The SEC approved a 3x Ethereum ETF – Here’s what it means

On the 2nd of October, the U.S. Securities and Exchange Commission (SEC) approved Cboe BZX’s proposal for a new Volatility Shares 3x Ether ETF alongside five other similar products.

The SEC approved the proposed rule changes allowing these funds to be listed on Cboe BZX but did not approve their initial trade.

Volatility Shares’ 3x Ether ETF will have the ability to amplify all positive and negative price movement in Ether [ETH] futures by up to three times.

Since this is an unleveraged daily reset product, volatile swings can cause returns to diverge sharply from three times ETH’s longer-term performance.

Furthermore, Futures-based leveraged products carry rollover costs as the underlying contracts are repeatedly bought and sold at higher prices. They can also experience tracking errors compared with Spot ETH.

It is possible that a high-demand product such as this may lead to increased short-term trading activity as well as rebalancing activity after it launches. However, trading still requires the S-1 registration to become effective.

However, until the product has completed its S-1 registration process, trading cannot occur.

Ethereum ETF demand weakens

However, despite the announcement, the ETF flows didn’t seem impressed. Instead, the data recorded more outflows on the product.