The Securities and Exchange Commission (SEC), a Government Commission that is responsible for overseeing financial activities in the US, is reported to be considering an approval of an options contract that is based on the Spot Bitcoin ETF just one month after the request was submitted by the New York Stock Exchange (NYSE).
This is considered a huge news considering SEC is always to be thought as cautious when approaching assets relating to crypto, in the sense that SEC usually does a long due diligence and screening process that usually takes a long time.
SEC Considering Approval of Spot Bitcoin ETF backed Options Contract
SEC is considering an approval of an options contract that is backed by the Spot Bitcoin ETF after NYSE proposed a rule change to allow listings of the assets.
The proposed rule specifically requested that the SEC would allow the listings of an options contract backed by the Bitwise Bitcoin ETF (BITC) and The Grayscale Bitcoin Trust (GBTC).
NYSE also proposed that in the future, more ETF issuers can list their own options contract backed by their Bitcoin Spot ETF which might prompt big companies such as BlackRock and Fidelity to get involved in the process.
The proposal was listed on January 19th, 2024, where the NYSE proposed a rule change to amend rule 5.3-O to permit the listings of those options contracts.
It was officially published on the SEC site and confirmed later on February 23rd, 2024 with an official letter published by the NYSE which contains the proposal that was submitted by the NYSE to the SEC.
To clarify, the asset that is being talked about is not a Bitcoin Options ETF like the already publicly traded Bitcoin Futures ETF where the ETF is backed by the Bitcoin Futures contract.
So in this case, the NYSE is not submitting a proposal to allow listings of an ETF backed by a Bitcoin options contract, but is submitting a proposal allowing listings of an options contract that is backed by the Spot Bitcoin ETF.
Also there will be different options contracts for different Spot Bitcoin ETF so it’s not one options contract that is backed by an ETF that represents all the Spot Bitcoin ETFs in the market.
This means that the price of that contract mimics the movement of the related Spot Bitcoin ETF, for example, one options contract will only mimic the price of GBTC that is now a Spot Bitcoin ETF.
This is a huge accomplishment because in the span of less than three months, an institution has submitted a proposal to change a rule to the SEC which usually will take months to be acknowledged based on previous crypto related rules.
This might be a sign that the US is warming up to the idea of adopting crypto legally so that its citizens can invest or utilize crypto in their everyday lives.
It is predicted that the options contract will be approved by September 2024 at the latest according to Bloomberg Analyst, James Seyffart.
Spot Bitcoin ETF Volumes Staying Strong
The proposed idea of a Spot Bitcoin ETF backed options contract is evident that investors, especially institutional investors are warming up to the idea of diversifying their portfolio to more riskier innovative assets.
The Spot Bitcoin ETF itself has been the number one support for that statement because just one month after the launch of most ETFs the transaction volume has been relatively stable.
The current Spot Bitcoin ETF volume, according to The Block, currently still stands at an average of $2 Billion a day which are mostly supported by institutional investors.
This is impressive considering most ETFs would take months or even years to achieve this kind of volume.
Steadily rising volume can be evidence that the US is warming up towards crypto and might see a drastic change towards regulations especially going into the predicted 2025 bull market.
However, the US still has a lot of ground to cover, considering there are no clear regulations yet regarding crypto, compared to most countries in Asia or South America.
At this pace, it might be that the US will get their title back as the leading country of crypto, but only if regulators are willing to open up and discuss more about clearer regulations.
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