Public Input Sought by SEC on Bitwise, Grayscale Bitcoin ETF Options

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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February 24, 2024 01:06 EST

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The United States Securities and Exchange Commission (SEC) has opened the floor for public comments regarding a proposed rule change that would allow the listing and trading of options for Bitcoin (BTC) exchange-traded funds (ETFs).In a notice published on February 23, the New York Stock Exchange (NYSE) requested a rule modification that would permit options trading on the Bitwise Bitcoin ETF (BITC), the Grayscale Bitcoin Trust (GBTC), and “any trust that holds Bitcoin.”If the rule change is approved, the options would be traded “in the same manner as options on other ETFs (including commodities ETFs) on the Exchange,” as stated in the notice. This means that the options would be subject to regulations governing criteria for listing, expiration dates, strike prices, minimum price changes, position and exercise limits, margin requirements, and procedures for customer accounts and trading suspensions.

BlackRock Seeks Options Approval for Bitcoin ETFs

BlackRock, an asset management firm, is also seeking approval for a similar policy change. The company has filed for rule revisions to list options on its Bitcoin ETF in collaboration with the Chicago Board Options Exchange (CBOE). Bloomberg ETF analyst James Seyffart predicts that the SEC’s decision on these proposals could come as early as September 2024.

The SEC has already acknowledged the 19b-4's requesting the ability to trade options on spot #Bitcoin ETFs. This is faster than SEC typically moves. Options could be approved before end of February if SEC wants to move fast?…

AT ABSOLUTE EARLIEST options still ~27+ days away pic.twitter.com/ohbvHgP2uO

— James Seyffart (@JSeyff) January 19, 2024

Options are financial derivatives products commonly used for portfolio hedging, generating income, or speculative purposes.

They provide buyers with the right, but not the obligation, to buy or sell a specific asset at a predetermined price on a specified date.

In the context of Bitcoin ETFs, options would enable investors to hedge or speculate on the price movements of a BTC ETF, rather than directly trading Bitcoin itself. 

The SEC has previously approved commodity ETFs held by trusts, including the SPDR Gold Trust, iShares COMEX Gold Trust, iShares Silver Trust, and ETFS Gold Trust.

The NYSE has assured the SEC that its existing surveillance procedures are sufficient to monitor the trading of options on Bitcoin ETFs in all sessions and detect any violations of exchange rules. 

The exchange also stated its commitment to implementing new surveillance procedures as needed to effectively monitor such trading.

Spot ETFs Continue to Attract Investments

Institutional investors in the US continue to invest to spot Bitcoin ETFs in order to get exposure to the booming crypto sector. Earlier this week, daily spot Bitcoin ETF trading volume amounted to nearly $2 billion, the highest level since the first day of trading on January 11.As reported earlier, spot Bitcoin ETFs witnessed a substantial influx of approximately $2.3 billion last week, nearly doubling the previous week’s inflow of $1.2 billion.It is worth noting that there has been a net outflow from Gold ETFs, possibly driven by global investors’ growing demand for U.S. equity.So far this year, the leading 14 Gold ETFs have experienced outflows of $2.4 billion in 2024 as of February 14.Among the gold ETFs, only three have seen minor inflows this year: VanEck Merk Gold Shares, FT Vest Gold Strategy Target Income ETF, and Proshares UltraShort Gold.