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Seeking Alpha 2024-09-20 23:10:27

U.S. SEC approves options trading on BlackRock's spot bitcoin ETF

The U.S. Securities and Exchange Commission (SEC) on Friday approved the listing and trading of options on BlackRock's ( NYSE: BLK ) spot bitcoin ( BTC-USD ) exchange-traded fund. BlackRock's ( BLK ) iShares Bitcoin Trust ETF ( NASDAQ: IBIT ) is the world's largest fund of the cryptocurrency, with net assets of $22.67B as of September 19, 2024. "Options on IBIT would provide investors with a hedging and risk management tool to manage exposure to the price of bitcoin and bitcoin-related products and positions," the SEC said in a statement . The options would be physically settled with American-style exercise, which refers to an options contract that allows holders to exercise their rights at any time before and including the expiration date. The options on IBIT would trade in a similar manner as other ETF options, the SEC said. "Huge win for the bitcoin ETFs (as it will attract more liquidity which will in turn attract more big fish)," Eric Balchunas, senior ETF analyst for Bloomberg, said on X (formerly Twitter). "Important note: This is just one stage of approval, the OCC and CFTC has to approve as well before they officially list. The other two don't have a 'clock' so not sure when they'll be approved. A big step (though) nonetheless that the SEC came around," Balchunas added, referring to the Options Clearing Corporation and the Commodity Futures Trading Commission. Options are contracts that give investors the right, but not the obligation, to buy (a "call" option) or sell (a "put" option) an asset at a predetermined price before a specific date. With bitcoin's ( BTC-USD ) tendency to show wild swings in price, options would allow investors to manage associated risks more effectively. The crypto industry in the U.S. received a major boost at the start of this year after the SEC's long-awaited approval of spot bitcoin ( BTC-USD ) exchange-traded products. Not long after, bitcoin ( BTC-USD ) surged to a record high north of $73K in March, though it has since retreated after its last halving on April 19, 2024. It was last +0.3% to $63,161.02. According to CoinMarketCap, the market cap of the global crypto industry stood at $2.2T. Here are some crypto-focused exchange-traded funds that investors can track: Bitcoin Backed ETFs: ( IBIT ), ( ARKB ), ( GBTC ), ( BRRR ), ( BTCO ), ( HODL ), ( BTCW ), ( FBTC ), ( BITB ), and ( EZBC ). Blockchain ETFs: ( BITQ ), ( DAPP ), ( BKCH ), ( BLOK ), ( CRPT ), and ( IBLC ). More on BlackRock and bitcoin Swimming With Giants - Don't Bet Against BlackRock BlackRock, Microsoft, Nvidia team up to launch $30B AI infrastructure fund Bitcoin: More Reserve Asset Than Global Currency Bitcoin on track to rise on weekly basis as Fed delivers jumbo rate cut MicroStrategy adds 7,420 more bitcoins to its balance sheet in past week

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