The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have warned investors about the risks of investing in funds with exposure to bitcoin futures.
- The SEC on Thursday published an investor alert on funds trading in bitcoin futures. The alert comes from the SEC’s Office of Investor Education and Advocacy (OIEA) and the CFTC’s Office of Client Education and Outreach (OCEO).
- He explained that some funds may engage in trading bitcoin futures contracts as a way of getting exposure to bitcoin, emphasizing that the cryptocurrency is “a highly speculative investment.” The document warns:
Investors should consider the volatility of the bitcoin and bitcoin futures markets, as well as the lack of regulation and the potential for fraud or manipulation in the underlying bitcoin market.
- They urge investors thinking about investing in a fund that buys or sells bitcoin futures to “carefully weigh the potential risks and benefits of the investment”, naming factors, such as their risk tolerance, of the fund. Disclosure of risks, and potential investment losses.
- The warning further cautions that an increase in the price of bitcoin may not increase the value of fund holding positions in bitcoin futures contracts, citing a number of reasons. For example, funds cannot have direct investments in the underlying assets of contracts. In addition, bitcoin futures contract prices may vary by delivery months and may vary from B T c The price is Futures contracts also expire prematurely, resulting in fluctuations in portfolio exposure as new contracts are usually rolled over when futures positions expire.
- Meanwhile, the new chairman of the SEC, Gary Gensler, is pushing for increased surveillance of the crypto space, especially crypto exchanges. SEC is 75. brought Crypto-related enforcement actions on the industry so far. Gensler has said Congress to pass a law to protect investors.
What do you think about the SEC and CFTC warnings about funds investing in bitcoin futures? Let us know in the comments section below.
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