Nasdaq Moves to Expand Bitcoin and Ethereum ETF Options
Looser ETF options limits could improve liquidity, trading flexibility, and hedging for both institutional and retail crypto participants.
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Nasdaq, a major US stock exchange, has filed a proposal with US regulators to loosen options limits on major Bitcoin and Ethereum ETFs. A technical shift could significantly expand how institutional investors hedge and trade around the largest crypto-linked funds.
The request, disclosed in a notice from the US Securities and Exchange Commission (SEC), targets position and exercise limits on options tied to several spot crypto ETFs, including BlackRock’s iShares Bitcoin Trust (IBIT) and iShares Ethereum Trust (ETHA).
The change would alter how much exposure a single market participant can hold through derivatives linked to these products.
What Nasdaq is Trying to Change
Options position limits set a maximum on how many contracts a single investor can hold. These rules mostly affect big players like hedge funds, market makers, and large asset managers, rather than everyday traders.
Nasdaq is asking regulators to loosen or remove these limits, saying that Bitcoin and Ethereum ETFs are now liquid enough to handle larger, more flexible options trading.
If approved, the change would bring crypto ETF options closer to the way options on widely traded stocks and commodities are regulated, where higher or even unlimited position limits are common.
Limits on Options Could Constrain Trading
Spot Bitcoin ETFs have quickly become a key way for large investors in the U.S. to gain exposure to crypto, attracting billions in inflows and changing how institutions buy and hold digital assets. On top of these ETFs, options are increasingly being used by professional investors to hedge risk, manage price swings, and handle large portfolios.
But current limits on how many options contracts one investor can hold can make these strategies harder to execute, especially during periods of market stress when demand for hedging spikes.
In those moments, liquidity can thin across different contract dates and exchanges, pushing up trading costs and limiting flexibility for big players.
The proposal also highlights broader regulatory implications. While the approval of spot Bitcoin ETFs was a major step for U.S. crypto markets, how regulators treat the options and other derivatives linked to these funds will signal just how mainstream digital assets can become in traditional financial markets.
Why This Matters
The SEC will review Nasdaq’s proposal, including a public comment period. If approved, it could boost crypto ETF liquidity, tighten spreads, and make hedging and trading easier for institutional investors.
