In brief
- Volatility Shares has filed to launch crypto ETFs that would give investors amplified exposure to Bitcoin, Ethereum, Solana, XRP, and various stocks.
- Such ETFs use leverage to maximize returns for investors.
- But investors can lose a lot of money buying such ETFs too.
As if crypto trading isn't already volatile enough, ETF manager Volatility Shares hopes to launch Bitcoin and other digital asset funds that would give investors five times the daily exposure to the asset class.
The long list of proposed funds includes Bitcoin, Ethereum, Solana, and XRP ETFs, as well as funds giving amplified exposure to crypto-related stocks such as crypto exchange Coinbase and Bitcoin treasury firms Strategy and Tesla.
Typical ETFs give investors exposure to an asset—be it a security or commodity—via shares that track its price and trade on stock exchanges.
A leveraged ETF holds debt to amplify its position. The idea is that returns for investors can be greater than the tracked asset, but losses can also be compounded—in this case, potentially by five times.
Volatility Shares had already filed the paperwork with the Securities and Exchange Commission to get crypto ETFs on the market with three times exposure to the daily returns of the asset.
The company in March debuted two ETFs tracking Solana futures, including one with two times daily exposure to SOL.
Leveraged crypto ETFs are already on the market: Miami, Florida-based Defiance ETF's MSTX gives investors access to a leveraged position in Bitcoin treasury firm Strategy's stock (MSTR), amplifying gains—and losses—by 175%.
The SEC in January 2024 approved 11 Bitcoin ETFs after saying no to applications for a decade. The funds were launched by prestigious asset managers like BlackRock and Fidelity, and had the most successful launch in the history of ETFs, with Ethereum funds following in summer last year.
Asset managers are now trying to get ETFs approved that give exposure to altcoins, including top assets like Solana, XRP, and Dogecoin—though a couple have already started trading.
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