SEC Approves Nasdaq Cash-Settled Bitcoin Options; CFTC Must Act
The SEC approved Nasdaq’s plan to list European-style, cash-settled bitcoin index options (QBTC) on the Philadelphia Stock Exchange; trading awaits CFTC exemptive relief.
The Securities and Exchange Commission approved Nasdaq’s application to list European-style, cash-settled bitcoin index options on the Philadelphia Stock Exchange under the ticker QBTC. The SEC’s approval does not permit trading to begin until the Commodity Futures Trading Commission issues exemptive relief.
The options will reference the Nasdaq Bitcoin Index, which tracks one one-hundredth of the CME CF bitcoin real-time index. The index updates every 200 milliseconds and uses aggregated price data from major cryptocurrency trading venues to calculate its value.
As European-style, cash-settled contracts, QBTC options will pay the difference between the spot index value and the strike price at expiration. No physical bitcoins will be transferred and early assignment is not possible. That settlement method removes custody and certain operational requirements tied to holding spot bitcoin, offering price exposure without owning the underlying asset.
Nasdaq set position limits at 24,000 contracts per side, which the filing describes as roughly 0.12% of bitcoin’s total outstanding supply. The exchange established a minimum price increment of $0.01. The SEC granted approval on an accelerated basis under Chairman Paul Atkins, but it provided no timeline for when trading could start.
Under U.S. law, the CFTC has jurisdiction over commodities, including bitcoin, and must grant the specific exemptive relief before the Philadelphia Stock Exchange may list and trade QBTC. The CFTC currently has one of its five commissioner seats filled, a staffing situation that could affect the timing of any approval.
QBTC would join existing U.S. bitcoin derivatives products, including bitcoin index options offered by other exchanges and futures-based options provided by the CME Group. Market conditions for bitcoin-linked products have been mixed recently: spot bitcoin exchange-traded funds recorded net outflows over several consecutive days totaling more than $1.26 billion, and bitcoin traded near $74,600, down from recent local highs around $82,000.
Market participants and exchanges are now awaiting the CFTC’s decision on exemptive relief; no date has been set for that action.
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