By
Chimamanda U. Martha
April 26th, 2024
The SEC has pushed making a decision on an application from the Cboe seeking to trade Bitcoin ETF Options. The agency will decide by April.
The United States Securities and Exchange Commission (SEC) has postponed making a decision on Cboe’s proposal to publicly list and trade options on Bitcoin exchange-traded funds (ETFs). Although the Cboe sent its application to the SEC in January, the Commission has decided to delay a response until April.
Cboe Awaits SEC and OCC Approval to Trade Bitcoin ETF Options
In its application, the Cboe stated the need for SEC approval because of the underlying asset here. The application noted:
“Cboe Options’ current rules generally permit it to list options on an ETP three days after shares of the ETP begin trading on a national securities exchange. However, those rules do not apply to ETPs holding commodities such as Bitcoin.”
The Cboe also notes that the Options Clearing Corporation (OCC) might need approvals from the SEC and the Commodity Futures Trading Commission (CFTC) before issuing and clearing these options. The options exchange platform says it intends to list options after all necessary regulatory approvals are received.
The SEC has also received other applications for proposed rule changes from the New York Stock Exchange (NYSE) and Nasdaq. While the NYSE hopes to list “commodity-based trust shares,” the Nasdaq’s application is specific to BlackRock’s iShares Bitcoin Trust ETF. Unfortunately, the SEC has postponed a decision on all three proposals until April.
The BlackRock IBIT ETF has performed very well since the SEC’s approval of the spot Bitcoin products. Last Tuesday, IBIT broke its own record, recording more than $1.3 billion in daily trading volume, according to an X post from Bloomberg Senior ETF analyst Eric Balchunas. IBIT has recorded the highest net inflow since spot BTC ETFs began trading. On Tuesday, IBIT recorded $788.3 million in net inflows, the largest daily amount recorded for active ETFs. Interestingly, the second and third largest are $612.1 million on the 28th of February and $603.9 million the day after, both by IBIT.
All of the excitement successfully pushed Bitcoin to a new all-time high (ATH). Last Tuesday, the price of the world’s largest asset hit $69,170, setting a new record. Unfortunately, Bitcoin fell shortly after, crashing more than 10% to levels below $60,000. However, as of this writing, BTC is trading above $67,000, slowly returning to the ATH.
Spot Ether ETFs
As the SEC reviews proposals for Bitcoin ETF options, prospective issuers also seek approval for spot Ether (ETH) ETFs. On Monday, the SEC again delayed applications from both BlackRock and Fidelity. The Commission is now seeking public comments and wants more time to decide.
Last month, major American Exchange Coinbase asked the SEC to approve spot ETH ETFs. The exchange argued that its surveillance-sharing agreement with the Chicago Mercantile Exchange Inc (CME) helps to allay some of the agency’s fears. Nonetheless, there are concerns that approval of spot ETH ETFs could worsen concentration risks.
According to an S&P Global Ratings report, ETFs incorporating staking could become so large that they change validator concentrations on the Ethereum network. The report also states that issuers would likely choose to stake with an institutional custodian like Coinbase, which would worsen concentration.
