Volatility Shares wins SEC approval for first 3x bitcoin and ether ETFs in the U.S.

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SEC approves 3x bitcoin ether ETFs

Highlights

SEC approved a Cboe BZX rule change on Oct. 2, allowing Volatility Shares to launch six 3x leveraged ETFs covering bitcoin, ether, and four commodities.
The Volatility Shares 3x bitcoin and ether ETFs will hold regulated futures contracts, require SEC registration statement effectiveness before launch, and do not yet have a set trading date.
Analysts warn that daily reset and leverage structures can cause volatility decay, amplified trading flows, and make the ETFs highly speculative and risky for all but short-term traders.

Approval scope and product structure

As reported by CoinDesk, the Securities and Exchange Commission on Oct. 2 approved a Cboe BZX rule change allowing six exchange-traded funds from Volatility Shares, with the lineup covering bitcoin, ether, gold, silver, crude oil and natural gas.

For the two crypto products, the funds are structured to hold regulated futures tied to bitcoin and ether rather than the underlying tokens themselves. The order does not set a deadline for trading to begin, and Volatility Shares still needs the SEC to declare its registration statement effective before the ETFs can launch.

Trading risks and market impact

Analysts and market participants are warning that the new products are aimed at short-term traders rather than long-term investors. Bloomberg Senior ETF Analyst Eric Balchunas said on X that leveraged ETFs are for trading, not investing, while Blockstream CEO Adam Back said automatic re-leveraging strategies can erode capital when bitcoin trades sideways with high volatility.

Because the funds reset exposure every day to maintain 3x leverage, they must buy more futures after gains and sell after losses, creating mechanical trading flows that can amplify market swings, especially near the close. That structure also creates volatility decay, meaning returns over several days can diverge sharply from three times the underlying asset's move and, in some cases, turn negative even when the asset is only modestly lower.

Volatility Shares highlights those risks in its preliminary prospectus, saying greater benchmark volatility increases the potential for volatility decay. The filing also says an investment in the 3x Bitcoin ETF is speculative and suitable only for investors able to bear the risk of total loss, while the use of futures contracts adds rollover costs that can further weigh on long-term performance.

We previously reported on SEBI’s plan to partially roll back its new derivatives settlement mechanism after volatility around expiry-day pricing. The regulator is expected to stop using the closing auction to calculate derivatives settlement prices and instead rely on a 30-minute volume-weighted average price window for at least a year, while keeping the auction for end-of-day pricing in less liquid cash-market stocks.

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