Michael Sonnenshein, CEO of Grayscale, has urged regulators in the United States to approve exchange-listed options for spot Bitcoin exchange-traded funds (ETFs).
In a February 5 post on X, Sonnenshein emphasized that options are crucial for investors as they help with “price discovery” and can assist investors in navigating market conditions or achieving desired outcomes, such as generating income.
An Exchange-traded option (ETO) is a standardized derivative contract traded on an exchange that settles through a clearinghouse and is guaranteed. The ETO enables investors to buy or sell using a call or put option, respectively.
Specific rules guide ETOs and might be implemented automatically for some funds. However, ETOs on Bitcoin ETFs cannot profit from automatic effectiveness and must pass through a potentially lengthy review process similar to the 19b-4 process for spot Bitcoin ETFs.
As we look ahead, I think it’s never been more important for the #crypto and ETF communities alike to advocate for the development of a robust listed options market for spot #bitcoin ETFs. Although $GBTC has been in the public market since 2015, it was never accompanied by listed…
— Sonnenshein (@Sonnenshein) February 5, 2024
Sonnenshein noted that even though Grayscale Bitcoin Trust Shares have been established in the public market since 2015, they are not accompanied by listed options because ETOs are not part of the over-the-counter (OTC) market.
The CEO also added that several national exchanges, such as the NYSE, had recently filed Forms 19b-4 to amend the listing standards to support listed options on commodity-based exchange-traded funds, such as spot Bitcoin ETFs like $GBTC.
According to Sonnenshein, the first Bitcoin futures ETFs began trading in the US on October 19, 2021, and the listed options became available the following day.
Sonnenshein’s advocacy of ETOs came a month after the US SEC approved ten new spot Bitcoin ETFs after over 11 years of delays and rejections. Both the present SEC Chair Gary Gensler and former Chair Jay Clayton declined to approve previous spot Bitcoin ETFs due to non-compliance with the Exchange Act.
It is worth noting that the regulator stated clearly that its approval of spot Bitcoin ETFs doesn’t imply its support for other cryptocurrency products. Gensler made it clear in his remarks accompanying the approval that changes in the regulatory landscape were what made the approvals possible.
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