Bitcoin ETF Options May Be in the Pipeline, CFTC Notice Reveals

Bitcoin ETF Options will be regulated by the U.S Securities and Exchange Commission (SEC). No official listing date was revealed.

The Commodity Futures Trading Commission (CFTC) has issued a staff advisory on Friday regarding Bitcoin ETF Options. The official press release also offered some regulatory clarity. It revealed that the new Options will be regulated by the U.S Securities and Exchange Commission (SEC).

This development is significant as it will pave the way for Spot Bitcoin ETF Options to be cleared by the Options Clearing Corporation (OCC). As per the CFTC advisory, the SEC will be handling the regulatory oversight of these Options.

Upon receiving the SEC’s green light, the Options will then be listed on national securities exchanges. No official listing dates have been revealed yet. However, Bloomberg’s Senior ETF Analyst Eric Balchunas highlighted that the SEC clearance is the second largest regulatory hurdle.

According to Balchunas, a green light from the OCC would be the last remaining step before Bitcoin ETF Options finally hit the market. He also noted that the SEC has been clearing the path for Bitcoin ETF Options in recent months.

The biggest impact of this development is that Spot Bitcoin ETF Options will fuel BTC exposure in the United States, especially in a legal setting. It could potentially boost liquidity in the market by attracting more institutional traders.

The whole idea behind Spot Bitcoin ETF Options is to lend exposure to BTC without having to hold the underlying asset. The Options will also pave the way for more speculation in the market, which could potentially lead to more volatility and amplified price swings.

The additional volatility could be a double-edged sword as it could influence both the bulls and bears.

Bitcoin bulls have been very active in November so far, with a surge in both spot and derivatives volumes. Demand for Bitcoin in the derivatives segment hit its highest levels in history recently.

To put things into perspective, its recent levels were higher than the levels seen during the peak of the previous bull run. The total Bitcoin Options Open Interest peaked at $38.75 billion on 14 November.

This was more than double the amount of Open Interest towards the peak of the previous bull run in October 2021. Also, the level of Open Interest was less than $5 billion towards the start of 2024.

This puts into perspective just how much the Bitcoin derivatives segment has grown so far this year. In fact, this figure can be expected to rally even higher once the Spot Bitcoin ETF Options are launched.