Reuters: Grayscale pressures the U.S. SEC, seeking approval for Bitcoin spot ETF options trading

ChainCatcher news, according to a report by Reuters, cryptocurrency asset management company Grayscale Investments is urging the U.S. Securities and Exchange Commission (SEC) to approve options trading for its Bitcoin spot exchange-traded fund (ETF), a move that would open the door for a new class of investors. Grayscale CEO Michael Sonnenshein stated in a letter to the SEC on Wednesday that denying options trading for the Grayscale Bitcoin Trust (GBTC.P) would "unfairly discriminate" against its shareholders, noting that the regulator had previously approved options for ETFs related to Bitcoin futures.

Sonnenshein emphasized, "It is crucial for investors in GBTC and all Bitcoin spot 'exchange-traded products' to have access to exchange-listed options on GBTC and other Bitcoin spot ETPs." Bitcoin is on track for over 47% monthly growth, the largest monthly increase since December 2020, and the opening of the ETF has introduced cryptocurrency to more investors. Asset management firms are seizing this momentum to submit a second wave of more complex cryptocurrency product proposals to the SEC, including some that will use options to amplify Bitcoin volatility.

It is reported that options give holders the right to buy or sell an asset (such as stocks or exchange-traded products) at a predetermined price before a set date. Regulatory approval for these new Bitcoin ETF product options may take months. The SEC is responsible for reviewing the technical rule changes that exchanges must make to list options and typically approves them a few days after the ETF begins trading. However, since the regulator views Bitcoin as a commodity, Bitcoin spot ETF options may also require approval from the Commodity Futures Trading Commission (CFTC), which oversees commodity derivatives, complicating the approval process.

Experts say that without options, large investors face risk management issues, which could hinder many from participating; analysts have suggested this could help drive up to $100 billion in inflows into the ETF. Sonnenshein stated that options would facilitate price discovery for new ETF shares, helping investors navigate market conditions, hedge, and generate income. Options will also "further bring Bitcoin into the regulatory fold by allowing more regulated market participants (such as contract traders and brokers) to trade the products."