SEC Delays Decision on Bitcoin Options; Seeks Additional Comment

The SEC delayed its decision on the approval of options trading for spot Bitcoin ETFs following proposed rule changes by various exchanges. 

The SEC is considering proposals from exchanges (collectively, the “Exchanges”) to list and trade options on exchange-traded product (“ETP”) shares that represent interests in either a specified bitcoin trust or in any trust that holds bitcoin. (See each proposal, BOX Exchange LLC; Cboe Exchange, Inc.; MIAX International Securities Exchange LLC; MIAX PEARL LLC; Nasdaq ISE, LLC; and NYSE American LLC).

The SEC is seeking comment on the following questions and asked commenters to submit supportive data:

• whether the Proposals should include data demonstrating that the shares of each of the specified Bitcoin ETPs on which an Exchange proposes to list options are “widely held and actively traded,” as required by the Exchanges’ rules;
• whether options on the specified Bitcoin ETPs should be subject to the same position limits as options on stock, and whether the available supply in the markets for bitcoin should be considered in establishing position limits for options on Bitcoin ETPs;
• whether the Proposals should analyze the potential impact that listing options on Bitcoin ETPs could have on bitcoin market quality and function, particularly during times of market stress, given the linkages between the options markets for Bitcoin ETPs, spot Bitcoin ETPs, and spot bitcoin;
• whether the Proposals should include representations regarding how the Exchanges would obtain information regarding trading in the Bitcoin ETPs from the exchanges where the Bitcoin ETPs trade; and
• whether the Proposals seeking to list options on any ETP that holds spot bitcoin provide an adequate basis for the Commission to find that it is consistent with SEA Section 6(b)(5) ("Determination by Commission Requisite to Registration of Applicant as a National Securities Exchange") to permit the listing of such options, rather than approving options on ETPs that hold bitcoin on a product-by-product basis.

Comments "regarding whether the proposed rule changes should be approved or disapproved" are due by 21 days following its publication in the Federal Register and rebuttals are due by 35 days following its publication in the Federal Register.