The United States Securities and Exchange Commission (SEC) is soliciting feedback on a proposed rule alteration enabling the listing and trading of options for Bitcoin exchange-traded funds (ETFs).
As per a notice dated February 23, the NYSE has sought a rule adjustment to authorise the listing and trading of options on the Bitwise Bitcoin ETF (BITC), the Grayscale Bitcoin Trust (GBTC), and “any trust that holds Bitcoin.”
If sanctioned, the options will be traded “in the same manner as options on other ETFs (including commodities ETFs) on the Exchange,” states the notice.
This encompasses regulations such as listing criteria, expiry dates, strike prices, minimum price changes, position and exercise limits, margin requirements, and protocols for customer accounts and trading halts.
BlackRock is similarly pursuing endorsement for a comparable policy revision.
The asset manager has applied for rule amendments to list options on its Bitcoin ETF in conjunction with the Chicago Board Options Exchange (CBOE). Bloomberg ETF analyst James Seyffart foresees the SEC’s verdict arriving by September 2024 at the latest.
Options are utilised for portfolio hedging, income, or speculative purposes.
They are financial derivatives affording buyers the right, but not the obligation, to buy or sell a specified asset at a predetermined price on a specific date.
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In the realm of Bitcoin ETFs, options would enable investors to hedge or speculate on the price movements of a BTC ETF rather than Bitcoin itself.
The SEC has previously greenlit other commodity ETFs held by trusts, including the SPDR Gold Trust, iShares COMEX Gold Trust, iShares Silver Trust, and ETFS Gold Trust.
Grayscale CEO Michael Sonnenshein has been publicly advocating for regulators to endorse the crypto derivatives products.
According to the executive, options are advantageous for investors as they bolster “price discovery and can help investors better navigate market conditions or achieve desired outcomes, such as generating income.”
Similar to other investments and financial products, options trading carries risks that may not be suitable for all investors.
The SEC authorised the trading of spot Bitcoin ETFs on Wall Street on January 10, following years of rejections.
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