Cboe Seeks SEC Approval for 3x Bitcoin and Ethereum ETFs

Cboe BZX Exchange has submitted a proposal to the Securities and Exchange Commission (SEC) for an exception to its listing rules, allowing it to offer six new Volatility Shares funds tied to Bitcoin and Ethereum futures. The proposed funds would target three times the daily performance of their respective benchmarks.

The funds, which include two Bitcoin-based ETFs and four Ethereum-based ETFs, would use futures traded primarily on the Chicago Mercantile Exchange (CME) rather than holding the underlying assets directly. This structure introduces risks beyond the direction of the benchmark asset itself, including futures basis, roll execution, financing, expenses, and tracking error.

Volatility Shares already offers 2x Bitcoin and Ethereum futures ETFs, which have reported significant losses since their inception. The 2x ETH ETF (ETHU) has a one-year return of -78.93%, while the 2x Bitcoin ETF (BITX) has a quarterly NAV return of -29.76%. The proposed 3x funds would reset leverage every trading day, making longer-term returns dependent on various factors.

Cboe needs a specific exemption to list these funds under its generic commodity-trust listing route because they seek three times the daily performance of their benchmarks. The SEC's approval would resolve the exchange-rule problem created by the 3x leverage target and would not complete the separate registration and trading steps required before the funds could launch.