SEC Seeks Comments on Bitwise, Grayscale Bitcoin ETF Alternatives
The United States Securities and Exchange Commission (SEC) is seeking comments on a proposed rule change that would allow the listing and trading of options for Bitcoin exchange-traded funds (ETFs).
In the year According to a February 23 announcement, the NYSE requested a rule change to allow listing and trading options in the Bitwise Bitcoin ETF (BITC), the Greyscale Bitcoin Trust (GBTC) and “any trust that holds Bitcoin.”
If approved, the options will “trade on the same basis as options on other ETFs (including commodity ETFs) in the market,” the announcement reads. This includes rules such as benchmarks, expiration dates, strike prices, minimum price changes, placement. and exercise limits, margin requirements and procedures for customer accounts and trade restrictions.
BlackRock is seeking approval for a similar policy change. The asset manager has partnered with the Chicago Board Options Exchange (CBOE) to propose legal amendments for options listed on Bitcoin ETFs. Bloomberg ETF analyst James Seifert predicts the SEC's decision could come in September 2024 at the latest.
SEC already acknowledges 19b-4s requiring ability to trade options on #Bitcoin ETFs. This is faster than the SEC normally operates. If the SEC wants to move quickly, options could be approved before the end of February?…
Absolutely early options still ~27+ days left pic.twitter.com/ohbvHgP2uO
— James Seyff (@JSeyff) January 19, 2024
Options are used for portfolio hedging, income or speculative purposes. Options are financial derivatives products that give buyers the right, but not the obligation, to buy or sell an asset at a certain price on a certain date.
In the context of a Bitcoin ETF, options allow investors to short or predict the price movements of the BTC ETF rather than Bitcoin itself. The SEC has already approved other commodity ETFs held by trusts, including the SPDR Gold Trust, the iShares COMEX Gold Trust, the iShares Silver Trust and the ETFS Gold Trust.
“Furthermore, the Exchange represents that its current monitoring procedures are adequate to properly monitor options trading on Bitcoin ETPs during all trading sessions and prevent violations of Exchange rules. The Exchange represents that it will implement new monitoring procedures as necessary to effectively monitor options trading on Bitcoin ETPs.”
Grayscale CEO Michael Sonnenschein has been publicly advocating for regulators to approve crypto derivatives products. According to the executive, options are good for investors because they “support value discovery and allow investors to better navigate market conditions or achieve desired results, such as generating income.”
Like other investments and financial products, options trading carries risks that may not be suitable for all investors. The SEC approved the trading of spot Bitcoin ETFs on Wall Street on January 10 after years of rejection.
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