SEC to review Nasdaq bitcoin options approval after CME challenge

The U.S. Securities and Exchange Commission (SEC) has paused Nasdaq’s approval of cash-settled bitcoin index options and will reconsider the decision following a legal challenge from CME Group, the agency said in an order released for public inspection on July 31.

Back in May, the SEC granted Nasdaq PHLX conditional approval to list cash-settled bitcoin index options under the ticker QBTC. The product still required exemptions from the Commodity Futures Trading Commission (CFTC) before it could launch.

CME Group challenged the approval in June, arguing that bitcoin is a commodity and, as such, options tied directly to its value fall under the CFTC’s exclusive jurisdiction rather than the SEC’s.

If the CME is right, the SEC would have no authority to approve QBTC, and Nasdaq would need to register as a CFTC-regulated futures or swaps venue, or redesign the contracts to track a security such as a spot bitcoin exchange-traded fund.

The CME already operates regulated bitcoin futures and options markets, while Nasdaq’s QBTC would compete for the same trading activity without Nasdaq registering under the CFTC framework that governs the CME.