Nasdaq Proposes Eliminating Position Caps on Cryptocurrency ETF Options for Bitcoin and Ethereum
In a submission to the Securities and Exchange Commission, Nasdaq is pursuing the removal of contract limitations on cryptocurrency ETF options, citing concerns about inconsistent regulatory treatment in the derivatives sector.
The Nasdaq stock exchange has submitted a regulatory proposal to the Securities and Exchange Commission aimed at eliminating position restrictions on options contracts connected to spot Bitcoin and Ethereum exchange-traded funds, representing an effort to bring crypto ETF options in line with regulatory frameworks governing other commodity-linked investment vehicles.
The regulatory submission, lodged on Jan. 7 and granted immediate effectiveness on Wednesday, eliminates the current 25,000-contract caps on options associated with various Bitcoin (BTC) and Ether (ETH) ETFs trading on Nasdaq's platform, encompassing investment products from BlackRock, Fidelity, Bitwise, Grayscale, ARK/21Shares and VanEck, the filing documents reveal.
The Securities and Exchange Commission chose to bypass its typical 30-day waiting requirement, enabling the regulatory modification to become operational without delay, though the agency maintains discretion to halt the implementation within a 60-day window should officials conclude that additional scrutiny is necessary.
Options contracts represent financial instruments that provide traders with the ability, though not the requirement, to purchase or sell an underlying security at a predetermined price point prior to a specified expiration date. Market exchanges and regulatory bodies generally establish caps on options transactions to mitigate risks associated with uncontrolled speculation, potential market manipulation and overly concentrated trading positions that might increase volatility or endanger overall market integrity.
According to Nasdaq's filing, the modification would enable the exchange to handle digital asset products "in the same manner as all other options that qualify for listing," with the exchange contending that the regulatory change would resolve disparate treatment concerns while maintaining robust investor safeguards.
The regulatory agency has initiated a public comment period regarding the submission, with a conclusive decision anticipated by the end of February unless officials choose to suspend the regulation for additional evaluation.
The current submission represents a continuation of Nasdaq's authorization in late 2025 to facilitate trading of options on individual-asset crypto ETFs classified as commodity-based trusts, a development that enabled Bitcoin and Ether ETF options to commence trading on the platform while maintaining previously established position and exercise limitations.
Nasdaq expands its role in crypto markets
The exchange operator has been progressively broadening its involvement in cryptocurrency market infrastructure, spanning initiatives from advancing tokenized equity securities and consolidating crypto benchmark indexes to relaxing derivatives regulations surrounding Bitcoin ETFs.
During November, Nasdaq submitted a regulatory request to the SEC proposing an increase in position caps on options linked to BlackRock's iShares Bitcoin Trust (IBIT) from 250,000 contracts to 1 million, referencing increased market demand and asserting that the current limitation hindered hedging strategies and other legitimate trading approaches.
That same month, Matt Savarese, Nasdaq's head of digital assets strategy, disclosed to CNBC that the exchange was making regulatory authorization for tokenized versions of its exchange-listed equities a top priority, committing to expedite progress through the SEC's evaluation procedures as public commentary and regulatory input are incorporated.
In January, Nasdaq and CME Group revealed initiatives to consolidate their cryptocurrency benchmark standards, rebranding the Nasdaq Crypto Index as the Nasdaq-CME Crypto Index, a diversified multi-asset benchmark that monitors prominent cryptocurrencies including BTC, ETH, XRP (XRP), Solana (SOL), Chainlink (LINK), Cardano (ADA) and Avalanche (AVAX).
Nasdaq operates as a United States stock exchange provider that manages electronic trading platforms for equity securities, derivatives instruments and exchange-traded products and serves as a prominent listing destination for technology-focused and growth-stage corporations.