Key takeaways:
- Another round of public comments on an upcoming rule modification for trading options on Bitcoin ETPs has been announced by the US SEC.
- The ultimate deadline is May 15, 2024, and the initial comments must be made within 21 days of the document’s official registration.
Another round of public comments on an upcoming rule modification for trading options on Bitcoin exchange-traded products (ETPs) has been announced by the US Securities and Exchange Commission (SEC).
The securities regulator is interested in learning more about the potential impact of listing Bitcoin options on the market as a whole, particularly in stressful times, according to a filing dated April 24. A portion of the evaluation will evaluate whether the exchanges’ present enforcement and monitoring systems are sufficient to manage the particularities of Bitcoin options.
The ultimate deadline is May 15, 2024, and the initial comments must be made within 21 days of the document’s official registration. Rebuttal remarks can also be sent until May 29, 2024.
Bitcoin options are financial products that grant the customer the option—but not the duty—to purchase or sell Bitcoin by a given date at a given price. Traders who are conversant with option pricing and market fluctuations generally use options. Like other investments, investing in options has risks, therefore not every investor is suited.
Prior to filing, the Commission requested comments on the proposed rule change and incorporated the responses. The majority of the comments emphasised how adding options to Bitcoin ETPs will boost market efficiency and liquidity:
“In addition, the commenter stated that approving the listing and trading of options on spot Bitcoin ETPs “would further bring Bitcoin into the regulatory perimeter by allowing additional regulated market participants such as CFTC-regulated designated contract merchants and SEC-regulated broker-dealers to trade the products.”
The SEC has received proposals from several financial organizations, such as Nasdaq and Cboe, requesting permission to trade Bitcoin options. While Cboe plans to provide options trading on multiple ETPs that hold Bitcoin, Nasdaq’s application aims to list and trade options on BlackRock’s iShares Bitcoin Trust.
Furthermore, through petitions to the New York Stock Exchange, asset managers such as Bitwise and Grayscale are requesting regulatory permission to list options on their Bitcoin ETFs.
On April 24, the Securities and Futures Commission (SFC) of Hong Kong authorized the first batch of spot Exchange Traded Funds (ETFs) for Bitcoin and Ether. Hong Kong will overtake the US in this regard on April 30, when spot Ether ETFs are authorized and made available for trading.
