Cboe seeks SEC nod for first US 3x bitcoin and ether ETFs

Cboe BZX Exchange is looking for U.S. Securities and Exchange Commission approval to list a suite of leveraged commodity exchange-traded funds, including 3x daily bitcoin and ether products.

According to the proposed rule change proposal on Friday, the firm is looking to introduce a 3x Gold ETF, 3x Silver ETF, 3x Bitcoin ETF, 3x Ether ETF, 3x Crude Oil ETF and 3x Natural Gas ETF, all of which are aiming to deliver three times the daily performance of its underlying asset primarily by holding futures contracts on CME or COMEX, with cash and cash equivalents as collateral.

Generally speaking, highly leveraged funds are designed for short-term, tactical trading by sophisticated investors — not for long-term holding.

"The Sponsor (defined below) will increase and decrease the number of Benchmark Futures Contracts that each Fund holds in order to accommodate purchases and redemptions of Shares and to account for changes in the value of the Benchmark so that each Fund can meet its daily investment objective," Choe wrote.

Of note, the funds are designed to operate as "commodity pools," under Commodity Futures Trading Commission oversight, rather than traditional 1940 Act investment companies overseen by the SEC, like many ETFs. A commodity pool is an investment fund that combines money from multiple investors to trade derivatives or other commodity-related instruments.

Additionally, because the funds seek leveraged returns, they fall outside the exchange’s generic listing standards and require specific SEC approval — hence the rule change request. Cboe will also file a related Form S-1 registration statement under the Securities Act of 1933, according to the filing.

Cboe referred to this structure as an "additional layer of federal regulatory oversight — beyond what a physical commodity-based exchange-traded product would be subject to." The filing notes that Volatility Shares LLC will sponsor the funds, which will enter the VS Trust.

Volatility Shares already offers 2x bitcoin and ether strategy ETFs in the U.S. market. LeverageShares debuted the world’s first 3x and –3x bitcoin and ether ETFs in Europe last year.