Nasdaq filed with the U.S. Securities and Exchange Commission (SEC) to remove the 25.000-contract position and exercise limits that applied to options on spot Bitcoin and Ether exchange-traded funds. The filing sought parity with traditional commodity ETF options and framed the change as a step to deepen liquidity and improve institutional risk management.
Nasdaq submitted the change via a Form 19b-4. The filing targets options linked to major spot crypto ETFs, explicitly citing large products such as BlackRock’s iShares Bitcoin Trust (IBIT) and its Ethereum counterpart (ETHA), along with offerings from other institutional issuers. Market participants named in the filing include asset managers and market makers that trade or hedge exposure in these ETF products.
The SEC waived its standard 30-day waiting period, rendering Nasdaq’s rule change effective immediately, while a broader SEC review is scheduled to conclude by late February.
Nasdaq argued the limits were no longer appropriate given the trading volumes and liquidity of the underlying ETFs. The exchange said the change aligns with “just and equitable principles of trade” and removes what it characterized as “unfair discrimination” between crypto ETF options and conventional commodity ETF options.
What Nasdaq proposed and who is affected
Removing the 25.000-contract cap allows market makers and institutional traders to scale hedges and construct larger options strategies without breaching an exchange-imposed ceiling. The filing contends this will support tighter bid-ask spreads, increase open interest and enable more efficient price discovery across the derivatives stack.
Regulators historically used position limits to curb concentration risk and deter manipulation. Nasdaq’s proposal repurposes that trade-off, moving the emphasis toward product-specific oversight tied to liquidity metrics rather than a fixed contract cap.
Investors and compliance teams should watch the SEC’s continuing review, due to conclude by late February, which will be the next formal checkpoint for assessing whether the market’s improved liquidity and governance practices justify permanent removal of the caps.
If the SEC’s eventual findings uphold the change, trading desks, market-makers and exchanges may adjust risk models and capital allocation to reflect larger permissible option positions, potentially drawing more institutional flow into crypto ETF derivatives.
