When Nasdaq ISE approached the SEC for a regulatory change, it signaled a significant shift in how options for cryptocurrency-backed ETFs might be handled. On July 28, Nasdaq filed a proposal that seeks the ability to list options on these ETFs that meet specific criteria without requiring individual approvals from the SEC for each new product introduced.
The filing, labeled SR-ISE-2026-42, establishes a framework for options tied to commodity-based trust shares which include digital commodities. This change means that if a crypto ETF meets predetermined benchmarks, its corresponding options can be launched without the need for additional regulatory endorsement.
#What are the Key Criteria for Eligibility?
To qualify under this new rule, trusts must demonstrate an average daily global market value of at least $700 million for each digital commodity they possess. Additionally, there are monitoring mandates in place to ensure adequate surveillance. The derivative products must be traded in markets monitored by a member of the Intermarket Surveillance Group (ISG), covering at least 85% of the trust’s net assets. The remaining 15% is given a partial exemption, allowing assets with weaker surveillance frameworks to remain included in portfolios, provided they represent a minority fraction.
This division allows a diversified crypto ETF to hold dominant stakes in major cryptocurrencies like Bitcoin and Ethereum, which are actively traded in well-monitored markets, while also participating in less-surveilled assets like Solana.
How Has the Market Evolved?
Earlier in January 2026, Nasdaq made a pivotal move by removing the 25,000-contract position limits on ETF options for Bitcoin and Ethereum. This development opened the floodgates for institutional investors to take larger positions in these markets. However, the proposal’s timing is also influenced by legislative inaction. The Digital Asset Market Clarity Act was intended to clarify jurisdiction between the SEC and the CFTC concerning digital assets; however, the bill remains stalled in Congress as of late July 2026, prolonging uncertainty.
#What Could Be the Implications of the Rule Change?
If the SEC grants approval of this proposed rule change, the most immediate benefit would be efficiency in launching new crypto ETF options. The current process mandates that every new option goes through a distinct filing and review sequence, which can take several months and create substantial delays.
With the set $700 million threshold, asset managers will have a clear target to meet in order to qualify for this expedited listing process. Still, there is an important risk factor to consider. The 15% flexibility regarding surveillance requirements opens the door for less-monitored assets to be part of these trusts, leading to potential scrutiny during the SEC’s comment period.
This proposed change could catalyze activity in the options market, particularly for digital assets, promising a more dynamic landscape for retail and institutional investors alike.