SEC approves Cboe listing for 3x Bitcoin, Ether futures ETPs

The Securities and Exchange Commission on Oct. 2 approved a Cboe BZX rule change to allow VS Trust’s proposed 3x Bitcoin and 3x Ether futures-based exchange-traded products to be listed on the exchange. The approval clears an exchange-level listing requirement but does not mean the products are available for sale. Registration effectiveness and a first trading date remained unconfirmed as of Oct. 4.

The order covers six trusts in total, including leveraged products tied to gold, silver, crude oil and natural gas, and advances a proposal Volatility Shares filed in August. The preliminary prospectus for the crypto offerings lists proposed ticker symbols BITH for the Bitcoin product and ETHK for the Ether product; the filings are marked subject to completion.

The crypto securities are structured as Commodity-Based Trust Shares rather than as funds registered under the Investment Company Act of 1940. Because of that structure, they do not carry the investor protections that apply to Investment Company Act funds. The prospectus states the securities cannot be sold until registration becomes effective.

Each product seeks to deliver three times the daily return of a specified futures benchmark before fees and expenses. The benchmarks track portfolios of front-month and second-month futures contracts. The trusts will obtain exposure through futures contracts alongside cash collateral, so the reference return is the daily performance of a futures portfolio rather than the spot price of Bitcoin or Ether alone.

Under the funds’ normal operating plan, managers will rebalance positions daily to maintain the targeted 3x exposure. Daily rebalancing causes results to compound: each day’s return applies to a changed asset base, so the sequence of gains and losses affects returns over longer holding periods. The prospectus and SEC guidance note that leveraged daily objectives can produce outcomes over weeks or months that differ from a simple multiple of cumulative spot returns.

Leverage magnifies gains and losses. SEC staff have warned that products using leveraged Bitcoin-futures strategies can increase volatility and expose investors to significant, rapid losses. The exchange order approving the listing rules does not confirm that individual brokerages will permit purchases of the securities; investors should not assume availability until registration is effective and trading has commenced.

Administratively, the Oct. 2 order approves Cboe BZX’s rule change authorizing the listings but does not certify that the trusts’ registrations are final or that trading has started. As of Oct. 4, neither registration effectiveness nor a first trading date had been announced.