The U.S. Securities and Exchange Commission (SEC) approved the listing and trading of BlackRock's (BLK.US) spot Bitcoin exchange-traded fund (ETF) options on Friday.

BlackRock's iShares Bitcoin Trust ETF (IBIT.US) is the world's largest Bitcoin fund, with net assets of $22.67 billion as of September 19, 2024.

The SEC said in a statement: "IBIT options will provide investors with a hedging and risk management tool to manage the risk exposure of Bitcoin prices as well as Bitcoin-related products and positions."

These options will be physically settled with an American-style exercise.

American-style exercise refers to an option contract that allows the holder to exercise their rights at any time before the expiration date.

The SEC stated that the trading of IBIT options will be similar to other ETF options.

Bloomberg's senior ETF analyst, Eric Balchunas, said on the X platform: "Bitcoin ETF has achieved a significant victory (as it will attract more liquidity, which in turn will attract more big players)."

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Balchunas added that IBIT options still need approval from the U.S. Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC) before they can officially list.

The other two agencies do not have a "timetable," so it is uncertain when approval will be granted.

Nevertheless, the SEC's shift is still a significant step forward.

Options are contracts that give investors the right, but not the obligation, to buy (call options) or sell (put options) an asset at a predetermined price before a specific date.

Due to the high volatility of Bitcoin prices, options can enable investors to manage the associated risks more effectively.

At the beginning of this year, the U.S. crypto industry received a major boost after the SEC approved the long-awaited spot Bitcoin ETF.

Shortly after, Bitcoin soared to a record high of $73,000 in March, although it has fallen back since the most recent halving on April 19, 2024.

According to data from CoinMarketCap, the global crypto industry's market value is $2.2 trillion.