CBOE Digital president says a spot bitcoin ETF approval will promote derivatives growth

CBOE’s John Palmer said that potential bitcoin ETF approvals would “pave the way” for pension funds to invest in a spot bitcoin ETF

article-image

JHVEPhoto/Shutterstock modified by Blockworks

share

CBOE Digital President John Palmer says that the potential approval for a spot bitcoin ETF could broaden the ecosystem for institutions and retail.

“I think seeing that approval really is gonna pave the way for pension funds and RIA-based funds to be able to invest assets in a spot Bitcoin ETF where they may not be able to gain that access today and just a native spot, Bitcoin token,” Palmer said.

Any potential approvals for an ETF could also change how institutions approach derivatives, Palmer added. Derivatives include options and futures contracts.

“So you have more players, institutional players that are used to hedging their risk. And so they lean on derivatives quite heavily to be able to hedge that risk…And so, as that ecosystem evolves, they’re going to lean on those derivatives more and more,” Palmer said.

Read more: This proposed bitcoin ETF has a twist. Would investors bite?

“So I think we’ll see that ecosystem on the derivative side, grow with the growth in the spot ETF as well.”

However, Palmer doesn’t think that the total breakdown will just be institutions. While he added that “it’s gonna be hard to judge what the breakdown is gonna be yet,” he also added that “institutions will lead the way” with the spot bitcoin ETF-involved participants using the hedging tools, but “retail will also look for that as well.”

Overall, ETFs give both institutions and retail a “broader ecosystem,” according to Palmer.

The US Securities and Exchange Commission is expected to hand down a decision on potential spot bitcoin ETFs by January 10. Ahead of the new year, a handful of potential issuers submitted fresh amendments to their S-1s, with firms including BlackRock disclosing authorized participants. 

As Blockworks previously reported, the inclusion of APs is one of the details that the SEC is looking for ahead of potential approval. 

“The SEC is ready to approve spot bitcoin ETFs, but only if they have clear language around cash-only creations and have a signed agreement with an authorized participant,” Bloomberg Intelligence analyst Eric Balchunas wrote in a note at the end of December.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Content Delivery Networks (CDNs) represent low-hanging fruit in a massive market ripe for Web3-driven disruption. The global CDN market was valued at ~$28B in 2024, and is projected to surpass $140B by 2034, (18.75% CAGR) underscoring the immense demand for efficient content delivery.

article-image

US dollars might technically be worth less, but it’s still good news

article-image

Apps are doing well, as is casino gaming, says Tom Schmidt of Dragonfly

article-image

Sponsored

Machine DeFi brings programmable peer-to-peer finance into contact with tangible machines that generate real-world value

article-image

What happens to your investment portfolio when the companies driving returns are no longer in it?

article-image

Wow, the ETF hype sure didn’t last long

article-image

The private sector lost 33,000 jobs in June; analysts had projected payrolls to add 100,000 positions