Bitcoin spot ETF options coming? Grayscale again urges SEC to pass as soon as possible

In the field of Bitcoin ETFs, Grayscale GBTC, the largest asset management company, recently stated that it has provided a comment letter to the U.S. Securities and Exchange Commission (SEC) in support of the NYSE American ) and the New York Stock Exchange (NYSE).

The proposal aims to open commodity-based exchange-traded funds (ETPs), such as Bitcoin spot ETFs such as GBTC, to options trading.

Grayscale’s main argument is that with the opening of trading in Bitcoin futures options, investors now have the opportunity to invest in products that hold derivatives of the asset, such as Bitcoin futures. Therefore, they believe that investments in products that directly hold the asset itself, such as GBTC, should be similarly embraced.

SEC differs in approving options trading “based on commodity products”

pointed out in the statement that the SEC will allow Bitcoin futures options to be used in the first batch of Bitcoin futures starting in October 2021. The ETF trades the day after it is approved and listed. This is because options trading based on products registered under the Securities Act of 1940, such as Bitcoin futures ETFs, are already widely accepted. The SEC’s approval of options trading on Bitcoin futures ETFs shows the regulator’s gradual openness to the digital asset market and also provides investors with more diversified trading options. This move is expected to further promote the development and growth of the digital asset market, bringing more opportunities and potential benefits to investors and market participants. The SEC’s decision also reflects the growing emphasis on digital assets. However, physical commodity products like GBTC are registered under the Securities Act passed in 1933 and therefore must be subject to separate review and approval by the SEC. . This has created inconsistencies in SEC approvals when dealing with options trading for commodity-based funds.

Grayscale recommends that the SEC update this outdated approval methodology to allow approval of ETP options on a spot commodity basis with the same structure as already approved exchange-traded products (ETPs) and allow national securities exchanges to amend their rules to Support the listing and trading of such options, which may include GBTC options.

Importance and Impact

Grayscale further used the results of the court ruling as support, pointing out that in its lawsuit with the SEC, the Washington court held that Bitcoin futures and Bitcoin spot “relevant regulatory factors” "substantially similar", and the court believed that the SEC's behavior in rejecting its application was arbitrary and capricious, and therefore overturned the SEC's rejection order in June 2022.

Grayscale stated that although the Bitcoin spot ETF market is still in its infancy, it has attracted more investors, provided smaller bid-ask spreads, and has far greater liquidity than the Bitcoin futures ETF market. .

As for what benefits opening options trading based on Bitcoin spot ETFs can bring to the market? Grayscale pointed out the following points:
Promote the price changes of Bitcoin spot ETF
Provide investors with more choices and help invest Investors should respond to market changes or achieve investment objectives (such as income generation, hedging or reducing volatility)
Increase investor interest in Bitcoin spot ETFs
Improve market efficiency
End the product-by-product approval approach that the SEC has relied on for 15 years, which is time-consuming and expensive.

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