SEC Considers Bitcoin ETF Options: Navigating New Territory

The United States Securities and Exchange Commission (SEC) wants comments on a proposed rule change. The change would allow listing and trading options for Bitcoin exchange-traded funds (ETFs).

According to a Feb. 23 notice, the New York Stock Exchange (NYSE) requested the rule change. It would allow options on the Bitwise Bitcoin ETF (BITC), Grayscale Bitcoin Trust (GBTC), and any trust holding Bitcoin.

If approved, the options will trade like other ETF options. This includes rules for listing, expiration dates, strike prices, price changes, position limits, exercise limits, margin needs, and account procedures. It also includes rules for trading suspensions.

BlackRock also wants approval for a similar policy change. It filed to allow options on its Bitcoin ETF with the Chicago Board Options Exchange. Analyst James Seyffart thinks the SEC could decide by Sep 2024.

Options let buyers purchase or sell an asset at a set price and date. For Bitcoin ETFs, options allow bets on price moves rather than Bitcoin itself. The SEC has previously allowed options on other commodity ETFs. These include trusts holding gold, silver, and more.

Bitcoin ETFs Monitored; Grayscale CEO Supports; SEC Approves

The Exchange says its current monitoring is good enough. It can properly watch Bitcoin ETF options trading in all sessions. It can also spot and stop Exchange rule violations. The Exchange will also make new monitoring as needed. This will help watch Bitcoin ETF options trading.

Grayscale CEO Michael Sonnenshein publicly pushed for the derivatives. He says options can help with price discovery. They can also help investors navigate markets or meet goals like income. According to the executive, options are good for investors as they support “price discovery and can help investors better navigate market conditions or achieve desired outcomes, such as generating income.”

Like all investments, options trading has risks. It may not suit all investors. The SEC approved the trading of spot Bitcoin ETFs on Wall Street on January 10, following years of denials. This came after years of the SEC denying applications for Bitcoin ETFs.

On Jan 10 Jan 10, the SEC allowed trading Bitcoin ETFs on Wall Street. This came after years of denials. Similarly to other investments and financial products, options trading carries risks that may not be suitable for all investors.

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The author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.

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