A proposed regulation change for trading options on Bitcoin exchange-traded products (ETPs) has prompted the US Securities and Exchange Commission (SEC) to hold additional public consultations.In a document dated April 24, the securities regulator stated that it would like to learn more about the potential impact of listing Bitcoin options on the market as a whole, particularly in stressful situations.A portion of the evaluation will evaluate the suitability of the exchanges’ present enforcement and surveillance systems for managing the particularities of Bitcoin options.After the document is formally registered, initial comments must be filed within 21 days, making May 15, 2024, the final date.Similarly, counterarguments can be filed by May 29, 2024.
Financial instruments known as Bitcoin options provide the buyer with the choice, but not the obligation, to purchase or sell Bitcoin by a specific date at a given price.Traders that understand option pricing and market fluctuations tend to use options.Like other investments, options trading has risks, so not every investor is going to be a good fit.
Prior to filing, the Commission requested comments on the proposed rule change and incorporated the responses.The majority of the comments emphasized 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 bids from a number of financial institutions asking for approval to trade Bitcoin options, including Nasdaq and Cboe.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.