• 28 May, 2024

SEC Delays Decision on Bitcoin ETF Options Trading Until Late April

The United States Securities and Exchange Commission (SEC) has recently extended its review period for the approval of options trading on spot Bitcoin exchange-traded funds (ETFs). The SEC’s decision, initially scheduled for March 10, has been postponed to April 24. This delay impacts proposals from prominent exchanges, including the Cboe Exchange and the Miami International Securities Exchange.

This delay comes due to the SEC’s stated need for “a longer period” to thoroughly evaluate the proposals submitted on January 25, the regulator stated:

The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change.

Options trading on Bitcoin ETFs presents a popular financial strategy, allowing traders to speculate on Bitcoin’s price movements with less capital. Traders can buy call options to speculate on a price rise, acquiring the right to purchase Bitcoin at today’s price at a future date, thus potentially profiting from favorable market movements.

The push for approval of Bitcoin ETF options has seen vocal support from industry leaders. Grayscale CEO Michael Sonnenshein publicly advocated for such financial products last month, emphasizing their potential to foster a “robust and healthy market.” Echoing this sentiment, VettaFi analyst Dave Nadig has highlighted the appeal of Bitcoin ETF options to hedge fund players and investors previously outside the direct cryptocurrency trading ecosystem.

Meanwhile, the SEC has also extended the review period for Nasdaq ISE, LLC’s request to list and trade options on BlackRock’s spot bitcoin ETF. The SEC aims to ensure it has adequate time to consider the proposed rule change, with a new decision deadline also set for April 24. This extension follows a public comment period during which individuals expressed their support for the approval of options trading on Bitcoin ETFs.

The deferral of these decisions comes amid growing investor interest in spot Bitcoin funds, which have seen significant inflows since their approval by the SEC in January. Excluding Grayscale’s spot fund, the total assets held by these newly approved funds amount to approximately $26 billion.

The anticipation surrounding the approval of Bitcoin ETF options is evident in the crypto market, particularly with 29,000 BTC options set to expire soon. This expiration carries a notional value of $2 billion and comes at a time when Bitcoin’s price volatility has reached its highest level in nearly a year. Following a high of over $69,000, Bitcoin experienced a sharp decline. At press time, the cryptocurrency is trading at $66,979, up 1.9% in the past 2 hours.

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