Tuttle Capital Management Proposes Innovative Crypto ETFs
In a bold move, Tuttle Capital Management, an established provider of exchange-traded funds (ETFs), has recently submitted a series of ten proposals to the U.S. Securities and Exchange Commission (SEC) for 2x leveraged ETFs. This initiative appears to be a strategic foray into the crypto-friendly environment fostered by the Trump administration, with a particular focus on tracking the official memecoins associated with Donald and Melania Trump.
The proposed ETFs aim to deliver 200% returns on several notable cryptocurrencies, including Chainlink (LINK), Cardano (ADA), Polkadot (DOT), Melania (MELANIA), XRP (XRP), Bonk (BONK), Solana (SOL), and Litecoin (LTC), as well as the Trump (TRUMP) token. According to the official filing, the daily performance of these digital assets will be meticulously tracked and generated through a combination of swaps, call options, and direct investments.
However, the filing also carries a significant caution for potential investors. The leveraged nature of these products means that while they can amplify returns, they also pose a heightened risk of substantial losses. As outlined in the documentation, investors could theoretically lose their entire principal investment within a single trading day if the value of the underlying asset experiences a drastic decline of more than 50%. “Using leverage amplifies returns but also magnifies losses,” the filing cautioned.
Although drops of 50% are relatively uncommon, the altcoin market is notorious for sudden fluctuations, with declines of around 10% occurring during periods of market stress, as evidenced by the recent market movements on Monday. In such a scenario, these ETFs could see a minimum drop of 20%, not accounting for any associated fees.
Bloomberg Intelligence analyst James Seyffart shared insights on the implications of these filings through an X post, suggesting that they serve as a litmus test for what the current SEC may permit. He stated, “This is a case of issuers testing the limits of what this SEC is going to allow.” Seyffart expressed optimism regarding the new crypto task force, led by @HesterPeirce, which he believes will play a crucial role in shaping the guidelines for what is permissible in the crypto ETF space.
Furthermore, analyst Eric Balchunas pointed out the unusual nature of filing for a 2x leveraged Melania ETF before a traditional 1x ETF, highlighting the unconventional approach taken by Tuttle. He also remarked that these ETFs could potentially launch as early as April unless the SEC explicitly disapproves them, thanks to the structured process outlined in the “Act 40” filings, which facilitates trading if no objections arise within the review period.
