Nasdaq Texas

The SEC has approved a new framework allowing Bitcoin-heavy trusts to allocate up to 15% of assets into otherwise ineligible holdings while retaining access to expedited listing rules on Nasdaq Texas. This flexibility opens room for fund sponsors to incorporate alternative digital assets or derivatives without triggering individual SEC approval for each product.

• Qualifying Commodity-Based Trust Shares must maintain at least 85% of net asset value in eligible cash, commodities, or related securities.
• The remaining 15% can hold specified digital commodities or securities that fail standard eligibility tests without losing streamlined listing access.
• Actively managed strategies are now permitted under the generic standards, whereas the prior rule contemplated only passive strategies.

• 85% Minimum qualifying asset threshold required for eligible holdings under the new rule
• 15% Maximum allocation permitted for otherwise ineligible assets per Commodity-Based Trust Share
• 71.42% Qualifying portion when Bitcoin trust holds $100M Bitcoin plus $40M options notional exposure
• Sept. 3 Date the SEC approved Nasdaq Texas amendments to the rule

The US Securities and Exchange Commission issued an approval order on September 3 for Nasdaq Texas amendments that grant commodity-linked trusts greater discretion in portfolio construction while maintaining the exchange’s streamlined listing framework. Under the new rule, a Commodity-Based Trust Share must keep at least 85% of its net asset value in cash, cash equivalents, or commodities and related assets that satisfy the exchange’s eligibility criteria. The residual 15% allocation can encompass specified digital commodities or securities that do not meet those tests, enabling fund sponsors to access expedited listing without individual SEC approval for each product.

This approval marks part of a broader regulatory shift toward greater acceptance of digital asset investment products. Following the approval of spot Bitcoin exchange-traded funds in early 2024, regulators have demonstrated increased willingness to accommodate crypto-based financial instruments within existing frameworks. The Nasdaq Texas amendment represents a continuation of this trend, providing market participants with tools to create more sophisticated crypto-linked investment vehicles while maintaining regulatory oversight.

How The 15% Allocation Works For Bitcoin Funds

For a Bitcoin-heavy trust, the 15% nonqualifying portion creates room to incorporate alternative digital assets or certain derivatives without triggering separate SEC filings. However, the rule imposes strict constraints on what occupies that space. Only digital commodities under the rule’s definition may occupy the nonqualifying portion, and the 15% limit applies to all otherwise ineligible holdings combined.

Derivatives consume the allowance rapidly because the rule counts their total underlying exposure, expressed as gross notional value, rather than the option premium or initial cash commitment. The SEC illustrated this constraint through an example: a trust holding $100 million of Bitcoin alongside 5,000 over-the-counter call options on a Bitcoin exchange-traded fund. Those options represent $40 million in exposure under the rule’s calculation method, giving the trust $140 million of total exposure for testing purposes. Since only the $100 million in Bitcoin qualifies toward the 85% requirement, the qualifying portion falls to 71.42%, well below the mandated 85% threshold. The example demonstrates that a Bitcoin-dominant portfolio can fail the test once its options position becomes sufficiently large.

This calculation methodology reflects the SEC’s attempt to prevent fund sponsors from using derivatives as a backdoor mechanism to exceed intended exposure thresholds or circumvent eligibility requirements. By treating derivatives on a notional basis rather than a cash basis, the rule acknowledges that leveraged positions can create outsized risk exposure relative to actual capital deployed. Fund managers considering derivative strategies must account for this treatment when modeling portfolio allocations.

Daily Compliance Monitoring And Active Management Approval

A sponsor must verify compliance with the 85% threshold each trading day and notify Nasdaq Texas promptly after any breach.

The amended rule now permits actively managed strategies under the generic listing standards, marking a departure from prior provisions that only contemplated passive strategies. Active management, however, does not grant fund managers unrestricted portfolio control. Trustees must disclose all holdings on a free public website before regular trading opens, including quantities and percentage weights of each position. The exchange must halt trading if required portfolio information is not made available to all market participants simultaneously, and individuals with access to nonpublic portfolio information must follow procedures designed to prevent misuse.

The active management provision addresses longstanding industry requests for greater flexibility in strategy design. Prior passive-only restrictions limited fund sponsors’ ability to implement tactical allocation changes or respond to market conditions. Allowing active management under generic standards reduces friction and compliance costs for fund launches, though transparency requirements remain stringent to protect retail investors from information asymmetries.

Nasdaq Texas said its amendments are materially identical to changes the SEC approved for Nasdaq in July.

Alignment Across Exchanges And The Expedited Listing Pathway

The Texas order reflects comparable approvals already issued for NYSE Arca and Cboe BZX, indicating an alignment of exchange rules rather than a novel national policy. The primary benefit for fund sponsors is access to expedited listing through generic standards. Once the SEC approves an exchange’s rules and generic listing standards for a product category, SEC Rule 19b-4(e) allows products meeting those standards to begin trading without undergoing a separate SEC approval process. Products falling outside the standards can still pursue approval through individual filings, though that route requires longer review timelines.

The consistency across multiple exchanges reduces regulatory complexity for issuers operating multi-exchange strategies. When product rules align, fund sponsors can more efficiently manage compliance across venues and potentially list identical or similar products on different exchanges. This harmonization also signals to market participants that digital asset products are moving toward mainstream institutional acceptance.

The rule expands which strategies can use Nasdaq Texas’s streamlined listing process without eliminating portfolio constraints: at least 85% of assets must still meet the exchange’s eligibility tests, while all holdings outside those tests must fit within the remaining 15% ceiling. Fund sponsors seeking to launch actively managed trusts with alternative digital assets or derivatives should evaluate whether their intended holdings satisfy the digital commodity definition and fall within the nonqualifying allocation limits before submitting listing applications. The September 3 approval provides a clear regulatory pathway for certain product types, but the boundaries of permissible holdings remain narrow enough to require careful structural planning.