Tag: SEC

  • SEC Clears the Way for 3x Bitcoin and Ether ETPs, but None Can Be Traded Yet

    On October 2, the SEC approved a rule that would let triple-leveraged bitcoin and ether funds list on a U.S. exchange. Anyone hoping to buy one on Monday morning will be disappointed, because the funds have not started trading and no launch date has been announced.

    The distinction matters because several headlines have blurred it. The approval clears the exchange’s listing rule. It does not put a product on the market.

    What the SEC actually approved

    The regulator signed off on a rule change from Cboe BZX Exchange (File No. SR-CboeBZX-2026-065) that allows six funds to list and trade. Each is a series of the VS Trust: 3x Gold, 3x Silver, 3x Bitcoin, 3x Ether, 3x Crude Oil and 3x Natural Gas. The SEC’s order shows Cboe filed on August 10. The notice went out August 14 and appeared in the Federal Register on August 19. The agency received no public comments.

    The decision came from the SEC’s Division of Trading and Markets under delegated authority, signed by Assistant Secretary Sherry R. Haywood. The Commission itself did not vote. The order concluded the proposal was consistent with the requirement to “prevent fraudulent and manipulative acts and practices.”

    A rule filing was needed because of how the exchange’s own standards work. Under BZX Rule 14.11(e)(4)(F), leveraged commodity-based trust shares cannot use the generic listing process that the SEC approved for commodity trusts in September 2025. Anything leveraged has to be reviewed individually, and this approval is the step that cleared these six.

    Not quite an ETF

    The names say “ETF,” but the SEC’s order treats them as commodity-based trust shares, which makes them exchange-traded products. They are not regulated under the Investment Company Act of 1940, the law that governs traditional ETFs and mutual funds. The legal wrapper is different, and so is the set of protections that comes with it.

    The bitcoin and ether funds also never touch the coins. Each aims to deliver three times the daily performance of its reference asset, before fees and expenses, using a portfolio of first- and second-month futures contracts. Futures are paired with cash and equivalents held as collateral or margin. Volatility Shares LLC is the sponsor, Wilmington Trust is the trustee and U.S. Bank is the custodian.

    The 3x Ether fund will not stake ether or collect staking rewards, according to the sponsor’s filing.

    Why the funds are not live

    The sponsor’s preliminary Form S-1, filed August 17, says shares cannot be sold until the registration statement becomes effective. It also states plainly that the funds have not begun trading. The prospectus date is still blank (“September [ ], 2026”), a sign the document is being finalized.

    The filing lists proposed tickers, though they are preliminary. The bitcoin fund would trade as BITH and the ether fund as ETHK. The other four are GLDU, SLVK, OILY and NATX. Neither the SEC order nor the S-1 offers a timeline.

    A first, according to reporting

    Several outlets have called this the first U.S. approval of 3x crypto products. The SEC does not make that claim itself. Its order does cite existing leveraged ETPs on other commodities, including ProShares Ultra Gold and the MicroSectors Gold 3x ETN, along with Volatility Shares’ own 2x bitcoin and ether products. The only crypto funds on that list are 2x.

    Those 2x funds, BITX and ETHU, are already run by the same sponsor. Volatility Shares says it introduced BITX in June 2023 as the first U.S. fund offering leveraged crypto exposure, though that is the company’s own claim.

    Bloomberg ETF analyst Eric Balchunas reacted the day of the approval, writing on X: “Big win for VolatilityShares.” He noted the SEC appeared to have approved the full slate of 3x products under the ’33 Act. The sponsor has not issued a public statement on the approval that NeuralWired has seen.

    What the sponsor says about the risks

    The most striking material in this story comes from the fund’s own paperwork. The S-1 warns that an investor “could lose the full principal value of their investment within a single day or overnight.” It adds that a one-day adverse move approaching 33% in the underlying asset could produce a total or near-total loss.

    Holding for longer is not a simple fix. The filing says that over any period longer than a day, returns can differ in size, and even in direction, from three times the asset’s move. Its hypothetical example is easy to follow. If an asset rises 10% and then falls back to where it started, a 3x fund would be down about 5.45% after two days, even though the asset itself went nowhere.

    A more extreme table in the filing shows how volatility can eat away at a leveraged fund. An asset that finishes a year at a 0% return, after swinging with 100% volatility, would leave a hypothetical 3x fund down about 95.0%. The sponsor labels that table illustrative, not a forecast.

    The S-1 also cites recent turbulence. It says silver futures fell about 26% in a single session on January 30, 2026, and gold fell about 11% on January 31, and that a 3x fund would have lost roughly three times those amounts. Those figures come from the sponsor’s filing and have not been independently verified.

    Costs are a factor too. The preliminary filing estimates the annual breakeven at 1.98% for the 3x Bitcoin fund ($0.30 per share) and 2.78% for the 3x Ether fund ($0.42), assuming a $15.00 share price. Like the tickers, those numbers could change before the filing takes effect.

    Rules for brokers and advisers

    The SEC’s order notes that Regulation Best Interest, FINRA sales-practice and margin requirements, and BZX suitability rules apply to recommendations of these products. In practice, that puts the burden on the firms that sell them. It does not change what the funds are, a complex, short-horizon instrument that the sponsor itself describes in stark terms.

    The market they would enter

    Demand for crypto exposure looks mixed. According to Farside data relayed by KuCoin, U.S. spot bitcoin ETFs took in a net $102.7 million on October 1. BlackRock’s IBIT drew $195.6 million, while the other funds combined lost $92.9 million. Ether ETFs lost $55.4 million, their third straight session of outflows. The IBIT figure has been matched by a second outlet, but the net and ether totals come from a single relay.

    The spot bitcoin ETP era began in January 2024, when the SEC approved listing and trading of products holding bitcoin directly. Then-Chair Gary Gensler’s statement at the time stressed that the action was limited to products holding bitcoin, a single non-security commodity. Leverage was never part of that decision. It took nearly three years, and a rule change at a single exchange, to bring triple-leveraged versions this close to market.

    What to watch next

    The next signals will come from the sponsor, not the SEC. Look for an amended S-1 with a finished prospectus date, a notice that the registration is effective, final tickers and fee disclosures, and a launch announcement. Until those arrive, the approval is a green light for a listing rule and nothing more.

    The larger question is whether fund flows broaden across the spot bitcoin ETF lineup, or stay concentrated in one product. That will shape how much appetite exists when the first 3x crypto fund finally appears on a ticker screen. When it does, the sponsor’s warning will be right there in its own prospectus, in plain language.

  • CLARITY Act Fails Senate Cloture Vote: What’s Next

    CLARITY Act Fails Senate Cloture Vote: What’s Next

    CLARITY Act Fails Senate Cloture Vote: What Happens Next
    NeuralWired
    Crypto Policy

    CLARITY Act Fails Senate Cloture Vote: What’s Next

    At 2:15 p.m. ET on September 15, 2026, the Senate floor felt like the end of an 18-month sprint. Fourteen months of committee markups, a Lummis rewrite, and a summer of lobbying all came down to one roll call. It failed.

    The CLARITY Act, crypto’s biggest shot at a real federal rulebook, fell 49-50 on a cloture vote, ten to eleven votes short of the 60 it needed. If you run compliance at an exchange, build DeFi protocols touching U.S. users, or just hold a bag of ETH and want to know what the government thinks it is, this is the vote that decides your regulatory reality for at least the next year. Here’s exactly what happened, why it collapsed, and what fills the vacuum now.

    What Happened on September 15

    The motion was procedural on paper: a cloture vote to end debate and proceed to H.R. 3633, the Digital Asset Market Clarity Act. In practice, it was the only vote that mattered. The tally landed at 49 yes to 50 no in most reports (some outlets flip the numbers to 50-49), but either way, the bill missed the 60-vote threshold by double digits, not by a hair.

    Four Republicans broke ranks. Jerry Moran, Rand Paul, and Josh Hawley voted no outright, while Thom Tillis switched his vote to no as a procedural maneuver under Senate Rule XIII, which preserves his right to file a motion to reconsider later. A competing tally from Coinpedia’s live blog names Susan Collins instead of Paul among the defectors, so the exact final roster should be checked against the official roll call at congress.gov before you cite specific names in follow-up coverage.

    Zero Democrats crossed over. That’s the number that actually killed the bill. Republicans hold 53 seats, meaning at least seven Democrats needed to vote yes, and none did.

    How We Got Here

    DateMilestoneResult
    July 17, 2025House floor vote294-134, including 78 Democrats
    January 2026Senate Agriculture Committee markup12-11
    May 14, 2026Senate Banking Committee markup15-9
    July 22, 2026Lummis releases merged floor textN/A
    August 8, 2026Senate adjourns, Thune files clotureVote set for Sept. 15
    September 15, 2026Senate cloture vote49-50, fails 60-vote threshold

    Notice the pattern: every committee stop was bipartisan and comfortable. The floor vote was neither. That gap between committee math and floor math is exactly where the bill’s three unresolved fights lived.

    Why the CLARITY Act Actually Failed

    Republicans added more than 100 revisions Democrats had asked for, including tougher ethics guardrails, according to Yahoo Finance’s reporting. It wasn’t enough. Three disputes stayed unresolved to the end.

    1. President Trump’s Crypto Income

    The president has disclosed crypto-related income reported at roughly $1.4 billion. Democrats wanted ethics language strong enough to prevent a sitting president from directly benefiting from a law he’d sign. Republicans added enforcement powers for state attorneys general as a partial concession. Senator Elizabeth Warren wasn’t satisfied.

    2. DeFi Developer Liability

    Section 604-style language on whether developers of non-custodial protocols could face personal or entity liability never reached a version both parties could accept. For anyone shipping smart contracts that touch U.S. users, this is the fight to watch when legislation returns, because it decides whether writing code is a legal exposure.

    3. Coinbase’s Stablecoin Yield

    A provision touching stablecoin-yield rules threatened an estimated $1.35 billion in annual USDC rewards revenue for Coinbase. The American Bankers Association sent more than 8,000 letters to Senate offices opposing the yield language between May 9 and 13, 2026. That kind of volume from the banking lobby doesn’t move quietly through a markup. It shows up on the floor.

    Key insight: None of these three fights are technical footnotes. Ethics, developer liability, and stablecoin economics are the exact three questions that determine who profits and who’s exposed once a market-structure law exists. That’s why compromise language kept collapsing right up to the vote.

    What Washington and Wall Street Are Saying

    “This one stings.” Brad Garlinghouse, CEO, Ripple, via The Block
    “Congress should vote to advance the Clarity Act and send it to the president’s desk as soon as possible. But with or without that legislation, this administration will deliver for American investors and technological innovators.” Paul Atkins, Chairman, U.S. Securities and Exchange Commission, via CoinDesk
    “Fails to adequately protect investors, our financial system, and our national security.” Senator Elizabeth Warren (D-MA), Senate Banking Committee, via TheStreet Crypto

    Mike Novogratz, CEO of Galaxy Digital, warned that a failed vote could push comprehensive crypto regulation off the table for years and send more of the industry offshore, while Senator Cynthia Lummis (R-WY), the bill’s lead Senate author, made her closing pitch blunt: “Let’s not only join the 21st century economy. Let’s not only join the digital age. Let’s lead it.” Grayscale, more measured, called the outcome “not the outcome we hoped for” while committing to keep working with regulators as policy matures.

    Even among Republicans, there’s disagreement about whether the bill is actually dead. One Senate GOP aide told The Block it’s finished for the year. Senator Tillis, whose procedural “no” vote keeps a reconsideration motion technically alive, said there’s still life in it. Treat “CLARITY is dead” as a developing claim, not a settled one, until the Senate calendar proves it either way.

    What Happens to Crypto Regulation Now

    Here’s the part that actually matters for your compliance calendar: no statute doesn’t mean no rules. It means the SEC and CFTC become the primary rulemakers by default.

    SEC Chairman Paul Atkins has been running “Project Crypto” since a January 28, 2026 staff statement laid out a taxonomy for tokenized securities. The agency’s broader 2026 agenda, informally dubbed “Regulation Crypto,” covers registration exemptions, a decentralization safe harbor, custody rules for broker-dealers, and trading-venue structure. Over at the CFTC, Acting Chairman Caroline Pham’s 12-month “Crypto Sprint” already produced the first listed spot crypto trading on CFTC-regulated exchanges, and Michael Selig, previously chief counsel of the SEC’s Crypto Task Force, has since been confirmed as CFTC chairman.

    The catch: agency rules aren’t statutes. A future SEC or CFTC chair can rewrite them. A federal court can strike them down under major-questions-doctrine theories. Atkins himself has said repeatedly that legislation “remains indispensable” for durability, which undercuts the industry’s own comfort blanket that agency guidance is a fine substitute for a law.

    The Market Already Voted

    Bitcoin slid from above $81,000 earlier in September to below $75,000 in the days around the vote, per CoinDesk’s live coverage. Crypto-adjacent equities took a sharper hit the same day: Coinbase fell 6.7%, Circle dropped 8%, Bullish slid 4.6%, and Robinhood declined 3.6%.

    Prediction markets had been pricing this in for months. Polymarket-implied odds of CLARITY becoming law in 2026 peaked near 82% in February and had collapsed to roughly 11-20% by the days before the vote. Galaxy Digital Research’s independent estimate landed even lower, around 10%, which matters because it shows the pessimism wasn’t just retail sentiment on a thin-volume betting market. It was showing up in institutional research too.

    What This Means for You

    If you’re building, trading, or investing in this space, here’s the practical fallout.

    • Compliance teams: Track SEC and CFTC rulemakings directly, not just Congress. The operative rulebook for the next 12 to 18 months is agency guidance, and it can shift with a new chairman.
    • Founders and token issuers: Treat any exemption or safe harbor you’re relying on as provisional. Budget for the possibility that a future administration rewrites Project Crypto guidance entirely.
    • DeFi developers: Personal and entity liability for non-custodial code remains legally unsettled. This is still an open exposure, not a solved problem.
    • Exchanges with yield products: Coinbase’s USDC rewards model and similar structures should not be treated as safe long-term. The yield fight that helped sink CLARITY will resurface in any future bill or rulemaking.
    • Traders: Expect continued volatility around political catalysts. Future Senate action, FOMC decisions, and SEC rulemaking announcements are scheduled volatility events now, not background noise.
    • U.S. vs. offshore decisions: Multiple industry voices are explicitly framing continued uncertainty as an offshoring risk. If you’re weighing incorporation and licensing strategy, this vote just tipped that calculation.

    One scheduling reality worth building into your roadmap now: with the fall Senate calendar and the 2026 midterms ahead, another serious legislative attempt is unlikely before 2027. Plan as if there’s no statute for at least a year, possibly longer.

    Our Read: The Overstated Panic and the Real Risk

    Not every reaction to this vote deserves equal weight. Novogratz’s “off the table for years, if ever” framing is a forecast dressed up as a fact. Atkins and Pham have both made clear that SEC and CFTC rulemaking continues regardless of what Congress does, so U.S. crypto regulation doesn’t fall to zero just because a bill stalled.

    At the same time, dismissing Warren’s investor-protection critique as pure obstruction misses the point. Her argument, that the bill could let companies move assets onto a blockchain specifically to sidestep securities-law protections, is a structural concern, not political theater. It deserves an actual counterargument, not a shrug.

    And the ethics dispute isn’t manufactured partisanship either. Senator Ted Cruz framed the failure as Democrats “playing politics,” but that framing skips over the fact that the trigger is a sitting president with more than a billion dollars in disclosed crypto income who would personally benefit from the law he’d sign. That’s an unusual governance question on its own merits, independent of which party is asking it.

    Our read: the realistic timeline here is longer than the optimistic “it’ll pass eventually” framing suggests. A failed cloture vote layered on top of a midterm election cycle has historically pushed complex financial legislation out by years, not months. Lummis herself has floated a window stretching toward 2030 for comprehensive reform. Plan accordingly.

    Frequently Asked Questions

    What is the CLARITY Act?

    The CLARITY Act (H.R. 3633) is proposed U.S. legislation that would create the first federal market-structure framework for crypto, splitting oversight between the SEC and CFTC and defining when a token counts as a security versus a commodity.

    Did the CLARITY Act pass the Senate?

    No. On September 15, 2026, the Senate voted 49-50 on a cloture motion to proceed, falling short of the 60 votes required. All Democrats plus several Republicans voted against advancing it.

    What happens if the CLARITY Act fails?

    Crypto regulation defaults to SEC and CFTC rulemaking under existing law rather than a new statute. SEC Chair Paul Atkins has said the agency will proceed with Project Crypto rules regardless, though agency rules can be reversed by a future administration or challenged in court.

    Why did the CLARITY Act fail in the Senate?

    Negotiators couldn’t resolve three disputes: ethics restrictions tied to President Trump’s disclosed crypto income, DeFi developer liability, and a stablecoin-yield provision affecting Coinbase’s USDC rewards revenue, despite Republicans adding more than 100 requested revisions.

    How did Bitcoin react to the CLARITY Act vote?

    Bitcoin fell from above $81,000 earlier in September to below $75,000 following the failed vote, with crypto-linked stocks like Coinbase and Circle also declining sharply the same day.

    Where This Goes From Here

    The CLARITY Act didn’t die of complexity. It died of three specific, nameable disputes that nobody was willing to lose on: presidential ethics, developer liability, and stablecoin yield economics. Understanding that is more useful than any “crypto regulation collapses” headline, because it tells you exactly what has to change before a bill like this gets 60 votes.

    Watch three things over the next six to eighteen months. First, whether the SEC finalizes Regulation Crypto Assets and whether it survives a court challenge. Second, whether Tillis’s procedural “no” vote turns into an actual motion to reconsider before the year is out. Third, whether the stablecoin-yield fight resurfaces in a narrower, standalone bill now that comprehensive reform has stalled.

    None of this happens on a predictable schedule, which is exactly why it’s worth having someone track it for you.

    Subscribe to The Neural Loop at neuralwired.com/newsletter for the next move, the moment it happens.


    Related reading: Trump’s CLARITY Act Faces Senate Cloture Vote Today and Crypto Regulation by Country 2026: GENIUS Act, MiCA and Global Laws.