Triple dose of bitcoin on Wall Street's menu: SEC authorizes 3x leveraged ETFs

Triple dose of bitcoin on the Wall Street menu. The SEC has authorized the listing of the first US leveraged ETFs. Thus, traders will be able to apply leverage of up to x3 on bitcoin and ether. Until now, the American market had remained stuck at x2 leverage since 2023, two years after their launch.

Short-term trading products, these funds rebalance each session and are not an investment that you forget at the bottom of a portfolio. Triple leverage ETFs have existed on American equity indices since 2010. Now it is the turn of bitcoin and probably soon that of other cryptocurrencies to access this functionality.

Key Points

Washington authorizes triple daily exposure to bitcoin and ether via listed funds, where the American market has stopped at a factor of two since 2023

Rule 18f-4 of 2020 limits the risk of 1940 Act funds, the three-factor equity products still listed dating from before this date

The adjustment is made session by session: a round trip of prices at equilibrium already leaves 6.7% loss on the fund

Faced with offshore perpetuals at 50 or 100 times, these funds eliminate margin calls and forced liquidations

This ceiling has held since June 2023, almost two years after the opening of the first American bitcoin ETFs. Launched in October 2021, these futures ETFs did not allow the use of leverage.

In 2023, the SEC opens the door to x2 levers and Volatility Shares was the first to step into the breach with its BITX fund. Spot ETFs 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 have hitherto encountered a technical obstacle.

Indeed, in 2020 the USA adopted rule 18f-4, which caps the risk of loss of funds governed by the Investment Company Act of 1940 at 200%. As a result, the x3 levers fall outside this regulatory framework. The equity ETFs still listed at x3, TQQQ or SOXL, are only held together by a grandfather clause: they date from 2010. Volatility Shares got around the wall by housing its products in commodity trusts, under the law of 1933, outside the 1940 Act.

3x leverage on Bitcoin and Ethereum: the bill for daily rebalancing

You still need to understand what you are buying. A triple leverage fund reproduces three times the variation of a session, and only of a session. An asset that loses 10% one day then regains 11.1% the next day returns exactly to its starting point. The fund is still 6.7% behind.

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

The product nevertheless maintains a serious advantage over its offshore competitors. An ETF does not trigger a margin call or forced liquidation. The maximum loss remains the capital invested, in an ordinary securities account, with daily reporting. On perpetual contract platforms, where the leverage commonly climbs to 50 or 100 times, the sanction falls within seconds and takes away the entire margin deposited. On October 10, 2025, a cascade of liquidations wiped out nearly $19 billion in positions in twenty-four hours.

“Investors should be aware that the performance of these ETFs over a period of more than one day may differ materially from their stated daily performance target. »

Joint SEC and FINRA Alert on Leveraged ETFs

The annualized volatility of bitcoin is around 45%. Under this regime, x3 leverage held for three months on a market that ends in equilibrium leaves around 15% of the capital on the table, even before management fees and the cost of rolling futures contracts.