The U.S. Securities and Exchange Commission (SEC) is seeking public comment on a proposal by New York Stock Exchange (NYSE) American LLC to list and trade options on Bitwise and Grayscale’s Ethereum spot exchange-traded funds (ETFs), according to an Aug. 7 filing.
The SEC said:
“The Exchange is proposing to amend Rule 915 to permit the listing and trading of options on the Bitwise Ethereum ETF, the Grayscale Ethereum Trust (ETH), the Grayscale Ethereum Mini Trust, and any trust holding ether.”
Options are derivatives that give the right, but not the obligation, to buy or sell an asset, such as a stock or ETF, at a specified price on a specified date. They are a cost-effective way to increase purchasing power and are commonly used by institutional investors to manage risk.
The NYSE argues that adding options on ETH ETFs will provide investors with a cost-effective way to gain exposure to the Ethereum spot market. It also suggested that these options will provide a valuable hedging tool to manage risks associated with the digital asset.
He added :
“The Exchange believes that offering options on a competitively priced ETF based on spot ether will benefit investors by providing them with an additional, relatively less costly risk management tool to more easily manage their positions and associated risks in their portfolios related to exposure to spot ether.”
The NYSE’s request follows a similar proposal on August 6 from Nasdaq, which sought approval for the listing of options for BlackRock’s iShares Ethereum Trust (ETHA).
Public comments on these proposals must be made within 21 days.
Meanwhile, Bloomberg ETF analyst James Seyffart expects a final decision from the SEC on these proposals next year.
Additionally, he noted that the SEC approval is just one step in the process, as other regulatory bodies, including the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC), must also give their approval since ETH is considered a commodity.
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Liam “Akiba” Wright
Also known as Akiba, Liam is a journalist, editor, and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to bring about positive change on a large scale.
