SEC clears listing rule for six 3x Volatility Shares products

The SEC approved a rule change on October 2 allowing six new 3x leveraged products from Volatility Shares to be listed, ETF Trends reported in a note dated October 15. The products target three times the daily performance of futures-based benchmarks for bitcoin, ether, gold, silver, crude oil and natural gas.

Volatility Shares structured the funds as commodity-based exchange-traded products under the Securities Act of 1933 rather than as investment companies under the Investment Company Act of 1940. That keeps them outside Rule 18f-4's derivatives risk limits, according to ETF Trends.

Rule 18f-4 caps targeted daily leverage at 2x for the funds it covers. The rule, adopted in 2020, grandfathered certain existing 3x ETFs, but new funds generally cannot offer 3x leverage — a limit ETF Trends describes as the reason 3x, 4x and 5x strategies have struggled to launch inside 1940 Act-registered ETFs.

For a 1933 Act commodity product, the binding constraint was listing eligibility rather than the leverage cap. Leveraged commodity-based products do not qualify for generic exchange listing under existing rules, so their listing needed separate SEC approval, per the note.

Volatility Shares already runs a 2x bitcoin ETF, BITX, with more than $1.2 billion in assets. ETF Trends describes it as a tactical trading tool that tends to draw flows when bitcoin prices are volatile; the note says it is unclear whether a 3x bitcoin product would add demand or shift trading away from existing leveraged bitcoin ETFs.

ETF Trends' records show Volatility Shares reported about $2.0 billion in regulatory assets across nine accounts as of October 10. The firm's record logs a six-product launch dated October 2.