Nasdaq and Cboe submitted 19b-4 filings with the United States Securities and Exchange Commission (SEC) to amend listing rules, seeking approval to trade options on Bitcoin (BTC) exchange-traded funds (ETFs). The SEC acknowledged these proposals on Jan. 19, marking a significant step toward expanding the crypto investment landscape.

Nasdaq applied for a rule change to list and trade options on BlackRock’s iShares Bitcoin Trust, while Cboe seeks permission to trade options on “ETFs that Hold Bitcoin.” This move follows the recent approval of BTC ETFs on both Cboe and Nasdaq, which started trading on Jan. 11, drawing positive attention from investors.

Catherine Clay, Cboe executive vice president, told CNBC on Jan. 18 that the platform was seeing “good inflows” into the BTC ETFs, which continued to track the price of BTC “as expected.” Cboe introduced six of the 10 BTC ETFs recently approved by the SEC. Moreover, Clay called options “the next logical step on the ETFs.” Options are a derivative that allows the holder to purchase or sell an asset at a predetermined price and time.

Clay emphasized that BTC ETF options trading would add utility and risk mitigation to these products. Nasdaq highlighted in its filing that options would offer “cost efficiencies and increased hedging strategies.” Cboe’s options clearing corporation has also submitted similar filings with the SEC and the Commodity Futures Trading Commission (CFTC). 

Bloomberg ETF analyst James Seyffart commented on the remarkable speed of Nasdaq’s announcement. He speculated that options trading approval could arrive before the end of February or around September 21 at the latest. The regulator typically takes time to respond to such requests, but Seyffart suggests the possibility of a faster decision this time. Following the proposed rule changes, the regulator has opened a 21-day window for public feedback.

The SEC has already acknowledged the 19b-4's requesting the ability to trade options on spot #Bitcoin ETFs. This is faster than SEC typically moves. Options could be approved before end of February if SEC wants to move fast?…

AT ABSOLUTE EARLIEST options still ~27+ days away pic.twitter.com/ohbvHgP2uO

— James Seyffart (@JSeyff) January 19, 2024

Bitcoin ETFs Approval

The move towards approving BTC ETF options comes in the wake of the SEC’s green light for 11 spot Bitcoin ETFs, including Hashdex Bitcoin ETF, iShares Bitcoin Trust, Grayscale Bitcoin Trust, Bitwise Bitcoin ETF, and the Valkyrie BTC Fund. Analysts anticipate that these approvals will bring more stability to Bitcoin prices in the long term and could potentially minimize liquidity risks over time, signaling the growing acceptance of crypto in traditional financial markets.