SEC pulls plug on super-leveraged ETFs—5x crypto not allowed

The UK has officially recognized cryptocurrencies as a new category of property with the passage of the Property (Digital Assets etc.) Act, providing much-needed legal clarity for crypto users and businesses. This legislation marks a significant milestone, as digital tokens previously existed in a grey legal area without formal recognition in statute.

CME Group has received approval from the SEC to launch its new securities clearing house, which is set to commence operations in the second quarter of 2026. This initiative aims to enhance market stability and compliance, potentially transforming the dynamics of US Treasury and repo transactions.

XRP Exchange-Traded Funds (ETFs) have attracted approximately $756 million in inflows, even as the token's price drifts toward the $2 mark, indicating a shift in supply from retail investors to institutional players. This divergence between ETF inflows and spot prices suggests a strategic repositioning among traders seeking higher returns in the current market environment.

In a recent Bloomberg interview, former SEC Chair Gary Gensler emphasized that Bitcoin is distinct from other cryptocurrencies, labeling most as 'highly speculative' assets. This statement underscores the regulatory scrutiny surrounding the cryptocurrency market, particularly as the SEC continues to evaluate the risks associated with various digital tokens.

Bitcoin traders are currently experiencing significant unrealized losses, marking a peak in pressure during this cycle. Analysts suggest that the recent selling pressure is only partially attributed to exchange-traded funds (ETFs), which accounted for a maximum of 3% of the decline.

The SEC has expressed concerns regarding high-leverage ETF plans associated with cryptocurrency and tech stocks, indicating a potential slowdown in the approval process for these investment vehicles. This scrutiny aims to mitigate excessive risk-taking in volatile markets.

Paul Atkins, speaking at the NYSE, announced that the SEC is expected to introduce an innovation exemption for cryptocurrency projects within a month, asserting that the agency possesses sufficient authority to advance regulatory frameworks for digital assets by 2026.

Grayscale’s Chainlink Trust has successfully converted into the first U.S. Chainlink ETF, receiving approval to trade on NYSE Arca. This marks a significant milestone in the cryptocurrency sector, reflecting a shift in regulatory attitudes as the SEC streamlines the approval process for crypto-related funds.