The US Securities and Exchange Commission (SEC) has announced a postponement in its ruling on whether to allow the Cboe BZX Exchange to list options based on Fidelity’s Ether (ETH) exchange-traded fund (ETF). This decision is significant as it could influence institutional investment in cryptocurrency markets. The SEC has set a deadline of May 14 to either approve or disapprove the listing request for Fidelity’s Ethereum Fund (FETH), according to a filing made on March 12.
Initially, the request from Cboe BZX to list options was submitted in January, following an ongoing trend of interest in cryptocurrency ETFs. Options trading on Ether funds is a crucial component in attracting institutional capital to the sector, making this ruling highly anticipated by market watchers.
In recent months, the SEC has acknowledged over a dozen such filings related to cryptocurrency ETFs, signaling a subtle shift in its regulatory approach. This change is noteworthy especially since President Donald Trump began his second term on January 20, as it appears to reflect a more accommodating stance towards cryptocurrency investments.
On March 11, Cboe BZX escalated its appeals by requesting permission to include staking in Fidelity’s Ether ETFs, a feature not currently supported by any publicly traded US Ether funds. Staking, which involves posting ETH as collateral with a validator in exchange for rewards, could enhance returns for investors. This move emphasizes the growing competitiveness among financial products based on cryptocurrencies.
Fidelity’s FETH is one of the more prominent Ether ETFs, boasting approximately $780 million in net assets as of early March. As the cryptocurrency market continues to evolve, ETF options are becoming increasingly relevant. In February, the SEC similarly delayed decisions on proposed rule changes by Nasdaq ISE and its affiliate, Cboe Exchange, which underlines the comprehensive regulatory review being undertaken by the agency.
Additionally, the SEC is expected to rule by April on whether Nasdaq can list options linked to BlackRock’s iShares Ethereum Trust (ETHA), the largest ETH ETF which has over $3.7 billion in net assets. These moves highlight a growing acceptance and integration of cryptocurrencies within regulated financial markets.
The ruling on Cboe Exchange’s application to list options tied to Fidelity’s Ether fund is crucial for the overall market. It will not only affect institutional participation in cryptocurrency markets but also indicates the potential for similar products coming to fruition in the future. Spot Ether ETFs, launched in July 2024, have already attracted close to $7 billion in assets, reinforcing demand for cryptocurrency investment products.
Options are financial contracts granting traders rights to buy or sell an underlying asset at a specified price, categorized as either ‘call’ or ‘put’ options. As these financial products become more mainstream, their acceptance by institutions could signal a major turning point for digital asset investment strategies.
