In a significant regulatory development, the US Securities and Exchange Commission (SEC) has officially approved options trading for Ethereum spot exchange-traded funds (ETFs). This approval marks a pivotal step in expanding access to ETH-based investment tools, providing both hedging and speculative opportunities for retail and institutional investors.
Nasdaq Gets Green Light for iShares Ethereum Trust (ETHA)
The SEC has approved Nasdaq’s rule change application to allow the listing and trading of options on the iShares Ethereum Trust (ETHA). This decision enables investors to buy and sell options contracts tied to ETH spot ETFs, offering leverage, downside protection, and income strategies such as covered calls.
Per Nasdaq’s announcement, the options will follow American-style exercise, functioning similarly to options on traditional ETFs. Investors will now have more affordable entry points into Ethereum exposure, as options contracts offer lower capital requirements compared to purchasing ETFs outright.
Expanded Approval to Major ETH Funds
The SEC’s approval doesn’t stop at BlackRock’s iShares ETF. It also extends to:
Bitwise Ethereum ETF (ETHW)Fidelity Ethereum Fund (FETH)Grayscale Ethereum Trust (ETHE)
Each of these funds will be subject to Nasdaq’s proposed position and exercise limit of 25,000 contracts, designed to limit potential market manipulation and protect retail investors.
Hedging and Passive Income Opportunities
The SEC emphasizes that this move adheres to Section 6(b)(5) of the Securities Exchange Act, which seeks to prevent fraudulent and manipulative acts. Investors will benefit from the ability to hedge via put options, reducing exposure to volatile ETH price drops. At the same time, covered call strategies allow income generation during periods of low volatility.
This evolution in Ethereum ETF offerings highlights the increasing maturity of the crypto market. It provides new tools for managing portfolio risk and increasing exposure, especially as ETH currently trades near $1,500 following a recent double-digit drop.
A Shift in SEC Stance
The approval comes after the SEC previously greenlit staking within Fidelity’s Ethereum ETF—another sign of evolving perspectives on digital asset products. Additionally, the SEC has ruled that dollar-backed stablecoins, memecoins, and PoW tokens are not securities, reducing regulatory uncertainty in several areas of the market.
Still, challenges remain. The SEC’s decision adds to its growing pile of pending applications, with XRP spot ETFs among those awaiting approval. ETF Store president Nate Geraci has stated that it may only be a matter of time before these new products hit the market.
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