SEC Blocks High-Leverage Crypto ETFs, Citing Excessive Risk
The U.S. Securities and Exchange Commission has halted multiple filings for 3x and 5x Leveraged crypto ETFs, enforcing stricter risk controls under Rule 18f-4. Issuers including Direxion, VolShares, and GraniteShares must now revise their strategies or withdraw applications entirely.
Regulators flagged attempts to circumvent the 200% value-at-risk limit through filing loopholes. "The SEC is drawing a clear line—leveraged products exceeding 2x exposure won't pass muster," said Bloomberg ETF analyst Eric Balchunas. The MOVE reflects growing concerns about derivative-heavy instruments amplifying market volatility.
This decision impacts the broader crypto ETF landscape but doesn't directly target spot Bitcoin or ethereum products. Market observers note the SEC's stance could temporarily dampen institutional strategies employing extreme leverage.
