Key Points
The US Securities and Exchange Commission (SEC) is contemplating the launch of Bitcoin spot ETF options trading.
Public input on this potential development has been requested.
Financial market experts have responded with predictions that the regulatory body could approve the move as early as March.
NYSE’s Application for Bitcoin Spot ETF Options
The New York Stock Exchange (NYSE) has made a proposal to the SEC.
In a letter, the NYSE requested a rule change to allow options trading on Bitwise Bitcoin ETF (BITC), Grayscale Bitcoin Trust (GBTC), and other trusts holding Bitcoin.
The NYSE argues that Bitcoin spot ETFs are eligible for options trading under US trading laws since they are commodity-backed exchanged-traded products (ETP).
Earlier this month, it was reported that Nasdaq submitted a similar proposal.
Nasdaq sought permission to list and trade options on BlackRock’s billion-dollar spot ETF IBIT.
Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before or at the expiration date of the option.
In this scenario, the Bitcoin spot ETF is the underlying asset.
The introduction of options trading could be a beneficial, relatively lower-cost investment tool.
It would allow traders to gain exposure to these investment funds without direct engagement.
The NYSE has stated that all exchange standard rules and regulations will guide the listing and trading of the spot ETF options.
These include listing criteria, expirations, exercise prices, minimum increments, position and exercise limits, margin requirements, customer accounts, and trading halt procedures.
The Bitcoin spot ETF options will also be subjected to NYSE’s continued listing standards and can be delisted if the underlying ETF fails to meet certain standards according to the US securities law, Rule 916, among other conditions.
The SEC has formally acknowledged the NYSE’s latest filing.
The proposal has been incorporated into its official register and public feedback is being invited for the next 21 days.
Bloomberg analyst James Seyffart has suggested that there may be an expedited consideration of this matter.
If this is the case, Seyffart predicts the US regulatory body could grant approval to Bitcoin spot ETF options trading in the next 27 days.
In the worst-case scenario where the SEC takes its time, the Bloomberg analyst believes an approval decision could come around September 21.
