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After months of inactivity, applications for options on spot [Bitcoin] ([BTC]) exchange-traded funds (ETFs) are now receiving attention from regulators. Expect [BTC] ETF options to debut on U.S. exchanges this year, with [Ethereum] ([ETH]) options likely to follow.
Options, which grant the right to buy or sell an asset at a specified price, are valuable for hedging and speculation. While the initial launch of [BTC] ETFs in January was a significant milestone, the addition of options trading represents a crucial development for institutional adoption, especially given the volatility of crypto ETFs.
In January, the three major U.S. exchanges listing spot [BTC] ETFs — NYSE Arca, Cboe, and Nasdaq — sought approval from the SEC to also list options on these funds. After initial silence and industry concerns about potential risks, including those highlighted by Better Markets Inc., the SEC is now showing signs of progress. On August 8, Cboe submitted an updated application addressing market manipulation and position limits in more detail.
Bloomberg Intelligence predicts that spot [BTC] options will launch in the fourth quarter of this year, potentially before November. Nasdaq has also filed to list options on [Ethereum] ETFs, with the SEC review underway.
Currently, U.S. investors can trade options on [BTC] futures ETFs, which have seen high activity despite their underperformance compared to spot [BTC] ETFs. As of August 9, the market for options on [BTC] futures ETFs is valued at over $3.25 billion, almost matching the total assets of these ETFs.
The introduction of options on spot [BTC] ETFs is expected to create a significant new market, potentially worth $45 billion, and represents a key step towards broader crypto adoption. Options are essential for financial advisors and hedge funds, enhancing the attractiveness of [BTC] ETFs to institutional investors.
