The U.S. Securities and Exchange Commission (SEC) has approved a rule change allowing Nasdaq’s International Securities Exchange to list and trade options on BlackRock’s iShares Bitcoin Trust (IBIT), expanding derivative products linked to Bitcoin. This marks a significant step for investors looking to manage Bitcoin-related risks through options, providing new tools for exposure to the world’s largest cryptocurrency.
BlackRock has been seeking approval for this listing since March 2024, following the regulator’s greenlight for several Bitcoin-linked exchange-traded funds (ETFs). The approval allows for options trading tied to IBIT, BlackRock’s popular ETF that tracks Bitcoin’s price.
The SEC’s approval comes after Nasdaq ISE submitted multiple amendments addressing concerns about market manipulation and excessive risk in the crypto options market. One key amendment sets conservative position and exercise limits for options on IBIT at 25,000 contracts, reflecting the market size and the ETF’s liquidity, according to SEC filings. These options will be physically settled and feature American-style exercise, offering hedging opportunities for investors looking to mitigate exposure to Bitcoin’s price movements.
Despite the approval, some concerns remain about the potential risks of cryptocurrency derivatives, particularly related to market volatility. Comment letters during the SEC’s review raised concerns about the broader integration of crypto into traditional financial markets, urging a delay until the Bitcoin market stabilizes further. However, the SEC found that Nasdaq’s surveillance mechanisms, including real-time monitoring and inter-market agreements with the CME, would be sufficient to prevent manipulation.
BlackRock’s Bitcoin ETF has garnered significant attention since its launch earlier this year, becoming one of the most liquid Bitcoin-related products in the U.S. market. With the SEC’s approval, investors now have additional ways to engage with Bitcoin through regulated financial instruments.