SEC clears Ethereum ETF options trading for BlackRock and Fidelity

The US Securities and Exchange Commission (SEC) approved proposals from Nasdaq and Cboe to list and trade options on spot Ethereum (ETH) exchange-traded funds (ETFs) managed by BlackRock and Fidelity, according to April 9 filings.

The orders were granted for the iShares Ethereum Trust (ETHA) and the Fidelity Ethereum Fund (FETH) following a 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.

Contracts to offer American-style exercise and standard settlement

Both filings approved options with American-style exercise and physical settlement. The approved contracts will adhere to existing listing rules applicable to ETF options, including margin, strike intervals, series expiration cycles, and minimum trading increments. 

The ETHA and FETH options will be subject to a 25,000-contract position and exercise limit per market side, just as the options for Bitcoin (BTC) ETFs were approved last year.

Nasdaq and Cboe emphasized the conservative nature of the 25,000-contract cap, which was derived from a comparative analysis with other ETFs and commodity-based trusts.

Additionally, 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.

The approvals follow a precedent set for spot Bitcoin ETF options, which received SEC authorization on Sept. 23, 2024, and began trading in November 2024.

As happened last year, options trading requirements from other issuers are likely to be approved, with trading starting in the same week as ETHA and FETH.

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