Cboe Seeks SEC Approval for First U.S. 3x Bitcoin and Ether ETFs
Cboe Global Markets has filed a proposal to list three times (3x) daily return Bitcoin and Ether exchange-traded funds (ETFs) on its BZX Exchange. The proposed ETFs, which would be sponsored by Volatility Shares LLC, would target three times the daily performance of their underlying assets before fees and expenses. This means that if the price of Bitcoin or Ether were to increase by 1% in a day, the fund's value would aim to rise by 3%. However, it is essential to note that leveraged returns can diverge significantly over longer holding periods.
The proposed funds would not hold physical Bitcoin or Ether but instead invest mainly in benchmark futures contracts, alongside cash and cash equivalents used for margin or collateral. Volatility Shares LLC would adjust the futures positions as necessary to maintain the daily investment objective. The company has also included a provision for using alternative instruments when primary benchmark contracts become unavailable.
The six funds, which include gold, silver, crude oil, and natural gas ETFs, fall outside Cboe BZX's generic listing standards due to their 3x daily return targets. As such, the exchange must obtain specific SEC approval through a proposed rule change. The funds would operate as commodity pools under Commodity Futures Trading Commission oversight.