Nasdaq Eyes Regulatory Nod for Bitcoin Index Options, Pending SEC Decision

Nasdaq, in partnership with Kraken-owned CF Benchmarks, announced Tuesday that it has filed an application with the US Securities and Exchange Commission (SEC) to list and trade options tied to the price of Bitcoin.

Nasdaq’s offering would be known as the Nasdaq Bitcoin Index Options (XBTX) and it would track CF Benchmark’s CME CF Bitcoin Real-time Index (BRTI), which operates on the Chicago Mercantile Exchange. Nasdaq says the new product would increase Bitcoin’s maturity as an asset class and improve its liquidity while also helping investors hedge their investments and manage risk.

This application comes amid lengthy delays in the launch of options based on the individual Bitcoin spot ETFs approved at the beginning of the year. Several major exchanges filed applications to list and trade options based on the ETFs back in January but are still awaiting a decision from regulators.

Related: US Spot Bitcoin ETFs Hit $16 Billion in Lifetime Inflows After Buying the Dip

Index Options Advances Bitcoin Maturation, Says Nasdaq

The proposed Bitcoin index options product would allow investors to trade Bitcoin options based on CF Benchmark’s BRTI index price. The primary benefit of this for investors would be the ability for them to buy or sell options at a set date for a predetermined price, opening up opportunities for more sophisticated risk-management strategies.

According to NASDAQ’s announcement, the BRTI’s price is based on data from several leading crypto exchanges, and is updated every second: 

The calculations powering the index are executed every second of every day by aggregating Bitcoin-USD order data from the leading cryptocurrency exchanges meeting the specific criteria.

NASDAQ

Nasdaqs’s Vice President and Head of Exchange Business Management, Greg Ferrari, says that if approved, the launch of Nasdaq’s Bitcoin Index Options would be a significant milestone for the digital assets market:

This collaboration further combines the innovative crypto landscape with the resiliency and reliability of traditional securities markets and would mark a significant milestone for expanding the maturation of the digital assets market.

Greg Ferrari, Vice President and Head of Exchange Business Management at Nasdaq

Options Based on Bitcoin Spot ETFs Still Haven’t Arrived

Nasdaq’s application comes as exchanges continue to await the green light to launch options based on any of the individual Bitcoin spot ETFs that launched in January. Several exchanges, including Nasdaq and Cboe, began applying to the SEC to launch options based on the ETFs way back in January when it became clear the ETFs were set to be approved — but as yet none have been rubber stamped.

Related: New York Stock Exchange to Collaborate with CoinDesk for Potential Crypto Trading

This delay has been at least partly explained by both the SEC and the Commodity Futures Trading Commission (CFTC) being involved in the approvals process. Speaking to Blockworks back in April, CK Zheng, co-founder of crypto hedge fund ZX Squared Capital, said:

It usually takes a longer period of time to approve an innovative financial product when both CFTC and SEC are involved.

CK Zheng, Co-founder of crypto hedge fund ZX Squared Capital

Nasdaq’s application also follows NYSE’s announcement in May that it plans to list Bitcoin options that will track CoinDesk’s Bitcoin Price Index (XBX).