Nasdaq is moving to scrap position limits on Bitcoin and Ether ETF options, aiming to treat crypto funds like other commodity-based ETFs.

Nasdaq has filed a rule change with the U.S. Securities and Exchange Commission seeking to remove position and exercise limits on options tied to spot Bitcoin exchange-traded funds, a move that would further integrate crypto-linked products into traditional derivatives markets.

The proposal, originally filed on Jan. 7 and made effective this week on the 21st, eliminates the current 25,000-contract cap on options linked to Bitcoin and Ethereum ETFs listed on Nasdaq. 

Affected products include funds from BlackRock, Fidelity, Grayscale, Bitwise, ARK/21Shares and VanEck, according to the filing.

The SEC waived its standard 30-day waiting period, allowing the rule change to take effect immediately, while retaining the authority to suspend it within 60 days if further review is deemed necessary. 

A public comment period is now open, with a final SEC determination expected by late February unless the rule is paused.

Nasdaq argued that lifting the limits would allow crypto ETF options to be treated “in the same manner as all other options that qualify for listing,” eliminating what it described as unequal treatment without undermining investor protections. 

The exchange said the change would support market efficiency while maintaining safeguards against manipulation and excessive risk.

Options are derivative contracts that give traders the right, but not the obligation, to buy or sell an asset at a predetermined price before a set expiration date. Position and exercise limits are typically imposed to prevent concentrated positions that could amplify volatility or destabilize markets.

The filing builds on Nasdaq’s approval in late 2025 to list options on single-asset crypto ETFs as commodity-based trusts. While that decision allowed Bitcoin and Ethereum ETF options to trade on the exchange, existing position limits remained in place.

Nasdaq has steadily expanded its involvement in crypto markets in recent years. 

Nasdaq’s bitcoin and digital asset push

In November, the exchange filed a separate proposal to raise position limits on options tied to BlackRock’s iShares Bitcoin Trust (IBIT) to as much as one million contracts, citing growing institutional demand and increased use of options for hedging strategies.

The exchange has also pushed into crypto indexing and tokenization. In January, Nasdaq and CME Group announced plans to unify their crypto benchmarks under the Nasdaq-CME Crypto Index, which tracks major digital assets including Bitcoin, Ether, XRP, Solana, Cardano and Avalanche.

If approved permanently, the latest rule change would mark another step toward normalizing Bitcoin derivatives within U.S. regulated markets, further blurring the line between traditional financial instruments and crypto-native assets.

• Nasdaq wants to remove limits on Bitcoin ETF options to improve liquidity and efficiency

• Ether ETF options could attract stronger institutional participation if limits disappear

• The proposal reflects growing maturity in the crypto derivatives market

• SEC approval could deepen integration between crypto assets and traditional finance

Nasdaq has taken a significant step toward expanding crypto-linked trading in US financial markets. The exchange has filed a proposal with the Securities and Exchange Commission seeking approval to remove position limits on Bitcoin and Ether ETF options. This move reflects Nasdaq’s view that crypto-based exchange traded products have matured enough to operate under fewer restrictions. It also highlights rising institutional interest in regulated digital asset exposure.

The filing comes at a time when spot Bitcoin and Ether ETFs continue to attract steady inflows. Options linked to these ETFs have also gained traction as traders look for advanced hedging and yield strategies. Nasdaq argues that existing position limits no longer align with current market depth and liquidity. The exchange believes updated rules could support healthier and more efficient trading conditions.

If regulators approve the proposal, Bitcoin ETF options could enter a new growth phase. Market participants would gain greater flexibility to manage risk and deploy complex strategies. The decision could also strengthen the bridge between traditional derivatives markets and digital assets.

Why Nasdaq Wants to Remove Position Limits Now

Nasdaq says the current position limits restrict market participation rather than protect it. Bitcoin ETF options have seen consistent growth in volume and open interest, yet traders still face tight caps that limit scale. According to Nasdaq, these restrictions discourage liquidity providers and institutional investors from actively participating. The exchange believes this ultimately reduces market efficiency.

In its filing, Nasdaq compared crypto ETF options to commodity-based ETF options. Products tied to gold and oil trade without strict position limits due to their liquidity and transparency. Nasdaq argues that Bitcoin ETF options now demonstrate similar characteristics. The exchange believes regulatory treatment should reflect this evolution rather than outdated assumptions.

How Bitcoin ETF Options Could Benefit From the Proposal

Removing position limits could significantly improve liquidity in Bitcoin ETF options. Institutional traders often require larger position sizes to execute meaningful strategies. Current caps force them to break trades into smaller orders or avoid the market altogether. Nasdaq believes lifting limits would attract deeper institutional engagement.

Higher participation usually leads to tighter bid ask spreads and stronger price discovery. These improvements benefit both professional traders and retail investors. Greater liquidity also helps markets absorb volatility more efficiently. Nasdaq views these outcomes as critical for long-term market stability.

The proposal also highlights risk management benefits. Options allow investors to hedge downside exposure without selling underlying assets. Expanded access to Bitcoin ETF options could reduce panic-driven selloffs during volatile periods. Nasdaq believes this strengthens market resilience rather than increasing risk.

What This Means for Ether ETF Options

Ether ETF options could experience similar growth if the SEC approves Nasdaq’s request. Interest in Ethereum exposure has increased following the launch of spot Ether ETFs. Traders now seek flexible tools to manage risks linked to network upgrades and ecosystem developments. Removing position limits could support that demand.

Ether ETF options often reflect higher volatility than Bitcoin-linked products. This attracts sophisticated derivatives traders who rely on larger position sizes. Higher limits would allow more precise strategy execution and improved liquidity. Nasdaq believes these changes would create a more balanced trading environment.

The filing treats Bitcoin and Ether products under the same regulatory framework. Nasdaq aims to apply consistent rules across major crypto ETFs. This approach could simplify compliance for trading firms while supporting broader adoption of crypto-linked derivatives.