SEC Extends Ethereum ETF Options Review to 2025

The U.S. Securities and Exchange Commission (SEC) has extended its review period for Ethereum (ETH) exchange-traded funds (ETFs) options until April 9, 2025. The decision, outlined in a February 7 filing, impacts proposals related to Bitwise's ETHW, Grayscale's ETHE, and Ethereum Mini Trust, as well as BlackRock's ETHA.

The SEC cited the need for additional time to evaluate the proposal and assess potential market implications. This is the third time the regulator has postponed its decision, with previous delays occurring in September and November 2024. The Commission has invited public comments for the next 21 days, allowing market participants to submit arguments in favor of or against approving options for Ethereum ETFs.

Beyond SEC approval, the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC) must also provide approval before trading can begin. Options contracts are financial derivatives that allow buyers and sellers to agree to purchase or sell an asset at a predetermined price within a specified time frame. Institutional investors often use options contracts for hedging and risk management.

The launch of options in spot Bitcoin (BTC) ETFs has been successful, with BlackRock's IBIT options trading debut reaching $1.6 billion in volume by midday. However, the position limit for options contracts on spot Bitcoin ETFs is only 25,000, far below the estimated fair amount of 400,000. Nasdaq has filed to raise the contract limit to 250,000, but it is still below the fair amount estimated by Bitwise head of alpha strategies Jeffrey Park. If approved, Ethereum options are likely to face similar regulatory restrictions.