Michael Sonnhenshein, CEO of Grayscale Investments, is strongly advocating for public options markets to be approved for Bitcoin spot exchange-traded funds (ETFs). Grayscale recently converted its Bitcoin trust into a spot ETF after a lengthy battle with regulators.
Options contracts give investors the right, but not the obligation, to buy or sell an underlying asset at a preset “strike” price on or before a specific expiration date. Options provide leverage and the ability to hedge positions. They allow creative trading strategies without having to directly own the underlying asset.
Currently, options are only available for Bitcoin futures ETFs, which were quickly greenlit by the Securities and Exchange Commission (SEC) back in 2021. However, Bitcoin spot ETFs must go through a long approval process before options can be added. Sonnhenshein argues this is unfair, as both products provide similar exposure to Bitcoin prices.
In his view, having robust options markets will improve Bitcoin’s price discovery mechanisms. Options help traders manage the crypto market’s high volatility and other unique attributes. Just as futures and spot ETFs are now treated equally by the SEC, so too should their options markets be given equal opportunity.
The SEC previously blocked spot ETFs, favoring only futures products. But Grayscale sued the agency and won, forcing the SEC to allow spot ETFs as they could no longer prove futures were less susceptible to manipulation. Given this court precedent, Sonnhenshein hopes spot ETF options will also get approved despite SEC hesitancy.
