SEC Delays Ruling on Options Trading for Ethereum-Based Spot ETFs

The US Securities and Exchange Commission (SEC) has

postponed

its determination on the authorization of options trading for Ethereum (ETH) based exchange-traded funds (ETFs) on the New York Stock Exchange (NYSE), as indicated by a document dated Nov. 8

notice.

The agency has requested additional time to consider the proposal and understand its potential impacts on the market. The under review decision pertains to funds from Bitwise (ETHW), Grayscale’s ETHE and Ethereum Mini Trust, and BlackRock’s ETHA.

Prior to this, the SEC had extended the deadline for consideration of ETHW and ETHA on Sept. 26, whereas it marked the initial delay for funds by Grayscale.

Bloomberg’s ETF expert James Seyffart had projected in August that the verdict on Ethereum ETFs options might arrive by April 2025.

Significantly, the filings by the SEC declared that any parties with interest may submit their arguments within a 21-day timeframe regarding the approval or disapproval of the Ethereum ETF options.

Furthermore, while the SEC might give initial acceptance to these applications for options trading, the filings highlighted that ultimate approval requires not only the nod of the Options Clearing Corporation (OCC) but also the Commodity Futures Trading Commission (CFTC).

Sophisticated Investment Instruments

An options contract is a financial derivative that enables two parties to enter an agreement to buy or sell an underlying asset at a predetermined price within a set timeframe. 

Options, akin to futures contracts, are utilized by institutional investors as a strategy to hedge their positions in the spot markets.

Comments from Eric Balchunas, a leading ETF analyst with Bloomberg, came in September post the sanction of options on Bitcoin (BTC) ETFs, suggesting that these instruments can sway more liquidity and attract major investors.

Introducing such options could stimulate essential liquidity for the struggling Ethereum ETFs, which have seen a net outflow of assets totaling a loss of $410 million, as per the information from Farside Investors’ report.

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