ProShares Withdraws 3x Leveraged Crypto and Tech ETFs as SEC Flags Risk

ProShares has halted plans to launch its suite of 3x leveraged technology and crypto ETFs after the U.S. Securities and Exchange Commission raised concerns over how the products measured and managed leverage risk. The proposed ETFs would have offered triple daily exposure to major assets including Bitcoin, Ether, XRP, Solana, and high-profile tech stocks such as Amazon, Nvidia, Tesla, Google, MicroStrategy, and Coinbase.

According to filings, the SEC’s Division of Investment Management sent a letter to ProShares warning that ETFs seeking leverage above 200% may fail to accurately capture the extreme volatility of the underlying assets. Regulators also questioned whether the funds properly tracked the securities or indices they were designed to follow. ProShares ultimately chose to withdraw the products rather than amend the filings or delay their launch indefinitely.

This move mirrors a similar decision by CoinShares, which recently paused the rollout of its planned XRP, Solana, and Litecoin ETFs due to mounting regulatory pressure. Analysts say these setbacks highlight growing skepticism around the feasibility and safety of highly leveraged ETFs, especially in volatile markets like crypto.

Bloomberg Intelligence research further supports the SEC’s hesitation, noting that single-stock and crypto-based 3x leveraged ETFs carry a statistically high chance of failure. Bloomberg identified 66 stocks slated for future 3x products and found that in the past five years, at least one of those assets experienced a 33% daily swing on more than 350 trading days—an event severe enough to mathematically wipe out a 3x ETF. Roughly 40 of the stocks crossed that threshold at least once.

Bloomberg ETF analyst Eric Balchunas warned that approving 3x and 5x crypto ETFs could have resulted in frequent product collapses, potentially one termination per week, given historical volatility. He added that even existing 2x single-stock ETFs already exhibit significant fluctuations, underscoring why higher-leverage crypto ETFs pose amplified risks.