SEC pauses Nasdaq PHLX bitcoin index options after CME challenges jurisdiction, highlighting unresolved regulatory turf disputes.
DeFi & Yields ·
The SEC has frozen Nasdaq PHLX's planned cash-settled bitcoin index options following CME Group's challenge to the approval. CME contends that contracts referencing bitcoin directly should fall under exclusive Commodity Futures Trading Commission jurisdiction rather than SEC oversight, and the full Commission will consider written arguments due August 24. The May 22 staff approval by the SEC's Division of Trading and Markets had allowed Nasdaq to proceed, though the exchange still required separate CFTC exemptions to launch trading.
CME's petition centers on whether bitcoin qualifies as a non-security commodity, which would place derivative contracts on it outside the SEC's domain. The exchange operator also argued that the staff exceeded its delegated authority under Section 717 of the Dodd-Frank Act and warned the approval could establish precedent for securities exchanges to list options tied to other non-security commodities. CME noted competitive concerns, stating the decision would let Nasdaq's product compete directly with its own offerings and potentially impose new regulatory costs.
The proposed QBTC contracts would be European-style cash-settled options referencing an index derived from the CME CF Bitcoin Real Time Index, with final settlement based on the CME CF Bitcoin Reference Rate New York Variant at 4 p.m. daily. The order halting the approval does not reveal whether commissioners endorse CME's jurisdictional argument, leaving the outcome uncertain as the Commission deliberates.