Lawmakers in the United States are reportedly putting pressure on the Securities and Exchange Commission (SEC) to approve options trading on Bitcoin exchange-traded products (ETPs). Representatives Mike Flood and Wiley Nickel recently penned a letter to the commission’s chair, Gary Gensler, urging the SEC to end its discrimination against crypto funds. In the bipartisan letter, they called on the SEC to promptly approve options on spot Bitcoin ETPs or provide an explanation for the discrepancy in treatment between options for Bitcoin futures ETFs, which are already being traded, and options for spot Bitcoin ETPs.
Options are financial instruments that grant the buyer the right, but not the obligation, to buy or sell an asset, in this case, Bitcoin (BTC), at a predetermined price by a specific date. These instruments are commonly used to hedge against price fluctuations, limit potential losses, and enable investors to generate additional income through various strategies. Flood and Nickel argue that approving options trading on Bitcoin ETPs is crucial for the protection of the investors the SEC aims to safeguard.
The SEC has been delaying decisions on applications from the New York Stock Exchange, Nasdaq, and Cboe Global Markets that were submitted in January. Nasdaq has sought permission to list and trade options on BlackRock’s iShares Bitcoin Trust, while Cboe plans to offer options trading on various BTC funds. Similarly, the NYSE intends to trade options on Bitwise Bitcoin ETF, Grayscale Bitcoin Trusts, and any other trusts holding Bitcoin. Recently, the commission initiated a new round of consultation on the proposed rule change to allow options trading on Bitcoin funds.
In an April 24 filing, the SEC expressed its interest in exploring how Bitcoin options could impact market stability, particularly during volatile conditions. The agency is also evaluating whether current market surveillance and enforcement practices are sufficient to handle the complexities associated with Bitcoin options. Participants have been invited to submit initial comments by May 15 and rebuttal comments by May 29.