Regulatory

SEC Considers Permitting Listed Options on Bitcoin ETFs

BitOoda Regulatory Analysis, 1/24/24

Tom Nath
Key Takeaway #1

The SEC is considering proposals to list options on Bitcoin ETFs.

Key Takeaway #2

Adding options on the BTC ETFs will provide institutional traders with an important and cost-effective tool for hedging BTC ETF exposure, which will be another large step forward for BTC as an institutional grade financial asset.

Key Takeaway #3

The SEC has moved quickly to acknowledge Cboe’s request.It has up to 90 days to either approve the rule change, or institute proceedings to determine if it should approve the rule change

Key Takeaway #4

The SEC has moved quickly to acknowledge Cboe’s request.

On January 5, Cboe filed a proposed rule change with the SEC that would be permit it to list options on Bitcoin exchange traded products. Nasdaq applied for the same type of rule change on January 9. On January 19, the SEC opened a 21 day comment period on Cboe’s and Nasdaq’s proposals.The rule change seeks to treat Bitcoin ETFs like other options on exchange traded products listed on Cboe. The exchange’s surveillance and reporting safeguards applicable to options on existing exchange traded products will apply to options on Bitcoin exchange traded products as well

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On January 5, Cboe filed a proposed rule change with the SEC that would be permit it to list options on Bitcoin exchange traded products. Nasdaq applied for the same type of rule change on January 9. On January 19, the SEC opened a 21 day comment period on Cboe’s and Nasdaq’s proposals.The rule change seeks to treat Bitcoin ETFs like other options on exchange traded products listed on Cboe. The exchange’s surveillance and reporting safeguards applicable to options on existing exchange traded products will apply to options on Bitcoin exchange traded products as well

Options on Bitcoin ETFs will be physically settled with Americanstyle exercise (meaning the contract can be exercised any time between commencement and expiration).The exchange will list a monthly expiry contract, in addition to short term (weekly, monthly, or quarterly) and long term (12-180 months) series of options

The SEC has moved quickly to acknowledge Cboe’s request.It has up to 90 days to either approve the rule change, or institute proceedings to determine if it should approve the rule change. We expect the SEC will ultimately approve Cboe’s and other exchange’s similar rule changes.Adding options on the Bitcoin ETFs will provide institutional traders with an important and cost-effective tool for hedging Bitcoin ETF exposure, which will be another large step forward for Bitcoin as an institutional-grade financial asset.

Disclosures

Purpose This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda .io. Analyst Certification Tom Nath, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships. Conflicts of Interest This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation. General Disclosures Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http ://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using services. BitOoda its brokerage makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information. The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance. All derivatives brokerage is conducted by Ooda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. BitOoda Technologies, LLC is a member of FINRA. “BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc. Copyright 2024 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda

On January 5, Cboe filed a proposed rule change with the SEC that would be permit it to list options on Bitcoin exchange traded products. Nasdaq applied for the same type of rule change on January 9. On January 19, the SEC opened a 21 day comment period on Cboe’s and Nasdaq’s proposals.The rule change seeks to treat Bitcoin ETFs like other options on exchange traded products listed on Cboe. The exchange’s surveillance and reporting safeguards applicable to options on existing exchange traded products will apply to options on Bitcoin exchange traded products as well

Options on Bitcoin ETFs will be physically settled with Americanstyle exercise (meaning the contract can be exercised any time between commencement and expiration).The exchange will list a monthly expiry contract, in addition to short term (weekly, monthly, or quarterly) and long term (12-180 months) series of options

The SEC has moved quickly to acknowledge Cboe’s request.It has up to 90 days to either approve the rule change, or institute proceedings to determine if it should approve the rule change. We expect the SEC will ultimately approve Cboe’s and other exchange’s similar rule changes.Adding options on the Bitcoin ETFs will provide institutional traders with an important and cost-effective tool for hedging Bitcoin ETF exposure, which will be another large step forward for Bitcoin as an institutional-grade financial asset.

Disclosures

Purpose This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda .io. Analyst Certification Tom Nath, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships. Conflicts of Interest This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation. General Disclosures Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http ://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using services. BitOoda its brokerage makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information. The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance. All derivatives brokerage is conducted by Ooda Commodities, LLC a member of NFA and subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets. BitOoda Technologies, LLC is a member of FINRA. “BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc. Copyright 2024 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda

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