US Lawmakers Push for Bitcoin Options Trading Approval

Lawmakers in the United States are reportedly urging the Securities and Exchange Commission (SEC) to approve options trading on Bitcoin exchange-traded products (ETPs). Representatives Mike Flood and Wiley Nickel wrote a letter to the SEC’s chair, Gary Gensler, requesting the Commission to stop discriminating against cryptocurrency funds. The bipartisan letter emphasized the need for the SEC to either approve options on spot Bitcoin ETPs or provide an explanation for the discrepancy in treatment between options for Bitcoin futures ETFs, which are already trading, and options for spot Bitcoin ETPs. Options are financial instruments that allow the buyer to purchase or sell an asset, such as Bitcoin, at a predetermined price by a specific date. These instruments are commonly used to hedge against price fluctuations, limit potential losses, and generate additional income for investors through various strategies. Flood and Nickel believe that approving options trading is essential for protecting investors, a key objective for the SEC.

Currently, the SEC has been delaying decisions on applications from the New York Stock Exchange, Nasdaq, and Cboe Global Markets, all submitted in January. Nasdaq has applied to list and trade options on BlackRock’s iShares Bitcoin Trust, while Cboe plans to offer options trading on various Bitcoin funds. The NYSE intends to trade options on Bitwise Bitcoin ETF (BITB), Grayscale Bitcoin Trusts (GBTC), and other trusts holding Bitcoin. The SEC recently initiated a consultation round to consider a proposed rule change that would allow options trading on Bitcoin funds. The SEC wants to explore how Bitcoin options might impact market stability, particularly during volatile conditions. The agency is also examining whether current market surveillance and enforcement practices are adequate for managing the complexities of Bitcoin options. Interested participants have been invited to submit initial comments by May 15, 2024, and rebuttal comments by May 29, 2024. This consultation process reflects the SEC’s commitment to thorough examination before making any decisions on options trading for Bitcoin funds.