The Nasdaq has officially requested the U.S. Securities and Exchange Commission to approve a rule change that would eliminate the position and exercise limits currently in place on options linked to exchange-traded funds (ETFs) spot on Bitcoin (BTC) and Ethereum (ETH), a measure that could significantly increase institutional participation in crypto-asset derivatives markets.
In a filing submitted to the SEC earlier this week, the Nasdaq proposed to remove the current cap of 25,000 contracts that applies to options on crypto ETFs.
The platform argues that these products now meet the same criteria for liquidity, market capitalization, and oversight as other options on commodity-backed ETFs and should therefore be governed by the same framework.
Willingness to align crypto ETF options with traditional products
The Nasdaq's proposal aims to treat options on spot Bitcoin and Ethereum ETFs the same way as options linked to commodities like gold or oil.
According to the filing, the current limits were introduced when crypto ETFs were new and untested, but market conditions have since evolved.
The platform indicates that trading volumes, assets under management, and price discoverability on the underlying ETFs have reached levels that justify more significant and sophisticated optional activity.
The removal of these limits, the Nasdaq argues, would improve market efficiency without introducing new systemic risk.
Institutional demand fuels the proposal
Options markets are a central tool for institutional investors, used for hedging, volatility strategies, and structured products. Current position limits have restricted the ability of asset managers, hedge funds, and market makers to deploy capital on a large scale, even as the demand for regulated crypto exposure has increased.
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If approved, the amendment would allow for larger optional positions on ETFs issued by companies like BlackRock, Fidelity, Ark Invest, VanEck, Grayscale, and Bitwise, reflecting the scale of the products involved.
A Test Of The SEC’s Regulatory Stance
The proposal places the decision directly in the hands of the SEC, which must determine whether options on crypto-asset linked ETFs should continue to be subject to specific restrictions or be fully integrated into existing derivatives regulation.
Although the agency has approved spot Bitcoin and Ethereum ETFs over the past year, derivatives linked to these products remain subject to stricter controls.
The Nasdaq's filing effectively calls into question this distinction, arguing that the oversight mechanisms, including surveillance sharing agreements and risk management by clearinghouses, are already sufficient.
Consequences for the structure of the crypto market
Approval would not introduce new crypto ETFs and would not directly expand access for retail. Rather, it would strengthen the layer of derivatives underpinning regulated crypto exposure in U.S. markets.
A more developed options market generally supports liquidity, tightens spreads, and allows for more sophisticated risk management, factors that tend to anchor institutional capital over longer market cycles.
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