The Securities and Exchange Commission has approved Nasdaq’s proposal to list cash-settled Bitcoin index options on the Philadelphia Stock Exchange.
The options available are European-style contracts linked to the Nasdaq Bitcoin Index, a benchmark tracking one-hundredth of the CME CF Bitcoin Real Time Index that updates data from major cryptocurrency exchanges every 200 milliseconds. The approval was there given on an expedited basis and published on Friday on the SEC’s website.
New contracts are cash settled, which means holders receive the difference between Bitcoin’s spot price and the strike price at expiration. Unlike the options available with instant Bitcoin ETFs, there is no physical Bitcoin and no early assignment risk, offering investors an alternative way to bet on the price of the cryptocurrency.
Source: KNOT
The contracts will trade under the ticker QBTC on Phlx, with a minimum increment of $0.01 and a position limit of 24,000 contracts per side, which is roughly equivalent to 0.12% of the remaining Bitcoin supply, the SEC noted in its order.
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CFTC approval is still needed
Despite the SEC’s green lithe, options trading cannot begin until the Commodity Futures Trading Commission grants its own exemption due to Bitcoin’s classification as a commodity under the CFTC’s jurisdiction.
CME Group, which has been offering Bitcoin futures options since 2020, submitted a comment letter last October arguing that the contracts fell under the exclusive jurisdiction of the CFTC. In its filing, the SEC noted that Art. 717 of the Dodd-Frank Act is not restricted to “new derivative products” and allows for concurrent jurisdiction between the SEC and the CFTC if the latter grants an exemption.
“The concept of shared jurisdiction between the Commission and the CFTC is not new,” the SEC wrote in its filing, citing existing examples such as cross-border swaps and securities futures.
Related: The Nasdaq and S&P 500 closed at record highs as technology stocks rose
The SEC is becoming more and more cordial to cryptocurrencies
The SEC, under Paul Atkins, is moving toward a more crypto-friendly regulatory stance. Atkins moved to drop several high-profile enforcement cases against crypto companies brought under the previous administration and publicly called for a clearer regulatory framework that encourages rather than stifles innovation.
As Cointelegraph reported, the agency is preparing an “innovation exemption” that would enable blockchain-based tokenized trading of shares of public companies on decentralized crypto platforms, even without the consent of tracked companies.
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