According to a filing on August 7, the U.S. Securities and Exchange Commission (SEC) is seeking public comment on a proposal by NYSE American LLC to list and trade options on spot Ethereum exchange-traded funds (ETFs) from Bitwise and Grayscale.
The SEC stated:
“The Exchange proposes to amend Rule 915 to allow options listing and trading on the Bitwise Ethereum ETF, Grayscale Ethereum Trust (ETH), Grayscale Ethereum Mini Trust, and all trusts that hold Ether.”
Options are derivatives that provide the right, but not the obligation, to buy or sell an asset, such as a stock or ETF, at a set price by a certain date. They provide a cost-effective way to increase purchasing power and are commonly used by institutional investors to manage risk.
NYSE argues that adding options to the ETH ETF would provide investors with an economic means to gain exposure to physical Ethereum. It also suggests that such options would provide a valuable hedging tool to manage risks associated with the digital asset.
It added:
“The Exchange believes that offering the option for a competitively priced ETF based on spot ether would benefit investors by providing them with an additional, relatively low-cost risk management tool to more easily manage their positions and the associated risks in their portfolios with respect to their exposure to spot ether.”
The NYSE’s request is similar to Nasdaq’s August 6 proposal seeking approval for listing options on BlackRock’s iShares Ethereum Trust (ETHA).
Public comments on this proposal will be accepted within 21 days.
Bloomberg ETF analyst James Seifart expects the SEC to make a final decision on the proposal sometime next year.
He also noted that SEC approval is just one step in the process, and that since ETH is considered a commodity, other regulators, including the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC), also need to approve it.
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Liam ‘Akiba’ Wright
Liam, also known as “Akiba,” is a reporter, editor, and podcast producer at CryptoSlate. He believes decentralized technologies have the potential to bring about broad positive change.