[Federal Register Volume 90, Number 110 (Tuesday, June 10, 2025)]
[Notices]
[Pages 24441-24444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-10442]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103194; File No. SR-NASDAQ-2025-016]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change, as Modified by Amendment No. 1, To Adopt Nasdaq
Rule 5712 To Provide for the Listing and Trading of Commodity- and/or
Digital Asset-Based Investment Interests and To List and Trade Shares
of the Hashdex Nasdaq Crypto Index US ETF Under Proposed Nasdaq Rule
5712
June 4, 2025.
I. Introduction
On February 18, 2025, The Nasdaq Stock Market LLC (``Exchange'' or
``Nasdaq'') 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 adopt new Nasdaq Rule 5712 to provide for the
listing and trading of Commodity- and/or Digital Asset-Based Investment
Interests and to list and trade shares (``Shares'') of the Hashdex
Nasdaq Crypto Index US ETF (``Trust'') under proposed Nasdaq Rule 5712.
On February 27, 2025, the Exchange filed Amendment No. 1 to the
proposed rule change, which replaced and superseded the original filing
in its entirety. The proposed rule change, as modified by Amendment No.
1, was published for comment in the Federal Register on March 7,
2025.\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. 102513 (Mar. 3,
2025), 90 FR 11563 (``Notice''). Comments received on the proposed
rule change are available at: https://www.sec.gov/comments/sr-nasdaq-2025-016/srnasdaq2025016.htm.
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On April 17, 2025, pursuant to Section 19(b)(2) of the 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, as modified by Amendment No. 1.\5\ This order institutes
proceedings under Section
[[Page 24442]]
19(b)(2)(B) of the Act \6\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 102885, 90 FR 17092
(Apr. 23, 2025) (designating June 5, 2025, as the date by which the
Commission shall either approve, disapprove, or institute
proceedings to determine whether to disapprove the proposed rule
change, as modified by Amendment No. 1).
\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Summary of the Proposal, as Modified by Amendment No. 1
A. Proposed Listing Standards for Commodity- and/or Digital Asset-Based
Investment Interests
As described in more detail in the Notice,\7\ the Exchange proposes
to adopt new Nasdaq Rule 5712 to provide for the listing and trading of
Commodity- and/or Digital Asset-Based Investment Interests. Proposed
Nasdaq Rule 5712(c)(1) defines ``Commodity- and/or Digital Asset-Based
Investment Interests'' to mean ``a security (a) that is issued by a
trust, limited liability company, or other similar entity (the `Fund')
that holds (1) specified commodities and/or digital assets deposited
with the Fund, or (2) specified commodities and/or digital assets and,
in addition to such specified commodities and/or digital assets,
derivative securities products \8\ deposited with the Fund and/or cash;
(b) that is issued by such Fund in a specified aggregate minimum number
in return for a deposit of a quantity of the underlying commodity(ies),
digital asset(s), derivative securities products, and/or cash; and (c)
that, when aggregated in the same specified minimum number, may be
redeemed at a holder's request by such Fund which will deliver to the
redeeming holder the quantity of the underlying commodity(ies), digital
asset(s), derivative securities products, and/or cash.'' \9\
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\7\ See supra note 3.
\8\ The Exchange defines ``derivative securities products'' as
securities that meet the definition of ``derivative securities
product'' in Rule 19b-4(e) under the Act. See Notice at 11564.
\9\ See id.
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Proposed Nasdaq Rule 5712(c)(2) states that ``commodity,'' for
purposes of this rule, ``means commodities as defined in Section 1a(9)
of the Commodity Exchange Act.'' \10\ Proposed Nasdaq Rule 5712(c)(3)
defines the term ``digital asset,'' for purposes of this rule, to mean
``any digital representation of value recorded on a cryptographically
secured, distributed ledger (i.e., blockchain) or similar technology.''
\11\
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\10\ See id.
\11\ See id.
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Proposed Nasdaq Rule 5712 sets forth certain listing requirements
specific to Commodity- and/or Digital Asset-Based Investment Interests,
as described in more detail in the Notice and Exhibit 5 thereto.\12\
Among other things, proposed Nasdaq Rule 5712(e)(1)(ii) would provide
that there shall be no limitation on the percentage of a Fund's
portfolio that may be invested in commodity and/or digital asset
holdings, ``except that, in the aggregate, at least 90% of the weight
of such holdings shall, on both an initial and continuing basis,
consist of commodities and/or digital assets concerning which the
Exchange is able to obtain information via the Intermarket Surveillance
Group (`ISG') from other members of the ISG or via a comprehensive
surveillance sharing agreement.'' \13\
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\12\ See Notice, supra note 3. See also Exhibit 5 to the
proposed rule change, available at https://www.sec.gov/files/rules/sro/nasdaq/2025/34-102513-ex5.pdf.
\13\ See Notice at 11564.
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The Exchange also proposes to amend Nasdaq Rule 5615(a)(6)(B)
(Exemptions from Certain Corporate Governance Requirements) to include
Commodity- and/or Digital Asset-Based Investment Interests in the
definition of ``Derivative Securities,'' the issuers of which are
exempt from certain enumerated corporate governance requirements.\14\
In addition, the Exchange proposes to amend its existing trading halt
rules related to exchange-traded products (``ETPs'') to add references
to Commodity- and/or Digital Asset-Based Investment Interests to make
clear that such products will be subject to those rules.\15\
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\14\ See id. at 11565. Nasdaq Rule 5615(a)(6)(A) provides that
for issuers whose only securities listed on Nasdaq are non-voting
preferred securities, debt securities, or Derivative Securities,
such issuers are exempt from the requirements relating to
independent directors (Nasdaq Rule 5605(b)), compensation committees
(Nasdaq Rule 5605(d)), director nominations (Nasdaq Rule 5605(e)),
codes of conduct (Nasdaq Rule 5610), and meetings of shareholders
(Nasdaq Rule 5620(a)). In addition, these issuers are exempt from
the requirements relating to audit committees (Nasdaq Rule 5605(c)),
except for the applicable requirements of Exchange Act Rule 10A-3.
If, on the other hand, the issuer lists on Nasdaq its common stock
or voting preferred stock, or their equivalent, it will be subject
to all the requirements of the Nasdaq 5600 Rule Series. See Nasdaq
Rule 5615(a)(6)(A).
\15\ See Notice at 11565. Specifically, the Exchange proposes to
(i) amend Equity 4, Nasdaq Rule 4120(a)(9) to add Commodity- and/or
Digital Asset-Based Investment Interests to the list of ETPs for
which the Exchange may halt trading under certain circumstances and
(ii) amend Equity 4, Nasdaq Rule 4120(b)(4)(A) to add Commodity-
and/or Digital Asset Based Investment Interests to the definition of
``Derivative Securities Product'' to make clear that this product
type will be subject to the Exchange's authority to halt Derivative
Securities Products pursuant to Nasdaq Rule 4120(a)(10) if the net
asset value (``NAV'') is not being disseminated to all market
participants at the same time. See id.
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B. Hashdex Nasdaq Crypto Index US ETF
As described in more detail in the Notice,\16\ the Exchange also
proposes to list and trade Shares of the Trust under proposed Nasdaq
Rule 5712.\17\
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\16\ See supra note 3.
\17\ The Commission previously approved the listing and trading
of the Shares of the Trust under Nasdaq Rule 5711(d) (Commodity-
Based Trust Shares) on December 19, 2024. See 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).
See also Notice of Filing of Amendment No. 1 and Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change, as Modified by Amendment No. 1, To List and Trade
Shares of the Hashdex Nasdaq Crypto Index US ETF Under Nasdaq Rule
5711(d), Securities Exchange Act Release No. 101218 (Sept. 30,
2024), 89 FR 80970 (Oct. 4, 2024) (SR-NASDAQ-2024-028) (``Amendment
No. 1''); and Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Update Certain Representations Relating to
Service Providers and Basket Size of the Hashdex Nasdaq Crypto Index
US ETF, Securities Exchange Act Release No. 102309 (Jan. 29, 2025),
90 FR 8961 (Feb. 4, 2025) (SR-NASDAQ-2025-006) (updating certain
representations made in Amendment No. 1 and, together with Amendment
No. 1, the ``Original Trust Filing''). The Exchange states that the
current filing amends representations regarding the investment
objective and strategy of the Trust made in the Original Trust
Filing and proposes to list and trade the Shares under proposed
Nasdaq Rule 5712 instead of Nasdaq Rule 5711(d). The Exchange states
that the Original Trust Filing will remain in effect until this
proposal is approved by the Commission, at which time the Exchange
would transfer the Trust from its current listing under Nasdaq Rule
5711(d) to a new listing under proposed Nasdaq Rule 5712, and the
Trust would implement its amended investment strategy as described
in this filing upon such approval. See Notice at 11563.
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According to the Exchange, the investment objective of the Trust
will be to ensure that the daily changes in the NAV of the Shares
correspond to the daily changes in the price of the Nasdaq Crypto
Settlement Price Index (``Index''),\18\ less expenses and liabilities
of the Trust, by investing in the digital asset constituents of the
Index (``Index Constituents'').\19\ The assets of the Trust will
consist of the Index Constituents, cash, and cash equivalents.\20\ The
weighting of each Index Constituent in
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the Trust's portfolio is generally expected to match the weighting of
the Index Constituents in the Index,\21\ except when the Sponsor
determines to exclude or limit the weight of one or more digital assets
from the Trust's portfolio in certain rules-based circumstances, in
which case the weightings of the digital assets held by the Trust are
generally expected to be calculated proportionally to the respective
Index Constituents for the remaining Index Constituents.\22\ As of the
date of the filing, the Index Components and their weightings were as
follows: \23\
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\18\ The Index, which is designed to measure the performance of
a portion of the overall crypto asset market, is owned and
administered by Nasdaq, Inc. and is calculated by CF Benchmarks
Limited. See id. at 11567.
\19\ See id. at 11566. The Trust is managed and controlled by
the Hashdex Asset Management Ltd. (``Sponsor'') and administered by
U.S. Bancorp Fund Services, LLC (``Administrator''). Coinbase
Custody Trust Company, LLC and BitGo Trust Company, Inc. will be
responsible for the custody of the Trust's digital assets. See id.
at 11565-66.
\20\ See id. at 11571.
\21\ According to the Exchange, crypto assets are eligible for
inclusion in the Index if they satisfy the criteria set forth under
the Nasdaq Crypto Index methodology, and the Index Constituents are
weighted according to their relative free float market
capitalizations. The Index adjusts its constituents and weightings
on a quarterly basis to reflect changes in the crypto asset markets.
See id. at 11567.
\22\ See id. at 11566.
\23\ See id.
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Constituents Weight (%)
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Bitcoin (BTC).............................................. 72.70
Ether (ETH)................................................ 14.48
Solana (SOL)............................................... 4.78
XRP Ledger (XRP)........................................... 5.02
Cardano (ADA).............................................. 1.50
Chainlink (LINK)........................................... 0.51
Avalanche (AVAX)........................................... 0.37
Litecoin (LTC)............................................. 0.37
Uniswap (UNI).............................................. 0.27
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For purposes of calculating NAV, the Administrator will value the
digital assets held by the Trust based on the settlement price of each
Index Constituent (``Index Constituent Settlement Price''),\24\ unless
the Index Constituent Settlement Price is not available or the
Administrator determines that the Index Constituent Settlement Price is
unreliable.\25\ The Trust will issue and redeem Shares in cash with
authorized participants on a continuous basis in one or more
``Baskets'' of 10,000 Shares.\26\
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\24\ For additional details regarding the calculation of the
Index Constituent Settlement Prices, see Notice at 11568.
\25\ See id. at 11571.
\26\ See id. at 11569-70.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
NASDAQ-2025-016 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \27\ to determine whether the proposed rule
change, as modified by Amendment No. 1, 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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\27\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\28\ 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
manipulative acts and practices'' and ``to protect investors and the
public interest.'' \29\
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\28\ Id.
\29\ 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, with respect to
the proposal to allow the listing and trading of Commodity- and/or
Digital Asset-Based Investment Interests on the Exchange, the
Commission seeks comment on whether the requirements and associated
definitions set forth in proposed Nasdaq Rule 5712 are sufficiently
clear. The Commission also seeks comment on whether the proposal to
list and trade Shares of the Trust, which would hold BTC, ETH, SOL,
XRP, ADA, LINK, AVAX, LTC, and UNI, and potentially other commodities,
digital assets, and/or derivative securities products, 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, as
modified by Amendment No. 1, 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.\30\
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\30\ 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, as modified by
Amendment No. 1, should be approved or disapproved by July 1, 2025. Any
person who wishes to file a rebuttal to any other person's submission
must file that rebuttal by July 15, 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-NASDAQ-2025-016 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-NASDAQ-2025-016. 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
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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-NASDAQ-2025-016 and should be submitted on or before July 1, 2025.
Rebuttal comments should be submitted by July 15, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(57).
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Stephanie Fouse,
Assistant Secretary.
[FR Doc. 2025-10442 Filed 6-9-25; 8:45 am]
BILLING CODE 8011-01-P