The Nasdaq International Securities Exchange is seeking approval from the Securities and Exchange Commission (SEC) to list and trade options on a new trust managed by investment giant BlackRock. This move could significantly expand investment opportunities for Ethereum and further integrate cryptocurrencies into traditional financial markets.
The proposed iShares Ethereum Trust, unlike other crypto-related products, will hold solely Ethereum and cash. The Ethereum will be safeguarded by Coinbase, a leading cryptocurrency exchange, while The Bank of New York Mellon will manage the cash component. Notably, the trust won’t participate in Ethereum’s proof-of-stake validation process, which involves using the cryptocurrency to earn additional income. This decision keeps the trust a purely passive investment vehicle, according to the filing submitted by Nasdaq on Tuesday.
Nasdaq’s proposal aims to create a broader range of tools for investors seeking exposure to Ethereum. By allowing options trading on the trust, the exchange intends to make crypto investments more accessible within traditional financial markets.
“While the shares aren’t an exact equivalent to directly owning Ethereum,” the Nasdaq filing explains, “they offer investors an alternative method for gaining exposure through the public securities market, which may be more familiar to them.”
According to Nasdaq, the rule change could benefit investors by providing a cost-effective way to participate in the Ethereum market and address their investment needs, including hedging against losses and speculating on future price movements. Options contracts, unlike futures contracts, offer more flexibility as investors can choose whether or not to execute the trade.
This development comes on the heels of the SEC’s recent approval of several cryptocurrency-related ETFs in the U.S. This includes the first spot Bitcoin ETFs that launched earlier this year, followed by multiple Ethereum ETFs in May 2024. These approvals marked a significant shift in the regulatory landscape, as the SEC had previously denied similar products for over five years.
If approved, options trading on the iShares Ethereum Trust will follow the same listing and trading regulations as traditional ETFs. These rules govern factors like the composition of underlying assets, option expiry dates, strike prices, and trading halts.
For BlackRock, the world’s largest asset manager, this move demonstrates its continued interest in the growing cryptocurrency market. It could potentially attract a new wave of investors seeking exposure to Ethereum within a regulated framework. The SEC’s decision on Nasdaq’s proposal will be closely watched by the financial industry, with potential implications for the future of crypto options trading and mainstream adoption of digital assets.
