SEC Approves 3x Bitcoin and Ether ETFs in Major Milestone for Crypto Industry
The US Securities and Exchange Commission (SEC) has approved the first three times leveraged bitcoin and ether exchange-traded funds (ETFs) in the country. The ETFs, issued by Volatility Shares, will offer triple the daily return of the underlying asset, with prices to be determined by regulated futures tied to bitcoin and ether, not actual tokens.
The approval marks a major milestone for the crypto industry, as previously, crypto funds in the US had been capped at 2x leverage. The funds, however, cannot trade yet, as the issuer still needs the SEC to declare its registration statement effective.
Market veterans have warned that these funds are not suitable for all investors, and may be deemed speculative. Volatility Shares itself flags the risk, stating that 'the more volatile the benchmark, the greater the potential for volatility decay.'
Blockstream CEO Adam Back noted that auto-releveraging strategies 'bleed capital in a sideways chop, especially with a high volatility underlying... like bitcoin.'
The approval is seen as another sign of crypto getting the same products as traditional assets, with short-term traders and speculators being the primary beneficiaries.