Spot Bitcoin ETFs Options Trading Decision Delayed

The Securities and Exchange Commission has delayed a decision on whether it will approve a rule change allowing options trading on spot bitcoin exchange traded funds.

The agency said in a filing Monday that it was extending the period for deciding on a New York Stock Exchange (NYSE) proposal "to permit the listing and trading of options" on the Bitwise Bitcoin ETF (BITB), the Grayscale Bitcoin Trust (GBTC), "and any trust that holds bitcoin."

"The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change," the SEC said in the filing. 

The NYSE first filed for the rule change on Feb. 9, which was listed on the Federal Register, triggering a 45-day comment period that was due to expire April 14. The Federal Register is the federal government's daily journal of rules, proposed rules, notices and executive orders. 

Investors use options to enter a contract where they can buy or sell a stock or an exchange traded fund at a specific price over a period. Investors often use options to bet on a stock, to hedge their risk, or for income.

Demand for cryptocurrency investment products has soared this year, following the SEC's approval of 10 spot bitcoin ETFs on Jan. 10. These funds have accrued roughly $60 billion in assets under management since they began trading a day later, helping to spur a nearly 60% year-to-date price gain. Bitcoin, the world's largest asset in market value, was trading above $70,500 late Wednesday (ET). 

A number of firms are eager to roll out products that would allow investors to hedge their bets on the cryptocurrency.

The SEC’s next deadline to decide on the rule change is May 29.

Bitcoin Futures Options

The agency has allowed options trading on bitcoin futures ETFs since 2021.

Grayscale CEO Michael Sonnenshein submitted a public comment on Feb. 28, urging the SEC to approve the NYSE’s rule change. “Our argument is straightforward: if investing in options for shares of products holding derivatives of an asset is acceptable for investors, investing in options for shares of products holding the asset itself should be as well,” he said.

The Cboe exchange has also filed a proposal that would allow options trading on spot bitcoin funds. The SEC has an April 24 deadline to rule on the exchange's filing. Cboe said in a filing that while it usually allows options to trade three days after approval, “rules do not apply to ETPs holding commodities.”

Contact Lucy Brewster at [email protected].