Crypto: SEC Approves First Leveraged x3 Bitcoin and Ethereum ETFs

Triple dose of bitcoin on Wall Street's menu. The SEC has authorized the listing of the first U.S. leveraged ETFs. Thus, traders will be able to apply leverage up to x3 on bitcoin and ether. Until now, the U.S. market had been limited to a leverage of x2 since 2023, two years after their launch.

These short-term trading products rebalance at each session and are not a type of investment that one forgets in the back of a portfolio. Triple leveraged ETFs have existed on U.S. stock indices since 2010. Now, it is bitcoin's turn, and probably soon that of other cryptocurrencies, to access this feature.

Key Points

• Washington allows a daily triple exposure to bitcoin and ether through listed funds, where the U.S. market had been limited to a factor of two since 2023.
• The 18f-4 rule of 2020 restricts the risk of funds under the 1940 Act, while the three-factor equity products still listed date back to before this date.
• The adjustment occurs session by session: a back-and-forth of prices at equilibrium already leaves a 6.7% loss on the fund.
• In the face of offshore perpetuals at 50 or 100 times, these funds eliminate margin calls and forced liquidations.

Bitcoin and Ethereum ETFs: How the SEC Broke the Leverage Ceiling

This ceiling had been in place since June 2023, nearly two years after the opening of the first U.S. bitcoin ETFs. Launched in October 2021, these futures ETFs did not allow for leverage.

In 2023, the SEC opens the door to x2 leverage, and Volatility Shares was the first to seize the opportunity with its BITX fund. The spot ETFs, on the other hand, had to wait until January 2024.

On October 2, 2026, the SEC announced the authorization of the listing of x3 leveraged products for the same issuer, on its BTC and ETH funds. All more aggressive requests had previously faced a technical obstacle.

Indeed, in 2020, the USA adopted the 18f-4 rule, which caps the risk of loss for funds governed by the Investment Company Act of 1940 at 200%. As a result, x3 leverage falls outside this regulatory framework. The equity ETFs still listed at x3, TQQQ or SOXL, only exist due to a clause of prior existence: they date back to 2010. Volatility Shares circumvented the barrier by placing its products in commodity trusts, under the 1933 law, outside the 1940 Act.

x3 Leverage on Bitcoin and Ethereum: The Cost of Daily Rebalancing

One must still understand what one is buying. A triple leveraged fund replicates three times the variation of a session, and only for one session. An asset that loses 10% one day and then gains back 11.1% the next day returns exactly to its starting point. The fund, however, still shows 6.7% lag.

This erosion becomes even more significant on an asset that moves 3 to 4% per day. A drop of 33.4% in a single session would wipe out nearly all of the net asset value. It is precisely on these positions that they are massively liquidated when bitcoin loses nearly 40%, as was the case on March 12, 2020.

However, the product still has a serious advantage over its offshore competitors. An ETF triggers neither margin calls nor forced liquidations. The maximum loss remains the capital invested, in a regular securities account, with daily reporting. On perpetual contract platforms, where leverage commonly rises to 50 or 100 times, the penalty falls within seconds and takes away the entire deposited margin. On October 10, 2025, a cascade of liquidations wiped out nearly $19 billion in positions within twenty-four hours.

<< Investors should be aware that the performance of these ETFs over a period longer than one day may differ significantly from their announced daily performance objective. >> Joint alert from the SEC and FINRA regarding leveraged ETFs.

The annualized volatility of bitcoin hovers around 45%. At this rate, a x3 leverage maintained for three months in a market that ends at equilibrium leaves about 15% of the capital on the table, even before management fees and the cost of rolling futures contracts.

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