First Sui-based ETF approved as 21Shares brings leveraged fund to market

Switzerland-based ETF issuer 21Shares has brought the first exchange-traded product tracking the price of Sui to the U.S. market, as the total number of crypto ETF launches continues to pile up.

The 21Shares 2x SUI ETF (ticker TXXS) was approved for trading on the Nasdaq exchange. This is a leveraged product designed to offer 200% the daily return of the Sui token.

"Widespread adoption of digital assets hinges on the market’s ability to offer consumers uncomplicated applications of the technology, and investors are eager to jump on products that seek to amplify those investment returns," said Russell Barlow, CEO of 21shares. "With this launch, 21shares is capitalizing on one of the winners rising to the occasion and ushering in the next era of blockchain technology – one dominated by simplicity."

Sui is a decentralized cryptocurrency built on the Ethereum blockchain. With its proof-of-stake consensus mechanism, transactions are conducted peer-to-peer, increasing transparency and eliminating the need for intermediaries. Its native token is used for transaction fees, network governance, and staking.

Sui has surpassed $10 billion in 30-day DEX volume and processed over $180 billion in stablecoin transfer volume for the fourth consecutive month, according to Thursday's release.

21Shares filed a registration statement with the SEC for a spot Sui ETF back in May, when it also announced a "strategic partnership" with Sui to produce product collaborations, research reports, and other initiatives.

Leveraged ETFs are typically short-term plays for experienced traders because of the high risk involved through the use of derivatives. In fact, the U.S. Securities and Exchange Commission recently halted the potential launch of 3x and 5x ETFs that are in the pipeline.

"While 2x leverage had long been seen as the ceiling under Rule 18f-4, some issuers believed there was a possible loophole in how the derivatives rule was written," according to ETF.com. "By structuring portfolios in certain ways, they hoped they could justify using something other than the actual underlying asset as the reference portfolio for the VaR test. The SEC made it clear that this interpretation is not acceptable."

Bloomberg senior ETF analyst Eric Balchunas noted that it's rare for the first crypto-based ETF to be a leveraged product. TXXS marks the 74th crypto ETF to launch this year and the 128th overall.

"We expect another 80 in the next 12 months," Balchunas said Thursday in a post on X.

Crypto trading firm FalconX acquired 21Shares for an undisclosed sum last month, around the same time the latter launched a leveraged Dogecoin ETF.