SEC Approves 3x Leveraged Bitcoin and Ether ETPs for Cboe BZX
On October 2, the U.S. Securities and Exchange Commission (SEC) approved an amendment to the Cboe BZX exchange rules, paving the way for six new leveraged exchange-traded products (ETPs). Among these are a 3x leveraged Bitcoin ETP and a 3x leveraged Ether ETP, designed to triple the daily performance of their underlying assets before fees. However, the official launch of these products remains contingent on a final regulatory approval step.
The six ETPs, offered by Volatility Shares, cover Bitcoin, Ether, gold, silver, crude oil, and natural gas. Each fund aims to replicate three times the daily performance of its reference asset, primarily through futures contracts, with daily adjustments to maintain the desired exposure. For example, a 1% daily increase in the reference asset could result in a 3% gain for the fund, though this amplification does not extend to multi-day performance due to compounding effects.
The SEC’s approval applies to the listing rules of the Cboe BZX exchange, but the funds still require effective registration before they can be traded. Additionally, these products are not governed by the Investment Company Act of 1940, meaning they fall under different regulatory frameworks compared to traditional investment funds.
The approval comes amid a growing market for crypto-linked financial products, though not all offerings achieve success. For instance, XRP-based ETFs experienced declines in early October. The next critical step will be the effective registration of the six funds, after which investor interest and market demand will determine their success in a landscape already marked by strong interest in Bitcoin ETFs and record gold inflows.