Grayscale CEO Urges Regulators to Approve Spot Bitcoin ETF Options

Grayscale CEO Urges Regulators to Approve Spot Bitcoin ETF Options

Grayscale CEO Michael Sonnenshein emphasized the importance of advocating for the development of a robust listed options market for spot Bitcoin exchange-traded funds (ETFs). In a statement on Feb. 5, Sonnenshein expressed his belief that it has never been more crucial to push for the approval of spot Bitcoin ETF options. The absence of listed options has been a notable absence in the market, as they are not a feature of the Over-the-Counter (OTC) market where Grayscale’s GBTC has been traded since 2015.

Sonnenshein further argued that similar products should be treated equally. He highlighted that both Bitcoin futures ETFs and spot Bitcoin ETFs are now treated equally, and the same approach should be applied to listed options on these products. Sonnenshein pointed out that the New York Stock Exchange (NYSE) and other national securities exchanges have recently filed applications to enable options trading on commodity-based ETFs, including Grayscale’s GBTC fund. The Securities and Exchange Commission (SEC) is now responsible for considering these applications.

According to Sonnenshein, options are beneficial for investors. He explained that options support price discovery, help navigate market conditions more effectively, and generate income. These advantages apply to both retail and institutional investors, making options a valuable tool for a wide range of market participants.

Unlike Bitcoin futures ETF options, which were quickly introduced through an automatic approval process, spot Bitcoin ETF options must go through a longer approval process. Sonnenshein likened the process for spot Bitcoin ETF options to that of each underlying fund. This longer process requires additional time and careful consideration from the SEC.

The SEC is currently reviewing various spot Bitcoin ETF applications. The agency began accepting public comments on BlackRock’s Nasdaq-listed fund and several Cboe BZX-listed funds on Jan. 19. Bloomberg ETF analyst James Seyffart has suggested that a decision on the applications could occur between February and September 2024. However, separate reports from Reuters indicate that the decision may be delayed until December 2024, partly due to the potential need for approval from both the SEC and the Commodity Futures Trading Commission (CFTC).

Grayscale was among the firms that gained approval for underlying spot Bitcoin ETFs on Jan. 10. The conversion of Grayscale’s GBTC into an ETF saw the fund amass $20.5 billion in assets under management (AUM) as of Feb. 2. With this AUM, Grayscale’s GBTC is currently the largest spot Bitcoin ETF in existence, despite experiencing significant outflows.

Grayscale CEO Michael Sonnenshein has made a compelling case for the approval of spot Bitcoin ETF options. Advocating for a robust listed options market, treating similar products equally, and highlighting the benefits for investors, Sonnenshein seeks to improve the overall market ecosystem for spot Bitcoin ETFs. The SEC’s handling of the applications and the potential for approval from multiple regulatory bodies will significantly impact the timeline for the availability of spot Bitcoin ETF options. However, given the growing interest in cryptocurrency investment, the approval and introduction of these options may be a crucial development for market participants.


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