The U.S. Securities and Exchange Commission has formally accepted CME Group’s petition to review the staff-level approval of Nasdaq PHLX’s proposed cash-settled Bitcoin index options, keeping the May 22 approval on hold while the full Commission weighs the jurisdictional dispute. The SEC’s order, dated July 29 and published in the Federal Register on August 3, sets an August 24 deadline for written statements supporting or opposing the earlier approval.
CME argues that Bitcoin is a non‑security commodity and that options directly referencing its value are commodity option swaps that fall exclusively under the Commodity Futures Trading Commission’s jurisdiction. The exchange operator contends the Division of Trading and Markets exceeded its delegated authority by adopting a novel interpretation of Dodd‑Frank Section 717, and it warns that allowing the approval to stand could open a pathway for securities exchanges to list derivatives tied to other non‑security commodities under SEC rules.
Nasdaq’s proposed options, tickered QBTC, would track the CME CF Bitcoin Real Time Index divided by 100. They would be European‑style, exercise‑only at expiration, and settle in U.S. dollars rather than in Bitcoin. Final settlement would use the once‑daily CME CF Bitcoin Reference Rate New York Variant (also divided by 100). Unlike options on spot Bitcoin ETF shares, these contracts reference Bitcoin itself, creating the central jurisdictional question.
SEC staff had conditionally approved Nasdaq’s rule change on May 22. CME filed notice of appeal on June 11 and submitted its formal petition on June 18, automatically staying the approval. The July 29 review order does not endorse either side’s legal arguments; it simply accepts the matter for review and leaves the stay in effect until a further Commission order. Even if the SEC later restores the approval, Nasdaq would still need CFTC exemptions—including relief allowing the Options Clearing Corporation to clear the contracts without registering as a CFTC‑regulated derivatives clearing organization—and OCC approval before listing.
The outcome could shape how Bitcoin‑based derivatives are regulated and has implications beyond QBTC. Written filings due by August 24 will inform the Commission’s next decision.
