Nasdaq is seeking approval for its plans to introduce and trade options based on a bitcoin index, the exchange operator announced on Tuesday.
According to a report from Reuters, the U.S. Securities and Exchange Commission (SEC) has not yet given the green light for options linked to individual exchange-traded funds (ETFs) that are tied to spot bitcoin prices, including Nasdaq's own application to offer options on BlackRock's $21.3 billion iShares Bitcoin Trust ETF.
These proposed index options would provide institutional investors and traders with a streamlined, cost-effective method to gain or hedge exposure to bitcoin, the largest cryptocurrency by market value.
Options are financial instruments that allow the holder to buy or sell an asset, like a stock or ETF, at a set price before a specified date. They offer traders an inexpensive way to leverage their positions, while institutional investors often use them to mitigate risk.
Reuters explains that Nasdaq's proposed Bitcoin Index Options would be based on the CME CF Bitcoin Real-Time Index, which tracks bitcoin futures and options traded on the CME Group’s exchange, according to the company.
While the SEC continues to deliberate on options for the new spot bitcoin ETFs, traders have been turning to alternative products, such as newly launched leveraged ETFs tied to bitcoin and their respective options.
Applications for spot bitcoin ETF options were submitted as soon as the SEC indicated it would approve the underlying ETFs in January. However, according to Reuters, the exchanges have since withdrawn and resubmitted these applications following feedback from the SEC.