- SEC clears options trading on ETH ETFs, expanding tools for institutional hedging.
- ETH options track spot prices using data from major U.S. crypto exchanges.
- ETFs exclude staking, use cold storage, and follow strict transparency rules.
The U.S. Securities and Exchange Commission (SEC) has sanctioned options trading on several spot Ethereum ETFs. The move permits regulated exchanges to list and trade derivatives on ETH-backed exchange-traded funds, providing institutional access to Ethereum-based products.
New Options on Ethereum ETFs Signal Market Expansion
CoinNess Global has reported that the SEC has greenlit the launch of options trading on BlackRock’s iShares Ethereum Trust (ETHA) on April 9. The approval extends to similar products, including Grayscale Ethereum Trust (ETHE), Grayscale Ethereum Mini Trust (ETH), Fidelity Ethereum Fund (FETH), and Bitwise Ethereum ETF (ETHW). BlackRock’s ETHA currently manages $1.8 billion in assets despite experiencing a 56% year-to-date decline.
Besides enabling lower-cost access to ETH exposure, these options provide institutions with new tools for risk management and portfolio strategies. Each ETF tracks the real-time market price of ETH using a volume-weighted average price from top U.S. exchanges, including Coinbase, Kraken, Bitstamp, and LMAX Digital.
SEC Aligns Surveillance Rules for ETH-Based Derivatives
The SEC’s approval followed a formal review process triggered by BlackRock’s rule change filing on July 22, 2024. The regulatory body cited existing surveillance-sharing agreements with the Chicago Mercantile Exchange (CME), referencing their ability to detect trading anomalies across spot and futures markets. These agreements satisfied the “significant market” test previously used in Bitcoin ETF approvals.
The Commission evaluated real-time ETH trading volumes, noting price correlation between ETH spot and CME futures markets. BZX and Nasdaq demonstrated compliance with Exchange Act Rule 19b-4, supported by consistent market data and structured reporting practices. Their proposals showed strong alignment with investor protection mandates.
Custodians such as Coinbase Custody Trust Company will safeguard ETH holdings in cold storage. Besides managing in-kind creations and redemptions, authorized participants will use arbitrage to stabilize ETF prices against NAV. Each fund must report holdings, fees, and NAV updates daily to ensure market transparency.
New Approval Taps Institutional Demand for Regulated ETH Access
The SEC emphasized that these products classify ETH as a commodity under CFTC oversight. ETH’s listing under commodity-based trust rules permits secure exposure without direct interaction with crypto wallets or unregulated platforms. The ETFs do not support staking or lending and maintain neutral exposure to ETH’s market performance.
Listed options on these ETFs will trade under existing exchange rules covering margin, account controls, and surveillance. By aligning regulatory oversight with rising demand, this approval introduces structured ETH exposure through accessible and transparent mechanisms across regulated U.S. exchanges.
