Cboe seeks SEC approval for the first U.S. 3x leveraged BTC and ETH ETF

Cboe BZX Exchange is seeking approval from the U.S. SEC to list a set of leveraged commodity ETFs, including daily leveraged products that provide 3x long exposure to Bitcoin and Ethereum. According to the proposed rule change document submitted on Friday, Cboe plans to launch the 3x Gold ETF, 3x Silver ETF, 3x Bitcoin ETF, 3x Ether ETF, 3x Crude Oil ETF, and 3x Natural Gas ETF.

These funds will primarily achieve their objectives by holding CME or COMEX futures contracts and using cash and cash equivalents as collateral, aiming to deliver 3x returns corresponding to the daily performance of the underlying assets. Since the related products do not comply with the exchange's general listing standards regarding leveraged products, Cboe needs to apply for approval through special rules. Such highly leveraged funds are typically aimed at sophisticated investors for short-term tactical trading and are not suitable for long-term holding.

The document also indicates that these funds will operate in the form of a "commodity pool," subject to CFTC regulation, rather than as an investment company under the 1940 Act regulated by the SEC, like many traditional ETFs. Commodity pools typically aggregate funds from multiple investors to trade derivatives or other commodity-related instruments.