Nasdaq Seeks SEC Approval for Bitcoin Index Options

Published on: Aug 28, 2024|2 min read

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London: 28 August 2024 (TraderMade): Nasdaq (NDAQ.O) has made a significant move in the cryptocurrency trading world by seeking approval from the SEC in launching options on a Bitcoin index.

This ambitious step is to provide institutional investors and traders with a new way to hedge their exposure to Bitcoin and expand trading opportunities in the crypto market.

Key Takeaways

Nasdaq is seeking SEC approval to offer options on a Bitcoin index, aiming to provide investors with an alternative option to gain exposure to the cryptocurrency.
The new options would be based on the CME CF Bitcoin Real-Time Index.

Nasdaq’s Proposal

On Tuesday, Nasdaq announced its intention to seek SEC approval for Bitcoin index options. The move reflects a growing demand for advanced trading instruments in the cryptocurrency market.

The proposed options would be listed derivatives that track the CME CF Bitcoin Real-Time Index, developed by CF Benchmarks. This index monitors Bitcoin futures and options contracts traded on CME Group (CME.O), providing a comprehensive view of Bitcoin’s market movements.

Current Regulatory Landscape

The SEC has not yet approved options on individual exchange-traded funds (ETFs) linked to spot Bitcoin prices despite their debut earlier this year. Nasdaq has also applied to trade options on BlackRock’s (BLK.N) $21.3-billion iShares Bitcoin Trust ETF (IBIT.O), which is still under review.

The delay in approving these options has led traders to explore other products, such as leveraged ETFs and options on those funds.

Industry Reaction

Matt Hougan, Chief Investment Officer of Bitwise, commented on the importance of the proposed options. “Options on Bitcoin need to be available for this asset class to be fully normalized,” Hougan stated.

“We’re missing a part of the liquidity picture that ETF options would provide.” Options are crucial financial tools that allow traders to enhance their purchasing power and institutional investors to manage risk more effectively.

Market Impact

The Bitcoin market has experienced volatility in recent months. As of Tuesday, Bitcoin was trading at $58,777, reflecting a 6.4% decline from its previous value and a 20.3% drop from its high of $73,794 reached on March 14.

The approval of Bitcoin index options could provide a stabilizing effect and new opportunities for investors navigating the current market fluctuations.

Conclusion

Nasdaq’s push for SEC approval of Bitcoin index options represents a significant development in the cryptocurrency trading arena. By offering a new way to gain exposure to Bitcoin and hedge risks, these options could enhance market liquidity and attract a broader range of investors.