The Securities and Exchange Commission (SEC) in the United States has initiated a fresh round of discussions regarding a proposed rule change for trading Bitcoin exchange-traded products (ETPs) options. The SEC aims to gain a better understanding of how listing Bitcoin options could impact the overall market, particularly during times of market stress. The review will also assess whether the existing surveillance and enforcement mechanisms of exchanges are sufficient to handle the unique characteristics of Bitcoin options. The deadline for initial comments is May 15, 2024, with rebuttal comments accepted until May 29, 2024.
Bitcoin options are financial instruments that grant the buyer the right, but not the obligation, to buy or sell Bitcoin at a predetermined price within a specific time frame. These options are commonly used by experienced traders who are well-versed in option pricing and market dynamics. It is essential to note that options trading, like any other investment, carries risks that may not be suitable for all investors.
The Commission previously solicited feedback on the proposed rule change and incorporated the received comments into its filing. Most of the comments emphasized that options on Bitcoin ETPs would enhance liquidity and improve market efficiency. Several financial firms, including Nasdaq and Cboe, have submitted proposals to the SEC, seeking approval to trade Bitcoin options. Nasdaq’s application intends to list and trade options on BlackRock’s iShares Bitcoin Trust, while Cboe plans to offer options trading on various Bitcoin-held ETPs. Additionally, asset managers such as Bitwise and Grayscale are also seeking regulatory clearance to list options on their Bitcoin ETFs through applications to the New York Stock Exchange.