The SEC delays its decision on Ethereum ETF options. Concerns over risk grow, but investor demand remains strong. #Ethereum #CryptoETF
Published: Feb 9, 2025 at 03:06 AM
- The SEC delayed its decision on BlackRock’s Ethereum ETF options trading request.
- Better Markets warned that options trading could increase risks for retail investors.
- Demand for crypto ETF options is rising, fueled by IBIT’s strong market performance.
The US Securities and Exchange Commission (SEC) postponed its decision on options trading for BlackRock’s iShares Ethereum Trust (ETHA) on February 7. BlackRock launched its spot Ethereum ETF in May alongside several others. Trading began that summer, and in August, Nasdaq submitted a proposal seeking a rule change to allow options trading on ETHA.
The SEC disclosed it requires additional time to complete their proposal assessment. The agency created a 21-day commenting period after publishing the proposal through the Federal Register. This move demonstrates the agency’s careful stance regarding cryptocurrency financial products. The SEC and Options Clearing Corporation (OCC) and Commodity Futures Trading Commission (CFTC) must approve the proposal for trading to commence.
Better Markets, a nonprofit organization focused on financial reforms, has warned the SEC about the risks of approving Ethereum ETF options. The group argues that cryptocurrency assets remain highly volatile, making options trading risky for retail investors.
Benjamin Schiffrin, Better Markets’ Director of Securities Policy, stated that many retail investors already face losses in options trading. He argued that allowing Ether ETF options would create another tool for experienced traders to exploit less-informed investors. The organization has previously criticized cryptocurrency markets for their speculative nature and potential risks.
Despite concerns, demand for cryptocurrency ETF options is increasing. BlackRock’s spot Bitcoin ETF (IBIT) received approval for options trading in September 2023. When trading began in November, IBIT options became one of the most traded ETF derivatives, with open interest surpassing $13 billion.
IBIT’s success has fueled hopes for similar interest in Ethereum ETF options. Spot Ethereum ETFs have accumulated around $9 billion in net assets since their July launch. BlackRock’s ETHA leads the sector with $3.7 billion in assets. On February 6, ETHA was the only spot Ethereum ETF trading in the green, highlighting strong investor interest.
The integration of options trading would improve market liquidity while offering professional investors enhanced tools to manage risks. Market volatility continues to be a persistent concern for retail traders. The SEC’s final verdict on Ethereum ETF options will serve as a benchmark for upcoming regulatory developments across the crypto investment field.
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