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Spot Bitcoin ETF options are getting closer to approval. According to Jason Shubnell, a recent advisory from the Commodity Futures Trading Commission (CFTC) shows progress in this area.

The CFTC’s Division of Clearing and Risk (DCR) issued a staff advisory late Friday. It stated that ETF options on spot commodity funds are cleared and settled by the Options Clearing Corporation, which is the sole issuer of all equity options. This is a significant step forward.

The advisory also highlighted that, based on relevant legal precedents, it’s very likely these spot commodity ETF shares will be classified as securities. Therefore, DCR believes that listing these shares on SEC-registered national securities exchanges doesn’t fall under the CFTC's jurisdiction. This means the OCC can clear these options as a registered clearing agency under SEC oversight.

This marks the second major hurdle for Bitcoin ETFs to clear. Bloomberg senior ETF analyst Eric Balchunas noted that the ball is now in the OCC's court. He mentioned on X, “They’re into it, so they’ll probably list very soon.” The OCC is the largest equity derivatives clearing organization in the world.

The process kicked off on September 20 when the SEC approved BlackRock's proposal to list and trade options for its IBIT fund. Following the SEC's approval of 11 spot Bitcoin ETFs in January, firms are eager to list and trade options for their own spot Bitcoin ETFs.

ETF Store President Nate Geraci shared his thoughts on X as well. He said, “Nice to see progress, but this delay has been entirely unnecessary. By the way, there’s no reason there shouldn’t be options trading on spot ETH ETFs as soon as possible.”

Typically, retail traders use options for speculation. Larger institutions, on the other hand, use options as a hedge. Given Bitcoin's strong retail following, market structure analyst Dennis Dick pointed out that there will likely be more speculation in Bitcoin ETF options compared to options on equities. He explained, “Contrary to popular belief, options actually reduce volatility. As open interest rises, it creates natural buyers and sellers on both sides of the market. This thickens the market and increases liquidity, which ultimately reduces volatility.”