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Grayscale CEO calls for regulatory approval on spot Bitcoin ETF options

grayscale-ceo-calls-for-regulatory-approval-on-spot-bitcoin-etf-options
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Grayscale CEO calls for regulatory approval on spot Bitcoin ETF options

Grayscale CEO Michael Sonnenshein has called on regulators to greenlight options for spot Bitcoin ETFs.

In a statement on Feb. 5, Sonnenshein highlighted the benefits of exchange-traded options for investors, emphasizing its role in price discovery and the potential to help investors manage market conditions more effectively or achieve specific outcomes like generating income.

Exchange-traded options are standardized contracts allowing the buying or selling a financial asset at a predetermined price within a specified timeframe. These options offer flexibility, enabling traders to speculate on or hedge against the future price movements of stocks, bonds, or the overall market without the obligation to buy or sell the underlying asset.

Such options are regulated by U.S. authorities, including the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), with the Options Clearing Corporation (OCC) providing guarantees for transactions.

Sonnenshein referred to the SEC’s approval of the first Bitcoin futures ETF in October 2021, which saw listed options for the ETF trading the next day, benefiting from automatic effectiveness based on existing rules. However, he pointed out that commodity-based ETFs like spot Bitcoin ETFs do not enjoy this streamlined process and instead face a more extended review period, similar to the 19b-4 process applicable to the ETFs themselves.

The Grayscale CEO argued for parity between similar products, noting recent filings by the New York Stock Exchange (NYSE) and other exchanges to amend listing standards, which would include listed options for commodity-based ETFs. He stressed that such amendments would also cover spot Bitcoin ETFs, aiming for equitable treatment across financial products.

The SEC reviews applications for listed options on spot Bitcoin ETFs, with comments open for BlackRock’s proposed options with Cboe.

Bloomberg ETF analyst Eric Balchunas indicated that the SEC’s decision could come as soon as Feb. 15 or could be extended to September 2024.

Sonnenshein’s advocacy for fair treatment of the crypto asset class and spot Bitcoin ETFs reflects a broader push for regulatory clarity and equal opportunity in the financial markets. Grayscale’s GBTC ETF, which transitioned from an existing fund, held $20.5 billion in assets under management as of Feb. 2, marking it as the largest spot Bitcoin ETF at the time despite experiencing significant outflows.