Benzinga - by Murtuza Merchant, Benzinga Staff Writer.
Crypto asset manager Grayscale Investments is advocating for the U.S. Securities and Exchange Commission (SEC) to approve options trading on its Bitcoin (CRYPTO: BTC) ETF, aiming to diversify its investor base.
What Happened: Grayscale CEO Michael Sonnenshein recently highlighted the importance of granting options on the Grayscale Bitcoin Trust (OTC: GBTC) arguing that a denial would unjustly affect its shareholders, Reuters reported.
This plea comes despite the SEC's history of approving options for ETFs linked to Bitcoin futures.
"It is vital to the interests of GBTC and all spot Bitcoin [exchange-traded product] investors to access exchange-listed options on GBTC and other spot Bitcoin ETPs," Sonnenshein emphasized.
This request is set against the backdrop of Bitcoin's impressive performance, with the cryptocurrency eyeing a monthly increase exceeding 47%, a peak not seen since December 2020.
The surge in Bitcoin's value has spurred asset managers to propose a new wave of intricate crypto products to the SEC, aiming to capitalize on the rising interest in cryptocurrency.
Also Read: Is Bitcoin's Bull Run Stumbling? Record Grayscale Outflows Signal Potential Shift
Why It Matters: Options trading, which allows investors the choice to buy or sell an asset at a fixed price within a specific timeframe, could revolutionize the Bitcoin ETF market.
However, securing regulatory consent for these new ETFs is expected to be a lengthy process. The SEC, responsible for sanctioning technical amendments for options listings, typically greenlights such changes shortly after an ETF's debut.
Nonetheless, the classification of Bitcoin as a commodity means that options for spot Bitcoin ETFs might also need the nod from the Commodity Futures Trading Commission (CFTC), further complicating the approval journey.
The absence of options trading poses significant risk management dilemmas for major investors, potentially deterring a substantial influx of capital—estimated by analysts to be up to $100 billion—into these ETFs.
Sonnenshein argues that options would not only aid in the price discovery of new ETF shares, helping investors to better navigate the market, hedge, and generate income, but also integrate Bitcoin more closely into the regulated financial ecosystem.
He stated, "Options would also further bring Bitcoin into the regulatory perimeter by allowing additional regulated market participants" such as contract merchants and broker-dealers "to trade the products."
Price Action: At the time of writing, Bitcoin was trading at $61,950, up 1.1% in the last 24 hours, according to Benzinga Pro.
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