The SEC has given the nod to BlackRock to start options trading for its spot Bitcoin ETF.
BlackRock Introduces Options Trading for its ETF After 8 Months
On September 20, the SEC published an approval notice for options trading on the iShares Bitcoin Trust (IBIT) on Nasdaq, approximately eight months after permitting BlackRock and other firms to create spot Bitcoin ETFs.
BlackRock proposed the options trading shortly after the ETF’s launch in January. Options are financial derivatives that allow investors the right to buy or sell an asset at a specified price before a certain date.
The SEC’s announcement stated:
We are issuing this notice to gather input on Amendment Nos. 4 and 5 from stakeholders and are approving the proposed rule change on an expedited timeline.
It’s important to note that other firms like Grayscale and Bitwise are also pursuing their own spot Bitcoin ETFs. Bloomberg analyst Eric Balchunas mentioned in a post on X that he anticipates their proposals will be approved soon.
Balchunas remarked:
This is a big win for Bitcoin ETFs as it will enhance liquidity and attract larger investors. The timing is favorable but not unexpected, given our 70% chance of approval by end of May.
He pointed out that while the approval from Nasdaq is a significant step, it still requires validation from the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC) before trading can commence.
Future Prospects for Spot Bitcoin ETFs
ETF expert Nate Geraci also shared his thoughts on the SEC’s latest approval for options trading, outlining the next steps for spot Bitcoin ETFs. He noted that these products have performed well under challenging circumstances.
In just eight months, spot Bitcoin ETFs have gathered a net $18 billion…
Even without options trading, direct creation and redemption, and limited availability on major platforms (with no access on Vanguard).
This is a tremendous success despite numerous constraints.
— Nate Geraci (@NateGeraci) September 20, 2024
Geraci emphasized that implementing in-kind creation and redemption should be the next major goal for Bitcoin ETFs. This refers to large investors being able to create or redeem ETF shares in exchange for the physical asset, Bitcoin.
This move would enhance trading efficiency for Bitcoin ETFs, enabling investors to deposit Bitcoin directly into the fund, thus lowering investment costs and making these ETFs more appealing.
