Federal Register, Volume 90 Issue 127 (Monday, July 7, 2025)

[Federal Register Volume 90, Number 127 (Monday, July 7, 2025)]
[Notices]
[Pages 29923-29926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-12518]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-103364; File No. SR-NYSEARCA-2024-87]

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 Grayscale Digital Large Cap Fund
LLC Under Amended NYSE Arca Rule 8.500-E (Trust Units)

July 1, 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 Grayscale
Digital Large Cap Fund LLC (``Fund'') under amended NYSE Arca Rule
8.500-E.\3\ The Proposal was published for comment in the Federal
Register.\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 Proposed Rule Change to Amend
NYSE Arca Rule 8.500-E and to List and Trade Shares of the Grayscale
Digital Large Cap Fund LLC, Securities Exchange Act Release No.
103345 (June 27, 2025) (SR-NYSEARCA-2024-87) (``Amendment No. 1''),
available at: https://www.sec.gov/files/rules/sro/nysearca/2025/34-103345.pdf.
\4\ Comments received on the Proposal are available at: https://www.sec.gov/comments/sr-nysearca-2024-87/srnysearca202487.htm.
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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). First, the
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.'' \6\ 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.'' \7\
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\5\ See supra note 3.
\6\ See NYSE Arca Rule 8.500-E(b)(2).
\7\ 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.\8\
Currently, the rule only provides that the Exchange may list and trade
Trust Units based on an underlying asset, commodity, security, or
portfolio.\9\ 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.'' \10\
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\8\ See id. at 4.
\9\ See NYSE Arca Rule 8.500-E(c).
\10\ 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.\11\
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\11\ 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.\12\
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\12\ See id. at 6.
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B. The Fund

The Exchange proposes to list and trade Shares of the Fund under
amended NYSE Arca Rule 8.500-E, as described above. The investment
objective of the Fund is for the value of the Shares to reflect the
value of the digital assets held by the Fund (``Fund Components''), as
determined by reference to their respective Index Prices \13\ and
weightings within the Fund, less the Fund's expenses and other
liabilities.\14\ The Fund's assets consist solely of the Fund
Components.\15\ The Fund Components, as well as their weightings, will
consist of the digital assets that make up the CoinDesk 5 Index
(``CD5''), as rebalanced from time to time, subject to the Manager's
discretion to exclude and/or rebalance the weighting of individual
digital assets in certain rules-based circumstances.\16\ The Manager
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 Fund Components 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'') \17\ and that

[[Page 29924]]

no more than 15% of the Fund Components will be non-Approved
Components.\18\ As of the date of the Amendment No. 1, the Fund
Components and their weightings were bitcoin (80.20%), ether (11.39%),
Solana (2.78%), XRP (4.82%), and Cardano (0.81%).\19\
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\13\ The ``Index Price'' of each Fund Component is the U.S.
dollar value derived from the Digital Asset Trading Platforms that
are reflected in each Fund Component's CoinDesk CCIXber Reference
Rate, calculated at 4:00 p.m., New York time, on each business day.
See id. at 10, n.20. A ``Digital Asset Trading Platform'' is an
electronic marketplace where participants may trade, buy, and sell
digital assets based on bid-ask trading. See id. at 15, n.29.
\14\ See id. at 11. The Fund is a Cayman Islands limited
liability company. The manager of the Fund is Grayscale Investments
Sponsors, LLC (``Manager''). The custodian is Coinbase Custody Trust
Company, LLC. See id. at 7.
\15\ See id. at 9.
\16\ See id. at 9. CD5 represents the five largest and the most
liquid digital assets in the digital asset market. The respective
weightings of CD5 components are determined by market capitalization
and rebalanced quarterly. See id. at 9, n.18; 32-33; 35-36.
\17\ As of the filing of Amendment No. 1, more than 85% of the
Fund Components were bitcoin (80.20%) and ether (11.39%). See id. at
8. 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.
\18\ See Amendment No. 1 at 34. The Exchange states that, to the
extent the Fund'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 Manager 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
Manager will rebalance the Fund's portfolio according to the
methodology described in the Fund's prospectus such that at least
85% of the weightings of the Fund Components will consist of
Approved Components. If it is anticipated that, as of 4:00 p.m. E.T.
on a given trading day, the Fund's portfolio will not consist of at
least 85% Approved Components by the start of the next NYSE Arca
Core Trading Session, the Manager 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 Fund Components consist of Approved
Components. See id. at 34-35.
\19\ See id. at 8.
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The Fund will use the Index Price for each Fund Component to
calculate its net asset value (``NAV''), which will occur at 4:00 p.m.,
New York time, on each business day or as soon thereafter as
practicable.\20\ The Fund will issue Shares to, and redeem Shares from,
authorized participants on an ongoing basis for cash, but only in one
or more ``Baskets'' of 10,000 Shares.\21\
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\20\ See id. at 12-14. The rules that the Manager will employ to
calculate the Index Prices for each Fund Component are described in
Amendment No. 1. See id. at 48-51.
\21\ See id. at 69, 71.
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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.\22\ In particular, the
Commission finds that the Proposal is consistent with Section 6(b)(5)
of the Exchange Act,\23\ 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,\24\ 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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\22\ 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).
\23\ 15 U.S.C. 78f(b)(5).
\24\ 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.\25\ 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.'' \26\
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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\25\ See Section 1a(10) of the CEA for the definition of
``commodity pool.''
\26\ 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 \27\ 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.\28\ Thus, the Exchange's rules, as amended,

[[Page 29925]]

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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\27\ 15 U.S.C. 78f(b)(5).
\28\ 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 Fund

1. Exchange Act Section 6(b)(5)
The Commission finds that the listing and trading of the Fund is
consistent with the Exchange Act. The structure of the Fund, 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 Fund'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 Fund's investments in other assets, which could include
other types of commodities as well as securities.\29\ 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.\30\ In approving an ETP 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.\31\
Accordingly, the Commission finds that the requirement that the Fund
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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\29\ See Amendment No. 1 at 34. See also supra notes 17-18 and
accompanying text.
\30\ 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.
\31\ For example, as of the filing of the Amendment No. 1, 85%
of the Fund'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 17.
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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.\32\ 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) \33\ that the Exchange's
rules be designed to ``prevent fraudulent and manipulative acts and
practices.'' \34\
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\32\ 15 U.S.C. 78s(b)(2)(C).
\33\ 15 U.S.C. 78f(b)(5).
\34\ 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 Fund
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 Fund 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
Fund's portfolio, and this limitation is consistent with similar
limitations approved by the Commission with respect to ETP
investments. See supra notes 30 and 31. 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 https://www.cmegroup.com/markets/cryptocurrencies/xrp/xrp.html. See also
https://www.cmegroup.com/markets/cryptocurrencies/solana.html.
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2. Exchange Act Section 11A(a)(1)(C)(iii)
The Proposal sets forth aspects of the Fund, 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.\35\ This includes
commitments regarding: the availability of quotation and last-sale
information for the Shares; the availability on the Fund's website of
certain information related to the Fund, 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.\36\ 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.\37\ Further, the listing rules of the Exchange require that
all statements and representations made in its filing regarding, among
others, the description of the Fund's holdings, limitations on such
holdings, and the applicability of the Exchange's listing rules
specified in the filing, will constitute continued

[[Page 29926]]

listing requirements.\38\ Moreover, the Proposal states that: the
Fund's Manager has represented to the Exchange that it will advise the
Exchange of any failure by the Fund 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 Fund is not in compliance
with the applicable listing requirements, the Exchange will commence
delisting procedures.\39\
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\35\ See, e.g., Spot Bitcoin & Ether ETP Approval Order at
106709.
\36\ See Amendment No. 1 at 79-86.
\37\ See id. at 82.
\38\ See NYSE Arca Rule 8.500-E, Commentary .03.
\39\ See Amendment No. 1 at 86.
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The Commission therefore finds that the Proposal, as with other
ETPs that the Commission has approved,\40\ 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 Fund's portfolio, and to ensure fair and
orderly markets for the Shares.\41\
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\40\ See Spot Bitcoin Approval Order, Spot Ether ETP Approval
Order, and Spot Bitcoin & Ether ETP Approval Order.
\41\ 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 Feb. 27, 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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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 \42\ 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 Fund, further described the terms of the Fund, 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.\43\ 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,\44\ to approve
the Proposal on an accelerated basis.
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\42\ See supra note 3.
\43\ See supra Item III.B.2.
\44\ 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.\45\ For the reasons set forth above,
the Commission finds, pursuant to Section 19(b)(2) of the Exchange
Act,\46\ 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.\47\
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\45\ In addition, the Shares of the Fund 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.
\46\ 15 U.S.C. 78s(b)(2).
\47\ 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,\48\ that the proposed rule change (SR-NYSEARCA-2024-87),
as modified by Amendment No. 1, be, and hereby is, approved on an
accelerated basis.
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\48\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\49\
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\49\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-12518 Filed 7-3-25; 8:45 am]
BILLING CODE 8011-01-P