The U.S. Securities and Exchange Commission has approved the first 3x leveraged Bitcoin and Ethereum exchange-traded products in the United States, clearing the way for Volatility Shares to list six triple-leveraged funds on the Cboe BZX Exchange. The decision, dated October 2, addresses a proposed rule change covering not only Bitcoin and Ether products but also funds tied to gold, silver, crude oil, and natural gas.
The approval marks a milestone because US crypto funds were previously capped at 2x leverage. It comes less than three weeks after the CLARITY Act failed to pass the Senate. However, trading cannot begin immediately: Volatility Shares must still obtain effective Form S-1 registration statements before investors can buy shares through brokerage accounts, and no launch date has been announced.
Each new product seeks to deliver three times its benchmark's daily performance before fees and expenses. The Bitcoin and Ethereum funds will use futures contracts rather than holding BTC or ETH directly, with exposure linked to CME contracts. This means their targets relate to futures benchmarks rather than spot cryptocurrency prices. For example, a 2% daily rise in the Bitcoin futures benchmark would imply a targeted 6% fund gain, while a 2% decline would imply a targeted 6% loss.
The funds reset leverage daily, so the three-times objective applies only to a single session. Over longer periods, daily rebalancing and volatility can cause returns to diverge significantly from a simple 3x multiple of the underlying asset's move, amplifying both potential gains and losses.
