SEC Delays Decision on Spot Bitcoin ETFs’ Options Trading

The United States Securities and Exchange Commission (SEC) has delayed its decision on whether to approve options trading on spot Bitcoin exchange-traded funds (ETFs), potentially paving the way for more institutional investment in Bitcoin. The SEC extended its response time to Cboe Exchange and the Miami International Securities Exchange, as well as Nasdaq’s bid to offer options on BlackRock’s iShares Bitcoin Trust. The delay is to allow the SEC “sufficient time to consider” the requests. The exchanges initially filed to list Bitcoin ETF options on January 25, and the SEC’s first decision deadline was on March 10. By deferring the decision, the SEC has an additional 45 days to come to a final decision, making the new deadline April 24.

Options are financial instruments that allow traders to make bets on the direction of the market. Traders can pay a premium to purchase a “call option,” which gives them the right to buy 1 BTC at today’s price in a month’s time, with less money down than if they were to buy 1 BTC outright. If the price of Bitcoin rises over the month, the trader can use their option to buy Bitcoin at the lower price and potentially make a profit by selling it. If the price falls, the trader may let the contract expire and lose the premium paid.

Grayscale CEO Michael Sonnenshein advocated for the approval of options for Bitcoin ETFs, arguing that they contribute to a healthy market. Analyst Dave Nadig suggested that the introduction of Bitcoin ETF options would attract hedge fund players who were not previously directly speculating on cryptocurrencies. Nadig believes that this move would give them a new platform to participate in the market.

The SEC has already approved ten spot Bitcoin ETFs, which began trading on January 11 after months of delay. These ETFs have attracted significant investments, with $25.87 billion in assets under management, according to data from BitMEX Research. The SEC is currently considering seven spot Ether ETFs, and analysts speculate that the agency may delay its decision until May 23, the deadline for VanEck’s application.

There are multiple leveraged Bitcoin ETFs awaiting a decision from the SEC. Asset manager Direxion has filed for five inverse and long spot Bitcoin ETFs, while ProShares has filed for five leveraged Bitcoin funds, and REX Shares has filed for six leveraged ETFs.

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