On January 19, the United States Securities and Exchange Commission (SEC) made a significant move by acknowledging the proposals submitted by Nasdaq and the Cboe regarding the introduction of options trading for Bitcoin exchange-traded funds (ETFs).
Nasdaq initiated a rule change request to facilitate the listing and trading of options linked to BlackRock’s iShares Bitcoin Trust, while the Cboe applied for permission to trade options linked to “ETPs (exchange-traded products) that Hold Bitcoin.”
Notably, the Cboe had recently launched six out of the ten BTC ETFs that had received SEC approval.
The much-anticipated BTC ETFs commenced trading on both the Nasdaq and Cboe platforms on January 11, just one day after obtaining approval from the SEC.
Catherine Clay, the Executive Vice President of Cboe, disclosed that the exchange was experiencing “good inflows” into the BTC ETFs, which were closely tracking the price of Bitcoin, aligning with expectations.
According to Clay, introducing BTC ETF options trading was the “next logical step” for these products, as it would enhance their utility and provide risk mitigation capabilities.
Nasdaq supported this notion by stating that options would deliver “cost efficiencies and increased hedging strategies.”
Options are financial derivatives that grant the holder the right to buy or sell an asset at a predetermined price and time.
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Analyst Dave Nadig from VettaFi suggested that this move could attract various hedge fund players to the BTC ETF options space who may not have previously ventured into the cryptocurrency ecosystem directly.
Cboe submitted its request for options trading permission just last week, and Clay expressed uncertainty regarding the regulatory approval process, emphasizing that it was challenging to predict the outcome.
Moreover, Cboe’s options clearing corporation had to make corresponding filings with both the SEC and the Commodity Futures Trading Commission, adding an additional layer of complexity to the situation.
James Seyffart, an ETF analyst at Bloomberg, noted the unexpected speed at which Nasdaq had made its announcement, suggesting that approval for options trading could potentially be granted as early as the end of February, or at the latest, around September 21.
These proposals are now open for public comment for a period of 21 days after their publication in the Federal Register, allowing stakeholders and interested parties to provide their input and perspectives on this pivotal development in the cryptocurrency and financial markets.
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