Nasdaq Seeks Regulatory Approval for ETH ETF Options Trading
Nasdaq’s options exchange has filed a request with U.S. regulators to permit options trading on spot Ethereum exchange-traded funds (ETFs). The August 6 regulatory filing specifically targets Blackrock’s iShares Ethereum Trust (ETHA), the only Ether ETF currently listed on Nasdaq’s electronic exchange. Other Ethereum ETFs are listed on NYSE Arca or Cboe.
Growing Interest in ETH ETFs
The filing is a significant move towards broader acceptance and adoption of ETH ETFs. Since their listing in July, these ETFs have attracted approximately $1.5 billion in net inflows, with Blackrock’s iShares Ethereum Trust (ETHA) alone drawing in around $500 million, according to Morningstar.
However, the U.S. Securities and Exchange Commission (SEC) has not yet authorized options trading on spot Bitcoin ETFs, which were listed in January and now hold around $50 billion in BTC. In July, the SEC informed the various options exchanges, including Nasdaq ISE, that more time was needed to make a decision regarding Bitcoin ETF options.
The Role of Options in Financial Strategies
Options are popular among hedge funds and financial planners for hedging against significant market fluctuations, such as the recent 28% drop in Ether’s spot price on August 5. They also enable more complex strategies like the “covered strangle,” recommended by investment research firm 10x Research.
In the broader $9 trillion ETF market, financial advisers play a crucial role, controlling up to half of investment flows. According to a survey by The Journal of Financial Planning, over 10% of advisers actively used options in 2023 to manage client portfolios. Morgan Stanley, the largest financial advisory firm with $3.75 trillion in assets, is reportedly preparing to allow its 15,000 advisers to recommend BTC ETFs as early as this week.
Additionally, Europe’s fourth-largest hedge fund recently invested nearly $500 million into BTC ETFs, following in the footsteps of Millenium Management, which allocated almost $2 billion to Bitcoin funds earlier this year.
