SEC defers decision on Bitwise, Grayscale Bitcoin ETF options

The US securities regulatory body has postponed its verdict on permitting the New York Stock Exchange to provide options trading for Bitcoin ETFS (Exchange-Traded Funds).

Based on the SEC’s objection as stated in the April 8 document, trading of options on the Bitwise Bitcoin ETF (BITB), Grayscale Bitcoin Trust (GBTC), and any other trust with Bitcoin listing on the NYSE may be affected.

The securities regulatory body decides to allow more time for evaluating the suggested rule modification to ensure a thorough review process.

SEC defers decision on Bitwise, Grayscale Bitcoin ETF options

The SEC has until May 29 to make a decision – approve, reject, or defer – regarding the proposed NYSE rule modification.

Last month, the securities regulatory body made a decision identical to Nasdaq’s regarding permitting options trading on BlackRock’s iShares Bitcoin Trust (IBIT).

Traders can use options as an alternative, which amplifies their exposure and allows them to wager on a market’s price movement in either direction.

A trader can choose an alternative way to bet on Bitcoin‘s price increase by purchasing a call option. This allows them to lock in the current Bitcoin price for a future purchase, without paying the full cost upfront. Essentially, they are promising to buy 1 BTC at the present price within a month, while only paying a smaller amount now.

Should Bitcoin increase in value during the month, the trader would have an opportunity to benefit by exercising their option: purchasing Bitcoin at a lower price, then potentially selling it for a profit. Conversely, if Bitcoin’s value decreases, the trader might choose to let the contract expire and relinquish the premium they paid.

Michael Sonnassien, the CEO of Grayscale, is among the duo who petitioned the SEC for the approval of the proposed rule change.

In a letter dated February 28th, Sonnenshein made the case that there’s no need to reject alternatives trading on bitcoin spot Exchange-Traded Funds (ETFs), considering the SEC has previously authorized bitcoin futures ETFs and introduced spot Bitcoin ETFs on the New York Stock Exchange.

“The natural next step is the approval of options on spot Bitcoin ETPs.”

In a February 5 post on X, Sonnenshein expressed that the authorization of various Bitcoin spot ETF proposals would significantly enhance the market’s strength and vitality.

On January 12, the NYSE submitted a proposal to allow options trading on Bitcoin ETFs through a 19b-4 form with the SEC. Following this, Nasdaq and Cboe made their respective proposals for similar Bitcoin ETF options trading on January 19 – a nine-day delay after the SEC’s approval of spot Bitcoin ETFs on various stock exchanges.

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2024-04-09 02:43