In a significant move aimed at bridging the gap between traditional financial markets and the burgeoning world of cryptocurrency, Nasdaq has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) requesting the removal of position and exercise limits on options related to spot Bitcoin exchange-traded funds (ETFs). This change, if approved, could lead to a more integrated landscape for crypto-linked products within the derivatives market.
The proposal, initially filed on January 7 and recently made effective on the 21st, seeks to eliminate the current cap of 25,000 contracts on options associated with Bitcoin and Ethereum ETFs listed on Nasdaq. The ETFs affected by this proposed rule change include offerings from major financial players such as BlackRock, Fidelity, Grayscale, Bitwise, ARK/21Shares, and VanEck.
In a notable acceleration of the regulatory process, the SEC waived its typical 30-day waiting period, allowing the rule change to take effect immediately. However, the SEC retains the option to suspend the implementation within 60 days if further scrutiny is deemed necessary. Additionally, a public comment period has been opened, and a final determination from the SEC is anticipated by late February, contingent on whether the rule is paused for review.
Nasdaq contends that removing these limits would enable crypto ETF options to be treated equivalently to all other options that qualify for listing, addressing what they describe as an instance of unequal treatment. The exchange emphasized that this proposed change would enhance market efficiency while preserving investor protections against manipulation and excessive risk.
Options represent a type of derivative contract that affords traders the right, but not the obligation, to buy or sell an asset at a predetermined price before a specified expiration date. Position and exercise limits are traditionally instituted to prevent the accumulation of concentrated positions, which can lead to heightened volatility and increased instability in the markets.
This latest move follows Nasdaq’s approval in late 2025 to list options on single-asset crypto ETFs as commodity-based trusts. Although this earlier decision allowed Bitcoin and Ethereum ETF options to commence trading, the existing position limits remained intact. Nasdaq has been progressively deepening its involvement in the cryptocurrency sphere over the past few years.
In November, the exchange filed another proposal aimed at raising position limits on options related to BlackRock’s iShares Bitcoin Trust (IBIT) to a potential one million contracts, citing a surge in institutional demand and a growing trend in employing options for hedging strategies. Nasdaq’s ambitions extend beyond trading, as the exchange has also ventured into crypto indexing and tokenization efforts.
Earlier this year, Nasdaq and the CME Group jointly announced plans to align their crypto benchmarks through the introduction of the Nasdaq-CME Crypto Index, which tracks a variety of significant digital assets including Bitcoin, Ether, XRP, Solana, Cardano, and Avalanche.
If the current rule change receives permanent approval, it would signify a major milestone in the ongoing normalization of Bitcoin derivatives within regulated markets in the U.S., effectively further blurring the lines that have historically separated traditional financial instruments from cryptocurrency-related assets.
