SEC Approves NYSE and CBOE Bitcoin ETF Options

On Oct. 18, 2024, the U.S. Securities and Exchange Commission (SEC) approved the applications from the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE) to list options for spot Bitcoin exchange-traded funds (ETFs).

This decision affects 11 ETF providers on the NYSE, including Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin (BTC) ETF, Invesco Galaxy Bitcoin ETF, BlackRock’s iShares Bitcoin Trust ETF, and the Valkyrie Bitcoin Fund.

The approval also applies to the Chicago Board Options Exchange, which had previously filed an application in August 2024 to list similar options for Bitcoin ETF providers through a proposed rule change. The rule change allows Bitcoin ETF options to be categorized similarly to other commodity-based ETFs, except the Grayscale Bitcoin Mini Trust.

NYSE and CBOE to List Multiple Bitcoin ETF Options

The SEC’s approval permits the NYSE to list options for the Grayscale Bitcoin Trust, Grayscale Bitcoin Mini Trust, and the Bitwise Bitcoin ETF. On the CBOE side, the regulator approved options for the Fidelity Wise Origin Bitcoin Fund and the ARK21Shares Bitcoin ETF.

The decision follows a similar approval weeks earlier when Nasdaq received authorization to list options on BlackRock’s iShares Bitcoin Trust.

Options are derivatives that grant the right to buy or sell an underlying asset, such as Bitcoin ETFs, at a specific price before a set date. These products are expected to increase trading flexibility and allow for hedging strategies. The SEC stated that options on Bitcoin ETFs would allow for more liquidity and better price efficiency.

Market Reactions to the Approval

Jeff Park, an executive at Bitwise, described the approval as an upgrade compared to platforms like LedgerX and Deribit, citing their lack of central guarantors. He noted that introducing options trading could create situations where traders, particularly those in overleveraged short positions, are “short-squeezed” and may need to buy Bitcoin to cover their positions.

Tom Dunleavy, managing partner of MV Global, mentioned that adding options could help reduce Bitcoin’s volatility over time. He pointed out that these financial instruments provide mechanisms that might smooth out market fluctuations.

As stated in the regulator’s memos, the SEC’s approval was welcomed by market participants who believe that options trading will bring more transparency and efficiency to Bitcoin-related products. One crypto enthusiast said, “ This approval feels like a step in the direction of legitimacy for Bitcoin. Wonder if other countries will follow suit.”

This approval feels like a step in the direction of legitimacy for Bitcoin. Wonder if other countries will follow suit.

— ChrisTheDrummer (@drumcryptochris) October 18, 2024