U.S. Bitcoin ETFs Bag Options Trading Approval From SEC

The U.S. Securities and Exchange Commission (SEC) has granted accelerated approval for a proposed rule change by NYSE American LLC, allowing the listing and trading of options on all spot Bitcoin ETFs. This marks the beginning of further adoption of these TC investment products, which could bring in further institutional influx.

SEC Approves Bitcoin ETF Options

The approval, detailed in Release No. 34-101386, permits NYSE American to list options on several major Bitcoin ETFs, including the Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, Franklin Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree Bitcoin Fund, Grayscale Bitcoin Trust, and more.

The proposal was initially filed by NYSE American on August 15, 2024, under Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4. Following a series of amendments, the third and final modification of the proposal, submitted on October 11, 2024, received SEC approval, allowing the Exchange to move forward with listing and trading options on these Bitcoin ETFs.

According to the latest notice, the approval enhances market efficiency and liquidity for Bitcoin-related products. By allowing options trading on Bitcoin ETFs, investors now have additional tools for hedging their positions and managing risk exposure.

These options are expected to provide more precise pricing and reduce volatility in the underlying funds, offering investors greater flexibility and market access. The move mirrors recent developments in the crypto market, where regulatory bodies are increasingly recognizing Bitcoin as a commodity.

NYSE American noted that this proposal is competitive with the Nasdaq ISE LLC, which recently gained approval for options trading on the iShares Bitcoin Trust. The SEC previously approved Nasdaq’s proposal to list options on the BlackRock’s iShares Bitcoin Trust in a similar move, emphasizing the growing interest and demand for Bitcoin-related financial products in the U.S. markets.

What’s Next for BTC ETFs?

The Bitcoin ETFs listed in this approval are structured as trusts that hold BTC, allowing investors to gain exposure to the cryptocurrency without directly purchasing or holding the crypto. Each fund’s shares represent fractional ownership of the underlying BTC, offering a more accessible and regulated way for investors to participate in the digital asset market.

Additionally, the approval of options trading could further solidify Bitcoin’s status as a legitimate asset class within traditional financial markets. This development marks another significant step in integrating crypto-based products into the mainstream financial ecosystem.

Bitcoin ETFs are seen as cost-effective alternatives for investors, and the ability to trade options on these products may attract more institutional and retail participation in the market. The SEC’s accelerated approval signals confidence in the ability of the financial markets to handle these products within a regulatory framework. This promotes transparency, investor protection, and market stability.

The approved rule change is now publicly available on NYSE American’s website and at the SEC’s Public Reference Room for further review and comments from stakeholders. Moreover, it’s worth noting that these ETFs have raked in a whopping $20.26 billion in inflows since inception in January 2024.

Also Read: Bitcoin ETF Inflows will Surpass Total Gold ETF Flows in Just 2 Years!