I am writing to respond to submission comments to SR-BatsBZX-2016-30 for Winklevoss Bitcoin ETF. Gemini is a regulated US exchange but it does not operate in a vacuum. The global landscape of many unregulated bitcoin exchanges exerts huge influence on the Gemini exchange and as result the Winklevoss ETF that is linked to it. This would also be the case for a ETF such as SolidX that is also in Proposal on NYSE. Several commentators have agreed with the Proposal that the situation today is different from the early days of bitcoin exchanges when "in the first half of 2013, Mt.Gox accounted for nearly three-quarters of all Bitcoin Exchange Market trading." The reality now is that the market is very concentrated and controlled by a small group of exchanges operating in China. These 3 make up a overwhelming 96% of the total bitcoin trade volume over the last 6 months[1]. That is first a rebuttal to commentators who argue that volume and liquidity is sufficient on Gemini. A remainder outside of that previously mentioned 96% trading volume from 3 Chinese exchanges, Gemini has 0.07% share of volume. Among only USD exchanges it has just a 3% share[2]. It's liquidity measured by order book depth is many factors lower than several other exchanges[3]. It is possible after a ETF is launched that the Gemini exchange has a increase in liquidity and volume. But the nature of bitcoin trading that leads to the concentration of volume and liquidity outside of US borders makes this unlikely to be significant (see below). These Chinese exchanges fall under little oversight by any regulatory entities. The People's Bank of China only has had occasional interest and limitations to the movement of yuan through the exchanges. Existing KYC or identity verification measures are lax and can be easily bypassed. One commentator said, "With regard to fairness, we have no reason to think the bitcoin markets are unfair. There are rumors of Chinese exchanges employing market making bots to boost trading volumes on their exchanges, but we do not think that makes the markets unfair. We believe it actually tightens the spread between the bid and ask, which one could argue benefits investors." These are not casual rumors by random people. OKcoin is ranked #1 in global exchange volume and has been accused of many practices that run afoul of securities trading regulations including fraudulent internal trades, wash trading and encouraging employees to trade on their own platform with internal data. This has been alleged by their own ex-CEO[4] and former product manager[5]. Some of this type of behavior has also been accused at the #2 ranked exchange Huobi[6]. The CEO of the BTCChina exchange ranked #3 has publicly described this behavior as normal in the industry[7]. To this day there is no incentive to stop these practices because there is no accountability to any body such as the SEC. No one audits their operations. Several of these Chinese exchanges actively engage in Bitcoin mining operations[8][9] creating a conflict of interest. The positive price performance of Bitcoin directly drives their own mining profits. It would almost be as if Barrick Gold also owned and operated the NYSE but under no SEC oversight. - A sizable portion of traders and owners of bitcoin do not desire to trade in a well regulated environment for reasons including tax evasion[10] evading capital controls[11] and money laundering[12]. For example BTC-E is one of the earliest bitcoin exchanges with reputation for least transparency[13] and is often associated with laundering of stolen or illicitly-obtained bitcoin[14]. Still it shows 3 times the market share of volume as Gemini in the last 6 months. US exchanges also do not offer trading products such as fee-free trading, margin trading or options. These are features that drive traffic to the top exchanges outside the US. For these reasons that trade is now sparse on regulated US exchanges including Gemini, arbitrage will not occur efficiently or proportionally to mitigate manipulation from the current dominant unregulated bitcoin exchanges. - The Commission cites the rule that national security exchanges, be "designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade," and "to protect investors and the public interest." Approving a Bitcoin ETF fund in the current state of the Bitcoin ecosystem is not compatible with this goal. [1] https://bitcoinity.org/markets/list?currency=ALL&span=6m [2] https://bitcoinity.org/markets/list?currency=USD&span=6m [3] https://coinsight.org/gemini [4] https://www.reddit.com/r/Bitcoin/comments/37tm1b/czs_statement_regarding_the_dvpnispute_between Archive copy: http://archive.is/Ay7rE [5] https://www.reddit.com/r/BitcoinMarkets/comments/4cavoj/reminder_chinese_bitcoin_spot_exchanges_okcoin/d1h80aw?context=3 Archive copy: http://archive.is/qCx3b [6] http://www.bitcoinfuturesguide.com/bitcoin-blog/houbi-reaches-10million-btc-weekly-volume-is-it-real [7] http://www.ibtimes.co.uk/btcc-chief-bobby-lee-bitcoin-not-anti-bank-its-pro-innovation-1525964 [8] https://pool.btcc.com/ [9] http://cointelegraph.com/news/chinese-exchange-huobi-unveils-three-new-offerings [10] http://fortune.com/2016/11/20/irs-bitcoin-tax-evasion-case [11] http://www.investopedia.com/news/bitcoin-being-used-chinese-capital-flight [12] http://www.newsbtc.com/2016/08/15/china-okcoin-exchange-fined [13] http://www.coindesk.com/btc-e-exchange-banking-issues [14] https://www.theguardian.com/technology/2013/dec/09/recovering-stolen-bitcoin-sheep-marketplace-trading-digital-currency-money