The Securities and Exchange Commission (SEC) has granted approval for two major exchanges to list and trade options on multiple Bitcoin exchange-traded funds (ETFs), broadening the array of cryptocurrency investment products accessible to U.S. investors.
On Friday, SEC filings revealed that the Cboe Exchange received authorization to offer options on the Fidelity Wise Origin Bitcoin Fund (FBTC) and the ARK 21Shares Bitcoin ETF (ARKB). Meanwhile, NYSE American was given the green light to list options on the Grayscale Bitcoin Trust ETF (GBTC), Grayscale Bitcoin Mini Trust (BTC), and Bitwise Bitcoin ETF (BITB). This approval follows the SEC’s earlier endorsement of spot Bitcoin ETF trading, which began in January, and the recent allowance for options trading on BlackRock’s iShares Bitcoin Trust (IBIT), the largest spot Bitcoin ETF.
Both Cboe and NYSE American will enforce conservative position limits of 25,000 contracts on the same side of the market for each Bitcoin ETF option, as indicated in their filings. This limit is lower than that for many other ETF options, reflecting a cautious stance towards these new financial products.
The introduction of options on Bitcoin ETFs offers investors enhanced tools to manage risk and potentially boost returns within their cryptocurrency portfolios. Options enable traders to speculate on future price movements or hedge existing positions without holding the underlying assets directly.
In their filings, Cboe and NYSE American noted that existing surveillance measures would remain in place for the new Bitcoin ETF options. Both exchanges are members of the Intermarket Surveillance Group, which facilitates information sharing to help identify potential market manipulation.
The filings also included data showcasing the liquidity and trading volume of the underlying Bitcoin ETFs. NYSE American reported that, as of August 30, GBTC had over 284 million shares outstanding with a market capitalization exceeding $13.4 billion, while BTC had nearly 367 million shares outstanding and BITB had about 68.7 million shares outstanding. Cboe’s filing indicated that FBTC had over 201 million shares outstanding as of August 7, with a six-month trading volume exceeding 1.1 billion shares. ARKB had approximately 45.5 million shares outstanding and a six-month trading volume of over 297 million shares.
Both exchanges emphasized that their rules requiring appropriate customer disclosures and suitability standards would apply to the new options products, aiming to protect retail investors who may be less familiar with the complexities of options trading.
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