BlackRock and Nasdaq Offer Proposals for Spot Ethereum ETF Options
Leading asset manager BlackRock and global stock exchange Nasdaq have proposed to introduce options for the iShares Ethereum Trust (ETHA), BlackRock's flagship Ethereum product.
BlackRock plans to create financial contracts that give future investors the right to buy or sell shares of the ETF. If approved, the options will provide investors with additional flexibility and strategies to manage their Ether (ETH) exposure.
ETFs everywhere
According to the filing notice filed on August 6, the proposed options will follow the same rules as other options on the ETF to ensure a level playing field. Nasdaq asserts that it will not unduly harm other market participants or hinder competition.
The exchange also noted that the new offering will provide investors with more choices and lower costs. It is expected to benefit investors by providing a more efficient way to invest in Ethereum and providing additional hedging opportunities.
“Ultimately, the exchange believes that offering options on trust to trade on the trans-exchange will encourage competition by providing investors with additional and relatively low prices to hedge their portfolios and investment needs in relation to spot ether prices and ether products and positions,” the statement said.
Nasdaq has experience listing options on other commodity ETFs structured as trusts, including other BlackRock products.
According to Bloomberg ETF analyst James Seifert, the Securities and Exchange Commission (SEC) has a 21-day review period for the proposal, with a final decision deadline around April 9, 2025.
The analyst pointed out that in addition to the SEC's decision, the proposal needs to be signed off by the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC).
BlackRock and Nasdaq previously filed a proposal with the SEC to allow trading in BlackRock's spot bitcoin ETF, the iShares Bitcoin Trust (IBIT).
However, the SEC has yet to approve options for spot Bitcoin ETFs from BlackRock or other asset managers. While the agency will approve multiple spot Bitcoin ETFs in January 2024, it has set aside a longer period to take into account proposed rule changes to the trading of options related to these ETFs.
SEC Chairman Gary Gensler is under increasing pressure from Congress to trade options for spot Bitcoin ETPs, according to a May report.
Congressmen Mike Flood and Willie Nickell are said to have urged Gensler to act quickly and called for transparency and consistency in the SEC's handling of these financial products, especially after the approval of spot Bitcoin ETFs.
The bipartisan effort seeks to address the bias against newly launched Bitcoin funds that receive options trading licenses shortly after entering traditional markets.
The SEC has reportedly requested public comment on the proposed options transaction, which could add to its timeline.
Industry experts believe that options on the spot Bitcoin ETFs can be particularly useful for institutional investors looking to hedge their positions.
US Spot Ethereum ETFs joined.
Since the start of trading, US spot Ethereum ETFs have shown mixed trends, mostly affected by the daily flows of Greyscale's Bitcoin ETF (ETHE). According to Farside Investors, the fund saw a net inflow of about $2.2 billion after the ETF conversion.
As of August 6, investors have withdrawn more than $39 million from ETHE, a record low. Flows from ETHE have decreased since the beginning of the week.
However, compared to Bitcoin ETFs, interest in Ethereum ETFs is relatively weak, with most interest focused on BlackRock ETHA.
Since its launch in late July, ETHA has attracted more than $750 million in net inflows, followed by Fidelity's Ethereum Fund (FETH) and Bitwise's Ethereum ETF (ETHW), data from Farside Investors shows.
BlackRock's ETHA has 237,882 ETH under management as of August 5, according to data from the fund's site.
