SEC clears Cboe rule change to list Volatility Shares' 3x Bitcoin and 3x Ether futures ETPs

The U.S. Securities and Exchange Commission approved a Cboe BZX rule change on Oct. 2 that would allow the exchange to list VS Trust's leveraged crypto futures products, including a 3x Bitcoin ETF and a 3x Ether ETF sponsored by Volatility Shares. The SEC order addresses an exchange-rule obstacle: Cboe's generic commodity trust listing standards generally do not permit products that target a specified multiple of a benchmark, requiring these funds to obtain individualized approval. The order covers six funds in total, including leveraged products linked to gold, silver, crude oil and natural gas. Other initial and ongoing listing standards still apply. In a preliminary prospectus dated Aug. 17, VS Trust proposed the ticker BITH for the Bitcoin product and ETHK for the Ether product. The filing is marked "subject to completion" and states that securities cannot be sold until the registration statement becomes effective. The SEC's Oct. 2 action approves only the exchange's rule change. It does not confirm that registration is effective or that trading has started. As of Oct. 4, both registration effectiveness and a first trading date remained unconfirmed, and investors cannot treat the order as proof the products are available through their brokerage accounts. The order classifies the vehicles as exchange-traded products structured as Commodity-Based Trust Shares, even though the fund names use the term ETF. As a result, they do not carry the investor protections associated with funds registered under the Investment Company Act of 1940. Each crypto product targets three times the daily performance of its benchmark before fees and expenses. The benchmarks track portfolios of first- and second-month futures contracts, with the funds using futures positions supported by cash collateral. Performance is tied to the daily return of the futures portfolio rather than spot Bitcoin or spot Ether alone. The prospectus defines a "day" as the period between successive net asset value calculations and says the funds generally rebalance daily. Because returns compound from one day's ending value to the next, the sequence of gains and losses can materially affect results over longer holding periods. The SEC's investor bulletin cautions that daily leveraged products can deviate substantially from their stated multiple over weeks or months, especially in volatile markets. The prospectus similarly warns that longer-horizon returns may differ in magnitude and even direction from what investors expect. A 3x daily objective does not imply three times the cumulative return of Bitcoin or Ether, and leverage can magnify losses. SEC staff have also warned that leveraged Bitcoin futures strategies can increase volatility and expose investors to significant, sudden losses.