SEC Seeks Comments on Applications for Spot BTC ETF Options

The United States Securities and Exchange Commission (SEC) is seeking comments on applications for options of spot Bitcoin exchange-traded funds (ETFs) prior to allowing them to be listed and traded on stock exchanges. 

As reported earlier by TheCoinRise, American stock exchange Nasdaq and the largest options exchange in the United States, Cboe, seek to provide investors access to the trading of options on spot BTC ETFs, which were approved by the SEC on January 10. 

SEC Seeks Comments

It is important to note that in a February 23 notice, the New York Stock Exchange (NYSE) requested a rule change to permit the listing and trading options on the Bitwise Bitcoin ETF (BITC), the Grayscale Bitcoin Trust (GBTC), and “any trust that holds Bitcoin.”

If the SEC greenlights the applications, the options will trade “in the same manner as options on other ETFs (including commodities ETFs) on the Exchange,” the notice stated. This also includes criteria for listing, expiration dates, strike prices, minimum price fluctuations, position and exercise limits, margin prerequisites, as well as protocols for managing customer accounts and implementing trading suspensions.

BlackRock Seeking Similar Approval from the SEC

BlackRock, the world’s largest asset management firm, is also seeking a similar approval from the SEC and has filed for rule revisions to listed options on its Bitcoin ETF in collaboration with the Chicago Board Options Exchange (CBOE). 

In a post on social media platform X, Bloomberg analyst Eric Balchunas noted that the decision on the spot BTC ETF option applications might come by September 2024 at the latest, while adding, 

“This is faster than SEC typically moves.”

Hedging Price Movements of a BTC ETF

The inclusion of options provides investors with the opportunity to hedge against or speculate on the price fluctuations of a BTC ETF, as opposed to directly dealing with Bitcoin. Notably, the SEC has previously granted approval for other commodity ETFs maintained by trusts. Examples include the SPDR Gold Trust, iShares COMEX Gold Trust, iShares Silver Trust, and ETFS Gold Trust.

“In addition, the Exchange represents that its existing surveillance procedures are adequate to properly monitor the trading of options on Bitcoin ETPs in all trading sessions and to deter and detect violations of Exchange rules. The Exchange further represents that it will implement new surveillance procedures, as necessary, to effectively monitor the trading of options on Bitcoin ETPs.”

Other ETF Applications

Ripple CEO Brad Garlinghouse recently emphasized the chances of approval of a spot XRP ETF while foreseeing a broader trend of cryptocurrency ETFs gaining traction in the market. 

Recently, investment firm Jupiter shared plans for an exchange-traded product (ETP) focused on XRP, making waves across the industry.