tl;dr
Defiance Investments files for 49 3X leveraged ETFs in crypto, tech, and gold, sparking debates about risk and regulatory shifts in volatile markets.
**Defiance Investments Files for 49 Leveraged ETFs, Targeting Crypto and Tech Sectors**
In a bold move aimed at attracting high-risk-tolerant investors, Defiance Investments has filed an application with the U.S. Securities and Exchange Commission (SEC) for 49 exchange-traded funds (ETFs) offering three-times (3X) long and short leveraged exposure to technology, cryptocurrency, and gold-related assets. The proposal, detailed in a recent N-1A prospectus, marks a significant escalation in the availability of highly volatile financial products, reflecting growing demand for digital asset exposure and the evolving regulatory landscape.
The funds would target a range of assets, including leveraged bets on tech giants like Coinbase, Bitcoin-focused entities such as MicroStrategy, brokerage platform Robinhood, and crypto-related firms like BitMine Immersion and Circle, the issuer of the USDC stablecoin. Additionally, the filings include exposure to Grayscale’s Bitcoin and Ethereum mini-trust ETFs, as well as Volatility Shares’ Solana ETF. This expansion builds on Defiance’s existing portfolio of 2X leveraged ETFs, such as the Daily Target 2X Long MSTR (MSTX) and Daily Target 2X Long HOOD (HOOX), which aim to mirror the daily price movements of specific stocks.
However, the proposed 3X leveraged funds are far rarer and come with heightened risks. Analysts caution that these products are suited only for sophisticated, short-term traders, as their performance can rapidly deteriorate in volatile markets. The prospectus itself warns that the funds may not be appropriate for all investors, emphasizing the potential for significant losses if underlying assets move unpredictably.
Bloomberg ETF Analyst James Seyffart highlighted the speculative nature of the move, quipping on X: “Things are getting wild.” The filing aligns with a broader trend of ETF issuers seeking to capitalize on the surging interest in digital assets. As of late August, the SEC was reviewing over 90 ETF applications focused on cryptocurrencies, tokenized strategies, and related assets. The recent success of spot Bitcoin and Ethereum ETFs—now holding around $150 billion in assets, per CoinGlass data—has emboldened firms to push for more aggressive products.
Sumit Roy, senior ETF analyst at ETF.com, noted that the proposals challenge conventional expectations. “The conventional wisdom was that the SEC was only going to allow 2X leverage going forward, but these filings suggest that it may be willing to allow more volatile products to hit the market,” he said. If approved, the 3X funds would cater to a niche audience of “the most aggressive short-term traders,” he added.
Defiance’s application also overlaps with other firms’ efforts to expand their crypto ETF offerings. On the same day, LeverageShares and Themes Trust submitted proposals for 14 ETFs, including 3X long and short funds tied to Coinbase (COIN) and Robinhood (HOOD). This flurry of activity underscores the industry’s bet on continued investor appetite for digital assets, despite regulatory uncertainties and the inherent risks of leveraged products.
As the SEC deliberates, the introduction of 3X leveraged ETFs could reshape the landscape for retail and institutional investors alike, offering new tools for speculation while raising questions about risk management in an already volatile market. For now, the move signals a bold step toward a future where extreme leverage and digital assets intersect more openly than ever before.