Cboe Global Markets, one of the largest exchange holding companies, withdrew and subsequently re-filed its application to list options of spot Bitcoin exchange-traded funds (ETFs). This action suggests that the US Securities and Exchange Commission (SEC) could be actively involved in the application process.
This follows a statement made earlier in the day by Bloomberg Intelligence analyst James Seyffart that options of spot Bitcoin ETFs could be available by the fourth quarter of this year.
Flurry of Withdrawals from Cboe
Meanwhile, the Miami International Securities Exchange (MIAX PEARL), BOX Exchange, and Cboe withdrew their applications to list options on spot Bitcoin ETFs within hours of Seyffart’s statement. However, Seyffart downplayed the importance of these exchanges withdrawing their applications.
He asserted that the filings from exchanges such as Nasdaq, NYSE, and Cboe are more significant. Eric Balchunas, a fellow Bloomberg Intelligence analyst, also echoed this sentiment. Balchunas emphasized that these exchanges may have a greater chance of obtaining approval for their applications later this year.
Cboe’s New Filing
Immediately after withdrawing its initial application, Cboe promptly re-filed a new and updated application. The exchange proposed an amendment of its rules in the updated application to permit the listing and trading of options on units representing interests in several spot Bitcoin ETFs.
This includes those managed by Fidelity, Ark Invest/21Shares, Invesco, Franklin Templeton, VanEck, WisdomTree, Grayscale, Bitwise, BlackRock, and Valkyrie. This new application represents a departure from the initial submission, which was more general. Remarkably, this updated version did not specify which ETFs would be impacted by the proposed rule change.
Seyffart suggested that the updated and expanded application could be a response to feedback from the SEC regarding concerns about market manipulation and position limits. Balchunas stated that the SEC’s engagement—if it is true—could be a positive indicator of approval.
He emphasized that the SEC is unlikely to pursue a detailed back-and-forth process if it intends to deny the application outrightly.
Nevertheless, Seyffart added that the SEC’s final decision is impossible to predict despite the positive signals. Additionally, he said that a disadvantage of the re-filing is that the regulator could postpone the decision deadline to April 2025.
Crypto ETF Market Trends
Furthermore, Nate Geraci, President of The ETF Store, stated that there are too many complexities regarding the ETF regulatory environment. He referenced the regulators’ approval of a variety of other crypto derivatives ETFs, such as those linked to Bitcoin and Ethereum futures, as well as levered and inverse products.
Then, he wondered why they are still determining the eligibility of options on spot Bitcoin ETFs. According to Geraci, this discrepancy has resulted in confusion and frustration among market participants.
Moreover, the week has been characterized by substantial volatility in the broader crypto market. As the bulls and bears vie for market control, $2.5 billion worth of Bitcoin and Ether options expired on the same day as the Cboe’s re-filing.
However, Bitcoin and Ethereum’s prices exhibited significant resilience, with BTC gaining by 7% and ETH increasing by 10% over the past seven days. Deribits data indicated that approximately 32,000 Bitcoin options contracts expired, with a put-call ratio of 0.71 and a notional value of $1.943 billion. Also, the maximum pain threshold was $60,000.
Surge in Market Volatility
The market’s volatility was further exacerbated by external factors, such as a recent rate increase by the Bank of Japan, which initially caused Bitcoin’s price to fall below $50,000. Nevertheless, BTC’s value soared by 20% and now trades above $61,000, following a subsequent statement from the Bank of Japan indicating a more accommodating posture after its initial decision caused a destabilization of global financial markets.
In a related development, the NYSE has proposed a rule modification to allow the listing and trading of options on Bitwise’s and Grayscale’s spot Ethereum ETFs. This proposal comes when Ethereum has demonstrated resilience, gaining 3.1% in the past 24 hours and trading around the $2,570 mark.
