CFTC Clears Path for Spot Bitcoin ETF Options, Final Approval From OCC Awaited

As the US CFTC clears the path for options trading on Bitcoin ETFs, Bloomberg senior ETF analyst Eric Balchunas shared bullish sentiment

The U.S. Commodities and Futures Trading Commission (CFTC) has cleared the path for options trading on Bitcoin exchange-traded funds (ETFs), paving the way for a new level of institutional crypto exposure.

The CFTC’s Division of Clearing and Risk (DCR) has given the green flag for the approval, according to an announcement on Wednesday. The regulator noted that its jurisdiction is not implicated by the listing of these shares on SEC-registered national security exchanges.

As a result, the clearing of these options under the Office of the Comptroller of the Currency (OCC) would be undertaken in its capacity as a registered clearing agency subject to the SEC oversight, the CFTC stated.

This approval will allow institutional investors and traders to utilize options contracts to either hedge their risk or gain greater exposure to Bitcoin price movements.

Options give the holder the right, but not the obligation, to buy or sell a specified asset at a predetermined price within a set timeframe. In this case, the underlying asset is Bitcoin, and the options will be traded on exchanges like the New York Stock Exchange (NYSE) and Cboe Global Markets (Cboe).

The final approval for spot Bitcoin ETF options now rests with the OCC, which is expected to clear the way for these products to start trading soon.

This move comes after the U.S. Securities and Exchange Commission (SEC) approved options trading of spot Bitcoin ETFs on the NYSE and Cboe platforms last month. Now, with the commodities regulator also giving the go-ahead, it marks a major regulatory milestone for Bitcoin enthusiasts.

These options are highly anticipated by institutional investors and traders, as they offer a versatile set of strategies to enhance their portfolio management.

With options, investors can bet on Bitcoin price movements by committing less capital compared to buying BTC directly or shares of the ETFs. For instance, they can buy call options to gain exposure to rising Bitcoin prices or put options to hedge against potential losses.

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