TL;DR
- Nasdaq ISE, LLC has withdrawn its proposal to list and trade options on Bitcoin and Ethereum products.
- The Securities and Exchange Commission (SEC) did not receive comments on the proposal before it was withdrawn.
- Other exchanges have withdrawn similar proposals, although they are expected to reintroduce them in the future.
Nasdaq ISE, LLC has decided to withdraw its proposals to list and trade options on Bitcoin and Ethereum products, according to documents filed with the U.S. Securities and Exchange Commission (SEC).
These proposals sought to amend current rules to allow trading of options on units representing interests in trusts that hold cryptocurrencies such as Bitcoin and Ethereum.
The withdrawal of these proposals came just one day after they were published in the Federal Register on August 12, 2024.
Surprisingly, the SEC received no comments on these proposals prior to their withdrawal, reflecting the complexity and potential uncertainties surrounding the approval of these types of financial products.
This move by Nasdaq ISE, LLC is not an isolated case.
In recent weeks, other exchanges such as MIAX, MIAX Pearl, BOX Exchange, and Cboe have also withdrawn similar proposals.
However, Cboe’s swift re-filing of one of these proposals suggests that these withdrawals may not be final and could signal a deeper discussion process between the exchanges and the SEC.
This could be an indication that the SEC is carefully evaluating the feasibility and safety of allowing trading in these financial products, especially given that to date, it has not approved trading of options on Bitcoin and Ethereum-based products in the spot market.
Possible Refiling of Proposals on Nasdaq
Although Nasdaq and other exchanges have chosen to temporarily withdraw their proposals, there are clear signs that they could reintroduce them in the near future.
Analysts such as Bloomberg Intelligence’s James Seyffart have indicated that Nasdaq and NYSE are likely to follow Cboe’s lead and resubmit their applications in the coming days or weeks.
This suggests that exchanges are working on adjustments or collecting additional data that could satisfy the SEC’s concerns.
Approval of options for Bitcoin and Ethereum ETFs on the spot market would be a significant step in the integration of cryptocurrencies into traditional financial markets.
However, the road to this approval has been long and complicated, with many back and forths between regulatory institutions and stock exchanges.
The SEC’s caution reflects its concerns about the volatility of cryptocurrencies and the associated risks to investors.
Despite these challenges, demand for cryptocurrency-based financial products continues to grow, putting pressure on exchanges and regulators to find solutions that can balance innovation with investor protection.
Although the current proposals have been withdrawn, exchanges are likely not to give up and will continue working to make spot market options trading on Bitcoin and Ethereum ETFs a reality.
This could mark a milestone in the acceptance and legitimization of cryptocurrencies in conventional financial markets.
