As a seasoned crypto investor with over a decade of experience navigating the volatile and ever-evolving digital asset market, I can confidently say that the recent approval by the SEC for BlackRock to offer options trading on its spot Bitcoin ETF is a significant step forward.
The U.S. Securities and Exchange Commission (SEC) has given the green light to BlackRock’s plan to provide options trading for their Bitcoin exchange-traded fund (ETF), enabling further investment flexibility in the digital currency market.
BlackRock’s ETF Launches Options Trading 8 Months After Debut
On September 20th, Friday, the Securities and Exchange Commission (SEC) gave its approval for options trading related to the iShares Bitcoin Trust (IBIT) on Nasdaq. This move follows approximately eight months after the SEC granted permission for the world’s largest asset manager and a dozen other companies to introduce spot Bitcoin ETFs.
After the launch of the Bitcoin ETF by Spot in January, BlackRock promptly put forward a plan to make their product available for trading options. To clarify, options are financial derivatives that provide the holder with the ability to buy or sell an underlying asset at a fixed price and specific date.
The regulator’s notice read:
As a crypto investor, I’m sharing this message to let you know that the Commission has published a notice seeking comments from anyone interested, regarding Amendments 4 and 5. Excitingly, they are also approving the proposed rule change, which has been modified by Amendments 1, 4, and 5, on an expedited basis.
It’s noteworthy that other asset management companies such as Grayscale and Bitwise are planning to introduce Bitcoin Spot ETFs for listing. According to Bloomberg analyst Eric Balchunas, posted on platform X, he anticipates these applications will be approved swiftly.
Balchunas added:
A significant victory for Bitcoin ETFs, as this decision could draw increased liquidity that may entice larger investors. The timing is pleasantly unexpected, but it wasn’t entirely unforeseen since James Seyffart and I had predicted a 7 out of 10 chance of approval by the end of May.
As a researcher, I’ve observed that the recent authorization granted by Nasdaq is merely a step in the approval process. The Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC) still need to verify their findings before official trading can commence.
What Next For Spot Bitcoin ETFs?
ETF specialist Nate Geraci shared his thoughts on the SEC’s recent approval of options trading through a popular platform, and outlined the upcoming procedures for Bitcoin Spot ETFs. The head of ETFStore emphasized that despite some constraints, these cryptocurrency products have shown impressive results.
Remember, spot btc ETFs have taken in a net $18bil in 8 months…
In simpler terms, without the ability to engage in options trading, creating or redeeming assets in kind, and with restricted approval on large brokerage platforms like major wirehouses, and no access on platforms such as Vanguard.
Monumental success w/ one hand tied behind back.
— Nate Geraci (@NateGeraci) September 20, 2024
As suggested by Geraci, a significant step forward for Bitcoin exchange-traded funds could be the implementation of in-kind creation and redemption. To clarify, this process allows large investors to either generate or liquidate ETF shares by swapping them for the underlying asset (Bitcoin in this instance).
By implementing direct deposit of Bitcoin for creation and redemption within Bitcoin Exchange Traded Funds (ETFs), trading efficiency will significantly improve. This is because investors will now have the option to transfer their Bitcoins directly into the fund, thereby lowering the costs associated with investing in these ETFs. As a result, spot Bitcoin ETFs become more appealing as investment options due to this cost reduction.
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2024-09-21 20:12