The SEC approved options trading for BlackRock's iShares Bitcoin Trust, offering new tools for hedging Bitcoin price risks.
A 25,000 contract cap was set to deter market manipulation, with strict surveillance measures applied to monitor Bitcoin options trading.
The SEC's approval follows months of review, addressing concerns on liquidity, market manipulation, and investor protection for Bitcoin ETFs.
According to a filing, the US Securities and Exchange Commission (SEC) has allowed options trading for BlackRock's iShares Bitcoin Trust (IBIT). This clearance provides investors with more options for hedging and managing risk related to Bitcoin price fluctuations.
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These options, which are physically settled in Bitcoin, will function similarly to other exchange-traded funds (ETFs) that are now available on US markets. The SEC stated that IBIT options will be rigorously monitored, following regular ETF trading regulations while also implementing Bitcoin-specific procedures to guarantee market stability.
New Limits and Enhanced Oversight
In its filing, the SEC detailed six essential rules designed to prevent market manipulation. Given Bitcoin's market capitalization and liquidity, a conservative cap of 25,000 contracts has been set in order to ensure market integrity.
The approval requires enhanced surveillance and anti-manipulation activities. Real-time tracking and post-trade analysis will be used to prevent any suspicious trading activity. The level of evaluation is deemed necessary given Bitcoin's well-known price volatility, which remains an area of concern for both investors and regulators.
Approval Process and Market Reaction
The approval process for these options began in January 2024, when Nasdaq ISE proposed to issue and trade options on BlackRock's spot Bitcoin ETF. Following public feedback and multiple revisions, the SEC approved the proposal. The decision addresses prior concerns about market manipulation, investor protection, and overall liquidity.
Industry insiders have already reacted enthusiastically. Experts believe that the approval will increase liquidity for Bitcoin ETFs. It will also encourage larger institutional investors to engage more actively in the cryptocurrency sector.
The approval of options trading on BlackRock's iShares Bitcoin Trust marks another important step. The SEC is broadening the tools available for managing Bitcoin risk. This action reflects increasing regulatory acceptance of Bitcoin in traditional financial markets. Investors now have greater options for exposure to this volatile asset.
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