The U.S. Securities and Exchange Commission has delayed a decision to allow the New York Stock Exchange to offer spot trading options for Bitcoin ETFs.
The next deadline for the SEC to approve, reject or delay the NYSE’s proposed rule changes is May 29.
SEC delays decision
The SEC delay could severely impact options trading on the Bitwise Bitcoin ETF (BITB), Grayscale Bitcoin Trust (GBTC), and other trusts that hold Bitcoin on the New York Stock Exchange. The committee also said it would delay decisions on the CBOE exchange and the Miami International Exchange until the end of April. The regulatory agency stated,
“The Commission believes it is appropriate to specify a longer period for taking action on the proposed rule changes to allow sufficient time to consider the proposed rule changes.”
The SEC said it needed to thoroughly review the reasons behind the proposed rule changes, which was the primary basis for its ruling. The extension means the next deadline for that decision is set for May 29, when the committee can approve or deny options trading on the NYSE Bitcoin ETF. Securities regulators did the same to Nasdaq last month, requiring BlackRock’s iShares Bitcoin Trust (IBIT) trading option.
Community calls for approval
Grayscale CEO Michael Sonnenshein sent a letter to the SEC urging it to approve the rule change. Sonnenshein argued in a letter written on February 28 that the SEC had no reason to deny options trading on the spot Bitcoin ETF because it already approved the New York Stock Exchange’s Bitcoin futures ETF and spot Bitcoin ETF.
“The natural next step is to approve spot Bitcoin ETP options.”
Sonnenshein said the approval of spot Bitcoin ETF options could help create a strong and healthy market.
“Going forward, I think it has never been more important for the #crypto and ETF communities to advocate for the development of a robust listed options market for spot #bitcoin ETFs. While $GBTC has been on the public market since 2015, it has never been accompanied by listed options because they are not a feature of the over-the-counter market.”
He also cited the example of Bitcoin-based ETF spot and futures, calling for equal treatment for similar products.
“Bitcoin futures ETFs and spot Bitcoin ETFs should (and still do) receive the same treatment, as should listed options on these products.”
Options are a type of derivative product that allow traders to take advantage of leverage and make directional bets on the market. If traders predict that the price of Bitcoin will increase, they can pay a premium and purchase a “call option.” They can then agree to buy 1 BTC at the current price within a month and invest less than what would be needed to purchase 1 BTC at that time. If the price of Bitcoin increases within a month, traders can exercise the option to buy Bitcoin at a lower price and then sell it for a profit. If the price falls, the trader can let the contract expire and give up the premium.
Disclaimer: This article is for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.
