Subject: File No. SR-CboeBZX-2018-040
From: Ken Kauffleman

July 11, 2018

Dear Securities and Exchange Commission,

I've devoted a fair portion of my life over the last five years think about Bitcoin, blockchains and cryptocurrencies. I've read articles, pored over documentation, fawned over mailing lists, and verbed over other nouns.

I like to imagine it's been a fruitful use of my time. It's led me to invest in some cryptocurrency, and I've netted a nice little return off of it. It's nothing that will see my retiring early, but it's gratifying nonetheless. I don't think it's really the reason I've stayed interested though.

I'd like to say that cryptocurrencies fascinate me because they're intellectually exciting. And it wouldn't be altogether untrue to say such a thing. Cryptocurrencies do push a lot of boundaries in economics, computer science, and game theory. It's been fun seeing the amazing technical schemes that are being concocted to rise to the demanding challenges that sound digital money creates. On the economic side it's been like watching a compressed history of every financial scam ever conceived. Wrapping my brain around these developments is stimulating, but I don't think that's what's driving me either.

You see SEC, the single biggest magnet that cryptocurrency draws me in with in the drama around it. Every internet community fractures and turns against itself at some point or another1 and these breakdowns are anthropologically fascinating. Bitcoin's fracture is a particular gem though because so many of the key figures have millions of dollars of newly found wealth tied up in these flame wars.

It's the joy of reality TV, no? Survivor's2 cash prize keeps its contestants at each other's throats4. Bitcoin's rapidly exploding and imploding value keep the community at each other's throats too.

There's a certain beauty in the ways these arguments unfold. It's easy to draw parallels between the sagas that unfold in the world of cryptocurrency and any well-trodden narrative you'd like. Can you see the emergence of 'big-blocker'5 supporters as a mirror to the populist movements that coalesced around Donald Trump or Bernie Sanders in the 2016 elections? Absolutely I think there's some really interesting comparisons to dig into there. Can you draw parallels between the ostracization of certain developers to experiences in your own life where you were either the ostracizer or ostracizee? Why not

Like any good narrative, Bitcoin drama can be recast in any number of Jungian manners. It's just that this narrative appeals to me personally.

I am a bit worried though, SEC, that my enjoyment is a bit voyeuristic. What does it say about me that I derive such pleasure from watching a previously harmonious community tear itself apart? Why is it that I'm entranced by the collapse and pain of a community rather than its growth and strength?

These are obviously hyperbolic questions, SEC. We've already established that my affection for cryptocurrency is multi-faceted. But I don't think it's fair to entirely discount these misgivings either.

I think there's a certain point where I should be concerned about what reading all of these angry arguments will do to me. I fear that it will slide me towards becoming a (more) combative, cynical person.

And I think of all the time that could be spent more productively. SEC, as I write this it is 'Twink Night' at my local bathhouse. I could be meeting and playing with cute young guys, but instead I sit here alone, writing to you. I don't want to offend you SEC, I'm sure you're a very kind and caring commission, but this probably isn't the healthiest relationship we've got (nascent as it may be).

And so SEC, I have written to ask that you may grant something constructive to this bitterly divided community. Give them something about to rejoice together. Be a catalyst for repairing some of these wounds. Grant approval for this ETF. Help me and many others like me chip away at this shell of cynicism. Give us this small nugget to believe in.

Kenneth G. Kauffleman

Notes Errata

2 Can you believe Survivor is still going? At the time of writing Survivor has 36 seasons. 36 It boggles the mind. What's crazy is if you take a screenshot of Jeff Probst from the first season of Survivor and compare it to one from the most recent season you wouldn't be able to tell which is which I'd be willing to bet money on it3 The man never ages

3 I won't actually bet money on it, SEC. I know y'all take that kind of financial tomfoolery very seriously and I don't want a simple commonplace phrase to turn into an investigation. Not that I have anything to hide I just think it'd be a waste of time for everyone involved, don't you think?

4 I recognize that there are other reality shows that feature plenty of drama without a direct cash incentive. But I'll be honest SEC, the likes of Toddlers in Tiaras and Jersey Shore never much appealed to me. There was a TLC show I liked on Romani people in England (I think it was England, but I'm not completely sure), but the crux of this show's entertainment (at least for me) wasn't anything to do with drama. It was simply a very well done slice-of-life type show set in a culture very different from my own. I only saw a few episodes of it, and that was quite some time ago, at least a few years before I became interested in Bitcoin. I mention it only for the sake of completeness, SEC. I want to make it clear that I'm not trying to cover up holes or exceptions to my claims. Certainly there will be parts which I will be unable or unwilling to address, but I hope you can trust that this is not out of any intention to deceive of mislead.

5 Hoo-boy. I'm treading into a bit of minefield here, aren't I SEC? This is the most contentious issue in the Bitcoin community, and there's really no way to talk about it without upsetting anyone. Given that my comments to you will be made available to the public, I'm going to do my best to put up a front of impartiality. I, like most everyone else thoroughly entrenched in the space, have strongly held opinions about the subject, but I don't think this is the time or place for me to get up on my soapbox. Given that disclaimer, let's give a lightning6 explanation of the whole controversy. My apologies SEC if this is old news to you I'm not sure how closely you've been following the Bitcoin community's turmoil.

Bitcoin has a cap on the amount of data that can be put in each block7. Changing that cap directly would cause any Bitcoin nodes that didn't upgrade to the newest version to no longer accept any blocks coming from the rest of the network after a large block had been mined.

As demand for space in Bitcoin's blocks increased, a rift emerged between those who sought to direct raise this cap and those who did not. This rift wasn't purely a technical disagreement, it cut to much larger issues about how the governance of the Bitcoin project should be handled, about what the purpose or vision of the project was, about how much caution should be taken when making changes, about the risks of not making changes fast enough. Battle lines were drawn, and a community that had (more or less) been unified turned against itself.

This rift in the community led to a rift in network: on one side there were nodes that did not raise the cap directly, on the other were those that did. These networks are (generally) referred to as Bitcoin and Bitcoin Cash respectively12.

6 Ha.

7 I'm going to assume you have a grasp of the basics of how a blockchain is structured, SEC. I'd honestly be a little concerned if you were to make a ruling without having at least some level of technical knowledge on the subject matter. I'm not expecting a mastery of the concepts, just as I wouldn't expect you to have a perfect understanding of the chemistry of gold to be able to rule on regulations around gold ETFs. But I suppose it doesn't really matter what I do or don't expect, does it SEC? At the end of the day, all the influence I have over your decision is just what I can present to you in this missive. And honestly, it's not really influence that I'm looking to exert, you know?

It's more that when I have an audience, particularly an audience that's not expecting a performance, that I'm able to more fully tap into my creative juices. And that's what I'm doing, SEC, tapping in. I spend so much of my life these days mindlessly consuming things (movies, TV, food, Bitcoin forums c.) that it feels like I seldom create anything of beauty anymore.

I'm not going to delude myself into thinking that a letter to the SEC is high art. I'm not going to pretend that it's a sign that my intellectual curiosity and sense of whimsy have returned. But it still feels good. This letter is more for me than it is for you, SEC. It gives me a good warm fuzzy to think of my ramblings being legally mandated8 to be displayed by you. I like think this is a softer version of Joey Comeau's 'Overqualified' letters9.

And as is probably already abundantly clear, I'm not going to spend a whole lot of time proofreading this. I fully expect to write this all in one sitting, do a quick once over for obvious mistakes (and of course to bask in a job well done10) and then send it off for your consideration13.

8 Are you actually mandated, or is it just more of a policy that could be changed? I hope it's legally mandated, but don't tell me if it's not. This is one thing I'm content to delude myself on.


10 Although I already cringe at some of what I've written thus far. I'm overly critical when I look over my writing. Nothing ever feels quite sincere or correct. It's all too cutesy, trying to dance around cliches11. If not that, it wallows in cliches and is trite. Sigh Such is life, no?

11 I'm not going to try to put an accent on that e. No offense SEC, but I'm not sure that your website could handle it properly14.

12 I'm not going to wade into that debate. Suffice it to say that I'm making a descriptive statement about what the networks/currencies are most commonly referred to at the time of writing, NOT a prescriptive statement about what each of them ought to be called.

13 Turns out I lied. I just finished writing this, and I'm not gonna go back and proofread. It's just gonna have to be submitted as-is, warts and all.

14 What the heck SEC? I just started to submit, and all my square brackets and exclamation marks were stripped away. SEC, I don't want to poke too much fun, but it is rather funny that a stuffy agency such as yourself won't even permit exclamation marks. Long story short, all of the note numbers were supposed to have square brackets around them, a lot of places were supposed to have exclamation marks, and a few ampersands have sadly been lost. I'm not going to go back and fix this (see 13), but I will add this salty extra note. Good thing I didn't try for that accent on the e.