Buy CryptoMarketsSpotFuturesGOLDEarnEvent Center
More
Gold vs Crypto
Nine ETF providers, including Direxion and ProShares, face SEC action over 3–5× leveraged funds, citing Rule 18f-4 breaches and systemic risk. The post SEC Slams the Brakes on Supercharged ETFs Amid Risk Concerns appeared first on Crypto News Australia.Nine ETF providers, including Direxion and ProShares, face SEC action over 3–5× leveraged funds, citing Rule 18f-4 breaches and systemic risk. The post SEC Slams the Brakes on Supercharged ETFs Amid Risk Concerns appeared first on Crypto News Australia.

SEC Slams the Brakes on Supercharged ETFs Amid Risk Concerns

Author: Cryptonews AU
Source: Cryptonews AU
2025/12/04 13:08
2 min read
4
4$0.006695-6.12%
For feedback or concerns regarding this content, please contact us at [email protected]
  • SEC blocks nine high-leverage ETFs, citing Rule 18f-4 violations and investor protection concerns.
  • Proposed ETFs amplified returns three to five times, targeting Bitcoin, Ether, Tesla, and Nvidia.
  • Ultra-leveraged products risk systemic losses; October’s crypto crash triggered US$20b (AU$30.8b) liquidations.

The US Securities and Exchange Commission (SEC) has blocked several ultra-leveraged ETF applications, issuing nine warning letters on 3 December 2025 to issuers including Direxion, ProShares, and Tidal Financial. The targeted funds were structured to deliver three to five times daily returns on equities, commodities, and cryptocurrencies.

The filings followed the 2024 election, as issuers anticipated a more favourable environment for crypto products. Many sought to launch highly leveraged ETFs tied to volatile assets like Bitcoin, Ether, Tesla, and Nvidia. 

The SEC flagged these proposals for likely violations of Rule 18f-4 under the Investment Company Act of 1940, which limits value-at-risk exposure to 200% of a non-leveraged reference portfolio. In its letters, the regulator noted: “The fund’s designated reference portfolio provides the unleveraged baseline against which to compare the fund’s leveraged portfolio for purposes of identifying the fund’s leverage risk under the rule.”

Issuers were told to either revise their strategies or withdraw their filings. Many of the proposed ETFs combined high leverage with daily resets, amplifying both potential gains and losses. Analysts warn such products can heighten systemic risk during volatile periods, as evidenced by October’s crypto market crash, which triggered US$20 billion (AU$30.8b) in leveraged liquidations.

Related: Bitcoin Dips Below $84k, Spot ETFs See Largest Outflow Since February

SEC Signals Leverage Ceiling

The warning letters were posted the same day they were issued, an unusually fast disclosure that underlines the SEC’s urgency. Leveraged ETFs now hold approximately US$162 billion (AU$249.5b) in assets, reflecting the growing retail and institutional appetite for amplified returns.

The SEC’s action signals a clear boundary: daily leverage above 2x is unlikely to gain approval, particularly for products tied to single-name equities or cryptocurrencies. Issuers must decide whether to redesign their ETFs to comply with Rule 18f-4 or abandon the proposals. The move underscores the Commission’s focus on protecting investors and limiting systemic risk in fast-moving markets.


Related: First-Ever Chainlink ETF Set to Debut on NYSE This Week

The post SEC Slams the Brakes on Supercharged ETFs Amid Risk Concerns appeared first on Crypto News Australia.

Market Opportunity
4 Logo
4 Price(4)
$0.006695
$0.006695$0.006695
+3.20%
USD
4 (4) Live Price Chart
Disclaimer: The articles reposted on this site are sourced from public platforms and are provided for informational purposes only. They do not necessarily reflect the views of MEXC. All rights remain with the original authors. If you believe any content infringes on third-party rights, please contact [email protected] for removal. MEXC makes no guarantees regarding the accuracy, completeness, or timeliness of the content and is not responsible for any actions taken based on the information provided. The content does not constitute financial, legal, or other professional advice, nor should it be considered a recommendation or endorsement by MEXC.

You May Also Like

Franklin Templeton CEO Dismisses 50bps Rate Cut Ahead FOMC

Franklin Templeton CEO Dismisses 50bps Rate Cut Ahead FOMC

The post Franklin Templeton CEO Dismisses 50bps Rate Cut Ahead FOMC appeared on BitcoinEthereumNews.com. Franklin Templeton CEO Jenny Johnson has weighed in on whether the Federal Reserve should make a 25 basis points (bps) Fed rate cut or 50 bps cut. This comes ahead of the Fed decision today at today’s FOMC meeting, with the market pricing in a 25 bps cut. Bitcoin and the broader crypto market are currently trading flat ahead of the rate cut decision. Franklin Templeton CEO Weighs In On Potential FOMC Decision In a CNBC interview, Jenny Johnson said that she expects the Fed to make a 25 bps cut today instead of a 50 bps cut. She acknowledged the jobs data, which suggested that the labor market is weakening. However, she noted that this data is backward-looking, indicating that it doesn’t show the current state of the economy. She alluded to the wage growth, which she remarked is an indication of a robust labor market. She added that retail sales are up and that consumers are still spending, despite inflation being sticky at 3%, which makes a case for why the FOMC should opt against a 50-basis-point Fed rate cut. In line with this, the Franklin Templeton CEO said that she would go with a 25 bps rate cut if she were Jerome Powell. She remarked that the Fed still has the October and December FOMC meetings to make further cuts if the incoming data warrants it. Johnson also asserted that the data show a robust economy. However, she noted that there can’t be an argument for no Fed rate cut since Powell already signaled at Jackson Hole that they were likely to lower interest rates at this meeting due to concerns over a weakening labor market. Notably, her comment comes as experts argue for both sides on why the Fed should make a 25 bps cut or…
Share
BitcoinEthereumNews2025/09/18 00:36
Cashing In On University Patents Means Giving Up On Our Innovation Future

Cashing In On University Patents Means Giving Up On Our Innovation Future

The post Cashing In On University Patents Means Giving Up On Our Innovation Future appeared on BitcoinEthereumNews.com. “It’s a raid on American innovation that would deliver pennies to the Treasury while kneecapping the very engine of our economic and medical progress,” writes Pipes. Getty Images Washington is addicted to taxing success. Now, Commerce Secretary Howard Lutnick is floating a plan to skim half the patent earnings from inventions developed at universities with federal funding. It’s being sold as a way to shore up programs like Social Security. In reality, it’s a raid on American innovation that would deliver pennies to the Treasury while kneecapping the very engine of our economic and medical progress. Yes, taxpayer dollars support early-stage research. But the real payoff comes later—in the jobs created, cures discovered, and industries launched when universities and private industry turn those discoveries into real products. By comparison, the sums at stake in patent licensing are trivial. Universities collectively earn only about $3.6 billion annually in patent income—less than the federal government spends on Social Security in a single day. Even confiscating half would barely register against a $6 trillion federal budget. And yet the damage from such a policy would be anything but trivial. The true return on taxpayer investment isn’t in licensing checks sent to Washington, but in the downstream economic activity that federally supported research unleashes. Thanks to the bipartisan Bayh-Dole Act of 1980, universities and private industry have powerful incentives to translate early-stage discoveries into real-world products. Before Bayh-Dole, the government hoarded patents from federally funded research, and fewer than 5% were ever licensed. Once universities could own and license their own inventions, innovation exploded. The result has been one of the best returns on investment in government history. Since 1996, university research has added nearly $2 trillion to U.S. industrial output, supported 6.5 million jobs, and launched more than 19,000 startups. Those companies pay…
Share
BitcoinEthereumNews2025/09/18 03:26
Fed Makes First Rate Cut of the Year, Lowers Rates by 25 Bps

Fed Makes First Rate Cut of the Year, Lowers Rates by 25 Bps

The post Fed Makes First Rate Cut of the Year, Lowers Rates by 25 Bps appeared on BitcoinEthereumNews.com. The Federal Reserve has made its first Fed rate cut this year following today’s FOMC meeting, lowering interest rates by 25 basis points (bps). This comes in line with expectations, while the crypto market awaits Fed Chair Jerome Powell’s speech for guidance on the committee’s stance moving forward. FOMC Makes First Fed Rate Cut This Year With 25 Bps Cut In a press release, the committee announced that it has decided to lower the target range for the federal funds rate by 25 bps from between 4.25% and 4.5% to 4% and 4.25%. This comes in line with expectations as market participants were pricing in a 25 bps cut, as against a 50 bps cut. This marks the first Fed rate cut this year, with the last cut before this coming last year in December. Notably, the Fed also made the first cut last year in September, although it was a 50 bps cut back then. All Fed officials voted in favor of a 25 bps cut except Stephen Miran, who dissented in favor of a 50 bps cut. This rate cut decision comes amid concerns that the labor market may be softening, with recent U.S. jobs data pointing to a weak labor market. The committee noted in the release that job gains have slowed, and that the unemployment rate has edged up but remains low. They added that inflation has moved up and remains somewhat elevated. Fed Chair Jerome Powell had also already signaled at the Jackson Hole Conference that they were likely to lower interest rates with the downside risk in the labor market rising. The committee reiterated this in the release that downside risks to employment have risen. Before the Fed rate cut decision, experts weighed in on whether the FOMC should make a 25 bps cut or…
Share
BitcoinEthereumNews2025/09/18 04:36