SEC Pauses Nasdaq Bitcoin Options Approval Following CME Legal Challenge

The US Securities and Exchange Commission has put a hold on its earlier approval of Nasdaq’s cash-settled bitcoin index options, agreeing to reconsider the decision after CME Group filed a legal challenge. The order, released for public inspection on July 31, keeps the product, listed under the ticker QBTC, suspended while the full commission reviews the matter.

Jurisdiction Dispute at the Center of the Case

CME Group argues that because bitcoin is classified as a commodity, options tied directly to its value should fall under the Commodity Futures Trading Commission’s authority rather than the SEC’s. The SEC had granted Nasdaq PHLX conditional approval for QBTC back in May, though the product still needed exemptions from the CFTC before launching. If CME’s argument holds, Nasdaq would need to register as a CFTC-regulated venue or redesign the contracts around a security like a spot bitcoin ETF instead.

Broader Implications for Derivatives Regulation

CME’s challenge also warns that allowing the approval to stand could set a precedent letting securities exchanges list derivatives on other commodities, potentially reshaping how such products are regulated going forward. Nasdaq’s proposed contracts were designed to use CME CF benchmarks for both their underlying index and final settlement price.

Public Comment Period Now Open

The SEC has given interested parties until August 24 to submit statements either supporting or opposing the original approval, with the suspension in effect since CME first filed its challenge on June 11.