[Federal Register Volume 90, Number 36 (Tuesday, February 25, 2025)]
[Notices]
[Pages 10667-10676]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-03032]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102443; File No. SR-NASDAQ-2025-012]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To List and Trade Shares of
the CoinShares XRP ETF Under Nasdaq Rule 5711(d)
February 19, 2025.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 7, 2025, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade shares of the CoinShares
XRP ETF (the ``Trust'') under Nasdaq Rule 5711(d) (``Commodity-Based
Trust Shares''). The shares of the Trust are referred to herein as the
``Shares.''
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rulefilings, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
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 IV 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
The Exchange proposes to list and trade the Shares under Nasdaq
Rule 5711(d), which governs the listing and trading of Commodity-Based
Trust Shares on the Exchange.\3\ CoinShares Co. is the sponsor of the
Trust (the ``Sponsor'').\4\ Any statements or representations included
in this proposal regarding: (a) the description of the reference assets
or trust holdings; (b) limitations on the reference assets or trust
holdings; (c) dissemination and availability of the reference asset or
intraday indicative value; or (d) the applicability of Nasdaq listing
rules specified in this proposal shall constitute continued listing
standards for the Shares listed on the Exchange.
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\3\ The Commission approved Nasdaq Rule 5711 in Securities
Exchange Act Release No. 66648 (March 23, 2012), 77 FR 19428 (March
30, 2012) (SR-NASDAQ-2012-013).
\4\ See Registration Statement on Form S-1, dated January 24,
2025 filed with the Commission on behalf of the Trust. The
descriptions of the Trust, the Shares, the Index (as defined below),
and XRP contained herein are based, in part, on information in the
Registration Statement. The Registration Statement in not yet
effective and the Shares will not trade on the Exchange until such
time that the Registration Statement is effective.
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Overview of the Trust and the Shares
According to the Registration Statement, the Trust is a Delaware
Statutory Trust that was formed on December 10, 2024. The Trust will
operate pursuant to a trust agreement (the ``Trust Agreement''), as
amended and/or restated from time to time. CSC Delaware Trust Company,
a Delaware corporation, is the trustee of the Trust (the ``Trustee'').
A third party will be the transfer agent of the Trust (in such
capacity, the ``Transfer Agent'') and the administrator of the Trust
(in such capacity, the ``Administrator''). A third-party custodian (the
``Custodian'') will be responsible for the custody of the Trust's XRP.
According to the Registration Statement, each Share will represent
a fractional undivided beneficial interest in and ownership of the
Trust. The
[[Page 10668]]
Trust holds only XRP and cash. The investment objective of the Trust is
for the Shares to reflect the performance of the value of XRP as
represented by the Compass Crypto Reference Index XRP--4 p.m. NY Time
(the ``Index''), less the Trust's liabilities and expenses. In seeking
to achieve its investment objective, the Trust will hold XRP and will
value its Shares daily based on the value of XRP as reflected by the
Index. The Index is calculated independently by Compass Financial
Technologies (the ``Benchmark Administrator'').
According to the Registration Statement, the Trust is passive and
is not managed like a corporation or an active investment vehicle. The
Trust is not registered as an investment company under the Investment
Company Act of 1940, and the Sponsor believes that the Trust is not
required to register under the Investment Company Act of 1940. The
Trust will not hold or trade in commodity futures contracts or other
derivative contracts regulated by the Commodity Exchange Act of 1936,
as administered by the Commodity Futures Trading Commission (the
``CFTC''). The Sponsor believes that the Trust is not a commodity pool
for purposes of the CEA, and that neither the Sponsor nor the Trustee
is subject to regulation as a commodity pool operator or a commodity
trading adviser in connection with the operation of the Trust.
When the Trust creates or redeems Shares, it will do so in blocks
of 5,000 Shares (a ``Basket'') based on the quantity of XRP
attributable to each Share of the Trust (net of accrued but unpaid
expenses and liabilities). The Trust issues Baskets to authorized
participants on an ongoing basis in exchange for cash, which is used to
purchase XRP that is deposited for safekeeping with the Custodian.
Neither the Trust, nor the Sponsor, nor the Custodian, nor any
other person associated with the Trust will, directly or indirectly,
engage in action where any portion of the Trust's XRP is used to earn
additional XRP or generate rewards or other income. The Trust will not
acquire and will disclaim any incidental right (``IR'') or IR asset
received, for example as a result of forks or airdrops, and such assets
will not be taken into account for purposes of determining the Trust's
net asset value (``NAV'').
Investment Objective
According to the Registration Statement, the Trust's investment
objective is for the Shares to reflect the performance of the value of
XRP as represented by the Index, less the Trust's liabilities and
expenses. While an investment in the Shares is not a direct investment
in XRP, the Shares are designed to provide investors with a cost-
effective and convenient way to gain investment exposure to XRP.
Generally speaking, a substantial direct investment in XRP may require
expensive and sometimes complicated arrangements in connection with the
acquisition, security and safekeeping of the XRP and may involve the
payment of substantial fees to acquire such XRP from third-party
facilitators through cash payments of U.S. dollars. Because the value
of the Shares is correlated with the value of the XRP held by the
Trust, it is important to understand the investment attributes of, and
the market for, XRP.
XRP Background
According to the Registration Statement, XRP is a digital asset
that is created and transmitted through the operations of the ``XRP
Ledger,'' a decentralized ledger upon which XRP transactions are
processed and settled.
XRP can be used to pay for goods and services or it can be
converted to fiat currencies, such as the U.S. dollar. The XRP Ledger
is based on a shared public ledger similar to the Bitcoin network and
other distributed ledgers. However, the XRP Ledger differentiates
itself from other digital asset networks in that its stated primary
function is transactional utility, not store of value. The XRP Ledger
is designed to be a global real-time payment and settlement system. As
a result, the XRP Ledger and XRP aim to improve the speed at which
parties on the network may transfer value while also reducing the fees
and delays associated with the traditional methods of interbank
payments.
Unlike a centralized system, no single entity controls the XRP
Ledger. Instead, a network of independent nodes validates transactions
pursuant to a consensus-based algorithm. It is this mechanism, as
opposed to the proof-of-work mechanism utilized by the Bitcoin
blockchain, that allows the XRP Ledger to be fast, energy-efficient and
scalable, and therefore suitable for its most prominent use case, the
facilitation of cross-border financial transactions. Unlike proof-of-
work systems, which require massive computational power to secure the
network, the consensus-based algorithm utilized by the XRP Ledger is
extremely lightweight in terms of energy usage, as it relies on trusted
validators rather than mining. The XRP Ledger can handle up to 1,500
transactions per second, far more than the Bitcoin or Ethereum
blockchain. This makes the XRP Ledger suitable for high-volume use
cases, such as cross-border payments. Lastly, because validators do not
need to spend resources on mining, transaction fees are extremely low
(typically a fraction of a cent per transaction).
Although launched in 2012, the concept for XRP and the XRP Ledger
traces back to 2004 when a web developer started work on a
decentralized payment system that would enable users to create and
trade their own cryptocurrencies in a peer-to-peer manner. More of an
alternative payment system than a cryptocurrency itself, it laid the
conceptual foundation of what would become XRP and the XRP Ledger. The
project was eventually handed over to Jed McCaleb, Arthur Britto and
David Schwartz in 2011 who were seeking to address some of their
concerns related to the scalability of bitcoin and the energy intensive
nature of the ``proof-of-work'' validation mechanism utilized by the
Bitcoin network that relied on ``mining.'' Their goal was to create a
decentralized ledger that used a network of validators that would agree
on transactions in a fast and secure manner, without relying upon
mining. This led to the development of a consensus-based algorithm. It
is this mechanism, as opposed to the proof-of-work mechanism utilized
by the Bitcoin blockchain or the ``proof-of-stake'' mechanism utilized
by the Ethereum network, that allows the XRP Ledger to be fast, energy-
efficient and scalable, and therefore suitable for its most prominent
use case, the facilitation of cross-border financial transactions.
Proponents of the consensus-based algorithm often cite several key
advantages it offers. The first is near-instantaneous settlement of
transactions, which normally occurs within 3-5 seconds. The second is
energy efficiency. Unlike proof-of-work systems, which require massive
computational power to secure the network, the consensus-based
algorithm is relatively light in terms of energy usage, as it relies on
trusted validators rather than mining. A third advantage is
scalability. The XRP Ledger can handle up to 1,500 transactions per
second, far more than the Bitcoin or Ethereum blockchain. This makes
the XRP Ledger an attractive option for high-volume use cases, such as
cross-border payments. Lastly, because validators do not need to spend
resources on mining, transaction fees are extremely low (typically a
fraction of a cent per transaction).
Transactions are validated on the XRP Ledger by a network of
independent validator nodes. These nodes do not mine new blocks but
participate in a
[[Page 10669]]
consensus process to ensure that transactions are valid and correctly
ordered on the XRP Ledger. Any node can be a validator, but for
practical purposes, the XRP Ledger depends on a list of trusted
validators known as the Unique Node List or ``UNL.'' Validators are
entities (which can be individuals, institutions, or other
organizations) that run nodes to participate in the consensus process.
These validators ensure the integrity and accuracy of the ledger. Each
node in the network maintains a Unique Node List--a list of other
validators that the node trusts to reliably validate transactions. The
XRP Ledger's decentralized architecture means that different nodes may
maintain different UNLs, but there needs to be some overlap in the UNLs
for the consensus mechanism to work effectively. Similar to the Bitcoin
network, anyone can join and start using the XRP Ledger; however,
unlike the Bitcoin network, which operates on a fully permissionless
blockchain, the XRP Ledger is maintained by a network of trusted nodes
that accept or reject transactions on the XRP Ledger.
A transaction on the XRP Ledger begins when a user submits a
transaction to the XRP Ledger network. The submitted transaction is
broadcast to all validator nodes. Validators do not immediately confirm
transactions as final; instead, they go through a process of reaching
consensus on which transactions should be included in the next ledger
version. Each validator collects incoming transactions into a proposed
ledger, called a candidate ledger, and then exchanges their proposed
candidate ledgers (also known as proposals) with other validators. The
actual consensus process happens over several rounds. In each round,
validators attempt to come to an agreement on which transactions should
be included in the next ledger version. In each round, validators
examine the transactions in the proposed ledger from the previous round
and compare it to the proposals from other validators in their UNL. If
the validator sees that a supermajority (typically 80% of validators)
of trusted validators have proposed the same set of transactions, the
validator updates its proposal to align with the majority. After a few
rounds of exchanging proposals, when a supermajority (typically 80%) of
validators have agreed on the same set of transactions, that version of
the ledger is considered valid. All participating validators then
update their copy of the ledger with the new, agreed-upon transactions.
The final ledger version is broadcast to all nodes, and it becomes the
new ``official'' state of the ledger.
Prior to engaging in XRP transactions directly on the XRP Ledger, a
user generally must first install on its computer or mobile device a
XRP Ledger software program that will allow the user to generate a
private and public key pair associated with a XRP address. The XRP
Ledger software program and the XRP address also enable the user to
connect to the XRP Ledger and transfer XRP to, and receive XRP from,
other users.
Each XRP Ledger address, or wallet, is associated with a unique
``public key'' and ``private key'' pair. To receive XRP, the XRP
recipient must provide its public key to the party initiating the
transfer. This activity is analogous to a recipient for a transaction
in U.S. dollars providing a routing address in wire instructions to the
payor so that cash may be wired to the recipient's account. The payor
approves the transfer to the address provided by the recipient by
``signing'' a transaction that consists of the recipient's public key
with the private key of the address from where the payor is
transferring the XRP. The recipient, however, does not make public or
provide to the sender its related private key.
XRP can be held in different types of wallets, including hardware
wallets, software wallets and custodial wallets provided by digital
asset trading platforms. The wallet essentially holds the private keys
that control the account on the XRP Ledger. The private key is crucial
for signing transactions on the ledger. Whoever possesses the private
key associated with an XRP Ledger account effectively controls the XRP
held by that account. While XRP is the native asset, the XRP Ledger
also supports the holding and transferring of other assets (like USD,
EUR, or other digital assets) through a system of trust lines. However,
these other assets are not XRP itself; they are IOUs issued by
institutions or individuals on the ledger.
Neither the recipient nor the sender reveal their private keys in a
transaction because the private key authorizes transfer of the funds in
that address to other users. Therefore, if a user loses his or her
private key, the user may permanently lose access to the XRP contained
in the associated address. Likewise, XRP is irretrievably lost if the
private key associated with them is deleted and no backup has been
made. When sending XRP, a user's XRP Ledger software program must
validate the transaction with the associated private key. In addition,
since every computation on the XRP Ledger requires processing power,
there is a transaction fee involved with the transfer that is paid by
the payor. The resulting digitally validated transaction is sent by the
user's XRP Ledger software program to the XRP Ledger validators to
allow transaction confirmation.
Some XRP transactions are conducted ``off-blockchain'' (i.e.,
through centralized book-entries) and are therefore not recorded on the
XRP Ledger. These ``off-blockchain transactions'' involve the transfer
of control over, or ownership of, a specific digital wallet holding XRP
or the reallocation of ownership of certain XRP in a pooled-ownership
digital wallet, such as a digital wallet owned by a digital asset
trading platforms. In contrast to on-blockchain transactions, which are
publicly recorded on the XRP Ledger, information and data regarding
off-blockchain transactions are generally not publicly available.
Therefore, off-blockchain transactions are not truly XRP Ledger
transactions in that they do not involve the transfer of transaction
data on the XRP Ledger and do not reflect a movement of XRP between
addresses recorded in the XRP Ledger. For these reasons, off-blockchain
transactions are subject to risks as any such transfer of XRP ownership
is not protected by the protocol behind the XRP Ledger or recorded in,
and validated through, the ledger mechanism.
XRP can also be held in escrow on the XRP Ledger, meaning the XRP
is locked up and released only when certain conditions are met (e.g.,
at a specific time or when a particular event occurs). This is a native
feature of the ledger, providing flexibility for complex financial
contracts. XRP can also be held in payment channels, which allow for
off-ledger transactions to occur between two parties, with the final
balance being settled on the ledger later. Each XRP Ledger account must
also hold a minimum reserve of XRP (currently 10 XRP) which cannot be
spent. This ensures that only legitimate accounts are created and
maintained. The XRP Ledger supports multi-signature accounts, where
multiple keys can be required to authorize transactions. This adds an
extra layer of security for holding and transferring large amounts of
XRP.
Unlike other digital assets such as bitcoin or ether, XRP was not
mined gradually over time. Instead, all 100 billion XRP tokens were
created at the time of the XRP Ledger's launch in 2012. This means that
every XRP token that exists today was generated from the outset,
without the need for a mining process. Of the 100 billion XRP generated
by the XRP Ledger's code, the
[[Page 10670]]
founders of Ripple Labs retained 20 billion XRP and the rest, nearly 80
billion XRP, was provided to Ripple Labs or will be released to Ripple
Labs at established intervals.
In 2017, to address concerns about the large portion of XRP held by
Ripple Labs, the company introduced an escrow mechanism to lock up a
significant portion of its XRP holdings. Under this mechanism, Ripple
Labs placed 55 billion XRP (55% of the total supply) into a series of
time-locked escrow accounts. The escrow releases 1 billion XRP per
month over 55 months. This process adds a level of predictability and
transparency about how much XRP can enter the market each month. If
Ripple Labs does not use all of the 1 billion XRP released in a given
month, the remaining amount is placed back into escrow for future
release. The purpose of this escrow system is to reassure the market
that Ripple Labs will not release too much XRP at once, which could
potentially disrupt XRP's price or market dynamics.
Index
According to the Registration Statement, the Index is designed to
provide a daily, 4:00 p.m. Eastern Time (``ET'') reference rate of the
U.S. dollar price of one XRP that may be used to develop financial
products. The Index is representative of the XRP trading activity on
selected crypto trading platforms. For purposes of determining the
value of the Trust's XRP, the Trust uses the Index to calculate a per-
XRP value in U.S. dollars (the ``XRP Index Price''). The XRP Index
Price is published between 4:00 p.m. and 4:30 p.m. ET on each trading
day.
The Sponsor believes that the use of the Index is reflective of a
reasonable valuation of the average spot price of XRP and that
resistance to manipulation is a priority aim of its design methodology.
The methodology: (i) takes an observation period and divides it in
twelve (12) time-equally sized partitions of trade records; (ii) then
calculates the volume-weighted median of all trade prices within each
partition; and (iii) determines the value from the arithmetic mean of
the volume-weighted medians, equally weighted. By employing the
foregoing steps, the Index thereby seeks to ensure that transactions in
XRP conducted at outlying prices do not have an undue effect on the
value of a specific partition, large trades or clusters of trades
transacted over a short period of time will not have an undue influence
on the index level, and the effect of large trades at prices that
deviate from the prevailing price are mitigated from having an undue
influence on the benchmark level.
In addition, the Sponsor notes that an oversight function is
implemented by the Benchmark Administrator in seeking to ensure that
the Index is administered through codified policies for Index
integrity.
Net Asset Value
According to the Registration Statement, the Shares are valued on a
daily basis as of 4:00 p.m. ET. The value of XRP held by the Trust is
determined based on the fair market value price for XRP determined by
the Benchmark Administrator.
The Trust's NAV is calculated by:
taking the current market value of its XRP (determined as
set forth below) and any other; and assets;
subtracting any liabilities (including accrued by unpaid
expenses).
The Trust's NAV per Share is calculated by taking the Trust's NAV
and dividing it by the total amount of Shares outstanding.
The XRP held by the Trust will typically be valued based on the XRP
Index Price. The Administrator calculates the NAV of the Trust once
each business day. The end-of-day XRP price is calculated using the XRP
Index Price as of 4:00 p.m. ET. However, NAVs are not officially struck
until later in the day (often by 5:30 p.m. ET and almost always by 8:00
p.m. ET). The pause after 4:00 p.m. ET provides an opportunity for the
Sponsor to detect, flag, investigate, and correct unusual pricing
should it occur. If the Sponsor determines in good faith that the Index
does not reflect an accurate XRP price, then the Sponsor will instruct
the Benchmark Administrator to employ an alternative method to
determine the fair value of the Trust's assets. The Compass Crypto
Reference Index XRP--4 p.m. NY Time shall constitute the Index, but if
the Index becomes unavailable, or if the Sponsor determines in good
faith that such Index does not reflect an accurate price for XRP, then
the Sponsor will employ an alternative method to determine the fair
value of the Trust's assets.\5\
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\5\ Such alternative method will only be employed on an ad hoc
basis. Any permanent change to the calculation of the NAV would
require a proposed rule change under Rule 19b-4.
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Availability of Information and Intraday Indicative Value
In addition to the price transparency of the Index, the Trust will
provide information regarding the Trust's XRP holdings as well as
additional data regarding the Trust. The website for the Trust, which
will be publicly accessible at no charge, will contain the following
information: (a) the prior business day's NAV per Share; (b) the prior
business day's Nasdaq official closing price; (c) calculation of the
premium or discount of such Exchange official closing price against
such NAV per Share; (d) data in chart form displaying the frequency
distribution of discounts and premiums of the Exchange's official
closing price against the NAV, within appropriate ranges for each of
the four previous calendar quarters (or for the life of the Trust, if
shorter); (e) the prospectus; and (f) other applicable quantitative
information. The Trust will also disseminate the Trust's holdings on a
daily basis on the Trust's website. Quotation and last sale information
regarding the Shares will be disseminated through the facilities of the
relevant securities information processor.
The intraday indicative value (``IIV'') will be calculated by using
the prior day's closing NAV per Share as a base and updating that value
during the Exchange's regular market session of 9:30 a.m. to 4:00 p.m.
ET (the ``Regular Market Session'') to reflect changes in the value of
the Trust's XRP holdings during the trading day. The IIV disseminated
during the Regular Market Session should not be viewed as an actual
real-time update of the NAV, because NAV per Share is calculated only
once at the end of each trading day based upon the relevant end-of-day
values of the Trust's investments. The IIV will be widely disseminated
on a per-Share basis every 15 seconds during the Regular Market Session
through the facilities of the relevant securities information processor
by market data vendors. In addition, the IIV will be available through
online information services, such as Bloomberg and Reuters.
Quotation and last sale information for XRP is disseminated through
a variety of major market data vendors. Information related to trading,
including price and volume information, in XRP is available from major
market data vendors and from the trading platforms on which XRP are
traded. Depth of book information is also available from XRP trading
platforms. The normal trading hours for XRP trading platforms are 24
hours per day, 365 days per year.
Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Information
regarding the previous day's Nasdaq official closing price and trading
volume information
[[Page 10671]]
for the Shares will be published daily in the financial section of
newspapers.
Custody of the Trust's XRP
The Custodian will be responsible for custody of the Trust's XRP.
The Custodian is a qualified custodian under Rule 206-4 of the
Investment Adviser Act. The Custodian will custody the Trust's XRP
pursuant to a custody agreement. The custody agreement requires the
Custodian to maintain the Trust's XRP in segregated accounts that
clearly identify the Trust as owner of the respective accounts and
assets held in those accounts; the segregation will be both from the
proprietary property of the Custodian and the assets of any other
customer. Such arrangements are generally deemed to be ``bankruptcy
remote,'' that is, in the event of an insolvency of the Custodian,
assets held in such segregated accounts would not become property of
the Custodian's estate and would not be available to satisfy claims of
creditors of the Custodian. In addition, the Custodian carries fidelity
insurance, which covers assets held by the Custodian in custody from
risks such as theft of funds. XRP owned by the Trust will at all times
be held by, and in the control of, the Custodian, and transfer of such
XRP to or from the Custodian will occur only in connection with
creation and redemptions of Shares.
The Custodian carefully considers the design of the physical,
operational and cryptographic systems for secure storage of the Trust's
private keys in an effort to lower the risk of loss or theft. The
Custodian utilizes a variety of security measures to ensure that
private keys necessary to transfer digital assets remain uncompromised
and that the Trust maintains exclusive ownership of its assets. The
operational procedures of the Custodian are reviewed by third-party
advisors with specific expertise in physical security. The devices that
store the keys will never be connected to the internet or any other
public or private distributed network--this is colloquially known as
``cold storage.'' Only specific individuals are authorized to
participate in the custody process, and no individual acting alone will
be able to access or use any of the private keys. In addition, no
combination of the executive officers of the Sponsor or the investment
professionals managing the Trust, acting alone or together, will be
able to access or use any of the private keys that hold the Trust's
XRP.
Creation and Redemption of Shares
The Trust creates and redeems Shares from time to time, but only in
one or more Baskets. Baskets are only made in exchange for delivery to
the Trust or the distribution by the Trust of the amount of cash
represented by the Baskets being created or redeemed (the ``Basket
Deposit''). The amount of cash required in a Basket Deposit (the
``Basket Cash Deposit'') is based on the quantity or value of the
quantity, as applicable, of XRP and cash attributable to each Share of
the Trust (net of accrued but unpaid fees and expenses of the Trust)
being created or redeemed determined as of 4:00 p.m. ET on the day the
order to create or redeem Baskets is properly received.
Baskets will only made in exchange for delivery to the Trust or the
distribution by the Trust of the amount of cash represented by the
Shares being created or redeemed, the amount of which is based on the
value of the XRP attributable to each Share of the Trust (net of
accrued but unpaid fees and expenses of the Trust) being created or
redeemed determined as of 4:00 p.m. ET on the day the order to create
or redeem Baskets is properly received. The Trust will engage in XRP
transactions for converting cash into XRP (in association with purchase
orders) and XRP into cash (in association with redemption orders).
The only persons that may place orders to create or redeem Baskets
are authorized participants (``Authorized Participants''). Authorized
Participants must be (1) registered broker-dealers or other securities
market participants, such as banks or other financial institutions,
that are not required to register as broker-dealers to engage in
securities transactions, and (2) Depository Trust Company participants.
To become an Authorized Participant, a person must enter into an
authorized participant agreement, which provides the procedures for the
creation and redemption of Shares and for the delivery of the cash
required for such creation and redemptions.
Authorized Participants may act for their own accounts or as agents
for broker-dealers, custodians and other securities market participants
that wish to create or redeem Baskets. Shareholders who are not
Authorized Participants will only be able to redeem their Shares
through an Authorized Participant. The Authorized Participants will
deliver only cash to create Shares and will receive only cash when
redeeming Shares. Further, Authorized Participants will not directly or
indirectly purchase, hold, deliver, or receive XRP as part of the
creation or redemption process or otherwise direct the trust or a third
party with respect to purchasing, holding, delivering, or receiving XRP
as part of the creation or redemption process.
Applicable Standard
The Commission has previously approved or disapproved exchange
filings to list and trade series of Trust Issued Receipts, including
spot-based Commodity-Based Trust Shares, on the basis of whether the
listing exchange has in place a comprehensive surveillance sharing
agreement with a regulated market of significant size related to the
underlying commodity to be held.\6\ The Commission has also
consistently recognized, however, that this is not the exclusive means
by which an ETP listing exchange can meet this
[[Page 10672]]
statutory obligation.\7\ A listing exchange could, alternatively,
demonstrate that ``other means to prevent fraudulent and manipulative
acts and practices will be sufficient'' to justify dispensing with a
surveillance-sharing agreement with a regulated market of significant
size.
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\6\ See Securities Exchange Act Release Nos. 78262 (July 8,
2016), 81 FR 78262 (July 14. 2016) (the ``Winklevoss Proposal'').
The Winklevoss Proposal was subsequently disapproved by the
Commission. See Securities Exchange Act Release No. 83723 (July 26,
2018), 83 FR 37579 (August 1, 2018) (the ``Winklevoss Order'').
Prior orders from the Commission have pointed out that in every
prior approval order for Commodity-Based Trust Shares, there has
been a derivatives market that represents the regulated market of
significant size, generally a Commodity Futures Trading Commission
(the ``CFTC'') regulated futures market. Further to this point, the
Commission's prior orders have noted that the spot commodities and
currency markets for which it has previously approved spot ETPs are
generally unregulated and that the Commission relied on the
underlying futures market as the regulated market of significant
size that formed the basis for approving the series of Currency and
Commodity-Based Trust Shares, including gold, silver, platinum,
palladium, copper, and other commodities and currencies. The
Commission specifically noted in the Winklevoss Order that the
approval order issued related to the first spot gold ETP ``was based
on an assumption that the currency market and the spot gold market
were largely unregulated.'' See Winklevoss Order at 37592. As such,
the regulated market of significant size test does not require that
the spot market be regulated in order for the Commission to approve
this proposal, and precedent makes clear that an underlying market
for a spot commodity or currency being a regulated market would
actually be an exception to the norm. These largely unregulated
currency and commodity markets do not provide the same protections
as the markets that are subject to the Commission's oversight, but
the Commission has consistently looked to surveillance sharing
agreements with the underlying futures market in order to determine
whether such products were consistent with the Act. See Securities
Exchange Act No. 99306 (January 10, 2024), 89 FR 3008 (January 17,
2024) (Self-Regulatory Organizations; NYSE Arca, Inc.; The Nasdaq
Stock Market LLC; Cboe BZX Exchange, Inc.; 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 ``Spot Bitcoin ETP Approval
Order''); 100224 (May 23, 2024), 89 FR 46937 (May 30, 2024) (Self-
Regulatory Organizations; NYSE Arca, Inc.; The Nasdaq Stock Market
LLC; Cboe BZX Exchange, Inc.; 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
``Spot ETH ETP Approval Order'').
\7\ See Winklevoss Order, 83 FR at 37580; see Spot Bitcoin ETP
Approval Order, 89 FR at 3009; see Spot ETH ETP Approval Order 89 FR
at 46938.
---------------------------------------------------------------------------
The Commission recently issued orders granting approval for
proposals to list bitcoin- and ether-based commodity trust shares and
bitcoin- and ether-based trust issued receipts (these proposed funds
are nearly identical to the Trust, but proposed to hold bitcoin and
ether, respectively, instead of XRP) (``Spot Bitcoin ETPs'' and ``Spot
ETH ETPs''). In both the Spot Bitcoin ETP Approval Order and Spot ETH
ETP Approval Order, the Commission found that sufficient ``other
means'' of preventing fraud and manipulation had been demonstrated that
justified dispensing with a surveillance-sharing agreement with a
market of significant size. Specifically, the Commission found that
while the Chicago Mercantile Exchange (``CME'') futures market for both
bitcoin and ether were not of ``significant size'' with respect to the
spot market, the Exchange demonstrated that other means could be
reasonably expected to assist in surveilling for fraudulent and
manipulative acts and practices in the specific context of the
proposals.
Both the Exchange and the Sponsor believe that this proposal and
the included analysis are sufficient to establish that there are
sufficient ``other means'' of preventing fraud and manipulation that
warrant dispensing of the surveillance-sharing agreement with a
regulated market of significant size, as was done with both Spot
Bitcoin ETPs and Spot ETH ETPs, and that this proposal should be
approved.
The Commission has approved numerous series of Trust Issued
Receipts,\8\ including Commodity-Based Trust Shares,\9\ to be listed on
U.S. national securities exchanges. In order for any proposed rule
change from an exchange to be approved, the Commission must determine
that, among other things, the proposal is consistent with the
requirements of Section 6(b)(5) of the Act, specifically including: (i)
the requirement that a national securities exchange's rules are
designed to prevent fraudulent and manipulative acts and practices; and
(ii) the requirement that an exchange proposal be designed, in general,
to protect investors and the public interest. The Exchange believes
that this proposal is consistent with the requirements of Section
6(b)(5) of the Act.
---------------------------------------------------------------------------
\8\ Pursuant to Nasdaq Rule 5720(a), the term ``Trust Issued
Receipt'' means a security (a) that is issued by a trust which holds
specified securities deposited with the trust; (b) that, when
aggregated in some specified minimum number, may be surrendered to
the trust by the beneficial owner to receive the securities; and (c)
that pays beneficial owners dividends and other distributions on the
deposited securities, if any are declared and paid to the trustee by
an issuer of the deposited securities.
\9\ Pursuant to Nasdaq Rule 5711(d)(iv), the term ``Commodity-
Based Trust Shares'' means a security (1) that is issued by a trust
that holds (a) a specified commodity deposited with the trust, or
(b) a specified commodity and, in addition to such specified
commodity, cash; (2) 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 (3) 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.
---------------------------------------------------------------------------
As noted above, the Commission has recognized that the ``regulated
market of significant size'' standard is not the only means for
satisfying Section 6(b)(5) of the Act, specifically providing that a
listing exchange could demonstrate that ``other means to prevent
fraudulent and manipulative acts and practices'' are sufficient to
justify dispensing with the requisite surveillance-sharing
agreement.\10\ While there is currently no U.S.-regulated futures
market for XRP, in the Spot Bitcoin ETF Approval Order and Spot ETH ETF
Approval Order the Commission determined that the CME bitcoin futures
market and CME ETH future market, respectively, were not of
``significant size'' related to the spot market. Instead, the
Commission found that sufficient ``other means'' of preventing fraud
and manipulation had been demonstrated that justified dispensing with a
surveillance-sharing agreement of significant size. The Exchange and
Sponsor believe that this proposal provides for other means of
preventing fraud and manipulation justify dispensing with a
surveillance-sharing agreement of significant size.
---------------------------------------------------------------------------
\10\ See Winklevoss Order at 37580. The Commission has also
specifically noted that it ``is not applying a `cannot be
manipulated' standard; instead, the Commission is examining whether
the proposal meets the requirements of the Exchange Act and,
pursuant to its Rules of Practice, places the burden on the listing
exchange to demonstrate the validity of its contentions and to
establish that the requirements of the Exchange Act have been met.''
Id. at 37582.
---------------------------------------------------------------------------
Over the past several years, U.S. investor exposure to XRP, through
OTC XRP Funds and digital asset trading platforms, has grown into
billions of dollars with a fully diluted market cap of greater than
$300 billion. The Exchange believes that approving this proposal (and
comparable proposals) provides the Commission with the opportunity to
allow U.S. investors with access to XRP in a regulated and transparent
exchange-traded vehicle that would act to limit risk to U.S. investors
by: (i) reducing premium and discount volatility; (ii) reducing
management fees through meaningful competition; and (iii) providing an
alternative to the custody of spot XRP.
The policy concerns that the Exchange Act is designed to address
are also otherwise mitigated by the fact that the size of the market
for the underlying reference asset ($300+ billion fully diluted value)
and the nature of the XRP ecosystem reduces its susceptibility to
manipulation. The geographically diverse and continuous nature of XRP
trading makes it difficult and prohibitively costly to manipulate the
price of XRP and, in many instances, the XRP market can be less
susceptible to manipulation than the equity, fixed income, and
commodity futures markets. There are a number of reasons this is the
case, including that there is not inside information about revenue,
earnings, corporate activities, or sources of supply; manipulation of
the price on any single venue would require manipulation of the global
XRP price in order to be effective; a substantial over-the-counter
market provides liquidity and shock-absorbing capacity; XRP's 24/7/365
nature provides constant arbitrage opportunities across all trading
venues; and it is unlikely that any one actor could obtain a dominant
market share.
Further, XRP is arguably less susceptible to manipulation than
other commodities that underlie ETPs; there may be inside information
relating to the supply of the physical commodity such as the discovery
of new sources of supply or significant disruptions at mining
facilities that supply the commodity that simply are inapplicable as it
relates to certain crypto-assets, including XRP. Further, the Exchange
believes that the fragmentation across XRP trading platforms and
increased adoption of XRP, as displayed through increased user
engagement and trading volumes, and the XRP network make manipulation
of XRP prices through continuous trading activity more difficult.
Moreover, the linkage between the XRP markets and the presence of
arbitrageurs in those markets means that the manipulation of the price
of XRP price on any single venue would require manipulation of the
global XRP price in order to be effective. Arbitrageurs must have funds
distributed across multiple XRP trading platforms in order to take
advantage of temporary price dislocations, thereby making it unlikely
that there will be strong concentration
[[Page 10673]]
of funds on any particular XRP trading platform. As a result, the
potential for manipulation on a particular XRP trading platform would
require overcoming the liquidity supply of such arbitrageurs who are
effectively eliminating any cross-market pricing differences. For all
of these reasons, XRP is not particularly susceptible to manipulation,
especially as compared to other approved ETP reference assets.
Initial and Continued Listing
The Shares will be subject to Nasdaq Rule 5711(d)(vi), which sets
forth the initial and continued listing criteria applicable to
Commodity-Based Trust Shares. The Exchange will obtain a representation
that the Trust's NAV per Share will be calculated daily and will be
made available to all market participants at the same time. A minimum
of 40,000 Shares will be required to be outstanding at the time of
commencement of trading on the Exchange. Upon termination of the Trust,
the Shares will be removed from listing. The Trustee will be a trust
company having substantial capital and surplus and the experience and
facilities for handling corporate trust business, as required under
Nasdaq Rule 5711(d)(vi)(D) and no change will be made to the Trustee
without prior notice to and approval of the Exchange.
As required in Nasdaq Rule 5711(d)(viii), the Exchange notes that
any registered market maker (``Market Maker'') in the Shares must file
with the Exchange, in a manner prescribed by the Exchange, and keep
current a list identifying all accounts for trading the underlying
commodity, related futures or options on futures, or any other related
derivatives, which the registered Market Maker may have or over which
it may exercise investment discretion. No registered Market Maker in
the Shares shall trade in the underlying commodity, related futures or
options on futures, or any other related derivatives, in an account in
which a registered Market Maker, directly or indirectly, controls
trading activities, or has a direct interest in the profits or losses
thereof, which has not been reported to the Exchange as required by
Nasdaq Rule 5711(d). In addition to the existing obligations under
Exchange rules regarding the production of books and records, the
registered Market Maker in the Shares shall make available to the
Exchange such books, records or other information pertaining to
transactions by such entity or any limited partner, officer or approved
person thereof, registered or non-registered employee affiliated with
such entity for its or their own accounts in the underlying commodity,
related futures or options on futures, or any other related
derivatives, as may be requested by the Exchange.
The Exchange is able to obtain information regarding trading in the
Shares and the underlying XRP or any other XRP derivative through
members acting as registered Market Makers, in connection with their
proprietary or customer trades.
As a general matter, the Exchange has regulatory jurisdiction over
its members, and their associated persons. The Exchange also has
regulatory jurisdiction over any person or entity controlling a member,
as well as a subsidiary or affiliate of a member that is in the
securities business. A subsidiary or affiliate of a member organization
that does business only in commodities would not be subject to Exchange
jurisdiction, but the Exchange could obtain information regarding the
activities of such subsidiary or affiliate through surveillance sharing
agreements with regulatory organizations of which such subsidiary or
affiliate is a member.
Trading Rules
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. The Exchange will
allow trading in the Shares from 4:00 a.m. to 8:00 p.m. ET. The
Exchange has appropriate rules to facilitate transactions in the Shares
during all trading sessions. The Shares of the Trust will conform to
the initial and continued listing criteria set forth in Nasdaq Rule
5711(d) and will comply with the requirements of Rule 10A-3 of the Act.
Trading Halts
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. The Exchange will halt trading in the Shares
under the conditions specified in Nasdaq Rules 4120 and 4121, including
without limitation the conditions specified in Nasdaq Rule 4120(a)(9)
and (10) and the trading pauses under Nasdaq Rules 4120(a)(11) and
(12).
Trading may be halted because of market conditions or for reasons
that, in the view of the Exchange, make trading in the Shares
inadvisable. These may include: (1) the extent to which trading is not
occurring in the XRP underlying the Shares; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present.
If the IIV or the value of the Index is not being disseminated as
required, the Exchange may halt trading during the day in which the
interruption to the dissemination of the IIV or the value of the Index
occurs. If the interruption to the dissemination of the IIV or the
value of the Index persists past the trading day in which it occurred,
the Exchange will halt trading no later than the beginning of the
trading day following the interruption.
In addition, if the Exchange becomes aware that the NAV per Share
with respect to the Shares is not disseminated to all market
participants at the same time, it will halt trading in the Shares until
such time as the NAV per Share is available to all market participants.
Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. The surveillance
program includes real-time patterns for price and volume movements and
post-trade surveillance patterns (e.g., spoofing, marking the close,
pinging, phishing). Trading of Shares on the Exchange will be subject
to the Exchange's surveillance program for derivative products, as well
as cross-market surveillances administered by FINRA, on behalf of the
Exchange pursuant to a regulatory services agreement, which are also
designed to detect violations of Exchange rules and applicable federal
securities laws. The Exchange is responsible for FINRA's performance
under this regulatory services agreement.
The Exchange will require the Trust to represent to the Exchange
that it will advise the Exchange of any failure by the Trust to comply
with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will surveil for compliance with the continued listing requirements. If
the Trust is not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under the
Nasdaq 5800 Series. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on
[[Page 10674]]
behalf of the Exchange, or both, may obtain trading information
regarding trading in the Shares or any XRP derivatives from such
markets and other entities. The Exchange also may obtain information
regarding trading in the Shares or any XRP derivatives via the ISG,
from other exchanges who are members or affiliates of the ISG, or with
which the Exchange has entered into a comprehensive surveillance
sharing agreement.
Information Circular
Prior to the commencement of trading, the Exchange will inform its
members in an information circular (``Information Circular'') of the
special characteristics and risks associated with trading the Shares.
Specifically, the Information Circular will discuss the following: (1)
the procedures for creations and redemptions of Shares in Baskets (and
that Shares are not individually redeemable); (2) Section 10 of Nasdaq
General Rule 9, which imposes suitability obligations on Nasdaq members
with respect to recommending transactions in the Shares to customers;
(3) how information regarding the IIV and NAV is disseminated; (4) the
risks involved in trading the Shares during the pre-market and post-
market sessions when an updated IIV will not be calculated or publicly
disseminated; (5) the requirement that members deliver a prospectus to
investors purchasing newly issued Shares prior to or concurrently with
the confirmation of a transaction; and (6) trading information. The
Information Circular will also discuss any exemptive, no action and
interpretive relief granted by the Commission from any rules under the
Act.
The Information Circular will also reference the fact that there is
no regulated source of last sale information regarding XRP, that the
Commission has no jurisdiction over the trading of XRP as a commodity.
Additionally, the Information Circular will reference that the
Trust is subject to various fees and expenses described in the
Registration Statement. The Information Circular will also disclose the
trading hours of the Shares. The Information Circular will disclose
that information about the Shares will be publicly available on the
Trust's website.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\11\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\12\ in particular, in that it is designed 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.
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission has approved numerous series of Trust Issued
Receipts, including Commodity-Based Trust Shares, to be listed on U.S.
national securities exchanges. In order for any proposed rule change
from an exchange to be approved, the Commission must determine that,
among other things, the proposal is consistent with the requirements of
Section 6(b)(5) of the Act, specifically including: (i) the requirement
that a national securities exchange's rules are designed to prevent
fraudulent and manipulative acts and practices; and (ii) the
requirement that an exchange proposal be designed, in general, to
protect investors and the public interest. The Exchange believes that
this proposal is consistent with the requirements of Section 6(b)(5) of
the Act.
The Commission has approved numerous series of Trust Issued
Receipts, including Commodity-Based Trust Shares, to be listed on U.S.
national securities exchanges. In order for any proposed rule change
from an exchange to be approved, the Commission must determine that,
among other things, the proposal is consistent with the requirements of
Section 6(b)(5) of the Act, specifically including: (i) the requirement
that a national securities exchange's rules are designed to prevent
fraudulent and manipulative acts and practices; and (ii) the
requirement that an exchange proposal be designed, in general, to
protect investors and the public interest. The Exchange believes that
this proposal is consistent with the requirements of Section 6(b)(5) of
the Act.
As noted above, the Commission has recognized that the ``regulated
market of significant size'' standard is not the only means for
satisfying Section 6(b)(5) of the act, specifically providing that a
listing exchange could demonstrate that ``other means to prevent
fraudulent and manipulative acts and practices'' are sufficient to
justify dispensing with the requisite surveillance-sharing agreement
with the underlying spot market. The Exchange and Sponsor believe that
such conditions are present.
The Exchange believes that the proposal is designed to protect
investors and the public interest. Over the past several years, U.S.
investor exposure to XRP, through OTC XRP Funds and digital asset
trading platforms, has grown into billions of dollars with a fully
diluted market cap of greater than $300 billion. The Exchange believes
that approving this proposal (and comparable proposals) provides the
Commission with the opportunity to allow U.S. investors with access to
XRP in a regulated and transparent exchange-traded vehicle that would
act to limit risk to U.S. investors by: (i) reducing premium and
discount volatility; (ii) reducing management fees through meaningful
competition; and (iii) providing an alternative to the custody of spot
XRP.
The policy concerns that the Exchange Act is designed to address
are also otherwise mitigated by the fact that the size of the market
for the underlying reference asset ($300+ billion fully diluted value)
and the nature of the XRP ecosystem reduces its susceptibility to
manipulation. The geographically diverse and continuous nature of XRP
trading makes it difficult and prohibitively costly to manipulate the
price of XRP and, in many instances, the XRP market can be less
susceptible to manipulation than the equity, fixed income, and
commodity futures markets. There are a number of reasons this is the
case, including that there is not inside information about revenue,
earnings, corporate activities, or sources of supply; manipulation of
the price on any single venue would require manipulation of the global
XRP price in order to be effective; a substantial over-the-counter
market provides liquidity and shock-absorbing capacity; XRP's 24/7/365
nature provides constant arbitrage opportunities across all trading
venues; and it is unlikely that any one actor could obtain a dominant
market share.
Further, XRP is arguably less susceptible to manipulation than
other commodities that underlie ETPs; there may be inside information
relating to the supply of the physical commodity such as the discovery
of new sources of supply or significant disruptions at mining
facilities that supply the commodity that simply are inapplicable as it
relates to certain crypto-assets, including XRP. Further, the Exchange
believes that the fragmentation across XRP trading platforms and
increased adoption of XRP, as displayed through increased user
engagement and trading volumes, and the XRP network make manipulation
of XRP prices through continuous trading activity more difficult.
Moreover, the linkage between the XRP markets and the presence of
arbitrageurs in those markets means that
[[Page 10675]]
the manipulation of the price of XRP price on any single venue would
require manipulation of the global XRP price in order to be effective.
Arbitrageurs must have funds distributed across multiple XRP trading
platforms in order to take advantage of temporary price dislocations,
thereby making it unlikely that there will be strong concentration of
funds on any particular XRP trading platform. As a result, the
potential for manipulation on a particular XRP trading platform would
require overcoming the liquidity supply of such arbitrageurs who are
effectively eliminating any cross-market pricing differences. For all
of these reasons, XRP is not particularly susceptible to manipulation,
especially as compared to other approved ETP reference assets.
The Exchange further believes that the proposed rule change is
designed to prevent fraudulent and manipulative acts and practices and
to protect investors and the public interest in that the Shares will be
listed and traded on the Exchange pursuant to the initial and continued
listing criteria set forth in Nasdaq Rule 5711(d). The Exchange has in
place surveillance procedures that are adequate to properly monitor
trading in the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws. As
discussed above, the surveillance program includes real-time patterns
for price and volume movements and post-trade surveillance patterns
(e.g., spoofing, marking the close, pinging, phishing). Trading of
Shares on the Exchange will be subject to the Exchange's surveillance
program for derivative products, as well as cross-market surveillances
administered by FINRA, on behalf of the Exchange pursuant to a
regulatory services agreement, which are also designed to detect
violations of Exchange rules and applicable federal securities laws.
The Exchange is responsible for FINRA's performance under this
regulatory services agreement.
The Exchange will require the Trust to represent to the Exchange
that it will advise the Exchange of any failure by the Trust to comply
with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will surveil for compliance with the continued listing requirements. If
the Trust is not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under the
Nasdaq 5800 Series. In addition, the Exchange also has a general policy
prohibiting the distribution of material, non-public information by its
employees.
The Exchange will communicate as needed regarding trading in the
Shares with other markets and other entities that are members of the
ISG, and the Exchange may obtain trading information regarding trading
in the Shares or any XRP derivatives from such markets and other
entities.
Trading in Shares of the Trust will be halted if the circuit
breaker parameters have been reached or because of market conditions or
for reasons that, in the view of the Exchange, make trading in the
Shares inadvisable. These may include unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market.
The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
Shares that will enhance competition among market participants, to the
benefit of investors and the marketplace.
For all the above reasons, the Exchange believes that the proposed
rule change is consistent with the requirements of Section 6(b)(5) of
the Act.
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 purpose of the Act. The Exchange notes that the
proposed rule change rather will facilitate the listing and trading of
additional exchange-traded product that will enhance competition among
both market participants and listing venues, to the benefit of
investors and the marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change 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 [email protected]. Please include
file number SR-NASDAQ-2025-012 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.
All submissions should refer to file number SR-NASDAQ-2025-012. 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 submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also 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-NASDAQ-2025-012 and should
be submitted on or before March 18, 2025.
[[Page 10676]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------
\13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-03032 Filed 2-24-25; 8:45 am]
BILLING CODE 8011-01-P