SEC Postpones Decision on BlackRock’s Ethereum ETF Options Trading

Highlights:

• SEC postpones ETHA options decision, setting April 9 as the final ruling date.
• IBIT’s growth raises hopes for the demand for Ethereum ETF options.
• Better Markets warns ETH ETF options may harm retail investors.

On February 7, the United States Securities and Exchange Commission (SEC) postponed its decision to approve options trading for BlackRock’s iShares Ethereum Trust (ETHA). BlackRock’s spot Ethereum ETF was introduced in May alongside eight others and commenced trading that summer. In August, Nasdaq submitted a proposal seeking a rule change to enable options trading for the iShares Ethereum Trust.

The fillings read:

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”

Alongside BlackRock’s proposal, the SEC is reviewing a request from Cboe BZX Exchange to list and trade options on Fidelity’s spot Ether ETF (FETH). The agency has opened a 21-day public comment period following its publication in the Federal Register. In addition to SEC approval, the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC) must also authorize the proposal before trading can commence.

SEC punting on spot Ether ETF options. I wouldn't read too much into it, can't imagine they don't get approved eventually, likely waiting until Atkins is confirmed before moving on stuff. pic.twitter.com/7VJAx6tNLf

— Eric Balchunas (@EricBalchunas) February 7, 2025

Better Markets Warns SEC About Risks of Ether ETF Options

In response to Nasdaq’s proposal, Better Markets, a nonprofit and nonpartisan organization dedicated to financial system reform, cautioned the SEC against rushing to approve options trading for spot Bitcoin and Ethereum ETFs. The organization argued that both assets share similar volatility and has consistently been critical of cryptocurrencies.

Better Markets’ Director of Securities Policy, Benjamin Schiffrin, warned in the letter that retail investors are already suffering massive losses in options trading. He argued that permitting options on spot Ether ETPs would merely offer seasoned market players another mechanism to exploit retail investors.

IBIT’s Rapid Growth Sparks Optimism for Ethereum ETF Options

Demand for cryptocurrency ETF options has surged. BlackRock’s spot Bitcoin ETF (IBIT) secured approval for options trading in September last year. When trading started in November, IBIT options rapidly became one of the most traded ETF derivatives, with open interest surpassing $13 billion.

BlackRock’s product has seen remarkable adoption within months of its launch, according to the firm. IBIT options continue to gain momentum, with liquidity and investor interest rising rapidly. It has now become the leading choice among American traders. The strong performance of Bitcoin ETF options has raised hopes for similar demand in Ethereum ETF options. 

Since their launch in July, spot Ethereum ETFs have accumulated around $9 billion in net assets, with BlackRock’s ETHA leading the sector at $3.7 billion. Yesterday, ETHA was the only spot Ethereum ETF trading in the green.

Adding options trading may enhance liquidity and offer institutional investors advanced risk management tools. However, there are ongoing concerns about market volatility and the potential impact on retail investors.