Cboe Asks SEC to List 3x Bitcoin & Ethereum Futures ETFs

Quick snapshot

Cboe BZX has asked the SEC for a special exemption so it can list funds that target three times the daily performance of Bitcoin and Ethereum futures. The filing — from the folks behind Volatility Shares — would cover a set of six leveraged funds tied to crypto and commodities (including Bitcoin, Ethereum, gold, silver, crude oil and natural gas). These products would use futures contracts rather than owning spot Bitcoin or Ether, and the request is still under SEC review; the registration statement is not yet effective and the shares are not authorized for trading.

What the funds would look like and why this is tricky

These aren’t ordinary ETFs. Because they aim for a daily 3x return, they reset leverage every trading day. That makes longer-term performance highly dependent on the order of daily moves, how futures behave, roll costs, financing, fees, and rebalancing — not just the headline move in BTC or ETH.

Structurally, the sponsor would be Volatility Shares (organized as a series of a trust) and the funds would operate as CFTC-registered commodity pools rather than classic investment companies. Service providers like fund administrators and custodians would handle accounting and safekeeping. The exchange is asking the SEC for a case-specific approval because its generic commodity-trust listing rules explicitly exclude products that seek a multiple of a benchmark.

The proposed crypto funds would generally use first- and second-month futures traded primarily on major U.S. futures venues and would roll the near-month position into the next contract over about five business days (roughly 20% moved each day). If the preferred contracts become unavailable because of price limits, margin rules, or position caps, the fund could use later-month futures, linked ETPs or listed options instead — which would preserve exposure but could change how closely the fund tracks its target.

Bottom line: SEC sign-off on the exchange rule change would only clear one hurdle. The funds would still need an effective securities registration and other approvals before anyone could buy shares on the exchange.

Why you should care (aka the risk party)

Daily resetting leveraged funds are a whole different animal. Compounding alone can create big gaps between the fund and the underlying benchmark over time. For a simple illustration: if a benchmark falls 10% one day and then gains 10% the next, the benchmark ends slightly down. But a 2x daily leveraged product will finish further down, and a 3x daily product will be hurt even more — the math works against holders when volatility and choppy moves dominate.

Put plainly: you can’t just take the performance of a 2x ETF and scale it up to guess what a 3x would have done. Different sequences of gains and losses produce different outcomes for daily-leveraged funds, and extra factors — futures basis, roll execution, financing costs, management fees and tracking error — all pile on.

There’s also a practical execution angle. After a market move, a daily 3x fund must rebalance more aggressively than a 2x fund to restore the target exposure. In a simplified example, a 3x fund starting with $100 million and exposed to three times that amount would need roughly $30 million of additional buying or selling after a 5% move in the benchmark to get back to target exposure. That’s a lot of trading and could increase market impact, depending on fund size and liquidity.

We already have a real-world point of comparison: Volatility Shares runs 2x Bitcoin and 2x Ethereum futures ETFs. The 2x Ethereum product showed steep losses over recent reporting windows — about -48.8% for one quarter, -79.6% for a year, and roughly -96.2% on an annualized basis since its June 4, 2024 launch (numbers ending June 30). The 2x Bitcoin product also had large negative returns over the same quarter and year snapshots. Those results don’t prove how a 3x product would behave, but they’re a clear reminder that leverage plus futures mechanics can produce brutal outcomes.

If the SEC grants the specific exchange-rule exemption, that only resolves the technical listing rule issue. Investors should remember these products are designed for short-term tactical use by traders who understand daily compounding and roll mechanics — not buy-and-forget retirement holdings. In short: exciting on paper, potentially stomach-churning in practice.