Nasdaq Seeks Approval to Launch Groundbreaking Bitcoin Index Options

Nasdaq is seeking regulatory approval to introduce and trade options linked to a bitcoin index, the exchange operator announced on Tuesday.

The U.S. Securities and Exchange Commission (SEC) has not yet authorized options tied to individual exchange-traded funds (ETFs) that track spot Bitcoin prices, including Nasdaq’s application to trade options on BlackRock’s $21.3 billion iShares Bitcoin Trust ETF.

These proposed index options, which are derivatives allowing for quick and cost-effective exposure to Bitcoin, would provide institutional investors and traders with another tool to manage their exposure to the leading cryptocurrency. Matt Hougan, Chief Investment Officer of Bitwise, a company involved in launching Bitcoin ETFs earlier this year, emphasized the importance of having options available for Bitcoin. “Options on Bitcoin are essential for fully integrating this asset class into the market,” Hougan stated. “ETF options would add a missing element to the liquidity landscape.”

Options, as listed derivatives, grant holders the right to buy or sell an asset, such as a stock or exchange-traded product, at a predetermined price by a specified date. Traders often use options to increase their purchasing power at a lower cost, while institutional investors use them as a risk management tool. Nasdaq’s proposed Bitcoin Index Options would follow the CME CF Bitcoin Real-Time Index, which tracks Bitcoin futures and options contracts on the CME Group (CME.O) exchange, Nasdaq explained.

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In the meantime, as regulators deliberate on the approval of options for the new spot Bitcoin ETFs, traders have been turning to other alternatives like recently launched leveraged ETFs tied to Bitcoin, along with options on those funds. Exchanges started applying for spot Bitcoin ETF options as soon as the SEC indicated its approval of the underlying ETFs in January. However, in recent weeks, these applications have been withdrawn and resubmitted due to feedback from the SEC, according to sources familiar with the situation.