Just recently, the U.S. Securities and Exchange Commission has granted approval BlackRock has a spot Bitcoin ETF called the iShares Bitcoin Trust, which is available for trading and listing.
Physical settlement means that the iShares Bitcoin Trust options approved will deliver Bitcoin to complete the contract when exercised. The American style options allow traders to exercise them at any point before expiration, giving flexibility. SEC says that this listing follows the same rules for options as those on exchange traded funds (ETFs), such as position limits and margin requirements.
“I’m assuming others will be approved in short order,” said Bloomberg Senior ETF Analyst Eric Balchunas. “Huge win for the the bitcoin ETFs (as it will attract more liquidity which will in turn attract more big fish). This is nice surprise re timing but not a shocker as James Seyffart and I gave 70% odds of approval by end of May.”
SEC stated that the approval will allow investors to use the options markets to reduce the volatility inherent in BTC. iShares Bitcoin Trust is the largest spot Bitcoin ETF and has helped to meet requirements for trading options. SEC highlighted that the SEC would implement extensive surveillance measures to prevent market manipulation.
“IBIT is the most liquid spot Bitcoin ETF and the 11th most liquid ETF in the U.S. by average volume (34,825,921 shares) and 18th largest by average notional ($1,246,060,738),” The SEC. “As of May 22, 2023, IBIT had approximately 193,956 shareholders.”
The SEC’s approval continues a trend that has seen the expansion of regulated financial product based on Bitcoin. This will bring it even closer to its full integration into the global financial systems. Trading options on the spot Bitcoin ETF offers new opportunities to institutional investors that want to be involved in Bitcoin trading while still maintaining an elevated level of risk control.
“Important note: This is just one stage of approval, the OCC and CFTC has to approve as well before they officially list,” Balchunas continued. “The other two don’t have a ‘clock’ so not sure when they’ll be approved. A big step tho nonetheless that the SEC came around.”
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Source: bitcoinmagazine.com
