Representatives Wiley Nickel of North Carolina and Mike Flood of Nebraska are urging the Securities and Exchange Commission (SEC) to swiftly approve the listing and trading of options on spot bitcoin Exchange-Traded Funds (ETFs).
Bitcoin Options Trading: Bitcoin-Friendly Lawmakers’ Urge
In a letter addressed to SEC Chair Gary Gensler, the lawmakers highlighted the agency’s prior approval of spot bitcoin ETFs in January, which have seen substantial investment inflows amounting to billions of dollars.
Nickel and Flood emphasized the need for the SEC to provide a clear rationale for the delay, particularly considering the current availability of options for Bitcoin futures ETFs. They wrote:
“We urge you, without delay, to either approve options on spot bitcoin ETPs or to provide an explanation for the Commission’s difference in treatment between options for Bitcoin futures ETFs — which are currently trading — and options for the spot bitcoin ETPs.”
Notably, the digital asset-friendly representatives had previously advocated for spot bitcoin ETF approval in a letter penned in September 2023, along with other lawmakers.
Bitcoin Community Frustrated
The SEC has been deliberating over allowing the listing and trading of options on spot bitcoin ETFs for several months, leading to frustrations among market participants.
Several exchanges have submitted applications to enable options trading on recently approved spot bitcoin ETFs. In particular, Nasdaq has submitted filings to list and trade options on BlackRock’s iShares Bitcoin Trust while Cboe plans to offer options trading on several BTC funds.
Similarly, the NYSE plans to trade options on Bitwise Bitcoin ETF, Grayscale Bitcoin Trusts, and any other trusts holding bitcoin.
The delay contrasts with the SEC’s swift approval of options for Bitcoin futures ETFs, prompting questions regarding the discrepancy in treatment.
The approval of spot bitcoin ETFs earlier this year was influenced in part by a court ruling during the summer. The court emphasized that the agency had not provided clear justification for treating spot ETFs differently than futures ETFs.
Nickel and Flood referred to this ruling, comparing the delay in approving options on spot bitcoin ETFs to a similar situation of inconsistency by the SEC.
Notably, the regulator recently launched a new consultation round regarding the proposed rule change to allow options trading on Bitcoin funds.
Spot Bitcoin ETFs’ Performance
Meanwhile, spot bitcoin ETFs in the U.S. experienced a slight slowdown in net outflows on Thursday, with a total of $34.4 million flowing out, in contrast to the previous day’s record outflows.
Grayscale’s GBTC, which has been consistently experiencing outflows, recorded a net $55 million going out on Thursday, while Ark Invest’s ARKB saw the highest daily net inflows of $13 million.
BlackRock and Fidelity’s bitcoin funds, ranked second and third in terms of total net assets, recorded zero flows on Thursday. Other spot bitcoin ETFs, including those from Franklin Templeton, Valkyrie, Invesco, and Galaxy Digital, reported smaller net inflows totaling $6 million combined.
This follows a record outflow of $563.7 million across bitcoin ETFs on Wednesday, with Fidelity’s FBTC witnessing a significant outflow of $191 million. Wednesday also marked the first net daily outflow for BlackRock’s IBIT.
Despite the recent fluctuations in flows, analysts note that such movements are very normal for ETFs.
James Seyffart, Bloomberg’s ETF analyst, explains that a day of zero flows is not uncommon. While acknowledging the significant outflow number on Wednesday, the analyst calmed the community down by stating:
“These ETFs are operating smoothly across the board. Inflows and outflows are part of the norm in the life of an ETF.”
