the Sponsor or the Trustee.
Intraday Indicative Value
In order to provide updated information relating to the Trust for
use by Shareholders, the Trust intends to publish an intraday
indicative value per Share (``IIV''). The IIV will be calculated using
data provided by one or more third-party data vendors. One or more
major market data vendors will provide an IIV updated every 15 seconds,
as calculated by the Exchange or a third-party financial data provider
during the Exchange's regular market session of 9:30 a.m. to 4:00 p.m.
ET (the ``Regular Market Session''). The IIV will be calculated using
the prior day's closing NAV per Share as a base and updating that value
during the Exchange's Regular Market Session to reflect changes in the
value of the Trust's NAV per Share during the trading day. The IIV is
disseminated during the Exchange's Regular Market Session and should
not be viewed as an actual real-time update of the NAV per Share, which
will be calculated only once at the end of each trading day. The IIV
will be widely disseminated on a per Share basis every 15 seconds
during the Exchange's Regular Market Session by one or more major
market data vendors. In addition, the IIV will be available through
online information services.
Availability of Information
The website for the Trust, which will be publicly accessible at no
charge, will prominently disclose the information required under Rule
5711(v).
The NAV per Share for the Trust will be calculated once a day and
will be 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 relevant securities
information processor. Also, an estimated value that reflects an
estimated IIV will be disseminated. For more information on the IIV,
including the calculation methodology, see ``Intraday Indicative
Value'' above.
The IIV disseminated during the Exchange's Regular Market Session
should not be viewed as an actual real time update of the NAV per
Share, which will be calculated only once at the end of each trading
day. The IIV will be widely disseminated on a per Share basis every 15
seconds during the Exchange's Regular Market Session by one or more
major market data vendors. In addition, the IIV will be available
through online information services.
Quotation and last sale information for the Trust's holdings is
widely disseminated through a variety of major market data vendors.
Information relating to trading, including price and volume
information, in the Trust's holdings is available from major market
data vendors and from the platforms on which such holdings are traded.
Depth of book information is also available from those platforms. As it
relates to bitcoin, the normal trading hours for platforms are 24 hours
per day, 365 days per year.
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
[[Page 47850]]
previous day's closing price and trading volume information for the
Shares will be published daily in the financial section of newspapers.
Applicable Standard
As noted above, the Trust's holdings of bitcoin, IBIT, listed
options, and FLEX options meet the eligibility criteria in the General
Listing Standards under Rule 5711(iv). Further, the Commission has
previously issued orders granting approval for proposals to list
bitcoin-based commodity trust shares and bitcoin-based trust issued
receipts (``Spot Bitcoin ETPs'').\14\ In the Spot Bitcoin ETP Approval
Order, the Commission found that sufficient ``other means'' of
preventing fraud and manipulation had been demonstrated that justified
dispensing with a surveillance-sharing agreement with a market of
significant size. Specifically, the Commission found that while the
Chicago Mercantile Exchange (``CME'') futures market for bitcoin was
not of ``significant size'' with respect to the spot market, the
Exchange demonstrated that other means could be reasonably expected to
assist in surveilling for fraudulent and manipulative acts and
practices in the specific context of the proposals, including that:
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\14\ See Securities Exchange Act No. 99306 (January 10, 2024),
89 FR 3008 (January 17, 2024) (Self-Regulatory Organizations; NYSE
Arca, Inc.; The Nasdaq Stock Market LLC; Cboe BZX Exchange, Inc.;
Order Granting Accelerated Approval of Proposed Rule Changes, as
Modified by Amendments Thereto, To List and Trade Bitcoin-Based
Commodity-Based Trust Shares and Trust Units) (the ``Spot Bitcoin
ETP Approval Order'').
[B]ased on the record before the Commission and the improved
quality of the correlation analysis in the record, including the
Commission's own analysis, the Commission is able to conclude that
fraud or manipulation that impacts prices in spot bitcoin markets
would likely similarly impact CME bitcoin futures prices. And
because the CME's surveillance can assist in detecting those impacts
on CME bitcoin futures prices, the Exchanges' comprehensive
surveillance-sharing agreement with the CME--a U.S. regulated market
whose bitcoin futures market is consistently highly correlated to
spot bitcoin, albeit not of ``significant size'' related to spot
bitcoin--can be reasonably expected to assist in surveilling for
fraudulent and manipulative acts and practices in the specific
context of the [Spot Bitcoin ETPs].\15\
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\15\ See Spot Bitcoin ETP Approval Order, supra note 11. The SEC
made substantially similar findings in the approval order for spot
Ether ETPs. See Securities Exchange Act Release No. 100224 (May 23,
2024), 89 FR 46937 (May 30, 2024) (Order Granting Accelerated
Approval of Proposed Rule Changes, as Modified by Amendments
Thereto, To List and Trade Shares of Ether-Based Exchange-Traded
Products).
With respect to the Trust's bitcoin holdings, today, both the CME
and Coinbase Derivatives, LLC (``Coinbase Derivatives'') offer trading
in bitcoin futures. Nasdaq has a comprehensive surveillance-sharing
agreement with both the CME and Coinbase Derivatives via its common
membership in the Intermarket Surveillance Group (``ISG'').\16\ This
facilitates the sharing of information that is available to the CME and
Coinbase Derivatives through their surveillance of their respective
markets, including their surveillance of their respective bitcoin
futures market.
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\16\ For a list of the current members and affiliate members of
ISG, see <a href="https://isgportal.org/public-members">https://isgportal.org/public-members</a>.
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With respect to the Trust's investments in IBIT, options, and FLEX
options, the Exchange has the ability to obtain information regarding
trading in these securities from other markets that are members of the
ISG. Accordingly, the Exchange believes that its ability to share
information regarding trading in the Trust's investments from other
markets via common ISG membership would assist the Exchange in
surveilling for fraudulent and manipulative acts and practices.
Given that OTC options are not traded publicly, the Trust would not
have the ability to obtain information regarding trading in IBIT OTC
options. Additionally, as OTC options are bilateral agreements, the
Trust may be subject to counterparty risk in the event there is fraud
or manipulation by the OTC options seller. However, participants in the
U.S. OTC options market for IBIT are generally regulated by their
institutional supervisors, and the Commission regulates market
participants with and has established rules designed to improve
transparency and investor protection in the OTC markets.\17\ To enhance
transparency the Trust will publish its holdings on its website to
ensure investors are aware of any OTC option positions held by the
Trust. Additionally, the Trust will include disclosure in its
prospectus of the risk related to trading in OTC options these options
to ensure investors are sufficiently aware of the risk of holding
Shares. The Trust will also publish its holdings on its website to
ensure investors are aware of any OTC option positions held by the
Trust.
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\17\ See Publication or Submission of Quotations Without
Specified Information, 85 FR 68124 (Oct. 27, 2020) (to be codified
at 17 CFR pts. 230 & 240).
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Initial and Continued Listing
The Shares will be subject to Nasdaq Rule 5711(d)(viii), which sets
forth the initial and continued listing criteria applicable to
Commodity-Based Trust Shares. The Exchange will obtain a representation
that the Trust's NAV per Share will be calculated daily and will be
made available to all market participants at the same time. A minimum
of 80,000 Shares will be required to be outstanding at the time of
commencement of trading on the Exchange. Upon termination of the Trust,
the Shares will be removed from listing.
As required in Nasdaq Rule 5711(d)(xii), the Exchange notes that
any registered market maker (``Market Maker'') in the Shares must file
with the Exchange, in a manner prescribed by the Exchange, and keep
current a list identifying all accounts for trading the underlying
commodity and commodity-based asset, which the registered Market Maker
may have or over which it may exercise investment discretion. No
registered Market Maker shall trade in an underlying commodity,
commodity-based asset, or any other related derivative thereon in an
account in which a registered Market Maker (1) directly or indirectly
controls trading activities, or has a direct interest in the profits or
losses thereof, (2) is required by this Rule to disclose to the
Exchange, and (3) has not reported to Nasdaq.
In addition to the existing obligations under Exchange rules
regarding the production of books and records (see, e.g., Rule 4625),
the registered Market Maker in Commodity-Based Trust Shares shall make
available to the Exchange such books, records or other information
pertaining to transactions by such entity or registered or non-
registered employee affiliated with such entity for its or their own
accounts for trading the underlying commodity or commodity-based asset,
or applicable derivatives of each of the foregoing, as may be requested
by the Exchange.
The Exchange is able to obtain information regarding trading in the
Shares and the underlying securities, bitcoin, bitcoin futures
contracts, or any other bitcoin derivative through members acting as
registered Market Makers, in connection with their proprietary or
customer trades.
As a general matter, the Exchange has regulatory jurisdiction over
its members, and their associated persons. The Exchange also has
regulatory jurisdiction over any person or entity controlling a member,
as well as a subsidiary or affiliate of a member that is in the
securities business. A subsidiary or affiliate of a member organization
that does business only in commodities would not be subject to Exchange
jurisdiction, but the Exchange could obtain information regarding the
activities of such subsidiary or affiliate through surveillance sharing
agreements
[[Page 47851]]
with regulatory organizations of which such subsidiary or affiliate is
a member.
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. The Exchange will
allow trading in the Shares from 4:00 a.m. to 8:00 p.m. ET. The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. The Shares of the Trust will conform to
the initial and continued listing criteria set forth in Nasdaq Rule
5711(d) and will comply with the requirements of Rule 10A-3 of the Act.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. The Exchange will halt trading in the Shares
under the conditions specified in Rules 4120, 4121, and 5711(d)(ix),
including without limitation the conditions specified in Rules
4120(a)(9), 4120(a)(10), and 5711(d)(ix), and the trading pauses under
Rules 4120(a)(11) and (12).
Trading may be halted because of market conditions or for reasons
that, in the view of the Exchange, make trading in the Shares
inadvisable. These may include: (1) the extent to which trading is not
occurring in the bitcoin and/or Securities underlying the Shares; or
(2) whether other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present.
In addition, pursuant to Rule 5711(d)(ix), the Exchange may halt
trading during the day in which an interruption occurs in any of the
scenarios specified therein. If the interruption 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.
Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. The surveillance
program includes real-time patterns for price and volume movements and
post-trade surveillance patterns (e.g., spoofing, marking the close,
pinging, phishing). Trading of Shares on the Exchange will be subject
to the Exchange's surveillance program for derivative products, as well
as cross-market surveillances administered by FINRA, on behalf of the
Exchange pursuant to a regulatory services agreement, which are also
designed to detect violations of Exchange rules and applicable federal
securities laws. The Exchange is responsible for FINRA's performance
under this regulatory services agreement.
The Exchange will require the Trust to represent 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 Exchange Act, the Exchange
will surveil 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 the
Nasdaq 5800 Series. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities 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, bitcoin futures,
and the Trust's IBIT, options, and FLEX options holdings from such
markets and other entities.
Information Circular
Prior to the commencement of trading, the Exchange will inform its
members in an information circular (``Information Circular'') of the
special characteristics and risks associated with trading the Shares.
Specifically, the Information Circular will discuss the following: (1)
the procedures for creations and redemptions of Shares in Baskets (and
that Shares are not individually redeemable); (2) Section 10 of Nasdaq
General Rule 9, which imposes suitability obligations on Nasdaq members
with respect to recommending transactions in the Shares to customers;
(3) how information regarding the IIV and NAV is disseminated; (4) the
risks involved in trading the Shares during the pre-market and post-
market sessions when an updated IIV 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. The
Information Circular will also discuss any exemptive, no action and
interpretive relief granted by the Commission from any rules under the
Act.
The Information Circular will also reference the fact that there is
no regulated source of last sale information regarding bitcoin, that
the Commission has no jurisdiction over the trading of bitcoin as a
commodity.
Additionally, the Information Circular will reference that the
Trust is subject to various fees and expenses described in the
Registration Statement. The Information Circular will also disclose the
trading hours of the Shares. The Information Circular will disclose
that information about the Shares will be publicly available on the
Trust's website.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\18\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\19\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest.
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\18\ 15 U.S.C. 78f(b).
\19\ 15 U.S.C. 78f(b)(5).
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The Commission has approved numerous series Commodity-Based Trust
Shares to be listed on U.S. national securities exchanges. In order for
any proposed rule change from an exchange to be approved, the
Commission must determine that, among other things, the proposal is
consistent with the requirements of Section 6(b)(5) of the Act,
specifically including: (i) the requirement that a national securities
exchange's rules are designed to prevent fraudulent and manipulative
acts and practices; and (ii) the requirement that an exchange proposal
be designed, in general, to protect investors and the public interest.
The Exchange believes that this proposal is consistent with the
requirements of Section 6(b)(5) of the Act.
As noted above, the Trust's holdings, with the exception of OTC
options, will meet the eligibility criteria in the General Listing
Standards under Rule
[[Page 47852]]
5711(iv). In the case of the OTC options, the ability to use OTC
options will allow the Trust to better meet its investment objective.
Further, the Commission has previously issued orders granting approval
for proposals to list Spot Bitcoin ETPs.\20\ In the Spot Bitcoin ETP
Approval Order, the Commission found that sufficient ``other means'' of
preventing fraud and manipulation had been demonstrated that justified
dispensing with a surveillance-sharing agreement with a market of
significant size. As discussed above, the Commission found that while
the CME futures market for bitcoin was not of ``significant size'' with
respect to the spot market, the Exchange demonstrated that other means
could be reasonably expected to assist in surveilling for fraudulent
and manipulative acts and practices in the specific context of the
proposals.
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\20\ See supra note 11.
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With respect to the Trust's bitcoin holdings, today, both the CME
and Coinbase Derivatives offer trading in bitcoin futures. Nasdaq has a
comprehensive surveillance-sharing agreement with both the CME and
Coinbase Derivatives via its common ISG membership. This facilitates
the sharing of information that is available to the CME and Coinbase
Derivatives through their surveillance of their respective markets,
including their surveillance of their respective bitcoin futures
market.
With respect to the Trust's investments in IBIT, options, and FLEX
options, the Exchange has the ability to obtain information regarding
trading in these securities from other markets that are members of the
ISG. Accordingly, the Exchange believes that its ability to share
information regarding trading in the Trust's investments from other
markets via common ISG membership would assist the Exchange in
surveilling for fraudulent and manipulative acts and practices.
With respect to the Trust's investments in IBIT OTC options, the
Exchange will not have the ability to obtain information regarding
trading in these securities from other markets that are members of the
ISG. However, the Exchange believes that the Trust's disclosure of
these options and the risks posed by these options will ensure
investors are sufficiently aware of the risk of holding Shares.
While the Trust will be an actively-managed product, the Exchange
does not believe this raises any novel regulatory issues under the Act.
Indeed, in the context of SEC Rule 6c-11 ETFs, the Commission did not
distinguish between active and passive management, and found they
function similarly with respect to operational matters.\21\ There, the
Commission concluded: ``[w]e therefore believe that eliminating the
regulatory distinction between index-based ETFs and actively managed
ETFs for purposes of exemptive relief under the Act will help to
provide a more consistent and transparent regulatory framework for ETFs
organized as open-end funds. This approach is consistent with our
regulation of other types of open-end funds, which does not distinguish
between actively managed and index-based strategies.'' In other words,
the regulatory framework treats active and passive ETFs registered
under the 1940 Act as functionally similar from a market oversight
perspective. The Exchange believes that extending this logic to the
ETPs registered under the 1933 Act will bring regulatory parity between
actively-managed ETPs under the 1933 Act and 1940 Act. Furthermore, as
discussed above, the Exchange believes there is substantial market
demand for actively-managed strategies, and that this proposal would
benefit investors by providing a transparent, regulated investment
vehicle as an alternative to less regulated avenues that investors
could use to obtain bitcoin exposure.
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\21\ See Securities Exchange Act Release No. 33-10695 (September
26, 2019), 84 FR 57162 (October 24, 2019), at 57168.
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The Exchange further believes that the proposed rule change is
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest in that the Shares will be
listed and traded on the Exchange pursuant to the initial and continued
listing criteria set forth in Nasdaq Rule 5711(d). The Exchange has in
place surveillance procedures that are adequate to properly monitor
trading in the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws. As
discussed above, the surveillance program includes real-time patterns
for price and volume movements and post-trade surveillance patterns
(e.g., spoofing, marking the close, pinging, phishing). Trading of
Shares on the Exchange will be subject to the Exchange's surveillance
program for derivative products, as well as cross-market surveillances
administered by FINRA, on behalf of the Exchange pursuant to a
regulatory services agreement, which are also designed to detect
violations of Exchange rules and applicable federal securities laws.
The Exchange is responsible for FINRA's performance under this
regulatory services agreement.
The Exchange will require the Trust to represent 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 Exchange Act, the Exchange
will surveil 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 the
Nasdaq 5800 Series. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
The Exchange will communicate as needed regarding trading in the
Shares with other markets and other entities that are members of the
ISG, and the Exchange may obtain trading information regarding trading
in the Shares, listed bitcoin futures, and the Trust's Securities
holdings, with the exception of OTC options, from such markets and
other entities that are members of ISG.
Trading in Shares of the Trust will be halted if the circuit
breaker parameters have been reached or because of market conditions or
for reasons that, in the view of the Exchange, make trading in the
Shares inadvisable. These may include unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market.
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
Shares that will enhance competition among market participants, to the
benefit of investors and the marketplace.
For all the above reasons, the Exchange believes that the proposed
rule change is consistent with the requirements of Section 6(b)(5) of
the Act.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange notes that the
proposed rule change will rather facilitate the listing and trading of
an additional ETP that will enhance competition among both market
participants and listing venues, to the benefit of investors and the
marketplace.
[[Page 47853]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
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 Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#3143445d541c525e5c5c545f4542714254521f565e47"><span class="__cf_email__" data-cfemail="abd9dec7ce86c8c4c6c6cec5dfd8ebd8cec885ccc4dd">[email protected]</span></a>. Please include
file number SR-NASDAQ-2025-085 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-NASDAQ-2025-085. 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 filing 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-NASDAQ-2025-085 and should be submitted
on or before October 23, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Sherry R. Haywood,
Assistant Secretary.
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\22\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2025-19350 Filed 10-1-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on October 2, 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.