BlackRock’s Spot Bitcoin ETF Gets SEC Nod for Options Trading

A filing published on September 20 revealed that the US Securities and Exchange Commission (SEC) approved options trading for BlackRock’s spot Bitcoin exchange-traded fund (ETF), iShares Bitcoin Trust (IBIT). 

This approval opens a new chapter for investors seeking to manage their exposure to Bitcoin through advanced financial instruments.

BlackRock’s Bitcoin ETF Options Approval Could Spark a Market Chain Reaction

The move allows physically settled options on the IBIT, further integrating Bitcoin into traditional financial markets. This new tool will enable investors to hedge their positions or amplify returns tied to Bitcoin’s price fluctuations.

The SEC’s approval comes with strict oversight and position limits to reduce the risks posed by Bitcoin’s volatility. The approved options will face conservative position and exercise limits, capped at 25,000 contracts. This measure is designed to minimize the likelihood of market manipulation while ensuring a stable trading environment for investors.

Read more: What Is a Bitcoin ETF?

Furthermore, the approval process included a thorough assessment of market manipulation and liquidity concerns. Alongside these limits, enhanced surveillance mechanisms, such as real-time pattern tracking and post-trade monitoring, have been put in place to prevent market abuse. These safeguards provide investors with greater confidence, ensuring a more secure trading experience.

Industry experts have been quick to acknowledge the significance of this move. Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, expressed his optimism about the move.

“[This is a] huge win for Bitcoin ETFs, as it will bring more liquidity and attract bigger institutional players. We gave it a 70% chance of approval by the end of May, so this is a welcome development,” Balchunas commented on X (formerly Twitter). 

He further emphasized that this approval will “open the doors for other Bitcoin ETFs to follow suit, creating a snowball effect in the market.” However, Balchunas noted that while the SEC’s approval is a critical step, “further approvals from the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC) are still required before trading can officially commence.”

BlackRock’s iShares Bitcoin Trust has long been a frontrunner in the spot crypto ETF segment. According to SoSo Value data, IBIT boasts a net asset value of over $22.49 billion as of September 20.

Read more: How To Trade a Bitcoin ETF: A Step-by-Step Approach

Additionally, in August, BeInCrypto reported that BlackRock filed a proposal with the SEC for options trading on its iShares Ethereum Trust (ETHA) ETF, seeking to list it on the Nasdaq International Securities Exchange.