SEC Approves 3x Leveraged Bitcoin and Ethereum Futures Funds for Cboe Listing

The US Securities and Exchange Commission (SEC) has given the green light to a rule change allowing the Cboe BZX Exchange to list six 3x leveraged funds, including products for Bitcoin (BTC) and Ethereum (ETH). The approval, issued on October 2, permits Volatility Shares to offer these funds, which aim to deliver three times the daily performance of futures contracts tied to the underlying assets.

Each fund targets a portfolio of first- and second-month futures contracts, with the underlying futures trading on venues registered with the US Commodity Futures Trading Commission. The SEC's Division of Trading and Markets approved the proposal, stating that existing investor-protection rules and standards of conduct would apply to these products.

The new funds are part of the VS Trust, sponsored by Volatility Shares, and cover Bitcoin, Ethereum, gold, silver, crude oil, and natural gas. Notably, this approval raises the leverage ceiling for US crypto funds from 2x to 3x. However, the funds are not yet trading, as Volatility Shares still needs the SEC to declare its registration statement effective.

The approval follows recent developments in the US crypto ETF space, including Bitwise's first US spot NEAR ETF with staking. Bloomberg ETF analyst Eric Balchunas cautioned that leveraged ETFs are designed for trading, not long-term investing, due to their daily performance targeting.