SEC Postpones Decision on Bitcoin ETF Options Approval Until April
Summary:
The U.S. Securities and Exchange Commission (SEC) has delayed its decision on the approval of options trading on spot Bitcoin (BTC) exchange-traded funds (ETFs). This decision, previously scheduled for March 10, has been deferred until April 24 to give the agency more time. The delay impacts Cboe Exchange, the Miami International Securities Exchange, and Nasdaq, all of whom have applied to provide Bitcoin ETF options. The approval could attract further institutional investment into Bitcoin.
A potential decision by the U.S. Securities and Exchange Commission (SEC) regarding the approval of options trading on spot Bitcoin (BTC) exchange-traded funds (ETFs) has been delayed, as announced in a filing on March 6. The approval of such options could facilitate a stronger influx of institutional capital into Bitcoin. This holdup is applicable to the applications of Nasdaq, Cboe Exchange, and the Miami International Securities Exchange, all of whom sought to offer Bitcoin ETF options. This delay in decision-making is attributed to the SEC's need for ample time to assess the applications.
The submitted applications for offering the Bitcoin ETF options were initially processed on Jan. 25. The SEC was facing a decision deadline on March 10, as per U.S. securities laws that give a 45-day extension or decision deferral. This current postponement provides the SEC with an additional 45 days, capping the legal limit of 90 days to reach a conclusive decision, which is set for April 24.
Options are derivatives that allow traders to leverage and place market anticipatory bets. Through options, if a trader is expecting a rise in Bitcoin's price, they can invest in a "call option" and commit to purchasing 1 BTC at the current market price in a month's period. As such, they can buy at a lower rate and potentially resell at a profit.
Encouraging the approval of options for Bitcoin ETFs, Grayscale CEO Michael Sonnenshein stated that these contribute to a vibrant and stable market. VettaFi analyst Dave Nadig echoed similar sentiments, stating that the initiation of Bitcoin ETF options markets could attract hedge fund players into the arena.
Ten spot Bitcoin ETFs were green-lighted by the SEC to commence trading on Jan. 11, after protracted delays. These ETFs have attracted considerable financial investment, with nine new ETFs accumulating $25.87 billion in assets under management, as per BitMEX Research data from March 6.
Currently, the SEC needs to decide on seven spot Ether (ETH) ETFs. Market watchers prophesize that the agency is deferring its decision until May 23 to approve them in bulk on the deadline for VanEck’s application. Various leveraged Bitcoin ETFs await the SEC's decision, with Direxion filing for five inverse and long spot Bitcoin ETFs in January, along with ProShares' five leveraged Bitcoin funds and REX Shares' six leveraged ETFs.
Published At
3/8/2024 8:21:04 AM
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