Grayscale CEO Urges SEC to Approve Spot Bitcoin ETF with Listed Options
Grayscale’s CEO, Michael Sonnenshein, is leading a push for regulators to approve options tied to spot Bitcoin exchange-traded funds (ETFs). Sonnenshein recently stated in a post that these options would greatly benefit investors by providing them with additional tools to understand market dynamics, discover fair prices, and navigate complexities to invest more effectively.
Options, as Sonnenshein explains, are financial contracts that give investors the right, but not the obligation, to buy or sell a specified amount of an asset at a predetermined price within a specified time frame. They are an important aspect of financial markets, allowing investors to manage risk, hedge positions, and potentially generate income.
While option trading is well-established in traditional financial markets and regulated by the CFTC and SEC, it is not yet commonly available for spot Bitcoin ETFs. Sonnenshein believes this gap must be bridged for market fairness.
Sonnenshein also highlighted the regulatory disparity between futures-based ETFs and commodity-based ETFs like spot Bitcoin ETFs. Following SEC approval, futures-based ETFs had accessible options almost immediately, whereas commodity-based ETFs did not. This discrepancy underscores the need for clear standards and equal opportunities for diverse ETFs.
To address this issue, national exchanges are actively seeking regulatory amendments to allow options trading on commodity-based ETFs, including spot Bitcoin ETFs. The submission of Forms 19b-4 is part of these initiatives to increase investment options and promote bitcoin innovation.
The SEC is currently reviewing proposals for options on spot Bitcoin ETFs and may consider BlackRock’s proposal with Cboe. Sonnenshein remains optimistic about the potential impact of these products, as he believes options would not only improve market liquidity but also make Bitcoin investing more accessible and understandable for novice investors. Bloomberg’s Eric Balchunas predicts that the SEC might reach a decision by either February 15 or September 2024.
In the meantime, Grayscale’s Bitcoin Trust (GBTC) continues to dominate the spot Bitcoin ETF market with a trading volume of $338 million, led by Sonnenshein. BlackRock is closely behind, intensifying the competition in the trillion-dollar industry.
The question now is what the future holds for options after the failed ETFs. Will they help revive the lost momentum?