[Federal Register Volume 90, Number 146 (Friday, August 1, 2025)]
[Notices]
[Pages 36248-36250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-14543]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103571; File Nos. SR-NASDAQ-2025-008; SR-NASDAQ-2025-
038; SR-CboeBZX-2025-010; SR-CboeBZX-2025-023; SR-CboeBZX-2025-031; SR-
CboeBZX-2025-033; SR-CboeBZX-2025-035; SR-CboeBZX-2025-050; SR-
NYSEARCA-2025-38]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Cboe
BZX Exchange, Inc.; NYSE Arca, Inc.; Order Granting Accelerated
Approval of Proposed Rule Changes, as Modified by Amendments Thereto,
To Amend Certain Bitcoin and Ether-Based Commodity-Based Trust Shares
To Permit In-Kind Creations and Redemptions
July 29, 2025.
I. Introduction
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 19b-4 thereunder (``Rule 19b-4''),\2\
The Nasdaq Stock Market LLC (``Nasdaq''), Cboe BZX Exchange, Inc.
(``BZX''), and NYSE Arca, Inc. (``NYSE Arca,'' and together with Nasdaq
and BZX, the ``Exchanges''), each of which lists and trades bitcoin-
and ether-based Commodity Based Trust Shares,\3\ filed with the
Securities and Exchange Commission (``Commission'') the respective
proposed rule changes to permit the following trusts (each a ``Trust,''
and collectively, ``Trusts'') to engage in creations and redemptions of
their shares with authorized participants on an in-kind basis: (i)
iShares Bitcoin Trust \4\ and iShares Ethereum Trust,\5\ listed under
Nasdaq Rule 5711(d) (Commodity-Based Trust Shares); (ii) ARK 21Shares
Bitcoin ETF and 21Shares Core Ethereum ETF,\6\ Fidelity Wise Origin
Bitcoin Fund and Fidelity Ethereum Fund,\7\ VanEck Bitcoin ETF and
VanEck Ethereum ETF,\8\ WisdomTree Bitcoin Fund,\9\ Invesco Galaxy
Bitcoin ETF and Invesco Galaxy Ethereum ETF,\10\ and Franklin Bitcoin
ETF, Franklin Ethereum ETF, and Franklin Crypto Index ETF,\11\ each
listed under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares); and
(iii) Bitwise Bitcoin ETF Trust and Bitwise Ethereum ETF,\12\ listed
under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares). Each of
the
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foregoing proposed rule changes, as modified by their respective
amendments, is referred to herein as a ``Proposal'' and collectively as
the ``Proposals.'' \13\ The Proposals were published for comment in the
Federal Register.\14\ This order approves the Proposals on an
accelerated basis.\15\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Commodity-Based Trust Shares are securities that are issued
by a trust that holds a specified commodity deposited with the
trust, or a specified commodity and, in addition to such specified
commodity, cash; that are issued by such trust in a specified
aggregate minimum number in return for a deposit of a quantity of
the underlying commodity and/or cash; and that, when aggregated in
the same specified minimum number, may be redeemed at a holder's
request by such trust which will deliver to the redeeming holder the
quantity of the underlying commodity and/or cash. See Nasdaq Rule
5711(d)(iv)(a), BZX Rule 14.11(e)(4)(C)(i), and NYSE Arca Rule
8.201-E(c)(1). The Commission previously approved the listing and
trading of Commodity-Based Trust Shares issued by the Trusts. 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); 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);
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).
\4\ See Notice of Filing of a Proposed Rule Change, as Modified
by Amendment No. 2, to Amend the Rules Governing the Listing and
Trading of the Shares of the iShares Bitcoin Trust to Permit In-Kind
Creations and Redemptions (SR-NASDAQ-2025-008), Securities Exchange
Act Release No. 103406 (July 9, 2025), 90 FR 31386 (July 14, 2025)
(``iShares BTC Amendment'').
\5\ See Notice of Filing of Amendment No. 1 and Designation of a
Longer Period for Commission Action on a Proposed Rule Change, as
Modified by Amendment No. 1, to Amend the Rules Governing the
Listing and Trading of Shares of the iShares Ethereum Trust to
Permit In-Kind Creations and Redemptions (SR-NASDAQ-2025-038),
Securities Exchange Act Release No. 103416 (July 9, 2025), 90 FR
31507 (July 14, 2025) (``iShares ETH Amendment'').
\6\ See Notice of Filing of a Proposed Rule Change, as Modified
by Amendment No. 3, to Amend the Rule Governing the Listing and
Trading of the ARK 21Shares Bitcoin ETF and the 21Shares Core
Ethereum ETF to Permit In-Kind Creations and Redemptions (SR-
CboeBZX-2025-010), Securities Exchange Act Release No. 103524 (July
22, 2025), 90 FR 35331 (July 25, 2025) (``21Shares Amendment'').
\7\ See Notice of Filing of a Proposed Rule Change, as Modified
by Amendment No. 1, to Amend the Rule Governing the Listing and
Trading of the Fidelity Wise Origin Bitcoin Fund and the Fidelity
Ethereum Fund to Permit In-Kind Creations and Redemptions (SR-
CboeBZX-2025-023), Securities Exchange Act Release No. 103525 (July
22, 2025), 90 FR 35355 (July 25, 2025) (``Fidelity Amendment'').
\8\ See Notice of Filing of a Proposed Rule Change, as Modified
by Amendment No. 1, to Amend the Rule Governing the Listing and
Trading of the VanEck Bitcoin ETF and the VanEck Ethereum ETF to
Permit In-Kind Creations and Redemptions (SR-CboeBZX-2025-031),
Securities Exchange Act Release No. 103526 (July 22, 2025), 90 FR
35348 (July 25, 2025) (``VanEck Amendment'').
\9\ See Notice of Filing of a Proposed Rule Change, as Modified
by Amendment No. 1, to Amend the Rule Governing the Listing and
Trading of the WisdomTree Bitcoin Fund to Permit In-Kind Creations
and Redemptions (SR-CboeBZX-2025-033), Securities Exchange Act
Release No. 103527 (July 22, 2025), 90 FR 35351 (July 25, 2025)
(``WisdomTree Amendment'').
\10\ See Notice of Filing of a Proposed Rule Change, as Modified
by Amendment No. 1, to Amend the Rule Governing the Listing and
Trading of the Invesco Galaxy Bitcoin ETF and the Invesco Galaxy
Ethereum ETF to Permit In-Kind Creations and Redemptions (SR-
CboeBZX-2025-035), Securities Exchange Act Release No. 103529 (July
22, 2025), 90 FR 35335 (July 25, 2025) (``Invesco Amendment'').
\11\ See Notice of Filing of a Proposed Rule Change, as Modified
by Amendment No. 1, to Amend the Rule Governing the Listing and
Trading of the Franklin Bitcoin ETF, the Franklin Ethereum ETF, and
the Franklin Crypto Index ETF, to Permit In-Kind Creations and
Redemptions (SR-CboeBZX-2025-050), Securities Exchange Act Release
No. 103530 (July 22, 2025), 90 FR 35343 (July 25, 2025) (``Franklin
Amendment'').
\12\ See Notice of Filing of Amendment No. 2 to Proposed Rule
Change to Amend the Bitwise Bitcoin ETF Trust and the Bitwise
Ethereum ETF in Order to Permit In-Kind Creations and Redemptions
(SR-NYSEARCA-2025-38), Securities Exchange Act Release No. 103407
(July 9, 2025), 90 FR 31390 (July 14, 2025) (``Bitwise Amendment'').
\13\ For the complete procedural history of each Proposal, see
each respective Amendment, supra notes 4-12.
\14\ The Commission received comments on the iShares BTC
Amendment, available at: https://www.sec.gov/comments/sr-nasdaq-2025-008/srnasdaq2025008.htm and the Fidelity Amendment available
at: https://www.sec.gov/comments/sr-cboebzx-2025-023/srcboebzx2025023.htm.
\15\ See infra Section III.
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II. Discussion and Commission Findings
After careful review, the Commission finds that the Proposals are
consistent with the Exchange Act and rules and regulations thereunder
applicable to a national securities exchange.\16\ In particular, the
Commission finds that the Proposals are consistent with Section 6(b)(5)
of the Exchange Act,\17\ which requires, among other things, that the
Exchanges' rules be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, 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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\16\ In approving the Proposals, the Commission has considered
the Proposals' impacts on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\17\ 15 U.S.C. 78f(b)(5).
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Currently, the Trusts only create or redeem their shares with
authorized participants in cash.\18\ The Proposals would allow the
Trusts, in addition to their ability to transact with authorized
participants in cash, to engage in creations or redemptions of their
shares in an in-kind transaction of spot bitcoin or spot ether, as
applicable.\19\ All Commodity-Based Trust Shares approved by the
Commission before the approval of bitcoin and ether exchange-traded
products could create and redeem shares on an in-kind basis.\20\
Permitting in-kind creations and redemptions offer the Trusts an
additional method of transacting with authorized participants and may
enhance tax efficiencies and minimize transaction costs. Providing
market participants with flexibility and creating potential
efficiencies in the market is consistent with the requirements of
Section 6(b)(5) of the Exchange Act \21\ and, in particular, the
requirement that the Exchanges' rules be designed to remove impediments
to and perfect the mechanism of a free and open market and a national
market system. Moreover, the Exchanges represent that all other
representations relating to the Trusts will remain unchanged and
continue to constitute continuing listing standards \22\ and that the
Trusts will continue to comply with all other provisions of the
applicable Exchange listing standards relating to Commodity-Based Trust
Shares.\23\ As such, based on the record before the Commission,\24\ the
Commission finds that the Proposals are consistent with Section 6(b)(5)
of the Exchange Act.\25\
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\18\ See supra note 3.
\19\ See supra notes 4-12. Generally, in an in-kind creation, an
authorized participant will deliver spot bitcoin or spot ether, as
applicable, to the trust in exchange for trust shares. And in an in-
kind redemption, an authorized participant will deliver trust shares
to the trust in exchange for spot bitcoin or spot ether, as
applicable.
\20\ See, e.g., streetTRACKS Gold Shares, Exchange Act Release
No. 50603 (Oct. 28, 2004), 69 FR 64614 (Nov. 5, 2004) (SR-NYSE-2004-
22); iShares COMEX Gold Trust, Securities Exchange Act Release No.
51058 (Jan. 19, 2005), 70 FR 3749 (Jan. 26, 2005) (SR-Amex-2004-38);
iShares Silver Trust, Securities Exchange Act Release No. 53521
(Mar. 20, 2006), 71 FR 14967 (Mar. 24, 2006) (SR-Amex-2005-072);
ETFS Gold Trust, Securities Exchange Act Release No. 59895 (May 8,
2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40); ETFS
Palladium Trust, Securities Exchange Act Release No. 61220 (Dec. 22,
2009), 74 FR 68895 (Dec. 29, 2009) (SR-NYSEArca-2009-94); ETFS
Platinum Trust, Securities Exchange Act Release No. 61219 (Dec. 22,
2009), 74 FR 68886 (Dec. 29, 2009) (SR-NYSEArca-2009-95); ETFS
Precious Metals Basket Trust, Securities Exchange Act Release No.
62692 (Aug. 11, 2010), 75 FR 50789 (Aug. 17, 2010) (SR-NYSEArca-
2010-56); ETFS White Metals Basket Trust, Securities Exchange Act
Release No. 62875 (Sept. 9, 2010), 75 FR 56156 (Sept. 15, 2010) (SR-
NYSEArca-2010-71). In addition, creations and redemptions of
exchange-traded funds (``ETFs'') that are structured as an open-end
management investment company or as a unit investment trust under
the Investment Company Act of 1940 (``Investment Company Act'') are
typically effected in kind. See Investment Company Act Release No.
33646 (Sept. 9, 2019), 84 FR 57162 (October 24, 2019) (adopting Rule
6c-11 under Investment Company Act).
\21\ See supra note 17 and accompanying text.
\22\ See iShares BTC Amendment at 31387; iShares ETH Amendment
at 31508; 21Shares Amendment at 35334; Fidelity Amendment at 35357;
VanEck Amendment at 35350; WisdomTree Amendment at 35352-3; Invesco
Amendment at 35338; Franklin Amendment at 35347; and Bitwise
Amendment at 31392.
\23\ See NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares);
Nasdaq Rule 5711(d) (Commodity-Based Trust Shares); and BZX Rule
14.11(e)(4) (Commodity-Based Trust Shares).
\24\ The Commission received one comment letter supporting SR-
NASDAQ-2025-008 and stating that approving that proposal would
provide significant benefits to investors, including increased tax
efficiency, simplified reporting, enhanced asset security, and
improved market integrity and efficiency. See Letter from Jeff
Kleban, dated May 14, 2025. The Commission also received one comment
letter generally supporting SR-CboeBZX-2025-023. See Letter from
Sammy Aigo, dated Feb. 19, 2025.
\25\ See supra note 17.
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III. Accelerated Approval of the Proposals
The Commission finds good cause to approve the Proposals prior to
the 30th day after the date of publication of notice of the Exchanges'
amended filings \26\ in the Federal Register. The amended filings make
technical clarifications of the proposed in-kind creation and
redemption process and conform various representations in the amended
filings to the applicable Exchange's listing standards and to
representations that the Exchanges have made for other Commodity-Based
Trust Shares that the Commission has approved.\27\ These changes do not
raise any novel regulatory issues. Further, the changes assist the
Commission in evaluating the Proposals and in determining that they are
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,\28\ to approve the Proposals on
an accelerated basis.
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\26\ See supra notes 4-12.
\27\ See supra note 20.
\28\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion
This approval order is based on all of the Exchanges'
representations and descriptions in their respective amended filings,
which the Commission has evaluated as discussed above.\29\ For the
reasons set forth above, the Commission finds, pursuant to Section
19(b)(2) of the Exchange Act,\30\ that the Proposals are consistent
with the requirements of the Exchange Act and the rules and regulations
thereunder applicable to a national securities
[[Page 36250]]
exchange, and in particular, with Section 6(b)(5) of the Exchange
Act.\31\
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\29\ In addition, the shares of the Trusts in SR-NASDAQ-2025-008
and SR-NASDAQ-2025-038 must continue to comply with the requirements
of Nasdaq Rule 5711(d) (Commodity-Based Trust Shares) to be listed
and traded on Nasdaq on a continuing basis; the shares of the Trusts
in SR-CboeBZX-2025-010, SR-CboeBZX-2025-023, SR-CboeBZX-2025-031,
SR-CboeBZX-2025-033, SR-CboeBZX-2025-035, and SR-CboeBZX-2025-050
must continue to comply with the requirements of BZX Rule
14.11(e)(4) (Commodity-Based Trust Shares) to be listed and traded
on BZX on a continuing basis; and shares of the Trusts in SR-
NYSEARCA-2025-38 must continue to comply with the requirements of
NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares) to be listed
and traded on NYSE Arca on a continuing basis.
\30\ 15 U.S.C. 78s(b)(2).
\31\ 15 U.S.C. 78f(b)(5).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\32\ that the Proposals (SR-NASDAQ-2025-008; SR-NASDAQ-
2025-038; SR-CboeBZX-2025-010; SR-CboeBZX-2025-023; SR-CboeBZX-2025-
031; SR-CboeBZX-2025-033; SR-CboeBZX-2025-035; SR-CboeBZX-2025-050; SR-
NYSEARCA-2025-38) be, and hereby are, approved on an accelerated basis.
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\32\ 15 U.S.C. 78s(b)(2).
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-14543 Filed 7-31-25; 8:45 am]
BILLING CODE 8011-01-P