Bitcoin ETF Options in US Hit A Setback as NYSE Aborts Options Plan

NYSE American LLC has formally announced its withdrawal of the proposal to list and trade options on two spot Bitcoin exchange-traded funds (ETFs). The proposal, which sought to have the Bitwise Bitcoin ETF and the Grayscale Bitcoin ETF listed, was initially filed with the United States Securities and Exchange Commission (SEC).

NYSE American Ends Plans to List Bitcoin ETF Options

NYSE American LLC has pulled back its proposal to list and trade options on two spot Bitcoin ETFs. The proposal to the SEC sought approval to offer options trading for the Bitwise and Grayscale BTC ETFs. The withdrawal of the proposal was formalized on August 9, 2024, and disclosed to the public through an SEC filing on August 15, 2024.

However, NYSE American is not the only one pulling out. Cboe and other exchanges such as MIAX Pearl and BOX Exchange have also recently pulled their applications to list options on spot Bitcoin ETFs. 

Despite this, Cboe resubmitted the application after it had withdrawn it, a move that some believe indicates an ongoing conversation with the SEC.

Regulatory Uncertainty Surrounds ETF Options

The withdrawal of NYSE American LLC from its proposal is in line with the increased lack of clarity in the US market regarding BTC ETFs. 

Even though the SEC had earlier in the year approved several spot BTC ETFs from firms such as BlackRock, Grayscale, and Fidelity, the approval of options trading for these ETFs has been delayed.

Consequently, exchanges have remained sending in proposals, only to withdraw them, pointing towards possible regulatory issues. Furthermore, the length of the SEC’s review periods and its delayed decision-making have also played a part in the Bitcoin ETF options’ ambiguity.

Broader Implications for the Crypto Market

The withdrawal of the NYSE American’s proposal and similar actions by other exchanges may have implications for the cryptocurrency market. If approved, Bitcoin ETF options would have given investors more options to hedge and bet on the price of Bitcoin. This could be seen as a disadvantage because there are few ways for market participants to hedge their risk.

As it stands now, industry experts have opined that there is still hope that the BTC ETF options may still receive approval in the course of this year. ETF analyst James Seyffart has predicted that the first BTC ETF products may come to market in the fourth quarter of 2024 assuming the green light is given by the regulators.

However, any approval would still need to go through some more regulatory checks and balances such as the Commodity Futures Trading Commission (CFTC).

Besides BTC, there are attempts in the market to launch options on Ethereum ETFs as well. NYSE American has also put forward options trading on Ethereum ETFs, similar to the now withdrawn Bitcoin proposal.