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SEC Delays Decision On Spot Bitcoin ETF Options Trading

SEC Delays Decision On Spot Bitcoin ETF Options Trading

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The United States Securities and Exchange Commission has delayed its decision to allow the New York Stock Exchange to offer options for trading on spot Bitcoin ETFs. 

The next deadline for the SEC to approve, deny, or delay the proposed rule change on the New York Stock Exchange is on the 29th of May. 

SEC Delays Decision 

The Securities and Exchange Commission’s delay could significantly impact options trading on the Bitwise Bitcoin ETF (BITB), the Grayscale Bitcoin Trust (GBTC), and other trusts holding Bitcoin on the NYSE. The commission also said it would hold off its decision on the CBOE Exchange and the Miami International Securities Exchange until late April. The regulator stated, 

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change.”

The Securities and Exchange Commission stated that it would need to thoroughly examine the reasons behind the proposed rule change, which was the primary basis of its ruling. The extension means the next deadline for the decision is set for the 29th of May, on which the commission can approve or decline options trading on Bitcoin ETFs on the New York Stock Exchange. The securities regulator reached the same decision for Nasdaq last month when it requested options for trading on BlackRock’s iShares Bitcoin Trust (IBIT). 

Community Urges Approval 

Grayscale CEO Michael Sonnenshein wrote to the Securities and Exchange Commission, urging it to approve the rule change. In a letter written on the 28th of February, Sonnenshein argued that the SEC had no reason to deny options trading on spot Bitcoin ETFs because it had already approved Bitcoin futures ETFs and spot Bitcoin ETFs on the New York Stock Exchange. 

“The natural next step is the approval of options on spot Bitcoin ETPs.”

According to Sonnenshein, the approval of options for a spot Bitcoin ETF could help in the creation of a robust and healthy market. 

“As we look ahead, I think it’s never been more important for the #crypto and ETF communities alike to advocate for the development of a robust listed options market for spot #bitcoin ETFs. Although $GBTC has been in the public market since 2015, it was never accompanied by listed options, as they aren’t a feature of the OTC Market.”

He also called for the equal treatment of similar products, citing examples of spot and futures Bitcoin-based ETFs. 

“The same way bitcoin futures ETFs and spot bitcoin ETFs should (and now are) treated the same, so too should listed options on these products.”

Options are derivatives products that allow traders to access leverage and make directional bets on the market. If a trader predicts the Bitcoin price will increase, they could pay a premium and purchase a “call option.” They could then agree to buy 1 BTC at the current price in a month’s time, and put down less money than what would be needed to buy 1 BTC at the time. If the Bitcoin price rises over the course of the month, the trader could exercise their option, purchase Bitcoin at a lower price, and then sell it for a profit. If the price drops, the trader can let the contract expire and forfeit the premium. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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