SEC Approves Daily-Reset Crypto Funds with 2x and 3x Multiplier

The Securities and Exchange Commission (SEC) has approved a new rule allowing Cboe BZX to quote products with daily exposure to Bitcoin and Ether, specifically those with a 2x and 3x multiplier. These funds are designed to replicate the performance of their underlying asset on a daily basis.

A key aspect of these funds is that they do not hold physical Bitcoin or Ether, but rather use futures contracts to track the price movements of these assets.

The article explains how the daily reset mechanism works, where the fund's exposure is adjusted daily to maintain its target multiplier. However, this can lead to unexpected results when compounded over multiple days.