SEC issues ruling on Bitwise, Grayscale Bitcoin ETF options
The US securities regulator has delayed a decision on whether to allow the New York Stock Exchange to offer trading options on bitcoin (BTC) ETFs.
According to an April 8 filing, the Securities and Exchange Commission's pushback will affect options trading in the Bitwise Bitcoin ETF (BITB), the Grayscale Bitcoin Trust (GBTC) and any other trust that holds Bitcoin on the NYSE.
“The Commission finds it appropriate to provide an extended period in which to act on the proposed rule change,” the securities regulator said.
The next deadline for the SEC to approve, deny or delay the proposed rule change on the NYSE is May 29.
The securities regulator reached a similar conclusion last month for Nasdaq, which called for trading options on BlackRock's iShares Bitcoin Trust (IBIT).
Options are derivatives that give traders leverage and allow them to make directional bets on the market.
If a trader thinks the price of Bitcoin will rise, they pay a premium and buy a “call option” and agree to buy 1 BTC in a month's time for less money than it takes to buy 1 BTC.
If Bitcoin goes up in a month, the trader can exercise their discretion, buy Bitcoin at a lower price and possibly sell it for a profit. If it defaults, you can let the contract expire and forfeit the premiums paid.
Related: Despite the 23% gain, Bitcoin options traders are still not bullish
Grayscale CEO Michael Sonnenschein is one of two people who wrote to the SEC asking for the rule change to be approved.
In a Feb. 28 letter, Sonnenshein argued that since the SEC has already approved bitcoin futures ETFs and lists bitcoin ETFs on the NYSE, there is no reason to trade bitcoin ETF options on the spot.
“The natural next step is to approve options on spot Bitcoin ETPs.”
Approving options for spot Bitcoin ETFs “will contribute to a strong and healthy market,” Sonnenschein said in a Feb. 5 X post.
The NYSE filed a Form 19b-4 Proposing Options on Bitcoin ETFs on Jan. 12, while Nasdaq and Cboe filed their own on Jan. 19 — nine days after the SEC approved Bitcoin ETFs on multiple stock exchanges.
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