Cboe BZX Exchange has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to list leveraged commodity exchange-traded funds (ETFs), including products offering three times the daily performance of Bitcoin and Ether. The funds, which would use futures contracts from the CME or COMEX as collateral, are structured as commodity pools under the Commodity Futures Trading Commission (CFTC) rather than as traditional SEC-regulated investment companies.
The proposed ETFs would cover a range of assets, including gold, silver, crude oil, and natural gas, alongside digital currencies. Volatility Shares LLC, the sponsor of the funds, will operate them under the VS Trust. The leveraged structure, which aims to amplify daily returns, has prompted the need for SEC approval, given the heightened risks associated with such products.
A statement from an individual associated with the sponsor, Choe, outlined how the number of futures contracts held by each fund would be adjusted to meet daily investment objectives. This mechanism would accommodate investor inflows and outflows while managing exposure to price fluctuations in the underlying benchmarks.
The initiative follows similar offerings by LeverageShares, which launched 3x and –3x Bitcoin and Ether ETFs in Europe. However, the U.S. market presents distinct regulatory challenges, with the SEC’s oversight adding a layer of complexity not present in other jurisdictions. The proposed funds highlight the evolving landscape of leveraged financial products in the cryptocurrency sector.
Written by Steven Cook
Regulation Desk
