SEC Delays Decision On Spot Bitcoin ETF Options Trading

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The SEC has put off making a decision about enabling the NYSE to trade Bitcoin ETFs through spot market options.

An upcoming decision from the SEC regarding the proposed rule modification on the New York Stock Exchange is expected by May 29th.

SEC Delays Decision 

A delay by the Securities and Exchange Commission (SEC) could substantially influence options trading for the Bitwise Bitcoin ETF (BITB), Grayscale Bitcoin Trust (GBTC), and other Bitcoin-holding trusts on the New York Stock Exchange. The SEC has postponed its decision regarding the CBOE Exchange and Miami International Securities Exchange until late April. The regulatory body expressed,

The Commission decides to allow more time for deliberation on the suggested rule modification, giving itself ample opportunity to carefully review and make a decision.

The SEC announced that it will carefully consider the rationale behind the proposed rule modification before making a final decision, which could result in approval or rejection of options trading on Bitcoin ETFs on the NYSE by May 29th. Similarly, the SEC made an identical decision regarding Nasdaq’s request for options trading on BlackRock’s iShares Bitcoin Trust (IBIT) last month.

Community Urges Approval 

Michael Sonnengsein, CEO of Grayscale, penned a letter to the Securities and Exchange Commission (SEC) on February 28th, advocating for their approval of a proposed rule change. In his correspondence, Sonnenshein contended that the SEC shouldn’t decline options trading on spot Bitcoin Exchange-Traded Funds (ETFs), as they had previously endorsed Bitcoin futures ETFs and introduced spot Bitcoin ETFs on the New York Stock Exchange.

“The natural next step is the approval of options on spot Bitcoin ETPs.”

Based on Sonnenshein’s perspective, granting approval for a Bitcoin spot ETF could lead to a thriving and vigorous market.

Moving forward, I strongly believe that both the crypto and ETF communities need to push for the creation of a strong market for Bitcoin ETF options. While Grayscale Bitcoin Trust (GBTC) has been available since 2015, it hasn’t had accompanying listed options due to the fact that they don’t exist in the Over-the-Counter (OTC) Market.

He similarly advocated for fair handling of comparable Bitcoin ETFs, using instances of both spot and futures types as illustrations.

Just as bitcoin futures and spot bitcoin Exchange-Traded Funds (ETFs) are now being treated equally, the same principle applies to listed options on these products.

Call options are financial instruments used by traders to gain exposure to higher market risks while using less capital upfront. For instance, if a trader believes Bitcoin’s value will rise in the future, they can buy a call option. This allows them to lock in a purchase price for Bitcoin at a later date, paying only a premium instead of the current market price. If the Bitcoin price increases during the contract period, the trader can profit by exercising their option and selling the Bitcoin at a higher price. However, if the price drops, they can simply let the contract expire and lose only the paid premium.

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2024-04-09 12:02