SEC Boosts ETF Limits, Giving BlackRock’s Bitcoin Fund Even More Room to Run

By José Oramas August 05, 2025 In ETF, SEC

ETF Financial Concept: A visually engaging illustration presenting the concept of Exchange-Traded Funds (ETFs) with a rising stock graph and financial elements. — Source:AdobeStock

The SEC has approved a tenfold increase in the options position limit for certain Bitcoin ETFs, raising the cap from 25,000 to 250,000 contracts.
The rule change is a major boost for BlackRock’s IBIT, which already has a commanding lead in the market. The new, higher limits facilitate larger, more aggressive options strategies.
This decision follows the SEC’s approval of in-kind creation and redemption for spot Bitcoin ETFs, which allows for direct swaps of ETF shares for Bitcoin.

The US Securities and Exchange Commission (SEC) has approved a tenfold increase in the options position limit for several Bitcoin exchange-traded funds, lifting the cap from 25,000 to 250,000 contracts.

According to a report from NYDIG’s global head of research, Greg Cipolaro, this increase is set to alter the competitive balance in the US Bitcoin ETF market, particularly benefitting BlackRock’s iShares Bitcoin Trust (IBIT).

Additionally, this change opens the door to larger and more aggressive options-based strategies, particularly for institutions. Covered call selling (writing call options against held positions) can now be executed on a scale that both tempers volatility and generates income, as Cipolaro states:

The recent increase in options position limits is likely to further suppress bitcoin’s volatility. This change enables more aggressive implementation of options strategies, like covered call selling.

Greg Cipolaro, Global Head of Research at NYDIG

It should be noted that with higher position limits, large hedges and structured trades become easier to manage, giving Bitcoin ETFs a tool for risk-managed exposure.

Long-Anticipated SEC Moves to Boost Adoption, Says Cipolaro

The decision coincided with the SEC’s approval of in-kind creation and redemption for spot Bitcoin ETFs, as Crypto News Australia reported, allowing authorised participants to swap ETF shares directly for Bitcoin or the underlying asset.

As Cipolaro states, the in-kind feature is expected to boost operational efficiency and attract more institutional capital:

These long-anticipated moves, some sought by fund sponsors since before the initial bitcoin ETF approvals, will likely have important impacts on market structure and investor access.

Greg Cipolaro, Global Head of Research at NYDIG