SEC pushes decision to open trading on spot Bitcoin ETFs
The United States Securities and Exchange Commission has postponed its decision on approving trading options on bitcoin (BTC) exchange-traded funds (ETFs) — opening the door for more institutional capital into Bitcoin.
In a March 6 filing, the SEC extended the deadline for the Cboe Exchange and Miami International Securities Exchange to respond to the issuance of options on Bitcoin ETFs.
He also delayed a decision on a Nasdaq bid to offer options on BlackRock's iShares Bitcoin Trust (IBIT), saying the delay would ensure he had “sufficient time to consider” the request.
Exchanges that registered to list Bitcoin ETF options on January 25 and the SEC face an initial decision deadline of March 10, as US securities laws give them 45 days to decide on the issue or delay a decision.
The delayed decision gives the agency an additional 45 days — the maximum 90 days under the law — to reach a final decision, which the SEC said was April 24.
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 option, buy Bitcoin at a low price and possibly sell it for a profit. If it defaults, you can let the contract expire and forfeit the premiums paid.
Grayscale CEO Michael Sonnenschein called for the approval of alternatives to Bitcoin ETFs last month, saying they “contribute to a strong and healthy market.”
Once the Bitcoin ETF options markets go live, “you're going to start seeing all kinds of hedge fund players in the space,” VitaFi analyst Dave Nadig told CNBC in January.
“Those who haven't been speculating about crypto directly in the crypto ecosystem will now have something to play with,” Nagid said.
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The SEC has approved a ten-spot Bitcoin ETF to begin trading on January 11 — the deadline to decide on the approval after months of delays.
Traders added to ETFs in cash — except for Grayscale, which converted to ETFs with nine of the $25.87 billion in assets under management as of March 6, according to BitMEX research data.
The SEC must now rule on seven Spot Ether (ETH) ETFs. Analysts predict the agency will have until the May 23 deadline to approve all of VanEck's applications.
Several leveraged bitcoin ETFs filed before the SEC with asset manager Direxion in January for five inverse and long position Bitcoin ETFs, along with ProShares' five leveraged Bitcoin fund and REX Shares' six leveraged ETFs.
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