The decision on whether to allow options trading on spot Bitcoin ETFs offered by the New York Stock Exchange has been postponed by the United States securities regulator. The delay will impact options trading on the Bitwise Bitcoin ETF (BITB), the Grayscale Bitcoin Trust (GBTC), and any other trust that holds Bitcoin on the NYSE, according to a filing on April 8. The Securities and Exchange Commission (SEC) stated that it needs more time to consider the proposed rule change. The SEC’s next deadline to make a decision on the NYSE’s proposal is May 29. Last month, the SEC reached the same outcome for Nasdaq, which had requested options trading on BlackRock’s iShares Bitcoin Trust (IBIT).
Options trading is a type of derivative product that allows traders to use leverage and make directional bets on the market. Traders can pay a premium, buy a “call option,” and agree to buy 1 BTC at today’s price in a month’s time, while putting down less money than needed to buy 1 BTC. If the price of Bitcoin rises, the trader can exercise their option, buy Bitcoin at the lower price, and potentially sell it for a profit. If the price drops, they can let the contract expire and lose the premium paid.
Grayscale’s CEO, Michael Sonnenshein, is one of two individuals who wrote to the SEC requesting the approval of the rule change. He argued in a letter on Feb. 28 that there is no reason to reject options trading on spot Bitcoin ETFs, as the SEC has already approved Bitcoin futures ETFs and spot Bitcoin ETFs on the NYSE. Sonnenshein also stated in a Feb. 5 post that approving options for spot Bitcoin ETFs would contribute to a strong and healthy market. The NYSE filed a form proposing options trading on Bitcoin ETFs on Jan. 12, while Nasdaq and Cboe made their own proposals on Jan. 19, just nine days after the SEC approved spot Bitcoin ETFs on multiple stock exchanges.
SEC postpones verdict on Bitwise and Grayscale Bitcoin ETF choices.