90 FR 141 pgs. 35355-35358 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; 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

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Type: NOTICEVolume: 90Number: 141Pages: 35355 - 35358

Docket number: [Release No. 34-103525; File No. SR-CboeBZX-2025-023]

FR document: [FR Doc. 2025-14031 Filed 7-24-25; 8:45 am]

Agency: Securities and Exchange Commission

Official PDF Version: PDF Version

Pages: 35355, 35356, 35357, 35358

[top]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-103525; File No. SR-CboeBZX-2025-023]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; 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

July 22, 2025.

On February 7, 2025, Cboe BZX Exchange, Inc. (the "Exchange" or "BZX") filed with the Securities and Exchange Commission ("SEC" or "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 amend the rules governing the listing and trading of shares of the Fidelity Wise Origin Bitcoin Fund and the Fidelity Ethereum Fund under BZX Rule 14.11(e)(4). The proposed rule change was published for comment in the Federal Register on February 25, 2025. ³

Footnotes:

¹ ?15 U.S.C. 78s(b)(1).

² ?17 CFR 240.19b-4.

³ ? See Securities Exchange Act Release No. 102451 (Feb. 19, 2025), 90 FR 10664.

On March 11, 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. ⁵ On May 22, 2025, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act, ⁶ to determine whether to approve or disapprove the proposed rule change. ⁷ On July 21, 2025, pursuant to Section 19(b)(2) of the Act, ⁸ the Exchange filed Amendment No. 1 to the proposed rule change, which replaced and superseded the original filing in its entirety.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, is described in Items I and II below, which Items have been substantially prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 1, from interested persons.

Footnotes:

⁴ ?15 U.S.C. 78s(b)(2).

⁵ ? See Securities Exchange Act Release No. 102595, 90 FR 12376 (Mar. 17, 2025) (designating May 26, 2025, as the date by which the Commission shall either approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change).

⁶ ?15 U.S.C. 78s(b)(2)(B).

⁷ ? See Securities Exchange Act Release No. 103110, 90 FR 22804 (May 29, 2025).

⁸ ?15 U.S.C. 78s(b)(2).

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

Cboe BZX Exchange, Inc. ("BZX" or the "Exchange") is filing with the Securities and Exchange Commission ("Commission" or "SEC") a proposed rule change to amend the rule governing the Fidelity Wise Origin Bitcoin Fund (the "Bitcoin Trust") and the Fidelity Ethereum Fund (the "Eth Trust" and, collectively with the Bitcoin Trust, the "Trusts"), shares of which have been approved by the Commission to list and trade on the Exchange pursuant to BZX Rule 14.11(e)(4), to permit in-kind creations and redemptions.

The text of the proposed rule change is also available on the Exchange's website ( http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/ ) and at the Exchange's Office of the Secretary.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item III below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

[top] This Amendment No. 1 to SR-CboeBZX-2025-023 amends and replaces in its entirety the proposal as originally submitted on February 7,

2025. The Exchange submits this Amendment No. 1 in order to clarify certain points and add additional details to the proposal.

The Commission approved the listing and trading of shares (the "Bitcoin ETP Shares") of the Bitcoin Trust on the Exchange pursuant to Exchange Rule 14.11(e)(4), Commodity-Based Trust Shares, on January 10, 2024. ⁹ The Commission also approved the listing and trading of shares (the "ETH ETP Shares") of the Eth Trust on the Exchange pursuant to Exchange Rule 14.11(e)(4), Commodity-Based Trust Shares, on May 23, 2024. ¹⁰ Exchange Rule 14.11(e)(4) governs the listing and trading of Commodity-Based Trust Shares, which means a security (a) that is issued by a trust that holds (1) a specified commodity deposited with the trust, or (2) a specified commodity and, in addition to such specified commodity, cash; (b) that is 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 (c) 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. The Bitcoin ETP Shares are issued by the Bitcoin Trust and the ETH ETP Shares are issued by the Eth Trust. The Bitcoin Trust was formed as a Delaware statutory trust on March 17, 2021 and the Eth Trust was formed as a Delaware statutory trust on October 31, 2023.

Footnotes:

⁹ ? See Securities Exchange Act Release Nos. 99290 (January 8, 2024) 89 FR 2338 (January 12, 2024) (SR-CboeBZX-2023-044) (Notice of Filing of Amendment No. 3 to a Proposed Rule Change To List and Trade Shares of the Wise Origin Bitcoin Fund Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares) ("Bitcoin ETP Amendment No. 3"); 99306 (January 10, 2024) 89 FR 3008 (January 17, 2024) (SR-CboeBZX-2023-044) (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) (the "Bitcoin ETP Approval Order").

¹⁰ ?See Securities Exchange Act Release Nos. 100215 (May 22, 2024) 89 FR 46478 (May 29, 2024) (SR-CboeBZX-2023-095) (Notice of Filing of Amendment No. 2 to a Proposed Rule Change to List and Trade Shares of the Fidelity Ethereum Fund Under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares) ("Eth ETP Amendment No. 2"); 100224 (May 23, 2024) 89 FR 46937 (May 30, 2024) (SR-CboeBZX-2023-095) (Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, to List and Trade Shares of Ether-Based Exchange-Traded Products) (the "ETH ETP Approval Order").

Bitcoin Trust

The Exchange proposes to amend several portions of the Bitcoin ETP Amendment No. 3 in order to permit in-kind creation and redemptions.

Representations

The Bitcoin ETP Amendment No. 3 included a specific representation making clear that the Bitcoin Trust would only process creations and redemptions in cash. Specifically, the "Investment Objective" section of the Bitcoin ETP Amendment No. 3 stated:

In seeking to achieve its investment objective, the Trust will hold bitcoin, cash, and cash equivalents and will value its Shares daily as of 4:00 p.m. Eastern time using the Index price to value the bitcoin and process all creations and redemptions in cash transactions with authorized participants. ¹¹

Footnotes:

¹¹ ?Bitcoin ETP Amendment No. 3 at 2365.

The Exchange proposes to replace the above with the following:

Creation and Redemption of Shares

Additionally, the "Creation and Redemption of Shares" section of the filing includes a detailed description of how the cash-only creation and redemption process works. ¹² The Exchange proposes to replace this section as provided below. The Exchange proposes no change to the subheading "Rule 14.11(e)(4)-Commodity-Based Trust Shares"? ¹³ and proposes to retain everything thereunder.

Footnotes:

¹² ?Bitcoin ETP Amendment No. 3 at 2367.

¹³ ? See Bitcoin ETP Amendment No. 3 at 2367.

Creation and Redemption of Shares

When the Trust creates or redeems its Shares, it will do so in cash or in-kind. When the Trust creates or redeems its Shares in cash or in kind, it will do so in blocks of 25,000 Shares ( i.e., a Creation Basket) based on the quantity of bitcoin attributable to each Share of the Trust (net of accrued but unpaid expenses and liabilities). For cash and in-kind creation orders, the Administrator determines the amount of bitcoin represented by a Creation Basket by dividing the total assets of the Trust, net of accrued expenses and other liabilities as of the opening of business on that business day, by the number of Shares outstanding at the opening of business and multiplying such amount by the number of Shares constituting a Creation Basket. Such determination is made as of 4:00 p.m. EST on the purchase order date.

The authorized participants will deliver or cause to be delivered cash or bitcoin to create Shares and the authorized participant or its designee will receive cash or bitcoin when redeeming Shares. The Trust will create Shares by receiving bitcoin or cash from an authorized participant or its designee and will redeem shares by delivering bitcoin or cash to an authorized participant or its designee.

According to the Registration Statement, on any business day, an authorized participant may place an order to create one or more Creation Baskets. Purchase orders must be placed by the close of Regular Trading Hours on the Exchange or another time determined by the Sponsor. The day on which an order is properly received is considered the purchase order date.

The procedures by which an authorized participant can redeem one or more Creation Baskets mirror the procedures for the creation of Creation Baskets. For a cash redemption order, an authorized participant will deliver Shares to the Trust and will receive cash for the Shares delivered. For an in-kind redemption order, an authorized participant will deliver Shares to the Trust and the authorized participant or its designee will receive bitcoin for the Shares delivered.

Eth Trust

Similarly, the Exchange proposes to amend several portions of the Eth ETP Amendment No. 2 in order to permit in-kind creations and redemptions.

Representations

The Eth ETP Amendment No. 2 included a specific representation making clear that the Eth Trust would only process creations and redemptions in cash. Specifically, the "Investment Objective" section of the Eth ETP Amendment No. 2 stated:

In seeking to achieve its investment objective, the Trust will hold ETH, cash, and cash equivalents and will value its Shares daily as of 4:00 p.m. Eastern time using the Index price to value the ether and process all creations and redemptions in transactions in cash transactions with authorized participants. The Trust is not actively managed. ¹⁴

Footnotes:

¹⁴ ? See Eth ETP Amendment No. 2 at 46487.

The Exchange proposes to replace the above with the following:

In seeking to achieve its investment objective, the Trust will hold ETH, cash, and cash equivalents and will value its Shares daily as of 4:00 p.m. Eastern time using the Index price to value the ether and process all creations and redemptions in transactions in cash or in-kind transactions with authorized participants. The Trust is not actively managed.

Creation and Redemption of Shares

[top] Additionally, the "Creation and Redemption of Shares" section of the filing includes a detailed description of how the cash-only creation and redemption process works. ¹⁵ The Exchange proposes to replace this

section as provided below. The Exchange proposes no change to the subheading "Rule 14.11(e)(4)-Commodity-Based Trust Shares"? ¹⁶ and proposes to retain everything thereunder.

Footnotes:

¹⁵ ? See Eth ETP Amendment No. 2 at 46488-46489.

¹⁶ ? See ETH ETP Amendment No. 2 at 46489.

Creation and Redemption of Shares

When the Trust creates or redeems its Shares, it will do so in cash or in-kind. When the Trust creates or redeems its Shares in cash or in kind, it will do so in blocks of 25,000 Shares ( i.e., a Creation Basket) based on the quantity of ETH attributable to each Share of the Trust (net of accrued but unpaid expenses and liabilities). For cash and in-kind creation orders, the Administrator determines the amount of ETH represented by a Creation Basket by dividing the total assets of the Trust, net of accrued expenses and other liabilities as of the opening of business on that business day, by the number of Shares outstanding at the opening of business and multiplying such amount by the number of Shares constituting a Creation Basket. Such determination is made as of 4:00 p.m. EST on the purchase order date.

The authorized participants will deliver or cause to be delivered cash or ether to create Shares and the authorized participant or its designee will receive cash or ether when redeeming Shares. The Trust will create Shares by receiving ether or cash from an authorized participant or its designee and will redeem Shares by delivering ether or cash to an authorized participant or its designee.

Conclusion

Except for the above changes, all other representations in the Bitcoin ETP Amendment No. 3 and the Eth ETP Amendment No. 2 remain unchanged and will continue to constitute continuing listing requirements. In addition, the Bitcoin Trust will continue to comply with the terms of Bitcoin ETP Amendment No. 3 and the Eth Trust will continue to comply with the terms of Eth ETP Amendment No. 2 and the Trusts will continue to comply with the requirements of Rule 14.11(e)(4).

2. Statutory Basis

The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act. ¹⁷ Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5)? ¹⁸ requirements that the rules of an exchange 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.

Footnotes:

¹⁷ ?15 U.S.C. 78f(b).

¹⁸ ?15 U.S.C. 78f(b)(5).

The Exchange believes the proposed rule change is designed to remove impediments to and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest because it would update representations in both the Bitcoin ETP Amendment No. 3 and the Eth ETP Amendment No. 2 such that the Trusts would both be able to engage in in-kind creation and redemptions with authorized participants or their designees, as described above. This ability would make the Trusts (and the market more generally) operate more efficiently because authorized participants would be able to source bitcoin or ether, as applicable, rather than to provide cash to the applicable Trust and to receive bitcoin or ether from the Trusts. This means that the authorized participant would be responsible for buying and selling the applicable crypto asset rather than the Trust itself, which would potentially lessen the impact on the market of the Trusts on both sides of the transaction by allowing the authorized participant to decide how and where to source the underlying crypto asset for creations and deciding how, where, and whether to sell the underlying crypto asset received for redemptions. This would improve the creation and redemption process for both authorized participants and the Trusts, increase efficiency, and ultimately benefit the end investors in the Trusts.

Except for the addition of in-kind creation and redemption for the Bitcoin Trust as specifically set forth herein, all other representations made in the Bitcoin ETP Amendment No. 3 remain unchanged and will continue to constitute continuing listing requirements for the Bitcoin Trust. Similarly, except for the addition of in-kind creation and redemption for the Eth Trust as specifically set forth herein, all other representations made in the Eth ETP Amendment No. 2 remain unchanged and will continue to constitute continuing listing requirements for the Eth Trust.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. As noted above, the proposed amendment is intended to allow the Trusts to operate more efficiently by allowing for in-kind creation and redemption. The Exchange believes these changes will not impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others

The Exchange neither solicited nor received comments on the proposed rule change.

III. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change, as modified by Amendment No. 1, is consistent with the Act. 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 rule-comments@sec.gov. Please include file number SR-CboeBZX-2025-023 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.

[top] All submissions should refer to file number SR-CboeBZX-2025-023. 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 filing 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-CboeBZX-2025-023 and should be submitted on or before August 15, 2025.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. ¹⁹

Footnotes:

¹⁹ ?17 CFR 200.30-3(a)(12).

Sherry R. Haywood,

Assistant Secretary.

[FR Doc. 2025-14031 Filed 7-24-25; 8:45 am]

BILLING CODE 8011-01-P