SEC Hits Pause on Nasdaq's Bitcoin Options After CME Says "Not Your Jurisdiction" 🥊

The U.S. Securities and Exchange Commission has frozen Nasdaq PHLX's approval of cash-settled bitcoin index options and will reconsider the decision following a legal challenge from CME Group, according to an order released for public inspection on July 31. The SEC had granted conditional approval to list the options under the ticker QBTC in May, but the product still required exemptions from the Commodity Futures Trading Commission before it could launch. CME Group filed notice of its challenge on June 11, and the stay has been in place ever since.

CME argues that because bitcoin is a commodity, options tied directly to its value fall under the CFTC's exclusive jurisdiction rather than the SEC's. If that position holds, the SEC would have no authority to approve QBTC, and Nasdaq would either need to register as a CFTC-regulated futures or swaps venue or redesign the contracts to track a security such as a spot bitcoin ETF. CME, which already operates regulated bitcoin futures and options markets, warned that the approval could set a precedent allowing securities exchanges to list derivatives on other commodities. Nasdaq's proposed contracts would use CME CF benchmarks for both their underlying index and final settlement price.

The SEC's May approval envisioned the CFTC granting exemptions that would allow Nasdaq and the Options Clearing Corporation to offer the product through the securities market, but CME contends the agencies cannot use exemptions to transfer a product from one regulator to another. The order keeps the approval frozen and gives interested parties until Aug. 24 to submit statements supporting or opposing it, while the full commission reviews the earlier approval.