Markets 2 min, 8 sec READ

by Mike Dalton

Leading stock exchange Nasdaq intends to give investors another way to gain exposure to crypto.

Nasdaq announced in an Aug. 27 press release that it intends to list and trade Bitcoin index options pending regulatory approval.

The company said it has filed for its Nasdaq Bitcoin Index Options (XBTX) with the U.S. Securities and Exchange Commission (SEC).

The index options will track Bitcoin prices through the CME CF Bitcoin Real-Time Index (BRTI), an index that continually calculates prices on a per-second basis from aggregated crypto exchange order data. Nasdaq described BRTI as an important risk management tool for institutional and retail investors.

Nasdaq said that XBTX will include European-style exercise and cash settlement provisions. Final settlement values will be calculated from reference rates, effectively providing a closing price even though crypto trades on a 24/7 basis.

Several Benefits for Investors

Nasdaq said XBTX will help investors manage positions and hedge investments in cryptocurrency, improving the asset class' maturity and liquidity.

Greg Ferrari, VP and Head of Exchange Business Management at Nasdaq, said that XBTX will provide investors with “trusted investment avenues” into the digital asset market. He added that the index options will add “resiliency and reliability” usually seen in traditional securities markets to the crypto ecosystem.

Elsewhere, Reuters described the options as listed derivatives that provide a fast and affordable way to boost exposure to Bitcoin.

Reuters noted that exchanges have applied for spot Bitcoin ETF options since January but have withdrawn and refiled the applications following SEC comments.

Reuters quoted Bitwise CIO Matt Hougan, who said that it is important for Bitcoin options to become available in order to normalize crypto as an asset class. Hougan also observed a shortage of liquidity that ETF options would otherwise provide.

Nasdaq Continues to Support Crypto ETFs

In its latest press release, Nasdaq mentioned its other digital asset efforts, including its crypto exchange-traded product (ETP) listings. Those products are sometimes referred to as exchange-traded funds (ETFs).

Sui Chung, CEO of CF Benchmarks, noted that the pending index options will complement the spot ETFs, which he said are popular with investors.

Nasdaq commented that it has worked closely with asset managers and regulators to help Ethereum ETPs and Bitcoin ETPs succeed at launch and during trading. The company asserted that its market quality and liquidity programs support the products through tight spreads and strong price discovery.

Nasdaq lists and trades spot crypto ETFs for BlackRock (iShares), Valkyrie, and Hashdex. Cboe and NYSE Arca also list and trade several other spot crypto ETFs.