The SEC’s reluctance has left the market in suspense as it anticipates the outcomes of options trading on Bitcoin exchange-traded funds (ETFs). The SEC has done this so that its decision is not made in a hurry but rather after receiving several requests from top exchanges. On the March 6 filing, the SEC expanded the time limit for responding to the Cboe Exchange and Miami International Securities Exchange about their applications for Bitcoin ETFs.
On January 25, Cboe Exchange and the Miami International Securities Exchange presented proposals to list options on Bitcoin ETFs. SEC’s decision deadline was March 10, but it used its regulatory prerogative to add 45 more days for review; it said “sufficient time to consider” the requests. This elongation of the period has now pushed the last date to decide forward to April 24, consuming all the 90-day window allowed by American security laws.
Trading options are significant in financial markets because they allow traders to make directional bets. For example, if one has a bullish view on the price of Bitcoin, they could buy a call option, which gives them the right to purchase Bitcoin at today’s price on some future date with less than what would otherwise have been required to own the underlying asset.
Bitcoin ETFs Spark Hedge Fund Surge
The consequences of putting options trading on Bitcoin ETFs are huge. Grayscale’s CEO, Michael Sonnenshein, has always advocated for this, saying that such financial instruments ‘make a strong market.’ VettaFi analyst Dave Nadig also shares this opinion, as he said in one of his interviews with CNBC in January. He predicted that once these markets start running, there would be a rise in hedge fund activity.
There have been instances when the SEC has taken a careful stance, which is true of their current attitude. On January 11, after so much thinking, this agency allowed 10 spot Bitcoin ETFs to operate. BitMEX Research reports that as of March 6, nine of them had accumulated $25.87 billion worth of assets under management since then.
As the SEC deals with the intricacies of the cryptocurrency market, it is difficult for it to decide about seven spot Ether ETFs. It is believed that perhaps this administration will wait until May 23, when VanEck’s application will be due, and approve them as a whole.
The SEC will have to be prudent in such a maneuver; they are quite conscious of the fine line between the promotion of innovation and the maintenance of market stability. With the upcoming deadline on April 24th, all eyes are on the SEC, whose decisions will surely define the future of cryptocurrency trading.
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