Summary
- Applications to list options on Bitcoin ETFs get attention from US regulators.
- BTC ETF options could start trading in the US before 2025.
According to the latest reports, applications to list options on Bitcoin ETFs are being placed in the spotlight in the US. This means that we could see BTC ETFs starting trading in the US before the year’s end.
Options are contracts granting the right to buy or sell (call/put) an underlying asset at a certain price. Hedging instruments are mostly popular among speculators.
The crypto instruments are critical for institutional adoption, especially with the volatile crypto ETFs and they could become a significant market.
Bitcoin ETF Options Get Regulators’ Attention
Back in January 2024, three US equities exchanges that list Bitcoin ETFs, the New York Stock Exchange, Cboe, and Nasdaq asked the SEC if they could also list options on the funds.
The SEC remained silent and was asked in May by the crypto industry watchdog Better Markets to proceed cautiously because the inevitable marketing of the options to retail investors could “cause harm.” The example of the GameStop 2021 frenzy was used to highlight the idea.
As a result, the SEC asked for more time to make a decision. However, on August 8, Cboe filed an amended application to the SEC, and this time, it was three times longer compared to the first one, addressing issues such as market manipulation and position limits in more detail.
Bloomberg’s James Seyffart said that this means there’s some movement on Bitcoin ETF options and the SEC probably offered some kind of feedback.
UPDATE: There’s definitely some movement on Bitcoin ETF options.
CBOE just withdrew their application for options on spot #Bitcoin ETFs. Which sounds like a bad thing at first… But at the same time they just re-filed a brand new and updated application https://t.co/L8qYTDXzPb pic.twitter.com/8BQG6JMROn
— James Seyffart (@JSeyff) August 8, 2024
Bloomberg predicts that the options could go live sometime in Q4 2024, most likely in November. It’s possible that Ethereum ETFs will also follow suit, as on August 6, Nasdaq asked the SEC for permission to list options on BlackRock’s ETHA.
Futures Bitcoin ETFs
At the moment, US investors can trade options on an inferior class of Bitcoin ETFs, tracking BTC’s price performance using futures.
Futures ETFs underperform spot market ones due to the cost of rolling over monthly futures contracts that drags down overall returns.
K33 Research crypto researcher says that the most popular Bitcoin futures ETF – ProShares’ Bitcoin Strategy ETF (BITO) underperformed spot by 2.6% between January and May.
The combined net asset value of all BTC futures ETFs is about $4.3 billion, which means that the market for options on Bitcoin ETFs is almost as large as the market for BTC ETFs.
Spot BTC ETFs have a larger asset value of more than $58 billion as of August 9. If the options of Bitcoin futures ETFs can be seen as a guide, a market of about $45 billion is waiting.