The U.S. Securities and Exchange Commission on November 10, 2026, issued Release No. 34-106863, an order granting accelerated approval of Nasdaq ISE, LLC’s proposed rule change in File No. SR-ISE-2026-42, as modified by Amendment No. 2. The order amends ISE Options 4, Section 3, the exchange’s criteria for underlying securities, so that ISE may list options on Commodity-Based Trust Shares that hold a digital commodity or multiple digital commodities, provided the trust meets specified standards. The Commission found the change consistent with Section 6(b)(5) of the Securities Exchange Act of 1934, which requires exchange rules to be designed, among other things, to prevent fraudulent and manipulative acts, to promote just and equitable principles of trade, and to protect investors and the public interest.
This is a listing-standards decision, not a product launch announcement and not a Commission endorsement of any particular token, trust, or options contract. The approval lets ISE list qualifying options after Nasdaq lists the underlying Commodity-Based Trust Shares, without returning to the Commission for a separate 19b-4 approval of each new options product that meets the generic criteria. Whether any given exchange-traded product actually receives an options listing still depends on those criteria, on ISE’s own series-listing rules, and on operational steps the order does not schedule. Traders who want a sense of how U.S. regulators are building a supervised perimeter around tokenized and crypto-linked instruments can read this order alongside the OCC’s final GENIUS Act stablecoin rule, which addresses a different, banking-supervised corner of the same policy landscape.
What the Commission actually approved on November 10
ISE originally filed the proposal on July 28, 2026, under Section 19(b)(1) of the Exchange Act and Rule 19b-4. The Commission published the filing for comment in the Federal Register on August 13, 2026, as Securities Exchange Act Release No. 106067, 91 FR 52387. The Commission received no comments. On September 21, 2026, it designated a longer period for action, in Release No. 106448, 91 FR 60669 (September 24, 2026), and set November 11, 2026, as the date by which it had to approve the change, disapprove it, or institute disapproval proceedings. ISE filed Amendment No. 1 on November 3, then withdrew that amendment and submitted Amendment No. 2 on November 5. Amendment No. 2 replaced and superseded the original filing in its entirety. The November 10 order both notices Amendment No. 2 and approves the proposal, as so modified, on an accelerated basis, finding good cause to act before the thirtieth day after publication of notice of the amendment.
The operative change sits in ISE Options 4, Section 3(h), the criteria for listing options on exchange-traded fund shares, including Commodity-Based Trust Shares. The term “Commodity-Based Trust Shares,” as used in the order and cross-referenced to Nasdaq Rule 5711(d)(iii)(A), means a security issued by a trust or similar entity that is not registered as an investment company under the Investment Company Act of 1940, that holds one or more commodities or commodity-based assets (and may also hold securities, cash, and cash equivalents), and that can be created and redeemed in specified aggregate minimum amounts for the underlying assets or for a cash amount based on net asset value. The proposal aligns ISE’s options rule with Nasdaq’s generic listing standards for those shares, which the Commission had already amended in SR-NASDAQ-2026-032, approved as Securities Exchange Act Release No. 105995 on July 27, 2026, 91 FR 48204 (July 30, 2026).
In practical terms, ISE is no longer limited, for these generic options listings, to the older “crypto asset” formulation in Options 4, Section 3(h). It may list options on Commodity-Based Trust Shares that hold “digital commodities” as that term is used in Nasdaq Rule 5711(d)(iii)(D), including trusts that hold more than one such commodity, so long as the quantitative and surveillance conditions discussed below are met. The Commission expressly noted that the proposal allows ISE to list such options without further Commission approval once the underlying shares are listed on Nasdaq under the revised generic standards, and that listed options would give investors an additional vehicle for gaining and hedging exposure to those shares.
Digital commodity is a narrower term than crypto asset
The terminology change is not cosmetic. The order recounts that Options 4, Section 3(h) had defined a “crypto asset” as an asset generated, issued, and/or transferred using a blockchain or similar distributed-ledger network, including tokens, digital assets, virtual currencies, and coins, that relies on cryptographic protocols. That definition is technology-based and deliberately inclusive. It does not turn on economic function, the source of value, or a regulatory character test.
By contrast, Nasdaq Rule 5711(d)(iii)(D) defines a “digital commodity” as a commodity that is a digital asset and is intrinsically linked to and derives its value from the programmatic operation of a functional crypto system, as well as supply and demand dynamics, rather than from the expectation of profits from the essential managerial efforts of others. The order states that this definition is informed by joint interpretative guidance issued by the SEC and the Commodity Futures Trading Commission, titled “Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets,” 91 FR 13714, effective March 23, 2026. ISE represented that if legislation is later enacted defining “digital commodity” or a substantially similar term, it will file a rule change to conform Options 4, Section 3(h) to that statutory definition.
The exchange’s own discussion, published verbatim in the order, emphasizes that a digital commodity is a narrower classification inside the broader crypto-asset universe. Not every crypto asset qualifies. For options listing, that distinction matters because the generic pathway is being aligned with the standards Nasdaq now uses to list the underlying shares. A trust that holds assets that fail the digital-commodity definition, or that fails the market-value and surveillance tests, is not automatically eligible for this options shortcut, even if those assets trade on a blockchain.
The $700 million test and the 15 percent surveillance buffer
Two quantitative conditions do most of the investor-protection work. First, the total global supply of each underlying digital commodity held by the Commodity-Based Trust must have an average daily market value of at least $700 million over the last 12 months. That test applies to each digital commodity in the trust, not merely to the trust’s aggregate holdings. It is a liquidity and size screen on the reference asset itself.
Second, each digital commodity held by the trust must underlie a derivatives contract that trades on a market with which ISE has a comprehensive surveillance-sharing agreement, either directly or through common membership in the Intermarket Surveillance Group, except that up to 15 percent of the net asset value of the trust’s holdings in the aggregate may consist of digital commodities that do not meet that requirement. The prior options rule required every crypto asset in the trust to meet the surveillance-sharing condition. The 15 percent buffer matches the flexibility the Commission already allowed in Nasdaq’s Commodity-Based Trust Share listing standards. Amendment No. 2 clarifies that, for purposes of calculating that 15 percent limitation, any derivatives held by the trust will be measured on a gross notional basis.
The Commission tied this structure back to its July 27 approval of the Nasdaq share-listing standards, in which it stated that a requirement that an exchange-traded product hold at least 85 percent of its investments in commodities approved to underlie an ETP as primary investments would enable adequate surveillance of the shares on the listing exchange. Under the ISE proposal, the exchange will consider suspending opening transactions in the options if the Options 4, Section 3(h)(3) requirements are no longer satisfied, a continued-listing discipline cross-referenced to ISE Options 4, Section 4(g)(3).
These are listing tests, not trading forecasts. A trust can meet the $700 million and surveillance conditions and still see thin options open interest. A trust can fail them and never receive a listing, even if the underlying token is widely traded on unregulated venues. Readers looking at existing U.S. spot bitcoin and ether products, and at the flow data those products generate, will find a related discussion in this week’s review of November bitcoin ETF outflows; those funds are already listed shares, whereas the ISE order is about when options on a broader class of commodity-based trusts may be listed under generic criteria.
What listed options would look like if ISE uses the new authority
ISE represented that options on Commodity-Based Trust Shares listed under the amended Options 4, Section 3(h)(vi) would trade in the same manner as options on other ETFs on the exchange. Existing rules governing listing criteria, expirations, exercise prices, minimum increments, position and exercise limits, margin requirements, customer accounts, and trading-halt procedures would apply in the same way. The same surveillance procedures that already apply to ETF options would apply to these options. ISE also represented that it and the Options Price Reporting Authority have the necessary systems capacity to handle the additional traffic, up to the number of expirations currently allowed under exchange rules.
The exchange said it could obtain information from Nasdaq about trading in the underlying Commodity-Based Trust Shares when investigating suspected manipulation or other trading abuse involving the options. It pointed as well to comprehensive surveillance-sharing arrangements, including common ISG membership with markets such as CME and Coinbase Derivatives, as a way to obtain information from those markets’ surveillance of their digital-asset futures books. Those representations were part of the record on which the Commission based its finding that the change is consistent with the Act. They are not a guarantee that any particular options series will be liquid, cheap to trade, or free of basis risk against the underlying coin or trust.
For a trader, the economically important point is simpler. Equity-style options on a Commodity-Based Trust are options on the shares, not direct options on the unregistered token. The shares can trade at a premium or discount to the net asset value of the trust. Creation and redemption, authorized-participant activity, and the trust’s own cash or collateral sleeve all sit between the option’s settlement value and the spot coin. Anyone comparing these listed options with perpetual futures on a crypto exchange should keep that residual basis in view, just as they should when they compare a spot bitcoin ETF to an offshore perpetual contract during a week of heavy ether ETF redemptions.
Accelerated approval, and what the order does not decide
Section V of the release explains why the Commission found good cause for accelerated approval of the proposal as modified by Amendment No. 2. The amendment added several representations and clarifications rather than a new economic theory of the product. It committed ISE to file a conforming change if a statute later defines “digital commodity”; specified gross-notional treatment of derivatives inside the 15 percent cap; discussed why, in ISE’s view, an attempt to manipulate 15 percent of a trust’s assets would be unlikely to affect net asset value or the options price; described ISE’s ability to obtain information from Nasdaq; and added discussion of continued listing, surveillance, trading rules, and systems capacity. Because those revisions were designed to strengthen the proposal’s consistency with the Act, the Commission approved the change before the usual thirtieth day after Federal Register publication of the amendment.
Several limits follow directly from the text. The order does not name a roster of tokens on which options must be listed. Secondary summaries that circulate informal lists of “digital commodities identified by the SEC” should not be confused with the four corners of Release 34-106863, which sets criteria rather than a catalogue. The order does not approve a new trust, does not alter Nasdaq’s share-listing rule beyond the alignment already approved in July, and does not determine position limits, margin add-ons, or market-maker obligations for any future series. It does not say when ISE will actually open options for trading. It does not speak to retail access on offshore venues, to unregistered token options, or to prediction-market contracts.
The Commission also published Amendment No. 2 for comment even as it approved the change, inviting submissions that refer to File No. SR-ISE-2026-42, through the Commission’s internet comment form or by email to rule-comments@sec.gov, on or before 21 days after the notice is published in the Federal Register. Comment is not a second vote on the approval already granted; it is the ordinary process that accompanies an accelerated order of this type. No comments had been received on the original July filing.
How this fits the 2026 market-structure debate
The timing is not accidental. ISE’s filing followed Nasdaq’s mid-year rewrite of Rule 5711(d), which, among other things, added the digital-commodity definition, allowed a 15 percent buffer for holdings that do not meet generic eligibility criteria, and allowed actively managed strategies in the Commodity-Based Trust Share framework. Options listing is the natural next step once the underlying shares can come to market under generic standards: listed calls and puts are how many institutional desks hedge ETF exposure, overwrite income, or express a defined-risk view without trading the unregistered token itself.
The March 23 joint SEC-CFTC interpretative guidance is the conceptual backdrop. By anchoring “digital commodity” in programmatic operation of a functional crypto system and in supply and demand, rather than in managerial efforts, the agencies drew a line that ISE and Nasdaq have now written into exchange rulebooks. That line will be tested whenever a trust seeks to hold a basket, a less liquid token, or an asset whose legal characterization is still contested. ISE’s commitment to conform its definition if Congress later writes one into statute is an acknowledgment that the terminology is still in motion.
For bitcoin and ether, listed options on some U.S. spot ETPs already exist under earlier, product-specific or narrower pathways. The significance of SR-ISE-2026-42 is breadth and speed. Once a Commodity-Based Trust Share is listed on Nasdaq under the generic standards, ISE can list options on it under Options 4, Section 3(h) without a fresh Commission approval, subject to the $700 million, surveillance-sharing, and other ETF-options rules. That is a procedural change with market-structure consequences. It can shorten the lag between a new digital-commodity ETP listing and the arrival of listed options. It can also concentrate early liquidity on whatever names ISE chooses to list first.
Practical implications for crypto and ETF traders
None of this requires a trader to open an ISE options account tomorrow. It does change the checklist a serious desk should keep as new Commodity-Based Trust Shares appear. The first question is whether the underlying shares are listed on Nasdaq under Rule 5711(d) and whether each reference asset clears the $700 million trailing market-value test. The second is whether the trust’s holdings fit inside the 15 percent surveillance buffer, including the gross-notional treatment of any derivatives. The third is whether ISE has actually opened options series, and on what expirations and strikes. The fourth is basis: options settle off the shares, and the shares can diverge from the token.
Hedging with a listed ETF option is not the same as hedging with a perpetual future. The option has an expiry, a strike, and an exchange-traded cap on loss for a long option buyer. The perpetual has funding, liquidation risk, and, on many venues, 24-hour trading that does not stop when U.S. options pits are closed. A desk that already uses both instruments should treat the ISE order as an expansion of the listed toolkit, not as a substitute for understanding funding and liquidation mechanics on the venues where most crypto leverage still sits. Position and exercise limits, margin, and account-approval rules on ISE will apply as they do to other ETF options; the order does not relax those protections.
Investors should also resist a common over-reading. Accelerated approval of listing criteria is not a signal about December Federal Reserve policy, about next week’s inflation data, or about whether any particular token will rally once options exist. Options can absorb demand or amplify hedging flows in either direction. If ISE lists options on a newly qualified trust, expected-volatility in the shares may change, authorized-participant behavior around expiry may change, and the relationship between the shares and offshore perpetuals may tighten or slip. Those are empirical questions that can be answered only after series are actually listed and after volume appears in the tape.
What to watch after the order
The immediate follow-through is operational. Market participants should watch ISE’s series listings and options-symbol announcements, not just headline summaries of the order. They should watch whether other options exchanges file conforming changes; ISE itself noted that other exchanges remain free to amend their own listing rules. They should watch Nasdaq listings of new Commodity-Based Trust Shares under the July standards, because the ISE options pathway is designed to activate after those shares are listed. And they should watch for any legislation that would force a conforming definition of “digital commodity.”
No specific ISE options series had been listed, so there is no official ISE open interest, no official strike table, and no official first-day volume to cite. This article does not invent those figures. It also does not treat informal social-media lists of tokens as Commission findings. The official record is Release 34-106863, dated November 10, 2026, approving SR-ISE-2026-42 as modified by Amendment No. 2, together with the July Commodity-Based Trust Shares Order and the March joint interpretative guidance cited in the release.
For readers who trade both listed products and spot crypto, the clean conclusion is narrow and factual. On November 10 the Commission approved, on an accelerated basis, a change in ISE’s rulebook that lets the exchange list options on qualifying digital-commodity Commodity-Based Trust Shares under generic criteria, including a $700 million market-value test and an 85/15 surveillance-sharing structure. That is a meaningful increment in how U.S. listed markets can hedge these products. It is not, by itself, a new trading session, a new token approval, or a forecast of flows.
