Crypto News: SEC Blocks 3x and 5x Crypto ETFs, Urging Firms to Revise or Withdraw
The post Crypto News: SEC Blocks 3x and 5x Crypto ETFs, Urging Firms to Revise or Withdraw appeared on BitcoinEthereumNews.com.
SEC blocks multiple 3x and 5x crypto ETF filings, citing Rule 18f‑4 limits and warning issuers to revise strategies or withdraw. The U.S. Securities and Exchange Commission has moved to block multiple 3x and 5x leveraged crypto ETF filings. The regulator sent formal notices to issuers after a surge of submissions tied to digital assets and equities. Firms have now been told to change their strategies or withdraw their plans. SEC Flags Filings Over Leverage and Risk Rules The SEC raised concerns that several ETF proposals attempted to work around Rule 18f‑4. The rule limits value‑at‑risk to twice the level of a chosen benchmark. Bloomberg analyst Eric Balchunas said the filings were flagged for attempting to bypass that quota. Looks like SEC is pushing back on all the 3x and 5x filings, calling them out on the loophole they were trying to use, to get around the 200% VAR, and “requests them to revise the obj and strategy to be consistent with 18f-4 or withdrawal” Honestly, it’s for the best. I’m as… pic.twitter.com/J8p6o1ND2B — Eric Balchunas (@EricBalchunas) December 2, 2025 Rule 18f‑4 requires strict controls for any fund that uses derivatives. The rule forces issuers to follow a documented risk program and maintain ongoing monitoring. The SEC said that higher leverage could create unstable trading conditions. Balchunas reported that the Commission warned that allowing leverage above 2x may lead to frequent termination events. He added that the SEC told issuers to either meet current rules or withdraw their applications. The notice also covered sector‑based ETFs and single‑stock leveraged products. Direxion and Other Issuers Pulled Into Review The SEC letter made reference to filings from Direxion. The firm submitted multiple leveraged ETF plans tied to crypto assets and high‑beta equities. These products aimed to offer amplified exposure using 3x and…
