Duane Morris – Duane Morris on Capital Markets

November 19, 2024November 19, 2024 by Duane Morris

Another Turning Point for Bitcoin—Options Mark Bullish Sentiment

On November 19, the Options Clearing Corporation (OCC) and Nasdaq launched Bitcoin ETF options—starting with BlackRock’s iShares Bitcoin Trust (IBIT)―signaling a new era of cryptocurrency financial instruments. The launch of Bitcoin ETF options in the United States marks a new moment for cryptocurrency markets. Options promise to transform how institutional and retail investors engage with Bitcoin.

The launch of Bitcoin ETF options enables Bitcoin to expand in the market and unlock larger trading volumes, while also providing retail and institutional investors the ability to hedge prices and manage their risk. Specifically, options create the right in the future to buy or sell at predetermined prices, allowing protections against volatility. Options also afford investors the ability to manage risk without selling underlying assets. Options enable greater portfolio diversification, offering flexible exposure to Bitcoin while providing investors a method to make strategic decisions on their portfolio without full ownership and without reducing overall portfolio risk through derivative strategies.

The options will also increase institutional investor access—notably, derivatives currently make up less than 1% of Bitcoin’s $1.8 trillion spot market cap. Options will enable investors with more sophisticated hedging and allocation strategies. Investors will have access to traditional option risk controls, including standardized contract terms and clearance through regulated exchanges (e.g., the OCC). Ultimately, the structured management framework with Bitcoin ETF options will follow traditional equity and commodity market development patterns, creating more access to and opportunities in Bitcoin for investors.

Recently, the Commodity Futures Trading Commission (CFTC) confirmed via a staff advisory notice on November 15, 2024, that the clearance and settlement of options on spot Bitcoin ETFs fall under U.S. Securities and Exchange Commission jurisdiction. The CFTC’s notice helped paved the way for the OCC and Nasdaq to offer trading on Bitcoin ETF options.

By integrating Bitcoin more deeply into established financial infrastructure, these ETF options could accelerate mainstream crypto adoption and market sophistication. Presumably, Bitcoin ETF option trading should signal enhanced market confidence and a growing mainstream acceptance of cryptocurrency.

August 8, 2023 by Duane Morris

SEC Final Rules Layout Companies’ Reporting Duty for Cybersecurity Incidents, Risk Management, Strategy and Governance

On July 26, 2023, the U.S. Securities and Exchange Commission (SEC) adopted final rules requiring U.S. public companies to disclose material cybersecurity incidents on Form 8-K and, on an annual basis, disclose material information regarding their cybersecurity risk management, strategy and governance on Form 10-K. The final rules also require foreign private issuers to make comparable disclosures on Forms 6-K and 20-F.

Read the full Alert on the Duane Morris LLP website.

April 23, 2021 by Duane Morris

SEC Continues to Educate Investors About SPAC Enforcement Risks

Special purpose acquisition companies, or SPACs, have quickly become a part of the Wall Street vernacular, but until recently, they were rare. In fact, the New York Stock Exchange went 10 years without listing a SPAC until 2017. Although the market seems to have embraced SPACs, regulatory authorities, including the U.S. Securities and Exchange Commission, have expressed concern that these investment vehicles may present certain risks for investors.

To read the full text of this Duane Morris Alert, please visit the firm website.

September 28, 2020 by Duane Morris

Shareholder Proposal Rule Amended by SEC

On September 23, 2020, the Securities and Exchange Commission adopted the amendments to its shareholder proposal rule, which governs the process for a shareholder to have a proposal included in the company’s proxy statement for consideration by all shareholders. Typical shareholder proposals include recommendations that a company or its board of directors take specified actions. The amendments are designed to promote engagement between the company and the proponent, raise eligibility thresholds for shorter-term investors and further restrict repeat proposals garnering minimal support.

To read the full text of this Duane Morris Alert, please visit the firm’s website.

September 28, 2020September 28, 2020 by Duane Morris

“Accredited Investor” and “Qualified Institutional Buyer” Get Updated Definitions in SEC Final Rule

On August 26, 2020, the U.S. Securities and Exchange Commission (SEC) adopted final rules amending the definitions of “accredited investor” and “qualified institutional buyer” (QIB). The purpose of the amendments is to identify more effectively institutional and individual investors that have sufficient knowledge and expertise to participate in investment opportunities without investor protections provided by registration under the Securities Act of 1933.

The final amendments will be published in the Federal Register soon and become effective 60 days after publication.

To read the full text of this Duane Morris Alert, please visit the firm website.

April 29, 2019 by Duane Morris

SEC Adopts Simplified, Modernized Disclosure Requirements

On March 20, 2019, the SEC adopted amendments to rules and forms of Regulation S-K to further simplify and modernize disclosure requirements. The final amendments were published in the Federal Register on April 2, 2019, and, except as noted below, become effective on May 2, 2019, 30 days after publication in the Federal Register. The SEC stated that it intends for the amendments to benefit investors by eliminating outdated, redundant and unnecessary disclosure; reducing cost and burdens of SEC reporting companies; and simplifying investors’ access to, and evaluation of, material information. These new rules follow on the heels of the SEC’s prior effort on simplification, which was published in the Federal Register on October 4, 2018. Combined with the earlier effort, these latest changes reflect a concerted push by the SEC to relieve SEC reporting companies of filing obligations that provide little value to investors.

This Alert provides a brief overview of certain of the amendments and practical considerations for SEC reporting companies and does not address parallel amendments to investment company and investment adviser rules and forms.

Read the full Alert on the Duane Morris LLP website.