BlackRock and Nasdaq Submit Proposal for Spot Ethereum ETF Options

Leading asset management BlackRock and global stock exchange Nasdaq submitted a proposal to introduce options for the iShares Ethereum Trust (ETHA), BlackRock’s flagship spot Ethereum product.

BlackRock plans to create financial contracts that give investors the right to buy or sell shares of the ETF at a specific price in the future. The options, if approved, would offer investors additional flexibility and strategies for managing their Ether (ETH) exposure.

ETFs Everywhere

According to a notice of filing dated August 6, the proposed options will follow the same rules as other options on ETFs to ensure a level playing field. Nasdaq asserts that they won’t unfairly disadvantage other market participants or hinder competition.

The exchange also notes that the new offering will give investors more choices and potentially lower costs. It is expected to benefit investors by providing a more efficient way to invest in Ethereum and by offering increased hedging opportunities.

“Ultimately, the Exchange believes that offering options on the Trust for trading on the Exchange will promote competition by providing investors with an additional, relatively low-cost means to hedge their portfolios and meet their investment needs in connection with spot ether prices and ether related products and positions,” the filing stated.

Nasdaq has experience listing options on other commodity ETFs structured as trusts, including other BlackRock products.

According to Bloomberg ETF analyst James Seyffart, the Securities and Exchange Commission (SEC) has a 21-day review period for the proposal, with a potential final decision deadline around April 9, 2025.

The analyst noted that in addition to the SEC’ decision, the proposal requires signoff from the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC).

BlackRock and Nasdaq previously filed a proposal with the SEC to allow options trading on BlackRock’s spot Bitcoin ETF, the iShares Bitcoin Trust (IBIT).

However, the SEC has not yet approved options for spot Bitcoin ETFs, either from BlackRock or other asset managers. While the agency approved several spot Bitcoin ETFs in January 2024, it has designated a longer period to consider proposed rule changes for options trading related to these ETFs.

SEC Chair Gary Gensler has faced increasing pressure from Congress to approve options trading for spot Bitcoin ETPs, a May report revealed.

Congressman Mike Flood and Wiley Nickel were said to urge Gensler to act swiftly and called for clarity and consistency in the SEC’s treatment of these financial products, especially after the approval of spot Bitcoin ETFs.

The bipartisan effort seeks to address concerns about potential bias against newly launched Bitcoin funds, which typically receive options trading approval shortly after their introduction in traditional markets.

The SEC reportedly solicited public comments on the proposed options trading, which could add to the timeline.

Industry experts believe that options on spot Bitcoin ETFs could be particularly beneficial for institutional investors looking to hedge their positions.

US Spot Ethereum ETFs Mixed

Since debuting trading, US spot Ethereum ETFs have shown mixed trend, mostly affected by daily flows of Grayscale’s Bitcoin ETF (ETHE). The fund has seen around $2.2 billion in net outflows after its ETF conversion, according to Farside Investors.

On August 6, investors pulled out more than $39 million from ETHE, marking a record low. Outflows from ETHE have slowed down since the start of the week.

However, compared to spot Bitcoin ETFs, interest in Ethereum ETFs is relatively weaker, with most of the demand concentrated in BlackRock’s ETHA.

Since its launch in late July, ETHA has attracted over $750 million in net inflows, followed by Fidelity’s Ethereum fund (FETH) and Bitwise’s Ethereum ETF (ETHW), data from Farside Investors shows.

As of August 5, BlackRock’s ETHA has around 237,882 ETH under management, according to data from the fund’s site.