SEC Approves Bitcoin Options ETF Listings

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

Options trading will now be available for the 11 approved ETF providers on the NYSE, which include Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, Franklin Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree’s Bitcoin Fund, Grayscale’s Bitcoin Trust, Grayscale Bitcoin Mini Trust, Bitwise Bitcoin ETF, BlackRock's iShares Bitcoin Trust ETF, and the Valkyrie Bitcoin Fund.

The Chicago Board Options Exchange also submitted an application in August 2024 to list options for spot Bitcoin ETF providers via a proposed rule change.

This regulatory update places Bitcoin ETF options in the same category as other commodity-based ETFs, which the SEC had already approved for listing on the CBOE, except for Grayscale’s Bitcoin Mini Trust.

Investors anticipate that offering options for Bitcoin ETFs will bring much-needed liquidity to the Bitcoin markets, potentially driving higher price movements.

Bitwise executive Jeff Park noted that the approval of options for these ETF products marked a significant improvement over platforms like LedgerX and Deribit, which lack central guarantors.

Park also suggested that the introduction of options could lead to situations where heavily overleveraged short traders face a "short squeeze" and are forced to buy Bitcoin to cover their positions:

"Saying you can't short squeeze a trillion-dollar asset is like saying you can't make an elephant dance. Sure, it's huge, but if you tie enough ropes to its legs and pull hard enough, even the biggest creature can be moved in ways it doesn't want."

Tom Dunleavy, managing partner of investment firm MV Global, mentioned that the introduction of options could also help reduce Bitcoin's high volatility and stabilize the markets over time.

Sources:

https://cointelegraph.com/news/sec-approves-new-york-stock-exchange-listing-bitcoin-options-etf

https://x.com/dgt10011/status/1847385905663004837?s=46&t=IG381NzNwJcdA_FEYqKdSg

https://www.sec.gov/files/rules/sro/nyseamer/2024/34-101386.pdf