ETHK Needs $362 Million To Hit CME Futures Accountability Level

A proposed 3x Ethereum ETF reaches CME’s 8,000-contract accountability level at $362.1 million in assets.

At ETHU's Oct. 6 disclosed futures valuation, a 3x Ethereum ETF with $362.1 million in assets would target about $1.09 billion of exposure. If held entirely in standard CME Ether futures, that would equal 8,000 contracts, CME's single-month and all-month accountability level.

ETHU Already Exceeds The Threshold

Volatility Shares’ ETHU held 19,204 October CME Ether futures contracts worth $2.61 billion as of Oct. 6. Those holdings imply $135,800 of notional per contract.

ETHU’s position already stands at 2.40 times the 8,000-contract level. ETHU had $1.31 billion in net assets as of Oct. 5.

How The Leverage Mechanics Work

A 3x fund resets its exposure every day by trading roughly six times its starting assets times the benchmark’s daily move in a simplified calculation before investor flows and fees. ETHK’s SEC filing describes a fund that seeks three times the daily performance of an Ethereum futures benchmark through derivatives.

CME cut its single-month and all-month Ethereum futures accountability level to an aggregated 8,000 standard contracts effective March 2. CME aggregates positions by ownership or trading control, including accounts where a person controls trading or holds a 10% or greater ownership interest.

ETHK Approval And Trading Start

The SEC approved Cboe BZX’s rule change to list Volatility Shares’ proposed ETHK on Oct. 2. ETHK’s first trading date is pending.

Volatility Shares’ BITX held 6,368 CME Bitcoin futures contracts across October and November worth about $2.74 billion as of Oct. 6. CME’s Bitcoin accountability level sits at 5,000 contracts. A 3x Bitcoin fund reaches that level at about $718 million of assets, roughly double ETHK’s $362.1 million.

The CFTC’s Sept. 29 futures-only report counted 27,392 open Ethereum cash-settled futures contracts.

A 3x fund resets its exposure every day by trading roughly six times its starting assets times the benchmark’s daily move.

Whether CME will aggregate ETHK and ETHU as one controlled position remains unconfirmed. Current ETHK assets under management are unconfirmed.