The U.S. Securities and Exchange Commission (SEC) has given the green light for BlackRock to introduce options trading for its spot Bitcoin ETF (exchange-traded fund).
BlackRock’s ETF Options Trading Launches 8 Months Post-Debut
On Friday, September 20, the SEC issued a notice approving options trading for the iShares Bitcoin Trust (IBIT) on Nasdaq. This comes approximately eight months after the SEC authorized the world’s largest asset manager and several other companies’ applications to launch spot Bitcoin ETFs.
Following the launch of the spot Bitcoin ETF in January, BlackRock promptly submitted a proposal to list and trade options on its offering. To clarify, options are financial instruments that provide holders the right to buy or sell an underlying asset at a specified price and time.
The regulator’s notice stated:
The Commission is issuing this notice to gather feedback on Amendment Nos. 4 and 5 from interested parties, while also approving the proposed rule change, as modified by Amendments 1, 4, and 5, on an accelerated schedule.
Source: SEC
Additionally, other asset management companies, such as Grayscale and Bitwise, are seeking to propose their own spot Bitcoin ETFs. Bloomberg analyst Eric Balchunas noted in a tweet on X that he anticipates these firms’ proposals will receive approval in the “near future.”
Balchunas further commented:
A significant victory for Bitcoin ETFs (as it will draw more liquidity, subsequently attracting larger participants). The timing here is a nice surprise but not unexpected, as James Seyffart and I predicted a 70% chance of approval by the end of May.
The Bloomberg analyst also emphasized that this latest permission for Nasdaq is merely one step in the approval process; the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC) still need to validate before trading can commence.
What Lies Ahead for Spot Bitcoin ETFs?
ETF specialist Nate Geraci also shared insights on the X platform regarding the SEC’s recent approval for options trading, elaborating on the forthcoming steps for the spot Bitcoin ETFs. The president of ETFStore pointed out the positive market performance of these crypto products, despite some constraints.
Remember, spot btc ETFs have attracted a net $18bil in 8 months…
With no options trading, no in-kind creation & redemption, & limited approval on major wirehouse platforms (plus no access on Vanguard).
Monumental success w/ one hand tied behind back.
— Nate Geraci (@NateGeraci) September 20, 2024
According to Geraci, the next significant milestone for Bitcoin exchange-traded funds should be the implementation of in-kind creation and redemption. This process allows large investors to create or redeem ETF shares by exchanging them for the underlying asset (in this case, Bitcoin).
Related Reading: SEC Vs. Coinbase On Hold: US Regulator Seeks 4-Month Delay in Fact Discovery
Implementing in-kind creation and redemption would enhance the efficiency of Bitcoin ETF trading, enabling investors to deposit BTC directly into the fund. This could lower the costs associated with investing in the spot Bitcoin ETFs, making them a more appealing investment option.
The price of Bitcoin on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image generated with Dall.E, chart sourced from TradingView
