Nasdaq Seeks Approval for Bitcoin Options as Race Heats Up in Crypto Market

On the road that could further legitimize the cryptocurrency market, Nasdaq announced on Tuesday that it is seeking regulatory approval to launch and trade options tied to the price of bitcoin (BTC). The proposed Nasdaq Bitcoin Index Options (XBTX) will be developed in partnership with CF Benchmarks and will track the CME CF Bitcoin Real-Time Index, which operates on the Chicago Mercantile Exchange (CME).

This initiative aims to provide investors with a sophisticated tool to hedge their investments in the volatile digital asset class. “This collaboration further combines the innovative crypto landscape with the resiliency and reliability of traditional securities markets,” said Greg Ferrari, Vice President and Head of Exchange Business Management at Nasdaq. He added that this move would mark a significant milestone in the ongoing maturation of the digital assets market.

Options are financial derivatives that give investors the right, but not the obligation, to buy or sell an asset at a predetermined price on a specific date. For investors in bitcoin, options can be a crucial tool for managing risk in a market known for its extreme volatility.

Nasdaq’s announcement comes amid growing competition among major financial exchanges to integrate cryptocurrency products into their offerings. Earlier this year, the New York Stock Exchange (NYSE) revealed its own plans to list bitcoin index options. However, those plans have faced regulatory hurdles, with the Securities and Exchange Commission (SEC) repeatedly extending its review period. Eventually, the NYSE withdrew its application to list and trade options based on the Bitwise Bitcoin ETF and the Grayscale Bitcoin Trust, as indicated by a recent SEC filing.

The SEC’s cautious approach to approving cryptocurrency-related financial products has created a challenging environment for exchanges eager to tap into the booming digital assets market. The Chicago Board Options Exchange (CBOE), which trades several Bitcoin ETFs, also withdrew its application earlier this year but has since re-filed with a more comprehensive proposal.

While the SEC has yet to provide public feedback on these developments, the push by major exchanges like Nasdaq and NYSE to offer bitcoin options reflects the increasing demand for more sophisticated financial instruments in the crypto space. In May, the NYSE announced its plan to list index options tracking Bitcoin prices, using the CoinDesk Bitcoin Price Index as a benchmark, further underscoring the growing interest in integrating cryptocurrency into mainstream financial markets.

As Nasdaq awaits regulatory approval, the outcome could have far-reaching implications for the future of cryptocurrency trading. If successful, it would not only offer investors new ways to manage their bitcoin exposure but also signal a deeper integration of digital assets into traditional financial systems.

David Thompson
Financial Desk