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The United States Securities and Exchange Commission (SEC) has commenced a new phase of consultations regarding proposed rule changes for trading options on Bitcoin exchange-traded products (ETPs).
In an April 24 filing, the securities regulator announced its intent to gain deeper insights into how the listing of Bitcoin (BTC) options could impact the overall market, particularly during periods of market stress. As part of this review, the SEC will assess whether the existing surveillance and enforcement mechanisms of exchanges are sufficient to address the unique characteristics of Bitcoin options.
Initial comments on the proposal must be submitted within 21 days after the document is officially registered, setting the final deadline for May 15, 2024. Furthermore, rebuttal comments may be submitted until May 29, 2024.
Bitcoin options are financial instruments that grant the buyer the right, though not the obligation, to buy or sell Bitcoin at a predetermined price by a specific date. Typically utilized by traders familiar with option pricing and market dynamics, options trading entails risks that may not be suitable for all investors.
Previously, the Commission sought feedback on the proposed rule change and integrated the received comments into its filing. Many of these comments emphasized how options on Bitcoin ETPs could enhance liquidity and augment market efficiency:
“Additionally, 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.'”
Numerous financial institutions, including Nasdaq and Cboe, have submitted proposals to the SEC, seeking approval to trade Bitcoin options. Nasdaq’s application aims to list and trade options on BlackRock’s iShares Bitcoin Trust, while Cboe plans to offer options trading on various ETPs holding Bitcoin.
Moreover, asset managers like Bitwise and Grayscale are also pursuing regulatory clearance to list options on their Bitcoin ETFs through applications filed with the New York Stock Exchange.
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