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Friday, April 12, 2024

Grayscale CEO Calls for Approval of Listed Options for Bitcoin ETFs

In the dynamic arena of cryptocurrency, Grayscale CEO Michael Sonnenshein is making waves with a groundbreaking proposition. 

In a recent public post, Sonnenshein urged U.S. regulators to consider exchange-listed options for spot Bitcoin exchange-traded funds (ETFs). 

This move, he contends, leads to enhanced price discovery and empowers investors to navigate market conditions more efficiently and meet their desired outcomes more effectively.

Grayscale CEO
Credit: DepositPhotos

A Call for Consistency & Fairness

Exchange-traded options represent a contract stipulating the right, without obligation, to buy or sell fixed quantities of an asset at predetermined prices before specific dates. Such options can offer traders the invaluable opportunity to forecast the impending movement of various stocks, bonds, or entire markets.

When the Securities and Exchange Commission (SEC) approved the first Bitcoin futures ETF in October 2021, its listed options were promptly available due to their automatic effectiveness. This rapid response was feasible under the umbrella of existing rules.

Contrarily, commodity-based ETFs, such as those for spot Bitcoin, didn’t enjoy such swift transition. They are often subject to an exhaustive review process mirroring the 19b-4 process required for spot Bitcoin ETF themselves.

bitcoin-etf
Credit: DepositPhotos

In his informative post, Sonnenshein emphasizes, “The same way Bitcoin futures ETFs and spot Bitcoin ETFs should (and now are) treated the same, so too should listed options on these products.”

Similarly, esteemed financial institutions such as the New York Stock Exchange have recently filed Forms 19b-4 to adjust listing standards, which would allow for listed options on commodity-based ETFs, including spot Bitcoin ETFs.

The Role of Regulators

Regulators hold significant influence over these decisions, with bodies such as the Chicago Board Options Exchange (Cboe) and the United States Commodity Futures Trading Commission (CFTC) playing key roles.

The SEC currently has applications for listed options on spot Bitcoin ETFs under review, and has solicited comments for BlackRock’s proposed options with Cboe. 

Analyst experts, like Bloomberg’s Eric Balchunas, speculate that the SEC could reach a conclusion by February 15 at the earliest, or September 2024 at the latest.

Conclusion

As the cryptocurrency field evolves, the integration of innovative strategies like exchange-listed options could potentially revolutionize investor capabilities and market transparency. 

Sonnenshein’s appeal is a clarion call for equity and opportunities in the world of crypto. It encapsulates the drive for spot Bitcoin ETFs and the crypto asset classes to be treated fairly in regulatory decision-making and opens the gates of discussion about standardizing such practices.

The possibilities within these considerations shed light on the ever-changing, forward-thinking landscape of cryptocurrency. 

As the realization of these potential breakthroughs becomes clearer, it demonstrates the urgent need for analysts, regulators, and investors to adapt to the industry’s future with open minds.

In the face of these ongoing negotiations and reforms, Sonnenshein reminds us that “The digital asset class deserves fair treatment.”

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