Grayscale’s CEO Explores Possibilities for Spot Bitcoin ETF, Advocates for SEC Approval
Grayscale CEO Advocates for Options on Spot Bitcoin ETFs
Grayscale’s CEO, Michael Sonnenshein, is leading the charge in urging regulators to approve options linked to spot Bitcoin exchange-traded funds (ETFs). Sonnenshein highlights the potential benefits for investors, emphasizing that these options can provide valuable insights into market dynamics, fair pricing, and effective investment strategies.
Looking ahead, Sonnenshein believes it is crucial for the crypto and ETF communities to advocate for the development of a robust options market for spot Bitcoin ETFs. While the Grayscale Bitcoin Trust (GBTC) has been in the public market since 2015, it has never had listed options available.
So why are options gaining traction after ETFs? Let’s explore the details.
The Case for Options Post ETFs
According to Sonnenshein, options are financial contracts that grant investors the right, but not the obligation, to buy or sell a specified amount of an asset at a predetermined price within a specified timeframe. Options are an integral part of financial markets as they enable investors to manage risk, hedge positions, and potentially generate income.
However, options on spot Bitcoin ETFs face additional hurdles and must go through a potentially lengthy review process similar to that of spot Bitcoin ETFs themselves. Sonnenshein emphasizes the need to bridge this gap to ensure market fairness.
Breaking Ground in Traditional Markets
Option trading is well-established in traditional financial markets, regulated by the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). Surprisingly, this avenue is not readily available for spot Bitcoin ETFs. Sonnenshein argues that closing this regulatory gap is essential for creating a level playing field.
He points out that while futures-based ETFs quickly adopted options after SEC approval, commodity-based ETFs, such as spot Bitcoin ETFs, did not. This regulatory inconsistency highlights the urgent need for clear standards and equal opportunities for different types of ETFs.
SEC Springs Into Action
To enable options trading on commodity-based ETFs, including spot Bitcoin ETFs, national exchanges are actively seeking regulatory amendments. The submission of Forms 19b-4 plays a crucial role in these initiatives, aiming to expand investment options and foster innovation in the Bitcoin market.
The SEC has already acknowledged the Forms 19b-4, requesting the ability to trade options on spot Bitcoin ETFs. This is a faster-than-usual response from the SEC, suggesting that options could be approved as early as the end of February. However, the absolute earliest timeframe for options approval is still more than 27 days away.
While the SEC deliberates proposals for options on spot Bitcoin ETFs, including BlackRock’s proposal with Cboe, Sonnenshein remains optimistic. He believes that options will not only increase market liquidity but also make Bitcoin investments more accessible and understandable for newcomers. Bloomberg’s Eric Balchunas speculates that the SEC’s decision may be revealed by February 15 or, at the latest, by September 2024.
GBTC Dominates Amid Growing Competition
Meanwhile, GBTC continues to dominate the spot Bitcoin ETF market, with an impressive trading volume of $338 million, led by Sonnenshein. BlackRock is closely behind, intensifying the competition in this trillion-dollar industry.
As the industry speculates about the future of options following the setbacks of ETFs, the question remains: will options rejuvenate the lost momentum? Only time will tell, but the push for options on spot Bitcoin ETFs is certainly something to watch closely.
Tags: Bitcoin ETF