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Will Wall Street Get Bitcoin Options? SEC Postpones Spot ETF Decision

Published March 8, 2024 11:03 AM
Teuta Franjkovic
Published March 8, 2024 11:03 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • The SEC has delayed its decision on Bitcoin ETF options trading.
  • Approval could bring more institutional investors into the Bitcoin market.
  • While Bitcoin ETFs are already approved, a decision on Ether ETFs is expected by May 23.

The United States Securities and Exchange Commission has deferred its decision  on approving options trading for spot Bitcoin exchange-traded funds (ETFs).

This decision holds the potential to usher more institutional capital into the Bitcoin market.

SEC Postpones Decision on Bitcoin ETF Options Trading

The SEC has postponed its decision to allow Cboe Exchange  and the Miami International Securities Exchange  to offer options on Bitcoin ETFs, as per a March 6 filing.

Additionally, it has delayed  its decision regarding Nasdaq’s proposal to offer options on BlackRock’s iShares Bitcoin Trust (IBIT). The regulator says the extension will provide “sufficient time to consider” the requests.

All exchanges had initially filed for listing Bitcoin ETF options on January 25. The was then SEC facing its first decision deadline on March 10. This is because of US securities laws which grant a 45-day period to make or defer a decision.

The deferral grants the SEC an additional 45 days, reaching the maximum allowed 90 days under the law, to make a final decision. The SEC has marked April 24 as its new deadline.

Credit: SEC

Impact of Potential Bitcoin ETF Options on Market Dynamics

Options trading allows traders to leverage their positions and place bets on market directions with less capital. For example, by purchasing a “call option,” a trader can agree to buy one BTC at today’s price in a month. The trader can then profit, if Bitcoin’s value rises—risking only the premium paid if the market declines.

Advocates like Grayscale CEO Michael Sonnenshein have urged for the approval of options trading for Bitcoin ETFs, arguing they enhance market robustness.

Analyst Dave Nadig of VettaFi suggested  that the introduction of Bitcoin ETF options could attract hedge funds and other investors who have previously avoided direct cryptocurrency speculation. As a result, he suggested, there could be new opportunities for market engagement.

Awaiting Decision on Ether ETFs Amid Market Enthusiasm

On January 11, the SEC approved ten spot Bitcoin ETFs for trading, marking the end of a prolonged period of deliberation. These ETFs, excluding Grayscale’s conversion to an ETF, have collectively amassed $25.87 billion in assets under management as of March 6, according to BitMEX Research .

The focus now shifts to the SEC’s pending decision on seven spot Ethereum ETFs. Analysts are anticipating a collective approval by the May 23 deadline, corresponding with the decision timeline for VanEck’s application.

Additionally, the SEC is reviewing multiple proposals for leveraged Bitcoin ETFs, including five each from asset managers Direxion and ProShares, and six from REX Shares, indicating a significant interest in diversified cryptocurrency investment products.

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