Patrick Daugherty on Nasdaq Bitcoin Index Options – 'Like foreign currency, bitcoin is liquid'

Foley & Lardner LLP partner Patrick Daugherty commented on Nasdaq seeking regulatory approval to begin offering options on a bitcoin index in Blockworks‘ On the Margin newsletter.

Daugherty said the SEC would have no rational basis to deny Nasdaq’s proposal, as the bitcoin index options are structured similarly to foreign exchange index options that already trade.

“Like foreign currency, bitcoin is liquid and markets for bitcoin demonstrate significant volume and turnover,” Daugherty explained. “The existing markets readily inform the spot market price of bitcoin, and the sufficiency of market surveillance for bitcoin products is now well established.”

Daugherty added that Nasdaq’s index options product would give investors another way to hedge the market risk associated with spot bitcoin exposure.

“These index options could be used for a wide range of activities such as asset valuation, settlement of financial risk, risk management, NAV calculation, unit creation, and unit redemption,” he said.