Securities and Exchange Commission v. De Novo Review, et al.

 
SECURITIES AND EXCHANGE COMMISSION 
[Release No. 34-103996; File No. SR-NYSEARCA-2024-87] 
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 
Grayscale Digital Large Cap Fund LLC under Amended NYSE Arca Rule 8.500-E (Trust 
Units) 
September 17, 2025. 
I.  INTRODUCTION 
On October 15, 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 adopt certain listing rules and to list and trade shares of the Grayscale Digital Large 
Cap Fund LLC.
3
  
                                                 
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 November 4, 2024. See 
Securities Exchange Act Release No. 101470 (Oct. 29, 2024), 89 FR 87681 (Nov. 4, 2024). On December 
17, 2024, the Commission extended the time period for Commission action on the proposed rule change. See 
Securities Exchange Act Release No. 101939 (Dec. 17, 2024), 89 FR 104581 (Dec. 23, 2024). On January 
31, 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. 102313 (Jan. 31, 2025), 90 FR 9092 (Feb. 6, 2025). On April 29, 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. 102941 (Apr. 29, 2025), 90 
FR 19037 (May 5, 2025). On June 26, 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change, which replaced and superseded the proposed rule change in its entirety.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 2, 2025. See 
Securities Exchange Act Release No. 103345 (June 27, 2025), 90 FR 29057 (July 2, 2025) (“Amendment 
No. 1”). 
 

 
2 
On July 1, 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 1, 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
  
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 
                                                 
4
   17 CFR 200.30-3(a)(12). 
5
  See Securities Exchange Act Release No. 103364 (July 1, 2025), 90 FR 29923 (July 7, 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 1, 2025, available at https://www.sec.gov/files/rules/sro/nysearca/2025/sr-
nysearca-2024-87-rule-431-letter-2025-07-01.pdf. 
8
  See Securities Exchange Act Release No. 103562 (July 29, 2025), 90 FR 36231 (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-2024-87/srnysearca202487.htm.  
 

 
3 
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
 
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. 
                                                 
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. 
13
  15 U.S.C. 78f(b)(5). 
 

 
4 
II.  SUMMARY 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,
14
 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.”
15
 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.”
16
  
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.
17
 Currently, the rule only provides that the Exchange may list and trade Trust Units 
based on an underlying asset, commodity, security, or portfolio.
18
 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.”
19
 
                                                 
14
  See supra note 3. 
15
  See NYSE Arca Rule 8.500-E(b)(2).   
16
  See Amendment No. 1 at 29058.   
17
  See id.  
18
  See NYSE Arca Rule 8.500-E(c). 
19
  See Amendment No. 1 at 29058. 
 

 
5 
Third, the Exchange proposes certain conforming changes to the rule, consistent with the 
proposed changes described above.
20
  
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.
21
 
B. The Fund 
The Exchange proposes to list and trade shares (“Shares”) of the Grayscale Digital Large 
Cap Fund LLC (“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
22
 and weightings within the Fund, less the Fund’s expenses and other liabilities.
23
 
The Fund’s assets consist solely of the Fund Components.
24
 The Fund Components, as well as 
                                                 
20
  See id. 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. 
21
  See id.  
22
  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 29059, 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 29061, n.29.  
23
  See id. at 29059. 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. 
24
  See id. 
 

 
6 
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.
25
 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”)
26
 and that no more 
than 15% of the Fund Components will be non-Approved Components.
27
 As of the date of the 
                                                 
25
  See id. 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 29059, n.18; 29066-67.  
26
  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 29059. 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. Today, the Commission is also 
approving 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) (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.  
27
  See Amendment No. 1 at 29059. 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 
 

 
7 
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%).
28
  
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.
29
 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.
30
 
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.
31
 In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(5) of the Exchange Act,
32
 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,
33
 which sets forth Congress’ finding that it is in the public 
                                                 
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 29067. 
28
  See id. at 29059.  
29
  See id. at 29060-61. 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 29070-71.  
30
  See id. at 29075-76.  
31
  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). 
32
  15 U.S.C. 78f(b)(5). 
33
  15 U.S.C. 78k-1(a)(1)(C)(iii). 

 
8 
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.   
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.
34
 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.”
35
 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 
                                                 
34
  See Section 1a(10) of the CEA for the definition of “commodity pool.” 
35
  NYSE Arca Rule 8.500-E(b)(2).  

 
9 
procedures, disclosures to members, customer suitability requirements, and market maker 
obligations.  
The Commission finds that it is consistent with Section 6(b)(5) of the Exchange Act
36
 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.
37
 Thus, the Exchange’s 
rules, as amended, 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. 
                                                 
36
  15 U.S.C. 78f(b)(5). 
37
 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.   
 

 
10 
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.
38
 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.
39
 In approving an ETP with a 
                                                 
38
  See Amendment No. 1 at 29067. See also supra notes 26-27 and accompanying text. 
39
  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 
 

 
11 
commodity as a primary investment, the Commission must find under Section 6(b)(5) that there 
are sufficient means to prevent fraud and manipulation.
40
 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.
 
 
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.
41
 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)
42
 that the 
Exchange’s rules be designed to “prevent fraudulent and manipulative acts and practices.”
 
 
2. Exchange Act Section 11A(a)(1)(C)(iii) 
                                                 
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. 
40
  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. 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 26.  
41
  15 U.S.C. 78s(b)(2)(C). 
42
  15 U.S.C. 78f(b)(5). 
 

 
12 
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.
43
 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.
44
 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.
45
 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 listing 
requirements.
46
 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 
                                                 
43
  See, e.g., Spot Bitcoin & Ether ETP Approval Order at 106709. 
44
  See Amendment No. 1 at 29078-80.   
45
  See id. at 29079. 
46
  See NYSE Arca Rule 8.500-E, Commentary .03. 
 

 
13 
the Fund is not in compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures.
47
 
The Commission therefore finds that the proposal, as with other ETPs that the 
Commission has approved,
48
 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.
 
 
C.  Comments 
The Commission received three comment letters supporting the proposal.
49
 Two of these 
commenters state that approving the proposal would provide benefits to investors.
50
 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.
51
  
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 
                                                 
47
  See Amendment No. 1 at 29079.   
48
  See Spot Bitcoin ETP Approval Order, Spot Ether ETP Approval Order, and Spot Bitcoin & Ether ETP 
Approval Order. 
49
  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”); Letter from Samir Kerbage, Chief Investment Officer, 
Hashdex Asset Management Ltd., dated Aug. 12, 2025 (“Hashdex Letter”); and Letter from Robert Citrone, 
Founder, Discovery Capital Management, LLC, dated Aug. 20, 2025 (“Discovery Letter”). 
50
  See Multicoin Letter; Discovery Letter. 
51
  See Hashdex Letter. 
 

 
14 
not widely available for either XRP or Solana.
52
 As discussed above, the Fund 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 Fund’s portfolio, and this limitation is consistent with 
similar limitations approved by the Commission with respect to ETP investments.
53
 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.
54
  
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.
55
 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.
56
 The Commission 
does not apply a “cannot be manipulated” standard; rather, the Commission examines whether a 
proposal meets the requirements of the Exchange Act.
57
 The Commission does not understand 
the Exchange Act to require that a particular product or market be immune from manipulation. 
                                                 
52
  See Letter from Anonymous, dated Feb. 10, 2025. 
53
  See supra notes 38 and 39. 
54
  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 26. 
55
  See Letter from Benjamin L. Schiffrin, Director of Securities Policy, Better Markets, Inc., dated Feb. 27, 
2025. 
56
  See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 78s(b)(2)(C). 
57
  See, e.g., Spot Bitcoin ETP Approval Order at 3013 n.61. 

 
15 
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.” 
D. Procedural Considerations  
The Sponsor
58
 asserts that the proposed rule change has been deemed approved pursuant to 
Section 19(b)(2)(D)(ii) of the Exchange Act.
59
 The Sponsor asserts that the Commission has no 
power to impose a stay pursuant to Commission Rule of Practice 431(e) after the 240
th
 day.
60
  
The Commission disagrees with the Sponsor’s assertions that: (1) because the Approval 
Order is stayed, the proposal has been deemed approved;
61
 and (2) the Commission has no power 
                                                 
58
  See Letter from Joseph A. Hall and Zachary J. Zweihorn, Davis Polk & Wardwell LLP, on behalf of 
Grayscale Investments, dated July 8, 2025 (“Grayscale Letter”). Two additional commenters request that 
the Commission lift the stay and approve the delegated action in short order. See Letter from Jaime Klima, 
General Counsel, New York Stock Exchange, dated July 21, 2025, and Hashdex Letter. This order by the 
Commission addresses those comments. In addition, one commenter also requests that the Commission 
approve the proposals to list and trade similar funds, simultaneously and with immediate effect. See 
Hashdex Letter at 2 (citing to File Nos. SR-NASDAQ-2025-016 and SR-NYSEARCA-2024-98). The 
proposal under consideration by the Commission in this order relates only to the Fund, along with changes 
to NYSE Arca Rules 8.500-E and 5.3-E. Accordingly, proposals to list and trade similar but different funds 
are beyond the scope of this order. 
59
  Section 19(b) of the Exchange Act requires the Commission to “issue an order” approving or disapproving 
a proposed rule change within, at most, 240 days of the proposed rule change’s filing. See 15 U.S.C. 
78s(b)(2)(B)(ii). If the Commission fails to issue an order within that period, the proposed rule change is 
deemed to have been approved. See 15 U.S.C. 78s(b)(2)(D). 
60
  See 17 CFR 201.431(e). Rule 431(e) provides that upon filing with the Commission of a notice of intention 
to petition for review, or upon notice to the Secretary of the vote of a Commissioner that a matter be 
reviewed, an action made pursuant to delegated authority shall be stayed until the Commission orders 
otherwise. Rule 431(a) also provides that the Commission may decide to “affirm, reverse, modify, set aside 
or remand [the delegated action] for further proceedings.” See 17 CFR 201.431(a). 
61
  See Grayscale Letter at 3. The Sponsor asserts that the proposal is deemed approved if the Commission 
fails to meet the statutory approval deadline under Section 19b(b)(2)(D), regardless of reason. 
 

 
16 
to stay the Approval Order after the 240
th
 day.
62
 The Commission complied with the requirements 
of the statute. Section 19(b)(2)(D) of the Exchange Act requires that the Commission “issue an 
order” approving or disapproving the proposed rule change within 240 days. The Approval Order 
was issued within that period. Although orders issued by delegated authority are issued by 
Commission staff, they are issued with the full authority of the Commission and are signed by the 
Secretary’s office on behalf of the Commission. Section 4A of the Exchange Act authorizes the 
Commission to delegate certain functions—including approval or disapproval of proposed rule 
changes under Section 19—to a “division of the Commission.”
63
 And the Commission’s Rules of 
Practice make clear that “an action made pursuant to delegated authority shall have immediate 
effect and be deemed the action of the Commission.”
64
 Moreover, as the Commission has 
previously explained, Congress was aware of the Commission’s ability to delegate authority to 
approve self-regulatory organization rule filings when the time restrictions in Section 
19(b)(2)(D) of the Exchange Act were enacted.
65
 In asserting that the Commission has no power 
to stay the Approval Order after 240 days, the Sponsor effectively construes Section 19(b)(2) of 
the Exchange Act to require the Commission’s review of an order by delegated authority to be 
completed within those 240 days. Such construction, however, “would undermine both the 
                                                 
62
  See id. at 2-3.  
63
  15 U.S.C. 78d-1(a). 
64
  Commission Rule of Practice 431(e), 17 CFR 201.431(e). See also, e.g., Rule of Practice 430(c), 17 CFR 
201.430(c) (referring to “a final order entered pursuant to [delegated authority]”); Rule of Practice 431(f), 
17 CFR 201.431(f) (giving an order by delegated authority operative effect, even when review has been 
sought, until a person receives actual notice that it was been stayed, modified, or reversed on review).  
65
  See Order Affirming Action by Delegated Authority and Disapproving Proposed Rule Changes Related to 
Connectivity and Port Fee In the Matter of the BOX Exchange LLC, Securities Exchange Act Release No. 
88493 (Mar. 27, 2020), 85 FR 18617 (Apr. 2, 2020) (SR–BOX–2018–24, SR–BOX–2018–37, and SR–
BOX–2019–04), at 18626.  
 

 
17 
specific deadlines set forth in the statute and the Commission’s ability to delegate functions.”
66
 
Nor is such a construction necessary to fulfill Congress’s purpose in enacting the deadlines to 
“streamline” the rule filing process.
67
 
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. 
103364 (July 1, 2025), 90 FR 29923 (July 7, 2025), is set aside and, pursuant to Section 19(b)(2) 
of the Exchange Act, the proposed rule change (SR-NYSEARCA-2024-87), as modified by 
Amendment No. 1, hereby is approved. 
 
 By the Commission.  
 
Stephanie J. Fouse, 
Assistant Secretary. 
                                                 
66
  See Order Setting Aside Action by Delegated Authority and Disapproving a Proposed Rule Change, as 
Modified by Amendments No. 1 and No. 2, Regarding the Acquisition of CHX Holdings, Inc. by North 
America Casin Holdings, Inc., Securities Exchange Act Release No. 82727 (Feb. 15, 2018), 83 FR 7793 
(Feb. 22, 2018) (SR-CHX-2016-20), at 7799.  
67
  See id. With rare exception, rule filings are decided, by delegated authority or otherwise, within 240 days. 
See id. 

SECURITIES AND EXCHANGE COMMISSION 

[Release No. 34-103996; File No. SR-NYSEARCA-2024-87] 

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 

Grayscale Digital Large Cap Fund LLC under Amended NYSE Arca Rule 8.500-E (Trust 

Units) 

September 17, 2025. 

I.  INTRODUCTION 

On October 15, 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 adopt certain listing rules and to list and trade shares of the Grayscale Digital Large 

Cap Fund LLC.3  

                                                 
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 November 4, 2024. See 

Securities Exchange Act Release No. 101470 (Oct. 29, 2024), 89 FR 87681 (Nov. 4, 2024). On December 

17, 2024, the Commission extended the time period for Commission action on the proposed rule change. See 

Securities Exchange Act Release No. 101939 (Dec. 17, 2024), 89 FR 104581 (Dec. 23, 2024). On January 

31, 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. 102313 (Jan. 31, 2025), 90 FR 9092 (Feb. 6, 2025). On April 29, 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. 102941 (Apr. 29, 2025), 90 

FR 19037 (May 5, 2025). On June 26, 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 2, 2025. See 

Securities Exchange Act Release No. 103345 (June 27, 2025), 90 FR 29057 (July 2, 2025) (“Amendment 

No. 1”). 

 



 

2 

On July 1, 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 1, 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  

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 

                                                 
4   17 CFR 200.30-3(a)(12). 

5  See Securities Exchange Act Release No. 103364 (July 1, 2025), 90 FR 29923 (July 7, 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 1, 2025, available at https://www.sec.gov/files/rules/sro/nysearca/2025/sr-

nysearca-2024-87-rule-431-letter-2025-07-01.pdf. 

8  See Securities Exchange Act Release No. 103562 (July 29, 2025), 90 FR 36231 (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-2024-87/srnysearca202487.htm.  

 

https://www.sec.gov/files/rules/sro/nysearca/2025/sr-nysearca-2024-87-rule-431-letter-2025-07-01.pdf
https://www.sec.gov/files/rules/sro/nysearca/2025/sr-nysearca-2024-87-rule-431-letter-2025-07-01.pdf
https://www.sec.gov/comments/sr-nysearca-2024-87/srnysearca202487.htm


 

3 

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 

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. 

                                                 
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. 

13  15 U.S.C. 78f(b)(5). 

 



 

4 

II.  SUMMARY 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. 1,14 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.”15 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.”16  

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.17 Currently, the rule only provides that the Exchange may list and trade Trust Units 

based on an underlying asset, commodity, security, or portfolio.18 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.”19 

                                                 
14  See supra note 3. 

15  See NYSE Arca Rule 8.500-E(b)(2).   

16  See Amendment No. 1 at 29058.   

17  See id.  

18  See NYSE Arca Rule 8.500-E(c). 

19  See Amendment No. 1 at 29058. 

 



 

5 

Third, the Exchange proposes certain conforming changes to the rule, consistent with the 

proposed changes described above.20  

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.21 

B. The Fund 

The Exchange proposes to list and trade shares (“Shares”) of the Grayscale Digital Large 

Cap Fund LLC (“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 Prices22 and weightings within the Fund, less the Fund’s expenses and other liabilities.23 

The Fund’s assets consist solely of the Fund Components.24 The Fund Components, as well as 

                                                 
20  See id. 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. 

21  See id.  

22  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 29059, 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 29061, n.29.  

23  See id. at 29059. 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. 

24  See id. 

 



 

6 

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.25 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”)26 and that no more 

than 15% of the Fund Components will be non-Approved Components.27 As of the date of the 

                                                 
25  See id. 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 29059, n.18; 29066-67.  

26  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 29059. 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. Today, the Commission is also 

approving 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) (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.  

27  See Amendment No. 1 at 29059. 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 

 



 

7 

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%).28  

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.29 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.30 

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.31 In particular, the Commission finds that the 

proposal is consistent with Section 6(b)(5) of the Exchange Act,32 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,33 which sets forth Congress’ finding that it is in the public 

                                                 
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 29067. 

28  See id. at 29059.  

29  See id. at 29060-61. 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 29070-71.  

30  See id. at 29075-76.  

31  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). 

32  15 U.S.C. 78f(b)(5). 

33  15 U.S.C. 78k-1(a)(1)(C)(iii). 



 

8 

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.   

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.34 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.”35 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 

                                                 
34  See Section 1a(10) of the CEA for the definition of “commodity pool.” 

35  NYSE Arca Rule 8.500-E(b)(2).  



 

9 

procedures, disclosures to members, customer suitability requirements, and market maker 

obligations.  

The Commission finds that it is consistent with Section 6(b)(5) of the Exchange Act36 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.37 Thus, the Exchange’s 

rules, as amended, 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. 

                                                 
36  15 U.S.C. 78f(b)(5). 

37 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.   

 



 

10 

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.38 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.39 In approving an ETP with a 

                                                 
38  See Amendment No. 1 at 29067. See also supra notes 26-27 and accompanying text. 

39  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 

 



 

11 

commodity as a primary investment, the Commission must find under Section 6(b)(5) that there 

are sufficient means to prevent fraud and manipulation.40 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.  

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.41 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)42 that the 

Exchange’s rules be designed to “prevent fraudulent and manipulative acts and practices.”  

2. Exchange Act Section 11A(a)(1)(C)(iii) 

                                                 
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. 

40  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. 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 26.  

41  15 U.S.C. 78s(b)(2)(C). 

42  15 U.S.C. 78f(b)(5). 

 



 

12 

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.43 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.44 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.45 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 listing 

requirements.46 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 

                                                 
43  See, e.g., Spot Bitcoin & Ether ETP Approval Order at 106709. 

44  See Amendment No. 1 at 29078-80.   

45  See id. at 29079. 

46  See NYSE Arca Rule 8.500-E, Commentary .03. 

 



 

13 

the Fund is not in compliance with the applicable listing requirements, the Exchange will 

commence delisting procedures.47 

The Commission therefore finds that the proposal, as with other ETPs that the 

Commission has approved,48 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.  

C.  Comments 

The Commission received three comment letters supporting the proposal.49 Two of these 

commenters state that approving the proposal would provide benefits to investors.50 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.51  

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 

                                                 
47  See Amendment No. 1 at 29079.   

48  See Spot Bitcoin ETP Approval Order, Spot Ether ETP Approval Order, and Spot Bitcoin & Ether ETP 

Approval Order. 

49  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”); Letter from Samir Kerbage, Chief Investment Officer, 

Hashdex Asset Management Ltd., dated Aug. 12, 2025 (“Hashdex Letter”); and Letter from Robert Citrone, 

Founder, Discovery Capital Management, LLC, dated Aug. 20, 2025 (“Discovery Letter”). 

50  See Multicoin Letter; Discovery Letter. 

51  See Hashdex Letter. 

 



 

14 

not widely available for either XRP or Solana.52 As discussed above, the Fund 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 Fund’s portfolio, and this limitation is consistent with 

similar limitations approved by the Commission with respect to ETP investments.53 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.54  

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.55 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.56 The Commission 

does not apply a “cannot be manipulated” standard; rather, the Commission examines whether a 

proposal meets the requirements of the Exchange Act.57 The Commission does not understand 

the Exchange Act to require that a particular product or market be immune from manipulation. 

                                                 
52  See Letter from Anonymous, dated Feb. 10, 2025. 

53  See supra notes 38 and 39. 

54  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 26. 

55  See Letter from Benjamin L. Schiffrin, Director of Securities Policy, Better Markets, Inc., dated Feb. 27, 

2025. 

56  See Exchange Act Section 19(b)(2)(C), 15 U.S.C. 78s(b)(2)(C). 

57  See, e.g., Spot Bitcoin ETP Approval Order at 3013 n.61. 



 

15 

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.” 

D. Procedural Considerations  

The Sponsor58 asserts that the proposed rule change has been deemed approved pursuant to 

Section 19(b)(2)(D)(ii) of the Exchange Act.59 The Sponsor asserts that the Commission has no 

power to impose a stay pursuant to Commission Rule of Practice 431(e) after the 240th day.60  

The Commission disagrees with the Sponsor’s assertions that: (1) because the Approval 

Order is stayed, the proposal has been deemed approved;61 and (2) the Commission has no power 

                                                 
58  See Letter from Joseph A. Hall and Zachary J. Zweihorn, Davis Polk & Wardwell LLP, on behalf of 

Grayscale Investments, dated July 8, 2025 (“Grayscale Letter”). Two additional commenters request that 

the Commission lift the stay and approve the delegated action in short order. See Letter from Jaime Klima, 

General Counsel, New York Stock Exchange, dated July 21, 2025, and Hashdex Letter. This order by the 

Commission addresses those comments. In addition, one commenter also requests that the Commission 

approve the proposals to list and trade similar funds, simultaneously and with immediate effect. See 

Hashdex Letter at 2 (citing to File Nos. SR-NASDAQ-2025-016 and SR-NYSEARCA-2024-98). The 

proposal under consideration by the Commission in this order relates only to the Fund, along with changes 

to NYSE Arca Rules 8.500-E and 5.3-E. Accordingly, proposals to list and trade similar but different funds 

are beyond the scope of this order. 

59  Section 19(b) of the Exchange Act requires the Commission to “issue an order” approving or disapproving 

a proposed rule change within, at most, 240 days of the proposed rule change’s filing. See 15 U.S.C. 

78s(b)(2)(B)(ii). If the Commission fails to issue an order within that period, the proposed rule change is 

deemed to have been approved. See 15 U.S.C. 78s(b)(2)(D). 

60  See 17 CFR 201.431(e). Rule 431(e) provides that upon filing with the Commission of a notice of intention 

to petition for review, or upon notice to the Secretary of the vote of a Commissioner that a matter be 

reviewed, an action made pursuant to delegated authority shall be stayed until the Commission orders 

otherwise. Rule 431(a) also provides that the Commission may decide to “affirm, reverse, modify, set aside 

or remand [the delegated action] for further proceedings.” See 17 CFR 201.431(a). 

61  See Grayscale Letter at 3. The Sponsor asserts that the proposal is deemed approved if the Commission 

fails to meet the statutory approval deadline under Section 19b(b)(2)(D), regardless of reason. 

 



 

16 

to stay the Approval Order after the 240th day.62 The Commission complied with the requirements 

of the statute. Section 19(b)(2)(D) of the Exchange Act requires that the Commission “issue an 

order” approving or disapproving the proposed rule change within 240 days. The Approval Order 

was issued within that period. Although orders issued by delegated authority are issued by 

Commission staff, they are issued with the full authority of the Commission and are signed by the 

Secretary’s office on behalf of the Commission. Section 4A of the Exchange Act authorizes the 

Commission to delegate certain functions—including approval or disapproval of proposed rule 

changes under Section 19—to a “division of the Commission.”63 And the Commission’s Rules of 

Practice make clear that “an action made pursuant to delegated authority shall have immediate 

effect and be deemed the action of the Commission.”64 Moreover, as the Commission has 

previously explained, Congress was aware of the Commission’s ability to delegate authority to 

approve self-regulatory organization rule filings when the time restrictions in Section 

19(b)(2)(D) of the Exchange Act were enacted.65 In asserting that the Commission has no power 

to stay the Approval Order after 240 days, the Sponsor effectively construes Section 19(b)(2) of 

the Exchange Act to require the Commission’s review of an order by delegated authority to be 

completed within those 240 days. Such construction, however, “would undermine both the 

                                                 
62  See id. at 2-3.  

63  15 U.S.C. 78d-1(a). 

64  Commission Rule of Practice 431(e), 17 CFR 201.431(e). See also, e.g., Rule of Practice 430(c), 17 CFR 

201.430(c) (referring to “a final order entered pursuant to [delegated authority]”); Rule of Practice 431(f), 

17 CFR 201.431(f) (giving an order by delegated authority operative effect, even when review has been 

sought, until a person receives actual notice that it was been stayed, modified, or reversed on review).  

65  See Order Affirming Action by Delegated Authority and Disapproving Proposed Rule Changes Related to 

Connectivity and Port Fee In the Matter of the BOX Exchange LLC, Securities Exchange Act Release No. 

88493 (Mar. 27, 2020), 85 FR 18617 (Apr. 2, 2020) (SR–BOX–2018–24, SR–BOX–2018–37, and SR–

BOX–2019–04), at 18626.  

 



 

17 

specific deadlines set forth in the statute and the Commission’s ability to delegate functions.”66 

Nor is such a construction necessary to fulfill Congress’s purpose in enacting the deadlines to 

“streamline” the rule filing process.67 

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. 

103364 (July 1, 2025), 90 FR 29923 (July 7, 2025), is set aside and, pursuant to Section 19(b)(2) 

of the Exchange Act, the proposed rule change (SR-NYSEARCA-2024-87), as modified by 

Amendment No. 1, hereby is approved. 

 

 By the Commission.  

 

Stephanie J. Fouse, 

Assistant Secretary. 

                                                 
66  See Order Setting Aside Action by Delegated Authority and Disapproving a Proposed Rule Change, as 

Modified by Amendments No. 1 and No. 2, Regarding the Acquisition of CHX Holdings, Inc. by North 

America Casin Holdings, Inc., Securities Exchange Act Release No. 82727 (Feb. 15, 2018), 83 FR 7793 

(Feb. 22, 2018) (SR-CHX-2016-20), at 7799.  

67  See id. With rare exception, rule filings are decided, by delegated authority or otherwise, within 240 days. 

See id. 


	SECURITIES AND EXCHANGE COMMISSION