SEC Initiates Review of Bitcoin Options Trading Impact and Seeks Public Feedback
The United States Securities and Exchange Commission (SEC) has initiated discussions on a proposed rule alteration for the trading of options on Bitcoin exchange-traded funds (ETFs) and is seeking public input on the matter. This new phase of discussions comes as multiple exchanges are looking to trade options on recently approved spot bitcoin ETFs, but have faced delays.
The SEC’s review will focus on the potential impacts of introducing Bitcoin options trading on the broader market, especially during periods of market turbulence. Exchanges such as Cboe Exchange, Inc., BOX Exchange LLC, and Nasdaq ISE, LLC have submitted requests to enable options trading on approved spot bitcoin ETFs. The SEC has extended the review period for allowing options trading on Grayscale and Bitwise Bitcoin ETFs, with a new decision date set for May 29.
Interested parties have been invited to submit their comments on the matter, with a final deadline set for May 15. The agency is also questioning whether options trading on spot bitcoin ETFs should adhere to the same regulations as stocks.
Feedback received by the SEC has highlighted the potential benefits of introducing options on Bitcoin ETPs, including enhanced liquidity and market efficiency. Some have suggested that options trading on spot bitcoin ETFs could provide investors with hedging strategies and risk management tools.
The delay in the SEC’s decision-making process regarding options trading follows a previous postponement earlier this month. Asset management firms like Bitwise and Grayscale are actively pursuing regulatory clearance to list options on their Bitcoin ETFs through applications to the New York Stock Exchange.
In a comment letter, Grayscale CEO Michael Sonnenshein emphasized the logical progression of approving options on these products, drawing parallels to the approval process for options on spot gold ETPs. The SEC’s review and public input process will play a crucial role in shaping the future of options trading on Bitcoin ETFs.
