Approval for U.S. Spot Bitcoin ETF Options May Face Extended Delays
The introduction of options for Spot Bitcoin ETFs in the U.S. might experience significant delays in the regulatory process. This could potentially decrease the appeal of these products, according to industry experts. The Securities and Exchange Commission (SEC) has already granted approval for Spot Bitcoin ETFs, which was a major milestone for the crypto industry. However, the launch of options has been stalled due to the lack of an established regulatory framework.
Why Is There a Delay in Approval for BTC ETF Options?
The delay in approving options for Bitcoin ETFs is primarily due to the absence of a predefined regulatory process. The SEC oversees technical rule changes, but the Commodity Futures Trading Commission (CFTC) may also require approval since Bitcoin is considered a commodity. Additionally, the CFTC is facing jurisdiction and oversight issues related to products associated with Spot Bitcoin ETFs.
This additional layer of complexity and potential regulatory challenges is causing delays. The lack of options presents risk management challenges for large investors, which could discourage their participation and hinder up to $100 billion from flowing into ETFs, as analysts suggest.
According to a Reuters report, Yesha Yadav, a law professor at Vanderbilt University, believes that this hurdle may cause major investors to avoid the market altogether. The delay also hampers the crypto industry’s goal of introducing innovative crypto products, as regulatory approval acts as a gatekeeper.
John Roglieri, FalconX’s Head of Capital Markets, acknowledges that while the industry wants to expand, regulatory barriers are preventing it. He emphasizes that “the regulators are the gatekeepers.” It’s worth noting that this dual regulatory engagement, although not unprecedented, is uncommon.
When Can We Expect Approval for Spot Bitcoin ETF Options?
The current situation could resemble the lengthy timeline for approving options tied to the SPDR Gold Shares ETF, which took over three years for CFTC approval. In 2010, regulators did not endorse options on platinum and palladium ETFs. Martin Leinweber, a digital asset product strategist, estimates that the approval process for Spot Bitcoin ETF options might take between two and 10 months.
Although Nasdaq, CBOE, and NYSE Arca have sought SEC approval to launch options and plan to list them later in 2024, the Options Clearing Corporation (OCC), responsible for clearing options, is waiting for CFTC approval.
The OCC is currently in discussions with regulators about the necessary approvals but cannot provide a specific timeframe. Exchange executives and CFTC officials will soon meet to address the issue.
Adam Sze, Global X’s Head of Digital Assets Product, who withdrew its Spot Bitcoin ETF application, believes that a delay in options is not surprising given the decade-long process for SEC approval of Bitcoin ETFs. He also states that “a few more months for listed options probably isn’t that long in the grand scheme of things.”
Hot Take: Extended Delays Pose Challenges for Spot Bitcoin ETF Options
The extended delays in approving Spot Bitcoin ETF options present significant challenges for both investors and the crypto industry. The absence of an established regulatory framework and the need for multiple approvals from the SEC and CFTC have hindered the launch of these options. This has resulted in risk management challenges for investors and a potential decrease in market attractiveness.
Furthermore, these delays impede the industry’s progress in introducing innovative crypto products to the market. While some experts suggest that approval could take between two and 10 months, it is crucial for regulators to address these challenges promptly and provide a clear path for the launch of Spot Bitcoin ETF options.
By
By
By
By