The U.S. Securities and Exchange Commission (SEC) has recently taken a step towards expanding options trading on Bitcoin exchange-traded funds (ETFs). In two separate notices, the SEC sought comments on proposals that would allow Nasdaq and Cboe Exchange Inc. to list and trade options on various Bitcoin ETFs. This move could open up new investment strategies for investors and potentially accelerate the approval process for options trading on spot Bitcoin ETFs.
One of the SEC notices pertains to a proposed rule change that would enable Nasdaq to list and trade options on BlackRock’s iShares Bitcoin Trust. While the notice does not specify the funds to which the proposal applies, it is worth noting that Cboe BZX is responsible for listing and trading a majority of the recently approved spot Bitcoin ETFs. This includes funds from prominent names like Ark Invest, VanEck, WisdomTree, and Franklin Templeton, among others.
Introducing options trading on Bitcoin ETFs would open up new investment possibilities for both retail and institutional investors. Options trading allows investors to engage in leveraged trading, potentially increasing their returns. However, it also comes with higher risks as leverage amplifies both gains and losses. This approach could attract traders seeking more aggressive investment strategies in the Bitcoin market.
Bloomberg ETF analyst, James Seyffart, commented on the SEC’s move and suggested that options trading on spot Bitcoin ETFs could be approved as early as the end of February. He noted that the SEC has already acknowledged the 19b-4 requests for trading options on these ETFs. Seyffart highlighted the comparatively faster pace at which the SEC is handling these proposals, indicating potential expediency in the approval process.
While the exact timeline is uncertain, Seyffart’s other statements suggest that the SEC could make a decision by February 15 at the earliest, or by September 21 at the latest. The recent notices published by the SEC are significant developments as they were posted just three days after the proposals were submitted. This is considerably faster than previous rule change proposals, which took over 14 days to reach a similar stage.
The SEC’s decision to open comments on proposals for options trading on Bitcoin ETFs is a significant step towards expanding the investment opportunities in the cryptocurrency market. If approved, Nasdaq and Cboe would be allowed to list and trade options on various Bitcoin ETFs, potentially attracting investors who seek leveraged trading strategies. While it remains to be seen when the SEC will make a final decision, the faster pace at which these proposals are being handled indicates a potential acceleration in the approval process. This move could pave the way for increased participation and innovation in the Bitcoin options market.
