SEC Delays Decision on Bitcoin ETF Options Proposals

1. SEC pushes back ruling on Cboe’s bitcoin ETF options proposals, now expected in late April.
2. Challenges arise as Cboe, NYSE, and Nasdaq seek SEC approval for bitcoin ETF options, facing unique considerations compared to traditional ETFs.
3. Grayscale supports NYSE’s rule change, urging SEC approval for options on GBTC.

The Securities and Exchange Commission (SEC) has extended the timeline for evaluating rule change proposals from major exchanges regarding the listing and trading of options related to bitcoin Exchange-Traded Funds (ETFs).

Cboe Faces Delay in Listing Bitcoin ETF Options

Cboe, which initially applied to list and trade options on newly launched bitcoin ETFs in January, faces a delayed decision from the SEC. The regulatory body announced on Wednesday that it is postponing its verdict on the proposed rule change until late April.

“However, those rules do not apply to ETPs holding commodities such as Bitcoin. In addition to Cboe’s rule filing receiving SEC approval, Cboe understands that OCC may need certain approvals from its regulators (SEC and CFTC) to permit it to issue and clear these options,”

Cboe

Options, instruments allowing parties to buy or sell financial products at predetermined prices within specified time frames, are essential for risk mitigation. The delay poses a challenge to Cboe. This typically offers options three days after an ETF begins trading on national securities exchanges.

NYSE and Nasdaq are also in the race to offer options related to bitcoin ETFs. NYSE filed to list “commodity-based trust shares,” while Nasdaq aims to list and trade options on BlackRock’s iShares Bitcoin Trust ETF. The SEC’s decision on all three exchanges’ proposals is expected in late April.

Grayscale Advocates for Options Approval

Grayscale, a major player in the cryptocurrency investment space, reaffirms its support for the NYSE’s proposed rule change. The firm advocates for the SEC to approve options on its fund. GBTC, emphasizing the need for a consistent approach in approving options for ETFs holding derivatives of an asset.

“Our argument is straightforward: If investing in options for shares of products holding derivatives of an asset is acceptable for investors, investing in options for shares of products holding the asset itself should be as well,”

Grayscale

BlackRock’s iShares Bitcoin Trust ETF has rapidly amassed $10 billion in assets under management, showcasing significant investor interest. Meanwhile, Grayscale’s bitcoin ETF, with $26 billion in assets under management, is also seeking approval for options.

Industry Push for Consistency

As the SEC reviews these proposals, there is a growing call for standardization in the approval process for options on identically-structured commodity ETFs, irrespective of the underlying asset. Market participants seek a consistent approach to foster investor confidence in this evolving financial landscape.

In the coming months, the cryptocurrency community will keenly watch for the SEC’s decisions. They are anticipating their impact on the broader adoption and integration of bitcoin-related financial instruments.