The U.S. Securities and Exchange Commission (SEC) has halted ProShares’ plans to launch a new lineup of 3× leveraged crypto funds, including products tied to Bitcoin, Ethereum, Solana, and XRP. The regulator says the proposals do not meet the agency’s leverage rules, and nothing can move forward until ProShares fixes the filings or withdraws them completely.
What Triggered the Block?
Earlier this month, ProShares submitted amendments seeking approval for several high-leverage ETFs designed to deliver triple the daily performance of major assets, including cryptocurrencies and popular tech stocks. However, the SEC responded with a detailed letter stating that the funds violate Rule 18f-4, an Investment Company Act rule that limits how much leverage an open-end fund can take on.
Under this rule, a fund’s Value-at-Risk (VaR) cannot exceed 200% of an equivalent unleveraged portfolio. The SEC says ProShares’ proposed 3× products exceed that limit, making them incompatible with the standards that govern leverage risk.
SEC: “Fix These Issues or Withdraw the Filings”
In its letter, the SEC made it clear that it will not continue reviewing any of the proposed products until ProShares rewrites the strategies to properly follow Rule 18f-4. According to the agency, funds that track leveraged versions of assets must use those same assets as their “designated reference portfolio” when calculating risk. The SEC argues that ProShares’ filings did not fully reflect that requirement.
The regulator also reminded ProShares that it must delay the effectiveness of the filings until these problems are resolved.
XRP, Bitcoin, Ether, and Solana Among Blocked Products
The halted lineup includes:
- ProShares Daily Target 3× Bitcoin ETF
- ProShares Daily Target 3× Ether ETF
- ProShares Daily Target 3× Solana ETF
- ProShares Daily Target 3× XRP ETF
Dozens of other proposed 3× leveraged stock and commodity ETFs were also affected, as listed in the SEC’s Appendix.
What Happens Next?
ProShares now has two options:
- Revise the ETF strategies to meet the SEC’s leverage rules, or
- Withdraw the filings completely.
Until ProShares responds, the SEC will not move forward with any review
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