Grayscale CEO Michael Sonnenshein has urged regulators to approve exchange-listed options for spot Bitcoin exchange-traded funds (ETFs) in a recent post on February 5.
Sonnenshein highlighted the importance of options in supporting price discovery and assisting investors in navigating market conditions and achieving desired outcomes, such as income generation.
Exchange-traded options represent standardized contracts allowing investors to buy (via call options) or sell (via put options) a specific quantity of a financial asset at a predetermined price (strike price) on or before a specified date.
This enables investors to make predictions about the future movements of stocks, bonds, and the overall stock market.
These options are traded on exchanges like the Chicago Board Options Exchange (Cboe) and are subject to regulation by the United States Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Clearinghouses like the Options Clearing Corporation (OCC) provide guarantees for these exchanges.
Sonnenshein pointed out that when the SEC approved the first Bitcoin futures ETF in October 2021, options for the ETF were available for trading the very next day due to automatic effectiveness, leveraging existing rules.
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However, this rule does not apply to commodity-based ETFs, including recently approved spot Bitcoin ETFs, which undergo a potentially lengthy review process akin to the 19b-4 process for spot Bitcoin ETFs themselves.
The Grayscale CEO advocated for equal treatment of similar financial products, drawing parallels between spot and futures BTC-based ETFs.
He highlighted that national exchanges, such as the New York Stock Exchange, have filed Forms 19b-4 to amend listing standards, allowing listed options on commodity-based ETFs, including spot Bitcoin ETFs.
Currently, the SEC is reviewing applications for listed options on spot BTC ETFs and has opened comments on BlackRock’s proposed options with Cboe.
Bloomberg ETF analyst Eric Balchunas suggested that the SEC could make a decision as early as February 15 or no later than September 2024.
Sonnenshein concluded his post by emphasizing the need for fair treatment of spot Bitcoin ETFs and the entire crypto asset class.
His advocacy aims to ensure that investors have access to a broader range of financial products and options, promoting transparency and market efficiency.
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