[Federal Register Volume 90, Number 44 (Friday, March 7, 2025)]
[Notices]
[Pages 11559-11560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-03663]
[[Page 11559]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102514; File No. SR-NYSEARCA-2024-98]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change To List and Trade Shares of the Bitwise 10 Crypto Index
Fund Under Proposed NYSE Arca Rule 8.800-E (Commodity- and/or Digital
Asset-Based Investment Interests)
March 3, 2025.
I. Introduction
On November 14, 2024, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the
Bitwise 10 Crypto Index Fund (``Trust'') under proposed NYSE Arca Rule
8.800-E (Commodity- and/or Digital Asset-Based Investment Interests).
The proposed rule change was published for comment in the Federal
Register on December 3, 2024.\3\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 101775 (Nov. 27,
2024), 89 FR 95853 (``Notice''). Comments received on the proposed
rule change are available at: https://www.sec.gov/comments/sr-nysearca-2024-98/srnysearca202498.htm.
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On January 14, 2025, pursuant to Section 19(b)(2) of the Exchange
Act,\4\ the Commission designated a longer period within which to
approve the proposed rule change, disapprove the proposed rule change,
or institute proceedings to determine whether to disapprove the
proposed rule change.\5\ This order institutes proceedings under
Section 19(b)(2)(B) of the Act \6\ to determine whether to approve or
disapprove the proposed rule change.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 102186, 90 FR 7199
(Jan. 21, 2025) (designating March 3, 2025, as the date by which the
Commission shall either approve, disapprove, or institute
proceedings to determine whether to disapprove the proposed rule
change).
\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Summary of the Proposal
As described in more detail in the Notice,\7\ the Exchange proposes
to list and trade Shares of the Trust under proposed NYSE Arca Rule
8.800-E (Commodity- and/or Digital Asset-Based Investment
Interests).\8\
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\7\ See supra note 3.
\8\ The Exchange, in a separate filing, proposed to adopt new
NYSE Arca Rule 8.800-E to provide for the listing and trading of
Commodity- and/or Digital Asset-Based Investment Interests, which
are securities issued by a trust, limited liability company, or
other similar entity that holds specified commodities, digital
assets, derivative securities products, and/or cash. See Securities
Exchange Act Release No. 101470 (Oct. 29, 2024), 89 FR 87681 (Nov.
4, 2024) (Notice of Filing of Proposed Rule Change To Adopt New NYSE
Arca Rule 8.800-E To Provide for the Listing and Trading of
Commodity- and Digital Asset-Based Investment Interests and To List
and Trade Shares of the Grayscale Digital Large Cap Fund LLC)
(``Commodity- and Digital Asset Based Investment Interests Listing
Standards Proposal''); Notice at 95853.
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According to the Exchange, 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'').\9\ The Trust rebalances monthly
alongside the rebalance of the Index to stay current with any changes
to the Index.\10\ According to the Exchange, as of the date of the
filing, the Trust's Portfolio Assets and weightings were: 75.10%
Bitcoin (BTC), 16.5% Ethereum (ETH), 4.3% Solana (SOL), 1.5% XRP (XRP),
0.70% Cardano (ADA), 0.60% Avalanche (AVAX), 0.40% Chainlink (LINK),
0.40% Bitcoin Cash (BCH), 0.30% Polkadot (DOT) and 0.30% Uniswap
(UNI).\11\ The Trust's only assets will be the Portfolio Assets and
cash.\12\
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\9\ See Notice at 95853. 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 will be
the custodian for the Trust's cash holdings, as well as the Trust's
administrator and transfer agent. The Index is administered by
Bitwise Index Services, LLC, an affiliate of the Sponsor. See id.
\10\ See id. According to the Exchange, 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. The market capitalization of a
digital asset is calculated by multiplying its price (based on the
Lukka Prime price) times its free-float-adjusted or ``circulating''
supply. The proportion of each digital asset in the Index is based
on this adjusted market capitalization. See id. at 95854.
\11\ See id. at 95853.
\12\ See id.
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The Trust's net asset value (``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.\13\ To determine
the Trust's NAV, the Sponsor will rely on a third-party valuation
vendor, CF Benchmarks Ltd. (``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. using prices from several different digital asset trading
platforms selected by the Valuation Vendor.\14\ The Trust uses the
Reference Prices to calculate its NAV.\15\ 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.\16\ 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.\17\ The Trust conducts creations and redemptions of its Shares
for cash.\18\
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\13\ See id. at 95857.
\14\ See id. at 95853. 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 95853 and n.11.
\15\ See id. at 95857.
\16\ See id.
\17\ See id. at 95857.
\18\ See id. at 95854. Authorized participants 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. See id.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEARCA-2024-98 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \19\ to determine whether the proposed rule
change should be approved or disapproved. Institution of proceedings is
appropriate at this time in view of the legal and policy issues raised
by the proposed rule change. Institution of proceedings does not
indicate that the Commission has reached any conclusions with respect
to any of the issues involved. Rather, the Commission seeks and
encourages interested persons to provide comments on the proposed rule
change.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\20\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with Section 6(b)(5)
of the Act, which requires, among other things, that the rules of a
national securities exchange be ``designed to prevent fraudulent and
[[Page 11560]]
manipulative acts and practices'' and ``to protect investors and the
public interest.'' \21\
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\20\ Id.
\21\ 15 U.S.C. 78f(b)(5).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on whether the proposal to list and trade Shares of the
Trust, which would hold BTC, ETH, SOL, XRP, ADA, AVAX, LINK, BCH, DOT,
UNI and/or potentially other digital assets, is designed to prevent
fraudulent and manipulative acts and practices or raises any new or
novel concerns not previously contemplated by the Commission.
IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\22\
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\22\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by March 28, 2025. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
April 11, 2025.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSEARCA-2024-98 on the subject line.
Paper Comments
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-2024-98. 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 (https://www.sec.gov/rules/sro.shtml). 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-2024-98 and should
be submitted on or before March 28, 2025. Rebuttal comments should be
submitted by April 11, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-03663 Filed 3-6-25; 8:45 am]
BILLING CODE 8011-01-P