The US Securities and Exchange Commission (SEC) has agreed to review Nasdaq's approved Bitcoin index options after a jurisdictional challenge from CME Group, extending a freeze already in place.
Nasdaq PHLX received SEC approval in May to list the cash-settled contracts, known as QBTC. They would allow investors to trade options based on a Bitcoin price index, with gains and losses settled in dollars. The approval required exemptions from the Commodity Futures Trading Commission (CFTC) before trading could begin.
The dispute turns on the difference between an option on a Bitcoin ETF and one that tracks Bitcoin directly. ETF shares are securities, which means options on them are subject to the SEC framework. CME argues that QBTC instead tracks a commodity and should therefore fall under the CFTC's jurisdiction.
CME contests approval process
CME filed notice of a challenge on 11 Jun, then a formal petition a week later, automatically staying Nasdaq's approval under Commission rules. In a 29 Jul order, the full Commission granted CME's petition for review, keeping the approval frozen and inviting public comment by 24 Aug.
Nasdaq's product would use versions of CME CF Bitcoin benchmarks that also underpin CME's cryptocurrency derivatives. CME said Nasdaq should register as a designated contract market or swap execution facility to offer options tied directly to Bitcoin.
Securities and commodity rules collide
The challenge shows how blurred securities and commodities regulation have become as exchanges expand into digital assets.
Cboe already offers options on indexes of US-listed Bitcoin ETFs, keeping exposure within securities markets. Nasdaq's contract would give more direct Bitcoin exposure, closer to CME's futures and options business.
The review leaves Nasdaq's approval inoperative for now, with no confirmed timetable for a final ruling. The decision could determine whether securities exchanges may list direct cryptocurrency index derivatives or must use the CFTC framework.
