SEC Halts Crypto ETFs: Will ProShares Cave or Quit? 🚫💰

The U.S. Securities and Exchange Commission (SEC), that paragon of regulatory virtue, has halted ProShares’ plans to launch a new lineup of 3× leveraged crypto funds, including products tied to Bitcoin, Ethereum, Solana, and XRP. The regulator, ever the stern father figure, declares the proposals incompatible with its leverage rules, leaving ProShares to ponder whether to fix the filings or retreat into obscurity. 🧠

What Triggered the Block?

Earlier this month, ProShares, that audacious upstart, submitted amendments seeking approval for high-leverage ETFs designed to deliver triple the daily performance of major assets-cryptocurrencies and tech stocks alike. The SEC, with the gravitas of a prophet, responded with a letter as dense as a Dostoevskian tome, asserting that the funds violate Rule 18f-4, an Investment Company Act rule that limits leverage like a jailer confines a prisoner. 🚫

Under this rule, a fund’s Value-at-Risk (VaR) cannot exceed 200% of an equivalent unleveraged portfolio. The SEC, ever the math teacher, claims ProShares’ proposed 3× products exceed that limit, rendering them incompatible with the standards of leverage risk. One might say the SEC is the ultimate gatekeeper, guarding the gates of financial sanity. 🧠

SEC: “Fix These Issues or Withdraw the Filings”

In its letter, the SEC, that relentless judge, made it clear that it will not continue reviewing any of the proposed products until ProShares rewrites the strategies to meet Rule 18f-4. According to the agency, funds tracking leveraged versions of assets must use those same assets as their “designated reference portfolio” when calculating risk. The SEC, ever the pedant, argues that ProShares’ filings did not fully reflect this requirement. 🧠

The regulator also reminded ProShares that it must delay the effectiveness of the filings until these problems are resolved. A warning, perhaps, to all who dare to chase gains without heed to the rules. 🚫

XRP, Bitcoin, Ether, and Solana Among Blocked Products

The halted lineup includes:

  • ProShares Daily Target 3× Bitcoin ETF
  • ProShares Daily Target 3× Ether ETF
  • ProShares Daily Target 3× Solana ETF
  • ProShares Daily Target 3× XRP ETF

Dozens of other proposed 3× leveraged stock and commodity ETFs were also affected, as listed in the SEC’s Appendix. A veritable feast of financial despair. 🚫

What Happens Next?

ProShares now has two options:

  1. Revise the ETF strategies to meet the SEC’s leverage rules, or
  2. Withdraw the filings completely.

Until ProShares responds, the SEC will not move forward with any review. A stalemate, perhaps, between ambition and bureaucracy. 🧠

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2025-12-03 19:13