2024-10-19
On October 18, 2024, the United States
Securities and Exchange Commission (SEC) approved applications from the New
York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE).
The SEC has granted "accelerated approval" for 11 exchange-traded funds (ETFs) to list and trade options tied to spot bitcoin prices on the New York Stock Exchange (NYSE).
The SEC’s accelerated approval
facilitates quicker access to public markets by allowing companies to speed up
the registration process while still maintaining necessary investor protections
through regulatory compliance.
This move allows institutional
investors and traders an alternative way to hedge their exposure to Bitcoin,
the world’s largest cryptocurrency through listed derivatives, according to a
regulatory filing.
The SEC's decision follows its approval
earlier this year of bitcoin ETFs that track the spot price of bitcoin. Among
the funds that received approval on October 18 are the Fidelity Wise Origin
Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, and the
Grayscale Bitcoin Trust.
Options trading on these ETFs will
provide a new mechanism for investors to amplify their exposure to bitcoin
while managing risks more efficiently. Options are financial contracts that
give the holder the right to buy or sell an asset at a predetermined price by a
specified date, offering flexibility and the potential for increased returns.
The approval also follows a similar
decision in September, when the SEC gave the green light for options trading on
asset manager BlackRock's spot bitcoin ETF on the Nasdaq. In addition to the
NYSE, the Chicago Board Options Exchange (CBOE) also filed for approval in
August to list bitcoin ETF options, a regulatory change that places these funds
in the same category as other commodity-based ETFs.
Market analysts anticipate that the
introduction of options for bitcoin ETFs will inject much-needed liquidity into
the cryptocurrency markets, potentially driving higher price movements and
reducing volatility. The ability to trade options on these funds could also
lead to increased market participation, boosting the profile of bitcoin as an
asset class.
