The US stock market regulator warns investors about the risks of buying bitcoin futures and funds. The SEC has called Bitcoin “an extremely high risk asset.”
The agency has issued a warning to users trading bitcoin futures. The SEC called the first cryptocurrency a “highly speculative asset” and also urged users to carefully analyze the financial risks inherent in bitcoin futures contracts with settlements in fiat currency.
Investors are encouraged to define a risk profile for the correct allocation of assets in their investment portfolio. According to the Commission, the high volatility of bitcoin, as well as the lack of clear regulation of the cryptocurrency industry, creates conditions for fraud and manipulation in the cryptocurrency market.
The SEC’s warning appeared in connection with the fact that large banks began to provide their clients with access to bitcoin and themselves are interested in this crypto asset. So, in April, the investment bank Morgan Stanley announced that some of its funds can indirectly invest in BTC through Bitcoin futures. In the same month, BlackRock Asset Manager’s fund invested in BTC by purchasing futures on the Chicago Mercantile Exchange (CME) platform.
This statement of the department indicates its unwillingness to support exchange-traded funds (ETFs) for bitcoin, which many companies have been waiting for for several years. To date, there are about 10 ETF launch applications pending with the SEC. Some companies have already submitted such applications more than once, but they still hope to get the approval of the regulator.
The agency noted that it will study in detail whether the bitcoin futures market will be able to interact with cryptocurrency ETFs. Unlike mutual funds, such ETFs will not be able to contain the flow of additional funds from investors in the event of their dominance in the market or a decrease in liquidity. In addition, the SEC will continue to monitor the development of mutual funds that provide access to bitcoin in order to protect the interests of investors.
User protection is one of the agency’s top priorities, according to Gary Gensler, recently confirmed as chairman of the SEC. At the same time, supporters of cryptocurrencies hope that thanks to their knowledge of blockchain and cryptocurrencies, Gensler will be able to influence the regulator’s attitude to ETFs for cryptocurrencies.
