The SEC has Approved Options Trading on Bitcoin ETFs Listed on Both the New York Stock Exchange and the Chicago Board Options Exchange

This approval allows traders to use Bitcoin ETPs like the Grayscale Bitcoin Trust, the Grayscale Bitcoin Mini Trust, and the Bitwise Bitcoin ETF as underlying

The Securities and Exchange Commission (SEC) has approved options trading on Bitcoin exchange-traded funds (ETFs) listed on the New York Stock Exchange and the Chicago Board Options Exchange.

According to a filing with the SEC on Monday, the approval will allow traders to use Bitcoin ETPs — such as the Grayscale Bitcoin Trust (NYSE:GBTC), Grayscale Bitcoin Mini Trust (NYSE:GMINI), and Bitwise Bitcoin ETF (NYSE:BITB) — as the underlying securities for options trading.

The SEC also granted accelerated approval for the listing and trading of options on other spot Bitcoin ETFs, including the Fidelity Wise Origin Bitcoin Fund (NYSE:FBI), ARK21Shares Bitcoin ETF (NYSE:ARKK), and Invesco Galaxy Bitcoin ETF (NYSE:GALT) on both exchanges.

The filing outlines the criteria for the underlying securities, stating that the options will permit hedging, boost liquidity, and potentially reduce volatility in the underlying Bitcoin ETFs.

"The Exchange believes that the approval of options on Bitcoin ETPs will provide market participants with additional tools to efficiently express their views on the price direction of Bitcoin and will ultimately benefit investors," the filing reads.

The rule amendment also permits the listing and trading of these options under Rule 915, ensuring that the Bitcoin ETFs are treated similarly to commodity-backed ETPs, such as those holding gold or silver, that are already listed.

However, the SEC emphasized that Bitcoin options must adhere to strict position and exercise limits.

"The Exchange proposes a 25,000 contract limit for Bitcoin Fund options, which equates to roughly 0.9% of the outstanding shares for GBTC, 0.7% for BTC, and 3.6% for BITB," the filing states.

The filing outlines how NYSE and its affiliate, NYSE Arca, will share surveillance data with the Chicago Mercantile Exchange to monitor trading activities and detect potential manipulation in both spot and futures markets.

"The Exchange believes that the high correlation between CME Bitcoin futures and the spot Bitcoin market will make any suspicious trading activity easily detectable and ultimately provides an additional layer of protection for investors," the filing adds.

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