Grayscale CEO Advocates for Approval of Exchange-Listed Options for Bitcoin Spot ETFs
Summary:
Grayscale CEO, Michael Sonnenshein, calls for regulatory approval of exchange-listed options for spot Bitcoin ETFs, benefiting investors by supporting price discovery and helping adapt to market conditions. The CEO urged for equal treatment between products such as spot and futures Bitcoin-based ETFs. Recently, several exchanges, including NYSE, have submitted Forms 19b-4 to change the listing standards allowing commodity-based ETFs, including Bitcoin spot ETFs. The final decision could come as early as February 15 or by September 2024, says Bloomberg ETF analyst, Eric Balchunas.
Michael Sonnenshein, the Chief Executive Officer of Grayscale, asserted in a post published on February 5 that regulators should give a nod to exchange-listed alternatives for Bitcoin ETFs that are spot (in cash). He contended that these options are beneficial to investors due to their contribution to price discovery and their potential to aid investors in adjusting to market fluctuations or achieving particular targets like income generation.
Exchange-traded options are standardized agreements that can be employed to buy (via a call option) or sell (via a put option) a defined quantity of a certain financial commodity at a given price (known as the strike price) on or before a set date. With the help of options trading, investors can forecast the future trends of specific stocks or bonds, as well as the overall stock market. Through option contracts, traders have the flexibility, but not the mandate, to buy or sell an underlying asset at a fixed price before the specified date.
These options are traded on platforms such as the Cboe, under the regulation of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). Organizations like the Options Clearing Corporation (OCC) offer guarantees to these exchanges.
Sonnenshein pointed out that when the SEC sanctioned the first Bitcoin futures ETF in October 2021, automatically effective options for the ETF were ready to be traded on the next day using existing rules. Regardless of this rule, the same does not apply for commodity-based ETFs like the recently approved Bitcoin spot ETFs, which may face a lengthy review similar to the 19b-4 procedure for Bitcoin spot ETFs. The CEO of Grayscale urged for equal treatment between alike products, providing the example of spot and futures Bitcoin-based ETFs.
Michael Sonnenshein also reported that several national exchanges, including the New York Stock Exchange, have recently submitted Forms 19b-4 to change the listing standards, permitting listed options on commodity-based ETFs, inclusive of Bitcoin spot ETFs. Presently, the SEC is going through the applications for listed options on Bitcoin spot ETFs and has opened the floor for comments on BlackRock’s proposed options with CBOE. Bloomberg ETF analyst, Eric Balchunas has implied that the SEC could finalize their decision as early as February 15 or at the latest, September 2024.
Lastly, the Grayscale CEO advocated for Bitcoin spot ETFs and the crypto asset class to receive equitable treatment.
Published At
2/6/2024 11:32:27 AM
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