Key Facts
- ✓ Nasdaq filed a rule change on January 7 to eliminate the 25,000-contract cap on Bitcoin and Ethereum ETF options.
- ✓ The U.S. Securities and Exchange Commission waived its standard 30-day waiting period, allowing immediate implementation of the rule change.
- ✓ Six major Bitcoin ETF providers are affected by this proposal, including BlackRock, Fidelity, Grayscale, Bitwise, ARK/21Shares, and VanEck.
- ✓ The SEC retains authority to suspend the rule within 60 days if further review is deemed necessary.
- ✓ A public comment period is currently open, with a final SEC determination expected by late February.
- ✓ In November, Nasdaq separately proposed raising position limits on BlackRock's iShares Bitcoin Trust to one million contracts.
Quick Summary
Nasdaq has taken a decisive step toward normalizing cryptocurrency derivatives within U.S. regulated markets. The exchange filed a rule change with the U.S. Securities and Exchange Commission seeking to remove position and exercise limits on options tied to spot Bitcoin exchange-traded funds.
This move represents a significant evolution in how crypto-linked products are treated within traditional financial infrastructure. By eliminating what Nasdaq describes as unequal treatment, the proposal aims to allow Bitcoin and Ethereum ETF options to operate under the same framework as other commodity-based derivatives.
The Rule Change
The proposal, originally filed on January 7 and made effective on January 21, eliminates the current 25,000-contract cap on options linked to Bitcoin and Ethereum ETFs listed on Nasdaq. This cap previously restricted the size of positions traders could establish in these derivative contracts.
Affected products include funds from major asset managers such as BlackRock, Fidelity, Grayscale, Bitwise, ARK/21Shares, and VanEck. The SEC waived its standard 30-day waiting period, allowing the rule change to take effect immediately while retaining authority to suspend it within 60 days if further review is deemed necessary.
A public comment period is now open, with a final SEC determination expected by late February unless the rule is paused. Options are derivative contracts that give traders the right, but not the obligation, to buy or sell an asset at a predetermined price before a set expiration date.
"eliminating what it described as unequal treatment without undermining investor protections"
— Nasdaq filing
Market Impact
Position and exercise limits are typically imposed to prevent concentrated positions that could amplify volatility or destabilize markets. Nasdaq argues that lifting these limits would allow crypto ETF options to be treated in the same manner as all other options that qualify for listing, eliminating perceived unequal treatment without undermining investor protections.
The exchange stated that the change would support market efficiency while maintaining safeguards against manipulation and excessive risk. This filing builds on Nasdaq's approval in late 2025 to list options on single-asset crypto ETFs as commodity-based trusts.
eliminating what it described as unequal treatment without undermining investor protections
While that decision allowed Bitcoin and Ethereum ETF options to trade on the exchange, existing position limits remained in place. The latest proposal seeks to remove those remaining restrictions.
Broader Context
Nasdaq's move represents the latest step in its steady expansion into cryptocurrency markets. In November, the exchange filed a separate proposal to raise position limits on options tied to BlackRock's iShares Bitcoin Trust (IBIT) to as much as one million contracts, citing growing institutional demand and increased use of options for hedging strategies.
The exchange has also pushed into crypto indexing and tokenization. In January, Nasdaq and CME Group announced plans to unify their crypto benchmarks under the Nasdaq-CME Crypto Index, which tracks major digital assets including Bitcoin, Ether, XRP, Solana, Cardano, and Avalanche.
Regulatory Timeline
The regulatory process for this rule change follows a specific timeline. The SEC's decision to waive the standard 30-day waiting period indicates an expedited review process, though the commission maintains oversight authority.
The public comment period provides an opportunity for market participants and investors to weigh in on the proposal. This period will remain open until the SEC makes its final determination, expected by late February.
If the rule is not paused for further review, it will become permanent. This would mark another step toward normalizing Bitcoin derivatives within U.S. regulated markets, further blurring the line between traditional financial instruments and crypto-native assets.
Looking Ahead
The potential removal of position limits represents a significant milestone in the integration of cryptocurrency products into traditional finance. By treating Bitcoin and Ethereum ETF options under the same regulatory framework as other commodity-based derivatives, Nasdaq is working to eliminate barriers that have historically separated crypto markets from established financial systems.
Market participants will be watching closely as the SEC makes its final determination in late February. The outcome will influence how other exchanges approach similar proposals and could set a precedent for future crypto-derivative products in the U.S. regulatory landscape.
