The U.S. Securities and Exchange Commission (SEC) is considering approval of the first options tied to Ethereum-based exchange-traded funds (ETFs), according to a recent filing. If approved, the decision would allow NYSE American to list options on various Ethereum-focused funds, including Bitwise Ethereum ETF (ETHW), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Mini Trust, as well as other funds holding Ether.
SEC’s Evolving Stance on Crypto Products
The SEC’s review of Ethereum ETF options marks a notable shift, potentially indicating a more favorable stance on crypto investments under the recent administration change. Since former President Donald Trump’s election win on November 5, some crypto proponents have speculated that U.S. regulators may adopt a more lenient approach toward digital assets.
In September and October, the SEC approved applications allowing three major exchanges—NYSE American, Nasdaq, and Cboe Exchange—to offer options on 11 Bitcoin ETFs. This approval set a precedent, and now these exchanges are looking for the green light to list Ethereum ETF options, having submitted requests in August.
Broader Crypto Investment Options on the Horizon
Jeff Park, Bitwise Invest’s head of alpha strategies, noted that introducing options on Ethereum ETFs could represent a “monumental advancement” in the crypto market, providing “extremely compelling opportunities for investors.” Options, which give investors the right to buy (call) or sell (put) an asset at a predetermined price, allow for more diverse strategies and risk management.
However, before Ethereum ETF options can begin trading, additional approval is required from the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC), two oversight bodies crucial for moving forward.
Pending Approvals and Potential Timelines
In October, the SEC postponed a decision on a proposed rule change to allow Cboe Exchange to list options tied to several prominent Ethereum funds. Initially expected in October, the SEC delayed the ruling deadline to December 3, indicating that a decision could soon be forthcoming.
Meanwhile, several other crypto-related ETFs await SEC approval, including diverse index ETFs designed to hold various altcoins. On November 4, the SEC also started reviewing Grayscale’s proposal for a groundbreaking ETF that would contain a range of cryptocurrencies, expanding opportunities for diversified crypto investments.
