In order to allow trading options on Bitcoin exchange-traded funds (ETFs), the US Securities and Exchange Commission (SEC) has asked for public feedback on proposed adjustments to listing standards.
An amendment was presented by the New York Stock Exchange (NYSE) that permits options on Bitwise Bitcoin ETF, Grayscale Bitcoin Trust, and other Bitcoin-holding funds. These derivatives would adhere to current regulations for ETF options, including futures-based commodity contracts, if approved.
To allow for options trading on its upcoming spot Bitcoin ETF, asset manager BlackRock submitted identical rule amendments to the Chicago Board Options Exchange. SEC approval is expected by September 2024, according to analysts.
Options grant buyers contractual rights, not obligations, to exchange an asset by a specific date for a predetermined price. Instead of allowing speculation on Bitcoin itself, Bitcoin ETFs let speculation on fund values. In the past, the SEC has permitted options on commodities ETF trusts that contain silver, gold, and other metals.According to NYSE, suitable surveillance systems are in place to monitor option trading on Bitcoin ETPs. It will also introduce new protocols as needed.
According to Grayscale CEO Michael Sonnenshein, options trading can assist investors in better navigating market situations and aid in price discovery. All investors may not be comfortable with the risks associated with options. This idea comes after years of denials by the SEC, which in January approved Wall Street spot Bitcoin ETF trading.
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