In a bipartisan letter, Representatives Mike Flood and Wiley Nickel called on SEC Chair Gary Gensler to stop "discriminating" against crypto funds and approve options trading for spot Bitcoin exchange-traded products (ETPs).

The lawmakers stated the SEC should "without delay" greenlight options on spot Bitcoin ETPs, or provide an explanation for allowing Bitcoin futures ETF options while blocking spot ETP options.

Enabling Options Key for Investor Protection Flood and Nickel argued that approving Bitcoin options is crucial for the very investors the SEC "seeks to protect." Options contracts provide tools for hedging risk, limiting losses and generating income.

The SEC has been sitting on several applications from major exchanges like NYSE, Nasdaq and Cboe filed in January to list options on various Bitcoin spot ETPs and trusts.

Public Comment Period on Proposals In late April, the SEC initiated a new public consultation period to gather feedback specifically on the proposed rule changes that would permit options trading on Bitcoin funds.

The agency cited concerns around how Bitcoin options may impact market stability, particularly during volatile periods. It also questioned whether current surveillance practices are adequate for dealing with the complexities introduced by Bitcoin options.

The public comment window runs through May 29th, after which the SEC will make its determination on approval.

Growing Pressure For Approval
While the SEC has greenlighted numerous Bitcoin futures ETFs in recent years, it has remained hesitant on approving spot ETPs tracking Bitcoin's actual price.

This letter from congressional representatives reflects mounting pressure from lawmakers for the SEC to adopt a consistent approach that keeps pace with growing crypto markets and products.

Options represent a critical trading and risk management tool already available for many other asset classes. Barring their availability for spot Bitcoin exposures puts those funds at a competitive disadvantage according to critics.

The SEC will have to carefully weigh concerns around Bitcoin price volatility and potential market disruptions against calls for equitable treatment and expanded investment opportunities as it deliberates the pending options proposals.