Unlocking Potential: Grayscale CEO’s Plea To Regulators for Listed Options In Spot Bitcoin ETFs

On Feb. 5, in a post, Grayscale CEO Michael Sonnenshein said regulators should give the green light for exchange-listed options on Bitcoin exchange-traded funds (ETFs). He believes options benefit investors by aiding ‘price discovery’ and assisting them in navigating market conditions or reaching specific goals, like earning income.

A traded option is like a ready-made deal you can use to either buy (with a call option) or sell (with a put option) a certain amount of a specific money thing at a set price (the strike price) on or before a decided date.

When you trade options, you’re guessing where certain money things, like stocks or bonds, might go. So, with these option contracts, you can decide if you want to buy or sell something by a certain date at a set price, but you don’t have to if you don’t want to.

Distinctive and diverse, these choices are exchanged on platforms such as the Chicago Board Options Exchange (Cboe) and adhere to regulations set by the United States Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Clearinghouses, including the Options Clearing Corporation (OCC), offer assurances for these exchanges.

Sonnenshein mentioned that when the SEC gave the green light to the first Bitcoin futures ETF in Oct 2021, the options for the ETF hit the market the next day. This quick availability was possible because of automatic effectiveness, letting them lean on existing rules.

CEO Advocacy: Equal Treatment For Bitcoin ETFs

Yet, it’s a different story regarding commodity-based ETFs, like the new spot Bitcoin ETFs. These have to go through a long review, much like the process for spot Bitcoin ETFs (known as 19b-4).

The CEO of Grayscale is pushing for fairness, pointing out how spot and futures BTC-based ETFs should get the same treatment.

Sonnenshein mentioned that the New York Stock Exchange and other big stock markets have recently filled out paperwork (Forms 19b-4) to change the rules for allowing options on certain investment funds, like those tied to commodities and even Bitcoin.

The SEC is considering these requests to let people trade options on Bitcoin investment funds. They’re also listening to what people say about BlackRock’s plan to have options on these funds through Cboe. Bloomberg’s expert on these funds, Eric Balchunas, thinks the SEC could give a thumbs up or down by Feb. 15, or at the latest, by Sept 2024.

The Grayscale CEO finished his message by supporting that spot Bitcoin ETFs and the entire crypto category should get fair treatment.

Related Reading | BlackRock Files For Spot Ethereum ETF With SEC

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

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