Grayscale Urges SEC for Spot Bitcoin ETF Options Approval

Grayscale is calling on the US Securities and Exchange Commission to approve options on its spot Bitcoin exchange-traded fund, aiming to expand access to a broader range of investors.

CEO Michael Sonnenshein said in a letter Wednesday that denying options on its Grayscale Bitcoin Trust would unfairly disadvantage its shareholders, Reuters reported. He emphasized that the SEC has previously authorized options on ETFs linked to Bitcoin futures.

“It is vital to the interests of GBTC and all spot Bitcoin [exchange-traded product] investors to access exchange-listed options on GBTC and other spot Bitcoin ETPs,” Sonnenshein wrote.

Implications of Bitcoin Options Approval

Options are contracts that give the holder the right to buy or sell an asset at a set price in the future. Options on a spot Bitcoin ETF would let investors buy or sell these contracts based on how they think the price of the Bitcoin ETF will change.

For instance, if someone thinks the price will go up, they might buy a type of option called a call option. Yet, getting approval for these products isn’t simple and might drag on for months.

Sonnenshein added that options could aid in determining prices for the shares of the new ETFs, helping investors adapt to market conditions, hedge risks, and generate income, per the report.

If approved, these would expand the regulatory scope around Bitcoin by enabling more regulated market players like contract merchants and broker-dealers to engage in trading these products, according to Sonnenshein.

GBTC Sees Outflows as Bitcoin Surges

The letter comes as Bitcoin has surged beyond $60,000, nearing a record high, driven by an influx of funds into ETFs. Concurrently, spot Bitcoin ETF trading volumes surged to over $7.5b on Wednesday, according to The Block.

On Thursday, Grayscale’s spot Bitcoin exchange-traded fund (ETF) (GBTC) faced a sluggish trading session, marked by net outflows nearing $600m. This day marked the second largest outflow since Jan. 11. Total GBTC outflows since Jan. 11 now amount to $8,406.3m.

Delays Expected for Bitcoin ETF Options

Crypto executives are already anticipating a shift beyond traditional ETFs. And asset managers are expected to incorporate a wider range of crypto assets into single investment vehicles in the coming year.

Reuters earlier reported that options on Bitcoin ETFs might face delays due to the absence of a defined regulatory procedure for their endorsement.

The SEC usually approves just days after an ETF begins trading. But, in this case there is a challenge because regulators categorize Bitcoin as a commodity. Consequently, options for spot Bitcoin ETFs may also necessitate approval from the Commodity Futures Trading Commission (CFTC).