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Public Input Sought by SEC on Bitwise, Grayscale Bitcoin ETF Options

The Securities and Exchange Commission (SEC) of the United States is currently inviting public feedback on a proposed amendment that would enable the introduction and trading of options for Bitcoin (BTC) exchange-traded funds (ETFs).

According to a notice issued on February 23 by the New York Stock Exchange (NYSE), there’s a request for a modification to the rules to allow options trading for the Bitwise Bitcoin ETF (BITC), the Grayscale Bitcoin Trust (GBTC), as well as “any trust holding Bitcoin.”

Pending approval of the rule alteration, these options would be traded “similarly to options on other ETFs (including commodities ETFs) on the Exchange,” as outlined in the notice.

This entails adherence to regulations governing various aspects such as listing criteria, expiration dates, strike prices, minimum price adjustments, position and exercise limits, margin requirements, and protocols for customer accounts and trading halts.

BlackRock Seeks Options Approval for Bitcoin ETFs

BlackRock, a prominent asset management firm, is pursuing approval for a comparable policy adjustment.

The firm has submitted applications for rule modifications to facilitate the listing of options on its Bitcoin ETF in partnership with the Chicago Board Options Exchange (CBOE).

According to Bloomberg ETF analyst James Seyffart, the SEC may reach a decision on these proposals as soon as September 2024.

Options serve as financial derivative products frequently utilized for portfolio hedging, income generation, or speculative trading.

Buyers of options are granted the right, yet not the obligation, to purchase or sell a specific asset at a predetermined price on a specified date.

In the realm of Bitcoin ETFs, options would empower investors to hedge against or speculate on the price fluctuations of a BTC ETF, rather than engaging directly in Bitcoin trading.

The SEC has previously greenlit commodity ETFs held by trusts, including the SPDR Gold Trust, iShares COMEX Gold Trust, iShares Silver Trust, and ETFS Gold Trust.

Assuring the SEC, the NYSE has affirmed that its existing surveillance measures are capable of overseeing options trading on Bitcoin ETFs across all sessions and detecting any breaches of exchange regulations. Moreover, the exchange has pledged to implement additional surveillance protocols as necessary to ensure effective monitoring of such trading activities.

Spot ETFs Continue to Attract Investments

Institutional investors in the US are increasingly turning to spot Bitcoin ETFs to gain exposure to the thriving crypto sector.

Just this week, the daily trading volume of spot Bitcoin ETFs soared to nearly $2 billion, marking the highest level since the initial trading day on January 11.

Recent reports indicate a significant uptick in inflows for spot Bitcoin ETFs, with approximately $2.3 billion pouring in last week, nearly doubling the previous week’s inflow of $1.2 billion.

Notably, there has been a noticeable shift in investment from Gold ETFs, possibly influenced by the rising demand for US equities among global investors.

As of February 14, the top 14 Gold ETFs have witnessed outflows totaling $2.4 billion since the beginning of 2024.

Among these Gold ETFs, only three have seen marginal inflows this year: VanEck Merk Gold Shares, FT Vest Gold Strategy Target Income ETF, and Proshares UltraShort Gold.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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