SEC Postpones Spot Bitcoin ETF Options Trading Decision

In a filing earlier this week, the SEC deferred its decision on a rule change that would allow exchanges to list and trade spot bitcoin ETF options. The SEC said it would wait until late April to decide whether to offer these options on the CBOE Exchange and the Miami International Securities Exchange. Due to numerous spot bitcoin ETFs based on the largest cryptocurrency by market value, the delay occurred.

"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," the SEC said.

Around the time the SEC approved 10 new spot bitcoin products in January, the exchanges requested to list bitcoin fund options. As of the close of equities markets on March 7, spot bitcoin ETFs had more than $9.3 billion in inflows, despite more than $10 billion in outflows from the Grayscale Bitcoin Trust. That fund varies from spot bitcoin products because it was converted from a trust.

Last week, BlackRock's iShares Bitcoin ETF (IBIT) became the fastest ETF to reach $10 billion in assets under management. CoinMarketCap said that Bitcoin reached a new $69,000 this week, beating its November 2021 high. Analysts and financial gurus recommend bitcoin ETF call and put options to mitigate crypto's volatility. Hedging risk with put/call options.

ETF options work like stock options because they can be traded all day. Option agreements allow investors to acquire or sell an asset at a defined price over a specific period. An increasingly popular technique for successful bitcoin ETFs is bitcoin fund options.

CBOE stated in January that it generally can list options on a new exchange traded product three days after it hits the market, but commodities items like bitcoin require SEC approval.

Grayscale Investments wrote Wednesday that "access to exchange-listed options on GBTC and other spot Bitcoin ETPs...vital to the interests of investors." Options would enable price discovery in the ETP's shares, give investors more options, and assist them navigate market situations or achieve investment goals like income, hedging, or volatility, the firm claimed.

After a decade-long regulatory drama, the SEC approved spot bitcoin ETFs in January after allowing bitcoin futures ETFs since 2021. Wall Street was researching additional cryptocurrency-based investment products before the approvals.

The SEC delayed a BlackRock exchange traded fund based on ether, the second largest digital asset by market cap, on March 4. According to CoinDesk, ether rose above $4,000 on Friday for the first time in two years, outperforming bitcoin.