Defiance ETFs asks permission to create a fund that doubles the value of investments in Ethereum futures.

On Monday, Defiance ETFs applied for another leveraged cryptocurrency ETF, this time focused on Ethereum (ETH) rather than Bitcoin (BTC).

Per a Monday filing with the U.S. Securities and Exchange Commission (SEC), the Defiance 2X Ether Strategy ETF is an ETH Futures ETF that seeks to double the daily performance of the rolling CME Ether Futures Index. This means exaggerated gains on Ether’s strong days and sharp losses during selloffs.

Defiance ETFs Make Waves

“Because the Fund seeks daily leveraged investment results, it is very different from most other exchange-traded funds,” the prospectus states. “It is also riskier than alternatives that do not use leverage.”


Leveraged ETFs are risky not only because they are volatile, but also because they tend to underperform the assets they track over time. Defiance noted that its fund will lose money if Ether futures trade flat or even if they modestly rise over a period longer than a day.

“The Fund is not intended to be used by, and is not appropriate for, investors who do not intend to actively monitor and manage their portfolios,” the company wrote.

Earlier this week, Defiance also filed for its 2X Short MSTR ETF, a leveraged short play on the Bitcoin development company MicroStrategy, which investors say is a leveraged play on Bitcoin (BTC). Blockstream CEO Adam Back blasted the ETF as a “terrible product” that would get investors “rekt.”

On Tuesday, ProShares followed Defiance with filings for its own 2X and -2X spot Ether ETFs.

The Importance Of Ether Futures ETFs

The filing happened after the SEC said it was okay for people to start trading Ether futures ETFs in October. About twelve companies sent a lot of documents to the SEC after they gave the go-ahead for the first 2X Bitcoin futures ETF from Volatility Shares at the end of June.

The fund with the ticker BITX has increased by 91% compared to Bitcoin’s 55% growth this year.

The idea was that if the SEC approved a risky product, they might also be open to Ether Futures ETFs. Ether is the second-largest crypto and has historically been riskier than Bitcoin.

Although the first Ether ETFs didn’t attract much trading compared to Bitcoin ETFs, their approval showed that the SEC might start treating crypto ETFs differently in the future. Three months later, Bitcoin investment funds became available and attracted $12. 3 billion in deposits.

Investors are waiting for the SEC to give the green light to ETH spot ETFs, but experts don’t think it will happen soon.

Latest stories

You might also like...