SEC Rules Keep Coinbase KPI Option Payouts Fixed After Settlement

The SEC approved Cboe Exchange rules that prevent a post-settlement restatement from changing payouts on company-metric options, clarifying settlement for contracts tied to Coinbase’s business results.

The order is dated Tuesday, Oct. 13, and was published Friday, Oct. 16. It covers binary options whose value depends on a company’s reported financial or operating measure rather than its stock price.

Eligible Coinbase measures include total trading volume, transaction revenue, total revenue, diluted net income per share, and subscription and services revenue. The approved list also covers Marathon Digital Holdings, Inc. (MARA), including measures such as Bitcoin (BTC) produced and total Bitcoin holdings.

A call pays $1 if the reported measure meets or exceeds its threshold. A put pays $1 if the measure falls below its threshold; a losing contract pays $0. Settlement uses the value for the specified period in an earnings-related filing submitted to the SEC, rather than a figure in an earnings press release.

If a company reports after the scheduled expiration, trading ends on that date but settlement processing waits for the figure. If the company does not report the metric, clearing rules may settle the contract at its last closing price, between $0.01 and $1. If that price is unavailable or deemed unreliable, the option may expire worthless.

A restatement made after an option has expired and settled does not change its settlement value or the amount paid. The rule sets how these contracts handle a later revision to the company figure used in settlement.

The approval does not by itself start trading. Cboe must complete separate clearing-related steps for Cboe Clear U.S. before listing the options. The SEC’s decision covers Cboe’s specified securities options and does not determine how differently structured contracts tied to the same measures would be regulated.

The settlement procedures are part of the company-metric options approval covered earlier; Cboe still needs separate clearing steps before listing the contracts.