Nasdaq Pushes for SEC Approval to List Bitcoin Index Options
Nasdaq files for Bitcoin Options Index| Credit: Photo by Beata Zawrzel/NurPhoto via Getty Images
- Nasdaq is seeking SEC approval to list Bitcoin Index Options.
- Experts express that a Bitcoin Options index would complete the Bitcoin ETF market.
- If approved, the BTC Options index would allow traditional investors to gain exposure to Bitcoin without owning it.
As the crypto ETF complex catches fire, Nasdaq is taking a bold step forward, petitioning the SEC to greenlight Bitcoin Index Options.
In its new filing , the exchange aims to bring the XBTX ticker symbol to life, tracking Bitcoin futures and options on CME Group’s platform—a potential game-changer for the crypto market.
The proposal for a Bitcoin Options index comes months after the US SEC approved the first spot Bitcoin exchange-traded funds (ETF) in January this year.
While the approval of the spot Bitcoin ETFs was a major milestone for the crypto market, the SEC has yet to follow up with options derivatives tied to these ETFs.
Why Bitcoin Options Is a Big Deal?
The SEC filing for a Bitcoin Options index would be the second such application from the stock exchange. Nasdaq had previously filed for Bitcoin Options based on BlackRock’s $21.3 billion iShares Bitcoin Trust ETF.
In a public statement, Nasdaq said the primary goal of filing for a Bitcoin Options index is to bring it under its financial umbrella.
A publicly listed Bitcoin Options index on Nasdaq would offer traditional investors better exposure to the world’s largest cryptocurrency. It will also allow traders to leverage traditional finance tactics for the crypto asset.
Talking about the decision to list XBTX, John Black, Head of Index Options at Nasdaq, said:
“Because we have such a footprint in equity options, ETF options, and index options, we think that this is the best approach to provide the opportunity for anybody trading Bitcoin to trade a listed derivative, as well as open the door to further product development.”
ETF pundits and market analysts have long called for approving derivative Options based on spot Bitcoin ETFs. Matt Hougan, chief investment officer of Bitwise, believes a derivative index based on the spot ETF market would complete the Bitcoin ETF market.
“It’s important for bitcoin options to be available for this asset class to be fully normalized. We’re missing a part of the liquidity picture that ETF options would provide.”
Nasdaq is not the only exchange platform that applied for a Bitcoin options index.
In fact, several asset managers filed for Bitcoin options right after the SEC approved the first spot BTC ETF. However, many of these firms withdrew their applications after the SEC’s comments and plan to file again later.
What are Bitcoin Options?
Options are a derivative market that allows traders to make money based on the price momentum of the underlying asset without actually owning the asset.
Bitcoin options are financial contracts that let investors buy or sell the cryptocurrency at a fixed price on a predefined future date to speculate on its price.
Using options, investors can speculate on the future direction of the market price, whether it rises or falls.
Thus, a spot Bitcoin ETF can only be bought or sold at the spot market price of the BTC.
On the other hand, BTC Options are contracts that give the holder the right, but not the obligation, to buy or sell an asset at a specified price before or at a specific time.
Suppose the SEC approves the Bitcoin Options index. In that case, traditional investors who are still skeptical of Bitcoin and don’t want to add it to their portfolio can gain Bitcoin exposure and bet on its price momentum.
The approval would open the gates of new users and a new market for Bitcoin.
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