SEC Halts Ethereum ETF Plans Post Bitcoin Approval

The U.S. Securities and Exchange Commission (SEC) has


delayed


its decision regarding the proposed rule change by Nasdaq’s International Securities Exchange, which would enable the listing and trading of options on BlackRock’s iShares Ethereum Trust (ETHA). Originally anticipated by September 26, the decision has now been moved to November 10, giving the SEC additional time for evaluation.

The SEC’s pause on Ethereum ETF options follows a recent nod to Bitcoin options, reflecting their cautious approach in integrating more cryptocurrency derivatives into traditional markets. If approved, Ethereum options could significantly enhance market liquidity and potentially ignite more bullish trading activity.

ETHA Options: A New Opportunity for Traders

Should the SEC approve, Ethereum ETF options will be regulated similarly to other ETF-linked derivatives, providing traders with new strategies to hedge against or speculate on Ethereum’s price movements. This follows the same framework that governs current cryptocurrency derivatives, aiming to offer a balanced mix of risk and opportunity.

Proposals and Market Impacts

Submitted on July 22, the proposal suggests amending existing rules to facilitate options trading on BlackRock’s iShares Ethereum Trust. This trust, managed by Coinbase with cash reserves held by The Bank of New York Mellon, aims to provide passive exposure to Ethereum without engaging in staking or other active management strategies.

The SEC has also postponed its decision on another proposal by NYSE American LLC to list and trade options on various Ethereum ETFs, including the Bitwise Ethereum ETF and the Grayscale Ethereum Trust. These delays come as the Ethereum ETF market faces volatility, recently experiencing its largest net outflows since July.

Grayscale’s spot Ether ETF experienced the largest single-day withdrawals, totaling $80.6 million, which is indicative of the challenges and volatile nature that Ethereum-related investment vehicles currently face.

Edited by Sebastian Sinclair

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