SEC Clears Way for Triple-Leveraged Bitcoin and Ether ETFs

The US Securities and Exchange Commission has approved six triple-leveraged exchange-traded products (ETPs) for listing, including funds tied to Bitcoin and Ether. The approval clears the way for trading of these high-risk investments, but actual trading cannot begin until a separate registration statement under the Securities Act of 1933 becomes effective.

The ETPs, sponsored by Volatility Shares LLC, are structured as series of the Volatility Shares (VS) Trust and aim to deliver three times the daily performance of their underlying assets. They target gold, silver, crude oil, natural gas, Bitcoin, and Ether, with each product resetting its leverage every day.

The funds do not hold actual assets but instead get their exposure through futures contracts, which are agreements to buy or sell an asset at a set price on a later date. This means that the ETPs can be subject to compounding losses if prices move erratically, and the costs of rolling over futures contracts can also weigh on performance.

The approval marks the first US approval of triple-leveraged ETPs linked to Bitcoin and Ether and brings them in line with similar products available internationally. The decision also reflects a shift in how the SEC views digital commodities, as Bitcoin and Ether were approved alongside traditional assets like gold and crude oil.