The move marks a rare pause in an otherwise permissive stretch for US
fund approvals, which has seen a green light given to crypto-linked ETFs
of all stripes, private-asset vehicles and increasingly complex trading
strategies.
- The funds now under scrutiny are on the extreme edge of that trend — combining high leverage, daily trading resets and exposure to some of the most unstable corners of the market, including single-name stocks and digital tokens.
SEC halts high-leveraged ETF plans in warning over risks
Funds' risk exposures may exceed SEC limits on how much risk a fund can take on relative to its assets.
DEC 03, 2025
by Denitsa Tsekova and Nicola M White
The US Securities and Exchange Commission has issued a flurry of warning letters to some of the country’s most prolific providers of high-octane exchange-traded funds, effectively blocking the introduction of products designed to deliver two or three times the daily returns of stocks, commodities and cryptocurrencies.
In
a set of nine almost identical letters posted Tuesday, the SEC told
firms including Direxion, ProShares and Tidal that it would not move
forward with reviewing proposed launches until key issues are addressed.
- At the heart of the regulator’s concern is that the funds’ risk exposures may exceed SEC limits on how much risk a fund can take on relative to its assets.
- The letters direct the fund managers to either revise their investment strategies or formally withdraw their applications.
“We
write to express concern regarding the registration of exchange-traded
funds that seek to provide more than 200% (2x) leveraged exposure to
underlying indices or securities,” the SEC wrote to all nine
applicants.
> Representatives of Direxion, ProShares and Tidal didn’t immediately respond to requests for comment outside regular business hours
Uploaded: Apr 7, 2025
Leveraged ETFs were popular during the bull market run and have remained popular
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