Nasdaq aims to break the ceiling of crypto options; why the 25,000 limit is being lifted

Nasdaq has submitted a rule change application to the U.S. Securities and Exchange Commission (SEC) seeking to lift the 25,000 position limit on spot Bitcoin and Ethereum ETF options. This move aims to ensure that crypto ETF options enjoy the same treatment as other commodity options. According to the latest news, the SEC has opened a comment period, with a final decision expected by the end of February. This reflects the ongoing evolution of the crypto derivatives market toward greater maturity and regulation.

Origin and Impact of the Current Restrictions

Why are position limits in place

Options position limits are common tools in securities regulation, designed to prevent excessive concentration of positions by a single investor and market manipulation. As a relatively new product, crypto ETF options were initially set with a cap of 25,000 contracts, a figure significantly lower than traditional commodity options limits.

This differentiated treatment actually reflects regulatory caution toward crypto assets. As spot Bitcoin and Ethereum ETFs are approved in the U.S. (Bitcoin spot ETF approved in 2024, Ethereum spot ETF also launched), institutional acceptance of crypto assets has increased markedly, but the restrictions on options markets have not been adjusted accordingly.

Practical issues caused by the restrictions

Lower position limits can lead to several issues:

• Insufficient coverage for institutional hedging needs
• Limited market liquidity, potentially widening spreads
• Reduced competitiveness of crypto ETF options compared to other commodity options
• Less attractive options products on exchanges

Nasdaq’s Strategic Intent

Why is Nasdaq taking the initiative

Nasdaq has been very active in the crypto space. Recent reports indicate that the exchange has launched several crypto-related products, including the Dogecoin spot ETF (TDOG) and listings on Perpetuals.com (a derivatives trading platform). The application to remove the options limit is a key step in its broader crypto ecosystem strategy.

This move has two implications: first, Nasdaq aims to expand its share in the crypto derivatives market; second, it signals to regulators that crypto assets are sufficiently mature and no longer require special restrictive treatment.

The practical significance of equal treatment

Nasdaq emphasizes that this change will allow crypto ETF options to enjoy the same treatment as other commodity options (such as gold and oil options), eliminating “inequitable restrictions.” This statement is crucial, reflecting a trend: crypto assets are gradually gaining the same market status as traditional assets.

Currently, Bitcoin trades near $89,777, with a market cap share of 59.25%, and market liquidity is quite sufficient. From this perspective, removing the options position limit aligns with market development and regulatory normalization.

Market Impact Assessment

Short-term potential changes

If the SEC approves this application before the end of February, the market may see:

• Increased options trading volume, especially with greater institutional participation
• Improved liquidity for Bitcoin and Ethereum options
• Narrower spreads and lower trading costs

Deeper implications

This policy change marks an important turning point: regulators are gradually shifting crypto assets from “special products” to “regular financial instruments.” This not only impacts the options market but also signals a move toward the normalization of the entire crypto derivatives ecosystem.

From Nasdaq’s perspective, this also paves the way for future product innovation. Once the position limits are lifted, exchanges can design more complex and flexible options strategies, attracting more institutional capital.

Follow-up Points

The SEC’s comment period is now open, allowing market participants to submit opinions. The final decision is expected by the end of February, with a relatively short time window. If approved, it could have tangible effects on the options market by early March.

It’s worth noting that this policy change aligns with the broader institutionalization process of the crypto industry. From spot ETF approvals and adjustments to options limits, to potential future futures product enhancements, crypto assets are gradually transitioning from “speculative tools” to “mainstream assets.”

Summary

Nasdaq’s application to lift the 25,000 position limit on crypto ETF options aims to achieve the same regulatory treatment as traditional commodity options. This reflects two key trends: first, the increasing maturity of the crypto market capable of supporting larger institutional participation; second, regulators’ gradual move toward normalization and regulation of crypto derivatives.

If the SEC approves before the end of February, liquidity and participation in the options market may improve. More importantly, it signals that the institutionalization of the crypto financial market is accelerating. For investors, the key is to observe the actual policy outcomes rather than overinterpret short-term fluctuations.