SEC Extends Decision Timeline for Spot Bitcoin ETF Options Trading

    Key Takeaways

    • SEC extended the timeline to respond to Cboe Exchange and the Miami International Securities Exchange on their move to offer options on Bitcoin ETFs.
    • SEC’s deferral gives it an extra 45 days to decide on the matter

    The US Securities and Exchange Commission (SEC) has extended the timeline for its decision on approving the trading of options on exchange-traded funds (ETFs) directly investing in Bitcoin. 

    This extension comes as the regulatory body deferred a filing from Cboe Exchange Inc. to offer options tied to Bitcoin ETFs, as revealed in documents posted on the agency’s website Wednesday. Additionally, the SEC postponed a decision on a filing from Nasdaq ISE to list and trade options on BlackRock’s iShares Bitcoin Trust.

    These options serve as derivative tools, allowing traders to speculate on futures gains or hedge against potential losses. With investors flocking to spot-Bitcoin funds since their SEC approval in January, these funds have collectively garnered a net inflow of $8.9 billion this year. Excluding Grayscale’s spot-fund, which existed in a previous fund structure, the newly approved funds hold around $26 billion in assets.

    The SEC has chosen to postpone its decision on approving spot Bitcoin ETFs until the final deadline for all filings in January. However, some experts caution that the regulator may reject the current filings for spot-Ether ETFs.

    In a filing dated March 6, the SEC extended its response time to Cboe Exchange and the Miami International Securities Exchange regarding their bids to offer options on Bitcoin ETFs. For investors, buying crypto options can offer a relatively low-cost and low-risk solution for trading digital assets compared to trading crypto futures or perpetual swaps.

    An “option” is a type of derivative contract giving the purchaser the right, but not the obligation, to buy or sell an underlying asset at a predetermined price by an expiration date.

    The SEC’s delay in deciding on Nasdaq’s bid to offer options on BlackRock’s iShares Bitcoin Trust (IBIT) is aimed at ensuring the agency has “sufficient time to consider” the request. The exchanges filed to list Bitcoin ETF options on January 25, with the SEC facing its initial decision deadline on March 10. The deferral grants the agency an additional 45 days, the maximum under the law, to reach a final decision, which is noted to be April 24.

    While investors typically buy and sell options on a product three days after its shares begin trading on an exchange, these rules do not apply to products holding commodities like Bitcoin, as noted by Cboe.

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