US Lawmakers Call on SEC to Approve Bitcoin Options Trading

As reported by Axios, Representatives Mike Flood and Wiley Nickel recently wrote a letter to committee chairman Gary Gensler calling on the SEC to stop discriminating against crypto funds.

“We urge you to without delay approve the options on the Bitcoin ETP Spot or provide an explanation for the Commission's discrepancies in the treatment of the Options Contracts on the Bitcoin ETF Futures (currently trading) and Options Contracts from Bitcoin ETP Spot.”

Quote from letter to SEC from 2 lawmakers

Options contracts are financial instruments that give the buyer the right to buy or sell, but not the obligation to buy or sell an asset (in this case, Bitcoin) at a fixed price by a certain date in future. This tool is commonly used to hedge against price fluctuations, limit potential losses, and allow traders to generate additional income through investment strategies.

According to Flood and Nickel, this approval is important for investors that the SEC "seeks to protect."

The agency delayed decisions on applications from the New York Stock Exchange, Nasdaq and Cboe Global Markets submitted in January.

Nasdaq has applied to list and trade Options on BlackRock's iShares Bitcoin Trust, while Cboe plans to offer Options on various BTC funds. Similarly, NYSE intends to trade Options on the Bitwise Bitcoin ETF, Grayscale Bitcoin Trusts, and any other trusts holding Bitcoin.

Recently, the SEC began a new consultation round on a proposed rule change to allow options trading on Bitcoin funds.

According to an April 24 filing, the SEC is looking to explore how Bitcoin options could impact market stability, especially during volatile conditions. The agency is also XEM whether current market surveillance and enforcement measures are sufficient to manage the complexity of Bitcoin Options. Participants are invited to submit initial comments by May 15 and rebuttal comments by May 29.