3x Bitcoin and Ether futures funds clear SEC listing hurdle

The SEC cleared an exchange-rule hurdle on Oct. 2 by approving the Cboe BZX exchange’s listing proposal for VS Trust’s 3x Bitcoin ETF and 3x Ether ETF. These products, sponsored by Volatility Shares, aim to provide amplified daily crypto futures exposure.

The regulatory order encompasses six funds altogether, which also includes offerings tied to natural gas, crude oil, silver, and gold. This moves forward the proposal previously covered by CryptoSlate in August when the exchange was actively seeking permission.

For brokerage investors, the adjustment creates a listing pathway for a greater daily leverage target. Because Cboe’s standard generic commodity-trust rules rule out products targeting specific multiples of a benchmark, these funds required individual authorization, though all other ongoing and initial listing standards continue to apply.

According to VS Trust’s preliminary prospectus filed on Aug. 17, the proposed ticker symbols are BITH for the Bitcoin offering and ETHK for the Ether fund. These symbols appear in a filing marked subject to completion, and the prospectus notes that securities are not eligible for sale until registration becomes fully effective.

While the October order grants approval for the exchange rule modification, it does not confirm that registration has taken effect or that trading has commenced. As of Oct. 4, the exact first trading date and registration effectiveness remain unconfirmed. Consequently, investors must not view this ruling by itself as proof that the products are currently accessible via their brokers.

Even though the word “ETF” appears in their titles, the order formally categorizes the funds as exchange-traded products (ETPs) structured as Commodity-Based Trust Shares. Consequently, they lack the specific investor protections granted to funds registered under the Investment Company Act of 1940.

What the daily 3x target means

Each of the crypto products targets three times the daily performance of its benchmark, calculated prior to fees and expenses. These benchmarks track portfolios made up of second- and first-month futures contracts, utilizing both cash collateral and futures. As a result, the primary reference point is the daily return of a futures portfolio rather than the spot price alone.

The preliminary prospectus defines a single day as the time frame between consecutive net asset value calculations. The funds generally attempt to rebalance on a daily basis under normal market conditions. Because each day’s outcome compounds from a newly adjusted asset value, the precise sequence of losses and gains heavily influences longer holding periods.

An investor bulletin issued by the SEC cautions that daily leveraged products can drift significantly from their advertised multiple over the span of weeks or months, particularly during periods of high volatility. Similarly, the prospectus warns that returns over extended periods can vary widely in both magnitude and direction. Therefore, a 3x daily objective does not guarantee triple the cumulative return of Ether or Bitcoin.

Furthermore, leverage serves to magnify losses. SEC officials explicitly caution that ETFs leveraging Bitcoin-futures strategies heighten volatility and can subject investors to sudden, severe losses.

?अक्सर पूछे जाने वाले प्रश्न

01Did the SEC fully approve the launch of the 3x Bitcoin and Ether funds?

No. The SEC approved the Cboe BZX exchange’s listing proposal rules for the funds, but registration effectiveness and a confirmed trading start date remain unconfirmed.

02Are these funds legally classified as ETFs?

While “ETF” appears in their names, the SEC order classifies them as exchange-traded products (ETPs) structured as Commodity-Based Trust Shares, meaning they lack Investment Company Act of 1940 protections.

03Do these funds track the direct spot price of Bitcoin and Ether?

No. They track benchmarks consisting of portfolios of first- and second-month futures contracts alongside cash collateral, rather than the spot price alone.