SEC Gives Green Light to 3x Bitcoin and Ethereum Leveraged ETFs

The U.S. Securities and Exchange Commission (SEC) has approved six new leveraged exchange-traded funds (ETFs), including Bitcoin and Ethereum products, for listing on the Cboe BZX Exchange. The decision, announced on October 2, allows for the creation of 3x leveraged funds targeting daily returns of three times the performance of Bitcoin, Ethereum, gold, silver, crude oil, and natural gas. However, trading cannot begin until the issuer, Volatility Shares, obtains effective registration statements.

The approved funds will use futures contracts to provide exposure to the underlying assets, rather than holding the cryptocurrencies directly. This means their performance will track futures benchmarks, not spot prices. For example, a 2% daily rise in the Bitcoin futures benchmark would target a 6% gain in the fund, while a 2% decline would target a 6% loss. These funds reset their leverage daily, which can lead to compounding effects over longer holding periods, potentially altering returns significantly from the simple 3x multiple.

Volatility Shares already offers leveraged cryptocurrency products, including funds targeting twice the daily performance of Bitcoin and Ethereum. The newly approved list increases that daily target to three times the respective benchmarks. Once the registration requirements are complete, the funds will trade on the Cboe BZX Exchange through brokerage accounts, offering investors stock-like trading access with amplified exposure to futures price changes.

While the SEC's approval clears the exchange’s proposed listing rule, the issuers must still complete separate registration requirements before launching the products. No estimated launch date has been announced.