The U.S. Securities and Exchange Commission (SEC) has approved a tenfold increase in options contract limits for certain Bitcoin exchange-traded funds (ETFs). NYDIG, a crypto financial services firm, has suggested that this move could bolster BlackRock’s iShares Bitcoin Trust ETF (IBIT).
The SEC has raised the limit from 25,000 to 250,000 contracts for ETFs with options. This includes IBIT but excludes the Fidelity Wise Origin Bitcoin Fund (FBTC), as noted by Greg Cipolaro, NYDIG’s global head of research, in a report released on Friday.
BlackRock’s iShares Bitcoin Trust ETF (IBIT) holds $85.5 billion in assets under management, making it the largest Bitcoin ETF, according to CoinGlass. This is four times the size of the second-largest Bitcoin ETF, Fidelity’s Wise Origin Bitcoin Fund (FBTC), which manages $21.35 billion in assets.
SEC Changes to Boost Bitcoin ETFs
The SEC has made changes that could make Bitcoin ETFs more appealing to big investors, according to NYDIG’s Greg Cipolaro. The SEC’s decision to raise options contract limits allows traders to use strategies like covered call selling, where they sell options while owning Bitcoin to reduce risk.
These changes could lower Bitcoin’s price swings, making it more attractive to institutional investors and driving more demand for Bitcoin ETFs. The SEC also authorized the creation and redemption of “in-kind” crypto ETFs, enabling the exchange of ETF shares for actual cryptocurrency rather than cash. The system was described as a key feature that improves market efficiency and investor access.
Cipolaro shared that only companies which already trade cryptocurrencies, like Jane Street and Virtu, can take full advantage of new Bitcoin ETF rules. Other firms may need to team up with crypto experts to keep up. These changes show that big investors are getting more interested in Bitcoin, helping it blend into mainstream financial markets, according to experts.
