SEC Blocks High-Leverage Crypto ETF Plans

SEC Enforces Rule 18f-4 on Leveraged ETFs Tied to Crypto and Tech

• The SEC has requested revisions to ETF filings proposing 3x and 5x leverage ratios, ensuring compliance with Rule 18f-4.
• Rule 18f-4 mandates risk management programs and value at risk limits for leveraged products.
• Direxion, an ETF issuer known for its leveraged funds, is among those affected by the SEC’s revision requests.
• The proposed ETFs include exposure to tech stocks and crypto assets such as Bitcoin and Ethereum.
• The regulatory action underscores the SEC’s ongoing application of Rule 18f-4 to oversee derivatives in ETF structures.

The SEC’s enforcement of Rule 18f-4 requires revisions to Direxion’s proposed ETFs involving high leverage tied to crypto assets like Bitcoin and Ethereum, highlighting regulatory scrutiny on derivatives use.