How Would the Introduction of a Travel Rule Protocol for P2P Transfers Impact the Pricing of Crypto Options?

The introduction of a P2P Travel Rule protocol would likely increase the friction and costs of transacting, which could impact options pricing in several ways. It could decrease liquidity on decentralized venues, leading to wider bid-ask spreads on options contracts.

The added compliance cost might be priced into the options premium. Furthermore, if the protocol is complex, it could increase perceived operational risk, potentially leading to higher implied volatility and more expensive options as traders price in the risk of failed or delayed settlement.