The US Securities and Exchange Commission (SEC) has given the green light to proposals from Nasdaq and Cboe to list and trade options on spot Ethereum (ETH) exchange-traded funds (ETFs) managed by BlackRock and Fidelity, as detailed in filings from April 9.
The SEC approved orders for the iShares Ethereum Trust (ETHA) and the Fidelity Ethereum Fund (FETH) following a thorough review that included amendments, public feedback, and regulatory justification for introducing new products in accordance with Section 19(b) of the Securities Exchange Act of 1934.
Contracts to feature American-style exercise and traditional settlement
Both approved filings feature options with American-style exercise and physical settlement. These contracts will comply with current listing requirements for ETF options, covering aspects such as margin, strike intervals, series expiration cycles, and minimum trading increments.
The options for ETHA and FETH will be capped at a position and exercise limit of 25,000 contracts per market side, mirroring the limits set for Bitcoin (BTC) ETFs approved last year.
Nasdaq and Cboe highlighted that this 25,000-contract limit is conservative, based on a comparative analysis with other ETFs and commodity-based trusts.
Furthermore, Nasdaq pointed out that the notional risk associated with the maximum position in ETHA would account for less than 0.03% of Ethereum’s overall market capitalization and under 4.4% of the trust’s outstanding shares. Cboe compared these proposed limits to those established for Bitcoin ETFs and similarly structured commodity products.
These approvals follow a precedent set by spot Bitcoin ETF options, which received SEC authorization on September 23, 2024, and commenced trading in November 2024.
As was seen last year, it is expected that options trading requirements from other issuers will also gain approval, with trading likely to start in the same week as ETHA and FETH.