The U.S. Securities and Exchange Commission has granted official approval for options trading on spot Ethereum exchange-traded funds.
As detailed in filings published on April 9, the SEC has given the green light to options associated with various spot Ethereum (ETH) ETFs, including offerings from BlackRock’s iShares Ethereum Trust, Bitwise Ethereum ETF, Grayscale’s Ethereum Trust, and Ethereum Mini Trust.
Options serve as financial tools that enable traders to speculate on the future value of an asset without needing to possess it outright. In this instance, investors can trade options on spot Ethereum ETFs, allowing for advanced strategies like covered calls or buffered exposure to the second-largest cryptocurrency by market capitalization.
The approval was largely expected. Bloomberg’s ETF analyst James Seyffart noted on X that the approval for Ethereum ETF options was “100% anticipated.” Nate Geraci, president of The ETF Store, expressed that he believes we will soon see new ETF launches incorporating options-based strategies.
Spot ETH ETFs received approval from the SEC last year, and these financial products have attracted $2.34 billion in net inflows as of April 9, according to data from SoSoValue. The introduction of options trading could give new energy to the Ethereum market, particularly at a time when the cryptocurrency’s price has faced considerable volatility.
Ethereum concluded the first quarter down by 45%, a loss of nearly $170 billion in market capitalization. Amid increasing competition from layer-2 solutions, analysts from Standard Chartered have revised their year-end price prediction for Ethereum from $10,000 to $4,000.
Recently, the cryptocurrency dipped below $1,500 for the first time since March 2023 but has since recovered to around $1,611 at the time of this writing. Moving forward, the potential approval of staking within ETH ETFs could represent another key milestone that may assist in price recovery.
By controlling supply, staking-enabled ETFs could boost demand for ETH and potentially increase its price as adoption grows. Proposals have been submitted by both the New York Stock Exchange and the Chicago Board Options Exchange, with the SEC set to make a decision by the end of October.
With the recent confirmation of crypto-friendly Paul Atkins as the new SEC chairman, analysts anticipate that ETF innovation, particularly in staking, could gain traction.