The United States Securities and Exchange Commission (SEC) will again delay its decision on Nasdaq ICE’s application for options trading on BlackRock’s Ethereum (ETH) exchange-traded fund (ETF). It can expect to hear the SEC decision on April 25.
BlackRock’s iShares ETH Trust was among the first eight spot ETH ETFs approved by the SEC. They began trading in July. The Nasdaq ISE exchange applied for a rule change to allow options trading on the trust the same month.
Options are contracts to buy or sell an underlying asset at a certain price within a predetermined timespan. Options grant the contractor the right to make those sales, but do not require the sale.
Watchdog objects to ETH ETF options trading
The application was published in the Federal Register on August 12. The agency had 180 days from that point (Feb. 8) to make its decision. The SEC explained in a filing on Feb. 7 that it can delay its decision by up to 60 days after that, or until April 25.
The delay is intended to give the SEC “sufficient time to consider the proposed rule change and the issues raised therein,” it explained. The agency received two comments on the proposal in December.
In one letter, a representative of Better Markets, a nonprofit financial markets watchdog, suggested that the high volatility inherent in cryptocurrency would cause greater instability in traditional financial markets due to the greater exposure potentially provided by the ETF.
Better Markets argued that an ETH ETF would be even more detrimental to the economy due to the amount of capital tied up in the proof-of-stake consensus mechanism. Bitcoin spot ETF options trading was approved by the SEC in January 2024, and BlackRock began trading BTC ETF options in December.
Interest in ETH ETFs is abundant
There is widespread interest in ETH ETFs. The NYSE American exchange filed for a rule change to allow it to list and trade options on the Bitwise ETH ETF, Grayscale ETH Trust, Grayscale ETH Mini Trust, and “Any Trust that Holds Ether” a day after Nasdaq’s request in regard to BlackRock.
Also on Feb. 7, the SEC released a filing requesting comment on Cboe BZX Exchange’s Feb. 3 request for a rule change it to list options trading on Fidelity’s ETH ETF. Fidelity’s spot ETH ETF was also among the first eight approved.
The SEC has not allowed options trading on any ETH ETFs so far.
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