Nasdaq Asks SEC to Approve Options Trading for BlackRock’s New Ethereum Trust

The Nasdaq International Securities Exchange has filed a proposal with the Securities and Exchange Commission to list and trade options on a trust managed by BlackRock.

The assets of the newly proposed iShares Ethereum Trust will consist solely of Ethereum, held by Coinbase, and cash, held by The Bank of New York Mellon, according to a filing on Tuesday.

The trust will not engage in Ethereum proof-of-stake validation or use its assets to earn additional income generated through staking, ensuring it remains strictly a passive investment vehicle, per the filing.

The move aims to broaden the range of investment tools for Ethereum and make crypto investments more accessible within traditional financial markets, Nasdaq said.

“Although the shares are not the exact equivalent of a direct investment in ether, they provide investors with an alternative method of achieving investment exposure to ether through the public securities market, which may be more familiar to them,” the filing reads.

The exchange also said the rule change will benefit investors by offering a lower-cost way to gain exposure to Ethereum and meet their investment needs, which typically entails hedging and speculation.

Traders use options to hedge against potential losses in their investments or to speculate on the future price of an asset, like a stock or ETF. Options provide flexibility because an individual can choose whether or not to execute the trade, unlike futures.

It follows the SEC’s recent approval of several crypto ETFs in the U.S., including the first spot Bitcoin ETFs earlier this year and multiple Ethereum ETFs in May 2024. 

The regulatory nod marked a shift forward for such crypto products, which previously faced opposition and denial from the SEC for more than half a decade. 

If approved, the options on the trust will follow the same listing and trading rules as other ETFs, including criteria for underlying securities, expirations, strike prices, and trading halts.