{"id":61935,"date":"2025-12-04T16:32:20","date_gmt":"2025-12-04T16:32:20","guid":{"rendered":"https:\/\/dogewisperer.com\/?p=61935"},"modified":"2025-12-04T16:32:20","modified_gmt":"2025-12-04T16:32:20","slug":"why-is-sec-blocking-highly-leveraged-crypto-etf-applications","status":"publish","type":"post","link":"https:\/\/dogewisperer.com\/?p=61935","title":{"rendered":"Why Is SEC Blocking Highly Leveraged Crypto ETF Applications?"},"content":{"rendered":"<div>\n<p><span style=\"font-weight: 400\">The US Securities and Exchange Commission has suddenly put brakes on high-leverage crypto ETFs by issuing warning letters to major ETF issuers.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Proposed funds from issuers like Direxion, ProShares, Tidal Financial, Volatility Shares, and GraniteShares apparently exceeded volatility limits \u2013 by using derivatives to chase extreme leverage on crypto and single stocks such as Tesla or Nvidia.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">The applications for ETFs that promised 3x to 5x returns on assets like Bitcoin and Ethereum could be blocked? But why has the SEC stepped in? Apparently, the regulators cited violations of Rule 18f-4 under the Investment Company Act of 1940 which caps a fund\u2019s value-at-risk (VaR) at 200% of its unleveraged reference portfolio.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">\u201cWe write to express concern regarding the registration of exchange-traded funds that seek to provide more than 200% (2x) leveraged exposure to underlying indices or securities,\u201d <a href=\"https:\/\/www.sec.gov\/Archives\/edgar\/data\/1424958\/000000000025011179\/filename1.pdf\" rel=\"nofollow\" target=\"_blank\">said the SEC letter<\/a>, issued on 2 December 2025. \u201cWe request the registrant revise its objective and strategy to be consistent with rule 18f-4\u201d<\/span><\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">\u201cThe SEC has issued a flurry of warning letters to some of the country\u2019s most prolific providers of high-octane ETFs, effectively blocking the introduction of products designed to deliver 3 and even 5 times the daily returns of stocks, commodities and cryptos.\u201d  <img decoding=\"async\" src=\"https:\/\/s.w.org\/images\/core\/emoji\/16.0.1\/72x72\/1f447-1f3fc.png\" alt=\"\ud83d\udc47\ud83c\udffc\" class=\"wp-smiley\" style=\"height: 1em; max-height: 1em;\"> <a href=\"https:\/\/t.co\/ZKm6HAqsgZ\" rel=\"nofollow\" target=\"_blank\">pic.twitter.com\/ZKm6HAqsgZ<\/a><\/p>\n<p>\u2014 Kalani o M\u0101ui (@MauiBoyMacro) <a href=\"https:\/\/twitter.com\/MauiBoyMacro\/status\/1996337685288652865?ref_src=twsrc%5Etfw\" rel=\"nofollow\" target=\"_blank\">December 3, 2025<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><strong>DISCOVER:\u00a0<a class=\"general-link\" href=\"https:\/\/99bitcoins.com\/cryptocurrency\/next-crypto-to-explode\/\" target=\"_blank\" rel=\"nofollow noopener sponsored\">20+ Next Crypto to Explode in 2025<\/a><\/strong><\/p>\n<h2><strong>ProShares Pulls Several Crypto ETF Applications After Receiving SEC Warning<\/strong><\/h2>\n<p><span style=\"font-weight: 400\">A 1% Bitcoin drop could mean 3-5% ETF losses daily. Which means, over half of recent leveraged ETFs have shuttered due to poor performance. <\/span><\/p>\n<p><span style=\"font-weight: 400\">Shortly after receiving the SEC letter, ProShares pulled several 3x crypto ETF applications while acknowledging that they didn\u2019t meet the legal standards.\u00a0<\/span>ProShares had originally filed its ETF in NYSE in October 2025.<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">The SEC has stopped ProShares from launching new 3\u00d7 leveraged crypto funds.<br \/>They proposed <\/p>\n<p>3\u00d7 Bitcoin, <br \/>3\u00d7 Ether, <br \/>3\u00d7 Solana, <br \/>3\u00d7 XRP.<\/p>\n<p>The SEC says the funds break leverage rules, so ProShares must fix the filings or withdraw them.<br \/>Nothing moves forward until they do.\u2026 <a href=\"https:\/\/t.co\/SXlYAHKgkZ\" rel=\"nofollow\" target=\"_blank\">pic.twitter.com\/SXlYAHKgkZ<\/a><\/p>\n<p>\u2014 \ud835\uddd5\ud835\uddee\ud835\uddfb\ud835\uddf8XRP (@BankXRP) <a href=\"https:\/\/twitter.com\/BankXRP\/status\/1996212415030042655?ref_src=twsrc%5Etfw\" rel=\"nofollow\" target=\"_blank\">December 3, 2025<\/a><\/p>\n<\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><span style=\"font-weight: 400\">Notably, no 3x or 5x single-stock or crypto ETFs exist in the US market yet. Rules limit leverage to 2x maximum.\u00a0<\/span><\/p>\n<p><strong>Read More: <a href=\"https:\/\/99bitcoins.com\/news\/altcoins\/sec-crypto-news-reveals-plan-to-recategorize-crypto-assets\/\">SEC Crypto News: US Plans to Redefine Crypto Assets<\/a><\/strong><\/p>\n<h2>SEC Could Soon Redefine How Digital Assets Are Classified Under US Law<\/h2>\n<p>Speaking in Philadelphia on 12 November 2024, SEC Chair Paul Atkins <a class=\"general-link\" href=\"https:\/\/www.sec.gov\/newsroom\/speeches-statements\/atkins-111225-securities-exchange-commissions-approach-digital-assets-inside-project-crypto\" target=\"_blank\" rel=\"noopener nofollow\">said<\/a>\u00a0the agency will \u201cin the coming months\u201d propose a structured framework based on the Supreme Court\u2019s Howey test, the legal standard used to decide whether an asset counts as a security.<\/p>\n<p>The move aims to bring clarity to one of the most contentious areas in crypto regulation: determining when a token constitutes a security and when it does not.<\/p>\n<p>Atkins also said the Commission intends to release a \u201cpackage\u201d of exemptions designed to create a more flexible system for crypto projects that sell assets through investment contracts.<\/p>\n<p><span style=\"font-weight: 400\"> <strong>DISCOVER:\u00a0<\/strong><a class=\"general-link\" href=\"https:\/\/99bitcoins.com\/cryptocurrency\/best-meme-coin-icos\/\" target=\"_blank\" rel=\"nofollow noopener sponsored\"><strong>Best Meme Coin ICOs to Invest in 2025<\/strong><\/a><\/span><\/p>\n<p><span style=\"font-weight: 400\">    <\/p>\n<div class=\"nnbtc-key-takeaways\">\n<h2 class=\"nnbtc-key-takeaways__title\">Key Takeaways<\/h2>\n<p><span style=\"font-weight: 400\">    <\/p>\n<ul class=\"nnbtc-key-takeaways__list\">\n        <\/ul>\n<p><\/span><\/p>\n<p><span style=\"font-weight: 400\">    <\/p>\n<li class=\"nnbtc-key-takeaways__list-item\">\n        <\/li>\n<p><\/span><span style=\"font-weight: 400\">The halt tempers hype around \u201csupercharged\u201d ETFs, potentially cooling demand for high-beta crypto plays as Bitcoin ETFs already hold billions.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\"><br \/>\n    <\/span><\/p>\n<p><span style=\"font-weight: 400\">    <\/p>\n<li class=\"nnbtc-key-takeaways__list-item\">\n        <\/li>\n<p><\/span><span style=\"font-weight: 400\">Issuers may pivot to compliant 2x products or options-based strategies, limiting innovation but protecting novices from wipeouts.<\/span><\/p>\n<p><span style=\"font-weight: 400\"><br \/>\n    <\/span><\/p>\n<p><span style=\"font-weight: 400\"><br \/>\n    <\/span><\/p>\n<p><span style=\"font-weight: 400\">    <\/span><\/p>\n<\/div>\n<p>    <\/span><\/p>\n<p>The post <a href=\"https:\/\/99bitcoins.com\/news\/bitcoin-btc\/is-sec-blocking-highly-leveraged-crypto-etf-applications\/\">Why Is SEC Blocking Highly Leveraged Crypto ETF Applications?<\/a> appeared first on <a href=\"https:\/\/99bitcoins.com\/\">99Bitcoins<\/a>.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The US Securities and Exchange Commission has suddenly put brakes on high-leverage crypto ETFs by issuing warning letters to major ETF issuers.\u00a0 Proposed funds from issuers like Direxion, ProShares, Tidal Financial, Volatility Shares, and GraniteShares apparently exceeded volatility limits \u2013 by using derivatives to chase extreme leverage on crypto and single stocks such as Tesla [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":0,"footnotes":""},"categories":[2],"tags":[3,4,5],"class_list":["post-61935","post","type-post","status-publish","format-standard","hentry","category-news","tag-crypto","tag-doge","tag-news"],"_links":{"self":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/61935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=61935"}],"version-history":[{"count":0,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=\/wp\/v2\/posts\/61935\/revisions"}],"wp:attachment":[{"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=61935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=61935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dogewisperer.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=61935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}