The United States Securities and Exchange Commission (SEC) has approved options trading on several spot Ethereum exchange-traded funds (ETFs), potentially expanding Ether’s appeal to institutional investors.
The approval, announced on April 9, follows a proposed rule change submitted by BlackRock for its iShares Ethereum Trust (ETHA) in July 2024. In addition to BlackRock, the SEC granted similar approvals to Bitwise Ethereum ETF, Grayscale Ethereum Trust (ETHE), Grayscale Ethereum Mini Trust (ETH), and the Fidelity Ethereum Fund (FETH).
Expanding Ether Exposure Through Options
According to the SEC’s response to Nasdaq, the move will enable exchanges to list and trade options on the approved Ether ETFs. This offers investors more flexibility, lower-cost strategies for gaining Ether exposure, and the ability to hedge against market volatility.
“The Exchange states that options on the Trust will provide investors with an additional, relatively lower cost investing tool to gain exposure to spot ether,” the SEC noted, emphasizing its utility as a hedging vehicle.
Options on ETFs are commonly used to manage risk or generate yield, especially in portfolios with exposure to volatile assets like cryptocurrencies.
Institutional Adoption Remains Uneven
Despite the regulatory green light, institutional demand for spot Ether ETFs has remained lukewarm compared to their Bitcoin counterparts. BlackRock’s ETHA currently holds $1.8 billion in net assets—a 56% decline since the start of the year, according to VettaFi data.
The muted inflows into Ether products come in contrast to the strong performance of spot Bitcoin ETFs, which have drawn the bulk of institutional capital since their approval.
SEC’s Shifting Stance Under Trump Administration
The approval of Ethereum ETF options comes amid a broader shift in the SEC’s approach to the crypto industry under President Donald Trump. Legal experts from Harvard Law School’s Forum on Corporate Governance have expressed surprise at how quickly the SEC has moved to ease enforcement pressure since Trump took office.
The SEC has recently closed investigations into multiple crypto firms and platforms, including Gemini, Coinbase, Uniswap Labs, and OpenSea.
Momentum Builds for Crypto Legislation
On the legislative front, momentum is also building. Lawmakers are working to advance several crypto-related bills, including the STABLE Act—designed to support the legal framework for stablecoins—and the GENIUS Act, which aims to regulate stablecoin issuers.
A broader crypto market structure bill is also reportedly in the works and could be finalized by the end of the year, signaling a potential regulatory turning point for the digital asset space in the United States.
