BlackRock Plans to Introduce Ethereum ETF Options: Market Implications Explained

Nasdaq and BlackRock, the world’s largest asset manager, are making preparations to introduce options trading for the spot Ethereum ETF.

A filing on the U.S. Securities and Exchange Commission’s website reveals that Nasdaq and BlackRock have requested permission from the regulator to enable options trading on the iShares Ethereum Trust ETF (ETHA), the sole Ethereum-based ETF listed on the Nasdaq exchange.

The proposal outlined in the document suggests amendments to the rules governing the listing and trading of options on the iShares Ethereum Trust. The exchange aims to broaden the range of ETFs eligible for trading on the exchange with options by incorporating the Trust.

The Trust’s ETH will be subject to Ethereum proof-of-stake validation or utilized to acquire additional ETH or generate income and other earnings.

Feedback on the proposal from Nasdaq and BlackRock is open for 21 business days. Bloomberg Intelligence analyst James Seyffart anticipates that a final decision on this application is unlikely to be reached before April 2025.

BlackRock must secure approval from the SEC, the Commodity Futures Trading Commission, and the Options Clearing Corporation to engage in options trading for the spot Ethereum (ETH) ETF. Meanwhile, Nasdaq is awaiting approval to conduct options trading for spot Bitcoin (BTC) ETFs, with the SEC indicating the need for additional time to evaluate this product category.

Options are contractual agreements that grant the option buyer the right to buy or sell the underlying asset at a predetermined time and price. Retail investors often utilize options for speculation and short-term transactions due to their potential for high returns with limited potential losses.

BlackRock’s introduction of options will offer investors an additional and cost-effective means to acquire ETH directly and serve as a hedging tool to meet their investment objectives.

Following the approval of a spot Bitcoin ETF in January, various financial institutions, including BlackRock and Fidelity, have been pursuing approval to establish cryptocurrency exchange-traded funds. The SEC approved the launch of a spot Ethereum ETF in the U.S. on May 23, with several major institutions receiving regulatory approval to commence trading ETH-ETF products on July 23.

During a crypto market downturn on August 6, inflows into ETH ETFs totaled $98.3 million, marking the second-highest figure since the products were approved, as reported by SoSoValue.

BlackRock recently introduced two new ETFs utilizing options strategies focused on U.S. stocks. The funds employ a covered call strategy on large-cap and small-cap stocks, providing investors with monthly income from option premiums and potential stock price appreciation within specified limits.

Given BlackRock’s track record and extensive assets under management, the approval of the new crypto-based tool is highly probable, which could attract clients and their capital to the industry.