U.S. lawmakers are reportedly advocating for the Securities and Exchange Commission (SEC) to greenlight options trading on Bitcoin exchange-traded products (ETPs). According to Axios, Representatives Mike Flood and Wiley Nickel recently penned a letter to committee chairman Gary Gensler, pressing the SEC to cease what they perceive as discrimination against cryptocurrency funds.
In their bipartisan letter, Flood and Nickel urged the SEC to promptly approve options trading for spot Bitcoin ETPs or provide clarity on why the Commission is handling currently traded Bitcoin futures ETF options differently from spot Bitcoin ETP options. Options, financial instruments granting the buyer the right (but not the obligation) to buy or sell an asset, such as Bitcoin, at a predetermined price until a specific date, are commonly utilized to hedge against price fluctuations, manage potential losses, and potentially generate additional income through strategic maneuvers.
The lawmakers stressed that SEC approval of Bitcoin options trading is paramount for investors seeking protection from market volatility. The SEC has faced delays in deciding on applications submitted in January by major financial institutions such as the New York Stock Exchange, Nasdaq, and Cboe Global Markets.
Nasdaq's application aims to list and trade options on BlackRock’s iShares Bitcoin Trust, while CBOE plans to introduce options trading on various BTC funds. Similarly, the NYSE seeks to offer options trading on the Bitwise Bitcoin ETF, the Grayscale Bitcoin Trust, and other trusts holding Bitcoin.
In a recent development, the SEC initiated a fresh round of consultations on proposed rule changes to permit Bitcoin funds to participate in options trading. Documents filed on April 24 indicate that the SEC is exploring the potential impact of Bitcoin options on market stability, particularly amid high volatility. The agency is also evaluating the adequacy of current market surveillance and enforcement practices to manage the complexities associated with Bitcoin options. Interested parties have been invited to submit preliminary comments by May 15, with rebuttals accepted until May 29.
