SEC Postpones Decision on Opening Options Trading on Spot Bitcoin ETFs

-->The SEC must decide whether to approve derivatives trading on spot Bitcoin ETFs on April 24. The U.S. Securities and Exchange Commission has postponed its decision on whether to approve options trading on spot Bitcoin exchange-traded funds (ETFs). More option options open the door for more capital in these investment products.

SEC postpones decision

The SEC has extended its deadline to respond to the Cboe Exchange and the Miami International Securities Exchange from offering options on Bitcoin ETFs. It is also postponing its decision on Nasdaq’s bid to offer options on BlackRock’s iShares Bitcoin Trust (IBIT). The watchdog says it needs more time. The delay gives the agency another 45 days to reach a final decision. That amounts to a deadline of April 24.

Options are derivative products that give traders leverage and allow them to ‘speculate’ in the market.

If a trader thinks the bitcoin price will rise, they buy a “call option”. With that, they agree to buy 1 BTC at today’s price a month from now. In the best case, they pay less if the price is a lot higher the following month.

Because if bitcoin rises, the trader can exercise the option to buy bitcoin at a lower price and sell it for a profit.

Grayscale CEO Michael Sonnenshein last month called for the approval of options for Bitcoin ETFs. He claims they “contribute to a robust and healthy market.” VettaFi analyst Dave Nadig also says that once Bitcoin ETF options markets go live, “you’re going to see all kinds of hedge funds.” Nadig says that those who “don’t directly speculate on crypto in the crypto ecosystem now have something to play with.”

The SEC approves ten spot Bitcoin ETFs to begin trading on January 11, the last day it had to decide on approval after months of delays. Traders have filled the ETFs with cash. Nine of the new ETFs had $25.87 billion in assets under management, according to data from BitMEX Research.

Ether ETF’s

The SEC must now decide on seven spot Ether ETFs. Analysts predict the agency will wait until May 23 to approve them all on VanEck’s application deadline. Multiple leveraged Bitcoin ETFs are before the SEC, with asset manager Direxion filing in January for five inverse and long spot Bitcoin ETFs in addition to ProShares’ five leveraged Bitcoin funds and REX Shares’ six leveraged ETFs.