NYSE submits proposal to the SEC to ease rules on Bitcoin and Ether ETF options

NYSE-affiliated exchanges have moved to amend rules to ease regulations on options trading for spot Bitcoin (BTC) and Ether (ETH) exchange-traded funds (ETFs).

According to The Block on the 22nd (local time), NYSE Arca and NYSE American recently filed related rule-change proposals with the U.S. Securities and Exchange Commission (SEC). The amendments would eliminate the 25,000-contract position and exercise limits that had applied to Bitcoin and Ether ETF options.

The SEC waived the usual 30-day waiting period and allowed the rules to take effect immediately. As a result, options position limits will be set under each exchange’s general standards, reflecting factors such as trading volume and shares outstanding. For highly liquid ETFs, the limit could be expanded to more than 250,000 contracts.

The change applies to options on major crypto-asset ETFs such as BlackRock’s IBIT, Fidelity’s FBTC, Ark 21Shares’ ARKB, and Grayscale trust products. At the same time, trading in FLEX options—previously restricted—will also be permitted, allowing investors to freely set strike prices and expirations.

The existing 25,000-contract cap was a conservative measure set when crypto-asset ETF options trading was first introduced in November 2024, in consideration of early-market stability. Since then, criticism has mounted that the limit was excessive compared with other products, prompting major exchanges to pursue easing steps sequentially.

With NYSE-affiliated exchanges now joining, all major U.S. options exchanges have completed the process to remove the relevant limits. The SEC said it determined the changes do not raise new regulatory issues.

The market expects the move to improve institutional investors’ hedging strategies and the efficiency of derivatives operations. In particular, the introduction of FLEX options—enabling bespoke contracts—is expected to broaden use cases, including structured-product design.

Meanwhile, Nasdaq ISE is pursuing a separate proposal to raise the IBIT options position limit to as high as 1 million contracts, which the SEC is reviewing.