The U.S. Securities and Exchange Commission (SEC) has made a groundbreaking decision by granting approval for the listing and trading of options on BlackRock’s spot Bitcoin ETF, the iShares Bitcoin Trust (IBIT). This move marks a significant step towards the integration of Bitcoin into the traditional financial system.
The approved options on the iShares Bitcoin Trust will be physically settled, meaning that Bitcoin will be delivered when the option is exercised. These American-style options offer flexibility for traders, allowing them to exercise the option at any time before the expiration date. The SEC has stated that the listing will follow the same rules as options on other exchange-traded funds (ETFs), including position limits and margin requirements.
Bloomberg Senior ETF Analyst Eric Balchunas expressed optimism about the approval, stating, “I’m assuming others will be approved in short order. Huge win for the bitcoin ETFs as it will attract more liquidity which will in turn attract more big fish.”
The SEC emphasized that this approval will enable investors to hedge their positions on Bitcoin, using the options market to manage the volatility of BTC. The iShares Bitcoin Trust has been recognized as the most liquid spot Bitcoin ETF, meeting the requirements for trading options. Extensive surveillance mechanisms will be in place to monitor potential market manipulation and ensure orderly trading.
With approximately 193,956 shareholders as of May 22, 2023, the iShares Bitcoin Trust has become a prominent player in the Bitcoin market. This approval by the SEC signifies a growing trend of expanding regulated financial products based on Bitcoin, bringing the cryptocurrency closer to mainstream acceptance.
While this approval is a significant milestone, it is important to note that the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC) also need to approve before the options can be officially listed. Nonetheless, the SEC’s decision marks a crucial step towards the wider adoption of Bitcoin within the global financial system.
