Nasdaq asks to list options on spot Ethereum ETFs — Filing

Nasdaq’s options exchange asked United States regulators to permit options trading on spot Ethereum exchange-traded funds (ETFs), according to an Aug. 6 regulatory filing.

Nasdaq’s proposed rule change would apply exclusively to Blackrock’s iShares Ethereum Trust (ETHA), which is the only Ether (ETH) ETF listed on Nasdaq’s electronic exchange. The others are listed on the New York Stock Exchange’s (NYSE) Arca or Cboe.

The filing marks an important step towards widespread adoption of ETH ETFs, which listed in July and and proceeded to attract approximately $1.5 billion in net inflows, according to Morningstar.

The US Securities and Exchange Commission (SEC) has still not yet authorized options trading on spot Bitcoin (BTC) ETFs, which listed in January and now control approximately $50 billion in BTC.

In July, the SEC told the half dozen options exchanges — including Nasdaq ISE — that had asked to list options on spot BTC ETFs that more time was needed to reach a decision.

Options are widely used by hedge funds and financial planners alike to safeguard against sharp market movements — like the 28% drop in Ether’s spot price on Aug. 5. They also form the basis of more exotic strategies, such as the “covered strangle” touted by 10x Research, an investment research firm.

Financial advisers control as much as half of investment flows in the $9 trillion ETF market, and more than 10% of advisers actively used options to manage client portfolios as of 2023, according to a survey by The Journal of Financial Planning.

Morgan Stanley — the largest financial advisory with $3.75 trillion in assets — reportedly will allow its 15,000 advisers to start recommending BTC ETFs as soon as this week.

On Aug. 5, Europe’s fourth largest hedge fund revealed it had put nearly $500 million into BTC ETFs, following others, like Millenium Management, which invested nearly $2 billion in Bitcoin funds earlier this year.