Nasdaq Seeks 1 Million Contract Limit for BlackRock Bitcoin ETF Options
- Nasdaq has asked the SEC to quadruple the daily trading limit for BlackRock’s IBIT Bitcoin ETF options to 1 million contracts, citing overwhelming investor demand.
- IBIT has cornered the market, controlling 98% of all Bitcoin ETF options trading, prompting regulators to treat it similarly to major international equity indices.
- The move supports a wave of new institutional products, such as JPMorgan’s recently filed structured notes, which rely on deep liquid options markets for hedging and risk management.
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| Photo by Meriç Dağlı on Unsplash |
Nasdaq is making a decisive move to accommodate the surging institutional demand for crypto exposure by formally requesting a massive increase in trading limits for options on BlackRock’s iShares Bitcoin Trust ETF (IBIT). In a filing with the Securities and Exchange Commission (SEC) on Wednesday, the exchange’s International Securities Exchange proposed quadrupling the daily position limit from 250,000 to 1 million contracts. This aggressive request underscores how quickly Bitcoin has transitioned from a niche asset to a central pillar of modern portfolio management, with IBIT acting as the primary vehicle for this shift.
The proposal is not merely administrative; it is a direct response to a market that has outgrown its initial constraints. IBIT, which now commands tens of billions in assets, has become the dominant force in the crypto options space, accounting for an astonishing 98% of all Bitcoin ETF options trading and 96% of open interest. The current cap of 250,000 contracts—already a tenfold increase approved just months ago in July—is no longer sufficient for the scale of hedging and speculation occurring. By seeking parity with major indices like the iShares MSCI Emerging Markets and China Large-Cap ETFs, Nasdaq is signaling that Bitcoin derivatives have matured enough to be treated with the same regulatory latitude as established global equities.
Tim Sun, a senior researcher at Hashkey Group, notes that this request highlights a "deeper shift in market dynamics." It isn't just about retail traders placing bets; it is about sophisticated institutional players needing robust tools for risk management. As Bitcoin becomes a standard asset class, large funds require the ability to hedge massive positions without hitting artificial ceilings. This move by Nasdaq effectively acknowledges that the "crypto winter" is over and a new era of institutional-grade strategy construction has begun.
The demand for these higher limits is further evidenced by the entry of banking giants into the fray. JPMorgan Chase & Co. has recently filed to introduce structured notes linked to IBIT, a product designed to offer wealthy clients exposure to Bitcoin’s upside while managing downside risk. This development suggests a cascading effect: as regulated options markets become deeper and more liquid, they enable the creation of complex derivative products that were previously impossible. Analysts expect other major issuers to follow JPMorgan’s lead, using IBIT as the underlying asset for a new wave of financial instruments.
Ultimately, Nasdaq’s filing is a validation of the "financialization" of Bitcoin. The rapid acceleration from a 25,000 contract limit in January to a proposed 1 million limit in November mirrors the asset's explosive integration into Wall Street's plumbing. With open interest in IBIT options recently peaking at over $50 billion—rivaling purely crypto-native exchanges like Deribit—the traditional finance sector is not just participating in the crypto market; it is actively taking it over.