Cboe Exchange Moves to List Options on Bitcoin and Ether ETFs

The Cboe Exchange, a major US securities exchange, has filed an amended application to regulators seeking approval to list options on Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs). This move, detailed in filings on August 28, represents a significant development in the burgeoning market for cryptocurrency derivatives.

Expanding the Cryptocurrency Options Market

The Cboe’s proposed rule change aims to introduce options linked to Bitcoin and Ether ETFs issued by a range of prominent asset managers. These include Fidelity, 21Shares, Invesco, VanEck, Grayscale, Bitwise, BlackRock’s iShares, and Valkyrie. The inclusion of these ETFs would categorize them similarly to commodities-based ETFs such as the Goldman Sachs Physical Gold ETF and the iShares Silver Trust, as securities deemed appropriate for options trading.

Options are financial contracts that give investors the right, but not the obligation, to buy or sell an underlying asset at a predetermined price. These contracts are used both for hedging purposes and speculative trading. The proposed listings signify a growing interest and acceptance of cryptocurrency options in traditional financial markets.

This filing follows a series of movements in the US cryptocurrency options market. On August 27, Nasdaq announced its intention to list Bitcoin options tied to the CME CF Bitcoin Real-Time Index (BRTI), a benchmark for Bitcoin’s spot price. However, earlier in August, both the New York Stock Exchange (NYSE) American and Nasdaq International Securities Exchange (ISE) withdrew four applications related to the potential listing of Bitcoin options. Additionally, on August 8, Cboe itself had withdrawn an earlier application to list options on Bitcoin ETFs.

Bloomberg Intelligence analyst James Seyffart noted that there has been significant movement regarding Bitcoin ETF options. He suggested that feedback from the Securities and Exchange Commission (SEC) could be influencing these adjustments, with Bloomberg predicting that spot Bitcoin options might go live in the fourth quarter of 2024.

Growing Interest in Cryptocurrency Derivatives

The popularity of cryptocurrency derivatives on regulated exchanges is rising in the US. As of August 9, open options interest on Bitcoin futures ETFs had surpassed $3.25 billion, according to data from The Options Clearing Corporation. This reflects a robust appetite for cryptocurrency trading instruments among institutional and retail investors alike.

In addition to Bitcoin and Ether, exchanges are also looking to expand their offerings to include Solana (SOL) ETFs. Despite the recent removal of Cboe Global Markets’ regulatory filing for a Solana ETF, VanEck’s plans for a Solana ETF remain active, as reported by Matthew Sigel, VanEck’s head of digital assets research.

Cboe’s move to list options on Bitcoin and Ether ETFs marks a significant step in the integration of cryptocurrency assets into traditional financial markets. As regulatory approvals progress and market dynamics continue to evolve, the expansion of options and other derivative instruments is likely to enhance the depth and liquidity of cryptocurrency trading. This development underscores the increasing convergence of traditional finance and digital assets, setting the stage for further innovation and growth in the sector.