SEC opened jurisdiction review of Nasdaq Bitcoin index options

The Securities and Exchange Commission opened formal proceedings on May 23, 2025 to decide whether Nasdaq PHLX could list and trade Nasdaq Bitcoin Index Options. The order put a jurisdictional question at the center of the review: could the proposed contracts be treated as securities because Nasdaq characterized bitcoin as a foreign currency, or would they instead be commodity options within an area where the Commodity Futures Trading Commission may have exclusive jurisdiction?

The action was not an approval, a rejection or permission to begin trading. The SEC said institution of proceedings reflected legal and policy issues and did not indicate that the agency had reached a conclusion. That distinction mattered because the proposal sought to bring a cash-settled derivative tied directly to spot bitcoin pricing onto a national securities exchange, rather than write options on shares of a bitcoin exchange-traded product.

What Nasdaq proposed

Nasdaq PHLX had filed the rule change on February 4, 2025. The SEC published notice on February 24, and the proposed Nasdaq Bitcoin Index Options carried the ticker XBTX.

The contracts were designed as cash-settled, European-style options, meaning exercise would occur only at expiration and settlement would be in dollars rather than bitcoin. The index would reflect spot bitcoin through the CME CF Bitcoin Real Time Index. The final settlement calculation would use the CME CF Bitcoin Reference Rate—New York Variant, with the difference from the strike price multiplied by $100 under the proposed contract design.

The reference rate was a once-daily benchmark built from bitcoin-dollar trades across multiple constituent platforms during a 3:00 p.m. to 4:00 p.m. Eastern observation window. That benchmark design did not make XBTX a round-the-clock product: bitcoin trades continuously, while an exchange-listed option would operate under securities-market rules and specified expiration procedures.

Nasdaq said the contracts could help investors, speculators and multinational companies shift risk, value assets and hedge bitcoin exposure. It also argued that holders of spot bitcoin exchange-traded products could manage exposure in the same account and margin regime. Those were the exchange’s claims supporting its proposal, not SEC findings about liquidity, hedging effectiveness or investor demand.

The jurisdiction question

In a March 17 supplemental letter, Nasdaq PHLX argued that the options qualified as foreign-currency options under Section 3(a)(10) of the Securities Exchange Act. Its reasoning relied on bitcoin’s status as legal tender in El Salvador and on the Act’s inclusion of exchange-traded options relating to foreign currency within the definition of a security.

The SEC’s May 23 order did not accept that theory. Instead, it asked commenters whether Nasdaq had supplied enough analysis to show consistency with Section 6(b)(5) of the Exchange Act. The agency specifically requested views on the foreign-currency argument and asked whether, if bitcoin was not a foreign currency, the contracts would be commodity options rather than securities.

That was more than a naming dispute. The classification could determine which federal regulator had authority over the exchange-traded product. The SEC noted that the CFTC holds exclusive jurisdiction over certain commodity derivatives traded on specified markets and exchanges.

What the May 23 record established

As of the order, the SEC said it had received Nasdaq PHLX’s supplemental letter and no other comments. The burden remained with the exchange to demonstrate that the rule change complied with the Exchange Act and applicable rules.

The verified conclusion for May 23 was therefore narrow: the SEC advanced XBTX into a formal approve-or-disapprove proceeding and exposed an unresolved boundary between securities and commodities jurisdiction. No contracts had launched, no trading volume or open interest existed for XBTX, and the public record established no launch date, market share or realized hedging performance.