The headquarters of the U.S. Securities and Exchange Commission at 100 F Street NE in Washington: a curved glass front between two stone pillars, the left one engraved with the agency's name above its · Another Believer, via Wikimedia Commons · CC BY-SA 4.0

Article · 2026-10-05 · 8 min read · Leveraged exchange-traded products · Crypto

SEC lets Cboe list 3x bitcoin and ether funds; trading must wait

The order of Friday 2 October, issued by SEC staff under delegated authority, approves Cboe BZX listing six Volatility Shares funds that seek three times the daily move of bitcoin, ether, gold, silver, crude oil or natural gas through CME Group futures; they are commodity pools outside the 1940 Act's 200 percent leverage test that held up the sponsor's earlier 3x filings, and none can trade until the SEC declares the trust's registration statement, filed on 17 August, effective.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

CMEadjacent BMOadjacent

What the SEC signed

The Securities and Exchange Commission on Friday 2 October approved a rule change that lets Cboe BZX Exchange list and trade six funds of the VS Trust, which Volatility Shares LLC sponsors: the 3x Gold ETF, 3x Silver ETF, 3x Bitcoin ETF, 3x Ether ETF, 3x Crude Oil ETF and 3x Natural Gas ETF. Each seeks, before fees and expenses, three times the daily performance of its commodity, measured by the daily change in a set of first and second month futures contracts on it. The order, release 34-106577, was issued 'For the Commission, by the Division of Trading and Markets, pursuant to delegated authority': the division acted on powers the Commission has delegated to it, and the order records no vote of the commissioners. Sherry R. Haywood, an assistant secretary of the Commission, signed it. ^[1]

The order came inside the first deadline the notice set. Cboe filed the proposal on Monday 10 August and the Commission published it for comment in the Federal Register on Wednesday 19 August; no comments came in. The notice gave the Commission 45 days from publication to approve or disapprove the change or to open proceedings on it, unless the period was stretched to as many as 90 days. By the desk's count the 45 days ran to Saturday 3 October, and the order is dated the day before. ^{[1, 2]}

The order does not let anyone trade the funds yet. The exchange's notice says the trust's registration statement, the filing that must take effect before securities can be sold to the public, 'is not yet effective, and the Shares will not trade on the Exchange until such time that the registration statement is effective'. The trust filed it on Form S-1 on Monday 17 August, and its cover still says the trust 'may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective'. The draft leaves blanks, among them the name of the first authorized participant, the dealer that would create the first shares from the funds. CoinDesk reported that the order sets no deadline for that step. ^{[2, 3, 9]}

Why it took a commodity pool

Despite their names, the six are not exchange-traded funds in the legal sense. The order keeps that term for funds regulated under the Investment Company Act of 1940 and says that although each fund has ETF in its name, they are 'Commodity-Based Trust Shares and therefore ETPs', exchange-traded products whose shares are registered under the Securities Act of 1933 but which the 1940 Act does not govern. The trust is registered with the Commodity Futures Trading Commission as a commodity pool, a vehicle that pools investors' money to trade futures, and Volatility Shares is registered as its operator. Cboe's standing rule for such trusts lets them list without a rule change of their own but shuts out any that seeks a multiple or an inverse of a benchmark. The exchange said the six meet every other requirement of that rule, which is why it asked for this order. ^{[1, 2]}

The 1940 Act is where the old ceiling sits. Under the SEC's Rule 18f-4, a registered fund's value at risk, an estimate of how much its portfolio could lose over 20 trading days at a 99 percent confidence level, may not exceed 200 percent of the value at risk of an unleveraged reference portfolio. A fund that was already operating on 28 October 2020 and promising more than 200 percent may go on doing so, as long as it does not raise its multiple or change its index. The rule's definition of a fund covers registered investment companies and business development companies. The draft prospectus says neither the VS Trust nor its funds is an investment company under the 1940 Act or subject to regulation under it. ^{[6, 3]}

Volatility Shares tried the 1940 Act route first. Between 14 October and 21 November 2025, Volatility Shares Trust, the same fund complex's trust registered under that act, filed to add 72 funds, by the desk's count of the list attached to the staff's letter, seeking three or five times the daily move of assets ranging from single stocks to crypto assets, a 3x Bitcoin ETF and a 3x Ether ETF among them. On Tuesday 2 December 2025 the SEC's Division of Investment Management wrote that it would not 'perform a substantive review' of those filings until its concerns under Rule 18f-4 were addressed, and asked the trust to change the funds' objectives to fit the rule 'or withdraw its filings'. The 3x Bitcoin ETF filing is still on file: on Friday 18 September the trust set 18 October as its new effective date, the filing's sole purpose being that delay. Unchained reported that the staff wrote to Direxion the same day about its own proposed 3x bitcoin and ether funds. ^{[4, 5, 10]}

CoinDesk reported that 'until now, crypto funds in the U.S. had been capped at 2x leverage'. The order's examples of leveraged products already trading on the six commodities fit that: for bitcoin and ether it names Volatility Shares' own 2x Bitcoin ETF and 2x Ether ETF; for gold, a 2x ProShares fund and a 3x exchange-traded note; for silver, crude oil and natural gas, 2x ProShares funds, adding that 3x products on those three once traded and no longer do. Three times is not new to American exchanges: Cboe counted about 67 listed products seeking three times or minus three times a benchmark, 51 of them registered funds and 16 exchange-traded notes, which are debt of large financial institutions. ^{[9, 1, 2]}

Futures, reset every day

None of the six will hold bitcoin, ether, metal or oil. The draft prospectus says the funds 'do not hold the physical commodities of gold, silver, light sweet crude oil, or natural gas, and do not hold the digital commodities of bitcoin or ether'. They hold futures, contracts to buy or sell at a set price on a later date, backed by cash and short-term instruments such as Treasury bills: mainly bitcoin and ether futures on the Chicago Mercantile Exchange, gold and silver futures on COMEX, and crude oil and natural gas futures on NYMEX, all three subsidiaries of CME Group. Before contracts expire a fund sells them and buys later ones, about 20 percent of the expiring position a day over five business days. If futures become unavailable, because of price limits, position limits or margin demands, a fund may use later-dated futures, other exchange-traded funds or products on the same commodity, or listed options. ^{[3, 2]}

The multiple holds for one day only. The SEC's investor bulletin on leveraged funds explains that most reset daily, so their performance over weeks, months or years 'can differ significantly' from the stated multiple, an effect that 'can be magnified in volatile markets'. The draft prospectus gives its own example: if a commodity rises 10 percent one day and falls back to where it started the next, a fall of about 9.09 percent, the fund gains 30 percent and then gives up about 27.27 percent of the larger sum, ending about 5.45 percent below where it began, according to the prospectus. In its table, a hypothetical 3x fund ends a year 52.8 percent lower when its benchmark ends the year flat with a volatility, the yearly measure of how widely it swings, of 50 percent. And a one-day move of close to 33 percent against a fund 'could result in the total loss or near total loss' of the money in it. ^{[7, 3]}

Keeping the multiple at three takes daily trading. The exchange's filing says the sponsor will increase and decrease the number of futures each fund holds as shares are created and redeemed and as the benchmark moves, and the draft prospectus says each fund will rebalance daily under normal circumstances. CoinDesk wrote that this forces the funds to buy more futures after gains and sell more after losses, 'mechanical flows that usually hit near the close and can amplify intraday moves', and that rolling into later contracts, which often cost more, is a steady drag over time. The prospectus makes the same point: when later contracts cost more than nearer ones, a pattern called contango, each roll sells low and buys high, and the futures markets for many of the six commodities 'have historically experienced extended periods of contango'. ^{[2, 3, 9]}

What the order leans on

The Commission's reasoning is brief. Gold, silver, bitcoin, ether, crude oil and natural gas each underlie futures that have traded for at least six months on an exchange registered with the CFTC, with which Cboe shares surveillance information, the data used to detect manipulation. Leveraged products on each already trade, and the order repeats the Commission's earlier finding that applying the same listing standards to products tied to the same commodities 'levels the playing field between issuers'. For investor protection it points to rules already in force: Regulation Best Interest for brokers recommending the shares to retail customers, the fiduciary duty of investment advisers, and FINRA's increased sales-practice and customer margin requirements for leveraged products. Every representation in the proposal becomes a condition of staying listed; the trust must tell the exchange of any failure, and the exchange must watch for one and begin delisting a fund that falls short. ^[1]

What holders give up is set out in the draft prospectus. They do not get the 1940 Act's protections, which it lists as including limits on dealings with affiliates and on leverage, a ban on suspending redemptions except in limited cases, a board that includes independent directors and proper valuation of assets; the trust has no board of directors and no audit committee. The SEC's bulletin makes the general point that exchange-traded products investing mainly in commodities 'do not provide the same investor protections registered funds do'. Each fund is to be taxed as a partnership: holders receive a Schedule K-1, the partnership tax form, and are taxed on their share of its income whether or not they receive any cash from it. The draft gives the sponsor's management fee as 1.85 percent a year of each fund's average daily net assets in its charges section and as 1.65 percent in the notes to its financial statements, and puts total yearly fees and expenses, the cost of rolling and rebalancing included, at 2.48 percent for the bitcoin fund and 3.28 percent for the ether fund before interest earned on their cash. ^{[3, 7]}

What settles it next

The records still to come: the trust's registration statement must take effect, through a further amendment that says so or on a date the Commission sets, as its cover provides, and neither the order nor the draft names a date; before trading begins, Cboe must send its members an information circular on the shares' special characteristics and risks; and at least 100,000 shares of each fund must be outstanding when trading starts. Volatility Shares' 1940 Act filing for a 3x Bitcoin ETF now carries a delayed effective date of 18 October. ^{[3, 1, 2, 5]}

Who it reaches

CME Group (CME) is reached through its exchanges, which list the futures all six funds are built on: the Chicago Mercantile Exchange for bitcoin and ether, COMEX for gold and silver and NYMEX for crude oil and natural gas; the draft prospectus says each fund also pays CME Group for the futures data its reference price is calculated from. Bank of Montreal (BMO) issues the MicroSectors Gold 3X Leveraged ETNs, listed on NYSE Arca as SHNY: the order names them among 3x gold products already trading, and they are the bank's unsecured debt, where the new gold fund seeks the same daily multiple through COMEX futures. ^{[3, 2, 1, 8]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

All news →