SEC formally blocked 3x and 5x leveraged crypto ETF applications from multiple issuers including Direxion and VolShares.
Rule 18f-4 limits fund leverage to 2x benchmark risk, preventing approval of extreme leverage products.
The Securities and Exchange Commission has made a major move against the crypto investment environment by rejecting several proposals for leveraged exchange-traded funds. Managers of funds who want to introduce 3x and 5x crypto ETFs have to make a very important choice now: whether to change their tactics drastically or to take back their applications.
The elimination of these proposals by the regulator comprises a large number of the crypto-related and high-volatility equities filings, which may be interpreted as a warning from the Commission about too much risk in the market.
Regulatory Concerns Over Extreme Leverage
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