U.S. SEC approves options trading on spot Ethereum ETFs

The U.S. Securities and Exchange Commission has officially approved options trading on spot Ethereum exchange-traded funds.

According to filings published on Apr. 9, the SEC approved options tied to several spot Ethereum (ETH) ETFs, including BlackRock’s iShares Ethereum Trust, Bitwise Ethereum ETF, Grayscale’s Ethereum Trust, and Ethereum Mini Trust.

Options are financial instruments that allow traders to speculate on the future price of an asset, without owning it directly. In this case, investors can now trade options on spot Ethereum ETFs, enabling advanced strategies like covered calls or buffered exposure to the second-largest cryptocurrency by market cap.

The approval was widely anticipated. Bloomberg ETF analyst James Seyffart remarked on X that Ethereum ETF options approval “was 100% expected.” Nate Geraci, president of The ETF Store, added that he expects to see new ETF launches featuring options-based strategies in the near future.

The SEC greenlighted spot ETH ETFs last year, and these products have seen $2.34 billion in net inflows as of Apr. 9, as per SoSoValue data. The approval of options trading could inject fresh momentum into the Ethereum market, especially at a time when the cryptocurrency’s price has been struggling with volatility.

Ethereum ended the first quarter of the year 45% down, losing nearly $170 billion in market value. Due to growing competition from layer-2 solutions, Standard Chartered analysts have lowered their year-end price target for Ethereum from $10,000 to $4,000.

The cryptocurrency recently fell below $1,500 for the first time since March 2023, but has since rebounded to $1,611 as of press time. Looking ahead, the approval of staking in ETH ETFs might be the next significant milestone that could aid in price recovery.

By locking down supply, staking-enabled ETFs may increase demand for ETH and raise its price as adoption increases. Both the New York Stock Exchange and the Chicago Board Options Exchange have filed proposals, with the SEC’s deadline for approval or rejection set for the end of October.

Now that crypto-friendly Paul Atkins has been confirmed as the new SEC chairman, analysts believe that ETF innovation, including staking, could accelerate.