CME Challenges SEC Approval of Nasdaq’s Bitcoin Index Options
CME Group has challenged the Securities and Exchange Commission’s conditional approval of Nasdaq’s proposal for bitcoin index options, arguing the contracts fall under the Commodity Futures Trading Commission’s jurisdiction, with the SEC postponing the approval pending a full review.
CME Group has sought to overturn the SEC’s conditional approval of Nasdaq PHLX’s plan to offer cash-settled bitcoin index options, asserting that the contracts are subject to the CFTC’s regulatory authority rather than the SEC’s. The SEC has granted CME’s request to stay the approval while the full Commission examines the dispute, according to the timeline provided. The dispute centres on jurisdictional boundaries, with Nasdaq’s proposed contracts referencing a bitcoin index and settling entirely in US dollars, tracking the CME CF Bitcoin Real Time Index.
The SEC’s Division of Trading and Markets initially approved Nasdaq’s proposal in May 2024 through delegated authority, following the exchange’s announcement of plans to introduce the options in partnership with CF Benchmarks. The proposed product, which would trade under the ticker symbol QBTC, relies on an underlying index calculated every 200 milliseconds using order-book data. A reference rate for the index is set at 4 p.m. New York time, as per the details outlined.
CME has warned that the SEC’s approval could set a precedent allowing securities exchanges to list options on other non-security commodities, potentially expanding their regulatory scope. The outcome of the SEC’s full Commission review remains uncertain, as does whether Nasdaq will secure the necessary CFTC exemptions to proceed with trading. The deadline for written statements supporting or opposing the approval is set for August 24, with the SEC’s decision pending further analysis.
The dispute underscores the ongoing tension between regulators over the classification of cryptocurrency derivatives, with implications for market structure and oversight. Resolution of the case could influence future regulatory frameworks for digital assets in the United States.
Written by Oliver Grant
Markets Desk
