Just In: US SEC Extends Review for BlackRock Ethereum ETF Options Trading
Highlights
- SEC extends review of Ethereum ETF options, decision expected by April 2025.
- BlackRock's Ethereum ETF, ETHA, leads with $3.7B in assets amidst a $9B sector.
- Bitcoin ETF options saw $13B open interest, setting high hopes for ETHA options.
The U.S. Securities and Exchange Commission (SEC) has postponed its decision on whether to approve options trading for BlackRock’s iShares Ethereum Trust ETF (ETHA). The regulatory agency stated that additional time is necessary to evaluate the proposal. A final decision is now expected by April 9, 2025.
SEC Delays Decision on Ethereum ETF Options
BlackRock, the world’s largest asset manager, submitted a proposal through Nasdaq in August 2024 to allow options trading on its Ethereum ETF. The SEC has been reviewing the request and announced on Friday that it requires more time to assess the proposed rule change.
In an official filing, the US SEC stated, “The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.” This move aligns with the regulatory approach taken for previous cryptocurrency-related financial products.
The decision extends the waiting period for market participants looking to trade derivatives tied to Ethereum ETFs. If approved, options trading on ETHA could provide investors with new strategies for hedging and speculation.
Strong Demand for Crypto ETF Options
Interest in cryptocurrency ETF options has grown significantly. BlackRock’s spot Bitcoin ETF (IBIT) received approval for options trading in September 2024. When trading began in November, IBIT options quickly became one of the most active ETF derivatives markets, with open interest exceeding $13 billion.
The success of Bitcoin ETF options has fueled expectations that Ethereum ETF options could attract similar demand. Spot Ethereum ETFs were introduced in July 2024 and have amassed approximately $9 billion in net assets. BlackRock’s ETHA has led the category with $3.7 billion in total assets.
The introduction of options trading could increase liquidity and provide institutional investors with more sophisticated risk management tools. However, concerns remain about market volatility and potential risks to retail investors.
Public Comments and Industry Concerns
The SEC’s decision delay comes as industry participants express differing views on cryptocurrency ETF options. Better Markets, a nonprofit financial advocacy group, has urged caution. In a letter responding to the Nasdaq proposal, Benjamin Schiffrin, Director of Securities Policy at Better Markets, stated,
“Retail investors already lose billions of dollars trading options. Options on spot Ether ETPs would only give sophisticated market participants another way to use options trading to take advantage of the retail investors to whom the options will inevitably be marketed.”
In addition to BlackRock’s proposal, the US SEC is also reviewing a separate request from Cboe BZX Exchange Inc. on behalf of Fidelity to list and trade options on its spot Ethereum ETF. The agency has invited public comments on the proposal, with submissions due within 21 days of publication in the Federal Register.
The SEC’s decision on Ethereum ETF options comes amid broader regulatory scrutiny of cryptocurrency financial products. While the agency approved Bitcoin ETF options, the extension of Ethereum options approval suggests that regulators are taking a cautious approach.
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