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BTC 
ETH The SEC approves amendments to the listing rules for six volatility share products of Cboe BZX
On October 2, the U.S. Securities and Exchange Commission (SEC) approved amendments to the listing rules of the Cboe BZX exchange, involving six products owned by Volatility Shares, including 3 times leverage Bitcoin ETP and 3 times leverage Ethereum ETP. The funds aim to triple the daily performance of their reference assets before deducting expenses. However, the official launch of these products still needs to complete the final regulatory process.
Summary of core points
On October 2, the SEC approved amendments to the Cboe BZX rule for six commodity-linked exchange-traded products (ETPs). Bitcoin and Ethereum funds mainly use futures contracts to pursue their earnings targets of triple the daily performance of their underlying assets. Although approved, the marketing of these products still needs to wait for registration to take effect before it can be launched.
Six ETPs receive green light from the SEC
The market for cryptocurrency-related financial products continues to evolve. It is worth noting that the spot Bitcoin ETF experienced its first outflow after nine consecutive days of inflows, although it still absorbed US$3.1 billion during this period. In this context, the SEC approved amendments to the Cboe BZX listing rules for six VS Trust products on October 2. These products are linked to Bitcoin, Ethereum, gold, silver, crude oil and natural gas.
Cboe BZX submitted its application on August 10 and announced it for public comment on August 19. Because these leveraged products do not follow the regular listing process for commodity trusts, the SEC reviewed each document separately.
3x leverage amplifies daily fluctuations
Specifically, each fund aims to replicate three times the daily performance of its reference asset. To achieve this goal, the fund mainly uses futures contracts, supplemented by cash positions, and adjusts its risk exposure daily. Therefore, if the underlying asset rises by 1% in a single day, it can bring investors a 3% return before deducting expenses; conversely, if it falls by 1%, it may result in a 3% loss.
However, this goal does not apply to multi-day cycles. In fact, a sequence of daily fluctuations can cause the fund's cumulative performance to deviate from the triple performance of the underlying assets. The Financial Industry Regulatory Authority (FINRA) specifically warned of this risk. In addition, the rollover of futures contracts may also affect the final result. If recently expiring contracts are not available, funds may switch to far-month contracts, other listed products or options strategies. Volatility Shares already offers similar leveraged fund strategies on its official website.
Listing still requires final confirmation
Despite the SEC approval, investors are currently unable to trade these six products. Regulators approve the platform's listing rules, but issuers still need to take effect on the registration statement, a step that will determine the final launch date of the product.
In addition, these ETPs are not governed by the Investment Company Act of 1940, which is the regulatory framework for traditional investment funds. They will still be subject to the rules applicable to their structure and associated assets. Finally, the launch of these products is in line with the general trend of expansion of listed cryptocurrency products. However, not all products are equally successful, with the XRP ETF, for example, showing a negative performance in early October.
The next critical step will be the effective registration of six funds. Subsequently, the flow of market funds will test investors 'interest in these products. This test is particularly critical in the current context of record gold and continued demand for Bitcoin ETFs.
