The United States Securities and Exchange Commission (SEC) gave Nasdaq the go-ahead to list and trade shares of options for BlackRock’s spot Bitcoin exchange-traded fund (ETF).
Details of BlackRock’s Bitcoin ETF Options Approval
On September 20, via a notice, the United States Securities and Exchange Commission (SEC) approved options trading for iShares Bitcoin Trust under the Nasdaq exchange. According to Nasdaq, they’d allow trading for options on the Bitcoin ETF “in the same manner” as other ETF options, subject to the same rules.
Options on IBIT will be physically settled with American-style exercise,” said the SEC notice. “The Exchange stated that options on IBIT will be subject to the Exchange’s respective initial and continued listing standards. The Exchange’s initial listing standards require, among other things, that the security underlying a listed option be ‘characterized by a substantial number of outstanding shares that are widely held and actively traded.’”
According to the SEC, this approval would allow investors to secure their positions on Bitcoin by leveraging the options market to mitigate the inherent volatility of BTC.
They also mentioned there would be ample surveillance procedures put in place to watch potential market manipulation and ensure orderly trading.
The SEC indicated iShares Bitcoin Trust as the most liquid spot Bitcoin ETF, which aids in meeting the prerequisites for trading options.
“IBIT is the most liquid spot Bitcoin ETF and the 11th most liquid ETF in the U.S. by average volume (34,825,921 shares) and 18th largest by average notional ($1,246,060,738),” stated the SEC. “As of May 22, 2023, IBIT had approximately 193,956 shareholders.”
Despite these, it is not certain the decisions of the commission in the path of approving the listing and trading of options for spot BTC ETFs with other US exchanges. According to Bloomberg ETF analyst Eric Balchunas on X, he speculated that more offerings would be “approved in short order.”
“This is just one stage of approval, the OCC [Office of the Comptroller of the Currency] and CFTC [Commodity Futures Trading Commission] have to approve as well before they officially list,” said Balchunas. “The other two don’t have a ‘clock’ so not sure when they’ll be approved. A big step tho nonetheless that the SEC came around.”
Final Thoughts
The SEC’s approval is only clearing the road of expansion in terms of regulating financial products based on Bitcoin, hence increasing the volume of its full integration into the universal financial system. This opportunity to trade options also opens wider doors for investors looking to explore the Bitcoin market.
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