SEC Postpones Decision on NYSE Proposal for Spot BTC ETF Options Trading

US SEC has postponed its decision on the New York Stock Exchange’s proposal to allow options trading on spot Bitcoin ETFs.
The new deadline for the SEC to either delay further, approve, or deny the proposal is now set for May 29.
The SEC revealed that more time is needed to thoroughly consider the proposed rule change.

The United States Securities and Exchange Commission (SEC) has postponed its decision on the New York Stock Exchange’s proposal to allow options trading on spot Bitcoin exchange-traded funds (ETFs). This postponement directly impacts entities such as Grayscale Bitcoin Trust and Bitwise Bitcoin ETF, which are both listed on the NYSE and hold Bitcoin.

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Details of the SEC’s Decision Delay

The decision was originally scheduled for March 10, 2024, but was postponed to April 24. However, in a new filing dated April 8, 2024, the SEC revealed that more time is needed to thoroughly consider the proposed rule change. The new deadline for the SEC to either delay further, approve, or deny the proposal is now set for May 29.

The proposal for this rule change was initially submitted to the SEC in February 2024 and was subsequently made available for public feedback. If approved, this change would enable trading options on specific Bitcoin ETFs by amending Rule 915, potentially introducing new avenues for speculation, hedging, and leveraging of Bitcoin’s price movements.

This delay mirrors a similar decision made for Nasdaq’s request to trade options on BlackRock’s iShares Bitcoin Trust (IBIT) last month. Furthermore, the SEC also deferred its response to requests from CBOE and the Miami International Securities Exchange to offer options on spot Bitcoin ETFs in a filing dated March 6.

Michael Sonnenshein, CEO of Grayscale, has actively advocated for the approval of options trading on spot Bitcoin ETFs. In a letter dated February 28, Sonnenshein argued that since the SEC had already approved futures and spot ETFs on the NYSE, it made logical sense to extend options trading to spot Bitcoin ETFs as well. He expressed optimism that such a move could foster a “robust and healthy market.”

Market Trends and International Interest

The SEC is also currently deliberating on seven spot Ethereum ETFs, with a decision expected by May 23, coinciding with the deadline for the VanEck ETF application. These developments underscore the growing interest and regulatory complexities surrounding cryptocurrency-related financial products in global markets.

Notably, the interest in spot Bitcoin ETFs extends beyond U.S. borders. Chinese mainland-based equity funds have recently applied to introduce spot Bitcoin ETFs through their Hong Kong subsidiaries. Harvest Fund Management’s Hong Kong branch, for instance, has been awaiting approval from the Securities & Futures Commission (SFC) of Hong Kong since January, underscoring the global significance of cryptocurrency ETFs.

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