Bitcoin Index Options By Nasdaq Get SEC Greenlight, What Comes Next?
Highlights
- An accelerated SEC clearing of Nasdaq Bitcoin index options.
- New contracts will be based on the CME CF Bitcoin Real Time Index.
- The products are not yet finalised for launch with the CFTC.
The U.S. Securities and Exchange Commission has approved Nasdaq’s proposal to launch Bitcoin index options. Like tokenization, it further cements the link between traditional financial markets and cryptocurrencies.
SEC Approves Nasdaq Bitcoin Index Options
An SEC filing made public on Friday indicates the regulator approved the proposal on an “accelerated basis.” This means that U.S. investors would thus have more exposure to bitcoin-related derivatives as a result of the equities market.
The new contracts will be based on the CME CF Bitcoin Real Time Index. For this, it will update pricing information from the crypto exchanges every 200 milliseconds. The new-found ETFs will not be spot Bitcoin ETFs, but rather cash-settled European-style contracts. It can only be exercised at expiration and minimizes the possibility that investors will be given the option to be assigned early.
The SEC approval widens the investment options for Bitcoin players in the United States, including institutional and retail traders. Bitcoin futures options are already available for investors with CME Group, and there are options related to spot Bitcoin ETFs like the iShares Bitcoin Trust ETF, which has been available since 2020.
On the other hand, the Nasdaq products would bring options tied to Bitcoin right into the U.S. stock options sector.
In a separate update, the SEC has delayed its rulemaking for tokenized U.S. stocks. It has raised questions on the agency’s stance on regulating digital assets.
Will The Bitcoin Index Options Launch Soon?
However, even with the SEC’s ruling, the products will not be able to start trading right away. The contracts will still need to be approved by the Commodity Futures Trading Commission before they can be launched.
David Barrett, head of U.S. options for Nasdaq, said that it is a big milestone for regulated crypto derivatives trading in the U.S. He added that the decision “represents an important step in expanding regulated, transparent access to digital asset derivatives,” per Bloomberg report.
The decision on Bitcoin index options comes as SEC Chairman Paul Atkins presses for greater involvement of crypto markets in the U.S. regulated financial sector. Earlier this month, Atkins cautioned against pushing crypto offshore due to the FTX 2022 debacle.
“The experience of the offshore growth and implosion of FTX demonstrates the folly of pretending that Americans will not be harmed if we do not address innovative technologies and thereby force them offshore,” said Atkins in a May 8 speech. Thus, lawmakers are focusing on the CLARITY Act’s passage for clearer rules.
Many of the world’s top crypto derivatives exchanges like Binance and Hyperliquid are still located in the offshore region.
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