By Michael Scott
The US Securities and Exchange Commission (SEC) sought an extended time to review bids by Grayscale and Bitwise to allow the spot for Bitcoin ETFs options trading on the New York Stock Exchange (NYSE).
The securities watchdog confirmed a move to delay a decision on the bids to permit spot Bitcoin ETF options trading on the NYSE. The Monday, April 8 announcement featured a declaration that the Gary Gensler-led SEC will extend the review period to decide on approving Bitcoin ETF options trading.
SEC Delays Decision on Bitcoin ETF Options
The announcement by the securities watchdog delayed the decision to applications by Bitwise and Grayscale for 45 days. The SEC deputy secretary, Sherry Haywood, indicated that the agency considers it appropriate to have a more extended period before taking action on the proposed rule change.
Haywood disclosed that the SEC has until May 29 to deny or grant approval to the request. The pro-approval community considers that the continued delay in deciding on the crypto-based ETFs only erodes the agency’s reputation.
Georgetown University scholar James Angel invoked the old saying that justice delayed amounts to denial. The finance professor indicated that a regulatory agency unable to execute the job on time and timely ultimately loses credibility among the constituents, subjects, public, and Congress.
Angel illustrated that the SEC’s grounds for denying approval have been lacking since the agency greenlighted the Bitcoin Futures ETFs. He laments that approvals for Bitcoin ETFs are delayed owing to red tape and bureaucracy.
Gensler Prioritizes Process-Driven Approval
Angel pointed out that Gensler harbors an ambitious agenda whose execution must align with his process-driven approach, unlike his predecessors. The scholar illustrates that the Commission now manifests more extended rule filings. It has become necessary for the SEC to improve its documenting approach, given the series of court losses.
Angel considers that the SEC received the proposals to allow Bitcoin ETF options trading on NYSE a month after approving the spot crypto ETFs in January. The February 29 bid identifies ETF options as financial derivatives, allowing the sale and purchase of shares at a defined price within a specific date.
The approval of spot Bitcoin ETFs would offer leeway to speculate, hedge, and earn from diversifying ETFs. A review of data furnished by the Chicago Board Options Exchange (CBOE) reveals that NYSE holds 21% of the US options market volume and 19% in the past five days.
Grayscale chief executive Michael Sonnenshein reiterated the argument that investing options for products’ shares that hold asset derivatives is acceptable to investors. The executive added that investing in options of products holding asset shares is well.
Sonnenshein is optimistic about Grayscale’s bid approval, considering that SEC has approved options in the past on the Bitcoin futures ETFs and Bitcoin ETFs trading. As such, the SEC should readily approve listing Bitcoin ETFs’ options.
The community does not expect the Bitcoin ETF options to replicate the protracted legal dispute in August last year when the court ruled in favor of Grayscale. The case saw the investment firm challenge the perennial denials of spot Bitcoin ETFs, citing market manipulation concerns.
SEC Unlikely to Favor Case Challenging Delayed Decisions
Grayscale’s victory over the SEC prompted the approval of the Bitcoin Trust conversion into the spot Bitcoin ETF. Angel rules that the SEC is seeking to waste time that would lead to extended navel-gazing on the rule filings.
The scholar warns that continued delay would result in another humiliating loss for the SEC in court. This awareness lowers the odds that the SEC will replicate the play and reject the bid for listing Bitcoin ETF options.
The delay in approving the listing of Bitcoin ETF options aligns with the move by the SEC to extend the review period of applications for spot Ethereum ETF. The SEC delayed decisions on the proposals tabled by ARK-21Shares, Galaxy Digital, and Invesco.
Angel illustrated that the market considers Bitcoin a speculative tech-based stock whose pricing influences other digital asset pricing. The scholar indicates that while the future is uncertain for Bitcoin, the regulator should not deny investors the opportunity to trade it within a well-regulated environment.
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