The decision on whether to allow options trading on spot Bitcoin ETFs on the New York Stock Exchange has been delayed by the United States securities regulator. The Securities and Exchange Commission (SEC) announced that this delay will affect options trading on the Bitwise Bitcoin ETF (BITB), the Grayscale Bitcoin Trust (GBTC), and any other trust that holds Bitcoin on the NYSE. The SEC stated that it needs more time to consider the proposed rule change, and the new deadline for a decision is May 29. Last month, the SEC reached a similar outcome for Nasdaq, which had requested options trading on BlackRock’s iShares Bitcoin Trust (IBIT).
Options are financial products that provide traders with leverage and the opportunity to make directional bets on the market. For example, if a trader believes that the price of Bitcoin will increase, they can pay a premium to buy a “call option” and agree to buy 1 BTC at today’s price in a month’s time, while putting down less money than the actual cost of 1 BTC. If the price of Bitcoin rises during the month, the trader can exercise their option, buy Bitcoin at the lower price, and potentially sell it for a profit. However, if the price of Bitcoin falls, the trader will likely let the contract expire and lose the premium paid.
Grayscale’s CEO, Michael Sonnenshein, is one of the individuals who wrote a letter to the SEC requesting the approval of the rule change. Sonnenshein argued that there is no reason to reject options trading on spot Bitcoin ETFs since the SEC has already approved Bitcoin futures ETFs and spot Bitcoin ETFs on the NYSE. He also stated that the approval of options for spot Bitcoin ETFs would contribute to a strong and healthy market. The NYSE filed a proposal for options trading on Bitcoin ETFs on January 12, while Nasdaq and Cboe made their own proposals on January 19, just nine days after the SEC approved spot Bitcoin ETFs on various stock exchanges.