Nasdaq Seeks Approval to Launch Bitcoin Options

Nasdaq is moving to expand its offerings in the cryptocurrency space by seeking regulatory approval to launch and trade options linked to the price of Bitcoin (BTC), the exchange announced on Tuesday.

The proposed Nasdaq Bitcoin Index Options (XBTX) would be developed in collaboration with index provider CF Benchmarks and would track the CME CF Bitcoin Real-Time Index, which operates on the Chicago Mercantile Exchange (CME). According to Nasdaq (NDAQ), this new offering aims to help investors hedge their positions in the cryptocurrency market.

“This collaboration further merges the innovative landscape of crypto with the resilience and reliability of traditional securities markets, marking a significant milestone in the maturation of the digital assets market,” said Greg Ferrari, Vice President and Head of Exchange Business Management at Nasdaq.

Options are a key tool for investors looking to manage risk, providing the buyer the right to purchase or sell an asset at a predetermined price on a specified date.

This move comes after a similar announcement by the New York Stock Exchange earlier this year, which also plans to list Bitcoin index options. However, their proposal is still awaiting approval from the Securities and Exchange Commission (SEC).

Nasdaq has officially filed with the SEC to list and trade these Bitcoin Index Options, offering institutions and traders a new method to hedge their Bitcoin exposure. The proposed XBTX options would be based on the CME CF Bitcoin Real-Time Index (BRTI), developed by CF Benchmarks, which tracks Bitcoin futures and options contracts on CME Group’s platform and provides real-time pricing data.

These Nasdaq options would feature European-style exercise and cash settlement, with the final settlement value based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY). This rate is calculated every second by aggregating Bitcoin-to-USD order data from leading cryptocurrency exchanges.

If approved, these Bitcoin options would become the first crypto derivatives to be cleared by the U.S. Options Clearing Corporation (OCC). Greg Ferrari emphasized the importance of this development, stating, “This collaboration combines the innovative crypto landscape with the resilience and reliability of traditional securities markets, marking a significant milestone for expanding the maturation of the digital assets market.”

This development comes at a time when interest in Bitcoin investment products is rising. For instance, BlackRock’s spot Bitcoin ETF recently saw its largest daily net inflow in 35 days, with $224.1 million on August 26. This contributed to a $202.6 million daily joint net inflow across all 11 U.S. spot Bitcoin ETFs. Moreover, crypto investment products recorded their largest inflows in five weeks, totaling $533 million from August 18 to August 24, according to CoinShares data.

The introduction of Bitcoin index options could provide institutional investors and traders with a new tool to manage their crypto exposure. Sui Chung, CEO of CF Benchmarks, noted that these options would complement existing futures and options contracts offered by CME and the trading of spot Bitcoin ETFs.

“Together, these regulated crypto derivatives will give investors the confidence to deploy more nuanced ways to gain exposure to the largest digital asset,” Chung added.