Nasdaq Pursues SEC Approval for Bitcoin Index Options
An important step toward broadening the investment tools available to cryptocurrency enthusiasts, Nasdaq has formally requested regulatory approval to launch and trade options on a bitcoin index. The exchange operator made this announcement on Tuesday while the U.S. Securities and Exchange Commission (SEC) is still debating whether to approve options linked to specific exchange-traded funds (ETFs) that track spot bitcoin prices.
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Interestingly, traders and institutional investors now have an alternate way to hedge their exposure to the top cryptocurrency thanks to these suggested bitcoin index options. Industry experts agree that this development could close a significant gap in the market by offering a liquid and affordable means of increasing exposure to Bitcoin.
Bitwise’s Chief Investment Officer, Matt Hougan, stressed the significance of these choices in the acceptance of Bitcoin as an asset class. “Bitcoin options are necessary for the asset class to become completely mainstream. Hougan said, “We’re missing a crucial element of liquidity that ETF options would bring.”
As financial derivatives, options give holders the ability to purchase or sell an asset at a fixed price within a given window of time. They provide traders with an effective instrument to increase their purchasing power, while institutional investors utilize them to efficiently control risk.
In order to follow bitcoin futures and options contracts that are offered on the exchange run by the CME Group, the planned Nasdaq Bitcoin Index Options would be connected to the CME CF Bitcoin Real-Time Index.
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Meanwhile, traders have resorted to alternate products such as recently introduced leveraged ETFs linked to Bitcoin, while the SEC evaluates these applications. The SEC approved the underlying ETFs early this year, and since then, exchanges have been actively asking for spot bitcoin ETF options. SEC input, however, has forced adjustments to these petitions, according to people familiar with the matter.
Nasdaq’s project has the potential to profoundly impact the future of cryptocurrency trading by offering improved tools to market participants and deepening the integration of Bitcoin into traditional financial markets.
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