US Lawmakers Call on SEC to Greenlight Bitcoin Options Trading

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Key takeaways:

  • There are reports that the US SEC is being pressured by US politicians to allow options trading on Bitcoin ETPs.
  • Flood and Nickel claim that the approval is essential for the investors that the SEC “seeks to protect.”

There are reports that the US Securities and Exchange Commission (SEC) is under pressure from US politicians to allow options trading on Bitcoin Exchange Traded Products (ETPs).

As per an Axios report, Representatives Mike Flood and Wiley Nickel have written a letter to Gary Gensler, the chair of the commission, imploring the SEC to cease its biassed treatment of cryptocurrency funds. According to the letter:

“We urge you, without delay, to approve options on spot Bitcoin ETPs or to provide an explanation for the Commission’s difference in treatment between options for Bitcoin futures ETFs — which are currently trading — and options for the spot Bitcoin ETPs,”

Financial instruments known as options grant the buyer the right, but not the responsibility, to purchase or sell an asset, such as Bitcoin, by a specific date at a specified price. 

The tool is frequently used to prevent possible losses, hedge against price fluctuations, and give investors the opportunity to employ tactics to increase their revenue.

Flood and Nickel claim that the approval is essential for the investors that the SEC “seeks to protect.”

Decisions regarding applications submitted in January by the New York Stock Exchange, Nasdaq, and Cboe Global Markets have been deferred by the government.

While Cboe plans to provide options trading on other Bitcoin funds, Nasdaq has registered to list and trade options on BlackRock’s iShares Bitcoin Trust. In a similar vein, the NYSE plans to trade options on Grayscale Bitcoin Trusts, Bitwise Bitcoin ETF, and any other trust that holds Bitcoin.

A new round of consultations on the proposed rule change to allow options trading on Bitcoin funds was just started by the commission.

The SEC is looking at how Bitcoin options can affect market stability, especially in erratic times, according to a document dated April 24. 

The agency is also looking into how well the present enforcement and market monitoring procedures handle the complexity of Bitcoin options. Initial comments must be submitted by May 15, and rebuttal comments must be submitted by May 29.

Congressmen Drew Ferguson and Wiley Nickel introduced their Providing Tax Clarity for Digital Assets Act on April 30 to the US House of Representatives. Under the proposed legislation, staking awards would be categorized as generated property under US tax rules. According to the bill, block rewards from PoW or PoS networks should only be taxed at the time of exchange or sale, not when they are first obtained.

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