In a statement on February 5th, Michael Sonnenshein, CEO of Grayscale, emphasized the importance of advocating for the development of a robust listed options market for spot Bitcoin exchange-traded funds (ETFs). While Bitcoin has been trading publicly since 2015 through Grayscale’s GBTC, listed options have not been available due to the absence of an options market. Sonnenshein argues that it is vital for regulators to approve spot Bitcoin ETF options to enable investors to benefit from this key financial tool.
Sonnenshein also highlighted the need for treating similar products equally. He noted that Bitcoin futures ETFs and spot Bitcoin ETFs are now treated the same, and listed options on these products should receive the same treatment as well. The New York Stock Exchange and other national securities exchanges have filed applications to allow options trading on commodity-based ETFs, including Grayscale’s GBTC fund. It is now up to the Securities and Exchange Commission (SEC) to consider these applications.
According to Sonnenshein, options are beneficial for investors as they support price discovery, help navigate market conditions, and generate income. These advantages apply to both retail and institutional investors. However, the approval process for spot Bitcoin ETF options differs from that of Bitcoin futures ETF options. While the latter were quickly introduced through automatic approval, spot Bitcoin ETF options must undergo a longer approval process similar to that of the underlying fund.
The SEC is currently reviewing various spot Bitcoin ETF applications, including BlackRock’s Nasdaq-listed fund and several Cboe BZX-listed funds. Comments on these applications were opened on January 19th. The timeline for a decision on these applications is uncertain, with Bloomberg ETF analyst James Seyffart suggesting a decision could come between February and September 2024. However, Reuters reports suggest that a decision may not be reached until December 2024. This delay could be due to the potential requirement for approval from both the SEC and the Commodity Futures Trading Commission (CFTC).
Grayscale’s GBTC ETF, which was converted from an existing fund, currently holds $20.5 billion in assets under management (AUM) as of February 2nd. This makes it the largest spot Bitcoin ETF in the market. However, the fund also experiences significant outflows.
It is crucial for regulators to approve spot Bitcoin ETF options to establish a robust listed options market. Treating similar products equally and considering the benefits of options for investors are essential in ensuring a fair and efficient financial ecosystem. The SEC’s ongoing review of spot Bitcoin ETF applications will determine the future of these products in the market. Meanwhile, Grayscale’s GBTC ETF remains a dominant player in the industry, despite experiencing outflows.