Nasdaq Demands SEC Scrap 25,000 Position Cap on Crypto ETF Options
Wall Street's biggest exchange just threw a grenade into the regulatory sandbox.
Nasdaq is publicly pressuring the Securities and Exchange Commission to eliminate position limits on crypto exchange-traded fund options—specifically, that 25,000-contract ceiling. The move signals a direct challenge to legacy market safeguards, framing them as archaic constraints on a digital asset class begging for institutional-scale liquidity.
The Core Ask: Unleash Institutional Flow
For funds and market makers, position limits act like a speed governor on a sports car. They cap how much exposure any single entity can build through options contracts, a tool critical for hedging and leveraged speculation. Nasdaq's argument hinges on a simple premise: crypto ETFs have arrived. They trade like any other security. Why handicap them with rules designed for a different era?
The 25,000 limit isn't just a number—it's a bottleneck. It restricts the size of bets major players can place, stifling the volume and sophistication the market needs to mature. Scrapping it would open the floodgates for complex options strategies, tighter spreads, and the kind of deep liquidity that attracts pension funds and endowments still peeking cautiously from the sidelines.
A Calculated Power Play
This isn't a polite request; it's a strategic volley. By filing publicly, Nasdaq forces the SEC's hand, putting the spotlight on a technical rule that has massive implications. The exchange is betting that the political winds have shifted enough—and the crypto infrastructure has hardened sufficiently—that regulators will blink.
The subtext is clear: legitimize the tools, and you legitimize the asset. Options are the plumbing of modern finance. Granting them for crypto ETFs isn't just an administrative tweak; it's a full-throated endorsement of the asset class's permanence.
The Finance Jab
Of course, watching traditional finance suddenly champion 'liberation' for crypto markets is rich—the same industry that built fortunes on gatekeeping and complexity now argues for deregulation when it's finally on the inside. The irony is almost as palpable as the potential profit.
The Verdict Awaits
All eyes turn to the SEC. Approve this, and you green-light a new phase of Wall Street's crypto embrace—one defined by derivatives, leverage, and the beautiful, terrifying efficiency of pure capital. Reject it, and you reaffirm the walls between the old world and the new. Nasdaq just made the choice stark. The ball, and the future of crypto's integration, is now in the regulator's court.
Exchange makes case for rule changes
If regulators say yes, the change would apply to BlackRock’s iShare Bitcoin Trust ETF, known by its ticker IBIT, and the company’s ethereum ETF called ETHA. Down the road, options on funds run by Grayscale, Bitwise, Fidelity, ARK21Shares, and VanEck would also see higher limits.
Under the proposal, all these crypto ETFs WOULD follow the same position limits that apply to other funds traded through Nasdaq’s options market. That would put them on equal footing with existing ETF options.
Nasdaq told the SEC that lifting the restrictions would create fair trading rules. The exchange said the MOVE would stop unfair treatment of different funds and help maintain an open market. The company argued that applying the same rules across the board protects people who invest while not hurting competition. Similar updates are expected at other options exchanges.
Nasdaq also asked the SEC to skip the usual 30-day waiting period and put the new rules in place right away.
The SEC is now collecting feedback from the public. Officials are expected to make a final call by the end of February.
Institutions continue buying Bitcoin
While this plays out, BlackRock has been buying more Bitcoin, apparently taking advantage of falling prices.
Early this month, BlackRock purchased 9,619 Bitcoin valued at roughly $878 million and 46,851 Ethereum worth about $149 million. The buying happened over three days in a row. According to Lookonchain, a firm that tracks blockchain activity, the combined purchases totaled around $1.03 billion.
Other companies are also adding bitcoin to their books. Strategy, a business intelligence software company, bought 22,305 BTC between Jan. 12 and Jan. 19. The company paid approximately $2.13 billion for that batch. After the purchase, Strategy now holds 709,715 BTC in total.
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