U.S. Legislators Urge SEC to Accelerate Options Trading for Spot Bitcoin ETFs
U.S. Representatives Mike Flood, a Republican, and Wiley Nickel, a Democrat, are actively urging the Securities and Exchange Commission (SEC) to expedite the approval process for options trading on spot bitcoin exchange-traded products (ETPs).
The lawmakers are advocating for equal treatment of Bitcoin futures exchange-traded funds (ETFs) and spot Bitcoin ETPs in terms of options trading. While Bitcoin futures ETFs have already been approved for options trading, spot Bitcoin ETPs are still awaiting approval, creating an inconsistency in regulatory actions.
Flood and Nickel pointed out that spot Bitcoin ETFs were approved in January and have attracted significant investment, whereas options for spot Bitcoin ETPs are still pending approval. This discrepancy has raised concerns about the SEC’s rationale and past court decisions challenging its treatment of similar financial products.
In their communication with SEC Chair Gary Gensler, Flood and Nickel emphasized the importance of options trading for spot Bitcoin ETPs in providing investors with risk management tools and diversified investment strategies. They highlighted the fact that options for Bitcoin futures ETFs were allowed to trade immediately after approval, while the request for spot Bitcoin ETFs has been pending for almost two months.
Their push for regulatory clarity gained momentum after a court ruling last summer that mandated the SEC to reconsider Grayscale’s application for a spot Bitcoin ETF. This ruling played a pivotal role in the eventual approval of spot Bitcoin ETFs earlier this year.
Despite the usual involvement of multiple regulatory bodies in such approvals, Flood and Nickel focused their outreach on the SEC’s actions. They expressed concerns about the SEC’s extended timelines and perceived indecisiveness, which could hinder the development and efficiency of the crypto market.
The SEC’s review process for options trading on Bitcoin ETFs aims to assess the potential impact on market stability, particularly during volatile periods. This includes evaluating the adequacy of current surveillance and enforcement mechanisms for handling the complexities of Bitcoin options.
The SEC has set May 29, 2024, as the new deadline for its decision on options trading, following a prior postponement in March 2024. This cautious approach reflects the SEC’s ongoing struggles with the regulatory challenges posed by emerging crypto-related financial products.
