Nasdaq just lifted the restrictions on crypto ETF options. What does this mean?

The process of standardizing crypto assets has taken another significant step forward. The rule change that took effect yesterday on Nasdaq, which removed the 25,000-contract position limit for Bitcoin and Ethereum spot ETF options, may seem like a technical adjustment, but it actually reflects a fundamental shift in the traditional financial market’s attitude toward crypto assets.

Core Content of the Rule Change

Nasdaq submitted a rule change application to the SEC on January 7, and it officially took effect on January 22. The main aspects of this change include:

Scope of the restriction removal

The 25,000-contract position limit on Bitcoin and Ethereum ETF options issued by institutions such as BlackRock, Fidelity, Bitwise, Grayscale, ARK/21Shares, and VanEck has been lifted. This means these institutions can conduct larger-scale options trading on these products without being constrained by the previous position cap.

Procedural breakthrough

The SEC unusually waived the standard 30-day waiting period, allowing the rule to take effect immediately. This is uncommon in regulation and generally indicates that the SEC has no significant objections to this change. However, the SEC retains the authority to suspend the rule within 60 days, with a final decision expected by the end of February.

Why is this change important

From differential treatment to equal treatment

Nasdaq explicitly stated that this move aims to give crypto ETF options the same treatment as other commodity options. This reflects an important shift in perspective: crypto assets are no longer considered a “different” asset requiring special restrictions but are integrated into the regular commodity options framework as normal assets.

Lowering the barrier for institutional participation

The removal of the position limit directly means institutional investors can participate more freely in crypto ETF options trading. For large asset management firms, the previous 25,000-contract limit could have been a bottleneck. Now that this bottleneck is removed, it is expected to attract more institutional capital into this market.

Expansion potential for market liquidity

More institutional participation usually leads to better liquidity. The activity level in the options market will directly impact trading costs and price discovery efficiency. With the restrictions lifted, trading activity in these ETF options is expected to increase.

Response to the current market environment

This policy change is not an isolated event. According to related news, the entire market is accelerating its standardization:

• 21Shares recently launched a Dogecoin spot ETF (TDOG), listed on Nasdaq on January 22
• Several Nasdaq-listed companies have begun to expand into the crypto space, such as KindlyMD rebranding as Nakamoto and disclosing holdings of 5,400 Bitcoin
• AVAX One launched validator infrastructure on the Avalanche blockchain

These phenomena indicate that traditional financial markets’ acceptance of crypto assets has moved from the “testing waters” stage to the “deep involvement” stage.

Potential future impacts

Increased institutional participation

After the restriction removal, institutional investors are expected to increase their positions in Bitcoin and Ethereum ETF options. This could further boost the asset management scale of related ETF products.

Increased activity in derivatives markets

More institutional participation will bring more trading opportunities and arbitrage space to the options market, potentially driving trading volume and frequency upward.

Gradual improvement of market structure

From spot to options, from ETFs to various derivatives, the trading tools ecosystem of the crypto market is gradually improving. This improvement usually accompanies diversification of market participants and increased market efficiency.

Summary

Nasdaq’s removal of crypto ETF options position limits marks a shift from “requiring special protection” to “enjoying equal treatment” for crypto assets. This not only lowers the barriers for institutional participation but also reflects the increasing recognition of crypto assets within the entire financial system. Coupled with the listing of DOGE ETFs and the expansion of Nasdaq-listed companies into crypto, since the beginning of 2026, the process of standardizing crypto assets has clearly accelerated. The cumulative effects of these policies and market trends are expected to gradually drive more traditional institutional funds into the crypto market.