ProShares has officially withdrawn its entire lineup of 3x leveraged crypto and technology ETFs after the U.S. SEC raised concerns over the products’ risk levels and how leverage exposure was calculated. The canceled ETFs would have offered traders triple-leveraged daily exposure to major assets, including Bitcoin, Ethereum, XRP, Solana, and leading tech stocks.
The SEC’s pushback centered on whether these funds accurately reflected the extreme volatility of the underlying assets. In response to the regulator’s request to amend filings or delay approval, ProShares suspended the launch. According to correspondence from the SEC’s Division of Investment Management, ETFs targeting more than 200% leverage are unlikely to represent real market risk and may fail to track their respective indices properly.
The move follows similar cancellations across the industry. CoinShares recently halted plans for XRP, Solana, and Litecoin ETFs amid growing uncertainty around leveraged products. ProShares’ withdrawn lineup included Daily Target 3x Bitcoin, 3x Ether, 3x XRP, 3x Solana, and 3x leveraged funds tied to Amazon, Coinbase, Google, MicroStrategy, Nvidia, Palantir, Tesla and other major firms.
Bloomberg Intelligence analysts have outlined why regulators stepped in. Research shows that 3x leverage applied to highly volatile stocks or crypto assets results in a high likelihood of mathematical failure. Bloomberg identified 66 assets intended for future 3x ETFs, noting that more than 350 trading days in the last five years saw at least one of these stocks move by 33% or more. Such volatility is enough to wipe out a 3x fund within a single session.
The SEC has previously blocked multiple 3x and 5x ETF filings due to similar risks. Analysts noted that nearly 40 of the 66 identified stocks experienced volatility levels capable of destroying leveraged funds at least once, proving the risk was not theoretical but statistically expected.
Bloomberg ETF analyst Eric Balchunas stated that regulators may have prevented a significant market issue. He noted that approving such products would have likely resulted in an average of one ETF failure every week. Balchunas added that issuers should be relieved, as managing these products would have introduced major regulatory and operational challenges. Even today, many 2x single-stock ETFs show substantial volatility, demonstrating how much risk higher-leverage versions would carry.
