Options trading on spot Bitcoin ETFs is moving closer to reality following a critical development from the Commodity Futures Trading Commission (CFTC).
On Friday, the CFTC's Division of Clearing and Risk (DCR) issued a staff advisory clarifying that options on spot commodity ETFs fall under the jurisdiction of the Securities and Exchange Commission (SEC), not the CFTC.
The advisory noted that it was “very likely” that such ETF shares would be considered securities based on court precedents. As a result, these options would be cleared by the Options Clearing Corporation (OCC), which operates under SEC oversight.
“The listing of these securities on national securities exchanges registered with the SEC does not fall within the jurisdiction of the CFTC,” the recommendation states, paving the way for further progress in listing spot Bitcoin ETF options.
The announcement is a significant step for spot bitcoin ETFs, which have been gaining regulatory momentum. Bloomberg senior ETF analyst Eric Balchunas called the CFTC’s decision the second major milestone for bitcoin ETFs after they received SEC approval.
“The ball is now in OCC’s court and they are involved in this, so they will be listed very soon,” Balchunas said on X (formerly Twitter).
The OCC, the world's largest equity derivatives clearinghouse, now takes responsibility for listing and facilitating options trading on these ETFs.
Progress on options trading began on September 20, when the SEC approved BlackRock’s proposal to list and trade options for its IBIT fund. This development follows the SEC’s approval of 11 spot Bitcoin ETFs in January.
But some industry leaders argue the delays are unnecessary.
“It’s nice to see progress, but this delay was completely unnecessary,” ETF Store President Nate Geraci said on X. “In the meantime, there’s no reason why there shouldn’t be options trading on spot ETH ETFs as soon as possible…”
Advocates of options trading on Bitcoin ETFs argue that it can help stabilize the market. Derivatives expert Dick Delaney explained how options trading can reduce volatility.
“As open interest increases, there are natural buyers and sellers on both sides of the market,” Delaney said. “This concentrates the market, increases liquidity and therefore reduces volatility.”
*This is not investment advice.