Nasdaq Seeks SEC Approval for Bitcoin Index Options, Advancing Crypto Market Maturity

Nasdaq, one of the world’s leading stock exchange operators, has filed an application with the U.S. Securities and Exchange Commission (SEC) to list and trade Bitcoin Index Options (XBTX). This move, announced on August 27, 2024, represents a significant step towards integrating cryptocurrency derivatives into traditional financial markets.

The proposed XBTX would track the CME CF Bitcoin Real-Time Index (BRTI), providing investors with a new tool to manage their exposure to Bitcoin. Nasdaq has partnered with CF Benchmarks, a regulated cryptocurrency index provider, to develop this product.

Greg Ferrari, Vice President and Head of Exchange Business Management at Nasdaq, emphasized the importance of this initiative, stating, “This collaboration further combines the innovative crypto landscape with the resiliency and reliability of traditional securities markets and would mark a significant milestone in expanding the maturation of the digital assets market.”

The XBTX options would feature European-style exercise and cash settlement, with final settlement values determined by the CME CF Bitcoin Reference Rate – New York Variant (BRRNY). This structure aims to provide a clear reference rate for Bitcoin pricing, addressing the challenges posed by the cryptocurrency’s 24/7 global trading nature.

If approved, these options would offer both institutional and retail investors a regulated platform to hedge their Bitcoin investments and manage risk. The move comes as the crypto market continues to evolve, with spot Bitcoin ETFs having been approved earlier this year.

Sui Chung, CEO of CF Benchmarks, commented on the potential impact: “Spot options settling to BRRNY will build upon the hugely successful BTC futures and options contracts offered by CME. Together these regulated crypto derivatives will give investors the confidence to deploy more nuanced ways to gain exposure to the largest digital asset.”

It’s worth noting that Nasdaq is not alone in this pursuit. The New York Stock Exchange (NYSE) had previously filed for approval to list Bitcoin index options based on the Coindesk index. However, neither exchange has yet received regulatory approval for these products.

The introduction of Bitcoin index options on a major exchange like Nasdaq could significantly enhance the liquidity and maturity of the cryptocurrency market. It would provide investors with more sophisticated tools for portfolio management and potentially attract more institutional participation in the crypto space.

As the SEC reviews this application, market participants eagerly await a decision that could further legitimize Bitcoin as an asset class and provide new opportunities for investment and risk management in the rapidly evolving world of digital assets.