SEC Approves Path for 3x Leveraged Ethereum ETF and Other Futures-Based Products
The US Securities and Exchange Commission (SEC) has approved the listing structure for the first 3x leveraged Ethereum ETF and other similar products in the US. This decision allows the Cboe BZX Exchange to list six funds issued by Volatility Shares, including 3x leveraged ETFs for Bitcoin, Ethereum, gold, silver, crude oil, and natural gas. The approval does not permit immediate trading but clears a significant regulatory hurdle for these products.
The approved funds will not hold spot assets but instead aim to deliver three times the daily benchmark returns through futures contracts, primarily on the Chicago Mercantile Exchange (CME). For example, a 1% rise in Ether’s price would generate a 3% profit before fees for the Ethereum ETF, while a 1% dip would result in a 3% loss. Bloomberg analyst Eric Balchunas described this as a major achievement for Volatility Shares, the issuer behind 2x products BITX and ETHU.
This approval marks a notable shift in the SEC’s stance toward cryptocurrencies, following the January 2024 approval of spot Bitcoin ETFs, which saw over $100 billion in cumulative net inflows by late September 2026. The approval of 3x futures-based products suggests the SEC is comfortable with leverage when it is tied to regulated CME futures, offering daily transparency and surveillance. This could boost liquidity in CME Ether futures, which averaged over $2.1 billion in daily notional volume in Q3 2026.
However, the 3x leveraged Ethereum ETF comes with risks, particularly concerning compounding. Over periods longer than one day, returns can deviate significantly from 3x the underlying asset’s performance. Daily rebalancing could also create end-of-day flows in CME futures, potentially increasing intraday spot volatility. The next steps include S-1 effectiveness, fee disclosures, and setting a launch timetable. If Volatility Shares proceeds with the launch, fierce competition from other issuers like ProShares and Direxion is expected.