SEC Delays Decision on Bitcoin Options Trading Approval for NYSE
Summary:
The U.S Securities and Exchange Commission (SEC) has delayed its decision on whether to approve the New York Stock Exchange's request for options trading on Bitcoin ETFs. This decision will impact the Bitwise Bitcoin ETF, the Grayscale Bitcoin Trust, and other Bitcoin-holding trusts on NYSE. The next deadline for review is May 29. The regulator took a similar action with Nasdaq last month. Grayscale's CEO, Michael Sonnenshein, has urged the SEC to approve the rule change, arguing it would contribute to a robust and healthy market.
The decision by the United States securities regulatory body to permit the New York Stock Exchange (NYSE) to facilitate options trading on Bitcoin (BTC) Exchange Traded Funds (ETFs) has been postponed. The Securities and Exchange Commission (SEC) indicated on an April 8 consent form that this delay will influence options trading on the Bitwise Bitcoin ETF (BITB), the Grayscale Bitcoin Trust (GBTC), and any other trust that stores Bitcoin on the NYSE. The commission thought it necessary to allocate more time to review the suggested rule modification.
This information is gleaned from an announcement made by the SEC. The regulatory body now has until May 29 to either sanction, turn down, or further postpone their ruling on the NYSE's suggested amendment. Last month, the SEC made a similar decision concerning the Nasdaq, which had advocated for options trading on the BlackRock's Bitcoin Trust (IBIT).
Options are derivative products that provide traders with leverage, permitting them to make market bets based on the direction they anticipate. A trader foreseeing a rise in Bitcoin's price could purchase a "call option" by paying a premium, thereby agreeing to acquire 1 BTC at the current price in a month's time with less upfront investment than purchasing 1 BTC directly. Should Bitcoin's value increase within that month, the trader could utilize their option, buying at a lower price and potentially selling at a significant profit. However, if the opposite occurs, they would likely allow the contract to lapse, forfeiting the premium.
Grayscale's CEO, Michael Sonnenshein, along with one other individual, wrote to the SEC calling for the approval of the rule change. In his letter dated February 28, Sonnenshein stated that there's no reason to dismiss options trading on Bitcoin ETFs since the SEC already sanctioned Bitcoin futures ETFs as well as Bitcoin ETFs on the NYSE. He also stated in a post from February 5 that endorsing options for Bitcoin ETFs would foster a "robust and healthy" market.
The NYSE submitted a proposal for options trading on Bitcoin ETFs on January 12, illustrated in a 19b-4 form. Meanwhile, Nasdaq and Cboe presented their proposals on January 19, following the SEC approval of Bitcoin ETFs on various stock exchanges nine days earlier.
Published At
4/9/2024 2:26:00 AM
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