Nasdaq Removes Position Limits on Crypto ETF Options as Crypto Derivatives Scale

TL;DR

• Nasdaq has implemented rule changes removing position limits on crypto ETF options, enabling uncapped options trading on Bitcoin and Ethereum ETFs.
• SEC has a limited 60-day window to intervene.
• The change reflects the normalization of crypto ETF options within existing U.S. derivatives rules.

Nasdaq, through several of its U.S. options exchanges, has submitted parallel rule change filings to the U.S. Securities and Exchange Commission (SEC) to remove Bitcoin ETF option limits. The filings, submitted by Nasdaq ISE, Nasdaq BX, Nasdaq PHLX, and related entities, took effect in mid-January after the SEC waived its standard 30-day review period.

As a result, the existing caps on how many contracts market participants may hold or exercise have already been lifted in practice. The SEC, however, retains authority to suspend, modify, or reverse the changes within 60 days of filing, a window that runs into early March.

The rule changes do not introduce new crypto products. They focus solely on how options tied to already approved crypto exchange-traded funds operate within U.S. derivatives markets.

Why option limits were applied in the first place

Position and exercise caps are a common risk-management tool in options markets. They aim to prevent excessive concentration, reduce manipulation risk, and support orderly trading during early market phases. When crypto ETF options were first listed, regulators applied position limits on ETF options to reflect uncertainty around liquidity and participant behavior.

Those constraints provided safeguards during market formation, not as permanent features. Nasdaq now argues that the conditions that justified those limits no longer apply.

>>> Read more: BlackRock’s Bitcoin ETF Options Approved

Nasdaq’s case for removing the limits

In its filings, Nasdaq points to sustained growth in trading activity and market depth since spot crypto ETFs began trading. According to the exchange, options linked to these funds now display liquidity and participation profiles comparable to other established ETF options markets.

From Nasdaq’s perspective, Bitcoin ETF option limits have shifted from a risk control to a structural bottleneck. Removing them allows market makers and institutional participants to manage exposure more efficiently without altering the underlying regulatory framework.

The rule changes apply to both Bitcoin-based products and Ethereum ETF options, reflecting the broader scope of crypto ETF derivatives now active on U.S. exchanges.

Normalization through existing regulatory channels

The filings build on earlier SEC approvals, which already permit options trading on spot crypto ETFs. Nasdaq is not seeking to revisit those approvals. Instead, the exchanges are aligning crypto ETF options with the same rules that govern traditional ETF options.

In that context, lifting options limits on Bitcoin ETFs represents procedural normalization rather than deregulation. Crypto-linked options are being treated consistently with comparable derivatives tied to equities or commodity ETFs.

Expansion as a market consequence

Although regulatory in nature, the impact is tangible. Eliminating caps enables larger hedging positions, more flexible market-making strategies, and higher potential open interest. These changes expand how the products can be used, even though the products themselves were already live.

For participants active in Nasdaq crypto ETF options, the shift affects scale rather than access. Retail participation rules remain unchanged, and the underlying ETFs continue to trade under existing oversight.

What the rule changes do not affect

The filings do not alter the approval status of any crypto ETF. They do not change how spot Bitcoin or Ether markets are regulated. They also do not expand retail eligibility or signal a broader shift in crypto policy.

Instead, the changes focus narrowly on whether limits on Bitcoin ETF options remain appropriate given current liquidity and market structure. While the limits are no longer in force, the SEC maintains the ability to intervene during the statutory review window.

Regulatory status going forward

Because the SEC waived its initial review period, the rule changes are already effective. The agency may still suspend or revise them within 60 days of filing if concerns emerge. Absent such action, the rule changes removing Bitcoin ETF option limits are final.

The episode marks a further step in integrating crypto-linked derivatives into mainstream U.S. market infrastructure, without expanding the regulatory perimeter around digital assets themselves.