The U.S. Securities and Exchange Commission (SEC) has recently opened comments on proposals relating to options trading on Bitcoin exchange-traded funds (ETFs). These proposals, if approved, would allow Nasdaq and Cboe Exchange Inc. to list and trade options on various Bitcoin ETPs. This move could introduce new investment strategies and provide investors with the opportunity to engage in leveraged trading.
One of the SEC notices pertains to a proposed rule change that would permit Nasdaq to list and trade options on BlackRock’s iShares Bitcoin Trust. Although the notice does not specify the funds that the proposal applies to, it is worth mentioning that Cboe BZX, responsible for listing and trading the majority of spot Bitcoin ETFs, has recently gained approval for various funds, including those from Ark Invest, VanEck, WisdomTree, Invesco, Fidelity, GlobalX, and Franklin Templeton.
The introduction of options trading on Bitcoin ETFs would provide investors with new investment strategies. By engaging in leveraged trading, investors have the potential to earn higher returns, albeit at a higher risk. This development has caught the attention of market observers, such as Bloomberg ETF analyst James Seyffart. He suggests that the SEC’s acknowledgment of the 19b-4s requesting the ability to trade options on spot Bitcoin ETFs signifies a faster-than-usual pace for the regulatory body. He further speculates that options trading could be approved as early as the end of February, should the SEC decide to expedite the process.
Seyffart notes that each proposal was posted on Jan. 16, indicating that the SEC published its latest notices within three days of filing. He considers this timeline to be significantly faster compared to previous 19b-4 rule change proposals, which took more than 14 days to reach a similar stage. However, upon closer examination of the documents, the filing dates for each proposal slightly precede the publication dates specified by Seyffart. For example, Nasdaq filed its proposal on Jan. 9, with an amendment submitted on Jan. 11. On the other hand, Cboe filed its proposal on Jan. 5.
Based on Seyffart’s analysis, the SEC may reach a decision on these proposals around Feb. 15 at the earliest, or by Sept. 21 at the latest. The speed at which the SEC has published the notices bodes well for proponents of options trading on Bitcoin ETFs, who are hopeful that the regulatory body will continue to expedite the process.
The SEC has initiated a comment period for proposals regarding options trading on Bitcoin ETFs. Should these proposals be approved, Nasdaq and Cboe will have the opportunity to list and trade options on various Bitcoin ETPs, potentially introducing new investment strategies and heightened risk for investors. Market experts speculate that the SEC’s recent actions indicate a faster pace for these rule change proposals, raising the possibility of options trading being approved by the end of February. However, the exact timeline for a decision remains uncertain.
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