US lawmakers urge SEC to approve Bitcoin options trading

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United States lawmakers are reportedly pressing the Securities and Exchange Commission to approve options trading on Bitcoin exchange-traded products (ETPs). 

According to a report by Axios, Representatives Mike Flood and Wiley Nickel recently wrote a letter to the Commission’s chair, Gary Gensler, urging the SEC to stop discriminating against crypto funds.

“We urge you, without delay, to approve options on spot Bitcoin ETPs or to provide an explanation for the Commission’s difference in treatment between options for Bitcoin futures ETFs — which are currently trading — and options for the spot Bitcoin ETPs,” reads the bipartisan letter.

Options are financial instruments that give the buyer the right, but not the obligation, to buy or sell an asset — in this case, Bitcoin — at a fixed price by a certain date. The instrument is commonly used for hedging against price movements, limiting potential losses and enabling investors to generate additional income through strategies.

The approval, according to Flood and Nickel, is crucial for the investors that the SEC “seeks to protect.”

The agency has been holding off on decisions on applications from the New York Stock Exchange, Nasdaq and Cboe Global Markets submitted in January.

Nasdaq filed to list and trade options on BlackRock’s iShares Bitcoin Trust, while Cboe intends to offer options trading on various BTC funds. Similarly, the NYSE intends to trade options on Bitwise Bitcoin ETF (BITB), Grayscale Bitcoin Trusts (GBTC) and any other trusts holding Bitcoin.

Recently, the Commission initiated a new consultation round on the proposed rule change to permit options trading on Bitcoin funds.

SEC requests public feedback on Bitcoin options trading. Source: SEC

According to an April 24 filing, the SEC seeks to explore how Bitcoin options might impact market stability, particularly in volatile conditions. The agency is also examining whether current market surveillance and enforcement practices are sufficient for managing the complexities of Bitcoin options. Participants are invited to submit initial comments by May 15, 2024, and rebuttal comments by May 29, 2024.

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