Nasdaq seeks regulatory approval for bitcoin index options

Nasdaq filed an application with the US Securities and Exchange Commission (SEC) to launch and trade options on a bitcoin index, the exchange operator said on Tuesday. This move would provide institutional investors and traders with a new way to invest in and hedge their exposure to bitcoin.

While the SEC has approved several spot bitcoin exchange-traded funds (ETFs), it has yet to approve options based on these ETFs. Nasdaq’s proposed index options would offer a more flexible and efficient way for investors to trade bitcoin.

Matt Hougan, chief investment officer of Bitwise, a leading asset manager, emphasised the importance of bitcoin options for the full normalisation of the cryptocurrency market. He believes that options will provide much-needed liquidity and hedging opportunities.

Options are financial derivatives that give the holder the right to buy or sell an underlying asset at a predetermined price. They are widely used by traders to amplify their exposure and by institutional investors to manage risk.

The proposed Nasdaq Bitcoin Index Options would track the CME CF Bitcoin Real-Time Index, which is based on bitcoin futures and options contracts traded on CME Group’s exchange.

While regulators review the applications for spot bitcoin ETF options, traders have turned to other products, such as leveraged ETFs and options on those ETFs.

Attribution: Reuters