SEC approves first 3x leveraged Bitcoin and Ether ETFs

These new Bitcoin and Ethereum ETFs will not directly hold the cryptocurrencies. Instead, they will utilize regulated futures contracts, including those linked to CME, to aim for three times the daily price movement of their respective benchmarks. This means a 1% daily gain in the benchmark could translate to approximately a 3% increase in the ETF, before fees and costs, while a 1% loss in the benchmark could result in a 3% loss. The daily reset mechanism means that returns over multiple days may vary significantly from three times the benchmark's wider price action.

Despite the SEC's approval, the ETFs are not yet available for trading. Volatility Shares must wait for its Form S-1 registration statements to become effective before brokers can offer the products to investors. No launch date has been announced.

The move signifies a continued expansion of U.S. regulatory engagement with digital assets, following recent crypto guidelines on staking and tokenized securities, and Treasury plans regarding crypto mixers.