Options on spot Bitcoin exchange-traded funds (ETFs) may not earn regulatory approval for several months, Reuters reported on Feb. 1.
Martin Leinweber, digital asset product strategist for MarketVector Indexes, told Reuters that it may take two to ten months for those options to gain approval. This implies a possible approval date between April and December 2024.
This is because options may need approval from two regulators. Spot Bitcoin ETFs only required approval from the U.S. Securities and Exchange Commission (SEC) prior to their launch in January. Options on those ETFs, however, may require approval from both the SEC and the Commodity Futures Trading Commission (CFTC). Leinweber explained that a need for dual approval “adds a layer of complexity and potential for … regulatory headaches.”
According to Reuters’ sources, delays are ongoing and no established regulatory process exists. One unnamed source said that the CFTC is currently looking at issues related to jurisdiction and oversight. Another said that exchange executives plan to meet with the CFTC in the near future.
Cboe, one of three exchanges that intends to list the options, supports a months-long timeline. Its website says it expects to list the options later in 2024.
Other experts anticipate earlier decision
A longer approval timeline differs from earlier expectations. Bloomberg ETF analyst James Seyffart previously suggested that the SEC could decide on spot Bitcoin ETF options as early as February and no later than September. He also suggested that the SEC had acknowledged some filings relatively quickly.
Seyffart made that statement as the SEC opened comments on certain applications on Jan. 19. His estimate seemingly did not consider the CFTC’s potential involvement in approvals, as described by Reuters today.
Regardless, the SEC is only required to reach a decision. Is not required to approve any proposals and may instead issue a rejection.
Options would provide a new way for investors to access spot Bitcoin ETFs. By investing in options, investors would be able to take part in leveraged trading and potentially earn higher returns, albeit with greater risk.