SEC approves 3x leveraged Bitcoin and Ethereum ETFs

The US Securities and Exchange Commission (SEC) has approved a rule change allowing Cboe BZX to list six 3x leveraged exchange-traded funds (ETFs) issued by Volatility Shares. These products will track the daily performance of Bitcoin, Ethereum, gold, silver, crude oil, and natural gas through futures contracts on the Chicago Mercantile Exchange.

Unlike traditional funds regulated under the Investment Company Act of 1940, which generally limit leverage to 2x, these products operate under the Securities Act of 1933. This regulatory distinction allows for the higher leverage. Because the funds reset daily, their long-term performance may deviate significantly from three times the underlying asset's total return due to volatility decay.

In the broader crypto market, recent capital flows have shown divergence. While Bitcoin ETFs saw net weekly inflows of approximately $241 million, Ethereum ETFs experienced net outflows of $138 million. Additionally, Injective (INJ) co-founder Eric Chen suggested that spot INJ ETFs in the US could arrive sooner than 2027, noting that two applications are currently pending with the SEC.