The U.S. Securities and Exchange Commission (SEC) is seeking public comment on a proposal for New York Stock Exchange (NYSE) American LLC to list and trade options on Bitwise and Grayscale’s spot Ethereum exchange-traded fund (ETF), according to an Aug. 7 filing.
The SEC stated:
“The Exchange is proposing to amend Rule 915 to permit the listing and trading of the Bitwise Ethereum ETF, the Grayscale Ethereum Trust (ETH), the Grayscale Ethereum Mini Trust, and options in any trust that holds 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 specified date. They are often used by institutional investors to increase purchasing power and manage risk in a cost-effective way.
The NYSE argues that adding options to the ETH ETF will give investors an economical means to gain exposure to spot Ethereum, and also suggests that these options will be a valuable hedging tool to manage the risks associated with the digital asset.
He added:
“The Exchange believes that by offering a competitively priced ETF option based on spot Ethereum, it will benefit investors by providing them with a relatively low-cost additional risk management tool that will enable them to more easily manage their portfolio positions and the associated risks associated with exposure to spot Ethereum.”
The NYSE request follows a similar proposal by Nasdaq on August 6 seeking approval to list options on BlackRock’s iShares Ethereum Trust (ETHA).
Public comments on these proposals must be submitted within 21 days.
Meanwhile, Bloomberg ETF analyst James Seifert expects the SEC to make a final decision on the proposals next year.
Additionally, he noted that because ETH is considered a commodity, other regulatory agencies such as the Commodity Futures Trading Commission (CFTC) and Options Exchange Clearing Corporation (OCC) must also give their approval, and that SEC approval is just one step in the process.
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Liam Akiva Wright
Liam, also known as “Akiba”, is a reporter, editor, and podcast producer at CryptoSlate. He believes decentralized technology has the potential to bring about far-reaching positive change.
