SEC Approves First US Triple-Leveraged Crypto ETPs

The US Securities and Exchange Commission (SEC) has approved six triple-leveraged exchange-traded products (ETPs) from Volatility Shares, but trading on these products is not yet available. The ETPs are designed to track the price of Bitcoin, Ether, gold, silver, crude oil, and natural gas, with a 3x leverage structure.

The approval means that the Cboe BZX rule change will allow the listing of these six triple-leveraged products on the exchange. However, shares cannot be offered publicly until registration requirements are completed and a Securities Act 1933 registration statement becomes effective.

The ETPs would provide exposure to the underlying assets through futures contracts, which can bring their own costs, including the need for frequent rolling of positions into later contracts. This can result in differences between the futures price and the spot price of the asset.

The 3x leverage structure targets a multiplication factor of three on a daily basis, rather than maintaining a fixed multiple over an extended period. This means that the product's return may fall short of its stated target due to compounding effects and costs associated with futures contracts.