The United States Securities and Exchange Commission (SEC) has requested public input on proposed changes to listing requirements that would enable trading options on Bitcoin exchange-traded funds (ETFs).Â
The New York Stock Exchange (NYSE) submitted an amendment allowing options on the Bitwise Bitcoin ETF, Grayscale Bitcoin Trust, and other funds holding Bitcoin. If authorized, these derivatives would follow existing guidelines for ETF options, including futures-based commodities.
Asset manager BlackRock filed similar rule revisions with the Chicago Board Options Exchange to permit options trading on its pending spot Bitcoin ETF. Analysts predict the SEC could approve by September 2024.
Options give buyers contract rights, not requirements, to trade an asset at a set price by date. For Bitcoin ETFs, they allow speculating on fund prices rather than Bitcoin itself. The SEC has previously allowed options on commodity ETF trusts holding gold, silver, and others. NYSE stated that surveillance procedures are adequate to monitor option trading on Bitcoin ETPs properly. Moreover, it will implement new procedures as necessary.
Grayscale CEO Michael Sonnenshein claims options trading aids price discovery and can help investors better navigate market conditions. However, options carry risks that may not suit all investors. This proposal follows the SEC’s approval of the spot Bitcoin ETF trading on Wall Street in January after years of rejections.
