SEC Approves 3x Bitcoin and Ether ETPs and Proposes New Crypto Custody Rules

Two decisions from the Securities and Exchange Commission this week are widening the regulated on-ramps to crypto in the United States. On Thursday, October 1, the agency proposed a new custody framework for digital assets. A day later, it approved the listing of the first triple-leveraged Bitcoin and Ether products on a US exchange. Bitcoin is trading around $85,000 to $86,000 today, up roughly 1%, as traders digest the news.

SEC Opens the Door to 3x Bitcoin and Ether Products

On October 2, the SEC approved a rule change from Cboe BZX Exchange that allows the listing of six triple-leveraged products sponsored by Volatility Shares. The lineup includes a 3x Bitcoin fund and a 3x Ether fund, along with products tied to gold, silver, crude oil and natural gas.

Despite "ETF" appearing in their names, the products are structured as commodity-based trust shares registered under the Securities Act of 1933. That distinction matters. In December 2025, SEC staff pushed back on 3x funds governed by the Investment Company Act of 1940, so the new approval follows a different legal route. The agency received no public comments on the proposal, and its Division of Trading and Markets approved it under delegated authority.

Volatility Shares already runs 2x Bitcoin and 2x Ether products under the tickers BITX and ETHU, which trade on US exchanges today. The new approval extends that product line to higher leverage.

What Investors Should Understand About Leverage

Leveraged funds target a multiple of an asset's daily move, not its long-term return. Because the leverage resets every day, results over weeks or months can drift far from three times the underlying performance, especially in choppy markets. Analysts commonly describe this effect as volatility decay. These products are built for short-term trading, and holding them for long periods can produce outcomes that surprise even experienced investors.

A New Custody Framework for Advisers and Funds

The second development is a rule proposal. On October 1, the SEC put forward changes to the custody rules under the Investment Advisers Act and the Investment Company Act. The goal is to give registered advisers and regulated funds a clear, compliant path to hold crypto assets, replacing custody rules written long before digital assets existed.

Under the proposal, advisers could hold client and fund crypto themselves in limited circumstances. State trust companies could also serve as custodians, provided they are authorized by their state, maintain safeguards against loss and theft, keep audited financial statements and segregate client assets from their own.

SEC Commissioner Mark Uyeda noted that adviser custody creates an inherent conflict of interest, and that fiduciary duties would continue to apply when advisers hold client crypto.

What Happens Next

The custody proposal is not final. The SEC will accept public comments for 60 days after it is published in the Federal Register, and the final rules could differ from the draft. Advisers, fund managers, custodians and crypto firms are expected to weigh in during that window.

Meanwhile, demand for regulated crypto exposure remains firm. US spot Bitcoin ETFs took in roughly $103 million on October 1 and about $190 million on October 2, according to Farside Investors data, following a $2.4 billion weekly inflow in the week ending September 25.