SEC Approves 3x Leveraged Bitcoin and Ether ETFs

The U.S. Securities and Exchange Commission (SEC) has approved a rule change that allows for the listing of 3x leveraged Bitcoin and Ether exchange-traded funds (ETFs), alongside similar products for gold, silver, crude oil, and natural gas. The approval, granted on October 2, covers six Volatility Shares funds that will seek three times the daily performance of their underlying benchmarks through futures contracts rather than direct holdings.

These 3x Bitcoin and Ether products will target three times the daily performance of Bitcoin and Ether using a portfolio of futures contracts, primarily traded on the CME. The funds will not hold the cryptocurrencies directly but will maintain futures exposure alongside cash and cash equivalents used as collateral and margin. The target applies to a single trading day, after which the portfolio is rebalanced to restore the required leverage.

Investors should be aware that these products are designed to amplify a one-day move, not deliver exactly three times the return of Bitcoin or Ether over a longer period. Daily compounding creates significant risks, as volatility can cause returns to differ substantially from the underlying asset’s cumulative return. For example, a 10% gain followed by a 10% loss would leave Bitcoin about 1% below its starting value, while a simplified 3x product would end approximately 9% lower.

The approval marks another expansion of leverage within traditional brokerage accounts and places crypto assets alongside other commodities in the same product lineup. While the products are likely to appeal to active traders seeking amplified short-term moves, they may not suit investors looking for long-duration exposure. The next step is for Volatility Shares to complete the securities-registration process before the funds can begin trading.