SEC Approves Ethereum ETF Options Trading on Nasdaq, Cboe

The US Securities and Exchange Commission (SEC) has approved proposals from Nasdaq and Cboe to list and trade options on spot Ethereum (ETH) exchange-traded funds (ETFs) managed by BlackRock and Fidelity. This decision, announced on April 9, follows a thorough review process that included amendments, public comments, and regulatory justification for new product listings under Section 19(b) of the Securities Exchange Act of 1934.

The approvals cover the iShares Ethereum Trust (ETHA) and the Fidelity Ethereum Fund (FETH), allowing these ETFs to offer up to 25,000 options contracts. The contracts will feature American-style exercise and physical settlement, adhering to existing listing rules for ETF options, including margin requirements, strike intervals, series expiration cycles, and minimum trading increments.

Both Nasdaq and Cboe highlighted the conservative nature of the 25,000-contract cap, which was determined through a comparative analysis with other ETFs and commodity-based trusts. Nasdaq noted that the notional risk of a maximum position in ETHA would represent less than 0.03% of the Ethereum market’s capitalization and below 4.4% of the trust’s outstanding shares. Cboe compared the proposed limits to those set for Bitcoin-based ETFs and similarly structured commodity products.

This approval follows the precedent set for spot Bitcoin ETF options, which received SEC authorization on September 23, 2024, and began trading in November 2024. As with the Bitcoin ETF options, it is expected that options trading requirements from other issuers will be approved, with trading starting in the same week as ETHA and FETH.

This development marks a significant step in the integration of cryptocurrencies into traditional financial markets, providing investors with more options to engage with Ethereum through regulated financial instruments. The approval underscores the growing acceptance of digital assets by regulatory bodies and financial institutions, paving the way for further innovation and investment in the crypto space.