A New 19b-4 Filing, Will the SEC Approve?

The introduction of spot Bitcoin ETFs has experienced a robust upswing in trading volumes, reaching $10 billion within the initial three days of their launch. Meanwhile, there is growing speculation in the market regarding the potential inclusion of options trading for the commodity-based trust shares associated with certain new Bitcoin ETFs.

Options Trading for Spot Bitcoin ETFs

Last Saturday, January 13, Bloomberg analyst Henry Jim reported that the New York Stock Exchange (NYSE) has submitted a 19b-4 filing, seeking approval for the listing and trading of options on Commodity-Based Trust Shares. This move aligns with the structural framework of some recently introduced Bitcoin ETFs. If approved, this initiative has the potential to not only enhance trading volume and income for NYSE but also to bolster liquidity for the newly introduced Bitcoin ETFs.

Bloomberg’s senior ETF strategist, Eric Balchunas, further explains that the 19b-4 filing is a crucial step to enable the listing of options on spot BTC ETFs. This process involves all three exchanges filing under 19b-4, anticipating the earliest approval within approximately two months. Besides, Balchunas emphasizes the significance of such filings, drawing a parallel with commodity trusts like $GLD, which underwent a similar process. Anticipating increased interest due to the inherent volatility, he notes that options could become a significant aspect of these ETFs.

This is a filing to be able to list options on spot bitcoin ETFs. All three exchanges had to file a 19b-4 (here we go again lol). Earliest approval in 2mo-ish. Commodity trusts like $GLD et al had to do the same thing. Options will likely be a big hit on these given the… https://t.co/gsMQO8DClq

— Eric Balchunas (@EricBalchunas) January 16, 2024

Bloomberg strategist James Seyffart shares insights into the 19b-4 application’s implications. While theoretically, the SEC could expedite the approval process with a first deadline in less than 60 days, Seyffart speculates on potential delays, considering the SEC’s historical approach.

The approval timeline could extend, with possibilities ranging from quicker approval to a wait until late September or early October 2024. The news unfolds against the backdrop of growing interest in the intersection of traditional financial markets and the cryptocurrency ecosystem.

Along with trading options for the spot ETFs, ProShares has also submitted fresh filings for leveraged Bitcoin ETFs. ProShares ETFs will offer investors the opportunity to take positions either in favor of or against the price movements of Bitcoin.

Grayscale Drives BTC ETFs Trading Volumes

Asset management giant Grayscale has been the heavyweight driving the Bitcoin ETF trading volumes lately. In his recent update for Tuesday, January 16, James Seyffart stated that yesterday, the Bitcoin ETFs witnessed net outflows, particularly estimating that approximately $594 million will exit $GBTC, leading to a total outflow of $1.173 billion.

While some other Bitcoin ETFs experienced inflows, Seyffart expresses skepticism about whether these inflows will be sufficient to offset the substantial outflow of nearly $600 million from $GBTC. The dynamics of fund flows within the Bitcoin ETF market continue to be a focal point for market observers.