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The U.S. Securities and Exchange Commission delayed its decision on a rule change that would allow exchanges to list and trade options on spot bitcoin ETFs, the agency said in a filing earlier this week.
The SEC said that it would hold off weighing in about the listing of these options on the CBOE Exchange and the Miami International Securities Exchange until late April. The delay relates to multiple spot bitcoin ETFs, which are based primarily on the price of the largest cryptocurrency by market value.
“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change,” the SEC filing said.
The exchanges first applied to list options on bitcoin funds in January around the time that the SEC gave its seal of approval to 10 new spot bitcoin products. Since then, investor interest in cryptocurrency has skyrocketed with the spot bitcoin ETFs netting more than $9.3 billion in inflows as of the closing of equity markets on March 7, despite more than $10 billion in outflows from the Grayscale Bitcoin Trust (GBTC). That fund is a conversion from a trust so differs from the other spot bitcoin products.
BlackRock’s iShares Bitcoin ETF (IBIT) last week became the fastest ETF in history to surpass $10 billion in assets under management. Bitcoin hit a record high above $69,000 earlier this week, according to crypto data platform CoinMarketCap, breaking its previous high mark set in November 2021.
Analysts and financial advisors see using call and put options on bitcoin ETFs as a key strategy to address crypto’s inherent volatility. Using put and call options hedge risk.
Options on ETFs work the same way that options on stocks do, since ETFs can be traded throughout the day. Investors use options by entering an agreement in which they buy or sell the asset at a specified price over a certain period. Options on bitcoin funds would apply an increasingly popular strategy to the successful spot bitcoin ETFs.
