Unlimited risk? Wall Street leverage competition enters the era of "5x speed".

Just a few days after the latest batch of ultra-high leverage products tested the regulatory tolerance bottom line, another new ETF proposal has increased the leverage multiplier and doubled the intensity. Volatility Shares has submitted an application to launch a fund that can provide a 5x daily return rate for some of the highest volatility assets in the global market. These assets include not only individual stocks such as Tesla, Inc. (TSLA.US) and NVIDIA Corporation (NVDA.US), but also cryptocurrencies such as Bitcoin and Ethereum. Currently, there are no individual stock ETFs with 5x or even 3x leverage in the US market. For a long time, the relevant regulations of the Securities and Exchange Commission (SEC) in the US have restricted such risk exposure. This makes the move by this Florida-based company not only aggressive but also unprecedented. This has become the latest high-pressure test for the new regulatory system. The current regulatory environment shows an unusually loose tendency - allowing exchanges to launch sports betting products, cryptocurrency financial products for retail investors, and leverage tools in the high speculative financial field that were previously considered off-limits. However, it may take some time to know the attitude of regulatory agencies towards this application - with the US government shutdown affecting operations, the SEC has been closed for over a week. It is currently unclear how this proposed fund will pass SEC scrutiny, as the SEC had previously set the leverage limit for new individual stock ETFs at 2x. In addition to covering Bitcoin and Ethereum, the fund also includes stocks such as AMD (AMD.US), MicroStrategy (MSTR.US), Palantir (PLTR.US), as well as smaller cryptocurrencies like Solana and Ripple. However, in the fiercely competitive US ETF market with about 4,500 funds, this is undoubtedly an attention-grabbing strategy. Volatility Shares declined to comment on this. It is understood that similar products have already appeared in other regions. Data compiled by ETF analyst Henry Jim shows that there are currently about 40 5x leveraged funds in the European market, with total assets under management of around $274 million. These funds mostly track indices such as the Nasdaq 100, S&P 500, a combination of the "Big Seven" stocks, and US treasuries, but do not target individual stocks. Jim stated that the US market is larger in size, and US investors who prefer risk are still likely to seek high-yield products, so this new proposed fund may have popular potential. However, signs have shown that investors are beginning to show fatigue - over the past three months, leveraged funds have experienced outflows of funds. At present, the biggest obstacle remains the current US government shutdown. In a notice issued on September 30, the SEC stated that during the government shutdown, investment companies could continue to submit applications; these applications will be automatically effective according to specific rules and deadlines before the regulatory agency resumes operations. The recent surge in ultra-leveraged products has once again sparked controversy over their pros and cons. Data shows that nearly one-third of ETFs launched this year contain some form of leverage tool. Asset management companies claim that they are simply meeting investor demand, but critics warn that many retail traders may overlook the details and risks behind these "turbocharged" funds. Mohit Bajaj, head of the WallachBeth Capital ETF division, pointed out another major obstacle - whether market makers and swap counterparties will support such products. These institutions (mainly bank financing departments) are responsible for designing and providing derivatives that offer leverage, and their involvement is crucial for the smooth operation of the funds. "This will face strict scrutiny," Bajaj said, and banks may be cautious in supporting products that amplify risk exposure by 5 times in terms of risk, capital requirements, and regulatory perception. According to the application documents, the proposed fund by Volatility Shares plans to achieve the goal of a 5x daily return rate for underlying assets through various financial instruments such as swaps and options, and will adjust holdings daily to achieve this multiple return rate. Bajaj cautioned, "Investors need to be cautious, especially during market corrections."