[Federal Register Volume 90, Number 223 (Friday, November 21, 2025)]
[Notices]
[Pages 52724-52727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-20523]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104212; File No. SR-NYSEARCA-2024-98]
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Setting
Aside Action by Delegated Authority and Approving a Proposed Rule
Change, as Modified by Amendment No. 1, To Amend NYSE Arca Rule 8.500-E
(Trust Units) and To List and Trade Shares of the Bitwise 10 Crypto
Index ETF Under Amended NYSE Arca Rule 8.500-E (Trust Units)
November 18, 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 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade shares of the
Bitwise 10 Crypto Index ETF under certain proposed listing rules.\3\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The proposed rule change was published for comment in the
Federal Register on December 3, 2024. See Securities Exchange Act
Release No. 101775 (Nov. 27, 2024), 89 FR 95853 (Dec. 3, 2024). On
January 14, 2025, the Commission extended the time period for
Commission action on the proposed rule change. See Securities
Exchange Act Release No. 102186 (Jan. 14, 2025), 90 FR 7199 (Jan.
21, 2025). On March 3, 2025, the Commission instituted proceedings
pursuant to section 19(b)(2)(B) of the Exchange Act to determine
whether to approve or disapprove the proposed rule change. See
Securities Exchange Act Release No. 102514 (Mar. 3, 2025), 90 FR
11559 (Mar. 7, 2025). On May 28, 2025, the Commission extended the
time period for Commission action on proceedings to determine
whether to approve or disapprove the proposed rule change. See
Securities Exchange Act Release No. 103140 (May 28, 2025), 90 FR
23574 (June 3, 2025). On July 17, 2025, the Exchange filed Amendment
No. 1 to the proposed rule change, which replaced and superseded the
proposed rule change in its entirety. The proposed rule change, as
modified by Amendment No. 1, was published for comment in the
Federal Register on July 23, 2025. See Securities Exchange Act
Release No. 103499 (July 18, 2025), 90 FR 34681 (July 23, 2025)
(``Amendment No. 1'').
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On July 22, 2025, the Commission, acting through authority
delegated to the Division of Trading and Markets (``Division''),\4\
approved the proposed rule change, as modified by Amendment No. 1, on
an accelerated basis.\5\ On July 22, 2025, the Deputy Secretary of the
Commission notified NYSE Arca that, pursuant to Commission Rule of
Practice 431,\6\ the Commission would review the Division's action
pursuant to delegated authority and that the Division's action pursuant
to delegated authority was stayed until the Commission ordered
otherwise.\7\ On July 29, 2025, the Commission issued a scheduling
order, pursuant to Commission Rule of Practice 431, providing until
August 22, 2025, for any party or other person to file a written
statement in support of, or in opposition to, the Approval Order.\8\
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\4\ 17 CFR 200.30-3(a)(12).
\5\ See Securities Exchange Act Release No. 103531 (July 22,
2025), 90 FR 35339 (July 25, 2025) (``Approval Order'').
\6\ 17 CFR 201.431.
\7\ See Letter from J. Matthew DeLesDernier, Deputy Secretary,
Commission, to Le-Anh Bui, Senior Counsel, NYSE Group, Inc., dated
July 22, 2025, available at https://www.sec.gov/files/rules/sro/nysearca/2025/sr-nysearca-2024-98-rule-431-letter-2025-07-22.pdf.
\8\ See Securities Exchange Act Release No. 103572 (July 29,
2025), 90 FR 36253 (Aug. 1, 2025). Comments on the proposed rule
change, including statements concerning the Approval Order, are
available at: https://www.sec.gov/comments/sr-nysearca-2024-98/srnysearca202498.htm.
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The Commission has conducted a de novo review of NYSE Arca's
proposal, giving careful consideration to the entire record, including
all comments and statements submitted, to determine whether the
proposal is consistent with the requirements of the Exchange Act and
the rules and regulations thereunder that are applicable to a national
securities exchange. Under section 19(b)(2)(C) of the Exchange Act, the
Commission must approve the proposed rule change of a self-regulatory
organization if the Commission finds that the proposed rule change is
consistent with the requirements of the Exchange Act and the applicable
rules and regulations thereunder; if it does not make such a finding,
the Commission must disapprove the proposed rule change.\9\
Additionally, under Rule 700(b)(3) of the Commission's Rules of
Practice, the ``burden to demonstrate that a proposed rule change is
consistent with the Exchange Act and the rules and regulations issued
thereunder . . . is on the self-regulatory organization that proposed
the rule change.'' \10\ The description of a proposed rule change, its
purpose and operation, its effect, and a legal analysis of its
consistency with applicable requirements must all be sufficiently
detailed and specific to support an affirmative Commission finding.\11\
Any failure of a self-regulatory organization to provide the
information required by Rule 19b-4 and elicited on Form 19b-4 may
result in the Commission not having a sufficient basis to make an
affirmative finding that a proposed rule change is consistent with the
Exchange Act and the rules and regulations thereunder that are
applicable to the self-regulatory organization.\12\
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\9\ 15 U.S.C. 78s(b)(2)(C).
\10\ 17 CFR 201.700(b)(3).
\11\ See id.
\12\ See id. See also 17 CFR 240.19b-4.
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For the reasons discussed further herein, NYSE Arca has met its
burden to show that the proposed rule change is consistent with the
Exchange Act, and this order sets aside the Approval Order and approves
NYSE Arca's proposed rule change, as modified by Amendment No. 1. In
particular, the Commission concludes that the record before the
Commission demonstrates that NYSE Arca's proposal is consistent with
section 6(b)(5) of the Exchange Act,\13\ which requires that the rules
of a national securities exchange be designed, among other things, to
prevent fraudulent and manipulative acts and practices, 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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\13\ 15 U.S.C. 78f(b)(5).
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II. Summary of the Proposal
The Exchange proposes to list and trade shares (``Shares'') of the
Bitwise 10 Crypto Index ETF (``Trust'') under NYSE Arca Rule 8.500-
E.\14\ The investment objective of the Trust is to invest in a
portfolio of digital assets (each, a
[[Page 52725]]
``Portfolio Asset'' and, collectively, ``Portfolio Assets'') that
tracks the Bitwise 10 Large Cap Crypto Index (``Index'').\15\ The
Trust's only assets will be the Portfolio Assets and cash.\16\ The
Trust rebalances monthly alongside the rebalance of the Index to stay
current with any changes to the Index.\17\ The Portfolio Assets, as
well as their weightings, are generally expected to be the same as the
Index, except that the Sponsor may determine to exclude a particular
digital asset from the Portfolio Assets and/or rebalance the weighting
of the Portfolio Assets in certain rules-based circumstances.\18\ The
Sponsor will ensure that, on an initial and a continuing basis, as of 4
p.m. E.T. on every trading day, at least 85% of the Portfolio Assets
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'') \19\ and that no more than 15% of the
Portfolio Assets will be non-Approved Components.\20\ As of June 30,
2025, the Trust's Portfolio Assets and their weightings were: 78.72%
bitcoin (BTC), 11.10% ether (ETH), 4.97% XRP (XRP), 3.03% Solana (SOL),
0.78% Cardano (ADA), 0.35% SUI (SUI), 0.32% Chainlink (LINK), 0.28%
Avalanche (AVAX), 0.24% Litecoin (LTC), and 0.19% Polkadot (DOT).\21\
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\14\ As described in more detail in Amendment No. 1, the
Exchange also proposed to make certain amendments to NYSE Arca Rules
8.500-E (Trust Units), 5.3-E (Corporate Governance and Disclosure
Policies), and 5.3-E(e) (Shareholder Annual Meetings) to accommodate
the listing and trading of Shares of the Trust. See Amendment No. 1,
supra note 3. The Exchange proposed, and the Commission approved,
identical amendments to such NYSE Arca Rules in a separate proposed
rule change relating to the listing and trading of shares of another
ETP. See Order Setting Aside Action by Delegated Authority and
Approving a Proposed Rule Change, as Modified by Amendment No. 1, 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), Securities Exchange Act
Release No. 103996 (Sept. 17, 2025), 90 FR 45440 (Sept. 22, 2025)
(SR-NYSEARCA-2024-87) (approving the listing and trading of the
Grayscale Digital Large Cap Fund, which will hold at least 85% of
its investments in assets approved by the Commission to underlie an
ETP as primary investments) (``Grayscale Digital Large Cap Order'').
As a result, the Commission has already addressed identical
amendments and does not need to make additional findings with
respect to the Exchange's proposed amendments to such rules in this
filing.
\15\ See id. at 34683. 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
(``Administrator'') will be the custodian for the Trust's cash
holdings, as well as the Trust's administrator and transfer agent.
See id. at 34682-83.
\16\ See id. at 34683.
\17\ See id. The Index is administered by Bitwise Index
Services, LLC, an affiliate of the Sponsor. 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. See id. at 34683-84. The
Sponsor represents that it will maintain a firewall between it and
the personnel responsible for the maintenance of the Index or who
have access to information concerning changes and adjustments to the
Index. See id. at 34683 n.15.
\18\ See id. at 34683. The weighting of the Portfolio Assets
will differ slightly from the weightings of the Index components due
to the need for the Trust to implement actual rebalance
transactions, unlike the Index. See id. at 34684 n.29.
\19\ As of June 30, 2025, more than 85% of the Portfolio Assets
were bitcoin (78.72%) and ether (11.10%). See id. at 34683. 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. Recently, the
Commission approved an ETP with an investment objective similar to
the Trust, see Grayscale Digital Large Cap Order supra note 14, and
approved proposals to adopt generic listing standards for Commodity-
Based Trust Shares that hold spot commodities (or certain
derivatives thereon). See Order Granting Accelerated Approval of
Proposed Rule Changes, as Modified by Amendments Thereto, to Adopt
Generic Listing Standards for Commodity-Based Trust Shares,
Securities Exchange Act Release No. 103995 (Sept. 17, 2025), 90 FR
45414 (Sept. 22, 2025) (SR-NASDAQ-2025-056; SR-CboeBZX-2025-104; SR-
NYSEARCA-2025-54) (``Commodity-Based Trust Shares Generics Approval
Order''). Approved Components would include commodities that would
qualify to underlie Commodity-Based Trust Shares that list and trade
pursuant to such generic listing standards.
\20\ See Amendment No. 1 at 34685. The Exchange states that, to
the extent the Trust's composition is, or is anticipated to be, less
than 85% Approved Components as of 4 p.m. E.T. on a given trading
day, the Sponsor 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
Sponsor will rebalance the Trust's portfolio according to the
methodology described in the Trust's prospectus such that at least
85% of the weightings of the Portfolio Assets will consist of
Approved Components. If it is anticipated that, as of 4 p.m. E.T. on
a given trading day, the Trust's portfolio will not consist of at
least 85% Approved Components by the start of the next NYSE Arca
Core Trading Session, the Sponsor 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 Portfolio Assets consist of Approved
Components. See id. The Exchange also states that the Index will
implement a rule that will limit the Index components and weightings
thereof such that at least 85% of the weight of the Index components
shall, on both an initial and a continuing basis, consist of
Approved Components. See id. at 34684.
\21\ See id. at 34683.
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To determine the Trust's net asset value (``NAV''), the Sponsor
will rely on CF Benchmarks Ltd. (the ``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
p.m. E.T.,\22\ and the Trust will use the Reference Prices to calculate
its NAV.\23\ The Trust creates and redeems Shares from time to time for
cash in one or more ``Creation Units,'' which will initially consist of
at least 10,000 Shares, but may be subject to change.\24\
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\22\ See id. Each Reference Price aggregates the trade flow of
several major digital asset trading platforms during an observation
window between 3 p.m. and 4 p.m. E.T. into the U.S. dollar price of
one of each Portfolio Asset at 4 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
34683 n.17.
\23\ See id. at 34687. The Trust's NAV will be determined by the
Administrator once each Exchange trading day as of 4 p.m. E.T., or
as soon thereafter as practicable. 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. See id.
\24\ See id.
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III. Discussion and Commission Findings
The Commission finds that the proposed rule change, as modified by
Amendment No. 1, is consistent with the requirements of the Exchange
Act and the rules and regulations thereunder applicable to a national
securities exchange.\25\ In particular, the Commission finds that the
proposal is consistent with section 6(b)(5) of the Exchange Act,\26\
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,\27\ 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. The Commission therefore approves the
proposed rule change, as modified by Amendment No. 1.
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\25\ In approving this proposed rule change, the Commission has
considered the proposed rule change's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\26\ 15 U.S.C. 78f(b)(5).
\27\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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A. Exchange Act Section 6(b)(5)
The Commission finds that the listing and trading of the Trust is
consistent with the Exchange Act. The structure of
[[Page 52726]]
the Trust, 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 Trust'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 Trust's investments
in other assets, which could include other types of commodities as well
as securities.\28\ 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.\29\ 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.\30\ Accordingly, the Commission finds that the
requirement that the Trust 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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\28\ See Amendment No. 1 at 34684-85. See also supra notes 19-20
and accompanying text.
\29\ 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. See also Grayscale Digital
Large Cap Order, supra note 14.
\30\ For example, as of June 30, 2025, more than 85% of the
Trust'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. Similarly, in the Commodity-Based Trust Shares
Generics Approval Order, the Commission found that the proposed
eligibility requirements for commodities that may underlie
Commodity-Based Trust Shares are reasonably designed to help prevent
fraudulent and manipulative acts and practices. See supra note 19.
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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.\31\ 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) \32\ that the Exchange's
rules be designed to ``prevent fraudulent and manipulative acts and
practices.''
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\31\ 15 U.S.C. 78s(b)(2)(C).
\32\ 15 U.S.C. 78f(b)(5).
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B. Exchange Act Section 11A(a)(1)(C)(iii)
The proposal sets forth aspects of the Trust, 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.\33\ This includes
commitments regarding: the availability of quotation and last-sale
information for the Shares; the availability on the Trust's website of
certain information related to the Trust, 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.\34\ 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.\35\ Further, the listing rules of the Exchange require that
all statements and representations made in its filing regarding, among
others, the description of the Trust's holdings, limitations on such
holdings, and the applicability of the Exchange's listing rules
specified in the filing, will constitute continued listing
requirements.\36\ Moreover, the proposal states that: the Trust's
Sponsor has represented to the Exchange that it will advise the
Exchange of any failure by the Trust 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 Trust is not in compliance
with the applicable listing requirements, the Exchange will commence
delisting procedures.\37\
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\33\ See, e.g., Spot Bitcoin & Ether ETP Approval Order at
106709.
\34\ See Amendment No. 1 at 34692-94.
\35\ See id. at 34693.
\36\ See NYSE Arca Rule 8.500-E, Commentary .03.
\37\ See Amendment No. 1 at 34694.
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The Commission therefore finds that the proposal, as with other
ETPs that the Commission has approved,\38\ 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 Trust's portfolio, and to ensure fair and
orderly markets for the Shares.
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\38\ See Spot Bitcoin ETP Approval Order, Spot Ether ETP
Approval Order, and Spot Bitcoin & Ether ETP Approval Order.
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C. Comments
The Commission received two comment letters supporting the
proposal.\39\ One of these commenters
[[Page 52727]]
states that approving the proposal would provide benefits to investors
while promoting fair, orderly, and efficient markets.\40\ The other
commenter agrees with the Division's conclusion that the proposal is
consistent with the Exchange Act and does not raise novel regulatory
issues.\41\
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\39\ 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 (``Multicoin Letter''),
and Letter from Samir Kerbage, Chief Investment Officer, Hashdex
Asset Management Ltd., dated Aug. 12, 2025 (``Hashdex Letter'').
\40\ See Multicoin Letter.
\41\ See Hashdex Letter. This commenter requests that the
Commission lift the stay and approve the proposal. See id. In
addition, the commenter requests that the Commission approve other
proposals to list and trade similar funds ``simultaneously'' with
this proposal. See Hashdex Letter at 2 (citing to File Nos. SR-
NASDAQ-2025-016 and SR-NYSEArca-2024-87). This order addresses the
proposal currently before the Commission by setting aside the action
by delegated authority and approving the proposal. Other proposals
are beyond the scope of this order. In addition, SR-NYSEArca-2024-87
has been approved and SR-NASDAQ-2025-16 has been withdrawn. See
Grayscale Digital Large Cap Order, supra note 14. See also https://www.sec.gov/rules-regulations/self-regulatory-organization-rulemaking/national-securities-exchanges/all-years?sro_organization=192811&field_display_title_value=&release_number=&file_number=2025-016&year=All&month=All.
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One commenter opposing the proposal 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.\42\ As discussed above, the Trust will limit
the amount of assets that are not the primary investment underlying
ETPs approved by the Commission to 15% of the weight of the Trust's
portfolio, and this limitation is consistent with similar limitations
approved by the Commission with respect to ETP investments.\43\ 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.\44\
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\42\ See Letter from Anonymous, dated Feb. 10, 2025.
\43\ See supra notes 28-29.
\44\ See https://www.cmegroup.com/markets/cryptocurrencies/xrp/xrp.html. See also https://www.cmegroup.com/markets/cryptocurrencies/solana.html. See also Commodity-Based Trust Shares
Generics Approval Order, supra note 19.
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Another commenter opposing the proposal 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, and believes that approving the proposal
would endanger investors.\45\ 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.\46\ The Commission does not apply a ``cannot be
manipulated'' standard; rather, the Commission examines whether a
proposal meets the requirements of the Exchange Act.\47\ 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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\45\ See Letter from Benjamin L. Schiffrin, Director of
Securities Policy, Better Markets, Inc., dated Mar. 28, 2025.
\46\ See Exchange Act section 19(b)(2)(C), 15 U.S.C.
78s(b)(2)(C).
\47\ See, e.g., Spot Bitcoin ETP Approval Order at 3013 n.61.
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IV. Conclusion
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the Exchange Act and the rules and
regulations thereunder applicable to a national securities exchange.
It is therefore ordered, pursuant to Rule 431 of the Commission's
Rules of Practice, that the earlier action taken by delegated
authority, Securities Exchange Act Release No. 103531 (July 22, 2025),
90 FR 35339 (July 25, 2025), is set aside and, pursuant to section
19(b)(2) of the Exchange Act, the proposed rule change (SR-NYSEARCA-
2024-98), as modified by Amendment No. 1, hereby is approved.
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-20523 Filed 11-20-25; 8:45 am]
BILLING CODE 8011-01-P