Spot Bitcoin ETF options should receive regulatory approval, says Grayscale CEO.
Grayscale’s CEO, Michael Sonnenshein, has urged regulators to approve spot Bitcoin ETF options. In a statement on February 5th, Sonnenshein emphasized the advantages of exchange-traded options for investors, highlighting their role in price discovery and their potential to help investors effectively manage market conditions and achieve specific goals, such as generating income.
Exchange-traded options are standardized contracts that allow the buying or selling of a financial asset at a predetermined price within a specified timeframe. These options provide flexibility, enabling traders to speculate on or hedge against future price movements in stocks, bonds, or the overall market without the obligation to buy or sell the underlying asset.
U.S. authorities, including the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), regulate these options, with the Options Clearing Corporation (OCC) providing transaction guarantees.
Sonnenshein referenced the SEC’s approval of the first Bitcoin futures ETF in October 2021, which resulted in the trading of listed options for the ETF the following day, benefiting from automatic effectiveness based on existing regulations. However, he pointed out that commodity-based ETFs like spot Bitcoin ETFs do not receive this streamlined process and instead undergo a more extended review period, similar to the 19b-4 process applicable to the ETFs themselves.
The CEO of Grayscale argued for equality between similar products, noting recent filings by the New York Stock Exchange (NYSE) and other exchanges to amend listing standards, which would include listed options for commodity-based ETFs. He emphasized that these amendments would also cover spot Bitcoin ETFs, aiming for fair treatment across financial products.
The SEC is currently reviewing applications for listed options on spot Bitcoin ETFs, with comments open for BlackRock’s proposed options with Cboe. Bloomberg ETF analyst Eric Balchunas suggested that the SEC’s decision could be made as early as February 15th or extended until September 2024.
Sonnenshein’s advocacy for fair treatment of the crypto asset class and spot Bitcoin ETFs aligns with a broader push for regulatory clarity and equal opportunities in the financial markets. Grayscale’s GBTC ETF, which transitioned from an existing fund, held $20.5 billion in assets under management as of February 2nd, making it the largest spot Bitcoin ETF at the time, despite experiencing significant outflows.
