⏱ 2 min read
An Oct. 7 filing sets a 1.85% fee and breakeven estimates of 1.98% for BTC and 2.78% for ETH, with futures, daily resets and K-1 tax reporting.
On Oct. 2, the SEC approved exchange-listing rules for VS Trust’s proposed 3x Bitcoin and Ethereum funds, moving a 3x Bitcoin ETF and its Ether counterpart closer to trading. An Oct. 7 amended filing details how they would work and what they would cost, including a 1.85% annual management fee, estimated breakevens of 1.98% for the Bitcoin fund and 2.78% for the Ethereum fund, and the use of futures. The filing says the funds have not begun trading.
Daily reset reshapes returns vs conviction
The report says the proposed funds seek three times their benchmark’s daily return, before fees and expenses. That promise is limited to one day. Because each day’s result becomes the next day’s starting balance, a volatile path can separate a leveraged fund’s outcome from the underlying market’s cumulative move. The report explains that when the market falls, leverage erodes capital faster than exposure is reduced; to restore the target multiple, the fund cuts exposure, so rebounds then apply to a smaller position.
The SEC, in an investor bulletin cited by the report, described a four-month period when an unnamed index gained about 8% while a fund seeking three times its daily return lost 53%. The example is not a forecast for these products, but it shows how daily compounding can penalize choppy paths and reward sustained advances, independent of a holder’s longer-term view.
▲ 0.71%
▲ 1.17%
Prices as of 2026-10-10 19:02 UTC. Source: CoinGecko.
Futures, fees and tax treatment change what holders get
The listing approval showed the funds would use futures. Maintaining exposure requires replacing contracts as they near expiry, and the pricing of those replacements can add costs or benefits. Either way, multiplying spot Bitcoin’s return by three will not match the fund’s results.
The Oct. 7 filing lists a 1.85% management fee for both proposed products and estimates the annual return needed to cover total operating costs at 1.98% for the Bitcoin fund and 2.78% for the Ethereum fund, incorporating other expenses and assumed interest on collateral. Against the 1.85% fee, 1.98% is higher by 0.13 percentage points for the Bitcoin fund, and 2.78% is higher by 0.93 points for the Ethereum fund. Those breakeven figures describe costs under the filing’s assumptions before any investor return.
The report says these are commodity-pool ETFs outside the Investment Company Act of 1940 framework, with the filing anticipating partnership tax reporting via Schedule K-1. Shareholders may have taxable allocations without cash distributions. The issuer also warns that the entire investment could be lost in a day or overnight, and the filing notes there is no performance record for BITH or ETHK because the funds have not begun trading. The listing decision permits a route to market; launch timing was not stated.
Source: CryptoSlate.
This article was written with AI assistance and reviewed by an editor.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
The higher breakeven cost for the Ethereum fund suggests it faces greater operational challenges or cost factors than the Bitcoin fund. Although the filing does not specify whether this difference is mainly due to the futures market structure or trading expenses, the larger gap means Ethereum investors will need proportionally higher returns just to cover costs. This dynamic could influence the relative attractiveness of the two funds depending on how their underlying futures perform and how fees and expenses evolve over time.
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