Crypto05 October, 20262 min read
SEC Approves Cboe BZX Rule Change for Six 3x Bitcoin and Ether Volatility Shares
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SEC approves listing rules for six 3x leveraged ETFs from Volatility Shares. Products aim to triple the daily moves of Bitcoin, Ether, and metals.
7 outlets told this the same way.
SEC clears 3x ETPs
The U.S. Securities and Exchange Commission approved a Cboe BZX rule change on October 2 to allow six Volatility Shares products, each aiming to deliver three times the daily return of its underlying asset.
“‘Leveraged ETFs are for trading, not investing,’ Bloomberg's Senior ETF Analyst Eric Balchunas said on X.”
The lineup covers bitcoin and ether, and it also covers gold, silver, crude oil and natural gas, with the products designed to hold regulated futures tied to bitcoin and ether and not actual tokens.
The SEC approval still leaves a gap before trading begins, because the issuer must still get the SEC to declare its registration statement effective, and the order does not set a deadline.
Volatility Shares said the daily reset is built into the structure, and the company warned that "The more volatile the benchmark, the greater the potential for volatility decay," in its preliminary prospectus filed as part of a Form S-1 registration statement.
Market veterans framed the products as short-term tools, and Bloomberg's Senior ETF Analyst Eric Balchunas said on X, "Leveraged ETFs are for trading, not investing."
Daily reset and drift
The products must rebalance every day to keep leverage pinned at 3x, and the daily mechanics force them to buy more futures after gains and sell more after losses. Blockstream CEO Adam Back warned that "Auto re-leveraging strategies bleed capital in a sideways chop, especially with a high volatility underlying... like bitcoin," describing the effect as volatility decay. CoinDesk illustrated volatility decay with a back-and-forth example where bitcoin rises 10% one day and falls 10% the next, leaving it down 1%, while a 3x fund would gain 30%, then lose 30%, ending down 9%.
CoinDesk also said the daily reset means multi-day returns can drift far from 3x, sometimes in the opposite direction, and it tied that drift to the sequence of gains and losses. Volatility Shares also cautioned that "An investment in 3x Bitcoin ETF is not suitable for all investors" and said it may be deemed speculative and should be considered only by persons who can bear the risk of total loss.
Who can trade, what’s next
The SEC cleared the listing-rule hurdle on October 2, but the funds still cannot be traded yet because the issuer still needs the SEC to declare its registration statement effective. CryptoSlate said the October order approves the exchange's rule change and "does not establish that registration is effective or that trading has begun," leaving a first trading date unconfirmed as of October 4. CryptoSlate also emphasized that "Although “ETF” appears in their names," the order classifies the funds as exchange-traded products, or ETPs, structured as Commodity-Based Trust Shares.
The SEC investor bulletin and the funds' own prospectus warnings tied the leveraged futures approach to amplified volatility and the possibility of significant, sudden losses. Cointribune added that the SEC approved the Cboe BZX listing rules for six Volatility Shares products on October 2, but it said the next step is the effectiveness of registration, which will determine the launch date.