BlackRock Spot Bitcoin ETF Approved by SEC for Options Trading

Key Points:

• The SEC approved Nasdaq’s application to list options for BlackRock spot Bitcoin ETF.
• Investors can trade IBIT options under the same rules as other ETF options on Nasdaq.

The U.S. Securities and Exchange Commission has approved Nasdaq’s application to list options on the iShares Bitcoin Trust ETF, or IBIT, marking a meaningful milestone in cryptocurrency investment products.

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SEC Approves Options Trading for BlackRock Spot Bitcoin ETF

That approval, which came on Sept. 20, enables the trading of options related to the BlackRock spot Bitcoin ETF listed under the ticker IBIT on Nasdaq and grants investors additional ways through which to hedge against and get exposure to the cryptocurrency market.

The decision permits options that are physically settled, which means that contracts will deliver the actual Bitcoin upon exercise. According to Nasdaq, options will trade in a similar fashion as other ETF options with the same rules and rulesets.

The approval marks the first time the SEC has allowed options trading around a spot Bitcoin ETF and gives institutional and retail investors more sophisticated ways to hedge or amplify positions in the world’s largest cryptocurrency.

Approval of First-Ever Options on Spot Bitcoin ETFs

Options trading gives an investor the right, but not the obligation, to buy or sell something at a certain price and within a specific time. BlackRock spot Bitcoin ETF options will be American-styled, meaning traders will have the possibility to exercise their contracts anytime before or on the expiration date.

The Commission also indicated that such options would be associated with improved risk management and hedging regarding the volatility of Bitcoin’s price. This new route to managing exposure to the highly volatile cryptocurrency market, in particular, would benefit institutional investors.

The move has been seen as a positive development for the broader cryptocurrency market, as Bitcoin ETFs and their derivatives will further find their way into mainstream financial markets.

Other U.S. exchanges are expected to follow Nasdaq’s lead and file applications for similar products. Later, Nasdaq also filed options trading in Ethereum ETF-linked options, but it may take a bit longer-possibly well into 2025.