SEC warns issuers of high-leveraged ETFs

The SEC has sent warning letters to nine ETF issuers, including ProShares, ordering them to halt the review of any ETF products offering more than 200% leveraged exposure—including proposed crypto ETFs—due to concerns about investor risk.

The regulator noted that leveraged ETFs use debt to amplify returns but can also magnify losses, as more crypto-linked leveraged products continue to enter the U.S. market.

Defiance recently filed to launch 49 triple-leveraged (3x) ETFs tied to tech stocks, crypto-related companies, and funds tracking BTC, ETH, and SOL prices.

The warnings come amid a boom in crypto ETFs, with BlackRock’s IBIT now managing roughly $70 billion, pushing total assets across the 11 U.S. Bitcoin ETFs to about $122 billion.